Monday, May 11, 2015

Sunday Globe Special: Brown State

It's the story of a governor who adopted Reaganomics and it's a real Laffer:

"Old battle lines drawn anew in Kansas; In state where ‘separate but equal’ died, governor’s bet on supply-side economics imperils school gains" by Michael Kranish Globe Staff  April 26, 2015

TOPEKA, Kansas — Amid the melting pot that is Highland Park, trouble has come once again to Topeka, once again focusing on equality, once again shining a harsh light on the state’s governing class.

This time, the fight is not about the color of students’ skin but about the quantity of money schools receive from the state, pitting poorer Kansans against the rest and roiling politics far beyond state lines.

At the center of this new fight is Kansas Governor Sam Brownback’s program to eliminate the state’s income tax. It is a bold move closely watched by Republican presidential candidates because it has put in an uncomfortable spotlight one of the core economic principles of the GOP — that tax cuts are the best way to fuel growth.

I don't know about state income taxes; however, the federal one is illegal. It was never ratified, and the courts have ruled that "Well, everybody is doing it." It was part of the Federal Reserve Act that enslaved this nation's people and put them to work for bankers. That's the thumbnail of it. 

I'm not sure where I stand on the merits anymore. I used to think government did good, but lately all they are doing is $elf-$erving looting -- and here it is again. I know I'm not for increased taxes on regular people. It's all in who gets hammered, and instead of a carbon tax why not take it out of rich hide?

As Brownback put it during in a 2012 appearance on MSNBC, “We’ll have a real live experiment” in Republican tax policy.

With the people of Kansas as guinea pigs.

So far, however, Brownback’s program has worked out more the way his Democratic critics warned than as his own party expected. It has mostly benefited wealthier residents and cost the state far more revenue than anticipated. The banner headline in the Topeka Capital-Journal on Friday was “State faces $800 million shortfall.”

As part of an effort to close the gap, millions of dollars are being cut from the budgets of Kansas school districts.

“It is not a blatant racial issue, it is a blatant economic status issue” of equality, an yes, it is ALL ABOUT CLA$$ -- a fact the propaganda pre$$ tries to obfuscate by breaking us all down into gender and race and saying "They made more!"


Partnership brings new policy

It was in 2012, two years after Brownback was elected governor, that he consulted with an economist named Arthur Laffer. The name Laffer prompts awe among many Republicans and disdain among many Democrats.

It was Laffer who convinced Ronald Reagan that cutting taxes could actually lead to so much economic growth that more revenue would come in the long term. When Reagan ran for president in 1980, his primary opponent, George H.W. Bush, famously called the plan “voodoo economics,” but he later applauded it when he became Reagan’s running mate.

Laffer’s critics brand his theory an economic gimmick, disproved time and again, most recently when the George W. Bush tax cuts led to huge federal deficits. But Laffer is utterly undeterred; indeed, he seems more certain than ever that he’s right.

In the years since Reagan seized on the idea, Laffer has pitched the plan to countless politicians, often persuading them to incorporate a version into their campaign proposals and budgets. His popularity among Republicans seems as strong as ever; he said he spent an hour with Jeb Bush on April 10 and has met with nearly every Republican potential candidate recently.

And the winner of the Republican primary in Kansas is....

So it was with great hope that Brownback reached out to Laffer as he searched for a policy that would help the Kansas economy — and boost his 2014 reelection chances. Laffer was given a $75,000 contract to help develop a plan, which he laid out in numerous phone calls and three meetings with Brownback.

Nine states have no income tax on wages. Laffer said he told Brownback that eliminating income taxes would encourage new businesses to locate in Kansas and existing ones to expand.

Brownback is known more for his social conservatism and antiabortion views than fiscal acumen. A Kansas native, he served as the state’s secretary of agriculture, was elected to the US House and then the US Senate, and he briefly ran for president in the 2008 cycle before being elected governor in 2010.

Brownback has long been seen as one of the leading disciples of libertarian brothers Charles and David Koch, who reportedly are spearheading an $889 million effort to help Republicans. The brothers oversee the Wichita-based Koch Industries, which employs 3,900 people in Kansas.


Employees of Koch Industries gave $127,000 to Brownback’s campaign and political committee between 1993 and 2010 for his federal campaigns, making it his most valuable donor base during that time, according to an analysis by the nonpartisan Center for Responsive Politics.

