That was then, this is now

What a difference a couple of years make.

Paul Krugman, 12/27/2002:

Finally, there's the desperate plight of the states. New estimates by the Center on Budget and Policy Priorities show that state governments are facing their worst fiscal crisis since the 1930's. Since Washington shows no interest in helping, states will be forced into desperate expedients. Taxes, mainly taxes that fall most heavily on the poor and the middle class, will go up. Spending on education and, especially, health care will be slashed, with the heaviest toll falling on struggling low-wage workers and their children. (Leave no child behind!)

States take in record $600B, 5/26/2005

Tax collections rose to a record $600 billion in the states last year, up 7.2% over 2003, the biggest increase since 2000. The money is rolling in even faster this year as many states report double-digit revenue increases through April.

The most immediate effects of improving state finances across the USA are college tuition hikes that were smaller than expected, pay raises for government workers and less borrowing. The big decisions - tax cuts vs. major new spending - are starting to brew in most legislatures but won't be decided until late this year or early 2006....

The reversal of fortune ends what the National Governors Association had called the states' worst economic situation in 60 years.

"We've come a long way, baby," says Massachusetts Gov. Mitt Romney, a Republican. He faced a $3 billion budget shortfall during his first year in office in 2003. Now, his state is on track for its second straight year of surpluses. He wants to use about half the surplus to cut the state income tax to 5% from 5.3%.

Instead of government trying to take a bigger piece of the pie, how about it adopt policies so the bakers will have incentive to make a larger pie? That way, everyone -- government included -- gets a bigger share, even those whose percentage actually decreases. That's supply-side economics.