What to Make of the Kansas Experiment

In 2010, Sam Brownback, a sitting U.S. senator, ran for governor of Kansas on an economic platform created by the American Legislative Exchange Council, a group that specializes in promoting draft legislation.

Kansas Governor Sam Brownback

Once elected, Brownback convinced state legislators to cut personal income tax rates across the board and eliminate the top tax bracket. The tax cuts were sold by Brownback with the idea that they would pay for themselves when a renewed economy boosted state revenues despite the lower rates. He promised to slash taxes on business owners and lower personal income tax rates, unleashing an economic renaissance and good times in Kansas.

NPR’s Planet Money goes back and takes a look at Kansas and the good times that have yet to materialize.

 

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.

8 Comments

  1. Hey, James. Great food for thought. This is so frustrating. Trickle down economics doesn’t seem to work and trickle down government doesn’t seem to work either. What the heck do we do? I prefer to take my chances with freedom and personal responsibility. But a lot of people fear this–and not without good cause. Sigh.

    • No doubt that most – certainly not all – have given up on the idea of Supply Side (Trickle Down) economics. That is what makes Kansas so interesting. The experiment has been run unimpeded, on a significantly large scale, for a few years now and the results are not that impressive. However, to hear Arthur Laffer – the father of the idea – in the podcast, it simply needs more time. We’ll see I guess.

      I don’t believe anyone, or very few anyway, are opposed to freedom and personal responsibility. It seems to me the real issue is a system that benefits those who have the ability to impact policy – in ways that benefit them, surprise, surprise – and make it harder for those with less access (to power, policy makers, resources, etc.) to attain/maintain financial stability. Of course, any suggestions to adjust policy (particularly fiscal policy) in such a way as to benefit those who have less is met with howls of ‘Socialism’ – as if that, in any form, to any degree, is the worst thing imaginable – by a large segment of the population.

      Thanks for stopping by and sharing your thoughts, my friend.

      • Negotiating broad economic policy that gets a majority of support among our elected leaders would be a start. 51-49 is not a win in my book. Too many times, one party shoves their legislation down the other party’s throat only to have the other party repay the “favor” four years later.
        Elected leaders, and in many cases, individual citizens themselves have become so ingrained with tunnel vision that they’re unable to even listen to another viewpoint when it comes to finding the right equation to assure economic prosperity for all Americans. As soon as someone even references a thought contrary to what the other believes in, they go right to their talking points. I believe that’s called having a “tin ear”.
        I think you and I should go to DC and show how those “suits” how citizens from both sides of the aisle can work together!

        • How’s your third week of July looking? D.C. here we come!

          • I’ll start a Go Fund “Us” page…..

      • Excellent rebuttal, my friend. And I agree wholeheartedly that we have way too much crony capitalism and crony socialism. I strongly believe, however, that these two scourges can be easily subdued by a cultural renaissance. But because we are culturally weak, we have no choice but to turn to the government for help. And this is where the moneyed and organized come in to bend the legislative process in their favor. I hope I’m wrong, but we’ve been trying since 1965 to help the poor and the weak via bureaucracy and things aren’t getting any better. In fact, many experts believe the current poor have less mobility than the poor had a couple of generations ago. Here’s a perfect example of why many Americans oppose more government and more socialism (from a conservative and liberal perspective).

        Greatest failure in the history of DOE?
        Why $7 billion didn’t help America’s worst schools.

        Cultures, however, are free. You don’t need permission or a grant from the state to work hard, learn a valuable skill, procreate responsibly, obey the law, avoid drugs, and save money. If the poor would only embrace these traits, they wouldn’t be poor a generation from now.

        Again, I hope I’m wrong, but if the poor’s only hope is getting the right people in power in Washington, the poor are sunk.

  2. A good article JM but in all fairness it’s time for you to enlighten your followers on the flip side of the coin, that being the state of financial mess that “progressive” states such as Illinois, California and New York, to name a few are in. Oregon, Washington and Massachusetts are not far behind. Kansas, dare I say, is in comparatively far better shape regardless of how they’ve has tried to balance their checkbook. Five major cities in California have filed for bankruptcy while the state of Illinois pays out state income tax returns in the form of IOU’s. New York City alone is over $110 billion in debt. These states have had very “progressive” legislatures (not Governors) for generations. Basically, each of the states have run out of money, in the form of revenues, i.e.taxes to pay their bills.
    I’m not trying to defend Brownbecks’ track record but he clearly doesn’t have the issues that these other states have.
    Tax cuts alone will not grow an economy as President Reagan found out in 1980. Remember “trickle down” economics? 🙂 Only when he increased revenue in 1983 in the form of tax increases did the economy take off.
    More recently, it’s clear that deficit spending alone doesn’t work either as we’re now approaching $20 trillion in debt and we haven’t had a single year of at least 3% GDP growth in over 8 years. The US Government currently overspends by nearly $33,000 per second.
    Only when our leaders can negotiate both targeted tax increases and cuts, especially for small businesses, will our economy be able to heal and grow again. The key word is “negotiate”! But, with the 40% of committed and Democrats and 40% of committed Republicans not willing to budge, I don’t see that happening anytime soon……

    • You’ve done a pretty job of identifying states where ‘Progressive’ policies have fallen short in your estimation. If you would like to author a post that details the faults of one of the states you mention – or perhaps a podcast that addresses the shortcomings – I would love to share with my readers.

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