DeSantis' plan vs past performance

Steve Prestegard

Aug 2

During the 2016 presidential cycle, I graded the tax reform plans of various presidential candidates based on factors such as marginal tax rates, double taxation, and fairness.

For the 2024 cycle, candidates have been disappointingly reluctant to make specific proposals about tax policy. Heck, most of them have very little to say about economic policy in general.

So I was excited when I read that Florida's governor, Ron DeSantis, was unveiling an economic plan. The good news is that he seems to favor a smaller burden of government. The bad news is that he is not very specific.

His theme is to have a Declaration of Economic Independence.

There's a lot to like on the above list, but also some items that may cause heartburn.

But my main reaction is that we don't see details. Even if you go to the DeSantis website, there are very few specific policy proposals (though the ones I did find — such as support for full expensing and opposition to a central bank digital currency — are admirable).

The Wall Street Journal editorialized about the DeSantis plan and found many positive features.

Mr. DeSantis's economic plan calls for "ambitious tax and regulatory reform," including making permanent "full immediate expensing" for businesses. Ditto for today's tax rates on personal income. ... he says he'd simplify the tax code further, while purging "K Street carveouts and loopholes." This is the right instinct, though we await specifics. ...It says Mr. DeSantis's appointee to lead the Federal Reserve would "focus on maintaining a stable dollar instead of the political pressures of the day." Stable money is essential to rising incomes, and GOP candidates should make it the basis for any economic program. ...The plan says he'd "support school choice nationwide..." As for college, he wants to stop government subsidies for "useless degrees" by making "universities, not taxpayers, responsible for the loans their students accrue."

But the editors also worried that the Florida governor is using populist rhetoric...and perhaps even supporting populist policies.

Sometimes Mr. DeSantis sounds like an optimistic believer in economic freedom, arguing that the way to produce broad prosperity is to get government out of the way. With the next breath, he's a Trumpian who wants industrial policy, speaks ominously of "large corporations," and pits the middle class against "elites." The Governor is trying to advance conservative policy while simultaneously appealing to Mr. Trump's base. ... He needs a vision for American renewal that transcends Mr. Biden's plans to use big government for income redistribution and Mr. Trump's desire to use it for political "retribution."

Probably the most disappointing feature of the DeSantis plan is that absence of any plan to restrain the burden of government spending.

My former colleague Brian Riedl is similarly frustrated (though he focuses more on red ink while I care about excessive spending).

For what it is worth, DeSantis got very high scores for fiscal policy from both the Club for Growth and the National Taxpayers Union while serving as a Congressman last decade.

So I suspect he knows what should be done (including genuine entitlement reform), but is afraid Trump will attack him from the left.

Which is strange since he has a great opportunity to attack Trump from the right by pointing out his bad track record on spending (and bad future agenda on taxes).

It's one thing to have a plan. More important for a governor running for president is past performance. Zachary Halaschak:

Since taking office in 2019, DeSantis gained national prominence in part for his handling of the pandemic, the state's lure as a migration hot-spot, and rapid economic growth.

Jobs and business

Florida's climate, relatively low cost of housing, and favorable tax environment have caused many families and companies — many from high-cost states like New York and California — to relocate to Florida.

Population Census Bureau data released last year showed that Florida is growing quicker than any other state, with its population growing nearly 2% from 2021 to 2022 alone. That number grows to 3.3% from April 2020 to July of last year — representing more than 700,000 new residents.

DeSantis bragged about Florida's successes in his State of the State address after his reelection, a possible preview of a presidential campaign message.

"We rank No. 1 in the nation for new business formations. We are No. 1 in economic growth among large states. Florida has more people employed today than before the pandemic. Our unemployment rate is one of the lowest on record, and it is significantly lower than the national average," DeSantis said. "And we do that with having the lowest per capita state tax and lowest per capita state debt burdens amongst all large states."

Businesses have relocated to the Sunshine State at a notable pace since the start of the pandemic.

Billionaire hedge fund boss Ken Griffin, citing a better corporate environment, announced last year that he was moving his massive firm Citadel from Chicago to Florida. Popular fitness company Barry's relocated its main office from California to Florida. SH Hotels & Resorts, which manages luxury hotels, also shifted its corporate headquarters from the Golden State to Miami.

In addition, business creation is booming in Florida. Out of the 5.8 million new business applications filed across the country from January 2021 to January 2022, a whopping 12% were in Florida.

Florida's unemployment rate is also an ultra-low 2.6%, well below the national average of 3.4%.

Housing

While the national housing market is flailing, because of the business growth and wave of new residents, many housing markets in Florida are holding up better than the rest of the country.

In San Jose, California, for instance, housing prices have fallen 8.8% over the past year, according to Redfin. Prices have plunged 4% in New York City and 4.6% in Los Angeles. But in Miami, prices have risen 7.6%, in Fort Myers, located on the west coast, prices have grown 14%, and in nearby Naples prices are up more than 13% in the past year alone.

