February 2015 – Page 3

Ambitious agenda? No, a vapid response

I was somewhat remiss last night in not mentioning the Democrat response to Larry Hogan’s State of the State address. Delivered by Delegate Anne Kaiser, I was expecting more of a robust set of disagreements but a pledge to work toward a better state in a bipartisan manner.

Then I remembered we were talking about Maryland Democrats here. Party Chair Yvette Lewis exhibited their true attitude in a pithy statement:

Today, Marylanders expected to hear from Governor Hogan a clearly stated vision for our State’s future. Instead, we got another campaign speech, even though the campaign for Governor ended almost three months ago. With cuts to education, and higher tuition being forced on our students, the Governor should look for ways to lessen the load on the middle class, instead of balancing his budget on their backs.

Governor Hogan’s campaign speech today does not reflect the actions he has taken or has told us he will take in the future. He said our students deserve a “world class education”, yet he cut $143 million from education. He said he knows that nitrogen and phosphorus run-off is the cause of the bay’s pollution, but he overturned an executive order on the Phosphorus Management tool that would decrease nitrogen and phosphorus runoff, and announced he will try to get rid of the storm water management fee. Simply put, the rhetoric doesn’t match the record.

Voters chose him to “Change Maryland”, but it looks like we, the taxpayers, are getting short changed instead.

Well, let’s see here. I would say Hogan’s vision is one of prosperity based on the tried and true approach where helping business succeed makes a state more prosperous. It’s embodied in a phrase attributed to a Democratic President, John F. Kennedy: “a rising tide lifts all the boats.” If you heard this as a campaign speech, given the opportunity Hogan wished to take in introducing himself and comparing and contrasting his agenda to the failed one of the last eight years, well, be my guest. But you’d be wrong.

Now, about those “cuts to education.” I admit I have a public school education, but I think I did pretty well in math. So when I look at the FY2016 budget and I see that the two figures under the FY2016 column for Elementary and Secondary Education and Higher Education are both larger than those same two figures under FY2015, I wonder where the “cut” is.

Expressed in millions of dollars, it’s FY2016 (7,513 + 5.954) – FY2015 (7,451 + 5,855) = 161.

I will grant it’s not a huge increase like you may think education deserves – but we were running a deficit here, Mrs. Lewis, mainly because the last governor and member of your party spent money like it was going out of style. Now the adults are in charge, so increases are more modest – if you call $161 million modest, that is – but they are paid for without raising taxes. (I know you hate that, but those of us in the hinterlands think it’s a refreshing change.)

And speaking as a person who would like a balanced approach to improving the Chesapeake Bay, why is it you wish to penalize the farmers who are doing their part while dismissing the upstream participants from responsibility? Oh, and the term is not “storm water management fee,” it’s “rain tax.” Own it, because it was your idea.

So the fact that Hogan is spending only a few hundred million dollars more this year than last is considered “short changing” Marylanders speaks volumes about the fact the other side is still in shock that the natural order of things was disturbed and a Republican became governor. In their entire responses, it was all about spending more money. Can’t Democrats come up with a solution which doesn’t involve more money out of our pockets or more government?

Democrats always claim to be the party of the working man, but too many Marylanders aren’t working and aren’t keeping ahead in this state’s moribund economy. In November, voters decided a new approach was necessary and it’s clear by their responses that Democrats haven’t been getting with the program.

The state of our state: an ambitious agenda

Now that the shoe is on the other foot for the first time in eight years, thousands were interested in how newly-inaugurated Governor Larry Hogan assessed the state of our state. And it didn’t take long for him to assess that:

But while our assets are many, and our people are strong and hopeful, their state is simply not as strong as it could be – or as it should be.

