The Seattle Times editorial board warns against deficit spending:
Washington already borrows billions for capital projects such as roads, ferries and university buildings. These are expensive assets that last many years, and borrowing spreads the cost over the generations.
Borrowing to build a university hall is like borrowing to buy a house. Borrowing to pay salaries of state workers is like taking out a mortgage to buy groceries.
Yeah, well, it depends on what those state workers are being paid to do. For example, if they’re being paid to educate our children, well, that’s a long term, expensive asset that lasts many years too (13 to 26 years to fully educate, a half century or so of productivity). So it kinda makes sense to spread that cost over generations as well, doesn’t it?
For example, study after study shows that investing in universal preschool and early, comprehensive intervention for troubled children and their families, pays off huge financial dividends down the road in the form of higher wages and lower costs. Same holds true of investing in preventative health care. So really, how is borrowing money to pay for a teacher or a vaccine any less justified than borrowing money to pay for a school or a hospital?
Again, I’m not ready to argue that the state should necessarily borrow a couple billion dollars to help ease the pain of this economic downturn, but the knee jerk arguments against it aren’t very conducive to an informed debate. The issue is not nearly as black and white as the folks at the Times want to make it out to be, and I hope our legislators adopt a more nuanced approach.
My editorial board warns against the kind of deficit spending used by Sam Zell to ‘purchase’ the Tribune Company.
Exactly.
This discussion reflects quite well the reason why terms like “left,” “right,” “liberal,” “progressive,” and “conservative” are utterly worthless.
In this case, the question, described most accurately, would be where we draw the line between long-term planning and short-term planning. What is our priority?
It should be pretty clear to everyone by now that our economic situation has been caused largely by ignoring long-term planning for the sake of short-term gratification.
This has nothing to do with party lines. It cuts across party lines. It has nothing to do with ideology. It is a way of thinking, and sadly, a way of governing and of doing business.
If we discuss the fiscal policies of governments in these terms, we rid ourselves of dumb-ass labels and can see the problems we face, and how we might solve them, much more clearly.
What about the deficit spending now happening at The Seattle Times Co. to keep the newspaper afloat? The newspaper owes about $100 million and is being forced to sell assets.
I think Frank Blethen would tell us that, in order to preserve the institution that is The Seattle Times, it has been necessary to borrow money during the bad times so the company can recover in the good times. Can’t something similar be said about state government?
I’m told that about 60% of the state budget is federally mandated and can’t be cut. That means, in order to resolve the revenue shortfall without raising taxes or borrowing money, Gov. Gregoire will have to cut about 40% of that remaining 40%.
Those cuts won’t be just “painful” and “ugly,” they will be debilitating. In this case, if government was being run like a business (as so many conservatives want it to be), the CEO wouldn’t hesitate to borrow money to keep its core functions intact during the down times.
Yes, dramatic cuts are necessary. But The Seattle Times editorial board — of all people — should understand that after you cut to the bone, you start cutting through it.
For more information, check out the op-ed by UW professor Dick Startz in Wednesday’s Seattle Post-Intelligencer.
I don’t disagree that education and health care are important, and might rightly be called investments. Then again, to take the Times’ example, buying groceries is an investment since not eating for an extended time can be hazardous or fatal. The real question here is the nature of the costs involved. When you finance a building, you’re expecting to be able to use that building for maybe 50 years. You don’t need to go build it again next year. So it makes sense to spread the cost over some period of time. Debt service plus operating expenses gives us a budget for what it will cost us each year to use that building. When we hire a teacher, however, the cost of their salary will recur each year. If we borrow money to pay that salary, then next year we have to cost of the teachers salary plus debt service on the money we borrowed last year. Clearly if we do this year after year, the cost becomes unsustainable.
There still may be a rationale for doing this, though. Our state’s tax structure tends to get amplified by economic cycles. When the economy is good, we collect lots of taxes. When it’s bad, tax collections fall precipitously. So the idea of running up debt during down turns and paying it off during up turns makes some sense.
Similarly an analysis could be made that investing in teachers’ salaries will improve our economy in the long term allowing us to pay off the debt that we’re running up. I’m not sure how easy this is to quantify, but in principle it’s a valid approach.
I think we need to consider the possibility of deficit spending just as we need to consider the possibility of (dare I say it) tax increases and tax system restructuring. To simply state, however, that hiring teacher is the same kind of investment as construction confuses capital spending with recurring expenses and confuses the issue.
