Why Governor Walker Should Love the Recall Election

The recall election is an economic stimulus that doesn't raise the deficit.

Anyone who knows about economics will also understand this dismal science has no correct view, only compelling arguments. With that said, I support the recall and so should Governor Walker. Oh, don’t start the hate mail yet, please continue to read.

When trying to fix the economy, the government can use policies that involve taxes or spending. The Federal Reserve has a couple more tools, but since each state does not have its own Fed, we have to focus on what tools the local governments have. Governor Walker has made it his goal to cut government spending, and, it seems he has. Congratulations.

However, during a recessionary period, cutting spending is the wrong thing to do, at least according to John Maynard Keynes, the father of modern-day economics. Keynes would say the government should be spending to help the economy. A classical approach would say as interest rates and prices fall, businesses are encouraged to invest more and the ship will right itself. Unfortunately, businesses have not yet started to reinvest fully in the economy, which leaves the needed monetary boost to come from the government. I’ll touch on fiscal responsibility in another post.

With that said, why should Governor Walker love the recall? First, this is pumping millions of dollars into Wisconsin’s economy. Now couple that with the economic principle of the multiplier effect, the amount of spending reported is actually closer to three times that amount. I have heard the governor’s war chest is around $24 million and the total spending is expected to be in the hundreds of millions. No fiscal policy could so easily pump up to a half a billion dollars into the Wisconsin economy without increasing the deficit. Spend it all governor, spend it all.

But why isn’t the Wisconsin economy recovering faster? There is what we call in economics a lag period. That says, what we do today will not be felt until some time later. When will this be? Approximately right before the potential recall election and the Governor will look like an economic genius.

