By State Treasurer Bruce Poliquin
Some 230 years ago, the founding documents that created our representative Republic acknowledged that free enterprise is the optimal engine of prosperity and liberty.
Our Founding Fathers and their fellow colonists included merchants, trades people and farmers. They understood the importance of hard work and enjoyed the fruits of their labor. They were thrifty and resourceful. They embraced risk and its potential for reward. They invented and competed, and sold their products far from their New World. They were private sector business people.
For more than two centuries, our dynamic free enterprise machine has generated new income and wealth for 300 million fellow Americans. Part of that income is taxed to provide services for our citizens, including national defense. Without a healthy and growing economic engine, we cannot live better lives—we cannot be free.
How is our engine of prosperity, freedom and liberty doing today? Very poorly.
Our elected officials set the rules by which our economy operates. They can make it easy and inexpensive to conduct free enterprise. Or, they can make it difficult and costly to do so. When they choose the latter, job-creating entrepreneurs leave the country, state, city or town to run their businesses in places where they have better chances to succeed. When they leave, they take their jobs (and part of our freedom) with them.
Washington is a fiscal mess, and it’s getting worse. We will not build a strong economy without putting our fiscal house in order.
For many years, Washington career politicians have spent more money than the hard-earned tax dollars they have collected from us. They made up the difference by borrowing the funds, primarily by selling U.S. government bonds to foreign investors, such as the Chinese. This fiscal recklessness has racked up a $15 trillion national debt that we owe to somebody in Beijing, Singapore or London who bought our bonds.
The interest payments on that $15 trillion debt is draining life from our economy and making us less prosperous and less free. That $15 trillion of borrowed money must be paid back by American taxpayers. We could have better used this money to support our families, grow our businesses and create more jobs.
What can we learn from Washington’s fiscal incompetence to help us here in Maine?
First, reduce our public debt. Working with the Legislature, our new leadership team in Augusta slowed the growth of retirement benefits for teachers and state employees, eliminating 41% of the pension debt, or $1.7 billion.
Second, cut government spending. Because $1.7 billion of the public pension debt has been eliminated, the annual taxpayer contributions to pay it off have been cut by approximately $200 million per year over the next 17 years.
Third, balance the state budget without gimmicks. The prior administration accumulated roughly $500 million of debt owed to hospitals for services provided mostly to Medicaid (Mainecare) patients. State employees were sent home without pay. One-time federal stimulus money was pumped into already unaffordable programs instead of reforming them.
The new LePage Administration doesn’t kick the fiscal can down the street: $250 million of the hospital debt has been paid off. No more unpaid furlough days. Balance the books straight up. No more gimmicks.
Fourth, make it easier to do business in Maine. Our new team is eliminating and streamlining unnecessary and redundant regulations. It’s becoming more predictable and less expensive to expand or start a business here. And we’re protecting our cherished natural environment.
Fifth, drive down the high cost of energy. The LePage Administration is exploring all sources of energy to lower the punishingly high costs to heat our homes and run our businesses. Natural gas pipelines are underway. We’re looking to Canada to possibly import cheap, green, renewable power generated by hydroelectric dams and nuclear power plants.
Sixth, reduce the high cost of health insurance premiums. Our new leadership team is defunding Dirigo Health—the state-run, taxpayer-funded $183 million failed health care experiment. A new law will allow Mainers to buy coverage across state lines. Over time, competition will return to our health insurance market. This will help drive down premium costs.
Seventh, cut taxes—fairly. Our new $150 million tax reduction package is the largest in Maine history: 460,000 residents will keep more of their hard-earned money, and 70,000 of our lowest earners will pay no state income tax at all. Small businesses that invest in new equipment to create more jobs will get a tax break.
The fuel tax has been eliminated for commercial fishing in the Gulf of Maine. The meals tax has been removed at retirement homes. The tax on labor for aviation repairs has been dropped.
The private-sector leaders in Augusta are taking Maine state government in a new healthy direction. We’re building a business-friendly climate by borrowing less, spending less, taxing less and regulating less. Entrepreneurs and the jobs they create are attracted to fiscal discipline and common sense. They avoid places where tax hikes or public-services cuts might be needed to pay for out-of-control spending or surging public debt.
Maine is doing its part to help build prosperity, better lives and more freedom for our citizens. Wouldn’t it be nice if the Washington career politicians followed our lead.
Contact State Treasurer Bruce Poliquin at Bruce.Poliquin@maine.gov or 624-7477.