Posts Tagged growth
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness . . . ” So begins Charles Dickens’s novel A Tale of Two Cities. It is set in in the years prior to the French revolution, but actually applies to the recent performance of Republicans in the Pennsylvania legislature.
As official Harrisburg prepares for what is shaping up to be another epic budget battle, the big question is: which GOP will show up in 2017? Will it be the Republican-controlled legislature that last year stood its ground and fought Governor Tom Wolf’s historic tax and spending proposals, or will it be the GOP that this year folded like a cheap suit and approved $1.4 billion in new spending?
The $1.4 billion spending hike might not qualify as the worst of times, but coming on the heels of a successful struggle against the Wolf Administration’s spending demands it did leave a lot of folks puzzled. After winning the longest budget fight in state history, why turn around and cave in months later? This leaves most observers – and quite a few participants – at a loss when it comes to predicting how the 2017 budget war will unfold.
We are certain of a few things.
The toxic stew of tax increases and new taxes cooked up to pay for this year’s massive spending increase has failed to live up to expectations. To date, revenue collections for the 2017-2018 fiscal year are running $261.8 million below estimates. This, coupled with a “structural budget deficit” pegged at over a billion dollars means the new budget will begin with a significant gap between spending and revenue.
We also can be sure that Governor Wolf will again demand massive spending increases and the taxes to pay for that spending. He used his budget address this year to lecture the General Assembly for its refusal to accede to his spending demands. Since most of his priorities have not been funded chances are they will be dusted off and included in his new budget proposal.
But should Republicans sit back and wait for the governor to set the agenda? Leo Knepper of the Citizens Alliance of Pennsylvania, a pro-growth PAC, suggests a different course of action. “If Republicans in the General Assembly were smart, they would upend a long-standing budget tradition and go on offense,” Knepper wrote in a recent policy brief. “(They) should ignore tradition and pre-empt the Governor’s budget address with a plan of their own.” Knepper observed this would “force the governor to play defense rather than the usual offensive position granted to governors.”
The question remains, however, whether or not legislative Republicans – or at least the leaders who actually sit at the negotiating table – want to go on offense. Will the resolute leaders who fought and won the first budget battle show up to play, or the ones who forfeited this year’s game?
The final certainty is that all this will play out against the backdrop of the rapidly approaching 2018 election for Governor. For his part, Governor Wolf will want to deliver the goods of higher spending to his largely urban constituency.
It won’t be so simple for Republicans.
With a number of legislators, including leaders who will negotiate the new budget, eyeing a race for the Republican gubernatorial nomination, the upcoming budget battle is fraught with peril. There are pressures for leaders to “be responsible” and give into spending demands. But with a veto proof Senate majority and a historically large majority in the House, voters are not likely to be either understanding or forgiving if the GOP doesn’t stand firm.
Will it be the “best of times” with legislative Republicans going on offense and standing up to a tax and spend governor, or will it be the “worst of times” with the taxpayers of Penn’s Woods getting stuck with yet another round of tax hikes? As the budget process begins a new cycle it is impossible to tell which of the GOP’s split personalities will emerge dominant in 2017, but both the pocketbooks of taxpayers and the political fortunes of many politicians will be affected by the outcome.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is email@example.com.)
Permission to reprint is granted provided author and affiliation are cited.
Pennsylvania’s business climate remains sluggish as the commonwealth continues to struggle in the aftermath of the Great Recession. Business conditions, employment levels and sales have all backslid over the past six months with owners blaming high taxes, government regulation and a lack of skilled workers for the malaise.
The Fall 2016 Keystone Business Climate Survey conducted by the Lincoln Institute of Public Opinion Research found half of the business owners and chief executive officers survey saying the state’s economy has gotten worse over the past six months, only five percent felt Pennsylvania’s business climate had improved during that time frame.
Comparatively, one year ago 42% felt the business climate had gotten worse, while six percent at that time said it had improved. There is little optimism that business conditions will improve soon. Forty-four percent say they expect the state’s economy to continue getting worse over the upcoming six months, five percent expect to see an improvement in the business climate.
Along with that pessimistic overall prognosis twice as many businesses report having reduced their workforce as say they have added jobs. The majority of businesses – 66% – reported that employment levels remained about the same over the past six months. But, 21% said they have reduced their employee compliment while 11% added employees. The picture improves slightly as the owners/CEOs look ahead to the coming six months. Sixteen percent say they plan to add employees, 12% expect to reduce their workforce.
