Terrific 60 Minutes piece last night based on Peter Schweizer's book, Throw Them All Out. Repeated examples of what's basically insider trading from congressional members of both parties.

In these cases the inside information isn't generally on corporate buyouts or surprising financial results about to be announced. The information is on impending changes in government policy that will affect corporate profits or the value of other assets. But guess what? Members of Congress are exempt from laws that apply to others in Washington banning profiting from inside political information. (For example, Bernanke can't go out and short bonds and stocks the day before he announces a huge increase in interest rates. For good reason.)

Check out this little flip by Dennis Hastert, from the 60 Minutes script:

When Illinois Congressman Dennis Hastert became speaker of the House in 1999, he was worth a few hundred thousand dollars. He left the job eight years later a multi-millionaire.

Jan Strasma: The road that Hastert wants to build will go through these farm fields right here.

In 2005, Speaker Hastert got a $207 million federal earmark to build the Prairie Parkway through these cornfields near his home. What Jan Strasma and his neighbors didn't know was that Hastert had also bought some land adjacent to where the highway is supposed to go.

Strasma: And five months after this earmark went through he sold that land and made a bundle of money.

Kroft: How much?

Strasma: Two million dollars.

Kroft: What do you think of it?

Strasma: It stinks.

Posted by Jay Hancock at 9:04 AM | Permalink | Comments (1)
Categories: Politics
        

Gov. O'Malley repeatedly said the legislature "choked" on offshore wind and septic tanks. People are interpreting this as an offensive comment. "Gov. Martin O’Malley drew the ire of some in Annapolis this week when he suggested members of the General Assembly had 'choked' on two of his initiatives," The Sun's Peter Jensen writes. O'Malley "settled on a confrontational line that laid blame on members of the General Assembly," said the Washington Post's Aaron Davis.

However the word "choked" seems aggressive only if you think about it in the way it's used in sports. "He choked at the charity stripe when the game was on the line etc etc." But was O'Malley really using it that way? He's an opinionated guy, but it doesn't seem to be in his best interests to gratuitously tick off the Assembly. It seems to me that he was trying to use choke as an inoffensive metaphor for not being able to swallow a big bite. Here's the Post:

“I think the size of the one and the sweep of the other made the General Assembly kind of choke on those and refer them to summer study,” O’Malley said in an afternoon briefing with reporters. “We will work with the leadership and with the members [before next year] in hopes of their becoming more comfortable with these proposals,” he said.

PS: Go read my columns if you think I'm a kneejerk O'Malley apologist.

Posted by Jay Hancock at 9:37 AM | Permalink | Comments (3)
Categories: Politics
        

Republican Bob Ehrlich, running to regain the governorship against incumbent Democrat Martin O'Malley, wants to cut the Maryland sales tax from 6 percent to 5 percent. O'Malley raised it from 5 to 6. Unlike most politicians promising tax cuts, Ehrlich at least gives voters specific information on how he might partly pay for those cuts. He might cut $126 million in education funding that goes mainly to mainly to Baltimore and Prince George's and Montgomery counties. Holding back that much in "geographic aid" to supplement teacher salaries in jurisdictions with high-costs or challenging teaching conditions probably wouldn't pay for the entire sales-tax cut, but it would go a substantial way.

O'Malley's taking credit for funding geographic aid, but he relied largely on federal stimulus money to do so, news accounts say. Ehrlich's plan to cut the sale tax is a dumb idea. It won't really stimulate retail spending and it won't make much difference in the habits of people shopping in Delaware. Will you really stop going to Delaware because Maryland's sales tax will be 5 percent vs. Delaware's 0 percent instead of 6 percent vs. Delaware's 0? Instead Ehrlich ought to be proposing to cut Maryland's personal income tax, which also falls heavily on business (through pass-through entities such as S corporations and partnerships) and makes the state uncompetitive with its neighbors.

But at least Ehrlich is being up front with how to pay for it. Usually politicians promise to pay for tax cuts by wiping out waste, fraud and abuse, which never happens. Now the voters can decide.

Posted by Jay Hancock at 8:30 AM | Permalink | Comments (11)
Categories: Politics
        

Maryland's Department of Labor, Licensing and Regulation employs professionals, paid with your tax dollars, to survey and analyze the Maryland economy. But the political types working for Gov. Martin O'Malley, also being paid with your tax dollars, don't seem to want to let them do their job. As reported by Annie Linskey, Secretary of Labor, Licensing and Regulation Alexander M. Sanchez got mad when a mildly negative report on Maryland job growth went up on the department's Web site.

