Friday, February 7th, 2014

Has Scott Walker Really Turned Around Wisconsin?

I’ve seen a few pieces in the conservative press lately boasting about Scott Walker’s performance as governor of Wisconsin. For example, the American Spectator ran an article called “Wisconsin Thrives Under Scott Walker“:

In 2011, Wisconsin had a whopping deficit of $3.6 billion dollars. But a cooperate tax cut and collective bargaining reforms invigorated the state economy. Now, the state is boasting a $911 million surplus, credited to “good stewardship of the taxpayers’ money.”

And what will Walker do? Buy his wife a $19,000 dress? Increase his paycheck? Go on vacation? Nope. He’s proposing $800 million in tax cuts. “What do you do with a surplus? Give it back to the people who earned it. It’s your money,” Walker said.

I find these articles revealing because they show how the Tea Party mindset has affected the definition of success in Republican circles generally. Why has Scott Walker been a success in their view? Because Wisconsin’s state government is financially healthy. The actual people of Wisconsin take a back seat to that. A friend of mine in Indiana summed up the mindset when she noted that many people today equate the financial health of government with the well-being of the people in the state.

This I think is the Tea Party mindset writ large. As I’ve noted before, under Tea Party influence, Republicans have come to see government as purely a fiscal machine in which nearly the entirety of good policy consists in reducing the amount of money flowing through it. This is rooted in a single factor determinism view of economics. Much like Marxism, it has a base and a superstructure. The base in Tea Party thinking is government. If you shrink it, the theory goes, prosperity must inevitably follow.

The fiscal health of government is no doubt important. But to determine if Wisconsin is actually “thriving” you need to look at statistics that actually affect people. So let’s do that. Scott Walker took office in January 2011. So here is the percentage change in jobs in Midwest states between December 2010 and December 2013 from the Bureau of Labor Statistics:

Wisconsin actually doesn’t rank that well in job growth during Scott Walker’s administration, barely beating fiscal basket case Illinois. The state looks better in its unemployment rate:

However, in part that’s because Wisconsin’s unemployment rate was already low on a relative basis when Walker took over. It ranks near the bottom in reducing its unemployment rate, though obviously reductions are harder to come by when you’re already lower. Michigan had nowhere to go but down.

I actually support many of Scott Walker’s reforms. Public sector unions clearly need to be reigned in or even eliminated as they are a huge barrier to rational fiscal management and effective service delivery in addition to being an inherently corrupting political force. Items like allowing unions to force localities to buy health insurance through union affiliated firms at inflated rate were clearly abusive.

It’s also early to judge, and this is monthly data that is fairly volatile, even though it’s seasonably adjusted and with a same month comparison. There just isn’t that much other data available.

What I object to is declaring victory when the budget is balanced. The attitude exposed by this is profoundly revealing and shows everything that’s wrong with Tea Party type thinking. It’s obvious that people claiming Wisconsin has thrived under Walker didn’t even take a cursory look at the actual economic performance of the state.

Wisconsin balanced its budget? Big deal. You’re supposed to balance the budget. That’s just doing your job. It shows how far we’ve come that you can receive plaudits simply for meeting what should have been the baseline expectation.

The charts above should also cause a reconsideration of the notion that government finances are the primary determinant of business climate and economic growth. There are states on both the left and right of that issue that are both thriving and struggling. Part of it is that states have limited power in the modern economy. There’s only a limited amount they can do to make things better, whereas they can definitely screw it up.

Also, the natural condition of a participant in a marketplace is failure. The vast majority of new businesses fail. Similarly, places can fail too, and having a budget surplus can’t necessarily stave that off.

My view is that while state governments are weak actors and there’s a risk of screwing it up, the likelihood of failure in the marketplace is high enough that government does actually have to try to do things. By all means prudent finances and a good regulatory climate need to be maintained, but if you think that’s enough to save you, you’ve got another thing coming. Now that Scott Walker has repaired the budget, what’s his actual plan moving forward to try to build actual personal and marketplace success for Wisconsin residents and businesses? That’s what will determine his actual legacy. It’s in whether he boosts the fortunes of the state’s residents over the longer term, and manages to bend the curve of progress in a positive direction over time.

