Wisconsin is not Broke, “Budget Crisis” a Fraud

Wisconsin was not and is not “broke.” Its pension system gets a “gold star” for soundness, and it has no enduring structural shortfall in revenues. Gov. Scott Walker gave business a $500 million tax break and caused the budget deficit thereby, and then claimed that social spending had to be slashed and public unions destroyed because the state is “broke.”

Cutting taxes on the rich does not create “jobs,” as the first 8 years of the 21st century conclusively demonstrated. It throws more money to the rich, who use it to buy legislators to induce more tax cuts on the super-rich, so that over the past 20 years the rich have amassed four times as much wealth as they had before, while the average wage of the average worker in real terms is virtually where it was in 1970. Cutting taxes on the rich is a way of taxing the middle class and imposing extra burdens on working families.

Government is not bad. It builds your roads, funds your hospitals, pays your social security (the elderly were the poorest group in American in the 1920s, now they generally not so badly off, because of a government program), and could help solve global warming by building high speed rail and promoting green energy. Corporations don’t do anything of that sort for you. Some of them are well-run and make things that improve lives. But many of them (as with industrial fishing) are destroying the species-wealth of the planet, or strip-mining it, or pumping enormous amounts of poisonous carbon into its atmosphere. Or they are ponzi schemes or modern-day slavers who get people deeply in debt and charge them usurious interest rates, turning them into serfs-for-the-lender. If someone is charging you 22% interest, he should be in jail, not the recipient of the bulk of your paycheck. Government student loans allow young people potentially to avoid this sort of situation, which is one reason financiers want to destroy government and the whole idea of regulation. Ayn Rand is a recipe for turning the United States into one big Company Town, in which we are born indebted to the corporations and pass the debt on to our children. In contrast, government debt can goose the economy during downturns, is mostly owed to ourselves, and becomes smaller over time because of inflation; and if it weakens our currency slightly it would help exports.

Artificial “budget crises” used to break unions and impoverish the lives of the middle and working classes are just a form of bank robbery, on top of the world-class heist pulled off in fall 2008 courtesy Bush/Paulsen. They are conspiracies promoted by billionaires like the Koch brothers, and promulgated by front organizations like ALEC and lackeys of the super-rich like Walker, and are the real class warfare.

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9 Responses

  1. Free-market classical liberalism is hardly a recipe for a Company Town. Neo-conservative corporatism certainly is, as is a heavily subsidized economy as advocated by the left, albeit for drastically different reasons. Koch supported foundations are hardly advocates of conspiracies (despite what Rachel Maddow may say), but rather offer a different perspective than the traditional left-right agenda normally presented to Americans. Unlike what the media propagates, there are generally more than two sides to an issue. That said, I am personally less impressed with Heritage, but I definitely think Cato puts out quality policy research, as do other research foundations that receive Koch money. Having read much from the more libertarian-leaning think tanks, I don’t think it’s fair to brand them as the conspiracies as if they are in the same league as a neo-con (or whatever he is) crazy person like Glenn Beck (at least that’s who I associate with crazy conspiracies now-a-days).

    I don’t know much about Wisconsin’s fiscal situation, and their governor definitely seems to be pulling a fast political maneuvers with budgetary tricks, but that is hardly reason to be dismissive of budget crises. Being able to pay the budget for the next year is hardly “proof” that it’s a good policy, especially since resources in one area by definition mean they aren’t used elsewhere. I am much more familiar with New York State and it’s quite easy to see the trend between unions and bad budget policy. Public sector employees in NYS do much better than the lower/middle classes in the private sector and it’s those people who pay the taxes which support their pensions. That’s not to say they deserve no benefits, but they should at least be consistent with equivalent jobs in the private sector. Then again, I can only speak to NYS, not Wisconsin’s situation.

    In recent decades, I think the evidence is dubious for unions doing much of anything to actually improve the working class. While I agree there are good things governments can do, even meeting your example criteria requires a significantly smaller government, and just because there is a government “solution” to an issue, doesn’t mean it’s the most effective, that’s fair and equitable across all classes. While this is more of an ideological point, I do think historical trends ultimately support the notion that if government gets (largely) out of the way, you end up with a more equitable society with fewer concentrations of wealth/power.

