June 30, 2015 by Chris Kite
Wisconsin Governor Scott Walker is a far right conservative that has had a controversial stint as governor. He’s been on the warpath against unions, higher education, and Amtrak. He is big on tax cuts and “small government.”
When Walker came into office, he took the typical conservative extremist path and immediately began cutting taxes. After all, everyone in the right wing kingdom knows that if you just cut taxes, business (and revenue) will grow. Except when they don’t. As Kansas Governor Sam Brownback discovered, it doesn’t really work.
Much as Kansas was faced with a real budget problem when the revenue growth promised by slashing taxes on the rich didn’t pan out, Wisconsin has seen its budget prognosis go from a surplus to a deficit. That’s because business and tax revenue didn’t grow. Jobs didn’t grow as promised. In fact, during Walker’s first term, Wisconsin ranked 36th in the nation for job growth. That’s even behind Illinois and we all know what a mess Illinois is! And now they are facing a $2.2B deficit over the next two years.
So what does this failure show?
It shows that cutting taxes isn’t a magical solution to economic problems. It shows that it isn’t a job creator.
If you think about job creation logically, you would quickly come to the conclusion that what “creates” jobs is when demand for goods and services goes up. But in Wisconsin, that demand hasn’t increased at the same pace as the rest of the country.
Why? As a largely consumer economy based country, the best way to increase jobs (and tax revenue) in the US is to increase demand for consumer goods and services. And how do we do that? By increasing real wages so that the average consumer has more money to spend. But by cutting taxes on the rich, you aren’t stimulating much economic growth. It isn’t like a millionaire with a few less tens of thousands in taxes to pay is suddenly going to start spending more money on typical consumer goods. Are they going to look for a place to invest that money? Sure. But that doesn’t mean someone is going to go out and hire workers just because money is available. You’ve got to have demand for your goods or services to justify increased hiring.
As a liberal, I supposed I own both Scott Walker and Sam Brownback a thank you for helping to prove that trickle down economics really doesn’t work. The problem may be that I’m not sure people have noticed. An awful lot of Americans still seem to be under the right wing spell and believing that cutting taxes creates jobs!