16 Comments
Topics: Economic Development, Public Policy
Cities: Madison (Wisconsin), Milwaukee

16 Responses to “Has Scott Walker Really Turned Around Wisconsin?”

  1. Jonathan says:

    Great post. Seems to me that the state can’t do much to help businesses, but it can do a great deal to help poor residents. Perhaps the singleminded focus on state finances is a way to avoid considering poor Wisconsinites as actual constituents with value.

  2. Gene says:

    Pot, meet kettle.

    So what should the state of Wisconsin do with $911 million ? Piss it away on new stadiums ? Militarize their state police ? Waste it on daycare ? That’s what other states are doing.

    Democrats will spend whatever money is available enriching public sector union members and asinine public works projects. The only way to stop this is to starve the beast.

    “Public sector unions clearly need to be reigned in or even eliminated…” – hey, if they did that, total remuneration for teachers would be cut in half, to match the Catholic schools. That would leave residents with more money in their pockets.

    At the federal level, the end result of a generation of deficit spending is the US military has bases EVERYwhere in the world. The NSA has the money to spy on citizens to a level only dreamed of by the East German Stasi. Starve the beast by balancing the federal budget, and suddenly choices have to be made. Do we want to keep Guantanamo open, or provide basic human services ? OMG we want both !!!

  3. Joe says:

    As a Wisconsin resident, I can tell you that Walker’s reforms have been wonderful for the wealthy and done exactly nothing for the rest of us. More than that, his ideological opposition to any form of transit but the automobile has kneecapped my state’s competitiveness in attracting talent from up-and-coming generations. While the Midwest evolves, Wisconsinites will be paying for his policies long after he leaves office.

  4. Derek Rutherford says:

    I am sure the pensioners in Detroit, faced with taking haircuts due to the city’s bankruptcy, wish they had elected a Mayor like Walker 20 years ago.

    At the rate IL is going, citizens there might end up wishing they had elected someone like Walker.

    If the next WI governor decides to invest in something expensive and photogenic, that person will be able to thank Walker for leaving the cupboard full (but probably won’t).

    It is easy to pour money into something visible and trendy and get lots of positive coverage. When that money is siphoned into union-affiliated health scams (like WI) or looted by union-(mis)run pension funds (like Detroit), no one covers that. Walker has actually done the politically painful work of straightening out these abuses (well, some of them) and given the state government some long-term flexibility with which it can address future needs, not just struggle to meet promises. Future WI governors will benefit from Walker’s work, even if they don’t thank him.

  5. “Wisconsin balanced its budget? Big deal. You’re supposed to balance the budget.”

    Tell that to Illinois or the Feds. It is a big deal and apparently too hard for IL / the US.

  6. Stephen Popolizio says:

    I am trying to make head or tail out of this contradictory article.

    So it’s a good thing that unions can no longer coerce public employees to funnel money to Democrat politicians that supported union corruption at taxpayer expense, but a bad thing that the result has been lower tax burdens and a budget surplus?

    Perhaps balanced budgets, in themselves, do not result in greater economic improvement but surely lower tax burdens allow more money to be invested and spent in the private sector, creating conditions favorable to hiring and consumer spending.

    The problem with a state’s economy is not a balanced budget but other factors that discourage economic development, and let’s be frank: the Affordable Care Act, increased federal corporate, business and personal tax rates, onerous government regulations, soaring federal debt, inter alia.

    It makes no sense lay Wisconsin’s economic performance at the feet of the Tea Party (Like Marxism? Really??). What Walker accomplished in Wisconsin is a big deal. Would you prefer that Wisconsin emulate Illinois?

    A couple of years ago you wrote an excellent piece on Columbus (Indiana) in which you set forth a formula:

    An aggressive, pro-business attitude +
    A commitment to excellence +
    High quality, efficiently delivered public services +
    Competitive costs +
    A rich awareness of the global world we live in +
    Striving to create a community outsiders might choose to live in =
    ————————————————————–
    Population growth
    Economic growth (jobs, output),
    High wages,
    Tax base growth,
    Quality infrastructure and services,
    Low taxes

    Do not Walker’s accomplishments fit squarely in with the top portion of your equation, even if more remains to be done?

