Hoping to win a GOP Cruz in 2016

Ted Cruz 2016As most who do not inhabit the space under a rock now know, Texas Senator Ted Cruz formally announced his candidacy for President on Monday. While he Tweeted the news just after midnight, the formal announcement came in an address at Liberty University later that day.

Perhaps the best part about the announcement, though, is the absolute conniption fit those on the Left had at the news. First I heard from the so-called “factivists” at the Democratic National Committee:

President Ted Cruz.

If you’re like us, Michael, just reading that phrase probably sent shivers down your spine or produced a pretty serious roll of the eyes.

But as of this moment, Texas Senator Ted Cruz is officially running for president, and if we don’t do everything in our power to stop him, the possibility of President Ted Cruz could become a reality.

So here are three things everyone needs to know about wannabe President Ted Cruz:

  • He led the GOP’s government shutdown, costing the economy a staggering $24 billion, as part of a personal crusade to take away quality health care from millions of Americans and give control back to the insurance companies.
  • He has obstructed everything from raising the minimum wage to paycheck fairness to immigration reform.
  • He would give corporations and the richest Americans huge tax breaks, at the expense of working Americans.

Interesting how these “factivists” don’t know the real facts. And by the way, I don’t have too much of a problem with a President Ted Cruz. My eye roll is at your abject ignorance.

The government “shutdown” of 2013 (which was really a slowdown because essential employees still had to work) only “cost” $24 billion according to an estimate by Standard & Poor’s. Supposedly it was the amount taken out of the economy. But some believe that was a dubious estimate because it didn’t account for shifts in productivity. It was a gamble, where the payoff could have been a savings of $1.4 trillion over 10 years by the repeal of the ill-advised Affordable Care Act.

As for the second portion of that statement, the real question is whether we were in better shape when an insurance company “controlled” your health care or whether some far-off bureaucrat controls it. The real goal is patient control and I suspect Cruz would work us back in that direction more quickly, vowing in his address to Liberty University to make “health insurance personal and portable and affordable.” That’s just SO scary.

Secondly, it seems to me the people of Texas sent Cruz to the Senate for the very reason of obstructing the list of items these political “hacktivists” would like to foist upon us. Raising the minimum wage is a proven job-killer, the Obama administration needs to look in the mirror when complaining about “paycheck fairness” and immigration reform needs to begin with securing the borders.

And of course, whenever someone talks about simplifying the income tax system it’s always portrayed by Democrats as tax cuts for the rich. Why shouldn’t our tax form be only a page or two?

Of course, then the other liberal outlets delivered their usual amount of snark, calling his speech a revival of obsolete evangelism, reminiscent of televangelists, or sniffing that students were forced to attend. All that obscures the real point: Cruz laid out a very conservative agenda on a number of issues, and it will take a strong dose of common sense to undo the damage of the last six years.

I don’t think it’s coincidental that I have written this piece and found that my colleague Cathy Keim had her own thoughts. This quick take is tonight’s dose of Cruz, and tomorrow morning you’ll get to see what she has to say. It will be worth the wait, I promise.

A doable goal?

Yesterday we received word that the unemployment rate dropped again, with another month of job growth in the 200,000 range. It’s not the Reagan recovery of the 1980s – when we had 15 straight months of job growth in 1983-84 that would put this latest number to shame, including a whopping 1,115,000 jobs created in September 1983 – but it is a reasonably decent run.

Yet just as manufacturing didn’t share in the Reagan-era gains as much as other sectors did (in fact, it lost some ground), the second Obama term has also fallen well short of manufacturing growth goals. I’ve discussed this group and its job tally before both here and on my former American Certified site, but the Alliance for American Manufacturing tracks progress toward the one million manufacturing jobs Barack Obama promised in his second term.

AAM’s president Scott Paul isn’t all that pleased about it, either.

The good news is that manufacturing jobs have grown over the past few months. The bad news is that they haven’t grown fast enough. I’m very concerned that a surge of imports from China and a paucity of public investment in infrastructure will continue to hamper the great potential of the productive sector of our economy.

Hopes of achieving the White House goal of 1 million new jobs in the Administration’s final term are fading fast. Without some progress on the trade deficit and a long-term infrastructure plan, I don’t see that changing. No doubt the economic anxiety that many Americans still feel is compounded by stagnant wage growth and diminished opportunities for middle class careers.

Two of the key issues AAM harps on are, indeed, currency manipulation and infrastructure investment, although they also took time recently to praise Obama’s manufacturing initiatives and chastise Walmart for their ‘buy American’ effort because much of it comes in the form of produce and groceries. Around these parts, we don’t really mind that emphasis because we produce a lot of American-grown poultry so if Walmart is willing to invest in us we’re happy to provide. (Then again, that promised distribution center would be nice too.) Of course, AAM is backed in part by the steelworkers’ union so one can reasonably assume their view is the center-left’s perspective.

Even so, the group is useful because it makes some valid points. And I think we should have some focus on creating manufacturing jobs in Maryland, as the defunct gubernatorial campaign of outgoing Delegate Ron George tried to do.

Thus, I think the incoming Hogan/Rutherford administration should make it a goal to create 50,000 new manufacturing jobs in Maryland over his first four-year term – if he succeeds, you better believe he deserves a second. According to BLS figures, as of September an estimated 103,000 people are employed in manufacturing in Maryland. But if you look at past data, it’s not unprecedented to have 150,000 (as late as November 2002) or even 200,000 (as late as June 1990) working in the field. And when you take the confluence of a state that is supposedly #1 in education and combine it with the proximity to both major markets and inexpensive energy sources, there’s no reason we should have lost 30,000 jobs in the manufacturing sector under Martin O’Malley – or 16,000 under Bob Ehrlich, for that matter.

But how do you turn things around in four years? Maryland has to make people notice they are open for business, and there are some radical proposals I have to help with that turnaround.

First of all, rather than tweak around the edges with lowering the corporate tax rate, why not just eliminate it altogether? The revenue to the state from that toll is $1.011 billion in FY2015, which is far less than the annual budgetary increase has been. Would that not send a message that we are serious about job growth and immediately improve our status as a business-friendly state?

