''I know you're really busy now with the Olympics, but when you're finished, please come back and save Massachusetts.'
A heroic job overall.
Outstanding on each of the factors that are included in affecting job growth.
Entered after 2002 into the second worst increase in unemployment in the nation
"There's no glimmer of economic optimism or life or confidence out there. The next governor, whoever it is, is going to have to address this aggressively.''
Many improvements despite barriers
With an 85% Democratic legislature, Romney made no excuses and just forged ahead.
High increase in median income for residents (+18%!)
Massive fiscal crisis had to be corrected (From $3B deficit to $1B surplus + $2B Rainy Day Fund)
Streamlined the state's permit process helping ease the state’s Byzantine permitting process by
creating “one-stop shopping” for businesses hoping to grow.
Per capita personal income grew in Massachusetts from $40,264 in 2003 to $47,559 in 2006.
Altered "sales force" - Number of companies considering Massachusetts jumped from 13 to 288
See other items below in the "What He Actually Did" section
Misrepresentations vs. fact
His record is misrepresented by his opponents (what a surprise)
People have "mined" the data to misrepresent what he actually did.
The state was a high-tech and a capital goods state - a sector that responds very slowly to
turnarounds, so they worked very hard to encourage job growth.
The actual fact is a heroic job overall, as he dealt with a massive financial crisis to start off with
and then created from no pipeline when he came and no sales force new jobs in higher income
The opposition says:
Politifact.com - Axelrod saying Romney was to blame for lack of job growth: "But we found little evidence to support that claim."
"But the idea that he [Romney] does not know how to create or preserve jobs is ridiculous. And the idea that President Obama and the Republican presidential contenders know more than Romney is even more ridiculous. He has walked the talk."
"I did not expect real pushback. After all, he’s a capitalist. But sitting in public office, he showed a different side. He used his knowledge of capitalism and free markets to make certain the Massachusetts job picture would not be negatively impacted. While he could not predict the future stock market crash and recession, he was determined that there would be no job loss on his watch. And he even pushed for new jobs."
When one removes the conjecture and judgments and uses only the facts of what he actually did, one can see the progress that Romney made against formidable and unusual odds in this state crisis!
Despite being hindered by an 85% Democratic legislature, Romney made no excuses and spread no blame. Instead he just go to work to solve the problems as best they could be solved.
"Romney brought Massachusetts "back from the brink of financial disaster."
Looking at true, not "wrong", causes
The grave economic situation Romney was recruited to save
What he actually did
A governor has limited effect, per economists
What others say
What he had to deal with
Not an attractive state compared to Texas (low taxes, lower cost of living, etc.)
Romney, in action
The unemployment rate
Assessment by a former governor
Governor Romney was a "bulldog for jobs"
LOOKING AT TRUE, NOT "WRONG", CAUSES
Romney had to consider competing priorities and make a decision on how to trade them off, where one had to take away from the other. Obviously, Job 1 was to save the state from financial ruin!
I taught how to look at cause and effect (Logical Cause) and to not get confused about other things that are present at the same time. For instance, Clinton (and even Gingrich) wasn't the cause of the surpluses - it was the huge increase in revenues from the tech boom (before the big bust). And, no, Clinton did not cause the tech growth. It is a mistake to assume that someone present at the time was therefore the cause - you have to find out what actually was the cause.
So, read on, with this in mind, if you will.
THE GRAVE ECONOMIC SITUATION ROMNEY WAS RECRUITED TO SAVE
The state was still reeling from the tech bubble’s burst and the economic situation was so grave, that after Romney decided to run, Tim Russert (from NBC) said:
“Lets go to a very, very important issue confronting this state. It's fiscal health. This is what someone on Beacon Hill said just the other day:
''A lot of people think this has been bad. This was the warm-up! This was just spring training. There's no glimmer of economic optimism or life or confidence out there. The next governor, whoever it is, is going to have to address this aggressively.''
That was in October, but by December (before he took office) the Boston Globe reported it got even worst:
"It's the worst I've seen it. Going back to the post-war era, I've never seen such an acute and focused fiscal crisis and particularly for the state government," said Richard P. Nathan, director of the Nelson Rockefeller Institute of Government at the State University of New York-Albany...
“The estimated budget gap of $547 million in Massachusetts is among the largest in total dollars, according to the report by the National Conference of State Legislatures... Massachusetts officials have predicted that in the next fiscal year the shortfall will far exceed an earlier projection of $2 billion...
