A 21st Century State…a 20th Century Tax Structure
The Idaho Legislature stumbled to adjournment on Monday after reducing state spending by 19% over the last two sessions. Now, you might ask, what next?
At some point – in the not too distant future, one hopes – the economy starts to grow at a stronger clip and the revenue streams at the state level start to produce the dollars needed to rebuild an education system and sustain other basic services. Education gets a lot of attention, as it should. For two years running state support has been reduced in real dollars. That has never happened before. At the same time, a number of other agencies – like the Departments of Environmental Quality and Water Resources – that consume a small slice of the budget, have been close to crippled.
Despite election year rhetoric about holding the line, the budget outlook this year and next is nothing less than bleak. The line hasn’t really been held, it has been moved backward.
Even as the session was dominated by the scramble to patch and scratch a budget together, some legislators were seriously floating the notion that taxes, particularly the income tax, should be cut. Others, like the state senate’s budget leader Dean Cameron were more realistically suggesting that the 2011 session will need to find a way a raise revenue. Cameron told the Statesman’s Dan Popkey that next year could “be even more difficult.”
“Our budget is full of places where we have robbed from one fund or another to keep programs or services going,” Cameron said. “Now, we’re at the end of it.”
Here is the reality: even when you account for the many tweaks that have been made to the Idaho tax system over the years – sales and income tax rates have increased over time, for example – the essential structure has gone unchanged since the historic decision in 1965 to create an Idaho sales tax. What has changed is a steady deterioration, made worse by the awful economy, of revenue to support critical services like public and higher education. Public school support, to a substantial degree, has shifted from the more stable property tax to the more volatile sales tax. Meanwhile, sales tax exemptions have grown like noxious weeds with each exemption eating away at the state’s general fund and, by definition, diminishing the state’s ability to support education.
Somewhere on a shelf in the spiffy, remodeled Statehouse is a box full of studies analyzing how the state’s tax structure has become the sick man of Idaho. Every serious look at Idaho’s “three legged stool” of sales, income and property taxes has concluded that the basic structure is badly dated. Those past studies have accumulated dust and not influenced policy and the just adjourned legislature – after two years of slashing spending by 19% – couldn’t even bring itself to study the system one more time.
That famous 1965 legislative session designed a tax structure for its time. Idaho had a resource dependent economy in those days. The timber industry was in full flower and the Coeur d’Alene mining district was producing vast amounts of silver and creating family wage jobs. Agricultural production was the dependable staple of the Idaho economy.
Forty-five years ago, Hewlett-Packard wasn’t in Boise, Micron either. The service economy hardly existed. Idaho’s corporate community, including mainstays like Albertson’s and Morrison-Knudsen, created stability and jobs. Now much of that is gone or at least diminished. Many things about the Idaho economy are vastly different today, yet the tax structure remains pretty much the same. No less an authority, and advocate for Idaho business, than former Idaho Association of Commerce and Industry President Steve Ahrens outlined what needs to be done at a Boise City Club event during the first days of the legislative session back in January. Was anyone listening?
A question for the next Idaho Legislature is how much more cutting can the state really stand? At some point, a 21st Century economy will require new investment and new thinking about a 21st Century education system. Good jobs require better schools and a trained workforce. The millions in revenue lost to Internet sales (at a detriment to hometown businesses) or left untaxed due to exemptions may not represent comfortable rocks to look under, but the alternative, if Idaho wants to grow a 21st Century economy, is unsustainable.
At the federal level, a few smart people know that spending restraint and tax increases are the only way to get the ballooning federal deficit under control. At the state level, lawmakers have done the cutting. It will take real political courage – and a view to the long term – to confront the need for new revenue.
The 2011 Idaho Legislature will need a Pete Cenarrusa, a Perry Swisher, a Cecil Andrus and a Phil Batt. Those guys, and others lost to history, made the tough decisions in 1965 that put in place a tax system that served the state well for a generation and ushered in the modern Idaho. What next?
