State Government and Editorials

State's thriftiness will lift economy

January 19, 2009
Democrats think they've seized on a flaw in the State of the State address Mitch Daniels delivered Jan. 14: The Republican governor, who spent much of his first term focusing on business issues, didn't unveil a jobs package to rekindle the state's economy.

House Speaker Pat Bauer, a Democrat from South Bend, took advantage of the governor's silence, as any good politician would. He said it's time to tap the state's Rainy Day Fund and other "surplus" money to help put Hoosiers back to work.

The reality isn't so simple.

To be sure, the well-being of Indiana's work force should be foremost in the minds of politicians these days. Hoosiers are hurting. They're losing their jobs and homes. Manufacturing workers are especially banged up.

But the country's incoming president, Barack Obama, already has proposed a massive, $775 billion stimulus plan, which is sure to undergo significant changes as it wends its way through Congress.

We think the stimulus effort is best left to the feds. For starters, this would be an especially awkward time for state lawmakers to try to craft a plan that complemented the federal plan, since it's far from clear what it will contain.

Then there are the benefits of austerity—a virtue long championed by Daniels. As tough as things are in Indiana these days, conditions are a lot worse in neighboring states that were less tightfisted with budget dollars and as a result are facing staggering deficits.

States like Michigan are going to have to dig themselves out somehow, likely with higher taxes. If our state can avoid following suit, that will enhance one of our advantages—our comparatively low cost of doing business.

As Daniels said in his State of the State address, "The dollars claimed by higher taxes would come from families who need them more than ever to get by. They would come from businesses which would otherwise use them to keep someone on the payroll, or add a new job."

To carry out that philosophy, the governor and Legislature will have to make a litany of tough decisions, with nearly every cut sure to spawn a backlash from the parties most directly affected.

We generally approve of where the governor is headed. He's largely preserving investments in education and economic development that help position the state for long-term prosperity.

But we do quibble with some of the details. Daniels often seems less than passionate about environmental concerns. We question, for instance, the Indiana Department of Environmental Management's recent decision to eliminate $3 million in funding for grant and loan programs for recycling and pollution prevention.

Such a move seems shortsighted in a state notorious for pollution problems. The decision also does little to position Indiana to capitalize on the expected boom in "green" jobs.

Yet overall we think the governor is on the right track. We're thankful he recognizes that the states best positioned to prosper when the economy finally turns will be those that have their fiscal houses in order, not those that tried to spend their way out of trouble. 

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