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Wednesday, March 9, 2011

Issue of the Week: Did Someone Fail Macroeconomics 101?

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Why are we having so much trouble balancing the state budget? Previous governors came to office facing large deficits and managed to balance the budget and move the state forward. The first question is: Should we have a balanced budget at the state level? The answer is yes, and the state constitution even mandates that we have a balanced budget each biennium. As a result, we always balance the budget. The last governor faced a $3.2 billion deficit when he came into office, and the budget got balanced. The issue is: How do we get to this balanced budget without killing jobs, hurting the economic recovery and destroying the fabric of the state we love?

First of all, the state's economy is not really out of balance now, and Gov. Scott Walker's emergency budget repair bill was totally unnecessary. The budget shortfall of less than $140 million for this biennium could easily be pushed into the next budget cycle. For example, the state owes the state-created Patients Compensation Fund money that could be paid in July, when the new budget begins, and that alone would more than cover the $140 million potential shortfall for this year.

Is this irresponsible budgeting? Absolutely not. The Patients Compensation Fund will get paid and the budget will be balanced. It is simply a question of how to handle this matter in a way that creates the minimum disruption to our lives and Wisconsin's economy. Every homeowner faces this type of decision in December. Should I pay my property taxes before Dec. 31 and deduct that expense in the current year so that my taxable income for this year would go down, or do I push this payment into the next year and pay my property taxes in January before the Jan. 31 deadline? The property taxes will get paid, but each homeowner considers their current economic circumstances and decides in which year to make the payment.

Now that it is clear there is no need for an emergency budget repair bill, how does the state deal with the projected budget deficit for the next biennium? Since the economy is beginning to grow, the state must be careful not to cut back unnecessarily and hurt the recovery. In pure economic terms, the state government's money is no different than yours or mine when it buys things from the private sector like new tires for its fleet of cars or new computers for its offices, so we don't want to hurt our local private businesses and economy by dramatically cutting back on needed state spending. Also, since we have a constitutional mandate to balance the budget without borrowing for operating costs, we have no fear of building up long-term debt for the state. It is again like the homeowner who has to manage his or her bills. Do I pay my entire property tax bill at one time or do I pay it in the two installments as provided by law? Private businesses make decisions like this every day as they "manage their payables."

Then it comes down to sound budget and policy decisions. Previous governors like Republican Tommy Thompson and Democrat Jim Doyle managed to balance the budget and keep our economy growing. For the next budget starting July 1, 2011, the state legislators need to do what they do each budget session: Scrutinize the budget requests from each state agency, including the transfer payments to local units of government, and make wise budgetary decisions that include not only cuts, but also expansions of good programs.

Then they need to look at the other side of the equation: revenues. As they say, Americans have always wanted more government than they are willing to pay for.It is time to look at fair taxation and increasing the taxes on those who can afford to pay. According to a Wall Street Journal/NBC News poll, 81% of the population believes that we should increase taxes on the wealthy. Not only is it fair, but also consider: When you increase taxes a little on the wealthy, in general they do not alter their spending patterns; economic demand is barely, if at all, affected. If that step is too much for some legislators, they can increase the tax rate on the wealthy with a sunset clause so that it goes back to the current rate when the economy recovers, "full employment" returns and the tax revenues return to a higher level. Right now the state needs smart economic decision-making to grow our economy, not right-wing ideological decision-making.

Heroes of the Week

The International Union of Painters and Allied Trades (IUPAT) District Council 7

Thank you, IUPAT members, for volunteering to repair any damage to the state Capitol from the historic protests in opposition to Gov. Scott Walker's union-busting proposals. The union—along with the rest of Wisconsin—scoffed at the Walker administration's estimate of $7.5 million in damages to the Capitol from taped signs to the interior of the historic building. (Actually, most of the tape used to put up posters in the Capitol was painter's tape, which does not cause damage.) That estimate has since been downgraded about 95%, to less than $400,000. IUPAT business manager John Jorgensen called Walker's $7.5 million estimate "yet another gross overreach." We agree. And we encourage the Walker administration to respect protesters as they fully exercise their First Amendment rights in the people's building. Trying to smear the protesters as "slobs" or vandals is not the way to lead Wisconsin forward—especially when the protesters represent the will of at least 60% of the state's residents, according to recent polls.

Event of the Week

Milwaukee LGBT Community Center Celebration

Celebrate the Milwaukee LGBT Community Center's new location at its annual fund-raising gala on Saturday, March 12. This year's theme is "Welcome to Your New Home," appropriately enough, since the center has moved to 252 E. Highland Ave. The celebration includes the "Family Fanfare" from 10:30 a.m. to 2:30 p.m. for LGBT families with kids or grandkids. Funnywinks the Clown will entertain and Stick to Your Ribs catering will provide food. The adults-only portion of the celebration—the "Sumptuous Soiree"—will run from 6 to 10 p.m. Los Angeles comedian Nadya Ginsburg, best known for her YouTube series "The Worm," will perform and an auction will be held. For more information, or to purchase tickets, go to www.mkelgbt.org or call Patrick at 292-3065.