McAuliffe's Entitlement Crossroads

Last week Governor Terry McAuliffe met with a board of economists and business leaders that advises his office on state revenue. The commonwealth is suffering through a two-year projected revenue decrease for the first time, he said, outside of a national recession (Richmond Times-Dispatch). The revenue reforecast is required under the Virginia Constitution because of an estimated decrease in revenue for the fiscal year that ended June 30 — about $438.5 million. That decrease, in turn, is projected to affect revenue for the next two-year budget by as much as $2 billion, possibly more. Already, the General Assembly and McAuliffe have targeted $1.55 billion in revenue cuts for the two-year budget and are bracing for millions of dollars more as income and sales tax revenue to the state declines. It all led to headlines when the governor told the board:

Virginia stands at an economic crossroads. ... The economy of the past, where we could simply take the economic benefits of federal government activities in our state, is over. We need to discard this entitlement mentality and build an entrepreneurial, innovative and dynamic economy. (Emphasis added.)

Three things strike me about this. First, no one exhibits the entitlement mentality more than Governor McAulife. His primary selling point for Medicaid/Obamacare expansion in Virginia, during his campaign and into his first six months of office, was that the tax money coming back from Washington is ours and we have a right to get it back, that if we don't, it will go to other states. (Any tax money we send to Washington is ours and the latter claim is false under the provisions of Obamacare.) He went as far as to say the money was essential for economic growth (while never explaining how Medicaid money fuels economic growth) and as far as taking Virginia to the brink of an unprecedented government shutdown unless it was included in the budget. Second, nothing is more entitlement oriented than an entitlement program! If the governor wants us to end entitlement mentality, he needs to foster it from the bottom up as well as the top down. If he wants to rejuvenate the Virginia economy, he can start by something bold, such as a dynamic restructuring of Virginia's tax code, both for individuals as well as corporations; reforming the budget process; and eliminating unnecessary programs. That would provide long lasting job creation and tax revenue and decrease the need for, and expectation of, government aid. Third, although technically not in a recession (but close) the policies of the Obama administration, that McAuliffe fully supports, including Obamacare, have stifled job creation. We are in the deepest economic stagnation and malaise since the Jimmy Carter era, where GDP growth was measured fairly high, but no one felt it. It's worse now with more people not working than ever before (according to the labor participation rate) and GDP barely budging. The Obama policies of higher taxes, record debt and unrelenting regulations have chilled businesses and entrepreneurs alike from expanding or starting new businesses. Virginia is a jewell in so many ways. The only thing we're entitled to is a lean government that functions smoothly and encourages organic economic growth. The only one who needs to discard an entitlement mentality is Terry McAuliffe. Rather than Virginia being at an economic crossroads, it is he who is at an entitlement crossroads.