Monday, November 30, 2009

Thank you sir! May I have another?

Employers in Massachusetts these days must feel like Kevin Bacon in this infamous scene from Animal House. Just days after Governor Patrick's surreptitious, pre-Thanksgiving announcement of his intention to double a significant levy on our employers, the state Rate Review Board implemented his plan and voted to implement the increase.

The State House News announced the vote with this disheartening headline: "State Health Program for Unemployed Doubles Charge on Businesses."

The SHNS reports that, predictably, business advocates are calling this move the latest in a "slew of 'anti-job taxes' that make Massachusetts an unfavorable environment for job creation." However the News Service also notes that Health Care For All, hardly a pro-business organization, agrees with the business groups' most damning criticism of the latest increase: the shortfall in the Medical Security Trust Fund that supposedly necessitated the increase "is primarily a result of withdrawals from the fund made by the Legislature to help balance the budget in previous years."

The newly doubled levy, according to the SHNS, is expected to bring in "an additional $44.6 million in 2010" to help close an anticipated shortfall in the Trust Fund that pays for unemployment insurance. Back in 2002, our Legislature in its infinite budgetary wisdom withdrew more than twice that amount from the fund, $105 million (in 2002 dollars), "to help pay for other health care costs."

The robbed Peter to pay Paul, in other words - violating one of the most basic rules of sound fiscal management. Now, Massachusetts employers are being robbed in turn to reimburse Peter.

For a time there, one could not turn on a radio without hearing Governor Patrick's voice extolling the virtues of doing business in Massachusetts. "Massachusetts - it's AAALLLL HEEERRRE!" he intoned at the end of those ubiquitous spots.

I have not heard one of those for a while.

Sunday, November 29, 2009

Couldn't have said it better myself

Expect plenty of fancy rhetorical footwork during next year's election cycle, as Democrats try to dance around a very stark, very ugly fact: during a sharp economic downturn, they repeatedly raised our taxes. And as the State House News reminds us last week, they did not stop there. They also created some new ones:
Fiscal analysts see the administration heading into budget planning with a gap of $3 billion between projected revenues and expenditures, and with shrinking pots of one-time federal stimulus law and state stabilization funds from which to draw. The Legislature and Patrick have also raised a host of taxes and created other new taxes, which makes new and higher levies, especially in an election year, less palatable.
There will be plenty of election year misdirection and finger-pointing. The national economy will be blamed, "sixteen years of Republican governors" will be blamed. A party in absolute and total control of every lever of government, however, will have a tough time credibly playing the powerless victim.

Republican candidates (whose numbers grow every week, by the way - see sidebar at left), for their part, have plenty of little factoids to deploy against these disingenuous attempts to deflect blame. Patrick and the Legislature drew heavily from the state's 'rainy day fund,' well before the rains truly began, to fund exorbitant spending growth even as economic storm clouds gathered. Their budget projections were routinely far too optimistic on the revenue side, and in execution their spending just as routinely exceeded budgeted outlays by hundreds of millions of dollars per year. Patrick barely had time to hang his new drapes before he proposed the first of his many tax increases on Massachusetts businesses, a particularly damaging habit of his that continued into this month. Time after time, as the state's budget problems forced them to act, the Democrats opted for tax hikes over reforms or real cuts in spending.

The State House News is non-partisan. The article quoted above is not an editorial. Their concise and factual observation is both accurate and damning: "The Legislature and Patrick have also raised a host of taxes and created other new taxes..."

Yes, they did.

Thursday, November 26, 2009

Happy Thanksgiving from Governor Patrick!

Are you an employer in Massachusetts? One of the steadfast few toughing it out here in the Commonwealth? Well, Governor Patrick is sending a real turkey of a proposal your way, just in time for Thanksgiving.

Globe headline: Health pushes firms' tax up - State to double levy to keep fund solvent in 2010. Here's the lede:
The Patrick administration intends to double a key tax on employers in an effort to save health insurance for thousands of laid-off Massachusetts workers, after a fund to help them has been virtually drained by the highest unemployment rates in three decades.
In a departure from it's well known practice of releasing bad news late in the day on Friday, The Patrick Administration this week one-upped itself by releasing this Turkey the day before a major holiday, when virtually nobody is paying attention. Mark it down, though - yet another huge tax increase on our struggling employers, who have already seen tax hikes totaling in the billions under the current Governor.

