Posted: 11/26/12 19:10, Edited: 11/28/12 16:10
by Dave Mindeman
The business community worked hard to get Republicans elected during the last election. They spent a good deal of money on the project but it failed miserably.
Now they say they are nervous about DFL Legislative control.
As usual, business gets it wrong when it comes to which Party is best for business. And, frankly, most of the perception problem stems from the fact that business always does better when government policies are promoted which favor their clientele and customers...not themselves.
Republicans and business generally collaborate on the superficial. They want property tax breaks....they want to limit taxes on the wealthy....they want tax incentives. All of that can free up cash and maybe increase the bottom line to a temporary extent....but they are not really pro-growth policies.
The dynamics of the economic engine are heavily fueled by demand. Business can create demand to some degree but unless there is a thriving middle class that has the means to purchase the goods produced, the economy goes nowhere.
As you can probably tell from the Thanksgiving shopping frenzy, business can create demand by focusing on lowering price points and generating publicity....all of which costs them profits. But over the long term, generating sales that will keep the business afloat throughout the year means to produce goods that are needed by the middle class and lower middle class. Sales and services that are consistent and fairly priced.
Giving businesses property tax breaks and other tax cuts may be a short term help but the middle class will have to make up the difference. Extra taxes paid by them will take away purchasing power and eventually affect demand.
When Democrats are in power, business may not get the preferential treatment they are used to by the GOP, but the broader economy usually does better. The criticisms of the Obama economy have been largely unjustified. Comparing Obama's 4 years to the previous 4 years in an economic sense is no comparison at all. Although growth has been slow, it has still been growing. One only needs to look at Europe to see what might have happened under heavy austerity programs.
Governor Dayton and the Minnesota legislature aren't looking to punish the business community. They are as much pro-growth as any GOP hard liner. Although the last legislature talked of slowing spending and "fixing" the deficit, it is clear that what they did was a series of bandaids which will keep things in check for a brief time...only until school shifts and tobacco interest comes due.
Structural fixes are key to the Minnesota budget and new revenue is imperative. The Governor and the legislature are not just going to raise taxes as a solution to everything, but they will use that tool if needed.
That is the real difference in the Democratic vs Republican approach. The Democrats will put everything on the table and make things work for the State as a whole, not just one aspect.
The business community doesn't need to be fearful. It would be wiser to join this growth opportunity.