Think again

Bad bets make for losing budgets

By TIM NESBITT
President, Oregon AFL-CIO

I know a bad bet when I hear one, and I heard a whopper from Oregon State Representative Scott Bruun on the House floor two weeks ago when he was touting the House Republicans’ latest windfall for the wealthy — a bill to cut state income taxes that investors pay on their profits to just half of what we pay on our paychecks.

During the debate, Bruun said, “I will happily donate a month’s salary to the charity of the OEA’s (Oregon Education Association) or the AFL-CIO’s choosing,” if the investment tax cut doesn’t raise more revenue than it gives away when fully implemented seven years from now. Bruun was offering one month of his legislative salary, which is $1,283, to demonstrate his commitment to a capital gains tax cut that the Legislative Revenue Office estimates will cost $407 million in the 2011-13 budget period.

How do you like those odds? If we lose $407 million from this tax cut for investors, Bruun will pony up $1,283. That’s a proposition based on odds of 317,225-1. We risk losing funds that pay for schools, state universities, in-home care for seniors, state police, courts, prisons and the Oregon Health Plan and, if we’re right, we get a dollar for charity for every $317,225 we lose for public services.

Bruun’s bad bet may nonetheless be a good representation of the kind of thinking that drives more and more tax cuts for the favored few. Legislators like Bruun continue to argue that tax cuts for corporations and the wealthy will pay for themselves. Then, when those tax cuts cost us real money, those same legislators say we have to live within our means. They cut funding for schools and human services and argue all over again that the solution to our budget problems is more tax cuts for their favorite constituents. And so it goes.

A bad bet is just a bad bet, until you keep repeating it. Then it becomes a bad addiction.

Representative Mark Hass knows this. He voted for some of these tax cuts in the past. But Hass has learned from experience. So, when Hass responded to Bruun during the debate on House Bill 2332, he began by citing the Legislature’s own economic model that estimates a dollar cut in capital gains taxes will recover at most nine cents in new revenue — leaving us $407 million short of where Bruun bet we’d be. Then Hass went right to the gambling analogy.

“Imagine a slot machine,” Hass told his fellow lawmakers. “You put in a dollar, the light goes off, the bells ring, and nine pennies jingle out to the bottom. And you keep putting in more dollars until you put in 407 million dollars. Imagine a slot machine next to it. It said bioscience research at Oregon Health and Science University. You put in a dollar and this time you get eight dollars back...You put in a slot machine that says Head Start Early Child Education, and you get 17 dollars back.”

“407 million dollars!,” Hass continued. “We could hire 800 new teachers for that. We could pay for the first year of college tuition for every high school graduate in Oregon.”

Given the winning alternatives that Hass describes, you might wonder why Bruun and his colleagues continue to play a losing game. But remember: Bruun isn’t playing with his own money, or at least with no more than $1,283 of his own money. He’s playing with our money, in the hundreds of millions of dollars.

When Bruun and his colleagues lose, we lose. But their response to these losses puts the burden back on us. We have to learn to set priorities, they say. We have to learn to live with less.

“Maybe we can’t be all things to all people,” Bruun said in his floor speech. “I believe this. As one example, instead of half funding the universities and half funding the Oregon Health Plan, maybe we should fully fund one and end the other.”

See, there’s a method to this madness. If we keep cutting taxes, then we’ll have to confront even harder choices in the future, like keeping our universities open by shutting health clinics for the poor.

“That’s a hard choice,” concluded Bruun, “but that’s a vote I would take.”

I bet you would, representative. I bet you would.

Tim Nesbitt is president of the Oregon AFL-CIO. For more information, check out the Oregon AFL-CIO online at oraflcio.unions-america.com