“Definitive Proof Of Failure Of Supply-Side Economics”: Kansas’ Experiment In Right-Wing Economics Is Still Failing Miserably
Every few weeks I feel it’s important to return to the ongoing disaster in Sam Brownback’s Kansas. It doesn’t get nearly as much play as it should in the media, which is unfortunate because Kansas’ experience is definitive proof of the failure of supply-side, Laffer-curve-based economic theory.
Under the leadership of Brownback and one of the most conservative legislatures in America, Kansas dramatically slashed the tax rates of Kansas’ wealthy and its corporations. According to ideology, the cuts should have jumpstarted Kansas’ economy and led to rapid growth that created jobs and helped the tax cuts pay for themselves. Of course, nothing of the sort happened.
The effect was disastrous, a slow-rolling series of budget shortfalls followed by cuts to essential services like education and roads, which only slowed the economy further. A series of punitive and regressive sin taxes on tobacco and other goods were instituted to make up for the cuts to the tax rates of the wealthy, which of course only further undermined consumer spending.
Officials in Kansas have tried to blame the problems on a slow national economy, but that is hogwash. Say what you will about the unequal distribution in gains from national economic growth, there is no doubt that the national economy is performing well by traditional metrics. It is not doing so in Kansas. Moreover, Kansas’ neighboring states are doing far better than it is.
It’s not local economic variations. Kansas’ troubles really are directly the fault of its tax cuts. They didn’t boost the economy–they slowed it down.
And now Kansans are paying the price. Even more cuts are coming, including devastating cuts to road maintenance through thefts from its already plundered Department of Transportation. These cuts to transportation (totaling over $2 billion in a small state!) are leading to deferred maintenance that will, of course, be incredibly expensive to deal with at a time when borrowing costs will likely be far higher than they are now.
This is on top of the damage Brownback is already doing to the state’s K-12 and university education systems, causing good teachers and professors to flee to more hospitable states. It’s a complete disaster.
The nation’s eyes should be trained on Kansas. This is what happens when you put Republicans in charge with the freedom to pursue their economic ideology. It’s not just a moral train wreck in terms of inequality and shared prosperity. It doesn’t even work to keep the lights on and make the trains run on time. Conservative economic orthodoxy is completely dysfunctional for running governments and society because it’s built on assumptions that aren’t true: rich people don’t create jobs, cutting their taxes doesn’t stimulate growth, cutting government services doesn’t “free up” capital to be spent on private sector growth, etc. What actually happens is that the rich simply hoard more money, corporations build up savings in their balance sheets, government cuts damage public confidence and infrastructure, and regular people don’t have as much money to spend, which dries up the consumer confidence and spending that is the real driver of job and economic growth.
By: David Atkins, Political Animal Blog, The Washington Monthly, July 3, 2016
“Living The Realities Of Supply-Side Economic Failures”: Debate Questions Naturally Lean Left Because Mainstream Voters And Reality Do
Timothy Carney at the Washington Examiner wrote a piece getting a decent amount of attention today proclaiming that liberal media bias exists and that it affected the CNBC debate. Unlike most of bloviating on the topic from the right, Carney actually adduces evidence for his point of view. After the usual blather about how most journalists lean Democratic (most professionals in almost every field requiring professional education do, which should tell conservatives something), he does something useful by illustrating what a debate from a conservative perspective might look like:
They could have asked Kasich: “Why did you increase Medicaid under Obamacare in Ohio?” They could have asked Trump, “How can eminent domain for corporate gain be squared with free-enterprise views?” They could have asked Rubio about sugar subsidies, or Cruz if his “defund Obamacare” fight did any good, or Jeb Bush about his support for more immigration. They could have asked Christie about his liberal court appointments.
They instead asked for price controls and regulations, they asked about the social compact in entitlement spendings, they asked why not to support budget-busting deals. Most questions were either non-ideological, and many were from a liberal perspective. When they asked about marijuana legalization it wasn’t from an anti-drug perspective or a libertarian perspective, but a “more government revenue” perspective.
