Druid Journal

10 responses to “How I’m Voting II: Cracks in the Constitution”

1. 

   Cat C-B

   October 27, 2008 at 6:54 pm

   Jeff, if Prop 1 passes, you will be voting to throw me out of work.

   Massachusetts voters who have not made their mind up on this one might want to visit the Vote No on Proposition 1 website for info on this. I’ll assume that you are familiar with their arguments, though, Jeff, and remain unconvinced, and believe that we can safely eliminate 40% of state revenues (or replace them with local property taxes and with sales taxes, both highly regressive forms of taxation which proportionately fall with far greater severity on those who are at the low end of the scale) without harm to basic services.

   I’d like to quote your own post back to you: “Most people have no expertise in running countries (why should we? We’re working hard enough on their own lives, thank you very much!)…I definitely include myself in that group…I have no time to get degrees in government, economics, military strategy, and the rest…”

   I realize that many proponents of Prop 1 believe that the opponents (including myself and, yes, my teacher’s union) are using scare tactics, and that the massive layoffs we allege will result from repealing our state’s income taxes will not occur. However, I’d like to go on record that I do consider myself an expert, at least in terms of my local district’s budget. That’s possible, despite my lack of a graduate degree in economics, because the district is small and does a pretty good job communicating with its constituents. My district will absolutely be in a financial crisis should Prop 1 pass. We are already discussing such fun topics as midyear teacher layoffs owing to the rising costs of energy and health care alone–add the loss of our state aid to the towns, and we will almost certainly cut not one, but two positions from my department of five English teachers. Indeed, the odds are excellent that we’ll cut three positions, and there goes my job–I’m the faculty member that’s right on the dotted line, so it could go either way.

   The students who are left are going to be in some very crowded classes, too. Oh, not at the level they saw in Boston in the eighties (sixty or more!) but high enough that, absolutely it will affect the ability of the teachers to teach. It’s not just classroom management: I can assign a weekly essay to a total classload of 60–80 students pretty well, but doing the same for a pool of 120–160 students becomes prohibitive. So we’re back to multiple choice education–and on our way on the race to the bottom.

   Proponents of Prop 1 cite New Hampshire as a success story. Though the recent lawsuits on inequitable access to education make that a little bit in doubt, I’m fonder of the fact that, here in Western Massachusetts, we are seeing less job loss than elsewhere in the country. Why? Jobs in education and health care. Both of which, in addition both require an educated workforce and draw citizens who demand access to high-quality education for their kids. Massachusetts is consistently ranked #1 or #2 on the “National Report Card”of public schools, or NAEP; we trade that honor with Connecticut. But New Hampshire, despite its proximity to Boston and Vermont (also strong centers of education and an educated workforce, and hence employers of many of those New Hampshire kids’ parents) scores much, much lower. (How much lower would take me a bit of time to research–I mislaid the journal with the numbers.) Compare NH with other New England States, and you can’t help but conclude, you get what you pay for.

   But maybe you don’t care about all that. Maybe you don’t have kids in the public schools, or think that education should be privatized, or are planning to home school your kids. Even then, you have a problem… it’s that massive sucking sound: the sound of jobs being drained from the state economy at the beginning of a recession–one that bids fair to be long and deep. Whatever your feelings on fiscal conservatism may be, fiscal conservatives will tell you, a recession is exactly the wrong time for a state to be cutting its spending. It is precisely because government can be a buffer against the cuts that the private sector will inflict on an economy in contraction that a recession is absolutely the wrong time to cut government spending.

   You see, the money that goes for my paycheck stays in the state, and is spent here. I buy from your business, or your employers.

   That is, unless I become one of the 30–40% of Massachusetts employees whose funding comes from the state to draw on my unemployment insurance. Especially those who believe that government is overfunded will understand that we’re talking about an awful lot of jobs that will simply cease to exist. Suddenly. And, yes, there will absolutely be a domino effect throughout the economy, and whether or not it is something we could absorb and deal with in times that the economy is strong, it would cripple the Massachusetts economy in the short run.

