Jon Margolis is VTDigger’s political columnist.
[E]verybody wants to cut the budget.
Just not his or hers.
He and she here are being selfish, or at least self-interested. They are saying that somebody else – another he and another she who live elsewhere and work in another field – should be hit by the cutbacks. But not him and not her, meaning the he and she who don’t want their budget appropriation eliminated or even reduced.
But maybe they have a point, beyond their obvious self-interest. Maybe cutting their budgets will damage more than him and her. Maybe everybody will pay a price.
Before proceeding, let’s admit that, “everybody” here is an exaggeration. There are a few people who oppose cutting the budget, preferring instead to raise taxes, preferably on the very wealthy.
Precious few of the very wealthy support this option, showing that those (he and she) who do support it are being comparably self-interested. Their choice to have others (another he and another she, both in the upper-income bracket) pay the price of balancing the fiscal year 2016 budget.
Again, though, self-interested does not necessarily mean wrong. Two truths about budget battles: (1) a reasonable case can be made for or against any proposal; (2) consistency is rare if not absent.
Take the continuing controversy in which many Vermonters who had not previously heard the term are learning what a PSAP is. For those who have not yet tuned in on this flap, a PSAP (commonly pronounced P-SAP) is a Public Safety Answering Point, part of the emergency 911 alarm system. The way that system works according to the state’s website is that “calls from the Public Switched Telephone Network (PSTN) (are routed) to a Public Safety Answering Point (PSAP) … calls are initially routed to one of these answering points based on the originating caller’s location.”
There are now four PSAPs, and to save $1.7 million, Gov. Peter Shumlin’s administration wants to close the dispatch services in Derby and Rutland. The tasks they now perform would be centralized in the Williston PSAP, eliminating 14 jobs.
Not a popular move in either the Northeast Kingdom or Rutland, from which officials and workers plan to converge on the Statehouse Tuesday afternoon to try to persuade lawmakers to keep both centers open.
Their opposition is hardly a surprise, but it might be a bit ironic. There are probably no two sections of the state where people are more avid about having the government spend less money than Rutland County and the Northeast Kingdom. In both areas, no theme is more common on the campaign trail and in the letters to the editor pages than the extravagance and waste perpetrated by the big spenders in Montpelier. Folks in Rutland County and the Kingdom want to cut the budget.
Just not theirs.
In this case, they say, the cuts will endanger the public. The person taking the call at the local center knows the area, they say. He or she knows the back roads and the byways, and can more quickly direct the ambulance driver to the scene of an accident or injury in the more remote rural areas.
So far, Shumlin does not seem to be convinced. “We firmly believe that we can make the system more efficient with technology that’s advanced since the system we created a long time ago,” he said last month.
No one can promise that somewhere, sometime, an emergency vehicle will arrive later because the emergency dispatcher didn’t know the territory. As any cell phone or Global Positioning System user knows, Vermont has some dead zones when it comes to modern communications technology.
Still, on balance, the governor would seem to have the better of the argument. Technology is not worthless. Federal experts think Vermont could manage with one PSAP, not the two the Shumlin administration plans. Besides, even in rural Vermont, not every dispatcher will be familiar with the twists and turns of every unpaved road.
The greater downside to eliminating these 14 jobs might be … eliminating these 14 jobs. Yes, it would save $1.7 million of the roughly $112 million gap in the fiscal year 2016 budget. But it would also mean that Vermont would have 14 fewer jobs. Worse, it would have 14 fewer middle-income jobs, precisely the kind of jobs needed for the state to prosper.
As it is in the other states, the economy in Vermont is better than it was a couple of years ago. Slowly, people are coming back into the labor force. Per capita income is inching up. But the recovery remains modest, and while there are no doubt several reasons for this, none is more central than the enduring deficiency of what economists call aggregate demand.
A fancy way of saying not enough people are spending enough money.
But they can’t spend money if they don’t earn money. And simply because there are so many more of them than of anyone else, the relevant “they” here are folks in the middle of the income spectrum. Poor people don’t spend very much because they don’t have very much (though they do spend almost all that they have). Rich people spend a lot. But they also save a greater proportion of their earnings, because they can, and they are more likely to spend it elsewhere, also because they can. Furthermore, there just aren’t that many of them.
So eliminating middle-income jobs, while good for the state’s budget, might not be so good for the state’s economy. And in this case, the regional economic shift appears perverse. The administration proposes to shift middle-income jobs from the poorest county (Orleans) and fifth poorest (Rutland) to the richest (Chittenden).
Good for Chittenden County. Its shops, gas stations, movie theaters and restaurants could use the extra business. But perhaps not as much as their counterparts in Rutland, Derby and Newport will miss that business.
OK, it’s 14 jobs, hardly enough to have a noticeable macroeconomic impact in a state where more than 337,000 people are working. But the administration is also proposing either to lay off up to 325 state workers or to cut the pay of several thousand of them. That means reducing the pay – and therefore reducing the amount of goods and services consumed – of more middle-income workers. The median income of a member of the Vermont State Employees Association (VSEA) is just over $42,000 a year. Cutting their salaries can’t be good for the economy.
None of this proves that the administration’s proposed cuts are the wrong policy. Raising taxes also cuts demand, though perhaps by not quite as much. It just proves – again – that when it comes to budgets and economic policy, everything that does some good also does some harm.
As both he and she can attest.
