It’s hard to be happy about something that will hurt so many working class retirees across Rhode Island, as would Governor Chafee’s proposed bills to help cities and towns. But Chafee designed his suite of legislation to help the most cash-strapped communities the most, which is the right way to handle the state’s municipal fiscal crisis that is disproportionately plaguing the poor.
Rather than giving every community the ability to suspend annual pension increases, Chafee’s proposal would only allow those with pension funds less than 60 percent funded to exercise this tool, reports the Providence Journal. While no retiree deserves to have the deal they struck changed, at least this wasn’t a blanket exemption.
Chafee also made a number of cost-saving tools only available to the “most distressed” communities. As we reported earlier this week, those four communities are Providence, Pawtucket, Woonsocket and West Warwick. Ian Donnis has a good list of the relief measures offered to these cities and towns.
While Ted Nesi notes that former Governor Carcieri offered some of the same mandate exemptions that Chafee proposed yesterday, the big difference is Chafee’s bottom-up approach. Carcieri’s proposal was a blanket exemption to every municipality and Chafee’s is need-based. RI Future has held the former governor’s feet to the fire for cutting so much money from cities and towns that had so little. So did Chafee earlier this week.
Here’s hoping that Chafee’s proposal sparks a big debate in the General Assembly about the disparity between the haves and have-not communities in Rhode Island as this is arguably the biggest affliction affecting the entire state. After all, no one is talking about how rough it is for East Greenwich, Barrington and South Kingstown have it. Rather it’s the plight of Central Falls, Woonsocket, West Warwick, Pawtucket and Providence that is pulling our state down.
I cry foul on this post Bob. This proposal from Chafee won’t help poor communities at all. where has austerity helped anywhere? Heck, just read Tom Sgouros’ posts here! and since when does union busting work? Since when does paying working women less? Since when does jeopardizing the health of students help? Since when does putting the safety of children at risk help?
All so the 1% can keep the hupe tax breaks the got thought the flat tax? This isn’t a bottom up approach…not at all. this is a choking off of the people at the bottom so the people at the top can remain untouched and privileged.
Thanks Pat. It’s a very fair point. Calling Chafee’s proposal good for poor communities is a bit like saying a haircut is better for Sampson than a beheading. That said, the point I was trying to make was that Chafee’s proposal was a better way that, say, the blanket approach taken at the state level last year.
I absolutely agree that rolling back the Carcieri-era tax cuts for the richest Rhode Islanders would be a much fairer and economically responsible way to address municipal budget issues than sticking it to retirees.
[...] Plain of Rhode Island’s Future thinks I missed a crucial difference between Chafee’s ideas and Carcieri’s: [T]he big difference is Chafee’s bottom-up [...]
“where has austerity helped anywhere?”
New Hampshire. They have run a small, lean government on low taxes for decades and it has done wonders for their state economy. When they do have a shortfall, they furlough government offices and cut costs instead of raising taxes. They are consistently ranked toward the top in health, education, median income, unemployment, overall quality of life, and business environment.
“and since when does union busting work?”
“Union busting” is just a propaganda term, but if you want to examine right-to-work legislation, it has worked well in many states. For example, Virginia was ranked number 1 for business last year, consistently maintains low taxes, high median income, high quality public education (with “busted” teachers unions), and high quality of life,
“Since when does paying working women less?”
This tired old propaganda line again? Women receive equal pay for equivalent job positions and all the data supports that. The disparity only comes into play when you take the entire workforce as a whole and equate all work positions, which is ludicrous from a logical and statistical standpoint. In fact, under 30 single women earn more than their male counterparts and BLS reports that there were more women in high-pay managerial positions than men last year.
“Since when does putting the safety of children at risk help?”
I seriously hope you aren’t talking about bus monitors, which have absolutely no benefit to child safety.
RTW, New Hampshire hasn’t implemented austerity, it’s simply run a long-term right-leaning budget which has managed to create one of the best levels of income equality in the country. Vermont has done roughly the same thing from the other way.
Austerity has to be implemented. It’s that implementation that’s the issue. Budget-cutting, tax decreases, budget-balancing, these are all different than austerity.
The simple fact of the matter is that stimulus countries have largely pulled themselves out of the economic collapse, and austerity countries have only suffered. The U.S. economy is improving and Sweden has been out almost since day one. Ireland, Greece, Iceland, Spain, Romania, Portugal, and the UK have all implemented austerity and suffered drastically (Ireland’s emigration is back up, the UK is suffering a longer depression than the Great Depression).
You can’t cut your way out of a crisis. Spain is standing up against further austerity. Greece is probably going to elect a parliament that will.
According to Wikipedia’s entry on the subject, “In economics, austerity is a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.” So according to that definition, at least, New Hampshire has absolutely adopted a policy of austerity because cutting government benefits and services has been their primary and preferred method for balancing its budget for years now over tax increases. It doesn’t look like Greece or Rhode Island, but that’s only because they were so much more fiscally responsible to begin with, so the public-sector “withdrawal symptoms” over loss of government crack aren’t as severe. I don’t understand your point about income inequality – it’s a relatively free market economy overseen by a small, lean government of core services and low taxes – it works extremely well. Rhode Island should be trying to replicate its success rather than continue in the opposite direction by bribing companies to relocate and increase its already high taxes even higher.
