Month: March 2010

The Spending Limit Amendment

Earlier this morning I participated in a conference call with Rep. Jeb Hansarling (R-TX) and Rep. Mike Pence (R-IN). They are two of the three initial sponsors of a possible Constitutional amendment called the Spending Limit Amendment (H.J. Res. 79), a proposal to limit federal spending to 20% of our Gross Domestic Product (GDP). This number was arrived at because that’s a rough average of federal spending vs. GDP over an extended period.

Their argument falls in a number of categories ranging from dire economic straits to lost productivity to a national security threat. In the call, Hensarling noted “we believe we have to act now” and that he’s “not naive about the fact 5,000 amendments to the Constitution have been offered but only 27 ratified.” Instead, “what we hope to do is start a national debate on the size of government.”

Added Pence, “we have come to the conclusion that we need to introduce a new force,” that force being one of changing our “charter.” He also made the oft-noted point that “as government expands, freedom contracts.”

A number of different bloggers asked questions; I happened to be one of them. My question related to the fact that this seemed to me a weaker version of the balanced budget amendments proposed in the early 1990’s. Congressman Pence argued that this was “not a weaker version” but “a focused effort” on reining in the “runaway spending on steroids” going on today. In their estimate, running a small deficit but only spending 20% of GDP was preferable to having a balanced budget consuming 40% of GDP.

On an earlier question, the pair agreed that the BBA debate “had an impact” on spending immediately after it was considered.

There’s a lot more to the roughly 40-minute call, but since I’ve been promised the recording later today I can let you be the judge. Suffice to say that this should be a great issue to use in the 2010 campaign and they hope the TEA Party movement embraces the proposal, but they agreed this will be “a multiyear effort” and warned that, left unchecked, in 20 years our spending will place us in the similar position Greece faces now.

It reinforced my belief that Pence and Hensarling are “keepers” when it comes to a “throw the bums out” mentality. You’ll enjoy hearing what they have to say.

Stealing a post

My original intention was to write a very short post highlighting an excellent, well-documented piece on Human Events by Newt Gingrich regarding the specter of reconciliation – after all, he’s been in Congress so I would have to defer to his expertise on the subject. I don’t always agree with Newt but I’m a fan and the man has a pretty good understanding of history.

But in looking for the actual website for the above link (I get the Newt Gingrich Letter in my e-mail so I don’t necessarily go to Human Events all the time) I found an op-ed by Maryland U.S. Senate candidate Dr. Eric Wargotz detailing his trip to Massachusetts during the exciting final days of Scott Brown’s campaign.

What I found most interesting was that Eric didn’t pull any rank during the visit, going out and slogging in the trenches like hundreds of other political volunteers. Having done petition drives in the cold and snow of January in Ohio for a candidate who wasn’t even in my district, lit drops and door knocking in October’s chill, and working the polls on a number of raw and rainy Election Days both here and in my native area I could relate.

And while Eric didn’t have the chance to hang around to savor Scott Brown’s eventual victory, there is a thrill for those of us who are political junkies as the elections draw closer.

Yet it’s both political junkies and agnostics who can make a difference in the battle over health care. Newt’s article is important because he describes the process which either health care bill needs to go through in order to be passed. Aside from a few small cracks here and there, the GOP wall of opposition has held fairly firm over the last many months these Obamacare proposals have been debated (remember, the original goal was to have health care done by last August’s recess.) With Frank Kratovil being considered as one of the possible key votes on the current reform packages being considered, it’s very important to let him know his original opposition should stand.

Unfortunately, none of the phone calls and e-mails beseeching them to “just say no” to Obamacare are likely to dissuade our two United States Senators from toeing the liberal Democrat line and voting in its favor. Since Barbara Mikulski has put aside those rumors she was calling it a career, the national GOP will likely not invest much time or effort into the Maryland Senate race. (Too bad, because the money they wasted on Dede Scozzafava may have come in handy here.)

