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NC Budget and Tax Center

Jobs11-5During the debate over last year’s billion-dollar-a-year tax cut plan, supporters made a lot of big promises about the supposed economic benefits of cutting corporate and personal income taxes for wealthy individuals and highly profitable corporations. The problem—as many warned at the time—is that tax cuts almost never live up to their promises.

And that’s the point made in a recent piece by the well-respected Fiscal Times. In order for the tax proponents’ claims to be true, North Carolina would have needed to generate job growth that is significantly better than other states and the national average. According to the Fiscal Times:

The trouble is that the promised job growth hasn’t really materialized.

To be sure, with the U.S. economy as a whole adding jobs at a pace of 250,000 per month, there aren’t many states seeing a downturn in employment anymore. But the promises that went along with the tax cuts and reduced spending weren’t about keeping up with the rest of the country, but about surging ahead.

The Fiscal Times examined the job creation record of North Carolina and two other states that have experimented with deep tax cuts—Kansas and Wisconsin—and found that:

The dramatic tax cutting doesn’t appear to have done nearly as much for job growth as promised.

Wisconsin and Kansas, for example, have actually lagged the national average in job creation since their big tax cuts and budget cuts were enacted:

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Dean BakerEarlier this week, we cross-posted a brief essay by one of the nation’s best economists, Dr. Dean Baker of the Center for Economic and Policy Research, in which he thoughtfully and professionally dissected and demolished the claims made by a Raleigh conservative think tanker in a Wall Street Journal piece. The think tanker’s central claim was that the state’s harshest-in-the-nation cuts to unemployment insurance had spurred all kinds of wonderful economic results in North Carolina.

Apparently not content to be put in his place just once, the think tanker posted a fairly snarky attempt at a response yesterday and today, with an almost audible virtual sigh, Baker took to his keypad (and the CEPR blog) to provide a few more lessons in basic economics. We’ve cross-posted his addendum below:

Addendum:

I see John Hood has replied to my post. Apparently he thinks that if we play games with the start and end dates we can say cutting benefits worked.

Okay, I don’t know what games they play in North Carolina, but let’s just remember what is at issue. The argument for cutting benefits was that if the state pushed people off unemployment insurance (UI) they would be motivated to get a job. We know that North Carolina pushed lots of people off UI. The question is whether there is any evidence this led more people to get jobs.

That gives us two numbers to focus on, Read More

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Dean BakerIn case you missed it, be sure to check out the latest from one of the nation’s sharpest economists, Dr. Dean Baker on the one-year anniversary of North Carolina’s harshest-in-the-nation cuts to unemployment insurance. In a post that originally appeared on the website of Baker’s Center for Economic and Policy Research, Baker specifically takes one of North Carolina’s right-wing think tank denizens to task for his recent column in the Wall Street Journal celebrating the cuts.

As Baker notes, the local pundit is simply and plainly wrong in his contention that the cuts are responsible for a job boom in the state — or that such a boom is even occurring: Read More

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As Dean Baker notes this morning, the national economic news is encouraging. In addition to the record high Dow Jones average, Baker points out:

“The economy added 288,000 jobs in June, making it the fifth consecutive month in which the economy added over 200,000 jobs. This is the longest stretch of 200,000 plus job growth since before the recession. The job gains were broadly based. Retail was the biggest gainer, adding 40,200 jobs, with professional and technical services adding 30,100 jobs. Manufacturing added 17,000 jobs for the second month in a row.

The news was also positive in the household survey with the unemployment rate falling to 6.1 percent, a new low for the recovery. This was due to people entering the labor force and finding jobs; the employment-to-population ratio rose to 59.0 percent. This is a new high for the recovery, but still 4.0 percentage points below its pre-recession level. Another piece of positive news is that the percentage of people who are unemployed because they voluntarily quit their jobs rose to 9.0 percent, the highest since the collapse of Lehman. This is a sign of growing confidence in the labor market.”

Unfortunately, the economic news is not so encouraging in North Carolina. As Allan Freyer of the Budget and Tax Center pointed out in a news release on Tuesday: Read More

NC Budget and Tax Center

We keep hearing that North Carolina’s economy is turning around. But while it’s true that we’re slowly making progress in replacing the jobs lost during the Great Recession, the bad news is that the overwhelming majority of these new jobs just don’t pay enough to make ends meet. In fact, many don’t pay enough to keep workers out of poverty, despite working full time. Check out the latest Prosperity Watch for details.