By Jon Cassidy | Watchdog.org
John Kasich is building a resume.
The Ohio governor needs impressive bullet points to sell himself, and he’s willing to mortgage the state’s future to get them.
His policies aren’t meant to work. They just need to sound good.
When he’s on the on the campaign trail, whether it’s his re-election next year or a rumored run at the presidency down the road, he needs a clear story.
He’ll be the guy who created jobs, slashed taxes and provided health insurance to hundreds of thousands, all while balancing the budget.
But the greater glory of Kasich has a cost. He’s siphoning money from future budgets to pay for his bullet points, tying the hands of any successor who would the tackle the reforms that Kasich has ignored.
Call it an opportunity cost. Columbus is run by Republicans. They could take a machete to the enormous bureaucracy and welfare state that has Ohio drowning in mediocrity. They could take a nap, and let the energy sector ignite the economy. Or they could take credit, bragging about the golden egg they took off some stupid goose.
So let’s take a look at the golden eggs and other shiny objects Kasich is waving in the electorate’s face.
All Kasich needs you to know about JobsOhiois the name. Maybe you’ll catch a news story where the quasi-private development corporation gets credit for 82,000 jobs created in a year or whatever sounds plausible.
All you really need to know about JobsOhio is that a more accurate name would be OhioLoopholes or CorporateWelfareOhio. The state’s tools for so-called economic development are tax credits, subsidies and grants. In other words, your tax dollars given to give one company and denied to its competitor. It’s called cronyism.
Ohio spends at least $3.24 billion a year, or 11 cents per dollar in the state budget, on these giveaways, according to a recent investigation by The New York Times. The money goes to corporations such as General Electric ($120 million), General Motors ($80.8 million), or Bob Evans Restaurants, which got $17.4 million to stop pretending it might move its headquarters to Texas, where it doesn’t even have any restaurants.
No serious free-market conservative or sensible liberal supports this sort of cronyism. There’s no principle unifying Kasich’s politics — if it puts money in his hands, it’s good. From the state’s liquor franchise to its turnpike, Kasich wants to siphon off years of future revenue and cash in now to spend on his pet economic bubble.
In that context, it’s easy to understand why Kasich ditched his anti-Obamacare rhetoric to accept federal cash for a Medicaid expansion. It’s $13 billion in the first seven years. The longer term costs are someone else’s problem. Kasich gets his free bullet point.
Ohio has the most bloated state and local government in the country because of politics like this. A recent study by the Fraser Institute found that it’s not direct government expenditures but endless redistribution that’s weighing the state down. Nobody outdoes Ohio in spending on unemployment insurance, workers compensation and government pensions, measured as a percentage of the economy, according to the study. And only five states spend a bigger slice on transfers and subsidies. Yet this is what Kasich offers: more of what we already have too much of.
Kasich’s tendency to mortgage the future is even clearer in his big plan to extend the sales tax to services, cut income and small business taxes and hit oil and gas production with a severance tax. There’s little to be gained by extending the sales tax to services that can easily be provided tax-free from out-of-state. Cutting tax on small business polls well, but makes no economic sense. It will just be a huge loophole for personal income up to $750,000.
But Kasich gets to be the guy who cut income taxes by 20 percent — OK, it’s actually around 1 percentage point, but you’ll never hear him describe it that way.
Does it matter if his tax chases energy investment off to other states — if it stifles Ohio’s one great chance at a turnaround? Does he really think Ohio needs a bigger government more than a vibrant new industry?
That’s not really the question, though. Credit is what matters to a true politician, and that means taking some sort of action, however pointless. That’s why we have a governor whose two signature initiatives contradict each other: the severance tax, to take money from some businesses, and JobsOhio, to give it to some other ones.
President Ronald Reagan knew the type. As he once told a White House conference, “government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Contact Jon Cassidy at [email protected]