What to do with the surplus? The economic and moral imperatives are clear | Column
“Let all who are hungry, come and eat.” Getty Images.
State lawmakers will return next week from their spring break facing a choice about Minnesota’s future — they’ll decide what to do with a $9.2 billion surplus.
Republicans want to cut taxes, with half the money from an income tax cut going to people who make more than $100,000 per year. We remain one of a handful of states that tax Social Security benefits. Republicans want to end the practice, but that tax cut also tilts toward the wealthy, with half the money going to people who make more than $125,000.
Democratic-Farmer-Labor lawmakers want to spend $3 billion on education and other key priorities like child care.
The latter course is better. Barring that, the status quo is better than a massive round of tax cuts.
A tax cut now risks a fiscal calamity as soon as federal money stops flowing and the next recession comes. Lawmakers would find themselves forced to make painful cuts to education and health care or raise taxes. Which, for Republicans, is the point. By cutting taxes now, they can force government to get smaller later, i.e. “starve the beast.” Or as anti-tax activist Grover Norquist once put it: “My goal is to cut government in half in 25 years, to get it down to the size where we can drown it in the bathtub.”
A round of tax cuts also serves no appreciable macroeconomic purpose. Minnesota’s economic magic has not arisen because we have a low-tax, lightly regulated marketplace.
Quite the contrary. Our schools and universities are better than most; we have a massive network of roads that outpaces nearly every state in the country; our state, regional and city parks are some of the best. When I moved here, I was astounded when the state plowed $14 million into expansion of the Minnesota Children’s Museum.
The point being: We maintain a high quality of life — which costs money — which in turn keeps productive workers here and attracts new ones.
The problem, however, is twofold:
First, that high quality of life has never been evenly distributed. We have some of the worst racial gaps in the country when it comes to education, health, housing and income.
The second problem is that the high quality of life is at risk due to a few factors.
We’ve not done enough to keep housing affordable. The Twin Cities metro had the lowest home and apartment vacancy rate of the nation’s 56 largest metro areas last year, which pushes up housing prices inexorably.
Our schools are struggling. Two years of pandemic-related closures — and an epidemic of untreated mental health afflictions — have eroded our academic achievement, especially for children who could least afford falling behind in literacy and numeracy.
And our child care system, if you wanna call it that, is in total crisis. As the Reformer’s Rilyn Eischens reported earlier this year, we pay more for child care than parents in nearly every state in the union, even though wages for the people we entrust with our youngest Minnesotans are depressingly low.
(Yeah, I’ve got a personal stake in this one: Beginning next month, our family’s child care payments will be roughly 33% higher than our mortgage.)
Can I afford a mortgage? Will my kids’ school be any good? Can I afford child care if I have another baby?
These are the key questions people face, and the answers are getting grimmer all the time, unless we act.
To understand how deeply irrelevant a tax cut is to this discussion, just consider: If we reduced a person’s child care bill by $500 per month, we save them $6,000 per year, or roughly $30,000 for the life of the child before kindergarten. Whereas Republicans want to give a married couple in the middle of the income ladder $1,071 per year, or about $20.60 per week.
When it comes to housing affordability: A $200,000 mortgage costs about $975 per month in principal and interest; a $300,000 mortgage is about $1,450. The difference is nearly $6,000 per year, overwhelming that $1,071 tax cut.
Republicans will cite the burden of regulatory compliance for driving up the cost of both child care and housing, and they may have a point, and Democrats should listen.
But that’s for another day.
Democrats should also be faithful to our flinty heritage and use the money wisely. If schools are to receive a new infusion of money, we should see results via assessment data. If we’re going to invest in housing, let’s spend something far south of the $900,000-per-unit boondoggle at Ft. Snelling. If we’re going to invest in transit, let’s avoid a fiasco like the Southwest Light Rail.
As important as these policy decisions are for the state’s future, they ignore our moral imperatives.
Legislators are currently on Easter/Passover break. This time is important for the three Abrahamic religions, as Muslims celebrate Ramadan, Jews celebrate Passover and Christians celebrate Easter.
They all implore us to look out for our brothers and sisters.
The Prophet asks: “How would God sanctify a nation that does not protect its underprivileged from its powerful?”
Jews will say at Passover seders: “Let all who are hungry, come and eat.”
Christ commanded his followers: “Whatever you did for one of the least of these brothers of mine, you did for me.”
Aha, you say, that’s what charity is for!
Consider the scale of our challenges, however: Across Minnesota, an estimated 5,800 minors and 7,500 young adults will experience homelessness over the course of one year. Tens of thousands more are living in unstable housing, among the 45% of renters in the Twin Cities who pay more than 30% of their pre-tax income on rent.
How can we expect our instructors to teach children who are moving every few months or aren’t getting regular checkups at the doctor and dentist?
As two Minnesota philanthropists wrote in the Reformer this week regarding child homelessness, charity can’t solve problems this large and systemic: Only the state can muster the resources to fix these issues.
And our moment is now.
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