The next proposals are somewhat more controversial. To the extent we are allowed by the federal government and its environmental regulations, those who choose to invest in the state and create jobs should have an easier path to getting environmental permits and zoning approvals. Even if a moratorium is temporary, making it easier to deal with MDE regulations would encourage job creation. Most of Maryland’s towns and cities already have industrial sites available, but we shouldn’t discourage construction in rural areas if a job creator needs more space.

We’ve also heard about the construction of the Purple Line in Montgomery and Prince George’s counties and the Red Line in Baltimore – combined, the two are expected to fetch a price tag of $5.33 billion. For that sum, it seems to me we could build a lot of interstate highway – even if this $4 million per mile figure is low (and it would be 1,267 miles of highway based on the combined cost of the Red Line and Purple Line) we could do a lot to assist in moving goods through and from Maryland, whether by finishing the originally envisioned I-97 through to the Potomac (and with Virginia’s assistance, to I-95 near Richmond) or enlisting Virginia and Delaware’s help in improving the U.S. 13/58 corridor to interstate standards to provide a secondary route around Richmond, Washington, and Baltimore.

Once we eliminate the onerous restrictions proposed for fracking and begin to open up the western end of the state for exploration, and (dare I say it?) work on making Maryland a right-to-work state like Virginia – or even creating right-to-work zones in certain rural counties like the Eastern Shore and Maryland’s western panhandle – the potential is there to indeed create those 50,000 manufacturing jobs – and a lot more! It just takes a leader with foresight and the cajones to appeal to the Democrats in the General Assembly as well as a Republican Party unafraid to take it to the streets in the districts of recalcitrant members of Maryland’s obstructionist majority party.

But even if we only create 40,000 or 25,000 manufacturing jobs through these policies, the state would be better-positioned to compete for a lot of other jobs as well, and the need is great. For too long this state has put its economic eggs in the federal government’s basket and there’s a changing mood about the need for an expansive presence inside the Beltway. Rightsizing the federal government means Maryland has to come up with another plan, and this one has proven to be a success time and time again across the nation.

AC Week in review – August 10, 2014

Thanks to a slow week a few days back I skipped an installment of my AC week in review – but I’ve come back with some new stuff.

On Friday I posted a piece about Andy Harris’s Salisbury town hall meeting. It was intended to be a followup of sorts to this piece I posted at the AC site regarding questions which should be asked at these gatherings – and as you hopefully read Friday, my question in that vein was indeed answered by the Congressman.

Oddly enough, the answer to my question at that town hall touched on a concern expressed by my AC blogmate Ed Braxton, who wrote about America’s high tax rates in a piece he did a week ago. But in a seeming contradiction, Ed penned a piece dealing with the decline in the necessity for manufacturing labor because workers today are much more productive than our forefathers were, while I noted that manufacturing employment was on the upswing last month.

One thing I didn’t ask Andy Harris about was his inclination to support the Ex-Im Bank, a saga which has played out over the last few months as some manufacturers would like to keep it going while conservatives consider it a piece of corporate cronyism. There aren’t too many session days left before the September 30 deadline, a fact I mentioned in this piece from last week.

There is one more item I wrote last week, and I’m hoping it gets on the site early next week because it looked at the recent EPA power plant emissions hearings in Pittsburgh. Regardless, it’s a topic which deserves comment and the opportunity is still there.

As I recall, there are a couple other stories I’ve been following which reach milestones as well. We may learn the fate of the OCTG complaint against South Korea this week, and there’s movement elsewhere on the trade front, too. I might see about writing a piece on something I learned Thursday night as well.

So hopefully my next installment will be chock full of good information. Generally I spend time on the weekends writing for AC so it’s ready early in the week. Looks like I may be busy.

Climbing rather than digging

I saw Delegate and Senate candidate Mike McDermott at a tri-county Republican Central Committee meeting the other evening, and he updated us on his campaign – in a nutshell, he said turnout would be key. Pretty basic stuff.

Unfortunately, that basic stuff seems to elude Maryland Democrats when it comes to the economy, as McDermott explained in a separate statement I received Wednesday:

As Americans, we understand that people can make mistakes. As we grow up, we learn from our mistakes so that we do not stumble a second time. Wise people do not often make the same mistake twice.

There is an old proverb which states, “Those who cannot remember the past are condemned to repeat it.”

Governor O’Malley and Senator Mathias are not exceptions to this rule.

Eight years ago when these two men took office together, Maryland enjoyed a billion dollar surplus at the end of Republican Bob Ehrlich’s first term as governor. Our state played host to 11 Fortune 500 companies. We were #25 on the list of “Business Friendly States,” poultry operations were expanding, and the future of agriculture in Maryland looked bright. Our people were happy to live here and most had no thoughts of moving away.

Eight years with O’Malley and Mathias have shown the devastating effects of their big government economic policies and made it clear that they do not learn from their past or their mistakes. Their shared philosophy promoting government as the answer to any problem has turned our surplus into deficits. While every state experienced the recession, Maryland has struggled to regain its footing, and some of our counties are simply not recovering. It is a failure of policy, not our people.

Of those 11 Fortune 500 companies…only 1 remains in Maryland and that is McCormick Inc. Based on recent news accounts, even the folks who gave us “Old Bay” seasoning are soon to relocate to Pennsylvania. These companies have not gone out of business, they just cannot afford to operate in a state run by folks who do not know how to be “business friendly.”

Being known as a “Business Friendly” state should be our goal. O’Malley, and his apologists like Mathias, have moved us from #25 all the way down to #42. We are surrounded by businesses that have closed shop, companies that simply do not exist anymore, and large retailers that have boarded up and moved away. Business has a thin bottom line that liberal lawmakers have never understood. Every increase to the cost of doing business must be passed on to consumers who have less money to spend. Liberals apparently skipped their Economics 101 class to attend Advanced Hole Digging 301.

It’s obvious that Maryland’s not doing it right. Just look at the survey of small business people I cited yesterday and compare us to Texas or even Virginia. We could do far worse than to replicate the business climate of Virginia or Texas – although every aspect may not be a perfect fit, the overall change would likely steer us in the right direction. Just look at North Carolina as another example – while they ranked 44th in State Business Tax Climate (Maryland was 41st in the same survey) the Tax Foundation study authors noted:

While not reflected in this year’s edition, a great testament to the Index’s value is its use as a success metric for comprehensive reforms passed this year in North Carolina. While the state remains ranked 44th for this edition, it will move to as high as 17th as these reforms take effect in coming years.

