Political insiders, charged with getting things done, recognize the inevitability of compromise when interests diverge. And many national pundits, relishing their insider status, view such pragmatism as an essential political virtue. It’s what Bismarck had in mind when he said, “Politics is the art
of the possible.”
It’s also what a lot of outsiders have in mind when they say it’s time to discard politics as usual. The clash this week plays out in woebegone St. Paul, Minn., as well as in the nation’s capital.
A budget impasse in Minnesota led to a rare state government shutdown July 1. Mark Dayton, the first Democratic governor in the generally blue state in 20 years, wants to increase spending and raise taxes. Republicans, in control of both legislative chambers for the first time in 40 years, adopted an austere $34 billion two-year budget without new taxes. Dayton vetoed it and the two sides remain far apart. Such are the potential consequences of divided government.
Even with state revenues growing by $2 billion over the next two years, Minnesota faced a $5 billion gap between projected current services spending and available revenues. The big driver, unsustainable health care programs, has driven holes in many state budgets. Minnesota, however, leads the pack.
“Minnesota has spent 35 percent to 40 percent more per capita than the national average on health and human services for decades,” explains Mark Haveman, executive director of the Minnesota Taxpayers Association. “Pernicious demographics,” including an aging population, persistently drive up costs.
Freshman Republicans, many elected as fiscal conservatives, reject a tax hike. That’s a position reinforced by the Minnesota Chamber of Commerce, which insists the budget be balanced within existing revenues.
The governor won’t agree to the health care cuts and backs a new millionaire’s tax that would fall on about 7,700 households and raise about $800 million a biennium. (Any of this sound familiar?) When you look at the major taxes — sales, income and property — Minnesota already has one of the most progressive state tax structures in the country, says Haveman.
The two sides are about $3 billion apart, with health care as the major ongoing problem.
An obstinate executive generally has the edge. Governing is his day job. He’s under no pressure to get home to family and career. As a caucus of one, he avoids the internal rifts that can fracture legislative majorities. Yet, Republicans came through the Fourth of July holiday unseared by negative public opinion and reinforced in their position.
So, we see an epic failure in the Gopher State, a place with a good government reputation rivaling Washington’s and where “Minnesota nice” merits its own Wikipedia entry. Meanwhile, about 80 percent of state spending continues to roll out for health care, schools, local government aid, etc., under court order. The shutdown primarily affects state operations, like licensing, road projects and parks. With negative effects muted, the impasse is easier to sustain.
Politicians across the country will want to follow the action in the Twin Cities, for many of the same reasons the collective bargaining showdown in Madison, Wis., garnered national attention. Employment anxiety, lost confidence in government institutions, daunting debt projections and unmanageable budgets have fostered a resurgent conservatism that has drawn a hard line: Enough is enough. Standing on the other side of the line are many public employee unions and social service activists insisting on maintaining unaffordable government programs with higher taxes.
The president and Congress face the same challenge in the debt ceiling debate. Conservatives remember past compromises that failed to deliver. Promised cuts never came; tax increases stayed forever. Without trust, there can be no grand compromise. The big deal House Speaker John Boehner and President Obama sought was always a long shot. The odds favor a fix by the Aug. 2 deadline, but a smaller one, befitting the cautious times. As for the Minnesota muddle, it may take months to resolve.
Meanwhile, we’ve entered a new fiscal year with lagging revenues, no budget cushion and a tough election year ahead. The debate here, as in St. Paul, will inevitably be framed around uncompromising views of the role and size of state government. The art of the possible can be maddeningly elusive.
Richard S. Davis, president of the Washington Research Council, writes on public policy, economics and politics. His email address is rsdavis@simeonpartners.com.
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