Attack of the Pods

Posted on November 21, 2012 by billmanzi

Please don’t ask why this post is here on a political web site! I just love coffee! Some interesting gift ideas.

http://live.wsj.com/public/page/embed-3897AF15_BADE_47B4_AD77_1AD07FE15944.html

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Two Stepping to the Cliff

Posted on November 21, 2012 by billmanzi

The issues involved in the so called “fiscal cliff” have been written about ad infinitum. With the first general meeting held at the White House and all coming out spouting optimistic platitudes the level of optimism has gone way up. But the issues are not only large in quantity but do not lend themselves to quick resolution. There is no question that some of the issues involved are indeed solvable today (AMT Patch, Agreement on Sequester Delay, Agreement to kick the “tax reform” question down the road, payroll tax holiday issue, and the unemployment benefit question). Both sides appear to have settled in on a “two-step” process that would allow delay of as much as possible, with some “good faith” down payment to show everyone how serious they all are about: (pick one)

1) Simplifying the tax code

2) Protecting our Defense Budget

3) Making the rich pay their fair share

4) Solving the Deficit Problem

5) Putting Medicare, Medicaid and (Social Security?) on a “sustainable path” forward.

I do believe that all involved are as committed as they can be to kicking as much of this down the road as possible. The problem comes on the down payment on increased revenues. Both sides are stuck on extension of the Bush tax cuts, and how a “two step” process will treat that problem. It does not seem, from my perspective, that the President can agree to extend, even for the shortest term, the Bush rates for those at the top. The Republicans, in my opinion, cannot agree to what the President needs without some concessions on “entitlements”. There simply is not enough time before December 31 to reach a substantive accord on entitlements.

Of course there are some pretty smart staffers from both teams in the negotiating room, and maybe they will come up with something that solves this problem. One alternative mentioned is shifting the threshold number on the Bush tax cuts from $250,000 to $1,000,000, meaning that only those earning one million and above would be subject to the increase in marginal tax rates. That approach may have some promise, but it still leaves the Speaker with the issue of what he gets in return. And while the President certainly is holding, in my opinion, all the cards on the tax rate issue I had mentioned in an earlier post the issue of the debt ceiling being raised, and how the President would try to incorporate that issue into these negotiations. Politico, in a story yesterday, mentioned exactly that, and pointed to the Speaker’s reluctance on that score. From Politico:

Then there’s the debt ceiling, which is increasingly creeping into the year-end discussion. The nation’s borrowing limit needs to be raised in the first quarter of 2013, according to the Treasury Department. Obama would like to see the debt limit boosted as part of an overall budget deal, say Hill insiders, but Boehner is unwilling to give ground on that issue if he feels Democrats are not really serious about negotiating a compromise.

So the President is not holding all the cards, and raising the debt ceiling just introduces another layer of complexity to an already difficult negotiation. The President is reportedly cool to the idea of just driving over the cliff, but I think, as pointed out in my earlier post, that it may be, for Speaker Boehner, the only viable option. All the noise on driving over the cliff is coming from the Democrats, but it may be Speaker Boehner with his foot firmly on the gas pedal.

http://c.brightcove.com/services/viewer/federated_f9?isVid=1

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New Transportation Taxes Coming.

Posted on November 19, 2012 by billmanzi

With Massachusetts looking at mid year budget cuts due to missing it’s revenue benchmarks, and with transportation scheduled for review in the coming month(s), it appears likely that there will be a strong push by the Governor and the legislative leadership for tax increases in the next fiscal cycle.