A leap like that would take North Carolina from a ranking which lags behind all its adjacent states and vault them into second behind Tennessee.

And while McDermott doesn’t get into policy specifics, let me whisper something into his ear: a complete elimination of corporate taxes would only “cost” the state $1.011 billion, or less than 3% of its budget. The year-over-year increase was larger than that! If Larry Hogan has that $1.75 billion of waste in his pocket, someone should get that corporate tax elimination proposal on his desk before February is out. It would be nice to have the first session after an election be devoted to major tax cuts rather than big hikes like 2007 and (to a lesser extent) 2011 were. (See update below.)

It truly is Economics 101: if you take a smaller slice from business, their profitability grows and they can be larger players in supporting the regional economy by investing in new workers and equipment. Those new workers and equipment provide more value, which builds the tax base and allows government to cut rates just a little bit more.

At one time, Maryland was booming – a condition I can attest to because that’s why I came here in the first place. Let’s see what we can do to get back to those conditions.

Update: In a subsequent release, McDermott gave me half a loaf, advocating for a 50% reduction in corporate taxes. Not bad. On the economic front he also calls for cutting income taxes, streamlining bureaucracy and relieving the regulatory burden to give Maryland “an attitude as a state that our job is to ‘permit’ not ‘deny’,” and allow the first $50,000 of retirement income to be tax free.

AC Week in review – July 27, 2014

Thought I was missing something this morning. Oh well, it gave my previous post a little time to breathe.

Actually, I had a busy week outside the AC realm – actually, outside the entire realm of writing. Running around for the outside job will do that to you.

Fortunately, my slack was picked up around the AC world. Take, for example, the news that Volkswagen’s new SUV will be made in America – more specifically, at the Chattanooga plant that just became unionized via the back door. So it’s good news for the plant and perhaps better news for American consumers, even those residing locally as we have a relatively new Volkswagen dealership.

While German-based VW brings more production to America, though, others are considering the opposite move. AC colleague Ed Braxton reveals one reason why in his look at high domestic business tax rates, but the practice of tax inversion has led to a call from the Obama administration for “economic patriotism.” (I got to expand on this a little bit on the Patriot Post as well.)

But whether it’s Volkswagens coming in or businesses moving out, infrastructure remains a concern. Barack Obama’s recent stop in Wilmington was the site of his unfortunate Malaysian Flight MH17 comment, but it was originally intended as the backdrop for a new infrastructure initiative and announcement of an upcoming summit on the subject, all thanks to the I-495 bridge debacle.

(When you think about it, though, we really have to give credit to those up in Delaware who discovered the issue and are addressing it. You may recall a couple other interstate bridge collapses in recent years with tragic results.)

Next week should be a more fruitful week, although Washington will soon be in vacation mode. I’m sure I can find something to write about.

AC Week in review – July 20, 2014

It was a varied palette of items written about on my American Certified blog, The Sausage Grinder. Maybe it was a little more like scrapple. Regardless, I made several contributions to the discourse.

For most of the spring and summer, I’ve been following a sort of obscure Commerce Department case regarding allegations of Korean dumping of a processed steel piping product called Oil Country Tubular Goods – it’s strange that Korea is an OCTG producer when it has little oil. They made a decision favoring American steelworkers, which got positive reaction from a variety of interests.

One of those I quoted in the Commerce piece was the leader of the steelworkers’ union. His fellows at the United Auto Workers got an unexpected surprise from Volkswagen, which let the UAW in the back door despite workers at the Chattanooga plant voting against the UAW in February.

The concept of economic patriotism was brought out last week in a letter from Treasury Secretary Jack Lew, who pressed Congress to do something about the practice of tax inversion, where companies transfer assets overseas to take advantage of lower tax rates. While I didn’t bring up the argument in my piece, locally it’s just like the practice of stores selling big-ticket items locating just across the Delaware line so they can advertise their “no sales tax” prices and hope to increase volume accordingly.

Finally, I restated the obvious: Obamacare rates will go up in 2015. In a government takeover of the health insurance industry, did you really expect otherwise?

As always, I’m working on new stuff for next week, with other stories to follow.

Time to get serious

While I mentioned the other day that not much fresh news would come from the political races until after the Independence Day holiday, that doesn’t mean that “Maryland’s top conservative blogger” (at least according to David Gerstman, contributor to Legal Insurrection) won’t have his say on things. I wanted to open up by taking a look at Larry Hogan’s “Hogan’s Plan” for the state’s finances.

Over the course of the primary campaign I was critical of Hogan for having such a vague “to-do list” of priorities he would have as governor, and this wasn’t a whole lot better. Be that as it may, I’m going to try and work with it in the real world anyway.

In Maryland, the governor perhaps has the most power of any such chief executive in the country – particularly if he wants to get serious about cutting the budget. The General Assembly can’t come back with a larger budget total, although they can tweak around the edges to some extent. So let’s go with the baseline established by Martin O’Malley when he set the FY2015 budget that takes effect tomorrow at $39.224 billion. Hogan promised that:

On day one, he will begin to run the government more cost-effectively and honestly. The Hogan-Rutherford administration will implement the recommendations of past audits, conduct additional independent audits of every state agency, and immediately get to work eliminating duplication, fraud, and waste to make sure that every cent of taxpayer money is spent efficiently.

By his reckoning, there is “$1.75 billion in waste and abuse” in state government. Figuring this with my public school math, that is 4.46% of the state budget – which seems like a nice little chunk of change until you realize the difference between the FY2015 and FY2014 budgets is $1.886 billion. In other words, the “waste and abuse” only accounts for about the same amount of money as an average annual increase. Something tells me there’s more low-hanging fruit than that. Yet Hogan says:

By cutting the waste and abuse from state government, he will be able to save the taxpayers of Maryland billions of dollars without having to cut our priority programs and agencies. It is a simple solution to a problem that has plagued our state for the last eight years, and it will enable him to cut and eliminate the regressive taxes that have crushed middle-class families and small businesses.

Nothing is ever that simple, but on the other hand his opponent is willing to blow up the budget with millions and millions of dollars in additional spending. If Anthony Brown simply maintains the Martin O’Malley glide path of 4% budget increases each year, this is what the next four budgets would look like:

  • FY2016: $40.793 billion
  • FY2017: $42.425 billion
  • FY2018: $44.122 billion
  • FY2019: $45.887 billion

Compared to level-funding the budget, that’s an additional $16.331 billion in tax dollars needed and you can bet your bottom dollar the Democrats will take all that and more from hard-working Maryland families.

