Republicans Who Love Taxes
Coming soon to a state house near you.
Feb 17, 2003, Vol. 8, No. 22 • By STEPHEN MOORE
In addition to seeking higher taxes, many governors are now begging Congress for bailout funds. Nothing could be more ill-advised. Congress can help states in two ways: First, pass President Bush's tax cut, so that the economy prospers and $670 billion of state taxpayer dollars stay out of Washington and in local economies. And second, devolve control over Medicaid to the states, just as we did so successfully with welfare in the 1990s, so that 50 laboratories of democracy can discover strategies for containing the raging inflation of health care costs that is now ravaging state budgets.
I have left the good news for last. Not all Republican governors have bought into the dimwitted notion that they can tax their states back to prosperity. In Minnesota, the newly elected Republican governor Tim Pawlenty has crafted a budget that essentially freezes state spending in the first year and dares the legislature to try to raise taxes. Another fresh face, Mark Sanford of South Carolina, is installing the first down payment on his plan to phase out the state income tax, despite inheriting a gargantuan deficit.
Meanwhile, the nation's two most fiscally conservative governors (and the GOP's fastest-rising political stars in recent years), Jeb Bush of Florida and Bill Owens of Colorado, remain as immovable as ever in their opposition to new taxes. "How can tax hikes solve the fiscal crisis in the states," Owens asked me in an interview, "when the budget problems are a result of chronic overspending?" Meanwhile, in Tallahassee Jeb Bush is pushing forward with the final phase of his $5.7 billion tax cut and notes that despite those tax cuts, Florida's bond rating has improved from AA to AAA. "As I look around the country," Bush observes, "I can't help but notice that the states that have enacted big, broad-based tax hikes are in the worst fiscal shape of all."
If Jeb's Republican colleagues don't start to digest that lesson soon, they might not be governors for long.
Stephen Moore is a senior fellow in economics at the Cato Institute and author of Cato's biennial Fiscal Report Card on the Governors.