Government should be counter-cyclic to the Main Street marketplace

Ohio Statehouse
Ohio Statehouse
I was listening to NPR on WMUB this morning about the freshman Ohio senators starting their terms and how hard their jobs will be dealing with the State having a $1.9 billion budget deficit, GM, Delphi, DHL and other large companies pulling out of Ohio and various other things.

Many of the in-coming senators went on and on about how they need to cut government waste and hunker down and spend smarter, blah, blah, blah.

And then it occurs to me: Shouldn’t government be counter-cyclic to the marketplace? When things are going well, the free market tends to create goods and services it needs without help from the government. When the economy is doing well, shouldn’t government be pulling back on services, conserving revenues for a down economy?

When the economy is not doing well, that is when we need government help. That is when the government should ramp up the spending, not pull back. Government waste during fat years is a lifeline to average folks and small business during famine years.

As an owner of a small business, I only heard that the various Ohio Revenue departments are going to start going after every single penny it feels it is entitled to. It will asses property values higher, it will send out random letters declaring I owe this penalty or that missed tax payment, whether real or not. It will extract and extort money from the down and hurting at a greater rate than normal. All in pursuit of “responsible budget balancing.”

And they will further spiral the economic crisis downward and wonder why the budget will never balance. When the Ohio Statehouse policies put people out of business, tax revenues dry up and no matter how threatening the letters are, you can’t get money from people you put out of business and kick out of their homes.

I know it is really hard for elected officials to act responsibly during the fat, happy party years but when we out here on Main Street are doing well, Columbus and DC should be saving for a rainy day, not joining in the party and buying the booze for the drunken puppies.

Am I wrong?

9 Replies to “Government should be counter-cyclic to the Main Street marketplace”

  1. You are totally right on the money…. what is happening to the we are the government concept? I think it’s been lost Throw the bums out!

  2. @alrady When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

    Interesting read in a more contemporary context.

  3. I agree in theory that government and business should work as opposites. However, we know that business moves much quicker than government ever could, so attempting to pair them would result in being more out of sync.

    By belief is that the government (and its people) should decide on what core services they will provide, and then butt out of others. Too many things are done on a piece-meal basis, so business and government get so interwoven that they can’t break apart.

  4. @norcross Then I think we need to start electing really smart people who CAN get things in sync instead of people we would rather drink a beer with. Just because something is the way it is doesn’t mean it has to stay that way.

    “When in the course of human events..” my friend…

  5. Your view is accurate as regards the Federal government, which is why we have an $800 billion stimulus bill. But it is wrong as regards the states. All 50 states are required by law to balance their budgets annually. If they were not so required, the Federal government would constantly be bailing them out.

  6. @patrick Not entirely true. While most states’ balanced budget requirements limit the amount of debt the state can incur, most don’t limit the surplus. My entire point here is that the states should recognize that economies go through ups AND downs and that their spending should be counter-cyclic to the economy. In the fat years, draw more taxes and SPEND LESS. In the lean years, cut taxes and SPEND MORE.

    But, you can’t cut taxes if you didn’t plan for lean years, which is what is wrong with the GOP approach to the $800B stimulus. There is no surplus to dip into.

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