   I don’t know if you’re one of those “average” voters who would save $3600 a year on your income taxes, or one of the median voters whose savings would be less than half that amount. But you gotta ask yourself, how happy will those savings make you when you are laid off, because Massachusetts decided to join those economic powerhouses of South Dakota and Wyoming in abolishing our income tax. (Yeah, I know: and Alaska–which funds its government with oil revenues–and Florida–which does very poorly on the NEAP and has a very strong tourism and real estate sector to fund its government–Nevada, tourism–etc.)

   I may not have convinced you. I may not convince your readers. But, friend, if you have any respect for my integrity, I hope you will acknowledge that I would not claim to have researched the question had I not done so; would not claim to a level of expertise I did not think I merited; and would not claim to support a position simply because my union agrees with me.

   It is my informed and considered opinion that, even from the perspective those with small-government and Libertarian leanings, this proposition is a very, very bad idea.

   I hope you won’t be offended by my strong position on this subject, nor by my making it plain on your blog. I seldom speak publicly on political matters–check my blog to confirm that!–because I see so many areas where reasonable and informed people may disagree.

   Here, I do not.

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2. 

   Kullervo

   October 28, 2008 at 6:08 pm

   Jeff, you make some really good points here, which is something I almost never, ever say to people who talk about politics and government who are not lawyers, law students, or poli sci grad students.

   I can’t say that I agree with absolutely everything you’ve written here, but I think your points are extremely reasonable.

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3. 

   Jeff Lilly

   October 29, 2008 at 5:14 pm

   Cat,

   I apologize for taking so long to answer — you deserved a detailed response with plenty of references. 🙂

   Cat, first, let me thank you very much for responding on this. Naturally you have every right to post your opinion, and since it’s obviously an informed one, it is all the more valuable. I hope you don’t mind if I counter a few of your arguments. I will not go into great depth, since it’s a local Massachusetts issue and slightly tangential to the main thust of the post; but it is an essential issue, and one that I think is instructive for others who are curious about how states (and States) mismanage the public’s resources. Anyone who would like to see a deeper rebuttal of these points can look here.

   I know quite a bit about this issue, too, since my wife is heavily involved in local politics and this is an important issue this year. The repeal of the income tax is a vital plank of the candidate my wife is helping out with, Keith McCormic (his web site here). Keith is a computer science teacher in the public schools in Holyoke, the state’s poorest city, and he sees firsthand how our money is thrown away. He likes to cite the seven miles of highway known as the “Big Dig”, its obscene cost of construction, the corruption and mismanagement endemic in the project, and the fact that the state could have used that money to pay the lifetime salaries of at least TEN THOUSAND ADDITIONAL TEACHERS. (Do the math! The Big Dig cost $22 billion, and a teacher makes no more than two million dollars in a lifetime.) Think of that! And your district is trying to decide whether to lay you off??

   Clearly the problem is not in how much money the state has, but what its priorities are. We’re not paying too little in taxes. The state is wasting our money.

   But I will address each of your points in turn:

   Will you lose your job? It is true that 40% of the state’s official budget comes from income tax revenue, but the figure is criminally misleading.

   The following numbers come from the Official State Government Statutory Basis Financial Report for 2007, available here, pages 312-314. (This documentation is not publicized, and is not easy to find.)

   First, about $12 billion comes in from income taxes, but actual state revenue is closer to $45 billion. That’s only 27%, not 40%. Why the discrepancy? Because Massachusetts has a lot more money than its “official budget” lets on. There is also “non-budgeted” money, which is essentially a $15 billion slush fund for appropriations bills. You can see it quite clearly in the report: on page 314, only about $30 billion is listed as “budgeted funds expenditures”. The remainder of the money is doled out to various programs without being officially budgeted. It is a system that only a pack of back-room politicians and lawyers could have come up with.

   Second, how much of the income tax returns to the towns in the form of schools, police, and the like? Precious little. In fact, the vast majority of towns in Massachusetts give a LOT more money to the state than they get back. You are in Northampton, correct? In 1999 (the latest figures that could be readily found from the Massachusetts Department of Revenue — again, this stuff is not publicized), Northampton income taxes sent $36.4 million to the state every year, and only $18.7 million came back. In fact, all the services the state provides to the towns totals only about $5 billion. Again, the state has far and away plenty of money to fund the schools, but it is choosing to spend it on other things.

