Janet v. Brian: Winning on Progressive Budget Priorities

I love our Governor, but I have been vaguely dissatisfied with the outcome of this year’s budget negotiations. I think that even though Janet got some of the spending she wanted, she had to swallow a program Democrats really dislike (diverting millions in tax revenues to private schools), fiscally irresponsible and regressive tax cuts (500 million in income taxes over two years), and a complete failure to put money aside for the stability fund (the Governor asked for 400+ million, she got less than 10 million).

I thought that I was just being ungenerous about Janet’s efforts in a politically difficult environment, but now I’ve seen a real master of progressive politics at work, Gov. Brian Schweitzer of Montana. Facing many of the same political constraints, and the looming threat of a tax revolt from the right also predicated on budget surpluses in a cyclical economy similar to our own, Schweitzer stepped forward to lead the way on tax relief instead of meekly following the GOP into disaster.

The result was a Democratic proposal for a property tax rebate that is fiscally sound, much more attractive to voters than the GOP alternative, much more fair to the average taxpayer, and undercuts the GOP’s standing as the ‘party of tax relief’. As a result of Gov. Schweitzer’s leadership on tax reduction, the GOP is tripping all over itself with impotent rage, the momentum for a disastrous TABOR policy in Montana has been arrested, and Democrats are getting another look from rural middle-income voters.

Why didn’t Janet go on the offensive in her budget, anticipating and countering the GOP’s tax cut package with a progressive tax cut plan of her own that voters were sure to strongly prefer? Janet did propose tax cuts, but they were so narrowly targeted that they looked much more like laundry list of pet policies than real cuts, and they only amounted to 1/10th of the surplus, thus they couldn’t hope to compete with the across-the-board income tax cuts the GOP proposed.

Janet should have made her tax package much more immediately attractive to voters by using a rebate format as Schweitzer did in Montana. In addition, Janet should have focused on the most regressive taxes for rebate, as rolling those back would automatically be progressive. Finally, she should have taken a page from Schweitzer’s playbook by making out-of-state interests and large corporations ineligible. Striking the top 1 or 2% of taxpayers saves revenue enormously, expanding greatly the benefits available to middle and low-income taxpayers, and excluding those are aren’t in the Democratic base in any case, and likely never will be.

Such a tax cut program, rather than striving to meet narrow policy goals, could have worked to increase Democratic chances in November down-ticket with a simple message of tax fairness and immediate return of some of the surplus to the taxpayers.

Janet could have made the case to split the surplus between her new spending priorities, tax rebates, and fiscal responsibility through funding the stabilization fund. With some 300 million devoted to each aspect of the plan, taxpayers would have been ecstatic at the prospect of 300 million in cash rebates right now, instead of 500 million in little-noticed cuts, going overwhelmingly to the wealthy, over two years. I know I would love any Governor who gave me a few hundred bucks refunded from my property taxes. If we’ve learned anything from the Bush era, it should be that if you put a check in voter’s pockets, you can get away with murder in the details.

The budget process for this year was really a defeat for Democrats; we got fairly minor concessions while the GOP framed the issues and dominated the debate on what to do with the surplus. They got a hugely regressive tax cut and have completely abandoned fiscal prudence by their failure to put money aside in the ‘rainy day’ fund. Coming years will almost certainly prove the imprudence of multi-year income tax rate cuts, possibly returning us to the budget shortfalls that Janet handled so ably in her first term. If Janet had played the game by Schweizer’s rules, we’d be heading into elections with an even stronger Governor, and with improved chances down the ticket. Instead, we got served a big plate of crow by the GOP and they have control of the issue of tax cuts.