If I were smart enough to reply to Kulongoski's economic austerity plan

Carla Axtman

It seems as if the economic austerity bandwagon is in full swing. Certainly, Governor Kulongoski has decided to take the reins of Oregon's version of it:

Those recommendations were among several the Democratic state leader laid out in his speech, which was billed as a report on how to “reset” state spending to align with austere revenues that are predicted to trickle in as Oregon makes its slow recovery from the recent Great Recession.

Kulongoski also called for shifting future surplus revenues from “kicker” rebates to state savings, scaling back the mandatory-minimum sentencing under 1994’s Measure 11, statewide collective bargaining for school teachers, a reduction in the number of regional educational service districts, and a compact with public universities allowing them to “move forward with clear goals and performance targets, tied to their funding.”

Yeah..we wouldn't want to actually have an in-depth discussion about the most stupid and destructive revenue policies ever instituted in the State of Oregon. No discussion of how we're going to boost revenues.

So skipping the real discussion that needs to be had in favor of the one that makes squeaky anti-government wheels dance in the streets is one way to go. But I'm thinking Digby has something here:

So consumer confidence is way down and the market tanked on the news. I don't suppose it might have anything to do with the fact that nearly every elite gasbag in the world is blathering on endlessly that the sky is falling because of the potential, maybe, could be future deficits and telling everyone they are going to have to sacrifice for decades and pull in their belts for years to come? Nah, couldn't be that.

And nothing builds consumer confidence like month after month of 10% unemployment and housing foreclosures. The lazy, drug addicted unemployed are obviously very upbeat and those who are working feel incredible freedom and opportunity in that environment because lord knows that while working people may not be able to leave jobs or start new businesses or get a raise in this environment there's no reason to be gloomy.

It can't be that the rubes see an economy that is moribund at best and a dysfunctional government that is telling them constantly that they are going to have "accept" high unemployment and "pitch in" to fix an economy that was destroyed by wealthy gamblers --- and assume they are well and truly screwed for the foreseeable future.

So we have to cut more state employees and their benefits, cut school days, cut public safety, cut..cut..cut...

And this is supposed to make things all better. Consumer confidence in Oregon will go up even with more state employees losing their benefits and possibly their jobs. And all this money will flow into our economy because...we cut more salaries and benefits? Businesses will be eager to flock to our state because we...cut more school days and teachers?

This is quite a plan.

  • (Show?)

    I'm just so very glad that the Governor has made these bold proposals with seven years left in which he can implement them.

  • (Show?)

    For persons utterly dependent on the state for their welfare, Kulongoski has been the worst governor in memory. Chris Dudley, a person who lives with a chronic illness, would be better, at least capable of empathy.

    Kulongoski plans to cut mental health, addiction budgets - http://www.mentalhealthportland.org/?p=5913

    Full list of Kulongoski's proposed budget cuts - http://www.oregon.gov/DAS/BAM/docs/Budget_Policy/Agency_Allot_Reductions_Summary.pdf

    • (Show?)

      Empathy from the Republican nominee? Maybe empathy for bankers, polluters, and plunderers.

    • (Show?)

      So let me get this straight, because Chris Dudley is diabetic multimillionaire, that makes him more empathetic (than those without diabetes?) ...about the plight of the poor who rely on social services to get by and about the effects balancing the budget by cutting core services?


  • (Show?)

    Ayup Jonathan. A Profile in Courage from The Man Who Wasn't There.

  • (Show?)

    Hey Jason, as one who lives with the same disease as Dudley it doesn't make me any more or less empathic as I conduct my business. It just means I'm one of millions and millions with diabetes.

  • (Show?)

    Meanwhile the economists and other people who actually understand the economy are screaming that any more state and local budget cuts will reduce GDP and could risk a double dip recession. More at your favorite neighbor state's progressive blog:


  • (Show?)

    I agree with Kulongoski. IMO... We should not receive the kicker when the times are bad. That money should go to the state's budget to make up for the lack of taxes.

  • (Show?)

    Certainly a late and limp effort from one going out the door. Most Oregonians would agree to changes to the kicker, however in order to get there something must FIRST be done about spending.

    Employees make up the majority of those costs. In the past 4 years the state went from 47,863.33 ftes to 51, 289.16 ftes. That is an increase of 1,731.71 ftes for this biennium alone and an increase of 182.50 ftes in March of 2010.

    The legacy costs of employees for retirement and healthcare are weighing down the state. Just ask Big Steel and the big 3 automakers. Some really por managment decisions have been made, but it will be the legacy costs that will undo the budget if they are not addressed. The current shortfall does not even factor in the approximate 5.5 - 6.5% increase in PERS rates due to hit July 1, 2011.

  • (Show?)

    First...when I keep reading 'consumers', consumer confidence etc., I have to laugh--The consumer/industrial economy is not coming back--we're now a knowledge/service economy and yet I see no mention of it anywhere. This is a significantly different economy (much like when we shifted from Ag to Industrial consumer) and we should be preparing for this new economy--not trying to revive the old.

    Secondly--there's actually plenty of money available for getting the state going. One way would be to initiate a State bank. North Dakota has had one for 90 years--very successful (the only one in the nation--they have a surplus in their budget and low unemployment). A State bank works cooperatively with small, local banks and credit unions to fund farming/small businesses and student loans. This could truly help NOW with getting a new economy going....

    The solutions for the future are going to need to be new and bold. We need new measurement systems beyond the GDP. We need new employment sectors beyond the market, government and illegal ones. Its time for a Great reset...

