What Should Minnesota’s Budget Surplus Tell Us?

Minnesota enjoys the problem of having a budget surplus, one that exceeds $1.2 billion and perhaps more.  Why?  Well two things happened.

First, the state — under Democratic leadership — finally dealt with our ongoing, systematic (i.e., politically motivated) cycle of fiscal crisis.  We stopped playing Pawlenty-era shell games and approved a truly responsible budget and funded it.  That did mean tax increases.  And it worked.

Minnesota Capitol SnowSecond, the state’s economy grew across nearly every measure.  We have one of the nation’s lowest unemployment rates at about 4.6% and steady growth in most economic sectors.  Like the rest of the nation, we lag mostly in manufacturing jobs and our public sector jobs — again a politically motivated outcome — remains depressed.

Republicans warned that higher taxes would depress the economy so what happened?  Note again:  Higher taxes, stronger economy, budget surplus.

I am not making the argument that higher taxes are the foundation to higher economic growth.  That isn’t true.  And Minnesota is not the only state looking at a surplus.  Nonetheless Republicans refuse to think in the nuances of context.  We cannot, for example, continue to underfund our state programs and services and expect economic miracles.  And we shouldn’t be misled time and time again into thinking that a strong and responsible public sector will be a drag on the economy.  After years of Republican leadership, the state had to take a fiscally responsible approach to our budget problems.  There was little choice.

On the overall economic growth situation, a lot of that growth — meager as it is — is sustained at the federal level, but there again we are looking at a somewhat — very subtle — progressive and activist role on the part of government.  Government action serves more as a backstop today than key player in restoring economic strength, but it is better than the GOP option of no action at all.

So in a period of “job-killing” tax increases, the economy grew, unemployment decreased, and the state covered its obligations with a surplus.  Kinda makes you think, doesn’t it?

And still the state’s Republicans are talking about how bad everything is and how much worse it will become.  The GOP has had it chance to prove that its approach is best.  Thirty-plus years of it, as a matter of fact.  The overall tendency has been one of decline, not the promised growth.  The time for something different is long overdue.  Minnesota’s surplus should tell us at least that much.

Eventually smart people will catch on, right?

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