Balanced Budgets And Tax Caps

For years, it has been a GOP article of faith that the United States should pass a balanced budget amendment. Here in Indiana, Republican Governor Mitch Daniels was the driving force behind the “constitutionalization” of tax caps–adding a measure to the state’s constitution limiting state and local government’s taxing power.

Fortunately, wiser heads prevailed in Congress, and the federal government retained authority for the massive deficit spending needed to ease what will certainly be a major recession or a depression in the wake of the Covid-19 pandemic.

Here in Indiana, we weren’t so lucky; Mitch Daniels successfully curried voter favor by decimating the ability of cities to adequately fund services and hobbling the state’s ability to meet unanticipated crises.

The average voter doesn’t recognize the different functions of constitutions and statutes, or understand why specific tax provisions of this sort don’t belong in the former.  Most Hoosiers thought it was a good idea to place tax caps in the state’s charter, making it difficult–if not impossible–to change direction if the need arose. Now, the state of Georgia–which has a similar restriction–is demonstrating just how short-sighted and damaging it is to elect people who are more concerned with politics than good policy.

From Heather Cox Richardson’s daily “Letter,”(no link, but her URL is heathercoxrichardson@substack.com) we learn about an investigation by George Chidi, a Georgia journalist and former staff writer for the Atlanta Journal-Constitution.

Chidi examined Georgia Governor Brian Kemp’s decision to reopen gyms, fitness centers, bowling alleys, tattoo parlors, barbers, nail salons, restaurants, theaters, and massage therapists, among other businesses, next week.

Kemp said the businesses would be required to screen workers for illness, increase sanitation rules, separate workspaces by at least six feet, telework where at all possible, and have staggered shifts. He also said that more restrictive local rules could not override his order.

Kemp told reporters that his concern was to protect small businesses, hurt by the economic shutdown, but Chidi had a different interpretation. “It’s about making sure people can’t file unemployment,” he wrote.

The state’s unemployment fund has about $2.6 billion. The shutdown has made claims skyrocket—Chidi says the fund will empty in about 28 weeks. There is no easy way to replenish the account because Georgia has recently set a limit on income taxes that cannot be overridden without a constitutional amendment. It cannot borrow enough to cover the fund either, because by law Georgia can’t borrow more than 5% of its previous year’s revenue in any year, and any borrowing must be repaid in full before the state can borrow any more.

By ending the business closures, Kemp guarantees that workers can no longer claim they are involuntarily unemployed, and so cannot claim unemployment benefits. Chidi notes that the order did not include banks, software firms, factories, or schools. It covered businesses usually staffed by poorer people that Kemp wants to keep off the unemployment rolls. (Emphasis supplied.)

We already knew that Kemp was despicable; a man for whom the word “ethics” is clearly meaningless–as Secretary of State, he refused to recuse himself and oversaw the Gubernatorial election in which he was a candidate. By throwing out some 50,000+ registrations from African-American voters, he narrowly deprived Stacy Abrams of a victory in that race.

This effort to deprive low-income workers in Georgia of the ability to claim unemployment is equally contemptible, but it is also equally attributable to the restrictive provisions in Georgia’s constitution.

Indiana’s constitution requires a balanced budget. That requirement need not be debilitating–if the state and its subdivisions can raise taxes to meet unanticipated challenges. Thanks to Mitch Daniels, his successors in the Governor’s office are unable to do that. Governor Holcomb thus far seems like a pretty solid guy–a throwback to the kind of Republicans I used to know–so I am hopeful he won’t emulate Georgia’s Kemp.

When rightwing Congress-critters bloviated about a Balanced Budget Amendment, cooler heads pointed to the perils and prevailed. When Republicans in the Indiana statehouse crowed about putting tax caps in the constitution to “protect” taxpayers, warnings by fiscal and tax policy experts were pooh-poohed.

Politics won, sane and informed policy lost.

Isn’t there a song called “Georgia on my mind”?

22 thoughts on “Balanced Budgets And Tax Caps

  1. And – in the middle east … The petulant piss-ant is telling our military to SINK IRANIAN BOATS. Always a distraction. The Orange one may still start a war for a distraction.

