Sharing in the Pain of "Budget Repair"

SHARING IN THE PAIN OF “BUDGET REPAIR”

Christopher Ebbe, Ph.D.   3-11

ABSTRACT:  The long-term pattern of politics as the power to benefit “friends” and deprive all others is continuing in the initial efforts in some governmental entities to begin to live within income rather than live on borrowed money or on hopes of future economic boom.  This will prove to be divisive and provoke anger and conflict, whereas including everyone in sharing the pain of these budget corrections might bring Americans together.

KEY WORDS:  budget deficits, budget repair, budget correction

For year governments at all levels have used deficit spending as their method of continuing to provide the same services and to maintain various programs without change over time.  This has been done because (1) government income varies significantly from year to year, since it is for the most part based on percentages of incomes and property values, etc.; (2) we have come to expect that as the economy expands, the years in which government income exceeds expectations will be sufficient to pay off any loans taken out by government in lean years in order not to have to cut programs or jobs; and (3) neither legislators nor citizens want to have any program, salary, or job cuts in lean years.  It seems that we are now entering a period of contraction of the economy or at least of very little growth, so that boom years are no longer occurring, and governments are beginning to fear that their debt levels are becoming insupportable.

As governmental entities search for ways to balance their budgets now, rather than waiting for boom years, officials cynically turn first to reducing programs and expenditures for persons who have little political clout or means to object.  When this is not sufficient, plans begin to emerge for reducing support for colleges and for primary and secondary education, reducing Medicare and Medicaid benefits, and reducing the number of government jobs.  (Increasing taxes would be another rational response, but those who favor smaller government have made such a shibboleth of “no new taxes” that this option is currently considered political suicide.)  Potential cuts provoke outrage among those potentially affected, who write letters, march in the streets, or seek publicity arguing that their service or job is so important that some other program or job should be cut rather than theirs.  In Wisconsin recently, the governor plans to limit severely the contract negotiation abilities of state employees, since government employees’ pay and benefits have become a symbol recently of government excess.  (This ignores completely the fact that the state has the ultimate power to approve those contracts and has apparently not had the backbone to insist on appropriate pay and benefit levels.)

The net effect is an intense competition for who will have to suffer.  It is understandable that everyone thinks that their program or job is more important than others or so important

that it cannot possibly be cut, but this is irrational, since there are no programs or jobs that the government cannot cut and still survive.  Citizens have been lulled by years of economic growth into believing that there is always enough money for anything we want to do as a country or state.  Clearly this is no longer true (and actually never was true).  Citizens must face the fact that they provide the money for government activities, and if they are not willing to pay enough to have the programs and jobs that they want to have, then those programs and jobs will not exist.

WHAT CAN BE DONE

The first step in budget readjustment is for citizens to become aware of what different arrays of programs and jobs can be paid for by different levels of taxation.  This is certainly a complex subject to present to citizens, but computers can make this possible.  Citizens must accept that government income must balance spending.

Once it is clear what level of programs and jobs the public wants, it is the job of legislators to balance the budget.  If they do not accomplish this, then citizens have the option of replacing them in the next election.

Since government is by all the people and for all the people, it is time to work toward all of the people sharing in the misery of reducing our average yearly expenditures (and expectations) to a level that can be supported by most years’ government income.  Instead of cutting jobs, perhaps a better alternative would be to reduce everyone’s salaries and not cut jobs.  Instead of cutting programs, perhaps a better alternative (at least worth considering) would be to reduce all programs by the same amount or the same proportion.  Police and fire services have been largely untouchable in these budget struggles, but they should be cut as well, so that the public realizes that it must pay for what it wants.  It should be obvious, too, that a greater proportion of most programs’ budgets could go to the real goal of the programs (like teaching or fire trucks rather than fancier buildings to house those services).

Sharing equally will probably be opposed by almost everyone, since no one wants to make do with less income (and some would then be unable to pay their bills and would lose houses, cars, credit cards, etc.).  Most people will initially want someone else’s job to be cut rather than share in a reduction of everyone’s income.  Fighting over who will suffer, however, only creates anger and a sense of unfairness among the people, while everyone sharing in the pain would help citizens to act more effectively as a total group to take charge of government spending.

If government employees were to have salaries that were different every year, many people would opt not to work for the government.  If stability of income is necessary in order to fill important government jobs, then government could establish a reserve account, to be added to or taken from each year, that could enable keeping salaries stable across time (not for increasing them).

Another approach would be to set tax rates differently each year to cover whatever programs and jobs have been approved by the legislature.  There will be loud objections to this, too, since people like to have stable tax amounts or percentages, so that they can plan their household budgets.  This might also require having a reserve fund that could be added to or taken from each year to enable taxation amounts to be relatively stable.

Right now the most important changes we need are (1) for citizens to realize that the taxes they pay determine what programs and jobs government can offer and support, (2) for citizens to find out what level of programs and jobs can be had for the amount of taxes they want to pay; and (3) for citizens to join together in sharing equitably the pain of determining supportable budget amounts.

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