Guest MINDSETTER™ Artigas: Government Deficits - The New Normal
Sunday, December 03, 2017
The Wimpy economic strategy has metastasized into mainstream policy on both the state and federal levels. The two houses of Congress are now hotly debating competing tax cut proposals with few or no offsetting decreases in spending. Depending on who is doing the math, these cuts are projected to increase the federal deficit over ten years by $1 to 1.5 trillion. The problem is, of course, that while a tax cut is an easy sell to the voters, no elected official dares bring up spending cuts, which are anathema to whichever constituency takes the hit, resulting in a price to be paid at the next election.
The political solution has usually been deficit spending, with taxes being cut while not inflicting fiscal trauma on those voters accustomed to the government largess that comes in a multitude of forms. But the stark reality is that the money has to come from somewhere- in most cases, from government borrowing. This, then, is the embodiment of the Wimpy financial plan. In the comic strip, we never see him paying for the burgers, and in the real world, we see the accumulated debt growing alarmingly larger.
In 1990, the accumulated national debt was less than $13,000 per capita, but by last year, it had ballooned to more than $60,000. Without the least of intentions to shrink that deficit, the government has gone the Wimpy plan one better- they have seemingly deleted Wimpy's Tuesdays from the calendar. Interest alone on this deficit, not even considering principal repayment, now in fiscal year 2018 is projected to be $212 billion and quadruple to $850 billion by FY2021, just three years away. (note: figures quoted from thebalance and statista.com). Congress apparently has no compunction against saddling future taxpayers with this burden.
On the Rhode Island level, per capita debt is $8,721, compared to the majority of states whose debt is in the low four-figure range and then there's Tennessee at $925, lowest in the country. Making matters worse are unfunded pension obligations even after the 2011 reform. That figure is at 58% as compared to the 50-state average of 72% funded (data from 247wallst.com). Through creative accounting, it seems the state is able to skirt the legal requirement for balancing the budget.
Governor Raimondo is apparently concerned about these figures, as her public relations staff has grown by leaps and bounds. In 2015, state government had 53 p.r. staffers collectively paid $4.3 million. As of today, there are 73 on the p.r. staff and, added to outside contractors doing p.r. work, the aggregate outlay for public relations is $15 million (figures quoted from Providence Journal, Sept. 17, 2017). But it seems she is not concerned enough to exercise fiscal restraint. Makes you wonder if the focus isn't on putting the proverbial lipstick on the budgetary pig.
Many of the relatively small percentage of voters who might be paying attention to any of this are themselves adherents to the Wimpy financial model, with personal debt that threatens to sink them. If they are unconcerned by their own impending meltdowns, perhaps they are comfortable with mounting government debt. But, as the saying goes, it's a helluva way to run a railroad.
Steven Artigas: I am some years' retired from 40 years as a self-employed building contractor in RI. I have lived my entire life here and despair to see the results of decades of short-sighted leadership in our state. It is time that voices are heard on behalf of the million or so of us who lack connections in the state hierarchy.
Related Slideshow: GoLocal: Benchmark Poll, October 2017
Next year, in November of 2018, there will be a statewide general election for Governor and many other state offices. How likely is it that you will vote in this election?
Will you definitely be voting, will you probably be voting, are you 50-50...
Definitely be voting: 78%
Probably be voting: 13%
What would you say is the number one problem facing Rhode Island that you would like the Governor to address?
Jobs and economy: 21%
State budget: 9%
Corruption/Public integrity: .8%
Don’t know: .9%
Recently, a proposal has been made to permit the issuance of $81 million in bonds by the State to build a new stadium for the Pawtucket Red Sox. If there was an election today on this issue, would you vote to approve or reject issuing $81 million in financing supported moral obligation bonds to build the stadium?
Net: Approve: 28%
Definitely approve: 15%
Probably approve: 14%
Net: Reject: 67%
Probably reject: 19%
Definitely reject: 48%
Don't know: 4%
The next question is about the total income of YOUR HOUSEHOLD for the PAST 12 MONTHS. Please include your income PLUS the income of all members living in your household (including cohabiting partners and armed forces members living at home).
$50,000 or less: 27%
More $50,000 but less than $75,000: 13%
More $75,000 but less than $100,000: 13%
More $100,000 but less than $150,000: 17%
$150,000 or more: 13%
Don't know/refused: 17%
What particular ethnic group or nationality - such as English, French, Italian, Irish, Latino, Jewish, African American, and so forth - do you consider yourself a part of or feel closest to?
Black or African American: 6%
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