“A Truly Extraordinary Record Of Being Wrong”: In-Demand GOP Economist Says Kansas ‘Is Doing Fine’
The first big hint that Kansas Gov. Sam Brownback (R) was pursuing a dangerous economic course was when he hired economist Arthur Laffer to help shape the plan. Laffer, of course, rose to GOP prominence in the 1980s pushing the celebrated-but-wrong idea that tax cuts can pay for themselves.
The Washington Post profiles the conservative economist today and notes that his influence has not waned, despite the real-world effects of his policies. In fact, Laffer is evidently a go-to source for many of this year’s Republican presidential candidates.
No one has influenced Republican candidates’ thinking on the economy for the past four decades as much as Laffer, who is now 75. Laffer says he believes that limiting government and cutting tax rates, especially the rate levied on top earners, will unleash faster economic growth. Since he sold then-candidate Ronald Reagan on that prescription, every Republican presidential nominee has run on a Laffer-inspired economic platform.
As the 2016 GOP primary season takes off, Laffer is more in demand than ever before, with Republican candidates embracing tax-cut-for-the-rich policies even as they bemoan economic inequality. Candidates have been meeting with him in recent weeks, and on Friday in Nashville, he says, his schedule includes Rick Perry at 10 a.m., Ben Carson at noon, Jeb Bush at 1:15 p.m. and Bobby Jindal at 5. Dinner is scheduled with Ted Cruz. He has already met at least once with Wisconsin Gov. Scott Walker.
And this does not include the meeting Laffer has already had with Rand Paul, who asked him to look over a tax-cut plan the Kentucky Republican likes.
The conversation turned to Brownback’s radical experiment, and the Post’s article added this gem: “ ‘Kansas,’ Laffer declared over a five-hour lunch interview in Washington, ‘is doing fine.’”
“Fine,” I suppose, is a relative term. For those of us who care about the details, the economic plan Laffer created for Kansas has resulted in debt downgrades, weak growth, and state finances in shambles. It’s reached the point in which two Kansas public school districts are wrapping up the school year early because they don’t have the money needed to finish a full school year.
“Fine” probably isn’t the first word that comes to mind.
Paul Krugman added some helpful context to Laffer’s record.
Since the 1970s there have been four big changes in the effective tax rate on the top 1 percent: the Reagan cut, the Clinton hike, the Bush cut, and the Obama hike. Republicans are fixated on the boom that followed the 1981 tax cut (which had much more to do with monetary policy, but never mind). But they predicted dire effects from the Clinton hike; instead we had a boom that eclipsed Reagan’s. They predicted wonderful things from the Bush tax cuts; instead we got an unimpressive expansion followed by a devastating crash. And they predicted terrible things from the tax rise after Obama’s reelection; instead we got the best job growth since 1999.
And when I say “they predicted”, I especially mean Laffer himself, who has a truly extraordinary record of being wrong at crucial turning points. As Bruce Bartlett pointed out a few years ago, Laffer was even wrong during the Reagan years: he predicted that the Reagan tax hikes of 1982, which partially reversed earlier cuts, would cripple the economy; “morning in America” promptly followed. Oh, and let’s not forget his 2009 warnings about soaring interest rates and inflation.
Looking ahead, Krugman added the broader question is “why this always-wrong economic doctrine now has a stronger grip on the GOP than ever before.” That need not be a rhetorical question. Indeed, it should matter quite a bit to the voting public given that so many Republican presidential hopefuls – including the entire current top tier – are eager to bring their economic plans in line with Laffer’s discredited thinking.
Or put another way, a wide variety of national GOP candidates are looking at recent developments in Kansas and thinking, “How can I impose this model on the entire United States?”
It’s a bit like turning to discredited neoconservatives for guidance on foreign policy and national security. Oh wait….
By: Steve Benen, The Maddow Blog, April 10, 2015
“Stigmatizing The Poor”: New GOP Lie: Food Stamps on Cruise Ships
The headlines are sensational:
Kansas bans welfare recipients for spending food stamps on cruise ships.
Kansas will make sure welfare queens can’t get their palms read on the Caribbean.
The new law awaiting Governor Sam Brownback’s signature also prohibits a long list of activities including shopping at jewelry stores, lingerie shops, video arcades, theme parks and even swimming pools.
Republican lawmakers in the Sunflower State want to make sure none of this waste would happen again.
If it even happened.
(It hasn’t.)
Think of it as the 21st century’s answer to Ronald Reagan’s welfare queen, who existed mainly in the minds of conservative critics.
Nobody has offered a current and/or concrete example of a person receiving TANF funds (Temporary Assistance for Needy Families) using their EBT card (Electronic Benefits Transaction) aboard a cruise ship, but that hasn’t stopped the Kansas legislature from passing a law to prevent it.