A 21st Century State…a 20th Century Tax Structure
It’s Not As Easy As They Made It Look
In the old TV series, Perry Mason always wrapped up the case in the last few minutes of the show, tied a ribbon on the verdict and went out for a cocktail, or whatever, with Della Street. If only it were that easy in real life.
The American system of justice is often complicated, confusing, contentious and cumbersome. It is also central to our form of government.
On April 15th in Boise, the Andrus Center for Public Policy – I proudly serve as the volunteer president of the Center – will host with the Idaho Press Club a half day seminar that will dig into some of the complications of the justice system, particularly as they relate to the media. The seminar – we’re calling it “A Delicate Balance” – is also supported by the University of Idaho College of Law and the Idaho State Bar. Members of the bar can earn two continuing legal education (CLE) credits for attending.
The seminar at the Boise Centre is open to the public – there is a $10 registration fee – and will be, I believe, both interesting and entertaining to anyone who cares about how our justice system works and how its workings are reported by the media. Register on line at the Andrus Center website and look over the seminar agenda.
Idaho’s Chief Federal Judge B. Lynn Winmill will keynote the seminar and be joined in a panel with, among others, Attorney General Lawrence Wasden, the Idaho Statesman’s Dan Popkey, Todd Dvorak of the Associated Press, Betsy Russell of the Spokesman Review nd prominent Idaho attorney Walt Bithell. University of Idaho Law School Dean Don Burnett will participate in the panel and offer remarks.
Some years back, the Andrus Center adopted as a part of several of its policy conferences a “Socratic dialogue” method of engaging participants in a discussion of difficult, contemporary issues. We’ll take that approach again on April 15th. I’ll present a hypothetical scenario to the panel and they’ll work through some of the issues that often occur when the Constitution’s guarantee of a fair trial comes in conflict with the First Amendment protections of a free press. It will be fun and provocative. Participants in the Andrus Center/Press Club seminar are also invited to attend the College of Law’s Bellwood Lecture reception also at the Boise Centre. The reception will begun upon completion of the seminar.
Hope you’ll attend. I’m guessing that even Perry Mason could benefit.
Scanning the Papers: Diverse, Unconnected, But Interesting…
The big news in southern Arizona on Friday was the reunion of John McCain and Sarah Palin in Tucson.
The cartoon is the work of David Fitzsimmons at the Arizona Daily Star.
Friday’s rally at the Pima County Fairgrounds was the first time since last November that the 2008 GOP running mates shared the same platform. Unlike that election night tableau at the Biltmore in Phoenix, where McCain graciously conceded to the new president-elect and Palin reportedly seethed because she wasn’t allowed to say a word, yesterday Palin was the big attraction and she did plenty of talking.
The Star’s coverage of the rally noted that one McCain constituent “stood out front holding a sign that said he wouldn’t forgive McCain for attempting to control his guns, speech, energy, health care and vitamins.”
That quote pretty well sums up the Senator’s problems in Arizona as he faces what is shaping up to be his potentially toughest ever re-elect. Gone, forever it seems, is the old McCain – unpredictable, working across the aisle, making common cause with Ted Kennedy and Russ Feingold. A very conservative former GOP Congressman is running against him now and McCain is running right, sort of like he’s late for the Tea Party. Utah Republican Bob Bennett has similar problems.
More Health Care…
One remarkable thing about the Internet is that no past statement of a politician is long safe from discovery. Writing at the Daily Beast Matthew Dallek, the son of the presidential biographer Robert Dallek, pieces together the origins of what, before this year, was Republican thinking on health care. Dallek makes the case that many of the ideas now the law of the land started with guys named Nixon and Dole, and the Associated Press, among others, tweak Mitt Romney for now being against what he once supported. History is a wonderful thing.
Perhaps this is all just evidence of the truth in Emerson’s famous quote: “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”
With all respect to Emerson, in politics a lack of consistency is usually called a flip-flop and those are to be avoided like the plague, as Romney will continue to discover.
And…Now For Something Completely Different…
Most papers anymore give little attention to baseball. Some barely find room for the box scores and offer the shortest possible game summaries. For a baseball fan, the joy of sipping a morning coffee and consuming the detailed baseball summaries from the day before is mostly a thing of the past. Like everything else, the fan of baseball detail, finds it online. Check out a great baseball blog – Joe Posnanski - who wrote recently about the great Ichiro.
