LA needs federal prodding to do right health care thing

And another way Louisiana is behind the curve is in its continued resistance to revamping health care in a way that maximizes outcomes for reduced cost. Of course, missing the deadline to institute changes for 2007 in health care delivery is also partly due to the legendary inefficiency in Louisiana’s government getting services provided (such as Gov. Kathleen Blanco’s choice of administrators of the Road Home Progam), but the lion’s share of blame rests with the politics-as-usual emphasis by its politicians.

“Politics-as-usual” in the case of health care delivery in Louisiana means an overemphasis and bias on institutional- rather than community- or individual-based health care solutions. This is why the state’s health care redesign effort continues to try to force feed a questionable “medical home” plan that shovels money first to institutions rather than a “money-follows-the-person” model that shifts it to the individual or his representatives that other states have been adopting.

Two factors explain why Louisiana remains so obstinate. First, there is the inertia of the ultimate institutional model of health care, the charity hospital system that only Louisiana insists on having. Despite generally worse outcomes from it, because of the hundreds of millions of dollars spent on it and the tens of thousands of jobs tied into it, those that have a finger in this pie and the politicians they have courted to support it continue to defend it and thus resist dismantling it.

LA needs to follow federal lead on cable competition

Once again, Louisiana remains behind the curve as, at the federal level, the Federal Communications Commission partially did what Gov. Kathleen Blanco denied the state only months ago.

The FCC recently relaxed regulations to increase the amount of competition allowed in provision of cable television, the point of HB 699 in the 2006 regular session of the Louisiana Legislature. They will make it easier for non-cable companies to get franchising agreements with local governments, after a study showed areas with those kinds of providers produced lower rates to consumers, as opposed to having satellite providers as the only competition.

Local governments have opposed allowing other communications concerns such as telephone companies to compete for franchising agreements because the present agreements often serve as a stealth way for these governments to squeeze extra revenue out of the pockets of those paying for cable TV by arranging for fees to be passed along. One way to accomplish this was by buildout provisions – forcing new providers to create supply in unprofitable way, rather than let the market determine where supply occurred. The FCC ruling put a lid on differential treatment of existing and potential providers in bailout and in passing along fees by local governments.

The Louisiana law would have gone much further – except that after passage of the Legislature Blanco vetoed it. Unfortunately, author state Rep. Billy Montgomery, despite his nearly two decades in office, didn’t have enough clout to prevent this.

It’s a bill that needs reviving in the 2007 session, perhaps by somebody more capable than Montgomery, especially because Congress can pass laws overriding regulations and now that it is controlled by the party that seeks to empower government and to disempower people, Democrats, they could attempt to do so and hope Pres. George W. Bush doesn’t bother to veto it. Sending it to Blanco a second time, especially during an election year where she’ll need all of the help she can get at the polls, might get her to sign it this time.

Well-managed state debt can't stop ticking time bombs

It’s good to see that Louisiana handles it issued debt responsibly, according to a report earlier this month. But before a number of Louisiana politicians get too self-congratulatory about the nature of the state’s debt, it’s helpful to review the issue over which the last special session of the Legislature foundered that in part dealt with this and related matters.

Recall why the session went kaput – Gov. Kathleen Blanco and the Legislature’s fellow Democrats wanted to bust the state’s spending cap quickly without a lot of thought while legislative Republicans wanted to hold the line to pursue greater contemplation of what to do with the presumed budget surplus on the way. (Republicans offered to increase some state salaries and to spend in some areas provided cuts were made in other areas, or to give some pay raises of shorter duration with funds that would not go over the cap, but Blanco and Democrats prevented a solution to this standoff.) One area where some detailed discussion needed to occur was in using any surplus funds to reduce the area where the majority of the debt currently lies, and also in the area where even larger potential looms.

By way of explanation, the Louisiana Constitution caps the amount of money at a certain level that can be spent by the state as a whole in primary government functions, adjusted by the rate of private-sector economic annual growth. The reason why the cap now is coming into play is the growth of government in the state has proceeded at a far higher rate than private-sector economic growth has in the state over the past decade or so.

Hightower, looking to future, left Shreveport worse off

Shreveport ex-Mayor Keith Hightower left office last month after eight tumultuous years. And while it’s true that the long-term impact of some of his decisions will define how his reign is evaluated in the future, not to understand the motive behind those decisions misses a complete understanding of his tenure, and of his future in politics.

Odds are pretty good that, to some degree, the city’s convention center (actually envisioned by his predecessor Bo Williams) but especially its accompanying hotel will be albatrosses around Shreveport’s neck for decades to come, siphoning valuable tax revenues for their subsidization, retarding the city’s progress. In isolation, the poor decisions made by Hightower to implement these would seem to constitute merely an error in bad judgment.

But there’s another piece to the puzzle, and that is Hightower’s insistence on practicing an ideology formed by the political culture in Louisiana that sees governing as an exercise in putting government first and people second in order to reward friends and to punish enemies. The liberal populism that has infected the state argues that government is to be used against any individual liberty that does not maximize rewards to certain interests. Thus, he entertains an exclusive, divisive ideology that, rather than aiming to create an environment that maximizes all people’s chances of achieving individual ends, instead deliberately rewards certain interests at the expense of the people.

Hightower, through his penchant of making public policy decisions that appeared to favor certain elites (his so-called “circle of friends” and supporters whose political muscle was needed to keep him in office) at the expense of good judgment (such as with the hotel deal), epitomized this good-old-boy trait in the state. It started almost from the beginning of his first term and lasted until the very final days of his second term.

So, the failure of Hightower’s leadership that will increasingly become manifest as the years roll by, stemming not from only poor decision-making, but from a wanton disregard of the entire public weal that caused those decisions to be suboptimal. That characteristic of Hightower’s mayoral run itself will become more obvious as time advances.

Which is why if he is to have any future career in electoral politics, he needs to act sooner rather than later. A number of people at present, those either who have profited from Hightower’s time in city government, or who share his liberal populism, or whom prefer symbolism over substance, or whom simply aren’t adequately informed, would continue to support Hightower’s future ambitions. It’s the latter group whose support will erode over time, and the rest cannot provide enough political punch to keep him elected.

Their support will fall off when they know the real Hightower record. Hightower spent tremendous sums of money on projects that promise to weigh down the city rather than to preserve its infrastructure (the costs of which were then passed on to ratepayers), giving it a crushing debt with a declining capacity to pay for it, allowed spending to spiral out of control, and had crime increase from 18,510 offenses reported in 1998 to 30,440 in 2005. Given all of that, the best his supporters can come up with in pointing to any substantial contributions of his was that he made for a more “positive” attitude. This, of course, is belied by the fact that the city’s population decreased about 8 percent in his years, both well behind the miniscule gain made statewide and much larger population gain nationally.

Salesmanship, as Hightower has implied, may be useful in generating a perception whether it corresponds to reality and to persuade people to vote for you, but it will go only so far in light of an inferior record opponents are willing to publicize. As time passes, fewer will believe his conjuring and the warts of his decisions will become more apparent. That’s why a 2008 run for the U.S. House may be the only chance for the continued shelf life of a politician whose governance style has no place in a progressive Louisiana searching for self-improvement.

Landrieu starts reelection push by misappropriating label

The rehabilitation of Democrat Sen. Mary Landrieu continues apace. Despite the fact that her lifetime Congressional voting record is decidedly liberal, the 2008 campaign cannot start too early for her with her trying to create a fiction that she is a “centrist” senator.

Landrieu got the opportunity to co-lead the Senate’s centrist coalition in an ironic way. Even as Democrats like Landrieu but particularly those running for office in 2006 were claiming they had a centrist agenda, the party spurned perhaps its most centrist member of the Senate, Joseph Lieberman, forcing him to win reelection as an independent. Now officially not a Democrat, he had been the Democrat co-chairman of the group (and now is starting a related group), the position Landrieu now inherits.

In addition, Landrieu tries to hog more credit that she is entitled to have over legislation which has changed the royalty distribution for offshore oil extraction which will bring many new dollars to Louisiana. She had a hand in it, but neither was she the most important senator in its passage (that being the lead author of the bill that eventually passed, Republican Pete Domenici), but she wasn’t even the most helpful member of the Louisiana delegation in the process, that honor going to the lead author of the House version of the bill, Republican Rep. Bobby Jindal. Landrieu assisted, but let there be no doubt she was not in any way the main forces like Jindal and Domenici in getting it done.