And if you look at what Anthony Brown is promising, particularly in the area of education with universal pre-kindergarten, student loans for children of illegal aliens, creating a new Office of Educational Disparities, and providing extra money for HBCUs, assuming 4% annual increases may be on the low side.

The other part of Hogan’s Plan deals with business climate:

Maryland’s unemployment rate is 75% higher today than it when the recession began. In fact, the nonpartisan Tax Foundation ranked Maryland #41 in the nation for business climate. The main reason for this unfortunate reality is that it costs too much for job creators to stay in or come to Maryland. He will reduce the burden on job creators, open Maryland for business, and make our state more competitive with others in our region. The Hogan-Rutherford administration will overhaul the Department of Business and Economic Development to focus on aggressively attracting and retaining job creators in order to bring more and better-paying jobs to Maryland.

This is where the lack of specifics is really aggravating, particularly when Hogan’s vanquished opponents directly addressed the issue by proposing corporate tax cuts. In the FY2015 budget, corporate taxes bring in $1.011 billion so eliminating them entirely is affordable if you assume Hogan has the $1.75 billion of waste and fraud elimination in his pocket. Now THAT would turn some heads, but Hogan refuses to make the commitment.

Let’s look at Brown’s “Competitive Business Climate Tour” plan, though. There are nine “areas of focus” therein, but I’m going to focus on five of them:

Tax Liability: Reform our tax code to ensure that it reflects our current economy, enables state and local government to adequately fund our shared priorities, and encourages job generating investments in Maryland.

If you want the tax code to reflect our current economy, rates should be decreased to match the zero growth Maryland is enjoying right now. Unfortunately, it will instead be certain to “enable…government to adequately fund” all the brilliant schemes these liberals come up with. And don’t be surprised if combined reporting isn’t among those items designed to “encourage” investment in the state by hiking taxes on national companies.

Cost and Reliability of Energy: Promote the cost-effective generation of energy and improve the reliable delivery of energy through the grid to businesses and residents while transitioning to more sustainable energy sources.

There’s either one of two ways to go here: we get a “grand bargain” where fracking is finally allowed on the western end of the state in return for “investment” in wind turbines off Ocean City (perhaps via a tax on natural gas producers), or we just get the necessary subsidies to make these unsightly and inefficient wind turbines and land-wasting solar panel farms a reality. Look for the “renewable energy portfolio” to increase the percentage of “sustainable energy sources” to levels unsustainable for utilities to address without huge increases in consumer bills.

Cost of Living: Expand access to affordable housing and healthcare, healthy food options and cost-effective transportation to create a reasonable cost of living for all Maryland families.

When you see the words “expand access to” they really mean “spend more on,” with two exceptions: expanding access to “healthy food options” will involve the elimination of those options deemed unhealthy, such as fast food outlets. You will eat your broccoli and like it. The same goes for “cost-effective transportation” because, for many, transportation will become cost-ineffective: gas taxes will increase in order to subsidize mass transit, which is only cost-effective to the inner-city user whose farebox donation isn’t nearly enough to cover its cost.

And just how is a “reasonable cost of living” determined by the government? To me, that is determined by the market and the desires of those families as to their priorities.

Reliable and Predictable Legal System: Provide a civil justice system that allows deserving individuals to get justice and hold wrongdoers accountable while ensuring that awards are fair and equitable.

That is called tort reform, and the chances of pigs flying in Maryland are probably far higher than passage and enforcement of anything of the sort – especially if Brian Frosh is elected as AG.

Small- and Medium-sized Business Access to Working Capital: Ensure all viable small- and medium-sized businesses have access to affordable capital by working with lenders and businesses to maintain a strong environment for growth.

When I read this, I immediately thought: nice little financial institution you got there, be a shame if something happened to it. It’s the market’s job to figure out if a business is capital-worthy, not government’s.

My gosh, Larry Hogan, you have to do better than this. There are so many holes and code words in Brown’s plans that it should be easy to come up with something actually viable for keeping businesses and people from leaving the state.

A little change I can believe in (or at least judge on its merits)

I’ve been highly critical of Larry Hogan’s single-track campaign of “jobs, middle class families, and restoring our economy,” not because the concepts aren’t good but because the details were scarce. I got a slight peek behind the curtain last night in an e-mail, so let’s see what we can make of it. The subject line was “Maryland was ranked 49th out of 50.”

For too long, families in Maryland have suffered under the policies of an administration more focused on political gains than the well-being of average Marylanders:

  • HIGH TAXES: Average Marylanders are crushed by the taxes they pay and I will fight to bring tax relief to every Maryland family.
  • EDUCATION: Parents and teachers agree that Common Core is a mess. Its rollout has left students confused, parents out of the loop, and teachers scrambling to learn a new curriculum just hours before having to teach it. We need to hit the pause button on Common Core and give control back to teachers and parents.
  • HEALTHCARE: Under the leadership of Anthony Brown, more Marylanders have lost insurance than gained it under the Maryland health exchange. Maryland was the first state to completely abandon its exchange, which cost taxpayers over $260 million to build, only to waste another $50 million on new technology. We need to get out of this boondoggle completely.

The state of Maryland cannot afford four more years of misguided policies and failed leadership. And after destroying the state’s economy and dropping the ball on his only responsibility, it’s clear Anthony Brown does not deserve to be our next governor. (All emphasis in original.)

With regard to “high taxes,” I was told Hogan would employ a “reduce-spending first approach.” Does this signal a change in response to others who would work to eliminate the income tax, in part or as a whole? Or will this just be tinkering around the edges by simply returning us to where we were pre-O’Malley? Admittedly, that wouldn’t be a bad thing but true leadership would try and do so much more. It’s still sort of hazy on that front.

On Common Core, I had seen where Hogan’s team was making this statement on social media, but this is as bold a statement I’ve seen as a more “official” policy stance. I would like to see the control returned to teachers and parents (as well as allowing money to follow the child wherever his or her parents choose to educate) but in order to do that there needs to be more than a “pause” placed on Common Core. It’s telling that the state doesn’t even call it “Common Core” anymore, as they have changed the terminology to the more innocent-sounding “Maryland College and Career-Ready Standards.” Larry would be fighting the powerful teachers’ union on this one.

