The Defecit Option Redux
In early February I wrote a long post arguing that, given the nearly unprecedented nature of the current economic crisis, the state should consider breaking with convention by deliberately running a significant deficit during the current biennium. Since then, Governor Gregoire has floated the idea of a bond measure to fund school construction and other new infrastructure (i.e., deficit spending for capital projects), but so far I have heard little discussion of the use of bonding to sustain the general fund budget. (Although, Josh tells me at this morning's press conference, the governor did talk about floating bonds for school construction and technology retrofits. She also flatly rejected the idea of breaking her no new taxes pledge.)
In my piece, I cited UW history professor James Gregory, an expert on the (previous) Great Depression, who, along with UW economist Dick Swartz, had been advocating exactly that sort of deficit spending option to the state Senate leadership. Five weeks later, Gregory is still on the case. He was interviewed on King 5 UpFront yesterday about the state budget crisis – “In a time of crisis, borrowing money is a very smart thing,” he says – though I would note that he is less enthusiastic about bonding for new capital spending. You can watch the interview here (the clip begins at the 14:00 mark).