Wisconsin’s Anemic Economy and the Walker Budget

Tuesday, April 2, 2013 at 7:00 PM by

Who’s Responsible for the State’s 44th Place Rank, and Does it Matter?  

Like many other governors, Scott Walker is frequently talking up the state economy and trying to take credit for any recent bit of positive economic news.  That’s perfectly understandable.  It’s also becoming increasingly difficult. 

If you missed the latest numbers, they aren’t pretty.  As the Milwaukee Journal Sentinel reported last Friday, the latest employment figures show that the 12-month job growth in Wisconsin (for October 2011 through Sept. 2012) was half the national average and trailed all but six other states.  The new employment numbers are from the Quarterly Census of Employment & Wages, which the Walker Administration has been arguing for the past year is the right data source to use.  In addition to the weak job growth figures, the report found that Wisconsin was 45th-worst in wage growth, and the state’s unemployment rates rose for a second straight month.

An interesting column by Jack Norman in Monday’s Journal Sentinel carefully lays out the case for why “it’s totally appropriate to blame the governor’s policies for the slumbering condition of Wisconsin’s economy.”  Accompanying the column is a very compelling graph, which charts how the monthly changes in Wisconsin’s employment compare with the national average, over the period 2009 to 2012.  It illustrates that Wisconsin’s underperformance became noticeable early in 2011 and the gap widened as the Governor’s 2011-13 budget took effect.    

Of course, this sort of correlation does not prove causation, which is why it’s worth reading and pondering the arguments Jack makes in his column.  He reminds us that he predicted two years ago that the austerity policies proposed by the governor would have a damaging effect on the state economy.  That prediction wasn’t based on ideology; it was the conclusion derived by plugging the governor’s proposals into a sophisticated computer model of the state economy. A similar analysis by UW professor Steven Deller yielded much the same results.     

A Journal Sentinel editorial posted online late today makes the argument that it doesn’t matter who is responsible for the state’s weak economy.  It contends that “this political finger-pointing is pointless,” and it focuses instead on policy options that the editors believe would help improve Wisconsin’s anemic economy.   

I agree with the editorial to an extent, because I concur that “finger-pointing” isn’t particularly useful.  Yet if they’re implying that finger-pointing is the essence of Jack Norman’s column, I think they are missing the point.  We need to get to the bottom of the question of whether the austerity policies the Governor continues to advance are working, and Jack’s column is a constructive part of that very important debate (and I presume that’s why the Journal Sentinel ran it).      

Until very recently, the Governor often pitched his budget policies on the basis that the state should build on or even double-down on the “success” of his last budget. The Governor’s rhetoric has changed a little as the job numbers have gotten harder to brag about, but he is still largely relying on the argument that we need more of the same sort of austerity that he prescribed for the state last session. 

Finger-pointing isn’t going to solve anything, especially if it exacerbates the polarization that was so pronounced inside and outside the Capitol last session.  But improving the state economy requires making smart choices about fiscal policy decisions, and we won’t accomplish that if we don’t ask tough questions about what is and isn’t working, and then start making decisions based on solid evidence rather than ideology.  

Jon Peacock

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