When the going gets weird, the weird turn pro
Hunter S. Thompson, the father of Gonzo journalism
by Hamilton E. Davis
The year of weird politics in Vermont continues apace. We are a supposedly blue state, but the right wing of the Republican Party has seized control of the political narrative, as evidenced by the course of the legislative session. The Democrats are still in control, but they lost strength last November, and they are probably on a track to lose more seats and possibly the governorship in 2016. The ultimate weirdness is that the left is acquiescing in the trend.
The backstory to this thesis is a decades-long debate over state financing. The essence of that debate centers on the role of state government-- what should government be doing, and how much should it spend doing it? The key to the Republican rise is that they have focused public attention on the latter. “We have a spending problem, not a revenue problem,” they say.
The current session of the legislature has been dominated by that question, driven by the lash of state budget gap of as much as $130 million, a gap projected to run for the next few years, at least. The budget question is highly complex, but it is being seen against the Republican narrative that Vermont is highly unfriendly toward business, that its tax rates are too high, and that Democratic profligacy is hurting Vermont economically.
I believe the weight of the evidence shows that that is wrong; at a minimum, it is highly debatable. The weight of the evidence also shows, however, that the Democrats and the Progressives are losing the debate. In the current legislative session, the House finally cobbled together a budget that looks like the dog’s breakfast. And that only after bizarre attempts to find places to cut, ranging from throwing out whole pieces of government, like the tourism office, to cutting seats out of the legislature itself.
The governing assumption, however, was that spending is just too high, and its corollary, that the source of the problem is a wasteful attitude on the part of Democrats and the left. No prominent Democrat, from the governor on down, argued with that proposition. Shumlin in fact endorsed it.
That performance is politically devastating. For one thing, the evidence seems to show that Vermont has a revenue problem, not a spending problem. We are spending less of our output on state government, not more. If all the Democrats and Progressives have to offer is a promise to cut spending, then the voters can be forgiven for thinking it would be better to turn the whole matter over to the Republicans, who really enjoy cutting government spending and probably would be better at it.
The threads of the argument could be seen in the flow of news and comment over the last couple of weeks.
The most extreme example of this phenomenon was a report by ALEC (the American Legislative Exchange Council) that Vermont ranks 49th out of 50 states in its economic outlook. This proposition was greeted with great glee by the right in Vermont.
“For 2015, the top states with the best economic outlook are Utah, North Dakota, Indiana, North Carolina and Arizona,” according to a Vermont group called Watchdog. “States making a race to the bottom include New York, Vermont, Minnesota, Connecticut and New Jersey.”
Wow, interesting…Wait a minute, Connecticut, really?
Take a look at the report and you’ll get a sense of what Alice would have found in political Wonderland. ALEC makes two calculations, economic outlook and economic performance. On economic outlook, where Vermont is next to last; states like California, Oregon, and Connecticut rank far behind such economic engines as Alabama, Mississippi, South Carolina and West Virginia. Washington state (think Microsoft) trails places like Nebraska and Kansas.
Vermont does somewhat better on economic performance; it ranks 38, which is actually just behind California at 37. If we could cut our minimum wage and cut taxes some we could sail right by California. Take that, Silicon Valley: here comes Chittenden County. Nothing either Vermont or California could do, however, would get themselves up there with powerhouses like Oklahoma (4) or Wyoming (5)…
This stuff is obviously bizarre—ALEC is notorious for it. But the narrative that the right wing in Vermont has been able to establish renders way more effective than it should be.
A second thread in a more credible vein came in the form of a column by Art Woolf on the growth of personal income in Vermont. Woolf is a an economics professor at UVM, and his work is mostly couched in neutral academic terms; but a close reading over time shows him to be a consistent supporter of the Republican themes.
Woolf’s column was based on data from the U.S. Bureau of Economic Analysis showing that Vermont’s per capita income increased faster than the national average; we rank 18th in the country. “Vermont was a low income state in the past, but that characterization is no longer true,” Woolf concluded.
