The Tea Party movement, fresh from savoring their victory over Eric Cantor in Virginia and undeterred by the close loss of Tea Party candidate Chris McDaniel to Thad Cochrane in Mississippi, is flexing its muscles again through various congressional leaders to put an end to the Export Import Bank. Despite much economic evidence to the contrary, the new House Majority Leader Kevin McCarthy from California wants to let the charter of the bank expire when it ends in the fall.
House Financial Services Committee Jeb Hensarling has also committed to opposing the renewal of the Ex-Im Bank’s charter, notwithstanding that it would negatively affect companies in his congressional district.
It’s not clear that this will happen, but certainly there is growing support among Tea Party supporters for seeking its demise.
Surely the Ex-Im Bank’s operations can be improved and surely there are problems that should be corrected, but at this moment in time with our economy again showing signs of economic weakness and slowing of growth, this is not the moment to suppress a financial agency that helps many American companies to increase their exports and their employment.
Though considerable amounts go to large corporations like Boeing and General Electric, as you can see in the article in yesterday’s Washington Post smaller companies are increasingly benefitting from financing from the Ex-Im Bank (see the details in The Ex-Im Bank battle is personal for these small business owners – The Washington Post)
Now we have a report from the Washington Post about the fiscal situation in the state of Kansas, where Governor Brownback and the state legislature cut taxes drastically in 2012 and now the state finds itself with a serious fiscal deficit, battling to meet it’s financial obligaciones and provide the public services it is committed to provide to its citizens.
As Josh Barrow reports yesterday in his column The Upshot in the Washington Post, Kansas expected in April and May to collect $651 million dollars in personal income taxes and instead they collected $369 million.
It turns out that the tax cut the legislature granted in 2012 as promoted by Governor Brownback created a hole much larger than anticipated in the state budget. Over the next few months the state will find out just how large the fiscal deficit created by the tax cut will be.
Even more damaging perhaps than the fiscal problems created by the tax cut in 2012, Kansas’s job creation has lagged significantly behind job growth in general as can be seen in this graph published yesterday in the Post Wonkblog article by Christopher Ingraham:
Ingraham cites a reference from a nonpartisan think tank:
“Earlier this year, my colleague Niraj Chokshi reported on a Center and Budget Policy Priorities study of Kansas’ cuts. In an unusually frank assessment from the nonpartisan think tank, the study’s authors concluded that “Kansas is a cautionary tale, not a model. As other states recover from the recent recession and turn toward the future, Kansas’ huge tax cuts have left that state’s schools and other public services stuck in the recession, and declining further — a serious threat to the state’s long-term economic vitality. Meanwhile, promises of immediate economic improvement have utterly failed to materialize.”
You can read the article here: Tax cuts in Kansas have cost the state money — and job creation’s been terrible – The Washington Post.
These are two examples among many that I could cite of the increasing tendency of the Republican Party, pressured by their Tea Party base, to govern by ideological convictions without regard for legitimate and rigorous economic analysis. Decisions are being taken based on how the Republican Congressional leadership wants the world to be instead of on how it really is. As a result, as in Kansas, serious problems are being created by ill-conceived policies born of ideological convictions instead of real-world analysis.
This is what our near future augurs for us and if the Republicans gain control of the US Senate in November, we can expect more of this, in addition to the problems being created in red states like Kansas where state houses and legislatures are trying to promote the ill-conceived, short-sighted and erroneous policies promoted by the Republican Tea Party base.
We must work hard in this election year to assure that there is a proper political balance in Congress and that the Republicans do not gain control of the US Senate.