Oklahoma needs to wean itself from federal funds, state's top financial officials say
Less federal money is expected to go to states next year even if a deal if reached on the looming fiscal cliff, they say.
“They did their homework,” said Miller, who as state treasurer is the state's chief financial officer in charge of managing more than $22 billion of taxpayer money deposited each year. “It's a political hot button, but I truly don't think the governor or that her office took that decision lightly. … I'm confident that she made the best decision that she could for our state.”
After a month of no progress, Democratic President Barack Obama and Republicans in Congress reportedly were in low-level private talks late last week to break the logjam over the fiscal cliff.
“If our leaders jump off the federal cliff, we'll have some short-term pain — likely recession again,” Miller said. “But we will get through it. It's a strong country. We've prevailed over tough times before.”
A report from the White House shows Oklahoma consumers would spend an estimated $2.2 billion less next year should federal income tax rates return to the levels of a decade ago. The average Oklahoma family of four with an annual income of $63,100 would see its tax bill rise by $2,200.
“You don't raise taxes if you want to incentivize production and grow an economy,” Miller said. “Raising taxes during a recession violates just about every economic principle you can think of. You don't raise taxes during a recession or what we're in — a weak recovery.”
The federal government is spending nearly 25 percent of its gross domestic product, the goods and services produced within a country, while its receipts are about 15 percent of the gross domestic product, he said.
“Washington has a spending problem that must be corrected,” Miller said. “Our nation is on an unsustainable path with our fiscal policies.”
“This country is spending itself into oblivion. Washington has a spending problem that has to be corrected.”
Doerflinger said he's not optimistic a deal can be reached to avoid the fiscal cliff.
“We're going to go to the cliff and then the conversation will begin in earnest,” he said. “I don't think there's a real desire … to reach a deal. I think we're going over.”
Miller said there's a strong possibility Congress will act by the 11th hour. The next Congress won't be sworn in until Jan. 3, after the fiscal cliff deadline, so it's possible Congress and the president could agree to another set of stopgap measures that would delay a more permanent policy change until 2013 or later.
Regardless, the country appears headed before the end of the first quarter next year to hit the debt ceiling, the same issue in the summer of 2011 that brought about the automatic spending cuts that make up a portion of the fiscal cliff.
“I'm hopeful that they will at least put a Band-Aid on the problem and kick the can down the road to the next Congress,” he said. “That's pretty much what they did at the eleventh hour with the debt-ceiling debate which created this mess in the first place.
“This is really a homegrown threat,” Miller said. “This is no one's fault but our political leaders in D.C. They created the fiscal cliff ... now they need to fix it.”