If states were characters from Aesop’s Fables, they’d be more
grasshopper than ant. With a little help from the federal
government, maybe more states could find their inner ant. Andy
Nelson/The Christian Science Monitor/File As state legislatures
return for what promises to be yet another difficult budget
year, they ought to be starting to refill their rainy day
funds–those accounts that set aside money for future hard times.
That’s a tough decision. After all, for the past three years,
states have been raising taxes and cutting spending just to keep
their budgets balanced. Why would any elected official want to
do more of both? But there are good reasons why they should and
why, perhaps, the federal government should help encourage some
prudent saving on the part of states. Here’s the problem:
Ideally, states should try to stimulate their economies during
recessions, or at least avoid raising taxes, eliminating public-
sector jobs, or cutting other spending. But balanced budget
rules make recessions exactly t