Melissa Cohlmia, a spokeswoman for Koch Industries, said the brothers and their foundations did not lobby Brownback to cut taxes and said Charles Koch, like any Kansan who pays income taxes, would benefit from the program. (David Koch is a New York resident.)

Brownback embraced Laffer’s general idea of eliminating income taxes but decided to phase it in, first eliminating income taxes for business owners and those he called job creators. He estimated that 191,000 out of the state’s 1.2 million taxpayers would be affected. That meant many better-off Kansans would no longer pay income taxes, while most salaried workers this year would pay at a rate of 4.6 percent, down from 6.45 percent.

On May 22, 2012, Brownback signed the bill and promised it would create “tens of thousands of new jobs and help make Kansas the best place in America to start and grow a small business.”

Grover Norquist, who persuaded thousands of politicians to sign an antitax pledge in his role as head of Americans for Tax Reform, hailed the governor for having “fired off the shot that said, ‘Go’ ” in a national effort to lower rates. Brownback was mentioned as a possible 2016 presidential candidate.

But Brownback had made a crucial miscalculation.

His definition of business owner turned out to be so vague that it applied to lawyers, lobbyists, freelancers, and many others. Democrats charged that thousands of Kansans gamed the new system, filing paperwork to reclassify their work in ways that enabled them to avoid taxes.

The result was that 333,000 Kansans, instead of 191,000, owed no income tax. With one-fourth of the state’s citizens and many businesses no longer paying income taxes, and many other individuals paying at a reduced rate, the state’s revenues plummeted during the first full year of Brownback’s plan from $6.4 billion to $5.6 billion. Moody’s Investor Service lowered the state’s bond rating, partly blaming the revenue shortfall.

Oh, the BANKS are UNHAPPY! They got the bigge$t block of votes.

There is, so far, no documentation that Kansans freed from paying income tax used the savings to hire new employees. Brownback said that has happened, but his office did not provide examples.

But even some Republicans who voted for Brownback’s reelection think the tax cut plan was a mistake and think the promises haven’t been fulfilled. Representative Don Hill, an Emporia Republican who opposed the initial tax cut and felt “intimidated” into supporting a follow-up measure, said he has talked to many businessowners who no longer have to pay taxes.

Hill said those individuals have gained as much as $12,000 apiece and many have put that money in “their hip pocket.” Asked whether he knew of any that had used the savings to hire new employees, he responded: “Not one.”

The effects of the revenue shortfall, and the resulting wave of spending cuts, became clear as Brownback’s 2014 reelection race heated up.


Battle with fellow Republicans

Many members of Brownback’s own party watched all this unfold with disdain. A group of 100 former and current GOP officeholders, calling themselves “Republicans for Kansas Values,” endorsed Brownback’s Democratic opponent, Paul Davis....

Bucked up by Laffer, Brownback said repeatedly on the campaign trail that his plan was working. His Democratic opponent, Davis, warned during the campaign that the deficit was even larger than Brownback said. Davis led in some summer polls but wound up losing, 50 percent to 46 percent of the vote.


Brownback was helped by the state’s increasingly conservative bent, having moved far from the moderation for which the state’s Senator Bob Dole was known. Kansas hasn’t gone Democratic in a presidential election since 1964.

Yeah, okay.

But Brownback’s tax plan clearly divided the electorate. Exit polls showed voters disapproved of President Obama by a ratio of a 67 percent to 32 percent but also said, by a 53 percent to 41 percent, that Brownback’s tax cuts had “hurt Kansas.” A key difference in the race was Brownback’s overwhelming support from religious conservatives.

A week after Brownback narrowly won reelection, his budget office conceded that the revenue picture was even worse than had been portrayed during the campaign.

Patrick did the same to Baker here, the the tune of $2 billion.

The state needed to come up with $280 million during the current fiscal year and another $436 million in the following year. Brownback expressed surprise at the time, insisting, “I knew what the public knew.”

As the revenue projections grew ever more dire, Brownback found a new target: the state’s two-decade-old formula for ensuring that Kansans in every school district receive an equal education.

Under this “equalization” program, for example, school districts received extra state money for every student poor enough to qualify for a free lunch. The intention was to enable poorer districts such as the one in Topeka to afford the same quality of education of wealthier, mostly white suburban ones.

