Sabotaging our competitiveness

“If a foreign power had done this, we would consider it an act of war.” So said a blue-ribbon panel, outraged by bad education policies. I say the same about Colorado Democrats’ economic mismanagement. Bill Ritter’s tax-hike threat this week is the latest absurdity. Now that Obama’s socialistic interventions and massive stimulus have failed to cure the recession, policymakers in each state must look to their own toolbox for policies to revive prosperity. Gov. Ritter, his legislative majority, and their liberal allies are making all the wrong moves at the worst possible time. Deliver us. There’s more than Republican rhetoric to back up my indictment. For witnesses I call Arthur Laffer, the father of supply-side economics; Stephen Moore, economist for the Wall Street Journal; and Jonathan Williams, fiscal analyst for the American Legislative Exchange Council. They’ve authored “Rich States, Poor States,” the ALEC economic competitiveness index for 2009.

The book’s findings should both please and worry Coloradans. For the decade through 2007, our economic performance ranked 10th among the states, based on personal income growth, employment growth, and population growth. ALEC’s data belie the lament that fiscal restraints are “strangling Colorado” (Susan Barnes-Gelt in a recent TV debate) or that tax cuts would make this “a state we want to leave” (reader Robert Schmidt after my Aug. 2 column on the car-tax backlash).

Mr. Schmidt can move away if he wants, should Initiative 10 with its reduction of income, vehicle, and phone taxes pass next year. But most people tend to vote with their feet in the other direction. Laffer, Moore, and Williams report that in the 10 states with lowest personal and corporate tax rates, population grew more than twice as fast as it did in the 10 states where tax rates were highest. “Strangling” indeed.

Overall, it’s clear our state was doing something right since 1997, despite shifting party control in the General Assembly and Governor’s office. Colorado families benefited hugely from what Laffer and his colleagues call the “shocking power” of tax and regulatory policy to lift or depress prosperity. Why now, of all times, amid a global economic downturn, would the Ritter crew decide to push every policy lever into full dive?

The “Rich States, Poor States” index puts Colorado 2nd nationally in terms of favorable economic outlook to keep gaining wealth and population, based on a scorecard for 15 variables. Eight of those measure taxation. The others look at debt burden, public employee burden, workers’ compensation, minimum wage, right to work, the liability climate, and fiscal guardrails such as TABOR.

The big-government zealots now in power could not be more backward in their handling of these levers if they were using a checklist. Democrats have raised property taxes and car taxes. They boosted the minimum wage via the 2006 ballot and blocked right to work via the 2008 ballot. They also tried an energy tax and a TABOR-buster in 2008. They’ll seek more debt and taxes for RTD in 2010.

They’ve added over a thousand jobs to state payrolls in each of the last two budgets, deficit woes notwithstanding. This spring they attempted to raid the workers’ comp agency, Pinnacol, and they’re prepping for another try this summer. Our Taxpayer’s Bill of Rights, lauded by Laffer, is Dracula as far as Ritter is concerned. Reelect him next year and it’s gone the year after, he has said. Legislators are prepping for that as well.

If Coloradans let this economic rampage continue, Arizona, Utah, Nevada, and other highly-ranked states on the ALEC index will be quick to pounce. Our loss is their gain. Wealth will flow out of state as surely as water flows downhill. But what a fiasco, to sabotage our state’s competitiveness that way. What a shame.