"Positive, but disappointing growth for years to come"
Dr. Alice Rivlin was the last Director of Management and Budget to have balanced the Federal Budget, so her opinions come highly regarded. The former Vice Chair of the Federal Reserve spoke at this morning's general session of the ICMA conference here in Montreal.She traced, with the benefits of hindsight, the now familiar sources of the global economic reckoning from outright greed and corruption to the larger problem of "overborrowing and overspending." On that foundation, she discounted the chances of a second dip ("possible, but not very likely") and inflation ("inflation happens when demand is high and the labor market is tight -- we should be so lucky.") But she ruefully acknowledged that "if I'm right, you are going to have continuing tough times" because the prospects are for "positive, but disappointing growth for several years to come."
"It's not going to be good for shopping centers, commercial property and new housing," she predicted, especially in regions (and at the edge of regions) where too much suburban sprawl occurred in the last boom. Consumers are simply tapped out and will need to pay down debt before they can resume spending.
To Rivlin, the greatest threats ahead are "looming Federal budget deficits" that are "the product of making too generous promises combined with uncontrolled per capita costs on medical care." This mismatch between our appetite and our ability to pay for it forces us to continue to borrow from other countries, particularly China and Japan. "We can't go on doing that," she noted dryly. "We're going to have to cut entitlement spending and raise taxes." Both are politically difficult, but necessary for the two parties to compromise on.
Turning attention to local government, she joked, "If you wanted an easy job, you wouldn't have gone into this line of work." Because local government revenues will recover even more slowly than the sluggish economy, there will continue to be a clash between citizen expectations and willingness to pay. The only bright side of this squeeze will be that it will be easier to win political backing for difficult, but overdue, efficiencies. There will simply be "no choice" about making even painful changes.
That certainly resonated with our challenges in Ventura. Having cut $11 million from this year's budget, we will either have to live with reduced services or pay more for years to come. The "recovery" predicted for the end of the year simply won't come strongly or quickly enough. "Living within your means" is not easy. But the alternative of "overborrowing" to finance "overspending" has been spectacularly discredited at both the Federal and State levels. We must and will take a different, more sustainable, route.
posted by Rick Cole at
7:08 AM
7 Comments:
Wonderful comments, it's only too bad that the powers did not use their common sense much sooner. It really doesn't take a rocket scientist to figure out "What goes up, Must come Down. That of course includes the economy.
It is interesting that a Fed Board member would admit that their policies actually caused the problems we are experiencing.
Unfortunately, even her statements are only partially true. We are about to see another round of foreclosures and a much larger "dip" than we have already experienced. Anyone who thinks otherwise needs to replace their pre 2008 Crystal Ball with a new one.
Measure A will only make the dip worse, because people will have even less money to spend and will look for ways to save, like spending outside the Ventura City Limits. Ventura is not big enough to contain spending like Los Angeles. The city needs to face the reality that it cannot support an "Arts" program and many of the other "Services" it provides, like sports and senior services. If sports (golf, tennis, softball leagues, soccer...) cannot support themselves, including the costs of the parks or facilities used, by the fees charged, the fees need to be increased or the activities stopped.
Seniors need to be self reliant or move in with their kids. I don't see any services for middle aged working families, we just keep getting taxed more.
The ONLY function of government is to provide safety and the means to promote commerce. The city needs to focus on protecting the public with police and fire and maintaining the infrastructure. Everything else is the purvue of the private sector. With that emphasis, Measure A is unnecessary and the local economy will seem to thrive compared to others in the region. If we continue to try and offer "services" and "arts" our city will begin to fall apart and people who can afford to leave will.
We need to remember the words of Thomas Jefferson; "Government big enough to supply everything you need is big enough to take everything you have . . . The course of history shows that as a government grows, liberty decreases."
C. Gorenson's comments are cogent and consistent -- it remains to be seen whether he is in the majority or minority on Measure A. As City Manager, I welcome philosophical consistency. If the majority of citizens want to confine local services to "provide safety and the means to promote commerce" then we can certainly do that -- and I believe we can do it well. What is problematic is when a majority seek enhanced services (including for public safety) but don't want to pay for them. Three years ago, 62% voted for a higher sales tax, but as the money was solely earmarked for police and fire, the measure fell short of the needed 2/3rds. Measure A would go to police and fire; infrastructure repair, beach health and safety and libraries. It is a strict majority vote, so the choice becomes very clear for citizens.
One correction to Mr. Goranson's comments, however. Wikipedia concludes that the quote attributed to Thomas Jefferson actually originated with Gerald Ford. It actually sounds more like the latter, which is why I checked.
I agree with C Goranson's comments.
As for the Wikipedia cite I feel that a quote from Michael Scott ("The Office" on NBC) is appropriate. "Wikipedia is the best thing ever. Anyone in the world can write anything they want about any subject, so you know you are getting the best possible information."
Hey, for once, nobody wants to remain anonymous in this discussion! How refreshing.
I find it interesting to think about how we can better help ourselves understand about living within our means.
Healthcare provides an interesting model of our dysfunction. Most of us take poor care of ourselves, but we would love to have the most expensive treatments provided for us.
I still think that part of the problem is that most of us are comfortable blaming "the government", with no acknowledgment that "it" is us.
right, and so the City of Ventura is us as well - even those of us who do not live there but make our businesses there. I grapple with the concept of personal responsibility working well for a large population. Leaving everything but safety and promotion of commerce to the many individuals in Venutra with varying values seems -unfortunately - irresponsible.
That is why we as a collective vote measures in, and why we must as a collective pay for those measures. We, The City of Ventura, have a social, moral, and fiscal responsibility for each other. That is what makes us a community.
Sounds idealistic, but I believe it is much more realistic than leaving many issues that affect us all to individuals. Thing is: many of us when asked to pony up, don't. That is what we, The City of Ventura, and our taxes are for.
And Dr. Young, you've got your arms around one part of the puzzle that each of us CAN control individually that greatly affects our larger community, economy, schools, and infrastructure: individual health. It is daunting for some to realize that their heath is their own to control and that is is absolutely 100% possible to become an active, healthy, and productive individual - inexpensively. If each one of us would commit to improving our own health, many of our economic woes would (at risk of sounding idealistic again) simply disappear.
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