Lately, area politicians have gone out of their way to seek the input of small business owners, independent contractors, and ordinary residents as they decide who to screw over in budget decisions, when setting tax rates or otherwise making cuts. Indeed, voters should sleep easy at night knowing that policymakers are getting advice from altruistic sources.
Maryland Reporter today, for example, highlighted this recent meeting of the Maryland Board of Revenue Estimates:
Comptroller Peter Franchot concluded “there is a sense of uneasiness about the economy” after three hours of testimony from Maryland business executives at a Board of Revenue Estimates meeting on Tuesday.
“You—the private sector – are going to lead us out of this,” Franchot told the business representatives. “I think it calls for a lot of caution.” In recent weeks, Franchot has repeatedly urged no new taxes or fees in the coming year....
Franchot said, “I was surprised at that the call for caution,” though that’s what he’s been preaching himself. He pointed to the new toll hikes for highway, bridges and tunnels, the proposed increases in the gas tax, and proposed increases in the flush tax for Chesapeake Bay restoration.
“You could reach the tipping point very quickly” for consumers who don’t have much money, Franchot said.
Sorry, but that tipping point feels like it is here, and it doesn't feel like the alarm is leading to shared sacrifice. To state a few uncontroversial facts: Maryland has rolled back the millionaire's tax, increased fees and tolls on average residents, ramped up collection of revenues from tickets and other punitive measures, brought gambling revenue to the State, is currently debating two regressive taxes (ie: an online "Amazon.com" sales tax and a gas tax increase), and has not passed legislation to close corporate tax dodges. Maryland Juice makes no comment on any of the proposals above (and in some instances I even support them), but I am struggling to point to equal sacrifices from the very people who are essentially asking legislators to force more "hard decisions" down the road (ie: more cuts and pain onto voters). If you disagree, I encourage you to cite instances in the comments.
Transitioning the Region's Economy: But here is an equally large problem that we don't appear to be wrestling with in our public dialogue. Defense spending, which has recently propped up the area's federal spending, is
definitely going to decline for the forseeable future. Remember that President Obama is making good on his promise to pull out of Iraq? Ain't nothin' we can do about that. Combine that with the fact that the Pentagon isn't in Maryland and there is a (soon to be Metro-connected) international airport and concentration of existing defense jobs over the border, and you can see that we need to diversify our portfolio. (
We still appreciate Lockheed's presence in MoCo, but that doesn't mean all tax and budget policy should be geared toward them!). To be fair, many Maryland leaders are already launching Maryland 2.0b with new investment in biotech, green and other industries.
Who is Bloated?: But still, these arguments from business leaders about taxes persist, and some politicians love to keep taking them at face value. Riddle me this.... Are corporations in Maryland willing to abide by the golden rule?
Do unto others.... Because for the last few years, Chamber representatives have been marching into public hearings to testify on the need for government to trim spending and reduce its workforce costs. To do otherwise would be irresponsible, they claimed. Maryland, after all, had become bloated at the expense of Federal largesse and overspending. But apparently, area defense contractors have been behaving no differently.
The Maryland Reporter article in question also noted the following:
There was considerable trepidation about the impact the decisions on federal budget cuts by the congressional Supercommittee could have on Maryland...
Jose Boluda of Northrup Grumman’s Electronic Systems Sector in Linthicum said that his company “has been working under a flat budget” for several years. He said that a defense industry group has estimated that proposed Defense Department cuts could cause the loss of 18,000 to 36,000 jobs at Maryland defense contractors, many of them in research and development.
He said the company was concerned by “any of these things that make us less competitive,” such as tax hikes.
No Tit for Tat: Indeed, as Maryland and Montgomery County transition their economies, it seems important to play devil's advocate for a second. If we are going to adopt the market-based solutions espoused by the business leaders, shouldn't we tell them not to be hypocritical? If their companies got fat during an era of Federal largesse, perhaps they need to shrink, become less bloated, downsize, adjust to the new economic reality, etc? If the R&D jobs are in danger, maybe they need to rethink the applications of their research and find new non-defense uses for their workers. After all, that's what they want us to do with government workers and their pensions and health benefits: retool or cut. But Maryland Juice is not making that aggressive counter-argument because these defense contractors are also Maryland Democrats, Republicans, shoppers, taxpayers, etc. We want everyone to stay, and we want to grow jobs, too. But I don't feel like the corporations are being team players.
Do you?
That's why testimony earlier this week from GMU Professor Stephen Fuller has been causing a buzz in Montgomery County this week.
