You can faintly hear the horns sounding triumphantly as a deal to end the Minnesota government shutdown appears close. The newspapers, radios and even Yahoo are reporting “Dayton: Will concede to GOP to end Minn. Shutdown.” (Source)
The June 30th budget the GOP had proposed to Dayton, “would close a $1.4 billion budget difference by delaying payment of school funds and borrowing against the state’s tobacco settlement.” (Source)
In this plan the State of MN would close the gap by delaying $700 million worth of payments to our schools, which is a trick Pawlenty used a few years back to balance the budget. We would also borrow $700 million by issuing state bonds against future Tobacco settlements (Tobacco settlement payment structure).
The GOP plan stops there. The recent Dayton counter-proposal would accept this GOP plan plus have the GOP drop calls to decrease the state workforce by 15%, drop all controversial proposals (whatever that means) and pass a $500 million bonding bill.
Dayton admits, “your plan achieves this goal, not by permanent sources of funding, but rather by borrowing an additional $1.4 billion: $700 million by increasing the school aid shift and another $700 million by issuing state bonds against future tobacco revenues.”
Both sides did offer a solution that ultimately would solve the problem. In MN the GOP goal was to cut spending with no tax increases. The same plan is being offered on the national level. I don’t agree with these plans as I am an avid supporter of the social safety net. But, that is better than increasing spending, borrowing the funds and then declaring bankruptcy.
The Dayton plans in MN called for a shift in the school aid, along with either a $1 tax increase on Tobacco or a 2% increase in the income on the 7,700 Minnesotans who make more than $1 million in a year. As you imagine, I support the latter proposal as it shifts the tax numbers to levels that MN has seen before. It is nothing as egregious as the GOP makes it sound.
However, the new plans are at least better then the proposal for a $1 sin tax on tobacco. A study by the National Review, a conservative magazine, found that taxes on tobacco are some of the most regressive taxes around. (Source)
If history has taught us anything it should be that borrowing against our future is never a good plan. That is what this recent proposal entails and both parties know exactly what they are doing. On a federal and on a state level there is mismanagement by the leadership of both parties. It is unfortunate that the only thing they can agree on is to increase the debt.
Which reminds me of a quote from J.F.K:
“We shall need compromises in the days ahead, to be sure. But these will be, or should be, compromises of issues, not principles. We can compromise our political positions, but not ourselves. We can resolve the clash of interests without conceding our ideals. And even the necessity for the right kind of compromise does not eliminate the need for those idealists and reformers who keep our compromises moving ahead, who prevent all political situations from meeting the description supplied by Shaw: “smirched with compromise, rotted with opportunism, mildewed by expedience, stretched out of shape with wirepulling and putrefied with permeation.”
Compromise need not mean cowardice. …”