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Reality Hurts

Originally Published in the Frederick News-Post

Economic & Fiscal Policy

by Marta Hummel Mossburg

OP-EDS

"Inconceivable" peppers the dialogue of the inimitable Vizzini in "The Princess Bride." The criminal buffoon repeats it each time his carefully laid plans are upended, prompting one of his fellow villains to tell him, "You keep using that word. I do not think it means what you think it means."

Like the dumbfounded Vizzini, Maryland's elected officials must find it incomprehensible that government, the giver of life, the funder of so many $1 million-plus retirement plans in Montgomery County, the fat Buddha whose tummy they would rub in exchange for billions of dollars of contracts, aid checks and jobs, could fail them.

But if Congress does not reach a compromise on the debt ceiling by Aug. 2, Maryland's wealth could evaporate.

In this state that has the fourth-highest federal tax allotments per capita, where nearly 287,000 residents work for the federal government and where almost $60 billion flows in the form of federal contracts, life as we know it could come to a halt.

Not reaching a compromise would be catastrophic for everyone in the country and severely damage U.S. standing in the world. But it would particularly hurt here because our state's fate is so bound to that of the federal government.

It did not have to be this way -- and does not have to be this way in the future.

But our elected officials act as if the only issue were resolving this current crisis and that everything will return to normal.

"We are watching the latest incarnation of the dinosaur wing of the Republican Party," Gov. Martin O'Malley said of the debt impasse in Congress last week at a dinner in Salt Lake City. "We cannot allow partisan-osaurus to take over the Republican Party or the future of this country."

Other Maryland officials have said a state bond issue may be delayed as a result of the uncertainty, but have not addressed the underlying problem: jobs. The state lost 20,000 of them over the last year, putting it dead last in relation to other states in terms of growth.

So even if Congress reaches a compromise on the debt ceiling, Maryland will receive only a temporary reprieve.

What it really needs is a plan to immunize itself against slower government growth. And the only way to do that is to make the state's tax code and regulatory environment friendlier to capital so that people start businesses here. This is not a partisan issue, it is a math problem compounded by years of legislators thinking Maryland is an exception to every economic rule.

As the debt crisis is highlighting as well as years of more people leaving the state than choosing to come, Maryland is fallible. Ratings agencies said as much recently, citing the state's low pension funding and its economic reliance on the federal government. Maryland may have maintained its AAA rating this time, but the likelihood it could be downgraded without structural changes to the economy is anything but inconceivable.