June 18, 2011
Another Rabbit Hat Budget
The late-Friday release of the RI House's budget proposal is in keeping with the overall impression one gets at first glance. At least Gov. Chafee's budget tried to do something. The General Assembly looks most inclined not to ruffle the feathers of any significant (read: "powerful") constituencies, and thereby continues the ratcheting effect that has brought the Rhode Island to its current condition.
Most sharply, that observation arises from the high-profile matter of the sales tax: with no reductions in rates, but with nonprescription drugs, digitally downloads (including software and other downloadable goods, travel agency services, and medical marijuana added to the list of taxable items. One can discern that the budget is a fraud simply by the fact that no controversies are immediately sparked, as if there really is no systemic problem with the way in which Rhode Island does business.
That mirage comes at the cost of gradual dehydration of our lives, as it were. Yes, that means the incremental increases in taxes and fees. It also means the way our laws affect our lives. If you find yourself unemployed, for example, the amount of the unemployment payments that you can expect are set to decrease by about one fifth. Currently, the weekly payable benefit rate is 4.65% of your highest-paid calendar quarter. Thus, if you were earning $45,000 per year, you would receive $523 per week when unemployed. This budget decreases that percentage to 3.85% over a couple of years such that, if you lose that same job after July 1, 2014, you will receive $433 per week.
What if you decide to join with an acquaintance and start a new business? Well, the budget avoided implementing combined reporting for multistate companies (although it greased the skids for future imposition). But it also adds limited liability partnerships and limited partnerships to the list of entities subject to the state's $500 minimum corporate tax. Thus, the risk, expense, and complication of directly growing the state's economy from the bottom up is increased at a time when people not employed by others are being pinched by high unemployment and (potentially) decreasing unemployment benefits.
If the General Assembly had attempted to pull a rabbit from its magic budgetary hat, it might have sparked some outrage and effected change (or, less likely, actually changed the state for the better). Instead, the trick is to create the illusion that nothing significant has been done at all. The danger is that, when it comes time to get off the stage and go about the business of life, the people of Rhode Island may find the rabbit dead, and of a communicable disease.
Have they taxed moving trucks yet? Now might be a good time to invest in one.
Posted by: Dan at June 18, 2011 10:49 AMSurely, you are not surprised by this annual kick-the-can down the road approach.
Unfortunately, our General Assembly can count on a generally ignorant, appathetic and compliant public.
And even when they run up against what should be a countervailing force like Anchor Rising, they still confidently plow ahead with their destructive policies, as they know they can ultimately coopt the likes of Anchor Rising by employing their most lethal tool ...the suggestion that we should "talk about the issues, study the issues, noodle the issues", but never actually address the issues.
Better to engage in endless polite debate rather than call a spade a spade and address the issue in a forceful unambigous way.
The best example was former poster George Elbow correctly taking Andrew to task for buying into Bob Walsh's nonsensical Pension assumptions (recall, the "Walshian Assumptions"), most specifically the 8.25% return assumption.
Andrew, in an naive effort to appear open minded and objective, allowed himself to be coopted into Walsh's foolishness.
Rather than pushing back hard and explaining the stupidity of Walsh's arguments / assumptions, Andrew preferred to "dialogue" with the likes of Walsh and ban the likes of George Elbow.
Well, we all know now, thanks to Gina, that George Elbow was exactly right and Bob Walsh and his compliant "watchdog" Andrew were wrong.
Again, rather than putting out Pension Simulators using Walsh's unrealistic and unsustainable assumptions, thus showing a result that appeared to be sustainable, Andrew should've / could've educated the great unwashed with regard to how absurd the Pension system was and how dangerous the likes of Bob Walsh are to the long term fiscal survival of the state and its productive taxpayers.
Oh well. Live and learn.
Posted by: Fan of George at June 18, 2011 4:03 PMSurely, you are not surprised by this annual kick-the-can down the road approach.
Unfortunately, our General Assembly can count on a generally ignorant, appathetic and compliant public.
