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October 8, 2008

Desperation is the mother of necessity

The soundbites from the two situations have been nearly identical: “It is a lot of money, but we have to spend it.” “We don’t have an option.” 

Uh huh. When politicians say that taxpayers have to spend an outrageous sum of money, their justification is usually pretty outrageous too.

First case in point: the U.S. Senate’s eleventh-hour, pork-ridden $700 billion Wall Street/Banking Bailout. Second case in point: the 47 percent raise recently given to Bobby Sherman, the director of Kentucky’s Legislative Research Commission. 

In the national instance the president, treasury secretary, fed chair, other Republicans and many Democrats — including House Speaker Nancy Pelosi — spent two weeks scaremongering members of Congress and citizens into buying the need for the exclusively beneficial, virtually oversight-free Emergency Economic Stabilization Act.

Here in the commonwealth, state Senate President David Williams, R-Burkesville, has contended that Sherman’s raise was necessary because Sherman threatened to quit; because paying the hugely inflated salary would actually save $50,000 after factoring in the cost of Sherman’s pension plus the salary the state would have to pay his replacement, and because “he (Sherman) deserved it.”

While it is clear that some action is needed on the national level to minimize the negative economic repercussions resulting from mortgage and banking industry failures, no one — not economists, not corporate tycoons, not leaders in Washington — could say with complete certainty that this bailout/rescue was the proper corrective action. No one could decisively answer the $700 billion question: What happens if we say no? Despite this, no one would seriously discuss other economic recovery options, including theories floated by radio money guru Dave Ramsey and Berkshire Hathaway billionaire Warren Buffett.

Several economic historians argue that President Herbert Hoover’s lack of market intervention was the appropriate response to the stock market crash of 1929. In the book “The Forgotten Man,” Amity Shales asserts that President Roosevelt’s involvement in the free market actually perpetuated the Great Depression, the New Deal failing to restore the health of the American economy. 

As for Sherman, just how does one get a 47 percent raise exactly? Do you start negotiations asking for 89 percent and work toward a compromise? It’s hard to believe that a single government employee is unique to the point that when lawmakers feared his retirement they appropriated a $62,000 raise at a time when the commonwealth faces an anticipated revenue deficit that is so serious other state employees were given a measly 1 percent. 

Not one single soul in the entire commonwealth can take this guy’s place? Those who know him say Sherman is very good at his job, but everyone can be replaced. What if a bus hit him? Would the state shut down? Would Tennessee have to absorb us? Who’s No. 2 in that organization? Isn’t that guy or gal even somewhat poised to step in? As for Williams saying that finding someone else would be a two-year process: If that’s true, we also need to find a new search committee.  

When the House of Representatives initially killed the bailout, the stock market plummeted, ending the day with a 777-point loss. The day the House approved it and the president signed the ill-conceived measure into law, the Dow closed 157 points down. Investors are going to need details before confidence is restored. 

House Speaker Jody Richards — along with other General Assembly Dems — has pre-filed state legislation to rescind Sherman’s raise. Unfortunately, during the last couple of weeks, the national economic crisis has almost completely dominated local news. Richards’ cries of fiscal foul have been drowned out.

In terms of what the future holds, while the horrendous and fiscally irresponsible Wall Street/Bank Bailout may be a done deal, this vote will be a career-ender for some politicians. In this case, nothing is over until the proverbial fat lady with the marginal FICO score applies for a line of credit on a house she’s upside down on.  

In January, Richards gets another shot at making his legitimate case for retroactively blocking Sherman’s raise. Just in case you wanted to exercise your opinion of the raise at the polls next month, of the 11 state lawmakers who voted for the skyrocket salary hike, only five are up for re-election. Sadly, four are running unopposed.

National and state lawmakers have forced upon us these two egregiously expensive bills of goods claiming that our desperation necessitated their actions. We literally cannot afford to let them continue such deliberate deception. 

Tagged: Francene |