American Forum Op-Ed

TEXAS LONE STAR FORUM
By F. Scott McCown

When the legislative session began in January, Texas faced a crisis. The state was short roughly one-fourth of the money needed simply to do what it was already doing. The Center for Public Policy Priorities was part of a broad coalition that pushed for a balanced approach to the problem -- one that used the Rainy Day Fund in combination with targeted cuts and new revenue.

Others pushed for a cuts-only approach that slashed things like the number of teachers and payments to nursing homes. Initially, the House proposed a devastating cuts-only budget. In the end, with a slightly improved revenue projection and various one-time measures, the Legislature largely funded the Senate’s modestly better, but still damaging budget.

Texas is growing twice as fast as the nation. In the most recent decade, Texas’ child population growth accounted for over half of the child population growth in the entire country, making our state’s education system critical to our country’s future.

Contrary to any spin you’ve heard, the Legislature actually cut spending on public education. And the money the state is spending won’t go as far because of enrollment growth and higher costs.

How does Texas turn this around? We’ll need more than a stronger economy to solve our revenue problems. While the Great Recession created a larger revenue crisis than usual, Texas has spiraled downward yearly with one round of cuts in important services after another because our revenue system doesn’t produce the money we require to meet our needs.

Honest budgeting won’t be enough. The right and the left have criticized the Legislature for using accounting gimmicks, diverting dedicated money, and relying on one-time measures. In reality, though, if our elected officials stopped these budgeting practices immediately, it would mean less money, not more, for Texas priorities. That conservative elected officials feel compelled to resort to these practices even in the face of withering criticism is strong evidence of our state’s desperate need for revenue.

Pitting our priorities against each other is not the solution either. Texas is already one of the lowest spending states in the country, with over three-fourths of everything we spend going to education and health and human services. Saying we could easily pay to educate our kids if we didn’t have to provide grandma health care is as helpful as saying we could easily provide grandma health care if we didn’t have to educate our kids.

Of course, the “shrink-the-government folks” are clever enough not to attack grandma directly. Instead they attack Medicaid. But Medicaid is very efficient, beating the cost of private health insurance.

So when people say we wouldn’t have a problem if we just spent less on Medicaid, what they really mean is we wouldn’t have a problem if we just denied more people health care. Certainly our nation must figure out how to keep people healthier for less money, but providing fewer people health care is not the answer.

If a stronger economy, honest budgeting, and pitting priorities against each other aren’t the answer, what is? Texas must modestly increase taxes. No one is suggesting that Texas become a high tax state, but Texas must raise the money needed to invest in education and other building blocks of a strong economy. As a group, Texans pay low taxes, and as a percentage of our economy our contribution has been falling.

This is not a question of living within our means. Texans have the resources in our trillion-dollar economy to meet today’s needs and build a prosperous future. But until we fix our tax system, we can’t make important investments for the common good.

The issue isn’t whether to increase taxes, but how. Our state’s major tax is a sales tax on goods -- a tax designed for yesterday’s economy when we sold more goods and fewer services. The business tax is also flawed -- redesigned in 2006 to help pay for a property tax cut, it instead leaves us $10 billion per biennium short. And our state has tax giveaways and loopholes galore.

Between now and the 2013 legislative session, Texans must square our shoulders and do two things. First, we must solve some technical problems -- how do we modernize the sales tax, reform the business tax, and address tax giveaways and loopholes so we have a smart and fair tax system that produces adequate revenue. Second, we must work together to build the public will for a tax increase. There’s no other answer. Texans can handle both the truth and the task.
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McCown is executive director of the Center for Public Policy Priorities.
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Copyright (C) 2011 by the Texas Lone Star Forum. 7/11

Riane Eisler

AMERICAN FORUM


By Riane Eisler and Rene Redwood

A financial debt can be paid back. But the debt we’ll owe our children if investments in health, nutrition and education are slashed is irreparable. Investment in human infrastructure – providing the human capacity development for optimal economic productivity and innovation through both government and business investments – is essential for success in the post-industrial economy, and this should be our policymakers’ guiding economic principle.

