John Frary: Budgetary crisis pits sentiment against arithmetic

It’s simply a lot easier to give money away than to take money away.

The Feb. 9 Sun Journal editorial, “Turning back the clock on social care,” is correct to say that Maine’s budgetary crisis is not comparable to the fiscal disaster now gripping Greece, but there are some common political features that are worth noticing.

In both cases, opposition to cuts pits sentiment against arithmetic. The NBC report quoted in the editorial presents harrowing evidence of failures of medical care and tales of actual starvation. That is something of a misdirection.

Michael Fuchs, the German parliamentarian in charge of the financial crisis, typifies the problem in the words of a fictional constituent: “Michael, you’re a nice guy, but can you explain to me why I have to work until 67, and I get (as a pension) 46 percent of my final salary, while a Greek guy is retiring at 57 with 94 percent of his last salary.”

You don’t have to see a complete set of statistics to conclude that these extravagant pension benefits have far more to do with the country’s impending bankruptcy than the cost of medical care.

That, of course, is an implicit reminder that politics is concerned more with counting votes than weighing tragedies. The number of pensioners are far more numerous than the number of destitute Greeks, so the politicians prefer across-the-board cuts to confronting a horde of middle-aged voters with the dread prospect of retiring 10 years later than they had planned, and with drastically reduced payments.

The 40 percent across-the-board cuts which produced the tragedies covered in the NBC report are an irrational evasion. Stelios Stavridis, vice president of a Greek business forum, explains the problem they evaded: “The cost of the Greek bureaucracy totals 14 billion (euros) per year, more than two times that of the EU average. Aiming for the EU average would save us seven billion (euros) per year, but the legislature has proven unable to get rid of the bureaucratic monster.”

There is another political similarity — the calls to cover Maine’s budgetary shortfalls by “taxing the rich.” In the Greek version, the “rich” is Germany.

Framed in sentimental terms, the question becomes, “Why shouldn’t prosperous Germans shell out more euros to rescue destitute Greeks?” Framed in arithmetical terms, the question becomes, “Why shouldn’t a German retire at 68 with 40 percent of his salary so that a Greek can continue to retire at 57 with 94 percent?” Nobody is asking that question openly, but it is clearly implied.

Gov. Paul LePage’s question is, “Why should Maine people, who earn some of the country’s lowest wages, be forced to pay above the national average for welfare costs?” That question is not mentioned in the Feb. 9 editorial. I believe it should have been. It is absolutely central to his reform proposals. Maine’s two U.S. senators take it seriously. They have been working to obtain a waiver from the federal government that would allow Maine to adjust its welfare commitments to the national average, so that Maine can join the 35 states that do not extend health care coverage to 19- and 20-year-olds.

Our governor’s objectives are to restructure eligibility, redesign benefits and adopt payment reform that addresses structural problems in order to put Maine’s welfare programs on a path to financial sustainability. His position is that if these changes are not made now, the Legislature will have to deal with a budget shortfall again in November or December.

The Sun Journal editorial does not challenge the arithmetic. The question is how the problem can be handled politically.

Echoing Stelios Stavridis’ complaint, Alexis Papachelas, a well-known Greek political analyst, characterizes his country’s political system as “lazy and incompetent.” Maine’s politics, like its budgetary problems, are not as hopeless as Greece’s, but we do have a problem with political calculation. It’s simply a lot easier to give money away than to take money away, and the political instincts of many legislators run against it.

It’s surely true that legislatures are not able to accomplish anything without compromise. The problem is that the easiest compromise of all is to “kick the can down the road.”

Gov. LePage aims for structural reforms that will resolve the $220 million shortfall here and now. A majority of the legislators are not indifferent to the need for structural reforms, but seem to favor an interim, $120 million welfare reduction, deferring a long-term solution. They are clearly uncomfortable with the governor’s uncompromising determination to solve the problem comprehensively, immediately and permanently.

They may have a point, but I suggest that we recognize that the problem here is a head-on collision between policy realities and political realities. That recognition is not a solution in itself, but it does have the advantage of clarity.

As for “Turning back the clock on social care,” some citizens may want this, but it is not going to happen and it is not on the table for serious political discussion.

John Frary has served as Franklin County Republican Committee chairman, and Farmington selectman. He ran for Congress in Maine’s 2nd District in 2008 and chaired the Republican Platform Committee last year.

John Frary

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Betty Davies's picture

"Taxing the rich"?

This essay deplores the concept of bringing in revenues by "taxing the rich."

Yet taxing the rich is an excellent idea. There is no justification for the Republicans' insistence on massive special tax cuts for millionaires and billionaires, especially when it is coupled with claims that (gosh, gee whiz!) the result is less money available to help Americans in desperate need.

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