Mattiello’s plan to increase rainy day funding is
austerity economics
RI House Speaker Nicholas Mattiello has introduced an amendment to
the Rhode Island State Constitution that
would double the funding of the budget reserve account, aka the “rainy day fund” and impose limits
state spending. A bill introduced by the Speaker, which was intended to accomplish much the same purpose legislatively, has been withdrawn.
Increasing the rainy day
fund might be a fine idea in times of economic plenty, but in a time of a
decreasing state revenues and increasing costs due to the COVID-19 pandemic,
Mattiello’s plan is exactly the wrong tactic, unless you’re plan is to defund social services.
“Now is our rainy day,”
said State Senator Samuel Bell (Democrat,
District 5, Providence) in response to a query from Uprise. “Now is not the
time to be diverting more revenue away from our budget. Pushing this now means
deep cuts that will hurt our recovery.”
The Economic Progress Institute (EPI) agrees. In testimony
presented to the House Finance
Committee last week it was estimated that Mattiello’s proposal
would “take close to a half-billion dollars of revenue out of the regular
budget and appropriations process, including tens of millions of dollars before
Rhode Island has fully emerged from the current economic crisis.
“These funds,” continued
EPI, “are urgently needed for critical public services, including housing,
healthcare, workforce development, and transportation. In better times, the
state can start putting aside additional funds; there is no good reason to mandate
this right now.”
The Speaker has argued, through House Spokesperson Larry Berman, that “it’s time to talk about adequate funding for the rainy day fund in the event of a severe economic downturn like the one we are experiencing. The current rainy day fund was not nearly enough to cover the revenue losses in the current crisis.”
The problem is, we’re
not out of the current economic crisis. And imposing budget restrictions now
will only make it harder for the state to provide the kind of assistance people
and businesses need to weather this, with the most vulnerable populations once
again bearing the brunt of the cuts.
“This rainy day is going to last more than a year and trying to pay it back next year is really, really, really dumb,” said Tom Sgouros, public finance consultant and contributor to Uprise. The Speaker’s plan, continued Sgouros, “doesn’t ‘smack’ of austerity. It is austerity.”
Austerity is a set of
policies that restrict government spending to reduce deficits. On the
international scene, austerity has been a disaster.
Austerity does nothing
for vulnerable people, but it is good for the very rich, and has been called, “just one part of a
wider elite plan to radically re-engineer society and everyday life in the
interests of profit, consumerism and speculative finance.”
“The language Speaker
Mattiello used to describe his resolution certainly indicates that it is
another austerity measure dressed up to seem imaginative, compassionate, and
sensible,” reponded ReclaimRI, a group advancing a
progressive economic agenda.
“What we see here is another attempt to ‘balance the budget’ and ‘reduce spending without even a glancing mention of the most obvious and humane option for funding essential state services: raising taxes on the wealthy and corporations. Any budget that will not do so fails the people of Rhode Island.”
“What we see here is another attempt to ‘balance the budget’ and ‘reduce spending without even a glancing mention of the most obvious and humane option for funding essential state services: raising taxes on the wealthy and corporations. Any budget that will not do so fails the people of Rhode Island.”
It’s not just those on
the political left who are opposed to Mattiello’s plan.
Michael DiBiase, who heads up the right-wing think tank the Rhode Island Public Expenditure Council (RIPEC), warned that increasing the rainy day fund “should be done in a way that doesn’t hurt the state financially in the short-term.”
'RIPEC consistently lobbies in opposition to legislation that would raise the minimum wage or otherwise help workers in Rhode Island at the State House.
Michael DiBiase, who heads up the right-wing think tank the Rhode Island Public Expenditure Council (RIPEC), warned that increasing the rainy day fund “should be done in a way that doesn’t hurt the state financially in the short-term.”
'RIPEC consistently lobbies in opposition to legislation that would raise the minimum wage or otherwise help workers in Rhode Island at the State House.
Austerity policies have
been failures everywhere they have been applied. In fact, “…austerity has been not
only an economic failure, but also a health failure, with increasing numbers of
suicides and, where cuts in health budgets are being imposed, increasing
numbers of people being unable to access care.”
Introducing such
irresponsible legislation during a pandemic is a recipe for disaster, and
unimaginable suffering. Speaker Mattiello is, as usual, focused on the wrong
issues.
Steve Ahlquist
is a frontline reporter in Rhode
Island. He has covered human rights, social justice, progressive politics and
environmental news for nearly a decade. atomicsteve@gmail.com
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