Before we kick 2009 down the basement stairs, let’s consider the year that was and the prospects ahead. The traditions of the season properly encourage optimism. Maybe it’s the champagne. But for many of us, “Happy New Year” will be more supplicatory prayer than celebratory toast.
We’re ready to get back to the good times, but the turning of a calendar page won’t uncover a succession of political happy days. Expect more of the same.
A year ago, aided by a collapsing stock market, rising unemployment and Bush fatigue, Democrats took decisive control of federal and Washington state government. The campaign promises of a new era of post-partisan collegiality quickly faded.
From the federal stimulus package through cap-and-trade to last week’s health care vote, Congress has forsaken common ground for the ideological battleground. While it’s tempting to carp about hyper-partisanship, the stakes are high, with transformational consequences for our economy and way of life. The majority chose the battles; the minority chose to fight. That’s the way politics works sometimes.
In our state, lawmakers also wrestle with health care reform and climate change. In the new year, if we’re fortunate, these will take a back seat to a $2.6 billion budget shortfall. The governor and legislative leaders have already said they expect to close the gap with new revenues, which is a euphemism for higher taxes. Republicans will oppose general tax increases, setting up another partisan divide.
And at least some Democrats will balk at general tax increases. It’s an election year, so political calculations are sure to come into play. More important, unemployed (and underemployed) workers, families and Main Street businesses continue to struggle. Legislators know this and will question how higher taxes will improve things for their constituents.
After Gov. Chris Gregoire released her “current revenue” budget — she’s required by law to present a budget balanced within existing resources — she abandoned it. Early next year we’ll see what is usually called the “Book 2” budget, a governor’s second effort, one bulked up with new money. With the regular legislative session limited to 60 days, she’ll want to reach consensus quickly with Democratic leaders on the size and composition of the tax package.
It won’t be easy. There’s no painless way to raise taxes. Liberals will resist a higher sales tax, saying it penalizes the poor. They may go along if the boost is offset with direct payments to low income taxpayers. That’s how the feds do it. The Tax Foundation notes that nearly one-third of those filing federal tax returns get every dollar back and half of them get more than they paid in. The fix may satisfy the progressives. Regardless, sales tax increases reduce consumer spending, hurt retail, and cut into business investment.
Lawmakers will scrub statutes for tax exemptions to repeal, consider extending the sales tax to services, look at business taxes, and search for untaxed sin. With the state unemployment rate at 9.2 percent, lawmakers should be sensitive to any tax that hurts job creation and investment. If they are, they’ll maintain the exemptions that stimulate growth and avoid increases in business taxes.
With some 21,000 state workers poised to receive up to 5 percent pay raises this year, any tax increase becomes a harder sell. Critics challenge the governor to press public employee unions to open up the collective bargaining contract to find savings in wages and benefits. Senate majority leader Lisa Brown has said state workers have already sacrificed enough. Many small business owners and laid-off workers will wonder why that means they must sacrifice more.
So, like something foul sticking to our shoe, the conflicts of 2009 trail into the coming year. That’s typical. What’s unusual is the consequential nature of the issues we currently confront. Most often, public policy evolves incrementally. Our system of checks and balances is designed to frustrate fundamental restructuring. Yet, from state budgets to global climate change, decisions made in the coming months will have far-reaching consequences.
That’s not all bad. Defining debates let people know where their representatives stand and remind us that politics should never just be a spectator sport. For the new year, resolve to be a player.
Richard S. Davis writes on public policy, economics and politics. His e-mail address is richardsdavis@gmail.com.
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