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24.12.08

Support of EWE commutation explains LA ineptitude

At first I thought I was reading a term paper from one of my sub-par students. No, it turned out to be an Abbeville Meridional newspaper editorial advocating the early release of former Gov. Edwin Edwards, now better know as Prisoner #03128-095, and the intellect and logic showed in demonstrates exactly why Louisiana ranks at the bottom of many quality-of-life indicators.

The rambling thesis of this appears to be that the elderly Edwards has suffered enough. A lifetime of achievement it offers as exculpatory justification. In doing so, not only does it miss the entire point of Edwards’ punishment, it doesn’t even provide convincing arguments that he merits commutation of his 10-year sentence.

The editorial skirts Edwards’ apparent corruption in office. Instead, it advances the peculiar notion that his long service in various capacity somehow exempts him from paying the full price for his misdeeds, even going so far as to maintain proof of his overriding good work was being elected governor four times showed “he must have done something right. Voters in this state are not stupid.” No comment of mine can illuminate better the “merit” of this statement and I’ll leave it to my readers to ponder this wisdom without my input.

While he never was convicted of abuse of office, plenty of circumstantial evidence makes it hard to explain what the author claims is a “myth” that “Edwards made his money in politics.” If he didn’t make it while in office, it seems difficult to understand why Edwards was so unconcerned from what today would be illegal lobbyist cash gifts from Tongsun Park while in Congress, or why his former operative Clyde Vidrine would produce salacious revelations in his books about these things, or why during his 1986 corruption trial it was revealed that Edwards regularly visited Las Vegas casinos with suitcases full of hundreds of thousands of dollars when as governor he made in salary a fraction of the contents of one such case each year. Willing suspension of disbelief does not make for good argumentation.

It also reads a “second myth is that government in Louisiana is corrupt and that all elected officials are crooks.” Insofar as this is a straw man argument – nobody seriously argues this so why waste the space refuting something irrelevant – it claims corruption essentially stops at the Orleans Parish lines. The author needs to do a little research to discover just in the past year high-profile corruption cases being decided in Jefferson Parish concerning judges and a former state senator and in Baton Rouge about the state’s film office. Somehow, asserting without proof that little corruption exists outside of New Orleans is supposed to make readers believe … what? That since Edwards wasn’t from New Orleans he wasn’t corrupt?

The sad fact that the author runs from is that Edwards was convicted of a federal crime of using his influence improperly in politics. No amount of character references or favorable polling can change this fact, and it is important for him to serve his entire (and typical for the collection of crimes for which he was convicted) sentence because, as noted elsewhere, it provides disincentive to deter criminals from doing things, including performing additional corrupt activities to prevent the day of reckoning from coming to hold off their punishments long enough to have a way to escape their full sentences.

It will be interesting to see whether the Meridional is consistent in its view about Edwards concerning the case of Bernard Madoff who also allegedly engaged in corrupt activities (in the financial markets). Investors may have lost billions by him (although some made quite a bit from him as well, so he did help the public), but, hey, the guy is 70 years old and no doubt the trial will be taxing on him so why not let him off light? I await this editorial that argues if Edwards should be let off despite what he did to the Louisiana citizen, regarding Madoff that he merit the same treatment for what he did to duped millionaires.

That such an editorial so oblivious and would seem to take itself seriously just provides another indicator explaining Louisiana’s dismal situation. People who entertain the notion that violation of public trust not be punished to the full extent of the law are the same folks who keep putting into office politicians and supporting public policy that tolerates such behavior to the detriment of the state.

23.12.08

Normal circumstances make Cao reelection difficult

With all due respect to longtime Orleans Parish stalwart Republican and former city councilman Bryan Wagner, saying GOP Rep.-elect Anh “Joseph” Cao was going to win earlier this month the majority-black-Democrat Second District without a favorable confluence of events shows less political sense than the neophyte Cao’s, who acknowledges these things. Whether he can win absent these dynamics in 2010 is another matter.

Wagner, who played a major role in the Cao campaign, naturally wants to create the impression of future electability of Cao because he understands the fundamental truism (misunderstood by many) that donations go to candidates on the basis of their quality, i.e. ability to win. These resources Cao will need for a 2010 run because all the Democrats in the 2008 contest except one outraised him as of Nov. 16 in terms of both total funding and individual donations. However, it is likely when the next reports in early January are released through the general election, Cao’s totals should have gone up considerably and won’t be reported too far behind incumbent and indicted Bill Jefferson’s.

Let’s not kid ourselves over why this was the case: Jefferson was viewed by many, even by some who voted for him, as corrupt, discouraging electoral and monetary support. Some portion of these people, as shown previously, who had supported Democrats against him twice unsuccessfully in the party primary and runoff, while they could not bear to vote for a non-Democrat in the general election did not vote for Jefferson thus at all. But an underreported aspect of the election was the fissures in the black vote that had begun to appear in the Democrat runoff primary in black support for Jefferson spread more forcefully in the general election.