Students at Highland Park have heard about the coming changes and are alarmed, particularly because they believe inequities already exist even with the equalization money.

Sophia Snepp, an 18-year-old senior at Highland Park, said she is proud that her school is one of the state’s most diverse. She has an unusual perspective, having previously attended a nearby school that had only a handful of minorities. The suburban school, she said, seemed to have better facilities and funding.

“If something was wrong there, they would just say, ‘We’ll buy a new computer,’ ” she said.

Brownback in March pushed through a law replacing the equalization formula with a fixed payment known as a block grant that essentially freezes funding to most school districts for two years.

A number of school districts promptly sued the state, arguing before a state court that while “Brownback refers to this as ‘a timeout in the school finance wars,’ ” the schools “see it for what it really is: a conscious decision by the State of Kansas to sacrifice the education of Kansas schoolchildren for the foreseeable future.”

Brownback stood his ground. His deputy communications director wrote in an e-mail sent from the governor’s office to supporters that replacing the equalization payments will “ensure that our educational system is not held hostage by a formula that punishes school districts for things that are out of their control, including changing demographics and numbers of students.”

The reference to “changing demographics” holding schools “hostage” set off a firestorm. The Senate minority leader, Anthony Hensley, who teaches a course in politics at Highland Park High School in addition to serving as a senator, saw a racial undertone to Brownback’s proposal. He lodged a written protest with the Senate that said the governor was “eliminating the protections” for minorities.

The Republican-controlled Legislature rejected Hensley’s protest and passed the measure in March. But the cost was high. It was another sign that the themes of the Brown case — of race and equality — were again in play.

There a lessons from Topeka’s past, cutting services amid budget woes. Anybody want to learn them?

Governor courts controversy

The entryway to the governor’s office is an homage to the state’s frontier heritage, when Kansas teemed with settlers and their dreams. A stuffed, mounted bison head greets visitors in an anteroom, overlooking the governor’s ceremonial desk, which in turn is draped with a large animal pelt.

Just outside the chamber, a mural of abolitionist John Brown, clutching a rifle in one hand and a Bible in the other, is a portrait of anger, storms swirling in the distance. In another hallway, an old poster recalls the days when Kansas beckoned newcomers with the slogan, “Room for a million!”

The governor’s office overlooks a network of city streets that feature an alarming number of empty storefronts. Politics in Kansas often seems dominated by a basic question: Are major parts of the state withering away?

Same walking down the one in this town.

Kansas’ population of 2.9 million accounts for only 0.91 percent of the United States, the lowest percentage since shortly after the state was admitted to the union in 1861. It grew last year at about one-half the national rate. The state that had six US House members in 1963 now has four and may soon only have three because of its slow population growth.

All of this is on Brownback’s mind as he enters his chambers and settles into his office couch, clutching a sheaf of charts.

Brownback, 58, cultivates a Reaganesque, happy warrior image, along with a deeply conservative, religious viewpoint. In his 2007 book, “From Power to Purpose: A Remarkable Journey of Faith and Compassion,” Brownback wrote that he once was blinded by ambition. “My soul was empty,” he wrote, until he decided to dedicate himself to his religious beliefs.

So, in 1996, he decided to run against a moderate candidate that Bob Dole had hoped would succeed him in the Senate, and then stunned the establishment by winning. If there was a moment that symbolized Kansas’ turn from moderation to conservatism, this might have been it.

These days as governor, he seems to court controversy with actions such as his February decision to unilaterally rescind an order by a Democratic predecessor that banned employment discrimination against gay, lesbian, and transgender state employees; Brownback said he didn’t approve of creating such a “protected class.”

All of this has emboldened Brownback over the years when he faces political blowback from moderates, including members of his own party. He has beaten them time and again, at least in Kansas.

So as Brownback defends his cuts, he is the picture of confidence and certitude. He portrays his plan as the best chance to revive the days when Kansas was a beacon for newcomers.

“I would submit that the tax cuts are doing what they are supposed to, spurring growth,” Brownback said. One of his charts showed that the state unemployment rate is 4.2 percent, down from 6.8 percent when he took office in January 2011. He said more Kansans are working than at any time in history, with 77,600 private sector jobs gained during his administration from January 2011 to February 2015.

