Response to Club for Growth
Since January the Club for Growth has attacked Gov. Huckabee...
November 28, 2007
Response to the Club for Growth (Part I)
Since January, the Club for Growth has attacked the Governor Huckabee's credentials as a fiscal conservative. The first salvo came with the release of their white paper, ""Is Arkansas Governor Mike Huckabee a Pro-Growth, Economic Conservative?" An honest examination of Huckabee's tenure as governor would have to conclude that he is the most pro-growth, economic conservative with executive experience in the race. Instead, CFG used the paper to slander the Governor's record and deceive numerous trusting conservatives. Even more surprisingly, journalists have accepted the CFG's claims without question, even though more than 80% of the "analysis" consisted of out-of-context news clippings.
Troubled by this unwarranted attack, the Huckabee campaign recently sent Andy Roth, the author of the white paper, a series of clarifying questions:
" Does the CFG believe that state tax monies should be used for infrastructure, such as roads, bridges, and highways?
" Does the CFG believe that state tax monies should be used for education?
" Does the CFG believe that state tax monies should be used for Medicaid?
" When, if ever, does the CFG consider a tax hike to be legitimate?
" Does the CFG believe in balanced budgets?
" If yes to #6, should taxes be raised when cuts in non-discretionary spending are not enough to cover the budget shortfall?
Unless the answer to each of these questions is an emphatic "no" the analysis by the CFG does not make sense.
The Arkansas constitution, in a measure that should be lauded by all fiscal conservatives, requires that the state budget be balanced. More than 90% of the state's budget is spent on education, Medicare, prisons, and human services. Naturally, cutting spending is always the first response of conservatives, as it was for Governor Huckabee. But that solution is inadequate when there is a shortage of elasticity in the budget. Unable to resort to deficit spending (as other candidates are able to do) the Arkansas Legislature was forced to raise taxes to pay for infrastructure repair, conservation efforts, court-mandated education expenditures, and federal mandates.
The purpose of this rebuttal is not to convince everyone that Governor Huckabee is their kind of candidate. Anti-tax radicals will never be convinced that tax monies can be legitimately spent on highways, bridges, schools, and Medicare. Instead, our aim is to prove to true fiscal conservatives-those that expect responsible governance, low taxes, reduced spending, and balanced budgets-that Governor Huckabee has the most consistently fiscal conservative record of any Presidential candidate.
The following is a point-by-point response to the "Taxes" section of the CFG's white paper. The portions from the CFG's paper are in bold.
Governor Huckabee touts himself as an economic conservative, writing in his biography that he "pushed through the Arkansas Legislature the first major, broad-based tax cuts in state history" and "led efforts to establish a Property Taxpayers' Bill of Rights" early on as governor, but he only offers a small piece of the picture. It is true that Governor Huckabee fought for an $80 million tax cut package in 1997 that was passed by the Arkansas Legislature; cut the state capital gains tax in 1999; and passed the Property Taxpayers' Bill of Rights in the same year, limiting the increase in property taxes to 10% a year for individuals and 5% per taxing unit.
Before the CFG attempts to downplay these significant actions, let's take another look at what they've admitted he was able to accomplish:
" Pushed through a Democrat legislature the first, major broad based tax cuts in the state's history.
" Pushed through a Democrat legislature an $80 million tax cut package.
" Cut the state's capital gains tax by 25%.
" Established a Property Taxpayers' Bill of Rights
" Limited the increase in property taxes to 10% a year for individuals and 5% per taxing unit
Here are a few that they left off the list:
" Eliminated the income tax for families below the poverty line.
" Increased the standard deductions.
" Eliminated the marriage penalty.
" Eliminated bracket creep by indexing the income taxes to inflation, thereby preventing taxpayers from moving into a higher bracket when their paychecks increase due to inflations.
" Doubled the child care tax credit.
" Eliminated capital gains tax on the sale of a home.
However, his record over the rest of his 10-year tenure tells a starkly different story.
" The CFG implies that Governor Huckabee made radical tax increases that offset the cut in capital gains, the $80 million tax cut, and the other fiscally conservative policies. As you'll see, though, they have to misrepresent the Governor's entire record in order to make such a specious claim.
Immediately upon taking office, Governor Huckabee signed a sales tax hike in 1996 to fund the Games and Fishing Commission and the Department of Parks and Tourism (Cato Policy Analysis No. 315, 09/03/98).
