U.S. states' fiscal crises are national — and international

For example, the Washington based Center on Budget and Policy Priorities issued a comprehensive report in 2004 which was remarkably prescient in forecasting the current very serious state budget problems. A number of factors were highlighted, including laws restricting state capacity to collect taxes, federal tax cuts which also reduce state revenues, and the growing Washington trend of imposing expensive mandates with no offsetting grant or other income.

Examples include the U.S. Internet Tax Freedom Act of 1998, which reduced state sales taxes, Bush administration tax cuts designed without consideration of impacts on states, and the No Child Left Behind Act of 2002, which greatly expanded testing and record-keeping responsibilities of states, with no compensating income.

Newspaper editorials as well as political speeches often generalize about government waste and excessive spending by politicians who just can't say no. As usual, reality is more complex, including the basic political point that we all tend to regard our own interests as the public interest — pressure group politics is what the other guy does.

The proposed prison cooperation between California and Michigan is reflected in other public policy initiatives. For instance, Democratic Gov. Jim Doyle of Wisconsin and Republican Gov. Tim Pawlenty of Minnesota have established a partnership to control costs through joint purchase and distribution regarding food, fuel, transportation and other expenses.

The U.S. has relatively few examples of effective long-term regional cooperation, reflecting the great established power of individual states in our federal system. One exception is the Tennessee Valley Authority (TVA), a very successful New Deal innovation to provide basic electric power to poor rural areas.

With politicians constantly comparing the current recession to the Great Depression, and a new Democratic administration in Washington, this is precisely the time to take some risks of a regional TVA variety.

Arthur I. Cyr is Clausen Distinguished Professor at Carthage College in Wisconsin and author of “After the Cold War” (NYU Press and Macmillan). He can be reached at acyr@carthage.edu

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