This puts me in mind of a well-used dodge that Patrick employed to great effect during his campaign against Kerry Healey. Any time she, a reporter or anyone else pointed out that the math attached to Patrick's various proposals did not seem to balance out, and suggested that he would inevitably seek tax hikes to pay the price of his programmatic ambitions, Patrick's response was always the same: "I have no plan to raise taxes." President Obama, when he was candidate Obama, answered similar questions in similar fashion.

And they may have been telling the truth. The issue with the tax-and-spend liberal is not necessarily that they *want* to raise taxes (though certainly some of them do). The trouble is that the tax hike tends to come at the front end of such a person's list of options for dealing with a cash crunch. Coming up short of dollars, they do not take long to turn, with furrowed brow and regretful explanations, to tax increases. Sadly, the increase decdribed in the Globe today is but the most recent in a long line of increases proposed and ultimately enacted by this Governor - who had "no plan" to do any such thing a mere three years ago.

Happy Thanksgiving!

Wednesday, November 25, 2009

Wow - that's LOW (Governor Patrick's latest poll numbers)

The latest Rasmussen Reports tracking poll on the MA gubernatorial race is out, and man-oh-man is it ugly for Governor Patrick. Whole thing here. Here are some highlights:

With businessman Christy Mihos as the GOP gubernatorial candidate, Patrick captures 32% of the vote. Independent candidate Tim Cahill gets 28% and Mihos earns 26%. Fourteen percent (14%) are undecided.

Patrick wins with 33% of the vote if health care executive Charlie Baker is the Republican nominee. In that scenario, the Republican candidate places second as Baker picks up 28% and Cahill 25%. Again, 14% are undecided.

A month ago, Patrick earned 34% of the vote in both scenarios. This suggests that the race for now is a referendum on the incumbent rather than a choice between competing alternatives.

Thirteen percent (13%) of Massachusetts voters now have a very favorable opinion of Patrick, who is serving his first term as governor. But more than twice as many (31%) view him very unfavorably.

Just 34% of voters in the state now approve of Patrick’s performance as governor, down nine points from October, while 64% disapprove. But unchanged is the finding that those who strongly disapprove outnumber those who strongly approve by more than three-to-one – 37% to 11%.
It is frequently observed that Patrick's poll numbers are in "Bush territory," which refers to President Bush's abysmal approval ratings as he neared the end of his second term. There is an important distinction to be drawn here, however. George Bush was not going to be on the next ballot. He was done. Hyper-partisan Republicans who might otherwise be tempted to voice approval for their once and future candidate, therefore, were freed up to vent their frustrations with the Republican party at all levels on the outgoing President. Patrick, on the other hand, claims he is going to be his party's candidate next year. In a state where the overwhelming majority of voters who identify with a political party align themselves with the Democrats, it is stunning that a mere 13 percent voice strong approval of the performance of the guy who will supposedly bear their standard next year.

Of even greater concern to the Patrick camp should be the fact that for at least the last month, Patrick has been acting like a candidate: handing out federal stimulus money to high-profile recipients, taking a very public stand with organized labor during the recent Hyatt flap, and going on the attack against an intransigent Legislature. And still, his approval numbers continue their protracted free-fall.

The current numbers for Charlie Baker and Tim Cahill are pretty much meaningless. Only a small minority of voters know enough about them to have an opinion. Christy Mihos, who spent millions just a cycle ago introducing himself to the voters (and garnered single digits on Election Day) ought to be concerned - but then reality checks do not seem to penetrate Christy's bubble.

Patrick is a known quantity. The voters know him, they have had three plus years to watch him in action, and by greater and greater margins they disapprove of his performance as governor.

Tuesday, November 24, 2009

Is that a rhetorical question?

How's this for a headline: "Fox Undercover: State Authority Wasting Money?"

Isn't that a rhetorical question? State authorities waste money - it's practically a statutory obligation. Some are worse than others, of course. The late, great Massachusetts Turnpike Authority leaps to mind (and yes, much of the waste that inhered in that defunct agency persists, though the accounting is done on different letterhead now). But to one extent or another, waste is endemic in government. That is the primary reason, of course, why we Republicans are such broken records on taxes - and why we bristle when told that ever higher taxes should be seen as our "fair share" to maintain core government services.

Still, this Fox Undercover story is a doozy - pretty much an investigative reporter's dream. It has it all - exorbitant compensation, out-of-control expense accounts, a prime rib dinner.

