CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

 

CLT UPDATE
Saturday, October 18, 2003

Like Social Security,
the societal balance of trade is shifting


There's more to retiring the state's projected $2 billion deficit for next year than curbing spending and consolidating services, the governor's budget chief told business leaders Thursday. 

The financial imbalance is a problem rooted in history and the solution will require a "completely new way of seeing government," Administration and Finance Secretary Eric Kriss said during a morning address to the Greater Boston Chamber of Commerce. 

Kriss said new taxes won't solve the problem, and will make it worse.

To create a system of "sustainable government services," the solution will rather involve establishing a better balance between the "givers and takers" in the system, specifically those who contribute to government through taxes more than they consume - "net contributors" - and those who rely most heavily on those taxpayer-funded services and are thus "net beneficiaries." 

In 1964, that ratio was set at a 9-to-1 ideal - 90 percent of people paying into the system to help the bottom 10 percent grow. Currently, Kriss said, it has dropped to a 3-to-1 ratio, and is nearing 2-to-1....

"The trends are unsettling," he said....

"It is extremely troubling that key people in our state government hold this view," [Democratic Party Chairman Phil] Johnston said. "I don't consider them to be takers. One fundamental reason government exists is to help us when we're having problems in our lives." ...

Economists also questioned whether such a ratio could be used to truly analyze the state's growing deficit. Cameron Huff, senior research associate at the Massachusetts Taxpayers Foundation, was unsure how to define "takers" because "everybody who is on Medicaid and on welfare is paying sales tax," he said.

State House News Service
Thursday, October 16, 2003
Kriss: Ratio of gov't givers and takers
underscores need for reforms


Chip Ford's CLT Commentary

Has the philosophical chasm between personal responsibility and capitalism vs. cradle-to-grave socialism ever been more vividly expressed?

Republican:  To create a system of "sustainable government services," the solution will rather involve establishing a better balance between the "givers and takers" in the system, specifically those who contribute to government through taxes more than they consume - "net contributors" - and those who rely most heavily on those taxpayer-funded services and are thus "net beneficiaries."

Democrat:  "One fundamental reason government exists is to help us when we're having problems in our lives."

Where did Democratic State Committee Chairman Phil Johnston find that alleged "fundamental" principle in the Constitution? It's nowhere in my copy. He's obviously confusing it with "Critique of the Gotha Programme" by Karl Marx, the founding father of their particular philosophy.

"In 1964, that ratio was set at a 9-to-1 ideal - 90 percent of people paying into the system to help the bottom 10 percent grow," the State House News Service reported yesterday. "Currently, Kriss said, it has dropped to a 3-to-1 ratio, and is nearing 2-to-1."

This trend is running closely parallel with Social Security and Medicare, with fewer and fewer burdened with supporting increasing benefits for more and more. The societal balance of trade has dramatically shifted between the givers and the takers with the givers being increasingly fleeced, "from each according to his ability to each according to his need."

Even now politicians are pushing to add on a costly new prescription drug benefit to an already near-bankrupt program primarily to attract senior citizen votes. This additional burden on top of an already-overwhelming tax load, in theory, will be paid by the seniors'  children, grandkids, and generations to come. I say in theory because of course it is unsustainable.

But this doesn't bother the so-called Massachusetts Taxpayers Foundation, alleged fiscal conservatives and reform advocates. "Cameron Huff, senior research associate at the Massachusetts Taxpayers Foundation, was unsure how to define 'takers' because 'everybody who is on Medicaid and on welfare is paying sales tax,' he said."

"Paying sales tax" is a burden for the takers? They're using the money taxpayers give them in benefits to pay the sales tax when they spend our money. Many if not most of them don't pay any income tax and, thanks to the Earned Income Tax Credit, they still get a healthy tax "refund" check in the mail ... allegedly to cover their cost of paying sales taxes and even Social Security and Medicare taxes if they work at all,  among other things.

Leave it to the so-called Massachusetts Taxpayers Foundation to run interference against any meaningful reforms ... or even an honest analysis of the problem. Incredibly, its senior researcher is unable to just define "takers."

Here's one common definition (Webster's New World Dictionary):  n. A person who takes something; esp., an available buyer, bettor, etc.

The only question Cameron Huff and his elite ilk at the fat-cat business-backed MTF need to answer honestly is, do the 33-50 percent ratio living off the rest of us pay in more than they take out? If not, they are net "takers" living at the expense of the rest of us.

So why is that "highly-respected" and "nonpartisan" alleged "think-tank" having difficulty answering this one simple question?

Chip Ford


State House News Service
Thursday, October 16, 2003

Kriss: Ratio of gov't givers and takers
underscores need for reforms
By Amy Lambiaso


There's more to retiring the state's projected $2 billion deficit for next year than curbing spending and consolidating services, the governor's budget chief told business leaders Thursday. 

