Branstad economic goals unattainable, says economist

Economic analysts agree it’s too early to judge Gov. Terry Branstad on attaining the economic goals he set forth during his campaign, but at least one says it’s a safe bet they won’t be reached.

Iowa State University economist David Swenson said Branstad’s goals to create 200,000 new jobs and increase family incomes by 25 percent over the next five years are lofty at best.

“The answer is I flat can’t see it,” Swenson said. “It’s a laudable goal but by every honest measure it’s just not going to happen.”

Swenson said there’s never been a time in the last 30 years when job creation in the state has come near to the levels it would take to create 200,000 jobs over five years. The only time it has happened is from the depth of a recession to the peak of a recovery.

“That’s bogus because 90 percent of the recovery that occurs in the economy that cycles through a recession has nothing to do with anything that a governor or business leaders did,” Swenson said. “That was just the national economy recovering, and to take credit for going from a trough to a peak is analogous to standing on a shoreline and saying you made the tide go out.”

Mike Owen, assistant director of the Iowa Policy Project, also noted that kind of growth has not been seen in recent years.

The state would need to post a net gain of between 3,300 and 3,400 jobs a month, Owen said, to reach 200,000 jobs in five years. Through the first seven months of 2011 the average net gain was 2,700 per month, and Iowa has not produced 3,000 jobs a month for a whole year since 1994.

“The numbers show that it would be out of the ordinary for recent years to produce those kinds of numbers,” Owen said. “But without knowing more about what’s going to pass in Congress and what’s going to pass in the Legislature in the next couple years it’s kind of hard to predict.”

August 2011 unemployment data shows 101,900 Iowans unemployed, a rate of 6.1 percent. August 2010 data showed 103,500 Iowans unemployed, a rate of 6.2 percent.

Swenson also said household incomes continue to go down, while family incomes have done a little better. But that’s typically due to family members working another job or more hours to make ends meet, he said.

“To take credit for gains by people in households working harder is also disingenuous,” Swenson said.

A summary of U.S. Census data released this month shows real median household income declined between 2009 and 2010. It also found the poverty rate increased, as well as the number of people without health insurance.

Owen said one thing research clearly shows is that reducing government spending is not the way to create jobs or increase family incomes.

“One thing we’ve said is there’s way too much reliance on the idea you can tax cut your way to prosperity or budget cut your way to prosperity,” he said. “And that’s what history shows us.”

But Jimmy Centers, deputy communications director for the governor’s office, said Branstad’s goals are attainable. He noted the Legislature passed a biennial budget this year and ended the use of one-time money for ongoing expenses.

“This sends a clear signal to business that Iowa has the stability and predictability Iowans and businesses need from their government,” Centers said.

He also noted Lt. Gov. Kim Reynolds led a trade delegation to Asia earlier this summer, and Branstad will lead a similar mission later this month.

And Centers said if commercial property taxes are cut and the federal government acts on pending free trade agreements with Columbia, South Korea and Panama, that could mean more Iowans working as well.

“These agreements would likely produce hundreds of agriculture-related jobs and increase Iowa exports by millions annually,” he said.

But Owen said reaching those job and income goals will take a balanced approach that seems lacking in the current discourse.

“How we get those new job numbers, how we get those income numbers, are going to have to come from different proposals than seem to be common on the political stage those days,” he said.

On Thursday, Branstad announced approximately 300 new jobs at Alcoa, an aluminum fabricator based in the Quad Cities. The same day, however, Lennox Industries announced that a portion of its operations at a Marshalltown air conditioner plant will be relocated to South Carolina in early 2012, which could impact up to 80 Iowa workers.