If we are talking about costs related to education, it not like “taking out a mortgage to buy groceries,” but rather literally “borrowing to pay for education,” which seems to be well-accepted as a fiscally prudent course (e.g., college loans) for individuals and families.
I really don’t like the idea of borrowing to meet operating expenses because that money will have to be paid back by shorting future operating budgets. It would be much better to get the money from the two severely-undertaxed pools of money that have enjoyed extraordinary special tax privileges for decades — big business and the richest 20% of our state’s citizens.
The auto bailout has stalled in the Senate, where Republicans would rather let an iconic industry go down than let legislation go through that doesn’t bash two of their pet hates: The environment and unions. This is why we need a 60-Democrat Senate — because Republicans put their discredited ideology above America’s best interests. In fact, the GOP really doesn’t give a shit about America, and certainly not America’s remaining manufacturing industries or workers.
It wouldn’t add much to the budget, but I’d like to see nonprofit organizations who spend less than 50% of their budget on program services have their nonprofit status revoked.
http://www.secstate.wa.gov/cha.....;category=
More Free Speech Than You Can Stand?
Olympia’s experiment with religious free speech spiraled further out of control today as Westboro Baptist Church — the nutty Fred Phelps outfit — weighed in with a demand to display an anti-Santa Claus sign.
Hey, if you gotta let one do it, you gotta let ’em all do it. The federal and state constitutions don’t allow giving any religious group special posting privileges on public property that other religious groups don’t get.
@9 Me, too, starting with the Seattle Marathon.
Mayor Nickels, with exquisitely poor timing and a stunning tone-deafness for the PR implications, today asked for huge pay raises for the city’s police chief, facilities manager, and city light superintendent.
The University of Washington operates under an unusually paradoxical situation in that it receives substantial income from leases on the Metropolitan Tract (the land in the downtown core that was the location of the original campus) but is restricted by law to using these funds only for capital projects. This has led in the past (most notably in the early 70’s) to construction of some magnificent new buildings which remained largely unoccupied for years, because there was no money to support the programs they were intended to house.
12 You mean he didn’t ask for one for himself first?
6 I don’t know if most families consider it “fiscally prudent” to borrow money to educate their children–most feel they simply have no choice.
Now we see people graduating from college with the expectation that they’re going to keep living with Mom and Dad for the next 20 years, because there’s no way they can live by themselves, work in the professions for which they went to school to learn, and pay off their student loans. Does anyone else see something just plain wrong with this?
@15 I suspect in the future many young people will walk away from higher education rather than take a chance on trying to eke a living from an economy already full of unemployed people with degrees, and what I see happening then is America falling behind up-and-coming economies and becoming a third world nation ourselves.
@3: ivan
I want to thank you for a very intelligent and incisive point about long term versus short term planning.
The stock market, unfortunately, is predicated on short term performance and that is why a lot of these banks gave up long term stability for short term excesses.
How are we the most advanced nation in the world, but we have the most backwards health care?!
Forget about the bailouts and support H.R. 767!
And support Dennis Kucinich, the bravest person in Congress!
17 This, of course, goes “splat!” in the face of the many people naive enough to think that one of the main purposes of a bank is supposed to be responsible stewardship of its depositors’ money for any length of time.
At this point in time, you’re probably better off trusting your bookie than you are your banker.
As I’m typing this, the radio is offering up the delightful information that Bank of America is going to lay off 35,000 people. The inevitable response on Wall St. was that their share price took a jolly leap.
So, somebody please explain to me again how the “free market” benefits the greater good.
>crickets chirping<
AftFart @ 20 said:
There’s a difference?
16 Happening then? It’s happening now.
Now we see people graduating from college with the expectation that they’re going to keep living with Mom and Dad for the next 20 years, because there’s no way they can live by themselves, work in the professions for which they went to school to learn, and pay off their student loans. Does anyone else see something just plain wrong with this?
————
To say nothing of the immense fiscal obligations they’ve been saddled with thanks to the current generation’s fiscal mismanagement. To add insult to injury, they will also be on the hook for looming entitlement costs – including ours.
I agree this is not a black and white issue, the old addage ‘it takes money to make money’ might apply. This issue is oversight and Republicans have done little of this. While needed programs go unfunded, Wall Street and politicians fill their own coffers with greed that is so prevalent today. Yet, middle and lower income Americans pay the price. When will this insanity stop?
