[speedgibson] Speed Gibson: Mr. Smith goes to the NARN (part 1)

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Posted by Speed Gibson:
Mr. Smith goes to the NARN (part 1)
http://speedgibson.powerblogs.com/posts/1208752953.shtml


   As I posted earlier, veteran Minneapolis Star Tribune reporter Dane
   Smith, now President of [1]Growth & Justice appeared in studio on the
   NARN this past Saturday from 2-3 pm with Mitch Berg and Captain Ed
   Morrissey. It was a remarkably clear insight into the delusion that is
   Minnesota liberalism. Let me begin with Dane Smith's opening
   statement. The following is my personal transcription, edited for
   clarity.

     Dane Smith: Growth and Justice really is a kind of center to
     progressive think tank that emphasizes the idea that certain
     investments, smart investments, and ample investments in the public
     sector are actually good for the economy. That's a real shorthand.
     We think that smart investments in education, in transportation,
     public health and other things actually work for the economy and we
     think that we have the numbers to show it. Or at least to show that
     Minnesota did quite well with higher taxes and bigger government in
     previous years. I think I'm sophisticated enough to know that
     there's not easy cause and effect on this stuff, but at the very
     least I think arguing that slashing taxes and making government as
     small as possible hasn't proven so far to be a formula for success.
     Mitch Berg:We wouldn't know because we haven't really tried it.
     There's been no period in Minnesota history where you've either
     slashed taxes in any sense that any real slasher would regard as a
     slash and government hasn't really shrunk in Minnesota ever.
     Dane Smith: Actually it has. Ten years ago, the Minnesota Taxpayers
     Association, the other conservative tax organization in this state,
     their statistics show, and these are commonly accepted and used
     statistics from the Census Bureau study of state and local
     governments , the effective tax rate was about 13 percent in the
     mid-90's. A combination of rebates and cuts over the last ten years
     have reduced that to 11.7 with the biggest cut coming in 1999 and
     2000 from the income tax cuts. So we are right now in a big
     experiment with smaller government. The actual tax has dropped [1.3
     percentage points] and that is significant.

   First, the effective tax percentages quoted are actually from the
   biannual tax incidence study published by the Minnesota Revenue
   department as required by law since 1990. Smith's figures are correct,
   however, that the effective tax rate was 13.0 percent in 1994, 11.7
   percent now. Let the record also show that it was 12.0 percent in
   1990, and given the tax increases just passed, will soon be there
   again.
   Yes, it fell during the Ventura adminstration, to 11.2 percent by 2000
   in fact. But let's remember that the rebates and rate cuts were in
   response to huge, unanticipated (and temporary) increases in revenue
   from the dot-com and Y2K bubbles. Let us also remember that most of
   that windfall was spent, not rebated. Having raised spending
   significantly and permanently against a temporary revenue surge, was
   it any wonder we faced a "mega-honking" deficit in the wake of 9/11?
   Ventura's two budgets raised general fund expenditures by 13.8 and
   14.1 percent, about 30 percent over the four years, far more than
   inflation, personal income growth, or GDP growth. So no, the
   government did not do without. We could afford those rebates. Besides,
   didn't they in turn stimulate the economy?
   The tax incidence study tallies what we pay, not what the state
   spends, which is larger because as the report notes, several billion
   dollars of spending are paid by outsiders, such as tourists. This is
   slightly misleading as we and our employers pay taxes in other states,
   not shown here.
   Finally, this study only covers only the General Fund, which is
   perhaps 70 percent of total spending. Who pays for that? Even Federal
   money is ultimately our money, after Congress has pocketed about 30
   percent of it in carrying charges.
   Sorry Dane, but what we've really seen the past ten years is an
   experiment in BIG government. And the ten years before that, and the
   the years before that ...
   Next time - whether you call it big or small government, does all that
   money truly pay for a better Minnesota?

References

   1. http://www.growthandjustice.org/