Economist says Budget Repair Bill could bring on another recession

By: Amelia Cerling Email
By: Amelia Cerling Email

Economists are warning of the economic repercussions on the Chippewa Valley if Governor Walker's bill is passed.

We spoke with a UW-Eau Claire professor of economics who painted a very grim picture of the Chippewa Valley and the state if Walker's Budget Repair Bill is passed.

“I am predicting that we fall back into recession again,” economics professor Fred Kolb tells us.

Kolb says Walker's Budget Repair Bill is too much too soon for our already shaky economy.

“Spread out over a 5-7 year period I think that the country would be better off, having it all happen right away, I think it's going to be a disaster for the economy,” he tells us.

And local businesses in Eau Claire are also starting to get worried about the impact on them if the bill is passed.

“It impacts all of us, whether you are poor, middle class or wealthy everybody spends money on food and my personal fear is that Walker's supposed repair bill is going to create a deflationary cycle,” Just Local Foods worker Nik Novak tells us.

Novak says with so many public workers facing considerably smaller paychecks, there will be a lot less spending in the Chippewa Valley.

“If people are pinched monetarily they are going to go someplace where they can buy in bulk, where they can buy cheaply during the transition,” Novak explains.

And that means less money coming into small local businesses. But, Republican Senator Terry Moulton tells us the alternative to Walker’s bill, laying people off could be even worse for state workers.

“Certainly I would say this is going to have an economic impact that won't be good, but the alternative may be even worse. If it's true we have 6,200 state workers in Eau Claire County and we had to lay off 10 percent of them, that would have an even more detrimental impact on the economy,” Moulton says.

Moulton adds he's looking at the greater good and he says this bill will help everyone, in the long term.


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  • by Jeff on Feb 24, 2011 at 11:48 PM
    Paul, 6,256 people is a grain of sand in the desert, compared to the number of people who have taken a much larger percent increase in their health care, and insurance. As the price goes up, we can afford less. I just think it's unfair that we have to pay for increases in the teachers/public workers benefits also, in the form of higher taxes. We want to eat too. Lets ALL do our fair ,(or unfair) share.
  • by g on Feb 24, 2011 at 10:12 PM
    Look up his salary at: http://host.madison.com/data/uw_salaries/ The UW professors are NOT HURTING
  • by Fred Location: Eau Claire on Feb 24, 2011 at 10:14 AM
    I feel I should respond to Jon as he referenced a conversation back in 2004 and asked what I would propose in this situation. I really cannot recall the conversation, but yes I felt very strongly about the 2004 election because I thought the war in Iraq was a huge mistake. In the current environment I am in agreement with those who feel that our debt at all levels from personal on up has reached a point where it must be brought under control. Ten years ago we had very large budget surpluses at the national level. So it took us 10 years to get into this situation. The issue that I see as crucial is the timing--not when to start the change, but over what period it should be carried out so as to cause the least amount of disruption. While I am sympathetic to the view that going slowly raises the chances of a loss of momentum, I perfer to see steady but carefully executed change because it is less likely to lead to rushed bad decisions and swings from election to election.
  • by jon Location: eau claire on Feb 24, 2011 at 12:26 AM
    I went to UWEC and had a one on one conversation with Professor Kolb about the elections in 2004. He made it VERY clear that he was voting democrat. For as abruptly as our conversation ended when I suggested that he might have been voting republican back then, I would find it very hard to believe that he has changed from his liberal stance. So, in that regard, yes, he is biased (not to mention his own pocket affected by this). That being said, he should be respected with his vast knowledge and expertise on the subject matter. However, I would have liked to hear his proposed solution to our government/society's spending problems.
  • by Paul Location: Eau Claire on Feb 23, 2011 at 02:52 PM
    The fact that someone may be biased does not mean that he/she is wrong. Consider this information from the Institute for Wisconsin's Future. If all public workers in Eau Claire County took an 8% cut in take-home pay (that would be 6,256 people x $3,363 pay cut) the total loss of purchasing power in our county would be $21,036,703 - - - 21 MILLION DOLLARS. If I owned a small business I would be seriously concerned!
  • by Fred Location: Eau Claire on Feb 23, 2011 at 02:26 PM
    This is Fred Kolb your "liberal" college economist who actually reads the Wall Street Journal and is using a textbook written by George W. Bush's first chief economic advisor. Oh well. Believe me, I understand the pain that the private sector workers have felt and feel. My main point is that in a weak economy, and this is a much weaker economy than some would have us believe, a series of very sharp cuts by state governments across the country may well be enough to push the US economy back into recession. I would feel this way even if the changes were not occurring in Wisconsin. It is a simple matter of multiplying the number of state, local, and school employees by about $3,500 to $4,000 and you will get the annual drop in expenditures. The Walker administration believe that the local economies can handle the blow. I think they are wrong. I think that by stretching the cuts over a longer period of time that we could bend and not break. We will find out who's right soon!
  • by Stephanie Location: Eau Claire on Feb 23, 2011 at 01:39 PM
    Economists and other professors are real working people, just like the rest of us. They pay taxes, try to save for the future, and give back to the community. Most of them work far more than the standard 40-hour week. And they don't make as much as their counterparts in the private sector. Professor Kolb is telling it like it is--or will be, if Governor Walker has his way. What I wonder is, who stands to benefit from the Walker plan? Not the middle and working classes!
  • by acornpeterson Location: chippewa valley on Feb 23, 2011 at 12:10 PM
    For a second, anyone who is in favor of this bill please open your mind just a bit and don't focus solely on who's making more money and working less hard than you do. Let's not even talk about the budget repair bill. I have a reliable source that told me Walker's yet-to-be-released 2011-13 budget will eliminate state funding to all public schools and universities, as well as all municipalities. It will also require all public employees to pay 100% of their pension and health ins. beginning in 2013. What will this lead to? For starters, layoffs in the tens of thousands. Second, an exodus of people directly affected by this, from the state. Third, massive turnover in these positions - as anyone who takes a public job will always be keeping an eye open for a better job. Fourth, a poorly educated workforce as tuitions at our uni's will have to increase tremendously to make up the difference, limiting the number of people that can actually afford college. That's what we're facing.
  • by Phillip Ashe Location: Knapp on Feb 23, 2011 at 11:53 AM
    OK...let's listen to a economic professor who is going to be directly affected by this bill. I'm sure he's not bias. What are his facts? All we have is a fluff piece by someone stating his opinion. I suppose anything to try and put fear into the public to gain support.
  • by Bill Location: Eau Claire on Feb 23, 2011 at 09:51 AM
    Gee, I wonder what kind of economic chaos we are in right now? Of course I am being sarcastic right now. I do not have faith in our present economy right now. How about you???
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