GOVERNMENT: Considering what we ask for

January 1, 2013 

South Carolinians want the size and cost of government cut, we say repeatedly via the politicians that we elect.

But do we mean it? And do we know what those cuts would mean?

We could find out in 2013.

The stakes for South Carolina are huge.

A smaller military, for instance, could impact the state’s military bases and installations, which contribute $15 billion a year to the state’s economy.

Cuts to future military spending could affect major bases in Columbia, Sumter, Charleston and Beaufort County. Some questions that those looking to cut the military budget may ask include: Does the Marine Corps need air bases in both Carolinas? Does a smaller Corps need two basic training depots – one on Parris Island in South Carolina, the other in California? Does it make sense to have air bases a dozen miles apart – an Air Guard base at McEntire in Richland County and an Air Force base in Sumter?

If big cuts come, S.C. jobs and the state’s economy could be hurt.

Alternately, others suggest entitlements and support programs should be cut or, at least, their growth should be slowed.

South Carolina, a poor state, receives billions each year from those programs.

The state gets back more than $1.30 in federal benefits for every $1 that South Carolinians pay.

In the Midlands, federal spending – from Social Security to Medicare to Medicaid to food assistance to college loans – accounts for roughly 20 percent of household income.

Every cut will mean less money in the economy, less to be re-spent in grocery and clothing stores, gas stations and colleges.

Proponents of cuts say, correctly, the current deficit spending is unsustainable. And, they add, taking “our medicine” now is best, alleviating the need for more draconian cuts in the future. They envision a future America less dependent on federal and state programs, more empowered by individuals.

But there is no agreement as to what government spending should be cut. For instance: Should Americans have to work longer – until they are 67 – before they can enroll in Medicare? It’s not a very popular idea.

Others say the answer is that if Americans want all those government services, they must be willing to pay for them through higher taxes, which could include eliminating or limiting certain tax breaks.

But some tax breaks – such as on mortgage interest and charitable giving – are very popular.

The current uncertainty over taxes and spending does not help.

Resolving the “fiscal cliff” and soon-to-follow debt-ceiling debate could give businesses, including many in the Midlands and South Carolina, the clarity that they say they want to more forward with hiring and expansion plans. The state Commerce Department’s new-job announcements in 2012, for example, lagged 2010 and 2011 announcements. Why? Uncertainty about future tax rates and treatments, according to some.

Not all the debate will be played out in Washington.

Cutting state costs also is on the agenda.

State lawmakers last year passed legislation to cut the future costs of the retirement system for public-sector workers, including state and local government workers, teachers and law enforcement officers. The calls to address the future costs of those workers’ benefits is not over, however. Ensuring those workers pay more of their health-care costs is likely to become a legislative issue this year.

Also, S.C. hospitals and their allies want to expand the federal-state health-insurance program for the poor, Medicaid. They say the influx of federal money that initially would pay for that expansion would be a multi-billion-dollar windfall to the state’s economy, creating thousands of jobs. Opponents, including Gov. Nikki Haley, say the expansion, part of “Obamacare,” commits the state to an open-ended financial obligation that it cannot afford. Those watching will include hundreds of thousands of low-income South Carolinians. They now go too often to hospital emergency rooms for “free” care that taxpayers end up paying for.

The bottom line? A reckoning is coming. What do we want government to do? And how will we pay for those services?

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