Reality Bites….

It’s really a shame that American policymakers are so allergic to evidence, because we have recently had a couple of natural experiments testing the GOP’s most fervent economic ideologies, and we could learn a lot from both of them.

Most people who follow the news are aware of Sam Brownback’s effort to make Kansas a shining example of economic growth to be achieved by drastic reductions in state taxes. To say it didn’t go well would be an understatement. Eventually–after brutal cuts to public education, infrastructure and public services and no sign of the promised offsetting economic growth–more rational Republicans in the state legislature forced him to accept tax increases.

Fewer people are aware of an even more dramatic experiment in Colorado.

The story began with the 2008 recession; like many other municipalities, Colorado Springs was experiencing fiscal distress.

To fill a $28 million budget hole, Colorado Springs’ political leaders—who until that point might have been described by most voters as fiscal conservatives—proposed tripling property taxes. Nearly two-thirds of voters said no. In response, city officials (some would say almost petulantly) turned off one out of every three street lights. That’s when people started paying attention to a city that seemed to be conducting a real-time experiment in fiscal self-starvation. But that was just the prelude. The city wasn’t content simply to reject a tax increase. Voters wanted something genuinely different, so a little more than a year later, they elected a real estate entrepreneur as mayor who promised a radical break from politics as usual.

For a city, like the country at large, that was hurting economically, Steve Bach seemed like a man with an answer. What he promised sounded radically simple: Wasteful government is the root of the pain, and if you just run government like the best businesses, the pain will go away. Easy. Because he had never held office and because he actually had been a successful entrepreneur, people were inclined to believe he really could reinvent the way a city was governed.

Bach promised to transform city government, making it work for everyone without tax increases. (Sound familiar?) He promised to do away with the personal property tax for businesses and to reduce the time needed for developers to get permits. He promised that these and his other “businesslike” measures would promote job growth–he promised 6,000 new jobs a year. He sold himself as an outsider fighting the city’s “regulatory agency mind-set.”

“Sixty Minutes” and “This American Life” covered the election and the town’s new “business friendly” governance. We haven’t heard much from the media since then, and it turns out that a lot has changed. As Politico noted, “seven years after the experiment began, the verdict is in—and it’s not at all what its architects planned.”

It turned out that putting people who don’t understand government in charge of government isn’t a formula for success. The new mayor fired people who had institutional memory and governing expertise; deferred critical infrastructure maintenance, and quarreled with the City Council when its members had the nerve to act like a co-equal branch of government rather than as his subordinates. The promised job growth didn’t come. Chaos did.

The next election, Colorado Springs elected as mayor a man who  had spent his entire professional life in government.

It’s still a conservative town. Donald Trump beat Hillary Clinton by more than 22 points in Colorado Springs’ El Paso County. But even with that “small-government mind-set,”

[T]hree times in his first two years as mayor, Suthers has gone to voters either proposing a new tax or asking to keep extra tax revenue. By overwhelming margins, he has now persuaded the supposedly anti-tax zealots of Colorado Springs to commit $250 million to new roads, $2 million to new park trails and as much as $12 million for new stormwater projects.

What has all this “wasteful” government spending done to economic growth? Some 16,000 jobs have been created in the past 24 months, and unemployment is at 2.7%.

Amazing as it may seem, running a government requires different skills than running a business–and fiscal prudence is not a synonym for low or no taxes.

Who knew?

19 thoughts on “Reality Bites….

  1. Markets are wonderful when they work but so is a well run government. Sometimes we need to re-learn this. Good post!

  2. Poor Sam was a Koch shill who followed the advice of ALEC’s, Art Laffer. Yes, the Laffer behind the “Curve” who also engineered “Trickle Down” economics in the 80’s.

    Art was dismissed as a reputable economist when researchers exposed his fraudulent “findings” to support his theory. The Koch brothers hired him to become their senior economist. Guess who has played a major role in Indiana’s economic policies?

    Also, if you follow the trends from the Deep Red states like Kansas and Missouri, cuts in the minimum wage are coming for folks in the Hoosier state.

    Follow Mike Hicks with Ball State’s CBER in the newspaper for clues. He’s a “distinguished” economics professor anointed by one of the Ball Family Foundations with connections to the Koch brothers.

    Straight ticket Republicans create their own misery.

  3. north dakota cries,we have no money in our funds, but we still produce 1 million barrels of high quality bakken crude a day..(as citizens,we all should have gotten a check every year like alaska does from the oil revenue, then i woke up…)

  4. Bush 41 was right when he called the trickle down theory voodoo economics. It seems the only thing that trickles down is the sludge.

  5. It wasn’t that long ago that Marion County tried that tricky property tax scheme of raising residential rates sky high, lowering business rates to a ridiculous level and NO property tax on business inventories. It was quickly reversed. The one specific I remember was a woman’s property tax on her home near the Kroger on East 16th Street in the College area was almost three times higher than Kroger’s.

    Marion County residents (since 2015) are now dealing with the “impervious surface area” tax on all parcels to figure our storm water utility fee. At the time I referred to it as the “Fucking Dirt Tax”; your impervious surface area is the area that actually absorbs rainwater which runs off into storm sewers, not entire property area but discounts house, garage, driveways, patios, outbuildings, etc. My question has always been; who has inspected every property in Marion County to assess this tax? The notice states, “all storm water fees” will be calculated by the City on the impervious areas. “all storm water fees” means huge businesses with paved lots will benefit by this adjustment. Another area where the residents pick up the bill for big business; we are paying for their storm water sewers and maintenance and repairs as we are for tax exempt churches.

