August 24, 2006

Tax Cuts Cause Unemployment, Liberals Say

Among the items I picked up in the exhibit area of the National Convention of State Legislatures' annual meeting, at Nashville's Opryland Hotel last week, was an inch-thick "candidate briefing book" from the liberal Center for Policy Alternatives, titled Progressive Platform for the States 2006. It's available on the organization's website in a 272-page PDF file, so you can read it if you want to know what the liberals are planning for you in terms of state politics and policies in the months and years ahead.

I was intrigued by the book's two-page spread on the "Taxpayers Bill of Rights" concept that is alive and kicking in many state capitals and, if it becomes law, would result in capping the annual growth of state tax revenue and spending.

The two-page section on TABOR, which I've uploaded here,

The Center for Policy Alternatives makes the mistake - or intentionally - conflates all tax-and-spending-limitation proposals with Colorado's "Taxpayers Bill of Rights," and goes on to tell a variety of lies about Colorado's TABOR and tax-and-spending limitation laws generally.

Here's the craziest lie:

TABOR increases unemployment.
Economic studies show that any private sector jobs that may be created by cutting taxes will be more than offset by the loss of public sector jobs caused by corresponding reductions in spending. That theory became reality in Colorado, which suffered a net loss of 68,000 jobs between 2001 and 2004. Only three states lost a larger share of employment during the 2001 recession.

Additionally, it is simply ludicrous to equate public sector jobs with private sector jobs when the discussion is about taxes. Public sector jobs are funded largely by taxes paid by people who work in the private sector. It has to be that way. A job lost in the private sector results in the government having less money as tax revenue declines. A job lost in the public sector results in the government having more money as it its payroll shrinks.

The liberals like to increase government jobs because government employees are a reliable liberal voting base.

But ny state that replaces a lot of private sector jobs with a lot of public sector jobs is headed for a fiscal crash of epic proportions. Consider this: if you replaced all private sector jobs with public sector jobs paying the identical salaries, from whence would the taxes come to pay those salaries? Unless you tax the government workers at 100 percent, the government would rapidly run out of money to pay its workers (if it was able to find workers willing to work for a paycheck of $0.00 after taxes).

Conversely, if you reduce public sector jobs and increase private sector employment - a trend that can be fueled by tax cuts - the government will have lower costs and higher revenue, eventually leading government being able to afford to pay its remaining employees much better. Public sector employees are often urged by liberal politicians, liberal bureaucrats and liberal think tanks to oppose tax cuts, but any public sector who truly understood that without a booming economy that grows a lot faster than government, they'll never get a decent pay raise would be first in line to support a push for a tough tax-and-spending limitation provision in their state's constitution.

By the way, the only candidate for Tennessee governor this year who supports enacting a tough tax-and-spending limitation provision in the state's constitution is state Sen. Jim Bryson.

The rest of the Center for Policy Alternatives' attack on TABOR - sure to be the blueprint for liberal politicians and candidates opposing TABOR-like laws on the campaign trail and beyond - is just as silly and riddled with errors. I'll have more on it later.

Update: This Michael Barone column from April 2006 is relevant here as Barone discusses how public-employee unions - a reliable part of the Democratic Party's base - are a threat to the thriving private-sector economy. Barone:

My U.S. News column this week is about one force that threatens to gobble up our otherwise thriving private sector economy: the greater-than-economic-growth increases in spending mandated by current entitlement programs like Social Security, Medicare, and Medicaid. But there's another force threatening the private sector economy: public-employee unions. In many but not all states, public-employee unions have been forcing greater-than-economic-growth spending increases on state and local governments - spending that produces very little in the way of public benefit.