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Monday, March 12, 2007

Moral musings instead of fiscal management

By Dennis Byrne
Chicago Tribune

"What I'm proposing is big, and historic. It solves all the problems we've been talking about for 30 years."

--Gov. Rod Blagojevich, describing his budget

Nothing better reveals Blagojevich's delusions than that defense he made of his fantasy budget last week on WGN radio. Here we've been flailing away for 30 years trying to solve the state's health care, education, pension, deficit and other crushing problems. Until now. Fear not; here's Rod.

The sad part is that some people actually believe it. Perhaps even Blagojevich himself. Certainly, the education, health-care and labor union lobbies, among others, believe it, because they, like the governor, are committed to the idea that scattering lots of money their way will solve everything. Already, they're saying that people who love children must support the budget; implying, of course, that if you don't, you don't love children.

The proposals in Blagojevich's State of the State speech rest on his assertion that they are prescribed by "a moral imperative." Good versus bad. Virtue versus evil. I presume that those who indignantly tell me to stop imposing my morality on others now will turn their wrath on the governor.

Actually, the governor and I agree that the public policy is informed by morality. Most laws have some moral component, the most obvious being the one against homicide. But here's where the governor is wrong: Yes, we have a moral imperative to educate our children. But no, that doesn't mean that the means of getting there has equal moral certitude. My saying that Blagojevich's budget isn't the best way to do it doesn't make me evil. If it does, then I'll tell you what is immoral. It is wrong to:

- Promise things you know you can't deliver, as does Blagojevich; to make false promises to those who are desperate for help and to feed their cynicism when your promises are broken.

- Jeopardize the pensions of state employees with "the largest pension obligation bond in history" (this from House Speaker Michael Madigan), as it is stupid for you to pay off massive credit card debt by charging it to another card. Even if it's at a slightly lower rate, it still doesn't solve your problem, as Blagojevich would have us believe.

- Raise taxes so high and inequitably that it'll drive jobs from the state.

- Sustain ever-larger deficits, possibly leading the state into bankruptcy, while pretending that you're not.

- Propose all sorts of extravagant new programs without solving the problems at hand.

- Tell whoppers.

Take how he claims that he balanced the budget by eliminating the $5 billion deficit he inherited. Like statistics, budgets can be made to say anything. The truth is closer to Democratic State Comptroller Dan Hynes' figures, which show a fiscal year 2006 deficit of $2.3 billion.

Or take his claims about the "unfairness" of the state's income tax system. For all of Blagojevich's rhetoric, you might get the impression that individuals ("the people") are paying twice the rate of businesses. In fact, the state income tax rate for individuals is 3 percent of net income; for businesses, it is 4.8 percent.

Logic would dictate that if loopholes in the state tax code allow large businesses to "legally forgo paying billions in state income taxes," as Blagojevich claims, then you should fix the loopholes, not junk the entire system in favor of one that creates new problems.

Blagojevich, for example, insists that his proposal for taxing businesses transactions wouldn't drive away jobs. In other words, he says a new tax that supposedly will extract billions more dollars from businesses that aren't "paying their fair share" won't discourage businesses from staying in or moving to Illinois. Tell me, how does that work?

There's a reason why it's more reasonable to tax a corporation's net profits instead of its gross revenues from sales. A company pulling in a lot of sales revenues may actually be losing money on the bottom line. It's unfair to put an extra burden on firms that are breaking even or losing money, taxing them at the same rate as companies whose margins on sales are much bigger. It's the same reason that you're taxed on your income after deductions, instead of your actual wages.

Well, that's just a few of the many problems with this budget, problems that are causing members of Blagojevich's own party to balk. Even those who believe that government can solve "all the problems we've been talking about for 30 years" aren't biting.


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