There's always a prime rib dinner involved in these stories, have you noticed? Always fed to hardworking staff to reward them for their "extraordinary effort." Note to state employees: when junketing, order the vegetarian option. The reporters never object to the vegetarian option.

There's even a book - "Strategic Planning for Dummies" - purchased with agency dollars for the well-compensated head of a quasi-public agency tasked with managing a whole lot of money. Truly a case of reality stranger than fiction.

One has to feel for this fellow, Benson Caswell, who suddenly finds himself the holiday/recession season's poster child for government waste. Obviously he didn't make the decision to pay himself $334,000 taxpayer dollars a year - though one assumes he holds sway over the underling who approves his expense account. There is no worse way for a state employee (or anyone, I suppose) to start the day than by finding a camera crew between himself and his car. It is truly a no-win situation. Answer questions, look like a jerk. Don't answer questions, look like a jerk - and invite more aggressive pursuit. Hey, here's an idea for a book: "Fending Off Investigative Reporters for Dummies."

Of course there is a flip side to the story, and as is usually the case in these strike pieces it is buried toward the end. "HEFA arranges financing for non-profit organizations, primarily hospitals and universities. It does not receive taxpayer funds directly from the Legislature. Instead, it covers its operating costs with the fees it charges to its customers."

Does that distinction matter? In a court of law, sure. In the court of public opinion? Probably not. The fact that Caswell heads up HEFA, the agency where Governor Patrick famously tried to plant his political crony Senator Walsh a while back makes this renewed attention on the agency even worse news for a Governor whose administration has earned a reputation for profligate spending and conspicuous cronyism.

Added bonus: Fox got most of their reaction commentary for the story from Senate Minority Leader Richard Tisei - as of yesterday, Charlie Baker's running mate.

Monday, November 23, 2009

Transportation reform rhetoric belied by reality

I've had a busy couple of weeks, during which time I have repeatedly intended to fire off a missive about the increasingly ugly political spectacle that has become of Governor Patrick's ballyhooed transportation reform. Each time I've realized I did not have the time to do the subject justice, since the contextual background necessary to substantiate any criticism is somewhat arcane.

How pleased I was, then, to click into BostonHerald.com and find that Charlie Chieppo took care of it, in typically thorough fashion, painting a clear picture to "reform" that has been handed over by the Governor to the very same unions that bear primary responsibility for much of the mess that the 'reform' was intended to rectify. Here is the meat (but do read the whole thing):

Last month, Patrick appointed hotel workers union head Janice Loux to the newly created board of the Massachusetts Department of Transportation (MassDOT), the mega-agency that oversees state road, bridge, air and rail divisions.

Does that sound like fundamental change in the way the state does business?...

The drafters of transportation reform went to great lengths to ensure that the legislation would change the commonwealth’s ways. The law specifies that the five-person board - which controls billions of dollars worth of land and private contracts and thousands of employees - include two experts in transportation finance, two with practical experience in transportation planning and policy, and one civil engineer with at least 10 years experience.

It’s hard to figure out how Loux qualifies. Massachusetts Taxpayers Foundation President Michael Widmer said the board appointments potentially represent a serious setback for transportation reform. Senate Transportation Chair Steven Baddour was more specific, saying that Loux is only interested in union and employee issues and never offered support for reform.

Arguably the new law’s most important reform is stripping away costly special privileges like MBTA employees’ ability to retire while in their 40s and receive free health care for life.

I have never met Janice Loux, nor do I have any problem whatsoever with the fact that she spends her days fighting for her union. As I've said many times in the past, unions have as much right as anyone else to bite, kick and scratch (politically, of course) for their own selfish interests - and to do so in the political arena, by whatever legal means available to them.

From experience, though, I know that the people tasked by their unions with doing the fighting do not fight on a part-time basis - and they do not fight in half measures. Hotel Workers Union head Janice Loux does not become 'Impartial MassDOT Board Member Janice Loux' for board meetings. One could feel very safe betting a limb or two on the prediction that Loux will serve out her term on the board, however long it may be, and never once cast a vote in support of reform that seeks to curtail union influence or ratchet back union benefits. As Chieppo notes, in the Massachusetts transportation context those benefits include very early retirement at the MBTA, with health care for life.

Unfortunately for all of us, these are the issues that will determine whether the end of the Massachusetts Turnpike Authority and consolidation of the state's various transportation agencies amount to true, cost-saving reform, or just another exercise in deck chair rearranging on a sinking ship.

