Why Do Democratic Governors Keep Budgeting Like Republicans?

State budgets nationwide are about to take a devastating hit due to the loss of federal funding for countless programs. It’s not clear yet which forms of state aid will get cut when the dust settles, but it’s clear that Elon Musk’s DOGE either doesn’t give a shit about cutting economically load-bearing funding streams or actively desires a recession. (I lean towards the latter.) To be sure, that limits the ability of the states (which must balance their budgets, unlike the federal government) to fund public services and infrastructure, and states should plan for more ambitious spending programs under Democratic administrations as a general rule. But it doesn’t prevent states from doing the necessary budgeting to keep public services humming along at current funding levels—it merely forces them to tax wealthy homeowners and pare back budget-busting corporate handouts. When faced with a choice between raising taxes and letting essential public services wither away, the choice should be an easy one for a Democrat. As DOGE threatens the very concept of public services, it is imperative that the Democrats who still have the power to fight for public services—those in the states—do so. It may mean tax increases on corporations and the wealthy. It may mean an end to the corporate handout programs that state legislators love. But a Democratic Party that commits to preserving and expanding public services will be stronger for it.

Unfortunately, that’s not the Democratic Party we have.

As Maryland braces for the economic fallout of massive federal layoffs, some unpleasant choices were inevitable. The state is hugely reliant on federal dollars due to its proximity to DC and the location of numerous government agency headquarters within the state. Democratic Gov. and potential 2028 hopeful Wes Moore had the power to set the agenda of budget season with his initial proposal—and his agenda was heavy on cuts, particularly to public schools and services for the developmentally disabled. To the credit of Maryland legislators, they balked at some of the proposed cuts, pressuring Moore into walking back the cuts for disability services and repeatedly voting down the proposed education cuts in committee. But Moore—in part constrained by legislators’ reluctance to raise taxes—swapped the disability cuts out for cuts to clean energy, state employee wages, and the state’s nascent paid family leave program, the start of which is being postponed to 2027 due to the cuts. While those cuts may be easier to swallow than gutting services for the disabled, they still represent a step back from Democrats’ ostensible commitment to a fairer and greener economy—and the fight over the education cuts is ongoing. Moore is proposing some modest tax increases and the closure of some tax loopholes benefiting the wealthy—as well as a cut to the corporate tax rate and the elimination of the state’s inheritance tax, both painfully regressive tax cuts. He’s also proposing more broadly applicable tax cuts via simplification of the state’s tax code. As the cuts themselves demonstrate, the state of Maryland can’t afford to lose revenue without the services that Marylanders rely on suffering as a result. Are extremely modest tax cuts worth the degradation of public schools, the underpayment of state workers, and the postponement of the state’s paid leave program?

A common tic of Democratic governors and legislators, in good times and in bad, is a focus on “tax relief.” This usually manifests in the form of tax credits, often accruing disproportionately to the wealthy. These tax relief initiatives are often a massive strain on state budgets, with price tags running into the billions in larger and wealthier blue states. And the price of these programs is, inevitably, harsh austerity somewhere else in the budget. Public services suffer, and the people who rely on them lose faith in government. More specifically, they lose faith in the party in government—which, for the purposes of this discussion of state budgets in blue states, is the Democrats. Lest you think I’m picking on Wes Moore unfairly, I’ll demonstrate that he’s far from alone.

In 2023, Massachusetts Gov. Maura Healey successfully pushed for wide-ranging changes to the state’s tax code. Some changes, like a new child tax credit, benefited middle- and working-class families; others, however, bestowed massive windfalls on the rich. In Massachusetts, it was Democrats, not Republicans, who cut taxes on large inheritances, capital gains, and corporate profits. Of the package’s estimated $1 billion price tag in lost revenue, $347 million flowed directly to corporations and the wealthy. Within months, sagging state revenue forced Healey to use emergency authority to slash $375 million in state spending that had already been budgeted for, most of it coming from MassHealth, Massachusetts’s Medicaid program. A cynical observer might think that Massachusetts Democrats were more concerned with mollifying a minority of rich voters (and donors) than with protecting the wellbeing of their most vulnerable constituents. (Meanwhile, Massachusetts voters were raising taxes on the rich through popular referendum, mitigating the damage of Healey’s cuts.)

That same year, New Jersey Gov. Phil Murphy and Democratic legislative leadership introduced StayNJ, a property tax credit for homeowning seniors. According to New Jersey Policy Perspective, a progressive, nonpartisan think tank, the program is estimated to carry a price tag in the billions annually, with benefits flowing disproportionately to the wealthiest senior homeowners. In subsequent budgets, Murphy and legislative leaders have continued to put aside huge sums for StayNJ—even in Fiscal Year 2026, when Murphy is touting “nearly $2 billion in appropriation reductions” in his proposed budget, including cuts in state aid to urban school districts in need like Jersey City and North Bergen, prompting backlash from Hudson County. The full, detailed budget proposal isn’t out yet, but urban schools aren’t the only hard-to-swallow cut that’s already known to be included; funding for nonprofits providing direct services to the poor, including food pantries and housing assistance, got slashed as well. Rumors out of Trenton about the specifics have been dire for weeks. Is a property tax credit for homeowning seniors—people who by definition have valuable assets, are likelier to have accumulated savings, and are likelier to have high incomes—really worth all this pain?

Tax relief may poll well and sound like a winner to staid Democratic consultants, but it’s counterproductive from a messaging standpoint. Democrats, no matter how much most of its elected members would prefer otherwise, will always be the party of taxes and spending, at least so long as they are the leading opposition to a conservative Republican Party. This is true in terms of policy as well as voter perception; even a voter who doesn’t pay much attention to the news probably has a vague idea that Democrats raise taxes and spend a lot in government funds, both because Republicans attack Democrats for this and because it is generally correct. This general perception is the entire reason DOGE exists and the entire reason that Republicans can run on austerity—which voters reliably hate in practice—and win anyway, so long as an actual round of Republican budget cuts isn’t fresh in their minds. The answer cannot be to concede the Republican framing that taxes are too high—which Democrats do when they run on and deliver tax relief. Smart, principled Democrats should defend taxes and spending on the merits, and they should do so proactively, in support of new taxes and new spending. Democrats’ appreciation for government spending and social services can’t just surface when Republicans slash and burn the existing social safety net. It shouldn’t take the threat of steep Medicaid cuts to marshal a forceful Democratic defense of government aid for the poor, which has been a main reason for the Democratic Party’s existence since the antebellum era. State-level Democrats need to cut it out with the “tax relief” act and make the tough choices to tax and spend appropriately to serve the needs of the whole public—because it’s what tax-averse voters will believe Democrats are doing anyway.

To close, I’ll return to DOGE. The slash-and-burn destruction of the federal government, combined with trade wars and international boycotts of American goods, is reasonably likely to cause a steep and painful recession, possibly even a prolonged depression. Rebuilding well from a recession requires generous stimulus, as we learned from COVID. Rebuilding from an unprecedented depression wrought by the permanent destruction of central structures of the economy—Social Security, Medicaid, an independent Federal Reserve, an easy flow of trade with our neighbors, a government which honors its contractual obligations—will require more than temporary stimulus; it will require the rebuilding of what remains that is salvageable, and the swift construction of entirely new systems purpose-built to heal the damage and prevent it from happening again, as we learned from the Great Depression. Do Democrats who cut taxes and public services, in an obsession with “right-sizing government”, really have what it takes to get that done? Do you think these Democrats have their own, comprehensive Project 2029 in the works?

I’m afraid they don’t.