Interestingly, one potential opponent (currently a Democrat but who knows in two years) state Treasurer John Kennedy already is stealing some of her thunder on this by promoting the idea that the relatively small initial additional royalties going into the fund expressly created to use the funds for coastal restoration be used to issue bonds backed by the fund to speed up restoration work. In essence, the new inflow of money would pay interest at first and then an increasingly-large amount of the principal as time passes and the royalties earnings grow much larger (because this applies only to new drilling). Kennedy’s idea is sound and should be pursued.

Nonetheless, she will inflate her reduced role in this matter day and night over the next two years, and anything else to blunt the fact that she has made many consequential votes out of step with Louisiana, and the country, over her decade in Washington. Quality challengers for her job will ensure in their campaigns that the public will know the mare Landrieu cannot paint moderate stripes on her liberal body and call herself a centrist zebra.

Defeated Democrats need to quit abusing judiciary

I’ve deliberately not commented on this particular news item because the whole thing has been ridiculous from the start, but a couple of whiney Democrats have gone to extraordinary efforts to keep it alive, so it’s time to bring some sense and perspective to it.

Last month, Republican Rep. Jim McCrery won yet another to term to Congress. But shortly thereafter, one of his defeated opponents, Patti Cox, sued to have the election invalidated and asked for something unprecedented in American politics, to rerun the election with McCrery disqualified. She based this on a claim that McCrery did not reside in the district, as he had sold his home and listed as his residence an address nearby where he stayed when in town.

While decentralized, the law is clear on determining residency and qualification for Congress, and the manner in which it may be protested. The U.S. Constitution requires that members of Congress live in the state they represent. Residency in Louisiana is defined as being an eligible elector. An eligible elector, by state law, is one who lives at an address for 30 days prior to an election. In terms of election qualification, someone who files for an office who is deemed to eligible to run at the time of qualification can be disqualified from running only if protested within seven working days of the filing deadline; otherwise, he may legally run. No one disputed McCrery’s residency at the proper time.

Thus, from the perspective of the state, McCrery has met all of the qualifications to run. Further, he has been duly elected. So now the only contestable matter is whether he is eligible to serve, something determined, according to the Constitution, by the body (in this case the House of Representatives) itself in which he is to serve which judges the elections, returns, and qualifications of its members.

Cox brought this case first to a state-created court, where it was properly rejected, and now the federal judiciary is correctly about to do the same thing. But now the other defeated Democrat from the race, Artis Cash, also has filed suit asking for him, the second-place finisher (40 points behind McCrery) be declared the winner because McCrery is not a resident because he has a driver’s license from another state.

Again, judicial relief is not afforded a plaintiff on this issue. At this point, unless they intervene before McCrery is sworn in for his next term, the only way McCrery can be removed from office is if the House voted to expel him (requiring a two-thirds vote). Further, the relief granted in that instance would be to schedule a new election, not to redo one or proclaim a winner from the old one.

These kinds of judicial actions merely clog up the courts, wasting precious judicial resources better used on other matters. Cox and Cash need to quit whining in courts and about their decisions and instead bring the action to the House, if they think they have a legitimate case.

Big media template of special session ignores reality

If a smattering of nattering about the recent special session of the Louisiana Legislature is any indication, either the state’s traditional media doesn’t get it about the partisan and political implications of it, or doesn’t want to.

After the session produced little of consequence, media analysis looked for who were the winners and who were the losers. It’s difficult not to conclude that Gov. Kathleen Blanco lost big in the session, able to get only one consequential, albeit short term in its policy impact, meaningful piece of her agenda through – insurance relief via tax credits for ratepayers saddled with extra costs due to the huge losses incurred by the state-owned property insurer. (Another measure set up a fund, but did not actually put money into it, to attract a foreign steel manufacturer, which may never get used.) And in going down in flames, she managed to drag legislative Democrats with her who were unwise enough to tie themselves to the populist/liberal agenda she espoused of showering money out like Carnival throws.

But to fail to see the potential large political gain legislative Republicans can realize out of the session reveals a myopic political analysis. For example we have the claims that “Rather than heroes of fiscal prudence, Republicans really came off more as partisan obstructionists” – an argument sustainable only if one didn’t really keep up with what actually happened at the session, or could not really understand the GOP agenda.

Perhaps it’s liberal political ideology espoused by the state’s old media that puts blinders on them when it comes to its dissemination of opinion about Republicans, but a more sophisticated and accurate understanding of the legislative conflict is this: (1) Republicans wanted tax relief for all taxpayers, (2) they refused to spend beyond the state’s constitutionally-imposed cap on expenditures, (3) they agreed with some of the Democrats’ agenda that included paying down state debt and the transportation infrastructure backlog and pay raises but insisted on tackling the issue of bloated state government in tandem, (4) Democrats refused to cut spending in bloated areas to allow for additional spending in others.

So, it is impossible to conclude that GOP “obstructionism” was to blame for little being done in these areas. If anything, it was Democrat obstructionism, because Blanco and her party are so wedded to big government that they could not bear to part with one cent of spending. (And they already know where much of the wasted spending is, for example.) Ironically, big media themselves seem to have consensus that there is unnecessary spending in state government, as one would gather from the scathing attacks they have on some facet of it from time to time, yet in relation to this session they seem to have forgotten that in their zeal to prevent the GOP from getting any credit.

Instead, their argument is too simplistic by ignoring the spending reduction request of the Republicans and instead they mistakenly tie the refusal to spend past constitutional limits to wanting tax cuts, an idea claimed to deserve “more deliberate analysis of their long-term effect: Will the state's economy continue to support recurring salary boosts and tax breaks?”

While accurate in calling for studying finances to support permanent salary increases, advocating that much time is needed at all to investigate the effects of tax breaks makes one wonder where have these authors been for the last three decades. To summarize succinctly what we have learned theoretically and empirically (even if this is resisted by some in the academy and politics who prefer to postulate on the basis of ideology rather than fact): tax cuts cause economic growth, and economic growth translates into higher government revenues. (And certainly you cannot argue that Louisiana is on the wrong side of the Laffer curve, given its higher level of marginal tax rates and other hidden taxes such as fees and overregulation.)

In short, there is no debate here: tax breaks only will benefit the state. But notice simultaneously the lack of understanding and knowledge of those who would express such a sentiment when they write, “Will the state’s economy continue to support … tax breaks.” They have it completely backwards: it is tax breaks that support the state’s economy, not the reverse.

With these in mind, we can understand the template into which the media is trying to cram the events of the special session: (1) Democrat ideas were hasty but not bad in theory, (2) Republicans ideas were hasty but might be worthwhile to pursue, (3) Republicans blocked Democrats in order to gain acceptance of their questionable ideas, (4) Republicans therefore obstructed progress. (Recall that in the liberal ethos to which the state media generally subscribes that “progress” is equated with “government action.”)

Contrast this simplistic summation to a more sophisticated, realistic analysis (partially restating from above): (1) Democrats wanted to spend more that the people, courtesy of the constitutional amendment they passed, thought wise, (2) Republicans wanted to stay under that cap, (3) Republicans wanted to shift spending to areas of higher priority and to promote economic growth by reducing government interference in people’s activities, (4) Democrats wanted to keep spending according to existing, sub-optimal priorities and to maintain the present size of government, (5) Democrats refused to allow legislation through that violated their desire of dysfunctional spending and love of big government.

Far from fulfilling the template of “obstructionism,” if next year during elections GOP leaders articulate the more accurate rendering of the session to voters, even a less-sophisticated electorate that typifies Louisiana will understand and will electorally grant rewards upon it while visiting punishment to the Democrats. Which if this happens, I suspect, the big, old, traditional media in Louisiana once again will misunderstand.

Emergence of partisan politics good for Louisiana

The media template regarding the recent special session of the Louisiana Legislature is that it brought partisanship to a new level, and which may stay at that level forever more. Assuming this accurately predicts the future, will this be positive for the state?

Some, particularly legislators who are long in the tooth, don’t think so, arguing flexibility becomes decreased. Such a view entirely misses the point because a major problem in why Louisiana government has been so dysfunctional, in terms of producing policy outcomes that don’t rank the state at the bottom of almost all indicators of quality, is because too much flexibility has been afforded individual legislators.

