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County Hall Corner: Not Just the Economy, Stupid

At a recent Lycoming County Republican Party meeting, State Representative Joe Hamm shared the difficulties that the PA Assembly is having over the next state budget. As with all budgets, everyone has their ideas of what is necessary, but there is also the struggle on how much is affordable.

Politicians must walk a fine line. Over thirty years ago, James Carville, a cagey but brilliant political strategist who worked for Bill Clinton’s 1992 presidential campaign, summed up the essence of campaigning in four words. Voters are certainly anxious about many different issues, and politicians work hard to research these areas and make sure they are on the side that most voters would want them to be on.

As much as voters are concerned about social issues and international conflicts and the particular political scandal or other flavor of the month, there is one ring that rules them all according to James Carville. He summed it up — “It’s the economy, stupid.” This simplistic political slogan has been repeated a zillion times since then, highlighting the profound impact of political decisions on the economy.

But, in the real world of government, there is much more than the economy to focus on. At the levels of local, county, and state government, there is a tightrope that must be walked on. These governments must make a budget that meets the needs of their constituents or is required by law, and the money for it must come from taxes, grants, or investments. It is a tightrope because governments must have that sweet spot between the needs of the voting public and their ability to fund those needs, illustrating the intricate challenges of government budgeting.

Unfortunately for our local officials, the one thing that they cannot control is inflation. I remember vividly the OPEC embargo from October 1973 to January 1974, which was sparked largely by the USA’s support for Israel in the Yom Kippur War. The cost of gasoline quadrupled over those four months (and that is not a misprint — it went up FOUR TIMES OVER!!). Later in that same decade, when the Iranians captured and held hostage diplomats in the US Embassy in Tehran, there was another embargo that almost doubled gas prices.

Notice a little trend here, anyone? These inflationary actions, which severely impacted our economy, were initiated due to the USA’s responses to events in the Middle East. When gas prices go up, so does everything else. According to the US Energy Information Administration, in January 2021, when the Biden administration began, the average US retail price for all grades of gasoline was $2.46 per gallon. By November of that year, the price was a dollar higher at $3.49. (And it was in August of that year that the USA withdrew the last of its troops from Afghanistan). In the past three years, gas prices at the pump have steadily gone up and are currently at $4.33 on average nationwide, an 88 percent increase in the past three years. The latest uptick has also been aligned with the current Israeli-Hamas conflict.

But these prices are also a result of the current administration’s focus on climate change. The Associated Press reported last month that the Interior Department’s rule raises royalty rates for oil drilling by more than one-third, to 16.67%, in accordance with the sweeping 2022 climate law approved by Congress. The previous rate of 12.5% paid by oil and gas companies for federal drilling rights had remained unchanged for a century. Raise the cost of drilling and guess how that will impact the price of gas at the pump. I will give a hint; it won’t go down!

It should be obvious that our international relations and federal restrictions substantially impact our economy, and our local, county, and state governments can do little to nothing about it. The federal government also has another advantage that these other entities do not — it is not burdened with the need to make a balanced budget because when the federal government needs more money, it can simply print more money!

In an interview with Fox News, Jared Berstein, President Biden’s Chairman of the Council of Economic Advisors, explains how this works: “Well, um, the – er – so the – I mean – again, some of the stuff gets – some of the language that the – erm – some of the language and concepts are just confusing. I mean, the government definitely prints money, and it definitely lends that money, which is why – erm, er – the government definitely prints money, and then it lends that money by – er – by selling bonds – er – is that what they do?” (Be kind to this man, after all, this chief “economy advisor” has a degree in music and is a professional musician. Maybe he was trying to sing a good answer…)

I pity our local officials who have to live in the real world, where they must find the financial sources for the things that they budget for. It’s not just the economy, Mr. Carville. It is knowing how to govern effectively at all levels of government, both domestically and internationally, because like dominoes, touch one concern or problem or issue and it impacts everything else.