Scott Walker: Governor Jim Doyle Flunks Economics

Governor Doyle Flunks Economics

A new report by the Wisconsin Policy Research Institute provides a sobering analysis of Wisconsin’s declining economic performance in recent years. In contrast to Governor Doyle and his legislative allies who attribute Wisconsin’s economic troubles to a failing national economy and the actions of past administrations, the report lays blame squarely at Governor Doyle’s feet.

Citing a lack of focus and an over-reaching strategy, co-authors Thomas Hefty and John Torinus note that not only has Governor Doyle failed to create jobs in Wisconsin, but jobs are leaving the state at an alarming rate. At the same time, the state’s average wage has fallen below the national average.

Here are some excerpts:

Above all, the focus of Gov. Doyle’s plan was to “retain and create high-wage jobs.” That laudable objective has been Wisconsin’s biggest failure. Since 2005, Wisconsin’s average wage has dropped by nearly 4 percentage points to 85.6% of the national average—roughly equal to wages in Alabama.

Wisconsin’s drop in relative wages and drop in job growth is troubling. Generally, states with below-average wages see job growth as businesses move to areas with low operating costs. The demand for new employees then drives up local wages. Similarly, areas with high wages tend to see slowing job growth. Yet, Wisconsin has managed to slide to below-average wages and below-average job growth.

In short, we have the worst of both worlds.


The authors are also critical of Governor Doyle for ignoring bad economic news and misrepresenting employment figures in order to paint a more positive picture of Wisconsin’s economy:

The state’s economic-development effort, in short, lacks urgency and follow-through. The phlegmatic posture is encouraged by state officials, who go out of their way to emphasize the good news and ignore the bad.

Wisconsin’s fudging of its unemployment rate is a good example of ignoring bad news. Bad data does not always lead to bad policy, but it stifles any sense of public urgency or accountability in addressing the failures.

Money magazine, which used the understated jobless rate, recently ranked Madison #2 in the country for job prospects. The Greater Madison Convention & Visitors Bureau and local media touted that recognition. But a similar Yahoo/Forbes magazine ranking of Best Cities for Jobs used actual job growth in its calculation, not the misreported unemployment rate.

Madison ranked 158th in that survey.


For me, the report’s most striking indictment of Governor Doyle and his top advisers is their failure to foster a positive working relationship with Wisconsin’s business community.  

Not only has an honest debate been delayed, but some officials continue to attack anyone who questions the state’s direction. Most recently in response to Thomas Industries moving almost 300 manufacturing jobs from Sheboygan to Louisiana, the state’s commerce secretary, Richard Leinenkugel, said, “Any time you go negative on these things, it doesn’t help in terms of business climate in Wisconsin.”

The secretary ignores the clear economic statistics—jobs are leaving the state. Ignoring the problem won’t make it better.

The final reason for Wisconsin’s economic failure is intangible: Call it business climate, call it the leadership or salesmanship factor. 

Businesses make location decisions based on objective factors, such as an educated workforce, business costs or tax rates. But as human beings, business executives also make long-term investment decisions based on their gut-level trust in the political system.

Those gut feelings are influenced by personal contacts—telephone calls, face-to-face meetings, handshakes with the governor and legislative leaders. All these help shape the perceptions of business executives.

For example, if the economy falters, do the business execs think the political leaders will cut spending or raise taxes? How much sway will political contributions have on economic policy? (The influence of money will always be there, but is it overriding?) If business leaders are upset about a policy, do they sense that they will get a fair hearing, or that they will be blown off?

Most of all, do they believe that the political leaders have a clear vision for the state’s economic development? By this measure, Wisconsin has not performed well.


The first priority of our Governor is to ensure that the state is doing everything possible to foster job growth and a strong economy, to assume the role of facilitator, and to help employers prepare and safely implement their business plans, instead of standing in the way of their progress.

Through ingenuity, hard work and determination, the people of Wisconsin have made our state a great place to live, work and raise a family. Our companies are recognized as world leaders in everything from manufacturing motorcycles to making a better bovine. Our people are famous for their Midwestern work ethic, and Wisconsin once led the nation in reform, from changing welfare to providing hope to low income families through educational choice and charter schools.

It is not enough to tinker around the edges of failed public policy. We need to change the way Madison thinks and the way it does business. It is time to put government back on the side of the people and build a Wisconsin we can believe in again.
 

Milwaukee Journal Sentinel:  It’s micromanagement

 A recent Milwaukee Journal Sentinel editorial was supportive of my authority to temporarily employ 35-hour work wee ks for county employees. I proposed the furlough plan as an alternative to permanent employee layoffs and additional cuts in county services in order to address projected budget shortfalls. Unfortunately, 16 of the 19 county supervisors joined District Council 48 of the American Federation of State Local and Municipal Employees in opposing this emergency cost saving measure.

The editorial says Reserve Judge Dennis Flynn was right when he said: "Ultimately, it is the county executive for Milwaukee County who is responsible under the law for selecting a course of action for dealing with the fiscal crisis from the many choices that exist...Walker has a right and even a duty to respond to Milwaukee County's 2009 fiscal crisis."

I still believe the 35-hour week is a better solution to the current fiscal crisis than permanent layoffs and deeper spending cuts, but one thing is certain: Increasing the tax burden on the county’s families and employers is simply not an option.

Earth to Governor Doyle


I was struck by a recent interview in which Governor Jim Doyle tried to explain the unique complexities of managing state finances.

“When we talk about the budget, everyone says it's like your family's budget, but it's a little different because normally you have a job and you know what your income's going to be. What 
you're doing with the state budget is forecasting over the next two years what the revenue will be.”

Clearly, the Governor has no idea about the economic uncertainty that plagues working families across Wisconsin.  Perhaps the Governor has lost touch with reality because taxpayers guarantee his wages and benefits and provide him with luxury housing at no cost. In contrast, Wisconsin families have seen their wages and benefits cut while they struggle to make their mortgage payment and contend with the rising property taxes and utility bills.

Governor Doyle seems to believe that private sector workers are held harmless during an economic downturn, that they can depend on a fixed revenue stream to meet their needs.  Doyle’s recent budget set out to hold public employees harmless, rather than look for ways to reduce the burden on taxpayers.

Managing the state budget is not different from managing the family budget. First, you need to make realistic revenue projections. Second, you need to make sure your income exceeds your expenditures. Third, you need to prioritize spending, and fourth you need to plan for emergencies.

Governor Doyle’s failure to do all of the above means that taxpayers will pay $2 billion more in taxes when they can least afford it and will still be stuck with a $2 billion deficit in the future.

 

 

 For more information about Scott Walker, you can visit his website at scottwalker.org

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