Follow the money ... or is it a pea?
By David Shapiro
I've greatly enjoyed the economic analysis posted in response to my entry a couple of days ago, "Room for compromise on furloughs," but I'm afraid it's wasted on the state.
The folks at the Capitol have a lot of work to do on basic accounting before they worry about the loftier principles of economics.
Last month, the state budget deficit grew by $44 million in a blink when the Lingle administration revealed it made an error in counting tax receipts.
Now, nobody seems sure of the status of $35 million in federal education stimulus money at Gov. Linda Lingle's disposal.
Legislators were under the impression that the money had not been obligated and suggested she use it to restore classroom time lost to teacher furloughs.
But Lingle's office said the money had already been appropriated by the Legislature in the last session for "payroll and other expenses."
"It's being spent as we speak," said Linda Smith, Lingle's senior policy adviser.
Then Maunalei Love of the charter schools office said the governor promised $24 million of the money to the charter schools a couple of months ago, but it hasn't yet been received or spent.
Lingle is traveling in China as the drama unfolds. Perhaps she can divine the whereabouts of the federal cash from a fortune cookie.
Volcanic Ash
November 12th, 2009 at 12:39 pm
Hi Dave!
Fair comment on the uneven accounting skills of some of our elected officials and public administrators. Point made. I expect some of them, certainly Speaker Say and Isaac Choi in the House, know where every nickel is in the budget.
Good bookkeepers don't necessarily make good economists. And, probably, vice-versa. Whatever their accounting skills, I would hope all of our leaders would take time to discuss whether their "penny wise" budget cutting may actually be "pound foolish" and counter-productive.
The Federal government is trying to pump money into the economy in order to build a consumer base for our stores, restaurants and other businesses. The hoped for effect is that businesses will profit and hire more workers, who, in turn, will spend their wages and create even more jobs as the money ripples through the economy.
The State government, meanwhile, is proceeding in exactly the opposite direction, slashing their spending, cutting salaries and laying people off. It's a reasonable question whether the State's actions will be more effective at accelerating our downward trajectory than the Feds efforts to turn things around.
If our legislators cannot bring themselves to consider the "loftier principles of economics," they may just be making things worse, leading to a deeper and longer recession.
[Or so it seems to me, a schmuck with absolutely no bookkeeping skills and a half-baked (mis)understanding of economics.]
November 12th, 2009 at 12:56 pm
Oh, and Dave, I think you should work on cleaning up you language a bit:
"do do on basic accounting"?
Surely nobody takes THAT view!
November 12th, 2009 at 1:09 pm
Aloha ~
Follow the money ... or is it a pea?
Governor Lingle, you makey one fool of me.
A $44 million error in tax receipts there,
Some $35 million vanishes in the tropical air.
First it's on your desk, next it's spent,
Maunalei Love charter school must pay its rent.
Secretary Duncan claims he's hoppin mad,
Parents are furious, saying they've been had.
In all this confusion, furloughs and cuts,
Our Keiki wonder why da school doors are shut.
Mr. Shapiro asks if you hid money in a cookie,
The rest of us want da name of your bookie.
$30 Billion in bonuses paid to Wall Street staff,
While Hawai'i looks more like da Grapes of Wrath.
Have fun in China, our drama queen gov,
Aloha no! from Hawai'i, we be sendin our love ...
A*L*O*H*A
November 12th, 2009 at 1:55 pm
Yikes, how Freudian of me. I reluctantly fixed it.
November 12th, 2009 at 4:19 pm
Why on earth doesn't the governor's office simply say that $24 million of the $35 million has been promised to the charters months ago?
November 12th, 2009 at 5:41 pm
falling prices of goods will stimulate consumption.feds pumping money into economy would lower purchasing power of money.anyway,got to admit,john maynard keynes is really popular with the elite ruling class in governments.
November 12th, 2009 at 6:41 pm
and i am not including anyone that comments on dave's blog as " elite ruling class in governments."
November 13th, 2009 at 8:15 am
Need some private sector practices injected into Government. If huge companies can accurately account for their $, the State of Hawaii should be able to do so too.
Aloha,
Keahi
November 13th, 2009 at 8:26 am
Keahi said:
"Need some private sector practices injected into Government. If huge companies can accurately account for their $, the State of Hawaii should be able to do so too."
