We owe more than we own

By Robert Wasserstrom | Aug 15, 2019

Did I read that right? Unwilling to reverse LePage’s tax cuts for wealthy people, Gov. Janet Mills would like us to borrow another $249 million for road repair and other routine expenses. Want to clean up our state parks? OK, let’s sell revenue bonds and stick our grandchildren with the bill. And hope they won’t need better schools or some other “unforeseen” but completely foreseeable public service.

Many Third World kleptocrats use a similar strategy to enrich themselves at everybody else’s expense. This works particularly well in countries with oil or diamonds or other valuable resources. Predatory lenders provide bogus “development loans” that are diverted to wealthy elites. Oil or diamonds are then sold off to pay for the loans (which is what bonds are). Ordinary citizens get almost nothing from the deal, but they are stuck with the debt. Economists call this the “resource curse."

Maine doesn’t have oil or diamonds, but it has another valuable resource that bondholders love: taxpayers. Our public goods are being squeezed so that state officials can justify borrowing money for “repair projects that may not last as long as the interest payments,” according to the Bangor Daily News. How will we pay for these loans, plus interest and commissions? Mostly with our taxes, stretched out over many years so that we won’t notice. It’s a never-ending downward spiral: our debt grows, even though we still have the country’s fourth-worst infrastructure.

Maine now “owes more than it owns,” reports the State Data Lab: $6.4 billion in assets and $9.9 billion in liabilities. Can we afford this in the Midcoast, where full-time employment at $15 per hour leaves most families 40 percent below the livable wage? What does more borrowing do for them?

But wait, you might say, didn’t we cut taxes so that rich people would create more jobs in Maine? Apparently not: nearly 20 percent of the jobs we lost in the Great Recession haven’t returned. One third of our labor force has given up looking for work. Meanwhile, low wages – 20 percent below the national average – drive young workers away faster than new ones arrive. And the families who stay are aging out of the workforce: our median age is now the nation’s highest. Not much to show for LePage’s $864 million tax giveaway.

Except for this: since 2011, the number of kids here who live in “deep poverty” – half the federal poverty level – has risen eight times faster here than anywhere else in the country. In Knox and Lincoln counties, more than 40 percent of schoolchildren don’t get enough to eat. In parts of Waldo County, the proportion is double that. With our severely underfunded education system, what are their chances to earn a decent living?

When Mills was running for office, she said she knew where to find more money without raising taxes. Now we know what she meant: Wall Street. But we can’t blame her for following the rules of the game. Since the 1970s, Big Money has mounted a frontal assault on the concept of public goods in our society, as a friend of mine says. In Maine and elsewhere, we’ve been told that public services are for losers. if you work hard, you’ll do fine; government will only get in your way. And of course, the less we demand from government, the less we’ll get: less education, less environmental regulation, fewer health and safety inspections, lower wages and longer hours, you name it. Big Money now calls the tune and both political parties join the dance.

It doesn’t have to be this way. More than a century ago, the Socialist Party of Maine proposed a radically different balance of public goods and private capital. In 1902, writes labor historian Charles Scontras, Socialists called for collective ownership of transportation and utilities, “as well as industries controlled by monopolies, trusts and combines.” Money from these industries would be used to increase wages, improve services and lower rates for consumers – not to reduce taxes on the wealthy.

Raise wages and lower living costs? Maybe young workers would stay in Maine and others would move in. Maybe children wouldn’t come to school hungry and their education would improve. Maybe people who had given up looking for work would find it. But that would be socialism. Better go borrow more money from Wall Street and give it to wealthy people. And hope that things will somehow get better.

Comments (1)
Posted by: Mary A McKeever | Aug 16, 2019 12:16

This makes me sad! What to do? I hope the tax payers don't give up. Maybe if they all moved away for better jobs

and no more taxpayers, what then? Loans, debts? Glad I moved.to the sunny landscape. ....



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