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Nah, the spending power of the federal government, and the tax collection of the federal government are not linked. So long as the fed can print money the fede
by nimish 6y ago
Nah, the spending power of the federal government, and the tax collection of the federal government are not linked.
So long as the fed can print money the federal government can spend. It cares not about the states or how much income tax flows in. Hence, it can run up structural deficits until faith is lost in the $ (inflation).
State governments, on the other hand, cannot print money. They must operate in a zero-sum mode.
- jacobolus 6y agoYes, the federal government could bail out state and local governments (and indeed that’s some of what the Heroes Act does – passed by the House in May). But the GOP Senate intransigently refuses to act or even negotiate, and so state/local governments are getting crushed.
- nimish 6y agoWell good? The federal government has no obligation to bail out the states That's a political decision and the gop has decided to let the states that need bailouts diy it. I don't think it's wise, but it sure is within gop policy aims