I assume we’ve staved off fiscal apocalypse because Yahoo Research economist David Rothschild’s greatest concern is governors reacting to the perverse political incentive not to spend money they don’t have. Let’s jump right to his main takeaway from New Jersey governor Chris Christie passing on a massively expensive new infrastructure project:
There’s only one clear solution: If voters show themselves capable of punishing politicians for maximizing short-term benefits at the cost of avoiding beneficial long term investments.
Is that what got NJ into a $10.5 billion budget hole? Selfish politicians refusing to commit to long term spending that kicks in after they’ve left office? Seems counterintuitive, but Dr. Rothschild does have a PhD from the Wharton School of Business; perhaps he was just fed bad information. From a NY Times article he references: Continue reading