Patrick knows this. Again, from Chieppo:
Patrick’s announcement of the appointments on a Friday afternoon - a technique the administration uses to bury unpopular stories - shows he knew the selections wouldn’t be well received. But he clearly thought the political benefits of currying favor with his union base would outweigh the bad stories.
He could be right. But then again, given his habit of citing "historic transportation reform" as the top item on a meager list of first-term accomplishments, it is Patrick (and/or Tim Murray) who will repeatedly bring up the topic of transportation in the months to come. That, coupled with a few good union votes by Janice Loux, might be enough to demonstrate to the voters just where this Governor's true priorities lie.

Thursday, November 19, 2009

Like sands through the hourglass

So are the hours of the Massachusetts Legislature.

I'm running this morning, and so will give short shrift to a topic that could easily consume my morning.

As I mentioned yesterday, Massachusetts' most recent legislative session - which saw massive tax hikes, cuts to basic services and a yawning budget gap born of irresponsible spending and even more irresponsible budget benchmarking - came to a close at midnight. Last night, as they do at the end of every legislative session, the House made a big show of being busy busy busy right up to the toll of midnight, and then proclaimed themselves "out of time" and unable to complete important business. Here's the State House News:
The Legislature capped formal sessions for the year with several major bills in motion but unfinished, including proposals to address a $600 million deficit in the fiscal 2010 budget caused by plunging tax revenues and overly optimistic spending projections.

The House, which held light sessions Monday and Tuesday, left the budget-balancing legislation until late Wednesday, passing the bill 132-21 at about 10:40 p.m. and leaving the Senate little time to consider it before formal sessions ended, under legislative rules, at midnight.
Darn the luck! They wanted to "address a $600 million deficit in the fiscal 2010 budget," but wouldn't you know it? They just ran out of time. They know that 99.7 out of every 100 voters out there do not have the time or patience to monitor their legislative activity, and so will not know that up until yesterday they moved with all of the alacrity of a snail on glue paper.

But they were there until midnight, hard workers that they are. So what, you ask, did they do with all that time? Let the State House News tell you:
An effort by House Republicans to repeal a tax on retail alcohol sales approved this summer was circumvented by House Democrats, who forced a study of the issue. The study amendment was adopted 99-54, precluding a vote on the tax rollback.
and
A Republican budget amendment in the House to roll the 6.25 percent sales tax rate back to 5 percent also was quickly hit with a further amendment from House Democrats calling for a study. Murphy's further amendment called for the Executive Office of Administration and Finance to furnish a study of the impact on the state economy and the cost to the Commonwealth, including an analysis showing the impact to the taxpayers, the practice of other states, and anticipated changes in employment. Republicans predicted the study amendment would not lead to a serious effort and accused Democrats of trying to avoid a vote on the rate reduction.
So they didn't have time to address the growing budget deficit. They did have time to knock back a couple of tax reduction proposals though! There is always time for that in the Massachusetts Legislature.

Speaking of things they do not time for, what about debate? Here's another fun vignette (again, from the SHNS):
Rep. Brad Hill (R-Ipswich) urged the House to take the opportunity to vote on the [alcohol] tax itself for the first time, since the vote to approve it was part of a much larger vote on budget issues. Hill said liquor store owners have told him the tax is hurting business, as consumers head to New Hampshire stores. Hill also took umbrage with being accused of slowing down the budget bill with amendments, saying the legislation only reached the floor of the House at 7 p.m.

[House Ways and Means Chair Charlie] Murphy retorted that the alcohol tax hike was agreed to by the House as part of the budget. "Did we debate it? No we didn't, but that's the process," Murphy said.
And of course Chairman Murphy is right! Who is this Rep. Hill to suggest that in a legislative body, the "process" ought to include "debate"!? Madness! Where does Hill thinks he lives?

I notice myself slipping more frequently into sarcasm lately.

Wednesday, November 18, 2009

Meanwhile, to our south

This little tid-bit from the State House News seems so far to have been missed by the major media. But it should be of interest to anyone pondering casinos as a means to budgetary salvation here in Massachusetts:
Foxwoods Resort Casino, the Connecticut facility eyed by Bay State policymakers as a cash vacuum from gambling residents here, defaulted on a debt payment Monday and saw its credit lowered to junk bond status, the Hartford Courant reported. The Pequot tribe that owns the casino reported paying $14.2 million of the $21.25 semi-annual interest on $500 million in debt, and does not plan to pay the remainder within 30 days, the paper said. That prompted Standard & Poor’s to downgrade the Foxwoods debt score.
Plenty of people here in the Bay State would have voters believe that a Foxwoods or two in our state, pumping a healthy portion of its revenues into state coffers, would solve all of our problems. Meanwhile, the real Foxwoods cannot even pay its bills.