Yet in reading through the speech, I didn’t see it as a negative in any way. Instead, Hogan proposed a number of solutions which, instead of spending money or growing government, generally worked in the opposite direction. Breaking the laundry list into eleven parts, it’s easy to summarize the Hogan plan for year one:

Analyzing and enacting portions of the upcoming Augustine Commission report on business competitiveness. The idea here is to make Maryland more business-friendly and hopefully wean the state’s economy off a long-term dependence on federal government jobs.
Restructure government to be more efficient and effective, using the new faces placed at many of the Cabinet-level departments.
Legislation repealing the “rain tax.” This may get some serious opposition from the environmentalist groups who believe this is a fair way to pay for Bay restoration efforts, even though the fees were set by county and only affected ten of 24 county-level jurisdictions.
Legislation proposed to exempt military, police, fire, and other first responder pensions from state income taxes. Eventually Hogan would like this to cover all retirement income. It’s an effort to improve Maryland’s dismal standing and reputation as a place not to retire.
Legislation to exempt the first $10,000 of personal property from taxation, a move Hogan claims would eliminate the tax for half of Maryland businesses.
Legislation to repeal the automatic gasoline tax increases baked into the Transportation Infrastructure Investment Act of 2013.
Restoring the local share of Highway User Revenues, a sore spot among the state’s rural counties in particular.
On education, strengthening the charter school laws. More controversial will be the oft-tried BOAST tax credit, which gives a tax credit to those who contribute to parochial or private schools. Hogan noted previous iterations have passed the Senate only to fail in the House.
Hogan has already shelved the Phosphorus Management Tool, and called for farmers and environmentalists to work on a better, more equitable solution. He also promised to address the “long-ignored impact of upstream polluters,” including the problems at Conowingo Dam.
An executive order to deal with the heroin epidemic. Lieutenant Governor Boyd Rutherford has been tasked with this issue.
Reinstating the Fair Campaign Financing Act fund by bringing back the checkoff on the tax returns, and also establishing a commission to examine the state’s redistricting process via executive order. If I have the time, I’d love to serve on that one because we really do need to reform the system.

Certainly it’s not the strongly conservative agenda some may prefer, but I would consider it a good first step. Much of the reform will have to go through the General Assembly, and perhaps the strategy is that of picking off just enough Democrats on various issues to build an ever-shifting coalition with the Republicans. The fifty Republicans in the House and 14 in the Senate would be joined by one group of Democrats who consider education reform a must, but may not agree with Hogan’s approach to cleaning up the Bay. Yet some Democrats may like that idea, but won’t budge on changing the gas tax – and so on and so forth. Just as long as Larry gets 71 votes in the House and 24 in the Senate, the means do not matter.

Because of the nature of how our state’s political process, the honeymoon for Hogan was barely existent. He had to have a budget mere hours after taking office, and some legislation he probably wouldn’t support was already being discussed in the General Assembly. Obviously Larry was working in a shadow government of sorts as he awaited inauguration, but once he took the reins that horse quickly accelerated to full gallop.

So while it’s not necessarily less government, at least Larry is working on making things more efficient and streamlined. Hopefully we can get it to such a level that it wouldn’t be missed when the reductions occur. That’s the next logical step.

A shift in the air currents

You probably recall that last month I detailed a study claiming that wind-created energy saved consumers $1 billion in last year’s “polar vortex.” Ironically enough, it was released on the anniversary of the 2014 polar vortex in the midst of more unusually cold weather at a time when the favored energy source of natural gas was serving the twin masters of electricity generation and home heating.

Yet a bone of contention for the wind industry has been the overdue renewal of a production credit of 2.3 cents per kilowatt hour, allowed over the first ten years of a qualifying project’s life. A five-year extension of this credit, sponsored by Senator Heidi Heitkamp of North Dakota, was included in an amendment to the Keystone XL authorization bill in the Senate, but the amendment lost 47-51. One opponent of the credit, Americans for Limited Government, called it:

(J)ust another example of the crony capitalism that runs rampant in Washington, D.C. distorting our nation’s energy markets while encouraging the non-economically sustainable wind farming of America.