Politics in Louisiana traditionally have been “personalistic,” meaning the exercise of power derives more from the efforts of individuals for individualistic goals than from any collective source with more holistic goals. Another way of putting this is policy-making is skewed towards a confluence of individual agendas as opposed to any agenda-setting and promulgation by collective institutions, along a collectively agreed-upon program.

It is no accident that in this environment the only powerful institutions in the state are built around the individual, the executive elective offices, particularly the governor. Even though, in a comparative sense with other states, Louisiana’s governor in terms of formal powers at best rests in the middle of the pack, the office’s influence gets magnified by its superior ability to exert personalistic power, as opposed to a collective institution such as the Legislature which is weakened by this reliance on personalistic power.

The central problem with this kind of culture is it is far less capable of promoting and implementing a policy agenda focused on the holistic needs of the state born of a political culture that vests more authority into institutions. It also is no accident that a weaker Legislature has gone hand-in-hand with a weaker set of political parties, probably the weakest in America, at the state level in Louisiana. Parties are the primary agent around which legislative power can be collected and utilized.

Without parties, and the necessary partisanship that makes them effective, rather than an impetus existing to draw individual legislators together around a holistic agenda, instead the Legislature dissolves into a number of princes representing fiefdoms with much less emphasis of acting first towards the good of the state, than making their districts their primary focus. The most visible example of this inanity is the capital outlay process and budget. There, legislators more often fight over money to fund certain projects to aid their districts than take a more reasoned, collective view over the kinds of items that really would benefit the state as a whole. It’s why things like needless reservoirs and horse barns get funded while the TIMED highway program designed to impact the entire state drags on years behind schedule.

Part of the “bring home the bacon” emphasis is the fault of voters. Like it or not, Louisiana suffers from one of the least sophisticated electorates which disproportionately evaluates candidates not on the basis of their issue preferences, but on how well they come across, or on what favors members of it feel have come their way from the candidate. The ideological thinking necessary to promote voting on the basis of issues, on the basis of an agenda that must include general principles applied to decisions affecting the entire state, will happen only as the Louisiana public increases its overall level of educational attainment and quality.

But this doesn’t means that political elites such as legislators and party officials can’t invigorate the process by taking the lead in shaping institutions that will encourage thinking in ideological terms, that will lend themselves to formation of a holistic agenda, thereby demanding partisanship from them. Simply, partisan parties provide clear policy choices for voters, shifting thinking from “what’s good for me” to “what’s good for the state, which in general is good for me?” It works the other way as well; increasing use of ideological discourse in Louisiana politics from its elected officials signals they are attentive to this growing preference in the electorate.

Additionally, the personalistic nature of Louisiana’s political culture has encouraged its tolerance of big, intrusive government. It prompts thinking about politics in zero-sum terms (“I have to fight for a piece of the pie for my district”) as opposed to non-zero-sum terms (“How can we make the state better for all concerned?). The latter attitude gets legislators away from trying to grow government (because the more it grows the more each of them personally can get a piece of it) towards reducing its size and power, because that empowers people, which is to the benefit of all. (This does not mean that a political ideology such as liberalism does not want there to be powerful government, just that the countervailing force of conservatism has the opportunity to resist creation of such a government, whereas the other view gives up on this by default.)

“Partisan” politics is a welcome innovation to Louisiana. The idea-driven politics that would lie behind a strengthening of collective institutions both informal (parties) and formal (the Legislature) would make for more efficient policy implementation, or at least would reduce politics based on personality where the transient coalitions must be built issue-by-issue more geared to reelection than to statesmanship. Given that the personalistic model has produced such dismal policy outcomes, theoretical arguments aside, the mere fact the partisan model offers something quite different alone should be enough to think any such transformation cannot happen too quickly.

Session shows gulf between parties' attitudes about your money

All one needs to know about the differences between Democrats and Republicans in Louisiana is to review what happened in the final hour of the recently-concluded special session of the Legislature.

HB 59, having passed the House, was brought up in the Senate. Originally, the bill was provide a child tax credit although Democrats had shot down a Republican attempt by state Rep. John LaBruzzo to make the credit apply only to heads of households who actually paid taxes. Therefore, since the bill also had the purpose of redistributing wealth from producers of it to consumers of it, Democrats favored it.

But then state Sen. Robert Adley (ironically, a Democrat) got an amendment added in committee that swung the bill back into a posture of mainly providing assistance to taxpayers, that would restore many popular tax deductions presently applicable to federal income taxes but which were taken away three years ago from state income taxes. These were measures that Gov. Kathleen Blanco and Democrats had favored and had introduced into the House earlier in the session.

Principled GOP, instransigent Democrats equal "partisan" session

It appears now that the 2006 Second Extraordinary Session of the Louisiana Legislature, which in the hopes of the big government crowd had much potential, will go out with a whimper. A couple of good things like tax credits to reimburse special insurance assessments came out of it (and one bad tax credit where essentially the state will pay people who don’t pay income taxes to have children) but its high level of success (ignoring the fact we had little need for it except for insurance assessment relief) is defined by the fact it did so little to injure the people.

But the legacy of it that big government lovers are trying to extract and popularize is along the theme that Louisiana is becoming like Washington, too “partisan.” For example, words of wisdom from Commissioner of Administration Jerry Luke LeBlanc: “I've been in some pretty heated standoffs but nothing based strictly on party politics like this. It does a disservice to the people of this state to have the Washington model of partisan politics so strong.”

Of course, uttering a statement like this shows exactly that LeBlanc has been in government too long, and it needs translation because all the way from the multi-degreed like me to those who may not have much formal education but a lot of common sense are not going to understand what he means if we look only at the surface of his remark – at least for those of us who don’t see government as the salvation for the great unwashed or as something that better knows what should be done for the people than the people themselves, as believe LeBlanc and his boss Democrat Gov. Kathleen Blanco.

Anti-business Blanco blames GOP for stalling giveaway

As House Republicans almost unanimously continue to prevent the state from busting its spending cap to accommodate massive new spending by Gov. Kathleen Blanco, this has gotten her dander up in reference to one of the requests, $300 million to prepare a site for a new manufacturer, if the firm chooses Louisiana over two others. “If we lose this business deal,” she said, “the blame will lie squarely in their laps.”

The sheer irony and hypocrisy of her statement is staggering, because for three years not only has Blanco not done as many as two things to help business in Louisiana – and that primarily would be existing business, not only going all out for a Pollyanna crapshoot that may never pan out – but she has championed measure after measure that would stifle economic development. Blanco has implemented only one measure designed to entice business into the state, the reduction of sales taxes on machinery and equipment purchased for manufacturing and corporate franchise taxes on borrowed capital – over eight years.

(Even as Blanco blames the Republican legislators, they have asked her to lobby her Democrat majority in the House to phase these taxes out immediately. She refuses to do so. Today, the House did vote to create a fund to contain up to $300 million for purposes of attracting that firm.)

Just some of the more recent and high-profile anti-business, and thereby anti-working man, actions of Blanco:

Backing a sick tax that would have raised the cost of health care in the state

Approving of a raise of the minimum wage (both legislatively and administratively) paid to state employees which would have a ripple effect on all employers

Making preliminary plans for the placing tolls on interstate highways, thereby raising transportation costs

Delaying flood control policy reform which discouraged commerce

Supporting a bill that would increase gas prices because of an ethanol-blend mandate

All would have or did increase costs on businesses and their employees, and note that, in every instance, her approach was one that championed bigger, less efficient government. Blanco also has been barely seen on a variety of bills to tighten ethics requirements, another set of things that would give business greater confidence to stay in or to locate to Louisiana.

Blanco has not been the most anti-business governor the state ever has seen, but it is ludicrous for her to claim that the failure to support legislation that favors one business not even in the state is a detriment to economic development when she has a past littered with instances of her refusal to reduce the size of government that would have helped the climate for all businesses in Louisiana.

GOP needs to take offensive against self-destructing Blanco

As a result of yesterday’s legislative action, things were bad enough for Democrat Gov. Kathleen Blanco. Having pared down her agenda to just spending $400 million on the transportation backlog, $300 million for site preparation for a manufacturer who may or may not come to the state, and just $100 million for pay raises for select state and local employees, she could not get enough votes to override the state’s spending cap limitation currently allowing for $194 million because of intense, almost exclusively, Republican opposition. This made her look ineffective, another such episode gubernatorial opponents could use against her next year in her reelection bid.