It just so happens that Wargotz is hosting an online “Mikulski Retirement Party” (it’s really a ‘money bomb’ fundraiser) tomorrow. That’s an idea borrowed from the Brown campaign too, and if it works half as well as Scott’s he’ll gain an even larger financial advantage over his two main contenders. (He had a huge cash-on-hand advantage on Jim Rutledge at the end of 2009, but Wargotz’s pot was less than 1/10 the size of Mikulski’s. Carmen Amedori has just entered the race so she has no FEC reporting data yet.)

Right now we have to play the hand we were dealt in 2008, though, so it’s up to us to convince the jokers we have to vote in our country’s best interest and scrap this health care debacle once and for all.

Bunning’s last stand

A tired old man whose time is almost through decided to chuck popular sentiment and make a stand for principle. It sounds like the storyline for a hundred Hollywood movies, but this played out in real life earlier this week as Kentucky Senator Jim Bunning was castigated for cruelly holding up unemployment benefits and highway projects because he simply wanted to follow the rules he didn’t vote for, but was determined to hold the Senate to.

Obviously the gesture was a futile one – perhaps not as futile as managing my old hometown baseball team (yes, Jim Bunning managed the Toledo Mud Hens in 1974 and 1975 before going into politics and is the lone Baseball Hall of Famer to also serve in Congress) but the $10 billion fiscal measure to extend unemployment benefits another 30 days passed handily, 78-19. That vote added another $10 billion to the deficit.

Originally, Bunning simply wanted the $10 billion to come out of stimulus funds already allocated rather than creating new debt. Later, an amendment he sponsored would have taken away a tax credit for paper companies as a tradeoff to maintain the idea of PAYGO legislation (that lost 53-43 on a fairly party-line vote.)

The PAYGO legislation came about as an effort to sweeten the deal when Democrats wanted to raise the national debt ceiling to nearly $15 trillion. Republicans voted en masse against the amendment to add PAYGO but they lost and PAYGO became the rule along with the increased debt limit.

Yet Democrats rammed through two pieces of legislation by declaring them as “emergencies” exempt from the PAYGO rules and were well on their way to making this another case when Bunning made his stand. “If we cannot pay for a bill that all 100 Senators support, how can we tell the American people with a straight face that we will ever pay for anything?” asked Bunning.

For Congress to pay anymore than lip service to cutting the size of government, some hard decisions need to be made. Certainly there’s a humanitarian case for extending benefits, but that $10 billion comes out of the private sector or becomes debt for our ancestors (descendants, thanks Tim – d’oh!) to pay off. It’s simply an unsustainable system.

Unfortunately, not every Republican backed Bunning’s stance because Democrats are outstanding at playing the victim card and attempted to tar the entire GOP with the broad brush of being uncaring and unfeeling. Since Bunning isn’t running for re-election he had nothing to lose by taking a stand.

And I have nothing to lose by branding Democrats as hypocrites. They had yet another opportunity to stand by the rules THEY enacted yet to them the rules only apply to everyone else. At least the Republicans didn’t have that pretense of PAYGO legislation yet managed to balance the budget during the early years when they were in charge of Congress.

So I applaud Senator Bunning for his stand and would love to see him and fellow Republicans continue obstructing when they see the double standard for which Democrats are famous. They may have won this round but come November Democrats may regret what they’ve done.

Ehrlich slowly closing the gap

A Rasmussen poll taken late last month shows former Governor Bob Ehrlich within striking distance of Martin O’Malley. The likely Republican nominee now trails by 6 points, 49 percent to 43 percent.

Neither candidate is disliked by voters, though, as both candidates’ personal favorability ratings lie in the mid-50’s (O’Malley 54, Ehrlich 55.)

On job approval, though, Governor O’Malley is at 53 percent. While that’s an improvement over his September numbers in a Gonzales Research survey, looking deeper into the poll suggests his support is relatively tepid – strong disapproves lead strong approves 23-18. However, previous Gonzales data had saddled O’Malley with a sub-50 approval rating since March 2007 so the spin machine must finally be working in his favor.