I also agree with trying to “get out of this (healthcare) boondoggle completely,” but my caution is that it’s a nice sentiment but we need a plan to do so. We may not do any better under a federal exchange, but any further action would have to wait until the second half of his term when – hopefully – sanity returns to Washington and Obamacare is scrapped for a more market-based set of options.

I’m more pleased to see at least some movement in the right direction on broadening the platform as the primary gets closer. But I have to warn the Hogan team that we can’t win on telling people Anthony Brown “does not deserve to be our next governor.” It won’t work. There has to be an alternative presented, preferably a conservative one, and there has to be a plan to address the criticism sure to come that cuts to government will hurt the poor and downtrodden, with minorities hardest hit.

Unfortunately we live in a state which has voted against its best interests for so long that people are conditioned to vote the same way they always have and then complain when nothing changes. They say jousting is the official Maryland state sport, but I think it’s complaining about how the politicians govern and the Orioles underperform. None of us can put Baltimore in the World Series, but we can change the leadership in the state – personally I think David Craig is the best choice for that, but if Hogan gets the nod consider him warned that the other side will stop at nothing to keep its power. Being bipartisan has to work both ways.

The great debate

Last night (because by the time I finish this it will be Sunday) the four Republican gubernatorial candidates got together at Salisbury University to discuss their vision for the state, an event which was televised locally and will be made available statewide at a future time.

With only one hour to discuss issues, a 2-minute time limit on answers, and questions written by the local Chamber of Commerce – the event was moderated by their executive director, Ernie Colburn – the questions were somewhat predictable given the bread and butter of these campaigns deals with their perception of the state’s sluggish economy. The time constraints only allowed for five questions after a two-minute opening statement and prior to a 70-second close. The five questions had to do with the tax increases and structural deficit, creating a business-friendly tax code, addressing the challenges in attracting jobs, a seat at the table for the Eastern Shore, and restoring highway user funds. I would have liked one more directly addressing agriculture, but we didn’t get the opportunity to write the questions.

One other weakness with the format of the debate is that the candidates were placed in alphabetical order, which is fine, but initial responses were not properly rotated. Charles Lollar either answered questions first or last, as did David Craig, while Ron George and Larry Hogan had the benefit of hearing at least one answer. In this narrative, I will discuss the candidates in order of their opening statement, which happens to be alphabetical order beginning with the Harford County Executive.

First of all, David Craig perhaps had the best-organized presence there, which included running mate Jeannie Haddaway. Some of Craig’s blue-clad staff were there, but many others had Craig lapel stickers advocating his support of concealed carry. They all sat in one section of the audience, a section which I sat immediately behind. They also had an event close by the University beforehand, so David made a day of it.

In his opening statement, Craig made sure to mention his running mate and her ties to SU, from which she graduated. “Jeannie and I are very much alike,” said Craig, referring to their respective families’ long history in Maryland. “I want the twelfth generation (of Craigs) to still live in Maryland,” said David.

He stressed his experience in balancing nine budgets when addressing the structural deficit, pointing out that he had reduced taxes and cut spending during his tenure. Craig would not kick pension or health care benefits down the road as he implied the current administration has done, instead proposing more “paygo” projects funded from existing revenues rather than bonding, specifically noting casino proceeds as one source. (It bears noting that it would take a legislative act to do so, as casino proceed percentages are set by the General Assembly and the plurality of nearly 50 percent is supposed to go to education. So this could be construed by others as “cutting education.”)

In adopting a more business-friendly tax code, David pointed out we shouldn’t be taking the dollars in the first place. He proposed slashing the business tax rate from 8.25% to 4% in stages, but also explained that many businesses such as S-corps use a personal tax form to report their business income. He also wanted to address the sales tax, gasoline tax, and tolls.

Craig also remarked that Harford County had gained 8,000 jobs at a time the state was losing them, but his focus wouldn’t be so much on bringing jobs in as it would be keeping them here. “Just 25 percent of businesses are hiring” right now, said Dave, and he would address this by getting a more proactive Department of Economic Development and expanding broadband capabilities. We would not be Silicon Valley, said Craig, but we could be “Silicon Bay.”

In terms of giving the Eastern Shore a seat at the table, Craig played up his decision to secure Jeannie Haddaway as his running mate. “The Craig-Haddaway ticket is going to have someone (from the Shore) who will always be on the second floor, not just at the table.” He continued by saying Haddaway gave up a safe seat in the House of Delegates to try and benefit her region.

Craig also vowed no money to the Red Line or Purple Line and promised that counties will get their highway user funds back in the first year of a Craig administration.

He closed by taking a subtle jab at opponent Larry Hogan, saying that we didn’t need to change Maryland, “just change what’s on the second floor.” Between him and Jeannie Haddaway, they were 14-0 in beating Democrats, he concluded.

Overall, I thought Craig gave a solid, steady performance. He rightfully played up the presence of Haddaway on the ticket, although I suppose if you were watching from other parts of the state it could be seen as pandering to some extent. Yet of all the running mates, she’s probably the most qualified to succeed David if the unthinkable should happen.

Ron George was blunt in his opening statement: “This is about the economy…the other side has not solved one problem.” The facts were ominous, as he told us about 73,000 unemployed Marylanders and a manufacturing sector “still stuck in the recession.” He was a working man, with a career and business he interrupted to serve his fellow citizens.

Ron would address the structural deficit by combating waste through independent audits and putting together a Spending Affordability Commission that doesn’t paint such a rosy outlook – they predicted 4.5% GDP growth in FY14 and 6% next year. “These rosy forecasts have got to stop,” said Ron. He would also address the state’s bond situation, where debt service costs the state over $1 billion a year.

But he was realistic enough to realize “I can’t go in there as a king,” meaning he can’t just change government overnight. But what we could change, he would – “I’m guaranteeing you the things I’m saying,” said George. Yet he made an excellent point about the challenges to attracting jobs by asking why we look down on the tradesman, instead emphasizing the four-year degree? There’s no focus on that sort of education, Ron added. Being a guy who has an interest in “made in America,” this was one of the two highlights of Ron’s night insofar as I was concerned, with the other coming in the next question.

