UPDATE VI: "In 2012, voters in California approved a measure to raise taxes on millionaires, bringing their top state income tax rate to 13.3 percent, the highest in the nation. Conservative economists predicted calamity, or at least a big slowdown in growth. Also that year, the governor of Kansas signed a series of changes to the state's tax code, including reducing income and sales tax rates. Conservative economists predicted a boom.
Neither of those predictions came true. . .
California's economy grew by 4.1 percent in 2015, according to new numbers from the Bureau of Economic Analysis, tying it with Oregon for the fastest state growth of the year. That was up from 3.1 percent growth for the Golden State in 2014, which was near the top of the national pack.
The Kansas economy, on the other hand, grew 0.2 percent in 2015. That's down from 1.2 percent in 2014, and below neighboring states such as Nebraska (2.1 percent) and Missouri (1.2 percent). Kansas ended the year with two consecutive quarters of negative growth -- a shrinking economy. By a common definition of the term, the state entered 2016 in recession.
Other effects of the Kansas tax cuts, which were meant to spur entrepreneurship, are well-documented.
While state officials anticipated that the reductions would create a shortfall in the state budget, tax revenues have been consistently below even those expectations. Standard & Poor’s and Moody’s Investors Service have signaled that they could reduce Kansas’s credit rating, indicating there is a chance the state cannot pay its bills."
Read the Washington Post, The interesting thing that happened when Kansas cut taxes and California hiked them.
UPDATE V: The Republi-con modus operandi: tax cuts for the rich, deficits and budget crisis, tax increases on the poor, repeat.
Read the Washington Post, Kansas lawmakers want the poor to pay for tax cuts for the rich.
UPDATE IV: "What's the matter with Kansas now? Oh, you know, just a small budget crisis brought on by its Republican governor's radical tax cuts. This week, the state discovered it would have to cut $279 million by June in order to balance its books, then slash another $436 million during the following fiscal year. For Kansas, this is a hefty amount of money. The entire state budget legislators approved in May was just $6.3 billion.
Back in 2012, the state's recently re-elected Republican governor, Sam Brownback, turned Kansas into a petri dish for conservative fiscal policy after he signed into law a massive tax cut that dropped rates for top earners and eliminated taxes entirely for some businesses. Brownback and conservative tax guru Arthur Laffer promised that the cuts would bring "enormous prosperity" to the state by making it more competitive. But jobs growth has lagged in Kansas, and this summer, the state government found itself nearly $300 million short on revenue. To cope, it began burning through its reserve funds, and Moody's in turn downgraded the state's credit rating."
Read Slate, Thanks to Massive Republican Tax Cuts, Kansas Is Facing a Budget Crisis.
UPDATE III: "There might be a worse idea than cutting spending during a depression, but I doubt it. . .
That's right: cutting spending in a slump might actually make debt problems worse."
Read the Washington Post, Austerity has been an even bigger disaster than we thought.
So much for the Republi-con myth of expansionary austerity.
UPDATE II: "In 2010, after two and a half terms in the Senate, Brownback made a bid for the governor’s mansion. Riding the Tea Party wave, he swept his opponent in a landslide, promising a new age for Kansas politics.
Brownback didn’t just keep his promise, he embarked on a radical 'real live experiment' in conservative governance. As he later explained to the Wall Street Journal, '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.' '
With advice from Arthur Laffer—the long-discredited guru for supply-side economics—and support from a new band of conservative lawmakers in the Kansas statehouse, the newly minted governor pursued a path of rigid orthodoxy. His signature move was a massive tax cut: He eliminated the top income bracket of 6.45 percent, reduced the middle bracket from 6.25 percent to 4.9 percent, reduced the lowest bracket from 3.5 percent to 3 percent, and ended taxes on certain kinds of small-business income. This, he promised, would increase disposable income and create thousands of jobs.
In reality, however, Kansas’ job growth stagnated in 2012 and income growth fell. Far from a stimulus plan, Brownback’s tax cuts were a massive program of redistribution for the rich. . .
In 2013 he proposed another round of tax cuts that would eliminate income taxes and maintain a high sales tax. Critics blasted the plan, noting the extent to which it was a massive tax increase on the poorest Kansans: For instance, replacing 50 percent of income tax losses with a sales tax would raise taxes on the lowest earners by 2.5 percent. But Brownback promised new revenue ($777 million in state earnings) and broad prosperity. 'We’re on a path of growth and job creation, so I say, 'Come to Kansas,' ' he said. 'We’re paving the way to make Kansas the best place in America to raise a family and run a business.'