A provision included in their restrictive legislation will prevent TANF recipients from withdrawing any more than $25 a day from an ATM machine.
Shannon Cotsoradis, president and CEO of Kansas Action for Children, says since most ATM machines don’t deal in $5 increments, the $25 is effectively $20, plus an 85 cents fee that TANF attaches, plus another couple dollars for the ATM fee, and the result is, “We’ve just made it harder to be poor, as if it weren’t hard enough,” she says.
The list of prohibited items reads like something out of the Legion of Decency, a now defunct Catholic organization that rated films according to their moral content.
And while no one is arguing these racier activities—like patronizing adult entertainment or casino gambling—should be permissible with government funds, banning them is more about stigmatizing the poor than creating any real hardship. The real problem is the $25 limit.
“This is not about a real problem, this is not a public policy decision,” says Liz Schott, of the Center on Policy and Budget Priorities. “This is all about politics and creating a wrong impression that public welfare recipients can’t spend their money wisely.”
The Kansas bill passed the House last week by voice vote and the Senate 30 to 10. Among the 10 opponents were the chamber’s eight Democrats plus two moderate Republicans.
Minority Leader Anthony Hensley told The Daily Beast the bill is “very mean-spirited, and it couldn’t have come at a worse time, Holy Week, leading into Easter. This is not something Jesus would have approved of in my opinion.”
Kansas is not alone in modifying its TANF program, and under the welfare reform law signed by President Clinton in 1996, states have the legal right to make adjustments.
States like Kansas with a Republican governor and a GOP-controlled legislature are in the forefront of the crackdown. In Missouri, a Republican state legislator has introduced legislation that would ban “cookies, chips, energy drinks, soft drinks, seafood or steak.”
What’s behind this wave of legislation, says Brookings scholar William Galston, is a familiar grievance felt by the middle class and the working class that programs of assistance are “either not going to the right people, or they’re not spending the money in a responsible way.”
These are voters who think the Democratic Party caters to the poor, and that politicians are buying their votes with programs like TANF (overlooking fact that the poor mostly don’t vote).
The misimpressions are on all sides, but that doesn’t make them any less powerful. Cotsoradis, with Kansas Action for Children, calls the cruise ship ban “my personal favorite” because it is so ludicrous when you consider a family of three in a high-paying, more urban county in Kansas receives $429 a month; a rural family gets $386 a month.
The way TANF works, recipients take their dollars out of an ATM, and with the $25 limit, “a cruise ship is probably out of the question,” she says.
They can use their card like a debit card in a supermarket, but there’s no way to track where they spend the dollars they withdraw from an ATM. “So we have legislated something that by and large we can’t enforce,” says Cotsoradis.
Some of the provisions are just mean, says Schott, with the Center on Budget and Policy Priorities.
“It’s not even clear you can take your child on a hot day to a municipal pool,” Schott says.
How infractions like that are policed would be prone to arbitrary enforcement. Would somebody report their neighbor?
“There could be a lot of biases,” says Schott. What’s clear is the gulf between the law and the people whose behavior it is meant to regulate. “I don’t think it’s coming from a lot of fact,” says Schott.
Many if not most TANF recipients are “unbanked,” and without a checking account, how will they take out enough money to pay their rent?
“This is not based on any understanding of the daily reality of making ends meet on these inadequate benefits,” she says.
The only evidence anybody can cite of a remotely recent abuse is a widely broadcast Fox News interview two years ago when a brash young food stamp recipient boasted about buying lobster and sushi with his government assistance.
But apparently that was enough to resurrect and perpetuate that long-ago myth first spun by Reagan.
By: Eleanor Clift, The Daily Beast, April 7, 2015
“Where Is The Outrage”: How States Are Redistributing The Wealth
In 2008, then-candidate Barack Obama was lambasted for supposedly endorsing policies of wealth redistribution. The right feared that under an Obama presidency, Washington would use federal power to take money from some Americans and give it to others. Yet, only a few years later, the most explicit examples of such redistribution are happening in the states, and often at the urging of Republicans.
The most illustrative example began in 2012, when Kansas’ Republican Gov. Sam Brownback signed a landmark bill that delivered big tax cuts to high-income earners and businesses. Less than two years after that tax cut, the state’s income tax revenues plummeted by a quarter-billion dollars — and now Brownback is pushing to use money for public employees’ pensions to instead cover the state’s ensuing budget shortfalls.
Brownback’s proposal: Slash the state’s required pension contribution by $40 million to balance the state budget, even though Kansas already has one of the worst-funded pension systems in the nation.
Brownback defended his proposal to take money from middle-class state workers and use it to effectively finance his tax cuts for the wealthy. He told the Wichita Eagle: “It’s kind of, uh, well where are you going to go for the funds? And I don’t like it, but it’s kind of what’s your other option if you don’t hit K-12 and higher ed with allotments?”
