Column: Kansas is still bleeding, thanks to tea party economics
Give some credit to Sam Brownback, the far-right Republican governor of Kansas: He’s got tenacity. Confronted by an unbroken string of reports that his fiscal policies are leading his state to economic ruin, he hasn’t given an inch.
We’ve been chronicling the tea party ruination of Brownback’s Kansas for more than two years, since soon after he enacted a slew of dramatic tax cuts in the conviction that they would unleash stupendous economic growth.
The latest evidence to the contrary comes from the Federal Reserve Bank of Philadelphia, which has just released its monthly survey of economic indices for the 50 states.The survey compiles state-level statistics on nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and inflation-adjusted wages and salaries.
No wonder Gov. Sam Brownback...killed a quarterly report aimed at telling Kansans how his policies are affecting the state economy.
— Yael T. Abouhalkah, Kansas City Star
Kansas ranked rock-bottom in the three-month change in these metrics from July through September, with a decline of 1.18%. Indeed, it was one of only eight states that showed any decline. The U.S. average gained 0.64%. Most of the other states with negative changes were oil-and-gas producers. Kansas is too, but that industry has been a tiny factor in its economy for years.
How bad is the situation in Kansas? So bad that in August 2015, the Brownback administration stopped publishing a semi-annual report of the state’s economy online; henceforth, members of the public have to make a special request for the document.
A spokesman for the governor said the step was taken because the reports had become the “the subject of careless scrutiny” and were “confusing.” That’s like saying that people might be confused by the setting sun into thinking that night is coming.
Yael Abouhalkah, a Kansas City Star columnist had been tracking the Brownback economy assiduously, got his hands on two recent reports anyway, for November 2015 and February 2016. He found them not confusing at all.
They painted a “doom and gloom scenario” in which the gross state product had declined from 2014 through 2015, and that growth in personal income, nonfarm employment and private industry wages all trailed the region and the country as a whole. Sales tax collections were up, but that’s because Brownback enacted two sales tax increases to compensate for his other tax cuts. The general effect was to burden the middle class and poor with costs that wealthier Kansans escape.
“No wonder Gov. Sam Brownback … killed a quarterly report aimed at telling Kansans how his policies are affecting the state economy,” Abouhalkah observed. (The Star laid off the indispensable Abouhalkah at the end of September. He continues reporting on Kansas affairs at yaelabouhalkah.com.)
The Kansas experience is important because the notion that dramatic tax cuts pay for themselves by spurring economic growth still unaccountably has an allure for conservative policymakers, despite overwhelming evidence to the contrary. Brownback, who took office in 2010, promised that “our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy.” He was seconded by his tax advisor, the notorious Arthur Laffer, who forecast “enormous prosperity” for the state.
The tax package Brownback enacted in 2012 cut the top personal income tax rates sharply. The rate on income under $30,000 was pared to 3% from 3.5%. Pass-through business income was made fully tax-exempt. The law increased the standard deduction, but also eliminated several tax credits that assisted the poor.
In follow-on changes the next year, the top income tax rate was cut further. But other cuts were reversed, effectively raising taxes for the middle class and working class. In all, as was documented by the Washington-based Center for Budget and Policy Priorities, the changes cut the taxes of the wealthiest 1% of Kansans by 2.2% and raised them for the poorest 20% by 1.3%.
It should go without saying that far from paying for themselves, these cuts have blown a huge and growing hole in the state budget. Income tax collections are more than 22% below their pre-cut levels. Schools, universities and road repairs all have taken a hit in spending. As the chart below shows, the Kansas economy has lagged behind the U.S. and neighboring Missouri for years. We’ve added a line to show the progress of the economy of California, which has the reputation for being a spendthrift but has gotten its fiscal house in order by raising taxes.
Brownback and his Republican colleagues have responded by hammering the neediest residents of his state, enacting an outstandingly punitive and irrelevant package of welfare reforms, barring the spending of relief funds on movies, at swimming pools or on “cruise ships,” as well as “adult” clubs or stores. (But it’s OK to spend the money on guns.) The measure also placed a $25 daily limit on ATM withdrawals using the debit cards issued to recipients, which made the cards useless for major spending, such as paying the rent and exposed users to relentless ATM fees. The state’s motto evidently was, OK if the banks drain your funds, but don’t dare use the money at a swimming pool.
Who’s to blame for this? The state’s voters are. While they already were feeling the pain, they reelected Brownback to a second term in 2014, at which point things got worse. Why? Maybe the electorate revels in the state’s role as a “laboratory for supply side nostrums,” as economist Menzie Chinn of the University of Wisconsin called it recently. Some of those who voted for Brownback deserve what they’re getting. But they’re imposing the disaster on a lot of innocent people.
7:56 a.m., Nov. 1: This post has been updated to report that columnist Yael Abouhalkah was laid off in September by the Kansas City Star.