Tuesday, September 16, 2014

Republican economic plan flops

The new Republican majority in the N.C. General Assembly was going to fix the state budget and the state's economy. It's not working out that well.

Despite boasting by Gov. Pat McCrory, North Carolina's economy is, overall, not much to brag about. Unemployment remains high in many counties, with only the heavily populated and well educated areas around the Triangle, Triad and Charlotte enjoying much of an economic surge. Other counties in the east, mountains and middle of the state are still flirting with double-digit unemployment.

The legislature's solution of drastically reducing the length of time a laid-off worker could draw unemployment insurance and the amount of those payments has not fired up the state's economy. Backers of this change claimed the unemployed were out of work because they enjoyed being idle, not because there were no jobs to be found. The results thus far show the Republicans were dead wrong, but it's the unemployed who are paying the price for their miscalculation.

The latest refutation of the Republican economic strategy comes from the state treasury: the state's revenues are down sharply, and officials are blaming the reduction on the legislature's revamping of the income tax. Legislators cut the state income tax for everyone and did away with any semblance of a progressive income tax. Now all taxpayers pay the same, reduced rate. As a result, the state is getting reduced revenues, and that further cuts the money available for providing state services. Reducing taxes does not automatically increase job creation and spending.

The political makeup of the legislature is locked in until after the 2020 census, when electoral districts will be redrawn, so Republicans have little motivation to admit their errors and get the state back on track. The poor performance of the Republican majority's economic experiment, however, could have an impact on this year's U.S. Senate race. Thom Tillis, the GOP speaker of the House, had planned to run on his record, which he still claims has benefited North Carolina — lower tax rates, reductions in school funding and a punitive attitude toward those who are out of work. Kay Hagan, the Democratic incumbent, has not had a stellar record, but she has not been responsible for the sinking revenues, destitute out-of-work residents and defunding of public education. 

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