Priorities? GOP Governors Shift Burden To Poor, Middle Class To Pay For Tax Breaks For Rich, Corporations

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ThinkProgress

Priorities? GOP Governors Shift Burden To Poor, Middle Class To Pay For Tax Breaks For Rich, Corporations

by
Josh Dorner

A detail from a Time Magazine put out in June of 2010. From Wisconsin to Indiana, New Jersey to Arizona, GOP state governments are slashing corporate taxes and dissing federal assistance all the while dumping new burdens on the poor and working class. (Time Magazine)

State budgets across the country are in disarray as a weak economy, the end of tens of billions in Recovery Act funds, and a GOP-led House that is pushing for deep cuts to many programs that benefit state and local governments set the stage for massive in shortfalls over the next two years. Instead of making the tough choices necessary to help their states weather the current crisis with some semblance of the social safety net and basic government services intact, Republican governors are instead using it as an opportunity to advance several longtime GOP projects: union busting, draconian cuts to social programs, and massive corporate tax breaks. These misplaced priorities mean that the poor and middle class will shoulder the burden of fiscal austerity, even as the rich and corporations are asked to contribute even less. Here’s a detailed look at how the GOP’s war on the poor and middle class is playing out at the state level:

Arizona: Following months of national outcry and at least two deaths, Gov. Jan Brewer’s administration has finally relented on what many likened to real-life “death panels” that denied care to those in need of transplants in order to save the state just over a million dollars. Now, however, Governor Jan Brewer is proposing to kick some 280,000 Arizonans, mostly childless adults, off the state’s Medicaid rolls. Brewer claims such a move is the only way to get the state’s fiscal house in order, as it would save $541.5 million in general funding spending. Brewer also wants to save $79.8 million by dropping 5,200 “seriously mentally ill” people from the state’s Medicaid program. Instead of balancing out these draconian cuts with additional revenue increases or simply not making the cuts in the first place, Brewer instead signed $538 million in corporate tax cuts into law two weeks ago.

Florida: Last week, Gov. Rick Scott announced that he was canceling a proposed high-speed rail line between Orlando and Tampa — something that will cause Florida to forego $2 billion in federally-funded investments and cost the state at least 24,000 jobs. Scott’s move is opposed even by the Republican chairman of the U.S. House’s Transportation and Infrastructure Committee, and Obama administration officials are seeking ways to bypass Scott to keep the project moving.

Scott’s radical budget proposal, unveiled at a tea party event, includes $4.6 billion in spending cuts that would result in the direct loss of more than 8,000 jobs. It would also privatize large areas of state services, including juvenile justice facilities, Medicaid, and some hospitals. Education spending would be cut by more than $3 billion and teachers and other public employees would see their pensions under threat. Such deep cuts in essential programs and services are necessary to offset Scott’s proposal to cut corporate and property taxes by at least $4 billion.

Michigan: While newly-elected Gov. Rick Snyder has said he won’t “pick fights” with unions, his budget plan echoes the misguided priorities of other GOP governors. As Matt Yglesias has noted, Snyder has an innovative definition of “shared sacrifice.” His plan calls for “$1.2 billion in cuts to schools, universities, local governments and other areas while asking public employees for $180 million in concessions.” In addition, it would raise taxes on individuals by ending many deductions and taxing pensions — all in order to pay for $1.8 billion in tax cuts for businesses. Since the state’s entire budget shortfall this year is only about $1.7 billion, all or most of the cuts to services and programs important to the poor and middle class (many of whom will also see their taxes increases) could be avoided if the governor was willing to forego corporate tax breaks.

New Jersey: Gov. Chris Christie has become a right-wing sensation, particularly because of his war on public employees — especially New Jersey’s teachers. He’s often lauded by the conservative punditocracy for his tough talk and for balancing the state’s budget last year without raising taxes. Unfortunately, a look behind the curtain reveals that Christie’s numbers simply don’t add up. After vetoing Democrats’ plans to raise taxes on New Jersey’s millionaires, Christie closed the state’s multi-billion dollar shortfall through a combination of measures, including simply refusing to make contributions to the state’s pension fund and steep cuts in education funding and assistance to municipalities. Democrats accused Christie of simply shifting the burden to local governments, which caused New Jersey’s already-high property tax rates to double even as the state was slashing funding to its property tax rebate program. (Former Minnesota Governor Tim Pawlenty used a similar gimmick during his final year in office.) Christie is also being sued by Federal Transit Administration for keeping $271 million in federal funding for a tunnel under the Hudson — money he insists on keeping even after having personally canceled the project.

