States (and federal government) do not suffer from a lack of taxes, but from uncontrolled spending.

WASHINGTON – Talk of "crises" and much hand-wringing have been heard in state capitals across the nation. 44 states and the federal government are facing unexpected, massive budget deficits. And always the predictable calls are heard from some quarters that we must repeal recent tax cuts, or even raise taxes, as a result.

But a new study by the Federal Reserve Bank of San Francisco traces the budget problems to their true sources. According the San Francisco Fed:

"The Genesis of state budget crises…appears to be rapid spending growth, optimistic revenue expectations during the current downturn, and, to a lesser extent, cost overruns on programs like Medicaid."

The San Francisco Fed places the blame for budget deficits squarely on overspending and economic downturn. But the report doesn\’t stop there. It also addresses the prospects for returning budgets to long-term balance:

"Resolving these crises likely will take several years and will depend heavily on an improving economy, both nationally and regionally."

"The San Francisco Fed hit the nail on the head," said taxpayer advocate Grover Norquist, president of Americans for Tax Reform. "Reckless spending growth at many times the rate of inflation during the 1990\’s got us into this mess. And only robust economic growth will get us out of it. Now is not the time for tax hikes – on the contrary, now is the time for stimulative tax cuts to boost the economy and balance the budget."