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Death Spiral in the Palmetto State?

Like many of you, I was surprised this week to hear that our great state was listed on a Forbes Magazine list of states caught-up in a fiscal “death spiral.” While those of us who deeply love South Carolina, as I do, have an immediate response of incredulity, this classification should make us stop and ask the question: Why?

While I certainly disagree with any categorization that would attempt to lump California and South Carolina into the same camp, I do believe there are merits to this Forbes report that ought to guide public policy in the Palmetto State in the years to come. In fact, many of the pro-growth policies folks like Governor Mark Sanford, Senator Kevin Bryant, Senator Lee Bright, Senator Larry Grooms, yours truly, and others, have been advocating for years would go a long ways toward reversing these negative trends.

First, let’s look at two of the primary criteria pointed out in the Forbes report that classifies a state as in a “death spiral.” The first is high levels of dependency on government programs for personal income, and the other is high levels of state debt that threatens the state’s sovereign credit rating.

Both are true in South Carolina, but largely for the same reasons, and they aren’t the same reasons that California is on the cusp of an outright implosion. While states like California and Ohio are in the “death spiral” due to collectivist economic tendencies, like heavy unionization of both the public sector in addition to the private sector, South Carolina has high dependency due to high unemployment. This unemployment is the direct result of two critical issues:

  1. a failing public school system characterized by too much bureaucracy, too little accountability, and too little choice for parents and children
  2. a misguided policy of targeted tax incentives that don’t achieve the economic results so often promised.

It is no surprise to those of us who have constantly fought for educational freedom in South Carolina that our state-stifled education system is failing our state’s children. We critically need comprehensive school choice reform, which will empower parents so that children learn in an environment that treats them as the individual that they are, with their own specific educational needs. A tax-credit to empower parents, particularly those in lower income and minority communities, would ensure their children’s educational quality and would go a long way toward building a world-class workforce in our state. This January, I hope our General Assembly has the common sense to enact comprehensive school choice legislation to address this critical civil rights and economic issue.

Additionally, to end the cycle of low income employment, which drives dependency on government programs and the skyrocketing state debts that these programs fuel, we must build an economy that works for all South Carolinians. As it stands right now, our state government, namely the Commerce Department, has a horrible habit of handing out targeted incentives (aka – taxpayer dollars) to large corporations that promise to set-up shop in South Carolina. While they rationalize it by claiming it creates jobs and drives economic development, they fail to understand the fundamentals of basic economics. A free economy, where all businesses are treated by the same set of rules, regardless of their size and scope, is an economy that creates higher wages and more high-paying jobs. If government takes money from small businesses, individuals and entrepreneurs to give the cash to mega corporations, they are giving a competitive advantage to billion dollar businesses, and squelching the free economy. This means that government has effectively blocked low and middle income individuals from pursuing other entrepreneurial efforts, thus placing them at the mercy of the mega corporations connected to government.

The end result of pathetic educational performance by a bureaucratically dominated education system, coupled with the economic central planning of the Commerce Department, leaves South Carolina families with little option other than to work low paying jobs for large firms brought in with their own hard-earned money. A truly free economy made-up of well-trained South Carolinians would put businesses in the position of fighting for good talent, which translates into higher wages, instead of employees fighting for the jobs brought in through targeted tax deals, which benefit only well-connected corporations and treat our citizens as pegs in a wheel with the low wages that accompany such a status.

I want us to get busy building an economy built to last in South Carolina, and that means more freedom, less government and better education. If we want to simultaneously reduce the number of South Carolinians dependent on government programs, while reducing our state’s debt, we need to build up the private sector by ratcheting down the size and scope of government in Columbia. This means divesting many, if not most, educational decisions back to parents instead of politicians. It means enacting fundamental tax reform that would put every business and business owner on an equal playing field, thus ending the practice of special interest cherry picking and politically motivated economic development deals that benefit only a handful. I would support an SC Fair Tax to eliminate all individual and corporate income taxes in our state, which would unleash free market enterprise in every corner of South Carolina and achieve the goals I’ve outlined above.

If we are committed to building a South Carolina that can lead our nation back to its founding values, then let’s get busy pulling South Carolina out of the “death spiral” and putting her back on the path to true prosperity for every single citizen.

Filed in: Economy, Headlines

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