What would McAuliffe policies really cost?

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  • In Virginia, the risks of bigger government loom large in Democratic gubernatorial candidate Terry McAuliffe’s campaign

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  • McAuliffe’s campaign promise to raise education spending by just 5 percent would cost VA $800 million more per year.

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  • If McAuliffe were to increase health care spending by 10 percent, it would cost the state over $400 million more per year.

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  • Without a commitment to budget discipline from its governor, VA risks future tax increases and a dangerous downward fiscal spiral.

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Good fiscal stewardship by elected officials requires a strong commitment to budget discipline. On the state level, increasing budgets signal future tax increases, and higher taxes can push businesses to relocate jobs to other states and drive families to “vote with their feet,” thereby threatening a state’s economic viability and competitiveness. In Virginia, the risks of bigger government loom large in Democratic gubernatorial candidate Terry McAuliffe’s campaign, but the threats are masked by his simplified and populist campaign commitments.

For instance, McAuliffe is dedicated to “investing in transportation and education” and “making sure Virginians have the skills they need.” These goals sound positive, but what will the McAuliffe policy platform really cost?

This question is difficult to answer, largely due to the vagueness of the promises. But many of McAuliffe’s ideas are quite ambitious and could easily drain billions of dollars from state coffers, leading to tax increases down the road. Here are two examples.

First, Terry McAuliffe promises more money for education, noting, “Education is the single most important thing we can do to build a strong Virginia.” But he says nothing about how much it would cost or how he would finance these increases. We know that last year the Commonwealth of Virginia spent a record $16.1 billion on education. If McAuliffe were to fulfill his campaign promise by raising education spending by just 5 percent — perhaps for the raises he promised public schoolteachers and his promised increased funding for university research — it would cost $800 million more per year. During the course of a McAuliffe governorship, such a change would total over $3 billion.

Second, McAuliffe acknowledges the importance of health care for the citizens of Virginia, including children, veterans and those struggling with disabilities and mental health challenges. While his health care agenda promises to both create more health care jobs and increase wages for certain health care workers, it says nothing about how much this would cost or how he proposes to finance it. In 2012–2013, the commonwealth spent $12 billion on health and human resources. McAuliffe intends to pass the fiscal burden for Medicaid expansion to the federal government, but financing for the rest of his health agenda remains a mystery. More funding for crisis intervention training, more case managers for mental health services, and more staff at the Department of Behavioral Health and Developmental Services are all part of his campaign platform. If McAuliffe were to fulfill his campaign promises by increasing health care spending by 10 percent — excluding changes to Virginia’s $8 billion Medicaid and children’s health insurance programs — it would cost over $400 million more per year, or more than $1.6 billion during his term.

The next governor of Virginia will play a critical role in preparing the commonwealth and its residents for the evolving global economy and increased competitive pressures from other states. Education, health care and other topics that McAuliffe addresses on the campaign trail are key issues for voters, but his potentially costly agenda poses risks to Virginia that could far outweigh the promises he is making. Virginia has much to offer its citizens, including nationally recognized schools like U.Va. and the College of William and Mary, robust high-tech and defense industries, and wonderful natural resources. But without a clear and specific commitment to budget discipline from its governor, Virginia risks future tax increases and a dangerous downward fiscal spiral that will never be resolved with more doctors or better textbooks.

Alex Brill is a research fellow at the American Enterprise Institute. Contact him at alex.brill@aei.org.

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About the Author

 

Alex
Brill
  • Alex Brill is a research fellow at the American Enterprise Institute (AEI), where he studies the impact of tax policy on the US economy as well as the fiscal, economic, and political consequences of tax, budget, health care, retirement security, and trade policies. He also works on health care reform, pharmaceutical spending and drug innovation, and unemployment insurance reform. Brill is the author of a pro-growth proposal to reduce the corporate tax rate to 25 percent, and “The Real Tax Burden: More than Dollars and Cents” (2011), coauthored with Alan D. Viard. He has testified numerous times before Congress on tax policy, labor markets and unemployment insurance, Social Security reform, fiscal stimulus, the manufacturing sector, and biologic drug competition.

    Before joining AEI, Brill served as the policy director and chief economist of the House Ways and Means Committee. Previously, he served on the staff of the White House Council of Economic Advisers. He has also served on the staff of the President's Fiscal Commission (Simpson-Bowles) and the Republican Platform Committee (2008).

    Brill has an M.A. in mathematical finance from Boston University and a B.A. in economics from Tufts University.

  • Phone: 202-862-5931
    Email: alex.brill@aei.org
  • Assistant Info

    Name: Brittany Pineros
    Phone: 202-862-5926
    Email: brittany.pineros@aei.org

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