Bad Analogy

October 28, 2009 at 12:10pm By: Mr. Wilson Posted in The Lincolnite Blog

I don’t disagree with Governor Heineman that we should reduce expenditures in the face of declining tax receipts. But his analogies could use some work:

When family incomes go down, they reduce spending. When business income is down, they reduce spending.

Actually, when faced with financial problems American families tend to take out credit cards and second mortgages, with a little reduced spending on the side. Businesses borrow cash, declare bankruptcy, or shut down altogether. And both, in modern America, start lobbying like mad for some sort of a bailout.

I don’t think we want state government emulating families or businesses in our current situation.

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Fletch October 28, 2009 at 1:11pm

I would normally agree with your point, Mr. W. However, IN THESE ECONOMIC TIMES (TM), I think we have clearly seen, perhaps for the first time, that folks are indeed reducing their spending. The LJS had a long article earlier in the week that “moms” have indicated those reductions in spending are here to stay. I’ll have to see that to believe it, but who knows.

The optimist in me hopes that Dave Ramsey’s ideas are catching on with more people as well.

Mr. T October 28, 2009 at 1:48pm

My prediction is that the Gov may be planning a US Senate run in 2012 against Nelson. He will strongly position himself as a fiscal conservative by continuing to cut state funds and not dip into the reserve fund. By then, the federal stimulus funds will drop off and the state will likely need to use our reserve fund by then. But it will be someone else who will have to do that, and not Heineman. Its a smart long-term political strategy.

Dave Ramsey is the man. I hope that more people heed his advice and save. Data is showing that is the case now. But after we pull out of this I am sure we will start consuming like no tomorrow again.

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