Bragging Rights
And the Texas legislature meets only every other year.
Not Bored, Tired
Phonically, it’s probably not the headline they intended: “Board trying to bring jobs to Arizona.” But there is something to it.
In the article that followed the headline, it was reported that Arizona’s new Commerce Authority will make recommendations to the legislature next year to help the state economy “specifically in the areas of aerospace and defense, science and technology, solar and renewable energy, and small business and entrepreneurship.”
Without legislative changes, Gov. Brewer’s budget director said that a large number of jobs Arizona expects to gain over the next eight years will be low paying positions, such as food preparers and cashiers. It ‘s unclear how he knows this.
To help the economy, the legislative “change” with the most impact would be one of direction; away from higher taxes. Since 2009, in the face of massive budget deficits, Arizona businesses and families have been asked to contribute substantially more in both property ($250 million annually) and sales ($1 billion annually) taxes.
A better course of action would have been drastic reductions in government spending. Not only would that have signaled to the market that Arizona is serious about maintaining a pristine credit rating, it would have also signaled that Arizona values its $250 billion economy as much as its $10 billion budget.
There has only been one meeting, but it causes us great concern that the new Commerce Authority intends to recommend policy changes to enhance only certain sectors of the economy. Subsidizing certain activities will lead to more of that activity, but less of other activities. Tax credits for the bioscience industry come from non-bioscience industry taxpayers. Take advantage of them long enough, and there will be fewer subsidies to go around. People will relocate to where they are treated fairly.
Gov. Brewer offered a nugget of hope that if the Authority (of which she is chairman) pushes policies that favor some at the expense of others, she’d be resistant.
“I will never take for granted the companies that are here, those that stuck with us through the bad times and the good times.”
Hypocrisy Charge (updated)
Linda Valdez, the editorial board member of the Arizona Republic, was kind enough to respond to my question about her Quick Hit on Tuesday, click here for original post.
Ms. Valdez explained that her aim was directed at Brewer and the GOP who rail against the federal government as the source of economic woes. The hypocrisy charge presumably then comes into play when those same politicians then gladly accept the federal stimulus dollars to make the Arizona budget picture appear better than it actually is.
Fair enough and I appreciate Linda clarifying.
I think it qualifies as hypocritical to blast Obama’s massive federal stimulus plan that includes billions of dollars to states when you overtly count on, plan on, and expect to use those dollars to “fix” (paper over) your own state’s woes. I don’t have any indication the Brewer has criticized Obama’s economic policies they pertain to overspending, but I also haven’t looked. And although I also haven’t checked on whether GOP members of the legislature made similar criticisms while quietly banking on the federal bailout, I’m almost certain I could find those instances.
Valdez did concede that I made a valid point that liberal Democrats are also hypocritical when it comes to their criticism of Obama. Sure, he may not have completely nationalized health care (or even included a public option at this point), brought all the troops home, closed Guantanamo, etc., but if not for the stimulus dollars propping up state governments, deeper budget cuts would be required–something liberals can’t stomach.
As for fiscal conservatives who supported deeper state budget cuts, who never acknowledged a balanced Arizona budget, who opposed the sales tax increase, and who still believe the state should have demurred the federal subsidies, there is no shame (or hypocrisy) in railing against Obama’s economic policies.
Again, I appreciate Linda Valdez’s response to my questions.
Hypocrisy Charge Needs Context
Hypocrisy is defined as “the practice of professing beliefs, feelings or virtues that one does not hold or possess.”
I needed to double-check the definition after reading a Quick Hit from Arizona Republic editorial board member Linda Valdez who wrote that Arizona’s deficit could reach $700 million this year. She then added, “But prior to new federal assistance, the shortfall had the potential to reach $1 billion. Those railing against the Obama administration might check their hypocrisy meters.”
If this is a shot at Gov. Brewer, then Valdez should say so. Brewer has been critical of Obama on a few fronts, namely ObamaCare (in which she filed a lawsuit against) and the Obama administration’s lawsuit against SB1070. It is also true that Brewer has accepted hundreds of millions of federal stimulus dollars to plug gaping holes in the state budget. Does the criticism of ObamaCare and the 1070 lawsuit, while accepting federal dollars to backfill the budget constitute hypocrisy? No, they have nothing to do with one another. Brewer never said she thought SB1070 was unconstitutional, nor did she ever claim we needed ObamaCare.
Moreover, Brewer has not been overly critical of the federal stimulus dollars as have other governors, and Brewer has publicly fretted over cutting enough spending to balance the budget. Heck, she even raised taxes to avoid cutting spending. So accepting federal dollars as part of her budget fix is not only NOT hypocritical, it’s consistent with her view of state spending.
Maybe Valdez wasn’t directing her Quick Hit toward Brewer. Maybe it was directed at the (very) far left (Maher, Olbermann, Matthews, Valdez, etc.) who are “railing against” Obama for not being “left” enough. “Well, he may have fallen short on some of our issues, but at least he prevented even more state cuts to education and health care.”
That’s the only way I see the hypocrisy charge sticking.
(I’ve emailed Valdez for clarification.)
Liberal Policy Group Diminishes State Corporate Tax Cuts
The Center on Budget and Policy Priorities (CBPP) released a paper today saying that corporate income tax cuts don’t matter much to a state’s economy. We hear the same thing all the time: that taxes don’t really matter except when they do. For example, industrial policy proponents, or those who want only certain jobs and industries to thrive, often turn to corporate tax credits to achieve their ends. Case in point: in 2009, in order to lure renewable energy manufacturers to Arizona, lawmakers approved a five-year, $350 million package of tax credits to qualifying companies.
The problem with these credits, which Republicans passed by a wide margin, is that they must be subsidized by every other taxpayer. Across-the-board rate cuts, however, such as a reduction in the corporate income tax rate that the CBPP discredits, apply to everyone. In a free society, the tax code should be neutral on what kind of business you’re in. The state shouldn’t pick winners and losers. So, while we agree that corporate income tax cuts don’t pay for themselves immediately and should be accompanied by spending reductions, it doesn’t mean that high rates (like in AZ) should be left alone.
Furthermore, Arizona taxpayers could stand a bit of relief. In the last two years alone, taxes have skyrocketed. Residential and business property taxes have increased $250 million and the statewide sales tax rate just jumped 18 percent. We need some downward pressure on taxes, and the corporate income tax is a place to start.
While we disagree with much of the CBPP paper, they do make some valid recommendations. For example, a focus on the “principles of good tax policy and sound management of core public responsibilities.” They also argue that states should “examine existing economic development tax incentives for effectiveness — and cost-effectiveness— at regular intervals.”
On that, we couldn’t agree more.
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