THERE ARE TWO SIDES TO A BUDGET LEDGER…. We’ve talked quite a bit recently about how voters are increasingly unimpressed with the new crop of far-right Republican governors, each of whom are pushing severe austerity measures during difficult economic times. To that end, Politico has a similar report, though the article has some flaws.
The first is the underlying assumption that these GOP governors are doing the right thing, and ungrateful constituents just don’t realize it.
As Josh Marshall noted earlier, the Politico article “perfectly captures the assumptions [of] most national political reporters,” by stating as fact that “‘we’ all agree that the message of the 2010 election was that the public has decided that government is too big and wants dramatic budget cuts. But now it seems like the governors who are really going whole hog on this … are getting really unpopular. Ergo, the public isn’t really ready for the ‘grown-up conversation’ about budgets that it seemed they might be.”
But there’s another angle that’s worth keeping in mind. McClatchy’s Tony Pugh reports that some of the states slashing key priorities are facing budget problems because of tax cuts the states couldn’t afford.
In his new budget proposal, Ohio Republican Gov. John Kasich calls for extending a generous 21 percent cut in state income taxes. The measure was originally part of a sweeping 2005 tax overhaul that abolished the state corporate income tax and phased out a business property tax.
The tax cuts were supposed to stimulate Ohio’s economy and create jobs. But that never happened once the economy tanked. Instead, the changes ended up costing Ohio more than $2 billion a year in lost tax revenue; money that would go a long way toward closing the state’s $8 billion budget gap for fiscal year 2012.
“At least half of our current budget problem is a direct result of the tax changes we made in 2005. A lot of people don’t want to hear that, but that’s the reality. Much of our pain is self-inflicted,” said Zach Schiller, research director at Policy Matters Ohio, a liberal government-research group in Cleveland. […]
Across the country, taxpayers jarred by cuts to government jobs and services are reassessing the risks and costs of a variety of tax reductions, exemptions and credits, and the ideology that drives them. States cut taxes in hopes of spurring economic growth, but in state after state, it hasn’t worked.
Arizona’s budget crisis is the direct result of tax cuts. A third of Texas’ budget shortfall is tied to a property tax reduction. Louisiana would have a budget surplus right now, were it not for its income tax cut.
And this is largely before the new governors took office this year and — you guessed it — started cutting taxes, assuming the tax breaks would lead to more growth.
Their willingness to forgo needed tax revenue is hard to fathom, as states face a collective $125 billion budget shortfall for the coming fiscal year, said Jon Shure, the deputy director of the State Fiscal Project at the Center on Budget and Policy Priorities, a respected liberal research institute in Washington.
“To be cutting taxes when you’re short of revenue is like saying you could run faster if you cut off your foot,” Shure said.
“States have suffered an unprecedented collapse in revenue, and they are at the bottom of a deep hole looking up, and these governors are saying, ‘You need a ladder to climb out, but I’m going to give you a shovel instead, so you can dig the hole deeper.’ “
When he says “these governors,” he’s referring specifically to Republicans like Ohio’s Kasich, Wisconsin’s Walker, Michigan’s Snyder, and Florida’s Scott, all of whom are eyeing deep cuts that will hurt struggling families, while also cutting taxes, exacerbating their own budget problems.
Somehow, the Politico piece neglected to mention any of this.