Conservative U.S. governors who came to power during the 2010 tea party electoral wave are facing a reality check. A few years ago, catering to a far-right constituency, they campaigned on pledges of slashing taxes and bolstering business. Their subsequent policies have benefited the wealthy but failed to bring trickle-down prosperity to their states.
It is the morning after the tea party. Republican governors are waking up to a sluggish job market, stagnant wages, state deficits and impoverished services. The party’s trickle-down ideology is no way to manage a government. And a state cannot be run on tax cuts alone.
Recent headlines are much different than those in 2010: “Republican governors buck party line on raising taxes,” read a recent headline in The New York Times. “Tax increases a much-regretted necessity for Republican governors,” said another in Bloomberg. “Republican governors are flirting with tax hikes,” the Christian Science Monitor noted.
Conservative governors now recognize the need to generate revenue to maintain schools and highways. But they are still not taking responsibility and cleaning up the messes they have created. Rather than reversing tax cuts for the wealthy, many are implementing regressive measures that penalize middle-class taxpayers.
“Of the 10 or so Republican governors who have proposed tax increases, nearly all have called for increases in consumption taxes, which hit the poor and middle class harder than the rich,” The New York Times reported last month. This includes new taxes on gas, e-cigarettes, movie tickets and services such as haircuts.
Tea party economics
In 2010, conservatives had a banner election year riding popular anger at Washington. In all, 11 Democratic governors lost to Republican victors. The GOP took control of both houses in 25 state legislatures.
For the new tea-party-backed leaders, tax cuts were high on the agenda. Governors such as Michigan’s Rick Snyder and Kansas’ Sam Brownback explicitly said business executives — rechristened by Republican wordsmiths as “job creators” — would see immediate benefits. Snyder pledged “to eliminate the Michigan Business Tax and replace it with a 6 percent flat corporate income tax,” according to The Grand Rapids Press, arguing it will result in “a $1.5 billion tax cut on Michigan job creators.” The night of his victory, Brownback flatly said he was opposed to “taxes on capital formation.”
What Brownback and Snyder, along with Ohio’s John Kasich and Wisconsin’s Scott Walker, were promoting in their states is merely the most recent incarnation of what George H.W. Bush once called “a voodoo economic policy.” Conservative logic has long held that tax cuts for the wealthy work miracles by stimulating economic activity. The argument goes: Not only do tax cuts create growth throughout the economy — thus boosting the fortunes of working people — but they also bolster state revenues and allow for balanced budgets, since people end up paying taxes on higher incomes.
Debating the merits of this philosophy with then-Gov. Ronald Reagan in the 1980 Republican presidential primaries, Bush argued, “It just isn’t gonna work.” He was right. It didn’t work then: Budget deficits soared during the Reagan years. As tea party governors are learning, it isn’t working now either.
In Kansas, Brownback lowered tax rates for top earners by 26 percent. Now the state faces a $334 million budget deficit. Kansas’ public services are so emaciated that the State Supreme Court ruled the funding of the school system unconstitutional. Economic growth has stalled and the state’s employment growth currently ranks 34th in the nation.
“Brownback’s recent promise of 100,000 new private sector jobs in his next four years seems to be unrealistic,” Kansas City Star columnist Yael T. Abouhalkah, wrote in January. “That’s because the state would need to create 2,100 jobs a month while it’s been averaging close to 1,300 a month for his first four years in office.”
Efforts to address budget troubles by using voodoo economics will only impose new burdens on the working families that are already hit hard by the lackluster economies these leaders created.
Wisconsin is experiencing similar woes from supply-side tax cuts and union busting. In 2013 the Federal Reserve ranked Wisconsin 49th in economic outlook and 44th in private-sector job growth. Wages fell 2.2 percent that year. Wisconsin is now raiding public employees’ retirement funds to make up for a budgetary shortfall of nearly $280 million. By contrast, neighboring Minnesota raised taxes on top earners in 2013 and now has one of the fastest growing economies in the nation. The state raised its minimum wage and balanced its budget without resorting to financial accounting games.
The conservative tactic of attacking government during an election rarely translates into good governance. There’s a reason why anti-government rhetoric remains vague and abstract: The public is often horrified to see highways and bridges deteriorate, public schools close and fire departments face crippling cutbacks.
Formerly insurgent anti-government governors are now recognizing this fact. Unfortunately, despite their scrambles to raise revenue, many are not going about this task responsibly. Rather than reversing the tax cuts for their top donors, they are implementing regressive measures that draw most heavily from middle-class families. For example, Snyder’s ballot initiative to increase infrastructure spending will be paid for with a sales-tax increase. This puts a heavy burden on families of modest means, who spend most of their incomes paying for basic necessities at retail stores.
Brownback is taking a page from Walker’s political playbook. Instead of asking his business friends to help address the state’s fiscal crisis, he is raiding a pot of money accumulated by middle-class workers. As in Wisconsin, Kansas’ tattered state budget is being mended with funds previously set aside for civil servants’ pension plans. Compensation that public employees have put into the system for decades is being drained to pay for top-bracket tax cuts.
That these governors now want to put their states on more stable financial grounds indicates that they are sobering up from their tea party bacchanalia. But gutting essential public services will only compound the economic woes of their constituents. Efforts to address budget troubles by using voodoo economics will only impose new burdens on the working families that are already hit hard by the lackluster economies these leaders created.