  7. @Stephen, I haven’t followed all of Walker’s initiatives, so keep that in mind. But from what I’ve seen he does not match the characteristics of Columbus, Indiana. He seems to be mostly around pro-business and competitive costs.

  8. Anonymous says:

    In a recent Daily Caller xolumn by Matt Lewis, he contrasted Walker’s improvements re business climate with Minnesota’s recent hard left turns (e.g. tax increases, new Vikings stadium levy, illegals instate tuition). I live near the Il/wi border and kind of view the more suburban areas of Kenosha and Racine counties as idyllic. I wonder if Twin Cities people are voting with feet and relocating to areas of Wisconsin just east of St.Paul.

  9. Chris Barnett says:

    Minnesota has only been moderately conservative for 10-20 years. Before that it was always very progressive. Ever hear of Hubert Humphrey or Walter Mondale?

  10. elizabeth says:

    I like your blog. I grew up in Louisville and southern Indiana and now live in Manhattan, so I like where you come from. But I don’t think you really understand the Tea Party. Fiscal solvency (e.g., of government) is not just about money and the bottom line; it also leads to personal solvency. The reverse also applies: being personally insolvent often leads to financial insolvency. In other words, fiscal policy has social outcomes.

  11. AIM says:

    “Perhaps balanced budgets, in themselves, do not result in greater economic improvement but surely lower tax burdens allow more money to be invested and spent in the private sector, creating conditions favorable to hiring and consumer spending.

    The problem with a state’s economy is not a balanced budget but other factors that discourage economic development, and let’s be frank: the Affordable Care Act, increased federal corporate, business and personal tax rates, onerous government regulations, soaring federal debt, inter alia.”

    If this were true, the states with the lowest tax rates would trounce those with higher tax rates. But that isn’t always the case. As for the supposed drag caused by federal actions, those would affect all states equally. Why isn’t Wisconsin putting up Texas style growth rates if Walker is following the same approach towards government as Rick Perry?

  12. When I was kid my family was very poor. My mother always balanced our budget, and no doubt things would have been much, much worse if she hadn’t (versus the pretty good “poor but didn’t know it” experience I had growing up). Nevertheless, balancing our household budget in and of itself did not bring prosperity to our home.

  13. the urban politician says:

    Aaron, interesting post but I’ll have to agree with the critics here.

    Wisconsin’s poor performance under Walker may not necessarily be a result of his policies. A quick glance at Illinois performance during the same time period will give you an idea of the “fruits” of the opposite (tax, borrow, and spend) approach.

    If you’re going to have poor growth and high unemployment, I’d much rather have a fiscally solvent State Govt than not.

  14. the urban politician says:

    I’d also like to add that you are missing the whole point by making this argument.

    You are still looking at this from a “Government can fix everything” point of view. I’m not a Tea Partier, but my impression of their point of view is that they don’t see Government as the solution. They see Government as a necessary evil, and one that should become as small and uninvolved with commerce as possible.

    All Government should be doing is performing its basic functions and keeping its fiscal house in order, the rest is up to the private market. If Wisconsin is performing poorly, that is the private market’s fault. If Wisconsin is performing well, kudos to private industry. Government should neither take blame or acclaim, at least ideally.

    I tend to think we have gone too far in our society of late in putting the onus on Government to “fix the economy” (ie “What’s the new President going to do to fix unemployment?”). As a society we have rather become addicted to that point of view, to the point that this question is expected to be asked of every new elected official. So in a sense, we have all become Democrats by default..

  15. Stephen Popolizio says:

    @AIM: Sales tax in Texas is slightly higher than in Wisconsin (6.25 vs. 5%)but Texas has no state income or corporate tax. In Wisconsin these are 6.35 and 7.9% respectively. Property taxes vary by location but are marginally lower in Wisconsin.

    The federal drag does affect all states and can impede their best efforts, as the national unemployment and business growth rates suggests.

