Tuesday, December 6, 2011

State Fiscal Policy Conference

For nineteen years, the Center on Budget and Policy Priorities has hosted a State Fiscal Policy Conference. Unless you are a policy wonk, you may not have heard of the Center. A quote from their website is a quite accurate description: The Center on Budget and Policy Priorities is one of the nation’s premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.

I just recently returned from this year's conference and want to share a few highlights with readers. In the first place, we started the conference in a very different place. Last year, Mark Zandi, the chief economist for Moody's Analytics, gave an establishment type of presentation. Essentially, saying that the current economic system needs some tweaks and things will be back in decent shape in five years. This year we opened with a panel talking about very practical state policy reforms. No one, no one was predicting an end to this recession.

Indeed, without a drastic change in national economic policy, this recession will not end, at least for 99% of us. However, that's a subject for other posts.

Notable ideas and presentations included reform of corrections (prisons) ,sentencing, and parole laws. There are 2.3 million Americans behind bars now. This population is growing thirteen times faster than our population. We have 5% of the world's population, but 25% of world's prison population. Around 50% of this prison population is incarcerated for drug offenses. Because of ever more "get tough on crime" legislation, prison populations are not only growing rapidly, but also aging. The corrections industry now must also have facilities that look a lot like nursing homes with bars. Legislation based on principles like "three strikes you're out" and "no chance for parole" and "mandatory sentencing" have all contributed to the mess. States are spending on average $25,000 per individual each year for incarceration.

Another presentation urged states to be prudent about their economic development spending, especially regarding tax cuts. A general business tax cut is not cost effective. Much of the money from a cut in business tax goes to businesses whose hiring in tied to local demand, regardless of what the tax incentive will be. Also, businesses who are in no position to expand receive the same break. Economic development ideas that do work include customized job training and manufacturing extension services. However, these both pale when compared to investment in early childhood. A one dollar investment in early childhood returns three dollars. Both hard and soft education skills appreciate over time as opposed to other investments that depreciate over time.

Two "talking head" celebrities were at the conference, journalist E.J. Dionne, and Jared Bernstein, who is now working with the Center. Among the many wonderful insights in both of their presentations was an acknowledgment of the Occupy movement. Dionne and Bernstein each praised Occupy for bringing more public attention on income inequality in a matter of two months than other progressive efforts have managed in two decades.

Next year the Center on Budget and Policy Priorities will celebrate the 20th annual State Fiscal Policy Conference. While we policy wonks enjoy catching up with one another each year, I'm not expecting a joyous reuniting around the work we do.

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