Shaw Friedman: GOP-Lite is lousy politics for Democrats
Thursday, May 31, 2012 5:13 AM
LAPORTE - Any Democrat looking at statewide office or the state legislature needs to think twice before embracing Republican calls for yet more budget-busting cuts in corporate taxes as a way to spur job growth. Not only is such a plan lousy politics, the evidence is overwhelming that there are far better ways to make Indiana attractive for economic development and job creation.
First the politics: Hoosiers, when polled, know there is a better, smarter way to grow new jobs than simply cutting Indiana’s corporate tax rates, which only reduces much-needed tax revenues that pay for education. Indiana’s business tax climate is already among the 10 most favorable in the nation, according to the Tax Foundation. A recent survey taken by the Kauffman Foundation ranks Indiana the fifth least costly state in the country for hiring a new employee. If taxes alone made the difference, we would be swimming in new jobs and prosperity, rather than awash in unemployment.
We’ve got the benefit of a recent statewide poll conducted by the Benenson Strategy Group of 600 likely November 2012 voters which was run March 6-8. Hoosiers simply aren’t falling for Republican trickle-down theory and neither should authentic Democrats who want to give the voters a choice. Fifty-seven percent of Hoosier voters polled said their view of the best way to create new jobs was “we should improve our schools and produce more skilled workers and engineers so companies will be able to hire the workers they need here.” Compare that with just 37% of Hoosiers polled who believe “we should lower taxes and loosen government regulations that cut into business profits” as the way to increase jobs.
That’s right – by a margin of 20% – Hoosier voters know that investing in education rather than slashing revenues needed to support schools is the way to go. Democrats need to give Hoosier voters credit and tailor our arguments and our campaigns accordingly.
The politics of pushing for more corporate tax cuts are lousy because the public understands that trickle-down doesn’t work. Democrats need to be ready to make the case on why there is a better way to accomplish economic development and job creation than corporate tax cuts.
Tim Bartik, senior economist with the Upjohn Institute for Employment Research, says that “corporate tax cuts don’t have a large enough impact on increasing wages for families.” Instead Bartik points out that other revenues have to increase to make up for the lost revenue from corporate tax cuts or other stimulative spending in the budget has to be cut to balance a state’s budget.
Indiana University economist Dr. Morton Marcus has been writing on these pages for years that the best investment for Indiana’s economic development is to invest in our high school age young men and women.
As Marcus puts the case, public high schools, their students and their programs “can set the tone for life in many communities.” We can’t continue undervaluing education and we need to “prepare young people for adult responsibilities.”
The former Kelley School professor says “this is the Indiana to which we hope to attract Illinois residents and businesses. Our workers struggle to receive justified compensation for injuries on the job. Our unemployed must make do with less generous payments than similar people in most states. Our schools are inadequate by most measures. Our local streets and roads are in poor to dismal repair. Our highway program is more than a generation behind. Ancient sewerage systems all over the state are in need of modernization. Public transit is on life support where it still exists.”
The literature is there for any Democrat ready to articulate an alternative vision. Dr. Amlan Mitra, professor of economics at Purdue Calumet, says his research shows that “tax cuts and incentives are unlikely to attract businesses, stimulate economic activity and create jobs in a cost effective way.” As he told the Post-Tribune on April 3, 2011, “there is little proof that state and local taxes are major factors in business location decisions.” As Professor Mitra makes clear, it’s important for elected officials to partner with education, “which is a major driver of economic development.”
Let’s continue looking at the data rather than right-wing GOP political dogma. Definitive studies cited by academics like Dr. Mitra, such as Bartik in 2003 and 1991, and Fisher in 1997 state conclusively that “state and local investments in public services stimulate economic growth and create jobs.” In sharp contrast, Republican orthodoxy on job creation relies almost exclusively on tax cuts. Says Dr. Mitra, “a skilled workforce, accessibility to raw materials, proximity to customers and quality public services such as schools, roads and highways, sewer systems, recreational facilities, higher education and health services are far more critical determinants.”
The bottom line is that no real Hoosier Democrat ought to buy into GOP claims that what is needed is simply more tax cuts for business. Repeating right-wing talking points only accomplishes three things – it helps turn right-wing GOP ideas into right-wing GOP realities, it legitimizes bad ideas and it elects Republicans.
Advocating Republican-Lite policies not only disenchants our core voters, it won’t win us independents either. Hoosiers want and deserve a real contrast and we Democrats have to be bold enough and smart enough to articulate a real, defined choice for voters. The polling shows Hoosiers want a different vision for job creation than simply more corporate tax cuts. Let’s give voters a genuine alternative in November.
Shaw Friedman served as legal counsel for the Indiana Democratic Party from 1999-2004 and is a regular HPI contributor.