By Carrie Sheffield
America is staggering under $34.54 trillion and counting in national debt. Smart Women Smart Money spoke with Elise Nieshalla, Indiana State Comptroller, to get her insights on a responsible fiscal blueprint moving forward. Enjoy her insights below!
Why is fiscal responsibility so important for your state?
Located in America’s heartland, Indiana continues to prosper and lead our nation in fiscal responsibility with low debt, low pension fund liability, AAA credit rating, healthy cash reserves, and a balanced biennial budget. In 2022 and 2023, strong revenue collections coupled with modest expenditure growth resulted in historic surplus levels that allowed Indiana to provide each qualifying taxpayer a $325 automatic taxpayer refund and an additional $2.5 million to the Teacher Pension Plan. We view financial responsibility and transparency as foundational contributions toward carrying on the birthright of freedom.
How is Indiana able to maintain a strong AAA bond rating when its Midwest neighbor, Illinois, is six grades lower?
Indiana’s fiscal leaders are to be commended for their focus on balanced budgets and low debt that has ensured our state’s fiscal prosperity. Our latest (2023) report from one of the three credit rating agencies, Finch, said it perfectly: “Indiana remains very well positioned to deal with economic downturns, with exceptionally strong gap-closing capacity in the form of ample budgetary reserves, robust control over revenues and spending, and a demonstrated willingness to take timely budgetary actions.” Indiana’s credit rating is expected to remain one of the highest in the nation.
What fiscal principles do you apply in Indiana that other states can learn from? The federal government?
Indiana continues to position itself as one of the lowest debt-level states in the country. Our net tax-supported debt (NTSD) represents just $366 per capita, which places us as 7th lowest in the country. Our low debt is the result of growing our economy through having a very favorable tax business climate and solid controls on spending. Last budget cycle, we utilized our strong cash position to cash-fund capital projects and avoid high interest rates. In stark contrast, the vast amount of debt at the federal level is extremely concerning to us, and we implore our country’s leader to develop, implement, and commit to a long-term plan to remedy our country’s debt crisis. A constitutional requirement to pass balanced budgets, as we have in Indiana, would be a great first step.
Why do you think the states generally (some, not all) are far more fiscally responsible than the federal government? Why are states able to garner surpluses far more often than the federal government?
As a result of fiscal conservative leadership that values low taxes, free markets, disciplined spending, and minimal debt, Indiana continues to experience healthy growth of our economy. However, it is imperative for us to look up from our state’s good economic position to see the country’s poor position – we are intrinsically tied together. We must involve ourselves in understanding the severity of the national debt load and the manifestation of real and negative impacts occurring now, and those that will implode the future of our country’s economy, and thus the states’, if not dealt with in all solemnity.
The debt crisis is a homegrown problem of compounding national debt and deficits that both political parties must own and solve. In our country’s history, after significant borrowing during times of war or calamity, our nation made dedicated efforts during times of peace to recover, reduce debt, grow and rebalance the county’s books. However, after the 2008-2009 financial crisis and the pandemic, the federal government has spent unprecedented amounts of borrowed money and has abandoned the historical and necessary practice of economic recovery, and thus now our country is in a very precarious position.
We have record federal debt and ongoing deficits, with future interest payments on debt crowding out important investments. Do states have any leverage to extract fiscal discipline at the federal level?
States are compelled to sound the alarm on the severity of our nation’s debt crisis and come together to provide support along with accountability for U.S. Congressional Members and the President for the necessary decisions that must be made for the sake of our nation’s financial future. Case in point on your question – the annual cost of interest on our nation’s debt is forecasted to exceed our U.S. annual military budget this year, which is terribly alarming.
Should states refuse some types of federal assistance in order to help reduce the federal debt/deficits? If so, do you think that the funds would be properly used for this purpose?
“Abrupt and large changes in fiscal policy are politically difficult to make and may harm the economy in the short run,” economist Austin Smythe wrote in his 2022 book Deficits, Debt and America’s Future. “Phasing in changes can demonstrate to financial markets and Americans that the US is on the case to get its fiscal house in order.”
This approach provides the governments of our states (and individual citizens) the needed runway to prepare for those eminently necessary cutbacks in spending. An effort by Congress and our President to plan purposeful, incremental cuts is much more kind to states than continuing down the current spending trajectory where we will certainly face a financial crisis where the federal government’s ability to borrow would be severely limited by financial markets and bring a major disruption or an abrupt halt to government assistance.
What advice do you have for citizens both in states and for the federal government to engage in calling for fiscal reforms? What actions can we take?
The first step is being aware and involved. Communicate with your federal representatives and candidates for office. Ask them to formulate a plan to address the national debt crisis and implement a financial framework for recovery and sustainability. To achieve this, the biggest drivers of deficits and the long-term debt must be addressed – Medicare and Social Security. The savings from those changes will compound powerfully over time. If nothing is done, Medicare is set to become insolvent in 2031, triggering an 11% reduction to benefits; Social Security is set to become insolvent in 2033, triggering a 20% reduction to benefits.
We need policies implemented to grow our country’s economy while incrementally and strategically decreasing spending. As states and as citizens of this country, we must speak to this issue and work diligently to secure our economic solvency and our political freedom that depends on it.
ABOUT THE AUTHOR
Carrie Sheffield is a columnist & broadcaster in Washington, D.C. She is author of the bestselling book Motorhome Prophecies: A Journey of Healing and Forgiveness published by Hachette Book Group. Carrie’s joined as a live broadcast guest on media networks including Fox News, Newsmax TV, Fox Business Network, MSNBC, CNN, PBS, and BBC.
An avid runner who completed the Marine Corps Marathon, she is a three-time winner of the National Press Club 5K race among female members of The National Press Club. She loves traveling, and prior to turning age 30 visited every continent–including Antarctica.
