Plundering the Middle Class

by James A. Bacon

To get a handle on how progressive (to be clear, I use “progressive” as a synonym for “leftist”) Governor Ralph Northam’s proposed two-year budget is, consider the following.

If Northam’s agenda is adopted, Virginia’s middle class will pay higher gas taxes, higher cigarette taxes, higher income taxes, and higher electric rates. That doesn’t include higher charges resulting from a new hospital tax last year, nor does it include higher college tuition, any of the proposals (such as an inheritance tax) proposed by emboldened Democrats in the legislature, higher who-knows-what-else is squirreled away in the budget, or ideas just hanging fire like the Transportation Climate Initiative.

What will the middle class get in return? Virtually nothing, unless you count expenditures on programs meant to benefit the public at large such as the environment, rural broadband, education, and workforce development. The majority of spending programs are targeted to help lower-income Virginians — and various Democratic Party constituencies who mask their self-serving agendas as benefiting the poor.

Going down the list of initiatives listed in Northam’s State of the Commonwealth address, we find:

Early childhood education. His early childhood education plan “will invest 95 million new dollars to help at-risk three- and four-year-olds start learning sooner,” says Northam. “This means training educators, providing support, and setting accountability standards.”  As the governor rightfully observes, childhood learning starts far earlier than kindergarten. But the evidence is mixed, at best, as to whether putting lower-income children suffering in pre-school has lasting effects. Perhaps that’s because so much critical learning occurs before children turn three years old. The only guaranteed beneficiaries of this initiative are teachers and the Virginia Education Association.

At-Risk Add-On. In addition to all the other money to be lavished upon public schools, Northam is asking for $140 million — “the largest single increase to this funding source in Virginia’s history” — to invest in schools with predominantly “at-risk” (lower-income) students.

Free community college. Northam proposes spending $145 million to provide additional financial assistance to lower-income students — over and above existing state, federal and private scholarships and financial aid programs. Assistance would include stipends up to $1,000 per semester to help with transportation, child care, rent, and even food.

Tuition Assistance Grants. More financial aid for lower-income students attending public universities. According to the Commonwealth Institute for Fiscal Analysis (CI), Northam is asking for $45 million. Additionally, he is adding $17 million in funding for Norfolk State University and Virginia State University, two public historically black colleges and universities whose student populations are disproportionately low-income.

Affordable housing. Northam wants to triple the Virginia Housing Trust Fund, which works to increase affordable housing and keep people from experiencing homelessness. According to CI, this will add $56 million in spending.

Health care. Over and above absorbing the increased cost of funding the Medicaid program by $675 million, the governor wants to create a state-run marketplace backed by a reinsurance program to supplement Obamacare. Says Northam: “The federal government runs the current system, and it isn’t working. Virginia can do it better ourselves and save money too.” The reinsurance program helps insurers cover high-need people. “The federal government used to have one, but it ran out — so premiums went up.” This spending will be funded by the increased tax on tobacco products. Estimated cost: $146 million.

Criminal justice system. Northam wants to fund more public defenders, including the first public defender office in Prince William County, support for “returning citizens” (not clear what that refers to), and funding to speed up reviews of requests for pardons. I can find no budget number for this.

Transportation. “We need to reform transportation funding this session, and start to make new investments in transit to help commuters and low-income people get to work,” Northam says, providing no evidence that “low-income people” want more transit. Mass transit ridership is declining. If we look at the actual behavior or low-income people, what low-income want is more access to automobiles. But mass transit is a favorite of affluent urban elites whose preoccupation is climate change and CO2 reduction. There is no set budget number set aside for mass transit.

We can argue all day long about the extent to which these programs will ameliorate poverty, reduce poverty, or perpetuate poverty. What cannot be disputed is (a) that it adds up to about $650 million (not including the transportation and public-defender pieces), most of which will be paid for by Virginia’s middle class, and (b) no comparable middle-class relief of any kind is contemplated.

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11 responses to “Plundering the Middle Class”

  1. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Middle class folks will certainly benefit from greater access to early childhood education. The tuition assistance grants will certainly benefit the middle, as well as the upper class. They are available to any Virginia resident attending a private college in the state.

  2. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    If past is prologue, these programs will not solve any of these problems. These programs instead will simply put more and more money (cash) into a relatively few pockets, including many of the biggest bucks into pockets tucked into the pants of elites running the show, like for example college professors and Administrators.

    Translated: our Government rarely fixes real problems. It refuses to dig down to the roots of those problems and fix the roots. Instead our government simply hands out money that stops and thwarts real solutions. This is why so many public schools keep declining and failing, while ever more money is thrown at the people and broken systems running those schools, and the broken culture that is feeding them and has been for half a century.

    1. Rebelathrt Avatar

      Reed, you nailed it.

  3. Steve Haner Avatar
    Steve Haner

    I don’t disagree with Reed, but I also have to agree with Dick: Many of these programs are not limited to lower-income families. The higher ed tuition assistance grants are not means tested. I don’t think (could be wrong) that this new community college scholarship proposal will be means tested. Jim is also right that many of the other things going on will add costs and remove dollars from the pockets of lower-income families.

