Gina Raimondo’s campaign manager, Eric Hyers, tells Phil Marcelo of the Providence Journal:
“This $60 million figure we’re talking about? To put it in context, we’re talking about 0.7 percent of the budget. What is more important than building schools that are new, safe, modern and help kids learn?”
Eric’s experience is in federal campaigns, so we can excuse the fact that he is obviously unfamiliar with the ferocity of fights at the State House over far less money than this. So here is a helpful list for him to consider of things that people might consider to be as important as building new schools:
The fact is that you don’t get something for nothing. Repairing schools is a worthy goal. Pretending you can do it for free is how we got ourselves in the fiscal crisis we’ve been in for a decade. If someone has an idea about where the waste is, then let’s hear it. In the meantime, let’s not waste more time with magic money proposals.
Again, Eric’s strong suit is not the state budget, so here are some suggestions he could recommend for paying for this new expense. Some people would even consider items in this list to represent waste. Maybe he’ll mention them to Gina.
The last one there deserves special attention. When the historic tax credit program was ended a few years ago, our state borrowed money to repay those credits. The total amount borrowed was $150 million. Given the way the tax credits work, around $30-40 million of that was borrowed only to lower the taxes of people who had bought tax credits. That is, we borrowed to make a tax cut. If that’s not waste worth cutting out of state government, what is?
]]>UK Prime Minister David Cameron shows us an example of the wrong way.
Regardless of where you stand on British austerity (hint: it’s not working), you should be able to agree this was an incredibly tone-deaf visual. For more in the study of contrasts, here’s the opinion of a waitress at the dinner.
]]>Before Carcieri’s cuts began to bite, Rhode Island public employment tracked the national numbers fairly closely, but once his policies were in place, Rhode Island’s public sector decoupled from the national public sector and took a precipitous nosedive. The bleeding has continued ever since. The pace of the widening of the gap accelerated in late 2006 after the passage of the 2006 budget, with its infamous tax cuts for the rich, but things didn’t end there. Even though public employment began falling all around the country in the aftermath of the recession, we still lost 7.75% of state and local public sector employees between January of 2008 and April of 2012—the second highest drop in the nation.
In conservative junk economics, laying off those greedy public sector workers is always a great idea, but of course, in the real world those layoffs can have devastating effects on the economy. To begin with, the jobs lost in the public sector are themselves jobs the Rhode Island economy has lost. If public employment in Rhode Island had followed the same trajectory as it did in the nation since 2000, we would have almost 9,000 more jobs in the public sector than we do now, and the unemployment rate would be 1.6 percentage points lower. Roughly half of our unemployment gap is the direct result of mass layoffs in the public sector.
The devastation caused by public sector layoffs does not end there. When public workers are laid off, their finances are devastated, and they start spending much less, driving down the demand for goods and services in Rhode Island. They also don’t have the money to buy new houses and can often wind up in foreclosure, which has devastating effects on the housing market. Rhode Island also ceases to benefit from the work that the public sector workers used to do. As Scott MacKay notes, Carcieri oversaw a general breakdown of government services that Chafee has spent much of his term in office trying to clean up.
Everyone has their favorite story of mistreatment at the hands of our government, but mine is the angry letter I received accusing me of not paying my state income tax. When I called up to protest that Rhode Island had already removed the money from my bank account, the woman I finally reached explained to me that they didn’t really have the staff to check whether everyone they were sending these letters to actually hadn’t paid their taxes.
Estimating the magnitude of the collateral damage from Rhode Island’s public sector mass layoffs is difficult, but it is probably fair to say that does not explain all of the rest of the unemployment gap between Rhode Island and the U.S. average. Part of the rest comes from other public sector cuts, many of which were far more savage than the national average. Pensions cuts, stagnant wages, and reduced morale most likely took their toll by reducing demand, but these cuts happened in other states as well, and much of the pain is spread out over several decades, so it remains unclear how much they added to our unemployment gap (probably no more than a few tenths of a percentage point).
Although the Rhode Island media are reluctant to use the word, what happened in Rhode Island was basically European-style austerity. When governments decide to throw out a century of economics and pretend that taking a chainsaw to the public sector will somehow magically not wreck the economy, the results aren’t pretty. This is partially because serious austerity measures like Carcieri’s public sector cuts can lock an economy into the austerity death spiral, where austerity weakens the economy, prompting more austerity. This is a lesson being learned not just in Europe, but also in states like Rhode Island that went all in for the same bad economic policies. All across America, the states that opted for austerity during the recession performed worse than states that did not. When conservative extremist Scott Walker took over in Wisconsin and implemented a severe austerity package that prompted mass protests, Wisconsin’s unemployment rate exploded. A similar wave of job losses is currently blowing through the Northeast region as governments from Maine to Pennsylvania opt for mass layoffs. Because Rhode Island’s recent public sector layoffs have been more in line with the national average, we have largely escaped this regional recession.
