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Monday, November 25, 2013

Griper Blade: What Happens When GOP Economic Fairy Tales are Applied to the Real World

Pile of cash
A piece in the New York Times this weekend compared the economic fates of Wisconsin and Minnesota, two states that were in roughly similar economic condition in 2012. Minnesota elected a Democratic government, while Wisconsin chose Republicans. And it was with this choice that the two neighboring states' fortunes began to diverge.

Three years into Mr. Walker’s term, Wisconsin lags behind Minnesota in job creation and economic growth. As a candidate, Mr. Walker promised to produce 250,000 private-sector jobs in his first term, but a year before the next election that number is less than 90,000. Wisconsin ranks 34th for job growth. Mr. Walker’s defenders blame the higher spending and taxes of his Democratic predecessor for these disappointments, but according to Forbes’s annual list of best states for business, Wisconsin continues to rank in the bottom half.

Along with California, Minnesota is the fifth fastest growing state economy, with private-sector job growth exceeding pre-recession levels. Forbes rates Minnesota as the eighth best state for business. Republicans deserve some of the credit, particularly for their commitment to education reform. They also argue that Minnesota’s new growth stems from the low taxes and reduced spending under Mr. Dayton’s Republican predecessor, Tim Pawlenty. But Minnesota’s job growth was subpar during Mr. Pawlenty’s eight-year tenure and recovered only under Mr. Dayton.
Trust me, it sucks when your state is used as an example of economic failure. While Walker complains that previous higher taxes and spending are dragging the state down (a tough argument to make -- the mechanics are so bad he doesn't even bother to explain them), Minnesota has raised taxes and spending to great success. And that spending has been distinctly Keynesian. NYT reports that the "lion’s share of Minnesota’s new tax revenue was sunk into human capital." Wisconsin, of course, has been anti-Keynesian, reaching into workers' pockets to take pay and benefits away...[CLICK TO READ FULL POST]

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