Economic Policy and Budget Overview: Final Points
30 October 20007
The following are some of the key points made either directly or indirectly over the past two weeks as we’ve addressed budget and economic policy matters:
1. Government plays a key role in shaping economic conditions of the state/country but there are some limits to government’s capacity to fully control the economy (ie. industry downturn, natural disasters, international crises that require aid, health/security threats, state level: rising health care costs; court decisions mandating certain educational formula or scope of government responsibility)
2. Unpredictability/uncertainty=are very important and require assumptions and forecasting to be part of economic policymaking/budgeting
3. Obligations of government restrict the scope of governmental decision-making to particular areas of budget/programs (ie. debt service, entitlement programs)
4. Longterm economic/fiscal planning are often at odds with electoral cycles; sometimes legislators may feel less responsibility for the future and more of a focus on the current situation; in fact, the effects of fiscal policies are sometimes not realized until much later on
5. Revenue growth is important for the expansion of government spending
· Reserves/rainy day funds often used as a revenue source during economic expansion/recovery
· Revenues sometimes one-time, not ongoing (sale of land)
6. There are a variety of tax reduction approaches that may be taken (temporary, permanent)
7. Getting to the “truth” can be very difficult; it is sometime easy to manipulate numbers and spin data in certain ways
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