They’re fucking insane, that’s what:
Two years ago Kansas embarked on a remarkable fiscal experiment: It sharply slashed income taxes without any clear idea of what would replace the lost revenue. Sam Brownback, the governor, proposed the legislation — in percentage terms, the largest tax cut in one year any state has ever enacted — in close consultation with the economist Arthur Laffer. And Mr. Brownback predicted that the cuts would jump-start an economic boom — “Look out, Texas,” he proclaimed.
But Kansas isn’t booming — in fact, its economy is lagging both neighboring states and America as a whole. Meanwhile, the state’s budget has plunged deep into deficit, provoking a Moody’s downgrade of its debt.
There’s an important lesson here — but it’s not what you think. Yes, the Kansas debacle shows that tax cuts don’t have magical powers, but we already knew that. The real lesson from Kansas is the enduring power of bad ideas, as long as those ideas serve the interests of the right people.
As Albert Einstein is often credited with saying: “The definition of insanity is doing the same thing over and over again, but expecting different results.” This bit of supply-side orthodoxy has already been tried again and again, and with disastrous fiscal results (for example, the massive deficits that resulted from the Bush tax cuts). Meanwhile the opposite strategy—the Clinton tax hikes—were followed by the longest economic expansion in US history, along with several years of budget surpluses.
Some might argue that Seattle is embarking on a remarkable experiment too, but that’s not entirely true. Washington State has long had one of the highest minimum wages in the nation, yet our economy has outperformed both neighboring states and the nation as a whole. In fact, last year Seattle was the fastest-growing big city in America. As Nick Hanauer recently wrote in Politico: “Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s ass.”
Unfortunately, Seattle’s demand-side strategy just isn’t perceived to serve the direct interests of “the right people” (you know, the rich and powerful). So whatever the results here, it’s hard to see the people of Kansas following our lead.