I don’t know how you can make such authoritative statements about something as fundamentally difficult (impossible?) to measure as stimulus effects. All of the original stimulus projections about unemployment in the United States have been blown past and then some, so I’m not sure what measures of success you are basing your assertions upon. Last time I checked, the economy was still in bad shape and unemployment was still high 5 years later. I’ve heard the argument made here that the stimulus wasn’t big enough – not sure how one could test or falsify such a claim. Maybe you could tell me?
I think you’re confusing austerity as a cause of fundamental budget problems with its use as a remedy. Nobody is saying that the medicine doesn’t have side effects. Those countries should have exercised more financial caution in the good times to lower the severity of the cuts necessary, and all the cuts have really done is exposed the true severity of their spending problems. As for Greece, if the socialist rioters are successful in reversing the austerity measures, then there is literally no hope for that country left at all – the bailouts were all contingent upon significant reforms.
“I’ve heard the argument made here that the stimulus wasn’t big enough – not sure how one could test or falsify such a claim. Maybe you could tell me?”
In precisely–and I mean precisely–the same way you test or falsify your claims about austerity.
And just to go you one further, here’s how one fellow measured the impact of the stimulus on New Hampshire: http://stateimpact.npr.org/new-hampshire/2012/03/06/why-one-economist-says-austerity-is-hurting-job-growth/
“In May of 2008, Delay expected about 680k jobs in NH. He’s gradually downgraded his expectations over the years. Now, state has about 630k jobs. ‘So one way to think about us in the Granite State is we’ve lost, in potential growth, 50k jobs from where we thought we’d be.’ Big impact on economy and, subsequently, state revenues…
It’s not at all the same. Austerity is implemented in response to real structural budget gaps and has real benefits that nobody could dispute, like lowering the overall cost of government. These are directly calculable and measurable. The reason the discussion then often moves into the theoretical realm is because Keynesians make their own counterarguments about hidden costs, based on untestable and unfalsifiable multiplier effect theories and such, that supposedly offset these real, measurable benefits.
Keynesian stimulus, on the other hand, is based on entirely theoretical ideas like aggregating demand across the economy, animal spirits in investment, and a multiplier effect of public spending. Its benefits and costs are both entirely in the theoretical realm and are untestable and unfalsifiable.
Correction: you’ve linked to one economist who CLAIMS to have measured the impact of stimulus on New Hampshire. That doesn’t mean he actually did it, and my contention is that it’s impossible to measure. I could also link to hundreds of economists who claim to have scientifically determined the positive or negative impact of stimulus in terms of dollar amounts, and then cherry-pick those that seem to bolster my arguments against it. No surprise here – that’s how you get in the news as an economist, by making definitive, quotable claims and predictions, even if they’re grossly irresponsible. I read every week on CNN quotes from economists like “There is now a 1/3 chance of entering a second recession.” These claims are all unscientific and ludicrous on their face – how could anybody possibly know such a thing and especially with that degree of certainty?
New Hampshire did not implement austerity. New Hampshire implemented stimulus.
You have lost the argument. No need to embarass yourself any further.
If you had actually read the transcript linked to in the article, you would see that the economist was talking about Federal stimulus, not state stimulus. He explicitly mentions the Recovery and Reinvestment Act. And there is no reason why he should be considered an authority on the subject – just one of many people to offer testimony that day with his own point of view.
You have no idea what you are talking about. New Hampshire has cut public spending and shed thousands of government jobs over the past few years. That is the definition of austerity.
I have not embarrassed myself at all. You have done so repeatedly by misreading articles, quoting irrelevancies, and making incoherent arguments about “loyalty to the aristocracy” and similar nonsense.
New Hampshire used Federal stimulus money to expand state government. This is irrefutable.
New Hampshire implemented stimulus.
There is nothing more to say.
Samuel,
Sorry for the thread-jack but are you suggesting that those European nations will not come out of the crisis? The difference between the U.S. and those other countries is that we just keep printing money. Greece and Spain cannot borrowing anymore so what are their options? In the end, who will be the better off, the country that has trillions in debt or the countries that don’t?
This whole “suite” of tools should be discarded in toto. Instead of always going after the people who have already sacrificed all they can, work on raising revenues.
The inequities now facing the Rhode Island communities stem from the breaks then Gov. Carcieri proposed to reduce taxes on the rich so they could create jobs. Well, they got their tax breaks but where are all those jobs they promised us? And the worst part is that a Republican governor with no base in the General Assembly was able to pass this legislation.
What we all have to ask ourselves is, “Why was this legislation passed in the first place, who benefited from it the most and why is the current GA leadership resistant to raising revenue by creating another tax bracket that would tax the top wage-earners in the state and make shared sacrifice a reality and not just a hollow talking point?”