  2. About those Mitch Daniels’ tax caps on property taxes; I didn’t get my panties in a bunch because I knew the coming loophole would allow higher property taxes. The regular property assessments raised the assessments which of course, using the new tax cap percentage, raised the amounts due.

    Dr. Birx stated she believed the people of Georgia could go to hair salons, nail salons and tattoo parlors and maintain social distancing. When asked “How?”, she responded “People are creative.” Now Trump has stated it is too soon for Georgia to reopen (what happened with the other states planning to do the same) but he will not stop the Governor from carrying out his plans. So much for his presidential total powers. What was until recently, sources of the day’s news on MSNBC and CNN, are now Trump’s new and deadly version of “Laugh In”. How long can Dr. Fauci last in this environment? He is still trying to be the voice of reason for the medical field to save lives; dead people don’t pay taxes…dead people don’t vote. Will there be any budgets to balance in our near future?

    patmcc; thank you for your reminder it may not be the Covid-19 Pandemic which wipes us out if Trump gets the war he sought during his campaign.

    As an aside; “Georgia On My Mind” was composed by Indiana’s own Hoagy Carmichael.

  3. Republicans have always been in total lockstep with the fantasy that government should be run like a business. It is NOT a business. Government is meant to govern, and that means it must rise to the needs of the people. We are seeing the perfect example today of a government totally unaware of its Constitutionally mandated duty.

    A balanced budget has NEVER been a reality except in the spider-web corners of Republican attics. Now, we have Mitch McConnell telling states to file for bankruptcy instead of asking for more money from the Federal government. This from a man who is on the grift with Russian oligarchs.

    The Republican idea about governance has ALWAYS been about serving the monied classes. And those classes, by their own definition, want it ALL. How’s that for a balanced budget?

  4. I’d like to remind everyone that balanced budgets were only important to Republicans during Democratic administrations. Remember Clinton left a surplus. W gave it away to his friends.

  5. patmcc,

    The petulant piss-ant is telling our military to SINK IRANIAN BOATS. Always a distraction. The Orange one MAY still start a war for a distraction.

    Do you blame him? Why not? Who’s going to stop him? The Democrats? The Progressives? The Jews? What about women? Now, there might be a chance there, but I doubt it.

  6. Here in NC, we have a recent constitutional amendment setting income tax at a flat rate of 5.25%. This is going to kill us as pandemic expenses soar…

    BTW not to worry about Iran – hope you noticed that the President said he would “shoot down” the gunboats. To my knowledge, the Iranians don’t have flying gunboats…

  7. “Politics won, sane and informed policy lost.” Sheila makes a sound point. Sometimes I feel I just as much read Tolkien’s: Tales from a Perilous Realm; than painfully pour over The Congressional Record. Logic and reason you ask? The next generation will be entertained by both Grimm’s Fairy Tales and transcripts of the record from the Trump Presidential Library. Here is one that will beat the tale of the hare and the turtle for best skit in a sixth grade history class. Unfolding before our eyes is a dog breeder just appointed to be Trump’s coordinator of our country’s response to the global pandemic. Yes. I kid you not. The former aide to Azar before joining Old 4-F Bone Spur’s elite fighting team, was a dog breeder. His resume provides absolutely no evidence of academic achievement or front line experience in public health. Guess he knows how and where to lick with puppy enthusiasm that opines to the wee willy gratification of …….. Oh well. If we must shelter in, let’s enjoy another reality fairy tale.

  8. All we can do now is just laugh. What else can you do with spilled milk? Maybe that’s the response we’ve been waiting for. Half of America all laughing in unison. Calling it: THE LAUGH HEARD ROUND THE WORLD!

    Who wants to cry all the time?

  9. thanks, I get info and more from the whole effect of this media here. some times ya gotta shake the tree to get the best fruit. this subject discribes to the working class why you dont vote to screw yourself. again,the repubs,forethought? and what else does the tax cap serve? if we had a living wage, and a tax base that was for the people, wall street would have to take a pay cut.. but as i see it,when the country goes back to work,were going to be handed lower wages again,and higher prices. after all, we again are bailing out those who made these decisions again..again,and again.. wheres joe? he hasnt said much either..

