2.1: Needs & Deficits

Address both emerging needs for public services and long term deficits.

Other Information:

Both emerging needs for public services and long term deficits must be addressed. While the nation’s intergovernmental crisis has many dimensions, at its heart is the absence of adequate revenue. For example, a recent OECD study points out that 30 years ago the US led the world in the percentage of 25-34 year olds possessing the equivalent of at least a two year degree. Most recent data shows that the US now lags behind 14 other countries in that measure of human resource capacity. Similarly, today 20 countries have higher High School graduation rates than the US. While this is occurring, states and localities in most parts of the country have been disinvesting in their educational systems and, in many cases, very significantly so. While there are many explanatory factors, the most important one is the absence of adequate revenues. The Rockefeller Institute reports that state tax collections dropped by over 16% in just one quarter of 2009 and that by the end of 2010 they were barely at 2006 levels. Local governments are experiencing, as the Pew Center on the States has noted, the first time since 1980 the simultaneous decline of both state aid and property taxes. The increasingly long term recession has had parallel effects on federal revenues, which sunk to 15.1 percent of GDP -- a level not seen since 1951 Since these declines have had significant impacts on both public services and debt, major tax reform is essential to address both emerging needs for public services as well as long term deficits at all levels of government.

Stakeholder(s):

• OECD


• Rockefeller Institute


• Pew Center on the States

Indicator(s):

Indicator:1

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