It’s still the economy, stupid
In 1992, Bill Clinton was elected to be the 42nd president of the United States by riding a tidal wave of economic frustration and giving middle class voters a simple message to believe in by famously stating, “It’s the economy, stupid.”
In 2016, Hillary Clinton was defeated in her bid for the White House at least in part because of the presence of similar economic frustrations and her opponent offering middle-class voters an equally simple message of “Make America Great Again.”
Two Clinton campaigns, roughly 25 years apart, broke in markedly different ways on this issue of jobs and economic growth. In the 1992 race, the Clinton candidate ran as the upstart outsider. In the 2016 version, the Clinton candidate ran as the establishment option. In both instances, the nation chose the outsider.
The economic frustration felt by many middle-class voters across the country is very real, and both parties are rightly grasping at how best to respond to it. Most commentators would agree that politically tapping into that frustration is the easy part … but that developing and implementing solutions to resolve it is another issue altogether.
America finds itself in the weakest post-recession recovery since WWII. In Louisiana, that news is even worse as local economists are now firming up their analysis that our state is stuck in a job-killing recession.
Last week, the Louisiana Revenue Estimating Conference met with legislative economists in the State Capitol to review tax collections for 2016. State General Fund revenue – taxes, licenses and fees collected by the state – are more than $300 million less than what was projected earlier in the year. Personal income collections are down 3.5 percent, and sales taxes are down 1 percent. Corporate income is down $110 million and energy royalties are short $32 million. Vehicles sales and gaming revenues are also down.
Considering the fact that three of the last four legislative sessions have focused on raising taxes, how can this be? The answer is clearly the same as the one offered by Bill Clinton roughly 25 years ago: “It’s the economy, stupid.”
At last week’s REC hearing, respected legislative economist Greg Albrecht cited the perils of shrinking employment since the latter half of 2015, pointing out that, “we need employment growth to stop declining ... We need job growth, but at least we need to see slower declining.” He went on to say that Louisiana has “been in real decline where the rest of the country has not.” Furthermore, Mr. Albrecht noted that job losses have occurred in the highest-paid positions with average salaries above $60,000 annually.
Commissioner of Administration Jay Dardenne, a member of the REC panel, stated, “Since the new administration has taken over, we have not seen nearly as robust growth in sales tax as we had hoped for and the continued decline in individual income taxes as well as the whole mystery on how low corporate collections continue to be. All that points back to employment issues, and the state’s biggest challenge is to turn around the state employment numbers. It is a big challenge to reverse that trend and get people working.”
It’s a simple fact. People don’t pay taxes if they don’t have a job, and they spend less if they have one but are scared of losing it. Louisiana has lost 20,000 jobs over the past 15 months, and prospects for the next year show no improvement.
Communities across this state are feeling the reality of this struggling economy, and the tension is mounting for families and small businesses alike. Meanwhile, state government continues to spend more each year, which is out of sync with the reality of what Louisiana taxpayers can afford. Digging our way out of this economic stagnation is the top challenge facing us as a state and a nation.
Let’s hope the incoming Trump administration and Congress finally make economic growth that benefits everyone a top priority, especially the middle class. We also need the Edwards administration and the state legislature do the same as they tackle Louisiana’s current economic challenges that are contributing to state budget deficits.
We need a jobs plan from our federal and state leaders, and we need it fast. There is no way around it. Smarter tax, regulatory and spending policies are necessary to reverse this trend. No other challenge facing government can be fixed without putting the economy on the right track first.
As James Carville famously penned and Bill Clinton artfully said, “It’s the economy, stupid.”
Stephen Waguespack is the president of the Louisiana Association of Business and Industry, the largest and most effective advocacy organization in the state.