Scott Walker – Wisconsin’s (Reverse) Robin Hood

By YeOldeScribe ~ February 19th, 2012 @ 3:17 pm

If there’s two things that Political Progressives loves to blog about the most, it would have to be corruption in government and hypocrisy. We see these two things as the biggest threats to sustainable, representative government. Thankfully, Wisconsin Governor Scott Walker has given us a great example of combining both of these traits at one time.

This tale requires a little bit of back-story, though. While there may be a chicken/egg debate over if the housing market failures caused economic collapse or vice versa, it’s generally agreed upon that the combination of those two events created a perfect storm of financial destruction for many middle-class Americans. Millions lost their home, and millions more are uncounted thousands of dollars behind on mortgage payments.

Before we go any further, many people are now screaming at us, “But it was their own fault! They never should have taken out loans for things they could never afford! Why should we help these people, essentially rewarding them for their mistake?” We’ve got a couple things to say in response to this. First, many people were given bad advice (or no advice whatsoever) about these loans. Can you really hold the average American responsible for not knowing the inner workings of mortgage finances and paperwork? Isn’t that the whole reasons why these professionals exist? We don’t think you can totally blame the people who were coned here. That being said, they aren’t fully off the hook – nor should they be. However, they are deserving of assistance – which is exactly what the government is planning to do.

The Federal Government reached a settlement with the top five mortgage lenders in the nation last week in which $25 billion dollars ($25,000,000,000.00) was awarded to the feds to compensate for the damages their unsafe lending practices caused. Of this $25 billion, Wisconsin received $140 million. Due to the way the settlement was worked out, $108 million had to go directly to the people affected by the crisis – so the state itself never saw or had control of the money. But almost $32 million did go directly to the state. This direct funding was to be used for the purpose of funding future law enforcement efforts, providing additional relief to borrowers, paying civil penalties, and the funding of foreclosure relief programs. The vast majority of states took the money that was allocated to them and just pooled it with the other money from the settlement.

But not Wisconsin, and not Scott Walker.

Gov. Walker’s administration released statements last week noting that their revenue projections for this biennium were well short of what was projected, mainly because, oh, we don’t know, all that job growth Scotty Boy promised us didn’t happen. So Scott got the state into a new deficit of $208 million on top of whatever debt he inherited from the previous administration. We were immediately fearful that the UW System would be forced to take another lapse (on top of the $296 million Walker already decided our schools didn’t really need) or that we’d be seeing yet another Budget Repair Bill to “fix” Wisconsin’s problems. But Walker announced that neither of things would happen. However, we didn’t even have time to exhale before we began cursing his name again.

Walker announced that he was taking $25.6 million of the $31.6 million that was supposed to go to those affected by the housing crisis and spending it on balancing the budget instead. That means that Walker took over 81 percent of the money that was supposed to go the citizens of his state, and spent it on himself.

We really couldn’t believe it, but the move prompted some Walker supporters to go “Well, what’s wrong with that?” While it seems like common sense would dictate the answer to this question, we’ll provide three reasons why this is such a big deal, and why Walker shouldn’t have even thought about doing what he did.

First and foremost, Walker’s decision is a huge abuse of power, and is the definition of misallocation of resources. Wisconsin is the only state that we can find at this point which decided to take the settlement money and use it for another purpose. The only one (so far). We’re the only state that told its citizens that because our State Government is irresponsible with their money, citizens who were coned by big businesses/banks are going to see less relief than they deserve.

So is it a misallocation of resources? Of course! Take a look at the list of things that the settlement was supposed to cover – do you see the words “balance the budget because our governor drove tens of thousands of jobs out of the state” on there? Absolutely not. The best part? This is a perfect example of a bait-and-switch policy – and isn’t that what caused all these homeowners to collapse the market in the first place? Milwaukee Mayor Tom Barrett correctly points that out:

“Hundreds and possibly thousands have lost their homes because of this bait-and-switch by lenders who pushed subprime mortgages during the housing bubble. The worst thing that can happen now is for the state of Wisconsin to employ its own bait-and-switch.”

Smooth Walker. Way to screw over people who big banks have already screwed over in the same manner in which the banks screwed them.

Our second – and in our opinion, best – reason why it’s a bad idea for Gov. Scott Walker to use settlement money to balance the budget comes from… none other than Scott Walker. In the “flipped stances” section of this article from the Journal-Sentinel, they note, “In the past, Walker has been sharply critical of using so-called ‘one-time’ money from legal settlements to balance the state budget.” But why would you believe a Pulitzer-Prize winning newspaper like the Journal-Sentinel? Let’s take a look at Walker’s own campaign website, thanks to the WayBack Machine project. Note this line:

End the practice of raiding segregated state funds to pay for other programs. If taxpayer revenue is collected for a specific purpose such as building and maintaining roads, it should be used for that purpose and that purpose only.”

Whoa, Scott, way to take the words right out of our mouths! Maybe you should listen… to you own advice?

Finally, Walker’s actions set a dangerous precedent and will lead to serious ramifications in the future. On the first half of the statement, if Walker can raid this fund, what’s stopping him from doing it in the future? His justification was that he did it because “this issue affected the state’s economy.” Our follow up question to Gov. Walker is this: What issue (at least in some way) doesn’t affect the state’s economy? Basically, Gov. Walker has told us that if it fits his agenda, he’ll raid whatever funds he wants, when he wants. But doing so will have implications for future funding. Think of it this way – if you gave a friend five bucks to buy you a cheeseburger and fries, and he comes back saying he bought himself sushi with the cash instead, are you going to trust him to buy your dinner again? Of course not. And you’d probably demand your money back too, right? Well, what’s stopping the Feds from doing the same on both fronts? The Federal Government has every right to a) withdraw Wisconsin’s funding and give it to a state that would use the money appropriately and (more importantly) b) not include us in future settlement awards. Scott Walker was given the money and told to be a good steward of it. Instead, he used it to fix a budgeting problem he caused.

Make no mistake, this decision has everything to do about presenting a supposedly balanced budget and making Walker look good before his inevitable recall election happens. Walker needs to prove to the state he represents that he’s done something good during the first year of his tenure, and since all of his economic plans have backfired to the point where he’s being kicked out of office by the people who elected him not more than a year and a half ago, he needs something – anything – to “prove” he’s done something right. But does stealing from the people you’re supposed to be serving count as doing good? We don’t think so.

One of our writer’s favorite parts of the Shakopee Renaissance Festival was listening to Puke & Snot – a two-pirate comedy act. In one of their sketches, Puke turns to Snot as says “We’re going to rob from the poor and give to the rich!” Confused, Snot asks, “Don’t you have that backwards?” Puke replies “Nope, we’ve gone Republican this year.”

The joke was a lot funnier before Wisconsin elected a person who turned the joke into reality.

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