Commentary: Refocusing on Vermont After the National Election (November, 2018)

By Rob RoperRob Roper

A recent post-election news story contained this quote from a Middlebury voter that, from what I observed, captures the broad reality of where people’s heads have been: “I’ve been so focused on the federal government, I don’t know what’s going on in Vermont.” (VT Digger, 11/7/18) Well, here’s some of what’s been going on. And, yes, Vermonters better refocus their attention to local issues.

Two weeks before the November election, the credit rating agency Moody’s downgraded Vermont’s bond rating from Aaa to Aa1 due to our aging demographics and high pension fund liabilities. This will make it more difficult and more expensive for the state to borrow money as we now appear to investors less likely to be able to pay it back. This is another way of saying Vermont has no more tax capacity.

Between August and September, the state labor force declined by over 1000, as did the number of Vermonters employed. (vtlmi.info) As UVM economist Art Woolf pointed out, “The latest snapshot from the Vermont Department of Labor showed a decline of 500 jobs in September…. What is concerning is it’s on top of a loss of 700 jobs in August and 1,900 in July.”

And, just last week, a report from the president’s Council of Economic Advisers listed Vermont dead last in the nation for job growth with a 0.9 percent drop in employment, the only state out of all fifty with a negative number. This was not long after Kuerig Dr. Pepper, adding an anecdote to the statistic, announced on October 26th it was laying off 120 Vermont workers, about ten percent of its local work force.

This is in sharp contrast to the nation as a whole, which mostly has been enjoying an economic boom. Over the last year, for example, while Vermont’s median income fell by 2.4 percent, the national median income increased by 2.5 percent.

We are clearly doing something wrong.

The rest of the nation is demonstrating that tax cuts and the removal of costly regulations lead to economic growth and prosperity. Wages are rising organically as demand for labor increases. Good paying manufacturing jobs, once proclaimed gone for good, are coming back.

Vermont, however, is proving that high taxes and onerous regulations lead to economic stagnation, outmigration, and increased poverty. Will our legislators recognize this fact and change course? Sadly, it doesn’t appear so.

The incoming legislature is signaling that its priorities will be increasing the cost of doing businesses (employing workers) with a $15 minimum wage and a new payroll tax to pay for a government-run paid leave insurance program that, were it not mandatory, nobody would buy.

Vermont Conservation Voters (VCV), an environmental group that spent considerably on Vermont elections, is boasting that 20 (out of 30) of the state senators and 93 (out of 150) state representatives that they endorsed won their elections, and that VCV’s efforts gave Democrats and Progressives their new supermajorities. What does VCV want in return? Among other climate change-oriented policies, a Carbon Tax on Vermonters’ vehicle and home heating fuel. This is a household budget killer that will wreak havoc on the overall economy. (Of note, they are currently rioting in France because of a similar tax.)

Over the past two years, Governor Scott either vetoed or threatened to veto these policies because they make Vermont a less affordable place to live and work, and he and the House Republicans were largely successful in holding the line on no new taxes and fees. But now there are no longer enough Republicans in the House (just 43 out of 150) or Senate (6 out of 30) to sustain such vetoes.

I expect the Democrats and Progressives will argue that the failure to pass the Carbon Tax, the $15 minimum wage, paid family leave, etc. is more responsible for the poor economic situation we are facing, and not that merely holding the line on taxes and fees was just too little a step in the right direction. Now that the elections are over, I guess we’ll find out who’s right. Are Vermonters paying attention?

— Rob Roper is president of the Ethan Allen Institute.

{ 1 comment… read it below or add one }

J. Norris December 20, 2018 at 10:33 pm

A while back I asked a friend with Progressive sympathies what would happen when taxes simply got too high and the populace pushed back. His answer was that Progressives would continue to advocate for higher taxes. A more complete answer would be to say that they would also continue to look for new things to tax. Carbon, soda, marijuana, etc. all prove this to be true. The mistake that Conservatives make is to assume that rationality will eventually win out. Progressives are fighting an ideological battle that is a zero sum game. They win, we lose.

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