But then she had to open her mouth and make herself look worse, handing them an even better issue. “No tax breaks are going out until we finish our business,” she announced, meaning, appropriate to her entire reign, that her vision of spending, whether it really makes any sense, gets priority over returning the peoples’ money to them.

Republicans U.S. Rep. Bobby Jindal, state Sen. Walter Boasso, and even other potential 2007 candidates of all partisan stripes must have pinched themselves to make sure they weren’t dreaming when they heard of these remarks. It’s easy already to envision them hammering home the message to voters that Blanco opposed tax reduction of all kinds, with the state supposedly sitting on a huge surplus, when it was within her grasp as a childish retort to the sensible view that more time was needed to formulate plans and to monitor the state’s fiscal situation.

From the least to most, the pay raises involve recurring funds, and the false economy created by billions of dollars of federal rebuilding money may support that for couple of years, even more. But unless structural changes occur in the state’s fiscal policy, when that money goes away, the additional expenditures may not be sustainable.

And what changes are those? Precisely the tax cuts Blanco refuses to give. This is a golden opportunity to jumpstart the economy with the recovery money supporting the temporary loss of tax revenue that comes from tax cuts before the economic growth they spur kicks in.

The same applies to the site money. More than throwing hundreds of millions of dollars at some firm, more attractive would be tax cuts that would attract better quality new employees from out of state, help new employees in state, and would reduce the tax liability of the company.

Finally, the transportation backlog is the most worthy of the three requests, but Republicans are absolutely correct in slowing this down because there is no guarantee if approved the money would spent in a rational fashion. Instead, given the state’s history, it is likely to be spent for primarily political reasons, rather than according to genuine need in helping Louisiana’s overall transportation goals. Once they sign over a $400 million check, the minority Republicans cannot control the process to ensure more rationality in passing out roads monies.

Note that Blanco’s declaration also gives legislative Republicans an issue by which to hold legislative Democrats’ feet to the fire. Already, House committees have passed along tax cut legislation. House Republicans need to agitate to bring them to a vote. If the House leadership, controlled by Democrats aligned with Blanco, refuses to bring them to votes or defeats them in votes, this becomes a campaign issue for Republican candidates for seats across the state in 2007. That looming reality may get enough Democrats on board to get the tax cuts through, and put pressure on the Senate to do likewise – leaving Blanco in the position to swallow popular bills she opposed, or to veto the greatest tax relief in the state’s history.

Going on the offensive one more way would help the GOP, and state as a whole. Republicans should sponsor legislation to remove $50 million from the state’s recently-created disaster fund (as was promised by Blanco after the end of hurricane season if nothing happened for insurance extra premium charge rebate checks, because it’s been previously appropriated and not subject to the cap), add it to the $194 million, and then appropriate it all out to roads projects in the current priority order they are listed in the unfunded portion of the current capital budget. This way they can show they mean to tackle a pressing problem, but in a responsible fashion. Then they should press for passage of legislation also already approved by committee to pay back the extra charge through tax credits.

The session continues to backfire on Blanco, to the benefit of the state. Republicans need to keep the pressure on to make both the practical and (to them) political dividends even greater.

Fiscal conservatives hold line, deal Blanco reelection blow

Fiscal conservatives in the Louisiana rebelled against Gov. Kathleen Blanco, politics as usual, and the prevailing liberal/populist ethos historically in the state by defeating a resolution to increase state spending over its Constitutional cap. Only two Republicans – Hollis Downs and Tom McVea – and independent Joel Robideaux voted for it, while Democrats Jeff Arnold and Alex Heaton votes against it making the final tally 59-40 in favor, but two-thirds of seats were required to pass (I think; with three seats unfilled, the House has been unclear whether it is total seats or the seated membership).

The hypocrisy of many of the supporters of the resolution was staggering. As an example of the use of non-recurring funds, they argued it was important to reduce the backlog of transportation projects, talking about how the cost of roads presently was rising 1.5 percent a month – when they frittered away hundreds of millions of dollars in past years on building unneeded reservoirs that could have gone to roads. As an example of the use of recurring funds, supporters argued the cap needed to be relaxed to fund raises for teachers. Yet in 2005, Republicans offered such a pay raise as an amendment to the operating budget – and it was voted down by many of the same House members then who claimed they were all for it this day.

The difference is one of priorities. Tax cuts to those who actually pay them, pay raises, money for roads, and (as required by law) reduction of the unfunded accrued liability are considered by the House majority to be less important than to keep money flowing to fund a bloated state bureaucracy, or to favored constituencies, or to pet projects that should not be a matter of state funding. More often they will do things like pass sick taxes onto the people rather than look for efficiencies in program operation because they put special interests ahead of minimal government that empowers people. The only time they rise in support of the things they articulated approval for today is when they think there’s enough money to take care of these things they usually think less important.

This leaves the state spending limit at (now estimated to be) $194 million, and there’s been talk of diverting $50 million from the newly-created disaster fund to add on to that. Some spending then can get done and, if the supporters of today are genuine, they’ll funnel that money to roads or the unfunded accrued liabilities. But unless the Blanco Administration and its legislative allies can figure out a way to switch about a dozen House members’ opinions in the next six days, that’s all. And if not, this will represent, at the philosophical level, a defeat of the old convoluted prioritization and, at a political level, a blow to Blanco’s reelection efforts.

House GOP sensibility wins on politics and principle

In Congress, Republicans lost their majorities last month because they strayed from the conservative principles that resonate with the majority of Americans. In Louisiana, House Republicans appear determined to attempt to gain a majority by not making the same mistake.

Yesterday, a whole raft of free-spending proposals, five in all, by Gov. Kathleen Blanco rubber-stamped by the House Ways and Means Committee (composed of all but two Democrats, one of whom recently switched parties in a bid to try to win a Senate seat later this year) were supposed to hit the floor after debate of HCR 6, the resolution that would have busted the state’s spending cap over $2.4 billion. It would take a two-thirds vote to enable this.

Instead, when the House met, rules were suspended to introduce a new bill which would allow for a tax credit rather than rebate of excess premiums paid by home insurance policyholders in order to prop up the state-run property insurer. The body adjourned, allowed that new piece of legislation to be heard in Ways and Means which rubber-stamped it, then reconvened to close itself for the day after introducing five other resolutions identical to HCR6.

The tactic is to produce vessels in which to allow the spending ceiling to increase for any of the five items already approved and waiting – if the Blanco Administration has the muscle to get any of them through. At this point it does not, hence the quick creation and disposition of HB 120 engineering the insurance tax credit which does not have to adhere to the spending cap as it is a credit and not a return of taxpayers’ monies.

The only other Blanco proposal that appears to have enough support is creating a fund to reward a company potentially building a large steel plant in St. James Parish. But Republicans indicated they believed the incentives provided would be no higher than the current cap, now estimated to be $155 million. With 41 of 105 votes and described to be nearly unanimous in opposing raising the cap, if they stay firm, these are the only two measures with any chance of passing.

If so, this turn of events would produce a stinging defeat for Blanco and cause a backfire of her agenda behind the agenda of the session she called, distributing goodies to buy votes for her reelection attempt next year. Instead, Blanco will appear as ineffective and cannot use the turn of events to raise political capital: how can she campaign against fiscal conservatism in a state well-known for lacking that precise quality?

At the same time, House Republicans will have shown they have the will to impose fiscal discipline in government, and that with any surplus they are interested in solving long-term problems repeatedly ignored by Blanco and Democrats, such as the unfunded accrued liability in retirement accounts the amount of which has grown to nearly half the size of a year’s budget. Such a preference will resonate with voters tired of short-term political considerations taking primacy in budgetary decisions.

Better, the GOP announced they were all for much of the Blanco agenda that promised in part selective tax cuts – but only in the fiscally-prudent manner of cutting spending elsewhere. If they are smart, they will come back in the spring’s regular session with some proposals to do this. Tax cuts alone would be a good idea, and in the ensuing few months the state will be on more solid footing with a better idea of what’s ahead to afford these in the short run (as there will be a lag effect to the increased revenues that will result from tax cuts).

