State government sent a delegation to New York this week to demonstrate that in light of the recent downgrading of the federal governments rating, Tennessee deserves to retain its AAA rating.
States with high numbers of government employees and contracts which if youve ever driven by Oak Ridge you know Tennessee is one are at risk of being downgraded for their heavy reliance on federal funds.
Tennessee deserves to keep its AAA rating:
Tennessee has a balanced budget
Unlike the federal government, Tennessee must keep a balanced budget. We have our fiscal house in order and did it by cutting spending. The state cut spending overall by 5.6% compared to current operating budgets. Along with meaningful reductions in spending, Governor Haslam instituted merit pay reform, incentivizing state employees to find efficiencies. This program will find greater savings in the long-run for taxpayers and keep costs down.
Often merit pay in the public sector is a shell game. While liberal interests and government employee unions fight tooth-and-nail against pay-for-performance reforms, should the reforms be enacted it is generally expected that all employees will receive decent reviews, and thus be rewarded with a merit salary increase.
In public administration theory managers do not generally give negative reviews to employees, because there is a tension to not replace the ineffective employee but in the era of skimp budgets there is a tendency to eliminate positions. Thus, to save their departments budget and staff positions, managers tend to rate all employees positively.
Yet, Tennessee has demonstrated an effective system for evaluating employees and rewarding hard work does exist in state government.
It is a tremendous victory for free market activists that, for the first time in history, the debate over raising the debt limit became a debate over cutting spending. For that, we should be heartened that our efforts are truly making a difference. But we must continue to fight, because this deal is simply inadequate to the size of the fiscal challenge our country faces.
Ratings agencies have consistently called for at least $4 trillion in cuts to avoid a downgrade -- and rated the Boehner and Reid bills on which the final deal was based as inadequate for putting the country on a sound fiscal footing. This deal includes only $0.9 trillion in guaranteed cuts and in a best case scenario envisions an additional $1.5 trillion in cuts. And these are Washington cuts, not real cuts; they merely reduce the expected rate of increase in spending, while the federal government will continue to grow.
The following letter was sent to all of Tennessee's Members of Congress:
Dear Member of Congress,
Runaway spending has buried the United States in debt, causing us to hit our statutory debt ceiling at $14.3 trillion. For months, lawmakers have been debating whether we should raise that debt ceiling and how to get the governments finances in order. There is only one plan that will solve Americas debt crisis: Cut, Cap and Balance. No other plan will avoid the looming credit rating downgrade that the rating houses have indicated will occur unless we dramatically cut our deficit. The Boehner plan will not do it, and the Reid plan will not do it.
Even before the money is in the bank, TN state Democrats have a plan to spend potential tax revenue should optimistic projections prove accurate.
State House Democrats proposed legislation that would direct any extra revenue to new spending programs; ostentatiously ignoring the need to drastically cut spending in the state's budget only a few short months ago.
AFP-Tennessee is non-partisan; we would chastise either Party for proposing new spending from Nashville while the nation is focused on how to rein in the unsustainable size of government. That the leadership of the Democrat Party in the TN General Assembly thinks now is a good time to commit to new spending is out-of-touch and exactly the type of politicking that got us into this financial mess in the first place.