Trickle-down plan may drown Pearce’s run for governor
The busiest season for buying and giving is over. Now Republicans who hold public office are reassuring the rest of us that prosperity is around the bend, that next Christmas will be better than this one. Congressman Steve Pearce is one of the most outspoken. He is taking the biggest risk of any Republican in New Mexico, having bet his political career on the federal tax cuts that President Donald Trump signed into law Friday.
Pearce is running for governor in 2018, and he probably will receive the Republican nomination without opposition. He supported the tax cuts, meaning one vote he made in Congress could define his candidacy for the state’s highest office.
If the federal deficit jumps, the economy stagnates and poor people get even poorer, Pearce’s vote for the tax cuts will be all it takes to sink him in the gubernatorial election next November.
A former oilman from Hobbs, Pearce has veered into the dangerous practice of predictions.
“By signing this bill into law today, we will see a more fair and simple tax code that creates jobs, raises wages and reduces taxes across the board,” he said.
It’s easy for politicians to talk about more jobs and better pay. Delivering on those promises is rare.
Pearce points to provisions in the tax bill that he says are good for people at almost every income level. They include lower individual tax rates, increased standard tax deductions for individual filers and married couples, and expanded deductions for medical expenses.
Even so, most of the tax breaks help the wealthiest people. In addition, tax cuts for individuals expire in 2026. Corporations keep the lower rates indefinitely.
This is another case of giving the richest the most, then hoping they share something with lower echelons.
New Mexico, perhaps more than any other state, has reason to be skeptical about corporate tax cuts improving the economy.
New Mexico’s sitting governor, Republican Susana Martinez, said in 2013 that more and better jobs would be created after legislators approved her bill to reduce corporate taxes.
Martinez’s measure was a product of incompetence, slapped together in the final few hours of a 60-day session by legislators friendly to her.
The bill contained no financial analysis by the legislative staff because it was concocted so belatedly.
Then Martinez’s Cabinet secretary of finance, Tom Clifford, miscalculated the cost of the tax cuts by $70 million for a single year. Clifford provided this faulty information to legislators. Several of them claim that Clifford’s error-filled analysis led them to vote for the tax cuts.
Martinez and her supporters in the Legislature made quite a mess. The boom she predicted never happened.
New Mexico’s unemployment rate is consistently among the highest in the country. And instead of the state lessening its dependence on federal installations and the oil industry, it has remained tethered to both.
Other fallout from the tax cuts was just as bad. As state revenue plunged, lawmakers reduced funding for schools and state services. Martinez, who claimed to be a fiscal conservative, was a party to illegal deficit spending.
Nothing trickled downward except the state’s credit rating and savings account.
It will take a while to assess the federal tax cuts. Most people will receive more take-home pay starting in February, after the lower tax rates begin. Then comes the real test. Will companies and the economy grow, or will the national debt balloon because less tax revenue comes in?
If the deficit rises quickly, Social Security and federal health insurance programs will become vulnerable to raids by Congress, just as state legislators took money away from schools to pay for operating expenses.
Even before the federal tax bill, Pearce looked like an underdog in the governor’s race. Many voters are eager for a change after eight years of ineptitude by Martinez.
Most Republicans will stick with Pearce no matter what. But independents and moderate Democrats will not consider sending anyone to the governor’s mansion if he played a part in worsening the national economy.
And so Pearce the predictor stands a chance of seeing his campaign for governor falter in a hurry. He could be one of the early casualties in the latest try at trickle-down economics.
Ringside Seat is an opinion column about people, politics and news. Contact Milan Simonich at msimonich@sfnewmexican.com