Wednesday, February 18, 2009

Budget Covers Deficit But Still Falls Short

Governor's Doyle's budget proposal is characterized by at least three ideas, none of which rise to meet the challenges of the day: an old one about costs and benefits, a twist on taxation, and the use of a one time payment to offset continuing costs.

The notion of governance through the employment of diffuse costs and concentrated benefits is a well understood phenomenon, and one that is in evidence in Doyle's budget. Thus we get an expansion of subsidized childcare under the Wisconsin Shares program and the expansion of health care benefits to domestic partners of state workers. As reported in the Wisconsin State Journal, the Governor's proposal would:
let state workers, including UW-Madison employees, add their partners to state health insurance coverage at an undisclosed cost Doyle aides described as modest.
While one may certainly disagree with these proposals (and no doubt many will) the fact that they are included should be a surprise to absolutely no one given the Democratic majority in state government.

The idea of taxation itself is not new, but its form under Doyle's proposal turns the diffuse cost/concentrated benefit notion on its head. Here is a description from the JS Online:

Doyle said he had no choice but to ask the Legislature to approve $1.4 billion in tax increases - the largest reworking of the tax codes in decades.

The increases include:...a new 7.75% tax rate for the richest 1% of taxpayers; $290 million in higher taxes on cigarette smokers; ...and more than $85 million paid on capital gains.

Piling taxes on a small group of citizens so that the majority can avoid the pain of taxation is a dangerous way to govern. One that has only a tenuous (if any) legitimacy in a pluralistic nation formed on the basis of representative government and protection of minority rights. The security of private property is absolutely fundamental to a free society. When we treat property rights dismissively, we do so at our own peril.

It is not an unthinkable leap to go from an additional 1% in taxes on the highest earners to 10% or even 50% when there is a political will to do so. While this will has not fully taken hold nationwide, it exists, often not far from the surface. What percent of the nation's wealthiest families would we have to impoverish to pay for the recent stimulus legislation? I suspect it is not a large percentage at all. Those of us who do not fall in that group, though, would be well advised to remember that a ring of thieves is no less one simply because they choose their leaders democratically.

The final piece of Doyle's proposal most starkly reveals the hidden deficit that we are suffering in this state, that of visionary leadership on budgetary matters. Again here is the JS:

To close a budget gap that has grown to $5.7 billion by mid-2011, the Democratic governor said he used $2.1 billion in federal stimulus cash to protect education and health care programs.

Using what is likely to be a one-time payment from the federal government to insulate any area of spending from cuts in a time of economic crisis is short-sighted. Even if the world economy is substantially improved by the next budget cycle, would anyone look back those two short years from now and regret cutting spending? If things have improved, increasing spending has never seemed to be a problem for politicians; and if they have not, we know that we took steps now in order to best cope with an uncertain future. Not adjusting spending now merely puts the problem off for another day. It remains to be seen if Doyle will be leaving the tough decisions to his future self or to a successor.

If current economic conditions really are as dire and unprecedented as so many in Washington and Madison would have us believe, what we need most desperately is a unique and thoroughly forward-thinking approach to the budget. Doyle's proposal is anything but.


johnny said...

I'm all for jacking up the taxes on smokers. If they insist on engaging in a habit that has a better than average chance of killing them, let em pay more for it because the citizens may be paying large portions of their medical care when the do get lung cancer. It costs a lot of dough to treat lung cancer which could be spent on other things(like a tax cut or some other nonstimulating idea). As for domestic partner benefits, well until states and the fed. gov either stop discriminating against homosexuals or stop endorsing heterosexual marriage then the least they can do is extend the same benefits to domestic partner relationships. By any reasonable defintion its discrimination to not give someone a particular tax break or inheritance rights or medical powers just because of whom they choose to spend their life. Give it to everyone or no one at all. As for states accounting gimmicks. You should see some of Arizona's shenanigans. Our Legislature and Governor could put enron to shame.

Jeremy R. Shown said...


I am sure I don't need to tell you this, but I wasn't arguing against either of those particular proposals on their merits, though my stance is probably obvious.

I don't like the fact that what everyone in power keeps telling us is a dire! terrible! catastrophic! economic crisis is being used to pass an agenda of ideas that have simply been laying around waiting for their opportunity.

If these ideas have been around for a while, their ability to address these new circumstances is certainly limited.