OK fine, but here’s the problem with that: most voters don’t care about those things, or they’re couched in a way that would only reinforce the hostility of mainstream voters. Any moderator that asked a GOP candidate like Kasich why they increased Medicaid as though that were a bad thing, would be inviting all the candidates to lay into him and provide endless soundbites for Democrats in a general election. Because most voters like Medicaid expansion when it’s explained to them. Most voters don’t give a damn about “eminent domain for corporate gain”–not even conservative ones. Corn and sugar subsidies, while important public policy problems that expose crony capitalism and contradictions in conservative ideology, don’t even begin to rate as top issues on the minds of voters or remotely interesting. Nor would inviting other candidates to attack subsidies for farmers be good politics, either to please donors or the public at large. Ted Cruz was asked about his government shutdown tactics, and the question was such a landmine for him that he dodged the question entirely. Meanwhile, immigration has been a big debate question for GOP candidates and Jeb Bush in particular: Bush’s support for immigration reform is the biggest reason for his poor performance in the polls, and the biggest reason for Donald Trump’s ascendance. Asking about immigration reform from a hostile, conservative point of view would only serve to give Trump and Cruz more ammunition, and further alienate Hispanic voters in the general election.
By contrast, taxes and budgets really matter. Education matters. Healthcare matters. Jobs matter. The fact that the public has decidedly liberal positions on those issues, and that the lived reality of supply-side economic failures and government healthcare successes disadvantages conservative ideology, isn’t the fault of debate moderators. It’s the fault of conservative ideology, which should in theory be forced to adjust just as certain aspects of liberalism had to during the 1970s.
These are also the issues on which the Republican nominee will be tested come the general election. Democratic candidates will be forced to answer for issues on which voters have skepticism of liberal positions, from guns to foreign policy to the welfare state–and challenging questions on those issues are consistently asked during Democratic debates, nor are they prejudicial. Republicans are likewise expected to answer for their unpopular positions, because they’ll be forced to defend them in the general election.
The fact that Republicans have more unpopular positions and a weaker track record of success isn’t the fault of debate moderators. It’s the fault of Republican candidates and their ideology.
By: D. R. Tucker, Political Animal Blog, The Washington Monthly, October 31, 2015
“Trump Is Right On Economics”: Jeb Relying On Magic Of Tax Cuts To Double The Growth Rate Is Pure Supply-Side Voodoo
So Jeb Bush is finally going after Donald Trump. Over the past couple of weeks the man who was supposed to be the front-runner has made a series of attacks on the man who is. Strange to say, however, Mr. Bush hasn’t focused on what’s truly vicious and absurd — viciously absurd? — about Mr. Trump’s platform, his implicit racism and his insistence that he would somehow round up 11 million undocumented immigrants and remove them from our soil.
Instead, Mr. Bush has chosen to attack Mr. Trump as a false conservative, a proposition that is supposedly demonstrated by his deviations from current Republican economic orthodoxy: his willingness to raise taxes on the rich, his positive words about universal health care. And that tells you a lot about the dire state of the G.O.P. For the issues the Bush campaign is using to attack its unexpected nemesis are precisely the issues on which Mr. Trump happens to be right, and the Republican establishment has been proved utterly wrong.
To see what I mean, consider what was at stake in the last presidential election, and how things turned out after Mitt Romney lost.
During the campaign, Mr. Romney accused President Obama of favoring redistribution of income from the rich to the poor, and the truth is that Mr. Obama’s re-election did mean a significant move in that direction. Taxes on the top 1 percent went up substantially in 2013, both because some of the Bush tax cuts were allowed to expire and because new taxes associated with Obamacare kicked in. And Obamacare itself, which provides a lot of aid to lower-income families, went into full effect at the beginning of 2014.
Conservatives were very clear about what would happen as a result. Raising taxes on “job creators,” they insisted, would destroy incentives. And they were absolutely certain that the Affordable Care Act would be a “job killer.”
So what actually happened? As of last month, the U.S. unemployment rate, which was 7.8 percent when Mr. Obama took office, had fallen to 5.1 percent. For the record, Mr. Romney promised during the campaign that he would get unemployment down to 6 percent by the end of 2016. Also for the record, the current unemployment rate is lower than it ever got under Ronald Reagan. And the main reason unemployment has fallen so much is job growth in the private sector, which has added more than seven million workers since the end of 2012.
I’m not saying that everything is great in the U.S. economy, because it isn’t. There’s good reason to believe that we’re still a substantial distance from full employment, and while the number of jobs has grown a lot, wages haven’t. But the economy has nonetheless done far better than should have been possible if conservative orthodoxy had any truth to it. And now Mr. Trump is being accused of heresy for not accepting that failed orthodoxy?
So am I saying that Mr. Trump is better and more serious than he’s given credit for being? Not at all — he is exactly the ignorant blowhard he seems to be. It’s when it comes to his rivals that appearances can be deceiving. Some of them may come across as reasonable and thoughtful, but in reality they are anything but.
Mr. Bush, in particular, may pose as a reasonable, thoughtful type — credulous reporters even describe him as a policy wonk — but his actual economic platform, which relies on the magic of tax cuts to deliver a doubling of America’s growth rate, is pure supply-side voodoo.
