Friday, March 4, 2011

Truth in Government Budgeting

It looks like government budgeting is going to be the main bone of contention in the next few election cycles at both the state and federal levels. That’s got to be bad news for Democrats because it means that they’ll be playing defense. The fact that, at the national level, they’ve taken it on the chin politically for fulfilling their campaign promises respecting the stimulus and health care reform shows how politically treacherous it is to try expanding the scope of government when the macro-economic ground is shifting beneath our feet

What’s happening in Wisconsin underscores the point. The public employee unions have decided that they need to give back pension and health care benefits to have any hope of holding onto their statutory collective bargaining rights. The question isn’t whether they’ll surrender ground in their battle with Scott Walker and the Republicans, but how much. That’s just a function of the lay of the budgetary land. Peggy Noonan reminds us that when the public books get far enough out of balance, “[i]t doesn't matter if you're a liberal or a conservative, it's all about the numbers, and numbers are sobering things.”

That probably means that, for the foreseeable future, successful politicians are going to have to be credible public bookkeepers. That’s going to be quite of challenge for any politician implicated by sorry state of standard public budgeting practice. Political battles over the federal and state budgets are going to bring to public attention the fact that the way governments keep their books would embarrass a lot of people now serving time in federal penitentiaries for securities fraud. Don’t take my word for it. Listen to Bill Gates:

“The Microsoft co-founder and philanthropist said state budgets have received a puzzling lack of scrutiny and have been ‘riddled with gimmicks’ aimed at deferring or disguising the true costs of public employees' health care and pension obligations, citing California's ongoing budget crisis as an example of creative deficit spending and the subsequent cuts to education spending as an unacceptable cost.
"‘[R]eally, when you get down to it, the guys at Enron never would have done this. This is so blatant, so extreme,’ Gates said of state governments' accounting practices generally. ‘Is anyone paying attention to some of the things these guys do? They borrow money -- they're not supposed to, but they figure out a way -- they make you pay more in withholding to help their cashflow out, they sell off the assets, they defer the payments, they sell off the revenues from tobacco.’"
The fact that nonpartisan figures of the stature of Bill Gates are starting to notice the deplorable state of government accounting suggests that it may be the next shoe to drop in the political war over public spending.  That’s more bad new for Democrats and Democratic constituencies trying to resist the defunding of their favorite programs.

1 comment:

Anonymous said...

Agreed. When I saw Bill Gates had made these comments, I really wondered where he was coming from. I think it is just a position of honesty. That has to make Democrats and union defenders a bit scared.