Not all jobs estimates are created equal (or deserve equal status in the eyes of policy makers and the media).  MHPC’s assertion is flawed out of the gate.  It assumes the necessity of new taxes and ignores the fact that rolling back recently enacted tax cuts would go a long way to closing the shortfall with little or no additional economic impact.  Since the tax cuts have yet to take effect, delaying their implementation or eliminating them entirely would simply preserve the status quo.

Even operating on MHPC’s unfounded assumption, how would we credibly evaluate the impacts of a tax increase?

For starters, who will the tax increase affect?  Is it rich people, poor people, or everyone across the income spectrum?  Is it businesses or individuals?  Is it a temporary tax, as was used to cover a budget shortfall during the McKernan Administration, or a permanent tax increase?

The answer to these questions has a significant impact on the outcome of the analysis.  Where taxes are concerned, not all cuts or increases are created equal.

For example, providing tax relief to low- and middle-income households generally does far more to increase economic activity than tax relief for wealthier households. Low-and middle-income households are more likely to spend their tax cuts than wealthier households that tend to put more of their money to savings.  Many nationally recognized economists such as Mark Zandi (former advisor to John McCain) and Douglas Elmendorf, Director of the Congressional Budget Officehave written about these issues and provide informative analysis of a range of policy options in supporting economic recovery and the appropriate methodology for assessing those options.

Since MHPC does not specify the kind of tax increase its analysis addresses, the results are smoke and mirrors, not substance.  A 10% surcharge on households with incomes over $250,000 would have very different economic impacts than a penny increase on the sales tax or a $1 increase in cigarette taxes for example.

CBO Analysis of Job Impacts of Various Federal Policy Proposals

MHPC further undermines the credibility of their analysis by asserting that $121 million in new taxes will actually result in $631 in lost personal income per household over the long-term.  This is quite a leap of faith predicated on a host of assumptions, none of which are made clear.  Presumably MHPC is assuming that the tax increase would be in effect in perpetuity – which likely would not be necessary since the revenue shortfall is due in large measure to a dramatic drop in revenues resulting from the recession and ill-conceived tax cuts yet to take effect that further compromise Maine’s revenue picture.

MECEP takes our commitment to provide credible research and analysis seriously.  In estimating the job losses associated with the proposed DHHS cuts, we erred on the side of caution given the lack of specific information from the Administration.  We also generated figures based on our best understanding at the time of which program areas would be impacted.   We did not make hasty assumptions about other potential job losses associated with the Administration’s proposal such as cost shifting, poorer health outcomes, and lost productivity.

With the health and well-being of tens of thousands Maine children, families, seniors, and disabled individuals at stake, it is critical that policymakers base their decisions on fact not ideology.

Greg LeRoy is known as one of America’s leading advocates for corporate and government accountability in economic development and smart growth for working families. He has been called “the leading national watchdog of state and local economic development subsidies.” With Maine facing a $1.1 billion budget shortfall, MECEP believes that Greg will provide insight and ideas to help to inform the debate in the months ahead.

A discussion following the lecture will feature panelists Rob Brown, Co-director, Opportunity Maine; Stacy Mitchell, Senior Researcher, Institute for Local Self-Reliance; and Orlando Delogu, Emeritus Professor of Law, University of Maine School of Law. The event is free to the general public and open to the media. Because of space limitations, attendees are asked to register in advance by visiting MECEP’s website or calling (207)622-7381. Parking will be available in nearby campus parking lots and garages.

Greg LeRoy founded Good Jobs First in 1998. For 25 years, he has written, trained and consulted on development issues for state and local governments, labor-management committees, unions, community groups, tax and budget watchdogs, environmentalists, smart growth advocates, and associations of public officials. A nationally prominent speaker, he is the author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation (Berrett-Koehler Publishers, 2005) and No More Candy Store: States and Cities Making Job Subsidies Accountable (1994).

MECEP initiated the Shepard Lee Lecture series to honor the noted entrepreneur, civic leader, political advisor and advocate for justice who contributed to Maine’s public life for more than five decades.

Many seem to have a similar relationship to government and taxes. They get agitated when government doesn’t use their tax dollars the way they think it should. But when all is well they hardly take note.

Largely overlooked in the discussion this year is the fact that because of legislation enacted last year, 99% of Maine’s working families paid, on average, nearly $1,000 less in 2009 taxes.

Rather than fixate on whether you paid too little or too much this year, imagine a world without government or taxes.  It’s an interesting exercise. Where would we be without safe roads and bridges, public education, safe drinking water and so many other things we take for granted?

At MECEP, much of our work focuses on taxes. How much is enough? How should they be spent? How do we make sure they are fair?

Our answers to these questions reflect our values. MECEP believes government can and does play a role in providing for our economic security and promoting shared prosperity for all. Who pays how much in taxes is just as important as how they are spent in realizing these outcomes, particularly for low- and middle-income families.  This is why dealing with the estate tax and tax reform are such important issues in the months to come.

We recognize that taxes are a tool.  They are not inherently good or bad. As with most tools, how we use them determines whether they build or demolish.  I need to look no further than my son’s tree house or the hole he dug in the middle of our garden to be reminded of this.

On February 4th MECEP released a new report which estimated that cuts proposed to the state budget for health care and education would result in the loss of 7,000 to 10,000 jobs.  The response from the Maine media was impressive with front page stories in the Portland Press Herald and the Central Maine Newspapers and an extensive report on MPBN.  Rep. Anne Perry, House Chair of the Legislature’s Health & Human Services Committee, cited the MECEP study in a February 9th “op ed” in the Portland Press Herald asserting that MECEP’s projected job losses “would only keep Maine in a longer, deeper recession.”  (Brunswick) Times Record columnist Doug Rooks wrote “The reason the MECEP report is so important is that it frames the choices differently than has been done so far.”

On February 9th MECEP Executive Director Christopher “Kit” St. John joined Maine House Speaker Hannah Pingree, Maine Senate President Elizabeth Mitchell, other legislators, business people and health care and education advocates for a State House press conference calling on Senators Snowe and Collins to fight for immediate passage of a new jobs bill pending in the U.S. Senate.  Kit stressed the need for federal fiscal relief for Maine and other states struggling to provide health care and education services to their citizens.   Video of Kit’s press conference statement is available on YouTube.

And finally, MECEP made its own contribution to job creation this week, hiring me as its new Communications Director.  I look forward to doing my best to support MECEP’s efforts to ensure economic and social justice for all Maine families.