Economists call it a "structural imbalance." You and I call it going into debt -- big time. It's happening with alarming frequency in Annapolis and with shocking enormity in Washington. Our appetites are far bigger than our wallets allow.
Take the case of Annapolis. After a quarter-billion-dollar tax increase and $1.1 billion worth of spending cuts, Governor Schaefer says the state still is $500 million out of balance.
State government has grown too large. There just isn't enough money coming in to pay for the services -- unless Marylanders want to fork over higher taxes. Judging from voter reaction in recent elections, that's not possible.
So be prepared for some big changes in government. Programs will cease to exist. Services won't be provided any longer. And local governments will be handed far less money to assist people in need.
These will be painful decisions, more painful than most Marylanders realize. In the past, much of the cutting has involved phantom jobs -- vacancies that aren't filled and can be abolished without throwing someone out of work. Or eliminating cash reserves squirreled away. Or trimming agencies a bit.
But now, the cuts will involve real people. And shutting the doors of certain agencies for good.
This is necessary because tax revenues aren't expected to boom as in the 1980s. Weak economic growth will be with us for the rest of the 1990s. Without cutting back on government spending, there's no way -- short of major tax hikes -- to balance Annapolis' budget.
Last year at this time, the Department of Fiscal Services predicted fairly accurately what this fiscal year would look like. Its projected gap: between $533 million and $749 million. Factor in the tax hikes and cuts imposed by the legislature last spring, and this forecast is pretty much on target.
That leads to even gloomier news. The department also made predictions on what the deficit would look like in 1996 and the year 2000. Hold onto your seats: a shortfall of as much as $1.4 billion in 1996 and $2.2 billion in 2000. Clearly, some drastic changes will have to made to get spending under control.
This translates into less money for schools, health, police, fire and the environment. It means a lowered quality of life.
But what choice does Annapolis have? Not much, in large measure due to Washington's bungling of the federal budget. This is a big chunk of Annapolis' predicament. Congress and a succession of presidents have so bungled the U.S. budget the economy has been strangled.
The Congressional Budget Office recently put out a report that is must reading. Be prepared, though. It won't leave you in good spirits.
It projected a 1992 federal deficit of $314 billion -- and likely to stay that high in later years. Economic growth will be only half the normal post-recession rate. Why?
"Federal fiscal policy is constrained by record-high deficits. State and local governments are making painful cutbacks to keep operating budgets in balance. Office and commercial construction is weak in the face of sky-high vacancy rates. With the end of the Cold War, the defense industry is shrinking. Families are attempting to pare their debt burdens by reducing their spending. And many businesses are cutting their work forces as part of efforts to reduce costs and increase productivity."
No wonder growth will be anemic.
Even worse, Washington is spending far, far more than it is taking in. By the year 2002, the deficit will top $500 billion.
No one seems willing to rein in spending. Certainly not the Congress, and not Republican presidents. The big savings are not found in everyday government programs, but in the Big Three entitlements of Social Security, Medicare and Medicaid. Until politicians are willing to withstand protests from these three interest groups, the federal deficit will continue to soar.
For instance, just holding the Big Three entitlements at today's levels (that means no cost-of-living raises for Social Security recipients for a decade) would save enough money in the year 2002 to wipe out the entire federal deficit projected for that year ,, and leave $95 billion in surplus. But if that same freeze were applied to all other discretionary federal programs, the savings would be so small that we'd still have a deficit in 2002 of $376 billion.
So states like Maryland are caught in a bind. They cannot dig out of their budget holes for long without a vibrant national economy that puts more people to work, who then produce more taxable, and spendable, income. But there won't be much steam in this economy any time soon because of the sky-high federal debt and all the related problems this causes.
Like it or not, we've got to get used to the idea that smaller is better. We can't afford much else.