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17.3.05

The Missouri Plan is for Louisiana

From time to time the issue of judicial selection comes up, and it surfaced again with a speech by Louisiana Supreme Court Chief Justice Pascal Calogero threw some cold water on the idea of at least partial appointment of Louisiana state jurists. Of course, Calogero, having been elected four separate times to the Court might be forgiven for not advocating the system that got him there which, in fact, is one of the rarest used in our states for the Supreme Court, fixed election by district.

Basically, there are three ways to select judges among the states, with variations to each. First, there is election, either partisan or (as in Louisiana) nonpartisan in nature. Second, there is appointment, either by a majoritarian branch of government or a combination of both, with or without a nonpartisan panel to vet appointments to forward to the appointing institution. Third, there is the combination of appointment/retention (the “Missouri Plan,” named after the first state to implement it), which generally features an appointment followed up with a retention election some years in the future, essentially a referendum on the candidate.

The group to which Calogero spoke, the Louisiana Organization for Judicial Excellence, basically supports a form of the Missouri Plan. There are arguments both ways on the election and appointment methods that this form tries to take from both their best aspects. Elections promote greater citizen control over judges, while appointing reduces the possibility that judges and candidates would allow themselves to be swayed on the bench by special interests, possibly in a corrupt fashion, and may improve the quality of judges relative to those who get there by only having to win enough votes.

Politically and structurally, Louisiana may seem particularly susceptible to an uneven quality of judges. With such a politicized environment as is Louisiana’s, the fact that judges may hear cases involving campaign supporters and donors to his surrogate campaign (by law, judges cannot raise money or ask for explicit support for campaign purposes, so supporters will form their own independent committees to do it on the judicial candidate’s behalf) may interfere with judicial impartiality (one reason perhaps why both the Louisiana Trial Lawyers’ Association opposes this, because it would lose undue influence over the composition and decisions of the state judiciary).

The LOJE plan would have certain interest groups and representatives of the bar select three names to forward to the governor who would pick one, with choices made mindful of demographic representativeness. Subsequently, a retention election would occur – a plan similar to the model plan set forward by the American Judicature Society.

Specifying the groups, as the LOJE has done, probably is not the most flexible way of doing things. Rather, a commission could be set up with gubernatorial appointees requiring Senate confirmation, with members staggered serving short, non-recurring terms. The amendment specifying this could mandate some members being sitting jurists, and the remainder evenly divided between Republican and Democrats, with perhaps a political independent or two thrown in for good measure. This would assure for a good mix of interests without any one having great influence.

While those against any appointive component to judicial selection might argue the sacrifice of democracy is more than the assurance that an appointive system would produce higher quality judges, it should be obviously that such a system still reduces the chances of inferior judges being elected, where the only qualification for service is how many votes you can win (and citizens will get their chance to vote in a retention election). In a state such as this with its checkered political history, we need all the assurance of quality we can get.

16.3.05

Unwitting Blanco gets rolled by Castro

Either Gov. Kathleen Blanco is having fun with us, or she’s absurdly politically na├»ve.

I think it’s got to be the second, or else she never would have been in the position to make us think it was the first. That’s the only conclusion that can be drawn from the moment she decided to take her quixotic trip to Cuba to pitch Louisiana products even as she neglected to go on business trips to other less-mysterious foreign locales with much larger potential contracts.

Let me count the ways in which Blanco showed a stunning ignorance about the trip (and why did she have to have some state legislators in tow with her – don’t they have a budget to balance back home?)

15.3.05

SB 7 is a start toward retirement fund fiscal sanity

The Public Affairs Research Council often comes across as a nagging grandmother because it keeps harping on the same things -- because the state doesn't act on so many of its usually-sensible prescriptions. So if you’ve read this before, don’t tune it out – because as of now, the problem is worth $12 billion.

