The moment that best portrays this tepid 2019 gubernatorial campaign was when the three major candidates were asked during the recent Louisiana Public Broadcasting/Council for A Better Louisiana debate to explain how each planned to pay for laudable government programs they supported.
The three major candidates could have used the opportunity to describe their priorities, illustrate their vision. Instead, their responses ranged from Republican Eddie Rispone calling for an outside businessperson to incumbent Democratic Gov. John Bel Edwards blaming his predecessor to Republican Congressman Ralph Abraham talking up the need for more people pulling the cart than riding in it.
To be fair, as candidates, this race is about the math. For the governor, it’s about narrowly winning in the primary, and for the two Republican contenders, it’s about getting in a runoff with Edwards. None of them want to say anything that could risk teeing off a narrow segment of their supporters and thereby disrupting a calculation that equals a close win for them.
So voters are left with platitudes that reassure their prejudices.
The key narrative by both Republican contenders is that Edwards raised taxes, which kept Louisiana's economy from booming. They would roll back taxes, which would create new jobs and thereby generate the money to pay for the state programs they want.
Edwards counters that electing either Abraham or Rispone would represent a return to Republican Gov. Bobby Jindal's policies.
On the campaign trail, both Rispone and Abraham point to President Donald Trump’s 2017 Tax Cuts and Jobs Act, which included permanent reductions of the top corporate income tax rate from 35% to 21%, as proof that lower taxes would stimulate this state’s economy.
While some jobs were created and the economy was briefly stirred, the projected federal revenues haven’t materialized and the national deficit is growing past $1 trillion dollars, according to the nonpartisan Congressional Budget Office. Other economists agree.
But put that aside. The federal solution isn’t a good model for Louisiana.
This state is constitutionally required to balance the budget each and every year, points out the Louisiana Legislature’s economist, Greg Albrecht. Federal lawmakers can borrow or print more money to pay utility bills until the tax cut promises come to pass.
In Louisiana, every reduction in revenues, be it cutting taxes or dropping oil prices, must be balanced now, not down the road, with either higher taxes or cuts in services.
Kansas discovered that truth after Republican Gov. Sam Brownback conducted a “real live experiment” that he promised would prove that lower taxes fuels economic growth. It didn’t.
After series of budget deficits and Kansas wallowing with Louisiana among the bottom 10 states in job growth, the Kansas Legislature, one of the most conservative bodies on the planet, ended the experiment and raised taxes.
Pretty much the same thing happened in Louisiana.
Jindal inherited a $1 billion surplus in 2008. He cut taxes while oil was selling at $100 a barrel and billions of federal hurricane recovery dollars flowed into the state. When that money dried up and oil prices fell, Jindal refused to raise taxes and legislators didn’t have the bottom for cutting popular programs. The result was smoke-and-mirrors accounting.
Edwards arrived in 2016 facing a $3 billion shortfall in revenues over an 18-month period.
As governor, Edwards pushed temporary sales taxes and suspension of some tax breaks, along with some program cuts, to balance the budget, at least until 2025.
Still, the argument persists that reducing marginal rates translates to more personal income that could be spent buying more goods and services, thereby spurring the economy. Numerous studies show that’s not necessarily the case. Using data collected over 25 years, for instance, the federal Bureau of Labor Statistics documented that high-income earners spent only 48 cents of every dollar realized.
Albrecht, the Legislature’s economist, says cutting taxes does stimulate the state’s private sector to spend, somewhat. But government is the largest customer for many private sector businesses and a reduction in taxes means less money to spend with those private businesses.
“It’s a wash, at best,” Albrecht said. “You can’t really do it (lower taxes) at state and local governments because of balanced budgets.”
What could be done, Albrecht allows, is a long-term plan that targets, as an incentive, certain taxes for reduction with lost revenues made up with higher tax collections elsewhere to fulfill a goal — through better roads, responsive schools, safer streets and scholarly universities — that would be achieved 20 to 30 years from now.
But that’s an ideal. To achieve it requires a plan to be articulated from the top with a majority of voters buying in. That won’t happen in this visionless gubernatorial campaign.