NC GOP has strong economy on its side
Editorial by Wilmington Star-News, July 4, 2015.
North Carolina’s Republican governor and Republican legislature might not agree on everything, but they saw eye-to-eye on how to fix the state’s ailing economy a few years ago. Now, the GOP is getting some good press about how its economic strategy is paying off.
Stephen Moore, of the Heritage Foundation, writing recently in the Wall Street Journal, heralds the strategy for supercharging the state’s economy and helping finance budget surpluses in Raleigh.
Moore credits two factors for the turn-around: Tax reform and changes in unemployment benefits.
Controversy still swirls over both, but as Moore points out, the results cannot be ignored.
Tax reform reduced North Carolina’s personal income tax rate from the South’s highest at 7.75 percent to 5.75 percent, which is more in line with the regional average. The corporate tax rate dropped from 6.9 percent to 5 percent. Lawmakers eliminated the estate tax.
At the same time, North Carolina took the bold step of becoming the first state to turn down additional federal money to extend jobless benefits. The GOP took the heat for cutting benefits from 26 weeks to 20 and for cutting the maximum weekly payment from $535 to $350.
The Republican strategy, in part, grew out of complaints from companies that they could not make hires for available jobs until people exhausted their unemployment benefits.
The state, Moore accurately notes, was paying people not to work.
And now, the results.
The state’s unemployment rate has dropped from 10 percent plus to a respectable 5.5 percent.
In Wilmington, the rate is 5.5 percent. It was 6.1 percent in May 2014.
Nearly 200,000 jobs have been added in the state since 2013.
By turning down additional federal unemployment money, the state will not have to pay it back. In fact, North Carolina has already paid back the $2.8 billion it did owe the feds for unemployment benefits that were paid out. What’s more, the state’s unemployment trust fund has a surplus.
Critics will point out that the GOP tax reform, while reducing the tax rate, eliminated many deductions, and that many North Carolinians pay more income tax as a result. That is true for some. The deduction changes apply only to those who itemize, not the vast number of taxpayers who take a standard deduction at the lower tax rate.
There also have been funding cuts and changes in state programs that GOP opponents will use as ammunition.
As the state’s economy continues to improve, we hope the legislature does not ignore folks that are still struggling in low paying jobs and with stagnant wages. And the number of North Carolinians with no health insurance continues to plague the state. Can Gov. Pat McCrory, who seems willing to govern by practical principles rather than ideology, work with the Obama administration to expand Medicaid?
And a myriad of hot-button issues remain that will have a lasting effect on the state, including possible elimination of health benefits for future retirees from state employment.
Pundits can say all they want, but it is the voters who ultimately will have the final say.
Opponents of the governor and the GOP majority in the General Assembly will come at them hard, and they likely will make some legitimate points. But if the upward economic trajectory continues, Republicans will have some strong statistics to point to defend their policies.