A Response to The Wall Street Journal's Hatchet Job.
Recently Stephen Moore and the Grover Norquist led no-tax posse galloped into Virginia in an effort to vilify and malign Governor Warner and the great success he has had managing the Commonwealth of Virginia. In “Virginia Ham: Governor Mark Warner is emerging as the Democrats alternative to Hillary,” I was surprised and more than a little dismayed at the sheer quantity of distortions and half-truths promulgated by the author, Stephen Moore. While I understand that the Opinion Journal is a bastion of so-called conservative thought, I never figured its editors would publish an op-ed piece that is, to use the author’s word, a “canard.” Although Stephen Moore is an anti-tax zealot that has at one time or another been either a president or member of some of the most far right wing conservative groups in the country such as the Cato Institute, Club for Growth, and the Free Enterprise Group, I expected his smear campaign to have a semblance of fact—not based in conjecture, amorphous numbers, revisionist history, and pure sophistry.
The core of Mr. Moore’s hatchet-job is that Mark Warner declared a “surprise budget short-fall” and that his tax reform package was a “scam” to simply increase taxes. He claims, without a scintilla of proof, that candidate Warner was always planning to raise taxes—and was simply waiting for the right moment. Mr. Moore’s assertions are incorrect and misleading. Everybody knew that Virginia was headed into a fiscal storm, but almost no one knew the breadth of that storm and what it would take to survive it. In any event, the record is clear. Governor James Gilmore created a budget shortfall with irresponsible unchecked spending increases coupled with revenue draining tax cuts.
Before Warner, the Commonwealth was so mismanaged that deficit estimates were reaching into the billions and Virginia’s coveted Moody’s Investment Service’s AAA bond rating was about to be downgraded. Because of previous administrations, localities were forced to bear the financial burden of Commonwealth mismanagement, transportation funding was scaled back, badly needed construction projects were in danger of being scrapped, there was inadequate funding for K-12 education, and our world-class universities were losing badly needed support. Simply put, Virginia was in the midst of a fiscal nightmare.
Mr. Moore also fails to tell his readers that Warner was not the only one who was “surprised” by the massive debt Virginia was facing. To be sure, there was a truly bi-partisan recognition that Virginia’s fiscal woes needed to be fixed and fixed immediately. The GOP Senate Majority Leader John Chichester not only recognized Virginia’s fiscal crisis but also lamented a decline in services. He echoed many other conservatives and liberals alike that decried the failure of Virginia to provide basic services and needed repairs to Virginia’s infrastructure. In fact, Mr. Chichester so believed that Virginia was headed toward fiscal disaster that he proposed a tax package with greater tax increases than Governor Warner’s tax package. United States Senator John Warner also recognized the fiscal crisis and supported a tax increase as did the right-of-center Virginia Chamber of Commerce.
Moreover, the Chamber’s Board of Directors issued a report in which it said “Virginia has reached the point where additional revenue is needed to meet the state’s core obligations . . . . No one is enthusiastic about raising taxes, but we believe that the other choices are as bad or worse.” Apparently the Chamber’s primary concern was the Moody Investment Services possible downgrading of the Commonwealth’s coveted AAA bond rating. Because, according to the Board of Directors, the loss of the AAA bond rating would engender greater fiscal hardship on Virginia taxpayers as well as undermine Virginia’s ability to attract businesses. Lest we forget, these were Republicans calling for tax increases as a means to lift Virginia out of its fiscal hole, not just so-called tax and spend liberals.
But Mr. Moore does not quit there. He goes on to call Governor Warner’s tax package a simple tax hike and, again, fails to tell the whole truth. Governor Warner’s tax package did, indeed, include tax increases but it also included tax cuts as well as a shift in the tax burden from the poor and middle class to the wealthy. Because Mr. Moore focused on Governor Warner’s tax increases to the exclusion of his tax cuts, I can only surmise that his anti-tax zealotry only extends to the wealthy, while tax cuts for the poor and middle class don’t deserve his attention. This might not be true. I really don’t know. But maybe I would if Mr. Moore’s critique told the whole story and didn’t deteriorate into an old-fashioned smear campaign.
The truth is that Governor Warner’s tax package was a mix of tax cuts and increases. Among the tax cuts, Governor Warner increased the personal exemption from $800 to $900 and eliminated the “marriage penalty.” Governor Warner also removed 141,000 low-income Virginians from the tax rolls and ended the estate tax for farmers and small businesses. Further, Governor Warner reduced the regressive sales tax on groceries as well as proposed to continue to phase out the car tax. Governor Warner’s tax increases consisted of closing corporate loop holes and raising taxes on cigarettes from 2.5-cent per pack—the lowest in the nation—to 30 cents a pack. (Why Mr. Moore doesn’t like this tax is beyond me. After all, it’s a regressive tax and it’s a voluntary tax—if you don’t want to pay it don’t buy cigarettes). In addition to a one penny increase in non-food sales tax, age reduction for older Virginians was tied to income. Governor Warner also proposed that the rate on those earning $100,000 or more be increased from 5.27 percent to 6.25 percent. Even with these tax increases, Virginia is still one of the least taxed states in the country. While there were some tax increases, there were significant tax cuts that resulted in a fairer tax structure and the largest tax increase was on a vice and not income or sales receipts.