  10. Vern,
    we dont have a goverment because we are not the people anymore. the elected ones believe that they got the job by the ignorance of the whole ,by the elected. ( they believe they are now the people)the fact is, todays voter is so in tuned to what bubba writes over common sense. we have allowed the people to be self absorbed in thier little world of nothing,and provide us with its rewards. reality check, and some sort of slap,across the head sometimes loosens their brain from its crazy glue. i wont tell ya any lies,in the working class field im in, it takes face to face reality checks to sensitize the ones who went numb listening to fox,and reading bubba.. sorry if the truth isnt in some social media,that’s the point,reality is face to face talks with those who havent a clue,anymore.. best wishes..

  11. The infamous Tea Party was the driving force behind tax caps. Locally, the majority of Tea Party members were landlords and Ball State University employees, which always brought complete amazement when they spoke against public spending. Telling grandma that her property would be taken from her by the government easily swayed Hoosiers to vote against their self-interest once again.

    Most had no idea the Koch brothers were behind this Libertarian movement, which ultimately wanted to eliminate all of the governments – local to national and replace with the free market.

    Quietly, Mitch also took away much of the powers of the health department and shifted it to regulatory bodies, which had no plans to regulate the polluters. Our ineffective response to this pandemic has exposed that maneuver. We have no idea where the “hotspots” are because we’ve tested less than 1% of the population. The newspaper referred to a local nursing home as a “hotspot” because of three elderly residents died in one facility. How’s that for being proactive?

    In my morning briefs from around the world, I’m amazed at the high debt to GDP now consuming this country (highest since WW2) and Europe. All are well over 100%, with some surpassing the levels Spain reached, causing an international economic crisis several years ago. How will the now independent U.K. spread out its debt?

    Is it any wonder that local and national governments are panicking?

    Where will the revenue come from to pay for all this global leverage?

    Our Central Bank has been printing money since 2008 (quantitative easing) to pump into the financial system, which has gone where exactly? Have banks lowered loan rates or increased savings rates?

    It would seem that much of the money has been loaned to large multinational corporations, and the rest invested into a stock market to inflate values artificially.

    I’ve done a fair case of financial modeling in my banking days, and usually, I could tell long before entering the numbers in our programs what the outcome would look like; the word, bleak, comes to mind this morning.

  12. Jack,

    “wheres joe? he hasnt said much either..”

    He’s not much of a comedian.

    This all started out to be one big, bad, joke by two spoiled brats from Dallas, one who had a multi-millionaire father and the other a billionaire father, the richest man in the world. Unfortunately, both brats had the moral backbone of that wonderful ’20s duo of Leopold and Loeb.

  13. It’s interesting, and yet nefarious! They been trying to purge voter rolls and fairly successful, of course that leads to legal pushback and action.

    But, if you can get individuals who are poor, living paycheck to paycheck, in Georgia, a goodly portion of those folks are African-American! So if those folks get sick and die, they are off the voter rolls, and, this microscopic viral interloper has done the work for them! All they have to do is shrug their shoulders, say they were doing the best they possibly could for the economy, and, the African-Americans and other minorities took one for the team!

    I’m really surprised that there is not anyone out there voicing with conviction, all of the nefarious angles to this reopening, limited reopening, to put targeted groups at risk purposefully!

    The thought process is flawed though, how are you going to burn down a bedroom in your home without destroying the whole house? It’s not going to happen, the fire will spread and the whole house will be lost. But when you have brainless buffoons looking to ingratiate themselves to a mentally ill very stable genius, gray matter, synapse, and neurons are in limited supply if not nonexistent.

    I’m sure Nero loved his music, and I’m sure he thought everyone else did also, I’m sure Romans enjoyed Nero’s little ditty while they all burned to death, SMH!

    Very Hitleresq, who needs brownshirts and Kristallnacht when a virus can do it for you?

  14. Off subject:

    Another lesson for those who would cross The Trumpet.

