Massachusetts suffered dearly in the Great Recession, but not as badly as some places. Realizing that cuts to state funding and services — ie. jobs — would exacerbate the economic damage, the Commonwealth raised revenues. That was due to the courage (!) and sober dutifulness of our state leaders at the time, who raised the sales tax from 5% to 6.25%. Credit goes to then-Senate President Therese Murray; Speaker Robert DeLeo, and Governor Deval Patrick.
Here we are again, and it’s even worse. Massachusetts is looking at a revenue shortfall of some $6 billion.
These 91 economists, from a variety of Massachusetts institutions, are calling for use of our rainy day funds of $3.5 billion; and income and corporate tax increases of 1% each, which would raise $2.5B and $180 million respectively. While there is an economic cost to raising taxes, the cost of losing jobs and services is far, far worse.
Economic theory and historical experience show that spending cuts are more harmful than tax increases during recessions. States and localities spend most of their budgets on health, education, public safety, public transformation, and safety net programs. Cutting from housing, public transportation, and healthcare removes spending from the economy when it is most needed and from the people who need it the most and now have been disproportionately affected by COVID-19. Cutting local aid to cities and towns for police and fire protection, parks, and public works erodes public safety and infrastructure. While reducing funding for early education, K-12 and higher education reverses our long-standing investment in human capital—including recent new commitments—with long-run consequences for worker productivity and economic growth.
Via email from MassBudget: https://scholars.org/sites/scholars/files/MA_Economists_Letter_05262020.pdf
Austerity is not the answer. Let’s keep people in their jobs as long as we possibly can.
jconway says
I’ll add that we should also restore funding for the Student Opportunity Act which they legislature and a Governor already enacted. Too many well meaning people in power from a progressive rep I talked to to our superintendent are acting as if that money is already off the table. This was not “extra” funding as some in the media portrayed it, but overdue funding parity between wealthy and working class districts that finally would have closed that gap.
We would finally have had a dedicated ELL Dept separate from Foreign Languages, more history teachers to reduce our class sizes, and a STEM Center. Along with admin focused on equity and restorative justice. That’s not going to happen now and it’s possible further cuts will occur. Our insurance contributions were going to go down and will now go up. I want our funding back, and I definitely refuse to entertain cuts.
johntmay says
Austerity is never the answer but it is always the “go to” of Republican and neoliberal Democrats who justify austerity on the grounds of responsibility. People must take responsibility for their own lives, rather than relying on the state. Local authorities must take responsibility for their spending. It ignores the connection between the society that created the wealth that is amassed by the wealthy and the wealthy themselves who now wish to hold onto it in time of crisis on the belief that they earned it. Of course, it was only through the laws and policies of the state that the wealthy were able to accumulate their fortune, and on that simple fact, it is only fair that the same state revise those laws and policies. Call it “socialism” call it “redistribution of wealth”, call it whatever you wish, but know that what it really is is justice in a time of crisis.