For years, Democratic Governor John Baldacci, governors before him, and many legislators have made job creation their loudest mantra. “Jobs!” echoes under Augusta’s State House dome as the rationale for cutting taxes and expenses (services) and increasing corporate tax breaks to make Maine more “business friendly.” Such policies also happen to reward politicians’ campaign contributors and possible providers of future jobs — for politicians, that is.
Baldacci in particular has pinned his reputation to jobs, bragging during his 2006 reelection campaign about the several thousand jobs created in the state since 2003, the year he was inaugurated. And he had claimed in his January 2006 State of the State speech, “If we stay the course of our plan with investments and hard work, we will grow 25,000 new jobs in Maine in the next five years.” In his plan was the elimination of the tax on business equipment, which the Democratic Legislature obediently approved.
If the governor is going to claim credit for creating jobs, then he has to take his lumps, too. According to his Labor Department, as of this April the state had lost 19,400 jobs in the past year. Since he first took office in 2003, there has been a net loss to Maine of 6500 jobs. The state unemployment rate, which was 4.8 percent in January 2003, is now 7.9 percent, and most economists expect it to get a lot worse.
But, of course, Baldacci’s policies aren’t to blame for the current international Great Recession. In fact, few economists believe state government actions can have much effect on the business cycle, especially in a globalized economy.
“Running on a platform of job creation in general seems to be pandering,” says economist John Messier of the University of Maine at Farmington.
As Republican state senator and fiscal expert Peter Mills wrote in a 1999 tax study, “a common plank found in every politician’s platform is support for business stimulation and creation of jobs.” But legislators falsely assume, he said, that they have the power to affect Maine’s economy, an assumption heavily reinforced by lobbyists who assure lawmakers “that the granting of an exemption, the forbearance of a tax, the easing of a regulation, or the expenditure of funds in a certain direction” will give the state “perpetual prosperity.”
Mills, who is famous for his frankness, added: “Most of this is hogwash.” The Legislature’s role, he wrote, “is to raise money in simple and orderly ways and then to spend it by doing well and efficiently those few things that only government can do.”
Baldacci’s office did not respond to requests for comments on this issue.