    A top US government doctor has turned whistleblower after he says he was pushed out of his role in the search for a coronavirus vaccine. Rick Bright told the New York Times he believed he was dismissed as director of the US health department’s Biomedical Advanced Research and Development Authority because he resisted Donald Trump’s push to use an unproven malaria drug, hydroxychloroquine, as a treatment for Covid-19:

    Contrary to misguided directives, I limited the broad use of chloroquine and hydroxychloroquine, promoted by the administration as a panacea, but which clearly lack scientific merit.

    Trump and his cheerleaders at Fox News have recently backed away from promoting the possible benefits of hydroxychloroquine, after a trial of the drug in US veterans hospitals went badly. The president told reporters on Wednesday that he had “never heard of” Bright.

    https://www.theguardian.com/us-news/2020/apr/23/first-thing-the-trump-administrations-coronavirus-whistleblower

  15. I am not going to say the property tax caps in Indiana were the best solution, but there was a problem in Indiana.

    I have lived in the same house for 30 years. It is in a historic district in a downtown Indy neighborhood. I was paying a ridiculously low $400 A YEAR in property taxes when they built a new house next door back in 1991. At some point those guys got a tax bill for $20,000 for one year. The houses are similar in size and quality.

    The real problem might have been Indiana’s backward assessment system, and it is still might be a problem. Because I have lived in the same house for 30 years, there is no recent sales data to compare. I now pay a more reasonable $7000 a year mainly because I built a carriage house (3 car garage with a 1 bedroom apartment) on the alley. They do have the assessment correct on that structure, but the neighbor on the other side pays $10,000 a year. Again they have a house with similar age and size, but no carriage house. The real solution would have been to reform Indiana’s assessment system AND fund the department to the level that stupid mistakes don’t happen. Again, in Indiana, we only took part of the solution, and did not bother to up the funding, so you still have crazy disparities, with unpredictable jumps in taxes from year to year.

    So in the age of run away taxes, I can see how it is tempting and looks good politically in the short term, to constitutionally cap taxes, I can also see how it can box you into a bad corner.

    Too bad in most cases, it is political suicide to tell the truth about your real motivations. In this day of misinformation, there will always be people that believe exactly what a politician says despite the fact that the actions go against their own interests and they will keep voting for these guys.

  16. There’s no question that we are transitioning away from what is unsustainable and no life form does that with grace. We probably stood the best chance of doing that of any species but we demonstrated long ago that we aren’t that smart. Perhaps some day in the process enough of the right kind of leadership will emerge along with something to replace what’s falling apart but no sign of that so far.

  17. And while Texas slept…. Dan Patrick, the vacuous Lt. Governor of that fair state said yesterday that there were more important things to consider than living. I’m not making that up. Having witnessed the rise of this turkey while living outside Austin, it’s really not that surprising. What IS surprising that there are so many Texas Republicans who still have enough sense to actually breath.

  18. “Too bad in most cases, it is political suicide to tell the truth about your real motivations. In this day of misinformation, there will always be people that believe exactly what a politician says despite the fact that the actions go against their own interests and they will keep voting for these guys.”

    Dan Mullendore: finding your on target quote above after reading the Wednesday interview between Anderson Cooper and Las Vegas Mayor Goodman and this morning’s conversation between New York City Mayor Cuomo and a reporter shouting the “real motivations” of their “self interests” was a microcosm of the dilemma we are facing today as an entire nation. Greed and avarice vs. life and death. Mayor Cuomo has become the spokesman for America and Americans prior to Trump and the Pandemic. Mayor Goodman is the typical Las Vegas “fixed slot machine world” spokesperson proving that “What happens in Vegas should stay in Vegas!”

  19. Lester – I also noted that Trump said to shoot down Iranian gunboats, so we had better give Boeing another 10 billion to build some of those gunboats in a hurry since we are apparently asleep at the technological wheel and need some of our own pronto. Uh. . .

    One of the big problems in the current giveaways of our progeny’s fiscal future is McConnell. He has openly said that he will not give any money to the states and political subdivisions that are blue and that they should take bankruptcy to, among other things, get rid of their pension liabilities. With a collapsed economy and drastic reductions in sales and other taxes and fees to such entities he may get his wish, but guess what the people get who have worked all their lives and are now to lose their pensions? One can only hope those pensions were not in lieu of social security because, if so, they are headed for their new quarters under the bridge or on the sidewalk.
    There are some other problems Mitch did not address in terms of state and municipal bonds, once thought safe with the bonus of freedom from federal taxation on the interest derived therefrom. What happens to the creditworthiness of such governmental units when they default for lack of income and lack of any opportunity to obtain income due to statutory and constitutional lids? What also happens to massive layoffs of public employees and the services they were employed to attend, like state police, sheriffs, jailers, clerks’ offices, recorders, those employed in health and human services et al. See any problems?

