Thursday, February 16, 2006

Extreme Nature of the Revenue Restrictions Amendment Becoming Clear

It’s been two days since UW-Madison economist Andrew Reschovsky released his scathing analysis of the revenue restrictions amendment. The report has been largely ignored by most major media outlets and its findings have been subsequently sidestepped by most conservative commentators.

Interestingly, though, through their rhetoric conservatives don’t exactly disagree with Reschovsky’s factual findings. Two of the key points made by Reschovsky in his report are that the public’s “ability to pay” isn’t dictated by the measures used to restrict revenue in the amendment—namely, inflation—and that the amendment is intended to make government an increasingly smaller part of the state’s economy.

Sure, when the amendment was announced last week conservatives used the “ability to pay” and “keeping government in check” lines to drum up popular support for the amendment. After all, who wouldn’t agree that government revenue collections shouldn’t outstrip the ability of people to fund them? Or who wouldn’t agree that government shouldn’t become the dominant player in the Wisconsin economy—the thought alone smacks of pinko commie socialism, for goodness sakes!

Lately, however, conservatives haven’t exactly held true to the “ability to pay” and “keeping government in check” lines in their rhetoric.

In a statement provided as testimony to the invitation-only legislative hearing on the revenue restrictions amendment held yesterday, the director for the business lobby and pro-amendment group Wisconsin Manufacturers & Commerce (WMC) had this to say: “It is my sincere hope that all of our citizens will prosper as personal income growth outstrips the growth in tax collections in government spending” (emphasis mine).

And responding to Reschovsky’s statement that the revenue restrictions amendment will, over the long haul, decrease the size of government in the state, amendment co-author Rep. Glenn Grothman (R-New Berlin) said this: "It's true. If you begin to rein in the increase in government spending at the rate of 1 or 2 percent a year over 20 years, it has a big impact. That's the power of compound interest."

In other words, conservatives want to play up the limitedness of this amendment by claiming it’s only about keeping revenues in line with the public’s ability to pay and keeping the growth of government in check. But at the same time they freely admit that the effect of the amendment will be to reduce the amount of money provided to governments relative to personal income and subsequently, as Reschovsky puts it, “assure that governments in Wisconsin become a continuously smaller part of the state’s economy.”

This is where we can clearly see the extreme nature of the revenue restrictions amendment and also why the business lobby—which represents the part of the economy that will take over more as government's role is decreased—is such a strong advocate for it. Some may see this and ask: “How can decreasing government and putting more money in the pockets of individuals possibly be a bad thing for the public?” Quite simply because it’s the government that represents the public interest in the state’s economy.

If the government is decreased, so too will the public influence within the economy—not to mentioned the harm the amendment will do to public services that serve to benefit the poor and working class in our economy. As Wauwatosa alderman and UW-Oshkosh professor of fiscal policy Craig Maher has noted, as government revenues decrease there will be an emphasis placed upon maintaining core services by governments like police, fire, etc., thereby leaving little leftover for other public services that protect the livelihood of our lower income citizens, such as the BadgerCare and Family Care programs, or those that work to better the livelihood of all citizens like public parks.

This is a dangerous amendment that is hardly modest in scope or intent. I’m glad to see that numerous political organizations, local governments, and state Democrats have united in support against this amendment. And moderate Republicans, too, have demonstrated hesitancy toward accepting it, just like they did with TABOR. It remains to be seen, however, whether this amendment will meet the same fate as its twin.


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