Today, the Cato Institute released their Fiscal Policy Report Card on America’s Governors: 2010 . The report card “uses statistical data to grade the governors on their taxing and spending records.” The grades are based on 2008 to the present, a particularly tough economic time as states faced declining tax revenues and yawning budget gaps. Some state leaders responded better than others, managing to keep tax rates low and finding ways to cut spending, to keep the fundamentals strong until growth returns.
Many governors didn’t escape the recession unscathed, finding themselves unable or unwilling to keep their deficits sustainable. Only four governors received As, while seven governors received Fs. If you compare the two extremes a startling distinction emerges – three of the four As were Republicans, and six of the seven Fs were Democrats. The trend would likely run deeper had Governors Chris Christie from New Jersey and Bob McDonnell of Virginia been in office long enough to have received a grade.
The report is important because it illuminates the return to true fiscal conservatives among today’s Republican leaders. Our nation is in dire fiscal straights. Our $13 trillion deficit hole grows deeper by the day and it will take leaders with some creative and brave plans to be able to dig our way out. One thing we cannot do is spend our way into prosperity or out of debt. Look no further than Illinois, New York or California, whose governors received either Ds or Fs, to see the failure of the big-government, big-spending experiment. If we wish to see America prosper without the burden of European levels of taxation then Washington must make difficult choices on spending cuts and government reform. Fortunately, Republican governors across the nation, from Chris Christie in New Jersey to Tim Pawlenty of Minnesota, are leading the way to defeat the debt.
Let’s take a look at one Republican success story – Bobby Jindal of Louisiana who received one of the four As given by the Cato Institute. During his term, beginning in January 2008, he has repealed income tax increases that were put in place by the Democratic legislature in 2002. He has also pushed through business tax cuts and income tax cuts – keeping more money in the pockets of those who earned it. To keep a budget balanced declines in revenue must be met with cuts in spending. In this regard, the governor has proposed a 2011 budget that is 17 percent less than the budget when he took office in 2008.
The results have been dramatic. The Commission on Streamlining Government has identified $1.5 billion in savings by streamlining the government and eliminating redundancies. He has eliminated thousands of government positions and over 70 unnecessary or wasteful state commissions. Any savings as a result of these projects are on top of $248 million in reductions ordered by Jindal in anticipation of declining tax revenues as a result of the recession. The totality of cuts and reform are the fulfillment of a promise Jindal made earlier. “Just like in families and small businesses, state government has to live within its means. That means we will have to reduce government spending to a level we can afford. Raising taxes is not an option, and would be the worst thing we could do in an economic downturn.”
On the opposite side of the grading spectrum is Democratic Governor Ted Kulongoski of Oregon who received an F under Cato’s rubric. Since taking office in 2003 Kulongoski has pursued tax increase after tax increase in a desperate effort to cover his big spending ways. In 2003 he signed into law a $544 million tax increase, the largest in decades , despite his state suffering under the nation’s highest unemployment rate. He has also championed enormous hikes in corporate taxes in 2007, raising the minimum tax from $10 up to $5,000. Apparently none of this was enough. In 2009 Kulongoski continued the trend, signing two new tax hikes that would increase corporate and personal income taxes by $733 million over two years. Sadly, that doesn’t even begin to cover it, he also increased taxes on gasoline, hospitals, and small businesses while proposing a sales tax and cigarette tax.
The result of all this increased taxation? In 2009 the legislative budget writers needed to fill a $4.4 billion deficit. How could the deficit rise with all of these increased taxes? As the Cascade Policy Institute found, “Oregon ranks seventh in total overspending relative to its demographics. State and local governments spend approximately 10.6 percent more than would be expected for a state with Oregon’s demographics.” Kulongoski, like so many Democrats, fell into the trap of taxing-and-spending, which inevitably leads to higher budget deficits.
Cato’s report provides an obvious warning about the dangers of government spending and a clear path to escape our budget woes. We are presented by two choices. And as the Cato report shows they are largely represented by the two parties. We can choose the party that pursues failed economic policies of tax and spend, or we can choose the party that has found its way toward pragmatic, proven methods that will help us prosper.
by Brandon Greife, Political Director of the College Republican National Committee