Tag Archives: economics

Lock, Stock and Bottom of the Barrel

Like so many Americans, I’ve been waiting for that promised light at the end of the economic tunnel, but I’ve come to the conclusion that all we are going to see for the foreseeable future is the bottom of the economic barrel. Today’s massive stock market drop is, I am afraid, the sort of swing we will see more and more.

Unlike all the pundits, left and right, who know with absolute certainty just why we can’t shake off the recession, I have a sneaking suspicion that it is a tangled and complicated number of things, some of which we could control if we had political will, some of which is global in nature and difficult or impossible to manage, and some of which is structural. The structural elements can be ameliorated but not reversed.

The question that scares me is this: if, in fact, my suspicions are correct and the economic picture is going to be fairly bleak for several years, what effect will that have on our political and social systems? We don’t have a very good track record of dealing rationally with economic adversity.

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State Workers Pay Taxes Too

During a discussion the other day, a SPEA staff member made a point that seems to be lost in the contending, highly ideological arguments about the standoff in Wisconsin. She noted that public employees are also taxpayers, and that the Governor’s insistence that he is acting in the “interests of the taxpayers” didn’t seem to include the interests of that particular subset of taxpayers.

Her observation has just been quantified and amplified by Robert Russell, a Wisconsin state economic analyst, who pointed out that state workers are not only taxpayers, but consumers.

According to Russell, if public employee salaries are cut through increased withholdings as Walker is proposing, by an amount large enough to fill the $137 million budget gap, the resulting drop in consumer spending will lead to: 1) a loss of over 1,200 nongovernment jobs; 2) a loss of about $100 million in business sales statewide; 3) a loss of nearly $35 million in personal incomes of nongovernment employee households; and 4)  a loss of nearly $10 million in state tax revenues.

This is not about economics. (Indeed,  Governor Walker seems blissfully ignorant of basic economics.) It’s about ideology, hubris, and political payback.

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