July 13, 2021 News & Press Releases

Glenn Youngkin’s Economic Message Hits A Brick Wall

by Democratic Party of Virginia

While Virginia was named the #1 state to do business, Youngkin’s disastrous economic plan would drag Virginia backwards 

Richmond, VA — Today, CNBC named Virginia the Top State for Business, making the commonwealth the first state ever to win the top spot in back-to-back rankings. While Glenn Youngkin has spent his campaign claiming that Virginia’s economy is “in a ditch,” new reporting on his economic agenda reveals that Youngkin would make dangerous cuts to public education, state police, and public safety. 

Youngkin has proposed eliminating Virginia’s income tax, which would be a disaster for the commonwealth. Even worse, his campaign has failed to explain how he would pay the salaries of teachers and law enforcement, maintain and improve Virginia’s infrastructure, or keep programs that Virginians rely on after slashing nearly three-quarters of the general fund portion of the state budget. 

Recent reporting by The Washington Post also reveals that Youngkin’s top economic advisor is Stephen Moore, a failed Trump appointee who faced bipartisan opposition after columns he wrote that disparaged women, made offensive comments about AIDS, and included a racist remark about the Obama family resurfaced. Moore also played a key role in Kansas’s sharp tax cuts that led to painful cuts to higher education, Medicaid, and other state services. 

Read key excerpts from The Washington Post on Youngkin’s far-right economic agenda below and see the full report here.

The Washington Post: Is Virginia an economic success or ‘in the ditch?’ Depends on which candidate you ask.

By Greg Schneider

Glenn Youngkin says he quit his multimillion-dollar job in private equity to run for governor because Virginia and its economy are wildly off track and "in the ditch."

The Republican’s Democratic opponent, former governor Terry McAuliffe, says he’s seeking a new term to help a thriving state do even better.

When it comes to describing the economy, the two candidates often sound like they’re running in different states.

Their policy prescriptions reflect it.

McAuliffe has released an 11-page plan calling for a host of steps to improve worker training, require paid sick leave and make child care more affordable.

Youngkin has yet to disclose any formal economic plan. But in media appearances he has suggested one of the most eye-catching policy changes of the race: eliminating the state’s individual income tax as a way to boost economic growth.

The former Carlyle Group executive’s stances have attracted national attention.

“Glenn has been an incredible success and will truly Make Virginia Great Again,” former president Donald Trump said in a news release Friday. “Virginia has so much potential but has been badly hurt by awful economic policy, terrible crime, and the worst education system promoting Critical Race Theory, etc. but Glenn will fix this immediately … If Virginia wants to open up and take advantage of its great and virtually unprecedented opportunity, Glenn Youngkin is the very successful businessman that will get them there!”

But Youngkin’s economic argument has left some political observers scratching their heads. “I’m not sure how he makes the case that Virginia’s in the ditch,” said Mark Rozell, dean of the Schar School of Policy and Government at George Mason University. He noted the state’s low unemployment, fast rebound from the pandemic, $2 billion budget surplus and AAA bond rating.

“Youngkin needs to convince voters that despite all of these economic data, Virginia is not in a good economic situation right now and needs a change in leadership,” Rozell said.

The argument seemed to take a hit on Tuesday when CNBC declared Virginia the top state in the country for business, an annual survey that the financial news network says is based on 85 data points across 10 areas of “competitiveness.” Virginia also won in 2019 and has topped the list five times since it debuted in 2007, passing Texas for the most number one rankings.

Gov. Ralph Northam (D) said in a news release that the ranking recognizes not just the state’s business climate, but “our world-class education institutions, talented workforce, and shared commitment to equity, diversity, and inclusion … and proves that when you lift everyone up, when you treat people right, and when you celebrate diversity, it’s also good for business.” [...]

Virginia was higher rated in categories for workforce, education, access to capital, “business friendliness” and overall economy.

Youngkin has made his economic case in multiple interviews with conservative media outlets. He often begins by describing his decision to step down as co-CEO of Carlyle.