It’s most recent report again highlights the fact that, as of now, the state’s 13 retirement systems have $37 billion in liabilities but only $25 billion funded. A constitutional amendment passed in 1989 was supposed to solve the problem but did not mandate a schedule on which payments towards the proper level of funding would be made. As such, as the target date of 2029 approaches payments get increasingly onerous: last year, the payment was $560 million (three years of this and I-49 easily could have been finished without even spending any federal dollars) – and it was all interest without any reduction of the short principal.

PAR makes several suggestions but two are particularly noteworthy:

Consolidating administration (the four state systems initially and ultimately all systems) and creating a consolidated system board with public members in the majority

Creating a new, less costly defined benefit pension plan for new state employees and educational personnel that would encourage longer career service

And it emphasizes the latter by noting:

Liberal eligibility requirements encourage early retirement and result in the use of DROP programs and rehiring of retirees to keep people on the job. Efforts to create a rational new system for future employees have floundered.

Since it is a foundation and not an advocacy group it cannot lobby specific legislation, but surely SB 7 would meet with its and others who support these measures approval. State Sen. Walter Boasso’s bill would exactly discourage early retirement, reduce financial incentives to do so, and bring some rationality to the two largest funds, the Teachers State Retirement of Louisiana and Louisiana State Employees’ Retirement System.

Predictably the TRSL opposes the bill because it changes the governing structure and argues that an overly-generous retirement system is compensation for “low” pay. Simply, the separate systems, one for educators, and the other for state employees, are having the same threatened future underfunding problems as several other public employee retirement systems in the state because they are too generous. The current system allows people as young as their early 50's to draw retirement for most at 75% of the average of their highest three years of salary (and then many of these people go right back to work full-time elsewhere). You could be in your early 60's and draw 100 percent. I don't know of many, if any, pension systems in the private sector that are so generous.

The bill would clamp down on future employees only. It would raise slightly the contribution level and essentially force everybody at least to work until 60 for full vesting in the system (leaving earlier would cause a refund of contributions compounded at a low rate of return). It also will probably slightly lower the level at which benefits are computed by spreading out the average over five years. This will put the systems on more solid ground.

But perhaps the major reason why the TRSL has come out against the bill is that it drastically changes the governance of it. Instead of a board selected mainly by the members/retirees, the majority on the new board (which would combine both TRSL and LASERS) will be comprised of elected officials or their designees and nominees from the for-profit and non-for-profit sectors, taking control out of the hands of the organizations.

Because of the huge stash in the funds these two boards administer, and their inherent inefficiencies and past records in managing them, it's probably best that there be more popular oversight of them. While there may some trepidation at giving politicians a small increase in representation on the board, the fact that over a third of the new board will be of investment professionals more than offsets this concern. This is a necessary reform to ensure solvency of the funds and increasing the chances of professional management of them.

This bill will deal with the problem now, and reduce the future liabilities of state taxpayers. At least it’s a start and deserves passage.

14.3.05

Some electoral system changes for the better

Election calendar changes are in the air, and that’s mostly a good thing.

Recently, the state Republican Party executive committee approved a change to move up by a month the party’s presidential preference primary for 2008 (which means almost certainly its Central Committee will approve). It would take legislative action for this to become reality (which means Democrats also would have to approve of moving theirs), unless the GOP wanted to go with a caucus on that date instead.

The impetus for this is that as the dynamics of nomination races continue to grant greater rewards to early delegate winners, states that award delegates later find their contests increasingly meaningless. Thus, more and more states are rushing to front-load their delegate selections in the process. Last week, the national Democrats took on this issue themselves.

It’s kind of a negative thing to join the pack in this rush, but it may have the salutary effect of forcing the hands of Iowa (first caucus) and New Hampshire (first state). Both have jealously guarded this privilege; New Hampshire, for example, has made it a matter of state law to have the first primary. In effect, they prevent reforms such as several days of primaries, spaced by a week each, where multiple states go to the polls on each, and each election cycle the groups are rotated in temporal order.

