Conservatives Urge Spending Restraint

A leading conservative economist is lashing out at the Republican governors of Alabama, Nevada and Ohio for raising taxes, accusing them of "acting like Democrats without the charisma or the heart."

Ohio University professor Richard Vedder told the annual meeting of the American Legislative Exchange Council (ALEC) that Republican state officials have been just as profligate as Democrats during the recent economic downturn.

ALEC is a bipartisan, conservative-oriented organization of state lawmakers that fights for lower taxes and smaller government.

"Some of the most outrageous and perverted acts of fiscal irresponsibility are occurring in such GOP strongholds as Alabama, Nevada and Ohio. By contrast, some relatively liberal governors, such as Bill Richardson in New Mexico, have shown some spending restraint and actually have cut some taxes. In recent years Republicans in many states are acting like Democrats without the charisma or the heart," Vedder said.

The meeting at which Vedder spoke came amid widespread budget deficits in the states and concern from conservatives that too many lawmakers are raising taxes to close the gaps.

Vedder and other ALEC participants said state policy makers should instead try to cut government spending. But they didn't encourage simple across-the-board cuts. Rather, they urged lawmakers to take a more business-like approach to state government that involves using technology to make government more efficient, privatizing some government functions and consolidating state agencies where duplication is a problem.

"A lot of states are in the process of trying to reap very large savings from consolidating agencies and operations. The biggest project out there right now is in Texas, where the Texas Legislature recently passed a radical plan that collapses 12 agencies into four and eliminates 2000 state jobs over time. ... (It's) expected to net $1 billion in savings over two years," said William Eggers, a director at Deloitte Research, a business and government consulting firm.

Another state trying to reap savings from consolidation is Virginia, which is merging scores of computer and information technology departments into a single agency. Virginia undertook this project at the behest of Gov. Mark Warner (D), a former telecommunications executive who is one of the leading proponents of using technology to make government more efficient.

"This isn't exactly sexy stuff, but the $100 million in savings they expect to get from this sure beats laying off teachers," Eggers said.

Health care, and in particular, prescription drugs, has become a major problem area for states, ALEC participants said. Total spending on prescription drugs through Medicaid, a joint state-federal health care program that covers 47 million low-income invidividuals, amounts to more than $21 billion per year, according to the Kaiser Commission on Medicaid and the Uninsured.

To control these costs, states like Michigan and Vermont are coming up with preferred drug lists, which mandate the drugs doctors can prescribe under state coverage. Others, like Maine, are flirting with price controls.

Bill Smith, a government relations manager with Pfizer, a major drug company, likened these moves to asking businesses to stop buying computers in the late-1980s, a request that would have led to unforeseen problems down the road.

"If you looked at software and hardware budgets in 1989 and you said, 'Wow, these things are growing at double digit rates. I'm going to push this thing down and flatten that budget out because it's growing faster than anything else,' then you'd be out of business," Smith said.

"I try to make a similar case in healthcare, that if you adopt some of these technologies you're going to save money over the long run," he said.

Smith urged legislators to follow Florida Gov. Jeb Bush's (R) example by partnering with drug companies to treat health problems now, thereby forestalling the need for more expensive remedies, such hospital stays, in the future.

"Pfizer partnered with Gov. Bush in Florida to run one of these programs. Gov. Bush was courageous to do that because not everybody wants to partner with a pharmaceutical company these days," Smith said.