The nation’s most aggressive experiment in conservative economic policy is dead.
Republican majorities in the Kansas legislature on Tuesday night voted to reverse the deep tax cuts engineered by Governor Sam Brownback five years ago, blaming them for blowing a hole in the state’s budget that threatened the viability of its schools and infrastructure. Brownback, a conservative first elected in 2010 on a platform of phasing out Kansas’s income tax entirely, stood by his vision even in spite of an electoral backlash last year. But a coalition of Democrats and newly-elected Republicans overrode his veto of legislation to raise $1.2 billion in revenue by hiking personal income taxes and repealing a widely-criticized exemption for small-business owners. Tax rates will now go up to levels near where they were before Brownback took office.
The stark shift in policy was months, if not years, in the making. Lawmakers in the GOP-controlled House and Senate came within a few votes of undoing the tax cuts in February as lawmakers searched for revenue to plug a nearly $900 million two-year budget gap and meet a court order demanding more funding for education.
For Brownback, a former senator and one-time presidential hopeful, the vote was nothing less than a humiliation. He had hailed his tax cuts as “a real live experiment” in conservative governance and offered them up as a model for other states and the Trump administration. Instead, they left him as the most unpopular governor in the country, who was reportedly casting about for a federal posting that would allow him to escape Topeka before the legislature could eviscerate his legacy. “The Brownback experiment didn’t work. We saw that loud and clear,” said Heidi Holliday, executive director of the Kansas Center for Economic Growth.
The move will reverberate in Washington, where the Trump administration is asking Republicans in Congress to enact a tax plan with the same basic structure as the one Brownback put in place in Kansas: sharp reductions in income tax rates as well as a large drop in the rate paid by small business owners that file their taxes individually, known as “pass-through” entities. “It’s a great day in Kansas and a blow to the myth of trickle-down taxation,” said Jared Bernstein, a liberal economist who served as a top adviser in the Obama White House. “Whether D.C. Republicans will learn from the Kansas legislature is very much another question.”
Indeed, conservatives took a very different lesson from the Brownback experience. The goal of conservative economic philosophy is to reduce the size of government—to shrink it down so small that you could “drown it in a bathtub,” in Grover Norquist’s famous description. Kansas only followed one half of the plan. “Don’t cut taxes and increase spending,” said Dave Trabert, president of the right-leaning Kansas Policy Institute. “That’s what Kansas did. That’s a bad plan, and it’s the root of all of Kansas’s problems.”
Yet where advocates on both the right and the left agreed is that Kansas, despite its decades-long tradition of Republican governance, simply did not want to go as far to the right economically as Brownback tried to push the state. While job growth did increase following enactment of the tax cuts, bipartisan coalitions rebelled against cuts to the schools. “Education actually matters to people in Kansas,” Bernstein said. “The lesson is that when it comes to things government provides, people value that more than conservative ideology admits.”
Trabert reached a similar conclusion. “There simply was not the political will to reduce the cost of government,” he told me. After moderate Republicans ousted conservatives in 2016 primary campaigns, legislators came to believe they would face punishment from voters if they cut spending too deeply. “It’s not about citizens. It’s not about students,” Trabert said. “It’s about getting elected and reelected.”
While Congress often looks to states for ideas—and warnings—about policy, there’s a limit to how much influence the Kansas example will have with Republicans on Capitol Hill. The biggest difference between the federal and state governments is that Washington can borrow money and run deficits, while states must balance their budgets. And the GOP has repeatedly prioritized the potential for economic growth it sees in tax cuts over the potential ramifications for the deficit. While Trump officials have wavered on whether a tax bill must be paid for, the administration’s one-page outline would add trillions to the debt without corresponding revenue increases that it didn’t propose.
In an interview on Wednesday, Norquist was unbowed by the result of Brownback’s experiment. “This is nothing new,” he told me. “You had a legislature unwilling to do the spending restraint necessary.”
Norquist said that although voters elected Brownback as a “Reagan Republican” in 2010, the state had always had “an inverted Republican Party” that was more vulnerable to the influence of teachers’ unions and other interest groups dependent on government spending. “Kansas is an outlier,” he said, pointing to Republican-led states like Texas, Florida, and Arizona as better examples of places where conservative leaders had cut both taxes and spending. “If you’re a Republican looking for a model, Kansas is not the model,” Norquist said.
On the morning after his signature policies met their demise, Brownback was not so sanguine. “Things sometime don’t go as well as they should,” he said of the legislative rebuke. He warned that the tax increases lawmakers approved over his veto would stunt business expansion and cause companies to flee to other states. “It’s a bad way to go,” Brownback told reporters at the state capitol. “We’re going to have longterm negative consequences for the economy of this state and for the people of Kansas going this route. I regret that.”
He had stood by the tax cuts to the end, insisting that they had indeed unleashed a new wave of growth and job creation but that external economic forces—low wheat and oil prices, a downturn in aircraft sales—had held the state back. It was an argument the conservative governor had made many times before, to decreasing avail.
Despite his pleas for patience, the state’s legislators—including many in his own party—wanted to move on. And when they cast their final votes on Tuesday, they turned Brownback’s grand experiment from national model into a cautionary tale.