( – promoted by Sue Prent)
I agree with Dubie yet again on fiscal issues:
Well I think there are some housewives that are listening to this radio that think they could probably do a better job than has been done.
This stay-at-home-dad or "househusband" takes issue with the anachronistic, not-so-vaguely-sexist "housewives" remark, but let's set that aside. I agree with Dubie's inartful point: households can and must do a better job on budgetary issues than the Legislature and Governor have done recently.
Unfortunately, I think the Lite Guv has sorta missed his own point, perhaps because when you have lots of fungible money in your own finances, you think making spending choices is easy. Not so when you're living paycheck-to-paycheck and have certain mandatory spending that doesn't change just because a bad economy has shrunk your income. I'm sorry if that's an ad hominem, but I have a feeling in my gut about this guy that makes me think he's never had to balance a household budget the way the rest of us do.
Okay back to the main issue. A lot of people, not just Dubie, have used such analogies as a justification for cutting government spending. They suggest that "if a regular family has to balance their budget, the government should as well."
All analogies break down with time, and this one evaporates faster than a dog fart in an autumn breeze (my off-color version of "that dog won't hunt"). Private citizens, of course, don't enjoy the same economies of scale that a government does, nor have access to vast potential revenues in the same manner.
But let's take the analogy as more or less sound. The subtext is that households can't spend more money than they make, so they cut items out of their budgets.
That's true for the most part. Us regular folks will perhaps reduce expenditures by cutting their cable bill, not buying so much beer, skipping vacations, etc. Yet there is a certain amount of spending that is not discretionary, such as for shelter, food, healthcare, school supplies, transportation, etc. You don't buy gas, you can't get to work and you can't generate income. You don't feed your family, you are less healthy and your kids do worse in school. Miss your mortgage payment, you incur penalties and risk losing your home.
Speaking of mortgages, Dubie is aware they are a form of debt, right? As in, I "own" my home only by virtue of borrowing money from a bank. In other words, I've essentially spent more on a house than I make because I'm investing in my economic security and have included the amortized monthly payments into my budget calculations.
So borrowing isn't inherently a bad thing. Without it, most Vermonters would not be homeowners. Nor could they afford the cars they need to get to work since we don't have very good public transit, at least out in the rural areas where my family lives.
What's more, don't businesses take out loans to buy equipment, upgrade facilities and otherwise expand (or even get started in the first place)? Of course they do. It's just a part of doing business, and it takes money to make money.
Thus I'm left scratching my head about why the government should avoid debt at all costs and balance the budget for the sake of balancing the budget. Instead of borrowing a little bit of money when it could do a lot of good, why should we cut important human services–the equivalent of a family cutting food spending below the USRDA–that impact the most vulnerable and hinder economic stimulus and growth?
I'm especially confused when I see the state's CFO say things like this:
Spending the reserves for other reasons is a bad idea for several reasons, Reardon cautioned. For one thing, it would be using "one-time" money to cover ongoing expenses. For another, it would look bad to Wall Street, which has so far granted Vermont very high bond ratings.
So rather than be fiscally responsible and dip into savings a little, or borrow a little money, we'll just cut services so we have a better bond rating? Um, isn't the point of bond ratings to help you…borrow money? Quite a disconnect.
I think the larger problem is exemplified by legislative committee members who are stuck in an instutional and intellectual rut:
The legislators who lead the so-called "money committees" that oversee spending and taxes agree.
"Those rainy day funds are there as our overdraft protection," Sen. Ann Cummings, D-Washington, chairwoman of the Senate Finance Committee. "Once we spend them, they are gone."
Rep. Michael Obuchowski, D-Bellows Falls, chairman of House Ways and Means and the Joint Fiscal Committee that meets to manage money when the full Legislature is away, agreed.
Money committee members have agreed "not to use them until it is apparent we are on the road to recovery" at least, Obuchowski said. That way, the money can be used as a springboard out of the recession.
Yes, once monies are spent, they are gone. That is, unless you're using them to create the necessary recovery and replenish them responsibly when revenues increase, as we've done in the past. It's part of the reason for stimulus: get the economy going so you can start saving again for the next rainy day.
But to wait until there is a recovery to "springboard" out of the recession? That's completely backwards, and shows just how much legislators are mired in a form of learned helplessness, waiting for the dysfunctional Federal government to do its job and/or for the recovery to just sorta magically happen without the State being an empowered actor using resources available to it.
These people are saying, "yeah it's raining, but I don't want my umbrella to get wet, so I'll use it when the clouds are breaking up and the sun starts to come out." In the meantime, we all get soaked from the stuff trickling, er…pouring down.
Back to households again: when times are tight, you cut what you can (discretionary things), dip into savings (it's for a new roof next summer and also for emergencies) and look for more income (taking on another job). A responsible, balanced approach.
So yes, I agree that "housewives" can do better than the State has. It's because they aren't just dealing with abstract numbers and political ideology, but with economic reality and family members who rely on them.
todd
PS–Here are a few good sources of information about our so-called rainy day funds, which aren't quite smoke and mirrors but certainly involve some accounting mechanisms that might seem opaque to the casual observer:
(x-posted at Todd for Vermont House)
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