Keep your stinkin' hands off our holidays!

Today is a big day - the last day of the current Massachusetts Legislative session. Bet you didn't know that, did you? Hardly anyone does.

Consistent with a long tradition of faithful procrastination in our legislature, a lot has been going on these last few days. Yesterday the Senate debated and passed an education "reform" bill full of meaningless half-measures - which is a good thing, since Governor Patrick's original "Readiness Project" proposal would have un-done many of the reforms that have made our public schools some of the best-performing in the nation. A non-bill is better than a bad bill, that's what I always say! The House is unlikely to act on the Senate bill today. There is a "criminal justice policy" bill kicking around. Lots going on, not much being done - again, in many ways a good thing. I'm not complaining!

Here's one thing that was done, though - the House again saved what Howie Carr likes to call the "High Hack Holidays" from the budget knife. You might remember that a few weeks back, in yet another too-late stab at getting the budget under control, Governor Patrick proposed a number of cuts, including elimination of the "Hack Holidays." You know about them, right? Bunker Hill Day and Evacuation Day: holidays "celebrated" only in Suffolk County (where Beacon Hill sits), with a blissful day off from work for government employees, who get to sit at home, presumably in solemn reflection on the historical import of the days, while the private sector and the rest of the state and the nation toil on. Every year the "Hack Holidays" are fodder for mild to moderate public outrage. Every year someone proposes their elimination. And every year, the Legislature brushes back those proposals. They already did that this year. How irritating it must have been for them to have to deal with it again!

With the state budget running on fumes and an election approaching that holds, for the first time in a long time, the distinct possibility of an anti-incumbent wave, some observers thought Patrick's latest proposal might be the end of the High Hack Holidays. But no. According to the State House News, the House simply ignored the proposal, declining to include it in the mini-budget bill the House budget panel considered last night. The elimination proposal (along with a much more substantive and controversial proposal to zero out funding for the Quinn Bill) went "unheeded" in the House, says the State House News.

In this economy, everyone is suffering. People are angry at the waste, profligate spending and corruption they see in their government. Beacon Hill understands that, and they are sharing the pain. Just ask your State Reps. They'll tell you.

But there are some traditions too important to cede to the Zeitgeist. Allowing Massachusetts State employees two days a year when they can stay home and munch Doritos in front of Oprah while the rest of us head off to work is apparently one of those traditions.

The next election is in less than a year. I'm just saying.

Tuesday, November 17, 2009

Another dopey "no cost" proposal

Recall about a month ago that Massachusetts House Speaker Bob DeLeo instructed his Members to bring to him proposals that 'don't cost anything,' so that the Legislature - which has spent every single available dollar and more - could continue to give at least the appearance of worthwhile activity. They started with nonsense like "canine devocalization."

Since then, it has been fun to watch the headlines for the fruits of the Legislature's 'no-cost' brainstorming. Here is today's installment.

Anyone who has experienced the frustration lately of searching in vain for an available parking spot at Logan will likely cringe at the bill proposed by Senators Jack Hart and Sonia Chang-Diaz to create hybrid-only parking spaces on our city streets. There are plenty of such spaces at Logan - placed in prime positions adjacent to the terminal entrances. The majority of them are nearly always empty, standing as infuriating rebukes to those who dare to approach the airport, perhaps on a tight time-frame, in a traditional gas-swilling vehicle.

These parking perks for people willing to shell out huge premiums for politically correct wheels are intended to discourage our collective preference for, well, big cars with powerful engines. They are also supposed to be 'eco-friendly.'

On that second point, though, here's a question: how much extra gas is "guzzled" every day at the airport by SUVs, station wagons and muscle cars forced to search level by level for an open space, while 'green-reserved' spaces stand mockingly vacant?