The Speaker has left the door open for a tax package by not taking the anti-tax pledge that he usually takes in advance of a session. The Governor continues to call for an “adult conversation” on the way we finance government, and the MBTA and our road and bridge system is badly under-financed. The tea leaves are not that difficult to read, with the only question being which tax vehicle will be brought forth and supported by leadership. I believe that you have to make the gas tax the “betting favorite”, since our transportation system will be one of the major reasons given for the need. Will there be an attempt made to charge people on a per mile basis? The Commonwealth, in a filing with the federal government related to the Green Line Extension, cited several possibilities for new revenues. The federal government has indicated that it will not fund its share of that Green Line extension unless the Commonwealth showed how it would fund its own share. (Total project cost of $1.3 billion, with $557 million picked up by the federal government, and $778 million by the State) Leaving aside the issue of why we are expanding transit with no way to pay for our existing maintenance the Green Line project has forced the Commonwealth to at least list some of the funding possibilities for the future. The State House News Service managed to secure a copy of a letter from the Federal Transit Administration to the State in which these funding sources, previously mentioned as possibilities by the State, were talked about. What were they? From the Metrowest Daily News.

Several “large new, uncommitted funding sources” have been identified by the state for the project, according to the response letter to Davey. They include a proposal for the state to take back the MBTA’s $1.6 billion in debt obligations; a new $.01 per-mile statewide tax on vehicle miles dedicated to the Commonwealth Transportation fund; and the allocation of casino gaming revenues to the MBTA, the letter says.
If those don’t garner support, the state would consider increasing MBTA fares or parking fees, raising the motor vehicle registration renewal fee or the motor vehicle sales tax. The state is also considering “indexing the $160 million annual contract assistance from the Commonwealth to growth in sales tax revenue.” Another plan calls for a “commercial parking tax” or indexing the fuel tax to inflation.

So the Commonwealth is on record as already examining the above listed options. The Governor says that we should just wait for his plan, but where is the fun in that? Edward Glaeser, writing in the Globe, advocated tolling on a per mile basis, with a peak hour pricing differential for Massachusetts roads as a partial funding solution.

I think it is safe to say that there will be a new tax plan based on some combination of the above options brought forward that will be a lifeline to the MBTA, and have as of yet undetermined benefit for non-mass transit transportation. The local Transit Authorities will likely see some benefit in order to try to build some political support statewide, but I believe it will still be a heavy lift politically. But if House and Senate leadership are on the same page politically then you would have to make passage of a new tax package a betting favorite. It should make for a very interesting session.

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No Massachusetts Tax Reductions on January 1, and…..

Posted on November 18, 2012 by billmanzi

The relatively modest reduction in the state income tax rate scheduled to occur on January 1, from 5.25% to 5.2%, will not occur, as the financial yardsticks necessary for implementation have not been met.

As you may recall voters opted to lower the income tax rate from 5.95% to 5% by ballot question, but that lowering was intercepted and modified by the State Legislature. Reductions were conditioned on state revenues hitting benchmarks established by the Legislature, which happened once previously (lowering the rate from 5.3% to the current 5.25% last year). What is that revenue formula? From the State House News Service:

Under the formula, the income tax rate would fall to 5.2 percent on Jan. 1, 2013 if growth in fiscal 2012 inflation-adjusted baseline revenues over fiscal 2011 exceeds 2.5 percent and if, for each consecutive three-month period starting in August and ending in November 2012, there is positive inflation-adjusted baseline revenue growth as compared to the same consecutive three-month period in 2011.

According to state finance documents, Pitter in September certified that fiscal 2012 inflation-adjusted baseline revenues grew by 2.77 percent from fiscal 2011, exceeding the initial trigger for the tax cut.

But in a letter dated Thursday, Pitter said that after revenue growth exceeded triggers for two straight months, baseline revenue fell by 1.29 percent for the three-month period ending on Oct. 31, 2012.

Based on the above the income tax rate for Massachusetts residents will hold at 5.25%. The potential cut was worth about $125 million for the Commonwealth.

Beyond this issues state revenues are falling short of the overall budgetary benchmarks, which will force the Governor to make some mid-year budgetary adjustments to reflect the lower revenue numbers. And the Governor and Legislature are due to deal with the funding issues plaguing the transportation system, especially the MBTA, in the next month or so. That transportation review, and the falling revenue numbers, may mean….. (coming in the next post).