“That was my dream job, but Virginia is in the ditch,” Youngkin told Fox News host — and former Trump economic adviser — Larry Kudlow last Wednesday evening. [...]

Democrats, he told conservative radio host Larry O’Connor in April, have put Virginia “in the ditch. They actually made us noncompetitive. We’re not competitive economically.”

A major reason, he said, is taxes — and pledged to do something about it.

“We are absolutely focused on not just getting our state income tax down but how can we in fact eliminate it,” Youngkin said on O’Connor’s show. “I have the best senior economic adviser on the planet in Stephen Moore working with me on this.”

Moore is a well-known advocate of tax cuts who was nominated by Trump for a seat on the Federal Reserve Board. He withdrew his own candidacy after bipartisan criticism, including for columns he wrote in the early 2000s that disparaged women. Moore had a prominent role in the effort to dramatically cut state taxes in Kansas beginning in 2012 — an experiment widely seen as a failure, leading the state to slash spending for priorities such as education and transportation when revenue dried up. The legislature eventually rescinded the cuts on a bipartisan vote.

“Kansas didn’t work out so well, but we probably got 10 other examples of states that did really well when they lowered taxes,” Moore said in an interview with The Post.

In Virginia, personal income taxes are projected to account for $31.5 billion over the current two-year budget — or 72 percent of the general fund portion of the budget that a governor and legislature can control, according to state officials.

McAuliffe’s campaign charges that Youngkin and Moore want to bring the “failed” Kansas approach to Virginia, which “would stall our economy while making dangerous cuts to public education, state police and public safety,” spokeswoman Christina Freundlich said.

Youngkin’s campaign did not specifically answer how he would solve the math of eliminating such a huge portion of state revenue, but said that it would not happen all at once and that cuts would turbocharge growth. “He is committed to igniting Virginia’s economy through lower costs, lower taxes, more jobs, and more opportunity,” said Wolking, the spokesman, via email.

Moore said Youngkin is looking at mechanisms for returning excess revenue to taxpayers — as Virginia did a couple of years ago with a budget surplus. The General Assembly is likely to discuss options for the state’s estimated $2 billion surplus at a special session scheduled for Aug. 2. In campaign appearances, Youngkin has also mentioned the possibility of a “tax holiday” for small businesses.

“I think there’s some property tax relief he wants to do, as well,” Moore said of Youngkin’s economic policy, but cautioned that “the plan isn’t really fully formed yet, so I don’t want to speak out of school.”

Asked how he explained Youngkin’s repeated assertions that the state is “in the ditch” and his depiction of a terrible economy, Moore said, “I don’t think it’s terrible, and I don’t think he thinks it’s terrible, but it could be doing better, and it has underperformed other states.”

McAuliffe, who likes to tout his own business prowess as an entrepreneur who has started several companies, made economic development a hallmark of his time in office and won praise from some Republicans for his efforts. [...]

Still, Virginia’s unemployment rate fell steadily through McAuliffe’s and Northam’s terms, hitting 2.5 percent in February 2020 — a near-record, topped only by a 2.1 percent rate in November 2000, according to federal Bureau of Labor Statistics data. Then the pandemic destroyed the job market — unemployment zoomed up to 11.3 percent in April 2020. As of May 2021, the state’s unemployment rate was back down to 4.5 percent, below the national average of 5.8 percent. [...]

Zamostny, McAuliffe’s policy director and a veteran of the Northam administration, said the candidate’s plans are a “holistic” approach to building up the economy. They emphasize factors such as workforce training, education funding, expanding access to broadband and improving conditions for workers as ways to make the state more attractive to businesses and residents alike. [...]

As the campaigns wear on, such issues are likely to take on more political significance, Rozell said. How each candidate would handle the economy as the state emerges from the pandemic “is certainly a key to the election,” he said. “I don’t think, in the end, the race is going to come down to ‘critical race theory’ and other social issues that seem to be driving the conversation in the campaigns right now.”