Happy New Year!
I won’t do a 2014 roundup post because year-end roundup posts generally suck.
1. A common refrain among Republicans is that cutting taxes spurs economic activity. Cutting them for the wealthiest Americans is supposed to somehow magically “trickle down” to the rest of us plebes. The problem is that you can cut taxes down to a certain point where the whole thing stops working. Consider, for instance, Kansas, where Governor Sam Brownback cut the living shit out of taxes. He said that doing so would be like a shot of “adrenaline” to the economy.
Like most states, Kansas’ state budget must be balanced every year. As it stands now, Brownback’s tax cuts have been so disastrous that the state is staring down a $280 million budget shortfall that has to be made up somehow. From Salon:
Brownback has reduced state contributions to Kansas’ pension fund — already one of the worst-funded in the nation — and cut highway funding. In an ironic twist, the vociferously anti-health reform governor is also relying on Obamacare to help fill the state’s budget gap; Brownback is transferring $55 million in revenue from a Medicaid drug rebate program expanded in the Affordable Care Act into the state’s general fund.
But those measures won’t suffice to make up Kansas’ budget shortfall, and with education and health services already cut virtually to the bone, Brownback may have no choice but to rethink his tax cuts.
That’s too bad for anyone in Kansas who relies on state services of any sort. In Forbes, one commentator says that tax cuts may not have had enough time to work (LOL), but admits,
Everybody knew the tax cuts would cost money; the fiscal note for 2014 estimated that the cuts would cost $800 million in 2014. But the tax cut package was sold as a panacea for all that ails the Kansas economy. Gov. Sam Brownback (R) predicted that the tax cuts would spur economic development, investment, and a lot of job creation. Indeed, Arthur Laffer, who developed the Kansas tax cut plan, practically guaranteed success. But it didn’t work. The Kansas economy is stagnating, the deficit has grown, and the state’s bond ratings have been embarrassingly downgraded.
And in case you were wondering,
The tax cuts’ failure to magically transform Kansas has prompted much discussion. Michael Leachman and Chris Mai at the CBPP wrote a paper skewering the Kansas experiment, saying the tax cuts cost money, the benefits inured to the rich, and the economy took a hit because of less government spending. They say that as a result, the state’s economy remains in the doldrums. The CBPP opposed the Kansas tax cuts from the beginning, and Leachman and Mai’s paper is one big “I told you so.” Even The Wall Street Journal wrote a piece noting that the Kansas failure has caused conservative politicians in other states to rethink significant tax cuts.
On another note, remember how people like Kathy Weppner and Carl Paladino feted former Texas Governor Rick Perry? Let’s see how great Texas’ economy does in our new era of $60/bbl oil. The Erie County unemployment rate is 5.7%. The national average is 5.8%. And unlike Texas, our public schools don’t teach kids that Moses was one of the Founding Fathers.
2. Here are some arguments as to why prosecco is as good as – if not better than – champagne.
3. The Dow Jones Industrial Average topped 18,000 last week. Let’s revisit a great anti-Obama op-ed from March 2009 entitled, “Obama’s Radicalism is Killing the Dow”. Ah, memories.
The cartoons are courtesy of Marquil at EmpireWire.com.
Enjoy 2015.