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“Protecting Conservative Principles”: Alabama Blocks Local Control On Minimum Wage

It’s been nearly two years since Oklahoma Gov. Mary Fallin (R) announced that her state would not only ignore calls for a higher minimum wage, but also that the state law would block any effort by local Oklahoma communities to raise wages at the municipal level. In other words, if a city in Oklahoma wanted a higher minimum, the state would effectively declare, “Too bad.”

Last year, Michigan Gov. Rick Snyder (R) made the same move, prohibiting local control over minimum-wage increases. And last week, MSNBC’s Zack Roth reported on the identical circumstances playing out the same way in Alabama.

Birmingham, Alabama, raised the city’s minimum wage to $10.10 an hour on Tuesday. Two days later, the state took it away.

Alabama passed a bill Thursday, largely along party lines, that bars cities and counties from raising the minimum wage or requiring employers to provide leave or other benefits. Because the law applies retroactively, it wipes out Birmingham’s raise.

Republican legislative leaders fast-tracked the bill in order to pass it before Birmingham’s raise was set to take effect March 1. The GOP enjoys super-majorities in both houses. Within an hour or so of the bill’s passage, Gov. Robert Bentley (R) announced he had signed it.

It’s amazing how quickly Republican policymakers can move when they feel strongly about an issue. In this case, their zeal applied to blocking a city that wanted to raise its own minimum wage.

The L.A. Times reported that there are now 17 states that prohibit their own cities from raising a local minimum wage – because if there’s one thing the right believes in as a bedrock principle of their entire ideology, it’s the importance of local control, except when Republicans decide they actually believe the exact opposite.

As we discussed the last time this came up, contemporary conservatism generally celebrates the idea that the government that’s closest to the people – literally, geographically – is best able to respond to the public’s needs.

But when communities consider progressive measures Republicans don’t like, those principles are quickly thrown out the window.

So, let this be a lesson to everyone: when officials in Washington tell states what to do, it’s an outrageous abuse and clear evidence of government overreach. When states tell cities what to do, it’s protecting conservative principles.

 

By: Steve Benen, The Maddow Blog, February 29, 2016

March 1, 2016 Posted by | Conservatism, Conservatives, Minimum Wage, State and Local Governments | , , , , , | Leave a comment

“Social Safety Net In Hands Of The States?”: The GOP’s State Budget Disaster Is The Best Case For Big Government

The Republican Party is cutting a swath of destruction through state budgets.

In Kansas, Gov. Sam Brownback’s experiment in income and business tax cuts has blown a $344 million hole in the budget for this fiscal year, and a projected $600 million hole for the next fiscal year. Part of his plan to close it is to cut $44.5 million from public schools and universities.

Illinois needs to cut over $6 billion to balance its books. So Gov. Bruce Rauner is calling for a $1.5 billion cut to the state’s Medicaid program, plus $600 million in cuts to local government finances and $387 million in cuts to higher education (though he may have trouble getting those ideas past the Democrats in the Illinois legislature).

Wisconsin’s state budget, meanwhile, faces a $238 million deficit, thanks in small part to tax cuts Gov. Scott Walker pushed through after taking office in 2011. That wiped out a $759 million budget surplus in 2013. Now Walker is looking to cut $300 million from higher education over the next two years, along with cuts to the state park system and its recycling programs, among other things, and to restructure about $100 million in debt payments the state already owes.

These three examples show the GOP’s “tax cuts now, tax cuts forever” ideology remains utterly unconcerned with economic reality. But more deeply, they’re a lesson in some bad choices America made in how to design its national social safety net, which set the stage for the current crises.

In not one of these three cases do the projected budget gaps rise above 1 percent of the income generated annually by the state’s economy. The idea that taxes couldn’t be raised, starting on high earners, to close these holes is risible.

On top of that, these tax cuts are often pitched as growth enhancers for state economies. That was the explicit case Brownback made for his tax cut package. But for such a policy gambit to have even a chance of working, spending must be held constant. If you start cutting spending on things like health care or education or transit or whatnot, you’re just pulling more dollars out of the state economy with one hand even as you leave more dollars in with the other.

In other words, you have to be able to deficit spend. But that can be hard for states. First off, most of them have balanced budget amendments in their constitutions, which means deficit spending is just a no-go. These restrictions generally don’t cover individual infrastructure projects and the like, which states can choose to borrow a set amount for from the bond markets. But covering shortfalls between general annual spending and revenue is much more difficult legislatively.

The other problem is that the bond markets might just not give you the money. Investors may consider a state a bad bet, which would drive its borrowing and interest payments up. That hasn’t been much of a problem in the aftermath of the recession, as investors have been desperate for safe places to park their money — which makes the refusal of state governments to borrow to cover their regular expenditures all the more absurd.

But the low rates won’t last forever, and the willingness of investors to take a bet on a state puts limits on state government borrowing.

