Public Assets Institute draws bizarre conclusions from Vermont economic data

by Rob Roper

In conjunction with the Workers’ Center’s delivery of petition signatures to the State House calling for a “People’s Budget,” the Public Assets Institute (PAI), a left-wing think tank fronted by Jack Hoffman and Paul Cillo, produced a report titled, “State of Working Vermont 2011: the end of a dismal decade.” The gist of the document is that the gap between the rich and the poor in Vermont is widening, the middle class is shrinking, and that government needs to do something about it.

No one will fault the Public Assets Institute’s numbers. However, the conclusions that they draw from them are twisted to the point of being bizarre. For example, they state:

The bad news is what’s happened to working Vermonters over the last 20 or 30 years. The gap between the rich and everyone else… is widening in Vermont as it is nationwide. The real earnings of middle-income Vermonters weren’t much higher in 2010 than they were in 1990. And Vermont’s private sector is no longer creating new jobs at a rate sufficient to keep up with population growth. The number of Vermonters living in poverty is increasing. And we’re losing what we knew to be our middle class. This adds up to a society that works for only the few at the top.

This is a pretty accurate picture of the state’s economic affairs. The middle class is either suffering or fleeing (See: Off the Rails). The gap between rich and poor in Vermont is widening (A 2007 study by the University of New Hampshire Carsey Institute reported that Vermont’s gap between rich and poor grew faster than every other state’s but one). Private sector job growth has been all but killed off, growing at just 0.6%. When we witness millionaires like AllEarth Renewables’ David Blittersdorf parlaying hundreds of thousands of dollars in campaign donations into millions of dollars worth of taxpayer/ratepayer funded grants for his wind and solar projects, it’s easy to conclude that Vermont politics is an insider’s ballgame. However, PAI argues:

Too many working Vermonters have lost ground in the past 30 years because of state and federal policies that favor the wealthy and put money considerations ahead of people’s needs-profits ahead of job creation, low taxes at the expense of adequate public services, and weak regulation in place of sound public interest protections.

This is contains all the logic of saying two plus to equals a jelly doughnut. What state — or more appropriately, what planet — are these people living in?

Over the past thirty years, what Vermont state policies, exactly, favor the wealthy and/or give short shrift to public services? Weak regulations? Try selling that to the people of St. Albans who have spent the past “dismal decade” as well as the one before it trying to get a Walmart built in their neighborhood. It’s still not there.

It was forty years ago that Playboy magazine ran the infamous article, Taking Over Vermont, discussing the Left’s plans to invade the state and turn it into a liberal Mecca. Vermont has been in a fairly steady leftward drift ever since. It was thirty years ago (the beginning of that magic number mentioned in the PAI report) that socialist Bernie Sanders was elected mayor of Burlington, giving birth to Vermont’s Progressive Party.

Over the past twenty or thirty years, for which Cillo and Hoffman decry the results, Vermont passed Act 60/68, a highly progressive and expensive property tax system, and raised its sales tax to 6%. Vermont now has one of the highest marginal income tax rates in the country, and the most progressive tax system. We have an Estate Tax on estates over $2 million. Overall, we have been consistently ranked in the top 10 for tax burden. These are not low-tax policies that, as PAI would suggest, “favor the wealthy.” Quite the opposite.

In terms of spending, Vermont is consistently within the top three in terms of K-12 spending per pupil, with the lowest teacher/pupil ratio in the nation. In terms of healthcare, Vermont passed in the terrible-two past decades, Guaranteed Issue and Community Rating laws, Dr Dinosaur, and Catamount Health. Our state is ranked near the top for the scope of Medicaid services offered. Overall, in 2010, the New York Times ranked Vermont number one in the nation for government assistance across six categories of social services. These are not policies that, as PAI would suggest, put money considerations ahead of people’s needs. Quite the opposite.

According to a 2008 article by Bill Schubart, “Vermont has about 2700 non-profits, one non-profit for every 225 Vermonters. This amounts to more non-profits per capita than any other state in the Union” [Emphasis added]. Vermont is consistently ranked as one of the worst states to do business for its cumulative tax and regulatory policies. This is not indicative of a state that is, as PAI would suggest, putting profits ahead of job creation. Again, quite the opposite.

PAI does point to some bright spots in Vermont’s recent past. They note:

Vermont saw strong growth in household income in the 1980s. Real median household income-that is, after adjusting for inflation-rose almost 23 percent between 1980 and 1990, which was the sixth-highest rise in the country. But that was the only decade in the last four that Vermont saw such growth of median household income.

Yes. And what did we have in the 1980’s? A Republican named Richard Snelling in Montpelier, and a Republican named Ronald Reagan in the White House. Did either of these leaders implement the kinds of big government, redistributionist policies PAI is advocating more of for Vermont. No. Quite the opposite.

The problems the Public Assets Institute raises are very real, but the reasons they blame for these problems are a blatant denial of reality. The solutions they offer are, in fact, the very policies that got us into the mess in the first place.

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