The most recent numbers show Minnesotans making $600 more per month, with wage growth over the past year more than doubling Wisconsin’s. That’s $7200 more per year.By Jimmy Anderson Milwaukee Journal Sentinel (10/22/14)
Wisconsin and Minnesota have always been friendly rivals: Badgers versus Golden Gophers, Packers versus Vikings, brats versus hotdish. But a battleground has recently opened up in a new field: politics. You see, over the last four years, our sister states have gone in completely different directions. Where Wisconsin elected Scott Walker and gave Republicans control of the legislature, Minnesota has gone to the Democrats. And what has played out has been a competition between conservative and center-left policies to address the most difficult issues facing our two states.
It was after the Great Recession that both states faced some pretty daunting problems: high unemployment, huge deficits, and a sluggish economy. At its most dire, Wisconsin’s unemployment rate was 9.2% and the state was facing a $3.6 billion budget deficit. At the same time, Minnesota was dealing with 8.3% unemployment and a $2.6 billion deficit.
To address the state’s budget problems, Walker and the Republican legislature made huge cuts to public education, shifted healthcare and pension costs to state employees, eliminated tax credits for low-wage workers, and cut healthcare. Walker then went on a tax cutting spree, significantly reducing taxes for the wealthy, arguing that it would stimulate the state economy.
The results have been lackluster at best. Wisconsin job growth has ranked at or near the bottom of the Midwest, personal income growth has been last in the Midwest and 44th nationally, and the budget is in shambles.
Walker likes to say that the state has a budget surplus, but to make such a claim requires some really irresponsible accounting. It’s the equivalent of showing off $100 in your wallet, claiming you’re flush with cash, but failing to mention the $2000 credit card bill you know is coming at the end of the month. It’s just not realistic.
Walker’s bumper sticker
The truth is we are falling behind. Our transportation budget has a $750 million hole in it, our healthcare budget is $760 million in the red, and that’s all on top of a $1.8 billion general budget deficit. Add it up and Walker has essentially taken a balanced budget and turned it into a deficit nearly as large as the one created by the worst economic disaster since the Great Depression. That makes for a terrible bumper sticker.
Minnesota took a different approach to address their problems. Since the recession, Minnesota’s budget deficit ballooned from $2.6 billion to over $6 billion under a divided government unable to come to an agreement. After the 2012 election, Democrats took control of the legislature, and they set to work balancing the budget, but they did so by focusing on middle-class Minnesotans. They raised taxes on individuals making more than $250,000, they raised corporate taxes to prevent the wealthy from funneling money to themselves through their businesses, and they increased tobacco taxes.
To spur the economy, Minnesota Democrats cut taxes but focused the cuts so that only middle-class Minnesotans could take advantage of the savings. They also increased tax credits for renters, lowered property taxes, and capped local taxes, which regressively affected lower and middle class families. They also raised the minimum wage to $9.50 per hour and made it so it would automatically increase with inflation.
And rather than cutting services, Minnesota Democrats balanced the budget while increasing investments in the state. They increased spending on public education by $485 million and college education by $250 million. They also increased the state’s economic development fund by $89 million, which allowed for more job training, and grew the transportation budget by $59 million. And by accepting the funds from the Affordable Care Act, the state reduced health care spending by $50 million without losing any health care services.
Let’s talk about health care real quick. While Wisconsin rejected the Medicaid expansion and refused to create a health care marketplace under the Affordable Care Act, Minnesota took the expansion and created a marketplace. The result? Minnesota currently has the lowest health insurance rates in the country, the number of uninsured Minnesotans fell 41% cutting the uninsured rate from 8.2% to 4.9%, and the state’s health care budget is sound. On the other hand, Wisconsin’s uninsured rate is double Minnesota’s, it’s health care budget has a deficit of $760 million, and thousands of lower income Wisconsinites lost their health insurance when Walker pushed them off Badgercare. In fact, by rejecting the Medicaid expansion, Wisconsin is paying $150 million more to cover 85,000 fewer Wisconsinites. Looking at these results, it’s becoming more and more obvious that the Walker administration’s rejection of the Affordable Care Act is more about ideology than common sense.
More jobs in Minnesota
Now, according to the conservative mantra, with Minnesota raising taxes on the wealthy, increasing spending, boosting the minimum wage, and implementing Obamacare, the state should have turned into a black hole of enormous deficits, huge job losses, and rampant unemployment. But that couldn’t be further from the truth. In fact, during Walker’s tenure, Minnesota has blown Wisconsin out of the water when it comes to job growth. From March 2011 to March 2014, Minnesota has created 20,000 more jobs than Wisconsin. And the gap is widening even faster with Minnesota creating 14,000 more jobs than Wisconsinsince only July of this year. Minnesota’s unemployment rate, at 4.5%, is actually lower than it was before the recession and is currently a full point lower than Wisconsin’s.
$600 more in wages per month in Minnesota
And it’s not only jobs; the numbers also show that Minnesota outpaces Wisconsin when it comes to wages and personal income growth. Just looking at manufacturing jobs, the most recent numbers show Minnesotans making $600 more per month, with wage growth over the past year more than doubling Wisconsin’s. That’s $7200 more per year. Not exactly chump change.
And if there is any question as to whether Minnesota’s plan is working, just look at their budget. It was only a few months ago that Minnesota had the enviable problem of debating what to do with their $1.2 billion surplus. Let me repeat that: a $1.2 billion surplus.
Minnesota Democrats ultimately decided to do another $500 million in property tax cuts for the middle-class. They also increased the state’s Earned Income Tax Credit, created tax credits for child care, lowered local taxes again, and provided more money for education, seniors, and healthcare. And they still had enough left over to put $150 million into the state’s rainy day fund, increasing the fund’s total amount to $617 million.
And here’s the kicker: even after increasing spending on education, healthcare, job development, environmental protection, seniors, services for the poor, and after two big tax cuts for the middle class, Minnesota is still expecting a $1.5 billion budget surplus come 2015.
So let’s review. Wisconsin cut education, cut healthcare, cut wages for state employees, cut services for the needy, increased taxes on the poor, and cut taxes for the rich. And after all that cutting, Wisconsin’s budget deficit is now in the billions, and Wisconsin trails Minnesota in job growth, unemployment, and wages. All this while Minnesota balanced its budget, increased spending on those services that Wisconsin cut, significantly reduced the tax burden for the middle class on two separate occasions, and is now looking at a $1.5 billion budget surplus for 2015. It’s no contest, it’s not even close.
But no matter how much better Minnesota is doing, I think we can all agree that brats are way better than their glorified casserole.