Economic output

Output growth, as measured by gross domestic product, has been red-hot.

Over the course of DeSantis's entire time as governor, which began in January 2019, to the fourth quarter of last year, real GDP for Florida has ballooned by 13.2%, according to data from the Bureau of Economic Analysis. That dwarfs the GDP growth of other big states. For instance, New York grew 5.6% during that same period, Massachusetts expanded by 7.4%, and New Jersey only increased by 5.4%.

Taxes

DeSantis has maintained Florida's low-tax status during his tenure as governor. The state is one of a few in the U.S. without a state income tax, a source of appeal for prospective residents and business owners.

The Tax Foundation, which generally favors low taxes, ranked Florida No. 4 in its 2023 State Business Tax Climate Index. New York, New Jersey, and California clocked in at the last few spots.

In February, DeSantis announced a plan to offer the largest tax relief program in Florida's history. The plan would save taxpayers in the state some $2 billion during fiscal 2024, according to the governor's office.

The governor also approved a yearlong program that provides taxpayers with toll payment relief. The plan automatically gives customers with at least 35 monthly toll transactions a 50% credit to their account. Savings totaled nearly $37 million in January alone.

Pandemic

A major feather in DeSantis's hat is how he managed to keep businesses up and running during most of the pandemic while other states imposed long-lasting restrictions that caused many companies to falter or even close up shop. In September 2020, DeSantis signed an executive order that opened all Florida businesses regardless of local restrictions. That allowed places such as restaurants and gyms to operate at full capacity.

In May 2021, DeSantis issued an order that suspended all remaining local coronavirus restrictions and mandates for both businesses and individuals.

Infrastructure

Despite keeping taxes low, DeSantis has invested in building up the infrastructure of the state. He signed a fiscal 2023 budget that included $4.4 billion for highway construction, $136 million in seaport infrastructure enhancements, and $867 million for rail and transit program growth.

"The historic investments made during the 2022 Legislative Session are a catalyst in bolstering communities, supporting Florida's thriving economy, and building upon Florida's innovative transportation infrastructure for generations to come," said Florida Department of Transportation Secretary Jared Perdue.

Disney

On cultural issues, DeSantis has found himself at odds with corporations. Most notably, DeSantis and Disney have locked horns in a battle that has since spread into the federal courts.

The feud began after Florida lawmakers passed HB 1557, known as the Parental Rights in Education bill, which was dubbed the "Don't Say Gay" law by opponents. Amid pressure from activists, Disney CEO Bob Chapek publicly denounced the legislation, and the company said its goal was to get the law repealed or struck down in the courts.

"This state is governed by the interests of the people of the state of Florida. It is not based on the demands of California corporate executives," DeSantis hit back. "They do not run this state. They do not control this state."

The governor then announced he would be pushing to strip Disney of its special taxing district, which includes the Walt Disney World Resort properties. But the Disney-backed board of the Reedy Creek Improvement District and Disney then crafted an agreement designed to undermine Florida legislation seeking to restructure the business district.

After much more maneuvering back and forth between Florida and Disney, the latter filed a lawsuit against DeSantis and members of the board in the U.S. District Court for the Northern District of Florida, alleging a "relentless campaign to weaponize government power against Disney in retaliation for expressing a political viewpoint unpopular with certain state officials."

The back-and-forth has drawn praise by some, who contend the state was working to curb an unwelcome growth in corporate forays into politics, which has become increasingly more common, but critics have argued that the state is overstepping its bounds.

Government interference in corporate affairs has long been something that companies have worried about from the Left. But as corporations have increasingly weighed in on hot-button political matters such as abortion and transgender issues, they have met stepped-up opposition from Republicans like DeSantis.

Still, some who believe that government should stay out of corporate boardrooms have praised the move because they see it as a deterrent for companies like Disney to wade further into the political realm.

ESG

Related tangentially to the Disney dust-up is DeSantis's crusade against the corporate environmental, social, and governance movement known as ESG. Pushback to ESG has become increasingly common as many GOP officials see it as incompatible with one of the most basic tenets of capitalism, namely, that businesses should focus on creating value for shareholders.

DeSantis announced anti-ESG legislation in February that builds off previous actions he has taken and would prohibit the use of ESG in all investment decisions at the state and local level, ban state and local entities from any consideration of ESG in the contracting process, and block state and local governments from weighing ESG when issuing municipal bonds.

And last year, Florida's CFO Jimmy Patronis announced that the state would divest some $2 billion from BlackRock, the largest such state divestment from the money manager over its ESG stance.

While proponents of ESG see it as a way that finance and business can cause social change (for example, by mitigating climate change), Republicans see the drive as an attempt to distort the free market and even the culture of the United States through capital and influence.

I have read claims that Florida has the highest inflation rate in the country. Since Florida has no currency of its own and is subject to the idiots in the executive branch like everybody else, the cause of said alleged inflation must be all the people moving in and all the growth taking place, the results of good policy.

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