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GOP is Taking "the Matter with Kansas" National Again

February 5, 2013

In his 2005 book What's the Matter with Kansas, Thomas Frank provided a case study in how conservatives in his home state successfully used social issues to get working class Americans to consistently vote against their economic self-interest. But that formula failed spectacularly in 2012, as Republicans nationally hit the brick wall of America's changing demographics and rejection of anti-immigrant, anti-gay and anti-abortion extremism. In the wake of that stinging defeat, Kansas Republican Governor Sam Brownback is offering a new blueprint of small government and low taxes as the "red state model" for Republican resurgence. Unfortunately, that toxic recipe will instead usher in draconian budget cuts, steep reductions in basic services and a dramatic shift of the tax burden to lower income residents.

As the Wall Street Journal explained, Governor Brownback is hoping to make his mark on the 2016 GOP presidential ticket, whether he's on it or not. "My focus," Brownback boasted, "is to create a red-state model that allows the Republican ticket to say, 'See, we've got a different way, and it works.'"

How? By turning Kansas into what he calls Exhibit A for how sharp cuts in taxes and government spending can generate jobs, wean residents off public aid and spur economic growth.

Like Bobby Jindal in Louisiana, Brownback hopes to eliminate the personal income tax in his state. Last year, he signed legislation slashing the top rate from 6.5 to 4.9 percent. (He is targeting a reduction to 3.5 percent by 2017.) Despite the proven record that tax cuts don't pay for themselves, "Mr. Brownback has leaned on Reagan-era supply-sider economist Arthur Laffer, as well as on Americans for Prosperity, a conservative group funded by the Wichita-based Koch brothers." As the New York Times explained in January, Brownback is hoping his "slash and privatize" model will represent the path back to power for Republicans in Washington, DC:

This month, the largest tax cut in Kansas history took effect, and most of its Medicaid system was handed over to private insurers. The bill introduced this week would pare taxes further, with the goal of eventually eliminating the state's individual income tax. Mr. Brownback has already slashed the state's welfare roll and its work force. He has merged government agencies and is proposing further consolidation. He is pushing for pension changes, to change the way judges are selected and for altering education financing formulas.

But as the alarming data show, what Sam Brownback and his Republican majority have enacted is a prescription for a tax-cut windfall for the wealthy, financial hardship for the poor and a budgetary disaster for Kansas.
As the Institute for Taxation and Economic Policy warned last year, the wealthiest one percent of Kansans will see their tax bill drop by an average of $21,087, or two percent. But thanks to an increase in the state sales tax from 5.7 to 6.3 percent, "the poorest 20 percent of Kansas taxpayers will pay 1.3 percent more of their income in taxes each year, or an average increase of $148." But with the income tax accounting for 40 percent of the state's total revenue, the result is an ocean of red ink. While ITEP warned last May that "had this law been in effect in 2011 the cost would have been $764 million," the Wall Street Journal reported that future revenue shortfalls could be even worse:

The official state economic-forecasting agency predicted last fall a drop of $700 million in revenue in the next fiscal year, equivalent to about 12% of this year's budget, with the decline growing steeper after that. Mr. Brownback's budget proposal for the coming year, released in January, put the figure even higher, at $800 million, or four times what the state spends annually on all its prison facilities.

Even with Brownback's proposals to fill that massive budget hole by ending the state's mortgage interest deduction and shifting $100 million from the Kansas highway fund, the resulting hemorrhage of red ink will ensure that the Sunflower State will once again become Bleeding Kansas:

Estimates prepared by the state's legislative research department predict that, even with the steps Mr. Brownback proposes, Kansas is on track to be short of money. The estimates suggest that the state will need to lean on its reserves in the coming years, and lawmakers by 2017 will be forced to make $780 million in spending cuts to prevent a deficit, which isn't allowed under Kansas law.

To be sure, Brownback's pain on the Plain is mainly felt by the plain. But for Kansas' schools, the suffering is already acute.

In January, a three-judge panel ruled that Brownback's education budget is unconstitutional and ordered the Governor to boost school funding by $400 million. (As Reuters noted, there have already been $511 million in cuts to the base funding between fiscal years 2009 and 2012.) The court specifically rebutting supply-side arguments by the Brownback administration that "that tax cuts will encourage business and stimulate the economy":

In the ruling, the court addressed that issue specifically, saying that it made no sense for the state to argue that its finances were tight and increasing education spending could have "disastrous consequences to the Kansas economy," while it was intentionally reducing revenues by cutting the state income tax.
"It seems completely illogical that the state can argue that a reduction in education funding was necessitated by the downturn in the economy and the state's diminishing resources and at the same time cut taxes further," the court said.

While Brownback's "red state model" is indeed "completely illogical," it is nevertheless the same roadmap being followed by Republican governors across the country. In Louisiana, Bobby Jindal has called for shifting the tax burden to the bottom 80 percent of his residents by replacing corporate and personal incomes taxes with a sales tax jump from 4 percent to as high as 7 percent. In North Carolina, too, Republican state senators proposed replacing the $18.5 billion in total tax revenues (65 percent of the total) from individual income and corporate taxes with a higher sales tax and other levies on services. (North Carolina Republicans like those in Kansas also pointed to a "supportive study done by a consulting firm run by Arthur Laffer.") Meanwhile in Indiana, already home to one of the most regressive tax systems in the nation, "Gov. Mike Pence (R) used his State of the State speech this week to propose a 10-percent income tax cut that would cost the state so much money that even leading Republicans won't support it."
With the exception of states experiencing new revenues from surging energy production, in almost every case the result will be the same. Sam Brownback's red state model means more red ink for state coffers, more green for the rich and more pain for lower and middle class taxpayers. And if Republicans get their way, what's the matter with Kansas will soon be what's the matter with America.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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