Brownback is not alone. He joins fellow Republican Gov. Chris Christie in coupling large tax breaks with cuts to actuarially required pension payments. In New Jersey, Christie slashed required pension payments while signing legislation expanding tax credits to corporations, and doling out a record amount of taxpayer subsidies to businesses. Many of those subsidies have flowed to firms whose executives have made campaign contributions to Republican political organizations. Earlier this month, New Jersey pension trustees filed a lawsuit against Christie for not making legally required contributions to the state’s pension system.
Both Brownback and Christie promoted their tax cuts as instruments to boost economic growth. Yet, a recent review of federal data by the Kansas City Star found Kansas “trails most other states when it comes to job growth.” Likewise, an investigative series by Gannett newspapers recently found “New Jersey’s job growth rate [is] the second worst in the nation. … New Jersey’s middle class has lost billions in income through layoffs, salary cuts and wage freezes [and] more than 100,000 job seekers have been unemployed for months on end.”
Illinois followed a somewhat similar path. For years, lawmakers did not make the full actuarially required pension payments, causing severe funding shortages in the state’s pension system. While lawmakers said there was little money to meet pension obligations, Democratic Gov. Pat Quinn signed a corporate tax cut in 2011 that is projected to cost the state more than $370 million a year in lost revenue. Two years after signing that bill, as pension funding gaps swelled, Quinn signed legislation slashing public employees’ retirement benefits. An Illinois judge last month ruled that the legislation violated the state’s constitution, though the ruling is being appealed.
The obvious question raised by these episodes is: Where is the outrage? To date, these attempts to use workers’ money to finance massive giveaways to the rich have generated little media coverage or political opposition — and certainly less than the full-fledged frenzy that took place when Obama made his “spread the wealth” comment a few years ago.
The tepid response to this kind of wealth transfer suggests that for all the angry rhetoric about redistribution you might hear on talk radio, cable TV and in the halls of Congress, the political and media class is perfectly fine with redistribution — as long as the cash flows from the 99 percent to the 1 percent, and not the other way around.
By: David Sirota, Senior Writer, the International Business Times; The National Memo, December 26, 2014
“A Massively Failed Experiment”: Why Conservatives Learned Nothing From Sam Brownback’s Failure
Kansas governor Sam Brownback had a plan when he got elected in 2010, and it was a plan that could only be enacted in a place like Kansas: Pass huge tax cuts, then watch the state transform into a kind of economic heaven on earth. Brownback surely could never have doubted it would work, since he and those in his party have been saying for decades that tax cuts deliver economic growth, rising tax revenues, general happiness, and shinier, more manageable hair.
You’ve probably heard the story: growth in Kansas did not, in fact, explode, but what did happen is that revenues plummeted, leading to severe cutbacks in education and other state services. Brownback nevertheless managed to get re-elected, because it was a non-presidential year and because it’s Kansas. So now he’s had a chance to reflect, and here’s how he’s looking at things, according to a Topeka newspaper:
As Gov. Sam Brownback’s first term comes to a close, the Republican governor has one regret — no, scratch that — one thing he would do differently.
“I probably would have chosen words better at different times, because you go through a campaign where you’ve got to eat the words you inartfully said,” Brownback said during a recent interview with The Topeka Capital-Journal.
The former U.S. senator — with the help of a Republican-controlled Legislature — slashed taxes, privatized portions of state government and pursued a staunchly conservative policy agenda during the past four years. And then Brownback fought off a competitive challenge from Democratic Rep. Paul Davis.
Atop the list of words and phrases that have proven controversial and given his opponents the greatest opportunity for mockery: predicting the Kansas tax cuts would act as a “shot of adrenaline” to the state’s economy and referring to the plan as an “experiment.”
In other words…
It’s obvious that he regrets calling it an “experiment” for no reason other than that word showed up in a bunch of Democratic attack ads. But as for the idea that tax cuts would give the Kansas economy a “shot of adrenaline”? Of course that’s what he said, because that’s what he believed. If you don’t believe that, you can’t call yourself a Republican.
It isn’t that there’s no truth to it—all else being equal, tax cuts put more money in people’s hands, so they can spend more, which will have some positive impact on the overall economy. The problem is that 1) the effect is never as large as Republicans expect it to be; 2) not only did Brownback’s tax cuts go mostly to the wealthy, who are less likely to spend the money, he actually raised taxes on poor people (there’s an explanation here), and 3) the benefits were swamped by the harm created by the inevitable cratering of state revenue.
But if you’re Sam Brownback, how do you account for such an outcome? It can’t possibly be that the theory on which the entirety of contemporary Republican economic policy rests is false. What’s he going to say—”It turns out that tax cuts don’t do much good”? Not in this universe.
