Corporate welfare is a bipartisan problem, and it’s a problem at both the federal and state level. Yesterday, I discussed the recent demise of Obama-subsidized Abound Solar and the fact that Indiana Republicans were also involved in helping the company obtain taxpayer handouts. Adding insult to injury is another example of “crony capitalism” gone awry in Indiana.
For much of the nation’s history, policymakers recognized that the federal government’s powers were “few and defined,” as James Madison noted. Issues like education and community development were largely left to the states. Unfortunately, the separation of responsibilities between the federal government and states has been eroded to the point that federal funds now account for approximately a third of total state spending.
There’s more bad news about the school choice bill awaiting Gov. Mitch Daniels’ signature in Indiana. Yesterday, Adam Schaeffer wrote about its possible negative fiscal impact if coupled with the state’s tax credit program. Perhaps just as concerning is the law’s requirement that private schools prove that they are sufficiently “American” to participate in the program. This interview with State Sen.
That’s the title of my latest column at National Review Online. An excerpt:
One positive outcome of the recession, as the states struggle to find revenue to spend, is that state subsidies to businesses are facing increased scrutiny.
Governor Mitch Daniels of Indiana has triggered a spat among policy wonks with his recent comments expressing sympathy for a value-added tax (VAT).