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OPINION

The failure of ‘Bergernomics’

Posted on November 22, 2021

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Alexander H. Jones

Alexander H. Jones

The state budget that the General Assembly finally passed last week tells us something about Senate Leader Phil Berger: He has not changed his mind.

This budget contains a further $2 billion in corporate tax cuts coming on the heels of a decade in which our corporate tax was all but eliminated. In fact, this budget finishes the job.

Berger and his compatriots in the legislature firmly believe that their policy revolution has been a huge success. The problem is that they’re wrong.

To hear them tell it, North Carolina was run by radical left-wingers before 2011. One influential conservative writer often contrasts “constructive conservatives” with what he ominously calls “the left.” We supposedly bore the burdens of high taxes and stifling regulations, a failing school system and a government that did not appreciate the critical importance of a strong business climate.

Of course, all of this is nonsense. In reality, North Carolina ranked 46th in per-capita state spending growth between 2000-10. We had an AAA bond rating and a top-ranked business climate. But none of those facts interest the ideologues who gained control of the General Assembly a decade ago.

Repudiating these imaginary failures, Republican legislators set about slashing state government. Their first budget cut the UNC system by 15-18%, depending on the campus — a jab at academic excellence motivated by decades of pent-up resentment of the intellectual liberalism nurtured in Chapel Hill.

In 2013, legislators passed, and Gov. Pat McCrory signed, a regressive tax cut package that transformed the state government’s fiscal picture. Those cuts cost our state government billions of dollars in structural revenue flows, and McCrory, despite his repeated insistence that any reform be revenue-neutral, signed it anyway.

The lesson: Don’t take Pat McCrory seriously.

By the end of a decade of right-wing rule, North Carolina’s state government is smaller as a percentage of GDP than it has been in 50 years. State spending relative to the overall economy is 30% lower than the 50-year average and even lower than the averages that prevailed before the Great Recession necessitated spending cuts.

Republicans are very proud of this record. But consider what it has meant for North Carolina’s economy.

One of the first warning signs that the GOP’s strategy would fail came in its first year of unified control. The state fell out of the top 10 in business climate, according to CNBC. Our business climate has consistently ranked lower under the McCrory-Berger-Moore trifecta than it had during the allegedly wildly liberal years of Democratic governance.

One reason: intolerance. Only when Gov. Roy Cooper defeated McCrory and restored some semblance of pluralism to our political and social climate did companies become comfortable once again investing in North Carolina.

The statistics, meanwhile, are sobering. Since Republicans took control of the General Assembly, North Carolina’s GDP growth has fallen by roughly 50%. Republican leaders boast about cherry-picked statistics and rankings devised by right-wing lobby groups like the American Legislative Exchange Council, but the reality is that personal income growth in the state has badly lagged behind the national average.

This is a stark reversal of the trend that prevailed during the last century, when the state steadily climbed toward the national median. To the extent that we have experienced economic growth, the vast majority of it has been in urban areas that were already prospering before Republicans took control. Fifty-one counties, by contrast, are losing population.

Numerous individual companies have declined to invest in the state because of the policies Republicans have implemented. Toyota-Mazda judged the state’s workers too poorly trained to staff an auto plant. Amazon actually put Raleigh in its top three finalists for the vaunted “HQ2” project, but took a pass on us because of the legacy of House Bill 2.

What has happened with these blue-chip companies reflects what has happened to the state under the reign of Bergernomics: failure and decline.

Alexander H. Jones is a policy analyst with Carolina Forward. He lives in Chapel Hill. Have feedback? Reach him at alex@carolinaforward.org.

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