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January 11, 2011

Host: Ted Simons

Arizona’s Structural Deficit

  |   Video
  • Arizona’s budget has a huge structural deficit that threatens its economic future, according to a new report released by ASU’s Morrison Institute for Public Policy and Brookings Mountain West. The report’s chief author, University of Tennessee economist Matthew Murray, discusses the report and what it says about Arizona’s ability to close its budget gap.
  • Matthew Murray - economist, University of Tennessee
Category: Business/Economy   |   Keywords: buildings, budget, economy,

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Ted Simons: Arizona faces a huge structural deficit that threatens its ability to make a successful economic recovery. That's according to a new report by ASU's Morrison institute and Brookings mountain west. The report suggests ways to fix Arizona's budget problems, but it says that can't be done with cuts alone. I recently spoke with the report's chief author, Dr. Matthew Murray, an economist and associate director of the center for business and economic research at the University of Tennessee. Matthew, thank you for joining us on "Horizon."

Dr. Matthew Murray: Happy to do it. Thanks for having me.

Ted Simons: Let's define our terms here. A structural deficit. What are we talking about here?

Dr. Matthew Murray: We are talking about a long-term imbalance between the revenues that we receive from taxes and the expenditure commitments that we have to make to provide services to the residents of the state, in this case Arizona. It's oftentimes masked in Arizona's case very much so masked during periods of economic growth and fiscal health. When you're state has a substantial revenue surplus, that same surplus often times can give rise to or aggravate a structural deficit through tax cuts or through expenditure commitments that are not sustainable during the ups and downs of the business cycle. The downs being the recession that we're crawling out of right now.

Ted Simons: It's the gap between spending and revenue.

Dr. Matthew Murray: Correct. It's not something that appears in your typical budget document. You're not going to be able to open up the Arizona State budget and see listed there as a line item "Structural deficit." The same is true of other states. Because of that, because it's not well-defined, it's not well quantified, it lends itself to growing above and beyond a size that it should otherwise be.

Ted Simons: Your study looked at four western states, Arizona included. How did Arizona compare to the other states?

Dr. Matthew Murray: Arizona has a smaller deficit, structural deficit than California in absolute dollar terms, larger than Nevada. But in terms of the size of state government, in terms of the size of the economy of Arizona, Arizona's is much larger than California's. In fact, the overall deficit, the structural deficit and cyclical deficit together in Arizona represent about 1/3 of your ongoing spending through your state budget. Structural deficit itself about 20%, 21%.

Ted Simons: Which translates to I believe $2.1 billion.

Dr. Matthew Murray: Correct.

Ted Simons: As opposed to what we're hearing from the state which is that were about $825 million to the wrong. Why the discrepancy?

Dr. Matthew Murray: The discrepancy is the way in which the money is flowing through the budget, through the use of one-time monies, for example, sale of assets like the state capitol building, the sweeping of idle funds off of the table. Expenditure cuts and so on that render the budget that we look at from the politicians perspective simply not comparable to this notion of a structural deficit that we're working with in our report.

Ted Simons: Now, the idea of income tax, income tax cuts over the last 15, 20 some odd years here in Arizona, were those factored in as well? If so, how so?

Dr. Matthew Murray: Correct. Those are one of the contributing factors to the creation of the structural deficit. Cutting taxes in and of itself is a good thing insofar as you are able to cut expenditures along with that. What happened in Arizona's case over a long period of time, going back to the 1990s, revenues had been cut, income tax revenues in particular had been cut since 1993 to today, almost $2 billion and simply nominal revenues forgone because of income tax cuts. However, at the same time, spending has increased. It was not cut commensurate with the cut in taxes.

Ted Simons: So according to the report, it sounds like you're saying Arizona needs to look at revenue, needs to figure out whether it's expanding the base, which is another recommendation, just some way to look. And yet right now there is an anti-tax attitude in the state that is very strong. What do you do?

Dr. Matthew Murray: You're right, there is an anti-tax sentiment across the country. It would be presumptuous for me to come in from Tennessee and argue to Arizonans that you need to raise taxes. I would cast it in this way. There should be a strategic direction for your state budget. Arizonans should decide what they want from their state government in terms of the services that promote the public welfare, the economic development of the state. And those strategic decisions about what you want state government to do should guide the way you deal with the budget. So if I think about this from an economic development perspective, I would want to do everything I could to protect education, for example. Because education is an investment today that we make in young people who become the workers tomorrow and they're the future of our state from an economic development perspective. So, if we wanted to protect education, we probably don't have the capacity to cut, if not gut, spending elsewhere in the budget and that might, in fact, necessitate a tax increase.

Ted Simons: Okay. But you also have economists who will say that raising taxes in a recession or something that was a recession, I don't know what's going on here right now, still not good, not a good thing to raise taxes in that kind of an environment.

