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Right Turn
Posted at 08:54 AM ET, 06/12/2012

States that defy Obamanomics succeed

As the wheels come off the Obama campaign bus, it seems that virtually every day brings news that the president simply has no clue how to restart the economy. The latest from the Associated Press:

U.S. states expect to collect higher tax revenues in the coming budget year that combined would top pre-recession levels, according to a survey released Tuesday. The increase could reduce pressure on states to cut budgets and lay off workers.
A slowly healing job market and modest growth have boosted sales and income taxes, which provide nearly three-quarters of state revenue. Overall corporate income taxes are also growing.

But ... but they have been trimming government — how can it be? Don’t they need to hire a bunch of civil servants to see incomes rise and revenues increase? I guess not.

In fact, as state spending slows, revenue increases:

Total tax revenue is forecast to rise 4.1 percent to $690.3 billion in the 2013 budget year . . . It’s the third straight year of revenue growth and $10 billion more than the budget year that ended June 2008. The recession began in December 2007.
Total state spending would increase only 2.2 percent and remain below pre-recession levels, the report said.

In Wisconsin, after Gov. Scott Walker’s reforms went into place, there were no state layoffs and overall the state added about 23,000 jobs. In Ohio, Gov. John Kasich has been streamlining government, wielding his veto pen and making Ohio more friendly to business. Lo and behold, Ohio is now among the top states in job creation.

But some states are following Obama’s advice. Illinois keeps raising taxes, and its budget deficits keep piling up. Its unemployment rate is above the national average at 8.7 percent.

The there is California, a policy paradise from Obama’s point of view. High marginal tax rates on individuals, dominating state employee unions, strict environmental legislation and a pro-trial-lawyer legal environment. Oh, yes, and it has 10.9 percent unemployment, an outflow of people and businesses and a $15.7 billion budget deficit. It faces a credit downgrade. I suppose the problem is not enough state employees.

Both Illinois and California, of course, are swimming in pension debt and other public-employee costs. Liberals are dismayed because these costs are so exorbitant that they are starving other government functions (roads, universities, libraries) of funds.

Obama is displaying an appalling lack of awareness of state and local finances and how to increase jobs and promote economic growth. If states followed his advice we’d have a bunch more Illinois and California clones and far fewer Wisconsin and Ohio success stories.

By  |  08:54 AM ET, 06/12/2012

Categories:  2012 campaign, Economy, Governors

 
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