Thursday, February 01, 2007

When economists go bad 

My SCBA colleague Gary Gross pointed me to a piece of Tarryl Clark's newsletter from yesterday:
Senate passes bill to return honesty into budget forecast process
Inflation has not been included in budget forecasts for expenditures since 2002, when the Legislature passed a bill banning its inclusion. The Governor�s budget creates the misimpression that the state is swimming in surplus dollars.
That is a misleading statement. The governor is following the law. The law was passed by the Legislature. Why? As I posted before, it's only a misimpression if you think a government spending program is entitled to meet the same level of activity -- not just the same level of dollars -- as was once voted. Each Legislature is therefore able to tie the hands of future Legislatures to that level of service. Who's doing the misleading?
Many economists have questioned the exclusion of inflation in Minnesota�s budget forecasts. Paul Anton, a member of Minnesota�s Council of Economic Advisers and the chief economist for the research unit of St. Paul�s Wilder Foundation, testified before the Senate Finance Committee that he believed that if the Legislature did not pass this bill legislators would be �making a conscious and deliberate choice to mislead the public about the true financial condition of the State of Minnesota.�
Let's understand who Paul Anton is, what his role is, and the foundation he works for. The last question is easy: Wilder is a social welfare organization that has interests in increased public expenditures.
In the next 12-24 months, we hope to to have "mini-conferences" on child care issues, the achievement gap, homelessness, early childhood mental health, and other topics. We particularly want to understand, raise awareness, and promote productive action regarding disparities in service access and effectiveness among Whites, African-Americans, Latinos, Asians, Africans, and other groups. We have several productions in the works with public television. We have begun planning a unique conference, for early 2008, on the economics of human service programs.
Safe to say, Mr. Anton is a liberal. And he works for a foundation that is in the business of advocating for social spending. He isn't exactly an uninterested observer.

Which makes his position on what is supposed to be an impartial Council of Economic Advisors all the more troubling. I want to know how this guy can show up now at the next CEA meeting and have his words taken as objective views. He wants to not be bound to a set of rules as they currently exist, that "on-entitlement programs are forecast to spend at current appropriations levels" rather than the levels Mr. Anton thinks will meet "the need" after his foundation has "understood, raised awareness, and promoted productive action..."

Mr. Anton is not an economist; he's an advocate. As such, he's on the wrong council. And he's being used to promote a bill that would increase government spending.
If approved by the Governor, the new law could be put into place in time for the February Forecast next month.
And Senator Clark and the DFL majority would have its political cover to increase spending and argue for higher taxes. It's the forecast that made 'em do it.