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Economics

You Don’t Spend What You Don’t Have

Even before I took my hand off the Bible and assumed the office of governor on Inauguration Day, the previous decade’s economy had begun to cool. On Day One, we did not yet know just how bad things would get — but it was obvious that the people of Virginia would need to become reacquainted with the meaning of the word, “austerity.” Perhaps I should say, it was obvious to me, at least, that the buzz word of the next couple of years would be austerity.

As it turned out, the economy softened at an alarming rate and we had some tough choices to make in Richmond.

Virginia has a reputation of being a fiscally conservative state, and when compared to many of our sister states, it is. But when times are good, even politicians steeped in a legacy of tight-fisted, pay-as-you-go policies aren’t immune from an ironclad rule of government: When politicians have other people’s money, they’ll spend it — then demand more. Be they from the left or the right, liberal or conservative, urban, suburban or rural, politicians can’t resist the intoxicating allure of the public teat. Even in Virginia, officials had spent too much and saved too little.

As we headed into those difficult economic days, I had more than a few people tell me that the definition of “tough choices” was some variation of higher taxes. As the nation’s first elected governor of African descent and a Democrat, many people — both friends and one-time political opponents — expected me to stumble down a path of higher spending, more taxes, and more burdensome government regulations.

The people who thought such things didn’t know me.

First and foremost, I am a Virginian, a grandson of slaves, and a child of the depression. Not only as a legislator had I never been comfortable with negligent free-spending and high-taxing policies, but I also had not grown up in an environment where pennies were wasted. My father, our family’s sole bread winner, never earned more than $50 a week. Even with that meager income he built the family home, modest but comfortable, the only home my family ever knew. And no member of the Wilder family went without the necessities either. I learned how to make a dollar out of fifteen cents early and from masters — my parents, Robert and Beulah.

So I followed my instincts during those early days as governor, and began the process of right-sizing Virginia’s budget. We funded necessities over niceties, and we avoided increasing taxes. The people of Virginia were hurting economically, and I wasn’t about to lead the charge to have their dreams dashed and their financial house collapse because government decided to spend more and more. Once we finished, Virginia was leaner and more efficient, plus it finally had a savings account for rainy days. It also was twice recognized as America’s best managed state. These were the first such recognitions for Virginia.

We made tough choices alright — some still haven’t acknowledged what we did and how we did it — but every square inch of Virginia is better off because we decided to tackle our fiscal emergency responsibly.

Today members of Congress return from their summer vacations and reconvene both the Senate and the House of Representatives. Will it’s members be able to look back on this time and say they enacted spending policies that led to this country being a more efficient and economically powerful nation?

Absolutely not.

Democrats won control of Congress in 2006 because of the public’s distaste for the Bush administration’s policies. No president had amassed more debt or spent more recklessly than had George W. Bush. He and legislators from his party flooded the banks of the Potomac with so much red ink that it threatened to permanently drown the dreams of multiple generations of Americans.

Democrats promised in 2006 that if voters took control of Congress from the Republican Party and handed it to the Democratic Party they would hold the public purse with a tighter fist. The people gave Democrats control of Congress in 2006, then handed them the White House two years later.

What have Democrats in Washington done since? They might as well have branded a capital “W.” on the donkey just to show everyone how much they learned from George Bush.

In just two years they have racked up more debt and spent more dollars than even the profligate Bush ever dreamed of. They did the impossible: They made the 43rd president’s spend-thrift credit card bill look downright miserly.

Is the economy strong and ready to counterbalance the growing fiscal power of Beijing? No. Are more people back to work? No. Are future generations of citizens freer to create an America only they can dream? No.

And what does political Washington prescribe as the solution to this problem? I can’t believe it, but its elixir is: more spending.

I hate to say it, but some cliches are true (and this one is often attributed to Albert Einstein): The definition of insanity is doing the same thing over and over again and expecting different results.

German Finance Minister Wolfgang Schaeuble, who is leading his nation through this crisis with surprisingly strong growth, recently said, “I have repeatedly told my colleagues from other countries that one of the biggest barriers to growth and to domestic demand is growing insecurity among the population about high deficits.” He couldn’t be more right.

With such uncertainty about unsustainable spending and the future tax increases that might saddle nations to finance it, how could an entrepreneur not be frozen by caution, despite desperately wanting to start a new business? In this environment, who can blame a large business for wanting to husband cash reserve, rather than invest in a needed new computer system? And who can blame the couple down the street who need to replace their refrigerator but can’t because they have hold on to those funds for fear of what might happen next?

We have tried Republican overspending, and it did not work. We have tried Democratic overspending, and it has not worked. Let’s stop with the spending insanity, and get our fiscal house in order.

In remarks made to the National Governors Association in February, 2009, President Barack Obama said, “If we confront this crisis without also confronting the deficits that helped cause it we risk sinking into another crisis down the road. We cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation. We will reinstitute the pay as you go rule. You don’t spend what you don’t have.” A year and a half later, it’s obvious Washington wasn’t listening.

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