[img_assist|nid=39345|title=Dog of war|desc=|link=none|align=left|width=150|height=130]This was predictable. Now that the national economy is beginning to perk again, even if ever so slowly, the state estimates that revenues are going to be considerably greater than expected over the next three years: $636 million greater, in fact. So, as Scott Walker says, are we still broke? Or just less broke? And if we're less broke, doesn't that mean Walker no longer needs to be so heartless? Nope. That huge upturn in projected revenues represents about one sixth of the imagined structural deficit Walker has set about to close. It's a shell game, though, because the much-hyped $3.6 billion deficit is based almost entirely old revenue projections along with what state agencies asked to spend before the new administration even began preparing its biennial budget. The fact left largely unsaid is that no Wisconsin governor or legislature ever gives agencies what they ask for. The agencies always get less. Because, knowing they'll get less, they pad their requests by more than they need. High school civics students know this, but news media apparently do not.
Thus, the real structural deficit is real, but less than the advertised amount. Maybe by as much as ten percent less, or even more. Add in the new revenue that's arriving and the spending gap shrinks further. Stop cutting corporate taxes and refrain from re-opening the loophole that lets state businesses pay their taxes in other states, and it shrinks some more. Convince state workers to take a few furlough days without pay, as Gov. Doyle did, and it shrinks some more. And so on.
In short, you can balance the budget, as previous governors did, by tweaking here and there, and by resisting the urge to give away the store. What you do not need to do is use the inflated spectre of a "we're broke" scenario to inflict major changes in social legislation while cutting support for the needy and public education and the environment and more. But if you're a right-wing ideologue like Walker, that's what you set about to do anyway. The deficit becomes a handy excuse to impose your will on all manner of programs and policies that have nothing to do with the deficit, which is in part an unreal abstration in the first place. Hence, voter ID. Hence, union busting. Hence, clawing back mass transit aids and school aids. Hence, nickel and dime tactics against state prosecutors. Hence, taking money out of health programs serving seniors and the disabled. Hence, robbing the poor.
You didn't need to do all those things even before the $636 million in new revenue appeared on radar. And now you certainly don't need to do all those things. But the state's chief executor says no way is he going to claw back any of the draconian cuts he has in mind for public education, public employee compensation, BadgerCare or anything else. Nope. He's still going to cut as much as he originally planned.
Which, if true, means that, logically, Walker will end up with a surplus. Now, maybe that's a political plus for him and we should just deal with it. And maybe he intends to actually put a lot of the new money into a real and meaty rainy day fund to even out future dips and spurts in revenue.
More likely, though, based on his history, Walker's going to pull a George W. Bush. He's going to give some of that money right back to taxpayers. Not to lower income taxpayers, though. Nope, he still plans to cut the Earned Income Tax Credit that helps out the working poor. Rather, Walker will, if true to form, give the money to wealthier taxpayers and businesses in the form of tax rebates and subsidies. Why? Because that's what he thinks works. Economically speaking, he's a supply-sider, years after that Reaganesque policy was denounced as unworkable by Reagan's own budget director.
So if you raise taxes on the little people, and cut taxes for the fat cats, and you end up providing way less services like basic education and pollution control and mass transit, what's that called? Big spender. Because it doesn't matter that Walker balances the state budget if in the process he wrecks the state for most of its residents. Hell, previous governors of both parties managed to balance their budgets despite heavy structural deficits without completely gutting the social contract. Walker promises to balance the budget and do it in a way that wrecks the state. It's a two-fer!
Put another way, Walker's methodology is hugely inefficient. He is saving money, but only by incurring what economists call "opportunity costs." It works like this: Let's say you come home after a hard week at the office with a C-note in your pocket. That's what you and your family are going to live in the following week. Ninety out of that hundred dollars is already committed to rent, heat and electricity, insurance, food and other necessities, like the rising cost of your weekly bus pass.
The remaining ten dollars is discretionary income. You have many options as to how to use the money, but that doesn't mean you can be a spend thrift. You might want to put in the checking or savings account so you can more easily pay your taxes next year. Or you might want to create a revolving fund in case your refrigerator breaks down or your kid needs braces. Or you might want to do something nice for your spouse's birthday.
The point is, you can probably only do a little of each of these things or just one thing. The choice you make is called an opportunity cost. Pay ten dollars towards the kid's braces and you give up the opportunity to spend ten dollars on your spouse's gift. That's a lost opportunity. Short of borrowing, or somehow earning more money in the same time, you will face these opportunity costs every time you come up short.
Walker's world view guarantees huge opportunity costs for Wisconsin residents. When he doesn't spend on improving vital infrastructure or better health care or better schools, he may save money but he incurs huge opportunity costs. It's like the Midas Muffler man says: "You can pay me now, or you can pay me later." Walker, for example, rejects $810 million for high speed rail, so jobs are not created. Other states get the money, improve their economies with new jobs and associated economic development, and become nicer places to live and work, meaning jobs flow there instead -- perhaps those jobs even flow from Wisconsin.
Yes, Walker "saved" the relatively tiny cost of maintaining the new rail line after it was built. But he incurred several billion dollars of opportunity costs in order to do it. Those include not just the near billion for the project itself but also the other several billion in spin-off private developments, energy savings and quality of life investments that likely would have ensued.
Penny-wise, pound-foolish. Walker is revealed not just as a big spender, but as a cynic. He'd cut unemployment insurance if he could get away with it politically because, as he just said, he thinks getting an unemployment check makes you work less hard to find your next job. A famous man once said that a cynic is a person who knows the price of everything and the value of nothing. Allow me to introduce to you Governor Scott Cynic.
But it gets worse, because the very first thing Walker did, before gutting state programs and cutting worker pay, was to hand over many tens of millions of dollars to businesses in the form of new corporate tax breaks. Because he's a supply-sider and believes that if you cut taxes on businesses, they'll create more jobs and the economic benefits will "trickle down" to average citizens.
Bull. Spit.
Even Reagan's budget director, David Stockman, now says the supply-side wet dreams of USC economist Arthur Laffer (whose sketch on a restaurant napkin became known as the "Laffer curve") were total fantasies, and remain so. You see, by cutting taxes, you somehow magically increase revenue! Not really, as Stockman and many economists have since made clear. That didn't stop George W. Bush from taking a nine-figure US budget surplus under Clinton and turning it into four trillion dollars worth of debt in a stubborn nod to Laffer and Reagan.
Reality isn't stopping Walker, either, and it's unlikely to stop the crazed ideologues in the state's Republican Party, either. Because they are completely convinced they're right. And when it turns out they're not right, and that the state is falling further into economic disarray, they won't back off (although even Reagan, in the end, did back off and raise taxes lest the country go into an economic tail spin; Walker and other admirers conveniently forget that). No, instead, the GOP faithful will just double-down on their bet. You see, the rationalization of all supply-siders and deregulators when their plans fail is to proclaim that they just didn't go far enough. So rinse and repeat. More tax cuts! More degulation! Oh, and also: More intrusive government snooping into your private lives, bedrooms, and uteruses.
More than a year or two of Walker and the GOP majorities, and this state is going to be in, as Bush's dad famously said in a slightly different context, "deep doo-doo," as voodoo economics work their ugly magic.
The difficult task of progressives is made harder by the fact that these right-wing ideologues are completely sure of themselves and pay no attention to facts or logic. If they were going over a cliff in an out of control car, they'd be arguing among themselves whether to push the accelerator pedal down half way or all the way. So don't try arguing with the other side. Just work hard every day to dis-elect and defeat them. And the sooner the better.