Sales have also taken a hit over the past six months. Thirty-nine percent said their sales remained about the same from March thru September. But, 39% reported decreased sales and were off-set by only 21% having reported sales increases. Looking forward, 51% expect sales to remain stable. Twenty-Four percent forecast an increase in sales, 23% are braced for a sales decrease.
Factors Impacting Business Growth
Among the factors cited by businesses for why they considered expanding their businesses over the past two years, but decided against expansion taxes and regulation topped the list of barriers. Onerous federal regulations were cited by 41% of the businesses that considered, but rejected, expansion plans. Coming in a close second was Governor Tom Wolf’s proposed tax increases cited by 40% as a reason why they did not expand. Pennsylvania’s tax structure was listed by 29% as having frustrated expansion plans.
Thirty-six percent cited onerous state regulations as a barrier to expansion, while another 35% cited the lack of a skilled work force. Nearly half of the businesses surveyed said they currently have open positions for which they have been unable to find qualified applicants. Forty-two percent say they have been unable to fill one to five jobs; 2% have six to ten open positions; one percent has more than ten jobs unfilled due to lack of qualified applicants.
Pennsylvania fiscal condition continues to be of concern to the business owners and CEOs participating in the Fall 2016 Keystone Business Climate Survey. Eighty-five percent disagreed – 70% strongly so – with Republicans in the General Assembly having agreed to a $1.4 billion spending increase and then raising taxes to enact the current year’s state budget.
Looking ahead to what will likely be another epic budget battle next summer, 92% say the General Assembly must address cost drivers such as pension reform before considering an increase in taxes. In fact, 34% said the state’s massive unfunded pension liability has caused them to not consider expanding in Pennsylvania.
Among pension reforms being considered is moving state employees from the current defined benefit pension system to a defined contribution plan. Thirty-nine percent of the businesses surveyed said they offer employees a company administered defined contribution plan to which the company contributes. Only 3% of the private businesses surveyed continue to offer a defined pension plan. Another 40% offer employees no retirement plans at all.
Earlier this year the General Assembly did pass, and Governor Tom Wolf signed into law, some modest changes to the state’s century-old liquor laws. Business owners/CEOs said those reforms did not go far enough. Fifty-two percent would like for the state to completely privatize both retail sales and wholesale distribution of alcoholic products. Another 26% would like to see just retail sales privatized. Twelve percent said the recent changes were sufficient.
Pennsylvania has an abundant supply of natural gas, but additional pipelines are needed to get that gas to market. Eight-nine percent agree – 60% strongly agree – that this resource should be developed and more pipelines built. Nine percent disagree. Twenty-five percent said easier access to natural gas would be a benefit to their business with an additional 14% saying it would be a major benefit. Thirty percent said they do not utilize natural gas in their business.
Over the past nine years since the passage of Act 44 the Pennsylvania Turnpike Commission has diverted $5.2 billion to PennDOT to help pay for state highways and public transit. This has resulted in annual fare increases for turnpike travelers. Sixty-three percent of those participating in the Fall 2016 Keystone Business Climate Survey said this should end and fare revenue be used only to maintain and improve the turnpike. Twenty-nine percent felt the sharing of revenue should continue.
Job Approval Ratings
President Barack Obama and Governor Tom Wolf continue to suffer from significantly low job approval ratings among the business community. Eighty-four percent have a negative view of the President’s job performance; 86% disapprove of the job being done by Governor Wolf.
U.S. Senator Pat Toomey, who faces re-election in November, received a 50% job approval rating against 23% with a negative view of his job performance. The job being done by U.S. Senator Robert P. Casey, Jr. is viewed negatively by 56% of the business owners/CEOs, 18% give him positive marks. Likewise, 54% say Federal Reserve Chair Janet Yellen is doing a poor job, 15% approve.
Pennsylvania has three statewide constitutional or “row” offices. Two are serving by appointment, their elected predecessors having resigned after being convicted of crimes. Auditor General Eugene DePasquale is the surviving official elected in 2012 still in office. Seventy-three percent have no opinion of his job performance, with 14% saying he is doing a good job and 14% having a negative opinion of his job performance. Likewise about two-thirds offered no opinions on state Treasurer Tim Reese or Attorney General Bruce Beemer. Of those who did, 18% give Beemer a negative rating, 6% a positive one while 15% hold a negative view of Reese, 5% a positive view.