It’s also worthy of note, though, that O’Malley’s numbers were at the lowest immediately after the tax increases of the 2007 Special Session he called took effect in 2008. At that point he was 10 to 11 points underwater on approval/disapproval. That’s also why I believe any tax increase comes immediately after he’s safely re-elected.

By comparison, President Obama has a 59% approval rating in Maryland with strong approves leading 38-32 over strong disapproves. Obviously Obama is quite the polarizing figure, even here.

In September, the Gonzales poll showed O’Malley leading 49-38 over Ehrlich, but O’Malley’s approval rating was only 48 percent. Oddly, that poll had both candidates’ personal approval numbers much lower (O’Malley 47, Ehrlich 42) so it appears time has burnished the perception of both gentlemen.

Obviously the poll which counts will be the one taken November 2nd, but pocketbook issues might have a way of changing the snapshots in time we see between now and then. Truly there is no other issue of importance in this race.

Robbing Peter (and John, David, Mary, etc.) to pay Paul

One criticism I’ve had about Maryland’s budget system is its lack of flexibility. There are a lot of money pots out there besides the General Fund, and Martin O’Malley seems to want to take money out of every one of them to balance his FY2011 budget. This from Americans for Prosperity:

As you know, the Senate Budget & Taxation Committee will be holding a public hearing this Wednesday on SB141. This bill, the Budget Reconciliation and Financing Act, will transfer nearly $1 BILLION from the state’s 382 special funds to cover Gov. O’Malley’s budget deficit.

(snip)

One of the funds Gov. O’Malley is proposing to raid is the Transportation Trust Fund (TTF). Started in 1971, the TTF is the account used to pay for road, bridge and infrastructure repairs. It is primarily funded by the gas tax – each time you fill up at the pump, you are contributing to road repair…or so you thought. This year, O’Malley has decided to take $125 million of those taxes and use it to paper over his $2 billion deficit.

Stealing from the Transportation Trust Fund becomes even more problematic next year, because the TTF is already under-funded. When the fund runs dry you can bet that the liberal politicians will want to raise taxes. Senate President Mike Miller has been pushing the idea of a gas tax hike for the last few years.

Another fund that O’Malley has decided to attack is the Injured Workers Insurance Fund (IWIF). IWIF is a low-premium insurer for many businesses who provide workers compensation to employees. It is financed by the premiums each policy holder pays on a quarterly basis.

Not only is the legality of the state confiscating $26 million from a private insurance company in question, but this move will hurt small businesses. Again, when the fund is drained, the premium rates will rise to replace the stolen revenue.

Small businesses are the engine of our state economy – they employ nearly two-thirds of the workforce in Maryland. If we expect an economic recovery with job growth, the government cannot continue to put undue burdens on businesses. The last thing small businesses need right now is to be paying higher insurance premiums or gas taxes.

382 special funds in the Maryland budget? WTF? Anyway, the Maryland Senate Republican Caucus also weighed in:

Entering the 2010 legislative session, there were few remaining reserve funds left to tap. They have all been depleted. O’Malley has exhausted all available reserves except for the Rainy Day Fund. Tapping the Rainy Day could jeopardize the coveted Triple A bond rating which would cause great embarrassment to the administration.

So O’Malley turned to the Injured Workers Insurance Fund to tap a reserve of $20 million. Problem is – the IWIF reserve is not state money. It is not taxpayer dollars. Instead it is overpayments of insurance premiums from small businesses throughout the state.

Then is it legal? A 1968 opinion of the Attorney General’s Office states that reserve funds of the State Accident Fund (IWIF’s predecessor) are not state funds accessible for general purposes. Established as a nonprofit insurance company, IWIF is a quasi-public agency and state use of insurance overpayments as a fund swap would be unconstitutional.

To cover their tracks, the O’Malley Administration has now introduced bills (Senate Bill 507 and House Bill 1008) that would give the Governor authority to transfer the $20 million this year just as long as it’s never done again. Go figure!

So, not only do we have the BRFA bill but now another bill in order to fix things for this year. Sheesh.

