Yes, I’m responsible for that smell… — Saul Loeb/AFP
❝ When a governor announces an economic theory as a solution to a state’s fiscal problems, while challenging all comers to observe the results, that’s something I want to pay attention to. And so for the past five years, I have been watching the public-policy experiment in Kansas with great fascination.
❝ With the state legislature now rejecting the governor’s experiment, we can move onto to the next phase: Not recrimination and blame, though there is lots of that going around. Instead, I want to look at how the experiment played out, and what lessons there are to be learned from it.
❝ A quick refresher: Kansas’s Republican Governor Sam Brownback pushed through a substantial change in the state tax code, centered around lowering rates. He promised it would lead to more growth, tax revenue and jobs. Instead, there have been persistent tax revenue shortfalls, huge spending cuts and disappointing job creation. As my Bloomberg View colleague Justin Fox wrote, Kansas is badly lagging its neighbors, all of which have similar economies. Even worse, people (especially young people) are fleeing the state. Kansas was one of the highest outbound migration states in 2014, 2015 and 2016. The vast majority of people who have moved out were either transferring when their companies left or were seeking employment elsewhere.
Before Brownback, this wasn’t the case. As recently as 2012 and 2011, Kansas didn’t make the lists of states with high migratory outflows.
❝ Incentives matter: There was a large behavioral incentive, but it was for financial engineering. Brownback eliminated taxes on limited liability companies and sole proprietorships. It isn’t surprising that lots of companies and individuals made these legal structural changes. But this was merely an alteration in form with no beneficial economic incentives.
Set reasonable benchmarks for success or failure: Brownback, despite making large promises, wasn’t specific in how success or failure should be measured…
❝ Have an exit strategy: Because Kansas didn’t focus on specific and measurable benchmarks, it had no way to know when to pull the plug. This is important, as the legislature was forced to wait until things were unequivocally bad and getting worse before taking steps to end the experiment. An exit strategy based on specific goals would have saved a lot of unnecessary austerity-induced pain for the people of Kansas.
❝ Share information freely: We knew the Kansas experiment was going badly when the executive branch decided to stop reporting economic news about it…
Win or lose, take responsibility: Broad proof of the failure of Brownback’s tax cuts led the legislature to begin unraveling them. Rather than admitting defeat, Brownback vetoed its actions. His refusal to accept a verdict reflects a failure to recognize and take responsibility for his own policies.
❝ By just about every measure, Kansas’ economic laboratory experiment is now over, and the results are in. Supply-side tax cuts as executed in Kansas don’t generate more economic growth or create more jobs. They reduce tax revenue and forced the government to cut spending on essential goods and services like roads and schools.
RTFA for more detail. Unless you’re a Republican True Believer the cause-and-effect relationships are clear. Evidence is a bear. That the mass of Kansas voters went along with Brownback’s incompetence for so long speaks only to their obedience, lack of independence, loyalty to ideology in the face of daily evidence of failure.
Barry Ritholtz is one of my favorite writers on matters financial in the United States. That he has a fey sense of humor, refers to himself as a Recovering Republican, allegiance to evidence and facts over ideology is icing on the fiscal cake.
Horse-and-buggy ideology doesn’t turn this into wind power
❝ Republican lawmakers in Kansas put an end to the state’s failed tax reform experiment on Tuesday, overriding the governor’s veto after three attempts to pass a tax-hiking bill this year.
The new law raises income and business taxes closer to pre-reform levels — a move Republicans had been resisting for years. But pressure had been mounting to do something. The drastic tax cuts enacted five years ago left the state in a fiscal mess, unable to balance its budget and properly fund its public schools.
❝ Gov. Sam Brownback’s signature tax reform closely mirrors the tax plan that President Donald Trump is trying to get through Congress. In fact, they were designed by the same supply-side economists.
❝ The fate of Kansas’s tax experiment provides many clues about what could happen if Congress goes along with Trump’s vision for tax reform.
❝ Economic growth predictions were wrong…
Instead, the Kansas economy tanked. For two years in a row, the state’s credit rating has been downgraded because of its budget problems. Job creation and economic growth is far below the national average. The state is facing a budget shortfall of about $889 million in the next two years…
❝ Moderate Republican lawmakers in Kansas are now in open rebellion, scrambling to find ways to roll back the tax cuts as the state looks for ways to balance its budget.