Monday, November 16, 2009

Monday Morning Miscellany

Massachusetts Lawmakers Working Second Jobs. Fox 25 Boston reports this morning on a number of Massachusetts legislators whose 'second jobs' might pose conflicts with their obligations as members of the Legislature with influence over the state budget. While I agree that several of the examples highlighted by Fox raise some serious questions about whether certain individuals are parlaying their legislative influence into state dollars for their outside employers, as a general matter, in my view 'second jobs' for legislators ought to be encouraged. We are one of only a handful of states that have a full-time legislature. To my mind, that fact leads directly to (a) too much spending; and (b) nonsense like this. A part-time legislature, on the other hand, requires that its members remain personally connected to the private sector, obligated to suffer the consequences of their legislative acts along with the rest of us.

The Globe 'hearts' Mike Capuano. Israel, not so much. This Globe headline today is a one-line love letter to Democratic U.S. Senate candidate Mike Capuano: Passionate sense of right and wrong drives Capuano. Jeez. What a smooch. The journalistic equivalent of embarassing P.D.A. Being driven by one's personal "sense of right and wrong," of course, in no way guarantees the "right" action in any given case. Here's a good example in Congressman Capuano's case. In 2008, as Hamas once again unleased a barrage of rockets targeted (if targeted at all) at civilian population centers in Israel, the House of Representatives voted overwhelmingly to condemn the act. As Senate rival Scott Brown pointed out yesterday at a candidates' forum at Framingham's Temple Beth Am, Capuano's "sense of right and wrong" in this case drove him to vote "present."

As a Mass. Republican, let me save the committee the trouble - we're treated BADLY. Legislative committee to review elephant treatment.

Wednesday, November 11, 2009

More Breaking News from the Land of Duh

From the front page of today's Boston Globe blares this banner headline: "Stimulus fund job boost in state exaggerated, review finds." It might as well read, "Stimulus fund job boost exaggerated, common sense says." Or, from another angle, "Bureaucrats and politicians exaggerate when big money on table, review finds."

Here are some of the lowlights:
While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started....
One of the largest reported jobs figures comes from Bridgewater State College, which is listed as using $77,181 in stimulus money for 160 full-time work-study jobs for students. But Bridgewater State spokesman Bryan Baldwin said the college made a mistake and the actual number of new jobs was “almost nothing.’’...
“There were no jobs created. It was just shuffling around of the funds,’’ said Susan Kelly, director of property management for Boston Land Co., which reported retaining 26 jobs with $2.7 million in rental subsidies for its affordable housing developments in Waltham. “It’s hard to figure out if you did the paperwork right. We never asked for this.’’...
Recipients said they found the reporting system confusing, leading them to submit information erroneously, and leaving them unable to correct mistakes in their reports. Additionally, the government files are massive and unwieldy. Reports do not distinguish between newly created positions and those that were “retained.’’...
The community action agency based in Greenfield reported 90 full-time jobs associated with the $245,000 it got for its preschool Head Start program. That averages out to just $2,700 per full-time job. The agency said it used the money to give roughly 150 staffers cost-of-living raises.
None of this is surprising in the least. I've railed for months against the ridiculous notion of trying to quantify "jobs retained." As the Globe's review makes clear, money is fungible. There is simply no way to determine if a dollar of federal money added to a larger pot of funds results in "retention" of a job that would otherwise have been lost. More to the point, applicants for stimulus dollars were required to claim from the outset that they would use the funds to "create or retain jobs." This created an obvious incentive for applicants to state that stimulus dollars were needed to stave off some number of pending job eliminations. That number, then, was rolled into subsequent reports as "retained jobs," whether or not the pending eliminations were real or illusory in the first instance.

In fact, as several of the examples above illustrate, many recipients of stimulus funds did the same thing that Massachusetts and other states did: they used it to back-fill existing gaps in their annual budgets (thereby often creating even larger gaps for next year... but never mind that for now).

Couple that perverse incentive to exaggerate explained above with the fact that government officials from the President to the Governor to the bureaucrat administering the funds were all pushing - hard - for big numbers in those "created or retained" reports, and the mish-mash of "mistakes," evasions and quite likely outright lies reported by the Globe was all but inevitable.

Bearing all of this in mind, and the fact that President Obama at the outset of this debacle promised "unprecedented accountability" and rigorous tracking of "every single dollar" allocated through the stimulus program, consider this sobering thought: this model of inefficiency and slippery accounting was brought to you by the same crew that is now pushing with all its might to seize control of the nation's health care industry, which comprises nearly twenty percent of our economy.