Whether or not you support the recall, hopefully we can all agree, we all support the financial stimulus it is providing our economy.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Steve January 26, 2012 at 04:42 PM
Although any spending is good, a large chunk of the spending will not stay in the state. Most of it is on media buys to get your political message across. All of our 3 big stations are owned by companies that are hardhearted outside of the state. Yes, money will be left behind here but it is not the same as buying a widget manufactured by a company in Sussex.
Michael January 26, 2012 at 05:03 PM
There are plenty of real world examples of Keynesian economic failures. We certainly do not want to go down that path. One of the main questions to ask regarding this article is where does the money come from for "government spending?" Wisconsin does not have a printing press like the Fed does. So, the money comes from taxes. Personal income taxes, business taxes, etc. You name it. Government does not create anything of value. Governmen in an of itself is an expenditure. Guess what happens when the taxpayers run out of money.
Brent Williams January 26, 2012 at 10:53 PM
The rich should pay the same tax rates as the other 99% of us. The millions that are flowing into the Walker coffers for his recall election comes from the rich who want to continue to pay a tax rate under 15%. They know Walker will deliver the goods for them, based on his history since his election.
Craig January 26, 2012 at 11:10 PM
A flat tax may not be an awful idea, but have you ever thought: 15% of $1Million = $150,000 15% of $50,000 = $7,500 What amount would you rather pay? Regarding the millions flowing into the coffers, have you not noticed a lot of union money has been pushing this issue for months now? But no union money will be used to pay the State for this recall election nonsence. Maybe it is time to start taxing the Unions on their income.
Bryant Divelbiss January 27, 2012 at 01:04 AM
The recall is clearly bad for the Wisconsin economy. That is why I say the recaller's clearly don't give a care about jobs or the economy. Job creators clearly indicate Walker is moving the state in the right direction. The recall effort throws uncertainty into the equation, will Wisconsin be dumb enough to allow a union owned Governor to destroy the state or will we be smart enough to re-elect Walker. That uncertainty hurts long term job creation and the economy far more than some little temporary spending helps. I am confident we will send Walker back but if I were looking to create jobs I would wait to see for sure that Walker is re-elected.
Say What? January 27, 2012 at 01:08 AM
Craig, I pay income taxes. So, there ya go.
Steve January 27, 2012 at 01:24 AM
Don't leave out the contant state of recall the democrats are holding over the State. If you wanted to move here woudl you really do it knowing that your boy Walker might not be there come summer? Or that one minute this is ok and the next you are considered the devil for making money.
Bryant Divelbiss January 27, 2012 at 01:27 AM
Are you confused the top tax rate is 7.75% in Wisconsin and it is graduated so rich pay more? Or are you wanting a flat tax to lower the top rates? You are jumping to the future if your thinking he is President of the United States.
Steve January 27, 2012 at 01:27 AM
Brent - The rich pay the same percentage as the 99% you refer to. The rich actually pay much much much more in actual dollar amount, not %'s. They fund say 95% of all taxes collected. Your 99% is too stupid to realize this and lie in order to use as a political pawn. The 99% also pay a 15% tax rate on capitol gains, same as the "rich". That is if they are smart enough to invest money for their future. Walker has nothing to do with federal IRS tax code. Your grasping at straws that have already been broken by liberals before you.
Craig January 27, 2012 at 01:46 AM
Bryant I am not confused, I was attempting to make a point to Brent W. He used the 15% figure (assume he was talking cap. gains). Doesn't really apply to Wisconsin issues, I know. But it has become politically charged.
Troy Melhus January 28, 2012 at 02:13 AM
Great post, Mr. M. So let's agree: the special election is going to bring millions of dollars of special interest money into Wisconsin. Question: How much is a special election going to cost Wisconsin taxpayers? (As you would say: Please continue to read. ;) No doubt it will rake in money for television affiliates and newspapers (which *arguably* may contribute temporarily to local economies—e.g. temp support workers, whose positions will no doubt be eliminated after the election). It will also keep a few local post offices afloat for perhaps another year. And yes, the special election will also mean a nice short-term boost for local print shops and others: the temp election workers getting paid for their mileage and staffing of election poll sites; local facility rental fees; the local sandwich shops that will provide food that night, etc. Not to mention the boost to your local Big Box, minimum-wage-paying-office-supply-stores; and to the printers for those nifty little "I Voted" stickers (though, truthfully, those are probably printed out of state). But at the end of the day, how much will all of this cost the state of Wisconsin? Between $9 million - $17 million. http://mountpleasant.patch.com/articles/gab-cost-of-statewide-recall-election-could-cost-9-million Isn't that effectively a wash? Who really wins?
Bryant Divelbiss January 28, 2012 at 03:12 AM
Craig my comment was to ask if Brent is confused as his statement makes no sense.
Keith Schmitz January 28, 2012 at 06:05 PM
"owned by companies that are hardhearted"? Think you meant headquartered, but it looks like your autofill committed a Freudian slip.
M. Chavannes February 01, 2012 at 11:23 PM
Mr. Troy, I agree, the recall will cost the taxpayers some money, but when we compare the hundreds of millions other groups will be spending in the state, the cost of the recall will not dampen overall economic impact. Oh, those people who think the spending will be limited to unions, I will bet my paycheck that just as many outside special interest groups will be joining the republicans in their campaign efforts.
I am right February 02, 2012 at 12:00 AM
Keith pay your damn loan to the Village of Shorewood and stop being a dead beat.
Craig February 02, 2012 at 12:18 AM
What you really meant to say was, "The BRB and Walker cost me money from my wages, so I am more than happy to share the pain with everyone else." In reality: You are happy to give up the benefit to the taxpayor as payback for messing with your union.
M. Chavannes February 02, 2012 at 12:31 AM
Sorry Craig, I'm not really sure where you are coming from. I am pretty sure I said what I meant to say. This has nothing to do with unions it only has to do with the positive economic impact of spending in an economy during a recession.
Craig February 02, 2012 at 01:19 AM
Sorry Mr. C,, maybe I was a little hard on you. Actually you are one of the teachers that should benefit from act 10. Let me try this again a little differently: If you were on unemployment or took a serious wage reduction, would it be wise to spend money you don't have? This cost to the State for a do over election is just as foolish. We may not agree if it is possible to spend our way out of a depression/recession. But we both should agree that burning money is not helping anything regardless of the economic climate.


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