The Wisconsin Policy Research Institute

Time For a Change - Not the One You Might Think

By George Lightbourn

I wonder if they get it. While America has been carpet bombed with bad economic news - credit markets have ceased operating, the stock market is in free-fall, commodities are inexplicably down – most of Wisconsin’s elected leaders have been working the campaign trail. I wonder if they understand the profound change we are undergoing.

Banks are gone, huge insurers have come to government hat-in-hand and some icons of American business are teetering on the brink of their very existence. I cannot recall any time when the nation felt such consternation. The Clinton people had it right in 1991 when they declared, “It’s the economy, stupid.” We might not admit it but the economy and the American psyche are one. Those of us with economic security sleep the sleep of angels while those without economic security toss and turn. We should expect a spike in the number of households with the lights on at 3 A.M.

And we are angry. America has a sense that we have been had. Accusatory fingers are pointed at bankers, borrowers, government regulators and politicians. As a nation we cannot fully understand what has gone wrong, but we do have a sense that the root cause is greed and impatience – the growing inability of Americans to deprive themselves of anything simply because they can afford whatever it is they want at the moment.

We understand the need to return to the fundamental values that built our economic security blanket: hard work, saving and living within our means. We will look to our government to restore these values, but will government be up to the challenge? If the answer is to be yes, government will have to go through an extreme makeover.

Let’s look at the record. Economists have been telling us for years that we need to save more and borrow less. They tell us that Americans household debt now totals 140% of disposable income (it was 80% in 1986). This unsustainable level of borrowing has yielded a false sense of prosperity.

Unfortunately our state government is just as addicted to borrowing as the rest of America. Since the early 1990s, Wisconsin state government has issued debt at a rate far higher than inflation. It has borrowed money to purchase buildings and land that it simply could not afford and, in recent years it has borrowed money to prop up spending when revenues were sluggish.

Will the live for today approach to governing continue? That is the key test for the Governor and the Legislature when they return from campaigning.

The country is in for some very difficult economic times. Hardest hit will be those of us who will lose our jobs and the baby boomers who have seen their retirement plans threatened. Government is facing some serious, adult issues and these people will be looking for serious, adult answers. The churlish bickering that has marked government in the past decade will be unacceptable. People will be paying attention to the quality of decisions coming out of the State Capitol.

They will expect a government that is both forthright about our economic circumstances and that is as frugal with a dollar as the population in general. This is a time for government to eliminate programs, reduce spending and return to the values we expected of our government before we all went on our debt-fueled spending binge.

-October 13, 2008

Time For a Change - Not the One You Might Think

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