Congressional Republicans, led by U.S. Rep. Tom Price of Georgia and others, have reportedly decided to introduce so-called “dynamic scoring” into the preparation of the federal budget. Under that approach, they propose to just “assume” that their favored economic policies, such as tax cuts for corporations and the rich, will produce additional economic growth and jobs and thus additional federal revenue.
Then they’ll go ahead and make policy based on that additional revenue, before this supposed “economic boom” materializes. (Ironically, they call that approach “conservative”.) The first step in implementing that approach will reportedly be the replacement of Douglas Elmendorf, head of the Congressional Budget Office, with a director more amenable to GOP illusions.
With that in mind, let’s update ourselves on the experiment still playing out in the Sunflower State …
Back in 2012 and 2013, you may recall, Kansas Gov. Sam Brownback and his GOP allies in the Legislature passed significant tax reductions, for example cutting the top income-tax rate by 29 percent and exempting 191,000 small businesses altogether from the income tax. At the urging of conservative celebrity economist Arthur Laffer, they then used “dynamic scoring” to assume that their tax cuts would inspire significant job growth and revenue growth and allow them to balance the state budget.
It hasn’t panned out. None of it. Last year, state revenue was $330 million below what “dynamic scoring” had predicted, which is a lot in state with a population less than a third the size of Georgia’s. After draining reserves and making cuts that he had promised would never be necessary, Brownback narrowly won re-election by promising that the worst was over and things would improve quickly.
Within days of the election, new projections were released showing the financial picture had instead gotten significantly worse, with revenue now projected to fall below predictions by more than $1 billion over the next two years. Just to get through the rest of fiscal 2015, the state faced a $280 million shortfall, which Brownback proposes to close in part by raiding transportation and early-childhood-education trust funds and cutting pension contributions for state employees. (Even before those cuts, the state faces court rulings that education funding falls $548 million short of its own constitutional requirement of “adequacy.”)
Last week came news that revenue in January had come in $47 million lower than the already lowered projections in November had predicted, which in turn were significantly lower than the projections of last April.
Oh, and what about all the jobs that the tax package was supposed to create? Since passage of those job-growing tax cuts, the Kansas City Star reports, Kansas has ranked 38th in job growth. In 2014, we added 2.6 million jobs nationwide, but job growth in Kansas averaged 1,000 a month.
The situation has gotten so bad that Brownback, the king of tax cuts, is now proposing significant tax hikes on cigarettes and alcohol to help close the huge gap. But so far, Republican legislators are balking, insisting that they will continue to govern by credo (“We don’t have a revenue problem, we have a spending problem”) rather than pragmatism.
Again, just as in Washington.