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For Dionne: Responsibility Equals Tax Increases

E.J. Dionne's latest column is titled, "For Governors: Responsibility Equals Invisibility."  He laments that the way for a governor to get attention these days it to "just cut and cut and cut some more" from budgets for education, health care and transportation.  By contrast, Dionne cites a handful of "brave" governors, such as Illinois's Pat Quinn and Jerry Brown in California, whose efforts to close budget deficits by raising taxes receive little attention and less praise.

Quinn, for example, signed a bill passed by a lame-duck session of the Illinois legislature that raised the state's income tax from 3% to 5%.  Quinn was "pilloried in conservative outlets" for that decision, Dionne says.  But that's not the whole story. 

Quinn won election in November 2010 after promising that he would veto any bill raising the income tax above 4%.  His subsequent claim that the state's fiscal situation deteriorated so dramatically after Election Day, making an even bigger tax increase necessary, would elicit raucous laughter at a funeral.  Illinois's fiscal problems were well known before Election Day.  For Quinn to claim that, by a remarkable coincidence, they grew much more severe in the weeks between when he won election on the basis of a campaign promise, and the signing ceremony when he broke it, can be explained in one of two ways: Either Quinn made the 4% promise cynically, knowing he would have to - or at least want to - break it, or he made it stupidly, not realizing the severity of his state's debt problems, even though he was serving his second year as governor during the 2010 campaign.  If Dionne applauds that kind of leadership, it will be difficult for any Democrat not under indictment to earn his reproach.

As for Brown, I've argued that California's governments, state and local, were spending about a quarter more for all their activities in 2008, after adjusting for inflation and population growth, than they were in 1992.  We're told out here that a savage 20% cut in overall government spending would leave us unable to afford to hire anyone to look after the school children, other than the child molesters we could no longer afford to keep in prisons.  And yet, less than 20 years ago, California managed to educate its children, imprison its criminals, maintain its roads and assist the indigent -- and did all this with inflation and population-adjusted government outlays about one-fifth smaller than what they were recently.  Is it so heartless or unreasonable for the taxpayers to expect that we try to recapture the levels of government efficiency seen so recently, before we declare the task impossible and say the only way out is for more money to prop up a less efficient government?

"There is nothing courageous about an ideological governor hacking away at programs that partisans of his philosophy, including campaign contributors, want eliminated," Dionne declares.  But there is something courageous, or at least interesting, about Democratic politicians risking the contempt of liberal columnists by declaring that further tax increases are simply impossible.  Governor Andrew Cuomo has been categorical in his opposition to addressing New York's fiscal problems with tax increases, even if it means laying off more than 10,000 public workers. 

Peter Shumlin is the Democratic governor of the People's Republic of Vermont, and even he thinks that his state cannot tax its way to solvency.   "Vermont has a 6 percent sales tax and, at the top tier, a 9 percent income tax," Politico reports. "The result has been a long period of stagnation for the Green Mountain State."  "We've already got a progressive income tax in Vermont, and we can't get more progressive because we'll lose the few payers that we have," Shumlin recently said. "We don't have any more tax capacity."

Dionne's readers will need considerable patience if they're waiting for his column praising Cuomo and Shumlin for courageously repudiating the interests and instincts that prevail among their partisans and campaign contributors.
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a quarter more for all their activities in 2008, after adjusting for inflation and population growth, than they were in 1992.

There is year to year growth in real incomes as well. If your public sector compensation is properly calibrated to begin with, it will have to increase in accord with competing opportunities in the private sector. Prison guards may have employments very similar to what they were in 1928. It would be inadvisable to attempt to pay real wages similar to those earned by guards in 1928. Real income per capita has quadrupled since 1928.

First, E.J. Dionne is delusional. I'm serious.

Second, the wheels are coming off the bus; here and throughout the world. The party is over. It will never again return to the kind of "land of plenty" prosperity we had -- or, as I'm coming to believe more and more, only thought we had before the housing bust of 2008, and the dot-com bust of 2001.

I wish Quinn and Brown luck. They will need it. The only thing that can save California and Illinois at this point is a massive federal bailout, which is not forthcoming.

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