And here’s what’s interesting: all indications are that Mr. Bush’s attacks on Mr. Trump are falling flat, because the Republican base doesn’t actually share the Republican establishment’s economic delusions.
The thing is, we didn’t really know that until Mr. Trump came along. The influence of big-money donors meant that nobody could make a serious play for the G.O.P. nomination without pledging allegiance to supply-side doctrine, and this allowed the establishment to imagine that ordinary voters shared its antipopulist creed. Indeed, Mr. Bush’s hapless attempt at a takedown suggests that his political team still doesn’t get it, and thinks that pointing out The Donald’s heresies will be enough to doom his campaign.
But Mr. Trump, who is self-financing, didn’t need to genuflect to the big money, and it turns out that the base doesn’t mind his heresies. This is a real revelation, which may have a lasting impact on our politics.
Again, I’m not making a case for Mr. Trump. There are lots of other politicians out there who also refuse to buy into right-wing economic nonsense, but who do so without proposing to scour the countryside in search of immigrants to deport, or to rip up our international economic agreements and start a trade war. The point, however, is that none of these reasonable politicians is seeking the Republican presidential nomination.
By; Paul Krugman, Op-Ed Columnist, The New York Times, September 7, 2015
“Sam Brownback’s Kansas Disaster Is Getting Even Worse”: Conservative Policies Are Both A Moral And Practical Disaster
Politics is all too often couched in terms of morality and ethics, rather than simple right and wrong. What I mean by that is that reasonable people can come to different moral value judgments about ethical dilemmas: is it more moral to ensure that everyone has access to a social safety net even if some people game the system, or is it more moral to ensure that people keep all their private property and never have to give it up to someone less hardworking than themselves?
But it’s important to remember that it’s not just about empathy and ethics. It’s about what works and what doesn’t. And every day in every way, we are learning that conservative approaches simply don’t work–not in terms of social policy, and certainly not in terms of economic policy.
Exhibit A in the utter failure of conservative dogma is Sam Brownback’s trainwreck in Kansas. Here are the latest figures, courtesy of Yael Abouhalkah in the Kansas City Star:
This has been a bad week for Gov. Sam Brownback and others who believe his massive income tax cuts are going to dramatically boost employment in the state. A new report Friday showed that Kansas had lost a whopping 4,300 jobs in July from a month earlier.
The unemployment rate climbed for the fourth straight month, up to 4.6 percent, according to the federal Bureau of Labor Statistics. And look at this disastrous note: The Sunflower State now has 1,700 fewer jobs than it did at the start of 2015.
One more fact from the latest report shows that Kansas has added a puny 5,600 total jobs in the last year — from July 2014 to July 2015. The new information shows that the tax cuts that have drained the Kansas treasury of hundreds of millions of dollars the past two years are not working to attract employers and jobs.
Keep in mind that Kansas’ atrocious performance has nothing to do with the state of the midwest or the manufacturing sector generally, because both manufacturing and Kansas’ neighbors are actually doing pretty well comparatively:
Meanwhile, Missouri celebrated much better news in the latest BLS report. The Show-Me State gained 11,900 jobs in July, and now has added 30,900 for 2015. Yes, that’s without the huge tax cuts that Brownback and Co. put in place.
Earlier this week, a separate report showed Kansas is missing out on the growth in manufacturing employment, which is happening across much of the rest of America. One key statistic: Kansas lost 39,000 manufacturing jobs during the recession but has added just 4,000 since it ended.
All this as Brownback’s tax cuts are destroying what remains of the state’s educational system and social services. Brownback and his allies suffer under the delusion that supply-side economics really works, and that if they cut taxes enough on rich people and businesses that there will be an explosion of jobs and economic growth. That’s not just immoral because it increases inequality and hurts the poor. It’s as wrong as 2+2=5. In all but the most extreme cases, cutting taxes on the rich does nothing to create jobs, but slashing the salaries of teachers and cutting welfare benefits means less consumer demand, which in turns drives the economy into recession. The immorality would at least be somewhat tolerable if the ideology functioned at a broad utilitarian level, but it doesn’t.
Conservative policies are both a moral and practical disaster.
By: David Atkins, Political Animal Blog, The Washington Monthly, August 22, 2015
“An Edge Of Ruthlessness”: Scott Walker; Uncle Scrooge’s Lackey In Wisconsin
Economically speaking, all 237 GOP presidential candidates are selling the same magic beans.