  16. jerry person says:

    Scott Walker was a state representative and the chairman of the Assembly Corrections Committee, he introduced bills that would privatize state prison operations and that would allow private corrections companies to open prisons in Wisconsin to house inmates from other states. This also allowed outsourcing our Prisoners in several states.
    In 1995 Walker and Prosser as state assemblymen championed for ALEC with truth in sentencing telling the legislatures it would not cost a dime it was to give judges not parole boards the control over sentencing. Then Walker filibustered to stop sentencing changes after the fact misleading ALL the legislatures. With out the sentencing changes Wisconsin`s prisons quadrupled over night. Most people sentenced to 2 years now had to serve as much as 6o years.
    This ended liberty a jusce for ALL in Wisconsin except the rich and powerfull. This destroyed thousands of families , and has made over one million Wisconsin children homeless and father less. The so called Justice system Wisconsin DOJ (JUST US SYSTEM) has ruined generations our youth for personal and agency gain. It has created criminal colleges nothing more. It has made the streets of Wisconsin VERY UNSAFE. Todays police are so worried about he people because of their aggresson on our youth. Citizen revenge or guilty consciences has created one of the most unstable justice systems in the world even tourist are afraid to visit our state. Last year in ALL of America 33 officer died in the line of duty last year. The lowest number since 1887. A officers chance at getting shot are less than your chances of winning a 100 million in the lottery. Over 4000 babies died from crib death last year. No occupation has less deaths .
    Police have the safest jobs ob the planet as the numbers show.
    On the other hand police are responsable for 1 in 13 shootings . The number of deaths annually is over 1000 annually kill by police. I have yet to witness one that was not jutsified . MURDER by Cop is 100% legal. This clearly shows that if not for double standards the just u sytems would not have any. Last week another unstable officer MURDERED a 68 year old unarmed man all wannabe rambos. This murder was jusified in a few days. like the BELL execution by four unstable cowrads with badges. These officers they got National awards for their murder rampage. In the Bell Case the district attorney Robert Jambois committed over one dozen criminal acts to protect the murders as the latest evidence revealed . When Prosecutors Mishandle Cases, Everyone Pays…Except For Them
    If not for double standards they would not have any at ALL. The 471 criminal regimes all part of the Wisconsin DOJ called justice systems never produce justice. They just cost 2.8 billion annually. Thanks to BIG GOVERNMENT BIG SPENDER SCOTT WALKER. He does not support liberty, justice, freedom, free speech, or democray . Walker wants prison slave labor . Walker has cost the taxpayers of Wisconsin 2.8 billion for the DOJ budget annually 3.2 billion annually in social sevices for the families of his victims.
    This also forced Wisconsin build or remodel 71 courthouse and county jails. Tthe average cost per jail like in Eau claire county was 60 plus million just for the building. Walker budget is short over 100 billion thanks to him. This also required Wisconsin to hire 32,000 union public sector workers since 1995 in the DOJ. BIG GOVERNMENT SCOTT WALKER.
    Walker will Pray in church or sunday and pray on the people all week long.
    This is how Josef Stalin and Fred Koch working together got slave labor in Russia in the 1920`s. Divde concer and incarcerate as the russian history shows. Wisconsin is repeating Russian history.
    Like scott walker says it is working . For the koch dynasty.
    Not educating children is child abuse scott walker. Walkers supports his HERO ted nugent who says poor people should not have the right to vote. Could an AMERICAN think that ? https://www.youtube.com/watch?v=HsHXJr8tqP0 . This is Ronald Reagan on Scott Walkers ideals saying they are commuist.
    This explains the Wisconsin justice stystem making mountains out of mole hills to advance themeslves. This is where they wiil all end up too. Plea bargainging / legal extortion has allowed Wisconsin to have a 97% of all convictions never got a honest day in court. You plea to this or get one hundred years. This is the most violent act in America today . extortion by district attorney which would never be allowed in a democrcay. Walker ended democracy in Wisconsin for russian king david koch. This is the reason mostf our ansestors came to America. To get away from evil walkerites for democracy and freedom. To end king rule and have citizen input. Something Walker does not allow.
    https://www.youtube.com/watch?v=N0Wn3Eey6dY

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