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Tax Expenditures in the News

Posted on November 17, 2012 by billmanzi

What more exciting subject could there be besides “tax expenditures” to write about today? I can think of nothing else that I would rather do over this weekend than study the new report from the Massachusetts Taxpayers Foundation on Massachusetts tax expenditures. Lets dive right in.

As budgets become tighter and tighter these so called tax expenditures are being examined everywhere. As a candidate for elective office this past year it was a major issue in my race, with all of the primary candidates from the Democratic side, myself included, pledging to examine such expenditures in the state budget and eliminate those that did not make sense. These so called tax breaks for larger corporations, in many cases ostensibly given to protect jobs, have been creating controversy for some time. Take a look at this from the Boston Globe in 2010.

The Great American Jobs Scam,’’ a book by Greg LeRoy, executive director of Good Jobs First — a Washington-based non-profit that promotes corporate accountability in economic development — chronicles what happened in 1995 in Massachusetts. That’s when Lexington-based defense contractor Raytheon Corp. threatened to move its defense operations out of the state if it didn’t get an extensive package of tax cuts. With about 16,000 Raytheon jobs on the line, along with thousands of other industrial jobs when the tax break was extended to other firms, lawmakers bought the spin that this was “a jobs package, not a Raytheon package.’’ Within five months of getting what it wanted, Raytheon offered buyouts to 4,400 workers. Two years later, the company had reduced its Massachusetts headcount by 4,100 people. Since the 1995 law said the company had to sustain its dollar payroll, not its headcount, Raytheon was free to lay off lower-paid production workers and replace them with higher-paid, white-collar workers.

Tax cuts for other companies followed, most notably, for Fidelity Investments, which waited for a job requirements clause in the law to expire before it shifted its workforce outside Massachusetts. Meanwhile, movie producers who film in Massachusetts are getting lucrative tax credits. In return, they provide jobs for a few scant weeks and most of the salaries they pay go to movie stars who live in California or elsewhere.

In 2011 those tax breaks for Fidelity Investments, a company who eventually moved some jobs out of Massachusetts, came under heavy scrutiny. Again, from the Globe:

State Senator Mark Montigny, chairman of the Post Audit and Oversight Committee, noted that the state government has created various tax incentives for one sector after another over the years, ranging from filmmakers to biotech companies to green energy firms. But Montigny said there has been too little follow-up reporting on how much money the companies received and whether they produced the amount of jobs expected.

“It almost seems like the flavor of the month,’’ said Montigny, a New Bedford Democrat. “The one thing that happens is that these tax breaks continue, and in fact accumulate.’’

The Massachusetts Department of Revenue annually produces a “Tax Expenditure Budget” that details these items annually. How do they define “tax expenditures”? From the FY 2013 “Tax Expenditure Budget’ from D.O.R.

Tax expenditures are provisions in the tax code, such as exclusions, deductions, credits, and deferrals, which are designed to encourage certain kinds of activities or to aid taxpayers in special circumstances. When such provisions are enacted into the tax code, they reduce the amount of tax revenues that may be collected. Massachusetts General Laws (MGL), Ch 29, Sec 1 defines tax expenditures as “State tax revenue foregone as a direct result of the provisions of any general or special law which allows exemptions, exclusions, deductions from, or credits against, the taxes imposed on income, corporations, and sales.”

With heightened scrutiny on these items, and with a broad definition of them that includes personal income tax exemptions, as well as sales tax exemptions on top of the corporate breaks given, the Massachusetts Taxpayers Foundation, headed by Michael Widmer, has issued a new report on tax expenditures in Massachusetts. What is in the Foundation report? A very interesting read.

