Sunday, March 13, 2011

Trickle Down

A devastating earthquake followed by a tsunami has created chaos in Japan this past few days. Getting overly excited about budget battles might seem trivial when compared to the loss of life and the still unresolved issues related to the nuclear reactors that have been negatively affected by nature's wrath. Perhaps a day will come when material possessions and the pursuit for them are prioritized appropriately by man. Perhaps it will take more acts of nature to help us along the way as it seems that despite our obsession with the material, disasters seem to bring out the best in us via humanitarian aid for the unfortunate. In the meantime, it might be helpful if we kept in mind that we should be working in concert with nature and not in competition.

This past week, Governor Corbett of Pennsylvania, proposed his 2011-12 budget. Going into the process, it was known that the governor was faced with the daunting task of balancing a budget with a $4 billion deficit, a task he made even more difficult by promising no tax hikes to close the gap.

The good news is that he was true to his word; no tax increases. The bad news is that he was true to his word. No new taxes but massive funding reductions, centered mostly in education and human services. He also plans employment terminations which will result in hundreds of public employee layoffs.

It appears that Governor Corbett has taken a page from the now 30-year old economic theory called trickle down. Originally, it was envisioned that this theory would create a rising standard of living for the middle class by allowing big business and those with the resources to proceed unencumbered; less regulation meant more free enterprise meant more money and opportunity for everyone. Unfortunately, the past 30 years has instead resulted in higher incomes for a very small percentage of Americans and a stagnation of the standard of living for working, middle class families.

Now, with governor Corbett's plan, the theory has come full circle. But in this case, the Governor's plan features the trickle down of the pain and suffering of sacrifice for the middle class. While state taxes may stay the same, local taxes will rise to cover the shortfall in funding, and/or jobs will be lost in many communities. Less jobs will mean less money to spend which means less goods and services being purchased which means less orders which means less need for employees. You get the picture.

Somewhere down the line, we, as taxpayers, will learn that voting for someone who pledges no new taxes will not necessarily result in no new taxes for the middle class. We never asked the governor elect how he was going to handle the $4 billion deficit so he never detailed his plan until elected. Now we get the details and are surprised that the tax burden will trickle down to the local level. That old saying, fool me once, shame on you, fool me twice (or over and over again) shame on me, comes to mind.

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