Careful, now, on the surplus
Brummett explains why the state surplus isn't necessarily so shocking and why the legislature should move carefully in response. (He doesn't mention, but could, that while $400 million is certainly a large figure it is not so large when viewed in the context of a $5 billion budget.) If income slows and needs rise, then the taxing and spending won't be so far apart.
That's why tax policy should be based on fairness and the long-term sufficiency of revenue-generating devices, not on a lucky couple of years.
Compare it to your household budget. If you received a bonus this year, would you be comfortable taking a wage reduction next year?
That's different, you say. Not so much. Households need to save for retirement. Governments might do well to save for rainy days, particularly since human needs tend to rise as economic growth and government income wane.




Comments
Brummett makes some very wise points. I do not keep my household reserve down to the bare bone because that is foolish and an invitation to financial hardship. I also don't foolishly hope that unwelcome expenses will stay away from my door forever. They will come a'knockin' and if your pocketbook is empty, Woe Unto Thee.
Those who demand that money back are simply following another policy they're familiar with: Cut and Run. Give me what's mine and to hell with the rest of you.
Colonel Travesty
Posted by: Cut & Run Economics | July 9, 2006 07:39 AM
I think Mr. Brummett repeats what many here on the blog have been saying. With the notable exception of the anon who keeps shouting "GIVE IT BACK! GIVE IT ALL BACK!! NOW!!!", most blog commenters have favored a careful, sensible approach such as Brummett describes.
Not surprisingly, the general public, not deep economic thinkers they, are joining the "give it back" shouts, but I don't think they'll be surprised if they don't get it.
Posted by: Spirit | July 9, 2006 07:51 AM
Remember about Anonymous. He's the same guy who believes you have to be a taxpayer in order to comment about anything and will probably lead the whiners who want their pittance back to get another six-pack of brewed courage.
Da Snake
Posted by: Jake | July 9, 2006 08:48 AM
I'm surprised at you bunch of liberals. If we give it back, the rich crowd will get big bucks from the state's coffers. If the Governor calls a special session and eliminates most of the food tax, the poor with children will be the group that benefits the most. Sales tax on food is the most regressive tax; eliminating that tax will help the most needy in our state. Oh, now I get it...you don't really care about the poor unless you're running for office.
Posted by: Anonymous | July 9, 2006 09:02 AM
I love Anon's Bait-and-Switch tactics. Toss out some names and then create a topic with a higher price tag.
Colonel Travesty
Posted by: Gimme Money, That's All I Want | July 9, 2006 09:33 AM
How long before the Beebe campaign runs with their advisors's, I mean Brummett's ,ideas.
Posted by: popeye | July 9, 2006 09:43 AM
This analogy is better than Brummet's...from the Huckabee blog.
Imagine for a moment that a young man estimates he can fix an old woman's porch steps for $20, but when he finishes she accidentally pays him with a $50 bill. He knows she can't see well, and that he could easily keep the overpayment for himself. He also knows she is living on a fixed income and needs her money for things like food, prescriptions, and electricity. He also knows she is having to help raise her grandkids, who need braces for their teeth.
What would YOU do if you were this young man? You would give it back, of course.
This is what has happened in Arkansas. Your Democratically-controlled legislature estimated the cost to provide services to you. But you overpaid them for those services--a lot.
Now your legislature has a choice. Do they do the right thing and give your money back, as Governor Huckabee wants them to do? Or do they keep it, knowing full well that many, many Arkansans struggle every day to make ends meet?
Posted by: Give Me Back My Money Now | July 9, 2006 10:04 AM
We're supposed to take economic advice from Brummet, a failed book author, and the AR Times brain trust that gives away it's paper and get's subsidiized by its auto rag. I say follow these thought leaders and remain 49th.
Posted by: Anonymous | July 9, 2006 10:22 AM
Well, GMBMMN, sounds like Glaucoma Granny is someone who needs--or soon will--much in the way of government assistance, given her mushrooming needs and very limited income. Tell the handyman to send the thirty bucks to the government to help off-set the many times that she'll receive in the form of aid, as the surplus is but a fleeting phenomenon.
Posted by: Clay, NLR | July 9, 2006 10:27 AM
The anology falls apart because Arkansas is more like the broken down poor old lady, while the taxpayers are the young man.
The young man has been starving the old lady and making her live in dismal conditions. He gives her $10 to buy groceries for the week. When he learns that the old lady only spent $9.90 and tried to set a dime aside for a rainy day, he goes ballistic and demands she give it back. The money is his, not grandma's.
Philosophically, he feels she ought to be started to death anyway; she's nothing but an unproductive leach on the economy. It is right for the strong to think only of themselves; greed is good and makes the world go round.
Posted by: Roland | July 9, 2006 10:40 AM
Try this: It wasn't the taxpayers who created a "surplus;" it was the poor planners who developed the budget who deserve the credit. Try some honesty for a change. Sure, it's easier to toss out an emotionaly laden term such as "surplus." To most, that likely implies that they overpaid their taxes. A term such as "inadequately funded services" might better reflect what is going on with the budget. Yeah, I know. It's a lot more fun to blather with the in-crowd. Beats thinking everytime.
Posted by: bodybybush | July 9, 2006 12:40 PM
Take a lesson from the French. Yes I said the French. The BBC reported that they have just established the Council for the Diffusion of Economic Culture to teach Frenchmen economic literacy and the benefits of wealth creation. What a novel idea. For those who need further explanation, taxing for prosperity doesn't work and never has. States with lower tax rates do better economically.
This blog rarely appeals to anything but ignorance, but if the French are coming around there is hope.
Posted by: real deal | July 9, 2006 12:56 PM
"A term such as "inadequately funded services" might better reflect what is going on with the budget."
Good Thought! Perhaps it would be more meaningful to actually develop a list according to priority. Where would school facilities and problems be, state police needs, -- what else needs to be on this list?
Posted by: Time Waster! | July 9, 2006 02:43 PM
We need another state police force. Two is not enough.
Posted by: Anonymous | July 9, 2006 03:40 PM
I think part of the money should go to a beefed-up police force and medical team designed to make sure that Gov. Beebe doesn't fall victim to a lethal pretzel or other calamity, as well as making sure he never leaves the state of Arkansas. That way, we'd be sure that crazy Jim Holt and Bill "I bought my election" Halter don't rise to the gov's seat.
Posted by: RazorbackDem | July 9, 2006 04:01 PM
I'm for repeal of the food tax.
Posted by: rablib | July 9, 2006 07:21 PM