I like a baseball writer with a name like Posnanski. Sounds right.
When the Irish writer John Banville won the Booker Prize a few years back he was asked what he planned to do with the cash prize. His response, not to mention his writing, has endeared him to me ever since. Banville simply said he’d spend the cash on “good works and strong drink.”
His new book is The Infinities and it is being much commented upon. The New York Times noted Banville’s connections to Joyce, while others have noted that his writing, always elegant and stylish, has become more playful over time. Whatever it is, it is good stuff.
Last One Out Turn Off the Lights
I have started to believe that Idaho Democrats have been down for so long that they might be suffering from the Stockholm Syndrome. That’s the psychological phenomenon named after a small group of hostages in Sweden in 1973 who, despite being held against their will, came to closely identify with their captors.
OK, I’m being a little facetious. Still as one who believes that a genuine two-party system just might serve Idaho better in the long run, it’s difficult when looking at the shape of the 2010 contests not to think that Idaho Democrats are destined to be down for a long, long time. Like the Stockholm captives, they have gotten so very used to the GOP calling all the shots it has become difficult for Democrats to envision an alternative reality.
The Idaho Statesman’s Dan Popkey noted, as of the election filing deadline a week ago, that Idaho Democrats have already conceded two of every five legislative seats statewide. There is no serious candidate on the Democratic side for the U.S. Senate, the 2nd Congressional District, Lt. Governor or Secretary of State. No Democrat filed at all for Attorney General, Controller or Treasurer. Furthermore, the D’s lost some of their best legislators, people who might actually be able to run for something else some day, when Senators Kate Kelly and Clint Stennett and Rep. James Ruchti all opted not to seek another term.
Surveying those puny pickings leaves the battered Democrats with only a trio of seemingly serious hopefuls at the top of the ticket. All the marbles are on races for Governor (Keith Allred), the 1st District Congressional seat (incumbent Walt Minnick) and Superintendent of Public Instruction (Dr. Stan Olson). Even in Idaho’s largest city, where Democrats have made inroads and held them over the last 10 years, no Democrat filed for the Ada County Commission.
By contrast, and by my quick count, Republicans filed against all but three incumbent Democratic state legislators and the GOP will have contested primaries involving more than 20 of their incumbents. It’s not hard to see which party enjoys the enthusiasm advantage headed toward November. Democrats better hope for many, many nasty GOP primaries but, in politics like football, basing your strategy on a hope that the other side will fumble is not a very smart path to end zone.
Randy Stapilus has a pretty good round-up of the filings at Ridenbaugh Press.
So, what do Democrats need to do in Idaho that they haven’t been doing? Where to start. Here are three steps that might begin to form a strategy.
First, Idaho Democrats need a full-time party chairman. That chairman should then go to school on Phil Batt’s playbook when he brought Idaho Republicans back from a series of defeats that culminated in Democrats reaching their high water mark of modern political success in 1990. After that election, ancient history now, Democrats held three statewide offices, both congressional seats and managed an even split in the state senate. Republicans were stunned and turned to Batt to devise their comeback. He downplayed ideology, traveled the state, held countless meetings, preached the gospel of organization and cooperation, recruited candidates and, not incidentally, positioned himself to run for governor and win in 1994.
Batt did most of this work out of his own pocket, which would be ideal for Democrats who are always strapped for money. No matter. Reality dictates that resources must be found – or donated – or the Democratic status quo will continue. The work Batt did for the GOP was hard, time consuming, under the radar organization and planning. It is the type of work that Idaho Democrats have never been very good at doing.
It’s darn hard to begin a comeback without a leader and Idaho Democrats haven’t really had a “face and a name” since Cece Andrus left the stage in 1995. A full-time chairman would provide a focus and a face.
