The New York Times is reporting on the deficit and debt ceiling fight that is happening right now.
Eventually, the country will have to confront the deficit we have, rather than the deficit we imagine. The one we imagine is a deficit caused by waste, fraud, abuse, foreign aid, oil industry subsidies and vague out-of-control spending. The one we have is caused by the worldâ€™s highest health costs (by far), the worldâ€™s largest military (by far), a Social Security program built when most people died by 70 â€” and to pay for it all, the lowest tax rates in decades.
To put it in budgetary terms, the deficit we imagine comes largely from discretionary spending. The one we have comes partly from discretionary spending but mostly from everything else: tax rates, Medicare, Medicaid and Social Security.
It made me think of an article that Dave Hutton wrote this week while covering City Councilâ€™s executive committee meeting. It starts with city manager Murray Totland appearing to give political direction to city council.
In a report to the city’s executive committee Monday, city manager Murray Totland said there is "growing sentiment" among residents that the city needs to refocus the programs and services it offers and "get back to the basics."
"We can sit back and reflect a bit about what programs and services matter most to us," Totland said. "It’s just to focus and maybe rethink our priorities. What matters most?"
It goes on with this.
Coun. Maurice Neault called for "zero-based budgeting" aimed at holding the line on taxes. "Once we get going, we’ll be amazed and surprised by the result," Neault said.
"Each of the things that we might want to give up has a role in the city," Coun. Charlie Clark said.
Saying it will be a "gut-wrenching" process, Coun. Myles Heidt said "something’s gotta go" to get to a two or three per cent hike. Council increased property taxes 3.99 per cent last year, but weren’t able to make fundamental changes some councillors called for during two nights of budget deliberations.
Taxes have risen an average of 3.7 per cent each year since 2005.
"Let’s not sugar-coat this," Heidt said. "It could be programs, it could be staff, it could be anything. We’ve got to make some decisions now."
Where to start. First of all most of the spending that has generated controversy has been capital spending, sans curbside recycling which comes in at a little over $4 million per year. Itâ€™s not an insignificant amount but this is a city of over $200,000 and things cost sometimes. So as a response to increased capital spending, some on city council have decided that the best way to go is to cut operational spendingâ€¦ on the political advice of the city manager.
Here is something that gets lost in these debates. Sometimes its takes courage to spend money and you know what, sometimes it takes guts to say that things are important to us as a city, even if it increases the tax rate. Somewhere around the time that George H. Bush said â€œno new taxesâ€ and today spending on government programs has the ultimate evil and instead of being a just society, we have become a society that has adopted a narrative that says, I have it so I deserve it. We saw it during the 2000 presidential campaign where Al Gore and George W. Bush fell over themselves to tell Americans that the surplus belonged to them and they knew best what to spend it on. The American public spent the money on cheap consumer goods imported from China while at the same time the United States had to borrow heavily to find two wars and is faced with a massive infrastructure deficit on their own.
I was reminded of this Paul Krugman column from earlier this year. It was written in the aftermath of the Gabrielle Gifford assassination attempt so the language is a little raw but he has some relevance to the debate over how the city spends itâ€™s money.
One side of American politics considers the modern welfare state â€” a private-enterprise economy, but one in which societyâ€™s winners are taxed to pay for a social safety net â€” morally superior to the capitalism red in tooth and claw we had before the New Deal. Itâ€™s only right, this side believes, for the affluent to help the less fortunate.
The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft.Thatâ€™s what lies behind the modern rightâ€™s fondness for violent rhetoric: many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.
Thereâ€™s no middle ground between these views. One side saw health reform, with its subsidized extension of coverage to the uninsured, as fulfilling a moral imperative: wealthy nations, it believed, have an obligation to provide all their citizens with essential care. The other side saw the same reform as a moral outrage, an assault on the right of Americans to spend their money as they choose.
This deep divide in American political morality â€” for thatâ€™s what it amounts to â€” is a relatively recent development. Commentators who pine for the days of civility and bipartisanship are, whether they realize it or not, pining for the days when the Republican Party accepted the legitimacy of the welfare state, and was even willing to contemplate expanding it. As many analysts have noted,the Obama health reform â€” whose passage was met with vandalism and death threats against members of Congress â€” was modeled on Republican plans from the 1990s.