Monday, November 9, 2009

Sunday, November 8, 2009

"Fair share": the tax hike advocate's favorite non-argument

These days, with everyone feeling the pinch and political Independents (and even many Democrats) turning on the tax-and-spenders at all levels of government, it is easy to forget that there are smart, well-intentioned and civically engaged people out there who still argue explicitly and openly for higher taxes. I ran across such an argument last week in my local paper, put forth by John Hudson, a suburban pastor who is given to political as well as spiritual sermonizing. Give his column a read at this link before continuing below.

I respect Reverend Hudson's honesty and candor. Most pro-tax increase advocates in the Commonwealth are loathe to label themselves explicitly as such. Our Legislature is full of people who agree with the Reverend's point of view, but one rarely finds an elected official willing to admit it.

The Reverend's column, however, rests on a false foundation. Pointing out, correctly, that essential services like police, paramedics, aid to the disabled and schools are "paid for through taxes," the Reverend argues that higher taxes should be viewed as "a civic responsibility to be embraced." "We should raise our own taxes," he proclaims. The income tax specifically.

Reverend Hudson fails to notice all the other things that are "paid for through taxes." MBTA policies that allow workers to retire in middle age with enormous pensions and life long health insurance - "paid for through taxes." Earmarked legislative pork in every annual state budget, including the latest one - "paid for through taxes." Patronage hires, no-show jobs and redundant positions throughout government - all "paid for through taxes."

Beyond rampant waste and inefficiency, our state government year after year turns back reform proposals that would save hundreds of millions of dollars, refusing to repeal the Pacheco Law, which hampers the state's ability to outsource non-essential state functions to the private sector; adopting cosmetic pension reforms while leaving huge dollar but politically-difficult union issues on the table; and (as reported just this weekend) allowing transportation salaries to continue to escalate, despite consolidation in state transportation agencies and, by the way, a budget-crushing recession.

Adopting the preferred Beacon Hill vernacular, the Reverend states that "[t]here’s no doubt our state budget needs new revenue sources." Respectfully, he is incorrect. Our government does not need "new revenue sources." Our elected leaders need to learn to live within a budget, just like our families and our businesses do. For several years now, our budget writers have consistently underestimated annual spending and over-estimated tax revenues. This is an unsustainable model that leads directly to deficits and to cuts in essential services.

Tax hike advocates like Reverend Hudson always come back to the same core, moral-flavored argument: "It’s time for us to pay our fair share," they say, never explaining how "our fair share" is determined. If "our fair share" is a rate of taxation sufficient to sate Beacon Hill's hunger for spending, then truly there is no limit to how high our taxes will climb.

I agree with Reverend Hudson on casino gambling. It is no budget panacea. He is wrong, however, to argue that yet another tax increase is the cure for our state's budget ills. Until our elected leaders do their "fair share" by finally addressing endemic waste and implementing real governing reforms, we taxpayers are already doing more than our "fair share."

POSTSCRIPT: I embedded a link in a parenthetical above to this weekend's front page Globe article about the escalation of transportation salaries under Gov. Deval Patrick. If you skipped over it, click into it now and read the whole thing. It is hard to conceive of a better way to illustrate exactly why the "raise our taxes" argument is so deeply misguided.

Thursday, November 5, 2009

Grants and targeted incentives are no match for escalating costs

The Globe has an important story tucked away in the "green living" portion of its Lifestyle section today.

"Evergreen shifts work to China," sub-titled "solar panels won't be assembled at Devens factory."

Yet another company moving operations (and jobs) out of Massachusetts. But this particular story is even worse news than usual, for reasons summed up at the front end of the article:
Little more than a year after cutting the ribbon at a new factory in Devens built with more than $58 million in state aid, Evergreen Solar said yesterday that it will shift its assembly of solar panels from there to China.

