Morning Must Reads: Budget Outlook Improves, Governor's Understanding of Economics Not So Much

The headline on an editorial by The Daily Review of Towanda says all you need to know about payday lending.

Yet some lawmakers favor a bill that would allow payday lenders to operate legally in Pennsylvania, under the rationale that some borrowers have obtained such loans over the Internet despite the state prohibition, or have obtained them in neighboring states.

Rolling over is not the way to protect Pennsylvania consumers, however.

The bill purports to protect consumers from bad practices by limiting interest rates to "just" 28 percent, but it doesn't limit fees. Nor does it preclude borrowing even against Social Security or veterans' benefits.

Several original cosponsors have taken a closer look at the bill and withdrawn their support. Good for them.

The web site Stop Predatory Payday Loans In Pennsylvania has a full explanation of the House Consumer Affairs Committee votes to amend legislation that would legalize predatory payday loans in the state.

Also Wednesday, the state Senate passed a budget.

A state budget for next year that would spend $500 million more than the governor's proposal passed the Senate on Wednesday, setting up weeks of give-and-take between the Corbett administration and Republican legislative leaders.

When unemployment is high, the worst possible thing the public sector can do is collect tax revenue and not spend it. When a state government collects revenues and fails to spend what it collects, the economy grows more slowly. Yet this is precisely the position now being staked out by the Corbett administration in response to the Senate budget.

As The Philadelphia Inquirer reports this morning, the Governor reacted to the Senate budget by noting he considered the extra $500 million in spending a ceiling for budget talks. To be clear, the Governor's position does not relate to the classic debate about the proper level of taxation —  the additional revenue is now coming in with the current level of taxation. The Governor is advocating for a partial repeat of the last budget cycle where more than half a billion in tax revenue was left unspent. The result: less investment in our future, more essential services left unmet, more suffering for struggling families, and fewer jobs. An unbalanced approach.

But Corbett today called the additional $500 million “a ceiling.”

“These are negotiations, and negotiations have two ends and we will work toward something in between,” the governor said.

He added: “Would I consider putting some of that money in? Yes, I would consider it … But $500 million is a lot.”

The Senate plan would restore $245 million of the $253 million that Corbett is proposing to slice from funding for the 18 schools in the State System of Higher Education. It would also restore tens of millions in basic education funding, including $50 million for distressed schools and another $50 million for Accountability Block Grants that help pay for early childhood education.


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