Rene Redwood

It’s up to us to ask the hard questions: Why are we being told we can’t raise taxes on the rich, but must cut wages for teachers, nurses, child-care workers and others on whom our future depends? There is no evidence that lower taxes on corporations and millionaires “raise all boats,” or that massive cuts in social services have ever helped people in developing nations rise from poverty. The opposite is true. It is countries like Canada, Sweden, New Zealand and Finland that have made commitments to caring for future generations that have risen from poverty to prosperity. And today nations such as Brazil, South Korea, and other “emerging advanced economies” are heavily investing in their people.

Why are we told that cutting social programs is the road to prosperity, when our past prosperity was the result of the very opposite?

At the beginning of the 20th century, the United States was what we today call a “developing country.” Except for the super-rich, our general living standard was abysmal: child and general mortality rates were extremely high, as was poverty. Then we invested in prenatal and child health care such as vaccines; abolished child labor; mandated not only primary, but also secondary public education; and promoted college education through the GI Bill for returning soldiers. These kinds of government expenditures, along with Social Security, Medicare, Head Start and other government programs to care for and educate our people had a huge return on investment for our people and nation.

Today, largely as a result of retrenching in such public expenditures, the U.S. has higher child mortality, maternal mortality and poverty rates than any other developed nation. According to a 2007 UNICEF study, the U.S. ranked 24th of 25 developed countries with children living below the national poverty level. By comparison, the Netherlands, Sweden, Denmark, Finland and Spain topped the list. The U.S. Census Bureau estimates that poverty afflicts roughly one in six American children—some 13 million youths, a figure that’s expected to rise as poverty trends continue to soar.

In 2009, more than 4.4 million single mothers earned wages below the national poverty level and were barely able to supply their children with basic needs. That number of women had increased 6.7 percent compared to the previous year, according to census figures. The kinds of cuts now proposed—especially cuts to programs to help impoverished families with children—will push us down even further.
By contrast, investing in education, health care, child-care and eldercare drastically reduces unemployment, poverty, public assistance, spending on prisons -- and at the same time provides a trained work force and higher tax base. According to a recent NBC/Wall Street Journal poll, 37 percent of Americans believe job creation/economic growth is our nation’s No. 1 issue, and only 22 percent named the deficit/government spending as the top. What’s more, while Americans find some budget cuts acceptable; they adamantly oppose cuts in Medicaid, Medicare, Social Security and K-12 education.

That’s because most of us know that our most important assets are our people. If we don’t invest in human infrastructure, we cannot be economically successful.

We urgently need a realistic long-term perspective on how national and state deficits are calculated. The human capital deficit created by cutting social programs will be irreparable. By contrast, benefits to individuals, families, businesses and society at large from investment in human infrastructure will accrue for generations.

There’s an old saying that an ounce of prevention is worth a pound of cure. Our priorities should be exactly what the “deficit hawks” are putting on the chopping block. Cutting those programs is criminal behavior, not sound policy.


Riane Eisler is president of the Center for Partnership Studies (www.partnershipway.org) and author of The Real Wealth of Nations and The Chalice & the Blade. Rene Redwood is CEO of Redwood Enterprise in Washington, D.C. (www.redwoodenterprise.com)

Copyright 2011 (c) by The American Forum. 5/11

TEXAS LONE STAR FORUM

By Scott Chase

As a small business owner, I am worried our Legislature is going to make unnecessary and deep cuts to public services that local businesses and all Texans need. Yes, our state has a revenue shortfall, but we also have choices about how deal with the shortfall. We can take a balanced approach that uses our Rainy Day Fund.

My fellow business owners in the Oak Cliff Chamber of Commerce are concerned about unnecessary cuts too. Our chamber includes over 600 small business owners in the Dallas area. We were the first local chamber in Texas to call for the State Legislature to use the Rainy Day Fund to help balance the budget instead of the irresponsible “cuts-only” approach that the Legislature is considering.

The cuts-only approach of the Legislature is wrong for many reasons. All businesses, but particularly small businesses, such as the members of the Oak Cliff Chamber, know that spending on education, health care, roads and bridges, job training and the environment is an investment in the economic future of Texas. This investment will result in a more educated, healthier workforce and a modernized infrastructure. The large cuts in these areas being presented by reckless legislators will lead to a less competitive business climate in Texas, lower wage jobs and economic stagnation.