Dr. Matthew Merrill: It's not a good thing. So we have to deal with an ugly tradeoff. The tradeoff is, do we simply let our investments in the future, in this case of Arizona, do we let those investments suffer knowing that we will pay a dear price for that over the long-term or do we compromise and raise taxes at least some. I'm not at all suggesting and I don't think anybody is suggesting that taxes be raised to fully offset the deficit that is now being confronted by your State Legislature, but a balanced mix of spending cuts and tax increases cast in a strategic way to promote economic development. I think and this report speaks to that issue, we think that that is the best direction to take.

Ted Simons: You also mentioned the idea and the problem, as you see it, of permanent spending, permanent spending programs and policies and permanent tax cuts, that both of them need to be more transitory, not so permanent, correct?

Dr. Matthew Murray: I would cast it in this way. I think we need to look to the long-term when we make our budget decisions. When we decide during a period of economic growth to cut taxes, we ought to be cognizant of the consequences of that over the long-term. If we really cut taxes significantly and increase spending at the same time, we're creating a train wreck that will really aggravate the fiscal woes that we encounter in a recession. In other words, the problem that our legislature here in Arizona is dealing with today is aggravated very seriously by expenditure increases and tax cuts that have been acted over roughly a 20-year period of time.

Ted Simons: Are you looking at things like triggers? Are you looking at those sorts of mechanisms in the future perhaps to say obviously there's a hierarchy, education would be at the top of that list, but other things once you hit a certain deficit, that's got to be looked at, something along those lines?

Dr. Matthew Murray: I would suggest loose triggers. I don't like binding triggers because the world changes. If you were to put the triggers in place today, in a year or two, the situation may have changed markedly, radically and you would be held to those triggers. But at least some general discussion about what our priorities are so when we run into a fiscal mess, we are better prepared and we have agreed before the crisis, because we don't make good decisions typically in a crisis. Arizona has dealt with its budget crisis by in large with one-time fixes. About 80% of the gap in the budget has been filled by one-time fixes. That doesn't strike me as being particularly strategic. Now, again, I don't want to criticize the legislature dealing with the worst economic and fiscal downturn in modern history. None of us have dealt with a problem like this before. But I think if we are more forward looking, if we have a more clearly defined strategic direction, I think that that can help guide us through this kind of an economic downturn.

Ted Simons: Last question. What kind of response are you getting so far from these ideas?

Dr. Matthew Murray: I think we're getting a pretty good response. I'm really quite surprised that we're not being attacked or criticized for advocating tax increases. That's a piece of what we are suggesting. But we're really arguing for a balanced view and a long-term view that can ensure that the choices we make today about our budget, that we understand the long-term consequences of those choices for the budget and for the economic development of the state.

Ted Simons: All right. Thank you so much for joining us. We appreciate it.

Dr. Matthew Murray: Thanks for having me.

Media Coverage of the Tucson Shootings

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  • ASU journalism professor Tim McGuire provides his assessment of how traditional and online media performed in covering the tragic events in Tucson.
  • Tim McGuire - ASU journalism professor
Category: Government   |   Keywords: tucson, media,

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Ted Simons: Within hours of the Tucson shootings, the story was being covered almost non-stop by traditional and on-line media outlets. As is often the case with breaking news, some of the initial information was incorrect. Here to talk about how different types of media covered the shootings is ASU journalism professor Tim McGuire. Tim, always a pleasure. Good to see you.

Tim McGuire: Good to see you again.

Ted Simons: Let me start with an anecdote. Yesterday I came into my office and someone comes in and says he’s angry with the media, he said he's angry with the misinformation of covering the story, angry with the speculation, just generally angry with the media. What do you make of that?

Tim McGuire: First thing I would of asked him is, what is the media? That's one of our real challenges today is, what is the media? Is media social media, Twitter, Facebook? Is it CNN and NPR? Is it "The Arizona Republic"? What is the media? You've really got to be very specific, because if I'm giving a grade, I have to grade all of those individually.

Ted Simons: Well, without going all of them individually, let's cluster a few here. Give us a grade. Let's start with things like traditional media, newspapers and such.

Tim McGuire: I thought "The Arizona Republic" did a heck of a job, but they had an advantage. They only came out and they published about 1:00 at night. They had all day to sort through all sorts of rumor and innuendo and nail down fact. And as a result, they were able to produce a really fine report that was by in large trustworthy, it wasn't guessing it wasn't yakking. I thought the radio and broadcast outlets were in a tough spot. That story was breaking during the day. They didn't have a lot of information and yet somebody said talk. And when you have to talk without much to say, you're bound to say something a little silly, a little inaccurate. You're going to get bulletins that are going to come fast and furious. Certainly NPR, CNN, a couple of the others were wrong on the death of Congresswoman Giffords, thank god. They were not following all the principles they knew they should have followed because they were so intent on speed.

