LePage rant got it really wrong on Kansas

An angered Gov. LePage, in a press conference last Friday, claimed that critics had it wrong on income taxes and Kansas. He said it simply wasn’t true that Kansas was having trouble and, in fact, Kansas was experiencing the fastest economic growth.

Thing is, it was the governor who got it wrong.

Here’s a graph from the economist Menzie Chinn that tells the tale. [source]

It shows state economic growth from when the governors of California (Brown-D), Minnesota (Dayton-D), Wisconsin (Walker-R) and Kansas (Brownback-R) took office, as well as U.S. economic growth.

Figure 1: Log coincident indices for Minnesota (blue), Wisconsin (red), California (green), Kansas (teal), and the US (black), normalized to 2011M01=0. ALEC-Laffer Rich States, Poor States, 2014 rankings in brackets. Source: Philadelphia Fed (April release), RSPS 2014, and author Menzie Chinn's calculations.

Figure 1: Log coincident indices for Minnesota (blue), Wisconsin (red), California (green), Kansas (teal), and the US (black), normalized to 2011M01=0. ALEC-Laffer Rich States, Poor States, 2014 rankings in brackets. Source: Philadelphia Fed (April release), RSPS 2014, and author Menzie Chinn’s calculations.

As you can see, the best growth was in California., which is in green.

Minnesota, in purple, is the next best state, generally tracking U.S. data.

Wisconsin, in red, did worse than the nation as a whole.

And Kansas? In green, it did the worst of those states. Also, if the look at the most recent trend for Kansas, it’s flattened out and isn’t even tracking Wisconsin anymore.

Chinn writes, “Three month growth in Kansas has flattened (-0.08%, annualized, in logs), and in fact the (preliminary) m/m annualized growth rate for Kansas is -2.4%. This is in sharp contrast to the other states in the graph, including Wisconsin which itself has lagged relative to the US and Minnesota, and lagged relative to what historical correlations up to 2010 would have indicated (and statistically significantly so).”

But not only did LePage get his facts wrong on Kansas.

This graph has an additional piece of information well worth noting.

See those numbers in brackets, at the end of each of the lines for the states?

Those are the ALEC-Laffer Rich States, Poor States rankings.

Some Mainers, including the Maine Heritage Policy Center (MHPC), think we should take these very seriously. Noting that Maine’s ranking on this index is pretty low, MHPC wrote:

Next year, Maine could rank very differently in the index if Governor Paul R. LePage has his way.  The governor’s budget, if adopted, would set in place sweeping changes to the tax code, cutting the personal income tax drastically and raising the sales tax.  The Governor has made clear his intention to ultimately eliminate the income tax in Maine.  Such reforms could raise Maine’s ranking.

But if you look at the chart above and the ALEC ranking, it’s what my kids used to call opposite day.

The states with the best economic growth — California and Minnesota — have the worst ALEC-Laffer scores, with rankings of 47 for California and 46 for Minnesota.

And the states with the worst economic growth — Wisconsin and Kansas — have the best ALEC-Laffer scores, with rankings of 17 for Wisconsin and 15 for Kansas.

In social science speak, we’d say the ALEC-Laffer rankings lack external validity.

All that means is that ALEC’s rankings don’t bear any resemblance to reality.

And neither does LePage’s claim that Kansas is doing just great. In fact, Kansas is doing rather poorly.

Given these data, following Kansas’s lead, as LePage and the MHPC would like us to do, doesn’t seem like a very good idea.

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Amy Fried

About Amy Fried

Amy Fried loves Maine's sense of community and the wonderful mix of culture and outdoor recreation. She loves politics in three ways: as an analytical political scientist, a devoted political junkie and a citizen who believes politics matters for people's lives. Fried is Professor of Political Science at the University of Maine. Her views do not reflect those of her employer or any group to which she belongs.