State and national media outlets took a tough look at Ohio Gov. John Kasich's claims that tax cuts and a balanced budget created jobs and economic recovery in his state. Their findings reveal that the governor, a candidate in the Republican presidential primary, is not telling the whole story.
On March 13, Politico reported on Kasich's Ohio “comeback story” with an article titled "The myth of Ohio's economic miracle." It found that while the governor frequently claims his leadership led to a balanced state budget and better economic growth, Ohio's economic recovery closely coincided with the national rebound initiated by President Obama's stimulus and rescue packages, which were signed into law long before Kasich took office. According to Politico, critics counter that Kasich “benefited from the tailwinds of an improving national economy.”
Ohio State University political science professor Vladimir Kogan pointed out that Democratic-led California has outperformed Ohio since Kasich took office in January 2011, and that state-level recoveries are so closely tied to the national economy that the governor “cannot credibly claim that his policies alone are responsible for Ohio's improving economy.” Kogan concluded, “Kasich was just lucky enough to be in the right office at the right time.” Unemployment rate data from the Bureau of Labor Statistics (BLS) seem to confirm Kogan's argument: The Ohio job market has been steadily improving since February 2010, 11 months before Kasich took office, and unemploment rates in the state have closely matched national averages since the late 1980s:
Politico also reported that Kasich's touted balanced budget did cut income taxes 10 percent in 2013 and an additional 6.3 percent in 2015, but to pay for it he had to take “billions of federal dollars from Obamacare” and raise regressive “sales and cigarette taxes -- levies that hit the pocketbooks of all Ohioans, especially low-income ones.” Cutting personal income taxes while raising sales taxes resulted in a tax cut for corporations and shifted the tax burden onto hardworking Americans (emphasis added):
To be sure, this heavy manufacturing state has rebounded after being hit hard by the recession. But that was part of a national economic recovery and it left behind many Ohioans, especially the low-wage and manufacturing workers who have flocked to Trump in states like Michigan, where Kasich campaigned so long he joked he should pay taxes.
Others say Kasich singled out one data point from Ohio's employment numbers to cast himself as the ultimate job generator, instead of as someone who benefited from the tailwinds of an improving national economy.
And while he cut income tax rates twice and eliminated the state's estate tax, he also raised sales and cigarette taxes -- levies that hit the pocketbooks of all Ohioans, especially low-income ones.
His administration cut income tax rates by 10 percent in 2013 and by another 6.3 percent in 2015 and eliminated the estate tax. However, it paid for those cuts by increasing the sales tax (a move frowned upon by budget experts for disproportionately hitting lower-income people) and doing an end-run around the Republican-dominated state Legislature to expand Medicaid, which resulted in an infusion of billions of federal dollars from Obamacare.
Conservatives universally applauded the slashing of the income tax rates, as did local manufacturers, many of which structure their companies so they file taxes through the personal income, and not the corporate side of the tax code.
A March 14 article by The New York Times also criticized Kasich's claims that he balanced the budget, noting that he had to cut local aid funding so deeply that cities and towns had to propose tax increases of their own, or initiate significant cuts to services. The Times found that “more than 70 cities and villages had lost at least $1 million a year because of Mr. Kasich's actions,” which included deep income tax cuts and elimination of the estate tax (a tax instrument that affects only a handful of extremely wealthy families).
This highly critical reporting from The Times and Politico followed a March 9 report from The Wall Street Journal, which found that Kasich's tax cuts for the wealthy and for corporations had “shifted $2.2 billion in costs to localities, a decision that continues to dog city and village governments.” Shifting costs to cities and towns allowed the governor to claim he balanced the budget, but as conservative economist and former Congressional Budget Office director Douglas Holt-Eakin put it in an interview with The Journal, Kasich “g[o]t others to do the tough job” of cutting services and raising taxes for him.
The omissions in Kasich's campaign talking points are readily apparent in state-level media coverage of the Ohio economy. On March 9, PolitiFact Ohio rated a Kasich campaign ad as "mostly false" for claiming, “As governor, Kasich delivered the largest tax cut in the nation.” PolitiFact argued that other states have actually implemented larger tax cuts than Kasich did after accounting for the size of their economy and population -- such as Republican-led Kansas, which has been devastated by Gov. Sam Brownback's Koch-backed tax cut program. Like The New York Times, The Wall Street Journal, and Politico, PolitiFact also noted that Kasich's so-called “tax cut” was actually “more of a tax shift” that “forces local governments to raise taxes in turn.”