Friday, April 29, 2011

No More “Happy Budgeting” – Please


With the firm declarations from the Republican leadership in the House and Senate summarily dismissing any and all revenue increases, the prospects for a government shutdown clearly increase and should now become part of the overall political discussion.

However, before a principled stand can be taken, the budget presented by the Republicans must fully comply with those principles.  This means a balanced budget without any revenue increases and one that is truly in balance.  This would be in keeping with the repeated rhetoric suggesting government waste, abuse, fraud, etc.  As a matter of fact, during the campaign there were public declarations by gubernatorial candidate Tom Emmer and Governor Pawlenty that there actually was not a deficit but rather a surplus.

Hence, from the prospective of the current legislative Republicans, the task of balancing the budget based solely on spending reductions should be relatively easy.  Unfortunately, that has not been the case.

While the budgets from the House and Senate are not identical, they are roughly comparable.  For instance, both budgets start out with an agreement to continue borrowing $1.4 billion from K-12 education.  This borrowing constitutes some 28 percent of the solution, but hardly meets the standards laid out by the “principles”.  A debt represents an acceptance of spending but delays the payment. 

I would submit that the validation of the spending and the delay of repayment is a deferred tax increase.  For those who would suggest that it could be a future budget cut, I would simply note the lack of courage and integrity to do it now.  Why should we always expect the future to have the courage to do what we refuse to do now?

To continue, the proposed GOP budgets violate any accepted standards of budgeting integrity when they book over a billion dollars in savings that cannot be verified by either the state’s Department of Revenue or Department of Management and Budget.  This speculative piece of the budget constitutes over 20 percent of the total budget so its importance should not be understated.

Suggesting cost savings reforms is excellent but booking them as budgetary savings is wholly unacceptable particularly when the two state departments warn against it.
For instance, what happens if the anticipated savings is realized to the extent of 80 percent and that would be a generous assumption.  The answer is a $200 million deficit and another struggle between tax increases and spending cuts with all the attendant political charge and counter charge.  And again, Minnesota’s already diminished credit rating will be reviewed for another reduction.

It should be remembered that “happy budgeting” is precisely what got us into this mess in the first place.  Go back to the “Big Plan” presented by Governor Ventura in 2001 which called for property tax reduction on one side and a sales tax expansion on the other.  The legislature decided to accept the tax reduction and eliminate the revenue increase to pay for it.  This absurd act of foolishness had bi-partisan support but Senate Majority leader Roger Moe and Senate Finance Chairman, Larry Pogemiller joined with Finance Commissioner Pam Wheelock, in strongly opposing the measure while House Majority leader, Tim Pawlenty, pushed for its adoption.

The oddity here is that the more liberal leaders were actually fiscally conservative while conservative leaders were liberally reckless.

From that point on, Minnesota rolled from one deficit to another even during the high growth Bush years from 2002-2007.  Every tool was brought into play in order to avoid a “tax increase” including massive multi-billion dollar borrowing, accounting shifts, “fee” increases, reserve depletion and transferring costs to local government.  State governments even rewrote the basic laws of economics by allowing for inflation on revenues but not on expenditures.  It ignored repeated warnings from bond rating agencies and suffered the loss of our prestigious AAA bond rating from Moody’s.

As a more traditional Republican, I would suggest that the Republican cause would be better served if the focus were to shift from partisan “principles” which appear not to be working to a higher standard of governance which involves respect for differing opinions and the recognition of placing service to the people over party loyalty.  

When the greater good is served, political leaders win.  Republicans would be well advised to share governing responsibility with the Governor and put together a compromised budget for this biennium and then be part of a bi-partisan alliance to eliminate the ongoing structural deficit via long-term reform.

6 comments:

  1. This post suggests that the Republicans sitting in the current legislature are capable of reasonableness, and so far there is no evidence that they are. Besides, they are still too stuck on the divisive but time-wasting hate issues like banning gay marriage to focus on their true responsibilities.

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  2. I agree with Howard.

    We need people like you, Governor Carlson, to address the terrible amendment making its way through the legislature. How can this be happening in Minnesota? How can we be a state that would write discrimination into our state constitution?

    Someone must talk some sense into the Republicans championing this amendment. Families like ours who dearly love our gay son are devastated. The debate that will erupt will be ugly, it will be terribly expensive and it will bring Minnesota shame.

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  3. Is it really an "oddity" that Liberals can be more fiscally conservative? Republicans, who have been unable to use legislation to kill the New Deal in almost 80 years, have been engaged in a policy of "Starve the Beast"- deliberately wrecking government by forcing it to go broke...making it, in the words of Grover Norquist, "small enough to drown in a bathtub". While some of the Tea Party people may have sincerely bought into the idea that such measures will help...I believe that seasoned operators like Pawlenty and Company knew, and know, exactly what they are doing.

    http://www.forbes.com/2010/05/06/tax-cuts-republicans-starve-the-beast-columnists-bruce-bartlett.html

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  4. Thank you, Govenor Carlson. I agree with Alex. The Republican/TP agenda is to destroy government and disenfranchise all but a powerful corporate oligarchy. Would we be willing to allow this if it we really understood? A concerted effort is needed to oppose and expose this intention. It would need to be well funded to go head to head against the likes of the Koch brothers, who have been pushing (and funding) their anti-government agenda many decades.

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  5. What an outstanding post. Our state and our country suffers from the absence of Republicans like Gov. Carlson on the scene today. Without them, there is no sensible core of the Republican Party, just idealogues who are willing to sell out intelligent policy for political expediency without a second thought.

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  6. These posts are informative and inspiring. It would also be helpful if occasionally you posted information on groups to support or actions to take that would help correct the direction our State's political process is taking. Thanks for your insight and hard work, Governor!

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