For Montanans, fiscal crisis is nothing new. Back in the ’80s, when interest rates were in double digits and we had Democrat Ted Schwinden in the governor’s office, there was nothing special about the Legislature’s special sessions; we seemed to have one every couple of months and the result was always the same, with some trust fund or another being ripped off to keep the state afloat—or at least gulping air.
During the ’90s, while most of the nation was experiencing a boom, Montana just chugged along, well behind the rest of the pack, paying our citizens bottom-end wages, “balancing” the budget by trimming services and using political sleight-of-hand to pinch the citizenry’s wallet through fees instead of taxes. The future, Gov. Racicot and his Republican-controlled Legislature told us, would take care of any problems with the massive economic growth that was just around the corner. As Racicot and his Repubs well knew, the promise of future economic growth is impossible to disprove and, as Stalin showed, if you tell the Big Lie enough times, people start to think it’s the truth.
But then we rolled into the new millennium, and guess what? The promise blew up, the country sank into recession, and Montanans waited for salvation like Hi-Line farmers looking for rain. Needless to say, neither salvation nor rain arrived, and we watched the soil and our hopes for a more secure future blow away in the seemingly endless winds of a downward-spiraling economy.
Nothing illustrated Racicot’s broken promises better than the dilemma left behind for his successor. Gov. Judy Martz cobbled together a budget for the Legislature that relied on busting the Coal Trust for a hundred million bucks and had the nerve to call it “balanced.” Luckily for Montanans, a tiny handful of Democrats refused to go along with Martz’ easy-way-out “leadership” and left the Coal Trust intact—although they paid heavily for their fiscal responsibility in budget cuts targeted at the weakest and poorest of our citizens.
Now, our experience on the state level is being replayed on the national stage. But there’s one significant difference: Montana has to balance its budget—revenues must meet spending—but the federal budget, on the other hand, has no such requirement. Spending can skyrocket far beyond revenues, as long as the votes are there.
Somewhat surprisingly for politicians who got elected on promises of fiscal responsibility, the Repubs and Bush are spending wildly on everything from war to special interest pork. Plus, they’re giving out huge tax breaks for their corporate buddies and the already-wealthy, exacerbating the out-of-control deficit spending by further cutting the revenue stream. Bush says they have a “plan” to cut the ballooning deficit in half—but the details of the “plan” have yet to be revealed.
n the meantime, some other developments are creating conditions that are far less than favorable for our future. For one thing, our trade imbalance is huge and growing. This means we are importing a lot more than we’re exporting—in other words, we’re consuming more products from other nations than we’re selling to them.
This combination of massive federal deficits and trade imbalances has not gone unnoticed by the rest of the world. In the last few months, the value of the dollar has plunged against that of other international currencies. One Euro, which was once virtually on par with the dollar, is now worth $1.27. What that means, in simplest terms, is that the dollar has lost about 25 percent of its purchasing power in the global marketplace. A simple example: Two months ago a U.S. dollar was worth $1.35 in Canada. Now it’s only worth $1.28. Losing 7 cents on the buying power of a buck might not seem like a big deal, but when you deal in billions, it adds up real fast.
Nor do our problems end there. Consumer debt for American families has more than doubled in the last decade to $1.98 trillion. Not surprisingly, the level at which people are saving has simultaneously plunged to a mere 2 percent of after-tax earnings. The average American family is now $18,700 in debt, which doesn’t include mortgages.
The stock market, however, is going up and just passed what was once called “the psychologically important 10,000 mark” prior to the dot-com meltdown. For some reason, no one is calling it that now—perhaps because the average loss for American families that invested in stocks was an estimated $70,000, and “psychologically” they no longer find much importance in the market’s gyrations.
Montana’s grim experience with Racicot’s profligate spending based on the ephemeral promises of a booming economy in the future remain fresh in our minds. And while much of the blame for the current round of wild spending should fall heavily on the shoulders of the Republicans who control Congress and the Oval Office, it is equally important that Democrats like Max Baucus—who has been marching in lockstep on the spending and tax cuts—come to their senses and show some fiscal responsibility. We’re up on the high wire, it’s a long ways down, and the “safety net” simply doesn’t exist.
When not lobbying the Montana Legislature, George Ochenski is rattling the cage of the political establishment as a political analyst for the Missoula Independent.