The Foundation lays out, rather extensively, the current numbers for personal income tax, sales tax, and corporate exemptions, and makes a compelling case on the personal and sales tax side that the numbers are not as great as they appear. Under current definition all exemptions together total over $26 billion, but that definition includes the exemption from the sales tax of food and medicine, the exemption from sales tax of real property transactions, and on the personal side the exemption given to pension plan and health care contributions. The essential argument made by the Foundation is that while the numbers appear great there is a lot less to capture than it would initially appear. The argument is buttressed by the fact that the very definition of “tax expenditure” has been modified by the Legislature, and the Foundation paper gives their estimate of what that modification will bring. (Cuts the “tax expenditure” number in half.) As usual it is an outstanding job by the Widmer team at the Foundation on the numbers.

The paper is a must read for those looking to understand Massachusetts tax exemptions on the sales and personal tax side. The real areas of discussion (and controversy) however have taken place on the corporate side of the tax ledger. The Foundation shows annual corporate tax expenditures of $1.3 billion, which is about 10% of the overall total of $13 billion (new formula number). The paper makes the case that about $595 million of that total comes from tax code issues, (accelerated depreciation, apportionment of taxable income for multi-jurisdiction corporations, and loss carry-forwards). They make a compelling case on these three items, but I am not sure yet I agree that accelerated depreciation schedules are a “standard” item. (worth $242 million). “Apportionment” is a complex subject, but I think there are some that would make the case that some additional scrutiny could come on that issue.

The paper zeroes in the remaining corporate tax expenditures after removing the three mentioned above, and shows that number at $416 million.

Research Credit $110.9 million
Film Credit $82.6 million
Investment $56.5 million
All Others$166.1 million

Among these the Film Credit is the only one criticized in the paper. It is a strong candidate, based on merit, for elimination. Whether politics lines up with merit is quite another thing. The research credit, and the investment credit, are dealt with without going too far into the relative merits. The “other” category is simply glossed over, with reference to the 8 credits that comprise this category. Here is the report description of “other”.

Eight other credits comprise $166 million in tax expenditures, ranging from $47.5 million for the historic building tax credit to $500,000 for the conservation land tax credit. For the brownfield, economic development,historic rehabilitation, and low income housing credits, if the property is no longer used for the purpose the credit was intended, the state may require the company to repay its credits. Similarly, for the life sciences incentives, if a corporation’s job targets are not substantially met, a portion or all of the credit must be repaid to the state.

The Foundation mentions in the report that “static scoring” is used on corporate tax expenditures, and that the dynamic impacts of potential job creation and economic activity created by some of the corporate tax breaks are not factored in to the DOR “tax expenditure” scorecard. But I would guess that such a look will be a part of any legislative review of some of these items. It certainly should have been a part of any consideration of the changes when they were made. I think that any further review at the legislative level will include potential sunsets to corporate breaks, as well as a harder look at the dynamic impacts mentioned, and whether they justify the “costs” of the breaks. The Foundation, as mentioned, looked at that type of analysis only for the film tax credit, and showed a hugely inefficient allocation of Massachusetts tax resources. It would be great to see additional data on the corporate side to justify (or not) the other tax breaks mentioned. The Massachusetts Taxpayers Foundation does superb work, and they have great credibility on tax and fiscal issues. As Massachusetts begins to examine the potential for tax increases you can bet some of these corporate tax expenditures will be in the legislative cross hairs. And that cost-benefit analysis will be a key to whether some of them survive.

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Everybody Better Sober Up

Posted on November 15, 2012 by billmanzi

The Democrats have won a smashing victory this past cycle, and with that victory will come great expectations. Naturally there are a whole host of issues that many Democrats feel have been neglected for the past four years, and they will be looking for action. I have a funny feeling that there is going to be some level of disappointment with the results.

