This is the Cato Daily Podcast for Monday, July 7, 2008. I'm Caleb Brown. In this

week economy, state budgeters are feeling the squeeze, but the panic over a lack of

revenue is misplaced.

So says Chris Edwards, director of tax policy studies at the Cato Institute.

He suggests that state budgeters shouldn't feel that they're any different than the average

family that has to do some actual

belt tightening in tough economic times.

Well when the economy slows both the federal and state and local governments

obviously their revenue slow to an extent.

It's no big deal for the federal government because it can run large budget deficits.

At the state level, just about every state is required legally to balance their budget every year

and so states properly are required to make trade-offs every year to balance their budget and that's not a bad thing.

Unfortunately when the economy slows and state and local revenues stagnate a little bit,

the mainstream media in New York Times, the Washington Post, have these stories that make

it sound like a horrible bloody slaughter in the state government budgets and they make it sound like it's a painful

slashing terrible situation frankly it's you know when the economy slows and

families have to restrain their own budgets it's not a bad

thing that state and local governments have to restrain their budgets and tighten their

belts a bit.

Now in a world where state budget directors have to match spending with dollars.

They can't run deficits, but they do borrow money year over year, right?

Well, that's right. I mean, state revenues, despite what some of the media says,

...