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BRUNELL: The two Washingtons and the disconnect
By Don Brunell
Business owners across our state don’t understand why elected officials are raising taxes and adding costs when employers are struggling to keep stores open, factories running and people working.
They feel there is a “disconnect” between politicians and the people who send them to Olympia and Washington, D.C.
They’re frustrated with the federal spending spree and the tax increases that will inevitably follow. They can’t comprehend the logic of running up our nation’s debt with little thought of how to repay it. If shop owners along Main Street don’t pay their loans, they’re out of business, but politicians seem to borrow money with no concern for the consequences.
Employers worry about a new trillion-dollar healthcare entitlement even as Social Security and Medicare are going bankrupt. And they worry about a federal budget that spends $1.6 trillion more than the government collects in taxes.
Just how much money is that? To pay off that $1.6 trillion budget deficit, you’d have to collect a $100 in new taxes each second for the next 500 years. And that’s the deficit for just one year.
Put another way, each family in the United States owes China $10,000. Your share of America’s $13 trillion debt is more than $40,000 and growing by the second. It is a debt we cannot pay so we will pass it on to our children, grandchildren and great-grandchildren and let them deal with our irresponsibility.
While the problem in Washington state is small by comparison, the disconnect is the same.
Our economy is stalled, unemployment is 9.5 percent and the state faces a $2.8 billion deficit. Just to survive, private employers are cutting costs, laying off people and working harder. By comparison, state lawmakers are diverting money from dedicated accounts, raiding the state’s “rainy day” fund, increasing taxes by $800-$900 million and spending $200 million more than they did last year.
Employers don’t understand why government isn’t taking real steps to do things differently and constrict spending. Why aren’t lawmakers doing something about the high costs of workers’ compensation? And why aren’t they asking state employees to shoulder more of their health-care premiums and co-pays as we’ve had to do? Why are we allowing automatic step pay increases to continue?
Employers know it isn’t easy to tighten their belts and cut costs, but it’s a matter of survival. And surviving is getting harder every day.
A couple of weeks ago, a sales representative for a small family-owned manufacturer in rural Washington walked into the owner’s office and handed him an exact knock-off of one of the company’s best-selling products. While it is patent protected in the United States, the duplicate was made in China where no patent protection exists. Its Chinese competitor now under sells the Washington product by 30 percent.
Another family-owned manufacturer who makes a key ingredient for papermaking has been scrambling to compete in a global price war. As offices move to become “paperless,” paper production has declined and even though the company’s product is superior, orders are dwindling.
These employers are not looking for a government bailout. They’re looking for state lawmakers to act responsibly and make real cuts instead of raiding accounts, increasing employer costs, hiking taxes and spending more money than ever.
That brings up another type of disconnect.
Sometimes it seems that state lawmakers don’t understand how their actions affect our economy. Some apparently believe that if they can score another federal bailout, hike fees, raid accounts and increase taxes, they can avoid making real cuts and wait for the economy to recover.
But their actions hurt our ability to recover. Washington employers pay the second-highest premiums for unemployment insurance and our workers’ compensation system has the second richest benefits in the nation. Still, lawmakers have done nothing to ease that burden. Instead, they’ve moved to increase it.
If lawmakers in either Washington fail to understand the consequences of their actions, employers and the jobs they provide will leave our state and country.
That will be the ultimate disconnect.
Don Brunell is the president of the Association of Washington Business.