Comparing us with the broader Northeast region, however, does not usually paint Rhode Island’s economy in a very flattering light. In fact, because most of the Northeast region did not do as badly as the rest of the country, Rhode Island’s singularly bad record is even worse than it looks. So while public sector cuts explain most of our unemployment gap, alone they do not explain all of it. Some other factor must be at work here, a factor that will be the subject of tomorrow’s post.
]]>In an Economist article entitled “Bankruptcy in Rhode Island“, Governor Lincoln Chafee is quoted as saying “We’ve hit rock bottom in this state”. And, frankly, I don’t know how to take it.
The article is about the municipal budget problems that are cropping up across the Rhode Island. Essentially, as we well know, Rhode Island is undergoing austerity, and in ways that of course fall mostly on those that can least afford it (as Rolling Stone‘s Matt Taibbi has pointed out, austerity only applies to regular people). The recent showings in Greece and France, where anti-austerity forces triumphed and expanded (turning Europe back towards fascism and communism as it did in the post-WW1 era), provide continued support to my thesis that austerity overthrows its own enactors. And that’s to say nothing of Italy, where in local provincial elections, an anti-austerity political party set up by a comedian thrashed the parties in government.
The problem for Gov. Chafee is that he and the General Assembly are largely responsible for Rhode Island’s austerity crisis (indeed, the General Assembly can only blame themselves). But for the small caucus of progressives in both the House and Senate, even most Democratic legislators are pro-austerity.
Rhode Island is not even blessed with an anti-austerity third party (the Moderates are pro-austerity). Certainly, that party would be hamstrung by its lack of association with a viable national political party. Since anything coming out of the right would be DOA, any such party would have to partly modeled on the Vermont Progressive Party. And let’s face it, large swathes of political players in Rhode Island are completely tied to the current model of politics as it is now; changing that threatens much of the work that’s done to understand and operate in the system that many, many organizations have built up. The work towards change is largely focused on working within the Democratic dynamic, which leaves progressives particularly open to co-optation by the demands of various party factions when they come to power.
But even that sort of wishful thinking ignores what Gov. Chafee said. Rhode Island is at rock bottom, and if the Governor is wrong, it’s only because we have further to fall. We’re completely shot through, economically, we’re devastated. And yet, the policy makers, like a man stuck at the bottom of a very deep hole, can only find ways to chew off their own hands rather then reach for ways out. If you’re not convinced, read URI economics professor Len Ladardo’s blog, which has been positing that Rhode Island is struggling to prevent a double dip recession for a while now (Mr. Ladardo is now telling RIPR’s Ian Donnis that Rhode Island needs deep structural changes). Or you could read GoLocalProv’s recent no-duh inflammatory headline. Yet the reality is that no matter whether you’re a conservative or liberal, objectivist or socialist, no one has a clear way forward out of our economic disaster. I particularly find “let the free market sort this out” arguments entirely unconvincing, because the free market got us into this mess.
What is striking to me, and maybe this is due to editing on the Economist’s part, is that there’s no sugar-coating on the Governor’s words. There isn’t even a “but Rhode Islanders have the strength to pull through.” It’s a grim statement, because the reality is very, very grim. Luckily we have Hope in this state. And we’re going to need it.
]]>The Providence Police Union plans to protest future fundrasiers for Mayor Angel Taveras. In an email obtained by WPRI, they write: “Be prepared to participate and stand your ground as this is going to be the biggest fight ever.”
Understatement of the day: “Rhode Island manufacturing may face uncertain future”. This is the headline on RI Public Radio’s brief announcing the series its launching this week on the the decline of manufacturing in the Ocean State.
It’s an austerity effort that would only make sense in East Greenwich. The proposed town budget would cut money to the Teen Center, a Friday night tradition (since, at least, I was in high school some 20 years ago) where local youths are offered an athletic alternative to the even longer local tradition of binge drinking. The budget protects taxpayer funding for the annual Summer’s End concert – the recently-started tradition of having the RI Philharmonic play a downtown concert. The former happens every Friday night and helps local teens avoid drinking and driving. The latter happens one Friday night of the year and offers adults (and others?) an opportunity to bring their own booze to a downtown party accompanied by classical music.
And in an austerity protest that would only make sense to Rep. Dan Gordon, he ended his tax protest on April 20 and filed his income taxes … the self-proclaimed libertarian reports he got a $331 refund from the state.
As Samuel G. Howard predicted yesterday, austerity will no longer be the de facto policy of European nations. According to the New York Times this morning: “After elections in France and Greece punished leaders advocating austerity, Europeans on Monday contemplated a new and untested political landscape shaped by competing demands for austerity on one hand to counter the debt crisis and growth on the other to avert further deprivation.
Vice President Joe Biden endorsed marriage equality on Sunday … though the White House wishes he hadn’t.
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