The cuts will affect our economy, not just in the future, but also right away. According to official legislative estimates, the cuts-only approach will also lead to over 300,000 fewer jobs, pushing unemployment up over 10 percent in Texas by 2013. Deep cuts to health care at the state level will mean increased costs of indigent health care for local taxpayers and higher health insurance rates -- both costing businesses.

But beyond the impact on our economy, the cuts-only strategy will have a detrimental impact on our society. Cuts in health care mean less healthy children; cuts in education mean fewer college graduates; cuts in transportation infrastructure mean longer commutes for workers and increased costs to move goods for businesses; and cuts in environmental monitoring mean dirtier air and water. That should not be the future of Texas either.

In the past, when Texas faced budget deficits, our state recognized that a balanced approach was necessary to keep the state moving forward. The Governor, Lt. Governor, Speaker, and Legislators all worked together to find a solution that was in the best interest of all Texans. But, in the current Legislature, our future economic development and the health of all Texans is threatened by the imprudent cuts that do not have to be made.

Using our $9.4 billion Rainy Day Fund is one way to minimize damaging cuts. Texans created the fund by constitutional amendment for the very situation our state is in now -- a revenue shortfall created by an economic downturn. In the first 18 of its 22 years, the fund never had a balance of more than $1 billion. In fact, the Legislature has spent the entire fund several times, including two times approved by Governor Perry. This is safe to do because the fund automatically replenishes from oil and gas severance taxes. Prices for oil and gas are likely to stay strong, rebuilding the fund quickly. Keeping billions in the Rainy Day Fund when we need to protect Texas from the damage of this recession is foolish.

The Oak Cliff Chamber of Commerce has gone on record asking our state Legislature to use the Rainy Day Fund as part of the balanced approach to solving our revenue crisis. Has your chamber of commerce gone on record in support of a balanced approach?

Chase owns his own solo law practice in Dallas and has represented small business owners, as well as public companies, in Texas for over 30 years. He is chair of the Legislative Affairs Committee of the Oak Cliff Chamber of Commerce and has served on the Legislative Affairs Committee of Texans for State Parks.

Copyright (C) 2011 by the Texas Lone Star Forum. 4/11

TEXAS LONE STAR FORUM

By F. Scott McCown

Maybe you’ve heard that our state is short of money because of the recession. Perhaps you think the state can just cut spending or that the problem doesn’t affect you. Well think again.

Our state isn’t just a little short of money. Merely to maintain critical public services, at their current levels, costs at least $27 billion more than we have. In other words, we only have three-fourths of the money we need.

If you try to fill this big of a hole with only cuts in spending, you cut into the state’s muscle and bone.

Instead, Texas needs a balanced approach. That means that instead of only cuts in spending we need to use the state’s Rainy Day Fund while adopting some modest new state revenue measures.

Unfortunately, legislators so far have proposed nothing but cuts. They would rather fire teachers and crowd classrooms and deny financial aid to all new applicants at community colleges and state universities.

Legislators would even make deep cuts to health care for children, the elderly, and people with disabilities. They would reduce payments to doctors, hospitals, and nursing homes -- compromising care and forcing local taxes and private health insurance premiums to go up.

The proposed state budget doesn’t just shortchange education and hurt folks who can’t help themselves, such as the elderly in nursing homes or abused children in foster care. It also seriously undermines the Texas economy -- today and far into the future.
For one thing, the proposed budget would substantially increase unemployment, and not just in the public sector. Cuts this big send a wave of job loss throughout the economy, as the state cancels contracts and reduces payments to people with whom it does business. Before long, folks who think they have no connection to state government are laid off because all of the other newly unemployed are buying fewer goods and services.

We’re talking about a lot of jobs here. Dr. Ray Perryman, a renowned Texas economist, estimates that every job directly lost as a result of state budget reductions takes with it roughly 1.5 more jobs.

The proposed state budget would eliminate over 9,200 state jobs right off the top. Then the chain reaction starts. Reduced state support to school districts, community colleges, and state universities means they too throw people out of work. School districts alone would lay off as many as 100,000 people, one of the state’s leading school finance experts calculates. Using the Perryman formula, this means that merely from reduced spending on public education, 250,000 Texans would be in the unemployment line. That’s enough to push the state’s jobless rate up to over 10 percent (it’s 8.3 percent now). And that’s without even figuring in jobs lost in higher education or health and human services.