As has been the case throughout the Keystone Business Climate Survey’s 22-year history the owners and chief executive officers hold the federal congress and the state legislature in very low regard. Just 8% approve of the job being done by the United States Senate, 11% approve of the job being done by the U.S. House of Representatives. Seventeen percent approve of the job performance of the Pennsylvania Senate; 19% approve of the job being done by the Pennsylvania House of Representatives.
Finally, the Lincoln Institute asked participants in the survey who they support for President of the United States and United State Senator from Pennsylvania in the upcoming November General Election. Seventy-three percent said they will vote for the Republican nominee Donald Trump, 12% support the Democratic nominee Hillary Clinton and 6% say they will vote for Libertarian Gary Johnson. Republican incumbent U.S. Senator Pat Toomey has the support of 81% of the owners/CEOs, Democratic challenger Katie McGinty has 12% support.
The Fall 2016 Keystone Business Climate Survey was conducted electronically by the Lincoln Institute of Public Opinion Research, Inc. from September 13 through October 5, 2016. A total of 370 businesses responded to the survey invitation. Of those 81% are the owner of the business, 14% are the CEO/COO/CFO and one percent a business manager.
Twenty-five percent of the responses came from the Philadelphia/southeastern part of the state; 18% from Pittsburgh/southwestern Pennsylvania; 16% from south/central Pennsylvania; 13% from northwestern Pennsylvania; 11% from northeastern Pennsylvania; 10% from north-central Pennsylvania; 4% from the Lehigh Valley and 3% from the Altoona/Johnstown area.
Complete numeric results are posted on-line at http://www.lincolninstitute.org
Imitation, the saying goes, is the most sincere form of flattery. So either Governor Tom Wolf is in the running for president of the Barack Obama fan club, or the Wolf Administration lacks the capacity for original thought. In ways big and small Tom Wolf has copied the Obama governing strategy. The problem for the governor is that the Obama approach relies heavily on levers of power available to the president, but not to governors.
President Obama and Governor Wolf each ascended to the chief executive’s office with skimpy political resumes. Obama had been a U.S. Senator for only two years when he ran for president. Wolf’s only public service was as secretary of revenue in the Rendell Administration. Both interpreted their elections as mandates that simply didn’t exist. Obama’s election resulted from voter backlash over George W. Bush’s unpopular wars. Wolf won simply because he wasn’t Tom Corbett.
Their campaign organizations were similar. Barack Obama bested Hillary Rodham Clinton for the Democratic Presidential Nomination in 2008. Clinton loyalists populated the Democratic National Committee and were salted throughout the party structure. Obama built his own campaign apparatus, Obama for America, which allowed him to essentially bypass the official party. When Jim Burn refused to step down as state Democratic Party chairman, candidate Tom Wolf formed Fresh Start PA, again running his campaign outside of the formal party machinery.
Seeking to build upon their phantom mandates, both Obama and Wolf took office espousing grand ideas. Having tacked hard to the Left to win a competitive primary, Wolf named two erstwhile opponents, Katie McGinty and John Hanger as chief of staff and policy director. McGinty and Hanger are two of the most left-wing policy wonks in the state and immediately proposed a massive expansion of spending, along with a complex reworking of the state’s tax structure that – if enacted – would result in the largest tax hike in state history. The scope of the proposed tax increase is so large it alone is bigger than the tax hikes proposed by governors of the other 49 states combined.
President Obama also came into office with big ideas. Most of those grand schemes failed, with the notable exception of the Affordable Care Act, or Obamacare, which became law but triggered massive Democratic congressional defeats the following year. In fact, Obama lost so many legislative battles he settled on a new strategy – bypassing congress and governing by executive order.
Governor Wolf’s copying of the Obama playbook fails to take into account that Democrats controlled both houses of congress during his first year in office. Wolf has no such luxury. In fact, he began his term with Republicans solidly in control of the state senate and holding a historically high number of seats in the house. In another major departure from the Washington model, the GOP majorities in Harrisburg are cohesive with effective leadership, unlike the hapless Republicans in congress.