Critics, however, say Kansas is not growing as fast as the US economy and cite a report that the state had lost 2,400 nonfarm jobs in March.

Which, it turns out, isn't even growing anymore.

As for criticism of his school funding plan, Brownback noted that spending is increasing slightly. He said freezing most school money for two years will enable the Legislature to come up with a more intelligent formula.

And he dismissed his critics with a taunt. “You may have heard the example of the piano in Kansas City,” he said. “The school district was spending $43,000 or something on a new piano but they couldn’t increase teacher pay.”

This is a reference to the fact that the Kansas City school district, which has one of the state’s highest numbers of low-income students, replaced a 50-year-old piano that had been used by thousands of students over the years. That is money, Brownback said, that could have been better used to increase teacher salaries.

Kansas City school officials say the example is absurd, defending the need to replace the piano and saying the governor is just trying to direct attention away from state budget cuts. Cynthia Lane, the Kansas City schools superintendent, said the state’s failure to provide suitable funds to poorer districts is drawing notice across the country.

“It is the civil rights issue of our times,” Lane said.

Brownback, meanwhile, has moved on to another target: welfare recipients. He signed legislation earlier this month that prohibits recipients from using funds for things such as cruises — even though the state has offered no evidence that this has ever been a problem. The measure was widely seen in Topeka as an attempt to direct attention away from the budget troubles.

The troubles continued anyway.

Last Monday, the state unveiled its biannual revenue projection. Brownback hoped it would show revenues had increased, thus proving his plan had worked. They showed instead that tax revenue was $87 million less than forecast in November.

The deficit in fiscal year 2016 could be $750 million, said Duane Goossen, a former Republican member of the Kansas House who served as budget director to both GOP and Democratic governors and is now a Democrat. Goossen said Brownback took a stable budget and created a crisis that other states should take as a lesson.

“Kansas has gone down a fiscally irresponsible course,” Goossen said in an interview. “At the beginning, it sounded really seductive: You can cut taxes and still bring in the same amount of revenue. But now it is very clear that has proven not to be true, and the result is that Kansas faces this huge budget deficit, which threatens services and programs.”

It's the $ame me$$age we have been getting for 35 years!

Legislators seem shellshocked by the continuing bad news. On Thursday, the state’s budget chief told lawmakers they needed to come up with $400 million to close this year’s gap. But one of the key potential sources of new money — a Brownback proposal to raise liquor and cigarette taxes — has brought him ridicule from those who once were his most ardent backers, including Grover Norquist.

A headline in the Topeka Capital-Journal underscored how quickly the bravado of two years ago has been turned on its head: “Antitax Norquist blasts Brownback’s budget for Kansas.”

More troubles are on the horizon. In May, the state Supreme Court will hear yet another challenge to Brownback’s school funding plan, with plaintiffs hoping to restore the equalization money. If that happens, the budget hole could widen even more. If it doesn’t, school districts fear the days of state-enforced equal education funding might be nearing an end....

It's a distraction from an education on which I've grown stale.


Sorry it took me so long to get through that.

Many more states turning brown:

"States debate whether to tax income or consumption" by Jay Fitzgerald Globe Correspondent  May 10, 2015

Not far from narrowly winning reelection, Governor Paul LePage rocked Maine’s political establishment earlier this year when he proposed slashing income tax rates and offsetting lost revenues by increasing and expanding sales taxes.

NOPE! Fine with the first part.

His goal: eliminating the state income tax altogether. “It is a pay raise of all working Mainers,” he told lawmakers during his State of the State speech. 

You reach the point where you are TIRED of TAXES, period. It's my money! What is government really giving you these days other than waste, fraud, and abuse with crumb benefits?

LePage is one of several Republican governors seeking to radically reshape their states’ tax systems, shifting them from taxing income — what people earn — to consumption — what people spend. The proposals are reigniting the debate over which is the best and fairest way to raise revenues without harming the economy, creating huge budget deficits, cutting critical government services, and exacerbating income inequality. 

I didn't know we were having one, and while on that:

"The typical US household saw its net worth actually decline 1.2 percent from 2010 to 2013....

Incomes for the highest-earning 1 percent of Americans soared 31 percent from 2009 through 2012....