    “Reality Bites”…here in Marion County!

  6. JoAnn,

    I don’t live in Marion County, but am confused by your definition of impervious surface area. In my neck of the woods ‘impervious surface area’ is ground that is covered by buildings, concrete, pavement or other hard (impervious) surfaces.

    It makes more sense that the government would actually charge property owners with impervious surfaces more for the water that they force off of their property and into the storm sewers. Those with more areas of grass/yard/uncovered ground allow water to seep through and don’t utilize the storm sewers like land that is covered with bldgs and pavement.

  7. @ Todd Smekens –

    I have just one argument with your statement “Straight ticket Republicans create their own misery.”

    They create misery for ALL of us, not just themselves.

  8. Sheila,

    It would be so nice if the media would now cover the story of Colorado Springs and the improvements now happening after the destruction of the business friendly mayor.

    Unfortunately, those who own the media have no intention of letting this “cat out of the bag”.

  9. And yet the citizens of this county, having learned a hard lesson about electing someone with no government experience and a lot of swagger, STILL voted overwhelmingly for Trump. Go figure.

  10. Nancy; you are not confused, I am. MEA CULPA! Realized my error after sending my comments. I don’t take back my name for it;-) The terms “Republicans” and “taxes” causes a brain-lock.

  11. I lived in Colorado Springs for 12 years and had to endure the vagaries one Mr. Douglas Bruce perpetrated on the good people of the “Springs” and the state. He changed the definition of fiscal conservative into selfish backwardness. Then, I moved to Texas.

    Texas is multiple times larger than Colorado and its cities tend to be progressive and run by progressive governments. These people actually understand that government is supposed to be a non-profit entity, elected by the people to disseminate funding and opportunity for the benefit of the people who pay the taxes. The warped mindset about small government and government spending is the result of the canard brought forth by Ronald Reagan, his chief hatchet, Donald Regan and one of our resident low-lifes, Grover Norquist.

    There is nowhere in the world where the supply-side approach to government economics has worked. Human nature and real economics won’t allow it to. But, Milton Friedman was awarded a Nobel Prize for this wacko theory of economics and the Republicans in the U.S. embraced it as capitalism on steroids. They didn’t learn their lesson when President Hoover repeatedly stated that the depression caused by buying stocks on margin for a decade, would be solved by free-market enterprise unencumbered by regulations.

    None of this worked then, it didn’t work in the 80s here and it isn’t working in Kansas.

  12. Last year when my older daughter and I went to a birthday party for the former archivist of the Truman Library in Independence, Missouri, a suburb of Kansas City (on the border with Kansas), I asked her to drive me across the river into Kansas so I could visually assess Brownback’s psychotic tax cuts in, so to speak, the flesh. After crossing into Kansas from Kansas City, Missouri, a vibrant metropolis, I noted how the environment changed to quiet and grim, as though a giant Wal-Mart had come to town and destroyed smaller businesses in its wake. It was depressing and I wanted to get back to Kansas City, Missouri, after a short tour. It was as if a Wal-Mart had come to town and is destroying the State of Kansas, but such is not the case. It is rather Brownback with his no-tax Norquistian-approved policies that are, as Grover said, designed “to drown government in the bathtub.” It worked; Kansas is going under for the third time, or was, until even Republicans put an end to Brownbank’s no-tax policies on steroids which approach psychosis by overriding his veto of a new tax plan designed to raise revenues. No-tax delusions are just that – delusions. Roads don’t fix themselves nor do fire trucks appear as manna from heaven. Government cannot meet its obligations without money, just as you and I cannot meet ours without the necessary wherewithal. Sam and Grover should go back to the dark cave from whence they sprang, and as in the poem Patriotism, “unwept, unhonored and unsung.” Will Kansas survive? Yes, but with enormous damage to be played out over years to come. As I recall, governmental units can take bankrupcy under Chaper 9, so with pensions and other such responsibilities of the state up for grabs, I can only hope that an awakened political community will tax themselves and not use Chapter 9 to throw pensioners under the bus because of Brownback’s abandonment of reality, among other such potential atrocities. Trickledown economics, the patent medicine hawked by the rich and corporate class (and Trump) has never worked, is not working now and will never work. Exhibit A? Kansas.

  13. I was in Canada a few years ago. The gentleman with whom I spoke said, “We have billionaires in Canada, too, but why do yours still want more and more?

  14. It’s tragic that in DC politicians, in some cases rank amateur politicians, are trying to teach science how stuff works.

    Would you trust your life to a politician designed airplane?

    But we are trusting them with all our lives.

  15. @ Gerald – your description of the difference between Kansas City, MO and Kansas reminded me of the stark difference between East and West Germany when I was there back in the late ’70s.

    While traveling through East Germany the WWII destruction and a deep economic depression were very visible. The people in the country lived in worn down ravaged homes and they wore old torn clothing. When I crossed into West Berlin it was like I had traveled back into the 20th century. The city was beautiful and was protected by the iron curtain.

    Needless to say, East Germany was shocking to see.

  16. When the real job at hand is to adapt to a changing environment the last thing you want is a leader who tells you that he can change the environment.

Comments are closed.