In reality, the national parties have to get involved here. They have to force these two states to share the spotlight or to rotate the first election date with others. That would happen only if the national parties refused to seat New Hampshire’s delegates if they were elected too "early," which they can do and have an alternative delegation seated or none at all. This would require some fortitude, but likely these states would back down in the parties pressed the issue.

More to the point of Louisiana, a bill introduced by state rep. Loulan Pitre promises to end the wasteful, costly way that general elections for congressional offices are done in the state as well as giving political parties a shot in the arm. Recall that the present system where all candidates run together in a single primary allows a general election (if no candidate gets an absolute majority in the primary) with two candidates of the same party (in a single-member jurisdiction).

HB 40 would make a technical change in state law that would circumvent a Supreme Court decision that forced Louisiana to schedule its primary election for congressional offices on the same day as national election day (first Tuesday after the first Monday in even-numbered years) because the state’s nonpartisan blanket primary system could produce a result as if it were a general election. This created a December general election that not only cost additional, but gave some Louisiana new members of Congress a late start.

It wasn’t a wise decision – if only one party in any state with any primary system had candidates running, the selection of that candidate likewise is tantamount to election – but it’s here and Pitre’s bill would once again allow the primary election in Louisiana to be held at an earlier time (with other state elections) while the general (also a “runoff”) election could occur on national election day. Given the Court’s reasoning in the 1997 decision, whether this satisfies it is another matter.

More intriguingly, in all elections the bill would disallow a general (runoff) election between members of the same party. This certainly would increase the competitiveness of parties in the state, probably to the benefit of the Republicans. With the nonpartisan blanket primary in effect, conservative Democrats stay in that party because there is no penalty for them to do so; indeed, it may benefit them by attracting black votes they might otherwise not get. In a closed primary state (where only party registrants can vote in a party’s primary), a more liberal Democrat could beat one in a primary because most conservatives would vote in a Republican primary. Here, they can run against more liberal Democrats and if forcing a runoff between those two, other conservative votes could bring that person the victory in the general (runoff) election.

For this reason, Democrats will look skeptically at this bill. But they shouldn’t because by making party labels more relevant, the parties themselves will become more meaningful. In doing so, it may bring the Democrats more resources in order to stem the GOP tide that has swept the state at the national level and now threatens to do so at the state level regardless of the blanket primary system. Keeping things as they are may delay Republican gains, but once the Republicans are in the majority (as is inevitable, just a matter of time now), the Democrats will be less competitive than without this law.

The real solution is to junk the current system, but if that won’t happen, this is the next best step.

13.3.05

Bush needs to address straw man opponents on Social Security reform

Pres. George W. Bush comes and goes from Shreveport, leaving a number of newly-persuaded supporters of his plans to reform Social Security. As long as he stays on message, detractors should fail in their attempts to stop progress.

Even though the president hasn’t submitted a formal plan, his opponents concerning his trip to Louisiana have begun the wholesale manufacture of straw man arguments to try to distract and deflect the public intellect from understanding the problem as his plan. Presented here are several of them, and why they fail.

Here we have two for one. Although the main purpose of this author’s appeal, from the leftist Economic Policy Institute, is to argue that Social Security now as constituted does not discriminate racially against blacks, he also introduces two specious arguments against the plan. First, he notes that the chunk of Social Security spending that goes to the disabled portion of payments makes up a considerable portion of payouts and implies reforms put this at risk. Second, he applies the same argument to survivor benefits.

Regarding the first, the president has not suggested that the disabled portion of benefits be altered in any way. Note that the only conceptual difference between the disabled and the retiree portions of Social Security is that the disabled part can be triggered at a much earlier age (however, one must qualify with a sufficient 10-year work history and get medical proof that disability prevents one from working on a basis that could support oneself financially). The same trends will buffet this portion of Social Security as for retirees, but the same philosophical solution as for the other (transitional costs to make up the trust deficit plus voluntary shifting of funds to privatized accounts that in the aggregate will earn more, meaning greater funds left over to spread among those not shifting some of theirs to keep the system solvent).

