Last year the U.S. economy soared, thanks to a strong dollar, increased job growth, lower gas prices, higher consumer spending, and improvements in the housing sector. But Wisconsin saw scant benefits, and the state’s GOP leaders are largely to blame.
A critical problem with the GOP’s approach to governing jumped out at us a year ago from the pages of a Pew Research Center report. The data is clear: Wisconsin is now home to the fastest-shrinking middle class in the nation.
Middle-class purchasing is the nation’s largest single economic generator. That means that when middle-class dollars shrink, so does economic activity. Our Republican leaders have failed to focus on policies that benefit the middle class, and the economic result was predictable.
In fact, Gov. Scott Walker and GOP lawmakers have initiated few, if any, policies in general to help the state’s economy. Instead, they’ve focused on making government less transparent and elections less fair. They’ve taken the state backward socially by attacking women’s health, transgender rights and immigrants.
What economic policies the GOP has enacted are counterproductive in at least three ways. First, they’ve extended tax breaks and incentives to large corporations and the wealthiest individuals.
This tactic has never worked. It’s based on the disproven premise that economic benefits showered on people at the top will “trickle down” to the middle class. More than 30 years of history have shown this simply doesn’t happen.
Wealthy people use their money for investments, luxury goods, vacation properties and other expenditures that do not put dollars into Wisconsinites’ pockets the way that middle-class spending does.
It is small businesses and startups, not corporate titans, that form the backbone of the nation’s economy. Small businesses create most of the nation’s jobs and led the post-recession economic recovery. Nearly 54 million Americans now work for themselves in small businesses that they created.
But in a second failure, the state’s Republican leaders have ignored the economic potential of small business growth. Wallet Hub recently ranked Wisconsin 46th in the nation for business start-up activity, 30th for “innovation potential,” and 38th in economic activity. States where those measures rank high, such as Utah, Washington and California, have the nation’s most successful economies.
Third, the GOP embraces right-wing ideology over reality. They’ve shifted money away from higher education, even though that’s necessary for a healthy economy. They’ve eliminated regulations, such as restrictions on pollution, that make doing business in the state less burdensome for companies, but at the cost of public health and safety. They’ve misguidedly “invested” taxpayer dollars into businesses through the Wisconsin Economic Development Corporation, Walker’s disgraced job-creation agency.
With policies like these, it’s no wonder the state is an economic basket case.
So what can Wisconsin lawmakers do? For one, they can stop doling out tax credits to politically connected companies that, in return, either ship jobs out of the state or create ridiculously few of them. They can stop cutting and rather restore funding to K-12 and higher education. They can offer meaningful tax relief — more than a few dollars per month — to poor and middle-class earners instead of the one-percenters.
To rebuild our middle class, GOP leaders must start investing in venture capital and assistance for small business startups. Successful entrepreneurs and venture capitalists — not self-interested politicians — should be involved in making decisions that involve investing our tax dollars.
Republican leaders must also invest in infrastructure improvements. Just ask a middle-class person — if you can find one — the cost of our disintegrating roads.
The bottom line is this: So long as Republican leaders continue to put their political interests and those of their corporate donors above the good of the state’s economy, Wisconsin’s middle class will continue to suffer and its economy will fail to launch into the 21st century. Walker and crew must take note of the remarkable economic successes achieved by states such as Utah and Minnesota, where start-up businesses proliferate. They must emulate the policies of those states rather than continue to legislate in ways that only serve their personal interests and political ideology.