Everybody knows the script by now: Tax cuts for wealthy “job creators” bring widespread prosperity; top off Scrooge McDuck’s bullion pool, and the benefits flow outward to everybody else, the economy surges, budget deficits melt away, and the song of the turtle dove will be heard in the land.
Almost needless to say, these “supply side” miracles have never actually happened in the visible world. State budget debacles in Kansas and Louisiana only signify the latest failures of right-wing dogma. Hardly anybody peddling these magic beans actually believes in them anymore. Nevertheless, feigning belief signifies tribal loyalty to the partisan Republicans who will choose the party’s nominee.
However, with everybody in the field playing “let’s pretend,” a candidate needs another way to distinguish himself. I suspect that Scott Walker, the Republican governor of Wisconsin, may have found it.
See, Walker won’t just put money back in “hardworking taxpayers’” pockets. Like a latter-day Richard Nixon, Walker will also stick it to people he doesn’t like: lollygagging schoolteachers, feather-bedding union members, and smug, tenured college professors who think they’re smarter than everybody else. If Walker lacks charisma, there’s an edge of ruthlessness in his otherwise bland demeanor that hits GOP primary voters right where they live.
No less an authority than Uncle Scrooge himself — i.e. David Koch of Koch Industries, who with his brother Charles has pledged to spend $900 million to elect a Republican in 2016 — told the New York Observer after a closed-door gathering at Manhattan’s Empire Club that Walker will win the nomination and crush Hillary Clinton in a general election “by a major margin.”
Viewed from a distance, the determination of prosperous, well-educated Wisconsin to convert itself into an anti-union right-to-work state like Alabama or Arkansas appears mystifying. To risk the standing of the University of Wisconsin system by abolishing academic tenure, as Walker intends, is damn near incomprehensible.
Attack one of America’s great public research universities for the sake of humiliating (Democratic-leaning) professors over nickel-and-dime budgetary issues? Do Wisconsinites have the first clue how modern economies work?
Maybe not. But Walker’s supporters definitely appear to know who their enemies are, culturally speaking. Incredulity aside, it would be a mistake not to notice the craftiness with which he’s brought off the transformation. Not to mention that Walker’s won three elections since 2010 in a “blue” state that hasn’t supported a Republican presidential nominee since Ronald Reagan.
Wisconsin’s 10 electoral votes don’t mean much by themselves, but throw in Michigan and Ohio, Midwestern states also trending similarly, and you’ve definitely got something.
Act 10, the 2011 law that took away collective bargaining rights for many public employees in Wisconsin (except, at first, for police and firefighters), brought crowds of angry teachers (also mostly Democrats) to the state capitol in Madison for weeks of demonstrations. As much as MSNBC was thrilled, many Wisconsinites appear to have been irked.
In the end, the state ended up saving roughly $3 billion by shifting the funding of fringe benefits such as health insurance and pensions from employer to employee, costing the average teacher roughly 16 percent of his or her compensation. Mindful of budget shortfalls, the unions had proposed negotiations, but that wasn’t enough for Gov. Walker.
For the record, Act 10 was an almost verbatim copy of a bill promoted by the Arlington, Virginia-based American Legislative Exchange Council (ALEC), a think-tank largely funded by, you guessed it, the Brothers Koch.
Four years ago, a documentary filmmaker caught Walker on camera telling wealthy supporters that the new law was just the beginning. “The first step is, we’re going to deal with collective bargaining for all public-employee unions,” he said, “because you use divide-and-conquer.”
“If we can do it in Wisconsin, we can do it anywhere — even in our nation’s capital,” Walker wrote in his book, Unintimidated, notes Dan Kaufman in the New York Times Magazine. Elsewhere, Walker has boasted that as president, he could take on foreign policy challenges because, he’s said, “If I can take on 100,000 protesters, I can do the same across the world.”
Ridiculous, of course, but it plays.
Meanwhile, rueful trade unionists who endorsed Walker in 2010 are crying the blues, because they never imagined that having vanquished the women’s union he’d come after the ironworkers and the electricians in their pickup trucks. Divided, they’ve been conquered.
So right-to-work it is: diminished salaries, job security, pensions, health and safety regulations will inevitably follow.
More bullion for Scrooge McDuck’s pool.
So now it’s the professors’ turn. Walker, a Marquette dropout, has described his new law as “Act 10 for the university.” Tenure’s a dead letter in cases of “financial emergency… requiring program discontinuance, curtailment, modification or redirection.”
So who gets redirected first? Left-wing culture warriors or climate scientists? Hint: Scrooge is a fierce climate-change denier.
Meanwhile, Democrats underestimate Scott Walker at considerable peril.
By: Gene Lyons, The National Memo, June 17, 2015
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