OPINION: The legacy of Eric Holcomb’s administration

At this point, it is a little early to examine Gov. Eric Holcomb’s legacy as he leaves office, but his greatest triumphs and biggest mistakes appear pretty clear. So, I offer a critical assessment.

From 2017 to 2019, Indiana’s economy first began earnest growth in the post-Great Recession period. His early years seemed full of economic promise. That was short-lived.

In March 2018, the Trump administration levied large tariffs that clobbered domestic manufacturing—particularly in auto and transportation equipment. This caused Indiana to stumble near a recession by the middle of 2019.

Retaliation by our trading partners was focused on U.S. agriculture—particularly commodities like corn, soybeans and pork. A large federal bailout staved off a deep farm recession, but Hoosier farmers have yet to recover from ill-conceived trade policies of the first Trump term.

Then COVID-19 hit. Our economic recovery from COVID has been mixed. It was initially strong, as demand for manufactured goods spiked. It has since slumped, and Indiana has fewer factory jobs today than we did before the Trump tariffs.

Indiana has enjoyed tight labor markets and good, but not great, GDP growth since the end of COVID. Our problem is that our growth is so much slower than the rest of the nation. Thus, we fall further and further behind. A main criticism of the Holcomb administration is that the policies he pursued did not focus on remedying this problem.

Holcomb entered office after five years of declining education spending. The situation worsened under his leadership. In 2017, when he entered office, Indiana spent 2.31 percent of its economy on state spending for K-12 and 0.55 percent on higher education. As of last year, those spending figures decline to 1.99 percent and 0.49 percent, respectively.

On a per-student basis, these reflect a stark reduction in commitment to education that now bears bitter fruit. Since 2017, the educational gap between Indiana and the rest of the nation has risen from 7.4 percent to 8.1 percent. Over the entirety of the Holcomb administration, the college going rate of Hoosiers plummeted from 63 percent to less than 53 percent of high school graduates. This is the worst period in state history.

The earnings gap in Indiana was even worse. In January 2017, Hoosier workers earned 6.2 percent less per hour than the average American. As of last month, the gap had risen to 13.4 percent. Today, the U.S. economy is growing robustly, and, yes, Indiana’s economy is better than it was when Holcomb took office. However, the past eight years have seen the worst relative performance of Indiana’s economy to the nation as a whole in state history.

The prognosis is worse.

There were some efforts to revitalize the state’s economy and boost educational attainment. The READI grants boosted recreational and downtown offerings across the state. Also, Holcomb has been a wonderful ambassador for Indiana on what are typically joyless and exhausting foreign visits.

These are overshadowed by some miscues. Indiana has become a tax incentive-heavy state, a deep contrast from the Daniels and Pence agendas. From 2017 to 2019, tax incentive use grew by more than 75 percent in Indiana—no doubt inspired by slow growth. Incentive use has continued to grow since, reflecting the grim fact that we must pay companies more to come to Indiana. That itself is as strong a signal of policy miscues as any economic data.

By far the worst mistake in this area is the ill-considered effort to turn the Indiana Economic Development Corp. into a land development agency. At its very best, the LEAP District will end up being a stunningly expensive business park that will never recoup the tax dollars spent on it. At its worst, it will rival Wisconsin’s Foxconn deal (see https://www.indystar.com/story/opinion/2017/08/02/hicks-foxconn-awful-deal-taxpayers/533933001/) in its lack of fiscal prudence, disregard for local residents and overall naivete regarding the actual causes of economic growth.

Holcomb did little to confront the hospital monopoly crisis that worsened throughout his terms. Though he managed to ensure senior leaders in state government received large pay increases—a needed step to maintain talented leaders—pay for civil servants, teachers and faculty and staff across Indiana are well below where they were in 2017.

Holcomb cut state government employment, which is now down by 6.7 percent since he took office, despite much higher demands on Medicaid and Family and Social Services Administration services. Anecdotally, state government operates efficiently, from the famously well-run Indiana Bureau of Motor Vehicles to the Indiana Department of Transportation.

This is not an especially stellar record, but it is not what historians will remember about the Holcomb administration. Holcomb will be remembered for his reaction to the state’s worst crisis since the Civil War—the COVID-19 pandemic.

Holcomb took a reasoned and pragmatic approach to the pandemic. His first stay-at-home orders came a full week after a statewide collapse in consumer spending. Holcomb didn’t close down the Indiana economy; it closed down from fear of COVID. Indeed, COVID deaths in Indiana started a week before his emergency declaration and saw their 2020 peak within two weeks of his emergency order.

Under Holcomb, the immediate response to COVID helped arrest the disease, saved lives and did as little damage to the economy as possible. Few, if any, governors offered as sober and deliberately thoughtful leadership in the early days of COVID. Holcomb’s instincts were impeccable. His response was a masterclass in conservative, pragmatic leadership in a time of crisis.

In the end, Indiana did poorly with COVID. Anti-mask and anti-vaccine pressures led to a spike in cases, with the death rate rising only after vaccines were made widely available. If Hoosiers respected the health of their fellow citizens as strongly as Holcomb did, quite a few more of the 26,000 who died would be with us today.

Holcomb’s term in office is likely not his final moment of public service. Perhaps he will find himself a university president in the coming year. Whatever his next steps, his governorship will be remembered for his rapid, thoughtful and ultimately humanitarian-focused leadership in the second-worst crisis in state history.

We don’t seem to do statues of governors any longer. If we did, his would stand on the grounds of the Capitol, near that of Oliver Morton’s, flanked by physicians and nurses rather than Civil War soldiers.