Logical missteps of Walker budget

Story by Alex Zank, News Editor

Governor Scott Walker recently proposed his plan for the state’s next biennial budget, which contains a serious lack of fiscal logic on the administration’s part. The part I’m bringing into question specifically is the small tax cut and a weak investment in the state’s education.

I totally see the economic rationale in the tax cuts. In fact, in a time of frustratingly slow recovery, I am generally in favor of tax cuts. The idea behind these is to stimulate consumer spending, which in turn leads to increased investment, demand and greater economic output in the short term as a result.

But there is a problem with the tax cuts proposed. Do you know how much the average family would be saving from them? The Milwaukee Journal Sentinel reports the cuts would give them about $83 more a year. What good another $83 per family does for the state economy is a mystery to me.

So what could be done better if the Walker administration could help jumpstart the economy? To answer this we need to start by looking at the economic ideas Walker is implementing.

This may come as a surprise to those that are both politically conservative and identify with a more classical approach to macroeconomics, but this is a typical example of Keynesian economic thinking. The governor wishes to stimulate the economy within a short amount of time through fiscal stimulus.

Many may think stimulus is just government spending, but this isn’t entirely true. Cutting taxes is another way to attempt to get the same thing accomplished, which is an increase of output in the aggregate economy.

With that said, if Walker truly wants to cut taxes for the reasons he says he does (to promote job growth) and not for political reasons through implementing a Keynesian strategy, he needs to go against what he calls “fiscal responsibility” and start some more serious stimulus spending.

Yes, that means running deficits in case that hasn’t been made clear to everyone. And of course Walker campaigned against this exact thing, deeming it to be irresponsible on the government’s part.

With that said, there is another approach Walker could take that deals with a long term outlook. But the truth is, with the “balanced budgets” consisting of accounting gimmicks, meaningless tax breaks and other such things, it appears that Walker actually doesn’t want to follow that economic approach either.

So where does this leave the state? Walker’s lack of an economic strategy means this biennial budget will leave Wisconsin in no better condition than before, at least by a fiscal standpoint.

I suggest Walker figure out what economic strategy he really wants, because as pointed out already I’m not too sure he knows what he wants. The strategy he is using right now is grossly illogical and contradicts what he supposedly stands for. If he had the state’s economic recovery at heart, rather than pursuing what looks good politically, he should maybe start making the “tough choices” he claims to be capable of making.