Lars Larson on Government for a Rainy Day

Let’s talk about Rainy Day funds for government. I think they’re a bad idea.

I keep hearing about Rainy Day Funds. Governor Kulongoski talks about them. Mayor Potter does. Practically every government in Oregon would like to have a Rainy Day Fund. Most governments have rainy days all the time. Vallejo, California just went bankrupt for goodness sake.

Rainy Day Funds are a bad idea and here’s why. You pay government taxes to provide you with services””fire, police, jails, courts, and of course, schools. If they hold back some of that money it means they’re not providing you with the service that you are paying for.

If they hold it back to put it into a fund, so that when the general economy declines and you’re not sending in as many taxes, they get their full salaries. Well, that’s just dead wrong. Government is held harmless in the middle of an economic downturn. While average families are cutting back government gets to live high on the hog. That shouldn’t be happening.

Never. No Rainy Day Funds.

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  • eagle eye

    The idiocy for which Lars Larson has become famous. The workers get their full salaries when times are bad. Wow! Does the demand for government services decline when times are bad? And the workers expect to get paid! Duh.

    Of course, what happens is the money is all spent in good times (or returned via the kicker). When the binge is over, government services get cut — the remaining workers DO still get paid, by and large, there are things called CONTRACTS even in Oregon. Oh, they do have salary freezes when the government is broke, it’s not all just service cuts. And then people wonder when the workders demand to catch up when the good times roll again.

    Practically every state, including plenty that are much more conservative and better run than Oregon, have substantial rainy day funds. A place like Oregon reminds me of Dogpatch home of Lil Abner, Daisy Mae, and friends in that old comic strip. Sometimes good looking, but very dumb.

  • Phil Jones

    I think Lars mis-spoke. He probably meant to say public employees would not be downsized in bad econonmic times. A “rainy day fund” would allow and encourage local governments to retain expensive employees along with their expensive benefits when they aren’t needed.

    • eagle eye

      And which government services are less desired in bad times than in good? Police? Schools?

      • John Fairplay

        Does the need for government programs go down in good times? Yo’re making a losing argument.

        For most, there’s little change. For some there’s less need. For some there’s more. The point is, of course, that even when the population that government programs serve are suffering, the government and its employees do not share in that suffering. The real problem is that Oregon government is not focused on its core missions and working to do an outstanding job in those areas. Instead it tries to be all things to all people, expanding at a rapid clip into all aspects of our lives. If government would focus on its 3 or 4 core missions and eliminate funding for all other programs, they’d be so awash with money they’ve have a permanent “rainy day” fund.

  • Brian

    Lars, one problem with the down economy and government cut backs. Unfortunatley, in law enforcement when the economy goes bad, the crime goes up and normally the populations does not changes so our problems stay the same if not worse. Law enforcement cannot makes cuts when the economy is bad. The only way to supports law enforcement during down years is with money in reserves. Otherwise, I agree with you.

  • Marvin McConoughey

    I note the risk that rainy day funds will crowd-out another important need of public agencies. That is the need to develop internal spending flexibility so that revenue losses prompts action to improve efficiency, prune less-successful endeavors, and to eliminate fully failed public programs. The risk of large rainy day funds is that hard decisions can be avoided, or never made.

    Fully reliable rainy day funds suggest that over-spending in temporary boom times can be perpetuated during bad times.

    As a practical reality, neither of Oregon’s two main rainy day funds are sufficient for more than a mild, temporary downturn. The funds may contribute to a false level of security that is unwarranted by the amount of dollars actually in the funds.

  • dean

    I think the basic error in thinking here is that there is some sort of uniform “suffering” that happens during economic downturns. It ain’t so. Some people lose their jobs, and some businesses have a temporary decline in receipts. Those who lose their jobs become even more dependent on government services for the time being, not less.

    Laying off even more people, i.e. government employees, does not “even the score” between the public and private sectors. This is a logical fallacy. If anything, Keynsian economics says government spending should increase during economic downtourns.

    • eagle eye

      Well put. In good times, government doesn’t do as well as the high rollers; in bad times, it probably does better than average. It probably evens out.

      When people like this talk about government “tightening its belt” in a recession, they rarely mean “give us less government services”.

      • dean

        I meant to add that most people don’t see any change in their incomes during economic downturns. A lot of the economy is pretty recession immune, and this is a good thing that helps preven a depression from forming. 20% of the economy is Federal spending.