Town Square

Update on the U.S. Economy

Original post made by stephen levy, University South, on Aug 8, 2009

In April I started a blog on when the recession would end.

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Posted by Paul Losch
a resident of Palo Alto
on Aug 9, 2009 at 8:56 am

Paul Losch is a registered user.

What has me worried are the severe budget problems at the state and local government levels. It is a huge issue here in California, but there are numerous other states and local governments elsewhere in the country in similar situations, or that will be soon.

I view these institutions as "enablers" that pave the road--literally and figuratively--on which the private economic engine operates.

These governments are saddled with legacy obligations such as generous pension programs for long term and now retired employees, that are an increasing portion of their budgets, and which take money away from things that can oil the economic engine.

Foolish spending programs that were introduced in headier times are now beasts to be fed. Reagan had some pat comment about this sort of thing, I wish I could remember how it goes.

Palo Altans are willing to tax themselves to support "enablers" such as our schools, our libraries, and our infrastucture, but this place is an anomoly.

I do think we averted what could have been a major catastrophe late last year, and there are some things under way from the federal government that seem to be taking root. Much of the stimulus program funding is yet to be spent, and it will be several more months at least before we start to see more fully its impact.

One can agree or disagree with what the folks in DC are doing, but either way, if our states and local governments are in a state of financial incapacity, it is an anchor on the economy that will drag it down for years to come.