President Obama is fond of saying “we can’t cut our way to prosperity.”

Alex Cartwright of Intercollegiate Review asks a great question. Why not?

“We can’t cut our way to prosperity” – Why not?

Even though most speeches that politicians give to large audiences are filled with general terms and are designed to be replayed in sound bites, there is one line President Obama said during his most recent state of the union address that cannot be easily taken out of context or given a reconstructed meaning. The president clearly remarked that in light of record deficits and federal debt, “we can’t cut our way to prosperity.” Though President Obama followed that comment up with what sounded like a reasonable, bi-partisan, solution of combining tax cuts with revenue increases, he didn’t explain why we cannot ‘cut our way to prosperity.’ Why cant we?

The states that have been successful in getting their fiscal houses in order have done exactly that– cut spending– and revenues so that their government’s can’t continue to spend. The Wall Street Journal reports that “Nine states—including such fast-growing places as Florida, Tennessee and Texas—currently have no income tax, and the race is on to see which will be the tenth, and perhaps the 11th and 12th.” At least 5 other states are pushing for major tax cuts; in fact, Arkansas is considering cutting their income tax by as much as half. Our states have to maintain secure fiscal environments and stable, fair, tax policies in order to attract businesses, and if they are not effective in doing so then their economies will suffer.

Despite the action that the states have chosen to take to stay competitive, the federal government, and especially the President, want to take a different path. Though the President believes, as he said many times during his campaign, that “we need to wisely invest government dollars” in things that he see’s valuable, like green energy and other research projects, it is simply not possible to have a ‘smarter’ government make ‘better’ economic decisions.