    And with that, I will end my pro-libertarian advocacy and continue to appreciate your blog for it’s Middle East content. That said, posts like these do help me realize you are indeed fallible and that I shouldn’t blindly agree with all your posts on the Middle East, where it’s much harder to find quality opinion commentary. If only there was another source that provided as in-depth coverage as you surrounding events in the region, I’d have more opportunities to formulate better opinions regarding policy in the region.

  2. The purpose of a corporation is to make money. This is fine as long as they are regulated so that they must work in ways that don’t damage the environment, create monopolies, or otherwise do harm to the country and the world.
    When regulation fails, we have spectacles like the 2007-08 crash. Combined with union-busting, distortion of the tax code to favor the rich, and failure to enforce anti-trust laws (which of course is a failure of regulation), we get a concentration of wealth and income in the top few percent, destruction of the middle class, and reinforcement of the boom-and-bust cycle. Another effect of the concentration of wealth, plus the Citizens United decision which permits unlimited campaign spending by wealthy individuals and corporations, is excessive influence of money on elections, which of course threatens democracy itself.
    And spectacles like Wisconsin (repeated, with less publicity, in Ohio, Maine, Indiana, and other states) naturally follow the concentration of wealth and the excessive influence of money on elections.

    • It is perhaps too much to say that corporations, even when regulated, are an appropriate tool for solving every problem. Some parts of the human enterprise are inherently poorly-suited to market solutions. I think we’re finding this out with health care; it may be better suited to non-profits (like the Church in the old days, or Washington State’s admirable Group Health co-op.

      Corporations are a creation of the state, designed to make life better as a by-product of the pursuit of profit. When they are inherently unable to do this, for whatever reasons, they should be excluded from that area of human activity.

      Too much of our modern political discourse is governed by a commitment to models – the left to a regulatory or state-owned model, the right to a corporate model. An ends-oriented approach would treat each of these models, and many now underrepressented, as tools in a tool-kit, to be selected where appropriate.

      • “It is perhaps too much to say that corporations, even when regulated, are an appropriate tool for solving every problem.”
        I agree, and of course I didn’t say that. Corporations are an appropriate tool when there is money to be made in “solving a problem,” and when the amount of money made is the measure of how well it is being solved. Many issues in modern society don’t fit that description and are better solved by government action–which is inherently inefficient (the only thing government does efficiently is write checks). Hence our “mixed economy” model.
        In some cases government can enlist private industry under contract, but even that has its limits. A (bad) example is private prisons: private industry may be able to run prisons “efficiently,” but then, as in Arizona, they lobby for laws that will create more criminals and thus bring them more business. Private industry running schools has similar limitations. Privatizing the Post Office would mean that people who can be served at a profit would be served, and services that can be provided at a profit would be available, and others would be neglected; up to now, at least, we’ve believed that everybody, even those in small remote communities, should have the benefit of (comparatively) cheap mail service.

  3. Please forward to Obama speech writers. Let them add “My fellow Americans”, but that’s it. I think a little populism right now would break the spout right off the tea pot.

  4. The debt that is “mostly owed to ourselves” is mostly owed to the richest among us; who naturally prefer lending money to the government rather than giving it in taxes. When they lend it, they earn interest as well as getting it back. Which is why promote idiocies like “trickle down” and “cutting taxes create jobs”. The more government debt the better they like it.

  5. Our previous governor, president wannabe, Tim Pawlenty used similar sleight of hand a few years ago. On the very last day of the legislative session, without warning,he signed the spending bill and vetoed the tax bill that paid for it. Then, he unilaterally cut budgets using a little used state provision for fiscal emergencies, essentially removing the legislative branch from the legislating and budgeting process. His actions were eventually struck down by the Supreme Court after affected citizens filed suit but of course that took a lot of time. This was after he had engineered a government shutdown over the budget in a previous year. We never had a year without fiscal crisis in Pawlenty’s entire 2 terms.

    • “…he signed the spending bill and vetoed the tax bill that paid for it. Then, he unilaterally cut budgets using a little used state provision for fiscal emergencies…”

      This is the “Tea Party Three Step”–you can see it in Wisconsin, Ohio, Indiana, Maine, New Jersey; even in the Federal government.
      – Create or aggravate a budget deficit by giving a big tax cut to wealthy individuals and corporations (or in Pawlenty’s case by vetoing a tax bill)
      – Declare a financial crisis due to the (manufactured) deficit
      – “Resolve” the crisis on the backs of the poor and middle class by cutting budgets for welfare, schools, hospitals, Medicaid, and other services

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