My new Reason.org column explores the moves in Arizona and California to sell and lease back state buildings in return for cash to spend on deficit reduction. While “sale-leasebacks” are a valuable tool, I argue that these states are just looking for a “quick fix” and are not approaching it in a way that derives long-term economic benefits:
Instead of making politically difficult decisions on budget cuts, priorities, and core vs. non-core government functions, Arizona and California policymakers are almost abandoning fiscal responsibility and making a desperation play for quick cash. […]
In the end though, even a flawed sale-leaseback program is preferable to the alternative. No one will argue that this is a desperation play. But many taxpayers would still prefer a desperation play to tax increases or taking on more bonded debt, IOUs and the like. Taxes and debt will only dig the fiscal hole deeper, and sale-leasebacks beat those approaches any day. In that light, the proposed sale-leasebacks offer a last firewall of sorts against billions in tax increases and additional public debt that would be another blow to fragile state economies.
It’s just unfortunate that it had to get to this point. What would truly be innovative would be to significantly reduce the size and scope of government, which neither state’s governors nor legislatures made any real traction on this past session. It’s long past time for policymakers to dispense with the illusion that there’s some easy and painless way to navigate the recession and start making tough, but necessary, decisions to rein in government spending.