Policy Wonk: Facts, facts, I like facts

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A recent letter in a local newspaper chided Democrats for ignoring empirical evidence that Republican economic policies are working. Maine’s unemployment rate is 5.7 percent, the letter pointed out, while the national unemployment rate is 6.3 percent. The implied message: Gov. Paul LePage deserves to be re-elected.

But the fact is, Maine’s non-farm job growth since January 2011 – when LePage took office – has been slower than the country’s job growth and slower than that of any other New England state.

The fact is, Maine Center for Economic Policy data show Maine ranked 49th among the 50 states in the recovery of non-farm jobs lost during the recession.

We’re recovering, but most other states and the country as a whole are recovering much faster. The governor’s policies have not worked. That’s the fact.

LePage’s major policy failures include:

1. Cutting taxes to stimulate the economy.

The governor put in place income, estate and gas tax cuts totaling $450 million dollars. The lion’s share of these cuts benefited the wealthy – the so-called “job creators.” LePage argued these cuts would jump-start Maine’s economy. That didn’t happen, just as it hasn’t happened at the national level.

President George W. Bush’s income tax cuts in 2001 and 2003 (which also largely benefited the wealthy) did not prevent recession. They did not pull us out of recession. It is absurd to believe that tax policies that failed the nation would somehow work in Maine. It is doubly absurd to believe that decreasing taxes would increase jobs; history clearly shows that taxes were significantly higher during the most robust periods of job growth in the post-World War II era. Tax cuts do not create jobs or economic vitality. That’s the fact.

2. Refusing to issue bonds.

The governor’s reasoning stood logic on its head. With the state and the country in recession, private demand for goods and services had fallen. Government demand – for infrastructure improvements like road repair, sewer upgrades and school construction – could have stabilized the economy and created jobs. But that didn’t happen.

LePage chose to ignore fact that bond interest rates were low, unemployment was high, construction companies were looking for work and cutting bid prices, and Maine had a huge backlog of infrastructure projects. At a time when a robust bond policy was needed – one that would have put thousands of Mainers to work, and provided improvements at bargain prices – the governor refused to issue bonds. Consequently, Maine’s recession was prolonged and the backlog grew. That’s the fact.

3. Refusing to participate in Medicaid expansion under the Affordable Care Act.

Every Mainer sends income, Social Security and gas tax dollars to Washington. In turn, the federal government sends dollars back to the states, based on their needs. The feds will fund 100 percent of the ACA for three years, and 90 percent afterward. Maine doesn’t turn down federal funds for small business assistance, highway improvement, agriculture support and other needs; accepting these funds saves Maine money. So why turn down nearly $1 billion in federal dollars that will provide health insurance to 70,000 Mainers? It makes no sense.

MECEP data show that every hospital in the state would benefit from the ACA dollars. Over 4,000 health care jobs would be created. Thousands of Mainers would be healthier, lives would be saved. But LePage doggedly ignores these facts. He has vetoed participation in the ACA four times, already depriving Maine of $117 million federal dollars. This is the single most ruinous economic blunder any governor has made. That’s the fact.

Beyond these major tax and economic policy errors, LePage’s gaffes include:

4. Paying for his tax cuts by reducing state employee and teacher retirement benefits, canceling road and bridge repairs, and cutting programs that assist the poor, handicapped and elderly. This type of budgeting is not sustainable. It scapegoats those who are most in need, and it does nothing to create jobs or improve the economy.

5. Driving Statoil, a global wind energy producer, out of Maine in favor of UMO’s Composites Center, which relies on wind technology five years behind the curve. Again, a decision that made no sense. This was borne out when the federal government, ready to hand out six wind energy demonstration grants totaling nearly $300 million, declined UMO’s proposal. Statoil was positioned to receive one of the grants, which would have put Maine at the forefront of offshore wind energy research and production. That won’t happen now.

6. Cutting revenue sharing to the bone. Reducing these state dollars – LePage wanted to kill them altogether – simply increases property tax burdens that are already high and regressive. Low-income homeowners, small businesses, and towns with small tax bases are hurt the most. It’s an unfair tax shift. And again, it doesn’t create jobs or grow the economy.

These facts are supported by empirical evidence that every Mainer should examine. The facts show one policy error after another. Taken together, the facts show why the governor should not be re-elected. We can do better.

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Orlando Delogu of Portland is emeritus professor of law at the University of Maine School of Law and a longtime public policy consultant to federal, state and local government agencies and officials. He can be reached at orlando.delogu@maine.edu.