The Legislative Process

Yesterday, the Indianapolis Star ran the second part of Matt Tully’s series on ethics at the Indiana General Assembly, or how a bill really becomes a law.

What struck me most was the irony–the amounts of money spent by vocal proponents of free enterprise and the market economy in pursuit of legislation privileging their positions in that market and/or protecting them against competition. Sunday liquor sales, gaming operations, banking rules, collective bargaining…for a state that  celebrates capitalism, our lawmakers spend an inordinate amount of time picking winners and losers.

Want an example?

Also appearing in yesterday’s paper was a report on a hearing held by the House Utility Committee on the boondoggle known as the Rockport Coal-Gasification plant.

As readers of this blog will recall from previous posts, then-Governor Mitch Daniels entered into a thirty-year deal with Leucadia National Corporation, represented in Indiana by long-time Republican operative and Daniels friend, Mark Lubbers. (If the name sounds familiar, it’s because Mark Lubbers’ wife Teresa was appointed by Daniels to head up the state’s Commission on Higher Education.) The terms of the deal obligated the state to buy the company’s synthetic gas and resell it on the open market. Indiana ratepayers would get discounts or increases on their bills, depending upon whether the synthetic gas was more or less expensive than gas available on the open market. Seventeen percent of ratepayers’ bills would be tied to the Rockport plant’s rate.

State Senator Doug Eckerty, who opposes the deal, has sponsored a bill that would send the agreement back to the Indiana Utility Regulatory Commission for a full review.

In the committee hearing, Eckerty pointed out that gas prices have plummeted since the plant was first proposed, and that the manufacture of synthetic gas is no longer economically feasible. Coal gasification projects in other states have been abandoned. As he noted, if private sources will not finance these projects, why should taxpayers?

When natural gas prices were high, there was at least a thin justification for a deal that used Indiana ratepayers to guarantee the profits of a private company. Now even that pretense of a public purpose is gone. Mark Lubbers testified that gas prices are volatile, so the plant would protect ratepayers if and when the prices spiked again.

The problem is, whether gas prices rise again is irrelevant. The state should not be picking private-sector winners and losers. I hate to use a sports analogy, but government’s role in the economy is best compared to that of the umpire or referee in a game. When government abandons that role–when it suits up and plays with one of the teams–it is improper. It violates the rules, undermines the sport, and makes cynics of the onlookers.

It’s no different when the game is the free market.


  1. I agree. We should have a Wall Of Separation between business and the state. Coal gas, Solyndra, NFL stadiums, etc etc.

    It’s gotten so bad that the government will literally take the public’s money away from them and give it to a private part. That’s the gist of the Indy 500 bailout, that $100 million in tax money would be handed to the inbred twits that run the track.

    And a few years ago a factory in Indiana (Randolph County?) got a $3 million grant from the county economic development commission, because it had fallen on hard times, and was faced with layoffs. The sensible approach be a combination of layoffs, wage reductions, elimination of management staff, and wiping out the owner’s equity. The head of the company lives in a $350,000 house. Instead, the county swiped $3 million from the public and gave it to the company.

    I forgot one – about 10 years ago, the town of Plainfield spent $6 million to build Galyan’s a new HQ building. They just GAVE them the building.

    In all these cases, the government would be barred from loaning the company the money, but somehow it’s ok to give it away.

    People in government who pick favorites in the business world are at best badly misguided, and at worst, on the take.

  2. One of the best exposes of how the big businesses bought the General Assembly for legislation was published by some excellent reporters for the Indianapolis Star in the late 90’s series “Statehouse Sellout.” Sadly, many of these skilled writers are no longer with the newspaper. “Plus ca change, plus la meme chose.”

  3. What Eugene said.

    “What struck me most was the irony–the amounts of money spent by vocal proponents of free enterprise and the market economy in pursuit of legislation privileging their positions in that market and/or protecting them against competition.” —That is what you call, a liar. It’s sad when a few idiots have to try and ruin it for the rest of us.

Comments are closed.