FYI: Where Did the Big US Deficit Come From? No Money for Coral Gables.

The US government deficit increased in the last year and it is expected to increase in years to come, and it is reported that it has come from three big sources.

  • Most of it, 59 percent, was comes from the economic recession because government revenues fall with economic activity.
  • Only 17 percent comes from the government spending (called discretionary spending) in response to the crisis, including the TARP to fix Wall Street.
  • And then 14 percent comes from increased interest payments on the national debt. (By the way, a lot of the debt is still owned by the US government itself.)

This tells us that concerns about the TARP and stimulus package spending are greatly exaggerated.  In fact, many economists are quick to say that too little was spent on stimulus and on the wrong things.

Notice that Coral Gables has taken a big budget hit this year because money from the State of Florida are dwindling and there was very little money left over from the stimulus spending for local infrastructure.  This tells me that local and state governments could have used a lot more money than they got.

US Taxes, Spending and Deficits: Big Consequences for Coral Gables

A recent statement of Simon Johnson clarifies the taxing and spending options of the US now and in years ahead.

In summary…

Most of the discussion of federal budget issues today is misdirected.  The shorter run issues are dominated by the likelihood of another financial crisis – and the implications that would have for the budget deficit – but no “fiscal hawks” even want to acknowledge the issue.  It is very hard to take anyone seriously if they refuse to look at these (uncontroversial) numbers.  Medium term, we obviously need tax reform.  The good news, in a sense, is that the US has an antiquated and inefficient tax system; it would not be hard to improve how this operates, raising revenue and actually reducing distortion.  Longer term, Medicare is obviously a tough problem with no easy solutions yet in sight.  But the argument “just cut entitlements” cannot be taken seriously. [underlines added]

He raises what are important facts and risks for the US economy, and indeed for the future of the City’s budget, spending, taxes and economy.  Coral Gables authorities and leaders should not be too optimistic about the future of the US economy.  Stagnation is more likely than a happy growth even for a premier city like Coral Gables.

Urgent News for the Commissioners: Home Prices To Decline Into Next Year

An important item to be considered in the forthcoming estimated budget discussion by the City Commission.

Home prices will decline into next year, Fannie Mae said Thursday, reversing earlier projections that the housing market would stabilize this year.

Former Federal Reserve Chairman Alan Greenspan said Sunday on NBC’s “Meet the Press” that a so-called double-dip recession was possible “if home prices go down.”

via Fannie Mae: Home Prices To Decline Into Next Year.

Coral Gables City Government: Why Isn’t There More Openness?

While the promotional materials of the city talk a highly educated and multilingual population, it is striking that there seems to be a lack of confidence in the residents and voters to participate in a open dialogue with the government.  The City Commission displays little practical interest in  the participation of citizens beyond comments on specific votes and in annual two sessions on the city’s estimated budget.

What is an open government? I cite a statement by the White House on the meaning of open government.

The three principles of transparency, participation, and collaboration form the cornerstone of an open government.  Transparency promotes accountability by providing the public with information about what the Government is doing.  Participation allows members of the public to contribute ideas and expertise so that their government can make policies with the benefit of information that is widely dispersed in society.  Collaboration improves the effectiveness of Government by encouraging partnerships and cooperation within the …Government, across levels of government, and between the Government and private institutions. [emphasis added]

via Open Government Directive | The White House.

What can the  City of Coral Gables do to have a more open government?

The Dialogue–

  • An open city government would be a government that incorporates frequent unimpeded dialogues among the city commissioners, the city manager and the citizens on the important problems of the day.  It is inadequate that time- and subject-limited presentations of 2 minutes to the City Commission can be thought of as openness.
  • Openness should involve is a serious, mature dialogue, debate or conversation between the government and the governed with each showing courtesy toward the other.  It is not one in which, at the final stage of decision making, a few interested citizens take 2 minutes for a colloquy on a serious city issue.  As I have observed, the people at commission meetings are lonely speakers and the commissioners and the city manager are polite observers who may simulate interest in comments on issues for which most decisions are already understood to have been taken.  The Commissioners state their views, but their views are never subject to deep questioning.
  • New forums need to be devised so that more citizens can participate more frequently.  The forums can be town hall meetings, neighborhood meetings in specific subjects, dialogues through the website or other social media, open sessions with important local organizations.  The meeting structure and organization is only limited by the imagination of the participants.

The Information–

  • The city provides information on the annual estimated budget as required by law.  More information of this sort could be provided on a quarterly basis.   Also, the city should publish the annual budgets results as soon as they are known and in the same categories as the detailed estimated budget to compare results.
  • The city should provide regular publications on the progress in capital spending.  Information on important projects, such as the city museum, should be published.
  • Information on the progress of the Country Club and Biltmore Hotel leases, their income and costs can easily be published.  There are frequent complaints of city commissioners on the publication of information by the Coral Gables Gazette.  This can easily be resolved by the city itself publishing current information.
  • Senior staff should be held responsible for providing more and regular information on the city’s website.