My drawing of Ralph from 2013.
— By Ralph Martire. Martire is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank.
Fiscal policy — essentially how government taxes and spends—is many things. Certainly it’s obtuse, requiring analysis of countless budgetary line items covering myriad services. It’s also somewhat unfathomable, given it frequently involves dollar amounts that run into the millions and billions of dollars, a magnitude beyond the ken of most normal humans.
And it’s quite the political football, if the blame game being played by leadership in both parties concerning the indeterminable budget stalemate in Springfield is any indication. All of which is a shame, because those barriers to public engagement tend to obscure the crucial role fiscal policy plays in creating social and economic justice.
That’s because there is one universal fiscal policy truism: Where needs are greatest, resources are least.
Always. So if the state fails to get its fiscal act together, it won’t have the capacity to invest in those communities that need it most. And while the negative consequences of that failure will be felt by families across Illinois, those who are low-income and/or minority will feel it most.
For instance, a recent study — “The American Health Care Paradox” — found that those states that spend more on social services relative to direct medical care have much healthier residents than states that spend less. Making social service investments is particularly cost-effective in low-income communities, where spending on things like after-school programs that provide meals to poor kids frequently prevents the need for more expensive medical services.
Which is good news in states like California, Washington and Minnesota, which have the fiscal capacity to make adequate investments in social services — but not so much in Illinois, which has consistently cut social service spending over the last decade. In fact, if Illinois decision makers ultimately fail to enact a General Fund budget for FY2016 — which ends in just about two months — state spending on social services will end up anywhere from $400 million to $500 million less in FY2016 than last year.
Meanwhile, the harm caused by Illinois’ disinvestment in social services won’t end with denying vulnerable populations the support they need to lead better, healthier lives. The state’s economy will suffer too. Here’s why. Consumer spending represents 67 to 70 percent of all economic activity. The best consumers are low- and middle-income families, who generally spend most or all of their earnings.
But when state government cuts spending, what’s really getting cut is either the jobs or the wages paid to the workers who actually provide services to the public. For the most part, those workers are middle-income. When they lose jobs or have their wages cut, they spend less in the consumer economy, generating private sector job loss. Based on multipliers developed by Mark Zandi of Moody’s, the bond rating agency, the $400 million to $500 million in estimated social service spending cuts for FY2016 will cause the loss of some 5,000-plus jobs statewide.
Now, take a wild guess about which communities will be most negatively impacted. No, it won’t be Barrington, Winnetka or Highland Park. Think more East St. Louis, Marion, Harvey, Dolton and Pembroke — communities that are low on the income ladder.
And while low-income families of all races suffer when Illinois’ poor fiscal policy forces spending cuts, African Americans are hurt disproportionately. Sure, most — 54 percent — poor people in Illinois are white, but that’s just because most of the state’s population, 77.5 percent, is white. However, as a group, only 11 percent of Illinois whites are poor. Meanwhile African Americans, who represent just 14.5 percent of the state’s total population, nonetheless account for 29 percent of its poor folks. Indeed, almost one-third of Illinois’ African Americans live in poverty.
Which is why it’s so incredible — as in, lacks credibility — when some politicians and talking heads claim that Illinois’ fiscal problems won’t be fixed until some “crisis” forces a resolution. Apparently, it isn’t a crisis when lousy fiscal policy just harms poor folks generally and African Americans specifically.