New Jersey is staring down another large deficit and Christie’s budget, expected to be released today, will pair continuing austerity for education and local governments with further cuts to the state’s Medicaid program. The austerity measures and cuts to programs for the poor will have to be all the deeper this year as Christie is also insisting on cutting corporate tax rates.

Ohio, Texas, and Wisconsin after the jump.

Ohio: Gov. John Kasich demonstrated an early propensity for making future-losing choices when he made good on a campaign promise to kill Ohio’s federally-funded high-speed rail project — a move that will cost Ohio $400 million in badly-needed infrastructure investment, cost thousands of jobs, and derail millions of dollars in related private sector investments in economic development. Kasich, along with numerous other Ohio Republicans, has signed the Americans for Tax Reform pledge that rules out any tax increases to help the state make ends meet. Even though the state has an $8 billion budget shortfall, Kasich has gone even further in proposing a variety of tax cuts that would benefit corporations and the wealthy. In addition to going after public employees (who Kasich thinks should not ever have the right to strike) and essential government programs, he has proposed a variety dubious privatization schemes to finance such massive tax breaks.

Kasich has voiced support for radical Wisconsin Governor Scott Walker’s assault on the middle class and workers. The Ohio Senate takes up SB5, its version of anti-union legislation, today; at least 8 Republican Ohio state senators have already come out in opposition to the current proposal. The current proposal goes even further than the Walker plan in eliminating collective bargaining rights for Ohio’s public employees.

Texas: As ThinkProgress has reported, Gov. Perry spent the last two years traveling around the country attacking the stimulus and other Obama administration initiatives, all while touting the “Texas Miracle” (low taxes, low services, and low regulations). However, as Matt Yglesias noted, “It looks like the secret behind Texas’ ability to avoid the kind of budget woes that afflicted so many states last year was two-year budgeting rather than the miracle of low-tax, low-service, lax-regulation policies.” Moreover, Perry relied more on the stimulus than any other state to fill his 2010 budget gap, with stimulus funds plugging a full 97 percent of the gap.

In facing down a $25 billion budget crisis on par with that of California, Perry categorically rejected any tax increases. Texas, as Paul Krugman said, already takes a “hard, you might say brutal, line toward its most vulnerable citizens,” as indicated by its poor educational performance and sky-high 25 percent child poverty rate. Still, Perry also refuses to use any of the $9.4 billion in the state’s rainy day fund (some of which, ironically, comes from stimulus funds intended to help states stave off draconian cuts that Perry instead squirreled away) and is instead contemplating deep cuts to child services programs and education, among other things. Perry even floated a plan to drop Medicaid entirely. Perry’s proposed education cuts are so deep that they prompted an unlikely source to take to the pages of the Houston Chronicle to write in opposition to them — none other than former First Lady Laura Bush. Bond ratings agency Standard & Poors has also weighed in, saying Texas’ cuts-only approach “won’t solve the state’s long-term fiscal problems” and that revenue increases need to be considered alongside the deep cuts being proposed.

Wisconsin: Gov. Scott Walker first gained national headlines for joining Ohio’s Kasich in a future-losing decision to cancel an $800 million investment — fully paid for the by the federal government — in high-speed rail. This decision prompted train manufacturer Talgo to announce it was leaving the state and will likely cost the state thousands of jobs.

Walker is of course now famous for his high-stakes war against Wisconsin’s workers. Walker has used a very small short-term shortfall and larger shortfall to come (which is still smaller than shortfalls the state has faced in recent years) to move forward with an unpopular plan to destroy the state’s public employee unions. As Ezra Klein and many others have noted, Wisconsin’s unions aren’t to blame for the state’s budget problems and taking away their collective bargaining rights will have no impact on the state’s fiscal situation. Indeed, the unions offered to concede to all of Walker’s financial demands, so long as they could retain their collective bargaining rights. Walker balked at this offer, betraying his true motive: busting unions. Walker is also late in offering his budget, but it is believed that in spite of the supposed “crisis” and being “broke,” as Walker himself has said, his budget plans will include “a LOT more tax breaks” for the rich and corporations that will have to be balanced on the backs of workers or with painful cuts to state services and the state’s Medicaid programs, BadgerCare. It’s also worth noting that the last time Scott Walker went union busting, it turned into a massive boondoggle when he was overruled by an arbiter, wasting hundreds of thousands of taxpayers dollars in the process.

When Republican governors speak of “shared sacrifice,” it seems that the only thing they mean is sacrifices by the poor and middle class in order to fund massive tax breaks for the rich and corporations. As governors from across the country gather in Washington, D.C. at the end of this week at the winter meeting of the National Governors Association, ThinkProgress hopes to catch up with some governors to discuss their priorities — misplaced or otherwise.

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