And after 30 years of skyrocketing income inequality, the top 1 percent now control a bigger share of wealth than they have since FDR, [and] not only are the rich getting richer — they’re getting taxed less, too."

It is a debate that will almost certainly play out in the upcoming presidential campaign and eventually in Washington, where the issue of tax reform is already simmering. 

Is it? Lot of talk and hot air, but not a lot of $team behind it.

Consumption tax supporters say such a system encourages people to work, save, and invest, leading to stronger economic and job growth. Opponents, however, say sales taxes fall most heavily on low-income families, who must spend higher proportions of their earnings; expand the gap between rich and poor; and hurt an economy driven by consumer spending.


In Kansas, Louisiana, Ohio, South Carolina, and other states where Republicans control the governor’s office and at least one legislative chamber, lawmakers are considering plans similar to those of LePage. The Maine governor has proposed slashing the 7.95 percent income tax rate to 5.75 percent, raising the sales tax to 6.5 percent from 5.5 percent, and extending it to cover services from accounting to haircuts.

In Ohio, Governor John Kasich has pushed for a 23 percent cut in income taxes over two years while raising the state’s sales tax to 6.25 from 5.75 percent.

Isn't he also running for president?

In South Carolina, Governor Nikki Haley is demanding a cut in the state’s income tax in exchange for raising the gas tax.

She's was one of the coven of Repug women I worked tirelessly for to get elected here, the only one that won that year. I was excited and disappointed then; now I don't give a $hit what letter is after their name. They should be like the race cars. Sponsor stickers on the suit, largest donors most visible.

Governor Sam Brownback led the charge in Kansas to slice the top income tax rate by about 30 percent while Louisiana’s governor, Bobby Jindal, pushed through the largest income tax cut in that state’s history.

Democrats have largely been thrown on the defensive in these states, losing key legislative votes and offering their own tax overhaul plans, such as limiting tax cuts to middle-class residents, to blunt the momentum of Republicans.

Puts the rigged votes in a different light, huh?

Generally, Democrats argue that GOP policies are a modern version of Reagan-era “trickle down economics” that benefit the wealthy at the expense of others.

Massachusetts has a Republican governor, Charlie Baker, but both legislative chambers have been controlled by Democrats for more than a half century, making it highly unlikely a serious income-versus-sales tax battle will break out here.

Ironically, considering partisan lines in other parts of the country, Massachusetts Democrats have sometimes followed a Republican-like script.

I didn't want to say anything, but....

In 2009, the Legislature hiked the state sales tax rate to 6.25 from 5 percent to plug a budget deficit, and, a few years ago, extended the sales tax to software services — later repealed following an outcry by technology companies. The state’s income tax, meanwhile, automatically fell this year to 5.15 percent from 5.2 percent.

Also see:    

"Legislators also agreed last week to change legal language in the recently passed sales tax hike to assure credit agencies that $100 million earmarked for the Turnpike Authority would go toward paying off Big Dig debt 

The income tax vote was required by ballot vote referendum, and the state fudged the figures for a long time before letting it through.

Max Behlkie, manager of federal and state relations at the National Conference of State Legislatures, said the tax policy battles are driven by changing political dynamics in state houses. In recent years, he noted, Republicans have solidified their control over most legislatures, today controlling 68 of 99 chambers in the country. “When you get down to it,” Behlkie said, “it’s about politics and about the different party views on how taxes should be applied.” 

The loot still seems to go to the same people.

About 36 percent of all revenues collected by states come from income taxes and about 32 percent from general state sales taxes, according to US Census data. The collections tilt in favor of sales taxes when “selective” levies, such as taxes on lodging and restaurant meals, are included.

In all, 43 states have income taxes and 45 have sales taxes, according to the National Conference of State Legislatures.

Republicans often cite the strong economic performance of Texas, which has no income tax, but a 6.25 percent state sales tax. Last year, Texas led the nation in the number of jobs created, 458,000. It had the second-fastest job growth rate.

But Democrats and liberal scholars cite Kansas to counter the Texas example.


There, Brownback pushed through big income tax cuts in 2012 and 2013 without offsetting sales tax increases. Since then, the state has endured huge budget deficits, credit downgrades, cuts in education funding, and, until recently, subpar economic growth.

Maybe they are coming out of it, ha-ha.

