Monday, February 20, 2006

Ph.D. Barry Poulson, Reporting for Duty

Economist Barry Poulson continues his tour of duty in Wisconsin with an op-ed at WisOpinion today. In it Poulson echoes much of his generalized “expert” testimony provided to the invitation-only legislative hearing on the revenue restrictions amendment last week.

Not a single actual number is mentioned by Poulson in his op-ed. All he really does is assert that governments as a rule can’t keep from spending in good times and bad, claim taxes are too high in Wisconsin, allude to the fact that high taxes are bad for business, and then predict that the revenue restrictions amendment would have the modest effect of giving taxpayers control over the fiscal situation in Wisconsin.

There are many problems with Poulson's generalizations, but I'll focus on three.

One, the revenue restrictions amendment says nothing directly about taxes or spending—it’s about the collection of revenue. The original TABOR was about spending, and that misguided initiative failed. Theoretically, taxes could increase under the revenue restrictions amendment as long as total revenue only increases at the rate of inflation plus population growth.

Two, in terms of total revenue collections—again, which is what the amendment is really about—Wisconsin is actually a very average state. According to UW-Madison economist Andrew Reschovsky, who actually completed a formal analysis of the Wisconsin situation, our state ranks 23rd in the nation in terms of revenue collections in relation to personal income. In fact, we’re just a few tenths of a percentage point above the national average in this regard.

Three, this amendment would hardly give taxpayers control over the fiscal situation in Wisconsin. While it’s true referendums could be called by governmental units—the state, counties, municipalities, school boards, etc.—to increase the level of revenue that can be generated under the amendment, it’s the state legislature that has the power to categorize the referendum as recurring or non-recurring. If determined to be recurring, the most a referendum can generate above the amendment-imposed restrictions is the greater of $50,000 or 15% of the total amount of revenue allowed under the amendment’s limits. In other words, the referendums—which are a very inefficient way to deal with a fiscal crisis to start—are highly circumvented by the state. What's more, under the amendment citizens would actually lose representation in the state economy as the place of government in it recedes.

The conservative Republicans are trying desperately to push Poulson into the limelight of this debate, but the Colorado economist really has nothing to add to the discussion. To me, that only says that the state GOP has very little to justify this amendment, as well.

UPDATE: Paul Soglin at Waxing America provides an excellent point-by-point rebuttal of Poulson's op-ed. Well worth the read.

5 Comments:

Blogger Peter said...

Great catch on this one:

"One, the revenue restrictions amendment says nothing directly about taxes or spending—it’s about the collection of revenue. The original TABOR was about spending, and that misguided initiative failed. Theoretically, taxes could increase under the revenue restrictions amendment as long as total revenue only increases at the rate of inflation plus population growth."

TABOR is about double-fucking Wisconsin. Promote ideology to decimate PUBLIC services and programs in the shorter term, but when they are in trouble (which is almost always too late), taxes can increase to attempt to save them. Which pisses off everyone who rail about high(er) taxes and poor(er) services, and the slow process of demolishing Wisconsin's effective government as we know it accelerates to the breakneck pace that the GOP leadership craves.

my rant about the death of the Wisconsin Idea and how TABOR sealed the deal.

February 20, 2006  
Blogger Sven said...

The original TABOR was about spending

That's not quite true, Seth. As is explained here, TABOR sucked in an unrelated and contradictory spending limitation that had just been passed by the legislature.

It did make things worse, but the primary problem with TABOR was the revenue formula. The tax jihadists in Wisconsin want to pretend that their version is fundamentally different. It's not.

February 20, 2006  
Blogger Seth Zlotocha said...

Thanks for your comment, Peter. I like your connection between the Wisconsin Idea and TABOR. It's an important one.

Thanks for your correction, Sven. I actually wasn't following WI politics very closely when the original TABOR push started here a couple years ago. I was just going off this line from the Journal-Sentinel when the latest amendment was proposed: "Colorado's law sharply limited spending, while the amendment made public Thursday would limit revenue of Wisconsin's governments."

February 20, 2006  
Blogger Sven said...

It's really just a stupid rhetorical game the GOPers are playing, the same way they did in Colorado. One can call TABOR a "spending limitation" in that one can't spend what one doesn't have.

That reporter has been spun so much that he doesn't know which way is up. Notice how the GOPers flip back and forth between "spending" and "revenue": "Gard...said the amendment should become law to reverse what he called the pattern of irresponsible spending by state and local officials..."

And I bet it was Gard who planted the bug in the reporter's brain that the Wisconsin version of TABOR is not a "spending limitation" like Colorado's. Pure BS.

February 20, 2006  
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