While there is no change scheduled for the disabled, survivors actually will benefit more under the president’s plan. The dirty secret the author doesn’t reveal is that now, unless the recipient already is receiving payments, survivors don’t get them. Further, the 10-year qualifying work history requirement means someone could pay in for nine years, nine months, then dies, and all that contribution is swallowed into the system with the survivors never seeing a penny of it back. Under the president’s plan, from the moment any money is put into a privatized account, the survivors can get it back at any time.

Then there are these criticisms (interspersed among these letters), both parroting the Democrat mantra that there’s not really a problem. One argues the trust fund will not be “depleted” sometime around 2042, but only that prior to then any excess in the fund (presuming it has all been put back; see below) will have been drained and by this time outflows will be larger than inflows into the program, with the latter only about 80 percent of the former.

All true, but the author conveniently fails to point out that when this point is reached, the several hundred million dollars per year deficit being run cannot be allowed to exist. So, one or all of several things must happen, (1) cut overall benefits by raising the retirement age, (2) cut monthly benefits, (3) raise taxes on those working to support retirees, or (4) raise taxes on everybody (realistically, only the middle class and above), in order to make up the deficit.

(This gives us insight into the liberal Democrat mentality. To them, Social Security is not a crisis, but an opportunity, using the deficit as a method to justify even greater confiscation of the people’s wealth into the hands of the government. Never forget the liberal mentality is to control the people’s resources, thus their liberty, so they can control the people.)

The other asserts an easy solution to the problem, simply to remove the $90,000 cap on earning taxable to Social Security. The way the system works now, eventual benefits (assuming one puts in 10 years and makes it to retirement age; fails on both of these and you get nothing back) come in proportion to wages, but capped at $90,000. By getting rid of this ceiling, from some people much higher amounts will get paid into the system, reducing the looming deficit.

But then these advocates fail to take the next logical step, by raising also the eventual benefits received by these higher payers in proportion to the additional resources they put into the system, an alteration which will not do anything to change the system’s monetary problems. In proposing only increased payroll taxes but not increased benefits for those contributors, they perform a neat trick: they turn a system designed as insurance into one of wealth redistribution (once again exposing the liberal mind’s true agenda here). For that reason, this “solution” is unacceptable.

Then we have the comments of the brilliant Sen. Mary Landrieu, who has complained elsewhere that the transitional costs are not included by the president in his plan and here that an unspecified past “bipartisan” solution proved to work while the president’s ideas won’t.

Well, let me specify what she meant by the bipartisan plan in 1983 which she was afraid to put in print: that was a payroll tax increase, the last hike of 20 since the system’s inception. Once again, Landrieu would rather raise your taxes so she can get her hands on your money than support a system that empowers you as a citizen.

And, of all these straw man arguments, perhaps the biggest is that the president’s plan does not address transitional costs. The costs are those to pay back the amounts borrowed out of the Social Security trust fund by the government and will runs in the hundreds of billions of dollars. But the fact is whether the president’s ideas about Social Security reform ever make it into law, the transitional costs will have to be paid. They have nothing uniquely to do with his plan.

Bush need not concern himself with these flimsy critiques. He just needs to emphasize a plan with the following:

  • The privatization aspect is only partial and totally voluntary, and not even available to those 55 and older

  • The disabled will be unaffected by the plan
  • Survivors will benefit because any thing put into the privatization part will be entirely recoverable at any age
  • Administration costs will be much lower for the privatized portions
  • Returns will be greater because the funds into which the privatized portion can be put will be very stable and, taking historical data into account, over any 10-year period (mirroring the work history requirement) none of these investments ever has performed worse that the government’s return on Social Security monies

    With well over half the public now having their resources invested in ways just like Bush is proposing, if he stays on message, the public will see the disingenuous nature of these critiques and give majority support to his ideas.