The budget gap: an alternative story

A simple narrative has emerged to explain Vermont’s budget gap of roughly $113 million. Oddly, tragically, it’s pretty much the same narrative whether you’re Republican or Democrat.

The Republicans’ version goes like this: The Democrats are out of control! They’re taxing and spending like drunken sailors!

Some liberals raise a fundamental objection to this — but not Gov. Shumlin. Now, he couches it differently; his version is that Vermont’s economic growth has failed to meet expectations and that state spending has overreached. But his underlying assumption — the state has spent beyond its means — is very similar to the Republicans’.

Gee, no wonder he had trouble developing a clear narrative in the 2014 campaign.

It’s true that the economy has underperformed expectations — but that’s not a phenomenon unique to Vermont. Nor is it attributable to our alleged “tax, spend and regulate” ways. By many measures we’re doing better than our northeastern neighbors. And we’re doing a hell of a lot better than states with hard-core free-market governments like Wisconsin, Michigan and Kansas.

(The states where free-market ideology is credited for booming economies enjoy unrelated economic advantages: Texas and North Dakota’s fossil fuel wealth, Arizona and Florida’s retirement havens and influx of immigrants.)

(Yes, immigrants. Most of them are hardworking people who came here in search of a better life. They add energy and ambition as well as cultural spice to our melting pot. We could use more of them here in Vermont.)

There’s an alternate story to tell about how we got into this fix. Strangely enough, it actually shows the Shumlin administration in a positive light. If only the Governor was willing to tell it.

Part of our problem is the structure of our tax system, as previously discussed in this space. ur income tax system has an extremely narrow base because of how we calculate taxable income and allow itemized deductions.  We’re losing tens of millions in potential revenue because our sales tax system has more holes than Swiss cheese. (Sen. Tim Ashe, chair of the Senate Finance Committee, estimates that we’re losing $50 million a year because of Internet sales. That’s not new tax money; it’s money we used to collect and aren’t anymore.)

The rest of the problem is that the Democrats have been responsible stewards, even if it means short-term trouble. They’ve tried to manage state finances in difficult times while maintaining state programs that have a beneficial impact on our present and future well-being.

Programs like Reach Up and expanded health care access and substance abuse treatment aren’t giveaways; they’re aimed at giving Vermonters a way out of systemic poverty. There’s also an immediate benefit: money spent in programs like food stamps and LIHEAP and the Earned Income Tax Credit go directly back into the economy, creating much more positive impact than capital gains tax cuts or corporate tax breaks.

And here’s a great big item that, sadly, I didn’t even realize until Saturday when House Speaker Shap Smith addressed the State Democratic Committee. The Democrats have spent millions to restore full funding to public sector pension plans. Smith mentioned $60 million, and called it a significant reason for our budget troubles.

Which is true. But it’s also the responsible — nay, the legally required — thing to do. The pension gap was created through years of mismanagement under previous administrations. (You know, those administrations that featured budget hawk Tom Pelham in prominent roles.) They took the easy way out of budget predicaments: putting off the day or reckoning. As Smith said, “we’re making up for the sins of the past.”

Really, it’s the Republicans who are bad managers. They are so single-mindedly focused on cutting that they fail to develop any sort of vision for governing. And they undercut the good things that government can, and should, do.

Two more overdue investments. First, the current administration has instituted health care reforms that have produced some waste and a bug-riddled website, but have also cut our uninsured population to 3.7%, compared to a national average of 12%.

And second, it’s making a long-overdue attempt to clean up Lake Champlain. That’s another legacy of the short-sighted practices of past administrations: they ignored the problem and let it get worse. And more expensive to fix.

These are noteworthy accomplishments. They are the right things to do. They are not wild or radical or thoughtless. And they are big reasons why we’re in our current budgetary difficulties.

And that’s it. It’s not a narrative of spendthrift liberals bankrupting the state. It’s a narrative of careful investment in Vermont’s future weighed down by a legacy of bad management and an outdated, creaky tax system.

This is not to say that I agree with everything the Democrats do. They’ve been too careful for my taste. But they do have a compelling story to tell.

Too bad nobody’s telling it.

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6 thoughts on “The budget gap: an alternative story

  1. Philip Beliveau

    Along with Wisconsin Vt has the greatest loss of middle class in the country. Obviously our tax system is not progressive enough

    Reply
  2. Walter Carpenter

    “And that’s it. It’s not a narrative of spendthrift liberals bankrupting the state. It’s a narrative of careful investment in Vermont’s future weighed down by a legacy of bad management and an outdated, creaky tax system.”

    This is well put. Thanks much for it. I had not known much about that legacy before Governor Shumlin.

    Reply
    1. John S. Walters Post author

      For that, we can thank the Governor’s incessant triangulation. Plus, the Dems could use some work on messaging; their party structure is mainly focused on internal maintenance.

      Reply
  3. Lee Russ

    Simple has always sold well in the market, and the Republicans sell it constantly. Wrapped in fear and anger, two more hot products. The fact that Vermont’s problems are largely the same problems experienced by the other states, regardless of whether Republicans or Democrats reign, is not nearly as simple as “Cut Spending Now!!!” or “Poor People Steal My Money!!!”

    The last couple of years has been one long, endless stream of PR–public relations or propaganda repeated, your choice–streaming from the few right wing & conservative groups in VT. Ethan Allen Institute may be very small, but they write a lot and the state’s newspapers seem to always find room to print it. Both “Vermonters for Healthcare Freedom” and “Campaign for Vermont” have been busy writing and holding local events. Wendy Wilton and her calculator are very prominent in the media. The “spokespeople” for the business organizations never stop speaking for public consumption.

    The other point of view? Not so prominent. So thank you for this contribution to the reality train. We need all the passengers we can get.

    Reply
    1. John S. Walters Post author

      At the Dem State Committee meeting Saturday, there was a call for more Dems willing to write letters to the editor, opinion pieces, and call in to radio shows.

      I’m not sure how much opinion pieces really move the needle, but it’d be nice to see more liberal participation on available forums.

      Reply

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