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Capital Report

Scott gets "jobs" budget that cuts taxes, spending and some say, jobs

By James Call

Tallahassee, FL – Governor Rick Scott says he is reading line by line the proposed state budget with a focus on economic development. Scott has until June first to sign it and issue vetoes. The Legislature for the most part followed his suggestion to attract new businesses to Florida by reducing the size of government.

James Call reports, advocates for organized labor and the environment, however, harshly criticize cuts in spending, taxes and regulations. They say the Legislature and Governor are trying to create jobs with policies that are bad for workers and the environment.

When Pasco County Commissioner Jack Mariano went before the Governor and Cabinet to get approval for a tourism project that would dig a boat channel through 27-acres of sea grass beds he knew the magic words to say.

"Let's face it; the purpose of tourism development is not tourism development. It's economic development. This project is going to be great. I want you to help us get our people back to work."

Mariano got approval for the first state permit requiring more than one-acre of sea grass mitigation. The Army Corps of Engineers needs to give an ok before the project can proceed. The Governor and Cabinet's approval shows that in a state with a 10.8-percent unemployment rate; getting people back to work is job number one. Scott's campaigned on a Let's Get to Work slogan and he urged the Legislature to send him a jobs budget.

"The budget meets my three core principles by reducing the size and cost of government, while also providing tax cuts for businesses and property owners."
The governor is pursuing a small government economic policy. Its roots are in the post World War ll writings of Austrian economist Friedrich Hayek. Critics say time has revealed flaws in the idea that when government plays a smaller role in the economy capital is liberated. Freed from government control capital grows and in the process jobs are created.

"Why do you look so skeptical? Smile, it's okay."

Senate President Mike Haridopolos said he wanted the Legislature to send a message that it is committed to small-government. He said that although spending cuts eliminate public sector jobs a stated commitment to lower taxes and fewer regulations will provide the stability business needs to expand and produce private sector jobs.

"That is what the stimulus plan was about government jobs to try and do the FDR approach to things. What are belief is if we offer stability, predictability, and certainty to the business environment, certainly in contrast to other states. That is what we are offering, we are not offering some stimulus package we are offering a stability package that comports well with..."

The alternative to FDR the Florida Legislature picked is Hayek. The governor and legislative leaders embrace Hayek's central idea. He wrote about a fatal conceit that plagues politicians; a belief that they can create an economy based on their designs. Hayek followers say big government perverts free market principals and suppresses the creative juices of entrepreneurs. Their ideas have been percolating in Florida policies for at least 12 years.

"They are worshipping at this altar of trickle-down economics, voodoo economics, supply-side economics, whatever you want to call it, the Chicago School. They are worshipping at the altar of something solely based on faith; with no factual evidence that shows it works whatsoever."

Rich Templin is a spokesman with the AFL-CIO. Labor groups say cuts in education spending, requiring government workers to pay into a pension plan and reducing the number of weeks one can collect unemployment compensation makes the 2011 Legislative session the worst in memory for workers. He said the way he counts, there will be more jobs lost because of budget cuts than will be added as a result of lower taxes and fewer regulations.

"Lose 10-thousand jobs. We saw the greatest cuts in education in the history of Florida with some estimating there could be as many as 20-thousand teacher layoffs. That's a net reduction in jobs, looking at some of the cuts in the health and human services sector that is a net reduction in jobs. So for anyone to claim success in this job session is quite frankly ludicrous."

Florida State Economics Professor Randall Holcombe said lawmakers did a pretty good job applying an economic theory that has produced economic growth around the world and before a housing bubble burst here in Florida.

"I don't think you can say that things haven't worked for 10 or 15 years. I mean, if we were doing this talk in 2008 instead of 2011 we would have a different story because Florida's economy at that time was booming."

Holcombe is a past President of the Society for the Development of Austrian Economics and served on Governor Jeb Bush's Council of Economic Advisors.

"You look at the fast growing economies of India and China today; I mean those were very poor countries decades ago. Why are they having fast growth today? That's because they have limited government and they have more of a market-oriented economies. If you look at international evidence, I'm reporting to you anecdotal evidence but there is a lot of statistical evidence showing that smaller government leads to economic growth."

Holcombe draws a distinction between China's economic policies and civil liberties and said it will be interesting to watch how long China's leaders pursue economic freedom principals; Hayek said political freedom grows from economic freedom. Closer to home, Holcombe said he sees Hayek's theories at work.

"One place where you are seeing that right now is Boeing's attempt to move some of its manufacturing to South Carolina and the reason why there is less union interference with its activities. We see the decline in the automobile industry in Michigan which is not a right to work state, but at the same time we see a lot of automobile manufacturing in the south east where there is fewer labor regulations and more economic freedom."

Economic freedom is the prescription Governor Scott says will produce jobs for about a million Floridians looking for work. The same week lawmakers sent Scott a budget designed to make Florida more business friendly, a national magazine ranked the state's business climate as third best in the nation.