Former Republican Gov. Paul LePage this week continued his bid to contrast his sparsely-detailed income tax cut initiative with Democratic Gov. Janet Mills’ inflation relief payments that aresteadily en route to Maine tax filers.
The debate — tax cuts versus direct payments — is a national one, particularly among candidates in the 36 governor’s races this year as the pinch of inflation remains a top concern among voters.
But as sitting governors and their challengers consider those two approaches, there’s a growing chorus arguing that neither tack will be particularly helpful, and if widely embraced, could actually hamper efforts to beat back the soaring price of goods.
Mills’ pitch for $850 direct payments to qualifying residents has mainly centered on the idea that distributing relief that way gives Mainers the freedom to spend the money in a way that best suits them, whether it’s on gas, groceries or other goods.
The approach appears to be catching on with other Democratic governors and some Republicans, too. Earlier this spring California Gov. Gavin Newsom proposed an $18.1 billion relief proposal that included direct payments, targeting low- and middle-income residents. Democrats in the Massachusetts Legislature have recentlypushed their own direct-payment plan and Republican Gov. Charlie Baker is reportedly supportive of the concept.
But Baker’s neighbor, New Hampshire Republican Gov. Chris Sununu, is backing LePage’s income tax-cut initiative. Sununu on Wednesday stumped for LePage in Westbrook — his second surrogate appearance for LePage so far.
When asked about his state’s approach to inflation, Sununu parried the question into a boast of the Granite State’s absence of income and sales taxes, which fit neatly into his promotion of LePage’s long-unfulfilled quest to eliminate Maine’s income tax.
“So I heard Janet Mills gave $850 or something to a lot of the citizens here,” Sununu said. “Let's remember she took $5,000 on average from all those citizens with sales and income tax, which I never took in the first place, right? So the best way to provide relief from inflation is to not let the government take your money in the first place.”
Sununu’s comments will no doubt resonate with Maine people who already think taxes are too high. Mills’ move “to return” nearly 60% of the state’s projected budget surplus to Mainers via direct checks could have a similar populist effect. Now, the debate centers on the duration of “inflation relief”: the one-time nature of Mills’ move versus the ongoing, or permanent, tax cuts that LePage is pushing.
There are many questions about how LePage will pay for his prospective plan after it gobbles up one-time money in the state’s budget surplus. Mills’ initiative is paid for as long as the projected surplus comes to fruition.
Both plans are framed as inflation relief. And some say that’s the problem.
“Putting more money in people’s pockets will increase demand for goods at a time of supply shortages,” Howard Gleckmanwrote in March for the Tax Policy Center, a sibling organization for the Brookings Institute and Urban Institute. “That will drive up prices and worsen the inflation that the governors claim to be so worried about. And it will increase pressure on the Federal Reserve to raise interest rates even more than it planned.”
He added, “What a deal: In exchange for modest tax savings, people will pay higher prices and interest costs.”
Gleckman was specifically criticizing governors’ pursuit of tax cuts under the guise of inflation relief. He didn’t mention direct payments, which was a relatively novel idea at the time of his column. But as more states have adopted Mills’ approach — which she once dubbed as one of the most aggressive in the country — there’s growing concern that the concept could have a similar effect as tax cuts: creating more consumer demand when demand is driving inflation.
Catherine Rampell, a Washington Post columnist who covers the economy,recently criticized tax cuts and direct payments as potentially making “red-hot demand even hotter.”
“There’s not a ton that most politicians can do to push inflation down ... but can we at least agree that politicians shouldn’t do things that will make inflation worse?” she wrote.
Mary Daly, president of the Federal Reserve Bank of San Francisco, took a more measured view of the direct payments.Daly told Axios that California’s cash-relief plan might not have much of an inflationary effect because it’s targeted to low- and moderate-income people.
“I don't think of it affecting aggregate inflation, but it is a demand support," Daly said. "If you thought that inflation was going to erode purchasing power for these groups, now they have more money to fund themselves and their spending will be higher.”
Other economists believe that direct payments won’t have an overall inflationary effect so long as the approach isn’t widely adopted by other states.
Overall, Daly said, inflation presents a vexing problem for policymakers.
“It's a societal decision that fiscal agents have to take, which is: do we let people run pretty close to the end of their budget? Or do we give them a little relief and tolerate a little higher demand?" Daly said.
That’s a tough choice for sitting governors, particularly those seeking reelection. However, it underscores what Sununu said while stumping for LePage.
“We can't control inflation, we can't control fuel prices,” he said.
But there’s a public expectation, fanned by election-year politics, that they try anyway.
Drug wars
Maine could set another tragic record this year for opioid deaths.
It’s a crisis that has spanned two administrations – first LePage and now Mills – that have had very different approaches to the issue. It could also become a campaign issue in the gubernatorial race based on recent missives aimed at Mills by Republican party leaders in their effort to lift up LePage.
