I grew up in Iowa and attended undergrad and grad school in Nebraska (Go Big Red! – sorry, couldn’t resist). In The Great Gatsby many literary scholars have suggested that Nick’s Midwestern upbringing symbolizes qualities like truth, honesty, purity, wisdom and decency, and I certainly encountered much of that while growing up. There were of course exceptions, such as when all but one of my high school’s cheerleaders became pregnant in a single year when I was in junior high. Or in 1970 when Nebraska’s distinguished Senator Roman Hruska, speaking in support of a Nixon Supreme Court nominee, brilliantly opined:
“So what if he is mediocre? There are a lot of mediocre judges and people and lawyers. They are entitled to a little representation, aren’t they?”
But overall the Midwest was still a model of 20th century propriety, common sense, dignity and reason.
And then there was Kansas. Comprised of more than 82,000 barren square miles, it’s basically Nebraska without the excitement. The only tourists you see there are either in search of the world’s second largest ball of twine, immortalized in National Lampoon’s Vacation, or on their way to Colorado. New York City is in New York; Oklahoma City is in Oklahoma; Kansas City chose Missouri. You get the picture.
In his 2004 best-seller What’s the Matter with Kansas?, historian Thomas Frank describes the state’s slow transition from 19th century left-wing Populism to 20th century social and economic ultra-conservatism (spoiler alert: the Wichita-based Koch Brothers were involved). The latest manifestation of that conversion has been the tragically failed fiscal experiment of Governor Sam Brownback. Elected in 2010 vowing sharp cuts in both taxes and state spending, except for education, he promised with evangelical zeal that these policies would create economic growth and jobs so boundless that the state’s tax coffers would suffer no harm and might actually grow.
Astute observers, a description befitting all three or four of my regular blog readers, will recognize the Brownback template as yet another effort to sell the oft-refuted snake oil known as supply-side economics to a gullible but hopeful public – hopeful because we all prefer getting more (prosperity and social progress) for less (taxes), no matter how counter-intuitive. There is, however, no objective evidence that this theory has ever worked as predicted. None. It didn’t work under Kennedy. Or Reagan. Or Bush II. Our most prosperous decade since WW II occurred in tandem with the tax increases of the Clinton administration. In the carefully nuanced words of Paul Krugman: “Supply-side economics never had any evidence behind it; it never had any support in academic research; . . . It was and remains crank economics pure and simple, with nothing going for it except political convenience.”
But cut taxes and spending Brownback and his legislative cronies did; a cumulative tax cut for example estimated at $3.9 billion between 2013 and 2019 that benefits the affluent disproportionately. Alas the rest of the supply-side script did not follow. While the nation’s annual economic growth rate of roughly 2% since 2012 is consistently described by Republicans as ‘anemic,’ Kansas grew at less than half that rate. ‘Sub-anemic’ presumably. Private sector employment in Kansas grew about 4% in total over this period, compared to 8% nationally. Even more tragically but predictably, state personal income tax revenues fell by almost $700 million between 2013 and 2016, resulting in a $570 million depletion of the state’s General Fund; indefinite postponement of numerous infrastructure projects; significant cuts in state education spending that was supposed to be off-limits, to such an extent that the State Supreme Court in March ruled that state-level school spending was unconstitutionally low; and two reductions in the Kansas bond rating. Other than that, the experiment in fiscal conservatism worked like a charm.
Finally even the soulless Republican legislature had to stop the bleeding. Earlier this year they passed $1.2 billion in tax increases that were not only unprecedented but also progressive, taxing high income Kansans at higher rates. Slammin’ Sammie, now the second most unpopular governor in the nation (thank you, Chris Christie!), doubled down on stupidity by vetoing the legislation, but last week the legislature overrode the veto.
Why should any non-Kansan care about this unfortunate fiasco? First, Brownback and many others saw the Kansas fiscal initiative as the highly visible grand experiment that would finally vindicate tax cuts and small government as the wave of the future. What they got was vilification rather than vindication. Optimists such as NY Times op-ed contributor Michael Tomasky even see a possible transformational return to fiscal sanity in a group of conservative Republicans raising taxes, given the Tea Party and ‘no tax pledge’ domination of the GOP over the last two decades.
But can the Republican leopard, especially with its amateurish and evidence-denying Washington leadership, really change its spots? The two major economic initiatives of the Trump administration, tax reform and health care reform, suggest not. The Republican tax reform plan is predictably entitled 2017 Tax Reform for Economic Growth and American Jobs (sound familiar?). While all we have for now is a one-page outline, it’s bullet point content includes: reduce the number of tax brackets and the top rate; repeal the Alternative Minimum Tax (which primarily affects only affluent Americans); repeal the death tax (in all but Republican circles this is known less dramatically as the inheritance and/or estate tax, and it also primarily impacts only the affluent); drastically reduce the business tax rate to 15%; repeal the 3.8% Obamacare tax that hits small business and investment income (that’s the grossly disingenuous Republican description. The 3.8% Net Investment Income Tax (NIIT) applies only to various earnings on investments above $250,000. Small business indeed!). And make no mistake about it, repealing the NIIT and Obamacare more generally would not only discontinue health insurance for 23 million Americans, it would generate $592 billion (CBO estimate) in tax cuts largely for the wealthy. In short, replace 2017 in the Republican title with 2010 and American with Kansas and this is, in the immortal words of Yogi Berra, deja vu all over again.
Will they never learn, you say? But that’s not giving Republicans enough credit, averse as I am generally to doing so. All but the most myopic and ill-informed (ok, that’s more than a few but my point remains) know full well from Kansas and previously that supply-side economics is a fraud, and that repealing Obamacare will wreak havoc on the lives of many millions of largely underprivileged Americans. But they don’t care, at least not enough to overcome their absolute obsession with tax cuts for the wealthy. Thomas Frank’s book was of course always about more than Kansas; in fact when it was later published in Britain and Australia it was entitled What’s the Matter with America?. How prophetic. Rock Chalk, Jayhawk!
Garygrams 
Loved the post. Brownback’s Kansas represents Republican policy come to full flourish. California represents the Democratic party’s approach. Which is better?
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Edifying and entertaining description of the situation!
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There
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There is an assumption that lower taxes, especially for high income people, will create many jobs and stimulate the economy. This is a myth that has not worked in states nor will it work at the national level. Kansas and other states like them put themselves at great risk for lower economic growth. The governor of Nebraska has a similar philosophy about lowering taxes which bears watching but so far has not received legislative support.
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