About half of the 577 full-time and 230 contract employees at the Devens factory are involved in putting the panels together. Evergreen declined to say how many of those jobs would disappear with the scheduled transfer next year to China, where it is expanding because of lower costs.
Bad news for Massachusetts is even worse news for our embattled Governor Patrick, as the Globe makes clear:
The company has been a poster child of the Patrick administration’s efforts to develop a “green energy’’ industry cluster in Massachusetts. But it has been struggling financially because of increased competition from overseas producers and rapidly falling prices for solar products. It recently persuaded the state to lend it another $5 million to cover equipment purchases, though the state has not yet released the funds.
So the relationship between Evergreen Solar and the Patrick Administration is roughly analogous to that between Kirstie Alley and Jenny Craig - 'poster child' turned embarrassment. The Patrick Administration spin on this will undoubtedly mirror its spin on virtually all of its economic problems. They will blame the national economy. But pay attention to what Evergreen's CEO has to say:
In explaining the move to China, Evergreen chief executive Richard M. Feldt said in the company’s filing that prices for assembled panels have fallen more than 30 percent in just the last year, making it “very difficult for manufacturers located in high-cost regions to remain price competitive.’’
Massachusetts typifies the "high-cost regions" he's talking about. Cash grants are all well and good, but they are short term. Over time, the relatively high (and rising!) cost of doing business in Massachusetts more than outweighs the value of a few million bucks tossed a company's way to attract an initial investment in the Commonwealth. As the Patrick Administration continued over the past two years to repeatedly hike taxes on our business community, it became all but inevitable that even our economic 'poster children' would begin to realize that - and to act accordingly, in their business interests.

This has implications beyond the limited context of this particular company. In addition to the millions of state dollars showered on 'green' companies like Evergreen, recall that the Patrick Administration gaudily devoted a billion dollars to create similar incentives for life science companies.

Watch for some of the recipients of that state largess to follow Evergreen out of the state - to other states that do not try and micromanage private sector investment in politically correct business sectors, but instead create long term incentives for business investment and expansion by keeping tax rates low and predictable.

In other words - to states that do the polar opposite of what we do here in Massachusetts.

Tuesday, November 3, 2009

What NOT to do.

For political aspirants, there are two, related lessons in this Globe article about the trials and tribulations of the Christy Mihos campaign:

(1) If you need to part ways with your campaign spokesman, best to do it in a friendly way, preferably yourself. Do not have someone else call him and then tell the press he's been working "pro bono" anyhow. Especially when he hasn't. And

(2) Don't ever, ever make a reporter look silly. Especially a veteran reporter. Especially Frank Phillips.

As a refresher on the background of today's Mihos meltdown article, read this post I put up a couple of months back about Christy's very brief U.S. Senate campaign. At the time, you may recall, Kevin Sowyrda (the now former Mihos spokesman who is the subject of today's article) told the Globe's Phillips and a number of other media outlets that a Mihos run for the Senate was pretty much a done deal.

A day later, Mihos was earnestly telling the world that he'd never planned to run. From the State House News at the time: "Asked if he’d given a Senate run serious consideration, Mihos said 'not really'..." This was blatantly, demonstrably false.

Flash forward to this morning, and some of the September's chickens are coming home to roost, as the two people most wronged by Christy's public Senatorial flirtation team up to make his campaign look silly:

Kevin Sowyrda, who has been Mihos’s spokesman and media director since the summer, said he was told yesterday that he has been terminated. Sowyrda said he has not heard directly from Mihos, but that he had heard he was fired from another consultant to the campaign, whom he would not identify.

Sowyrda said the first hint came when his campaign cellphone shut down yesterday.

“This is classic Christy,’’ Sowyrda said. “Apparently, he has told people on the campaign that I resigned a month ago and have been working pro bono since then, which of course was news to me. However, we all love Christy dearly for this type of eccentricity, because that’s what makes him the very special person that he is.’’

That has to be the back-handed compliment of the cycle thus far: "we all love Christy dearly for this type of eccentricity, because that's what makes him the very special person that he is." As a last favor to his former boss, Sowyrda is locking up the 'my crazy uncle for Governor' voters.

Further twisting the knife, Phillips (with the help of Sowyrda) notes that Mihos's fundraising is lagging well below expectations.
A fund-raising appearance last week by Dick Morris, a national Republican consultant who is advising Mihos, fell flat. Two events with Morris, one on Cape Cod and one in Boston, drew sparse crowds, according to Sowyrda.

The Mihos campaign hired national GOP fund-raiser Carolyn Machado more than a month ago to put together a financial plan. But Mihos’s committee has yet to show it can raise substantial sums beyond the candidate’s own bank account.

Of course "the candidate's own bank account" is exactly what the candidate is counting on. Sooner or later we'll see a roll-out of quirky Christy campaign ads, thematically and probably stylistically no different from the ones that for a time saturated the airwaves in 2005-2006 - and ultimately netted Mihos roughly six percent of the vote.

Meanwhile, in other gubernatorial campaign news...