Less Bull in Job Creation Claims, Please

Governors and would-be governors love to wow us with ludicrous job-creation claims.

“Part of it is they just don't know what they're doing,” said Iowa State University economist David Swenson. “Politicians don't generally know how the economy works. They mean well.”

The road to Terrace Hill has been paved with good intentions.

Gov. Tom Vilsack predicted the Grow Iowa Values Fund would create or retain 50,000 jobs over five years when he unveiled it in 2003. It never got half that far, and even the 23,000 jobs claimed by its backers are questioned by critics who say you can't prove they were spawned directly by state incentives.

Last year, Gov. Chet Culver claimed his I-JOBS bonding program would spawn up to 30,000 jobs. By January, he backpedaled to “hundreds and perhaps thousands” of jobs. Swenson says the program will create 4,000, tops, but we don't know because hardly any of the money has been spent. The downturn will be over before we've been stimulated.

Now, Republicans hunting Culver are joining the exaggeration nation. Terry Branstad says cutting corporate income taxes in half and lowering commercial property taxes will create 200,000 jobs. Rivals Rod Roberts and Bob Vander Plaats would eliminate the corporate tax, bringing what Roberts called “a powerful surge of new job creation.” Branstad backers say his corporate cut would slice $80 million annually.

I can understand if they see a corporate tax cut as a useful tool in Iowa's economic development toolbox. It may beef up our sales pitch. But pouring an $80 million pint glass into the state's $135 billion economy won't result in a massive job surge any more than big incentives did. There are no magic bullets.

“Arguing that a set amount of tax cuts is going to lead to a set amount of job gains is just flat out hooey,” Swenson said.

Iowa already casts a lot of corporate tax bait. A tax credit for research activities alone is $40 million and wipes out the tax burden for some companies. We give credits and incentives to firms that move in or expand or decide to stay. The percentage of state revenues paid by corporations has declined steadily.

Even with that bait, Swenson says, we added only 57,000 jobs between economic peaks in 2001 and 2008. Slow growth.

I'm not saying don't ever cut taxes or that cuts are useless. I'm just saying please play it straight with us. Give us realistic expectations, and some solid numbers to back them up. And tell us what spending you'd cut to offset tax reductions.

In short, show us you know what you're doing.

Comments: (319) 398-8452 or todd.dorman@gazcomm.com