Category Archives: Public Policy and Governance

Checks, Balances and Legislative Absences

Yesterday, my sister asked me when I was going to blog about the Democratic “departure” from Indiana’s legislative session. She was the fourth person to ask me that.

I haven’t addressed our legislative impasse, largely because I am conflicted about it.

The walkout as a tactic has much in common with the U.S. Senate filibuster; both are intended to provide a check on the power of majorities to ride roughshod over the interests of a legislative minority. Both are legitimate IF–and it’s a big if–they are properly and judiciously employed. In the case of the filibuster, I support the “old-time” version (the Jimmy Stewart version, if you will), where Senators actually stood up on the chamber’s floor and talked–and talked. Filibustered. I do not support the current version, where the minority party simply says “If you do that, we’ll filibuster,” and the majority caves if it can’t count on sixty votes to override.

This iteration, it seems to me, is worse than lazy–it gives positive encouragement to those whose sole purpose is to deny the majority an opportunity to accomplish anything.

In the state legislature, my calculus is much the same. If negotiation fails, if the majority is being dictatorial and unreasonable, if it is attempting to take actions that the minority is convinced would cause significant damage, the minority may legitimately withdraw in order to bring the chamber to a halt and focus public attention on the arguments involved. The use of such a “nuclear option” should be rare, however, and judiciously employed.

A couple of additional observations: these “rules” should apply no matter who is in the majority or minority. And as Doug Masson observed in his blog post yesterday, legislative absence does not necessarily equate to “not working.” Most of the work of legislative bodies occurs outside the chamber even when everyone is present, for one thing, and keeping bad laws from being enacted is also “doing legislative work.”

There are certainly arguments to be made about the propriety of any particular use of drastic tactics, but the tactics themselves serve a purpose when appropriately used. When I look at the current assault on working people, teachers and women, and the potential consequences of the measures the Democrats are trying to block, I think this is an appropriate response.

If the use of such tactics at the state level becomes a routine part of our toxic and gridlocked political environment, as the abuse and misuse of the filibuster has, I might change my mind.

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Wealth and Power

For the last few years, there’s been a good deal of debate over the growing gap between the rich and everyone else.

We’ve all seen the numbers: the top 1% of Americans own 43% of all the nation’s wealth, and the next 4% owns another 29%. Meanwhile, 80% of Americans share only 7% of the nation’s total wealth.

That bare fact is troubling enough–disparities of this magnitude typically generate resentment and often lead to significant social disruptions–but the reasons for that gap are even more worrisome. The truth of the matter is that money buys access and power. Poor folks don’t have lobbyists, they don’t make significant political contributions. To use academic jargon, the poor lack “voice.” Meanwhile, the rich have megaphones.

Look at the proposals to cut the deficit–a deficit caused primarily by two ill-considered wars (wars that “coincidentally” enriched a number of major corporations) coupled with massive tax cuts for the wealthy. Programs at risk include things like early childhood education, low-income housing programs, community health centers, family planning and job training–all programs that assist poor Americans. It’s estimated that cuts to these programs will “save” 44 billion dollars (save is in quotes because most of these are short-term savings with significant long-term costs). Meanwhile, the recent extension of the Bush tax cuts to the richest 2% of Americans cost the treasury 42 billion a year. Changes to the estate tax–dubbed the “death tax” by opponents–cost another 11.5 billion.

Let me be very clear: I accept the argument that confiscatory tax rates dampen innovation and entrepreneurship. And I not only accept, but heartily endorse market economics. I’m a capitalist and make no apologies for that. But American tax rates are at their lowest levels in fifty years, and one would have to be delusional to believe that returning the top rate to 39%–the rate during the Clinton administration–would discourage investment. What is even clearer is that we have abandoned markets in favor of crony capitalism. Large employers and the wealthy have used their clout to game the system; they have effectively bought tax and other advantages that have had the effect of protecting them from the very market forces they so piously invoke.  Instead of a genuinely free market, where businesses compete on a level playing field, we have an economic oligarchy–an Animal Farm where some are much more equal than others.

This state of affairs is bad for the economy in the long term. It is worse for social stability and democratic institutions.

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Politics and Propaganda

I opened the Sunday Indianapolis Star to a front-page story about Governor Mitch Daniels’ claim that public employees make more than their private-sector counterparts. The article discussed the issue in the “fair and balanced” way we’ve come to expect from “journalists” today, dutifully reporting on the “he said/she said” dueling studies–without bothering to tell readers which studies were sound and which were utter garbage.

I am absolutely confident I could conduct a study demonstrating that people who exercise less break fewer bones–if i didn’t bother to control for things like overall mobility and severity of breaks that did occur. I can see the headline now: Study shows that less exercise leads to better bone health.

There’s a reason academic journals insist on peer reviews.

The Star gave equal weight to two studies. One simply compared overall wages of private and public employees. It found public employees doing slightly better. The other study controlled for factors like education, duration of the workday, etc. In other words, it compared people with similar skills and educational training to each other. (What we used to call “apples to apples” comparisons.) That study–surprise!–did not confirm the Governor’s charge.