   Concerning states with no income tax: Washington State has no income tax, but it has no special industries like gambling, oil, or rampant tourism to bring extra money to the state. True, it has many rich companies there — but arguably this is BECAUSE there is no income tax. Of course, Wyoming and South Dakota don’t have fantastic economies, but I doubt an income tax would be the way to help them out.

   There are plenty of states that have an income tax, but have rotten schools. I grew up in one. North Carolina’s public schools were terrible because (to be blunt) there was a pervasive cultural bias against educated folks. There were, however, some schools that were quite good, and these were the public schools in the affluent areas of the larger cities, especially the ones near North Carolina’s universities. I think the schools in Massachusetts are good because Massachusetts is relatively urban, affluent, has a culture that values education, and has a lot of universities.

   As for the coming recession, two things.

   First, with a change in the tax laws, there will be more money in the hands of the citizens, to be spent on the local economy. This will encourage businesses to stay and even to move here. (Massachusetts had the second-highest rate of job loss in the country this year — only Michigan fared worse.) In other words, the income tax money would still be spent IN the state, just not BY the state. According to the Beacon Hill Institute (an economic think tank in Suffolk University), while the loss of state income could lead to the loss of state jobs, so many new jobs would be created in the private sector that there would be a NET GAIN of over 80,000 jobs.

   Second, I am indeed a fiscal conservative (since I don’t think governments have enough information to spend money wisely), and I know a LOT of fiscal conservatives who argue quite convincingly that governments absolutely must reduce taxes during recessions (see, for example, this excellent article on the long Japanese recession). A recession, after all, is caused by a misallocation of money: too much money has gone to bad investments. These failing investments need to be liquidated and the money needs to be reinvested soundly. The government does not know which investments are sound; how could it? Economic systems are tremendously complex, and they cannot be managed top-down, any more than a forest can be. People who know their industries, who are on the ground and can see the conditions there, these are the ones who know how to reinvest the money so that the economy recovers.

   So — that was a lot more than I intended to write. I don’t know if I’ve convinced anyone, but I hope I’ve shown two things:

   1) Reasonable people CAN disagree on this issue.
   2) The issue is complex enough that you and I cannot decide it, and frankly, I don’t think anyone could; there is just no way of knowing. And this supports my point: if no one knows the best way to spend this money, then for goodness’ sake let it remain in OUR hands, so that we can look around OUR communities and see where it is needed.

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4. 

   Jeff Lilly

   October 29, 2008 at 5:19 pm

   Kullervo, thank you kindly! I know you are an expert on these matters, so I definitely appreciate your praise.

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5. 

   Cat C-B

   October 29, 2008 at 5:39 pm

   One point (since you’re right, and the issue is off-topic for your blog, as single state specific)–talk to any school superintendent on how much of his/her budget is the result of state aid to cities and towns, and you’ll see that for most districts, the money is very important.

   Holyoke is a special case, because of the Holyoke Mall, a huge revenue generator for the city, so they may be an exception in that category. And computer science teachers may or may not be able to scan budgets that huge anyway–Holyoke is certainly _not_ a small town! But I’ll concede the probability that your favored candidate is at least as well-versed in his city’s funding as I am in my small town’s.

   I live in Northampton, and I am familiar with their finances to a degree–enough to know that the issue facing Northampton schools is primarily one of Special Education reimbursement formulae that are broken–but that’s a Federal issue, with unfunded mandates! (The reason it impacts Noho more than other towns is the presence of Clarke School for the Deaf within the city–lots of families with deaf kids move to Northampton, knowing that the city will be legally responsible for paying the special education costs for their kids, and that the very expensive but still most cost-efficient way to do that will be to pay their tuition to the private Clarke School. Agree with it or disagree with it, it, it’s the reality that Noho must wrestle with every time the special education formula gets refigured.)

   The district I teach in, however, is a small rural one: Gateway. And about 40% of our school funding comes from that state aid to cities and towns. And, as small towns, the lion’s share of local costs are wages to teachers–keeping the schools open.

   So I’m actually pretty well-informed when it comes to the impact of Prop 1 on my small school.

