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Heritage Foundation’s chief economist Steven Moore was in Chicago recently, a guest of Illinois Policy Institute. During his presentation, Moore spoke very highly of Bruce Rauner, having met with him to give advice before the election.
Of importance to Moore is that people are not paying enough attention to how red states are getting redder (run by Republicans with pro-growth and pro-market oriented policies), while blue states are getting bluer. Arkansas was cited as one of the last states to turn red. North Carolina is now a thoroughly red state. In blue states — Illinois, Massachusetts, California, Connecticut, New Jersey, and New York — Democrats have become even more powerful and the states bluer. The difference being: Red states practice Reaganomics; blue states have high tax rates which force wealthier people to move.
High tax rates do matter, Moore says. This accounts, in part, for the slow bleed of people and businesses exiting blue states and migrating into red states. We are in an economic war, as states do compete with each other. Voters vote with their feet for policies they think are important to them and their livelihood. Moore listed CA, NY, NJ, and CO as states that must change or else die.
Moore zeroed in on the four largest states, two red (Texas and Florida) and two blue (New York and California). The difference couldn’t be any starker. There is zero state income tax in the states of TX and FL. In NY and CA a top income tax rate exists of 13.5%. Nine states have no income tax.
Texas and Florida benefit from being “Right to Work” states. This doesn’t mean that TX and FL can’t have unions, just that workers can’t be compelled to join a union if they decide not to. Businesses have been heard to say that they prefer locating in Right to Work states. Moore related his experience in Chattanooga, Tennessee, and how unions wanted to come in and unionize. The point was made that unions would be harmful. But what really resonated with workers was this cautionary statement, “Don’t turn Chattanooga into Detroit!” The effort to unionize in Chattanooga was defeated by a vote of 57 – 47.
Where are the jobs
Amazing statistics: In the last 15 years Texas has netted a 74% increase in jobs; Florida, 60%; CA, 35%; and New York, 9%. For every one job created in CA and NY, three jobs were created in TX and FL.
Steven Moore related a debate with Paul Krugman in which Moore asked Krugman this question: “States that aren’t doing well did all the things you told them to do to create jobs for working people, but what happened?” To which Krugman replied: “People are leaving the North for the South because of the weather.” Moore’s retort: “Explain then why the following migration patterns are happening? CA is a lovely place to live, yet in the last 10 years 1.5 million more people left CA than came to live in CA. Also, “How do you explain that people are leaving San Diego for Houston? It’s certainly not for the weather!” Texas is an amazing place. Since the recession began in June, 2009, new job growth has been zero in this nation. Texas has accounted for every new job that has been created in America.
According to Moore, this nation is experiencing an energy revolution. North Dakota has the lowest unemployment rate in this nation. People in North Dakota are getting super rich. Steve Moore remembered paying a nightly rate of $300 a few years ago to stay at a Best Western hotel. Moore’s upbeat reaction to the economy is based on fracking and its unbelievable technology. If this nation can get it right, in five to six years she will move from being an oil-gas importer to an oil-gas exporter.
Why isn’t the economy doing better?
People who run Fortune 500 companies look at their financial situations. Companies have been able to retool themselves and become efficient and productive. This wouldn’t have happened ten or twenty years ago. Why then isn’t the economy growing at 4%? Instead, the economy is in a beetle position. Companies are not reinvesting money into the economy because they are terrified of Washington, D.C. and the next shoe that might drop. A common attitude among Democrats is that business is evil. It might be said that liberals love jobs, but hate employers. When was the last time President Obama ever said anything positive about big business?
Steve Moore believes that if Obamacare is rolled back, this nation will see one of the greatest economic booms it has ever seen.
Question and Answer Session
The question and answer session had much value and expanded upon many of the ideas expressed by Steven Moore in his remarks.
1. Question: How will Bruce Rauner be able to govern Illinois with Madigan still in charge and with super majorities in both the House and the Senate?
Response: Steve Moore had only positive things to say about Rauner, believing Rauner has the fortitude and backbone to do the right thing, admitting, however, that it will be a huge challenge. One advantage is that Rauner isn’t beholden to anyone. If Rauner is privy to a stone wall of opposition from Democrats, as was true with President Reagan, like Reagan, who gave speeches on TV, Rauner must likewise take his case to the people. Rauner must deal with the following three issues in a timely way: 1) Fixing the pension system, 2) Pulling back the tax increase, and 3) Providing the opportunity for school choice.
2. Question: How does Jonathan Gruber fit in with the future of Obamacare?
Response: Johathan Gruber is important because he demonstrates how the Left will lie, cheat and steal to win, regardless of the issue. In regard to the issue of Global Warming, which Moore called a hoax, the assumption that science has been settled is not in keeping with the true nature of science, as science is always evolving. It is so-called elitists, often touting their doctorate degrees, who believe that the populous can’t make decisions for themselves. They “want to keep the poor people on the reservation.”
