Some 230 years ago, the founding documents that created our representative republic acknowledged that free enterprise is the optimal engine of prosperity and liberty. For more than two centuries, our dynamic economic engine has generated new income and wealth for millions of American families.
Part of that income is taxed to provide services for our residents, including national defense. Without a healthy and growing private sector, we cannot live better lives, we cannot be free.
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.
Today, our capitalist engine of prosperity and freedom is performing poorly. 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.
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 has slowed the growth of retirement benefits for teachers and state employees, eliminating 41 percent 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, make it easier to do business in Maine. We’re eliminating 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.
Fourth, 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.
Fifth, 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.
Sixth, cut taxes — fairly. The new $150 million tax reduction package is the largest in Maine history. As a result, 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.
Seventh, balance the state budget without gimmicks. The prior administration accumulated roughly $500 million of back payments owed to hospitals for services provided mostly to Medicaid (Mainecare) patients. The new LePage Administration has paid off $250 million of this hospital debt. No more budget gimmicks.
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 residents. Wouldn’t it be nice if the Washington career politicians followed our lead.
Bruce Poliquin is Maine’s state treasurer.