Republicans have been offering the same golden lies about trickle-down economics since the days of President Herbert Hoover. Failure has resulted every time voters and Congress hand over a chance to put theory into practice. Reagan came closest to succeeding for a year or two – only because he didn’t try to support the theories with the massive level of lying estimates of successful growth – and tax cuts – demanded by Brownback and Trump Republicans.
The inevitable still resulted. Recession, downgraded credit ratings, working families and their children get the bill – and screwed, as usual.
❝ Americans generally feel they’re being over-taxed, especially around this time of the year . . . The Organization for Economic Cooperation and Development analyzed how 35 countries tax wage-earners, making it possible to compare tax burdens across the world’s biggest economies. Each year, the OECD measures what it calls the “tax wedge,” the gap between what a worker gets paid and what they actually spend or save. Included are income taxes, payroll taxes, and any tax credits or rebates that supplement worker income. Excluded are the countless other ways that governments levy taxes, such as sales and value-added taxes, property taxes, and taxes on investment income and gains.
While you’re at it – reflect that those tax dollars in other countries get folks better healthcare, generally better education and jobs for their kids, better roads and public transit – especially high speed rail. They don’t go to the world’s largest military-industrial welfare plan, special loopholes for Big Pharma, the NFL, etc..
Thanks, Barry Ritholtz
❝ In 2015, a blockbuster study came to a surprising conclusion: Middle-aged white Americans are dying younger for the first time in decades, despite positive life expectancy trends in other wealthy countries and other segments of the US population.
The research, by Princeton University’s Anne Case and Angus Deaton, highlighted the links between economic struggles, suicides, and alcohol and drug overdoses…Since then, Case and Deaton have been working to more fully explain their findings…
❝ In a new 60-page paper, “Mortality and morbidity in the 21st Century,” out in draft form in the Brookings Papers on Economic Activity…the researchers weave a narrative of “cumulative disadvantage” over a lifetime for white people ages 45 through 54, particularly those with low levels of education.
Along with worsening job prospects over the past several decades, this group has seen their chances of a stable marriage and family decline, along with their overall health. To manage their despair about the gap between their hopes and what’s come of their lives, they’ve often turned to drugs, alcohol, and suicide.
Meanwhile, gains in fighting heart disease have stalled, and rates of obesity and diabetes have ploddingly climbed.
Here are the five big takeaways from the researchers’ new opus.
❝ 1) Suicides, alcohol, and drug overdose deaths have gone up across the entire country…It’s not just a rural problem…
2) Deaths from chronic diseases such as diabetes have been rising…
3) The least-educated Americans are suffering the most…
4) Other nonwhite racial groups aren’t experiencing the same mortality uptick — so it’s not just about income…
5) This story is unique to the US…
❝ If American wants to turn the trend around, then it has to become a little more like other countries with more generous safety nets and more accessible health care, the researchers said. Introducing a single-payer health system, for example, or value-added or goods and services taxes that support a stronger safety net would be top of their policy wish list…
America right now is, of course, moving in the opposite direction under Trump, and shredding the safety net…
No one ever complained about American voters being quick to react to economic and political dangers threatening their lives and lifestyle. The opposite prevails courtesy of pundits, priests and – I would venture – a lockstep 2-party political hierarchy that severely limits opportunities for change outside the boundaries of obedience.
It may be that the contemptible, sneering class warfare now being inflicted in tandem by Trump and neo-con Republicans will provoke sufficient opposition to rise fast enough and deep enough to flush out the Democratic Party deadwood. I hope so.
That doesn’t mean I’m confident.
❝ The text of a bill introduced in the US House of Representatives in early February to dramatically change the way the government regulates environmental issues was finally posted online for public viewing, and it gets right to the point. The statement of purpose for H. R. 861 is only one line long: “To terminate the Environmental Protection Agency.”
Below that is the single directive the bill would require, if passed: “The Environmental Protection Agency shall terminate on December 31, 2018.”
❝ While it would be illegal for president Donald Trump to unilaterally abolish the EPA—which he has said he’d like to to — it is technically within the power of Congress to do so. The president does plan to sign executive orders to limit the EPA’s climate change-related work as soon as his nominee to run the agency, Scott Pruitt, is confirmed, according to sources within the Trump administration.