And even when they run up against what should be a countervailing force like Anchor Rising, they still confidently plow ahead with their destructive policies, as they know they can ultimately coopt the likes of Anchor Rising by employing their most lethal tool ...the suggestion that we should "talk about the issues, study the issues, noodle the issues", but never actually address the issues.
Better to engage in endless polite debate rather than call a spade a spade and address the issue in a forceful unambigous way.
The best example was former poster George Elbow correctly taking Andrew to task for buying into Bob Walsh's nonsensical Pension assumptions (recall, the "Walshian Assumptions"), most specifically the 8.25% return assumption.
Andrew, in an naive effort to appear open minded and objective, allowed himself to be coopted into Walsh's foolishness.
Rather than pushing back hard and explaining the stupidity of Walsh's arguments / assumptions, Andrew preferred to "dialogue" with the likes of Walsh and ban the likes of George Elbow.
Well, we all know now, thanks to Gina, that George Elbow was exactly right and Bob Walsh and his compliant "watchdog" Andrew were wrong.
Again, rather than putting out Pension Simulators using Walsh's unrealistic and unsustainable assumptions, thus showing a result that appeared to be sustainable, Andrew should've / could've educated the great unwashed with regard to how absurd the Pension system was and how dangerous the likes of Bob Walsh are to the long term fiscal survival of the state and its productive taxpayers.
Oh well. Live and learn.
Posted by: Fan of George at June 18, 2011 4:03 PMHi, Fan of George:
Nice try. You're not convincing me that 1) you honestly believe that Anchor Rising has contributed to the continuation of bad government in Rhode Island or 2) that you didn't recognize Andrew's academic exercise for what it was. Nosireebob. You're much too smart for that.
So. What's the problem? What's given you this case of DanYorkeBecomesMr.HydeAndNitPicksTheGoodGuys-itis?
This budget proposal reminds me of the Trojan Horse ... late Friday delivery, only to be amended to what they really want next week ... after the public has already concluded that "WOW", they finally have done something to fix things!" ... NOT!
Posted by: Andrew - SK at June 18, 2011 8:10 PM"This budget proposal reminds me of the Trojan Horse ... late Friday delivery, only to be amended to what they really want next week"
One thing that for sure will GO is the end of longevity. They can wait till next year to do it though because the faux cuts don't take effect till July 2012.
So, for now, the longevity "cuts" make the out year deficits look a bit better while they cab surgically excised in next June's budget..
Abracadabra!
My assumptions, then and now, were based on the actuarial data provided by the state. As even the Journal noted, I supported the decrease in the expected rate of return assumption from 8.25% to a more realistic 7.5% long term average.
Many people here question my politics, but generally only the anonymous or uninformed question my math. And, by the way, there has never been an increase in pension benefits in the almost two decades I have been working for labor.
Posted by: Bob Walsh at June 19, 2011 7:35 AMAnd, by the way, there has never been an increase in pension benefits in the almost two decades I have been working for labor.
Posted by Bob Walsh at June 19, 2011 7:35 AM
HAH! Pure sophistry.
The COLA's raise the pensions every single year-inflation or not for Plan A.
Also, the health care costs go up roughly triple the rate of inflation-every year.
That is why the teachers pay 9.5% and their "partners", we the taxpayers (aka suckers) pay 30%-soon to skyrocket to 50% without real changes.
Oh and you can ask your scumbag commisars Crowley and Linedecker why we post anonymously here-and for good reason.
PS-Did anyone break the news to you yet that a toll on 95 is ILLEGAL without Congress changing the law?
Talk to Boehner!
LOL
" there has never been an increase in pension benefits in the almost two decades I have been working for labor."
Pre-retirement? No. Then again, something that is so (some would say obscenely) generous in the first place really does not need to be increased.
The GA is going to do for the budget mess what it will do for the pension mess.....is everybody worried yet? Have they ever proved themselves competent? It's impossible for them to make the correct decisions when they are so beholden to what got the state to this point thus far. That would be the "isms" brothers...cronyism,nepotism and unionism.
Posted by: ANTHONY at June 19, 2011 11:07 PM