...I do not think it means what you think it does.*
So much ado today over Liberal economist Paul Krugman's column where he pretty much takes Texas to task for not tax and spending as he has recommended the rest of the Country do. Of course, the Right has had their say, specifically, that Texas is NOT broke, which led to the following response from a twenty-something anthropologist (not kidding) writing for the news-ish organization Texas Observer.
Partisan wrangling aside (is it really wise to start a serious piece of writing with the descriptor "kick-ass"?) it seems that people don't have a very clear standing of the fiscal concept of deficit. Let me explain. In order to have a "deficit" one must first have actual "expenditures". Right now Texas, by nature of it's biennial budget process, does not have any actual expenditures for their to be a revenue short-fall against. Because of this, future expected revenues are bounced up against future expected expenditures where assumptions are made that all past expenditures will be maintained at cost plus inflation.
What this is called is a projected revenue short-fall, or a projected deficit, much in the same way the Clinton projected government surplus never materialized, so might this projected short-fall be avoided by either reducing expenditures or increasing revenues. In other words, it's not broken, it just needs to be addressed. This differs from say...California in the sense that many of their costs are fixed and there are few mechanisms allowed to the State to fix the issue.
Texas, on the other hand, has many options available to it to prevent the State from operating at an actual deficit. Does this mean things will be easy? Most assuredly not. In fact, many of the so-called solutions are, in the eyes of many, worse than the projected revenue short-fall itself.
All that being said, this much is clear: Krugman got it wrong because he doesn't have a good understanding of how Texas budget process works. Kevin Williamson of the NRO got it wrong because Texas does have budget challenges in front of it that will not just be whisked away with some clever Republican sleight of hand. And finally, Forrest Wilder of the Texas Observer got it wrong because he's too willing to substitute progressive talking points for "facts".
The only "fact" we have on our side now is that Susan Combs (the Texas State Comptroller) is scheduled to issue the official numbers on Monday. At that point we'll know exactly how much money the Legislature has to work with, and then a budget process can start that may, or may not, be sufficient to deal with the problem, no matter how big (or small) it might be.
Note: The best way to deal with the problem is probably a mix of revenue increases and spending cuts. While it's true that Texas Republicans will probably not look at ways to increase revenues and will focus completely on cutting expenditures, it's also fair to say that Democrats, were they in power, would surely lean the other way. That's not a fact, it's just a prediction based on past performance. Both sides are, in my opinion, 50% wrong.
*Thank you once again The Princess Bride for continued blog fodder.