Spin and Facts: “Out of Control” State Spending Edition

With the legislative session over until January, we will be subjected to months of politicians trying to spin their various storylines leading into what figures to be a contentious session and election year.  Let’s look at one of the primary spin lines you’ll be hearing a lot over the next few months.

SPIN:  State spending is out of control and damaging to our economy!

This is a favorite line of Republican legislators, including our own in Carver County.  For instance, you can find the graphic below on the webpage of State Senator Julianne Ortman:

But does such a claim really hold up to scrutiny?

FACTS:  The answer, of course, is no — the facts don’t back up these assertions at all.  Let’s start off at a macro level, looking at total state and local tax revenues as a percentage of income — this is referred to the by Minnesota Management and Budget as the “price of government” (POG).  In 1991, at the start of the Carlson administration, these revenues totaled 17.4% of personal income in the state.  In 2010, the price of government was 15.3%.

As you can see from the graph, there has been a noticeable downward trend in the price of government.  In fact the average POG over the last decade (15.5%) is nearly two points lower than it was in the 1990s (17.3%).  That’s resulted in a savings of $34 billion over that time — the area in red on the graph below.

So, state and local government is clearly shrunken from where it was a decade ago.  If you believe Sen. Ortman and her cohorts, this should lead to improved economic performance. Has that panned out?

Well, if you live in Minnesota, you know that isn’t true.  Since 2002, Minnesota has experienced poor economic performance compared to the rest of the country.  We’re 39th in job creation and have below national average performance in wage and wealth growth over that time.

Mark this down as more evidence that there’s more to a strong economy than merely tax rates.  There’s a lot of proof that shows that investing in critical priorities like education does far more than merely cutting taxes when it comes to creating jobs.

Advertisements

No comments yet... Be the first to leave a reply!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: