Public Policy and Governance – Page 317

Speaking of Gushers….

American taxpayers subsidize the giant oil companies to the tune of 4 billion dollars a year.

The American tax code contains a variety of provisions that make oil production one of the most heavily subsidized businesses in the country, with tax breaks available at virtually every stage of the exploration and extraction process.

According to the most recent study by the Congressional Budget Office, released in 2005, returns on capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.

For many of the smaller oil companies, the tax on capital investment returns is so low that it is more than eliminated by various deductions and credits. Incredible as it may seem, some companies’ returns on investment are higher after taxes than before.

In fact, oil profits are gushing. According to the organization Public Citizen, from the time George Bush became President in 2001 through the first quarter of 2007, the top five oil companies in the United States recorded profits of $464 billion. By 2011, those numbers were beginning to look like small change: in the second quarter of 2011 alone, the big five oil companies made 36 billion in profit.

That’s profit, not total revenues.

Meanwhile, you and I–together with other American taxpayers–continue to provide the industry with subsidies that have been estimated at between 4 and 8 billion dollars a year.

The various tax breaks enjoyed by big oil probably made sense when the industry was in its infancy. They make no sense at all when the industry is not just profitable, but obscenely so. Nevertheless, a move to eliminate those subsidies failed yesterday in the Senate, despite strong support from President Obama. While the proposal received support from a majority of the Senate, it failed to garner the filibuster-proof 60 votes that are required in order to get anything done in this era of Republican intransigence.

I suppose there is something admirable in the GOP’s loyalty to the 1%–those George W. Bush once called “his base.” They refuse to tax the rich (and by “tax,” I mean raising the top marginal tax rate by 3% to the still historically low levels of the Clinton administration). They refuse to eliminate or reduce subsidies for obscenely profitable oil companies–indeed, Paul Ryan’s budget proposal would visit a world of hurt on people who depend on Medicaid, Medicare or other social programs, but it reportedly increases subsidies to big oil.

So much for the GOP’s purported concern about deficits.

From a fiscal policy perspective, these positions are simply unfathomable. And it is really difficult to believe they are politically palatable. Maybe the theory is that if they raise enough of a fuss about transvaginal probes and contraception, no one will notice.

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Audacious in Chicago

This morning’s New York Times reports that Rahm Emmanuel will announce a 7.1 billion-with-a-b infrastructure improvement plan for Chicago. Improvements will be made to everything from the water system to the airport, from public transportation to parks. The improvements will be financed primarily through a public-private investment trust, details of which Mayor Emmanuel is supposed to announce later today.

I found this paragraph particularly interesting:

Some public-private partnership projects have been criticized as giveaways to the private businesses that take them over — including two prominent cases in Chicago itself, the privatized Chicago Skyway and the city’s parking meter system, which obligate the city to leases that span generations. Mr. Emanuel says that the city has learned an important lesson, and that “I am not leasing anything,” or selling off the city’s assets, he said in an interview. “I’m using private capital to improve a public entity that stays public.”

Great cities are places people want to live. As former Mayor Hudnut repeatedly reminded us, livable cities are first and foremost “cities that work.”

Most of us don’t want to live in housing that is unkempt and run-down, but we also understand that we aren’t improving our situation if we sell the stove to pay for new carpet.

In order to build a great city–especially in these days of fiscal hurt–its leaders need vision, and the audacity to insist that investment in the public square is both necessary and important. The audacity to refuse to sell off public goods to private profiteers.

The audacity to defend and maintain great urban spaces for the generations of citizens who will enjoy them.

What Legislatures are For

Given the antics of the Indiana General Assembly in the just (mercifully) ended session, you might think the role of the legislature is to ensure proper singing of the national anthem, determine whether children need to learn cursive and require the BMV to honor the prejudices of people who hate gays. So it might come as something of a surprise to learn that this branch of government really does have a proper function.

Okay, for a lot of us, it apparently comes as a surprise to learn that we have three branches of government–and that there is a reason that the legislature is separate from the executive branch.

Which brings me to a story reported by the Courier Press a week or so ago.

The Governor has been supporting a coal gasification plant being developed in Rockport, Indiana. He has been so supportive, in fact, that he has had the Indiana Finance Authority negotiate a 30-year contract to purchase the gas and resell it to Hoosier ratepayers. And Daniels also favored an award of a 20-year, $120 million dollar tax credit to the plant operation–a tax credit that required legislative approval.

When the legislature proved reluctant to provide that approval, the administration suddenly decided that the credit could be enacted by the Indiana Department of Revenue. No legislative action needed, thanks very much.

Now, I don’t know whether the criticisms of the Rockport plant as a boondoggle, and the Governor’s support as “crony capitalism”are accurate. I do know that the questions raised by other utilities and some lawmakers are legitimate, and deserve answers. Maybe taxpayer support can be justified, maybe not.

But I do know that legislatures are supposed to make these kinds of decisions.

Let’s revisit the first lesson of high school government: the legislature decides what policies to enact, and the administrative branch–under the stewardship of the chief executive–administers those policies. In the real world, of course, it is never that neat–government workers in the executive branch necessarily “make policy” in some sense when dealing with the public. But it is not within the authority of the administration to decide whether taxpayers will go on the hook for $120 million-dollar coal gasification plant.

