Drennen: Revisit the Stelly plan
The Louisiana Association of Business and Industry asked three former commissioners of administration to provide some perspective on the current budget crisis – a $750 million mid-year shortfall and another $1.2 billion gap between revenues and expenses in the 2016-17 budget cycle. While Dennis Stine (Buddy Roemer) and Angele Davis (Bobby Jindal) recommended new rounds of budget cuts, Mark Drennen – who served as the chief budget architect for Gov. Mike Foster – said lawmakers might need to revisit the massive income-tax cuts of 2007 and 2008 when the Stelly Plan was partially repealed:
Drennan (sic) said other possible solutions include revisiting the Stelly Plan. The controversial revenue-raising measure of the early 2000s increased income taxes that were supposed to be offset by sales tax exemptions. Several years later, the Legislature repealed the income tax increases but kept the exemptions, which is one of several factors behind the current budget shortfall. “Revisiting Stelly is something we need to do,” Drennan said.
Public wants wide-ranging special session
LSU survey results released this week show that 66 percent would prefer a Legislative Special Session that covered a broad base of topics including education, healthcare and jobs. Greg Hilburn with Gannett points out that the reality is we are likely to see a session focused on making structural changes to the budget. Finding a permanent fix to Louisiana’s budgetary woes and ending the cycle of mid-year shortfalls and huge projected deficits will be the top priority.
“It’s compelling, but puzzling,” said Michael Henderson, research director of the Public Policy Research Lab. “It can be interpreted in two ways. “One way is the public has a sophisticated understanding of the connection to the budget and issues like education and health care. But if you wanted to be more skeptical the public doesn’t really understand what the special session is designed to do. I think it’s probably the latter.” The budget and taxes were the fourth and fifth most mentioned items by those surveyed Edwards hasn’t issued the specific call for the session, but he plans for it to begin Feb. 15. “We must address the issues that have created a structural budget deficit for our state,” he said earlier this week…“I think it shows that the governor and Legislature can’t look to the public for leadership of this specific issue,” Henderson said. “The governor and Legislature are going to have to do the work and come back an explain it to the voters.”
Krugman: Is vast inequality necessary?
New York Times columnist Paul Krugman delves into the question of inequality in America and his belief that – contrary to the beliefs of many economic elite – a vibrant economy can exist with much less wealth concentrated at the top of the economic spectrum. He outlines three possible drivers of inequality and how those elements are involved in the real economy.
First, we could have huge inequality because individuals vary hugely in their productivity: Some people are just capable of making a contribution hundreds or thousands of times greater than average. This is the view expressed in a widely quoted recent essay by the venture capitalist Paul Graham, and it’s popular in Silicon Valley — that is, among people who are paid hundreds or thousands of times as much as ordinary workers. Second, we could have huge inequality based largely on luck. In the classic old movie “The Treasure of the Sierra Madre,” an old prospector explains that gold is worth so much — and those who find it become rich — thanks to the labor of all the people who went looking for gold but didn’t find it. Similarly, we might have an economy in which those who hit the jackpot aren’t necessarily any smarter or harder working than those who don’t, but just happen to be in the right place at the right time. Third, we could have huge inequality based on power: executives at large corporations who get to set their own compensation, financial wheeler-dealers who get rich on inside information or by collecting undeserved fees from naïve investors. As I said, the real economy contains elements of all three stories. It would be foolish to deny that some people are, in fact, a lot more productive than average. It would be equally foolish, however, to deny that great success in business (or, actually, anything else) has a strong element of luck — not just the luck of being the first to stumble on a highly profitable idea or strategy, but also the luck of being born to the right parents. And power is surely a big factor, too. Reading someone like Mr. Graham, you might imagine that America’s wealthy are mainly entrepreneurs. In fact, the top 0.1 percent consists mainly of business executives, and while some of these executives may have made their fortunes by being associated with risky start-ups, most probably got where they are by climbing well-established corporate ladders. And the rise in incomes at the top largely reflects the soaring pay of top executives, not the rewards to innovation. But the real question, in any case, is whether we can redistribute some of the income currently going to the elite few to other purposes without crippling economic progress.
Politico Magazine issued its third annual “strength of the states” ratings this week, and Louisiana is pulling up the rear. The rankings are derived from 14 indicators culled from a variety of sources. As Politico explains,
The resulting list, inspired by American Mercury editors H.L. Mencken and Charles Angoff’s 1931 series “The Worst American State,” doesn’t promise scientific infallibility. But it’s based on the simple idea that education, health and wealth generally make us better off, while crime, unemployment and death do not.
J.R. Ball of Nola.com/The Times Picayune has more:
Where Louisiana checks in is a testament to the age-old theory of the state consistently finishing first, or near-first, in lists of bad things and last, or near-last, in lists of good things. Here’s where Louisiana finished in each of the 14 measures, along with the state that topped each list:
Number of the Day
51 – Louisiana’s ranking in Politico’s third annual “strength of the states” rating. (Source: Politico Magazine)