The verdict is in, and it’s time for conservatives to face the cold hard facts.
Right-wing trickle-down Reaganomics doesn’t work.
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It doesn’t work internationally, it doesn’t work nationally and it doesn’t work at the state level.
And we know this is true thanks in part to Kansas Gov. Sam Brownback’s 2010 decision to turn his state into a “real live experiment” in Reaganism and the religion of trickle-down economics.
Quickly after taking office, Brownback and the Tea Party-controlled legislature passed massive tax breaks for the state’s 1%; repealed all income taxes for more than 100,000 businesses; tightened welfare requirements, making life harder for the working poor and poor children; privatized the delivery of Medicaid so his corporate buddies could have a bigger slice of the state action; cut $200 million from the education budget; eliminated four state agencies; and laid off 2,000 government employees.
In 2013, after he signed the largest tax cut in Kansas history with the help of legislators backed by the American Legislative Exchange Council (ALEC), he told The Wall Street Journal, “My focus is to create a red-state model that allows the Republican ticket to say, ‘See, we have a different way, and it works.'”
And in 2016, six years after Governor Brownback took office and started shaping Kansas into the “red-state model,” you’d be hard pressed to find anyone in their right mind, Republican or Democrat, who would say that the economy in Kansas “works.”
Back when Governor Brownback initiated the plan, conservative economists like Arthur Laffer predicted a massive boom in the state, and the CATO-inspired Kansas Policy Institute projected that his tax cuts would create $323 million in new local revenues by the year 2018.
In reality, during the first year of Brownback’s budget, the state lost $688 million and job growth shrank to 1.1 percent below the national average.
And it didn’t get better.
In following years, job growth dropped to one-tenth of 1 percent, and personal income growth slowed from 6.1 percent to 3.6 percent.
According to the Institute of Taxation and Economic Policy, the poorest one-fifth of households in Kansas, households that make less than $23,000 a year, saw their average taxes go up about $200 a year, while the richest 1% are saving an average of $25,000 a year.
That means that under Sam Brownback’s “red state model,” the richest 1% in Kansas are SAVING $2,000 more in TAXES than the bottom fifth of households EARN in a year in INCOME.
As a direct result of this policy, now one health insurance CEO is taking his company across the border to Missouri, just to get away from the cruelty of Brownback’s so-called “red state model.”
Jeff Blackwood, the president and CEO of Pathfinder Health Innovations, recently published a blog post called “Kansas Isn’t Home Anymore,” announcing that Pathfinder’s headquarters will be moving from Kansas to Missouri.
In the post, Blackwood points out that Republican Kansas Governor Brownback has worked as an ultraconservative tool of the Koch Brothers and ALEC to make Kansas into “a test center of ‘trickle down’ economics” where “the burdens for the shortfalls rest on the shoulders of those who can least afford it, children and the developmentally disabled.”
He points out that, “One of Brownback’s first actions was to close the [city of] Lawrence’s office for Kansas Social & Rehabilitation Services,” which provided services for low-income children and the developmentally disabled.
That cut was supposed to save $400,000 per year, but Blackwood points out that Brownback chose to pursue “a personal vendetta at the expense of the disabled” when he then proceeded to squander more than $400,000 on lawyers and auditors to attack the Kansas Bioscience Authority.
Beyond that, Blackwood notes that when Brownback privatized Medicaid (which is what Paul Ryan wants to do with Medicare nationwide) the results were even more disastrous for the state.
Blackwood personally saw the impacts as the president and CEO of a private health insurance company, and he points out that the cuts to Kansas’s Medicaid program led to significant delays in eligibility, an inexplicable loss of coverage, an increase in caseloads and struggles for providers to get paid.
Blackwood ends his lengthy post saying that, “I can’t, in good conscience, continue to give our tax money to a government that actively works against the needs of its citizens; a state that is systematically targeting the citizens most in need, denying them critical care, and reducing their cost of life as if they’re simply a tax burden that should be ignored.”
A stagnant economy, failing job growth, falling personal income, massive budget shortfalls, loss of healthcare coverage, significant delays in health care services and CEOs who take up stakes and move their businesses across the border: These are the results of Brownback’s experiment in rabid “free-market” trickle-down economics.
What’s happening in Kansas is no exception though.
ALEC is pushing this broken and cruel “red-state model” of Reaganomics in every state across the country, and they’ve successfully implemented it to varying degrees in Wisconsin, Michigan, Ohio, Florida, Texas, Arizona, West Virginia and the list unfortunately goes on.
There is a proven alternative to the “red state model,” though, because California has been running what might be called a “blue state” experiment since 2012 when voters increased the state’s top income tax rate to 13.3 percent, the highest in the nation.
In 2014, two years after that tax hike went into effect, California’s economy grew by 3.1 percent.
One year later it grew by 4.1 percent, tying with Oregon for the fastest state growth of the year, and resulting in a budget surplus of nearly $900 million.
Of course, conservatives who pretend to understand economics, like Laffer, predicted a disastrous slowdown in growth in California, and they were as wrong about tax hikes California as they were wrong about tax cuts Kansas.
There’s a simple lesson here: Assume the opposite of whatever Laffer and his Reagan leftovers predict.
Brownback’s experiment has proven that conservative “trickle-down economics” doesn’t benefit anyone except for the superrich and large corporations, and it undoubtedly and unnecessarily hurts the poorest and sickest Americans.
If we genuinely want to help low-income Americans, if we want to promote small businesses, if we really want to see our states grow, we need lawmakers across the country to reject the failed ALEC-backed “red state model” and to follow the proven model of raising taxes on the billionaire class and investing in the state economy.