Barriers were in place on the road in front of the Minnesota State Capitol Friday, July 1, 2011 in St. Paul, Minn., after negotiations over the state budget between Republican lawmakers and Democratic Gov. Mark Dayton broke down and the government shutdown at midnight. AP Photo/Jim Mone)
Jim Mone, Associated Press \
Lori Sturdevant: Scorched earth politics
- Article by: LORI STURDEVANT
- Star Tribune
- July 2, 2011 - 12:22 PM
One of the most galling things about the state government shutdown that began Friday is how disproportionate its pain is to the size of the fiscal fight that caused it.
Gov. Mark Dayton and Republican legislators were said to be tussling over as little as $1 billion in the days leading up to the brink. Yet they could not find an agreeable way to close that gap.
That's $1 billion over two years, in a state with an annual gross state product that state economist Tom Stinson pegs at $270 billion.
But the very legislators who dub even a tiny tax increase a "job-killer" and the governor who said jobs are his Job One are now party to a shutdown that, if it lasts long enough, will slay jobs by the tens of thousands -- many of them good-paying, private-sector jobs.
Those are the jobs that were on Stinson's mind last week.
"It's not good to have state employees laid off," he said when I asked about the economic implications of more than 22,000 state workers being pink-slipped on Friday. "But if the shutdown lasts a month -- as opposed to say three or four months -- that won't make a lot of difference."
State employees received a full paycheck Friday and will be due a partial check -- their last for the duration of the shutdown -- on July 15. If they file for unemployment compensation promptly, they could start receiving those benefits -- about half of their regular salaries -- as early as July 19.
They'll draw down their savings, cut back on spending, and cope in ways that will create an economic ripple, but not much more, the state economist predicted.
"What will surprise people is the extent of the secondary impacts. That's what worries me," Stinson said.
For example: Road construction projects will halt, as state inspectors aren't on the job to OK progress. Vendors that sell supplies or services to state government will be pinched, some a little, some a lot.
The entertainment and hospitality industries will suffer -- and already are, just from the closure of state parks, historic sites, two racetracks and at least three golf courses this holiday weekend.
"I won't say a shutdown will put the state back into a recession. But it's going to slow us down. And the longer it lasts, the worse that will get," Stinson said.
Not only was the final disagreement puny in the runup to shutdown, but its importance for the state's economy was slim.
Stinson said again last week what he's regularly told lawmakers since the Great Recession hit: Raising taxes and cutting government spending are both bad for the state's economy -- but cutting spending does more damage than Dayton's preference, raising income taxes on upper-end earners.
"That's because upper-income individuals are likely to keep spending at the same level after a tax increase. They'll dip into savings." That softens the negative economic impact of a tax increase.
Another Minnesota economist, Louis Johnston of the College of St. Benedict and St. John's University, said economists have found that for every dollar government cuts in spending, the total economy takes a $1.20 hit. The multiplier effect of a tax increase is much lower, he said.
Economists like these two have been bringing research-based policy recommendations to the Capitol for years -- only to have them ignored. (This may be what gives editorial writers a sense of kinship with economists.)
Social science data doesn't matter as much as it should at the Capitol. What matters is politics -- the politics of lowest-denominator popular opinion, of special-interest pleaders, of campaign donations, of party endorsing conventions dominated by zealots.
What did not seem to matter as much as it should have last week is Minnesota -- the 153-year-old endeavor in this northern place to govern ourselves in a way that, as the State Constitution says, provides for the "security, benefit and protection of the people."
Those words were cited by Ramsey County Chief Judge Kathleen Gearin as she demonstrated a keener awareness of that phrase's obligation than the other two branches of government did.
The same passage in the state's founding charter also says that the people of Minnesota have "the right to alter, modify or reform government whenever required by the public good."
As this discouraging, job-threatening, trust-damaging shutdown continues, that passage ought to give the people who caused it a chill.
Lori Sturdevant, an editorial writer and columnist.
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