"By nearly any measure, Janet Mills has failed to address Maine’s opioid crisis,” Jason Savage, executive director of the Maine GOP, said in a statement this week. “Overdose deaths are up and we’re seeing horrible records being set. It’s clear that Mills’ lockdown policies ignored the Mainers struggling with addiction - and their families, friends, and loved ones . . . Mills should be held responsible for her abysmal record on the issue at the ballot box."
Drug overdose deaths in Maine have, indeed, surged in recent years despite significant new investment by the Mills administration in drug treatment, recovery programs and distribution of the overdose reversal drug naloxone. They were up 9 percent in the first five months of 2022 after Maine saw a record 626 deaths last year, with the vast majority involving opioids.
Nationwide, drug overdose deaths increased roughly 15 percent between 2020 and 2021, with total deaths topping 107,000 last year. But deaths increased 23 percent in Maine during that time.
Two major factors, in Maine and nationally, were the COVID-19 pandemic (and the facility closures and social isolation that came with it) as well as the presence of highly deadly synthetic opioid fentanyl, which is being found in more street drugs.
But by targeting Mills’ handling of the opioid crisis, Republicans invite re-visitation of LePage’s turbulent and often controversial handling of the same.
LePage talked often, and sometimesin racially charged ways, about stepping up law enforcement to stop drugs coming across the border even as he resisted efforts to expand access to overdose reversal drugs and a common form of medication-assisted treatment.
LePage tried toend MaineCare coverage for the medication-assisted treatment methadone and cut state reimbursement rates for the treatments, leading to the closure of at least one clinic.
He also vetoed a bill to expand access to the reversal drug naloxone, which is also known as Narcan. While state lawmakers ultimately overrode his veto,LePage’s commentary in his veto letter stunned and infuriated some in the medical and recovery communities.
“Naloxone does not truly save lives; it merely extends them until the next overdose,” LePage wrote when vetoing the 2016 bill. “Creating a situation where an addict has a heroin needle in one hand and a shot of naloxone in the other produces a sense of normalcy and security around heroin use that serves only to perpetuate the cycle of addiction.”
Mills, by contrast, used her position as Attorney General at the time to distribute thousands of naloxone doses around the state for free. She continued that focus as governor, distributing more than 130,000 doses since 2019. According to statistics compiled by the Attorney General’s Office, members of the community (not EMTs, police or emergency rooms) reversed more than 2,000 overdoses last year.
But as a former attorney general and prosecutor, Mills has pushed back on efforts to decriminalize drugs.
The Mills administration also worked with the Legislature to budget $110 million for drug treatment, recovery, prevention and early intervention programs. And her administration’s expansion of medication-assisted treatment within Maine prisons drew praise this week from Dr. Rahul Gupta, the U.S. Director of National Drug Control Policy, a potential national model.
Gupta’s was visiting Maine as part of a Mills administration summit that Republicans dismissed as “a partisan event designed to create a false narrative about Janet Mills' failed opioid response.”
Democratic leaders, meanwhile, accused LePage of causing “unnecessary death and suffering across the state” by opposing and vetoing bills to expand access to medication-assisted treatment.
“Governor Mills is committed to using every tool available to fighting the opioid epidemic and helping Mainers with substance abuse disorder recover,” Drew Gattine, chairman of the Maine Democratic Party, said in a statement. “We can’t let LePage return to office and once again block life-saving treatments for vulnerable Mainers.”
Federal statistics, meanwhile, show that Maine has fared worse than most other states when it comes to fatal drug overdoses under both LePage and Mills.
During Mills’ first year in office in 2019, Maine had the thirteenth-highest drug death rate in the nation for every 100,000 residents. But Maine climbed to ninth-highest in 2020.
But Maine also had the eighth-highest rate in 2017 and the ten-highest rate in 2016 while LePage was in office.
Tight security, lips
Many of the nation’s governors were in Portland and surrounding communities this week for a meeting of the National Governors Association.
Despite the glut of contentious political issues swirling around Congress and many statehouses, the agenda for the NGA summit (at least what little of it was released to the media) was largely nonpartisan and uncontroversial.
Mills delivered welcoming remarks to her counterparts on Thursday. There were sessions planned on infrastructure, computer science, tourism and other topics as well as a lobster bake for 600 planned for Fort Williams Park in Cape Elizabeth.
Security wastightened around some areas of Portland because of the high-profile visitors. But it was unclear how many governors attended, or exactly who showed up, because the NGA declined to release such details. Most events were also closed to the press and the public.
This is the first NGA meeting held in Maine since the early 1980s.
Maine's Political Pulse waswritten this week political correspondents Steve Mistler and Kevin Miller and produced by digital editor Andrew Catalina. Read past editions or listen to the Political Pulse podcast at mainepublic.org/pulse.