    Budgets are not set in stone, nor are fee and tax rates. Politicians need not make illegal what should be done depending upon the need and the moment, and since, unlike the federal government, states are required to balance their budgets, they would be well advised to plan budgeting in advance and adopt tax and fee schedules somewhat in excess of the projected needs with a buffer in case of emergency.

    McConnell would selectively destroy the creditworthiness of blue states or if such states were to manage to issue bonds the lenders would demand an excessive rate of interest, thus further penalizing blue states for their past sins while forgiving red states theirs and without regard to the perhaps millions of Republicans who inhabit blue states. Fortunately, I think such an attempt by Mitch is unconstitutional, but unfortunately, his refusal to bring such a bill up for a vote where all states have access to federal largesse is not. November 3 in Kentucky can’t get here soon enough!

  20. Vernon – you are so right – government isn’t business, but beyond that, business (and the family budget) don’t operate like the Republicans pretend. Businesses borrow money all of the time and that “balanced family budget”? I don’t know about other people, but I have bought and owned four cars through auto loans and I still have a mortgage on my home.

    Sheila – It is great, although maddening, to see Governor Kemp’s real motives exposed. Thank you.

    Time for pet peeve – Christine Todd Whitman – lauded now as a less crazy Republican and former EPA administrator, but everyone seems to forget her rise to power as New Jersey Governor. She kept her campaign promise to cut taxes and “balance the budget”. She succeeded OK. She simply said that the state would no longer set aside money for its pension fund. She spent those dollars and figured that the state would simply cut the pensions some time in the future when she was long gone (imagine telling a fat cat CEO that he wasn’t getting the bonus he was promised).

  21. Not a fan of Kemp but the notion he did something wrong with the voter purges and those voter purges prevented Abrams from winning, just isn’t well founded. The 1993 National Voter Registration Act (Motor Voter Law) requires the purges after several elections of non-voting and, I believe, two postcards are mailed by voter registration to the address and are returned as deliverable.) That law had been ignored up to Kemp’s time and the Georgia registration rolls were filled with dead voters and those who had moved. (Bloated registration rolls is also a problem in Indiana and why a few years ago Marion County had a 105% registration rate.) I know from personal experience working the polls that if someone has not voted a single time in 4 years, there is about a 99% chance they’re dead or have moved.

    The notion that Kemp purging voters deprived Abrams of so many votes it cost her the election is a fantasy that Abrams is selling and too many people are buying. After the election, there were only one or two isolated cases of voters complaining they couldn’t vote because of the purge. Abrams lost the election by 50,000 votes. Percentage wise it was close. But when you look at the raw vote difference, Abrams was not even close to qualifying for a recount. If Kemp were trying to suppress the vote, he was spectacularly unsuccessful. Turnout in 2018 was through the roof, especially African-American turnout. 3.9 million people voted for Georgia Governor in 2018 while only 2.5 million did so in 2014. The 3.9 million vote total nearly matched the Georgia vote total for President in 2016.

    The media, rightfully, are quick to fact check Trump when he’s telling lies, which is pretty much every time he opens his mouth. But when it comes to Stacey Abrams, the media just repeats Abrams’ claim of the stolen election, without any scrutiny of the “facts” she say support her claim. Abrams ran a good race in 2018 and could have handled the loss with dignity and grace. She instead decided to be the ultimate sore loser and to leave Georgia Democrats down by refusing to run for either of the two Senate seats up in Georgia in 2020, races that were very winnable for the Dems, especially with Abrams on the ballot. Instead Abrams insists she,’s deserving of being Biden’s Vice President. Uh, no. Abrams act has gotten very old.

    bypass two Senate seats in Georgia the Democrats desperately needed her to run for.

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