The proposed cuts-only budget doesn’t just hurt us today, though. It also fails to create opportunity for tomorrow. When we refuse to raise the money needed for things like public education and higher education, we undermine economic growth and our future as a great state.

If the legislature takes a balanced approach, though, we can both avoid an economic disaster today and promote economic growth tomorrow. The state’s Rainy Day Fund can cover about a third of the shortfall. Some of the rest can come from new revenue, for example, increasing the cigarette tax by a buck a pack. Regardless of what politicians say, raising a little new revenue is vastly preferable to deep cuts in education or health and human services.

Of course, politicians say we have to keep taxes low to attract business. But, businesses care about more than just taxes. They need an educated workforce and a good transportation system, for example -- and Texas is proposing spending cuts so deep that the state’s ability to provide these sorts of economic building blocks would be severely compromised. Besides, Texas businesses already pay lower taxes than in almost any other state, so low that there’s ample room for increases without endangering our competitive advantage.

In the end, our elected officials will do what Texans say they want done. In the last several months, lawmakers have heard mostly from those who offer the bromide that we can balance our budget with cuts alone. But this is one bromide that will kill us. It’s time for the rest of us to make our voices heard. We need to demand a balanced approach.
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McCown is executive director of the Center for Public Policy Priorities.
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Copyright (C) 2011 by the Texas Lone Star Forum. 2/11

AMERICAN FORUM

By Susan Shaer

Are you clued in to the current slashing and burning going on in Washington, DC? The new Congress is trying to settle on a federal budget that should have been voted on last fall. President Obama unveiled his idea for the next budget on Monday. How do you think they are setting priorities? After all, our federal budget shows what we value, doesn’t it? What we care about as a country? So what does our president’s budget care about?

President Obama’s federal budget for our next fiscal year revealed that almost all of Secretary of Defense Gates’ recommended Pentagon “cuts” (really restructuring and a reduction in the rate of increase) will be consumed by increased war spending. The total Pentagon budget planned for 2012-2016 shows virtually no change between this year and last year's projections.

This year, President Obama does face an incredibly steep challenge –growing deficits and debt. The fall election made it clear that fiscal conservatives, Tea Party candidates, and backers demand deep spending cuts to address this. Despite promises from President Obama that everything would be considered for cuts – this is not true for the Pentagon.

Worse, the new Republican-run Congress proposes that this year’s spending be cut back by $100 billion. To do this, they are proposing draconian cuts to everything except military spending.

Yes, we need a strong defense but also a reasonable one. Horrified hoards responded when they learned we sent troops to Iraq without proper body and vehicle protection. Ironically enough, we are currently spending about one hundred billion a year in Afghanistan – the same amount that Congress is proposing we find by cutting needed domestic programs. Critics still remind Congress that we are not protecting our ports or transportation systems here at home. These are not examples of a reasonable approach to defense.

Recent polls show that most Americans would juggle the budget deficit/debt problem differently than what President Obama proposes. Congress, however, does not ordinarily hear this message. They ignore their constituents. On the subject of the military industrial complex, members of Congress heartily agree with the military contractors instead of those individuals who vote for them. Recent analyses acknowledge that military contractors recognized immediately that when the Cold War was over their gravy train had ended. They needed a new strategy for survival and growth. So they developed one by making parts of weapons systems in every congressional district in the country.

There are prices to be paid at every level for this kind of thinking. Job training, science research, higher education, National Institutes of Health, heating aid for the poor, nutrition programs for children - the list goes on and on. These programs will help us to economic recovery. These programs are where we need to invest in order to have a hope of competing in the coming decades. The President’s plan would freeze many of these programs at last year’s spending levels, while the Pentagon is gobbling up way over half of the overall discretionary budget.

We need to stop mindless unchecked spending on bloated Pentagon programs that feed defense contractors while starving real economic and security needs. Let’s be winners with our American values. Do we choose weapons and war, or do we insist on real security, a growing economy and a healthy environment?

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Shaer is executive director of Women’s Action for New Directions (WAND), a national activist organization working to redirect excessive military spending to unmet human and environmental needs.
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Copyright (C) 2011 by the American Forum. 2/11