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Finding the Balance Proves to Be Elusive

posted in: Weekly Commentary 0
By Lowell L. Kalapa

     The headline blared the ugly news: “670 Jobs to be Cut.” The folks downtown beat their breasts and shook their heads and agreed amongst themselves that this is just another sign that Hawaii’s economy is slipping even deeper into a malaise.

Over at the State Capitol, some lawmakers were hearing proposals to raise the general excise tax so state government wouldn’t have to lay-off workers. Is there something wrong with that picture???

No doubt the reason the proposal to cut the tax burden on residents and raise it on tourists is meeting with such cynicism and resistance is that very fact: that government has not done much to downside itself. Yes, elected officials proudly point to eliminating positions across the board, of course they rarely mention that those positions were vacant anyway. And of course they don’t mention that one of the first cuts they made was to contracts with private agencies known as purchase of services.

 

 

  …in some cases some public officials continue to deny that government has grown too large.        No doubt there is a need for public services but there is a limit on what taxpayers and more importantly, what the economy, can afford in taxes. However, it seems that elected officials have a difficult time in deciding what is the proper balance. In fact, in some cases some public officials continue to deny that government has grown too large. In fact, one recent memorandum indicated that government spending was up because of the growth in unemployment and welfare expenditures because of the poor economy.

To a large extent, this is the thinking that seems to be driving public officials, that all of the public spending can be justified on the basis that there is a public need. Be it welfare, crowded prisons, high unemployment, crowded classrooms, and so on, each program or project appears to have its constituency. With perhaps the exception of the money committee chairs, legislators are obligated to various constituencies and become advocates of those specific special interest groups. The result is that no one wants to cut their friends out of the state spending pie.

This makes the job of the money committees even more difficult as lawmakers entreat the powerful chairs to spare their particular pet projects or programs. On the other hand, lawmakers want to do something good for the economy as that is the issue that is on the minds of their voters, but to do so means giving up some precious tax revenues. This then is the dilemma facing economic revitalization. What is going to give!

If tax cuts are seen as necessary to revitalizing the economy, then there has to be either revenue increases in another area or spending cuts. The trial balloon has already been floated and it has been roundly shot down. Raising taxes in a slumping economy is not a good idea. That leaves lawmakers with only one alternative, cut spending. But where?

One suggestion that was offered in a hearing was that if the politicians did not have the fortitude or political will to cut spending, then set up a commission much like the federal commission to recommend base closings as part of the downsizing of the defense budget. Once recommended, Congress could only stop those base closing by an extraordinary vote.

Perhaps that is what is necessary here. Although the Senate tried that exercise with a group of private business people, those who participated were given insufficient information to make those decisions. Instead of a program by program description, they were given broad department by department expenditures and were asked where the cuts should be made. That is not a sincere effort as almost every department is important to public health and welfare. It is specific programs that should be reviewed and justified.

Isn’t it ironic that the people we elect to office to do the will of the people fail in finding the balance between a government we need and a government we can afford as taxpayers?

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