  4. LarrytheG Avatar

    Interesting, you had to go to the Commonwealth Institute for Fiscal Analysis to get actual numbers………..

    The reason Northam wants to switch to state run health care exchanges is that they are trying to kill them at the Federal level. The Federal exchanges used to have the reinsurance but it was cut and premiums went up… a purposeful strategy to hurt the program so Northam wants to move that program to Virginia and get the re-insurance back in and using the cigarette tax is, in my view, a reasonable way – there is a nexus.

    The Transportation thing is interesting. When they talk labout mass transit they are not necessarily talking about just METRO. More and more, there are park & ride lots in exurban localities that run buses and vans and it’s the insurance on them that is subsidized by the state so as to keep the fares low. Same thing with VRE, commuter rail. The fares are subsidized TWICE – once by Virginia then the Feds give vouchers to employees who ride.

    It’s easy to look at any function in government and to program it a “failure” despite all the money spent.

    We could say that about transportation. All the money we spend and we still have congestion and accidents.

    All the money we spend on health care and we still have obese people and smokers…

    All the money we spend on education and we still have kids who fail and end up not employable or needing entitlements or incarcerated.

    So all this money we spend – it really goes for nothing because it does not work – right?

    That’s the standard narrative. It says, we already spend a bunch of money and spending more won’t fix anything – just more bad money after good…

    that’s what I get from listening to the hard-core fiscal conservatives here… then they stir that in with the “leftist” “people’s republic” stuff and what we get is a basic “hell no, we’re getting taxed to death already and we’re killing the free market and other assorted FUD…. not discussion of issues on the merits… no pros and cons – nope… it’s all hands on deck to stop the “progressives”.

    It’s kind of amusing in a way…………. 😉 It would be even more fun
    if they would advocate reducing funding for schools and transportation and medical care on the premise that we are already spending too much! After all – we have failing schools, failing transportation and failing medical care, right?

  5. What are the hypothesized benefits of the additional funding? Is there any data that quantifies the benefits and the costs based on past experience? I hope the additional expenditures are not a case that “if it sounds good, it is good.”

    1. LarrytheG Avatar

      there never are per se. Take VDOT – why give them a gas tax increase? Do they promise less congestion?

  6. johnrandolphofroanoke Avatar

    Now drill down to your local government. If you live in the radius of major urban and suburban areas, progressives have declared a tax and spend holiday. Just examine Loudoun County Public Schools. The superintendent is asking for $1.4 billion dollars and a near 9% increase over last year. That means an additional $113 million dollars just for the next budget. Enrollment growth only requires $32 million. This one time $113 million increase is the size of most local school budgets state wide. The great give away has begun and it will run much deeper than fall line on the James River.

  7. LarrytheG Avatar

    Typically, the school divisions in NoVa turn out better performing students and that is proven by the higher percentage of them that qualify for College.

    What schools are asking for is more money for Pre-school, at-risk kids in K-12 and Community College.

    The premise is to increase the number of people who can qualify for better paying jobs – and transition from entitlement takers to taxpayers.

    There is a big of leap-of-faith but not much – it more a question of what programs work or work better than the idea that none of them work and any money towards it is wasted.

    I am somewhat allied with those who think we should be able to keep increases down and re-allocate money from programs that don’t work to programs that might but the basic problems with schools is that it means taking money from programs for high-performing kids and reallocating it to low-performing kids..and that puts the schools between a rock and a hard place and the easier path is to ask for more money.

    Does it cost more money to provide equity for all kids? Or do we provide equity by diverting existing funds to lower-performing kids?

    The basic opposition view that every kid should be allocated the same amount of money, i.e. disadvantaged kids should not get more – is a problem if it’s not the kids fault that they are disadvantaged. Equal opportunity – means they all start “equal” and if not – then whose responsibility is it? If we all say “not mine” where does that leave us?

    1. johnrandolphofroanoke Avatar

      The chief reason why NoVa schools turn out better students is very simple. Socio economics. Decades of data show that young people who come from intact families, educated families, high income families, low crime zip codes, and active participants in their communities are going to be far more successful than others. We could air lift top performing students from NoVa to Middlesex County and still get those kids into top colleges that lead to six figure jobs.

      The modern definition of equity is code speak for redistributing education resources to sub groups deemed disadvantaged with the goal of raising education outcomes. My observations lead me to conclude that equity has lowered the bar for education standards, lowered the bar for testing outcomes, disguised education triumph under the veil of cooperative learning/project based learning, it would lead to busing kids to other schools to achieve an equitable student body, and the outright shaming of so called “privileged” communities.

      This has been done already. The Progressive Era of the turn of the century (aka 1900), the New Deal, and the Great Society have already demonstrated that this will make only a limited difference. The power of government is great but it will never achieve a full solution to the problems of inequity. How can it be that taking from one group and giving to another creates a sense of equality?

      Equity is code speak for leveling the playing field and the end result will be mediocrity. We are already half way there.

  8. I would like to see some official comparison numbers, but seems to me Virginia does hit middle class harder. Compared to other states, I feel we are probably extremely tax friendly to lower income, reasonably tax friendly to high net worth. So we need to hit up the middle class hard, because as Steve has quoted, that’s where (we feel) the money is .

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