History Sez: Budget surpluses lead to program cuts

Experience contradicts a recent Yakima Herald Republic piece that began, "When the state Legislature convenes Monday, you can bet that $1.4 billion surplus is going to be burning a hole in its collective pocket -- despite promises from everyone from the governor on down to be 'prudent' .... Every special interest in the state will argue that its desire for more money and new programs will best serve the young/ old/ poor/ underprivileged/ needy/ disadvantaged/ most deserving." cite

Wrong.

In fact, both at the state and national levels, and with the enthusiastic support of the wingnuts at the Yakima paper, short-term budget surpluses have been turned into long-term program cuts. How? By cutting taxes irresponsibly. Tax cuts have swamped spending increases. Since taxes are simply the financing mechanism for public goods, when you cut taxes, you cut public goods.

(What used to be one of my favorite columnists, Peter Callaghan of the Tacoma News Tribune, pulled out the same stereotype in a column in mid-December, although I see he recently has attempted to finesse the issue, saying the legislature "and initiative writers" have historically "spent" surpluses in the form of tax cuts.

At the national level, the budget surplus passed on to the Republican power elite was transformed overnight into tremendous tax cuts. The cuts were portioned out as an early snack for working families followed by an unending series of banquets for the already wealthy. These tax cuts have been absorbed primarily by borrowing, that is, shifting the taxes plus interest to our future selves and after we die to our children.

The Radical Right has sold the notion that we can have the house, but paying the evil mortgage is optional. In order to maintain this myth, we are literally taking out more loans to make the monthly payment. When the day arrives that we need to pay both our current tax bills and that from these Bush giveaway years (plus interest), we will be facing some very tough choices.

Now these self-created budget deficits have offered Republicans an opportunity to grandstand, trumpeting as "fiscal responsible" cuts in social programs, student loans, Medicaid benefits, and child support enforcement (of course). These cuts are short-sighted and mean, and are driven only by ideological myopia. Rescinding the tax cuts for the rich is the fiscally responsible move.

Here in the state, we are all familiar with the Eyman initiatives which sold the voters "painless" tax cuts. They were painless only as long as a temporary surplus numbed our nerves. That anesthetic wore off quickly and we are still suffering. (Pity the cities and transit agencies whose tax base was lopped off. The state filled in its own holes with sin taxes, but has left local agencies to bite the bullet.)

The $1.4 billion surplus is an uptick in a downward trend. It needs to be allocated along the lines of Gregoire's supplemental budget proposal -- reserving the bulk of it against the shortfalls ahead. This can be an object lesson on the inadequacy of the state's revenue architecture. By following the governor's lead, the Dems can demonstrate which party is fiscally responsible in both Washingtons and make selling responsible tax reform much easier when the time comes.