Hawaii deficit nears $1B

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March 11, 2011 :: Permalink

Aloha HoDaSmell ~
You left some IMPORTANT economic realities out of your familiar Republican rant.

When you downsize government, you do a couple things:

#1) You lay off workers, who are currently paying TAXES! With our current rate of high unemployment, these people cannot find jobs, thus they go on welfare. They no longer provide needed services; they no longer pay taxes. Services drop along with tax revenue and cost of government goes up. This negative combination INCREASES the state's deficit.

In addition, since the newly unemployed don't take home as much as they did when they were working, they buy less from the private sector. This reduces profits to local small businesses. Some may go out of business; many will pay less in taxes as revenue drops; and others may have to lay off additional private sector workers. This cycles around to increase cost of government (as more people demand public help); further reduce revenues which increase public debt and may force more public job losses, job furloughs and loss of services.

Your recommendation turns into a Downward Spiral of Economic Death.

#2) By downsizing government, you slash public contracts to private vendors. In this difficult economy, this can put some out of business, force additional job cuts in the private sector and reduce tax receipts due to lower revenue, which further increases government debt ... now, re-read #1, as this cycle will apply.

Your recommendation turns into a Downward Spiral of Economic Death.

Remember to thank GW Bush and Gov. Lingle ... this is what happens when Republicans run the state and country. We're not left with very good options, are we?

Aloha diverdave ~
You don't run a small business, do you? Day to day, they don't know EXACTLY where they are financially. Checks promised are coming in; bills arrive but are required to be paid sometime in the future - and, maybe in installments. How many customers will come in today? How many will buy? How much will they spend in total? How much should I order for tomorrow? Should I hire another worker? Should I lay someone off?

How about tomorrow? Next week? These are all the "guestimates" a small business owners makes every day, as it is a very dynamic and fluid environment. Now, multiply these complications by 1,000 (as government is not one entity, but many smaller subsections) and increase the numbers by millions.

Once you do this, you begin to understand the challenges faced by those you call "frauds."

It might be better to offer a bit of respect to people who are trying to solve a REALLY BIG, BAD PROBLEM. And, guess what, they didn't create it. Lingle didn't create it (although she managed this crisis poorly).

This is ALL the result of GREEDY banksters on Wall Street and the financial markets. They're the frauds ... yet you falsely blame the wrong people while the Foxes Guarding Hen House received $400,000 BONUSES.

Aloha Kalamity Flats ~
No, you didn't get it right ... you're simply parroting Republican talking points.

1. You believe government doesn't make money??? (Of course, I could tease here ... as government prints money and isn't that making money? JK) If you pay a fee to DMV to register your car, the government makes money. When you drive your car, government makes money off the gas taxes you pay. If you buy a hamburger from MickyDees, the business makes money.

In all these cases, the provider of the service, public or private sector, receives and makes money.

2. You believe government does not drive innovation??? What? Schools are the #1 driver of innovation in the nation. This includes K-12 and college. This is a mix of public and private function. Go back 100 years. People moved around on dirt roads. This was inefficient. Today government paves roads and we travel at 70mph. This is innovation. NASA doesn't innovate? Our military doesn't innovate? CDC, NIH innovate in the medical field. Colleges and universities provide tremendous innovation to our world.

3. You believe government does not create products??? A student is a product of government education. A dentist, doctor, engineer, lawyer comes from a public (government) as well as private school. Most famous athletes come from public education systems.

Now, should we keep increasing taxes? Yes, in some cases ... WWII / Great Depression we taxed our MOST WEALTHY at 90% (top rate) to meet the needs of society. This money rebuilt Europe and Japan after the war. This money then returned to the U.S., as these populations needed goods and services. This put money into the hands of Middle Class workers and we witnessed the greatest expansion of wealth in the history of the world. We tax our MOST RICH at 35% (top rate) today - and this is the biggest reason we struggle.

Federal debt today is 80% of current GDP. During WWII period, it hit a high of 120%. We survived because we grew the economy. We never paid this back. Tax revenues paid to government was used to invest, innovate and grow the economies (US, Europe, Japan). Our economy grew so greatly as a result that the previous debt was irrelevant.

And, that is the solution today - grow the economy!