RALEIGH — Pardon the shameless promotion — as you know, a rare thing indeed on this site — but if you’re in the Raleigh area around noon on Tuesday you might want to drop in on a John Locke Foundation Headliner luncheon at the Brownstone Hotel.
The speaker is Stephen Moore, president of the Club for Growth. Steve is a public policy entrepreneur of the first rank. Along with lengthy and notable stints as a fiscal policy analyst with the Cato Institute, the Heritage Foundation, and former House Majority Leader Dick Armey’s staff on Capitol Hill, Steve helped found the Club for Growth several years ago as a pro-market, pro-freedom political action committee.
One of Steve’s strongest talents is explaining economic principles in the context of current news events. This was in evidence Monday with one of his commentaries, a column on the 25th anniversary of California’s Proposition 13, which began the modern tax revolt in America. The Durham Herald-Sun printed Steve’s column (thanks to my Locke Foundation colleague Asa Spaulding for pointing it out to me). Unfortunately, the Herald-Sun doesn’t yet post its op-ed material on the web, but you can read a virtually identical version in the Anchorage Daily News.
Proposition 13 got a bad rap at the time from the state and national press, from special-interest groups across the political spectrum, and from academics. But as Steve points out, the tax-limiting measure did wonders for the California economy, helping to usher in a “second Gold Rush” in Silicon Valley, in Southern California, and elsewhere.
Since then, state and local governments haven’t exactly followed the fiscal straight-and-narrow. Some have cut taxes, some have raised taxes, and some (North Carolina among them) have done both over years of boom-and-bust fiscal cycles. But Proposition 13 and its legislative stepchildren — including constitutional spending limits in states such as Colorado and Washington — have, on balance, slowed the growth of government. State and local spending per capita grew much more rapidly during the 1950s, 1960s, and early 1970s than it did after the passage of Prop 13 in 1978.
To some, this is an indictment. They say that Prop 13 starved California governments for revenue, thus precipitating declines in education and other services. Nope. The data don’t show this. Spending continued to grow more than enough to keep up with inflation and population growth. “In fact,” Moore wrote in his column, “as in most states, if [California] government spending had simply grown at the rate of population plus inflation over the past decade, Sacramento would not only have a balanced budget [this year], it would have enough money left over to return $400 in taxes to every family in the state.”
During the 1990s, a different dynamic kicked in. After a couple of years of recession, most state budgets took off like rockets. At the supposedly profligate federal level, however, spending growth moderated (the 1994 elections had a lot to do with that, as did the end of the Cold War). With Congress continued to ratchet down the federal tax burden, it’s time for states to rediscover the wisdom of frugality and the political potency of measures like Prop 13.
That’s in part what Steve Moore will talk about Tuesday at the JLF Headliner in Raleigh. Plus, I guarantee an entertaining speech. Steve’s group is the one that ran the funny TV ads in Maine and Ohio comparing Republican senators who refused to back President Bush’s tax cuts to the leaders of France. And, yes, the ads were a bit offensive — to the French.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.