The larger question is what we’ll need to do next year to fill in all of these pots. With the federal portion of the state budget now eclipsing 60 percent, one would think that Barack Obama may bail out his cohort if he’s reelected this November. But with these funds come strings and that lack of flexibility will probably preclude O’Malley being able to make up the shortfalls with federal money next year.

Three years ago, Governor O’Malley called a Special Session to address this issue and its result was a number of tax increases which were supposed to correct the state’s structural deficit. However, the increase in the sales tax, cigarette tax, and a (since-repealed) “tech tax” on computer services were counterbalanced by a huge increase on spending which attempted to bring health insurance to thousands more Marylanders.

To the surprise of everyone – except those with a little bit of economic common sense – these new levies didn’t bring in as much money as the so-called experts predicted. In all that’s not so bad, but other previous taxes like property and real estate transfer taxes also declined. Making matters worse (but certainly not unexpected) is the outflow of capital due to the “millionaire’s tax” – again, from the Senate GOP Caucus:

According to an Associated Press article posted at Examiner.com, Montgomery County has experienced a 27% decline in tax returns from high income earners. This decline has contributed to a loss of $4.6 billion in taxable income: “County Executive Isiah Leggett says some wealthy residents who own homes in other states are establishing residency elsewhere. Officials believe the state’s millionaire tax is a factor.”

You think?

Unlike the perception progressives attempt to create about TEA Partiers as people who want to get government services without paying for them (a description more apt for Democrat voters,) most don’t mind paying a fair share in taxes. But what we want in return are efficient services which perform necessary functions, and too often we find that government at all levels fails to deliver on one or both sides of the equation.

If Martin O’Malley truly decided to live within his means, he would gain the intestinal fortitude to make cuts such as the insurance program he started. Obviously it’s a decision which affects a large number of people, but so would increasing taxes and fees. Raising the gas tax, for example, would disproportionately affect poor and middle-class Free Staters and rural residents like those on the Eastern Shore would pay more of a toll than city residents along the I-95 corridor.

One issue sure to come up in this year’s campaign will be fiscal accountability, and while Bob Ehrlich wasn’t the poster child for frugality the state was in much better financial shape when he left office than the potential mess he inherits should he be re-elected for a second, non-consecutive term.

Perhaps a solution would be to bring in some solid fiscal conservatives for the General Assembly in with Ehrlich, hopefully to keep his free-spending tendencies in check. Mark my words, if Martin O’Malley is reelected 2011 will be a rerun of 2007 – a session devoted to raising taxes and killing off whatever recovery the state is scratching out by then.

Electoral toast

Update 9:30 a.m. –  A new AP story by Erica Werner quotes Kratovil spokesman Kevin Lawlor, who says that Frank won’t vote for the Obamacare bill if it’s similar to the first one. Apparently there’s not enough carrots dangling out there for him yet.

Perhaps this is wishful thinking from the Associated Press and writer Charles Babbington, but Frank Kratovil is listed as one of ten House Democrats who may be open to switching his vote on the health care bill in order to pass it. Technically the article says he’s not stated a position or is undecided, and it may well be he’s not stating.

But his vote may be the one which makes the bill sink or swim because, of the 220 votes Nancy Pelosi got to pass the bill the first time through she’s likely to be missing four due to death, resignation, and the slim chance Republican Joesph Cao would make the mistake of voting ‘yes’ again without language restricting abortion.

So Kratovil is between a rock and a hard place for sure. With it out in the open that he may be amenable to changing his vote, the White House may dangle all sorts of bribes for his support – think help for his re-election campaign or even a cushy Administration job if he loses come November. On the other hand, First District voters might see to it the latter happens if he doesn’t maintain his stance against it and he would truly earn the moniker ‘flip-flop Frank.’

Perhaps this is why Kratovil has been attempting to burnish those conservative credentials he does have like talking up fiscal conservatism and getting tough on illegal immigrants.

But that may be too little too late as First District voters may decide why have conservative-lite when they can have the real thing?

The case for an elected school board

Tomorrow the Wicomico County Council discusses the FY2011 county budget (as part of legislative session 2010-05.) Obviously a significant chunk of that budget will go to the county’s education funding and County Executive Richard Pollitt conceded “there’s no way” that Wicomico County will meet the state Maintenance of Effort requirements next year. It’s beyond questioning that money is going to be a contentious issue for those who were elected to take care of the budget.