"Huge companies" obfuscate and falsify their financial status and dealings in myriad ways that government can't get away with. Ever hear of Enron? Goldman Sachs? Private industry's accounting practices are no better than government's; it's just that everybody who can type a comment thinks they know what government should do, whether or not they understand what private business does.
November 13th, 2009 at 10:10 am
@shaftalley,
Shucks! Last week I was personally being denounced as the voice of the ruling class. Now you have stripped me of my power. Again, shucks!
You wrote:
"...john maynard keynes is really popular with the elite ruling class in governments."
I only wish that were true. During the Bush administration, it was Milton Friedman whose thinking dominated. Even under Clinton, Alan Greenspan, a close personal friend, perhaps even a "devotee" of Ayn Rand, was retained as chief of the Federal Reserve. And during Clinton, it was Robert Rubin and Larry Summers who had his ear on economic policy and led the way in stripping away regulatory restraints on Wall Street. Neither could be called "Keynesian."
Today, Obama's chief advisors are, once again, Summers, Rubin, joined by their protoge, Tim Geithner. Prominent Keynesian economists, Paul Krugman and Joseph Stiglitz, are largely ignored and are openly critical of Obama's policies. We are currently in the midst of the greatest recession since the "Great Depression" of the 30s. It is only natural that policy makers would be dusting off long ignored copies of Keynes to try to learn from his strategy for dealing with that depression. Unfortunately, Obama's advisors appear largely impervious to learning and the influence of Keynes on current policy is weaker than it probably should be.
That has not prevented a resurgence of interest in Keynes among more liberal economists and policy wonks critical of Obama's policies. BUt you are making a mistake if you misread such chatter as a sign Keynes is now popular with "the elite ruling class in government."
If only you were right. (sigh)
November 13th, 2009 at 10:45 am
@Makakilo,
Well said!
I get a bit tired of those who are so fond of telling us government would run so smoothly if it were run according to principles that guide the private sector. That's a load of horse do do.
The private sector has even more cronyism, nepotism and insider dealing than government. With far fewer safeguards.
One of the biggest problems with legislators is that they are petty political entrepreneurs, more interested in advancing their political careers and taking care of those who have literally INVESTED in their careers than in looking out for the public interest. These personality traits are a perfect fit for the private sector.
A number of us active Democrats were fearful that Lingle would bring into government highly competent people from the private sector and they would put us to shame with their professionalism. Wrong for a couple of reasons. First, few people are willing to sacrifice the money they can earn in the private sector for the extreme pay cut they would get in government service, so most of Lingle's cabinet appointees and deputy directors were third rate. Second, because they lacked government and meaningful political experience, they generally lacked the social skills and interpersonal relationships necessary to get things done.
Of course, Lingle and the GOP never had unified control over state government like the Democrats had from Burns to Waihee. (Ben C. is in a special category).
But in those spheres where Lingle had the power to make decisions, her administration was characterized by cronyism and favoritism to a degree AT LEAST as bad as that of the Democratic "Old Boy Network" at its prime. She benefited from the decline in investigative reporting and from a press which had adopted a rather explicit "affirmative action policy" towards local Republicans, dating back (at least) to Lingle's first defeat against Cayetano and her assumption of the chairmanship of the Hawaii GOP. It is only in the last 18 months or so that the press has moved away from its uncritical, often fawning, coverage of Lingle.
November 13th, 2009 at 2:21 pm
The DoE grab for $35M is just another raid on charter school funds.
Dave you are a big backer of charter schools, please advocate for converting EVERY DoE school to a charter school. That would solve the DoE budget problems and create a massive surplus which could be used for teacher & principal performance bonuses. Heck, they might even adopt a curriculum.
Sure it would cost lots of bureaucrats and "professional svcs" contractors their jobs, but we can use them to "stimulate" the much maligned shark tour business.
November 13th, 2009 at 4:45 pm
@Joe & Suzy I'm not sure anybody knew $24 of the $35 million was already committed to charter schools when they suggested using it for furloughs. I didn't and wouldn't support taking the money from charters. The last proposal I saw from Will Espero would take only the $10 million not committed to charters for furloughs and get the rest from the hurricane and rainy day funds. I don't know about forcing every DOE school to convert to charters, but I do support the ones we have.