After Ron talked about the Eastern Shore being “in my blood,” he addressed such items as more state money for tourism (with a proposed slogan – “the Maryland Eastern Shore: life as it should be” – bringing back the canning business, protecting farms, expanding broadband, and reducing sales tax on this side of the Bay. But the best idea went back over 50 years, to a time when each Eastern Shore county had its own State Senator. “I think we need to have a Constitutional Congress in this state and go back to something that makes it fair for the Eastern Shore and the rural areas,” said Ron. And while I said 48 Senators (two from each county) I still think it’s an outstanding idea.

Ron used the highway user fund question a little differently, making the case that he would be “a governor for all of Maryland” and that helping Baltimore City would assist the rest of the state. But he would repeal the automatic increases in the gasoline tax and instead of a “reactive” transportation plan his would be proactive.

He concluded by promising to be a “hard worker” as governor and to treat all fairly, while also mentioning a little about running mate Shelley Aloi, who was also at the event.

Something I’ve observed about Ron, though, is that he comes across as ill at ease in a public speaking situation. He also rattled off a lot of numbers in his presentation, and perhaps sealed his image as a policy wonk because he’s also the only candidate who wears glasses. I noticed him looking down reading a lot, instead of looking at the camera. He also had very little presence at the event, which led to his only getting a smattering of applause after questions rather than a rousing ovation. I have no doubt he would be a hard-working governor – and as a policy wonk type myself I loved a few of his ideas and goals – but he’s going to have to overcome a lot to get there.

I was surprised that Larry Hogan didn’t have a larger presence there as well. In his opening he alluded to three recent visits to Salisbury University before settling into the familiar bromides of not desiring to be something, but to do something and being fed up with politics as usual. He also brought back the oft-repeated refrain of the state being on the wrong track and the emphasis on jobs, the middle class, and restoring the economy.

Of course, in the first question Larry brought up the $9.5 billion in new taxes, but pointed out that he worked for an administration which finished with a cash surplus that’s now once again a structural deficit eight years later. He would cut spending first, then roll back taxes where he could. Recently, Hogan added, he put out a plan to address $1.75 billion just by enacting existing recommendations.

Another familiar Hogan theme was that of our state being 41st of 50 in business-friendliness. Our corporate tax rate was “not competitive,” personal taxes were too high, and regulations too stringent. He would eliminate the hostile attitude and vowed “Maryland will be open for business again.”

After another regular reprisal of those things we’ve lost in terms of businesses, Larry made the case that there’s been “no discernible response” from Annapolis. He asked how an administration could be pro-jobs yet anti-business?

As far as the Eastern Shore goes, Hogan called the current administration “openly hostile” to the Shore, adding that he spoke to Jim Perdue, who told Larry he “feels like they are attacking our business.”

“There’s been a war on rural Maryland,” Hogan added.

Larry then made a statement some have already jumped on, saying “I agree with David; I think Jeannie (Haddaway) is terrific. I actually appointed Jeannie to the legislature and if I’m lucky enough to be governor then I’d think she’d make a terrific ombudsman and maybe liaison for the Eastern Shore.” He then added that the Shore is “not the only place neglected.”

In that respect, Larry is probably correct because each area of the state has needs not being addressed, But as a whole our part of the state is the poorest and tends to have higher unemployment. It could easily be argued we’re already in a recession.

He then promised to restore the highway user fund cuts that were “devastating” to local governments, perhaps by chopping away at the 53% of transport dollars spent on mass transit.

Hogan warned in his close that this was the “last chance to turn this state around,” this being “a fight for Maryland’s future.”

As a whole, Hogan’s performance came across to me as “meh.” The problem is that I’ve heard it all before, and this particular debate format and questioning lent itself to Hogan’s perceived strengths. Yet he never hit anything out of the park.

Although he appeared a little tired and troubled, Charles Lollar spoke with the most passion, generally motioning with his arms as he spoke. (Since I couldn’t watch the feed, I don’t know if this was seen at home.) Once he made the case that the state is going in the wrong direction, he mentioned that even the Democratic strongholds of Montgomery and Prince George’s counties and Baltimore City believe “the course is wrong.” He claimed his economic plan had the approval of Dr. Arthur Laffer and his health care plan won favor from Dr. Ben Carson, but vowed to “aggressively look for non-partisan solutions.”

So when Lollar stated that spending had jumped 36% over the last eight years (including $2.3 billion this year), he announced his intention for a taxpayers’ bill of rights (or TABOR) law to hold spending in check and to phase out the income tax in five years. “How would you love to wake up in five years, in 2019 in Maryland, and not have a personal income tax that you have to pay?” he asked.

He repeated the Laffer endorsement in his next answer, as well as the TABOR reference, but added that our legislature and governor doesn’t understand business. “We have a governor who hasn’t had a job in 28 years,” Lollar quipped. But he also dropped a bombshell on the group by proposing term limits. “It’s time for us to get rid of the career politicians,” he opined. Me? I love the idea, but it also has to come with the discipline of keeping the non-elected regulatory state in check.

Lollar pledged his running mate, Ken Timmerman, would address the challenge of attracting jobs by using his investigative skills to focus on waste and the 84 new taxes and fees. He also made the case that the biggest challenge to business is simply staying in business.

Charles wanted to “make the Eastern Shore a priority,” noting that we don’t get a good return on our tax dollars and would rather just be left alone by regulators. They’re “tired of being picked on,” said Lollar. He also brought up the Hudson lawsuit.

As for the highway user funds, Charles promised to stop the Red and Purple Lines, which were enacted under “reckless leadership.” He also wanted an “enforceable lockbox” over the funding.

Lollar got the last word in the debate, saying the job calls for real leadership. So he urged voters to “think this thing through” and that he had “found nonpartisan solutions…and already has ‘Democrats for Lollar’ organizations in Montgomery, Prince George’s, and Baltimore City.”

I’m sure Charles may have gained himself some converts around the state with his performance, which was surprisingly strong. Unlike Ron George or even Larry Hogan, Charles seems to thrive in a debate format such as this because he is a passionate speaker. He did fall into the Hogan trap of repeating some points several times, but overall it was a strong, compelling performance.

However, there were a few issues with Lollar’s day today. I happened to be sitting amid a few Lollar backers and they were disappointed by the lack of local support at his earlier gathering. Others I spoke to earlier today bemoaned his campaign’s lack of direction. But he’s the only one who has brought concepts like a TABOR and term limits into the conversation – these are broad-based conservative points of view, as is lowering the income tax to extinction.

