Less Dependence on Federal Dollars Could Force New Mexico to Generate its Own Wealth

Much has been made recently over congressional efforts to cut funding at Los Alamos and Sandia national labs in New Mexico. As important as that discussion has been, the issue of cuts at the labs becomes more of a long-term issue with the recently announced decision by U.S. Sen. Pete Domenici not to run for re-election. Thus, no matter what happens during the current budget discussions, the long-term future of the labs is truly up in the air.

But is that such a bad thing for New Mexico’s economic future?

While it is true that in the short term, these efforts could remove hundreds of millions of dollars from the state economy and cost many New Mexicans their jobs, in the long run, a reduced federal presence in New Mexico might be good thing.

Right now, New Mexico receives $2 in federal funds for each $1 we pay in federal taxes – more than any other state in the country.

Despite this large federal presence in our state, New Mexico’s economic picture relative to other states remains rather bleak. We have the third-highest poverty rate, and personal-income levels are among the lowest in the nation.

Obviously, the labs are not the only manifestation of the federal presence in New Mexico. We have Indian reservations, federal lands, military bases and large numbers of retirees on Social Security and Medicare, not to mention welfare recipients on Medicaid and other programs.

With all of these programs funneling money into New Mexico, many of our policy leaders seem to think federal tax dollars come from heaven. But, as any economist worth his or her salt will tell you, “There is no such thing as a free lunch.”

To New Mexicans, this means that while our federal burden might be less than that borne by taxpayers in other states, New Mexicans bear a portion of the federal tax burden. If our elected representatives believe cuts are in order – budget cuts of any kind being an exceedingly rare occurrence in Washington these days – shouldn’t we at least do our share?

Rather than complaining about our own ox being gored in the form of relatively minor cuts – at least in the grand scheme of the federal budget – New Mexicans through their elected representatives should demand a smaller, more accountable federal government that leaves money in taxpayers’ wallets.

After all, it is the private sector, not government, that creates wealth in New Mexico and in the economy as a whole.

Governments – whether we are talking about entitlements such as Medicare and Social Security or the labs – simply redirect resources from those who produce wealth to those who consume it.

Whether these programs are possible and necessary or not, government does not produce anything that couldn’t be produced more efficiently by the free market – with the possible exception of reams of paperwork.

New Mexico’s leaders both in the state and in Washington should dedicate themselves to making New Mexico a wealth-generating state rather than a wealth-consuming state.

While the loss of some jobs at the labs might be an economic blow in the immediate future, it might put pressure on the Legislature and Gov. Bill Richardson to cut taxes, offer regulatory relief for businesses and look at innovative ways to build the state’s economy.

At the same time, perhaps the budget cutting will spread in Washington. Although it rarely pays to be optimistic when it comes to constraining federal spending, even modest restraint would go a long way toward rectifying the economically damaging spending binge throughout the Bush administration, during which spending has grown 7 percent a year – about twice the 3.5 percent rate under President Clinton.

Rather than fleecing taxpayers in other states for our benefit, New Mexicans should demand fiscal responsibility from their representatives.

If it takes temporary pain for that long-term gain, so be it. With Domenici’s departure from the Senate and our subsequent lack of clout – despite Sen. Jeff Bingaman being the chairman of the Energy Committee – we might not have a choice.

Gessing is president of the Rio Grande Foundation, which describes itself as “a nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.