Ted Simons: Okay. One of the reasons they're intent on speed is the rise of social media. How did social media do this weekend?

Tim McGuire: In my view social media was following big media. Everything -- I follow Twitter, I'm on Twitter and I was on Twitter all day Saturday, and they were reporting what NPR and CNN were doing. A lot of people want to delay this at the feet of social media,that they got it wrong, they were reporting what big media was doing. I didn't see social media as the problem this weekend at all.

Ted Simons: You have talked about and written about slow news and the idea that newspapers, even in this environment, might have an advantage because they get to slow things down. Talk to us about that.

Tim McGuire: Well, it's a concept developed by my colleague here at the Cronkite School, Dan Gilmore. In this era of instantaneous information, he advocates and I agree with him that we need to get facts quickly and slow on speculation and analysis. We have to make accuracy our absolute bedrock and slow everything down. And I do think that this weekend the republic had a real advantage because they were the slow news operation.

Ted Simons: When, though, does slow news become too slow, especially in this environment?

Tim McGuire: Well, certainly we demand instantaneous information. There's no question that 11:30, quarter to 12:00 on Saturday I wanted to know what was going on. I wanted to know what happened down there. Well, people didn't know yet, and we have to have some patience. The fact is, 10, 15, 20 years ago when I was in the newsroom, we used to cover major stories all the time, and I remember distinctly how a story would break midday, we’d be operating on some assumptions but 5:30, 6:00, you find out many of those assumptions were wrong. We had the time to fix them, to get them right. Today we don't have that.

Ted Simons: We also don't have filters for a lot of the social media, whether it's Twitter, especially Twitter because it's just so quick. Facebook as well. On-line blogging, these sorts of things, live blogging during events. Are we just evolving toward that or have we lost those filters forever?

Tim McGuire: Some have. I mean, certainly the newspapers, the one place that's kept many of those filters, I listen to some radio and TV the other day that didn't have many filters at all. Certainly as my wife says, the only filter between you and tweeting is your thought. That's not much of a filter. So yeah, some people -- I saw some really ill-advised statements on Twitter on Saturday. You're right, the lack of filters is changing that. One of the things we've got to do since we don't have built-in filters is maybe we all have to count to 10 a little bit more than we have been.

Ted Simons: Except that, again, if you count to 10 too slowly or by the time you get to 9, you're already being laughed by folks who are getting more attention.

Tim McGuire: Does that matter? That's the real question.

Ted Simons: Here’s another question --

Tim McGuire: We're so focused on speed and I think what we're learning is that credibility is far more important. What's your value? If your value is speed, then you go flat out and you let it fall where it might. If credibility is your goal, well, that says I'm okay with being 20th because I'm going to make sure I have it right. ABC -- I did not watch ABC but they're being quite smug about the fact that they had it right through the day. They held off because they didn't meet their fundamental reporting standards. Every good journalist knows what those standards are. What we're finding out now is NPR and CNN kind of blew them off on Saturday.

Ted Simons: That brings my last question here regarding getting it first. Obviously in the old days with four newspapers in the same town and those sorts of things with deadlines, getting it first was a big deal because you got it first and you were the only one who got it. In this age where if you get it first and I get it 16th, the difference could be five seconds or ten seconds. Is getting it first still crucial in the news business?

Tim McGuire: What's my brand? Is my brand that I'm going to be first or is my brand you can trust me? And I think that's a choice many people have to make. Right now one of the reasons we're talking is not very many people are saying my brand is you can trust me.

Ted Simons: All right. Tim, thank you so much. We appreciate it.

The Tucson Tragedy and Politics

  |   Video
  • ASU pollster and political scientist, Dr. Bruce Merrill.
  • Bruce Merril - ASU pollster and political scientist
Category: Government   |   Keywords: tucson, giffords,

View Transcript
Ted Simons: We still don't know the motive behind the Tucson shootings, but some are pointing to what happened in our state as a call to change the tone of increasingly nasty political rhetoric. Here to talk about how the shootings could impact politics in Arizona and around the country is ASU pollster Dr. Bruce Merrill. Good to see you again.

Dr. Bruce Merrill: Good to see you Ted.

Ted Simons: Impact on political discourse, there's a lot of talk about this. How do you see it?

Dr. Bruce Merrill You know, I think that we have gone through a period where there's been a lot of things that have occurred, whether it was 1070 or the debate over the birther concept or all of the things that have been going on in Arizona. Plus, the economy has put a lot of stress on people. So there's been a lot of factors out there. And the rhetoric has been kind of negative and high tone. What I see happening right now, first of all, it's a tragedy in itself that we have to have something like that happen to have a discussion on whether or not there's been too much heated rhetoric. But you know what I see right now? I see an awful lot of people that are kind of coming together and saying, at least looking at the question as, has it been too much? Has it been too heated? And what do we do about it? Where do we need to go in the future? That can only be a positive thing for us.