As previously noted, in the runoff estimated black support (calculated by Jefferson proportion of the vote less proportion black registration) for Jefferson dipped to about 89.5 percent against a Hispanic opponent. It further dipped in the 142 precincts with at least 90 percent black registration to less than 85 percent, precincts on average only voting about 80 percent in Jefferson’s favor (in several, he barely pulled an estimated 70 percent of the black vote). (Contrast this with the five 90 percent-plus white precincts that gave Cao an average 92 percent of the vote, where he got an estimated 95 percent of the white vote.) Simply, an unusually high proportion of blacks abandoned a black candidate in favor of a Republican, and it’s hard not to conclude it was more the scandal-tinged Jefferson than Cao’s campaign that triggered this significant exodus.

So Cao was seen this election cycle as a quality, competitive candidate, but most likely because of the nature of his opposition. Reduced black loyalty to a black candidate when running against a non-black, the introduction of (mostly white) Republicans into the contest who were absent in the primary which had produced the least-electable candidate, and, as previously observed, a much bigger drop in black compared to white participation from the primaries in part due to black registrants’ questions about Jefferson all played a role in making Cao an attractive candidate, obviously enough to win.

That perception will be enhanced by a couple of years’ service in Washington. But that time also is plenty for one or more black Democrats free of scandal to position themselves well to win the 2010 party nomination to go up against Cao. Such a candidate will restore black voting loyalty to levels not far below those below the Jefferson era’s (giving Cao a little credit for some minor conversion through good service) and not discourage those blacks who stayed home. This scenario creates numbers that undeniably will make Cao a longshot for reelection, and no amount of talking up his chances by senior Republicans will change this. Not acknowledging this reality almost certainly will lead to his defeat.

Although I do envision one scenario where Cao’s chances would be pretty good. I won’t go into details now, but it involves as the Democrat nominee somebody who believes a high crime rate “keeps the New Orleans brand visible” and envisions New Orleans as a “chocolate city” ….

22.12.08

Tax cuts blamed when LA really has spending problem

It’s official: the arbiter of liberalism in the American press, The New York Times, has weighed in on Louisiana’s budget deficits present and forecast, and as usual misses the point in its eagerness to slant the story in favor of big government.

The party line that liberals want to spread about the state’s deficit is that tax reduction, principally the individual income tax cut, is bad even in flush economic times, perhaps explained by irrationality. Appropriately to advance this notion, they trot out one of the most liberal state legislators, head of the Democrat Caucus state Sen. Eric LaFleur, who practices a little psychology in declaring “euphoria” captured the minds of so many greenhorn legislators who “hadn’t been around long enough” to know apparently that tax cuts have consequences by his reckoning. (For his part, LaFleur proved to have a gelatinous spine by voting for the cut, although at least he has done the proper liberal thing by declaring he had “misgivings” about it.)

Of course, this view entirely ignores the statistics and recent history of the state’s fiscal picture. Numbers officially got declared on Friday so they have yet to be posted, but the forecast has the fiscal year 2009-10 revenues numbers for the general fund outside of statutorily-dedicated funds to come in around $8.3 billion (as opposed to the previous that came in a billion bucks higher). Excluding in all cases federal recovery dollars, this can be compared to the numbers of (still-evolving) about $9.65 billion for FY 2008-09 (note that if the 2/10/08 forecast had held a surplus would have been declared instead of the deficit that used the 5/9/2008 forecast), about $9.5 billion in FY 2007-08, $8.2 billion in FY 2006-07, and $7.3 billion in FY 2005-06.

In other words, from FY 2005 to FY 2009 (predicted), state revenues have increased over 13 percent, at a decent annual clip of nearly 3 percent. The increase for 2005-08, pumped up by federal disaster recovery dollars, was 32 percent. By contrast, consumer inflation over the 2005-08 period was only 9 percent (and may not even be that high through 2009 given recently falling prices). Add to this that the state’s population has declined slightly (about 85,000) throughout this period. This shows that state revenues (and therefore, except for an eventual $500 million or so of tax cuts now or about to kick in, spending) rose much faster than existing needs and demands on government. Only unless one thinks (as no doubt The Times, LaFleur, and liberals in general) that government should do more (implying that people should be less responsible for their own affairs), could such an increase in spending from these revenues be justifiable.

Once again, the data are very clear: Louisiana has not had a revenue problem, which has grown at a faster rate than inflation with a stagnant population, but rather has had a spending problem. There is no justification why government must keep doing more just because more money rolls in. With all of the excess revenue coming in, a tax cut was not only appropriate because it allows people to keep more of their money and will set the stage for improved future economic growth, but it was the moral thing to do. Yet the majority of the attention of the article was about the revenue side of the equation, not on spending.

