In Annapolis, fine words and hope but no solutions

February 05, 2010|By Ron Smith

Gov. Martin O'Malley's State of the State address Tuesday was, well, strange. By that I mean it was filled with Kennedy-like rhetoric such as, "The recession will end, our journey is not over. And our best days are still in front of us if we make it so." This reassurance, according to Sun reporter Julie Bykowicz, drew a bipartisan standing ovation from the lawmakers and guests in attendance, unlike his warning about "a dark thing that has penetrated deep into our collective soul that somehow we are destined to decline, backslide and fail."

On the other hand, there was no specific acknowledgment of the ever-growing budget deficit, estimated to total perhaps $8 billion over the course of the next gubernatorial term. Despite the record-setting 2007 tax increases, the gap between revenue and expenses continues to widen. It has been papered over with short-term fund transfers and one-time accounting gimmicks, plus hundreds of millions from the Obama stimulus plan.

In an interview with The Daily Record, Mr. O'Malley admitted the short-term fixes have been exhausted. A reckoning looms. Yet, there were few actual proposals in his 27-minute speech of anything substantive to avoid disaster ahead. He did mention jobs creation, pushing for a $3,000 tax credit for each person hired by a business off the unemployment rolls, and suggested the controversial hike in the state's unemployment tax rate might be eased by more federal stimulus dollars. He also claimed that federal stimulus money enabled the state to save or create 19,000 jobs. The Obama administration has been saying the number is more like 36,000, but nobody really knows, as the definition of saved or created jobs is a slippery one. What's more, the U.S. Department of Labor, after examining actual changes in state-by-state payroll employment through December, says 49 states, including Maryland, have lost jobs since the stimulus was enacted in February 2009. According to these data, Maryland has lost 35,700 jobs since then. Oops.

Predictably, Democrats hailed the speech and the minority Republicans castigated it. Senate Minority Leader Allan Kittleman, in his response to it, said the state's Democratic leaders have "grown arrogant and unresponsive." Well, yeah, but what does the GOP offer to fix the situation? Nothing much, really, and the reason for that is a microcosm of the federal government's dilemma: There are currently no remedies that are politically palatable -- that wouldn't cause great unhappiness to huge numbers of voters. Therefore it's a given that they can't be expected to be applied by politicians.

Again, let's take a peek at the big picture, the one beyond Maryland's tiny piece of it. In an important piece in Commentary magazine titled "A Never-Ending Economic Crisis?" the highly regarded David Smick details the extent of the 2008 global meltdown, suggests the 2009 recovery may be yet another bubble, and explains why we should be worried about the future. "Global governments," he says, "spent an astonishing $17 trillion to support the world economy in the form of bailouts, guarantees, and stimulus packages." That's a quarter of global GDP. "In the 12 months following the outbreak of the crisis," he adds, "global trade declined by 25 percent, global investment by 15 percent, and global GDP by nearly $4 trillion."

Mr. Smick examines the jobless crisis and why it is so persistent, marvels at how the stock market has risen startlingly in the last 10 months (predicting a rebound in the economy that to him is not in sight), and joins the chorus of those warning about the coming public-debt crisis.

One must assume that most high-level politicians are aware of these huge problems. They read the poll numbers that show an anxious and restive voting public, worried not only by short-term concerns but also about a pending national fiscal nightmare that could send the average American's standard of living spiraling downward.

So we get poetic ramblings from Maryland's governor and expressions of hope, but not much else. The bag of budgetary tricks is empty, and we await the dénouement.

Ron Smith can be heard weekdays, 3 p.m. to 6 p.m., on 1090 WBAL-AM and WBAL .com. His column appears Fridays in The Baltimore Sun. His e-mail is rsmith@wbal.com.

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