Like Obama, Tom Wolf has opted to run a perpetual campaign rather than trying to govern. Obama for America became Organizing for America as the president attempted to politically bludgeon Republicans into bending to his will. Likewise Governor Wolf has set up his own PAC and called in help from the Democratic Governors Association attacking Republicans for blocking his tax and spend agenda.
The problem with this strategy is it leads to gridlock. Washington has been beset by a series of high profile budget battles. Wolf vetoed the GOP-passed state budget and talks are at a stalemate. Worse for Wolf, the president’s ace in the hole is his bully pulpit. Obama can count on a compliant national news media to beat the drums against Republicans. At the state level few media organizations have reporters at the capitol and state issues gain little public attention. That makes it considerably more difficult for Wolf to put voter pressure on a legislature that simply won’t give in to his demands for more spending and higher taxes.
Finally, President Obama has consistently out-messaged national Republicans framing issues to his advantage. Tom Wolf has failed to do so. More spending and higher taxes play well in the Philadelphia region, but nowhere else. It is a message that quite simply won’t sell statewide.
By not grasping the structural differences between the Obama approach and governing Penn’s Woods Tom Wolf has wed a policy agenda that cannot be achieved. Thus the budget stand-off in Harrisburg will continue until the governor realizes he is no Barack Obama and accepts the reality that Harrisburg is a very different place than Washington, D.C.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is firstname.lastname@example.org.)
Permission to reprint is granted provided author and affiliation are cited.
Radio Program Schedule for the week of May 23, 2015 – May 29, 2015
This week on Lincoln Radio Journal:
- David Taylor hosts a Capitol Watch roundtable discussion on Governor Tom Wolf: campaign promise vs. performance in office with Matthew Brouillette of the Commonwealth Foundation and Neal Lesher from the PA Chapter of the National Federation of Independent Business
- Lowman Henry has a Town Hall Commentary on the state’s business leaders rejecting Governor Wolf’s tax plans
This week on American Radio Journal:
- Lowman Henry talks with Stanley Renshon of the Center for Immigration Studies about stopping President Obama’s executive orders on illegal immigration
- Andy Roth of the Club for Growth has the Real Story on key 2016 U.S. Senate races
- Eric Boehm and Mark Lagerkvist have a Watchdog Radio Report on New Jersey Governor Chris Christie’s lavish spending at NFL football games
- Dr. Paul Kengor from the Center for Vision & Values at Grove City College has an American Radio Journal Commentary on seven brothers from one family who fought in World War II
Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!
For the first time in a decade, by a narrow margin, more Pennsylvania employers say business conditions in the commonwealth are improving than say the state’s economy is getting worse. But, that optimism is tempered by a lack of job creation and lower wage hikes due to the implementation of the Affordable Care Act, better known as Obamacare.
George W. Bush was president and on the verge of re-election in 2004, the last time respondents to the Lincoln Institute’s Keystone Business Climate Survey thought the business climate was getting better rather than worse. Since then the nation has experienced the Great Recession and subsequent slow recovery.
But, the current survey finds 20% of the business owners and CEOs responding say over the past six months business conditions in Pennsylvania have gotten better, while 19% say the state’s economy has gotten worse. By comparison, one year ago 31% felt business conditions had gotten worse and just 14% saw an improvement.
There is not, however, optimism for the immediate future. Looking ahead six months, 27% expect business conditions in Pennsylvania to get worse, while 16% expect conditions to get better.
Driving the current burst of optimism are increasing sales. Thirty-six percent of the companies said sales have increased over the past six months as 24% reported decreased sales. Looking ahead, 32% project sales will increase, 13% expect sales to drop.
Employment levels dropped over the past six months, with 20% reporting higher employment and 24% saying employment at their business has decreased. Looking ahead six months, 21% project adding employees, while 9% plan to employ fewer workers.
Impact of the Affordable Care Act
It is clear the Affordable Care Act (ACA), or Obamacare, is having a negative impact on both the number of jobs that are being created, and on wages and pay hikes. Twenty-five percent of the business leaders participating in the survey said they have decided not to hire additional employees due to the requirements of Obamacare. Ten percent said they have actually reduced the number of employees because of ACA; while another 3% said they hired, but did so later than they had planned. Less than 1% said they hired sooner than planned because of Obamacare. Fifty-eight percent said ACA has had no impact on their hiring plans.