So as for who “won” the debate, I would say it’s Lollar and Craig who did best, with George and Hogan lagging behind. But now I’m a little closer to determining who I will endorse and it will probably be made public in one week.

Slings and arrows: criticizing a “timid” approach

I wasn’t sure just what I was going to write on tonight, but thanks to Charles Lollar I have some blog fodder. It’s the kind of thing that happens when the race establishes a front-runner and those who aren’t king of the mountain try and climb up the hill.

Here’s what Charles Lollar had to say regarding Larry Hogan’s comments, quoted in the Washington Post, about his plan for “prudent” tax cuts:

All the Democrat candidates agree with Larry on this, that we should be “timid” in cutting taxes and putting government on a diet. Lt. Governor Anthony Brown has said the state “can’t afford” even a modest reduction in the corporate tax.

Ken and I believe on the contrary that the time is over for Republicans to advocate tinkering around the edges of our bloated state budget, our confiscatory tax policies, and our corrupt and inefficient state government.

It is time for bold reforms that go to the core of our problems here in Maryland. That is why Ken and I turned to Dr. Art Laffer, who helped turn around our national economy in the 1980s, to vet our plan to eliminate the state income tax.

We have looked at the numbers, and we know we can achieve this step by step over the next five years, without putting at risk the services Maryland citizens expect their state government to provide.

Government is overhead on the economy. When you tax income, you reduce economic activity. Our objective is to restore economic vitality to Maryland, so families and small businesses will want to come here, invest, and grow.

Lollar and Timmerman are also vowing to eliminate the “rain tax,” the death tax, and the latest increases in the gasoline tax. So let’s look at what is at stake.

It’s difficult to quantify what chucking the “rain tax” would actually save because it does not affect all Maryland citizens equally. Sitting in Wicomico County, I pay no “rain tax” because our county hasn’t been forced to adopt one. Annual rates for counties which were mandated to adopt the fee range from one penny to $170.84, depending on location. Of course, we could go into why we are forced to come up with this when other states in the Chesapeake Bay watershed successfully fought the mandate, but that’s for another time.

As far as eliminating the “death tax” goes, according to the fiscal note for this year’s House Bill 739, which set in motion a four-year process to recouple Maryland’s estate and inheritance taxes with federal law, these two taxes combine to create approximately $200 million a year in revenue for the state – a significant amount, but barely 1/2% of the state’s FY2015 budget. In short, we could easily eliminate this as a rounding error.

The gasoline tax, however, is another matter. By the end of Lollar’s first term, the increased tax is expected to bring $685 million in annual revenue, not counting the roughly $700-800 million the existing tax has taken in annually over the last decade. The intent of increasing the tax was to build light rail in Baltimore and metro Washington – note that by FY2019, O’Malley’s budget projected the Maryland Transit Authority would be allocated nearly as much as the State Highway Administration receives (page 33 here). Currently the MTA gets about 56 cents for every dollar that goes to SHA; by FY2019 it would be 92 cents. Just keeping the MTA at its current 56 cent rate to SHA for FY2019 would save about $405.5 million; reducing them to the 25 cents per dollar MTA/SHA rate exhibited in the FY2007 budget (Bob Ehrlich’s last, see page 19) would save $752.7 million. Guess what? There’s your gas tax increase.

In looking at the two example budgets, which happen to be the final ones presented by the respective governors, it’s remarkable that income tax has remained a fairly constant portion of the revenue. Its share was 23% of Bob Ehrlich’s $29.6 billion FY2007 budget and 22% of Martin O’Malley’s $39.3 billion FY2015 proposal. (In terms of real money, though, the income tax increase is $1.999 billion, from $6.552 billion to $8.551 billion.) Over time, we have to figure out what to cut and how to grow the economy to backfill $8.551 billion in revenues if the state income tax goes away.

But let’s assume we can hold the budget where it is, rather than grow it at a 5% annual rate as Martin O’Malley has been doing for the last few years – a trend we could easily assume Anthony Brown would continue. Rather than looking at a $47.8 billion FY2019 budget, $8.5 billion higher than today’s, we would be in a position where other revenue sources could indeed grow to obviate the need for an income tax. Even as people prosper and have more income, the state would get a cut from increased sales tax revenue and perhaps even additional property taxes as housing becomes more valuable in a growing, thriving state.

Yet all of this is academic to a degree. Even if Republicans split 50-50 on all the contested races this year in the Maryland General Assembly, they would remain the minority by 91-50 in the House of Delegates and 29-18 in the Senate. Most of the Republicans who won would be replacing the centrists of the Democratic delegation, so those remaining Democrats would be farther left than ever. We would need Reaganesque leadership to shepherd tax cuts through that body, particularly after those aggrieved Democratic constituencies begin taking a haircut on the budget. (If you thought the grumbling about the “doomsday budget” from the Left was bad, the caterwauling on this would be deafening.) If Charles Lollar (or, for that matter, David Craig, who is also suggesting the elimination of the income tax) can get it done, the prospects are there for voters to further reward both them and the Republicans in general in 2018 – an important election because the winners will draw the next set of redistricting lines.

So I would prepare to be a little disappointed if you’re expecting our income taxes to magically disappear the moment Charles Lollar is sworn into office. However, he makes a good point in that we should be making bold initiatives, because being cautious isn’t really getting us anywhere. If you’re going down, go out with your guns blazing and don’t spare any bullets.

Plans and schemes for jobs

One recurring theme of this site is my interest in the manufacturing sector, both nationally and regionally. I suppose the realization that much of what we buy is supplied by a nation which points missiles at us and holds trillions of our debt made me consider the need to think a little bit more about self-sufficiency.

In the generations of my 78-year-old father and my last living grandparent, who died at the ripe old age of 90, America built things. Many cite Detroit as an example of where we as a nation once were “makin’ Thunderbirds,” but we made a million other consumer products as well, all over the country. And while the Thunderbird hung on through 2005 – as did my late grandfather – many of those other manufacturers long since had abandoned us for greener pastures overseas where things could be made more cheaply and regulations weren’t nearly as strict. The latter had to be the reason that companies could spend huge amounts to ship products across the ocean in order to bring them back to our market – the market where, in many cases, these same products were once made in factories which sat shuttered and dormant.

