After calling the $1.3 trillion federal spending measure very disappointing, President Trump signed the package causing much upset in some circles. In the Unicameral, lawmakers continue to have problems coming to terms with a state budget. Creighton University Economist Ernie Goss sees spending is out of control at both levels.
Goss says those problems keep getting Band-Aids put on them but no solution is really found. He says that comes with a price and it will be in higher inflation, higher interest rates or higher taxes.
In the meanwhile life goes on pretty much as usual and the big shoe never really drops. Goss says just wait. He says, “As baby boomers move into getting Social Security. Medicare spending is rising and it is a slow drip. Each year we spend and our deficits continue rising now and the debt as a percentage of the GDP.” Goss says there will be a reaction and we have already seen it with the fed raising interest rates due to fear of rising government spending. He predicts two more rate hikes this year and possibly more if out of control spending continues.
Budget battles continue at the state level as well. Goss says Governor Ricketts has proposed a property tax rebate through the income tax system. Goss feels that was done to short-circuit a movement by several lawmakers to have a program that is twice as big.
Goss says, “I don’t like any of them in the sense we need to focus on spending. That is where the problem is. We keep thinking we can shift it to somebody else. For example a fair tax is a tax someone else pays. No one wants to pay for the increase spending and we have a spending at the local level out of control and that would be essentially in schools. Somebody has to pay for those schools and we continue to increase their spending and the property tax burdens are rising to what some would say unacceptable levels.”
Goss also warns of low tax reserves that could be in dangerous territory if we move into a recession.