Maine is finally turning a fiscal corner

By Bruce Poliquin

Maine State Treasurer

Ten short years ago little was discussed about our accumulating public debt. The media wasn’t interested in government’s addiction to spending money it doesn’t have.  Many years of this financial recklessness by career politicians has caught up with America.

During each of the last four years alone, Washington has spent roughly $1.5 trillion more than collected from us in federal taxes.  Today, our national economy is suffocating under a growing $16 trillion mountain of debt.  The annual interest paid by taxpayers on this and other public liabilities has reached $450 billion, 13% of all federal government expenditures.  As interest rates rise, these mandatory payments will likely surge, further crowding out our nation’s ability to fund core services like national defense.

As a result, 23 million of our fellow citizens can’t find jobs or are underemployed.  Companies are scared to expand and hire more workers because, in part, they fear rising taxes to pay for this monster debt.

On the bright side, the political debate these days swirls around America’s fiscal crisis.  That’s the first step to fixing the mess – realizing that you have it.

Here in Maine, we’re getting it right and leading by example.  During the past two years, the new leaders in state government have started to reverse 35 years of ever bigger and more expensive government.  We understand that living within our means, paying off debt, reducing taxes, simplifying business regulations, and pushing down energy and health insurance costs will attract business investment and jobs.  The expanding economy will generate more tax revenues to fund road and bridge repair and to help educate our kids.

The graph below shows Maine state government turning a fiscal corner.  The previous Administration grew our tax-supported public debt by 85%.  In two years, this Administration has shrunk it by 19%, assuming no new borrowing during the current fiscal year.  Entrepreneurs are taking notice that Maine is finally putting its fiscal house in order, budgeting for expenditures instead of borrowing to spend.

Our huge and expensive Medicaid program (MaineCare) has swamped our state budget for years.  The last Administration poured hundreds of millions of federal “stimulus” dollars into this health care program for the disadvantaged, making it even more unaffordable when the funds dried up.  Today, our Medicaid program enrolls approximately 27% of our entire state population.  The benefits are generous relative to those offered by other states, and it’s easy to qualify for enrollment.

This next graph illustrates the dramatic 77% increase in Medicaid enrollment during the previous Administration.  During the past two years, this Administration and legislature has decreased enrollment by 13%, assuming receipt of a federal waiver to further reform the program.  Soon, we hope, by not trying to be everything to everybody, badly needed health care services will be available to our truly needy disabled fellow Mainers on waiting lists.

For two decades, soaring health insurance premiums in Maine have drained family budgets.  These high costs have also stifled small business growth, resulting in fewer jobs being created.

Last year, the Maine legislature enacted a new law that is beginning to attract competition to our health insurance market.  For many, premiums have already started to drop.  The new law is being phased in over the next two years to conform to the new federal health care law.  Finally, we Mainers will soon be able to shop for our health insurance across state lines.

For those purchasing individual policies, the graph below shows the average premium increases since 1992 when they have occurred.  The small 2012 increase of 1.7% compares with the average 12.8% rise since 1992.  It’s expected that more and more Maine families and small businesses will experience lower premiums as a greater number of insurance companies compete for our business with new products.  This trend will keep more money in the pockets of our struggling families, and help small businesses expand and hire more fellow Mainers.

Two years ago, Maine started down a new path of putting in place the building blocks of a healthier economy and more jobs.  Maine state government is paying off debt, borrowing less, spending less, taxing less, and regulating less.  In other states and other countries, these steps have attracted entrepreneurs who create jobs, resulting in more prosperity and freedom and better lives for all.  Let’s stay the course.