States are proving in spades that small government works

Between $1.9 trillion in pandemic relief, an extra half trillion in the infrastructure bill, and just under a trillion in the Inflation Reduction Act, President Joe Biden has signed into law unprecedented increases in federal spending. All this has blown out a massive budget deficit and caused debt to climb as a share of the economy. Fortunately, there’s an alternative to big government. It’s found at the state level and, critically, it’s working for regular people.

Red states are putting a lid on spending and debt while expanding economic freedom — and enjoying marked gains in prosperity. Even many blue states aren’t going as far as the Biden administration in growing government. A comprehensive index just released by the Cato Institute shows as much.

First, look at the numbers right before the pandemic. The average state and local debt burden stood at 17% of income in fiscal 2019. According to the latest figures, it is already down to 15%. The state and local government sector’s share of the economy in 2019 averaged 10.1%, but it has ticked down since then.