A very interesting OpEd piece, Brown’s account lacks accounting, by Scott Lehigh appears in The Boston Globe today.
Lehigh starts off with some quotes from Senator Brown.
“In 2001 to ’02, the bursting of the technology bubble hit the Massachusetts economy hard,’’ Brown wrote. “Our unemployment rate was growing faster than any other state in the country, and we faced a fiscal crisis that many experts said was the worst since World War II. The projected deficit for 2003 was nearly $3 billion.’’
And how did Massachusetts solve its problems? “[I]nstead of raising taxes . . . we tightened our belts and balanced the books by cutting spending,’’ Brown maintained. “It wasn’t easy, but . . . we turned our deficit into a surplus and the economy and jobs started coming back.’’
I’ll quote some of the analysis that Lehigh provides.
In fact, in 2002, the Legislature passed a revenue package worth about $1.1 billon – tax increases that took effect on Jan. 1, 2003. That was part of a balanced approach that saw the state reduce spending, raise taxes, and tap rainy day reserves, notes Michael Widmer, president of the Massachusetts Taxpayers Foundation.
Under Romney, the state hiked fees for permits and licenses and closed corporate loopholes to raise hundreds of millions in new revenues.
Those fees and loophole closings (closings that businesses certainly viewed as tax hikes) brought in more than $600 million. Include other one-time dollars, and the state used about $800 million in additional revenue to close the budget gap, Widmer says. Add in the fact that the budget problem turned out to be a third smaller than the preliminary projection of $3 billion, and the truth is clear: New revenues were a substantial part of the solution.
This appears to be another case of politicians spouting off about how the government in their own state works when in fact they have no clue. See the other case in the post Texas Gov. Perry Got His Keynes On