President's Message
Tightening Our Belts
The recent economic downturn will cast a shadow on many strategies, both nationally and locally. It will affect personal finances, as well as local, state and federal finances. As we gaze into the crystal ball to anticipate upcoming events, let's hypothesize about some of the consequences to personal and public actions.
On the personal level, the consequences are very straightforward. In tough economic times, one has to cut spending and become even more dogmatic about living within ones budget. Dining out takes place less frequently, or in some cases is reserved for special occasions only. The latest and greatest electronic gadget sits on the retailer's shelf instead of in your living room, and you find ways to stretch out the life expectancy of your automobile for at least another year. In short, you sacrifice. This sacrifice also causes the public to reexamine their credit situation, and many people make attempts to pay down their short term debt, like credit card balances, and be more frugal with their short term debt going forward.
On a local government level, it's much the same as on a personal level. Projects get deferred for a period of time so that revenues can replenish. Baltimore County has, historically, proven to be frugal with its expenditures, overall, and the County has set up a rainy day fund to tide itself over in periods of economic downturn. Other local governments have introduced talks of employee furloughs or similar tactics to weather the storm, but Baltimore County's wise fiscal management has thus far been able to avoid such steps.
On a State level, there have been budget reductions already put into place. But if the reports are correct, even with the reductions enacted thus far, the State plans to spend about one percent more than expenditures from the previous year. This may be the result of mandated programs and expenditures for those programs, but I know many would feel better if the State were spending one percent less than the previous year. I was amazed by some of the logic espoused in one of the commercials advocating the passage of the slots referendum. It was the commercial that argued that the only recourse to not passing the amendment on slots was to increase taxes by six hundred million dollars. What ever happen to the notion that you tighten your belt and not spend the money in the first place? That you wait until economic times are better and then, and only then, do you examine if you can afford the increased expenditures. The current economic downturn offers the Legislature a compelling reason to ask the hard questions and make some meaningful decisions about curtailing spending. We shall see if our representatives possess the will in a few of months.
And on the national level, it seems that there is no willingness to live within ones means. The government prints more money and sells more bonds while the national debt reaches new highs in a far too predictable pattern. And the problem is not confined to one political party. The Democrats of the Clinton years faired better than the Republicans of the Bush years in keeping the national debt down. Certainly our next president will have a challenging time to say the least. But what I found most perplexing was that neither candidate would concede that some of their promised programs would have to be scaled back or compromised in light of our present economic woes.
Let's hope that all levels of government become reacquainted with the economic realities that are faced on Main Street. If you want to read a very dry but accurate account of what has led to the current economic problems, one that details the consequences of over spending on the personal and national level, pick up the book BAD MONEY by Kevin Phillips. It may put you to sleep, but it offers an interesting account on how the country's thirst for debt has led to our present circumstances.
Eric Rockel, President