Second, Idaho Democrats must embrace a youth and minority strategy. At the national level, thoughtful GOP strategists realize that unless Republicans find a way to consistently appeal to younger people, Hispanics and African-Americans they will be the minority party forever. No less a big political thinker than Karl Rove knew that the GOP had to make a stronger appeal to Hispanics and he crafted an approach for his boss that did just that in 2004. The one sure demographic that will grow in Idaho over the next decade are folks of Hispanic heritage and new, first time voters. Democrats better get after them.
Third, Democrats need to stand for something that has broad appeal. And they have to systematically sell to Idahoans a version that is different – and better – than not just being a Republican. They also need to shun litmus tests. Any appeal must take into account the fundamentally conservative nature of most Idahoans.
The message is about jobs, schools and a place to recreate on the weekend. As governor, Andrus was a champion of all that, but especially education. So was John Evans. Both spoke with conviction about creating a “quality of life” in Idaho that combined jobs, good schools and a conservation ethic built around hunting and fishing. The GOP-dominated legislature has just approved significant cuts in education, at every level, for the second year in a row. I know, we’re in a recession and every state seems to be cutting education, but some day – I hope – the economy will improve. Meantime, what do Democrats really stand for? How do they articulate what a better education system looks like and what it will do for kids, the economy and more and better jobs? Where is the personality? Where is the brand? Without a vision – and a much more compelling message – the party perishes.
Re-building ain’t easy even with Republicans offering up some tempting targets and struggling with their own Tea Party problems. A Democratic resurrection in any of our lifetimes will require the small handful of real leaders in the state party to admit the obvious. What they have been doing clearly isn’t working. A little public soul searching wouldn’t hurt. Maybe the party need to convene a very public discussion about priorities and shortcomings. They need to take some risks and they might start by airing out the corpse.
The first step on any road back is to have a plan – a real plan – that realistically puts one foot in front of another on the long slog back. As they say, the definition of insanity is doing the same thing over and over again and hoping for different results.
For Idaho Democrats, the 2010 election looks a lot like 2008, 2006, 2004, 2002…and the captives don’t seem very restless.
A Win is Better Than a Loss
Anyone who says they know with any degree of certainty the short and/or long-term political impacts of the health care/insurance reform legislation is guessing or, depending upon your politics, thinking wishfully about the party they favor. There is no sure fire way to predict the impact. Lots of people are riled up for sure, but many also consider passage of the bill the great accomplishment since Social Security. The truth is no one knows the political impacts yet and with seven months to go until November, lots of things can shape the mid-term.
Having said that, I’ll venture two predictions and the first is easy because it is already happening.
After any big, prolonged political brawl, and this was one of the biggest and longest in many years, its fascinating to watch the conventional wisdom – the CW – shift. After the special Senate election for Ted Kennedy’s old seat was won by an anti-Obamacare candidate, Scott Brown, the wisdom from the Beltway wise guys was simple: the whole blood mess was toast, Obamacare was dead, DOA, nada, ain’t gonna happen.
CW held that the very best the president could do was cut his loses, trim his sails, buck up and take a beating. Apparently even Rahm Emanuel was counseling a strategic retreat. But wait. Hear that? That would be the sound of the CW creaking around and changing direction.
Polls taken since Sunday’s dramatic vote in the House are already showing a swing in favor of the controversial legislation. Stay tuned for even more of a bounce despite the attorneys general in a Baker’s Dozen (or more) states, including Idaho and Washington, promising legal action. Meanwhile, the retribution begins with the former Bush speechwriter, David Frum, suggesting what was once described as Obama’s Waterloo is becoming the GOP equivalent of Napoleon’s retreat from Moscow.
Fearless prediction number two: the unemployment rate on Labor Day, coupled with a sense of whether the nation’s economy is finally recovering, will have more to do with the outcome of the mid-term elections than the last year and a half of turmoil over health care/insurance reform. Congressional Republicans have bet the Congress on making the 2010 elections about health care. It might have been a better bet – we’ll see – to put all the chips on the economy. Every poll in every state says one thing – folks are worried more about the economy than anything.
