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Sunday, February 22, 2009Budget Review
By Lyle Hillyard
Senate Chair of Exec Approps It was again very difficult and time consuming to spend the final part of last week to sit down and review the work of the subcommittees that identified 15% in budget cuts on the reduced base after September special session and their prioritized list of back fill. I sincerely believe that this has been a very good process both from the aspect of finding areas where government can be cut back and the services that are truly needed be more efficiently delivered and from the view of forcing the public to think what they want government to provide and how to pay for that service. Even with using the federal spending package, there will be budget cuts. The main question will be how deep and whether there is enough on-going money to avoid the reductions or just postpone them. We hope to know before too long this next week just exactly what money is available, when and what strings are attached. There is some sentiment not to take the federal money and where the funds are lacking, to raise our own taxes to cover them. Others justify it, saying the money is ours; someone else will be happy to spend it if we don’t. It is a little like dieting. Most of us know that we need to lose weight and there are three things we must do: 1) eat less and better food, 2) exercise, and 3) change our attitude about eating. I believe the same is true for our current budget crisis. We know that to solve the problem we must:1) work and add to the wealth of our economy, 2) avoid unnecessary borrowing especially for the things we cannot afford, and 3) change our attitude about the proper spending patterns we should be following. Both with dieting and controlling the current spiral of lack of confidence in the economy, some people look for the quick fix like a pill or new plan or a bail out from Washington where they don’t have to balance the budget and can just print money. As we look at the long term impact of both of those decisions, any thinking person should know that they don’t work. The fall of confidence in the Stock Market tells me that the quick fix pill being offered by the Federal Government won’t work. It suggests that we should toughen up and do the right thing for our children and grandchildren. I hope that I can convince my fellow legislators to look long term and not on what we need to do to just balance this budget and go home feeling the easy 'joy' a quick fix and avoiding work creates.
posted by The Senate Site at 8:26 PM | Link
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7 Comments:
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My response couldn't be properly expressed in a brief comment, so I've expanded on my argument to the Senators foolish "markets = predictors of sound policy" meme here.
Hillyard knows better, and I'm disappointed he'd make even the attempt at the argument.
I agree with what jason has said above, and in the other post he linked to. i also find it rather amusing that you've made this stock market is the gauge of our economy twice here now. the pr campaign continues i suppose.
here are my thoughts on this weeks version of the stock market says government spending won't help the economy. you compare attempting to 'solve the problem' to dieting, but the problem you've defined isn't really something that's comparable to dieting. if someone was starving they wouldn't be likely to count calories in their next meal, likewise a struggling economy isn't too concerned about the size of it's deficit (there's a time and place to balance a budget, but that comes after gdp is growing again)/
it's easy to see why you chose dieting though, you want to be able to angle your position against deficit spending. the fact that you can do this while happily spending the federal stimulus money that is covering for the state's poor budget planning and tax legislation is a little baffling if you ask me. you're complaining about the how much the lifeboat cost while treading water in the middle of the ocean. but i get it, you're a conservative, and as such you've got to be against spending money.
which brings me back to your diet analogy, you're three steps don't provide jobs, if anything they take away jobs, since people are employed by government spending. it actually seems as though you would be adding to the 'current spiral of lack of confidence' by giving more people more reasons to lack confidence. so, since i'm clearly not understanding, how does restraining spending inspire confidence in the economy?
that's mostly rhetorical, unless you want to clarify for me, because i know you don't have the answer, you said it to keep that fiscal conservative republican street cred going for you, and you've most likely succeeded at that. the specific details involved don't really matter, thus the lack of answer to the question of how.
It looks like the market doesn't like Hillyard saying the stock market doesn't like the stimulus. Wall Street disagrees with the Senator!
Has to be the case, as these are the final numbers of the market on the same day that Hillyard published this "budget review."
The evidence is obviously empirical!
This does seem like a strange argument for an elected official to make. Basic finance experience or education explains easily the fickle nature of the markets and their propensity to react, over-react, or even fail to react rationally to real time events. Being a veteran of the broker business myself, I would think this: http://www.newser.com/story/51644/politicos-loose-lips-sink-stocks.html would have more of an influence than their confidence or lack thereof in the stimulus plan. If I were the Senator, I'd change this line, or at least fail to repeat it in the future, so that I can continue to take him seriously.
Normally not one to gloat, but since I haven't seen a withdrawal from Senator Hillyard, I have no choice. Looks like it was the bank shareholders hesitation over the future of banks after all. Not the stimulus. At all. Just as I'd pointed out above:
The chairman of the Federal Reserve, Ben S. Bernanke, gave the markets a lift Tuesday when he testified before a Senate commitee that regulators are not planning to nationalize banks. The news eased some investor concerns about the banking system, and the Dow Jones industrial average, coming off its lowest levels since 1997, rose more than 235 points or 3.3 percent. The broader Standard & Poor's 500-stock index jumped nearly 30 points or 4 percent.
I'm sure the Senator will be clarifying the discrepancy between his comments in this budget review and what turns out to be the reality, post haste, for the benefit of disappointed constituents.
Yglesias:
Not only is it obviously stupid for political commentators to be assessing the quality of economic policy by tracking the ups-and-downs of the stock market but the fact that the commentators who want to do this keep wanting to specifically use the Dow Jones Industrial Average just highlights their ignorance. Not only is there no particular significance to the stock market as such, but there’s no particular significance to this index.
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