Downturn, Measures Needed, & Traditional Party Politics

Today, as we enter a recession that threatens to become severe, there are indications that this may become the deepest economic crisis since the 1930s. This has the potential to cause widespread suffering because it is taking the form of a crisis of stagflation, that is simultaneously an economic downturn and rising prices. Along with rising unemployment, recession would eventually result in millions more men, women, and children living in poverty, people losing health-insurance coverage, and an estimated drop in family incomes of $2,000-3,700 per year. Effects may extend as far as 2010 or 2011, depending on the severity of the downturn ("What We’re In For: Projected Economic Impacts of the Next Recession).

Impact on State of Vermont

At least twenty-five states face budget shortfalls in fiscal year 2009. Vermont has a projected shortfall of $59 million, or 5.1% of the FY2008 General Fund. The combined budget shortfall for these states is at least $39 billion .

The federal economic stimulus package enacted in February not only cuts federal taxes, but also threatens to reduce many states’ corporate and personal income tax revenue this year and next year. Vermont may lose $7 million annually in revenue due to a provision of the stimulus package known as “bonus depreciation,” retroactive to January 1st, which allows businesses to claim an immediate tax deduction for new equipment purchases. Read the rest of this entry