There are, I think, some almost universal political truisms at play as the dust still swirls around the Washington action on health care/insurance reform. Democrats want you to believe it was a once in 50 year historic vote. Maybe. Republicans want the story to be, as GOP House leader John Boehner said, “Armageddon.” Probably not. More than the verdict of history or the demise of the country, this is politics and certain rules will apply.
Johnson’s Rules: Winning is Better than Losing
I’ve long been a fan of the Hollywood writer and director Preston Sturges. He won the Academy Award in 1941 for the screen play for a very funny political movie – The Great McGinty – and went on to make a string of classic, screwball comedies including The Palm Beach Story and Sullivan’s Travels.
Sturges once came up with his 11 rules for box office success, including such gems as: “a pretty girl is better than an ugly one, a bedroom is better than a living room, a chase is better than a chat, a kitten is better than a dog, a baby is better than a kitten, a kiss is better than a baby, and a pratfall is better than anything.”
With apologies to the great filmmaker, but in the “spirit” of his rules – some things in politics are always better than some other things in politics – I offer my rules as something to think about as the next political chapter rolls out.
1) A win is better than a loss. Obama and Democrats have won. Politics tends to reward winners. Losers tend be regarded as, well, losers. Maybe the intensity around the current issue trumps that truism, but I doubt it. Bill Clinton went limping into the 1994 mid-terms reeling from a health care defeat and dogged by ethics allegations. He looked like a loser and was. Different story line now. A win replenishes political capital and support. A loss is a loss.
2) Hope is better than fear. In virtually every presidential election, at least back to Richard Nixon in 1968, the candidate who expressed the greater sense of optimism won. Think about Reagan and Carter, Reagan and Mondale, Bush and Dukakis, Clinton and Dole, Bush II and Kerry. Americans like the upbeat guy, the positive guy with the smile. Americans bought Obama’s optimism in 2008, I’m betting a majority still do and recent polling bears this out. The GOP message on health care was about the destruction of the country, creeping socialism, fear and dread. Now turn the media attention to the president selling the positive attributes of what he’s created and I’d bet a donut (hole) his optimism looks better to most Americans than John Boehner’s Armageddon. New York Times columnist Charles Blow sliced and diced the poll numbers recently and concluded that while the president’s approval numbers have certainly come down over the last few months, people still think he is inspiring – 61 percent – and that he makes them feel hopeful – 54 percent. Optimism trumps fear. It also doesn’t hurt Obama that the press loves a comeback narrative; exactly what he’s running with right now.
3) Being for something is better than being against something. Democrats, say what you will about the merits of the bill they just passed, were trying to do something, Republicans were trying to stop something. Being for something and winning – Bush’s tax cuts or Clinton’s welfare reform, for example – almost always beats playing defense, especially when you are defending an indefensible status quo.
4) A specific is better than a slogan. Republicans have always been better at the message game than Democrats, but now Obama and Democrats have specifics to talk about, Republicans don’t. Expect a lot of talk about the “donut hole,” about the end of denying coverage for “pre-existing conditions” and greater “regulation of insurance companies.” Details are good, if they can be understood. Those talking points, repeated over and over, can be understood, particularly since they now represent a done deal.
5) And, an improving economy is best of all. I began this analysis with a prediction that the state of the economy will have more to do with the fall elections than the nasty spectacle in Washington over the last 13 months. By November, if there is a genuine sense that the economy is improving – not a sure thing by any means – if American troops are continuing to come home from Iraq and maintaining in Afghanistan, and if the president is able to convincingly display a sense of optimism and confidence about the future of the country, then the mid-term could be more typical from an historic standpoint. Charlie Cook, the best guesser of which way the Congress will swing, now predicts Democratic loses in the House, for example, but not a GOP takeover. Expect R’s to win 25 to 30 House seats.
Seven months to election day. Much can happen, and probably will. Those are my predictions and I’m stickin’ with them – for now.
Debt and Taxes, Cuts and Clowns
Al Simpson, the former Republican Senator from Cody, Wyoming, is one of an increasingly rare breed in American public life. He actually thinks that once in a while our political system must try and mobilize in order to address a real problem; a real problem like the out of control deficit.
