Tuesday, February 05, 2013


I've told you, and others have told you, that cutting or eliminating state income taxes (which tend to be somewhat progressive) is all the rage among GOP governors, as is raising sales taxes (which fall disproportionately on the poor, the lower middle class, and the middle class, because the more of your paycheck you have to spend to live, the more they get to tax you). Bobby Jindal is a big fan of this approach (he wants to eliminate all income and corporate taxes in Louisiana) -- and you know he wants to be president.

So it's not a surprise to read what I'm reading in The Wall Street Journal this morning: that Republicans -- bizarrely -- think this approach could win them the White House four years from now.
TOPEKA, Kan. -- Even if he doesn't enter the race himself, this state's Republican governor, Sam Brownback, is determined to play a starring role in the next presidential election.

How? By turning Kansas into what he calls Exhibit A for how sharp cuts in taxes and government spending can generate jobs, wean residents off public aid and spur economic growth.

"My focus is to create a red-state model that allows the Republican ticket to say, 'See, we've got a different way, and it works,' " Mr. Brownback said in a recent interview.

Coming off the largest tax cut in state history on Jan. 1, Kansas is now on the leading edge of a growing but still largely untested quest among conservative governors to create growth by dramatically revamping state tax codes.
Is this an idea limited to a few Republicans, or is it a party idea? Ask Brownback:
Mr. Brownback recounts how Senate Minority Leader Mitch McConnell reacted when the two talked recently about the work under way in Kansas.

"Mitch said, 'This is exactly the sort of thing we want to do here, in Washington, but can't, at least for now,' " Mr. Brownback said. An aide to Mr. McConnell confirmed the conversation.
Now, what exactly is Brownback doing? As The New York Times recently reported:
... the poorest 20 percent of Kansans will spend an additional 1.3 percent of their incomes, an average of $148 per year, on taxes, according to a report by the Institute on Taxation and Economic Policy.
And as Jamelle Bouie notes:
As for the top 1 percent of Kansans? Their tax burden will decrease by $21,087 a year, or a little less than the state poverty line for a two-person household.
Is this actually meant to appeal to voters? Or is it meant to appeal primarily to Republican donors? I suspect it's the latter -- as I said yesterday, Wall Street donors want the GOP running on fiscal policy rather than social issues, and many Republicans really, really want to do what these donors would like them to do.

And they apparently want to do what rich donors would like even if it alienates ordinary citizens and puts their states' fiscal health in peril. Consider what the Journal story says about Brownback's plan:
... the governor faces an array of challenges. His income-tax cuts, which took the top rate from 6.45% to 4.9% at the start of the year and are targeted to hit 3.5% by 2017, are projected to leave a significant hole in next year's state budget, which starts in July.

The official state economic-forecasting agency predicted last fall a drop of $700 million in revenue in the next fiscal year, equivalent to about 12% of this year's budget, with the decline growing steeper after that. Mr. Brownback's budget proposal for the coming year, released in January, put the figure even higher, at $800 million....

To make up for the revenue drop, the governor is pushing to preserve what was meant to be a temporary increase in the state sales tax, and to eliminate two popular deductions, including the state write-off for home-mortgage interest payments.... He also wants to transfer more than $100 million from a state highway fund to cover other expenses.
Seriously? This guy wants the party (and, probably, himself) to pursue the White House in 2016 on a plan that eliminates state home mortgage deductions? As well as keeping sales taxes high and allowing roads and bridges to crumble?

Even some GOP legislators are balking -- though we're told,
In Kansas, about a dozen centrist Republican lawmakers were targeted by conservatives and voted out of office last year, so Gov. Brownback now enjoys the backing of an overwhelmingly conservative legislature.
Corporatist teabagging!

Brownback seems to be engaging in classic Laffer-curve magical thinking:
Mr. Brownback and others believe the tax cuts will eventually pay for themselves by drawing in new businesses and stirring job growth.
In any case, Brownback is not alone -- he's doing this, Jindal is doing similar things, and so are Governors Mike Pence in Indiana, Mary Fallin of Oklahoma, and John Kasich of Ohio. I think this is what Romney/Ryan probably would have done with a willing Congress. I'm certain it's what a Republican president elected in 2016 will do if there's also a GOP House and Senate.

But can the GOP win with this? I think it's possible. I worry that the fat cats just didn't know how to use Citizens United effectively last year -- and that they may be learning from their mistakes. Then maybe, with this as inspiration, they really will buy an election for the GOP.


Victor said...

Republicans - determined to drain every last drop of "crazy" out of the laughably moronic Laffer Curve.

Only, the victims, and we potential victims, ain't laughin'.

And, when their states run out of money, and the road, bridges, airports, and railways crumble, from neglect, it won't be because this bankrupt philosophy of theirs has demostrably proven to be a really bad idea since Reagan was sworn in.
It will be because the politicians involved, weren't Conservative ENOUGH!

Being a Conservative, or a Republican, means you're a member of the Anti-Zombie Party.

To join, you have to give away your brains.

BH said...

Even though the makeup of the electorate in '16 will potentially - a crucial qualifier - be considerably different in '16 from its makeup in '04, I fear that the spectre of the '04 election will haunt me to the grave. In other words, yeah, I think it's possible for the R's to sell this crap to enough idiots to win in '16. A bit of Electoral College tinkering here & there, perhaps; some improved & better-coordinated TV strategy; a more seemingly human candidate than Mitty; a widespread tacit acquiescence among the lumpenright to laying off patently insane public pronouncements until after the election... such stuff plus unimaginable $$ to spend, and sure, I could see it happening. And that's even without any major eff-ups on the Ds' part.

Anonymous said...

One obnoxious aspect of this is that while it's possible for individual states to drain businesses from other states by offering more tax expenditures, if you try to scale that up to the national level you're trying to drain businesses from other countries. This is problematic, because the US is already a hugely favorable environment for corporations to operate in.

Steve M. said...

the US is already a hugely favorable environment for corporations to operate in.

Well, in terms of labor costs, not compared to the Third World it isn't.


Brian said...

Their mistake is doing this now instead of 2014. Four years is enough time to see the consequences.

Maybe they're hoping that the Obama recovery to the Republican recession will be strong enough to hide the worst effects of their own policies.

Unknown said...

Our TParty GOP Gov Mike Pence (IN) has the same plan but the GOP legislature is not going along. The legislators have seen TParty Mourdock voted down and don't want to suffer similar fate.