Being Canadian, of course there is middle ground, we are all about the middle ground but there is a view that says that the smaller our civic responsibilities are, the better off we are as a city. As former councillor Elaine Hnatyshyn writes,
In today’s SP (June 21/11) it is reported that council will take a ‘gut-wrenching’ review of services. Back to basics seems to be the coming theme for budget preparation for 2012, a civic election year. Would I rather have services necessary to my daily living over debt and debt repayment? Do I want my roads repaired? Street cleaning? Snow Removal? Or do I want pay to maintain River Landing, the Shaw Olympic Pool, Art Gallery of Saskatchewan . . . . .
In some ways Hnatyshynâ€™s comments make a lot of sense. There is a pothole on Avenue E (between 34th and 33rd) that is so large that it will have itâ€™s own MP in the next redrawing of electoral boundaries. It has done some damage to quite a few vehicles when the shadows camouflage itâ€™s true depth but I disagree when she talks about River Landing or a new pool and Art Gallery.
Wendy and I are doing okay financially. I work for the Salvation Army and they have treated me well. Working for a non-profit organization is no way to get rich. Wendy works for Safeway and is lucky to have been part of the old guard there where the salary is still livable. We also own our home and pay around $600/month for mortgage and taxes (about $150 more a month in taxes than when we bought it). Despite doing okay, some of the derided extra services the city provides, make a big difference in our standard of living. Is Mayfair Pool an essential service the city should be providing? No itâ€™s not. Itâ€™s a money pit but tell that to my sons who name it as one of the best things about their summer. Like most people in Saskatoon, we donâ€™t have a pool and so these public spaces serve as an important roll in giving those who donâ€™t have the resources, access to important services. Have you seen the mayhem at the waterpark at River Landing many days? Thatâ€™s not essential either but it provides a free public gathering spot for thousands of people everyday. Starting tonight the city will be full of the sounds of the SaskTel Jazz Festival. In addition to crown corporation sponsorship dollars going to subsidize the event, funding agencies include the City of Saskatoon and Canadian Heritage, money that goes to help subsidize the event, keeps ticket prices down and helps keep the free stages going. You know, so more people can come down and enjoy it despite not being able to afford it. This isnâ€™t a new concept. Years ago the citizens of Saskatoon decided to keep commercial and residential development away from the part of South Saskatchewan River valley and eventually decided to create the Meewasin Valley Authority, mostly because we realized that a riverbank that was open to all of us, was important. That initiative was started by Saskatoonâ€™s City Council in 1974 and has become one of Saskatoonâ€™s crown jewels.
Art Gallery of Saskatchewan Remai Art Gallery of Saskatchewan is not an essential service but what is the value of an art gallery to the citizens of Saskatoon. As a kid growing up in Calgary, we very little money after my dad left but I remember being taken to the Glenbow Museum (which uses over $3 million in govt funding each year). I still have vivid memories of models, displays, and information as we would wander through the galleries of history, politics, and art. I had no idea at the time but that place started me off on a lifetime of learning and curiosity. My son has a passion for design and architecture which started from seeing an exhibit of Clifford Weins at the Mendel Art Gallery a couple of years ago.
So what does a Saskatoon look like without the Meewasin Valley Trail, Harry Bailey Aquatic Centre, Mayfair Pool, or the architecture of University and Broadway bridges? Does 20th Street look as hopeful today without the city redesigning and rebuilding sidewalks? How much higher are rent rates without a city that invests heavily into affordable housing. As Richard Florida writes in the Rise of the Creative Class, some of the cities in the United States that are struggling the most have the lowest tax rates. No one wants to live there, no one wants to work there. One of thing that many cities who are growing and vibrant have in common is that they do have higher taxes but itâ€™s citizens believe that they are getting good value from living there and enjoy the extra services and amenities. Whatâ€™s crazy about this budget and spending debate is that Saskatoon has low taxes and is providing some extra value. By deciding that we have to make â€œgut-wrenchingâ€ cuts and limit operational spending to 2% (or inflation), some councillors are saying that the cityâ€™s role in shaping the city is done. I donâ€™t agree. There is a role for government to shape our city and provide a city that all of itâ€™s citizens can enjoy. Sometimes it takes money to spend money to make a city better and more liveable. Yesterday I linked to a video about Helsinki, Finland and as a video said, they had the courage to take risks and make changes. Hopefully city council will be able to find it.