The economy, the budget...and the Cubbies

Commentary by Tom Reynolds:

Let’s add some perspective to recent statements in the Ithaca Journal.

Some believe that Franklin Roosevelt’s New Deal ended the Great Depression, which started in 1929 and ended sometime between 1941 and 1946.  At best, that’s 12 years!  Is that an example to follow?  If we imitate Roosevelt’s policies, should we expect the current recession to end in 2020?  

Roosevelt’s policies were as effective as the Chicago Cubs’ management strategies.  It took a World War to overcome Roosevelt’s policies and the same World War to get the Cubs into a World Series.

In 1920, the US economy took the biggest, single-year drop in history; worse than any single year in the Great Depression.  In July 1921, (just 1 ½ years after that depression started), the recovery began.  What did the US Government do?  Nothing!  How come that Depression doesn’t get mentioned?  

Actually, the Secretary of Commerce, Herbert Hoover, was planning a massive intervention but the 1921 Depression ended before he could intervene.  Unfortunately, he had more time in 1929.  

Hoover was probably a Chicago Cubs fan.

Some people justify taxing the rich as if higher taxes have no effect on the decisions of the wealthy.  If so, why hire tax accountants and tax lawyers?  Have you ever heard of a tax preparation service advertising for business on the basis of calculating your “fair share” of taxes?

Some deny that union donations control the government.  In political donations since 1989, twelve of the top twenty donors are unions.  They are #s 2, 3, 7, 8, 9, 10, 11, 12, 13, 14, 17, 19.  Who is #1?  ActBlue, a Democratic Political Action Committee, made the highest total donations since 1989 even though it only came into being in 2004 (www.opensecrets.org).  In the 2010 races, ActBlue was also #1, giving more than twice as much as the # 2 donor, SEIU.

Now it’s the Tea Party that’s controlling the government!  Could SEIU be an acronym for the Tea Party?

“Greedy bankers” are blamed as the cause of the 2008 financial crises that started the recession.  Certainly, bankers found creative ways to unload the bad debt that they had accumulated.  But the root cause was the bad debt, not the bankers.  Where did the bad debt come from?  The primary answer lies in the federal government using the “Community Reinvestment Act” to force bankers to make loans they did not want to make to people that could not repay the loans.  No “Community Reinvestment Act” and, probably, no financial meltdown and no recession. Reagan was right; government is the problem!  

Reagan began his career as the radio voice of the Chicago Cubs, so he learned to recognize bad ideas very early in his career.

NY politicians decry how hard it is to cut the proposed budget by $10 billion to balance it.  The official state budget is about $130 billion, but there is another $50 billion in Public Authorities that should be—but don’t—get counted in the budget.  Add them together and the proposed budget was $180 billion and needed to be cut by 5.6%. In my 36 years of preparing budgets at for-profits and not-for-profits, the original “proposed” budget was ALWAYS more than 5.6% out of balance.  My experience is the norm, not the exception.  Balancing a proposed budget by less than 6% would have been considered a walk-in-the-park. 

Wait!  Last year, NY State tried to close state parks; maybe that’s why balancing the budget wasn’t a walk-in-the-park.  Again, Reagan was right; government is the problem!  

From 2001 through 2011, the NY State budget increased by $50 billion.  Had it increased by the rate of inflation, it would only have risen by $20 billion.  So the increase was 2 ½ times the rate of inflation!   And remember, the $10 billion they now had to “cut” was over-and-above the $30 Billion that was over-and-above the rate of inflation. 

Perhaps the solution to our economic problems—the national ones anyway—is to stop finding our political leaders in the same city that brought us the Chicago Cubs.

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tvm—with my apologies to the original artist (although, really, the same graphic could be used every year):

A version of Tom's op-ed appears in today's Ithaca Journal.