The first flash point is the most obvious one, the fiscal cliff. But the cliff is an amalgamation of a whole bunch of separate issues that have managed to converge on us at the same time. The cliff debate has been publicly focused on “revenues”, with the President laying down a marker of a ten year revenue number of $1.6 trillion, and Republicans generically appearing open to some “revenue” through loophole closings. On this matter Democrats and the President hold all the cards, as no action means the rates for everyone go up on January 1. But despite all the focus being on that issue, and only that issue, there is substantially more to be determined. The sequester cuts need to be unwound, with Republicans very concerned about the Defense cuts, but Democrats will be looking to avoid some of the non-defense cuts as well. And for those who believe that the debt ceiling is not part of this mix they better think again. It is a point of leverage for the House, as they will need to vote for any increase. The President will be looking for a larger deficit reduction deal that will have to include the debt ceiling being raised as a part of that package. I can assure you, election or not, that Speaker Boehner will not just be giving up that chip easily.

What else, besides the Bush tax cuts, are at stake? Plenty. Start with the AMT Patch. The Alternative Minimum Tax (AMT) was originally designed to stop top earners from shielding most, or all, of their income with legal federal deductions. As it began to ensnare more people, including middle class taxpayers, Congress has enacted “patches” that protect these folks. What type of numbers are we talking about? Currently about 4 million taxpayers are hit with the AMT. With no “patch” for 2012 that number will climb to 30 million, and would likely hit 40 million within a year or so. Want to give away that new found Democratic majority? Ignore that at your peril.

Treatment of Capital Gains and dividend income will change dramatically. While there is a major impetus for fairer (read: higher) taxes on capital gains and dividends the simple expiration of existing law certainly is not the best way to achieve that. This is a major bargaining chip for the President, but it makes the negotiations with the Republicans a bit more complicated.

So you have major spending cuts, including defense, tax rate increases, AMT Patches, and deficit reduction, including some “entitlement reform”, along with the debt ceiling issue, all rolled into one. And you have some Democrats thinking that the President is just going to snap his fingers and get a package that is 100% satisfactory to Democrats. For people that hold that view disappointment lies right around the corner.

Beyond the fiscal cliff there are of course other priorities that have been neglected. Unions looking for card check? Don’t think you are going to be getting that through the Republican House. Tax reform that further hits business? No chance. Carbon tax? Unless it is part of the fiscal cliff deal you have zero chance of getting it through the House. And to be honest it just will not sell with Republicans, even as part of the fiscal cliff deal.

So I am the skunk at the garden party! Do I see the glass as being half full for any Democratic initiatives? I think that areas where the President can act through his executive authority will bring progress on a host of issues. Legislatively the timing has never been better for comprehensive immigration reform, which will be able to garner Republican votes in the House. Judicial nominations? A big win for Democrats, as the President will be able to nominate judges that will protect and preserve important rights, and will likely share his values over new challenges, including Republican efforts to impose new hurdles on voting rights. In the final analysis, despite the fact that the fiscal deal will ultimately contain items of distaste to Democrats, the issue of the extension of the Bush tax cuts for upper income folks is settled. In favor of the President.

I believe that in his heart of hearts the President is fed up with the constant stream of Republican attacks. As a political matter, no matter how distasteful, we can understand the campaign attacks. But to have the McCain/Graham cabal launch these continuing and bitter attacks on Ambassador Rice after the election leaves the President no alternative but to get tough. And I do not believe, despite his big victory, that he was looking to do that at this point. Bad will begets bad will, and it is a rough way to start the post election interactions between the parties. But that slight dose of bad will will make it that much harder to achieve a common sense compromise on the critical fiscal matters facing the country, and more likely that we will have to go over the cliff before we can reach agreement. I hope I am wrong, but right now it looks like more than a few people in Washington better sober up, and Democrats should be prepared to give the President the room he needs to make the best deal he can.

My earlier post here.

http://live.wsj.com/public/page/embed-EE994540_68DA_4374_81FE_287A76422E5C.html

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Republican Strategy? Help John Kerry?

Posted on November 14, 2012 by billmanzi

A shorter post today on the seemingly intractable Republican opposition to the nomination of U.N. Ambassador Susan Rice as the successor to Hillary Clinton as Secretary of State.

