Click here for the article from The Economist. The Chart is interactive and has multiple options on the pull down in the article from The Economist.
Click here for the full article from The Heritage Foundation
MacIver News Service | August 16, 2011
[Madison, Wisc...] Despite efforts to curb the increase in government spending here, Wisconsin’s past spending spree has left it with a serious debt problem according to a new report.
“While our state budget is moving in the right direction, it is clear that the budgetary excesses of the past still haunt us to a degree,” said Robin Vos (R-Rochester), chairman of the budget-writing Joint Committee on Finance. “Wanton spending on the state’s credit card left us with bills we’ll be paying for years.”
Indeed.
A recent report by the Tax Foundation ranked all 50 states by how much interest payments on their debts amounted as a percentage of direct spending in 2009, the most recent year a complete picture is available for all the states.
Wisconsin’s Fiscal Year 2009 budget numbers ranked as the seventh worst in the nation, with debt payments accounting for 4.96 percent of the budget.
“Fortunately for Wisconsin taxpayers’ there is a new approach in Madison–one of fiscal responsibility,” said Vos. “As evidenced by the recently passed state budget, we’ve now controlled spending and borrowing and paying our bills from the previous budgets. Wisconsin’s ranking on this list will improve.”
Maine held the dubious honor of having highest interest payment as percentage of direct spending at 9.58%. Tennessee’s FY2009 budget was in the best shape, with the Volunteer state posting the lowest percentage of interest payments, at 1.12%.
Click here for more from the Tax Foundation.
The country faces difficult tradeoffs in putting the federal budget on a sustainable path. This chart by Mercatus Center Senior Research Fellow Veronique de Rugy compares federal spending and its key components as shares of GDP on average over the past 40 years, before the recession began, and in 2021 under the Congressional Budget Office’s current-law baseline projections.
During the past 40 years, government spending has ranged from as low as 18.2 percent of GDP in 2000 and 2001 to as high as 25 percent in 2009; revenues have averaged 18.0 percent of GDP. As a result of this overspending, budget deficits will continue to rise from 1.6 percent (2007) to roughly 6 percent (2021) of GDP.
Entitlement spending is the main driver behind this increase over the historical baseline. Under current law, CBO projects that spending on Social Security and major health care programs—mainly Medicare, Medicaid, Children’s Health Insurance Program—would be 12.2 percent of GDP in 2021; a 70 percent increase relative to the historical average. All spending apart from this and interest payments on the debt have averaged 11.5 percent of GDP during the past 40 years. That broad category includes defense (largest single item), food stamps, unemployment compensation, veteran’s benefits, transportation, and other programs.
Assuming current tax and spending policies persist through 2021, limiting federal spending to 18 percent of GDP would require cutting spending by one-fourth. We can continue to fuel the spending fire—and ignore these chilling facts—or we can extinguish it by putting federal spending in proper perspective.
Veronique de Rugy explains the trajectory of federal spending under three plans at NRO’s The Corner.
Source: Mercatus Center at George Mason University
MacIver News Service | August 4, 2010
[Madison, Wisc…] The State of Wisconsin continues to be one of the largest debtors to the federal government when it comes to covering losses in its Unemployment Reserve.
Earlier, MacIver News reported the state had amassed a $1.4 billion dollar debt in their Reserves.
According to a new analysis by the Council of State Governments, that total puts Wisconsin as the nation’s fourth most indebted state, per capita.
By owing $251.96 per person to the federal government just to cover monies borrowed for the Unemployment Reserve, Wisconsin only trails Michigan ($382.57), Indiana ($272) and North Carolina ($253.31) for per capita indebtedness.
If the amounts in Wisconsin’s Unemployment Reserve account in the U.S. Treasury are not sufficient to cover anticipated unemployment payments, the state can borrow funds from the federal government. Despite receiving $134 million in Stimulus funds, Wisconsin’s Unemployment Reserve Fund ended 2009 with a deficit of nearly one billion dollars. That figure continues to grow.
“We are coming out of the worst national economic times since the Great Depression,” said John Dipko, Wisconsin Department of Workforce Development Communications Director, told MacIver News when the figures were first reported in June. “Unemployment insurance has been a critical lifeline for many workers who are out of work through no fault of their own.”
According to the American Enterprise Institute, nationwide spending on extended unemployment insurance benefits since July 2008 has exceeded $131 billion, and the net federal spending in this area far exceeds even the Greek bailout.
Normally, the interest rate charged on these funds either 10 percent or the average rate on specified federal securities. However, no interest is charged if a) the loan is made in the first nine months of a year b) the loan is repaid prior to October 1st of the same year and c) no additional loans are made before the end of that calendar year.
Future interest obligations, according to a memo from the Wisconsin’s Legislative Fiscal Bureau, are significant. Based on the projected deficits in the Reserve Fund, Wisconsin’s DWD has estimated the state would owe the feds $317 million dollars in interest by 2014 if it were to continue to borrow funds from the Treasury to cover the shortcomings in the state account.
Updated figures which will include the borrowing done through the 2nd quarter of 2010 will be available soon. MacIver News will continue to follow this story and bring you reaction as it develops.
The Badger State earned a failing grade when it came to the science standards that students are supposed to held to, posting a 0/10 score and a “F” grade. This was the lowest recorded score in the entire study.