It’s not just him. The failure of Brownback’s experiment may provide an effective rhetorical tool liberals can use against conservatives in economic debates, but it won’t actually change any conservatives’ thinking. The reason is that their belief in tax cuts doesn’t rest on the practical effects. That’s an argument that’s meant to appeal to everyone, since it concerns something (growth) that just about everyone thinks is good. But the real source of the conservative support for tax cuts is moral, not practical. They believe that taxes are inherently immoral — the government stealing from you the fruits of your labor (or inheritance or wise investments, as the case may be) to enact its nefarious schemes. Taxes should therefore be as low as possible. Conservatives also tend to believe that progressive taxation is doubly immoral, since it takes more from the most virtuous among us.
So my guess is that Brownback sees his experiment as a practical failure but a moral success, and other conservatives would agree. Not that he’d say so in quite those terms, because he knows how it would sound. But the only lesson he’s learned from his failure is to change the words he uses.
By: Paul Waldman, Contributing Editor, The American Prospect, December 23, 2014
“Undoing The Extremism”: Will The GOP Get The Message In Kansas?
For many political observers, the question about Kansas these days is no longer, “What’s the matter?” so much as, “What the fuck?”
There was the unexpectedly close GOP Senate primary—three-term incumbent Pat Roberts wound up winning by 7 points—and the forced retirement of the Democratic Senate candidate; there’s the fact that Gov. Sam Brownback, whose average margin of victory in state-wide races is 23 points, is now fighting for his political life. Tom Frank made the state famous for illustrating how its citizens elected conservative candidates whose actual policies went against the voters’ economic self-interest; after one term of Brownback’s “Tea Party experiment,” Kansas voters seem to have enlightened their self-interest and want to undo the extremism that Brownback both promised and delivered. The question remains as to whether their Republican candidates will ever wise up to the same conclusion.
There’s no doubt that Brownback’s radically conservative economic policies failed. Schools closed, the deficit ballooned, highways crumbled, jobs disappeared—I imagine ruby slippers were hocked. That failure has the reddest state in the nation blushing blue.
Citing the state’s fiscal woes, moderate and not-so-moderate Republicans have flocked to Brownback’s opponent, Paul Davis, who trails by just 0.6 points. On the Senate front, independent candidate Greg Orman, who may be forced to caucus with the Democrats by default (RNC chair Reince Preibus has said his caucusing with the GOP would be “impossible”), is reaping the benefits of that Tea Party-weighted primary. “Traditional Republicans for Common Sense,” made up of 70 Republican moderates who served in the Kansas legislature, endorsed Orman and he is favored by independent voters by a margin of 30 points.
In the face of this, both Brownback and Roberts have chosen not to battle for the wide swath of Kansas voters who identify as moderate Republicans (47 percent, versus 38 percent “conservative Republicans”), but to move further to the right. In a just world, Roberts’ violation of Godin’s Law (warning that “our country is heading toward national socialism”) would mean that we could simply ignore him from here on out. But his lumbering lurch toward the Ted Cruz tin-foil-hat convention should instead be an object lesson for Republicans to come. (Brownback can’t really be said to have shifted right but rather has celebrated already being there.)
It’s true both races have tightened, with Roberts eking out a lead: 5 points in an average of the latest polls. Their still-slim chances of victory, however, hardly validate the GOP’s decision to double-down on the hard-right voters who have yet to make the connection between the false populism of tax cuts and their own dire straits. For those seeking to figure out a long-term strategy for Republican victories in Kansas, shouldn’t who supports him matter less than the masses of voters who have left both him and Brownback?
Think about it: If a ruinous adventure into Laffer-land has already alienated many Republican voters, won’t a further march into the barren fields of zero-tax-revenue put off even more? Combine this possibility with the inevitable demographic erosion of the GOP’s base and one has to wonder not just if the Republican leadership is shooting itself in the foot, but why it is. Is it misplaced, or at least short-sighted, cynicism, which might have them believe that their old white guy coalition (if you can call it that) will sustain them a few more cycles? (At least long enough to pass voting restrictions?) Or is it a form of psychosomatic blindness, a function of such deeply held, incorrect perceptions, that the party leaders literally cannot imagine the need to change their tactics, much less their policies?
The motivations matter mostly because understanding them can help progressives sharpen their arguments, or maybe let us know if the argument is even worth having. In other words, are we dealing with cynics or zealots?
Obviously, one hopes for the former. Cynics respond to defeat, for one thing. Cynics and opportunists look at polls. Cynics are the lifeblood of representative democracy. Cynics will do anything to save their own skin, even change their minds.
By: Ana Marie Cox, The Daily Beast, October 24, 2014
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