Reaganomic myths haunt Wisconsin’s budget

Wisconsin Republicans are playing all the trickle-down hits as they mangle the surplus.
Illustration: Ghosts and ghouls are shown swarming about the Wisconsin Capitol. Illustration by Maggie Denman.
Illustration: Ghosts and ghouls are shown swarming about the Wisconsin Capitol. Illustration by Maggie Denman.

Wisconsin Republicans are playing all the trickle-down hits as they mangle the surplus.

Wisconsin politics brings an abundance of bad policies, bad takes, and bad actors. In Capitol Punishments, we bring you the week’s highlights (or low-lights) from the state Legislature and beyond.

If there’s one myth I would love to see wiped off the face of the earth, it’s that Republican policies are good for the economy. 

It is a tenacious myth that still drives voters, as silly as that might seem to anyone who’s actually scratched the surface of the issue. For one, there’s a direct link between Republican policies and the two biggest social and economic cataclysms in my living memory. Former President George W. Bush’s administration did the bare minimum to rein in the mortgage-trading behemoths Fannie Mae and Freddie Mac, shied away from enforcing banking regulations, and ignored warnings from members of his own administration right up until the world economy tanked. Former President Donald Trump scrapped a pandemic early warning program three months before COVID-19 broke out. 

Outside of world-altering catastrophes, the Republican Party continues to tout bad economic policies despite a thorough body of evidence showing that they stunt economic growth. Let’s say, for example, that you live in a state with a higher death rate than birth rate and an aging population. You need people to move to your state so when that large older population retires and requires greater services and care, those newcomers can step into those jobs and pay taxes. Furthermore, you need to encourage people who want children to have children. 

So why on earth would you cut line items in the state budget that would provide paid family and medical leave—a big factor in whether or not people decide it’s worth having babies? 

Why would you cut a program that has shored up child care, a vital industry that supports families and has been on its last legs for years? That’s what the Republican majority on the Wisconsin Legislature’s powerful Joint Finance Committee did on June 16, as part of their biennial hatchet job on the state budget. Their counter-proposal is to fund a rotating loan for new child care businesses, but why would anyone want to start a new business in a precarious industry where they will make poverty wages?

And of course Wisconsin Manufacturers and Commerce is gunning for tax credits they pinky-swear will go to their workers to pay for child care. Even if we try to hold them accountable on that front, why would anyone think this is a better solution than to just fund child care centers directly and sustainably? Especially when we have a $7 billion surplus? 

Republicans decided long ago that $3.5 billion of that surplus was going to go towards cutting taxes, which will disproportionately benefit the wealthy. There’s the key difference people need to understand: Republican policies are not good for the economy, they are good for big business and the rich. The GOP has been very effective at blurring those distinctions in the minds of the public. And here’s a dirty little secret: big businesses and the rich are not good for the economy. 

Generally speaking, economies do well when money, goods, and services are flowing. Some money needs to be stored into savings, both to help households and businesses stabilize after a shockwave, and so banks have pools of money they can lend out to people who want to buy big-ticket items or start new businesses. 

Big businesses are where money stops flowing and where new ideas go to die. Despite what the hokum of “trickle-down” or “supply-side” economics says, big businesses don’t invest profits into the business. Instead, they mostly sit on it, putting it in money markets and securities, even when they carry massive debts. 

Sure, big businesses can afford to give inventors big salaries, but they are slower than start-ups to adopt innovative ideas. And let’s be honest: most companies are not paying their rank-and-file workers well, certainly not compared to C-suite executives. And those executives are not spending money the same way the rest of us are; they are “opportunity hoarding,” or, in other words, finding places to put their money that ensures they and their families stay rich. Meanwhile, when poor people receive more money, they spend it in ways that ripple outwards and benefit the community at large.

If you really want to see a booming economy, you want to get more money into the pockets of those at the bottom of the ladder. We don’t because a) the U.S. still believes that people are poor because they make poor choices, when it’s really because they don’t have enough money. Also b) there’s a lot of people and institutions, including banks (which make about $15 billion a year in overdraft fees), payday lenders, and others who are in the business of making poverty expensive. And c) it would hurt politicians’ fundraising for campaigns, which rely on big donors, as well as their own pocketbooks.

The current state surplus gives Wisconsin an opportunity to invest in policies that attract people, nurture new businesses, support families, and grow the economy in real ways that impact ordinary people and make life enjoyable. Instead, Wisconsin’s Republicans want to shove most of it into the wealthy’s deep pockets where it will go into bank accounts, stock portfolios, and luxury items—all far, far away from the people who need it most.

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