Ted Simons: And yet the debate is starting to heat up now between those who are saying that there is some sort of causal connection and you've got to do this, that and the other. And others saying there's absolutely no causal connection. You're just trying to frame this and blame others for something that can't be blamed for.

Dr. Bruce Merrill: Like everything today, it's a complex issue. Number one, in a causal sense you can't really say that this caused this young man to do that. This man is psychotic. He's schizophrenic which means he isn't even thinking like we are. The way his mind works is only the way he understands it. And, however, it may be that he's had some connection with her for two or three years, have been following her and has been interested in her, which shows some level of cognitive thinking that he could do this. But to say that the events of the last year or two, particularly 1070, that's the thing most people are concerned about actually caused this young man to go off the deep end is impossible. You can't do that. However, could it have been a contributing factor? Well, sure. I mean, everything in the environment is a contributing factor.

Ted Simons: And with that in mind, because, you know, as we mentioned in a rising tide, all kinds of boats, even the crazy boats go up as well. If the tide is rising on nasty rhetoric, you never know what’s going to happen. With that in mind, could this be, to use another metaphor, a watershed moment here? Could this something that changes folks?

Dr. Bruce Merrill: It could be. Out of respect to the families and to the congresswoman, you don't even want to say well, something good should come out of this. I mean, that's ludicrous because six people are dead, it's affected their families, et cetera. But the event did happen, and I think your point is a good one, Ted. That point is, can we learn from this? Can we benefit this? You know, the tragedy with Arizona is we're at such a crucial state with Arizona. Where the political leadership needs to focus on jobs, and the economy. I think the reason Obama hasn’t done as well as a lot of people thought is because he didn’t focus on jobs and the economy. If there's a state that needs political leadership that focuses on jobs and the economy as opposed to whether or not Obama should bring his birth certificate to Arizona, you know, before he runs again, it's Arizona. And, you know, the governor, she's been in an enigma to me in some respects. I go back and think of her support for raising sales tax when it wasn't a popular thing to do. Could have cost her the primary. I think that showed a lot of courage, a lot of leadership. On the other hand, when she talked about beheadings in the desert, I don't think that made Arizona look real good. So the question now becomes, where will she help take this state over the next few years? I've got a lot of confidence in her that whether it's this event or where she was going anyway that she's going to be an effective leader and help us in this area.

Ted Simons: Will that include re-examining things like gun laws? Will that include re-examining things like funding for the seriously mentally ill which I think we can safely say this shooter was a part? There's no denying that.

Dr. Bruce Merrill: Ted, again, you raise a good issue. These are legitimate issues needed to be debated, and we have a two-party system where people have different opinions. It's not that we shouldn't be able to discuss these issues or debate these issues and do it passionately. Because Democrats and Republicans have different opinions. The point is, when does it go over the edge? When is too much too much? I really do think that in Arizona we've been close to that edge, and that it hasn't been healthy for this state. So I hope in the future that we will tone some of that down, focus on the issues that need to be debated legitimately and move ahead to do what's best for the state of Arizona collectively.

Ted Simons: The sheriff of Pima County, I don't want to get to exactly what he said regarding the mecca of intolerance because there are those that agree and those that don't. However, he did say something else that was interesting in terms of pure politics. He said that were not going to find reasonable, decent people willing to subject themselves to serve in office. Is that a valid concern?

Dr. Bruce Merrill: Absolutely. It’s been a growing concern even before the violence issue with financial disclosure, I've had a lot of people come to me who wanted to run for office and they found out what that involved, giving up your family time, living in a glass house, revealing everything since you were in the second grade and have said, I'm not going to put my family through that. Now you have the violence and is that a concern if you're a young family with young children? Absolutely. I think it's a very legitimate concern.

Ted Simons: So as a political scientist, what do you take from all this? What do you see, again, aside from the personal, the overview of politics in Arizona? We'll stick to Arizona. What are you seeing here?

Dr. Bruce Merrill: I think what I see in it is, I think, number one, we know now that words do matter. When we talk about words mattering, we tend to think about the negative words that cause this environment to be so bad. But we need to think about positive words, too. I mean, positive words matter. What we really need now is some very positive political leadership from both parties. I think in the long run will it have a huge effect on Arizona? Yeah, I hope so. I hope that it's going to bring us together, tone down the rhetoric and focus on the issues that are important.

Ted Simons: All right. Bruce, always good to hear from you. Thank you so much for your insight. We appreciate it.

Dr. Bruce Merrill: Good to be here.