Staying committed to this course of action by the GOP legislators not only is good for the state in the long run, but for their party’s political fortunes as well, as voters will respond positively to this kind of agenda next fall.

Elections deliver bad news to state, national Democrats

Voters sent state politicians conflicting messages Saturday by Baton Rougeans sending a political newcomer to the state Senate over a veteran Louisiana House member, while denizens of the U.S. Second District reelected a legally embattled U.S. House member – but the signal was all clear to Democrats: bad.

Despite being the subject of an ongoing corruption investigation, Rep. William Jefferson was reelected to Congress. No doubt the two major factors of this was the peculiar Orleans-area insistence on thumbing its nose at the rest of the country, in this case manifested by many black voters believing Jefferson was being set up for posing too much of a challenge to “the man” (whoever or whatever that is) and “retaliating” by pressing the button for him, and by others who were supporters of unsuccessful opponents of Jefferson who, frankly, wanted a damaged incumbent in office in case he is indicted and resigns, creating another chance for their favorite to get in that office.

But the gesticulation of defiance also ended up giving the sanctimonious national Democrats a black eye. Jefferson is perhaps the most visible of the many ethical problems congressional Democrats have, reminding an electorate temporarily distracted from this fact long enough to vote in sufficient numbers for enough Democrat candidates last month. Jefferson’s reelection exposes the sham status of the national Democrats, and will embarrass them with a likely indictment and lengthy trial all the way through the 2008 elections.

So, the apparently unethical Democrat gets reelected, but a clean GOP incumbent met with defeat by another Republican. State Rep. William Daniel IV lost heavily to physician Bill Cassidy in the latter’s first run for office, for Senate District 16. On the issues, the candidates didn’t differ much, so the main factor in Daniel’s defeat here had to be his violation in spirit of term limits.

Daniel is preparing to conclude his third term in the state House. But the three-consecutive term limit in the state Constitution applies just to a lawmaker’s present chamber. In anticipation of a future political career, Daniel switched from Democrat to Republican last year, got an early break when past occupant of the seat Jay Dardenne was elected as Secretary of State in this year’s special election, and ran for it.

But so did Cassidy and, again, while it was perfectly legal for Daniel to run for the Senate, apparently a good portion of voters must have held it against his desire to stay in the Legislature more than 12 years. As long as this sentiment is not particular to that portion of Baton Rouge comprising the district, this could be a sign of big trouble to other term-limited legislators who are thinking of a similar switch.

And being that term-limited Democrats outnumber Republicans 40-24, it’s likely that of those others who try to extend their careers they disproportionately will be Democrats so this trend could hurt the state party fortunes as well the damage being done to the national party’s image by Jefferson’s triumph.

Can Jefferson use dynamics, like Nagin, to win reelection?

Voters in Louisiana’s Second District will hit the polls Saturday as one of the two last U.S. House races to be decided this election cycle. It may also be the next House race contested in the country as well, for incumbent Rep. William Jefferson stands a good chance of winning it.

Even as Jefferson led the field in the primary, his underwhelming total of about three-tenths of the electorate reflected poorly on an incumbent, but understandably given his being in the crosshairs of a corruption investigation. While some of his supporters make ridiculous excuses for him, and while he promises to explain all after the election, the fact remains about $90,000 in marked bills related to a sting operation was found in Jefferson’s residence, after a government witness testified Jefferson accepted that marked money as a bribe.

In these political corruption cases, authorities walk a fine line in deciding whether to return an indictment prior to an election involving a targeted official knowing an indictment almost certainly would mean that politician’s defeat. In this case, if it’s coming, they decided the will of the people in determining his fitness for office given the information already released would suffice. Also complicating the fact is the government may be waiting on the resolution of certain constitutional questions before it indicts, so it know what it can do. Lack of indictment to this point does not mean suspicion against Jefferson is spurious and was manufactured.

But it does mean that Jefferson, who almost certainly would have resigned had he been indicted, may continue in office by winning this election. Reviewing the dynamics, it’s not hard to draw parallels between this contest and the New Orleans mayor’s election earlier this year. There, you had a contest between two Democrats, one black, one white, where black voter suspicions about the Lt. Gov. Mitch Landrieu allowed Mayor Ray Nagin on mostly monoracial voting in a majority black city to win reelection.

Now equate Jefferson with Nagin and Landrieu with Jefferson’s general election runoff opponent (of course, bleaching her and changing some of her parts) state Rep. Karen Carter. Nagin was embattled by his underwhelming performance during the Hurricane Katrina disaster of 2005, with many in the black community feeling that Landrieu (backed in large part by whites and reformists) was trying to take advantage of the chaotic aftermath of the storm to win election to make New Orleans, in terms of policy, more a vanilla than chocolate city.

As Jefferson’s opponent (and keeping in mind the district’s dynamics are somewhat different than the city’s), Carter, like Landrieu from a prominent political family, also is drawing support more from whites who are less likely to believe Jefferson is fit to serve than blacks and government reformers also have lined up behind her (even though she, like Landrieu, has never backed a reform agenda at all). Embattled for different reasons, racial solidarity for many still is a driving factor in supporting Jefferson as Carter’s basis of support among whites makes her seem more “suspicious.”

Yet what well could put Jefferson over the top is the lack of indictment, and the almost sure resignation that would follow if he still occupies the office, that in essence would reopen the seat to challengers if Jefferson wins this time around. Most prominently, the Jefferson Parish West Bank political organization of state Sen. Derrick Shepherd, who finished third in the primary, could provide enough muscle to send Jefferson to victory especially since this election standing alone on the ballot will magnify the mobilization fortitude of political groups (including Jefferson’s Progressive Democrats and Carter’s BOLD). Jefferson Parish could be vital to a Jefferson win, given the bad publicity Carter has received there.

In the end, the contest will hinge on how prevalent perceptions within the black community are that Jefferson is being persecuted for his race, and on the willingness of political opportunists to put that opportunism aside and advise followers to vote their consciences.

Blanco possibly forced to choose between royalties, session

The plot thickens as a harmonic convergence of political forces prepares to clash over the looming special session of the Louisiana Legislature, with reverberations all the way from Washington, D.C.

Many politicians and pundits continue to criticize having the session, with varying complaints about its being too broad and/or too little time available, that it rushes on matters that can wait, its matters open for discussion deserve more debate prior to a session, and it is highly uncoordinated. Some actively are trying to get the thing adjourned immediately, while others have done things to make the idea of a session less attractive, but the surest way to stop it is to get Democrat Gov. Kathleen Blanco to call it off herself.

This Blanco would be loath to do. Her fondest wish is to have the session turn into an orgy of gift-giving in various forms (tax cuts, rebates, salary increase, etc.) regardless of the long-term implications to state finances still shaky over the long run because of the hurricane disasters of 2005, in order to boost her reelection chances next year. Acceptable to her would be a session where at least some of this happens. Even having an immediate adjournment would not hurt her politically, it just wouldn’t help. But the only harm that could come to her now politically would be calling it off, an admission that she erred, compounded if the Legislature came back to the regular session in April and proceeded to do all of these things.

Poker with real dollars being played over session limits

Hardball politics went on display at the meeting of Louisiana’s Revenue Estimating Conference, producing results with implications concerning this year’s special session and next year’s elections.

At the meeting, which establishes limits of money to spend by the state, there are two kinds of funds considered. Non-recurring funds are those (in essence) left over from previous years considered a bonus and can be spent on public works projects or debt reduction of various kinds. Recurring funds are predicted to come in future years and may be spent for any purpose. Unless additional funds were recognized in this meeting, the only way the upcoming special session could spend money would be by a two-thirds vote of the Legislature. All four members of the panel must agree on the limits.

Consensus was there on $1.6 billion in recurring revenue, meaning these monies are available for things like tax relief, insurance rebates, and operating expenses of state government. But Sen. Pres. Don Hines refused to go along with the others in allowing $827 million from being recognized as nonrecurring expenses, which could reduce a backlog of authorized transportation spending, paying off state pension debt, or projects across the state.

GOP, Hines can damage Blanco session reelection ploy

Gov. Kathleen Blanco raised the stakes in her battle to jumpstart her reelection campaign by calling for a special session of the Legislature Dec. 8-21, putting the ball squarely in the court of legislative Republicans and Senate Pres. Don Hines, whose next moves may seriously damage Blanco’s hopes to serve past 2007.

