A Day of Reckoning

Commentary by Ron Miller

Ron MillerI've hung around a lot of politicians in my time, and I'm not easily impressed by them, so I must tell you I'm impressed with Governor Chris Christie of New Jersey. Of all the recently elected officials, he is the one who seems to understand the times in which we live.

New Jersey is facing what Governor Christie calls "a day of reckoning" and that day is coming for Maryland, many other states, the United States, and the world. We have reached the point where, as former British Prime Minister Margaret Thatcher put it in her description of the problem with socialism, we have "run out of other people's money."

New Jersey today is a microcosm of the United States - huge budget deficits, a bloated public sector, high taxes and onerous regulations, and private industry tanking or fleeing, further reducing the state's revenue base. This same description could be made of Maryland, and it would be accurate. With $2 billion annual budget deficits, an overbearing and overreaching state government, the 4th highest tax rate in the nation for individuals, and businesses and millionaires looking elsewhere for a place to thrive, we may not be in the same boat as New Jersey, but we can see the sails from here.

In fact, Governor Christie made a reference to Maryland in his budget speech to the New Jersey legislature earlier this year:
In Maryland, they are borrowing to cover current obligations. And in doing so, they are piling one problem on top of another, reducing the creditworthiness of their state, and creating a crisis that will be larger in the future.
This scenario is playing itself out across the country. States are facing a combined projected budget gap for fiscal years 2011 and 2012 of over $260 billion. According to the Center for Budget and Policy Priorities, the states are facing "the steepest decline in state tax receipts on record." With all but one state required by law to balance their budget annually, they don't have the luxury of spending money they don't have.

These facts may finally force the one-party monopoly in Maryland to abandon its free-spending, high-taxing ways. The budget may look balanced, but it's being held together by temporary federal assistance, accounting gimmicks, and the plunder of designated funds to pare down the general fund deficit. The pressures on revenues won't change anytime soon, and the money won't be there in the future to cover the post-dated checks the General Assembly has written.

Meanwhile, the federal government is racking up record deficits, and before they are done, the gap will be historic in scope. Many in the U.S. Congress are now suffering pangs of conscience, because they are balking at a multi-billion dollar emergency aid bill for state and local governments.

Even one of the kings of pork, House Majority Leader Steny Hoyer, is complaining about "spending fatigue" and giving major speeches on the need for budgetary restraint. His hypocrisy on government spending would be laughable, except for the fact his decades of unapologetic tax-and-spend policies cannot be undone, and he is just as culpable as anyone of indebting our children and grandchildren.

Across the pond, Greece is undergoing the greatest debt crisis in its history, and the pattern is the same for many other European nations, who are slashing the size of their public debt, even as the U.S. debt skyrockets. The generous safety net of government social services that characterizes the European democracies is proving to be unsustainable, and dramatic austerity measures are being implemented to stabilize their economies.

We have "run out of other people's money."

Oh, if you think the typical liberal screed of "taxing the rich" is the answer, think again. The rich aren't doing so hot these days, either. Don't let the sensational stories about CEOs and Wall Street fat cats who make exorbitant salaries cloud your vision. Forty-five percent of the world's wealth has been destroyed during this economic crisis, and the world's number of millionaires dropped 15% in 2008.

Here at home, most of the so-called rich, those who make over $250,000 a year by President Obama and Steny Hoyer's calculations, run small and medium sized businesses. These business owners are working harder than anyone in our nation to generate enough wealth for themselves, their families, their employees and the communities in which they live. It's these businesses that employ the majority of our private sector workforce, generate the most exports, and contribute to the tax base through their business income and the jobs they create.

As their revenues fall, they are forced to cut back on employees, whose unemployment puts a double whammy on state budgets. Not only are they not collecting individual tax revenue because there's no paycheck, they are doling out unemployment benefits at record levels.

This seismic shift in the fiscal landscape isn't sitting well with public sector employees, recipients of government benefits and labor unions, who are screaming for relief from these crushing deficits. Generous public sector and labor union pension plans are on the verge of insolvency as the promises of yesteryear are coming due, and there are insufficient funds to cash the checks.

Congress is actually considering rescuing labor union pension funds with more money we don't have, pandering to their traditional constituencies. In no universe of which I'm aware is that responsible stewardship.

Similarly, public sector employees in the beleaguered nation of Greece are rioting to keep their generous salaries and benefits, even if the government and economy collapse as a result. The European Union is scrambling to bail out Greece before it brings down the entire European economy, but their individual economies are also fragile and at risk.

In New Jersey, Governor Christie is practically at war with the powerful teachers union because he wants to freeze teacher pay increases so money to students in the classrooms can be preserved.

Their battle validates statements made by the National Education Association general counsel earlier this week at the NEA convention, in which he said the top priority of the teachers union is collecting "hundreds of millions of dollars in dues each year" to represent their members.

Sure, student achievement and teacher quality are important, he offered, "But they need not and must not be achieved at the expense of due process, employee rights, or collective bargaining." There you have it; conservatives have been saying for years that their top priority is themselves, not your children, and now you have it straight from the horse's mouth.

That's not to say there aren't wonderful teachers dedicated to our children - I'm married to one! There comes a point, however, where the goose that lays the golden eggs is barren, and no amount of protesting, screaming, crying or foot-stomping is going to make her produce.

We have, indeed, "run out of other people's money."

We must brace ourselves for some of the most difficult economic times the world has known since the Great Depression. No one can predict when the recovery will begin or accelerate, and millions of jobs will be left behind, never to return. Businesses are extremely cautious about investing or hiring because of a poor economy, consumers cutting back on their spending, and the government continuing to use them as a source of revenue rather than an engine of wealth generation for our economy.

In the short term, we need to listen to our small businesses rather than politicians and let them tell us what they need to start creating jobs and wealth again. The puny tax credits for hiring employees passed by President Obama at the national level, and Governor O'Malley at the state level, were as anemic a response to a pressing need as any I've seen from government. They need substantive and far-reaching tax and regulatory relief to encourage investment and production, and their customers need tax breaks to put more money in their pockets so they're able to spend again.

In the long term, we need to rethink the role of government, individuals and communities, and the free enterprise system, and then we need to change.

Government needs to focus on providing stability and safety so freedom can thrive, leaving economic growth to the creators of wealth, and charity to individuals and communities. This is a time-tested and effective model of governance in a free society, but we haven't followed it in a long time, regardless of which party has been in power.

I encourage you to listen to Governor Christie's powerful presentation at a town hall meeting last week. If you aren't persuaded after hearing his words about the crisis in which we find ourselves, and what we need to do to fix it, then you aren't capable of understanding the problem and, in fact, are probably contributing to it.

I especially hope candidates for public office here in Maryland listen to Governor Christie's words and take them to heart, because this is the standard we expect you to bear going forward. Anything less is irresponsible.

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