“All these Republican governors are buying into the assumption that cutting income taxes automatically leads to economic growth and that they can rely more on sales taxes,” said Kim Rueben, a senior fellow at the Tax Policy Center, a joint venture of the liberal-leaning Brookings Institution and Urban Institute. “It’s a very regressive way to raise revenues.”

Rueben said she has studied the economic impact of cutting income taxes and found only a “small effect” in terms of growth. Economic growth in states is usually driven by other factors, such as the historically strong oil industry in Texas.

They are laying off tens of thousands.

In Maine, where Republicans control the Senate as well as the governor’s office, LePage has said he will propose a constitutional amendment to eliminate the state income tax, and, like Texas, raise revenues mostly from sales taxes.

“With consumption taxes, you make the choice,” LePage said in his State of the State address in February. “You decide where you spend your money.”

I like him only because the Globe does not.

He faces a major obstacle in enacting his policies — the Democrat-controlled House. Asked if the governor would get all or some of his tax proposals through the House this spring, LePage’s director of policy and management, Jonathan LaBonte, would only say that the governor can always campaign against lawmakers who oppose his policies in the 2016 election.

Maine’s House Democrats say they welcome the fight. They say they are determined to block LePage’s push to eliminate the income tax, which they argue amounts to a giveaway to the rich. The differences between the two parties couldn’t be more stark, they add, and Maine residents face a clear choice....

Which corporate-controlled party would you like to be ruled by?


The Last of the Moderates (in Maine):

"Maine’s Susan Collins a force for consensus" by Jessica Meyers Globe Staff  May 06, 2015

WASHINGTON — The February menu featured lobster salad, wild blueberry pies, and the indulgence of Gifford’s Ice Cream. The ingredients for this buffet of good will came from the home state of Senator Susan Collins, a Republican long known for her moderate views and willingness to find compromise.

She seemed a fitting host for a new Republican-led Senate determined to rectify the dysfunction that has mired Congress. As senators struggle to pass even innocuous bills, Collins is emerging as a lifeline for moderate Democrats and a counterbalance to the GOP’s right flank — a catalyst for compromise in a sea of intractable ideologies.

Unless it comes to Wall Street, the war machine, Isreal, etc, etc. I'm so tired of the narrative.

Collins no longer sits in the shadow of Senator Olympia Snowe, a Republican and iconic Maine moderate who retired at the end of 2012. Collins has cultivated relationships with a powerful contingent of female senators, the largest number ever to serve in the chamber.


And she has an opportunity this session to test her skill as a prominent dealmaker on challenging issues that range from raising the minimum wage to financing long-term repairs for the country’s crumbling infrastructure.

“The Senate is supposed to be the greatest deliberative body in the world, and in the last two years, we don’t seem to have done much deliberating,” Collins said in her Capitol Hill office, filled with home state mementos from her nearly two decades in office.

The sedate, 62-year-old senator, quickly dove into the Senate’s thorniest issues.

You know, homeland security, immigration, abortion. I hope she's not on drugs.


In a Senate where the loudest GOP voices frequently get the most attention — Senator Ted Cruz of Texas as Exhibit A — Democrats lavish praise on Collins as someone with whom they can work.

Lawmakers have started to show signs of compromise, namely by fixing a Medicare payment formula that had long vexed doctors and, in a separate dispute, crafting a role for Congress in negotiations with Iran. Bipartisan cooperation is crucial to moving legislation through the Senate; the Senate Republican leadership needs at least six Democratic votes to reach 60 and break filibusters, so someone has to meet in the middle. 

That's a very important issue!

“I see my role as someone who has credibility with senators on both sides, who deals in good faith, and . . . is willing to put the time in to figure out what matters most to each side,” Collins said.

It’s a role grounded in Maine’s unique stature and history. The rural state, with a strong independent streak, occupies a corner of the political landscape all by itself — a last bastion of a vanishing brand of moderate Republican politics....

I'm going to make the rest of the fawning print vanish.


Time for me to get some gruel.


"The goal of Donald Sussman, husband of US Representative Chellie Pingree, Democrat of Maine, was never to own the newspapers over the long haul but to ensure the newspapers’ survival, said Lisa DeSisto, the publisher of MaineToday Media. Cliff Schechtman, executive editor of the Press Herald, said the arrangement allows the newspaper to continue watchdog journalism." 

Time for a nap.