Of all that can be said about the proposed budget of Governor Snyder (and there certainly is lots), the question of time perhaps exposes the conflict best. The cuts envisioned by the Governor are largely immediate; the hits to the schools will be felt in the classroom this fall if not sooner. By contrast the benefits of tax cuts for business would seem to have a longer time frame, 18 – 36 months, before their impact is felt. And therein lies the risk for the Governor’s proposal.
Talk of sacrifice is always best when the sacrifice and the benefit are closely linked. The farther apart the links, the more difficult the sacrifice.
For the GOP, two risks immediately come to mind. The primary one is the gamble that the substantial hits to cities and schools will not be crippling, that the economy sufficiently rebounds to add to the State budget and walk back these cuts. That’s the core of “shared sacrifice:” we put up with the admittedly constrained budget for the moment, trusting that it will be undone. The obvious danger is that the cuts may themselves be too deep, that they end up stripping too much from communities and so crippling them in the regional competition for new employers.
There is also a second risk to the policy, this by way of human nature. Will the businesses who benefit from the tax cut, those who have been saying that taxes stop them from hiring, begin adding employees? If the employment does not pick up as the advocates would have it, then what? Here there is a fixed time line: 18 months, or September 2012. A tax cut that doesn’t deliver on added employment will be a heavier burden for incumbents in an already contentious 2012 cycle. And no, you can’t redistrict yourself out of this.
Crains also points to the other great risk of the mixed time lines: perhaps the longer term economic theory doesn’t work well enough. Low tax rates may not be a sufficient competitive advantage. There is more to making the state economically competitive than this. What else must be put into place remains the unspoken question. Here the administration and its Party can probably finesse the next election, but not 2014.
Of course, in a rational world, revenue enhancements would end up being part of the package, too. And they may very well be, but almost certainly not this budget cycle. For now, there is the immediate pain of loss of public goods, whether the offsetting economic expansion will be sufficient let alone evenly shared is far less certain.