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Conservatives across Minnesota and the nation have been applauding Gov. Tim Pawlenty's decision to balance the state's 2010-11 budget by unilaterally unallotting $2.7 billion, with some enthusiasts describing it as a "real butt-kicking" of all those dastardly liberals in St. Paul. Appraisals like this are not my style, but given how folks on the right have been pretty down and ornery lately, the extruded steam is not all that hot.
In fairness to the governor's opponents, though, it's hard not to see how the process is setting a questionable precedent, as it's a safe bet that not too many people over the last 151 years of statehood ever envisioned a legislative session ending this way. This is largely unexplored territory, and since conservatives lay claim to honoring tradition, dramatically changing the way Minnesota slices billions of dollars is no small matter.
Nevertheless, one underplayed rationale for Pawlenty's method is particularly potent, and it's the biggest reason I endorse what he did. The fundamental prudence of unallotment, I would argue, has less to do with any current need for belt-tightening and more with an impending boomer-based mess that will be much harder to fix than anything under way now.
No hyperbole. The deluge is coming; watershed escapes are required. These are truly new and difficult days.
Boomers beginning to retire
Rudiments of the nearing crisis are increasingly well-known, which is not to say sufficiently appreciated. Seventy-seven million Americans were born between 1946 and 1964. They already have begun to retire, collecting Social Security. Starting in two years, they also will start getting Medicare, and when many millions wind up in nursing homes, they frequently will be sustained and kept alive by Medicaid. All this will cost an extraordinary amount of money — at precisely the same time their retirements and infirmities erode tax revenues.
There are loads of petrifying projections, by analysts of all political stripes. Here's but one, courtesy of Brian Riedl of the Heritage Foundation (calculated, by the way, before the current explosion of federal spending and debt).
Unless things change dramatically when it comes to Social Security, Medicare and Medicaid, federal spending will eventually consume 28 percent of GDP, while federal revenues will total a comparatively paltry 18 percent. This 10-percentage-point gap will lead to budget deficits large enough, Riedl predicts, to increase the national debt from (what was) 40 percent of GDP to more than 300 percent. Projected state finances across the county may be prettier, but not enough.
I'm not comfortable with every cut Pawlenty has made. But in preparation of what's bound to come, the fiscal imperative is clear: We simply have no option other than to be more aggressive than ever before in draining budgets at all levels of non-essential spending — as well as paring programs for which, sometimes and frankly, legitimate cases can be made.
Similarly, when it comes to taxes, we need to strain and keep all of them as low as possible for as long as possible, as the pressure to spend like spigots on entitlements may prove overwhelming, insofar as boomers and older Americans continue to show little interest in reducing or sacrificing any of them. I fear the pressure to raise taxes to pay all the bills will be all-powerful.
Pawlenty's vetoes and unallotments kept lid on
Returning to the recent legislative session, the only means of keeping lids sealed in this part of the country, in regard to both spending and taxes, was Pawlenty's vetoes and unallotments.
Among disparaging thoughts provoked by such an analysis, I trust, is this one: Any conservative defense of unallotments grounded in the likelihood of future tax increases is disingenuous at best, given that pledges of "no new taxes" have become less matters of case-by-case preference and more matters of unbending ideology. Right-wing pitches, in effect, for forward-looking pragmatism just don't cut it. Or so go the accusations.
I grant the plausibility of some skepticism out there. But it says something about the severity of the systemic problems we face, as well as the sobriety of those involved, when five conservative Minnesotans, in a recently released American Experiment symposium, all agreed that a new tax — or at the very least, a mandated premium of some sort — may well be necessary to pay for long-term-care insurance if substantial improvements to the current system aren't somehow found.
No ideological blinders on their part, no cant, no playing to the rafters; just realistic and responsible recognition of what needs to be done. As well as further grist and evidence for why Pawlenty's extraordinary steps are called for.
Mitch Pearlstein is founder and president of Center of the American Experiment.
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