❝ H.R. 861 was introduced to the House by Matt Gaetz, a Republican from Florida who took office in January. It’s co-sponsored by Thomas Massie, a Republican from Kentucky, who introduced another one-line bill last week, to “terminate the Department of Education.” The text of H.R. 899 is not yet posted online, but on his website Massie promises it has only eight words: “The Department of Education shall terminate on December 31, 2018.”
It’s been 63 years since the first time I heard an American say they wished to have public education abolished. They were unashamed of the elitism they embraced. The mother of a friend simply said, “You have no right to an education unless your family can pay for it.”
I admit I was shocked. I didn’t know that people so completely caught up into the value of money and privilege lived on this planet. Not in my neighborhood. I’m not shocked anymore. Surviving a lifetime of cowardly rationales for TweedleDeeDumb two-party politics ain’t easy; but, it didn’t kill me. Although a number of war-lovers – mostly chickenhawks like Trump – tried their best to send me and my peers off to wars halfway around the planet to “defend” this nation.
But, then, I grew up in a time when our money didn’t need God imprinted on it to have any value and the creeps who fronted for weapons manufacturers were open about working for the War Department. Generations since are handicapped by listening to years of nothing but politically correct slogans governing foreign and domestic policy.
❝ Americans with no more than a high school diploma have fallen so far behind college graduates in their economic lives that the earnings gap between college grads and everyone else has reached its widest point on record…
College graduates, on average, earned 56 percent more than high school grads in 2015, according to data compiled by the Economic Policy Institute. That was up from 51 percent in 1999 and is the largest such gap in EPI’s figures dating to 1973.
❝ Since the Great Recession ended in 2009, college-educated workers have captured most of the new jobs and enjoyed pay gains. Non-college grads, by contrast, have faced dwindling job opportunities and an overall 3 percent decline in income, EPI’s data shows…
College grads have long enjoyed economic advantages over Americans with less education. But as the disparity widens, it is doing so in ways that go beyond income, from homeownership to marriage to retirement. Education has become a dividing line that affects how Americans vote, the likelihood that they will own a home and their geographic mobility.
❝ The dominance of college graduates in the economy is, if anything, accelerating. Last year, for the first time, a larger proportion of workers were college grads – 36 percent – than high school-only grads – 34 percent, Carnevale’s research found. The number of employed college grads has risen 21 percent since the recession began in December 2007, while the number of employed people with only a high school degree has dropped nearly 8 percent…
❝ The split is especially stark among white men. For middle-age white men with only high school degrees — the core of President-elect Donald Trump’s support — inflation-adjusted income fell 9 percent from 1996 through 2014, according to Sentier Research, an analytics firm. By contrast, income for white men in the same age bracket who are college graduates jumped 23 percent.
The AP is starting to fill the gap in journalistic choice formerly led by reporting from Reuters and the NY TIMES. Not that the AP has raised standards. Just maintained what they always had while the competition oozes downhill. Especially Reuters since their purchase by Thomson.
RTFA, please. Many more topics of interest needing discussion and thoughtful reflection. As an example: “…Women with college diplomas enjoy an 8-in-10 chance of their first marriage lasting 20 years…That’s double the odds for women with just high school degrees.”
Who’da thunk it?
❝ New Hampshire is the least religious state in the U.S., edging out Vermont in Gallup’s 2015 state-by-state analysis…Mississippi has extended its eight-year streak as the most religious state, followed closely by neighboring Alabama…
Hmmm. Think education has anything to do with this?
❝ Gallup classifies Americans into three religious groups based on their responses to a question measuring religious service attendance and how important religion is in their daily life.
Very religious Americans are those who say religion is important to them and who attend services every week or almost every week.
Nonreligious Americans are those for whom religion is not important and who seldom or never attend religious services.
Moderately religious Americans meet just one of the criteria, either saying religion is important or that they attend services almost every week or more.
❝ Gallup began tracking several religious indicators on a daily basis in 2008. Some of these indicators have shown significant change over this time, most notably the percentage of Americans who report no formal religious identity when asked to name their religious preference. But the percentage classified as very religious on the basis of their attendance and view on the importance of religion has stayed remarkably stable.
Yup. My view on the not-usefulness of religion hasn’t changed since 1951. Been an atheist ever since. Extended the depth of that understanding through studies in science and philosophy in following years.