You wrote:

Shifted costs from where? If these costs were previously borne by the Federal government, they weren’t paid for by the tooth fairy. They were paid for by the taxpayers. What does it matter whether they are funded via Federal or state government?

I say:

Taxes collected by the federal government are progressive in nature, thus tax cuts help the people making the most..which is fair enough since they pay the most taxes. However, state and local taxes are more regressive in nature. This is due to greater reliance on property taxes and sales tax. Thus, a tax cut at the federal level that is made up by tax increases at the state and local level end up benefitting wealthier people and hurt poorer people. This one is particularly so, since it also lowered taxes on dividends and capital gains.

There is also the largest un-funded mandate in history aka No Child Left Behind. The state and local governments didn’t ask for this legislation and because it was under-funded have to know bear the burden of paying for it.

You wrote:

It’s a failing of state governments to adhere to even the slightest semblance of fiscal responsibility.

I say:

Are you thus implying that the Bush Administration is adhering to some semblence of fiscal responsibility? The only difference is that most of the governors have to balance their books..Bush has no such requirement as President. See this:
http://www.foxnews.com/story/0,2933,107415,00.html

It might be worth mentioning that paying taxes to the state rather than federal government has the revenue-enhancing effect of allowing for fewer “loopholes”, which means wealthier taxpayers might not be able to avoid as much tax as they otherwise would if they were paying on a federal return.

Re: “No Child Left Behind”, I’m not overly familiar with it. But if the feds mandate it, they should fund it.

Regarding the budget, I agree that spending is out of control. Part of it is unavoidable–the war on terrorism is ruinously expensive, and it comes at a time when revenues are down. The Fox article you referenced says:

“Much of the increase stems from the fight against terrorism and wars in Afghanistan and Iraq. Also expanding relentlessly have been huge programs such as Social Security, Medicare and Medicaid, which grow automatically with inflation, higher medical costs and more beneficiaries.”

Entitlement spending now comprises well over half the federal budget. According to the latest CBO figres, the combined spending on Medicare, Medicaid, and Social Security is projected to reach 15 percent of GDP by 2030 and 20 percent of GDP by 2075–that’s the size of the entire federal budget! For Social Security, the cost increase is projected to be up to 6.6 percent of GDP by 2075.

The entitlements need to be scaled way back. And the 31% increase in discretionary spending is inexcusable. The pork needs to go away, too.

Finally, I would say that there is some good news in the tapering off of fighting in Afghanistan and Iraq. As those countries are stabilized and their governments are formed, we will be able to withdraw many (even most) of our troops, saving a lot of money.