It’s called “checks and balances.”

As the head of the Citizens Action Coalition put it, “I thought we overthrew the monarchy in 1776.”

Let me spell this out: approving applications for specialty license plates is an administrative function. Deciding whether to teach cursive is an administrative function. Deciding to spend $120 million dollars of taxpayer money on a new technology is a legislative function.

Do we provide these people with job descriptions?

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I Was Wrong

Yesterday I blogged about something I’d gotten right. Today, I’m going to admit being wrong.

When people first began talking about a “war on women,” I thought the rhetoric was over the top. Sure, there were some retrograde legislators in statehouses around the country–not to mention Washington–but that’s always been the case. Attacks on Roe v. Wade have been a staple since the case was first decided, and the persistent efforts to roll back a woman’s right to terminate a pregnancy have long been an unpleasant but relatively minor part of the political landscape. I never believed those who insisted that–given a chance–the attacks would intensify, and even extend to contraception.

Boy, was I wrong!

The elections of 2010 that swept conservative and Tea Party Republicans into office were evidently seen as authorizations to engage in a full-scale and increasingly demeaning attack on women’s reproductive rights.

It wasn’t just the offensive transvaginal ultrasound bill that has been characterized as “legislative rape.” During the first six months of 2011, 19 states enacted 162 new provisions aimed at reproductive health. There were “counseling” and extended waiting periods for abortions–including a South Dakota measure that requires “counseling” to include risk factors even when those risks are not supported by medical evidence. In Kansas and Arizona, laws working their way through their respective legislative processes would allow doctors to withhold accurate information about fetal abnormalities or risks posed by the pregnancy from women who might decide, on the basis of that information, to abort.

Fifteen states banned abortions after 20 weeks unless the woman’s life is endangered. Ohio went even farther, banning abortion once a fetal heartbeat can be detected, usually between six and ten weeks. Still others passed measures making medication abortions difficult or impossible.

Then there have been the truly bizarre efforts aimed squarely at birth control and women’s health.

The recent Congressional effort to characterize contraceptive coverage as a religious liberty issue has been widely debated, but there have been other, less publicized efforts to deny women access to birth control. Several states have considered so-called “personhood” amendments that would effectively ban the most effective forms of contraception by equating a fertilized egg to a “person.” There have been repeated efforts at both the federal and state level to de-fund Planned Parenthood, despite the fact that huge numbers of poor women depend upon the organization for basic health services like pap smears and breast exams.

The (male) politicians who favor these and other punitive measures used to pretend they were operating out of a concern for women’s “informed” consent–since, as we all know, women are too stupid to make these intimate decisions unaided. But even that pretense is disappearing. We have a Republican Presidential candidate, Rick Santorum, on the record saying contraception is wrong because it allows people to do “wrong” things–i.e., engage in non-procreative sex.

If this avalanche of misogyny isn’t a “war on women,” I’d hate to see the real thing.

Gail Collins recommends investing in burqa futures. I think she’s on to something.

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I Told You So

There’s nothing as annoying as someone who tells you “I told you so.” It’s a taunt that’s anything but gracious. So I’ll try to throttle my desire to do just that, but it won’t be easy.

When the Ballard Administration entered into a fifty-year contract to manage the city’s parking meters with a consortium headed by ACS, a lot of us were highly critical. The length of the contract was excessive. ACS had a horrible reputation nationally. There was really no good reason we couldn’t manage our own parking meters (other cities seem capable of doing so) and keep all the profit, rather than giving the bulk of it to ACS. The terms of the contract favored ACS over Indianapolis taxpayers.

Many City-County Councilors shared those criticisms. Even after the administration engaged in considerable reported arm-twisting, the contract was only approved by one vote–and the deciding vote was cast by then-Council President Ryan Vaughn, a lawyer employed by the law firm that represented ACS.

After the new meters were installed, we were treated to a series of press releases–uncritically accepted by the local media–telling us how well everything was going. Revenues were up! (As a cynical friend noted about one of these glowing reports, of course revenues were up; hours had been extended and rates had been raised. For this you need a contractor??)

This week, the Star (finally) examined the numbers, rather than repeating the Administration’s hype. And guess what?

The first year of Indianapolis’ 50-year parking meter lease brought doubled rates in some areas as a tradeoff for a wholesale upgrade of equipment and the convenience of paying by credit card or smartphone.

Was it worth it?

New financial data provided by the city shows its share of revenue from the vendor in 2011 — nearly $1.4 million, or 30 percent — fell well short of the city’s own projection of $2.1 million.

And the city didn’t end up seeing the full amount: After the vendor subtracted $286,000 in charges to compensate for the city closing metered spaces, often for RebuildIndy road construction work, the city pocketed $1.1 million.

The contractor, by contrast, made 3.5 million.

And we’re stuck with this bit of crony capitalism for the next 49 years. Forty-nine years of foregoing 3.5 million plus–money that could be used to pay for paving streets, improving parks or plugging budget shortfalls at IMPD.

This was a very bad deal. And I did tell you so.

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