Reality Check, Republican Version

Vermont State Republican Chair Rob Roper writes

Despite the severe economic downturn in the economy...

No.  The economy is softening.  Maybe we're in a recession.  Maybe not.  But there's not a "severe economic downturn" either in the nation or Vermont.   Nationally, job losses have averaged about 80,000 per month this year.  In the downturn in the early part of this decade they were twice that, and that was, by every economists' analysis, a mild recession.  In Vermont, job growth is zero, but not negative.

Gas prices are high, but most people are coping.   And complaining.  But high gas prices do not make for a severe economic downturn.

I know it's an election year and we're going to be hearing more statements like this all the time from both sides.  But, please, let's try to keep things in perspective, Mr. Roper.

And don't worrry, I'll be looking out for statements like this from politicians from all the political parties.

Comments

[Green Mtn Punter]

Art, I'm quite surprised by your assessment in this post since I almost always agree with you. It's about time that Rob Roper showed some leadership here, Gov Douglas will soon have no choice but to get on board.

There is big trouble fast approaching unless the price of fuel drops substantially very soon. Americans, including Vermonters, are not going to adjust "gracefully" to $4 fuel. I see it and hear about it every day from my real estate owner clients and customers: The present numbers are unsustainable. Period. One of the biggest property owners here in WRJ is planning on shutting down a number of his properties and evicting the tenants if he has to heat them with $4+ oil. And I'm sure there are others in the same boat all over VT and other cold climes.

The rubber has finally met the road and we haven't seen even the tip of the iceberg that awaits. We are going to pay a price for the years of delay and inaction in establishing our energy independence. As for political solutions, Newt Gingrich's American Solutions is the plan that will work and cause the least damage to our economy, beginning with a massive release of oil from national stockpiles at below spot prices. I suggest you check out his website.

Art, let me do some cutting and pasting...

If the Fed does the right thing and raises rates, we'll sooner see even worse tax revenue collections and market performance on our state and municipal pension funds. If they keep rates too low, we'll see even worse inflation and market performance on our pension funds; as corporations will not be able to pass on most of their price increases onto consumers, but will have to accept lower profits. Lower profits and higher inflation translates into lower P/E ratios and thus, lower stock prices. Hence, increased unfunded liabilities, both at the state and municipal levels.

Does our state legislature understand this and the other dynamics in this economy? I doubt it.

Former Federal Reserve Chairman Alan Greenspan concurred with the following statement: "Over time, tax revenues are determined by economic and productivity growth."

In Vermont, economic growth will only occur when serious and meaningful reform in our regulatory, land use and tax policies occur. Without economic growth - and in the very near future - Vermont won't have enough tax revenues necessary to fund basic and necessary government functions. As you know, Vermont's private-sector job growth is 0% over this past decade.

From my reading of the tea leaves - from our Medicaid global commitment agreement due to expire soon to whether reauthorization of Waterbury's mental heath hospital will occur to Catamount Health's budget woes to lower tax revenue collections, etc... - I believe our state will be facing tens of millions of dollars of shortfalls within a six to twelve month period.

Worldwide, we have rampant inflation, slowing economic growth, food and energy shortages and a very wobbly U.S. dollar.

Quoting you, Art, "let's try to keep things in perspective."

[Tim Diette]

I have to side with Art on this one (as I usually do).

It is difficult to call our current state a severe economic downturn. Relative to incredibly low inflation AND unemployment it is worse, but it lacks historical perspective to label the current unemployment and inflation as "severe". I would agree that there are still significant risks of where we might be headed.

Yes, we have to adjust to $4 gas.
We can't claim we love the market and then suddenly want the government to solve everything when price increases.

My personal preference would have had us at $3.00 gas 10 years ago (if we have priced in the negative externalities with appropriate fuel taxes and phased it in at 10 or 20 cents per year). Let the market and individuals respond (alternative fuels, different residential/commuting patterns, etc.)

The person who mentions closing rental units due to heating costs. Well, this is all about demand and supply shifting in various markets. I do have a hard time believing that a cold, vacant apartment (still heated to 50 or so unless the water pipes are drained) is more profitable than a rented one...but I will leave the market to figure that one out too...(but I'm guessing it involves passing on some of the increased cost to renters...just as increases in property taxes, etc...)