Wayne O'Leary

Yes, Toto, We Are in Kansas

Unlike Dorothy, who managed to escape to Oz, Americans are stuck in Kansas. Obviously, they are not abiding there in a literal sense, but rather in a spiritual or psychological sense. The nationwide triumph of political austerity means that, for most of us, life is being lived in a Kansas of the spirit, where meanness of soul and smallness of mind have made us a lesser people than we used to be.

Under Republican Gov. Sam Brownback, a conservative extremist of the first order, and his tea-party legislature, Kansas has become the symbol of triumphant austerity at the state level during the Obama era. And almost like osmosis, this triumph in the heartland has been transposed to the nation’s capital, where it has infected all manner of federal policies and effectively crippled the incumbent administration.

In Kansas, Brownback has imposed what the New York Times characterized earlier this year as a “red state model” for social and economic policies; it’s since become the red-state model. Featured on the agenda: radical restructurings and cuts to public pensions, school finance, and the state’s Medicaid program; an end to teacher tenure in public schools; a total defunding of the state’s arts commission; a virtual statewide ban on abortion; and, of course, a rejection of anything associated with the Affordable Care Act.

But foremost of Brownback’s radical-right initiatives, his piece de resistance, is clearly a state tax program the like of which has not passed into law anywhere in the country within living memory, if ever. In 2012-13, Brownback and his legislative allies, urged on by the corporate-funded and rabidly right-wing American Legislative Exchange Council (or ALEC) and enthusiastically backed by conservative lobbies like the US Chamber of Commerce, pushed through what has been described as perhaps the largest tax cut ever enacted by an individual state.

Following a closely guarded blueprint created by ALEC and working (according to columnist Paul Krugman) in close consultation with oddball economist Arthur Laffer, who in the 1980 presidential campaign helped sell Ronald Reagan on supply-side — what George H. W. Bush famously called “voodoo” — economics, Gov. Brownback jumped eagerly into a time capsule bound back to the previous century. His grand experiment was premised on the long-discredited theory that massive income-tax cuts at the high end pay for themselves by generating spectacular economic growth leading, in turn, to dramatically increased government revenues.

Notwithstanding abundant historical evidence to the contrary since the 1980s, it was full-speed-ahead for true-believing Sunflower State Republicans. Brownback and company, the blind captives of ideology, dutifully reduced (gutted is a better word) the Kansas income tax; the top bracket was lowered by 25%, and all taxes on business profits reported on individual tax returns were eliminated, something no other state has ever done. Stand by for an economic-development boom, with jobs and new businesses galore; the world would come knocking on Kansas’ door, predicted the governor.

It didn’t happen. What happened instead was a mini-recession. An already slack job market worsened, and starting in 2012, average earnings steadily fell, while the number of state businesses simultaneously shrank. Kansas lost employment outright during the first six months of 2014, only one of five states to do so. The windfall in tax receipts anticipated as a by-product of explosive supply-side growth failed to materialize. State revenues from income taxes fell by half — from an expected $651 million to just $369 million — resulting in an overall budget shortfall of $338 million for fiscal 2014.

Predictably, the anti-government austerity previously implemented has begun to cut more deeply, passing through the muscle and into the bone. The Kansas school system is now on the chopping block. In the last two years, public-school spending has been reduced by 2%, and the funding of higher education has declined by 3%. Altogether, $500 million has been stripped from the state’s public education funding since Brownback took office in 2011. Topping it off, Moody’s Investors Service, citing poor financial management and tax-cut concerns, downgraded the state’s credit rating this past spring.

Kansas, led by its tea-party Republicans, has created for itself a perfect fiscal storm; its red-state prescription (first, institute austerity by cutting spending, then exacerbate the situation enacting deep tax cuts) has proven disastrous. Things are now so bad that Kansas Democrats may be invited in from the wilderness to run the state. Over 100 prominent “moderate” Republicans of the old AIf Landon-Bob Dole variety have endorsed Democrat Paul Davis for governor, putting Brownback’s reelection in jeopardy.

Somehow, however, political awareness of the Kansas dust storm has not yet permeated Washington, D.C., where it’s still austerity business as usual. In Congress, Paul Ryan (R-Wis.), chairman of the House Budget Committee, is pushing his latest scheme to “disappear” the federal government, combining a $791 billion reduction in nondefense discretionary spending over 10 years with reduced Medicare and Medicaid outlays, and a Kansas-style 25% cut in the top income-tax rate. In theory, all this slashing will magically create growth and produce overall revenue increases.

Actually, we’ve been trying it for the better part of five years now. Agencies across-the-board have been methodically trimming staff, closing offices, and reducing services. Federal spending and public investment have fallen 8%, the largest decline in a half-century. Meanwhile, though the deficit is down to its lowest level since 2008, economic growth has not come back; at 2% a year, it’s a third less than after most downturns and far below the historical average.

Researchers at the New York Times recently looked into the failed attempt to cut our way to prosperity. Their findings revealed that the US is continuing to produce over $800 billion a year less in economic output than it normally should during a recovery. The shortfall (5% of total GDP) can be traced in large part to the debilitating effects of combined government cutbacks — namely, $307 billion annually in lost economic stimulus from absent federal, state, and local government spending.

We could break out of these self-imposed doldrums at any time, given the will, but Congress, paralyzed by its flights of ideological fancy, clings tight to the public purse strings and imposes its poverty of the soul on the American people. Thankfully, there now exists the increasingly unavoidable object lesson of Kansas.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He is the author of two prizewinning books.

From The Progressive Populist, October 1, 2014