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Politics : View from the Center and Left
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To: epicure who wrote (103292)2/6/2009 1:47:17 PM
From: Win Smith  Read Replies (2) of 542015
 
I always wondered about that. My understanding is most states are obligated to balance their budgets, so that when the economy goes south and revenues decline, they have to cut spending just at the time when stimulus is needed. So state spending tends to amplify the business cycle instead of smoothing it out.

In a perfect world, states would build up a reserve in flush times. In the world we live in, of course, anytime anything like a reserve appears, tax cuts are mandatory. I think it's all part of the miracle of supply-side economics. Artie Laffer's napkin lives!
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