Arthur Laffer is Not Laughing at Sam Brownback’s Budget
An anonymous tipster called me on what he or she said was a burner phone, and directed me to a row of round hay bales in a field outside Topeka. “Walk down the row, and when you find a pile of manure, look for an envelope. I think you’ll be very interested in what’s inside.”
Curious, I pushed back a bit. “Lots of things might interest me. What’s in that envelope that’s so special that I should go looking for a pile of manure?”
The voice on the phone laughed, hard. When it calmed down, the voice said “What’s in the envelope? Two things. I won’t tell you what the first one is,” — the voice snickered — “but the second one is a bill submitted to the State of Kansas from Arthur Laffer.”
So I went to the field with the hay bales, found the manure, and sticking out from underneath it — ewwww! — was an envelope. As they say about the ubiquitous videos from the war zones of Syria, Pakistan, etc., I am unable to authenticate the contents, but it sure sounds authentic . . .
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From: Arthur Laffer, Economic Policy consultant
Date: January 20, 2015
Subject: Budget Hypocrisy
Ever since we talked back at the beginning of your administration, I told you I’d give it to you straight — pulling no punches, either in praise or criticism. Today I write to give you both.
Praise first, for your State of the State address the other day.
Kudos to you for sticking to the strong program of income tax cuts that we pushed through in your first term. Blame the revenue drops on the feds, and keep the faith! I understand that for political reasons, you had to slow down the phase-out of income taxes, but I’m very pleased at how aggressive you were in defending the approach we laid out. You didn’t apologize, you didn’t play defense, and you didn’t run scared. You stood up and proudly declared that tax cuts were right for Kansas in 2012 and they remain right today.
Which brings me to the criticism.
WHAT THE HELL IS YOUR BUDGET DIRECTOR DOING?
Sorry to “shout” like that, but when I saw your budget director’s presentation on your proposed budget that came out the next day, I couldn’t believe what I read on page 39:
The additional tax on cigarettes and tobacco products is estimated to generate additional revenues in FY 2016 of $80.8 million, and for FY 2017, $76.2 million.
The liquor tax increase is estimated additional revenues of $27.1 million in FY 2016 and $27.9 million in FY 2017.
Sam, how many times have I told you that CUTTING taxes increases revenue, and RAISING taxes decreases revenue? How many times have you told me that you agree with me? How many times have we laughed at the mainstream economists who scoff at us? (And yes, I’m still seething at the CBPP report. Why do you ask?)
I’ve been out there defending your tax cuts, as recently as last week, and now you come out with this?
As I said above, you were eloquent in defending tax cuts in your state of the state address, but even proposing a tax increase like this makes you look really, really bad. At best, you look like you got rolled by your political enemies and caved to pressure to raise taxes. If they rolled you once, they’ll be back tomorrow to do it again. At worst, it makes you look like you are fine with raising taxes as long as they are someone else’s taxes. “I’m not going to get hit by increasing cigarette taxes, so sure, go ahead an raise them.” Indeed, by holding the firm to decreasing income tax rates while increasing “sin” taxes, you give the impression you want to be a religious scold rather than a solid economic conservative.
Sam, your budget director needs be fired. He’s either intentionally sabotaging what we’re trying to do or unintentionally undermining it. Whichever it is, he’s got to go. And if he’s the one who’s been whispering in your ear that raising sin taxes will increase revenue, he should be fired in a manner that is as publicly humiliating as possible.
Your reputation is on the line here, Sam. See “Bush, George H.W., and tax hikes”. Don’t make me regret having decided to take on the State of Kansas as a client for my consulting work.
(Speaking of which, attached is my bill for this additional advice.)
Oh, and one more thing — and this is a free bit of advice, with no additional charge — maybe you could have a few words with your friends in the Catholic hierarchy about the nonsense that Pope Francis is spouting about the economy. Tell him to stick to abortion and contraception, and leave the economic analysis to professionals like me.
h/t to Michael Coghlan for the photo above and used under Creative Commons Attribution-Share Alike 2.0 Generic license. And before someone spends a lot of time analyzing the photo, it’s not the same hay bales and field to which I was directed. Got to protect my sources, you know . . .