Whenever any politician or government agency claims that they’ve created jobs, or that they have a plan to do so, it’s worth taking a long, careful look at those claims. While it’s remarkably easy for government to hinder job creation and economic growth, it’s much more difficult for them to stimulate it – especially in a specific sector of the economy with a specific program. Even if such a program does work as intended, it’s often difficult (if not impossible) to quantify exactly how many jobs were created solely as a result of that program, and whether it offered taxpayers a good return on their investment.
In Maine, this issue has arisen yet again after careful analysis by this paper of the Maine Technology Asset Fund, a job-creation program funded through a bond.
The fact that it was funded through a bond should be the first red flag. Since bonds are given final approval by voters rather than by the Legislature alone, they’re not quite as thoroughly vetted as other state funding. Maine voters tend to almost always approve bond packages – the usual question is only how much they’ll win by. There’s hardly ever much of a campaign around them, since there’s rarely any ever organized opposition. Without that opposition, proponents of borrowing proposals feel little, if any, need to explain the programs to the voters beyond the ballot question itself.
The media in this state rarely do much extensive analysis of bond proposals, focusing instead on other hot-button policy issues on the ballot such as referendums. Bond proposals fly under the radar and usually pass overwhelmingly with little critical analysis once they pass the Legislature and are sent on to the voters.
Special interests and their allies in Augusta know this, too, which is another reason they like to take advantage of the process. They can make grandiose claims with little pushback, emphasizing the positive while everybody ignores the negative: that all borrowing needs to be repaid eventually.
Voters and politicians alike act as if bonds are piles of free money flowing from rainbows, especially when paired with three magical words: federal matching funds (or private investment, in some cases). All of this makes it perfectly natural for proponents to seek this route rather than the normal state budget process for their schemes, but it doesn’t mean the process should be abused. Instead, voters and legislators should view the bond process with extreme skepticism and caution.
First and foremost, bonds should only be used for one-time expenses that produce tangible, physical results, like infrastructure. In this area, the Maine Technology Asset Fund is almost a good fit: Some of the projects it funded were physical assets, like new buildings and new equipment, and it’s easy for the state to at least know whether or not they actually got built or purchased. Giving a company money to build a new building is a little more tangible than just writing it a check on a vague promise that it’ll somehow end up creating more jobs. Either way, it probably shouldn’t be done with taxpayer money at all, though, and it definitely shouldn’t be done with a bond. That should be reserved for projects owned by the public, since the public are the ones paying for them.
Moreover, any time the state borrows money to fund some project, there should be total transparency throughout, from the initial planning all the way through to the final brick being laid. On this front, the Maine Technology Asset Fund fails disastrously, as it doesn’t make all of the data available to the public. The state should be even more transparent with borrowed money than the rest of the budget, not less.
Really, though, the entire idea of the program strikes at the heart of the question of how government ought to be run. Does it really make sense to hand out grants on a case-by-case basis to spur economic growth? Even if completely transparent, that approach is ripe for abuse.
And the program in question wasn’t transparent. Instead of borrowing money for questionable spending that seems to have fallen far short of the program’s stated goals, Maine should have spent that money on infrastructure, spurring our economy through a combination of broad-based reforms and tax relief that makes it easier for everyone to do business here, not just a chosen few.
Jim Fossel, a conservative activist from Gardiner, worked for Sen. Susan Collins. He can be contacted at:
jwfossel@gmail.com
Twitter: @jimfossel
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