   I also encourage you to seek out what economists, including normally quite fiscally conservative ones, have to say about the probable effects of this particular cut to state revenues at this particular point in time. Even if there is ever a time to abandon a tax structure that is progressive–taxing least those who can afford it least– this isn’t it.

   And, yeah, I’d much rather have had the Big Dig money go to something worthier than Haliburton overcharges! But eliminating the income tax won’t get that money back. And trying to eliminate waste in government by cutting revenues by–I’ll stick to my guns on the 40% figure, because I know that the point of the “slush fund” you refer to is to avoid a bonds-interest problem like the one the state had under Dukakis in the late 80s–such a large figure is like trying to do surgery on brain tumors with a pickaxe.

   Even if you “fix” the problem, the patient isn’t going to be able to recover.

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6. 

   Jeff Lilly

   October 29, 2008 at 6:55 pm

   Cat, I never argued that state aid was not important to the cities and towns, the way things are set up currently. But I was primarily arguing that the state was wasting our money, and had plenty of money to give to the cities and towns, even without the income tax.

   Let’s assume you’re correct, and the state would really lose 40% of its budgeted revenue without the tax. The state would still have a budget of between 15 and 20 billion. The state only sends 5 billion to the towns. This five billion should be among the highest of the state priorities.

   As for Holyoke, it is among only the dozen or so towns that actually receives MORE state aid than it gives to the state in taxes. The districts that get more aid are the poor ones, with low tax bases and — yes — rotten schools. We may argue about whether these regions are better served by the state or by charity, but the fact remains that the state is doing a rotten job.

   I think Gateway — which is another community that gives more money to the state than it gets back — could save money for its citizens if the income tax were revoked, and other taxes were raised. But, again, there is no reason that the state would have to cut aid to schools if the income tax were revoked. There is more than enough money from other sources.

   As for the opinion of economists… Most of them were dead wrong about the catastrophe we’re in now — almost none of them saw it coming. I have no reason to believe their forecasts. The exceptions are those of the Austrian school, to whom I provided a link in my previous comment, and whose opinion I value a lot higher.

   By the way, if the slush fund is to help the state’s bond rating, it isn’t working. Massachusetts has among the lowest bond ratings in the nation.

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7. 

   Emily, MIT Grad

   October 29, 2008 at 9:56 pm

   I couldn’t help but notice that Cat said that 40% of her school’s funding comes from state aid (and most of it is (correctly) spent on teachers). She then went on to say that if the state income tax is eliminated and the state cuts funds straight across the board, that her school would automatically be cutting 40% of the teachers with a 40% cut in state aid.

   But only 40% of her school’s funds come from state aid; if 40% (or, really, the 25% figure quoted by Jeff) of the state aid is cut, then that is only 16% (or 10%) of the total funds to the school. (40% of 40% is 16%; 25% of 40% is 10%. I went to MIT and took statistics.)

   Vital services will be the last to go; regardless of which expenditures you consider to be technically part of the budget (40% vs 25%), the amount of any cuts (should they occur) is far less than the 40% figures being quoted by the No-on-1 folks. Given their misinformation on this simple mathematical point, how many of their other claims can you truly believe?

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8. 

   anne johnson

   October 30, 2008 at 5:10 pm

   Jeff, by choosing not to vote you join the separatist sects like the Amish who find all government matters worldly. I have always admired these people, chiefly because they do not feel their views ought to be foisted on anyone else by law, but rather sought as a personal choice. The separatist sects do not have to enter the military, even in draft time, but they do pay income taxes. They consider it “rendering unto Caesar.” And yes, the ones I know eagerly cash their Social Security checks. They feel like it’s payback, and they’re right.

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9. 

   Kullervo

   November 1, 2008 at 11:50 pm

   I am definitely not an expert. But I learned enough in my first year of law school to know that, like, 90% of Americans just actually don’t have any idea what they’re talking about.

   What I tell people now is this: “The good news is that all the reasons you think the government is fucked up are actually not true. The bad news is that the government is still really fucked up, just for different reasons than the ones you think.”

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10. 

    Druid Journal » Blog Archive » We The People

    November 21, 2008 at 7:10 am

    […] before the day of the 2008 US federal election, I posted this article in which I said I wouldn’t be voting, and listed three major problems with the […]

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