Both Ambassador Rice and Senator Kerry have been named as likely successors when Hillary Clinton leaves as Secretary of State, with Ambassador Rice seemingly having the inside track as of late. The White House actually floated the trial balloon of John Kerry as Secretary of Defense via the leak process last week. Republican opposition to Ambassador Rice has been strong, based on her initial response to the Benghazi attack, in which she stated that the incident was likely a spontaneous response to the anti-Muslim video that had received much publicity in the days before the attack.

The attacks on Rice by the Lindsay Graham/John McCain cabal, put forth strongly in the past week by both in different media, make it obvious that achieving the necessary 60 votes for her in the Senate will require some heavy lifting by the President. The obvious beneficiary of this is the long time friend of John McCain, Senator John Kerry. If the President is deterred by the angry Republican rhetoric on Rice he would likely turn to Kerry. Maybe Benghazi is not the only reason McCain/Graham oppose Ambassador Rice. Trying to help push along their long time friend and colleague John Kerry would certainly give them a bit more sway and access at State were they to be successful in derailing Ambassador Rice. Speculation? Absolutely. Evidence? None. But the United States Senate works in strange, and sometimes not so mysterious ways.

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Happy 67th Birthday Neil Young

Posted on November 12, 2012 by billmanzi

Neil Young today celebrates his 67th birthday. Nothing short of a musical icon who changes musical direction like other folks change socks, Neil is back on tour with Crazy Horse. He looked like he might be hitting the road with Steve Stills in a newly reformed Buffalo Springfield, but he pulled the plug on that rather suddenly. Always unpredictable Young is still looking to grow musically. Happy Birthday Neil.

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Local Winners and Losers

Posted on November 12, 2012 by billmanzi

Elections always have some winners and losers that extend beyond the candidates themselves. I already posted about those bigger stage winners and losers. How about another run at it, with a more local flavor.

Winners:

Diana Fay DiZoglio. We have concentrated on more behind the scenes “winners and losers”, and we generally don’t include candidates on that basis. But DiZoglio got into the Democratic primary (14th Essex State Representative race) against long term incumbent David Torissi, and managed to run an underfunded campaign that relied heavily on door to door campaigning, and on the still golden DiZoglio name in Methuen. Geography played a big role in her victory, but she simply overwhelmed the incumbent with a street level campaign. While DiZoglio had a Republican opponent her real political challenge was in the primary. The re-districting process, which was thought to be favorable to Rep. Torissi when passed, turns out to have not been so advantageous for him.

The local Democratic Coordinated Campaign. I have already extolled the virtues of Democratic Chair John Walsh. The locals, who ran the coordinated campaign, turned out some big vote numbers, and did so in areas that have traditionally been difficult for some Democrats (Methuen, North Andover, Dracut) But they also ginned up some big numbers in Lawrence, where we have always seen a big Democratic registration edge. The elephant in this room? It is obviously the role, if any, of Lawrence Mayor William Lantigua in that City’s Democratic turnout operation. Local Republican operatives have tried for some time to taint that effort by associating it with Lantigua. The truth is that Lantigua, due to his political problems, was essentially shut out of the Democratic operation. That factoid has been assiduously avoided by Democratic operatives, who dodge the subject in the hopes of not insulting the Mayor. Obviously the Mayor still has a following, but his non-participation, to a large degree, has been a two way street. He has other matters of concern. The Rep. Marcos Devers operation, and the participation in the coordinated campaign of City Councilor Dan Rivera, were two of the factors that were of significant import in the Democratic operation in Lawrence. Both have had their issues with Mayor Lantigua.

Senator Elect Kathleen O’Connor Ives. I have tried to avoid discussion of this race, since I was involved as one of the unsuccessful Democratic candidates. But it is over now. Ives has some similarity to DiZoglio, in that she was considered to be a big underdog at the beginning of her run. She took the plunge anyway, and emerged victorious. But there are some notable differences as well. Ives, had she not been successful, was well positioned to be a major player in Newburyport politics, and a potential successor to Mayor Holaday. She placed herself, through clever political positioning, into a win-win situation. And she won.

