New Year Economy Pivotal for Republican Leaders

The New Year promises to be a pivotal year for Republican leaders in Mississippi. With “job creation” tax cuts in place at both the state and federal levels, voters will be looking for Mississippi’s moribund economy to take off.

But, that’s not what Mississippi’s state economist Dr. Darrin Webb forecasts.

“Mississippi’s growth will not catch the national growth” in the near future, he told the Legislative Budget Committee in November. “That is not likely to happen.”

As reported in the Northeast Mississippi Daily Journal, Webb told legislative leaders that Mississippi’s economy continues to lag that of the nation and will do so for the foreseeable future. “As you know, the state has struggled to gain momentum since the recession of 2008,” Webb said. “It seems we take one step forward and two steps back.” He said the state’s “real” gross domestic product (GDP), the total of everything produced in the state, is lower now than it was in 2008 before the so-called Great Recession.

At the state level, Gov. Phil Bryant, Lt. Gov. Tate Reeves, and House Speaker Philip Gunn, all Republicans, have said business tax cuts enacted over the past several years will stimulate the economy and bring growth. At the federal level, Sen. Thad Cochran, Sen. Roger Wicker, Rep. Trent Kelly, Rep. Gregg Harper, and Rep. Steven Palazzo, all Republicans, have said the big cuts in federal corporate taxes they helped pass will stimulate Mississippi’s economy.

Despite the positive rhetoric, Bryant, Reeves and Gunn must agree with Webb that not much economic growth will occur in the near future. They agreed to a revenue projection for state government for the upcoming fiscal year that is below this year’s level. Then, the Legislative Budget Committee adopted a “bleak” budget recommendation that cuts most state agencies, “which are already reeling from several planned and unexpected budget cuts the past three fiscal years,” reported the Clarion-Ledger.

It’s these cuts, not the tax cuts, that have the attention of economic developers. As one conservative developer told me, “underfunding education, infrastructure, and health care hurts” development.

That aligns with what the state economist told legislative leaders – Mississippi faces economic headwinds because its workforce is less educated and less healthy than those in other states. “I believe the only thing we can do for Mississippi to be more competitive is for our people to be more competitive,” Webb said.

The Mississippi Economic Council sees infrastructure shortfalls hurting Mississippi’s competitiveness. “Every business relies on the road surface transportation system,” MEC interim president Scott Waller told the Mississippi Farm Bureau. “If you can’t move your crops, livestock, and machinery because a bridge can’t support the weight, and you have to find a different way to go, it costs you time and money.”

Since the recession in 2008, Mississippi’s GDP has grown just 1.7% compared to national GDP growth of over 14% and neighboring state GDP growth of 16%.

All this makes 2018 the year to watch for Mississippi politics. Will Republican leaders’ investments in business tax cuts pay off and spur economic growth? Or will their lack of investment in education, infrastructure, and health care hold Mississippi back?

Happy New Year!

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