At what point in your life are you most likely to spend extravagantly? When are you most likely to waste? When are you most likely to purchase the thing you don’t need, or indulge yourself on the thing that you want, or eat out more often, at more expensive restaurants?
The answer is universal for every human being alive in the world today. It is in times of plenty, when you are living comfortably and have a lot of extra money, when you are least careful with what you have.
Certainly some people are more careful with money than others, but human nature being what it is, we horde and protect what we have in times of scarcity, and are far less careful in times of bounty.
Yet, almost without fail, the logical thing for a person to do in times of excess is to save. Inevitably, unless you are very fortunate, you will face some future challenge in your life. Maybe you lose a job. Maybe you have a major medical need not covered by insurance. Maybe you have a major home repair that you weren’t expecting. Something almost always happens.
If you had used your own personal prosperity wisely and saved for such an eventuality, you would not only have protected yourself from destitution, but you would likely have set yourself up for a much faster and more prosperous bounce back.
We should all use our success to bolster and reinforce the fundamentals of our own lives. But we don’t. When we suddenly find ourselves with much after having lived a life of little, most of us say to ourselves, “now I can finally afford those things that I have always wanted,” and then give many of them to ourselves.
Government, being run by humans, is no different.
In times of great prosperity, governments grow insatiable appetites for spending. They say to themselves, “now we can finally afford all of those things that we have always wanted,” and they inevitably search for ways to do just that.
Yet those decisions end up sowing the seeds of future misery. Economies are cyclical, and downturns are inevitable. At some point, no matter how masterful the manipulation of the economy by political leaders, there will be a recession. Sometimes a severe recession, or even a depression. It will happen.
Had government used the good times to plan for the bad, and managed their fiscal house well, saved for the future, and denied their impulse to grow government and spend as much money as they could, they would be able to weather the storm much more successfully, and put themselves in a superior position to bounce back afterward.
Maine, today, is living the high life, economically. Our biggest problem in this state, right now, is that we have too many jobs, and not enough people to fill them. Our unemployment rate throughout Paul LePage’s tenure as governor has been lower — significantly so at times — than the national unemployment. Maine’s unemployment rate is so low that, macroeconomically, we are at full employment.
We also have a mountain of cash. In 2017, Maine was reported to have an average monthly balance of more than $1 billion in the state’s cash pool, which is made up of all the revenues that the state receives. Maine’s structural gap — the cost of maintaining services versus expected revenues — was brought down from more than $1 billion to just $165 million that same year.
In June, the state government announced that it had ended the 2018 fiscal year with a budget surplus of more than $175 million. Last week, LePage announced that Maine is expected to collect more than $362 million in revenue above budgeted expectations in the next three years.
This provides Maine with a remarkable opportunity to invest in itself, and begin to create an environment that would not only guard against the future downturn, but make Maine a more competitive place in comparison to its neighbors.
Now is the time to significantly cut taxes. Now is the time to reinforce the state’s budget stabilization account. Now is the time to reform government, and limit its size and scope.
Doing so would mean more money in the bank for the hard times. It would mean a more efficient government that wouldn’t need to be cut as much when the economy goes south. And it would mean a more economically competitive state of Maine that is in a better position to grow and prosper into the future.
I challenge Gov.-elect Janet Mills and her new majorities in the legislature to rise to the occasion, take seriously their charge, and do this for Maine.
If not now, when?