The financial imbalance is a problem rooted in history and the solution will require a "completely new way of seeing government," Administration and Finance Secretary Eric Kriss said during a morning address to the Greater Boston Chamber of Commerce. 

Kriss said new taxes won't solve the problem, and will make it worse.

To create a system of "sustainable government services," the solution will rather involve establishing a better balance between the "givers and takers" in the system, specifically those who contribute to government through taxes more than they consume - "net contributors" - and those who rely most heavily on those taxpayer-funded services and are thus "net beneficiaries." 

In 1964, that ratio was set at a 9-to-1 ideal - 90 percent of people paying into the system to help the bottom 10 percent grow. Currently, Kriss said, it has dropped to a 3-to-1 ratio, and is nearing 2-to-1. Kriss pointed to the more than 1 million residents receiving free health care covered by the taxpayers and the need for the state to subsidize education in cities and towns that can't afford it with property taxes alone. 

"The trends are unsettling," he said. 

Kriss used the example to make his point that reforms are needed to supplement spending decisions.

But the state's Democratic Party leader decried Kriss' analogy late Thursday, calling it "classic right wing Republican philosophy to believe that poor, elderly and disabled people contribute nothing to the society," said Phil Johnston, the state's Democratic Party Chairman. 

"It is extremely troubling that key people in our state government hold this view," Johnston said. "I don't consider them to be takers. One fundamental reason government exists is to help us when we're having problems in our lives." 

Johnston called the philosophy "Social Darwinism of the 19th Century," and said people who seek government assistance ought to be defended rather than singled out. 

"Eric Kriss will be on the Medicare program when he turns 65. Would he consider himself to be a taker at that point in his life?" Johnston asked.

Economists also questioned whether such a ratio could be used to truly analyze the state's growing deficit. Cameron Huff, senior research associate at the Massachusetts Taxpayers Foundation, was unsure how to define "takers" because "everybody who is on Medicaid and on welfare is paying sales tax," he said. 

Kriss' remarks come as the administration continues to push its reform agenda, much of which was rejected by the Legislature during the earlier part of 2003. Specifically, he used Thursday's stage to officially announce the administration's intention to move forward with plans to build a new courthouse in Worcester, a project that the state has spent nearly $7 million on during 10 years of planning, advocates say. Kriss said the state will use approximately $3 million in funds from fiscal year 2004 for demolition work and begin construction work by the end of this fiscal year. 

"We still need a courthouse in Worcester, so we're going to move forward," Kriss said. "But moving forward does not mean we're going to stop asking questions."

The administration's capital plan, outlined three weeks ago, puts a $1.278 billion cap on all spending for FY 2004. The Corner Office had delayed its release of a plan while budget officials worked to draw a larger connection between capital projects and the state's operating budget. 

The state needs to "look at each project individually, and we need to think through how these projects fit together," Kriss said. "It behooves us to think through this in a strategic, systematic way." 

Kriss said consolidating several Worcester-area courthouses such as Clinton, Uxbridge, Westborough, Dudley, and Milford to develop a more "regionalized" court system would be a money-saver. The administration has not proposed such an option, but will "take the lead in asking these questions" to the Legislature, he said. 

But some Beacon Hill lawmakers think the Romney administration is misguided in its attempt to revamp the state's court system. 

"He's wrong," said Sen. Richard Moore (D-Uxbridge), whose district includes many of the courts possibly slated for closure. "I don't think Eric Kriss knows anything about judicial reform." 

Moore said the administration's standoff with building a new court in Worcester was a "blatant political move" that they were smart to reverse. The majority of the Legislature does not favor further court consolidation, he said, and will continue to fight courthouses from closing. 

"They're getting into areas they don't know enough about," Moore added. 

Kriss kept his comments to a minimum on other topics such as the Unemployment Insurance Trust Fund, which will likely be depleted by the year's end. Lawmakers will soon release a compromise plan to adjust what certain companies pay into the trust and Kriss said the administration is working on its own proposals to make the system "more fair." 

"It's a work in progress," he said.

Kriss also touched on the state's higher education system and the "cumbersome" school building assistance (SBA) program. The state needs to take an honest look at the role of state and community colleges and determine if that role is different from that of the university system, he said. 

But the state's major work lies ahead with the SBA program; a program he said cannot be continued at its current level. The more than 300 projects on the waiting list for construction are estimated to add up to $13 billion. Kriss said overhauling the program to approve projects on more of a need-basis could help ease the state's future commitments. 

"The system is completely broken and is not sustainable moving forward," Kriss said. "It must change."

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