Although Mr. Moore left out a large piece of Governor Warner’s tax package in his effort to malign Governor Warner, he added significant spending to his claim that Governor Warner increased spending by 26 percent. First, I don’t know where the 26 percent comes from, but a safe assumption is that it was created out of whole cloth by the Club for Growth or one of its sister organizations. That being said, the dishonesty of that number is outrageous at worst and misleading at best. Mr. More must have lumped together the Commonwealth’s general fund that includes, funding for state agencies, administration, and a portion of Medicaid payments with the non-general fund that includes federal monies for Medicaid, school loans, and other federal requirements. It is more than misleading to attribute an increase in non-general fund expenditures to Warner because they are federal funds that are directed to specific programs. For example, after the technology bubble burst Medicaid roles increased which resulted in an increase in Medicaid expenditures. Because Medicaid is a federal-state partnership, Medicaid costs are paid for with both Commonwealth general funds and federally directed non-general funds. These costs cannot be avoided unless there are major reforms to the Medicaid system as a whole and Mr. Moore’s suggestion that Governor Warner can completely control these costs is simply disingenuous. As an aside, Governor Warner has tirelessly advocated for Medicaid reform and a better managed system both to expand health care to low income children and families and to keep costs down. Mr. Moore also failed to mention that Governor Warner cut state government more than any administration in Virginia’s history, that state agency spending was reduced on average of 20 percent, and Governor Warner eliminated more than 50 agencies and over three-thousand positions in state government. So, again, the true story—the whole story—paints a very different picture.
The fact that Governor Warner shifted the tax burden from the poor and middle class to the wealthy, reduced taxes on income and food, and cut the size of government shows that he is not simply a “tax and spend” Governor. More importantly, Governor Warner was faced with a crisis which revealed his ability to build unlikely coalitions to solve very difficult problems. Criticism of Governor Warner is expected and a part of a successful working democracy. Let’s face it accurate and genuine criticism keeps politicians honest—mostly. But criticism couched in murky numbers and partial truths has no value in the public square and should be dismissed out of hand.
Mr. Moore attributes Republican acquiescence in Warner’s tax package and Warner’s continuing success to Republican disarray. What he sees as disarray, most Virginians call a bipartisan effort to heal Virginia of its fiscal ills. Indeed, if you actually look at the amount of success Governor Warner is experiencing the Virginia GOP must be in permanent disarray. Let’s hope they stay that way.
The core of Mr. Moore’s hatchet-job is that Mark Warner declared a “surprise budget short-fall” and that his tax reform package was a “scam” to simply increase taxes. He claims, without a scintilla of proof, that candidate Warner was always planning to raise taxes—and was simply waiting for the right moment. Mr. Moore’s assertions are incorrect and misleading. Everybody knew that Virginia was headed into a fiscal storm, but almost no one knew the breadth of that storm and what it would take to survive it. In any event, the record is clear. Governor James Gilmore created a budget shortfall with irresponsible unchecked spending increases coupled with revenue draining tax cuts.
Before Warner, the Commonwealth was so mismanaged that deficit estimates were reaching into the billions and Virginia’s coveted Moody’s Investment Service’s AAA bond rating was about to be downgraded. Because of previous administrations, localities were forced to bear the financial burden of Commonwealth mismanagement, transportation funding was scaled back, badly needed construction projects were in danger of being scrapped, there was inadequate funding for K-12 education, and our world-class universities were losing badly needed support. Simply put, Virginia was in the midst of a fiscal nightmare.
Mr. Moore also fails to tell his readers that Warner was not the only one who was “surprised” by the massive debt Virginia was facing. To be sure, there was a truly bi-partisan recognition that Virginia’s fiscal woes needed to be fixed and fixed immediately. The GOP Senate Majority Leader John Chichester not only recognized Virginia’s fiscal crisis but also lamented a decline in services. He echoed many other conservatives and liberals alike that decried the failure of Virginia to provide basic services and needed repairs to Virginia’s infrastructure. In fact, Mr. Chichester so believed that Virginia was headed toward fiscal disaster that he proposed a tax package with greater tax increases than Governor Warner’s tax package. United States Senator John Warner also recognized the fiscal crisis and supported a tax increase as did the right-of-center Virginia Chamber of Commerce.
