Friday, October 27, 2006

A great illustration of why we need a spending limit

I was asked to stand in for Ron Saxton last night at a governor candidate forum at Lake Oswego High School in front of a couple hundred students and parents. Standing in for Ted Kulongoski was the state representative from the area, Greg MacPherson.

During the forum MacPherson made a statement that I still have trouble believing he said it. He was talking about keeping the corporate kicker to put in a rainy day fund, and telling the students how bad a deal Measure 48 would be. Then he explained that "Oregon already has a spending limit." How so? Brace yourself:

"State spending is limited by how much revenue it brings in."

There you have it. If there was ever a more forthright admission that the Democrat philosophy is simply to spend every dime that comes in, I have yet to see it.

When he made this statement I wrote it down so I could read it back when it was my turn. I said that this is precisely the kind of thinking that has gotten us into the fix we are in. If we spend every dime, not only will we never have a rainy day fund, but anytime the pace of revenue growth slows, the government and the school s will be in fiscal crisis.

It think the audience fully understood this rather obvious point, but it seemed lost on MacPherson, who appeared utterly unabahed as I made it.

As I drove home, I thought about the political environment that allows an otherwise intelligent person such as MacPherson, who by all accounts is a bright light in the Democrat caucus, make such a ludicrous statement.

The fact is, Democrats in Oregon can say the most ridiculous things and are almost never challenged. They avoid any arena in which they may be challenged on their positions (such as the Lars Larson Show.) The media literally never makes them defend their illogic. They say outrageous things all the time and never are held to account.

The cumulative effect is that the logical faculties of Democrat politicians are atrophied, or they never get developed in the first place. How else to explain an intelligent guy like MacPherson making such a ridiculous statement and then not even being embarrassed?


Anonymous said...

One side of the democratic logic that carries from MacPherson's point is what needs to happen when revenue growth slows.

The state has a spending limit and the rainy day fund needs to really be the ability to raise funds. Specifically an easier tax increase ability. Maybe a "temporary" sales tax.

Son of the Beach said...

No, no, no -- we certainly do not need an "easier" fund raising (taxing) ability. Our fiscal problems all result from overspending NOT undertaxing. And besides, a "temporary" sales tax is exactly the wrong approach to the problem -- one, because no taxes are EVER temporary -- and two, because it does not address the overspending problem -- which is -- income tax revenues are tied to the fluctuations in the business cycle and therefore spending all revenue available at the top of the cycle puts the state on a spending trajectory that cannot be sustained when the economy slows and less revenue is available to fund the overspending.
The obvious solution is to NOT SPEND every dime available in good times and instead stash some good-time revenue away in a rainy day fund to be available when the cycle slows -- a process known as "smoothing" or anticipating inevitable fluctuations in the business cycle.
Unfortunately, elected reps are under too much lobbyist pressure to spend every dollar available, and this is precisely why we need a REALISTIC spending limit that forces legislators to create this "rainy day" fund for cyclic smoothing. Successful businesses (and ordinary people) use this tool effectively every day, but governments are as yet very unsophistaced in their fiscal policies.
Incidentally the seven percent spending trajectory Oregon is now on will QUINTUPLE state spending in only one generation (25 years). Keep smiling.

Daniel said...

The truth is there is so little actual talent demanded from Democrat politicians in Oregon, that we can have people like Dianne Linn and Eric Sten have long and successful careers even after multiple screwups.

Anonymous said...

...and like that Meth addicted Corvallis Democrat Representative who waas boinking the Capital Bldg janitor, Oregon really has very poor state leaders.

And the Republican side has some real losers as well, just not as many.

And no, extra money thrown at this problem won't help.

gus miller said...

Oregon actually has a spending limit enacted in 1979. It has never been applied as it is overrided by a simple majority of leglislative votes.

Measure 48 could not be written to include a spending cap and a rainy day fund because of the "single subject" rule imposed by the courts upon ballot measures that amend the Oregon constitution.

We should be pressuring legislative candidates on both sides of the aisle to enact a rainy day fund as their first order of business in the upcoming legislature. A rainy day fund is an absolute must if M48 passes and a must if M48 doesn't pass given Oregon's recent history of fluctuating revenues dependent on the strength of the economy made worse by the proclivity to spend every last dime when times are good.

Anonymous said...

Measure 48 is dead on arrival. How many times to Oregonians need to reject your loony ideas to turn our state into a third world economy.