Wednesday, July 01, 2009

Happy [Fiscal] New Year?

July 1 is the start of the fiscal year for many businesses, as well as the state of California and our neighbor, Arizona. Besides a border and fiscal year, CA and AZ share another thing in common: they will each begin issuing IOUs to their employees, vendors, contractors, and others due to the inability of our elected representatives to agree on a state budget. In fact, 19 states are on the verge of such financial calamity.

Some cheer this as a bit of political anarchy and showmanship. I, however, am not alone in finding this grandstanding mockery of the democratic process to be an irresponsible dereliction of duty.

My friend in Arizona, JR Snyder, Jr., has blogged about his thoughts on the state government shutdown. Although from the opposite side of the political spectrum on many issues, JR and I are agreed on this fact. From JR's blog:
If you choose to take the position that the state needs a shutdown to get it's house in order, know the consequences no matter which side you're on. Social services may be distasteful but the answer is not abruptly halting them without some thoughtful unwinding. The chaos ensuing affects all citizens, because the ripple of destruction will run through the state economy on all levels.

Destruction is not the same as Disruption.

There are good reasons why even a partial shutdown is a very bad idea right now. A shutdown will destroy the state's credit rating. We are already insolvent and any money borrowed to operate will have to be paid back at higher interest rates due to bad credit. The entire state economy is in a precarious position and even a 24 hour shutdown will have a negative impact and far worse if protracted. The law suits against the state alone will hinder us for decades.
Many find these state shutdowns to acceptable because of the assumption that it will only hurt either "welfare queens" or faceless bureaucrats. And wouldn't it be fun to think of this as our way of getting revenge on that idiot at the DMV who kept me waiting in line for three hours?

But, as I commented on JR's blog, the IOUs will be going to more than just these usual political scapegoats. They'll be going to suppliers and contractors to all sorts of state run or funded institutions and offices. The companies that supply food to the prisons, or who have maintenance contracts with the universities, or provide linens to hospitals (etc., etc.).

Those suppliers, in turn, cannot pay their staff with IOUs; they need money. Many of them are small, local businesses that will be forced to lay off staff, and possibly shut their doors for good, if the budget impasse continues for more than a couple of weeks. This will slow down local spending and hurt the economy in communities up and down each of the 19 budgetless states, and far beyond the state capitals or the homes of bureaucrats from the other party.

Demand your representatives do their jobs and pass a budget! Whichever side of the political fence you're on, our legislators have a duty to run their states in a responsible manner. Political grandstanding that costs regular citizens their livelihood is wrong, from the left or the right.


  1. I have been convinced for almost two years that on the opposite sides of the political spectrum, left and right, there is more common ground on ideas and ideals than differences. The only thing that stands in our way is the "social agenda" and cultural differences in perception of the other side. How we overcome that I am still not sure.

    This grandstanding on both sides, as we've both pointed out, is beneficial to no one. It disturbs me that one party seems to see all this as an opportunity to break the backs of some people and the other party refuses to examine the expense and effectiveness of government social programs. Something has to give in the dialogue or we all suffer together.

    A friend who works for the State Department of Corrections at "The Gate" where they receive goods also points out exactly what you wrote: "If a guy risks bringing his truck in here and unloads the local goods we need and receives an IOU...he's not going to have the money to repurchase and won't be back."

    It is not that we aren't just being represented properly by our elected officials. In Arizona the Legislature, governor and both political parties have been engaging in extra-legal activities and out of process. In that sense, these folks are our representatives in name only. Think about that.

  2. JR: Again, I'm agreed with you that we need leaders who focus on where we all agree, rather than exploiting where we disagree. To me, this is yet another shining example of politics over policy.

    One bone I'll pick with your comment, however, and that's the idea that it's all about spending on social programs. That's true only if you use the term in the broadest possible manner, and include such things as decent schools, safe roads, oh, and those pesky little police and fire fighting functions, as "social programs."

  3. This is where I believe that political parties have done a wonderful job of obfuscating what we think each other mean by certain terms. It works for them because it keeps the fold in check.

    A reasonable person shouldn't call police, fire, emergency services, prisons, etc "social programs" yet some do and I disagree with them. In a modern society these have become "services" that serve more than the obvious ones, they also keep society functioning in the sense of "moving things along."

    Where the lines get blurred and people's eyes cross and they lose all when you start talking about general social security welfare style programs. It's a tough issue. My sister is disabled and I'm familiar with the problems. We have to be honest and ask ourselves "has the safety net really worked and can we afford it?" And "what do we do about people who can least take care of themselves and see that they get treated humanely?"

    My principle thought is "Can we call ourselves an advanced civilized society and have people in third world conditions in a first world country?"

    My conclusion is we can't and how to reconcile that with a solution that does not involve a lot of bureaucracy is going to require a lot of innovative thinking and open minds. We are going through a revaluation in our country unlike any other since Reconstruction. You have to go that far back to see when the last real economic seismic shift occurred in the US.

    Lincoln took us direct from a Jeffersonian style confederation to Hamiltonian Federalism.

    We ought not to throw the baby out with the bathwater. Our two states government structures operated fine for decades (California's much longer) and it may need some modifying. The real problem is we haven't been paying attention and look who got elected.

  4. Not sure what sort of "spectrum" you're thinking of which places you and JR at opposite ends. In my opinion police, firefighters, emergency services, roads, etc all belong outside government monopolies and in the hands of private individuals!

    And let's place blame where blame is due: How much of the bankruptcy is from politicking in Sacramento and how much is from unfunded mandates from Washington?


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