WILMINGTON — Before I get into the details about the spending and revenue bills that were just passed in the state House of Representatives, I'd like to explain how my beliefs informed my decisions during the process that evolved into the legislation that I supported.
Let's start with capitalism, the very complex system that guides the flow of money through our economy and our lives. The trick for all of us is to have enough of that money stick to us that we can sustain our lives in this complex system.
Money moves when we spend it or invest it, which is actually specialized spending. It also moves when we save it in a place where it can be used as an investment, like a bank. Putting it under the mattress or into a jar under the dresser removes it from the system. So does parking it in the Cayman Islands.
Broadly speaking, there are three legs of capitalism where spending happens: producers, consumers, and the government.
It is widely acknowledged that 70 percent of our economy is generated by consumer spending. The politics of the Right has for several decades successfully pushed supply-side economics, or policies that favor the producers, in the belief that the resulting profits of investment will “trickle down” to the rest of us.
Yet the result today is that 40 percent of America's wealth is owned by 1 percent of us, and the bottom 80 percent of us own only 7 percent.
This is a vastly different spread of wealth than occurred in the 1950s and '60s, one of the most productive and stable times in our history. It is as though the middle class and the poor have merged to become a vast cauldron of Americans, each of us having trouble keeping a roof over our heads, keeping warm, and feeding ourselves and our families.
Just who does the Right think makes up the 70 percent of the economy which consumes?
To make matters worse, enter “No Tax Pledge” Grover Norquist who once said his goal is to shrink government until it is small enough that he can “drown it in a bathtub.”
Norquist has been successful in convincing not just the Right but a whole lot of the mainstream that government spending is the problem, when in fact government is the only remaining place where spending and investment can happen if the producers won't and consumers can't.
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Our Vermont economy has been recovering slowly, and we are in many respects in better shape than much of the rest of the country. Projected revenues to the state's General Fund have been increasing, but slowly. We returned to 2008 revenue levels just last year.
The budget passed in the House of Representatives meets the growth in government expenditures driven by growing costs (the same growing costs that burden all of us), increasing case loads, pay increases, pension contributions, impacts from Tropical Storm Irene, and decreasing levels of federal funding.
The budget we enacted also invests in our future, a commitment that was a guiding principle of our appropriations committee as we combed through the details of every request for money.
A number of viable investment proposals were left behind, but here is what we did include. The House budget:
• increases the appropriation to higher education, the first such increase in four years, by making available $2.5 million in additional scholarships for Vermont students.
• increases payments to Medicaid providers by 3 percent to reduce the shift of costs to private and insurance-pay patients.
• budgeted $6 million for home-heating fuel assistance for the first time, replacing federal money.
• placed a five-year cap on Reach Up in Vermont clients and also increased the fee scale for child-care beneficiaries, expanding the number of people who are financially viable to work.
• increased the investment in Vermont Working Lands Enterprise Initiative, which provides for state backing of agricultural and forest-based businesses.
• supported the regional development corporations with an additional $200,000 to expand their work in developing economic opportunities throughout the state.
• appropriated $325,000 to provide all eligible schoolchildren lunch as well as breakfast to improve learning opportunities.
• reserved $6 million to deal with the impact of federal budget sequestration. Revenues raised in the tax bill, also enacted, recently added $3.1 million to this reserve, for a total of $9.1 million.
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The second part of the investment strategy is the revenue bill that raises $20 million to support General Fund spending and $4 million for the Education Fund in addition to the above-noted allocation for the Reserve Fund.
The package of changes increases the amount paid by the wealthiest among us without raising tax rates. It brings Vermont into increasing compliance with the national Streamlined Sales and Use Tax Agreement, raises the meals tax by 0.5 percent for one year only, increases the tax on tobacco products, and repeals the employer Health Care Fund contribution. It does not tax satellite TV.
No one likes to pay taxes (or the consequential higher prices), yet increasing taxes has the same effect for government as capital infusion has in the private sector: additional resources available for investment in a future that needs to create jobs - which is how in our economy money sticks to us as individuals and how we grow our way out of the effects of the Great Recession.
Personally, I do not wish to remain on the ever-downward economic spiral driven by the no-spend mantra. I support the role of Vermont's government to invest in our future until producers are once again strong enough to do so and the consumers have enough money in their pockets.