The lead editorial in Raleigh’s News & Observer this morning rightfully laments the fact that North Carolina’s economic recovery appears to be petering out while other states rebound more quickly.
In the end, however, there’s no mystery. The persistence of unemployment points to how badly the job market deteriorated and how tax cuts and spending cuts do little to restore it. North Carolina has cut taxes in a way that disproportionally benefits higher earners while expanding taxes or removing exemptions that helped middle-income and low-income earners and retirees. Tax breaks for the wealthy tend to go into savings while a tax break for lower income earners would have gone directly into the economy.
North Carolina’s cuts in state funding for education have an outsized impact on the economy. Unlike many states where local governments bear most of the cost of schools, North Carolina funds education primarily from the state level. Meanwhile, North Carolina’s refusal to expand Medicaid has cost the state’s economy billions of dollars in federal funds and reduced or blunted employment by hospitals.
There’s not much state government can do to escape the influence of the national economy. But states can do more to soften the effects of a national recession and speed the effects of a recovery. North Carolina should spend aggressively on education, participate fully in the Affordable Care Act and focus tax breaks lower down the income scale.
That’s not being done, and the economic pain is being extended.
Good news for the hundreds of thousands of truck drivers, janitors, day-care attendants, fast-food servers and other low-income workers in North Carolina: Gov. Pat McCrory and the legislature may soon reconsider their long-standing opposition to Medicaid expansion.
Aldona Wos, the state Health and Human Services secretary, told the Observer editorial board Wednesday that with some flexibility from the federal government on how things are structured, a half-million or so state residents could become newly eligible for health insurance….
North Carolina should have accepted Medicaid expansion long ago rather than make a political statement against Obamacare at the expense of hard-working North Carolinians. It was a good financial deal for the state, and it would have encouraged cheaper preventative care for low-income residents before they encountered more serious problems.
It’s not too late, though. With face-saving measures included or not, Gov. McCrory and legislative leaders can still do the right thing.