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Saturday, July 28, 2012

"Stay the Course" isn't working

By Pat Crowley in RIFuture.org

If you are of a certain age “Ferris Bueller’s Day Off’ is an iconic movie.  Reading about the fretting going on in the media about the latest edition of CNBC “Business Rankings” I can’t help but think about the movies’ opening sequence when Ferris’ parents, thoroughly convinced he is sick (once again) let him stay home from school and as soon as they close the door to his bedroom and are safely out of ear shot he shoots up from under the covers and says:




Five years ago, CNBC ranked Rhode Island 48th in the country.  At the time, our unemployment rate was less than half of what it is today, 5.2% for July of 2007.   

In the legislative session that followed, there was a progressive proposal to revamp the tax structure of the state, known as the Economic Growth and Fairness Act of 2008.  

I’m not interested in re-arguing those ideas here, what I am interested in is the response to the bill from the corporate class in Rhode Island.  Writing in The Providence Business News, Greater Providence Chamber leaders Laurie White and Ed Cooney specifically referenced the CNBC ranking as a reason to kill the bill.  

But more interestingly, they ended their essay with these words:

Protect our jobs. Fight for our ability to compete. Stay the course on tax reform.

I could be snarky and ask “Whose jobs?” but I won’t.  But I will point out the current unemployment rate is 10.9% according to DLT. But it is the “stay the course” line that is intriguing to me for two reasons.
  1.  We have stayed the course.  And it hasn’t worked.
If 5 years ago we were ranked near the bottom in the country we are now at the bottom (again, assuming these lists matter, which I am not willing to concede, but for arguments sake….).  

In those 5 years, we have seen the Flat Tax option for high income earners made permanent, cuts to the income tax, two rounds of draconian pension reform to public sector workers including teachers and state employees, an erosion of collective bargaining rights in the public sector, cuts to social services in the state budget, aid to cities and towns in the state budget slashed and slashed again, and the escalation of the property tax cap at the local level thanks to the 3050 law of 2006.

In other words, state mandated austerity for the last five years and our “Business Climate Ranking” declined.  Now, we can believe the corporate class and say “stay the course” or as more recently stated “give the cure more time to work” or we can wake up to the realization that Ferris isn’t sick…he’s skipping school.

2.     When did Tax Reform Start?

When Ferris says “They bought it” who is “they” in this case?  The legislature? The Press? Both? Maybe…. you can help decide.  See, the theme in the debate over the proposal in the last legislative session to raise income taxes on the wealthy centered in part on giving recently enacted tax cuts a chance to work.  

SOME local media outlets (I won’t link to them, you can find them on your own and decide) fell for the argument hook line and sinker that tax reform just started in 2010.  

That’s why when Chamber Lobbyist Kelly Sheridan wrote in The Providence Journal  “It would extremely unwise to dismantle the 2010 reform before the first returns are evaluated” it was a theme repeated by members of the legislature AND, unfortunately, members of the media.

But wait a minute: Didn’t the Chamber use the exact same argument in 2008 about letting tax reform take affect so that it can be evaluated before it is changed?  Yes, as we see in the 2008 piece in PBN referenced above.  They also did it in 2009, when there was a strong push to repeal or reform the Flat Tax for high income earners. That is where the line “give the cure time to work” comes from. (Of course in 2009, we were still ranked in 48th place by CNBC).

Why does it matter?  Because if the Chamber and the powerful corporate special interests are allowed to pull the wool over the media and the politicians eyes every year by saying “hey, we just implemented this last year, let’s give it a shot” most people are good natured enough to say “well, sure, why not? 

We’ve got to try SOMETHING.”  Well, we’ve been giving them their shot for the better part of a decade, and if only people would remember that they keep using the same argument that “this time, things will work out” then maybe we won’t fall for the sales job. Again. Maybe?  Hopefully? Hello? Bueller? Bueller? Bueller?

Look, I get it.  Ferris Bueller is an endearing kid.  He’s funny, likeable, smart and in a 1980’s John Hughes movie kind of way showing a safe way to “fight the power.”  But it isn’t real.  

And neither is the line of argument put forward by the corporate class in Rhode Island that we need to “stay the course” or “give the cure time to work” on austerity.  Hopefully Rhode Island can turn things around – but we will never do it by continuing to run the same plays and chase ideas that continue to drive out economy deeper into a ditch while enriching those at the top of the economic ladder.  You want a cure that works? We can start by stopping doing the things we know that don’t work.