Of course, the American Wind Energy Association, while touting the increased capacity put into place last year, lamented the lack of this tax incentive:

2014 saw the completion of 4,850 megawatts (MW) in generating capacity, with cumulative installed capacity increasing eight percent to a total of 65,875 MW. That current wind capacity will avoid over 130 million metric tons of CO2 emissions annually, equal to taking 28 million cars off the road, when the current wind capacity produces generation for a full year.

However, the amount installed in 2014 still falls far short of the record 13,000 MW that the U.S. wind energy industry was able to complete during 2012.

Industry leaders blamed uncertainty over federal policy. The renewable energy Production Tax Credit was only extended for two weeks at the end of last year, and has now expired again.

“Wind is gaining strength, but as recent history shows, we can do a whole lot more,” said AWEA CEO Tom Kiernan. “We’re looking forward to working with Members of Congress from both sides of the aisle so that a reasonable, responsible tax policy is in place that allows the wind industry to continue lowering costs and investing billions of dollars in U.S. communities.”

So is it a “reasonable, responsible tax policy,” or a boondoggle?

As noted above, the tax credit is equal to 2.3 cents per kilowatt hour. According to the Energy Information Administration, the average American home uses just over 900 kilowatt-hours of electricity per month. Rounding down to 900 for ease of math, it means that each month a wind-powered home creates a tax credit of $20.70 – over a year that adds up to $248.40.

In the same AWEA release, they claim that “U.S. wind farms now provide enough power for the equivalent of 18 million typical American homes.” If this is so, then the annual cost of this tax credit would be nearly $4.5 billion. Granted, this assumes that all wind capacity in the country would qualify for the credit, but stick with me.

Yesterday our not-so-illustrious former governor Martin O’Malley blustered in the New York Times that:

(R)enewable-energy businesses still aren’t even competing on a level playing field with fossil-fuel companies, which enjoy more than $4 billion in guaranteed federal subsidies each year.

Yet if you work out the wind power tax credit, that section of renewables could get a tax break exceeding $4 billion per year, not to mention the carve-outs states like Maryland provide for renewables at the expense of less expensive and more reliable fossil fuels. The benefit of having a share of a market worth tens of billions of dollars handed to renewable energy (or, as is more common, the treatment of this rent-seeking as a penalty paid by energy companies) is rarely factored into the equation, but stands as an advantage for the renewables side that traditional sources do not enjoy.

To really get a sense of where wind power can compete, not only should we permanently eliminate the Wind Production Tax Credit, but also do away with the market share requirements for renewables. Only then can we get a sense of where the market really is for that type of energy.

There’s a reason we have cars that run on gasoline, electrical plants which run on coal and natural gas, and fervent exploration for new sources of oil, just as there’s a reason wind turbine construction came to a near-halt in 2013. The market seeks its own level.

Yet another candidate, by George

As proof that the 2016 presidential contest is wide open on the Republican side, I give you the newest entrant: George Pataki.

Many of you are probably saying, “George who?” But as evidence that some people are more than just getting their name out there, Pataki served three terms as the governor of New York, actually establishing a period of sanity before the circus that was the Eliot Spitzer administration, which led to the David Paterson tenure before yielding to current Governor Andrew Cuomo. (Pataki, ironically, succeeded Cuomo’s late father Mario.)

But Pataki fits into the mold that Mitt Romney vacated: a more moderate Northeastern governor. Yet one has to wonder why he didn’t make a bid at the top of his game in 2008, just after leaving office. And at 69 years of age (he’ll be 70 later this summer) he would be older than many in the field. (He’s two years older than Hillary Clinton but almost three years younger than Joe Biden.) Granted, the current President is panned for his relative inexperience at the age of 53 so age may not be so much of a factor in Pataki’s case.

Like many governors, Pataki is running against Washington and has created his own superPAC called “We the People, Not Washington.” He’s also heading to New Hampshire to introduce himself to voters, perhaps believing he can make more of an impact in a state closer to home with an early primary.