Moreover, the Chamber’s Board of Directors issued a report in which it said “Virginia has reached the point where additional revenue is needed to meet the state’s core obligations . . . . No one is enthusiastic about raising taxes, but we believe that the other choices are as bad or worse.” Apparently the Chamber’s primary concern was the Moody Investment Services possible downgrading of the Commonwealth’s coveted AAA bond rating. Because, according to the Board of Directors, the loss of the AAA bond rating would engender greater fiscal hardship on Virginia taxpayers as well as undermine Virginia’s ability to attract businesses. Lest we forget, these were Republicans calling for tax increases as a means to lift Virginia out of its fiscal hole, not just so-called tax and spend liberals.
But Mr. Moore does not quit there. He goes on to call Governor Warner’s tax package a simple tax hike and, again, fails to tell the whole truth. Governor Warner’s tax package did, indeed, include tax increases but it also included tax cuts as well as a shift in the tax burden from the poor and middle class to the wealthy. Because Mr. Moore focused on Governor Warner’s tax increases to the exclusion of his tax cuts, I can only surmise that his anti-tax zealotry only extends to the wealthy, while tax cuts for the poor and middle class don’t deserve his attention. This might not be true. I really don’t know. But maybe I would if Mr. Moore’s critique told the whole story and didn’t deteriorate into an old-fashioned smear campaign.
The truth is that Governor Warner’s tax package was a mix of tax cuts and increases. Among the tax cuts, Governor Warner increased the personal exemption from $800 to $900 and eliminated the “marriage penalty.” Governor Warner also removed 141,000 low-income Virginians from the tax rolls and ended the estate tax for farmers and small businesses. Further, Governor Warner reduced the regressive sales tax on groceries as well as proposed to continue to phase out the car tax. Governor Warner’s tax increases consisted of closing corporate loop holes and raising taxes on cigarettes from 2.5-cent per pack—the lowest in the nation—to 30 cents a pack. (Why Mr. Moore doesn’t like this tax is beyond me. After all, it’s a regressive tax and it’s a voluntary tax—if you don’t want to pay it don’t buy cigarettes). In addition to a one penny increase in non-food sales tax, age reduction for older Virginians was tied to income. Governor Warner also proposed that the rate on those earning $100,000 or more be increased from 5.27 percent to 6.25 percent. Even with these tax increases, Virginia is still one of the least taxed states in the country. While there were some tax increases, there were significant tax cuts that resulted in a fairer tax structure and the largest tax increase was on a vice and not income or sales receipts.
Although Mr. Moore left out a large piece of Governor Warner’s tax package in his effort to malign Governor Warner, he added significant spending to his claim that Governor Warner increased spending by 26 percent. First, I don’t know where the 26 percent comes from, but a safe assumption is that it was created out of whole cloth by the Club for Growth or one of its sister organizations. That being said, the dishonesty of that number is outrageous at worst and misleading at best. Mr. More must have lumped together the Commonwealth’s general fund that includes, funding for state agencies, administration, and a portion of Medicaid payments with the non-general fund that includes federal monies for Medicaid, school loans, and other federal requirements. It is more than misleading to attribute an increase in non-general fund expenditures to Warner because they are federal funds that are directed to specific programs. For example, after the technology bubble burst Medicaid roles increased which resulted in an increase in Medicaid expenditures. Because Medicaid is a federal-state partnership, Medicaid costs are paid for with both Commonwealth general funds and federally directed non-general funds. These costs cannot be avoided unless there are major reforms to the Medicaid system as a whole and Mr. Moore’s suggestion that Governor Warner can completely control these costs is simply disingenuous. As an aside, Governor Warner has tirelessly advocated for Medicaid reform and a better managed system both to expand health care to low income children and families and to keep costs down. Mr. Moore also failed to mention that Governor Warner cut state government more than any administration in Virginia’s history, that state agency spending was reduced on average of 20 percent, and Governor Warner eliminated more than 50 agencies and over three-thousand positions in state government. So, again, the true story—the whole story—paints a very different picture.
The fact that Governor Warner shifted the tax burden from the poor and middle class to the wealthy, reduced taxes on income and food, and cut the size of government shows that he is not simply a “tax and spend” Governor. More importantly, Governor Warner was faced with a crisis which revealed his ability to build unlikely coalitions to solve very difficult problems. Criticism of Governor Warner is expected and a part of a successful working democracy. Let’s face it accurate and genuine criticism keeps politicians honest—mostly. But criticism couched in murky numbers and partial truths has no value in the public square and should be dismissed out of hand.
Mr. Moore attributes Republican acquiescence in Warner’s tax package and Warner’s continuing success to Republican disarray. What he sees as disarray, most Virginians call a bipartisan effort to heal Virginia of its fiscal ills. Indeed, if you actually look at the amount of success Governor Warner is experiencing the Virginia GOP must be in permanent disarray. Let’s hope they stay that way.
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