A year later Kansas is among the most dysfunctional states in the country. Even after cuts in schools, colleges, libraries, and social services, Kansas can’t keep up with expenses. This year, it faced a huge shortfall in personal income tax receipts, and had to end tax rebates for food and child care to help fill the hole. And overall, it faces a $900 million budget shortfall by 2019, even as the top income tax rate is scheduled to decline to 3.9 percent by 2018. Both Moody’s and S&P have downgraded the state’s bond rating, and economic growth has been poor. Far from giving Kansas a bright new future, Brownback plunged it into chaos."
Read Slate, The Kansas Miracle.
In Kansas they drank the kool-aid.
UPDATE: "[R]ecently, Kansas went all-in on supply-side economics, slashing taxes on the affluent in the belief that this would spark a huge boom; the boom didn’t happen, but the budget deficit exploded, offering an object lesson to those willing to learn from experience. . .
In 2012, however, Democratic dominance finally became strong enough to overcome the paralysis, and Gov. Jerry Brown was able to push through a modestly liberal agenda of higher taxes, spending increases and a rise in the minimum wage. California also moved enthusiastically to implement Obamacare. . .
Needless to say, conservatives predicted doom. . .
What has actually happened? There is, I’m sorry to say, no sign of the promised catastrophe.
If tax increases are causing a major flight of jobs from California, you can’t see it in the job numbers. Employment is up 3.6 percent in the past 18 months, compared with a national average of 2.8 percent; at this point, California’s share of national employment, which was hit hard by the bursting of the state’s enormous housing bubble, is back to pre-recession levels. . .
And, yes, the budget is back in surplus. . .
So what do we learn from the California comeback? Mainly, that you should take anti-government propaganda with large helpings of salt. Tax increases aren’t economic suicide; sometimes they’re a useful way to pay for things we need. Government programs, like Obamacare, can work if the people running them want them to work, and if they aren’t sabotaged from the right. In other words, California’s success is a demonstration that the extremist ideology still dominating much of American politics is nonsense."
Read The New York Times, Left Coast Rising.
I've often suggested that Obama should just
call the Republi-con bluff -- implement some of their wacky ideas and watch CONservative ideas implode. Well in Kansas they
drank the kool-aid.
"Governor Sam Brownback is facing an organized revolt from centrist Republicans, over 100 of whom just endorsed the presumptive Democratic nominee for governor, so disgruntled are they with the effects of Brownback’s rule.
In many ways, Brownback’s term has been a perfect experiment in Republican governance. Take a crusading conservative governor, give him a legislature with Republican super-majorities so he can do pretty much whatever he wants, and let him implement the right’s wish list. The result was supposed to be a nirvana of economic growth and budgetary stability. But the opposite happened.
The disastrous results of Brownback’s economic and fiscal policies demonstrate that it’s one thing for your average Republican to go around saying things like 'cutting taxes raises revenue!' even if nearly every economist agrees that the idea is absurd (Greg Mankiw, chairman of the Council of Economic Advisers under George W. Bush, famously called the purveyors of this idea 'charlatans and cranks'). It’ll never really be tested, at least not in a context where there aren’t so many other variables at play that any inconvenient results can be explained away. Republicans know that it’s bogus, but they like the way it sounds; after all, who wouldn’t love a free lunch? But if you bet a single state’s future on the idea — and you have the power to take it to an extreme — you’re going farther than anyone in Washington ever has to go.
That’s what Sam Brownback did. In 2012 and 2013, Brownback and Republicans in the legislature cut income taxes twice, eliminated taxes on corporate profits that are “passed through” to individuals (making it the only state that does this), and since they’re Republicans, made changes to the tax code that had the effect of raising taxes on the poor (the Center on Budget and Policy Priorities has a good explanation of the tax changes and their effects). The governor has said his goal is to eventually eliminate the income tax completely.
And what happened? At a time when most states are seeing higher revenues as the country recovers economically, Kansas’ revenues have plummeted. The result has been cuts to schools, cuts to higher education, cuts to libraries, and cuts to local health centers. Kansas’ job growth and income growth are lagging the nation’s. In response to the fiscal difficulties, Moody’s recently lowered the state’s bond rating. . ."
When he was elected governor, some Washington conservatives touted Sam
Brownback as a future presidential contender. Once he implemented the
conservative economic agenda and showed what a dynamic economy and
pleasing government balance sheet it produced, he’d be able to take the
message nationwide as a demonstration of the power of conservative
ideas. Nobody’s saying that anymore. Brownback is
trailing his
probable Democratic opponent. In a state as conservative as Kansas
(where Mitt Romney beat Barack Obama by 22 points), you have to screw up
pretty badly to be in that position. And saying, 'hey, didn’t we all
agree that tax cuts raise revenue?' probably won’t bail him out."
Read the Washington Post,
GOP governor implements GOP economics, disaster ensues.
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