In the darkest days of the state budget crunch, he held the line on tax increases -- if not fee increases. He has made wise long-term investments in transportation and ''smart growth" and helped expand housing. Getting something substantial done on healthcare would be a significant accomplishment
WHAT HE ACTUALLY DID
Per capita personal income grew from $40,264 in 2003 to $47,559 in 2006.
Sales force: Number of companies considering Massachusetts jumped from 13 to 288 (Massachusetts
had little in place to attract new jobs when his administration started.) Established a sales force to entice
companies. Individual members of the administration worked to persuade companies in Massachusetts to
stay and expand.
Attract companies: "Put in place initiatives to attract companies to Massachusetts, and set the
foundation for job growth.”
Streamlined the state's permit process helping ease the state’s Byzantine permitting process by creating
“one-stop shopping” for businesses hoping to grow.
Decreased state tax burden: During Governor Romney's tenure from 2003-7, Massachusetts dropped from
13th to 17th in national tax burden rankings.
More tech companies: He sought more tech companies; realized green jobs weren't fruitful, higher incomes.
Implemented a "New Market Tax Credit"
Extended the Investment Tax Credit during 2003.
Manufacturing tax relief (helped create new biotech jobs)
As governor, Romney proposed $8 billion in bonds be authorized in order to empty the waiting list for school
building projects; In July 2005, Romney proposed $200 million in funding for University of Massachusetts
Sales tax holidays
Property tax relief for seniors
Allow commuters to deduct commuting costs
Tax breaks for veterans and national guard members
Source: BusinessWeek.com - Ranking the States for the New Economy - Feb 27, 2007
Mitt Romney: “Massachusetts is a high-tech state and a capital goods state. And that’s a sector of the economy that responds very slowly to turnarounds, and so we worked very hard to re-stimulate the economy there and to encourage job growth.
“I came into a state that had no pipeline, no sales force. Believe it or not, they had literally no sales force that called on companies and encouraged them to come into the state. There was no activity of any significance to bring jobs to the state. And we went to work, the legislature and I, to try and change that.”
A GOVERNOR ACTUALLY HAS LIMITED EFFECT, PER ECONOMISTS
Economists generally agree that the power of a governor to affect economic growth and job statistics is much more limited than is the perception. The state's relative attractiveness based on low costs, low taxes, low cost of living, being a right to work state is the key. And all of those were negative, especially as contrasted with Texas. See below.
"Massachusetts emerged more slowly from that recession because its pre-recession numbers were disproportionally inflated by the technology bubble. A lot of those tech jobs never came back."
Widmer warned not to put to much stock in any governors' influence over their states' rate of job growth, or decline. The ability for governors to manage the state economy is vastly overrated, he said. States are tied to larger economic forces, he said, and governors often claim too much credit when things are going well and no blame when things are going poorly.
"Governors and presidents generally get way too much credit and blame for job creation or losses," Miron said. Assessing a governor's performance on jobs is difficult due to national economic forces and policies that predate a governor's term in office, he said. "It's misleading to give him too much blame," Miron said. (Jeffrey Miron, director of undergraduate studies at the Harvard University Department of Economics)
Politifact.com - Axelrod saying Romney was to blame for lack of job growth: "But we found little evidence to support that claim."
With an economy more pegged to technology than most states, Massachusetts took longer to recover.
Lord says Bristol-Myers Squibb is proof that Romney did more to help create jobs in Massachusetts than that 47th ranking suggests. Lord and others say what Romney did for the state’s economy can’t really be quantified. They say that ranking was affected by things outside of a governor’s control, like housing and energy costs and high unemployment insurance costs for business.
So, to judge what Romney did, we should, of course, look at what he actually did and ask if those were smart, positive things to do. (Unfortunately, he had to close corporate loopholes and charge them for the services they used, so businesses weren't too happy with that part! But it helped to aggressively save the state!)
WHAT OTHERS SAY
Between January 2003 and December 2006, Massachusetts was one of seventeen states to accelerate its job growth every year (creating more jobs each year than were created the year before), and one of only two states — Illinois being the other — to accelerate its job growth by at least 20,000 jobs each year. Massachusetts was one of the top ten most-improved states (seventh overall) in terms of job creation, going from 49th in the nation in the first year of the Romney Administration to 36th in the nation in the last year.”
NationalReview.com - Romney’s Jobs Record - Jun 21, 2011
"If you go back and look at the last 10 years, it was a lost decade for job growth in Massachusetts. The only bright spot was Mitt Romney’s term as governor. Both his predecessor and his successor posted job losses."