Mayor James Fiorentini of Haverhill. Thrust into a difficult position in light of all of the Haverhill candidacies for State Senate the Mayor managed to balance a whole bunch of sharply divergent political interests banging on his door without appearing to alienate any. Despite some grumbling he is well positioned to win re-election next year.

Local Organized Labor. There are still some intractable financial issues, but organized labor, at the local level, is poised to do better than they have for a few years. Public sector unions will have a stronger voice in local government, and will look to make up ground lost during the worst of the downturn.

Independent Candidate for Senate Paul Magliocchetti. The Haverhill independent won the endorsement of the Boston Globe and the Eagle Tribune, and while not successful managed to get some positive attention paid to him and his campaign. Would have been a significantly stronger candidate if affiliated with the Democratic Party.

Losers:

Methuen City Councilor Jeanne Pappalardo: Pappalardo invested heavily in the Shaun Toohey campaign for State Senate, along with her husband, former Councilor Joseph Pappalardo. They brought along all the usual suspects in Methuen but got skunked pretty good.

Haverhill City Councilor Bill Ryan. Bill Ryan is Mr. Republican in Haverhill, and has shown a dynamic political resiliency, serving as Mayor and State Representative, and now Councilor. He was obviously invested heavily in son-in-law Shaun Toohey’s campaign for State Senate, and in daughter Maura Ciardello’s campaign for Governor’s Council. His influence and political acumen helped both, but both lost. Tough year to run as a Republican in Massachusetts.

Independent Candidate for State Senate Jim Kelcourse. Attorney Kelcourse is a smart and engaging City Councilor, who has a terrific resume. But he did not get any campaign traction, and underestimated what was needed to run a State Senate race. He got a good dose of reality on election day.

Ok, ok. I know I ran and lost. So finally:

Former Methuen Mayor Bill Manzi. Despite the imbecilic notion that I was the “heir apparent” in the race it was indeed winnable. When I study losing campaigns who are looking to assess blame I have always said that the candidate should always first go to a mirror. That is the case here.

And that is all (for now).

Posted in Merrimack Valley Politics, Methuen | Tagged | Leave a comment

Republican Policies? Where are They?

Posted on November 12, 2012 by billmanzi

And so the Republican hand wringing over the election continues, and you can expect some serious fighting within Republican ranks over the future of the GOP. Some great back and forth between some thoughtful Republicans, and a few of them are on to something (in my Democratic opinion). Besides numbers and polls what happened to the Romney message, or what was the Romney message?

As best I can tell Romney’s message was that President Obama had not done enough to fix the economy, and that Mitt Romney had the skills to make the changes necessary to create 12 million jobs. Leaving aside all of the political talk about Romney not being the right messenger, and all of the other political criticisms of the campaign, what about the substance of the campaign? Did Romney actually produce major policy ideas? My Republican friends seem to now realize that the campaign was bereft of anything other than we need to get rid of Barack Obama. There are so many policy areas that this applied to, but lets look at health care.

The Republican (Romney) message was that the Health Care Reform Act (Obama-Care)needed to be repealed. He said he would do so on day one of his presidency. The mantra was “repeal and replace”, but the Romney folks could never quite say what “replace” meant. As I had the arguments over Obama Care with my Republican friends I always asked a very simple question: What is the Republican policy on health care, beyond repeal? I got plenty of shrugging, but no specific answers except:

1) Tort Reform.

2) Allowing the purchase of insurance across state lines.