3. Question: How to deal with the $7 trillion plus increase in the debt since Obama took office
Response: We must get back to 3% to 4% growth. The economy needs to grow faster than the debt. One thing that keeps Steve Moore up at night is the possibility of interest rates spiking. Presently interest rates are low. On a 10-year Treasury bond the interest rate is 2.3%. If interest rates do rise, all taxes collected could be used to pay the interest on the debt. By 2020 the single largest expenditure will not be Medicaid, Medicare, or defense, but interest on the debt. Bruce Rauner must deal with Illinois’ unfunded pension system. Moore suggested providing a 401(k) retirement system for workers.
4. Question: Explain how states change from red to blue states, etc.?
Response: Colorado was basically a red state until Californians left California and moved to Colorado. Now Colorado is a purple state. New Hampshire (Live Free or Die state) has gone from a red state to purple as Massachusetts and Connecticut residents moved to New Hampshire. Democrats tried to turn Texas from a red state to a blue state, but the recent Primary Election exposed their complete failure! In Texas there are fourteen state-wide races. In all fourteen races, not one of the Democrats running received more than 40% of the vote. Touching on the illegal immigration issue, Moore is in favor of Republicans passing comprehensive immigration reform. Thorner is not with Moore on this issue. Steve Moore’s explanation: In Texas 40% to 45% of Hispanics vote Republican; in California they overwhelmingly vote Democrat. Why the difference? According to Moore, in Texas illegal immigrants are put into the work force as soon as they arrive, while in California illegal immigrants are put on welfare which leads to their radicalization.
5. Question: What must Republicans do to win more of the minority vote?
Response: As Woody Allen once said, “90% of life is just showing up” The 2012 election presented a clear choice of candidates between Mitt Romney and President Obama. Moore found it disappointing in watching Spanish-orientated TV programs such as Univision before the 2012 election, that the ads run were all sponsored by Democrats which informed Hispanics that Republicans hated them. Where were the Republican ads to counter this assertion. Moore believes that in the presidential elections of 2016, 2020, and 2024, the Republican presidential nominee must speak Spanish. It was then that Moore expressed his liking for Jeb Bush (Throner cringed in her seat upon hearing Moore’s pronouncement!). Bruce Rauner did quite well with blacks in Illinois, campaigning as he did in black churches and neighborhoods with this question: “What have they [Democrats] really done for you?”
6. Question: What about the city of Chicago?
Response: Chicago is a world-class city. It should be “the Hong Kong of the Midwest” if not for its bad leadership. Moore advised that the first vote in the GOP Senate and House should be for the full repeal of Obamacare. Lots of Democrats weren’t in office when Obamacare passed without a single vote from Republicans. Let’s put the Democratic legislators on record.
7. Question: What about the surge in the stock market? People should be feeling better about the economy.
Response: Even though Obama remarked before the election that the economy was improving, felt pain of the people doesn’t make it into media reports or via the performance of the stock market. What matters most is real take home pay. This has shrunk under Obama, leading people to believe otherwise about the economy. 52% of the American people still believe this nation is still in recession. Because of Obamacare, people are dealing with its “49” mandate (businesses with more than 50 workers must provide insurance) and it “29” mandate (people working more than 30 hours a week are entitled to insurance by employer).
8. Question: Why are Democrats opposed to fracking?
Response: Steve Moore called Tom Steyer a “wacko and a global warming fanatic. It is insane to believe that we can energize this economy with windmills!” In so far as the Keystone XL pipeline bill failed to garner the 60 votes needed to pass in the Senate, Democrats can rightly be painted as radical environmentalists. In their fixation with the environment, which stems from their acceptance of Global Warming as settled science, they are destroying blue collar jobs. Republicans must send this message: “We are the party who is trying to protect your jobs. We are on your side.”
Instead of the Heartland pen usually given to guest speakers, Johnathan Greenberg, Vice President of External Relations, presented Steven Moore with one of two attractive ties now available for purchase sporting the Illinois Policy Institute logo.
In closing, Greenberg warned how the media and union bosses are already rallying to make the 5% tax hike permanent. Their goal is to move Bruce Rauner to where they want him to be. Greenberg assured attendees that the Illinois Policy Institute would be their voice in pushing against the unions and the media.
As Executive Vice President of the Illinois Policy Institute responsible for executing the Institute’s strategic plan which center on turning liberty principles into marketable policies that become law, Kristina Rasmussen was on hand in Chicago from her headquarters in Springfield, IL, to welcome chief economist at the Heritage Foundation, Steve Moore, to discuss his book “An Inquiry into the Nature and Causes of the Wealth of States. The event was held in the Library at the Chicago headquarters of the Illinois Policy Institute, 190 S. LaSalle St.
[Originally published at Illinois Review]