Wednesday, June 17, 2009

Draconian Budget Cuts Have Senate Republicans Admitting Need For More Revenue

Thank the Detroit News for the term "draconian". They handed it out in an editorial last Sunday that urged Mike Bishop and the Senate Republicans to make those $1.2 billion in budget cuts so we can have a "leaner state government" that can afford to cut taxes for business.

The state can't afford a bureaucracy as large as it has right now. And a leaner state government would make it easier for lawmakers to get rid of the onerous business tax surcharge.

Bishop says he expects Senate Republicans to stand firm, even though some of them voted for a state income tax hike and a surcharge on the Michigan Business Tax as part of the 2007 solution. They should.
Using a vague terms like "bureaucracy" is supposed to make these cuts palatable to the public. An old right wing trick, it is designed to fool those that refuse to look deeper at the consequences of severe cuts. The fact that college tuition goes up. The fact that your insurance rates will go up. The fact that the roads are crumbling and costing you more for car repair. The fact that your local government will cut cops and firefighters, delaying response times to your emergencies. The fact that you will have to pay more for everything with these back door tax increases, but somehow all those problems will somehow magically be solved if we just cut the "bureaucracy"? The word ranks right up there with "reform" now; empty, meaningless, dehumanizing.

You are supposed to ignore the fact that we have cut to the point where we are taking in just a little over half the revenue that Dick Headlee thought was appropriate to fund our government, that current revenue numbers "put us back to 1965 when adjusted for inflation" according to Bob Kleine, that Michigan's 4.35 percent income-tax rate is "lower than it was under most of Republican Gov. John Engler's 12 years in office", that the current administration has resolved $6 billion in budget deficits and trimmed "more from state government than any governor in Michigan's history." We have cut taxes and government to the point where we can’t sustain a decent quality of life, and the national recession now threatens to drown us all. Ignore the facts.

Just throw out the word "bureaucracy", and all of that reality goes away though, as Pavlov's dogs predictably respond to the bell once again, and the Bush economics of deregulation and more tax cuts are presented as the answer to our fiscal woes.

So, thank you for the word "draconian". It still carries weight. It accurately describes these cuts to "bureaucracy" in stark reality. How else can you term a half a billion dollar cut to health care?

A massive cut to the proposed 2009-10 Department of Community Health totaling more than $500 million in general fund cuts - including cuts in provider payments, community mental health and the elimination of most of the Healthy Michigan fund - was sent to the full Senate Appropriations Committee Tuesday on a 4-2vote.
According to Gongwer, the cuts to DCH are "$8 million more than the entire set of targeted budget cuts House Democrats have called for". Emphasis mine. Health care providers are understandably appalled.

Hospital and physician groups blasted a $95 million cut in state Medicaid reimbursement. Since the federal government provides about $2 for every $1 spent by the state, the overall cut to doctors, hospitals and nursing homes approaches $355 million.

Dennis Paradis, head of the Michigan Osteopathic Association, called the 8-percent cut "a stunning disregard for the health of Michigan residents. Additional Medicaid cuts will erode Michigan's health care delivery system and further constrain access to care at a time of Michigan's greatest need."
That's just a sample of the initial outrage, and we haven't even discussed the 12% cut to revenue sharing to cities yet. But read these next lines closely. Cracks in the Senate Republican armor are starting to appear, as the reality of what cutting all this bureaucracy really means sets in. Here's Roger Kahn, admitting revenue will be needed, and that this process will go down to the wire once again:

Sen. Roger Kahn, R-Saginaw Township, one of two physicians on that health care subcommittee, called that population of mentally ill among the most vulnerable in society. If they don't receive their medication, they'll wind up in emergency rooms or jail.

But Kahn also said the Senate cuts were just the start of a long budget process likely to last deep into the summer and possibly right up to the Oct. 1 start of the 2010 fiscal year.

"It's going to be a long time before this is done," Kahn said of a budget process that took a very serious turn Tuesday. In the end the question will be "how much will be cuts and how much will be some version of revenue enhancement." He declined to say, however, that a tax increase was inevitable.
Want more? Here's Bill Hardiman:

Sen. Bill Hardiman, R-Kentwood, said the Michigan economy can't afford another tax increase, but the alternative appears to be causing "irreparable damage to our health care system."
The question now becomes: How long are the Senate Republicans going to mess around with this? Are they going to take it to the point of shutdown once again, coming up with a last minute fix that only creates more problems, as they did in ‘07? Skubick seems to think so, noticing that all sides are lining up in their familiar positions, as we get set to do this dance all over again.

Bishop and his GOP gang are currently in a negotiating mode. They are tossing cold water on raising more money right now because they want to squeeze more budget cuts out of the governor before they talk about new revenue. Rest assured, that talk is coming, but not in the near term.
No, not in the near term. Not as long as economic extremists like the Michigan Chamber of Commerce and the Detroit News are calling the shots for the Michigan Republican Party. Here’s Ron Jelinek, admitting that the DNews editorialists are where they look for direction:

And Senate Appropriations chair Sen. Ron Jelinek (R-Three Oaks) said in response to a Detroit News editorial that he was glad lawmakers did not wilt in the face of the cuts and he urged them to continue to stay strong in terms of cutting the budget.
That came last week, before they eliminated college tuition aid and health care. They had simply cut public transportation, veteran’s services, inspections to migrant housing, and food banks at that point. Republican Gerald VanWoerkom said last Thursday that he “hoped at some point other funding could be found to restore some of the programs”. You can bet he does. You can bet they all do. They understand the implications better than they want to let on.

With these little comments, you can see the Senate Republicans conceding the need for revenue. Whether it be tax loophole closures, or even Dillon’s still secret grand plan to revamp the whole system – they know that they can’t make these kinds of cuts, and another alternative will need to be found. Cuts do cost, they take money out of the economy just as sure as a tax increase will, and these cuts will cost our state too much when they drive away business, investment, and finally the people, because no one will want to live in a state with sky-high tuition costs, inadequate public safety, and a crumbling infrastructure.

The economic right wing of the MRP is going to make life extremely hard for the Senate Republicans by backing them once again into a corner with their anti-tax rhetoric, just like they did in 2007. But remember that in the end that year, even the DNews admitted the need for revenue, after they got done chastising the Legislature for not cutting more of that nebulous "bureaucracy", of course.

It would be nice to think that we could just skip the dance this year, and get straight to the solution for fixing this "chronic" deficit that we have, but given that the noise machine is already in full gear, and the Republicans are going to act accordingly, the best we can hope for is that they don't screw this up too badly when they do finally reach that solution.