In the last two weeks, we’ve seen two different “state of” speeches, from leaders with widely disparate views. Both offered a list of priorities amid a recovering economy, setting goals to better the lives of those they serve. Each was greeted with applause from supporters, grim faces and still hands from foes.
Yet President Barack Obama’s State of the Union and Gov. Nathan Deal’s address to Georgians each took different approaches, and likely will have different results.
It starts with their limitations. Deal manages a budget that can’t spend money the state doesn’t collect, according to the Georgia constitution. That restriction doesn’t apply to leaders in Washington who continue to let the red ink flow.
Yet Deal’s agenda goes before a Republican legislature that is likely to pass most, if not all, of his plan. Obama faces a new GOP majority in Congress that will greet his ideas on the floor as they did his speech: with thumbs down. So while the issues he poses may be worth debating, his rhetoric won’t result in real policy anytime soon.
Obama’s catalog of new benefits sounds great on paper: free tuition to community college, paid sick and parental leave for all workers, a higher minimum wage and tax breaks for the middle class. No one is against any of that.
The problem is it all needs to be paid for, either by a government already running a massive deficit or by a private sector still struggling to regain its footing after a long, deep recession. Right now, anything that could undermine the economy’s slow and uncertain recovery is a bad idea.
An effort to rebuild the middle class by tackling income inequality is valid, yet the president’s plan is based on reshuffling wealth through increased investment taxes on the wealthy. Soaking the rich may sound good at election time and resonate among many who feel left out of free market prosperity, but could do more harm than good in the long run.
The president’s wish list is akin to ordering one of everything off the menu in a fancy restaurant: Appetizer, soup, entrée, dessert, the best wine. But when the bill comes, he points to the guy at the next table and says, “He’ll pay for it.”
Those who buy into his plan believe the well-off should pay more of their “fair share.” Yet high-earners already pay a large majority of taxes collected, 50 percent or more depending on whose numbers you use and what income level is measured.
First, we need to define who is considered “the wealthy.” Heirs, athletes and entertainers are part of this group, sure, but most people of considerable means earned it by launching, owning and running businesses that provide most private sector jobs. Many small-business owners already are turning their pockets inside out to get by, and are weary of being looked at as an ATM by politicians solely focused on buying votes.
Obama’s definition of “middle class economics” is to tap into their success even more, a losing game that won’t ultimately help workers.
So while big companies like McDonald’s and KFC may be able to afford higher wages and benefits, they likely would pass those costs on in the form of higher prices. Those who earn more pay could find their paychecks eroded by the higher cost of food and other necessities.
But what about the owner of a local shop with a couple dozen low-wage workers? He or she doesn’t have the margins to increase payroll costs without serious pain. That leaves only bad choices: Eliminate jobs, cut back workers’ hours, delay expanding the business or raise prices, or perhaps a combination of all of it.
Sick pay surely is an issue worth addressing; no one should suffer a job or pay loss from an illness, nor be allowed to spread it to others. Some states allow for payroll deductions to over costs so this directive doesn’t hurt employers. However it’s funded, businesses need the flexibility to work out leave policies to everyone’s benefit without government forcing mandates upon them.
If helping workers without hurting the economy is truly the goal, why not offer a carrot instead of a stick? Tax incentives for businesses to increase pay and benefits could offset any bottom line impact. Less money would go to government but more would stay in the pockets of both bosses and workers, a win-win that would energize local economies.
Easing financial burdens for college students is another worthy goal that carries a hefty price tag. Georgia provides financial aid for college and technical school students through its HOPE programs, something the federal government could do well to replicate. But even if the path to higher education is made smoother, good jobs need to be available for graduates or that effort will not bear fruit.
Here in Georgia, Deal’s budget is less constrained by the cuts made necessary in years past during the recession, and seeks to boost funding for education, transportation, child welfare and justice reform. An expanding economy would create more jobs, with better pay and benefits and, in turn, produce more tax revenue to pay for the state’s needs.
That’s why leaders at all levels should increase middle class buying power more effectively by growing the whole economy, not just pieces of it. That opens the path for opportunity to everyone by creating a “rising tide that lifts all boats.”
We certainly don’t need government driving the economy back into the dumps by trying to pick and choose the winners based on how they vote. In that scenario, those dinner bills would be left unpaid and we’d all be lined up in the kitchen waiting to wash dishes.