WHAT HE HAD TO DEAL WITH
In 2002, Massachusetts' economy was rapidly deteriorating. It was ranked 50th, the second worst in the nation in its increase in unemployment. Job losses were so great that although a dozen states were more populous, and California had over 5 times as many people, Massachusetts lost more jobs than anywhere else in the country,
NOT AN ATTRACTIVE STATE COMPARED TO TEXAS (LOW TAXES, LOWER COST OF LIVING, ETC.)
Compared to Texas, for instance, there were negative factors for growth:
A state's relative attractiveness in these factors affects their growth rates (contrast that with Texas!):
Mass. Not so friendly Texas: Business friendly
Mass. High tax Texas: Low tax
Mass. Democratic Texas: Right to work
Mass. High wage base Texas: Low wage base, cheaper workers available
Mass: cost of living higher Texas: Much lower
When it comes to producing products, costs of manufacturing are very high here, so that we lose jobs,”
"An overheated industry [tech bubble] had gone bust. A tepid economy is not producing enough jobs. And a successful businessman promises he can use his private-sector experience to jump-start the economy.
ROMNEY, IN ACTION
He cut capital gains taxes, benefiting well over 150,000 residents. Thousands more are currently benefiting from new jobs in the biotech field because of Romney's manufacturing tax relief and because he made the investment tax credit permanent. Thousands of Massachusetts families saved their hard-earned dollars when Romney enacted sales tax holidays. Seniors are benefiting from property tax relief proposed and signed into law by Romney. Our honorable veterans and National Guard members have several new tax breaks because of Romney's belief that they should be taxed less. Commuters can now deduct expenses for travel because Romney believes they shouldn't be penalized for helping increase commerce.”
The Boston Globe - Deficits studies say crisis is worst since WWII - Dec 5, 2002
It continued to get worst. By the time Mitt Romney took office as governor of Massachusetts, the upcoming state budget for that year would have a structural deficit of nearly $3 billion if the budget was not cut. Furthermore, the existing budget passed the previous year, that would be in effect for several more months, had a projected total deficit of approximately $1.2 billion. He inherited about a $650 million deficit in that budget by the time he took office.
Governor Romney convinced the legislature to allow him to immediately make changes to the existing budget. He immediately slashed spending and balanced that budget. He then balanced each of the four annual budgets he created. He was dealing with a veto-proof legislature that was 85% democrat, but he was able to 'hold the line on all the spending that the democrats up there wanted to do.' The budgets he submitted, fought for and succeeded in obtaining not only were balanced each year, but provided a surplus of $700 million in 2004, nearly $1 billion in 2005 and a surplus of $700 million in 2006. He balanced the budget every year without raising taxes. By the end of his term, he had taken "Massachusetts from billions in deficit to billions in surplus". He turned in a $2 billion rainy day fund at the end of his term in office.
THE UNEMPLOYMENT RATE
The unemployment rate in Massachusetts had doubled from January 2001 to January 2003, the year Romney took office, and was continuing to increase at a fast rate. He implemented pro-growth policies and programs. By summer the increase in unemployment had stopped and by fall unemployment was dropping. While Massachusetts was 50th, or nearly the worst in the nation in the increase in unemployment rates the year that just ended when he took office, he got it down to 38th place by the end of his first year in office. The unemployment rate continued to rapidly drop for nearly two years, hit a plateau for about a year and a half, then started dropping again at the end of his term of office (see chart below). The year he left office (2007), the trend in Massachusetts' unemployment rate was in the top ten in the nation, a big improvement from the 50th place it was in the year he won office.
While jobs were shrinking by the thousands each month in Massachusetts when he took office, by the time he left office, "the state had attracted hundreds of new companies and added [a net total of] 60,000 new jobs." It takes time for pro-growth policies to effect the economy, but before the end of his first year in office the job losses had stopped, and in his remaining time in office 81,000 new jobs were created.
The people in the state benefited not only by increased employment and not having their taxes raised, but they also saw attempted and successful tax cuts by the governor. (The 85% Democratic legislature sometimes overrode his attempts.)
But he did succeed in lowering the total taxes paid to Massachusetts from an average of 7.33% of residents' income in 2003 when he entered office to 6.99% in 2007 when he left office and the year of his final budget. During that period, taxes paid to other states increased from an average of 2.6% of residents' income in 2003 to 2.9% in 2007, resulting in the total state and local tax burden on Massachusetts residents being 9.9% in 2007, the same rate as it was in 2003. During that same period, from 2003-2007, the average state and local tax burden in the U.S. increased from 9.6% of income to 9.8%. Governor Romney bucked the trend resulting in Massachusetts dropping from the 13th highest taxed state in the nation, to the 17th.