@ 21 “So, somebody please explain to me again how the “free market” benefits the greater good.”
We do not now have a “free market” and in reality probably never have had one.
TLG
How about reducing the prison industrial complex by legalizing drugs and quit locking people up for the personal habits. How much would that save in court costs, police and prison costs?
I suspect Goldy is not serious about this.
Borrowing to buy are create something that has capital value, a road or a building, is supposedly a one time affair. Whatever we pay out for education is a continuing expense because we will have new kids next year.
If anything, I would argue that fiscal sanity should mean we do LESS borrowing. Many of the bond issues we pass in Seattle are for costs that should be anticipated in an operations budget .. eg road repairs, updating for code, etc, All we accomplish by borrowing that money is to create an interest burden that is ongoing AND a subsidy to the wealthy SOBs who buy govt binds to avoid paying taxes.
If we had a gubner who was not afraid of her shadow, she would tell the folks the truth. This crisis is NOT because of the current financial imbroglio, but because w have been living year to year without long term financial planning.
I also am wary that the legislature will do its usual slight of hand by deferring costs that will mean we have higher costs in the future. That is no better than Goldy’s idea.
Asa a good starting place, if she were not a cowardly turkey, the guv could do a Ross Perot and get on the tube. There, she should lay out the state budget. Then she can lay out fixes that make no sense .. such as stealing from pension funds, cutting down on the number sof cops, not maintaining roads, releasing prisoners, etc.
What is left would, I beleive, shock people.
re: 3
This discussion reflects quite well the reason why terms like “left,” “right,” “liberal,” “progressive,” and “conservative” are utterly worthless.
I don’t necessarily agree. An ideological conservative is skeptical of public education. In fact, the reason so many college students today end their college career with tens of thousands of dollars in debt is because after the Reagan revolution, education budgets have been cut again and again.
As a person who just got done with college, I do find it a little annoying when individuals from generations that have known affordable tuition are so willing to hike tuition costs again and again instead of taking a more nuanced approach that may including taking on some debt and maybe even hiking taxes.
The reason that this approach is not widely accepted is because conservatives generally speaking are reluctant to make long-term investments. And while WA state is progressive on social issues it is ideologically conservative when it comes to spending. As a result, countless 20-something-public-university grads begin their adult lives with 20+ k in dept.
I wish the douchebag would can about 75% of workers at every state agency just for starters. They don’t do anything anyhow. Then
property taxes could be cut huge, get rid of sales and B&O taxes. Close labor and Industries
in favor of 24 hour health insurance. Unemployment could be made optional as in not
mandatory. Let the worker decide if they want
that insurance or they could put that money into a retirement account and taken out of
their check pretax.
SeattleJew: Interesting anal-lysis of the guvnur and her spending habits.
So in a sense Cynical is right, huh? She lived in the moment, spent all that money in the moment and now has to fix her in the moment shortfall problem in a future moment.
So since the legislature is beholden to all dem unions, how will she cut unless she cut peeps? She can’t raise taxes cuz, she be just another tax and spend libtard; let alone a liar.
I think it’s funny all them libtards living in King County seeing their property taxes rise when their house prices fall. Remember, y’all voted in the fools now screwin ya! Just like that city park and Greg I Don’t Give A Nickel and how y’all complained about it; you get what y’all voted fer!
@30
So you would fire 3/4 of the State Patrol? Close 3/4 of the State Prisons and mental institutions? Shut down 3/4 of the state ferry runs? Close 3/4 of the community colleges and 4 year universities? Close 3/4 of the state liquor stores? Shutter 3/4 of the drivers licensing offices?
What proof do you have that 3/4 of all state workers “don’t do anything anyhow”?
Then again someone who thinks workman’s comp could be replaced with “24 hour medical insurance” or that unemployment insurance should be optional is an idiot with no connection to reality.
@31 Puddy
Trouble is, you are not offering an alternative.
The way the State got into this trouble is by ass stupid anti tax policies of the right and by the rights ability to create mythical ideas such as we are highly taxed (we are not).
As a hard ass, I would like to see the guv statrt by telling folks the truth. The State budget is not so complex that she could not give us hard numbers sa
1. percentage of expenditures that are fixed (interest, fed law, etc).
2. percentage that goes to entitlements that would require law changes (e.g. education).
3. percentage that goes to services that are indispensable … prisons, state patrol, maintenance.
THEN we can talk sensibly about these issues.