Governor Sam Brownback of Kansas was the poster boy of supply side economics…cutting taxes to stimulate the Kansas economy in a pure experiment of Reagan economics. Only it hasn’t worked out the way he and the GOP planned…in fact it has turned out exactly as you would expect when you cut tax revenues: record deficits and little business growth:
In February 2015, three years into the supply-side economics experiment that would upend a once steady Midwestern economy, a hole appeared in Kansas’ finances.
To fill it, Gov. Sam Brownback took $45 million in public education funding. By April of this year, with the hole at $290 million, Brownback took highway money to plug it. A month later, state money for Medicaid coverage went into the hole, but the gap continued to grow.
Today, the state’s budget hole is $345 million and threatens the foundation of this state, which was supposed to be the setting for a grand economic expansion but now more closely resembles a battleground, with accusations and lawsuits flying over how to get the state’s finances in order.
The yawning deficits were caused by huge tax cuts, championed by Brownback and the Republican-dominated Legislature, that were supposed set the economy roaring. They didn’t.
To those of you who live in Wisconsin, some of these things may sound familiar to you…although WI hasn’t yet sunk this deeply into the trickle down sink hole. But there are already complaints around funding for education from around Wisconsin and they are just getting going. But here’s what we can expect if things don’t change here:
“The finances are making it hard to meet the needs of our kids,” he (Steve Jameson,the principal of Columbus Kansas’ Park Elementary) said. “The climate makes it hard to recruit good teachers. If you hear the legislators bashing you all the time, the governor bashing you all the time, you can choose to go to another state.”
And this Reagonomics is exactly what Donald Trump is promising on a national level and economists are warning about trillion dollar increases in the deficit if he reduces tax revenues…something like we are seeing in the test bed of Kansas:
It was a risk Brownback ran when he overhauled the state budget based on an interpretation of fiscal conservatism that dramatically cut personal income taxes.
The state would thrive, he pledged, because the tax cuts would help keep businesses and smart, young Kansans in the state, not fleeing “to Houston, or Dallas, or Chicago or somewhere else.”
“It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business,” Brownback wrote in 2012. “It will leave more than a billion dollars in the hands of Kansans. An expanding economy and growing population will directly benefit our schools and local governments.”
Well it hasn’t been happening…so what do you do in this situation? Repeal the tax cuts? Hell no:
Unwilling to scale back the income tax cuts, the state did increase the sales tax. Now Kansas has the second-highest sales tax in the nation, and such reliance on sales taxes has saddled the state with additional problems: Deflation is dropping the prices of goods and the taxes the state collects on them.
Kansas has the second highest sales tax in the nation? Kansas? Wha?
Is this where Wisconsin is heading now that the GOP has solidified it’s hold on the state capitol? Is this the path that Donald Trump will lead the nation down? Pay attention to the ailing canary in Kansas. Supply side is an interesting theory but we can’t afford to live there.
But you know, how could anything go wrong?
“We’re going to continue to grow the economy,” Brownback has said in response to questions about each new revenue shortfall.