Published on -8/10/2014, 3:28 PM
When Moody's Investors Service downgraded Kansas' credit rating in April, the responses were telling if not somewhat predictable.
Kansas House Minority Leader Paul Davis, D-Lawrence, said the downgrade is "more bad news for the state of Kansas and further evidence that (Gov. Sam) Brownback's tax plan is failing in a number of ways."
Brownback's office didn't address the downgrade in a prepared statement, instead focusing on: "The Moody report also cites our strengths which include fiscal best practices, a continued low unemployment rate, a strong ending balance and a debt service ratio which is lower than the national median."
Such divergent views were to be expected from the two candidates who will vie for the governorship in November.
An impartial observation came from Ken Kriz, the Regents' distinguished professor of public finance at Wichita State University's Hugo Wall School of Urban and Public Affairs. He said Moody's downgrade by itself wouldn't have much effect on interest rates for the state, but warned that could change if Standard & Poor's followed suit.
"When they both go, that's when markets start bidding down," Kriz told the Wichita Eagle at the time.
That time has come.
On Wednesday, the nation's other major rating agency lowered Kansas' bond rating and gave the state a "negative" outlook. Citing similar reasons as Moody's, Standard & Poor's said: "The downgrades reflect our view of a structurally unbalanced budget, following state income tax cuts that have not been matched with offsetting ongoing expenditure cuts in the fiscal 2015 budget."
Fresh off explaining his lackluster primary victory against a political nobody by saying Republican voters were irritated with all the bad things President Barack Obama has done for the country, Brownback continued spinning his fantastic version of reality by saying the ratings agencies did not understand Kansas.
"We're putting those dollars back into the economy, and the bond rating agencies don't like you cutting taxes," he said.
The governor said both Moody's and Standard & Poor's had faulty and incorrect analyses. If they are at fault for not believing Brownback's assertion that cutting taxes will stimulate the economy like a "shot of adrenaline," then so be it. The only people who believe Arthur Laffer's trickle-down economic theory actually works are those who conveniently forget the massive amount of debt that accompanied President Ronald Reagan's wonder years.
The super-rich will overlook such details because the tax cuts always benefit them. Why middle-class and lower-class voters continue to believe in an approach that harms them every time is beyond our comprehension. But there were at least 63 percent of Tuesday's GOP voters who continue to hold out hope in spite of all the countering facts.
Anybody who believes we can take billions of dollars out of the state budget and not cut education and social services simply is praying for the same miracle as Brownback.
The miracle won't happen. It can't. And because the neutral, non-partisan credit rating agencies have elevated the risk of our debt, the cost to service that debt will increase. Which will force even further cuts to education and social services. Those two categories comprise approximately 90 percent of the state budget.
Davis understands what is going on. Nothing has changed either to raise more revenue or cut more expenses on Brownback's Roadmap for Kansas. Davis basically just reissued April's response after Standard & Poor's downgrade last week, saying this "is terrible news for Kansas and is further evidence that the governor's economic experiment has failed."
Although we believe in the essence of what Davis is saying, we believe it is more correct to use the present tense. We would say the experiment is failing. If Brownback's prayers are not answered, and hard-to-persuade Kansans have to face the fact it has failed, it will be too late.
Editorial by Patrick Lowry