" According to the Cato report cited:
"Upon taking office in July 1996, Huckabee immediately backed a 1/8-cent sales tax hike to fund the Games and Fishing Commission and the Department of Parks and Tourism. The voters enacted that hike as a constitutional amendment in November 1996."
" Governor Huckabee didn't "sign a sales tax hike." An overwhelming 80% of the voters chose to do so through an amendment to their state's constitution. He supported the measure, however, because he believes that conservatives should be "conservationist" and that clean lakes, streams, rivers, and forests are a necessary expenditure.
Notice they also left off the rest of what Cato had to say:
"In his first budget, however, he redeemed himself by proposing a sweeping overhaul of Arkansas's archaic income tax system. The $80 million tax cut package was enacted in 1997 and became the first broad-based state tax cut in more than 20 years. It increased the standard deduction, eliminated the income tax "marriage penalty," and indexed the state tax brackets for inflation."
He supported an internet sales tax in 2001 (Americans for Tax Reform 01/07/07).
" Indeed, Governor Huckabee joined 43 other state governors in sending a "strong and unified message to Congress: deal fairly with Main Street retailers, consumers, and local governments."
As the letter stated, "If you care about a level playing field for Main Street retail businesses and local control of states, local governments, and schools, extend the moratorium on taxing Internet access ONLY with authorization for the states to streamline and simplify the existing sales tax system. To do otherwise perpetuates a fundamental inequity and ignores a growing problem….The loophole creates serious budget problems for schools, states, and local governments. A study estimated that states could lose as much as $14 billion by 2004 if they are unable to collect existing taxes on Web-based sales. Nearly half of state revenues come from sales taxes."
" Governor Huckabee supported the federalist position of allowing the states-not Washington, D.C.-to decide whether sales taxes were collected from goods sold within an individual state. Why should the federal government be allowed to say that Amazon.com must be given a 7% tax break over a local Arkansas book store owner?
He publicly opposed the repeal of a sales tax on groceries and medicine in 2002 (Arkansas News Bureau 08/30/02).
" The CFG fails to note that Arkansas law prohibits deficits and requires that the state budget be balanced.
" According to the article cited, the reason Governor Huckabee opposed abolishing the food tax was because it would drain $168 million from the state's Medicaid budget by eliminating the soft drink tax. The article also notes that the Arkansas State Chamber of Commerce and Associated Industries of Arkansas also opposed abolishing this particular tax, saying approval would likely lead to an increase in the general sales tax.
He signed bills raising taxes on gasoline (1999), cigarettes (2003) (Americans for Tax Reform 01/07/07), and a $5.25 per day bed-tax on private nursing home patients in 2001 (Arkansas New Bureau 03/01/01).
" The CFG fails to note that 90% of the state's budget is spent on education, Medicare, prisons, and human services.
" The CFG fails to note that the gas tax was used to fix 1,300 miles of highway, much of which was considered the worst in the country.
" The CFG fails to note that the cigarette tax was used to cover a budget shortfall. In 2003 the state's chief financial officer projected a $62.3 million revenue shortfall that would result cuts in state services, possible layoffs, tax increases or the possible repeal of late 1990s tax cuts. The Legislature was presented a series of options and chose to increase the tax on tobacco.
" The CFG fails to note that the bed-tax on private nursing home patients was instituted to generate revenue for a nearly 3-to-1 match in federal Medicaid funds. Without this revenue low-income patients would not be able to find beds in nursing homes.
In 2004, he allowed a 17% sales tax increase to become law (The Gurdon Times 03/02/04).
" Notice the odd wording, "allowed…to become law"? Here is how the Cato Institute report describes the incident:
"In response to a court order to increase spending on education, Huckabee proposed another sales tax increase, and the Legislature sent to him a smaller sales tax increase with a corporate franchise tax to make up the difference. Huckabee let it become law without his signature."
" Governor Huckabee had three options: sign the bill into law, veto the bill, or let it become law without his signature. As the Governor told the Arkansas News Bureau (1/28/2004), "If this is what they want to put their signature on and their stamp on, then I should let them do it, even though I think that's pathetically less than what we ought to be shooting for, it will let the public see that that's the best they could offer."
He proposed another sales take hike in 2002 to fund education improvements. (Arkansas News Bureau 12/05/02).
