NC changes in context

Another Sunday, another great Rob Christensen column on the NC legislature.  As WRAL reporter Laura Leslie put it, “nobody brings the historical context like Rob C.”  So, here it is:

RALEIGH — Call it the big shift – a sharp right pivot by North Carolina state government in spending priorities, taxes, social policies and even in tone.

Not since the 1930s, when North Carolina was staggered by the Great Depression, has a legislature performed such radical surgery on the state’s body politic. This legislature moved to a flat tax and away from a graduated income tax first enacted in 1921, cut unemployment benefits to 1951 levels, turned down federal health insurance for the poor and made voting more difficult…

For generations, North Carolina tended to walk a middle path, spending more on roads, universities and culture, and later on community colleges and research parks, as a way to modernize. Often called “the North Carolina way,” the approach was backed by the state’s forward-looking business leadership as an alternative to the low-tax, low-regulation strategies of much of the rest of the South.

At one time, other creative Southern governors – from Bill Clinton of Arkansas to William Winter of Mississippi – beat a path to North Carolina to learn about the newest policy innovations. Now the conversation in Raleigh has flipped. It is focused on how North Carolina can catch up to its neighbors by having the lowest taxes and the fewest regulations. North Carolina has moved from being a regional leader to a follower…

The driving intellectual idea in the session has been the Republican faith in Reaganomics – that broad tax breaks would stimulate North Carolina’s economy and lessen the state’s lingering high unemployment. Legislative leaders even brought in Arthur Laffer, the father of supply-side economics, to Raleigh to sing its praises.

The historic tax cuts – and ultimately the state budget – that were the centerpiece of the legislature’s work were shaped by the Reaganomics idea.

But the legislature’s reliance on huge tax cuts is a major gamble for the state. Michael Walden, an economist with N.C. State University, said that while everyone likes to pay less tax, there’s little evidence that lower taxes will actually have much of an effect on the state’s economic growth.

“The preponderance of evidence that has been published by economists in peer review journals is that state taxes have at most a modest – modest – impact on economic growth,” Walden said. “The reason is that states have to operate under a balanced budget. When they cut taxes they usually have to cut services. Businesses benefit from state services. They benefit from an educated work force. They benefit from the transportation system.

“So will the cut in state taxes set off an economic boom in North Carolina? I would say based on the literature that I have looked at, which is extensive, no.”

Well, the Republicans have not exactly distinguished themselves in looking for evidence to guide policy.  Who needs evidence when you know lower taxes are a genuine panacea?   And here’s something new I learned about Jesse Helms:

Underlying much of the discussion is a question of the size of government.

It was expensive for North Carolina to become known as “the good roads state” and to build an extensive university and community college system. That’s why North Carolina is not a low tax-state.

At every step along the way, conservatives unsuccessfully fought the expansion of services. Conservative icon Jesse Helms, then a WRAL commentator, editorialized against creating a community college system, saying the state could save money by relying on its network of private colleges.

Now the legislature is filled with lawmakers who view Helms as a role model.

Yowza!  How fabulously short-sighted can you be?!  Well, I guess we know.  You know if this was just some philosophical disagreement about the size of government, that would be one thing.  But, the Republicans are systematically and pervasively undertaking policies which will lead to a diminished North Carolina far into the future.  And that’s just sad.

About Steve Greene
Professor of Political Science at NC State

One Response to NC changes in context

  1. Deborah Ferry says:

    And look at the human toll. No health care for any but the most destitute. Reduced educational opportunities. Penalizing those unemployed through no fault of their own. Maybe some of these Tea Party fanatics will be given their walking papers after the next election, but that will require those hurt most to vote in favor of their own self-interest.

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