- Wisconsin's Legislative Fiscal Bureau has announced that Governor Scott Walker's administration will skip a scheduled $108 million debt payment because of a budget shortfall.
- The state is allowed to skip this payment under its loan terms without defaulting, but costs will accumulate over the long term, "starting with an additional $19.3 million in the two-year budget starting in June," Jason Stein of the Milwaukee Journal Sentinel reports.
- Wisconsin had a surplus last year, which spurred Walker to enact a new round of $541 million in tax cuts, the Washington Post's Jeff Guo writes.
- But since then, less revenue has come in than expected, leading to a $280 million shortfall that must be plugged by June 30. Skipping the debt payment lets Walker "avoid the spectacle of a state budget repair bill," Stein writes.
- The news will surely draw attention to Walker's handling of his state's finances as he gears up for a presidential run. Since taking office, Walker has cut taxes by nearly $2 billion.
Dinner with the supply-siders
The debt payment news came shortly before Walker dined in New York with Arthur Laffer, Steve Moore, and Larry Kudlow — longtime staples of the supply-side economics movement, which holds that cutting taxes will often increase government revenue by stimulating economic activity. In practice, after the Reagan and George W. Bush administrations slashed taxes, revenues fell and deficits increased.
"According to several attendees, when Walker talked about the need for sweeping tax cuts, [Wall Street Journal editorial page editor Paul] Gigot and Kudlow flashed thumbs-up signs," according to Robert Costa of the Washington Post. Later at the event, Costa writes, Walker compared his showdown with public employee unions to Ronald Reagan's famous face-off with federal air traffic controllers.
During Walker's trip to New York, he also met with several wealthy Republican donors, whose support he hopes to win for his likely presidential campaign. He has recently been winning increased attention as a potential top challenger to former Florida governor Jeb Bush for the GOP nomination.