The short session involves as much material as a regular fiscal session would, including changing laws to restructure homeowner insurance provision by the state, changing laws to ease state tax burdens by allowing again certain exemptions wiped out by the infamous Stelly Plan, accelerating dinosaur-speed tax breaks on business timidly brought into being by Blanco, tax credits galore such as for transportation by sugar farmers, pay raises for multitudes such as public safety personnel and school workers, and infusions to reduce transportation backlogs and unfunded accrued liabilities in state pension plans. In other words, spending huge sums from a presumed large state revenue surplus that may evaporate when rebuilding from the 2005 hurricane disasters abates, much on operating expenses, to give some goodies to a large portion of the Louisiana public.

Parsing through the requests, no real coherence exists to it, or any contemplation of these measures’ long term impacts seems clear, with just one idea holding it all together – trying to get as many votes as possible for Blanco next year. But, she may find, the Legislature may not feel so cooperative in this endeavor.

She had the ill fortune, also in large part governed by reelection calculations, to oppose Hines on the issue of whether to commit state money to guarantee a loan to build a sugar mill at Bunkie. Prevailing, Hines now has come out full against the idea of the session. More importantly, Hines can subvert the entire basis of the session by his vote, scheduled Tuesday morning, against declaring about $1.5 billion in surplus revenue that the Legislature could spend at the Revenue Estimating Conference meeting as available.

If Hines makes that move, then the spending could occur only with a two-thirds concurrence of each house of the Legislature (which explains item #6 in the call). Having just $331 million to blow may not be enough to entice members to do much of anything unless it’s related to spending for their own districts which, if anything, would hurt Blanco’s reelection chances if her nominal opponents point out she called a session that turned into a pork barrel festival. Thus, Blanco is hoping the siren song of much greater revenues out there would be enough to get two-thirds to want to work on the bigger items that could make her look better to voters.

Here, others against Blanco for different reasons could take up the opening Hines can provide to make the whole session a fiasco for Blanco. Republicans in particular have been critical of the session’s transparent reelection boost, rather than its representing any serious (given the time frame involved, therefore limited agenda to it) attempt to address looming state issues. Given that they control over a third of the seats in both chambers, with a few to spare, when House Republicans conference tomorrow, they could issue a statement that they oppose any efforts to raise the expenditure limit.

If they did so, followed by Hines scuttling the declaration of extra revenue (because he and his three Conference counterparts unanimously must approve of any increases), Blanco would be left with two bad choices, call the session only to see the GOP block any raising of the limit and watch it degenerate into a pork-fest, or to cancel it to avoid this. Either action makes her look weak and unable to govern, not what she needs heading into an election year. She could save her reputation only if she could twist enough legislative arms to get that two-thirds vote, in each chamber.

Starting tomorrow, some real tests of political will go on display. We’ll see who blinks, and if it’s Blanco, the state will be better off.

Hines tantrum shows term limits can get job done

Yesterday, a boondoggle to the state of Louisiana got derailed with the State Bond Commission voting not to put state money behind a money-losing sugar mill, but mostly for the wrong reasons. Today, a proposed special session spinning out of control might get sidetracked and again mainly for the wrong reason. In the process, it demonstrates an interesting and desirable side effect of term limits.

The biggest supporter of the mill, Sen. Pres. Don Hines, today transmitted a letter to Gov. Kathleen Blanco who had planned to call a special session over the weekend starting next Friday (which she must do in order to have it start that soon) which requested for her not to call the session. He mentioned it in that its timing was bad (too close to Christmas with other senators planned to be away) and that he thought the items she contemplated were too broad to be completed adequately.

Both complaints ring true but, if she wanted to, Blanco could ignore them. If she could get the Revenue Estimating Conference together, which she or her representative could call, and have declared roughly $1.6 billion declared ready to spend in different ways, with that much largesse to dole out, probably enough senators wouldn’t mind a midwinter’s gathering. However, one other part of the letter contained Hines’ real threat, when he said the state had only $331 million that it could spend before hitting its Constitutionally-imposed limit, requiring a two-thirds vote to override.

That’s because Hines as president is one of the four members of the Conference, and all members must agree that a surplus exists before it can be spent. This was Hines’ way of saying he was going to veto any such declaration, knowing that having just $331 million lying around may not jazz enough senators to want to stick around Baton Rouge to have a full session – the Constitution only allows a governor to call a special session with a specified agenda; it does not force the chamber to do anything and it could adjourn almost immediately. (This is even if he allows it to meet; as the current Conference chairman, he makes that decision.)

In a news conference concerning the letter Hines made obvious the genesis of the threat. “I’m not mad about the syrup mill; I’m just going to get even, that’s all,” he said. Yes, that’s absolutely petty and immature, making it about par for the course for the good-old-boy populist politics in Louisiana.

Still, the fact remains that Blanco’s idea of a special session and the right way of doing exist far apart from each other. Blanco sees it as an early Christmas, giving away all sorts of presents to the electorate to take the wind out of the sails of potential opponents to her reelection next year, especially Democrats who may challenge her, making it logistically difficult and philosophically problematic because the issues of tax cuts, credits, spending priorities, and the like deserve much more of a hearing than less than a couple of weeks can provide. Doing it right would mean a longer session, which would turn off legislators, or a much more limited agenda, which does not serve Blanco’s political agenda.

So Hines may end up doing the right thing, scuttling the unrealistic, political session, for the wrong reason, a temper tantrum because his son-in-law and other cronies didn’t get what they wanted. Even more fascinating, this assertion of legislative power relative to the governor may have happened because of something most legislators lament, term limits coming due with next year’s elections.

Hines is term limited, as is over a third of the Senate. It doesn’t matter so much to them to disperse the goodies because it serves them no real political gain without voters to impress. That incentive devalued to them, the governor loses leverage over the body. And it provides a piece of validation for term limits if that ends up causing a realistic special session to occur or prevents an unrealistic one from doing more damage to the state.

Mill rejection lacked political courage, but got job done

Not entirely for the right reasons, and in a convincing display of a lack of political courage, a request to throw away likely $67.5 million of Louisiana’s money was scuttled by the State Bond Commission.

The Commission turned down a deal that would have had the state back half of the $135 million cost to build a sugar mill in Bunkie. Most economic studies showed it had little chance of making any kind of profit, meaning the state would be liable for the bonds’ cost, and the one study that did so that was riddled with a number of problems. The facility well may not be built as a result of the vote.

The key figure in the vote was Gov. Kathleen Blanco, who by formal powers as governor such as line time vetoes, and informal powers such as arranging for the heads of Legislative committees, could pressure legislators, who comprise a majority of the Commission, to vote the way she liked. Representatives from her office comprise another two votes, while the other four come from other state elected executives.

The dynamics of the vote broke into three camps. First, apparently from previous comments, only one of the negative voters – the only Republican on the panel new Secretary of State Jay Dardenne – had the courage to vote against it because of what the deal truly was, bad for the state. (At the meeting, Treasurer John Kennedy began to imply this as well when he wondered whether other alternatives could assist farmers.) The supporting votes came from state senators led by its President, Don Hines – whose district is where the proposed mill and whose son-in-law would stand to profit directly from being able to use the mill. Hines, usually a Blanco loyalist, has as much input into the Senate careers of these senators as does Blanco.

All the other opposing votes seemed to be based upon the theme of there not being enough “information” about the mill, that a number of sugar farmers were against the deal, and/or that there were other ways such a tax credit (suggested by Blanco’s representatives) to help farmers. These were politically safe things to say – for example, allowing Blanco make herself appear as a fiscal reformer yet seeming concerned about sugar farmers – but disguise that those like Blanco who fell back on these explanations, if they believe them, do not understand the larger issue.

And that is, the state must reject inefficient spending designed to aid only a few and commit it to much more serious, higher priority projects such as (in the case of capital projects like this one) working down the transportation backlog (that $135 million could knock out over 1 percent of the estimated $12 billion needed for this). Public aid to sugar farmers ultimately is a wasteful exercise because there is too much sugar already being produced – hence the quota system imposed by federal law. Rather, the market should be allowed to work freely and permitted the shed the least efficient producers in the state, before any kind of aid would make sense; nobody has the right to impose a cost on others just because they want to pursue a certain occupation.

