February 15, 2010

The Same Ol' Government-as-Solution Thinking

Justin Katz

Got that sinking feeling that nobody's really interested in keeping the state afloat? The ideas floating from Rhode Island legislators have that distinctive feel of suggestions that sound good to constituents but that avoid addressing the real problems:

House Finance Chairman Steven M. Costantino, too, voiced his backing, saying that while the state would be liable for the so-called IRBA money, he believes the risk remains "very low," given what it could do to help limping businesses.

"They could come to the EDC, get a loan backing, and the bank will ease up on the borrowing because the state is taking the risk," Costantino said. "Now you have a company that can put on an addition and hire new employees." Fox said he also sees value in Governor Carcieri's proposal that would give employers a $2,000 tax credit for certain full-time workers hired between July 1, 2010, and Dec. 31, 2010. And he hinted at other potential proposals, including the possibility of state-issued bonds to finance a seed fund for new businesses.

Yes, you read that right. More government debt to finance start-ups.

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""Now you have a company that can put on an addition and hire new employees.""

It doesn't matter, if no one is buying that company's widgets or services. The problem, contrary to what President Obama and others have said, is not a lack of loans but a completely understandable reluctance on the part of companies to take on borrowing when it's not at all clear that there will be a sufficient revenue stream to repay it.

Posted by: Monique at February 15, 2010 9:53 PM
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