Wednesday, March 09, 2011

The Shared Need to Sacrifice

I have heard lots about this in the recent weeks, mostly from Republicans and aimed at civil servants. An example by governor Corbett of Pennsylvania:
"If government is here to share the taxpayer's wealth then everyone needs to share in the sacrifice," said the new governor, whose relaxed posture and shock of white hair threw off an aura of imperial calm, even as he metaphorically jabbed a budget dagger so sharp that would have made Caligula proud. "Educators, Pennsylvanians await your decision."
An interesting ethical dilemma, the shared need to sacrifice. Do those who use that language mean that every single person in the society should sacrifice something, however little? Or that everyone should sacrifice the same relative amount, such as one tenth of their incomes? Or that some people should sacrifice lots, such as losing their jobs, while other people should just stand "ready" to sacrifice and could even get rewards?

I'd guess that it is the last interpretation they have in mind, though slightly more nuanced, because it uses the high unemployment rate as the actual example of those Who Have Already Sacrificed. Now other employed lower-income people must also sacrifice. But the governors of states, such as Corbett? Do they sacrifice? And if so, what?

I guess they are making painful tax cuts all over the place, to match those painful expenditure cuts. In Wisconsin, governor Walker cut taxes first:
How would Wisconsin voters deal with a budget crisis created in large measure by Walker’s tax cuts for the wealthiest people in Wisconsin? By reversing Walker’s course and raising taxes on those making over $150,000 a year (72 percent favor, 27 percent oppose).
In Florida, tax cuts are in the plans:
Florida Governor Rick Scott on Tuesday told increasingly skeptical lawmakers that the state's corporate and property taxes had to be slashed despite a gaping $3.6 billion budget hole.
On a day that saw protests from unions resisting cutbacks and anti-government Tea Partiers that back him, the Republican Scott, in a speech to the Republican-dominated state legislature, stuck to a script that last year took him from obscurity to the governor's mansion in eight months.
Likewise, in New Jersey:
New Jersey could become stiffer competition for its neighbors with the $200 million in tax cuts pitched in Gov. Chris Christie’s proposed $29.4 billion fiscal year 2012 budget, business leaders said.
And yes, even the Pennsylvania governor who spoke about the shared need to sacrifice doesn't want to raise taxes. That's not the kind of sacrifice he meant:
When Corbett, a former attorney general, came into office, he faced an estimated fiscal 2012 budget shortfall of roughly $4 billion. During his election campaign, he had pledged to avoid raising taxes to fill the gap.

In addition to paring government spending, Corbett said he would push to remove obstacles to private sector job creation.

Corbett, who had pledged just after his election in November to support the state's booming natural-gas industry, said Pennsylvania, should not "scare away" industry with new taxes.

"Just as oil companies decided to headquarter in one of a dozen states with oil, let's make Pennsylvania the Texas of the natural gas boom," Corbett said.

The governor, who wants a task force to study privatizing state liquor stores, also proposed increasing the research and development tax credit and restarting a planned phase-out of the capital gains tax.
I understand the economic theory behind the use of tax cuts for corporations. The idea is to make the state a more attractive business location by letting firms keep a larger share of their profits. This attractiveness might then mean that the tax-cutting state gets more jobs for its people.

But what corporations might do with those extra post-tax profits isn't tied to anything like the employment they offer in a particular state. The money will be theirs, to use as they please. They could dole it out to the shareholders, say.

There is something off-putting about rich governors talking to people about sacrifice when they don't expect to sacrifice anything themselves, in any case.