To The Daily Sun,
The governor's veto of the New Hampshire budget is one of the most harmful acts within the chief executive's prerogatives. When the governor vetoes the budget, state agencies are thrown into turmoil. Without an authorized spending level they cannot know what level of activity they can support. As a result of this increased uncertainty (risk), restrictions on spending must be put into place reflecting the range of potential budget outcomes. The governor's decision making is ignorant of the basics of economics. Further, it illustrates a lack of capacity to grasp the harm inflicted on the people and employees of the state.
The state budget exists as a component part of New Hampshire's economy. To the extent that the state budget grows the other three components of state gross domestic product (GDP) are restrained. When state government spends more, the state must tax more because New Hampshire's constitution requires the budget to be balanced. When the state taxes more the people and businesses of the state have less money in their pocket to spend for the things they desire to consume; they have less money available to produce products for export and they have less money available to invest in their future.
Of the component parts of GDP, investment is the most important. It drives GDP both when the investments are made and as a multiplier effect in future periods through improved productivity. Each of the other components have an effect in the current period only. Investments in new enterprises are a catalyst to new hiring which boosts consumption through wage payments from investment profits. Impediments to investments, which a veto of the state budget is, are a drag on the economy. The fiscal unknowns as a result of the uncertainty of the state budget ripple through the spending of all businesses and personal budgets.
- Category: Letters
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