The 2016 Economic Forecast Forum held signs that the policy discussion may be starting to take the long-term economic challenges facing the average North Carolinian and poor communities more seriously. Hosted by the NC Chamber of Commerce and NC Bankers Association, the annual forum is not always the first place you expect to hear arguments for more public investment and taking stagnant wages seriously, so it was nice to witness yesterday.
The morning panel in particular delivered a nuanced discussion of how to balance taxation and the need for public investment, done with honest recognition of how people and communities are getting left behind in the current economy. Distinguished economists offered their thoughts on how North Carolina can continue to compete and central to that was a grappling of how to make the economy work for more people. They took the obligatory moments to laud cuts to marginal tax rates, say some broadly polite things about the 2013 tax cuts, and muse on the possible benefits of privatization. But more notably, particularly for the venue, was the recognition that public investments do play a positive role in the economy, that stagnant or falling wages and high poverty rates hold us all back and that communities must have more tools to build a viable economic future.
Governor McCrory ended the day with themes that echoed some of what had been discussed in the morning. The Governor touted recent tax cuts, and implicitly claimed credit for the jobs created during the recovery, among other key points for the stump this year. However, amidst the prepared lines, McCrory also recognized that we still don’t have enough jobs, wages aren’t growing, and we need to upgrade a lot of public infrastructure. The governor made the most impassioned plea for more public investment while pitching the $2 billion ConnectNC Bond, which will be on the March 15th primary ballot. Perhaps even more strikingly, Governor McCrory recognized that if the bond is approved, it won’t meet the infrastructure needs of a growing state.
Among the messages that I left with that I hope we all carry with us into 2016:
- Our tax system can’t meet the needs of a growing state. The choices made in our state tax code have to rebalance the pursuit of low rates with the very purpose of a tax system, to raise the revenue needed to support a growing population which topped 10 million in 2015. Education and transportation were two key investments noted for their potential to generate higher wages in the future and jobs today and ones that have suffered under the lack of revenue.
- We have pressing needs beyond what the Connect NC Bond alone can provide. As we catch up on capital investments and infrastructure in disrepair with a proposed bond, we also must consider the new infrastructure that the state needs to be competitive in the future economy. Broadband infrastructure is one area that was identified as a clear economic positive. But here again, bonding for legacy and transformational infrastructure along with its maintenance and operations begs the question (asked but not fully answered) of where the revenue will come from as tax cuts drain revenue.
- We have to make wage growth an economic priority. The state’s wage problem is real and one that is having an impact on how well the economy is doing. Most workers are not seeing their wages go up. On the plus side there could be a powerful role that household formation—i.e. kids leaving their parents basements—could have in generating more consumer spending. Not noted in the session but by extension of that idea, workers have pay that keeps up with the rising cost of living—through pay raises for public sector employees and increases to the state’s minimum wage standard—would also boost the economy.
- We can’t forget that many communities and neighborhoods are struggling. The persistence of poverty and the concentration of growth in just a few metro areas was a question asked of panelists at the NC Chamber and NC Bankers Forum. To me, it was a revealing recognition that for us all to do well there must be greater attention to this issue that has not gone away with the recovery. The solutions may be public investments along with private sector innovation, they may include getting better data and setting forth clearer visions. A more robust discussion is needed to move toward solving this for our state.
There were many other important pit stops in the hour-long panel discussion: what NC is doing about the potential of technological unemployment, what will the Fed do with interest rates, and how do we deal with economically inefficient (but politically important) incentives.
While the luncheon economist provided a less serious presentation of the ideas and thinking that will lead us into even stronger economic growth and improved economic opportunity, I left with a feeling that mainstream North Carolina remembers what makes us great. Not our marginal tax rate but the sum of our commitments to each other to build bridges to opportunity and pathways to economic success for everyone.