This 7.33% to 6.99% tax drop is more incredible when one takes into account that those rates include local taxes which went up during that period, particularly after his first year in office when he cut spending (after which he focused more on tax cuts rather than more spending cuts).
In fact Governor Romney cut taxes 19 times. (Opponents often say it was the opposite, equating eliminating loopholes and charging appropriate user fees for services received, but note that Boehner had agreed in one negotiation, before Obama blew it out of the water by asking for even more, to give $800,000 of increased revenue through closing loopholes in lieu of increasing tax rates.)
THE ASSESSMENT BY A FORMER GOVERNOR
Anyone who claims that Romney did not cut taxes in Massachusetts is simply mistaken. He cut capital gains taxes, benefiting well over 150,000 residents. Thousands more are currently benefiting from new jobs in the biotech field because of Romney's manufacturing tax relief and because he made the investment tax credit permanent. Thousands of Massachusetts families saved their hard-earned dollars when Romney enacted sales tax holidays. Seniors are benefiting from property tax relief proposed and signed into law by Romney. Our honorable veterans and National Guard members have several new tax breaks because of Romney's belief that they should be taxed less. Commuters can now deduct expenses for travel because Romney believes they shouldn't be penalized for helping increase commerce.
Besides tackling government waste and inefficiency, he halted the state's economic tailspin and added tens of thousands of new jobs. He signed into law a health insurance reform modeled on a conservative market-oriented approach that emphasizes personal responsibility. He started the Adams Scholarship, a merit-based program that awards the top 25 percent of high school students in Massachusetts with four years of free tuition at a Massachusetts public college or university. He instituted English immersion in the public schools and abolished the old bilingual education system.
Note that the state's credit rating rose
Richard Lord, president of Associated Industries of Massachusetts, credited Romney with helping ease the state's byzantine permitting process by creating "one-stop shopping" for businesses hoping to grow.
"I think overall generally I would give him a pretty good grade," Lord said. "He really cared about the business climate here and making sure it was a good place for businesses to locate."
Residual effect of forming a new foundation: "Massachusetts' lead over other states in 2007 has increased—with a concentration of software, hardware, and biotech firms supported by universities such as MIT, Harvard, and others. The state had the fourth-highest increase in per capita income, according to the study.”
MITT ROMNEY’S first reaction was: “What is happening to the jobs?’’
I had called then-Governor Romney at his New Hampshire vacation home in 2003 to inform him that the John Hancock Financial Services, a century-old Boston company, was being sold to a Canadian corporation.
I thought it would be a simple courtesy call, but Romney peppered me with dozens of questions such as:
- Are you going to pay for your stock premium with job losses?
- Are jobs being shipped to Canada?
- What quality jobs will be left in Massachusetts?
- What are the chances there will be some job increase if the merger works?
- Are Canadian regulators requiring certain job levels in Toronto?
And on and on.
What I thought was going to be a simple phone call between a CEO and a governor turned into an inquisition. A friendly one, but without question, it was a combination elected official/Wall Street savvy inquisition.
He asked for a Monday presentation in his office to cover the details. At that meeting, the questions continued.
Romney made it clear that he needed to be satisfied that there would be no exodus of jobs and no mass elimination of jobs. He even discussed ideas for new jobs. He was well aware that, as governor, he could easily place regulatory and public relations roadblocks in our path.
Mitt Romney came in trying to create a culture of competitiveness, looking at systems change,” Anderson said. “I think for the most part employers felt the governor was working hard to create changes in systems and working in a legislative environment that ultimately was reluctant to reform systems.”
Anderson says another major Romney accomplishment was preserving the Natick and Hanscom military bases, which kept more than 30,000 jobs in Massachusetts.
Even so, his supporters, like Jim Stergios, president of The Pioneer Institute, say Romney’s effect was more subtle and he helped make deep changes that Massachusetts still benefits from today.
“Businesses will not come to Massachusetts because of one individual,” Stergios said. “Businesses always look at long term — what’s their investment? The next election could bring someone very different. They’re looking for structural changes. That’s why I say Gov. Romney did some very important work to make this state much competitive."
Balancing the budget is antithetical to growth, so it was a negative factor to overcome in addition to the great effect on the state of the tech bubble bursting
The country was coming out of a recession when Romney took office. And it's likely, Widmer said, that Massachusetts emerged more slowly from that recession because its pre-recession numbers were disproportionally inflated by the technology bubble. A lot of those tech jobs never came back.
When Romney entered office in January 2003, Massachusetts was shedding jobs at a faster rate than the country as a whole. The state had ridden the dot-com boom to greater riches, but when the bubble burst, it struggled to stem the losses.