But I look at this announcement with the realization that political analyst Larry Sabato has Pataki as a “seventh-tier” candidate – along with another blue-state Republican governor who you might know, Bob Ehrlich – correctly pegs Pataki’s chances. Their similarities include a long near-decade out of office, although in Ehrlich’s case it was thanks to two straight electoral defeats. As I noted yesterday, the list of GOP governors who are considering a run is very long because our side has a deep bench to turn to. Sabato lists close to a dozen possible current or former governors who are thinking about it.

And in looking at the political landscape Pataki would have to run in, he almost has to hope for a New Hampshire miracle where they embrace the populist message that government doesn’t have to be smaller, just run better. That’s not a direction the TEA Party wants to go.

Whether it’s a serious run or a last gasp at relevancy, you can’t fault a guy who had a pretty good twelve-year run as governor for trying. I just don’t know if he’ll succeed beyond the end of this year.

The new “it” candidate

In each Presidential cycle, there always seems to be a candidate who breaks through against the conventional wisdom choices and becomes popular because he is a new face and excites the populace. Barack Obama was one of those in 2007, and he rode that early wave of popularity all the way through to the White House. They are usually from the opposition party to the one in the White House.

But aside from Obama, usually that particular politician flames out early in the process just as Howard “the Scream” Dean did in 2004 and Herman Cain did in 2011. So whether the cycle is going back in the other direction or we’ll hear the same old song is up to the voting public.

This cycle’s early “it” candidate has been through the electoral wringer quite a bit in the last four years, though, so he’s not exactly a completely unknown quantity. But over the last couple weeks, since the Iowa Freedom Summit, the star of Wisconsin Governor Scott Walker has rapidly ascended in the Republican ranks, putting him up into the top tier of candidates. Walker drew praise from no less than Rush Limbaugh, who believed the Wisconsin governor has clearly expressed a conservative manner of governance in his tenure over a previously staunchly Democratic state. “I believe Scott Walker is the blueprint for the Republican Party if they are serious about beating the left,” said Rush.

Walker, who recently formed an exploratory committee, comes into the race as one of several successful GOP governors. It’s a group that includes recent or current governors in Rick Perry, Bobby Jindal, John Kasich, and Chris Christie, along with former governors Mike Huckabee and Jeb Bush. This group with executive experience has served to push back many of the other contenders, such as Ben Carson and Ted Cruz, who don’t have as much time in the national spotlight. (One exception in that group is Rand Paul, who remains among the top dogs.)

Yet the argument for a candidate like Walker is simple in light of the last six-plus years of having a president who learned on the job: it’s time to put the adults back in charge. In fact, you have to reach all the way down the Democratic field to Martin O’Malley to find a person who’s actually run anything on a scale that several GOP aspirants have – and O’Malley’s legacy was so poor that he couldn’t even get his lieutenant governor to succeed him in a majority-Democratic state. Otherwise, their top half-dozen contenders got their political experience mainly from the Senate and despite the oversized ego required to be a Senator they really don’t have a lot of qualifications for the job. Good or bad, four of the preceding five Presidents before Obama served as governors of their state.

The question going forward will be how much scrutiny Walker will receive, although having survived both a recall effort and re-election should mean there’s not too many secrets we don’t know about him. Much will be made about Walker’s lack of a college degree (he attended Marquette University but did not graduate) but it hasn’t stopped him from running the ship of state in Wisconsin. Consider him a magna cum laude graduate of the School of Hard Knocks.

I can see why Walker would be popular, though. He has the record of success against Big Labor Chris Christie can only dream of and beaten them back at the polls in a way John Kasich of Ohio could not. And while he doesn’t have the job creation record of a Rick Perry in Texas, his state also doesn’t have the energy potential Texas has. Wisconsin did rank fourth last year in the number of new manufacturing jobs, as industry has traditionally been the state’s economic bread and butter.

So is Walker the outsider the GOP rank-and-file is looking for? Time will tell, but he’s the buzz on social media right now and for good reason.