Without going into much detail tort reform would produce some minor savings (on a percentage basis) but is no “solution” to the problems in our health care system. The purchase of bare bones policies across state lines really does nothing to help, and has some major problems from a logistical point of view. Neither “solution” brings anything to the table as far as pre-existing conditions, uninsured, real cost containment, or “free riders”, and a host of other health care issues. I think it is fair to say that most real health care analysis from both left and right agree with that assessment. So, while nobody expects the man on the street to be expert in health care we do expect a Presidential campaign to be fluent in such policy. The Romney campaign fumbled this ball badly, having to walk back on at least two occasions misstatements by Mitt Romney that said his “plan” would cover pre-existing conditions. The campaign actually gave answers that were less substantive than those that I heard from Republican partisans I talked to on the street. How do you cover the uninsured? No answer! (Sending them to hospital ER’s is not a policy idea. It is rank stupidity) What should you do about “free riders” in the insurance market? No answer (except opposing the originally Republican idea of an insurance mandate).How do you contain cost? No answer. And on and on we go.

This post is not meant to persuade on the President’s health care bill. But Obama has a policy for the uninsured. He has a policy to help make the insurance market work, including for those with preexisting conditions. He has a policy. Republican columnist Ross Douthat, in the Times, bemoans the lack of policy from Republicans. From that column:

But Republicans are also losing because today’s economic landscape is very different than in the days of Ronald Reagan’s landslides. The problems that middle-class Americans faced in the late 1970s are not the problems of today. Health care now takes a bigger bite than income taxes out of many paychecks. Wage stagnation is a bigger threat to blue-collar workers than inflation. Middle-income parents worry more about the cost of college than the crime rate. Americans are more likely to fret about Washington’s coziness with big business than about big government alone.

Both shifts, demographic and economic, must be addressed if Republicans are to find a way back to the majority. But the temptation for the party’s elites will be to fasten on the demographic explanation, because playing identity politics seems far less painful than overhauling the Republican economic message.

Later in the column Douthat references James Capretta as having some real conservative ideas about health care. Lets look at a piece of a column from Capretta and Robert Moffit on replacing Obama Care, which they favor doing.

The “repeal and replace” formulation quickly caught on, but it was not without its critics. That Obamacare should be “repealed” was obvious, given how strenuously conservatives and many independents objected to the new law. But “replace”? Hammering out the details of a new health-care law might easily stir controversy and sow discord, thereby undermining the push for “repeal.”

This concern is not unfounded. But repeal will not be enough, for a simple reason: Although Obamacare would worsen many of the problems with our system of health-care financing, that system clearly does call out for serious reform. Despite the widespread public antipathy toward the new health-care law, simply reverting to the pre-Obamacare status quo would be viewed by many Americans, perhaps even most, as unacceptable. After all, a repeal-only approach would leave many of the most grievous flaws in our system of financing health care unaddressed. Chief among them would be steadily rising health-care costs, driven by the same misguided government policies that so evidently demand reform.

The Romney approach was truly repeal only. That decision by Romney was of course driven by political considerations, as even Capretta acknowledges the political problems inherent in providing details, which could sow discord, and thereby hurt any repeal effort. Sort of like Obamacare, which tried to address a glaring problem, and cost the President politically by sowing that “discord and controversy”. Want to do something besides just “be the President”. Then you need to make some policy choices that attempt to address problems, rather than simply spouting inanities about sending heart attack victims to emergency rooms. The Romney campaign was hollow to its core, and the public came to realize it. Until there are real policy proposals from the Republican Party that actually address problems facing everyday Americans they can expect more of the same. Douthat has it right. Republican subservience to their donor class, (and their entertainment complex)will doom them to further and larger electoral defeats.

The bad news is that unlike a pander on immigration, a new economic agenda probably wouldn’t be favorably received by the party’s big donors, who tend to be quite happy with the Republican Party’s current positioning.

But after spending billions of those donors’ dollars with nothing to show for it, perhaps Republicans should seek a different path: one in which they raise a little less money but win a few more votes.

Tom Coburn, on Meet the Press, talked about the lack of a positive message from Republicans. Republican Coburn said on MTP, “We didn’t say what we were for”. Health care is but one example of that.

http://www.msnbc.msn.com/id/32545640

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