Interestingly, the supporters of the mill inadvertently latched onto this logical shortcoming most of the opponents expressed in their reasons for their negative votes – that it is not a question of the manner of aid, but rather whether aid should be given at all given other priorities. They argued the tax credit regime might end up being more costly and less effective to solve the presumed problem, transportation costs of cane and unrefined sugar. They implied that if Blanco really did care about the costs in committing the state’s money, her crew would not have suggested this. (Bad publicity – maybe even from bloggers – they blamed as the true reason for the negative votes; if only, they must lament, there was no freedom of speech and press things like this wouldn’t happen!)

The Commission made the right call, but mostly for the wrong reasons. And while the decision gives Blanco more room to try to get off the hook concerning accusations that she does not really diverge from the good-old-boy populist model of Louisiana politics where decisions are made more to satisfy certain constituencies than the public as a whole, no doubt she will try to present this action in her reelection campaign as evidence to demonstrate she is a reformer.

Blanco opposing mill deal right and politically beneficial

Even if Agriculture Secretary Bob Odom is the most powerful man in Louisiana, tomorrow’s State Bond Commission meeting may give Gov. Kathleen Blanco the opportunity to show she is the most powerful person in the state.

At the meeting, Odom will ask for the state to issue bonds to support the boondoggle Bunkie sugar mill sale which seems unlikely to earn enough and, as a result, under Odom’s deal would cost the state up to $67.5 million with nothing in return. Because of his heft with the state Democrat Party and with a majority of the Commission’s members being Democrats from the Legislature (who share Odom’s love of big government for which bonds sales can pay for), in case any of them for some reason go against their instincts and vote against an Odom-backed proposal, he can threaten to withdraw his electoral support of them.

However, because Blanco as governor can do even worse things to them (such as delete spending for their districts from the budget), if Blanco chooses to exert herself, she can muster a majority on the Commission to deny Odom’s request. If they oppose each other, Odom’s recourse is the same as with any Democrat elected to state office who dares stand up to him, deny support of Democrat Party money, operatives, and endorsements (the last being perhaps his most important source of power).

Daniel should address own record before doubting others'

Perhaps as a coming attraction that a number of members of the Louisiana Legislature will try to duplicate next year during their elections, state Rep. William Daniel IV is trying to run, but cannot hide, from his voting record.

The House term-limited Daniel is trying to succeed new Secretary of State Jay Dardenne against physician Bill Cassidy, both Republicans – although Daniel is a recent convert to the party in the past year. Yet, he is trying to paint Cassidy as “soft” Republican by publicizing Cassidy’s $1,000 contribution to Democrat Gov. Kathleen Blanco’s campaign in 2003. Cassidy says he has moved on from that and now supports Rep. Bobby Jindal should he run for governor.

But Daniel is one to talk, according to his voting record courtesy of the Louisiana Legislature Log. Graded on a scale where 0 was the most extreme liberal/populist score and 100 was the most extreme conservative/reform score, in 2005 Daniel graded at a 57 – behind 27 Republicans although higher than all but 4 non-Republicans, where the House average was a 46 but the overall Republican average was a 64. In 2004, then a Democrat, Daniel scored a 60, behind 26 Republicans whose average as a whole was also a 64 while the House average was a 52.

What really drove his scores down these years was he missed a number of votes on key legislation without any excuses, which served as votes against good legislation such as failing to support lower cable prices in 2005 or in 2004 on an amendment to fund teacher pay raises without additional taxes, because absences are counted as negative votes, but this also calls into question his fidelity as a legislator. The record shows Daniel – when he shows up – votes pretty well for conservative and reform measures as most Republicans would, but that he somehow managed to miss unexcused a number controversial votes, even if he did vote on other measures the very same day.

Constituents in Senate District 16 probably want their senator to earn his salary by being there and who’s willing to cast the tough votes to show that he’s in step with their proclivities – Republican in this instance. Recent Democrat Daniel needs to concentrate on convincing voters that’s what he can do as a legislator, rather than criticizing an opponent on how he donated his money four years ago.

Change law to prevent fund hijacking for boondoggles

The madness must stop: since Louisiana Agriculture and Forestry Commissioner Bob Odom continues to use taxpayer dollars on dubious deals, it’s time to cut off the mother’s milk around which Odom bases his political career, money.

In addition to the questionable prospects for the existing sugar cane mill at Lacassine, threatening that the state will have to pay loans backed by it in the event of its failure, it turns out that the deal meant to prevent state exposure, a promissory note to own it from a Colombian former cement maker, is financially poor as well. Consider that the note is for $60 million, payable out over 44 years at 3 percent interest, but with payments of only $100,000 for the first four years. Yet expenses so far to the state seem to be over $58 million so they may well exceed the note’s value. In addition, the 44-year length and 3 percent interest rate are (well) beyond and below, respectively, marketplace-based loans, meaning the state is locked into an inferior rate of return for a longer period. (For example, a more realistic 5 percent rate would get the state a whopping $276 million additional, over double the future value of the actual deal). Finally, the initial four year grace period costs the state a total of $12 million in forgone interest payments.

Why is the state allowing Odom to structure deals that cost taxpayers much more than any benefits brought? Because it’s the law: Odom gets use of $12 million a year coming from next taxable slot machine proceeds which may be used by the Louisiana Agricultural Finance Authority for “economic development” programs. Politically, Odom, who sits on the Authority, controls enough votes on it.

Blanco unlikely to avoid circling electoral sharks

Given her sagging, stagnant poll numbers, Gov. Kathleen Blanco will take any ray of sunshine regarding her reelection attempt in 2007. But she better not look too closely at them or she’ll be blinded from the truth of her precarious position.

She might be tempted to take heart in that the incumbent Democrat governors of Michigan and Illinois were reelected earlier this month despite having popularity numbers similar to hers. But she needs to face reality. For one thing, Republicans in both states self-destructed in their choices of candidates (for Illinois, their second one since the frontrunner withdrew after questions were raised about his personal behavior). This is unlikely to occur in Louisiana since one juggernaut of a Republican opponent (Rep. Bobby Jindal) has all but declared his candidacy, and another who would be favored against Blanco (state Sen. Walter Boasso) has expressed interest.

The other thing is that 2006 was a “perfect storm” year for the Democrats, one unlikely to be repeated for a long time. Certainly next year won’t be especially because Blanco will be unable to replicate the national Democrats’ strategy of running against everything without being for something. Voting behavior is such that national electoral forces can trickle down extensively to state elections, and embattled Democrat governors benefited. But without national elections in 2007, attention will squarely be on the Blanco record, and it isn’t pretty. If anything, given demographic changes, 2007 will edge closer to being a Republican storm in Louisiana, although probably not perfect.

Blanco also might be encouraged by New Orleans Mayor Ray Nagin’s comeback win earlier this year. Nagin, along with Blanco, was seen by many as negligent in disaster preparation and response, yet he eked out a reelection victory.

However, there was a simple election calculus present in New Orleans that will be absent at the state level. That is: (1) Nagin is black Democrat, (2) a majority of those present in New Orleans on election day were black Democrats, so (3) Nagin wins. This is untrue at the state level where likely only a quarter of the electorate a year from now in the state will be black Democrats – down in proportion from Blanco’s narrow win in 2003.

With these dynamics operating against her, unless Blanco can boost her approval ratings to the 50 percent mark, it would take a miracle for her to win reelection in 2007.

Thanksgiving Day, 2006

This column publishes usually every Sunday through Thursday after noon (sometimes even before; maybe even after sundown on busy days) U.S. Central Time except whenever a significant national holiday falls on the Monday through Friday associated with the otherwise-usual publication on the previous day (unless it is Independence Day or Christmas when it is the day on which the holiday is observed bu the U.S. government). In my opinion, there are six of these: New Year's Day (becasue nobody is reading anything and the Sooners probably are playing), Memorial Day, Independence Day, Veterans' Day, Thanksgiving Day, and Christmas.

With Thursday, Nov. 23 being Thanksgiving Day, I invite you to explore the link above.

Blanco declares Christmas early ignoring reality, chasing votes

As Christmas approaches, just call Gov. Kathleen Blanco “Santa Claus” – as her popularity continues to slip ahead of an election year, she’s taken to promising everything to everybody.

