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Many Americans believe that the states have a spending problem. But are the formal tax and expenditure limits (TELs) that many states use to restrict spending effective? At an AEI event on Wednesday, economists and policy elites joined AEI's Benjamin Zycher to discuss the impact of these measures on state spending.
Zycher highlighted the results of his most recent paper, which found that TELs are rarely an effective tool for limiting state spending despite their national popularity. Zycher noted that TELs do not address any of the fundamental causes of government growth. He instead called for a renewed emphasis on federalism and a return to the basic principles of limited government.
Michael New of the Cato Institute suggested that TELs may be effective if they are designed properly. He pointed to the Colorado Taxpayer Bill of Rights as a TEL that helped to significantly rein in spending.
Nicholas Johnson of the Center on Budget and Policy Priorities agreed with Zycher's conclusions that TELs are ineffective, but rejected the assumption that states have an underlying spending problem that needs to be controlled. Matthew Mitchell of the Mercatus Center concluded that states may be better off pursuing balanced budget amendments and other institutional changes as mechanisms to help control spending.
For many years, US states and localities have confronted pressures for ever-greater spending. In pursuit of enhanced fiscal discipline, 30 states since 1978 have enacted formal limitations on taxes, budgets, or outlays. Current fiscal pressures, driven largely by pension and health care costs, have renewed policymakers’ interest in such tax and expenditure limits (TELs).
Despite the substantial time, resources, and effort that have been devoted to the enactment of TELs, new research conducted by AEI’s Benjamin Zycher finds that the fiscal outcomes stemming from such tools have largely failed to live up to their promises.
Exactly how effective have TELs been in constraining state and local spending, and how can state and local officials curb budget growth more effectively? Why have TELs failed to live up to their expectations? And what lessons might these findings hold for policymakers at the national level?
Join Zycher and a panel of TELs experts to discuss the local and national implications of this new research.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Benjamin Zycher, AEI
Nicholas Johnson, Center on Budget and Policy Priorities
Matthew Mitchell, Mercatus Center
Michael New, University of Michigan-Dearborn
Mark J. Perry, AEI
Audience Question-and-Answer Session
For more information, please contact Brad Wassink at firstname.lastname@example.org, 202.862.7197.
For media inquiries, please contact MediaServices@aei.org, 202.862.5829.
Nicholas Johnson serves as vice president for state fiscal policy at the Center on Budget and Policy Priorities, a Washington, DC-based research and policy institute. He directs the center’s State Fiscal Project, which publishes frequent reports on how state budget and tax decisions are affecting families and communities, and develops policies to enhance fiscal responsibility, equity, and accountability. His analysis and commentary have been featured in national, regional, and local newspapers, and he is a frequent television and radio commentator on state fiscal issues. He is a regular contributor to the center’s Off the Charts blog, and he speaks regularly at conferences in Washington, DC, and around the country. He also serves as an adviser to the members of the State Fiscal Analysis Initiative, a network of independent state-level policy organizations.
Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University and the lead scholar on the Project for the Study of American Capitalism. His primary research interests include economic freedom and economic growth, public choice economics, and the economics of government-granted privileges to businesses. He currently serves on the Joint Advisory Board of Economists for the Commonwealth of Virginia. He has testified before the US Congress and his work has been featured in numerous national media outlets, including The New York Times, The Wall Street Journal, The Washington Post, The Washington Times, National Public Radio, and C-SPAN. He also blogs about economics and economic policy at Neighborhood Effects.
Michael New is an assistant professor of political science at the University of Michigan – Dearborn. He is also an adjunct scholar at the Cato Institute. Before coming to Michigan, New worked as a postdoctoral researcher at the Harvard-MIT Data Center and later taught at the University of Alabama. New researches and writes about both fiscal limits and the social science of pro-life issues. He is a frequent blogger on National Review Online's The Corner blog. New's study on state-level tax and expenditure limits (TELs) was published by State Politics and Policy Quarterly in 2010. Three of his other studies on budget rules and fiscal limits have been published by the Cato Institute. New has spoken at Harvard University, the University of Notre Dame, the Massachusetts Institute of Technology, the University of Pennsylvania, the College of the Holy Cross, and the University of Alabama Law School. His writings have appeared in the Philadelphia Inquirer, the Atlanta Journal Constitution, Catholic Social Science Review, The Weekly Standard, National Review, and the New York Post.
Mark J. Perry is concurrently an AEI scholar and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.
Benjamin Zycher is currently a visiting scholar at AEI, the president of Benjamin Zycher Economics Associates Inc., a senior fellow at the Pacific Research Institute, and an adjunct professor of economics and business at the Martin V. Smith School of Business and Economics at California State University in the Channel Islands. He is an associate in the Intelligence Community Associates Program of the Office of Economic Analysis, Bureau of Intelligence and Research, US Department of State. He served as a senior staff economist for the President's Council of Economic Advisers from July 1981 to July 1983.