Talk to almost any thinking person in Washington, Republican or Democrat, and they will privately say what most folks in the country instinctively know. We’re broke. The deficit is a huge and growing danger. The Chinese hold our debt. Spending, particularly on entitlements, is out of control. In Al Simpson speak, the country is “going to the bow-wows.”
There are only two options and they must work together. Spending must be cut and taxes must be raised. Yet for the political right raising taxes is the third rail of American politics; a touch brings certain political death. Resisting spending cuts is every bit as much liberal orthodoxy. Still, every serious person in politics, business and the media knows both ends need to come to the middle, yet the political gridlock of Washington allows no one to move and few have the courage to talk seriously about the problems.
The old line about what constitutes a political gaffe comes to mind: in Washington, a gaffe occurs when a politician speaks the truth.
Enter Al Simpson. The tall, bald guy has a grand sense of humor. He speaks his mind. He cracks wise. He pokes big egos. He’s not afraid to commit a gaffe. The hard right hates him.
“He’s old and grumpy, and he doesn’t like the Reagan Republican Party,” according to Grover Norquist one of the influential leaders of the no taxes, never, no how crowd.
[Norquist, by the way, has a selective memory about the Reagan record. Reagan both cut and raised taxes during his two terms. Al Simpson would remember that bit of trivia, but clearly that story line doesn’t fit with the conventional wisdom of the right or left and that is part of the problem.]
Simpson was profiled in the New York Times last week because – what was he thinking – he agreed to co-chair the bipartisan commission appointed by President Obama to recommend actions to reduce the federal deficit. Simpson is already sharpening up his tongue, saying he knows he’ll catch hell from “Rush babe” and others who “babble into the vapors” while whistling past the deficit grave yard.
The political left won’t get serious either, vowing to defend to the death sacred cow spending programs. If you need any more proof of the dysfunction in Washington, I would note that Democrats and Republicans couldn’t even agree on forming the deficit commission. Obama launched it with an executive order after Senate Republicans balked. At the same time, so called “progressives,” including people who ought to know better, initially refused to sign up. Some, meanwhile, have come around.
The Concord Coalition is a sober and respected advocate for doing what needs to be done to get the deficit under control. As the Coalition, chaired by former Senators Warren Rudman and Bob Kerrey, a Republican and a Democrat, points out, both parties have made this mess.
“Consider what has happened over the last decade,” the Coalition says on its website. “In January 2001, Congress had a very nice ‘problem’ on its hands: what to do with a projected 10-year budget surplus of $5.6 trillion. At that time, the projected surplus for the fiscal year ending Sept. 30, 2009 was a mind-boggling $710 billion.”
What really happened in the last decade, of course, created the mess: big tax cuts, big spending increases, two wars fought on credit, a great recession and bam – fiscal chaos.
Again, the Concord Coalition: “In 2009, for example, Congress spent $826 billion more on programs than had been projected in 2001. Taxes were cut by $363 billion. Additional debt service stemming from these legislated changes cost $225 billion. That comes to a negative impact of $1.4 trillion. In other words, the $1.4 trillion deficit in 2009 can be entirely attributed to the $1.4 trillion of legislation enacted by Congress since January 2001.”
Republicans controlled the Congress for part of that time, Democrats part of the time. A Republican was in the White House, a Democrat is there now. Everybody is responsible, but will anyone do anything?
The witty and wise Christopher Buckley doesn’t think so. He notes that the recommendations of Blue Ribbon Commissions collect dust on shelves all over Washington. The last big commission – The Iraq Study Group – recommended an exit from Iraq and, as Buckley says, “What happened? The surge.”
That said, I’m pulling for Simpson and his Democratic co-chair, former Clinton Chief of Staff Erskine Bowles. For certain, Simpson will need his sense of humor to sustain him as he picks his way through this thankless thicket. Al once said, “In your country club, your church and business, about 15 percent of the people are screwballs, light weights and boobs and you would not want those people unrepresented in Congress.”
If Simpson’s percentage figure is right, here’s hoping he can appeal to enough of the remaining 85 percent to get serious about this huge national crisis. If not, bring on the bow-wows.