Now she’s pledging that a roughly $827 million surplus from the past fiscal year – which can only be used on nonrecurring expenditures – will be matched by a similar amount in the present fiscal year. Further, she expects “surpluses” to recur over the next five years.

Of course, this begs the question, if we know already they exceed current budgetary projections and thus factor them into budget calculations, how can they be “surpluses?” Regardless, the anticipated 2006-07 surplus calls not for the doling out of goodies such as pay raises but uses that tackle long term fiscal problems facing Louisiana such as the backlog of road construction and unfunded accrued liabilities in the state’s pension systems. Even avowed populist and potential Blanco opponent Public Service Commissioner Foster Campbell recognizes that, as many economists have pointed out, any surpluses Louisiana experiences will be as a result of a “false economy” – an inflated economy as a result of tens of billions of dollars pumped into the state artificially by the federal government for recovery purposes that will not be sustained over the long run.

Yet Blanco wants to have any 2006-07 surplus declared as recurring, meaning it could be used for continuous expenditures such as pay raises for teachers, public service employees, and the like. This is a tried a true method of Louisiana politics to buy off certain voting blocs ahead of an election, by promising goodies. By asserting, without any real validity, that the “surpluses” will continue, she is trying to build a case to justify this transparent attempt to buy votes that puts the state’s fiscal condition at great hazard.

It’s an extremely risky and detrimental strategy that seeks to encumber recurring expenditures to what likely will be nonrecurring, if ever realized, revenues boosts. Much smarter would be a conservative strategy that recognizes these revenues for what they are, gifts from the American taxpayer that cannot be expected to reappear, usable only to reduce long term problems. But, from the Blanco perspective, as demonstrated in her choices of support for legislation over the past three years, trying to eat into the roads backlog or the pension liability in her view doesn’t gain her a lot of political mileage that will translate into votes, even if they are huge crises.

It would be supremely reckless to make commitments to recurring spending out of any potential revenues that exist. However, we must understand that such policy pronouncements by Blanco are more about getting her another four years in office than a serious attempt to put Louisiana on a sound fiscal basis.

Market and government reform will solve insurance woes

Apparently a big part of any approaching special session will be discussion about not just how to deal with past insurance issues, but in how to avoid financial problems involving it in the future. If addressed, Louisiana needs to take the proper, free-market approach rather than give into the siren song of big government backstopping insurers.

Many insurers and politicians, including Louisiana’s Insurance Commissioner Jim Donelon if done at the federal level, support the idea of a catastrophic fund run by government that would pay out to insurance companies under conditions triggered by huge claims as a result of a natural disaster. Its most radical form would compel taxpayers from nationwide to pay into the fund, while less extreme versions would create a compact among states, or within states, where only ratepayers would subsidize the fund (which is close to how Louisiana’s Citizens Property Insurance Company works now in catastrophe situations).

But on both philosophical and practical levels, this plan has problems. Philosophically speaking, it violates taxpayers by forcing them to subsidize lifestyle choices made by others, instead of making people responsible for their own actions. Nobody forces anybody to live in a certain place, and it is immoral for people to ask for others with no connection whatsoever to them or their choice to be coerced into contributing to facilitate their ability to reside in a specific location when no common good is derivable from that. To ask others who buy homeowners insurance to do so also is illegitimate, since people should be free to choose what insurer to select (if they can afford it in the first place) and they would be punished even if they went with a company that made wise financial decisions to keep rates lower. (And, the notion is a total nonstarter among peoples in states where living entails lower casualty risk.)

It also invites government abuse. A government-run fund would put tremendous financial power in the hands of government rather than with individuals or corporations. Since government makes the least wise investment decisions (because they do not have to observe marketplace rules and the discipline and incentives to make optimal decisions) it would be less efficient and thus take more resources from the public or ratepayers than would reinsurers (in essence, private sector catastrophic funders). It also could wield these monies in a coercive fashion by its investment behavior, or be lax and allow these funds to be raided for other purposes, leaving the fund short when it is needed.

Practically speaking, catastrophic funds serve only to excuse lazy business practices among insurers, providing the industry disincentives to exercise good judgment and to use resources the most optimally, as the removal of some funds from the reinsurance marketplace would do. This would cause rates to rise overall. It also puts government in the business of competing with the private sector which discourages economic growth and tax revenues from it.

Rather than pursue this end, the best approach begins with the state setting land-use regulations in coastal areas, creating building codes and encouraging hazard mitigation – as explained by the Reinsurance Association of America, some things which Louisiana has started doing. But the key change would be to make reforms that encourage policy-writing in the state – less regulation of the industry in both structure and philosophy.

Structurally, the state is saddled with the Insurance Rating Commission, the only one of its kind which approves all rates above a certain level in addition to departmental review. Either it or the commissioner’s office should be abolished as they are duplicative and, theoretically, it’s better for the commissioner to stay because the Commission, being comprised of appointed officials, allows more room for meddling and agendas to discourage insurers, while the elected commissioner must face the voters who will punish him for allowing rates that are too high or also if they are set too low that would cause insurers to flee the state leading to undersupply of homeowners’ insurance.

Getting insurers to write policies is as simple as understanding that insurers remain in business if they have business on which they won’t go broke. Let rates go to their natural levels and there will be plenty of eager insurers patrolling the state. Greater flexibility in rates, which may anger some consumers because they historically they have underpaid dramatically commensurate to the risk they choose to shoulder in their residential choices and would see rates skyrocket under regulation more faithful to the marketplace, if put in place and not altered in response to populist pressures will encourage enough insurers that the vast majority of the state’s ratepayers will pay no mores, or even less, than they do now.

Only a private sector-oriented approach along these lines can solve permanently the vicious cycle of fewer insurers and higher prices. Resorting to big government schemes like catastrophic funds only means higher prices for most with no stable, ultimate solution for Louisiana taxpayers and ratepayers.

Session call shows Blanco has caught jailhouse religion

“Jailhouse religion” runs rampant among the incarcerated, where many more prisoners than actually have done so claim they have reformed their ways, in order to obtain reduced sentences or privileges. As the election year 2007 looms, Gov. Kathleen Blanco in her special session call for the end of this year shows she has caught it in an attempt to make Louisiana voters forget that she often has passed on opportunities for lower taxes and sensible spending. (“Call” is in parentheses above because it is not official and may not even be constitutional in that form, when a formal call comes.)

Just to name some examples, about 18 months ago Blanco was all about raising taxes on health care consumers by creating an new tax on health care facilities that would have passed the cost through to consumers, instead of steering the state away from its bias on institutional care which on Medicaid reimbursements alone would save the state nearly $100 million a year. (Then, she quietly led for the repeal of this tax after the realities of it in the post-disaster environment sunk in.)

Another was concerning the $12 billion backlog in road repairs (despite a special tax levied almost 20 years ago to address this) which she now claims she’ll have addressed in the special session. But only months ago, even as she denies it, she tried to float an idea about slapping tolls on roads to fund this, in part because she has allowed very low-priority but politically well-connected capital spending going on in other areas such as funding horse barns and creating reservoirs that assist a select few in the state. Had she mandated sensible spending, the road backlog already would have been whittled by hundreds of millions, perhaps billions, of dollars by now.

In addition, she has had plenty of opportunities in the past to address the huge and growing unfunded accrued liability in the state’s retirement accounts, another session call. But every time she had the chance, she preferred spending operating funds on programs favoring the interests of certain individuals rather than tackle perhaps the biggest ticking time bomb the state faces.

And, the Blanco record is chock full of instances where she cared more about distributing benefits to a favored few than to the people of Louisiana. This year, she signed onto sweetheart deals for the politically-connected, increased prices at the pump for consumers (while creating an imperfect mechanism to prevent that), prevented a reduction in cable television prices for consumers, and supported perks for lawmakers until great public outcry got her to reluctantly cast a veto of them.

Does anybody seriously believe that if next year were not an election year and that Blanco’s approval ratings weren’t in the tank that she would not behave in the tax-and-spend manner she has in the past, bloating up the state budget? Her call contains good ideas and, if implemented properly, they will do more good for the state than the sum total of her contributions to date by far. But, informed voters next year will recognize the expediency and convenience of her conversion to supporting these ideas and would do better to support for governor genuine reformers such as Rep. Bobby Jindal or potentially any of a number of other candidates for Blanco’s job.