BOBBY HARRISON: Cutting and more cutting becomes self-consuming

JACKSON – More people are out of work and are having trouble finding a job. It is all in the news, but more importantly many Mississippians and Americans are living that reality day to day.
Some of these out of work people are opting to go back to school – most to community college, but some to the universities – to learn new skills in hopes of increasing their chances of finding a job.
The current economic conditions is one reason the state’s 15 community colleges and eight universities are literally bursting at the seams. Enrollment has never been better.
Yet, both the community colleges and the universities have suffered major state budget cuts during the past three years. Gov. Haley Barbour has told them and other state agencies to prepare for an additional 15 percent cut during the upcoming fiscal year, which starts July 1.
Parents with kids in college and those paying for college themselves should heed the warning that it takes a mighty big tuition hike – more than 30 percent one community college president recently said – to make up for a 15 percent cut in state appropriations.
But do not worry. Neither the universities nor the community colleges are going to raise tuition 35 percent. They might approve sizable hikes in tuition, but not that much.
So what is the alternative?
Many, including some of our leading politicians, say the alternative is for government to be run like a business.
The businesses are enduring the current economic woes by making cuts. Government can too.
Well, government has been cut. But, as I have pointed out before, there is a huge difference between government and business.
During tough economic times, it is true a business can make adjustments – whether it is by purchasing less or a cheaper grade of supplies or by laying off people .
But the person affected by the business decision, whether it is the employee laid off directly or the employee indirectly laid off because he worked for the supply company that the business no longer uses, is going to look to the government for help.
That help might come in the form of signing his or her children up for state-sponsored health care, such as Medicaid or the Children’s Health Insurance Program, or it might come in the form of applying for and receiving unemployment benefits.
And it might come in the form of going back to school to learn a new skill in hopes of being a productive member of society.
There is a key difference in business and government.
A business thrives during good economic times and expands. Government must expand during poor economic times as a safety net.
It is a conundrum that the time when government is the most in need – during economic hard times – is when revenues are down. During economic hard times, when the businesses make those cutbacks, that means less revenue for government.
While the federal deficit is a serious problem under any circumstances, it is greatly magnified by the drop in revenue collections. The federal government is collecting less revenue because fewer people are working.
When the economy improves and the unemployment rate drops, so will the federal deficit. The expansion of the economy in the 1990s had more to do with the federal budget surplus than did the cuts in spending.
Take, for instance, the much talked about and controversial American Recovery and Reinvestment Act, commonly called stimulus package.
The legislation is essentially about one-third tax cuts, about one-third help to the states with such items as Medicaid, education and unemployment benefits and about one-third projects, whether road projects, or innovative energy efficiency projects.
Sure, the business-thing to have done might have been not to spend that money on the stimulus.
But without that money, even more instructors would have been laid off, making it even more difficult for people to improve their education and garner more skills; the state would have been struggling even more with how to pay for Medicaid and other health services, such as mental health services; and, oh yea, we would have missed out on another tax cut.
And who doesn’t like a tax cut?
Contact Bobby Harrison, the Daily Journal’s Capitol Bureau Chief at bobby.harrison@djournal.com or call (601) 353-3119.

Bobby Harrison