However, the Wicomico County Board of Education (WCBOE) has come under some withering fire lately regarding the travel budget allotted to school personnel. Spearheaded by County Councilman Joe Holloway, this effort found the taxpayers were occasionally footing the bill for everything from meals at Hooters and Ruth’s Chris Steakhouse to the morning coffee at Wawa. While most of the expenditures were on the up-and-up, the attitude reflected by those who abused the process (and paid for the previously-charged expenditures out of their own pocket once it was learned Holloway was on the case) was that of an entitlement mentality.

As mentioned before on my website, the present FY2010 budget has been revised, but in essence only 54% of the budget was at stake – the 46% belonging to the WCBOE was practically untouchable due to state mandates.

It is my belief – a belief shared by a growing number of people – that Wicomico County is not well served by having an appointed school board in charge of holding the schools accountable to the taxpayers. All but a handful of Maryland counties have gone to an elected school board, and I think its long past time to adopt the same here.

As the system stands now, the seven appointed members of the WCBOE come into office via a process rife with the prospect of patronage. Until a change is made, there will always be at least three Republicans and three Democrats on the board, with the pivotal seventh vote awarded to the party whose candidate won the last race for governor. Thus, the first Democratic vacancy which occurred after Bob Ehrlich was sworn in back in 2003 was filled by a Republican and the first GOP vacancy after Martin O’Malley came into office in 2007 was filled by a Democrat. To be more proper, vacancies were filled from a list provided by the local Central Committee of the respective party (so as a member of the Central Committee I had influence on any board member replacing Republicans, except the first GOP vacancy became a Democrat seat.)

If you look at things on that level, it’s clear that Wicomico County may have preferred a 4-3 GOP split based on who they selected as governor since Bob Ehrlich carried Wicomico handily. But the decision was taken out of their hands based on the statewide vote.

While I take my job seriously as a member of the Central Committee, it seems to me that the input of selecting those who are responsible for running our schools should be at a much higher level than a seven- or nine-member body. And looking at things from a strictly partisan basis I understand there’s a risk the voters could select an even more partisan mix of 5-2 or 6-1 Democrats based on voter registration numbers. (While it’s likely the BOE would be a “non-partisan” race, certainly the Democrats will be recommending a slate of candidates as would the GOP.) Yet this also provides an opportunity for those who are politically unaffiliated to have a greater say in affairs as well.

People who are passionate about education tend to be the ones who want to see more local control of their schools. They join the PTA or volunteer in the classroom in order to do their part for the school community.

But the process as it stands now doesn’t necessarily reward these attributes. The folks in Annapolis don’t have much of a body of work to judge would-be BOE members on – usually it’s just a curriculum vitae and application. An electoral system could be set up to allow district representation, giving a person who’s known to the parents of a particular school a better opportunity to serve at a higher level.

In the end, though, it comes down to accountability. The system we have now doesn’t provide for enough, and moving to an elected school board would give the people of Wicomico County the final say on just how a board member is doing.

We can get the process started with leadership on County Council. They can pass a measure to put a referendum on the ballot this fall showing the amount of support there is for an elected school board. Once that passes (as I’m confident it would) then the General Assembly could act accordingly and pass the law allowing BOE elections to occur beginning with the next general election in 2012.

That’s the easy road. If County Council refuses to act, the ballot measure would have to be achieved via petition and getting signatures is a time-consuming process. We could also be at the mercy of outside events, as a 2001 petition drive was shelved in the wake of 9-11.

Joe Holloway is already on record as supporting an elected school board, so I call on his fellow Republicans to lead the way and allow thoughtful Democrats to follow behind if a veto override is needed. Once we get this on the ballot, at that point we can work on just how the transition would be achieved, the question of staggering board members’ terms, and the like. That’s actually fairly easy since we have a number of counties to view as models.

The hard part is getting there, so I encourage the County Council to start the process soon.