Sheila Kennedy: As Kansas learned, faith has no place in economic policy

Keywords Opinion / Viewpoint

Here’s a question to ponder: When efforts to implement the economic policies that form the basis of current GOP ideology simply do not work as anticipated, does the party adjust its approach to conform to the evidence? Or does ideology continue to trump reality? (Pun intended.)

Kansas has provided us with a real-world answer.

When Sam Brownback was elected governor of Kansas in 2012, he vowed that the GOP’s economic theology—often characterized as “trickle down”—would make the state an economic paradise, and he immediately set about implementing that theology. Kansas’ super-majority Republican Legislature concurred, and helped Brownback eliminate income taxes for more than 100,000 businesses and significantly reduce taxes on the wealthy.

For years, it has been an article of Republican faith that such steps would greatly boost economic growth, and more than pay for themselves. Despite any real-world confirmation of this belief, Brownback was clearly a True Believer.

As a number of credible economists predicted, Brownback’s policies failed to deliver the promised prosperity; instead, they devastated the state’s economy.

State revenue fell dramatically. School years and school days were shortened, public construction projects came to a screeching halt, Medicaid benefits were reduced, and job creation moved elsewhere.

The political consequences were equally unpleasant.

In 2016, Kansas voters—Republican and Democrat alike—who were horrified by what was happening to their children’s educations and their public infrastructure—revolted. Republican primary voters voted out the legislators who were refusing to repeal the tax cuts, and in the next session, the lawmakers they installed overrode Brownback’s veto of a bill repealing the cuts. In 2018, voters elected a Democrat, Laura Kelly, as governor.

With adequate tax funding restored, Kansas resumed its support for education, infrastructure, and what columnist Harold Myerson has dubbed “the basics of civilization.”

But what about economic growth? Did the return to higher tax rates throttle down Kansas’ already faltering economy, as the ideology predicted?

To the contrary.

CNBC issues an annual list of “America’s Top States for Business.” Usually, states don’t move up or down much from one year to the next, but on this year’s list, Kansas placed 19th—which is a full 16 places higher than it placed last year.

The GOP’s response to this “real world” experiment reminds me of old-time American communists who dismissed Russia’s disastrous experience by saying Russia simply hadn’t done communism “correctly.” Similarly, President Trump and U.S. Sen. Mitch McConnell repeated the “Brownback Argument” to justify passage of 2017’s massive tax cuts to businesses and the wealthy.

As the Kansas experiment predicted, share buybacks have soared to new heights while wages and infrastructure investment have risen barely at all. Of course, the federal government—unlike the states—can run deficits, and the federal deficit is soaring. A report from the Congressional Budget Office predicts that, under current tax law, the national debt will rise from 78% of the economy to 105% over the next decade. “Beyond 2029, if current laws remained in place, deficits would grow, driving debt to its highest levels in the nation’s history,” according to the report.

Brownback resigned early in 2018 to become the Trump administration’s ambassador at large for international religious freedom. (This administration’s approach to “religious freedom” could provide grist for a different column.) Brownback is probably a good fit for the role, since his approach to public policy in general, and economic policy in particular, is clearly based upon faith, irrespective of experience and evidence.

Religion requires faith. Public policy, however, should be based upon evidence.•

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Kennedy is a professor of law and public policy at the Paul H. O’Neill School of Public and Environmental Affairs at IUPUI.

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One thought on “Sheila Kennedy: As Kansas learned, faith has no place in economic policy

  1. Having very little knowledge of the state of affairs in Kansas, I cannot comment on the critique Shiela Kennedy makes on politics and government there. I can comment about the state of affairs here in Indiana where I was born and have lived for 60 plus years. We enjoy great opportunities in Indiana. With the highest amount of manufacturing per capita of any state, we know how to make things. Agriculture is also a major part of our Indiana fabric. We also have challenges. The overall health of Indiana citizens needs to be improved. Obesity and smoking rates need to be addressed. Education, one of Shiela Kennedy’s talking points, should always be improved on a continuous basis. One of the fundamental differences between conservatives and liberals such as Shiela Kennedy, is how best to continuously improve services government provides, such as education. Liberals nearly always advocate “throwing more money” at all government programs. This works to their political advantage as it is an efficient way to “buy votes” from those that receive the public funds that are distributed. Education stands out as one government service that most citizens, regardless of political persuasion, agree is important to structure for the best outcomes possible. This is where differing opinions surface.
    Measuring the outcomes of education, namely the quality of education programs provided and how to test and assess performance of our education systems. One economic reality that impacts education greatly is funding. While we all agree we want the best education programs possible, paying for them is an undeniable necessity. Merely throwing more money at education is fiscally irresponsible and does not necessarily translate to improved outcomes and performance. The best example of what is possible to deliver excellent outcomes at low costs (that is a basic definition of “good value”) is right here in Indiana at Purdue University. In April of 2018, former Republican Governor of Indiana, Mitch Daniels, now President of Purdue University, announced that Purdue would not increase tuition for the 7th year in a row, for the 2019-2020 academic school year. In a word, “unprecedented”! What this means is that the cost of attending this world-class research university is an outstanding value …, regardless of who is paying the tab …, whether by government grants and scholarships (our tax monies) or by individual students that take out loans, or families of the students. President Daniels has worked the “cost side of the equation”. At the same time he has supported those efforts by spearheading funding campaigns to realize record-breaking contributions from alumni, corporations and private sources to fund new infrastructure, equipment, and programs vital to not only maintain, but improve Purdue University’s world-class status. Oops! I guess he is throwing more money at it. The difference is the money he is throwing at it is not on the backs of the taxpayers, but funds from successful organizations and individuals best positioned to shoulder such expenditures. They also “trust” Mitch Daniels and his leadership team to get the most bang for the buck with these funds. Something our government at all levels could stand to improve greatly.
    Finally, I don’t know if Shiela Kennedy refers to Kansas only or the nation at large when referencing share buybacks and wages and infrastructure investments barely rising at all. Wikipedia defines share buybacks as … Share repurchase (or stock buyback) is the re-acquisition by a company of its own stock. It represents a more flexible way (relative to dividends) of returning money to shareholders. Our record-breaking, strong stock market has benefited the working class with greater job and career opportunities and soaring 401-k retirement portfolios.

    As far as wages and infrastructure are concerned … what I do know is that in spite of a trade war, necessary to level the playing field after decades of “looking the other way” by political leaders on both sides of the aisle, we are enjoying one of the best, sustained, economic booms of not only this century, but the last as well. Again unprecedented. Most cannot appreciate what this means to our families, especially those college graduates looking for the career launch of that first job. or the upward mobility a boom economy delivers to those without a college education. So different from the “best years behind us” philosophy of our former President.