U.S. Sen. Thom Tillis believes that Greece could learn from North Carolina, which is undoubtedly true.
Greece could learn from most anybody – with its unsustainable pensions, bloated budgets, huge debts, and Swiss-cheese system of collecting taxes. The Greeks may have invented democracy, philosophy and theater, but they have been struggling with the basics of running a government in recent years.
In a recent interview with Kathimerini, a daily newspaper published in Athens, Tillis – described as active in North Carolina’s Greek-American community – urged Greece to stay in the euro. But he said Greece needs to change its ways.
“The Greek government has to make major changes in its spending policy and entitlements,” Tillis said. “When I was speaker in North Carolina, the state was gripped with a deficit and we made a fundamental policy decision to adopt austerity budgets for four years.
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“Today, we have a one of the best-performing economies in the U.S. and our unemployment dropped from 10.6 percent to 6.4 percent,” Tillis said. “Greece could learn from North Carolina.”
This, to paraphrase the late radio commentator Paul Harvey, is only part of the story.
North Carolina never was in the middle of a Greek-like crisis when the Republicans took over.
At the time the GOP took over Raleigh, North Carolina was one of only nine states with the top AAA bond rating, according to the three major Wall Street rating agencies. State spending was modest, with the 45th fastest-growing state government in the country in the years between 2001 and 2011, according to a report by the conservative Tax Foundation. North Carolina’s state-local tax burden was 9.9 percent in 2010, exactly the national average, according to the Tax Foundation.
But North Carolina did have one of the highest unemployment rates in the country – thanks to the deep recession and the loss of much of the state’s manufacturing base as textile and furniture plants fled overseas.
The unemployment rate was already dropping when the Republicans took over, and that decline accelerated under GOP control. In June, North Carolina’s unemployment rate stood at 5.7 percent, still above the national rate of 5.3 percent. You can judge for yourself whether Tillis is correct in saying North Carolina has “one of the best-performing economies in the U.S.”
Like other Republicans, Tillis argues that the improving economic picture is the result of their economic formula of fiscal austerity, tax cuts and cuts in regulation. That is possible, but hard to prove. The Federal Reserve’s easy-money policy may have played a role.
Two states that took different approaches, California and Massachusetts, have shown far more job growth than North Carolina since the start of recession, according a report released last week by N.C. Budget and Tax Center. Silicon Valley and Boston’s Route 128 Corridor are precisely the areas that North Carolina is now competing with.
California saw 5.2 percent job growth from the end of December 2007 until this April while Massachusetts saw 4.6 percent job growth during the same period, according to the center. North Carolina experienced 1.7 percent job growth during the same time.
Patrick McHugh, a policy analyst with the center, argues that the policies of Massachusetts and California of public investment in education are likely to work better than North Carolina’s strategy of low taxes and lax regulation. So are Massachusetts’ and California’s approach more likely to pay off with better jobs? Who knows? Maybe they were just not saddled with dying textile and furniture industries and are blessed with some thriving high tech sectors.
But their argument is as valid as that of Tillis and the North Carolina Republicans.
So while Greece could benefit from a dose of fiscal restraint, it should look carefully at the lessons it might learn from North Carolina.