    • (Show?)

      Could you expand on this, please?

      How does this "new" economy look, in practical terms? What is the government's role, if any, in it? How does this economic change significantly effect the way the government is funded and serves us, if at all?

      (Sorry for all the questions..but I'm very interested in this and want to understand the realities of it)

      • (Show?)

        One major difference is the nature of the labor market.

        An industrial model, particularly and advanced industrial economy as of the post WWII era in the US requires a substantial number of workers who may not have extensive "education" in an academic sense, but who have a skill level requiring many years to acquire.

        Having that skill level, they are not easily replaced, and thus have significant opportunity to make wage demands for their work. This leads to a viable middle-class: the ability to make a "family wage" without having the need for a college education or contacts through a social network (usually through the parents and college).

        A "knowledge/service" economy is actually a split economy: high and low. Services such as legal and financial require extensive education and social networking. Lacking the ability to acquire knowledge people will pay for, and the contacts to establish those paying positions leads you to the low end of the service sector (food, retail, etc).

        The low end of the service sector is different from the old industrial sector by virtue of having such a low entry-level requirement (in terms of acquired skills) that workers are easily replaced, and so have little ability to make wage demands.

        Government's role? IMO two things: make opportunities to acquire higher level skills and education affordable enough that they are not only available to an "elite" class; and at least not help (and maybe even discourage) companies from taking the mid-level jobs which do exist to other countries.

        Preventing the flow of mid-level jobs to other countries could be achieved by two fairly simple tax reforms: Deny corporations the ability to "defer" recognizing corporate profits earned by foreign subsidiaries; and deny any tax deduction for labor or environmental practices in a foreign country if it would be illegal in the US.

      • (Show?)

        Well, let's see what I can do in a small posting.. The four major systems--economic, financial, social and environmental are part of this transformation. From an economic standpoint--the new 'industries' are around creative work--arts, education, medical, technical, financial, insurance, --services that enable our lives to more full. , use our creative energy etc.,vs. the old 'make something industries'. This is why we need new measurement systems--these do not fit nicely into the old GDP of 'unlimited growth and productions'. Things like Gross Household production, Gross environmental production will need to be factored in.

        This will expand the current employment sectors--markets, govt' and illegal (you make your living in one of these--let's be clear folks--there's as much money/many people making their living in the illegal employment sector as the traditional markets)...The future will need to factor in new ways of making a living--through the household, volunteer/alternative wealth exchanges and finally including the environment/true cost accounting. With 6 employment sectors--there will be plenty of work--but very different work being valued than what we have today. Its actually a very vibrant economy that's on the horizon if we'd open up to new ideas.

        As for gov't....obviously still there, but I'd say that there will be more non-profit/NGO work replacing 'ever-bigger government'. Right now though, starting a State bank to enable some of these new smaller businesses would need gov't initiation. But I still think the changes into this new economy needs to be done collaboratively with business/government in partnership --each recognizing the need for change, new measurements etc. and Oregon really would be a good state for leading into this...

        Hope that helps some...hard to explain it all in such a short space.

  • (Show?)

    Austerity programs are like a doctor advising a person who has lost a couple of quarts of blood that they need leaches instead of a blood transfusion. Sheesh! Yes in Oregon we need to revise our tax and revenue programs by making it more fair, but to put more teachers, firefighters and police out on the street make no sense. I suggest we take a look at Ted Wheeler's vision.

  • (Show?)

    LOL - Josh I don't pay much attention to habitual liars, frauds and propagandists.

    • (Show?)

      you mean you don't read josh's caustic insults... no one else does either all he has ever added to any conversation is anger and hate speech with some personal attacks thrown in for good measure. LLLLL

  • (Show?)

    almost forgot to post my comments about the topic. interesting ideas Ann ...great comment Phil. On that thought I overheard some people talking yesterday about an article in the newspaper in hillsboro or forest grove where the teachers and admin who were set to receive a 3% raise opted to only take 1.5% ..even still the FG school district apparently has an asst principal who after his first year on the job is knocking down 130k a year for a 261 day work year ..plus benefits and retirement. and as they said this the husband of one of the ladies in the waitinf area got up and said "130k for 261 days, he still has enough time in his schedule to be a full time fireman and make another 100-k a year playing cribbage for the other 100 days" lol anyway I thought that was funny does anyone know if the schools are really paying that kind of money for school administrators?

  • (Show?)

    Robert S--Average pay for principals is $95,000. Page 89.....



    Ann K.--Have to agree that financial and insurance sectors are "creative", but not in any good way.

    The largest six banks in our economy now have total assets in excess of 63 percent of GDP. In 2006, they were around 55 percent of GDP, and in '95 they were 17 percent of GDP. In the wake of healthcare reform it seems like the only other sectors that are handing out raises are the insurance companies and the various local, state, and federal gummint entities.

    This is not a blueprint for any sort of positive recovery for us down here on the ground.

    Now that is a changing economy, again not in a good way. These guys don't think of themselves as support for the economy. They think they are the economy, and these days they are correct.

  • (Show?)

    Pat R. I agree that much of insurance/finance is not being used in a good way--just saying that this is where 'work' is vs. manufacturing.

    The next economy is more about a 'quality of life vs. a quantity of stuff' and what needs to come into public discussion is what is it that we want/need in terms of quality of life. Here's an article I wrote discussing it a bit..


    As you'll see...."Option 3" is now possible but we need to make it visible and commit our energy to creating it. We have the knowledge to do this...we need only the will.

connect with blueoregon