A second piece of intelligence from the federal data is that Vermont’s per capita income continues to rank below the New England Average. It is also true, however, as Woolf notes, that most of the New England states, as well as New York, are some of the richest in the country. “Connecticut has the nation’s highest personal income per capita, 35 percent above the U.S. average,” Woolf writes. “Massachusetts ranks second and New Hampshire ranks eighth.”
Vermont ranks 18th; the only New England state that comes in below the national average is Maine. But Woolf concludes by reaffirming the Republican thesis: the “bad news” in the report is that “compared to most of our neighboring states we still have a ways to go to catch up, and there is not much indication we are headed that way.”
So, what should we think about this? Well, it isn’t a palpable absurdity like the ALEC stuff, but Woolf’s conclusions are pretty argumentative. In the first place, the graph he includes shows that Vermont is catching up to its neighbors, at least since around 2000, which is to say, for the last 15 years. Scaling off the graph, Vermont has moved over that period from about 77 percent of the New England average to about 84 percent.
It is true that we hit that point in the mid-1970s, before dropping back between them in 2000. But at a minimum, there is nothing in these data to indicate that Vermont is some sort of economic cripple. And contrary to the little Republican snark that Woolf drops into his last sentence, there is some indication that we are catching up to our neighbors: over the last decade, the Vermont percentage has risen from about 80 percent of the regional average to about 84 percent, a pretty respectable slope.
Beyond that, the implicit proposition that Vermont is doing something wrong because it isn’t as wealthy as places like Massachusetts and Connecticut is pretty silly. Vermont is a tiny, mostly rural state; its largest city has 40,000 people. And it isn’t at all clear that Vermonters want to turn their state into Massachusetts, or Connecticut, or New Hampshire, for that matter.
The third thread on the Republican theme that Vermont is an economic cripple came from the Joint Fiscal Office, which issued a report showing that the total state tax burden has been going down, not up, over the last 10 years. According to the analysis of the report by Jack Hoffman of the Public Assets Institute, the expenditure of state funds before the 2008 recession represented 11.5 percent of the state’s domestic product—the total output of our economy. It will be down to 10.9 percent for fiscal 2016.
“That may not look like much of a difference,” Hoffman wrote. “But if state spending equaled the same percentage of our economy in fiscal 2016 as it did in fiscal 2007, the budget would be higher by nearly $200 million.” Given that the budget gap is well below that, it is perfectly reasonable to suggest the underlying problem facing state government is a drop in revenue, rather than a spending blowout. The JFO study also showed that Vermont was tied with Massachusetts for the fastest growing economy since the bottom of the recession in 2009. (Art Woolf missed that one).
None of that is to suggest that solving the budget conundrum will be easy. It won’t. But the job needs to be carried out in an environment where the facts really matter. We won’t get any help there from either ALEC or Art Woolf.
But so far, we’re not getting any help from Democrats, either. No governor in Vermont has really made the case for what state government ought to since the 1980s. Howard Dean, a Democrat who took office in 1991, did a few liberal things, but he was every bit as fiscally conservative a governor as any who has served in the modern era. The Republican Jim Douglas, who served three terms in the oughts, took his marching orders from what he used to refer to as the “Burlington Bishops,” by which he meant the entrepreneurial elite of Chittenden County.
They demanded two things: no new taxes and clear away as much of the environmental constraints on development as possible. Douglas did his very best. And Governor Peter Shumlin is cast in basically the same mold. His image is liberal, based on his going-in support for closing Vermont Yankee and establishing a single payer health care system.
But Yankee essentially went away on its own, and Shumlin abandoned the difficult aspects of health care reform. And his underlying posture is not that the state needs new revenue, but that its fundamental problem is that it must cut spending. Dean, Douglas, Shumlin: by instinct, Republicans all.
That’s just weird. Will we ever again see a political leader who will make the case for what state government needs to do, not simply what it can cut?