" In Arkansas, 49% of the tax revenue comes from Sales/Use taxes. Such increases were required to meet the legal requirement to balance the budget. The citizens of Arkansas, like most true conservatives, the benefit of having an educated populace far outweighs a 7/8-cent tax increase.
By the end of his 10-year tenure, Governor Huckabee was responsible for a 37% higher sales tax in Arkansas, 16% higher motor fuel taxes, and 103% higher cigarette taxes according to Americans for Tax Reform (01/07/07),…
" As noted above, the Governor allowed the sales tax to increase from 5.125% to 6% (+7/8 cent) to increase funding for education.
" As noted above, the 3-cent higher fuel tax was used to make needed repairs to the state's dilapidated highway system.
" As noted above, the cigarette tax was used to cover a budget shortfall of $62.3 million. …garnering a lifetime grade of D from the free-market Cato Institute.
" The CFG doesn't explain why fiscal conservatives should care how a libertarian think tank grades a candidate. Perhaps they were unable to find a fiscally conservative group that would aid them in their hit piece.
" Unfortunately, Cato's analysis is as weak as CFG's:
"Thanks to a final term grade of F, Huckabee earns an overall grade of D for his entire governorship. Like many Republicans, his grades dropped the longer he stayed in office. In his first few years, he fought hard for a sweeping $70 million tax cut package that was the first broad-based tax cut in the state in more than 20 years. He even signed a bill to cut the state's 6 percent capital gains tax-a significant progrowth accomplishment. But nine days after being reelected in 2002, he proposed a sales tax increase to cover a budget deficit caused partly by large spending increases that he proposed and approved, including an expansion in Medicare eligibility that Huckabee made a centerpiece of his 1997 agenda. He agreed to a 3 percent income tax "surcharge" and a 25-cent cigarette tax increase. In response to a court order to increase spending on education, Huckabee proposed another sales tax increase."
" After praising his accomplishments, Cato bashes Governor Huckabee for proposing a sales tax to "cover a budget deficit caused partly by large spending increases that he proposed and approved…" Again, 90% of the Arkansas state budget is on education, Medicare, prisons, and human services. Obviously, the radical libertarians at Cato consider it blasphemous to have the state funding schools or paying the medical bills of the poor. But complying with state law in order to balance the budget and pay for such entitlements does not make a governor a "big-government conservative."
Finally, Governor Huckabee opposed further tax cuts at a 2005 gathering of Iowa conservatives.[15] On January 28, 2007, Governor Huckabee refused to pledge not to raise taxes if elected President, first on "Meet the Press"[16] and then at the National Review Conservative Summit.[17] The evidence suggests that his commitment to protecting taxpayers evidenced in his early gubernatorial years may be a thing of the past.
" Governor Huckabee has signed the Americans for Tax Reform's Presidential Taxpayer Protection Pledge which states he will, "oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses … and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."
" It should be noted that Sen. Thompson and Mayor Giuliani have refused to sign this pledge.
A final word about the motivation for the CFG's attacks:
" In January when Governor Huckabee announced he was forming an exploratory committee, the CFG released a white paper on his tenure in Arkansas. Governor Huckabee was the first candidate scrutinized even though he entered the race after Sen. McCain, Mayor Giuliani, Sen. Brownback, and Governor Romney.
" What was the reason the CFG thought he was worthy of moving to the head of the line? The tax burden during his time in Arkansas was better than under Mitt Romney's in Massachusetts. Likewise, his record on spending was better than Mayor Giuliani, who increased spending more than under his Democratic predecessor. So why was Governor Huckabee singled out as inconsistently conservative?
" The reason is that one of the CFG's biggest donors and organization officials is a longtime political rival of Governor Huckabee.
" In August the Club for Growth began running attack ads in Iowa on Governor Mike Huckabee. Salon.com found after checking disclosures through the IRS that the ads had been paid for by "a Little Rock neighbor and political rival of Huckabee's named Jackson T. "Steve" Stephens Jr." Not only did Stephens provide the $125,000 to Club for Growth.net, he serves as the chairman, along with his Arkansas business associate, Gary Faulkner. Stephens has contributed over $1 million to CFG
" CFG President Pat Toomey recently hinted that more context-less attack ads that distort Governor Huckabee's record will soon run in Iowa. We'll be ready with the truth.
[A rebuttal of the other sections of the white paper is forthcoming.]
