Robin Vos Eupdate: Jim Doyleopolis ~ May 7, 2010

Jim Doyleopolis From Greece to the Wisconsin State Budget

The news of the total collapse of the Greek economy is a complex issue, but simplistic at the same time in that they only got to this point due to (in the words of the Wall Street Journal editorial page) "an economy that's hostile to free enterprise and private property, primed for corruption, lacking in labor and capital mobility, stifled by powerful trade unions and unlikely to grow without deep-rooted changes". 

Sounds a little like Wisconsin , doesn't it?

Also, just like Wisconsin , Greece was ranked very close to the bottom of 183 countries on the annual World Bank 2010 "Doing Business" survey.  They were ranked at the very bottom of all 27 members of the European Union as well as dead last among the 31 advanced economy countries in the Organization for Economic Co-operation and Development (OECD).

These dismal rankings also conjure up images of Wisconsin , as we are frequently ranked one of the worst states in the country in which to do business. According to the Wisconsin Manufacturers and Commerce, in a recent policy paper on jobs in Wisconsin, "most independent rankings put Wisconsin in the bottom ten worst business climates in the country" and went on to say "we must move aggressively to address the issues that undermine our competitiveness". They say our impediments to competitiveness are out of control government spending, an unbalanced budget, high taxes, regulation and permitting complexity, and a legal system run amok - much the same as Greece .  

While the news today of 290,000 new jobs is encouraging, the unemployment rate has actually increased since last month as many become ineligible for unemployment and must once again try to enter the workforce. Unfortunately, the job number is also padded by limited-term census jobs and no doubt, other newly-created government jobs.

If Wisconsin is to recover from our budget mess and try to fill what is already shaping up to be a $2.3 billion budget hole in the next biennium, we too, will need improving economic news.  But that seems elusive when you consider last week's announcement that Harley Davidson needs to find $54 million in cuts.  If they can't get there, they've threatened to close plants in Tomahawk and Menomonee Falls .  This will jeopardize 1,400 private Wisconsin jobs as well as hundreds more jobs that exist to supply products to Harley Davidson.

It doesn't take a rocket scientist to figure out that this woeful situation is due, in large part, to a new combined reporting business tax, implemented by Governor Doyle in the last budget.  The tax cost Harley Davidson an additional $22.5 million this year.  It also perpetuates the disturbing trend in Wisconsin in which for the first time in our history we have more government jobs than manufacturing jobs. More government jobs, of course, means a worse budget problem, not a better one.

So where does that leave us? How will we fix this problem? We have higher taxes, and therefore, less private sector jobs.  But we also have more government jobs requiring more money to continue funding those government jobs and their massive benefit packages.

Perhaps we could look to other states for answers? Not likely.  This article details the huge budget problems currently faced by Illinois . Yesterday they increased the cigarette tax to generate another $320 million.  Doyle already did that. They are also considering re-securitizing their tobacco settlement money to bring in $1.2 billion. Wisconsin has already used that gimmick, too. So what will they do? They'll just kick the can down the road for the next Legislature to deal with it.

Governor Doyle is no different.  As a member of the Joint Finance Committee, I recently received a memo from the Department of Administration asking permission to issue $800 million in operating notes because fund levels have dipped to negative levels.  As you can see from the chart below, if operating notes are not used, our cash funds will be in the negative for much of the next year. This a very convenient gimmick designed to get Doyle through the end of his term with positive cash flow, leaving the next Governor with a real mess on his hands. This is certainly not a new gimmick to Governor Doyle, however.  He's borrowed more than $2 billion in short-term operating notes since he took office.

So when the can gets kicked down the road into the next budget cycle, I can only hope that Wisconsin has principled leaders who are willing to actually tackle the problem. Wisconsin has raised so many taxes already that simply raising more will not solve the problem - and we've seen that now based on the most recent budget.  In fact, they never solve the problem.  We will collapse under the weight of the inefficiency and non-competitiveness generated by our increased tax collections - just as Greece has. 

The bottom line is that in almost every place on the planet, government has become too big.  From Athens to Washington to Madison . As Americans - though we face tough economic times - we have thus far managed to stay afloat. But every day it seems we witness new, yet unseen actions taken by our government that are clearly just more steps down the slippery slope into the disaster that is Greece. And we need to heed that warning by electing new leaders who apply the smaller-government principles necessary to drag us back up the slope.

The Wall Street Journal said it best:

"All of this ought to be a cautionary tale for politicians in Europe's other high-spending, slow growth states - and for those in Sacramento , Albany and Washington , D.C. , too. Greece shows that the welfare state model of development, dominated by public unions, onerous regulations, high taxes and the political allocation of capital, has hit the wall. Down the road lies more Greek tragedy."

Rep. Vos Launches New Website; Update Gets a Makeover

You may have noticed the new look of the E -Update this week.  It's a new format designed to match the look of my new legislative website, just launched yesterday.  You can access it by clicking

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