In terms of wages/salaries, 33% said they have delayed giving pay raises due to the costs of Obamacare. Twenty-eight percent indicated they reduced the amounts of pay raises, while 26% said they paid new hires less to compensate for the costs associated with compliance of the Affordable Care Act. Five percent reduced the pay of current employees, while 2% said they increased employee pay in response to ACA requirements. A total of 42% said Obamacare has no impact on their wages/salaries.
Education spending has been a major issue in the gubernatorial campaign. But, unlike the electorate at-large, business owners and CEOs participating in the Fall 2014 Keystone Business Climate Surveysay the state spends too much money on public education. Forty percent think state government spend too much on public education, 29% say the state spends too little, while 27% say state spending on public education is about the right amount.
By a large margin, 78% to 19%, the employers say they are not willing to pay higher taxes to provide additional funding to public education. There is, however, strong support for the Educational Improvement Tax Credit (EITC) which businesses can claim for donating money to K-12 educational institutions. Forty-seven percent think the General Assembly should allocate more month to the tax credit fund so more businesses can participate; 36% say the fund should be kept at current levels.
Taxes have also been a major campaign issue in 2014. When asked whether Pennsylvania should retain the current “flat” income tax or move to a “graduated” income tax where low income earners are exempt and higher income earners pay a higher rate 84% said they support the current “flat” income tax, 14% would like to see a “graduated” rate.
A proposal to exempt the first $30,000 from state income taxes and raise the rate for money earned above that level from 3.07% to 5% drew strong opposition from the business leaders. Seventy-three percent oppose such a system with 60% saying they are strongly opposed. Twenty-three percent said they would support such a change.
Mandating paid sick leave for employees was opposed by three-quarters of the business owners and CEOs who participated in the Lincoln Institute survey. Seventeen percent said they would support mandating paid sick leave for businesses with over 50 employees. Another 6% support mandating paid sick leave for all businesses regardless of size.
Job Approval Ratings
Mirroring the national trend, President Obama received a highly negative job approval rating from the business owners and CEOs. Eighty-five percent voiced a negative view of the president, while 13% offered a positive assessment.
U.S. Senator Pat Toomey is viewed favorably by 51% of the survey participants while 24% have a negative view. The numbers reverse for U.S. Senator Robert P. Casey, Jr. as 60% offered a negative view of his job performance against a 21% positive rating. Fed Chairman Janet Yellen received a 38% negative / 28% positive rating; and, U.S. Treasury Secretary Jack Lew scored a 42% negative / 8% positive.
At the state level Governor Tom Corbett sports a 52% positive rating while 35% disapprove of the job being done by the Republican governor. The CEOs and business owners turned thumbs down on Attorney General Kathleen Kane, who received a 49% negative rating against just 16% positive. Most offered no opinion on the job performance of Auditor General Eugene Depasquale and State Treasurer Rob McCord. Of those who did, Depasquale had a 20% negative / 11% positive rating and McCord scored 21% negative / 17% positive.
Participants in the Fall 2014 Keystone Business Climate Survey took a dim view of the job being done by both Congress and by the Pennsylvania General Assembly. Eighty-nine percent offered a negative assessment of the U.S. Senate, with 7% having a positive view. The U.S. House of Representatives fared slightly better scoring a 72% negative / 22% positive rating. Sixty-three percent have a negative view of the job being done by the Pennsylvania Senate, 19% approve. The Pennsylvania House of Representatives turned in a marginally higher score, with a 62% negative / 23% positive rating.
And, Governor Tom Corbett finally came out ahead in one poll. Sixty-five percent of the business owners and CEOs said they plan to vote for the incumbent governor in the November 4th General Election, 20% say they will cast their ballot for Democratic challenger Tom Wolf. However, 53% expect Wolf to win the election, while 29% predict a Corbett victory.
The Lincoln Institute’s 2014 Keystone Business Climate Survey was conducted electronically from September 26, 2014 through October 17, 2014. A total of 316 responses were received. Of those, 69% are the owner of their business, 24% are the CEO/COO or CFO, another 4% are a state or local manager. Twenty-seven percent of the respondents are located in southeastern Pennsylvania, 18% in southwestern Pennsylvania, 14% in the northwest section of the state, 17% in south-central Pennsylvania, 11% in northeastern Pennsylvania, 6% in the Lehigh Valley, six percent in north-central Pennsylvania and 1% in the Altoona/Johnstown area. Complete numeric results are available at www.lincolninstitute.org.