Monday, August 22, 2011


With the national economy once again verging on a recession, many are scrambling for good examples of successful economic policy to bring to the national level. This week the Republican party suggested that Ohio, under with Governor Kasich at the helm, is an example to follow:
Gov. John Kasich described Ohio as a success story in a time of economic uncertainty yesterday and urged the federal government to follow Ohio’s example as a state that eliminated budget shortfalls while cutting taxes. “We looked our problems square in the eye and we didn’t blink … and Americans can learn from Ohio,” Kasich, a former congressman, said in the weekly Republican address to the nation. He cited the state’s privatization of economic development, tax cuts and reforms to programs such as Medicaid and prisons as an example of how the state has worked to boost Ohio’s economy, but he stressed that the federal government’s work might undo Ohio’s progress. “Our success ... will be thwarted if Washington continues its spending spree and its punitive taxes on success,” he said in a message recorded Friday. “You know, if we’ve learned anything from the federal ‘stimulus,’ it’s that government can’t tax, spend and regulate its way to prosperity.”

Kasich has brought a change for the better to Ohio. He has indeed stood firm on spending cuts, even as windfall revenue from state taxes has ticked up. He has also expressed strong resistance to tax increases as a solution to The Buckeye State's budget problems. However, his opposition to increasing revenue has not been as complete when push comes to shove: he has decided to enforce an outdated use tax, and he is eager to get more revenue from addiction taxes.

Ohio has experienced a modest improvement in its tax burden in the past few years. Its state-local tax burden, as measured by the Tax Foundation, fell from 10.6 percent in 2005 to 9.7 percent in 2009. However, its business tax climate remains one of the three worst in the nation.

Furthermore, from 2000 to 2008 the state lost almost 580,000 private-sector jobs, while state and local governments added more than 12,000 jobs. This is an unsustainable imbalance that has not been mitigated by the recession. Governor Kasich is way too new on the job to be held accountable for anything yet, but he better show emerging results over the next year, or else Republicans will look rather foolish using him as a role model for the rest of America. His interest in use and addiction taxes do not speak well for his potential to deliver.

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