Wednesday, February 24, 2010

‘Tis better to have bonded and lost

Than to not have bonded at all.

Both houses of the Minnesota Legislature passed a bonding bill but have now snatched it back from the jaws of a Gutshot veto. That’s a relief.

The governor wants a bonding bill of around $650 million; the bill passed by the Lege was in the neighborhood of a billion dollars. As many people have observed, the difference in debt service is negligible in its effect on the general fund budget. But it would provide some additional economic stimulus when, in case you hadn’t noticed, it could still do some good.

One complaint about the bonding bill, I believe it was by Tom Emmer, is that it only creates “temporary jobs.” If you want permanent construction jobs, Tom, you’ll have to propose a Big Dig or a new airport.

Paul Krugman’s image of Fifty Herbert Hoovers resonates when thinking about Pawlenty’s promise to veto the Legislature’s bill:

No modern American president would repeat the fiscal mistake of 1932, in which the federal government tried to balance its budget in the face of a severe recession. The Obama administration will put deficit concerns on hold while it fights the economic crisis.

But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.

Krugman goes on to say:

It’s true that the economy is currently shrinking. But that’s the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending, too.

In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.

As the Strib and Tom Bakk observe in article linked above:

In Pawlenty, DFLers are battling a lame-duck governor who has little or no skin in the game. With less than a year to go in his term, he is not encumbered by vast new initiatives or proposals that might more easily coax a governor to the bargaining table. Instead, they face a Republican governor who appears to be eyeing a run for the White House as he tries to polish a reputation as a blue-state fiscal conservative who has clamped down on government spending.

"The governor doesn't need another bonding bill; he's not running again," said state DFL Senate Tax Committee Chairman Tom Bakk, who is running to replace Pawlenty. "He knows the Legislature needs a bonding bill, so the power's really tipped his way."

In other words, he’s free to play Herbert Hoover for the Republican presidential primary crowd.

It is also interesting to note that the best that the governor can do to show leadership support in the Senate is his trusty squire Geoff MIchel, quoted in the Strib article. Why? Well, Dave Senjem, the Minority Leader, voted for the bill.

But, back to the Lege here. The governor won this one without a shot. It is disheartening to see how the Legislature is so unable to match the governor in rhetoric or in commitment to principle.

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