The article also reported that Indiana has fewer public employees than it did when Daniels assumed office, and it attributed that decline to privatization. But privatization, an inaccurate term for contracting out for services, does not reduce government employment, except in the very narrow sense of “on the State’s payroll.” If the government is paying someone to perform a task, that person is effectively an employee of the government. It may be harder to recognize that fact, because his compensation is being paid through an intervening party (who gets a cut, not incidentally, called profit), but when government is paying someone for providing services and dictating the nature of those services, that someone is effectively a government employee.

A study that really should be conducted would investigate just how many of these de-facto state employees there are in Indiana. (Several years ago, at an academic conference, a well-known scholar explained to me that the federal government had the equivalent of 18 million additional employees. They weren’t counted as federal workers, because they worked for private contractors, but they were employed full-time providing public services.)

Whether you are a proponent or opponent of government contracting–and as readers of this blog know, I’m firmly in the “it depends” category–this sort of game-playing goes beyond disingenuous. It’s not just inaccurate; it’s propaganda.

It would be nice if we had journalists who could tell the difference.

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When Privatizing Met Public Infrastructure

As readers of this blog know, I’m not a “believer” in contracting-out–what we Americans quaintly call “privatization.” I’m not necessarily opposed to contracting, either–it’s a tool that can be appropriate in many circumstances. Call me an agnostic.

It’s important to examine claims about privatizing, because contracting is too often a form of patronage–a way of rewarding campaign contributors–or, as we’ve seen in Indiana, a way that canny politicians can borrow from the future to provide services that should be paid for from current tax revenues.

When we start privatizing public infrastructure–toll roads and parking meters, for example–it is even more important to ask what the research shows. We know what the politicians who are pushing these deals say; what does the evidence say?

Ellen Dannin is a law professor who is a national expert on contracting, and she has just published an important (and sobering) analysis of what happens when public infrastructure is privatized. In “Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and Their Effects on State and Local Governance,”
Dannin finds that these agreements typically make the public the guarantor of private contractors’ profits, and ” give private contractors quasi-governmental status, with power over new laws, judicial decisions, propositions voted on by the public, and other governmental actions.”

Well worth a read!


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Who Moved Wisconsin’s Cheese?

In 1998, Dr. Spencer Johnson wrote a best-selling book about dealing with change; he titled it “Who Moved My Cheese?”

I can’t help thinking how ironic it is that Wisconsin—home of the Cheese-heads—is the most prominent example of what happens when political leadership stubbornly refuses to deal with an economic landscape that has changed.

Upon assuming office, Governor Scott Walker immediately made two incredibly poor policy decisions: he rejected federal dollars for high-speed rail, and (as anyone who hasn’t been in a coma this past month knows) he has offered legislation that would revoke the bargaining rights of public sector unions. He has attempted to justify both decisions by pleading state poverty.

It’s tempting to point out that Wisconsin’s fiscal straits didn’t keep the governor and legislature from first enacting generous tax breaks for business, but that bit of political hypocrisy isn’t nearly as troubling as the Governor’s evident inability to understand a simple fact of contemporary budgetary life: it is impossible to balance public budgets by cuts alone. As Robert Russell, a Wisconsin state economic analyst has pointed out, state workers are also taxpayers and consumers.

According to Russell, if Wisconsin public employee salaries are cut through increased withholdings (as Walker is insisting) by an amount large enough to fill the $137 million budget gap, the resulting drop in consumer spending will lead to: 1) a loss of over 1,200 nongovernment jobs; 2) a loss of about $100 million in business sales statewide; 3) a loss of nearly $35 million in personal incomes of nongovernment employee households; and 4)  a loss of nearly $10 million in state tax revenues.

In other words, lower wages and fewer workers translate to less tax revenue and consumer spending. Since even the most modest tax increases appear to be politically untenable these days, the only option likely to generate sufficient revenue is economic development and job creation.

Which brings us to high-speed rail.

The policy arguments for high-speed rail are familiar to most of us: our highways are increasingly congested and enormously expensive to expand; we can’t abate environmental pollution or reduce dependence on foreign oil without offering viable alternatives to the automobile; long commutes translate into lost productivity, costing businesses billions each year.  Urban planners argue that rail is essential if we are to address the problems caused by urban sprawl and make our cities more livable. Groups trying to save America’s small towns argue that those towns will disappear without fast, convenient inter-urban transportation.

All true, and all reasons to support mass transit within–and high-speed rail between–cities.

What is less noted and equally important, however, is the job-creating potential of high-speed rail. Last fall, California voters approved $10 billion dollars for a rail project linking San Francisco and Los Angeles; more recently, the San Francisco Business Times ran an article highlighting the California High-Speed Rail Authority’s projection that 450,000 permanent jobs would be created by the project in addition to the 160,000 new jobs needed to plan, design and build the system.

The Christian Science Monitor estimated that the Obama Administration’s $8 billion initial investment in high-speed rail will produce 320,000 jobs and generate roughly $13 billion in economic development benefits, “including construction and operations jobs, as well as manufacturing and supply chain opportunities. By increasing mobility while decreasing congestion and sprawl, high-speed rail makes our country more competitive while simultaneously spurring economic development.”

Waging a war on public unions—however ideologically satisfying—will not help Wisconsin’s economy. The cheese is on the high-speed train, and thanks to the Governor, that train has left Wisconsin’s station.