That’s why I’m glad to see some of our gubernatorial candidates pay attention to this long-neglected sector. In doing some research for this piece, I found that just one on the Democrat side, Doug Gansler, is making an issue out of manufacturing and doing more than simply giving platitudes in addressing it. I must say some of these ideas are worth discussion and adaptation; unfortunately Doug takes the time to pander to a certain crowd in advocating for the self-defeating ideas of a higher minimum wage and additional mandated sick leave – these would only discourage manufacturers and businesses from locating in this state. Gansler doesn’t quite understand the concept of market forces with some of his proposals, but with some tweaking a few – particularly the apprentice program – could be workable as an expansion of vocational education.

On the other hand, the leader in this arena on the GOP side is Ron George. While he already had a good beginning as far as job creation goes, yesterday he expanded on his existing ideas of rebuilding manufacturing in Maryland – as he pointed out at our Lincoln Day Dinner, “I cannot cut welfare payments unless I have those entry-level, mid-level jobs.” This is what George proposes to do:

The technology and life sciences industries in Maryland have taken off in part because of significant tax credits and a Tech Services tax repeal. By trusting you to use your revenue to enhance your businesses and create jobs, Maryland has become one of the most successful regions in the country for IT, healthcare technology and biotechnology companies.

I’m proposing we make the same investment in attracting and rewarding new manufacturing firms for creating jobs in Maryland. As Governor:

I will lower the Total Effective Tax Rate of new capital-intensive manufacturing firms from today’s current rate of 31.9% to 20% by 2016.

In the short term, I will work with local and county governments to lower property tax rates and with the legislature to exempt equipment from the property tax of manufacturing firms.

By 2018, I will eliminate the business personal property tax, returning stability and certainty to the manufacturing industry.

This proposal is an investment in the perseverance and innovation of Maryland workers. We must bring manufacturing back to Maryland.

While there is an appeal to eliminating the income tax we have to bear in mind that, as currently constituted, revenues from the income tax make up 22 percent of the overall pie, while business taxes make up far less – eliminating them, one could argue, would create enough of a multiplier effect that the other taxes could eventually also be reduced (with prudent spending, of course.) Having to account for the loss of a 22 percent chunk of state revenue is the reason why all of the income tax proposals out there phase themselves in rather than eliminate the income tax in one bite. (Ever notice, though, that tax increases are rarely phased in?)

But there’s also a lot being left on the table through the short-sightedness of the current administration, and while Gansler and his cohorts on the Democratic side are (literally) tilting at windmills for job creation, we can conclusively show that one $3.8 billion project will help a portion of the state succeed long-term. Maryland was one of the first states studied in a new series of blog posts detailing the impact of the energy industry.

And while the API concedes the state isn’t a leader in the production of oil and natural gas, there’s nothing saying we can’t hold our own through a combination of Marcellus Shale exploration in the state’s panhandle, the prospect of more natural gas in the heretofore barely- or unexplored Taylorsville, Culpeper, Gettysburg, and Delmarva (!) Basins, and perhaps oil drilling offshore. Even the idea of testing the waters can have a positive economic impact on a particular area, and one major key in attracting industry is having inexpensive sources of energy. We hear a lot of complaints from industry about the cost of electricity in Maryland, but having more natural gas (and the power plants to use it) would be of assistance in drawing manufacturers.

Now if the candidates can put together a proposal of transportation structure improvements, one which includes an interstate-grade highway north from Salisbury to I-95 (with the cooperation of Delaware) and the completion of the originally envisioned I-97 across the Potomac to meet with I-95 near Richmond to save trucks from having to deal with congestion around Washington so goods could find their way to market much more easily, I’d really be a happy camper. But for now these will have to suffice.

Just as an aside, you just might be hearing a lot more from me on the subject. Stay tuned.

The tax man cometh

I was perusing a LOT of e-mail today because I had a short night and long day, and among the items I found was from this Rasmussen survey:

A new Rasmussen Reports national telephone survey conducted over the past weekend finds that 75% of American Adults have filed their income taxes, while another 13% expect to do so by today’s deadline. Five percent (5%) plan to get an extension.

Since I did the taxes for both Kim and I over the weekend, I think I qualified in that 75 percent category. (Surprisingly, I didn’t get screwed but probably screwed myself by giving an interest-free loan to Uncle Sam.) But what I can’t figure out is the 8 percent who are unaccounted for – are those the people who pay estimated tax? Or, were these the people who don’t earn enough to have to file? Way back when I was in college I had that situation, only filing because I wanted the money from my backup withholding back. It may have only been $50 or $100, but it was my money. Otherwise, if 8 out of 100 aren’t filing, that seems like a whole lot of civil disobedience.

Yet while April 15 is the day of infamy when we pay our tribute to the Internal Revenue Service, the real day we’re relieved from this annual burden falls on April 28. That’s the day those of us working in the Free State since January 1 finally pay our debt to the federal and state governments, according to the Tax Foundation. (Those of you reading across the line in Delaware are relieved a little earlier, this Friday the 18th as a matter of fact. Go out and tip a 16 Mile or Dogfish Head to celebrate.) Meanwhile, the state where Anthony Brown was endorsed to lead doesn’t have Tax Freedom until May 9, so he would feel right at home there in Connecticut.

Naturally, the whole idea of filing a return is one of aligning what the government thinks you should owe (and takes out of your paycheck) with the actual amount due after all the calculations are done. They don’t really mind sending your money back – or adding a little extra to that amount if you qualify for the earned income credit – but heaven help you if you owe them more than a few hundred dollars. They’ll have the audacity to penalize you even more money then! Unfortunately, that doesn’t work both ways, but most people believe they’ve pulled one over on the feds if they get a few thousand dollars back. $5,000 looks great as a lump sum, but if people were smart they’d work it in such a way they get the extra $100 a week. (That’s not always possible, though – again, the government sets the withholding rules and I’m sure they’re not doing it for us to accrue a benefit.)

Many of us live our lives in order to avoid paying taxes one way or another. But wouldn’t be easier if the nation did what several states have already done and decided to live without an income tax? I think the FairTax is a pretty good idea myself and talk about it always peaks this time of year. While nothing can be done about until 2017, why not lay the groundwork for doing something more than talk?