The below article by Larry Huss is very well written and paints a very clear picture of why Oregon politics is out of control.
The ink was not even dry on the results of the election when Gov. Kulongoski called in leaders from the public employee unions and the business community seeking support for his proposal to raise even more revenue by eliminating Oregon’s cherished “kicker” – the amount by which taxes are collected in excess of budgeted need each year. The public employee unions’ leaders endorsed the proposal enthusiastically – why wouldn’t they since they are the primary beneficiaries of increased government spending? The business community, still licking its wounds from the passage of the massive tax increases in Measures 66 and 67, were more reticent – and for good reason. They have seen the future and it is one of unchecked spending and continuous increases in fees and taxes and all backed by the public employee unions massive campaign war chests.
Oregon’s political system is broken. It lacks any semblance of a balance because one entity – the public employee unions – has access to virtually unlimited amounts of cash that it has demonstrated it is prepared to spend freely. No person or entity, or even a group of entities, can match the financial resources of the public employee unions – particularly on a recurring basis.
The recent election on Measure 66 and 67 highlighted the disparity. The proponents of the massive tax increase outspent the opponents by over fifty percent. The vast majority of the proponents’ money came from the public employee unions and therein lies the rub.
When the opponents needed money to finance the signature gathering and campaign they had to go out to contributors one by one and raise the money – a $100 here, a $1000 there. Yes, there were some large contributions from some large business entities but they pale in comparison to the million dollar contributions from the public employee unions.
And while the opponents had to go one by one to their contributors, the public employee unions had the state and local government and the local school districts automatically collect and remit their money on a quarterly basis – over $60 million of it each biennium – every biennium. While the opponents had to beg and convince each contributor each time they asked for a contribution, the public employees unions have a mandatory collection from public employees each payday using the resources of the state and local government and the local school districts.
The sheer volume of money available to the public employees unions coupled with the use of government resources to collect the mandatory contributions is what has unbalanced the political process. Until a means is found to return the public employee unions to the same footing as all other political organizations in terms of raising political money, Oregon political system will remain broken.
Even though the public employees unions tend to support Democrats – almost exclusively – this is not about party politics. This is about political corruption where one entity utilizes the resources of the state to acquire political contributions on a mandatory basis and thereafter uses those contributions to ensure government benefits to itself. The public employee unions have run the state of California over the economic cliff and they have now pushed Oregon to the brink.
No other political fight is worth pursuing until the corruption in Oregon’s political system is purged.
The vast majority of economists and a large number of small business people agreed that Measures 66 and 67 will actually be good for small businesses and the Oregon economy. By my reckoning, there will be an extra $1-2 billion circulating, preserving jobs and generating business profits as a result. Even Bill Conerly couldn’t bring himself to say there would be a short-term negative effect, because it’s so clear that the cash infusion from the federal government will provide the stimulus we need to make the recession shorter and shallower.
For small businesses especially, the extra gross margin provided by the additional sales will be more than enough to cover the extra $140-150 in minimum tax due. That’s even true for larger businesses that will see gross margins increase by more than the extra 1.3 percent income tax on profits over $250,000.
Reforming the kicker will also be good for business. The last thing you want to do in a recession is to have the government compound the problem by cutting its spending and digging the hole even deeper. Building the Rainy Day Fund to a sufficient level to avoid big spending cuts will provide a stabilizing influence and keep many businesses from falling over the edge into bankruptcy when times get tough. Forget the mantra “government should tighten its belt too.” That’s just bad economics.
Instead of demonizing public employees, why not see them as an important sector of the economy? We don’t hear criticism of big salaries at Nike and Intel, even though they add to the cost of the products we buy. We should be glad those folks are still on the job (even though they’ve taken significant pay cuts during the recession – look it up) providing the services we all need to keep our businesses running. If you run a grocery store or a gas station, where would you be if your low-income customers didn’t get food stamps or unemployment checks?
The simple fact is that we all owe everything we have to the public structures we have built and maintained over the course of history and that make our economy even possible. Would you rather live in Somalia or Rwanda? I’ve heard some people claim that it’s okay for low-income people to pay a higher percentage of their income in state and local taxes than wealthy people do (8.2 percent vs. 6.0 percent), because they get more benefits from government. Well, that’s obviously untrue. Wealthy people get far more benefit, because without government, all their wealth simply would not exist.
Let’s focus our efforts on electing good people who will make government run as well as possible, and stop enabling those who pander to our selfish instincts.