What this all means is that state government spending is pretty pro-cyclical — i.e. it rises and falls with the economy. If the economy is doing well, state tax revenues go up. If the economy goes into recession, state tax revenues go down, forcing budget cuts in health, education, and elsewhere. And that’s before you factor in Republican governors and state legislators who are out to cut taxes willy-nilly.

But for spending on things like health care and education — two of the biggest drivers of any state’s budget — being pro-cyclical makes no sense. It’s not as if people just stop getting sick during recessions, or that children simply stop needing an education. These are public investments in the health and well-being of the American people themselves, and the need for them remains constant throughout all the ups and downs in the economy.

The only entity that can spend with impunity regardless of the state of the economy is the federal government. That’s because it can print money, which means it can always pay lenders back in a pinch. This does mean the federal government faces a different sort of threat — instead of being abandoned by investors, it could print so much money it drives up inflation. But that’s just really hard to do, historically speaking.

In short, these are programs that should be run through the federal government. But Medicaid is a joint state-and-federal program, meaning both the federal government and state government supply some of the money from their respective budgets. Meanwhile, education is funded by streams from the federal, state, and local levels at the same time.

That structure leaves these programs critically vulnerable to the whims of the economy — not to mention the whims of Walker, Brownback, Rauner, and their friends in the Republican Party.

 

By: Jeff Spross, The Week, February 24, 2015

February 25, 2015 Posted by | Social Safety Net, State and Local Governments, State Budgets | , , , , , , , | Leave a comment

“We’re No. 1!”: How Government Helps The 1 Percent

You may think that government takes a lot of money from the wealthy and gives it to poor people. You might also assume that the rich pay a lot to support government while the poor pay a pittance.

There is nothing wrong with you if you believe this. Our public discourse is dominated by these ideas, and you’d probably feel foolish challenging them. After Mitt Romney’s comments on the 47 percent blew up on him, conservatives have largely given up talking publicly about their “makers versus takers” distinction. But much of the right’s rhetoric and many of its policies are still based on such notions.

It is thus a public service that the Institute on Taxation and Economic Policy (ITEP) has issued a report showing that at the state and local level, government is, indeed, engaged in redistribution — but it’s redistribution from the poor and the middle class to the wealthy.

It’s entirely true that better-off people pay more in federal income taxes than the less well-to-do. But this leaves out not only Social Security taxes, but also what’s going on elsewhere.

The institute found that in 2015, the poorest fifth of Americans will pay, on average, 10.9 percent of their incomes in state and local taxes and the middle fifth will pay 9.4 percent. But the top 1 percent will pay states and localities only 5.4 percent of their incomes in taxes.

When you think about it, such figures should not come as a surprise. Most state and local governments rely on regressive taxes — particularly sales and excise levies. Poor and middle-class people pay more simply because they have to spend the bulk of their incomes just to cover their costs.

This gets to something else we don’t discuss much: Public policies in most other well-to-do countries push much harder against inequality than ours do. According to the Luxembourg Income Study (LIS), the United States ranks 10th in income inequality before taxes and government transfers. By this measure, Ireland and Britain, and even Sweden and Norway, are more unequal than we are. But after government transfers are taken into account, the good old USA soars to first in inequality. Norway drops to 6th place and Sweden to 13th.

It’s not a matter about which we should be proud to shout, “We’re No. 1!”

Actually, things may be a bit worse for us even on pre-transfer incomes, said LIS Director Janet Gornick, because people in the other rich countries tend to draw their pensions earlier.

The overall story is that we are not very aggressive, with apologies to Joe the Plumber, in spreading the wealth around. “Our inequality is already high because of the low minimum wage, the weakness of unions and very high levels of private-sector compensation at the top,” Gornick, a professor at the Graduate Center of the City University of New York, said in a telephone interview from Luxembourg. “But on top of that, we are redistributing less than other countries and also have lower taxes on the highest incomes, particularly income from capital.”

And at the state and local levels, our governments are exacerbating inequality. The ITEP study concludes that “every single state and local tax system is regressive and even the states that do better than others have much room for improvement.” The five states with the most regressive systems are Washington, Florida, Texas, South Dakota and Illinois.

On its face, the property tax would seem progressive, because big houses are taxed more. But the study finds that on average, “poor homeowners and renters pay more of their incomes in property taxes than do any other income group — and the wealthiest taxpayers pay the least.”

There is also an unanticipated consequence of growing economic disparities: Because states and localities tax the wealthy less, “rising income inequality can make it more difficult for state tax systems to pay for needed services over time. The more income that goes to the wealthy, the slower a state’s revenue grows.”

Political debates are typically driven by clichés , but at the very least, we can expect our clichés to be true. We need to stop claiming that we have a massively redistributive government. We need to stop pretending that poor people are “takers” when they in fact kick in a lot to the common pot. And we need to replace arguments about “big” and “small” government with a debate over what governments at all levels are doing to make our society more just — or less.

 

By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, January 15, 2015

January 16, 2015 Posted by | Economic Inequality, Redistribution, State and Local Governments | , , , , , , , | Leave a comment

   

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