Deficits loom now because spending was not kept under control. If it had been, huge surpluses could have been declared for a couple of years and far-sighted legislators could have in the past (even one this year) voted to increase the maximum size of the Budget Stabilization Fund where this money could have been saved to cushion future deficits. Even better, with spending controlled, the deficits may not have appeared at all, and the excess money could have gone to unfunded accrued liabilities, coastal restoration, improved infrastructure, etc., if not even more tax cuts.

Often, when people advocate reductions in government spending, their ideological opponents ask where cuts should take place. But in this situation of rapid revenue growth above the baseline price and population levels, the more appropriate prior question is first to justify the increased spending beyond what was being done previously, and then what cannot be justified is the candidate for cutting. Trying to deflect attention from this imperative by fixating on revenue-raising measures disingenuously disserves the public.

21.12.08

Success on Jindal health plan also can help budget woes

It is all interconnected, the balancing act Gov. Bobby Jindal is trying to pull off as state revenues look to underperform and state expenditures, basically Medicaid, prepare to overperform. He has to get it right or practical and political ramifications will be substantial.

Naturally the state’s current and looming budget deficits have dominated headlines for the past week, even as surrealistically a surplus came about for last year.. Problem is, that surplus cannot directly be used to offset this year’s or the predicted deficit. As has been suggested previously, the best use of the surplus would be to boost the Budget Stabilization Fund, which would comprise about 60 percent of it. And while paying off debt and then using interest savings with the remainder also would generate some more short-term cash to offset the future deficit, perhaps a better strategy would be paying down unfunded accrued liabilities of state retirement systems to reduce huge expenditures in the next two decades.

But aggravating spending over the long run will continue unless the single biggest portion of the biggest item growing at the fastest rate continues, and that is Medicaid spending on the poor and indigent. This week, Jindal got a significant victory with legislative approval to allow him to bring to the federal government a coordinated care plan that would introduce private sector aspects to the system that promise to hold down costs.

This came despite two different forces who oppose the plan. One comes from physician organizations which would prefer the fee-for-service model because it better serves their interests. The new plan would reduce providers’ abilities to make nonessential and/or duplicative charges and thereby also their revenues. It additionally would force more attention to be paid regarding their own practice management which some would prefer not to do.

The other, represented by the only dissenting legislative committee vote of state Rep. Karen Carter Peterson, objects because Jindal’s plan disempowers government too much for its liking. The current fee-for-service arrangement, where government pays whatever reasonably is billed, puts everybody but the health care consumer in charge and encourages no efficiency. Jindal’s plan, developed by Health and Hospitals Secretary Alan Levine who supervised a similar reform in Florida, introduces market forces with competing nongovernment administrators. This is in contrast to rumblings coming from Democrats in Washington who now control both majoritarian branches of government and campaigned on providing national universal health care.

Peterson commented that the process was too rushed, even though legislators were not being asked to make a commitment and many options were open. The implication was this plan was trying to get approval before Democrats essentially could force a plan onto states that had no free-market mechanisms to it, as it would be more difficult for them to dismantle these kinds of programs (which more and more states are turning to) oncethey were put into place. Particularly dangerous to their perspectives is that Jindal’s plan has elements of universal coverage in it, making it politically difficult to turn down half a loaf.

However, while a rearguard action of the likes of Peterson’s would slow things down for nothing more than political reasons, the fact is it is highly unlikely that in less than a month the federal government will be able to act on and approve the waiver anyway. The real concern is that with the new administration coming in, months will pass before positions are filled where these kinds of decisions can be made and that threatened to push back the intended launch date a year from 2010. By having lower-level bureaucrats start immediately on approval, that could save several months, and Democrats still would get a chance to approve or not.

Jindal is being particularly crafty with his introduction of the elements of universal coverage, and not just because it can win approval for a free market-oriented plan. Because of past shenanigans, the state owes $771 million to the federal government for Medicaid overcharges. Jindal has proposed waiving that if the state plows that into a phase-in of universal coverage, and also makes for a more compelling case for the efficiencies from the free market elements to be introduced in order to keep overall costs down. One must be there for the other, and without either, as Levine has preached constantly, costs will continue to spiral without any improvement in coverage or service.

The timing is everything because while Jindal probably can come up with stopgap measures to take care of this next fiscal year’s deficit, with no attempt to control Medicaid spending future year deficits will create a chronic budget problem. So not only does Jindal have political stakes attached to Medicaid reform for its own sake, but also to help mitigate potential future budget woes. With legislative approval, given the confluence of political forces in these times of transition, he may have started playing a winning hand.