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“Tax Cuts Don’t Increase Revenue”: This Is What Happens When Republicans Actually Enact Their Radical Agenda

A persistent elite Washington trope, embodied by folks like Ron Fournier, says that bipartisanship is the key missing ingredient in our system of government. The two parties just need to stop their partisan bickering and join hands to hammer out serious, substantive compromises (read: slash social insurance).

It’s certainly the case that because of U.S. constitutional design, compromise is necessary during times of divided government — and the ones who won’t do it are ultraconservative Republicans. But there’s another model of governance that gets short shrift among the lovers of bipartisanship: letting election winners implement their agenda. By providing clear lines of accountability and making clear who is responsible for which policy, allowing an election winner to govern makes democracy work.

We see this today in Kansas of all places, where Gov. Sam Brownback is in an unexpectedly tight re-election race:

Although every statewide elected official in Kansas is a Republican and President Obama lost the state by more than 20 points in the last election, Mr. Brownback’s proudly conservative policies have turned out to be so divisive and his tax cuts have generated such a drop in state revenue that they have caused even many Republicans to revolt. Projections put state budget shortfalls in the hundreds of millions of dollars annually, raising questions of whether the state can adequately fund education in particular. [The New York Times]

Brownback’s tax cuts were passed back in 2012 with the help of Arthur Laffer, the conservative policy hand who has made his career insisting in the teeth of contrary evidence that tax cuts increase revenue. Multiple experts warned that the Brownback-Laffer plan would actually crater the state revenue collection, but Brownback ignored them and did what he wanted. The results are in, and it turns out when you cut taxes, you decrease revenue:

Kansas has a problem. In April and May, the state planned to collect $651 million from personal income tax. But instead, it received only $369 million. [The New York Times]

Naturally, the cuts have required more cuts to critical government services, and most of the tax benefits have been vacuumed up by the rich. Worse still, the promised job-creating effects have also failed to appear. On the contrary, Kansas has actually been performing worse than its neighbors on the jobs front.

In short, movement conservatism produces garbage economic policy. But the beauty is, now that fact is obvious to almost everyone in Kansas, including a bunch of Republicans. To his credit, Brownback actually believed in his ideas and put them in place. He is now paying the price for taking that risk.

Contrast that to the elite D.C. idea of bipartisanship, in which the ancient grandees from both parties get together, and through the magic of high-minded civil discussion, iron out a compromise to cut Social Security and Medicare, preferably by enough to be called a “Grand Bargain.” This has the not-coincidental effect of making it impossible for most people to figure out who is responsible for what — and very easy for either side to spin negative consequences as the other side’s fault.

Now, Brownback may well pull out a victory in the end. But Kansas is a very conservative state, and he ought to be cruising to a huge reelection. Future Republicans may well try to jam through similar tax policies copy-pasted from a conservative think tank’s guide to enriching the wealthy, but the colossal failure of the Brownback cuts will surely give them pause.

Government by the permanent D.C. establishment used to at least keep the country on two legs, but with ideologically well-sorted parties, one of them increasingly extreme, it’s come perilously close to breaking down multiple times. When considering reforms to the structure of government, as I believe will be necessary sometime in the future, we should keep in mind stories like this one. Democracy works best when the voters have meaningful and comprehensible choices.

 

By: Ryan Cooper, The Week, September 17, 2014

September 18, 2014 Posted by | Kansas, Republicans, Sam Brownback | , , , , , , | Leave a comment

“Snake Oil Salesmen”: ALEC’s Worthless Recommendations For Prosperity In The States

For most of its history ALEC has operated in the background, but its influence recently drew the spotlight when its promotion of “Stand Your Ground” laws came to light in the wake of the killing of Trayvon Martin in Florida. Faced with the potential of consumer boycotts, corporate sponsors such as McDonald’s and Pepsi withdrew their support. Henceforth, the organization announced, it would concentrate on state economic policy.

State legislators who might look to the organization for leadership on economic policies should be wary of following ALEC’s lead in this arena. A startlingly candid report, “Selling Snake Oil to the States,” just released by the Iowa Policy Project and the Washington-based Good Jobs First, shows that ALEC’s recommendations for producing economic growth in the states are essentially worthless.

This is a strong claim, but the researchers support their conclusion neatly by putting under the microscope the implicit predictions in the 2007 edition of Rich States, Poor States, the volume written by economist Arthur Laffer and the source of the ALEC-Laffer State Economic Competitiveness Index.

In brief, the authors take ALEC’s 2007 ranking of states based upon the states’ adherence to its recommendations, and seeing whether indeed the states that were predicted to prosper were doing so five years later.

None of ALEC’s predictors of economic growth—elimination or reduction of progressive taxation, reduced commitments to public services, tightening of social safety net programs, or reduced union influence—showed any relationship to economic prosperity.

In fact, if anything the ALEC formula for prosperity had an inverse relationship. As the authors put it:

…states that were rated higher on ALEC’s Economic Outlook Ranking in 2007…have actually been doing worse economically in the years since, while the less a state conformed with ALEC’s policies the better off it was.

Looking at median family income specifically:

Once again, actual results are the opposite of the ALEC claim. The more a state’s policies mirrored the ALEC low-tax/regressive taxation/limited government agenda, the lower the median family income; this is true for every year from 2007 through 2011; Figure 5 below shows the results just for 2011. The relationship is not only negative each year, it also became worse over time: the better a state did on the ALEC Outlook Ranking, the more family income declined from 2007 to 2011. The correlation, -.30, is statistically significant.

The authors of the report remind us that the only way to accelerate economic growth is to pursue policies that increase or maintain productivity, such as investing in roads, bridges and schools, and insuring an educated workforce and a healthy population.

One report can hardly be expected fully to turn back the simplistic analysis that ALEC has been promoting for understanding state economic development. But this one should provide a strong counter-weight to the notion that states can prosper by following the low road of tax cuts and limited support for the public sector.

By: Michael Lipsky, The American Prospect, December 3, 2012

December 4, 2012 Posted by | Politics | , , , , , , , | Leave a comment

   

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