Ohio Gov. John Kasich likes to brag these days that he’s produced a $2 billion surplus. He especially likes to make this claim to his dear friends at Fox News where he knows it’s always softball time. Yet no one quite knows what he did and he doesn’t have to explain how he supposedly resurrected Ohio from the dead.
His answer would be curious, indeed, now that Ohio sleeps with the fishes as one of the last dozen states that have yet to recover their job losses to pre-Great Recession levels.
The answer is simple, and it’s not due to cutting income tax rates as the secret sauce no one other governor or legislature has figured out but Ohio. Showing his age, the 62-year old Kasich remains a proud and uncompromising relic of the Reagan Era of supply side economics, which was popularized by his political friend and role model, Jack Kemp, a former Congressman from Buffalo who ran and lost as a candidate for vice president in 1996. Mr. Kasich devoutly preaches fiscal discipline—and wants to “impose” fiscal discipline on Congress via a federal balanced budget amendment—even though he has avoided his own teachings with little fear Ohio media will call him on it. When he’s out evangelizing on what he’s done so far, he doesn’t brag about proposing the three biggest budgets in state history, which would make Gov. Kasich seem every inch a tax and spend politician, not the advocate of austerity budgets that actually get smaller, an achievement Kasich’s predecessor, Gov. Ted Strickland, did do. Each of Ohio’s budgets under Kasich have done the opposite.
Is the so-called “Ohio model” really any different from the Wisconsin model, the South Carolina model, the Florida model, the Tennessee model, the Maine model or the New Jersey model? The group of Republican governors in the class of 2010, which included Mr. Kasich, have all done the same thing with the help of lawmakers: cut incomes tax rates and raised other taxes to pay for them, or withhold other transfer payments to fund giveaways to the already wealthy class. Put simply, Kasich and his cohorts have all tax-shifted from the rich to middle-class and low-income earners.
They do so claiming cutting income taxes perform economic miracles with little evidence to support their belief system. For the Kasich crowd, if raising all other taxes or fees to get there is the recipe, so be it.
Poor Ohio And It’s Poor Ohio Model
On Monday, a progressive economic think tank said Ohio leads a group of twelve states that have yet to recover the total number of jobs lost to the 2007 recession. Policy Matters Ohio, relying on the most recent jobs data released by the Ohio Department of Job and Family Services, said Ohio is still “off the mark by 0.6 percent, or a little more than 32,000 jobs.” At the same time, the nation has added back all the jobs lost, plus an additional 2.0 percent, PMO said. Backing this up, of course, is The W.P. Carey School of Business at Arizona State University, which calculates Ohio is 37th among the 50 states in job creation.
“Much of Ohio’s tax and budget policy is based on the premise that lower taxes and less government spending generates faster job growth. That promise has not panned out,” PMO study author Hannah Halbert.
As Gov. Kasich brags about his surplus, no one should be fooled that the administration achieved without shortchanging local governments. Gov. Kasich’s executive budget, which offers $1.4 billion less in his proposed 2016-17 budget than in fiscal years 2010 and 2011, is already experiencing legislative turbulence as it gets man-handled by a dominant Republican legislature.
To be fair to Team Kasich, PMO says some local governments will see revenue increases compared to the current year budget, when not adjusted for inflation. But remembering where Gov. Strickland left local governments at the end of his term, funding to local governments, while benefiting about $300 million more than in the current year, is still far away from the partnership it used to be. “This is a half-step forward that doesn’t compensate for a previous full leap backward” PMO’s Wendy Patton reported.
“Statewide, this budget [Kasich’s 3rd] provides some restoration from a low point, which is a good thing. Nonetheless, many local governments will experience losses, especially special districts that provide health and human services,” Patton said. She added, “This is not the time to resume cutting. We need investment in Ohio’s communities and people, not more cuts.”
For people like Gov. Kasich who adore the private sector and corporations in particular, the failure for public sector jobs to be restored has made the difference between a roaring recovery and a too slow growing recovery, as experts say it is now. Other informed voices worry that government jobs, including police, firefighters, teachers, nurses and others, may not come back to pre-Great Recession levels. And because of this failure to launch in the pubic sector, hard-right governors like Kasich come up empty handed when their tax cuts don’t prove to be the economic elixir they claimed they would be.
Currently, President Obama’s second term is on pace to be the second best ever for private job creation. However, with very few public sector jobs added, Obama’s 2nd term is only on pace to be the third best for total job creation.
For those who watch job creation figures, the fact is that only 21 thousand public sector jobs have been added during the first twenty six months of the president’s second term. The Great Recession fouled the national economy with the loss of 702 thousand public sector jobs during the president’s first term. According to Bill McBride at Calculated Risk, a well respected finance and economics Website, “This is less than 2% of the public sector jobs added during Reagan’s 2nd term!”