Matt Yglesias and Ezra Klein are exercised about what they see as the overuse, and indeed the misuse, of the term “bailout.” Ezra writes:
For one thing, we need a better definition of a bailout. I’d say it’s something like “putting public money into a firm that’s insolvent because of poor business decisions.” Conversely, putting money into South Carolina’s schools to blunt the cuts required by plummeting tax revenue caused by a financial-sector crisis isn’t a bailout. You may think it’s good or bad policy, but it’s not a response to epic mismanagement on South Carolina’s part.
I can’t speak to the specifics of teacher compensation in South Carolina. I do know, however, that state budgets across the U.S. increased by an average of 6 percent per annum between 1999 and 2009, a rate that far outstripped overall economic growth and the growth in the taxable wage base. It should go without saying that state governments are not for-profit firms. But is it fair to say that sharply expanding spending commitments without regard to the likely long-term shape of the revenue base is a poor business decision?
We’ve historically associated public service with an ethic of sacrifice, and an understanding that public officials have a special obligation not to waste taxpayer dollars. Given the intense resistance to productivity-enhancing reforms in public schools, it’s not obvious that transferring large sums of money to meet current expenditures is not usefully described as a bailout.