"Maryland's Market Stalls During July" was the headline on the jobs report for that month, which was true. Job growth based on payroll counts rose by just 500 in July, following more impressive gains in previous months. Maryland's economy had made "substantial progress" since the beginning of the year, the report said. But with the end of temporary Census jobs, "we can expect in the months ahead to face an uphill struggle in trying to regain the jobs lost during the downturn," it said.

Routine stuff. It's information that Maryland businesses rely on for planning and analyzing their hiring, buying and investment decisions. But it was too hot for Sanchez.

"Is it down?" he emails DLLR spokesman Bernie Kohn, according to documents obtained through a public records request by the campaign of Bob Ehrlich, O'Malley's opponent in the gubernatorial election. "Call mw (sic) as soon as we know who posted outrageous info on the site."

(Disclosure: Kohn is the former business editor and special projects editor at The Sun and was my boss for several years.)

Sanchez apparently thinks telling the truth about Maryland's economy is outrageous. His story is that it was an "internal document" that was posted in error. But the only error was to put a (barely) bad spin on the O'Malley economy. So the document comes off the Web site, and staffers at DLLR and elsewhere in the O'Malley administration waste hours worrying about whether it's really off-line, who put it up etc.

Ehrlich called a news conference to publicize the emails. O'Malley campaign spokesman Rick Abbruzzese called the news conference an "embarrassing political stunt." No, the embarrassing political stunt is a DLLR secretary who seems to be more worried about spinning the data than telling Marylanders what's going on with the economy.

UPDATE: O'Malley's response to this -- "The numbers are what they are and economists will differ on that. Whether those economists are people inside our staff or people in academia or other places" -- is utterly disingenuous. This isn't about economists disagreeing on how to interpret the numbers. This is about political appointees -- non-economists -- freaking out that the DLLR economic commentary would make the governor look bad.

Posted by Jay Hancock at 6:02 AM | Permalink | Comments (14)
Categories: Politics
        

More evidence, if you needed it, that Maryland politics are not like national politics. Here's Andy Barth, spokesman for Republican gubernatorial candidate Bob Ehrlich, in today's paper:

Andy Barth, a spokesman for Ehrlich, said the problem with the state and federal job-creation tax credits is "they don't attack our economy's underlying problem: lack of demand."

Lack of aggregate demand is the fundamental Keynesian diagnosis for economic slumps. That is to say, it is the fundamental Democratic diagnosis. Ehrlich's read on the problem, however, fits with one of the main planks of his platform, which is to cut the Maryland sales tax from 6 percent to 5 percent. (Here's my column on why the personal income tax should be cut instead.) Cutting the sales tax will increase consumer spending & spur growth, he says. The real Democrat, meanwhile, Gov. Martin O'Malley, is pushing the traditional Republican, supply-side recession remedy: income-tax cuts -- in this case in the form of tax credits for hiring.

Of course the candidates' economic policies aren't that surprising. Unlike the president, Gov. O'Malley doesn't have the power of deficit spending (thank goodness) to boost demand in traditional Keynesian fashion. Thus the income-tax credit, which isn't being much used by business and even if it were wouldn't make much difference. On the Ehrlich side, Barth also makes the argument, handed down from generation to Republican generation, about Democrats hating business.

Still, it's funny to hear Barth sound, at least initially, like Paul Krugman.

Posted by Jay Hancock at 8:50 AM | Permalink | Comments (4)
Categories: Politics
        

With election opponent Bob Ehrlich talking ceaslessly about small business and jobs, Gov. O'Malley may feel the need to boost his biz cred. Nevertheless, I found the press release below to be unusual. I'm not a politics junkie, and if this happened before maybe I missed it and somebody remind me.

But in my experience CEOs and other business leaders don't generally formally endorse political candidates. They write checks to both sides and keep their mouths shut, for obvious reasons. I remember being surprised four years ago when Ed Hale had O'Malley signs at 1st Mariner Bank branches. (He's on this list.) I'm not necessarily surprised they're endorsing O'Malley. I'm surprised they're endorsing anybody.

Some of the names on the list are unsurprising. And many aren't in "business" at all; they're lawyers or lobbyists. But some names surprised me. Among them:
Paul Allen, Constellation Energy, Senior Vice President, Corporate Affairs (Maybe Constellation, even after all the bashing O'Malley has given them, felt the need to assign a token O'Malley supporter.)
Norman R. Augustine, Lockheed Martin Corp., retired Chairman and CEO
Chet Burrell, CareFirst, CEO
Mark Fetting, Legg Mason, CEO
Edward Kelly, Citigroup, Vice Chairman (the former Mercantile CEO who sold the bank to PNC)
Bill Roberts, Verizon Maryland, President
H. Thomas Watkins, Human Genome Sciences, CEO

BUSINESS LEADERS BACK O'MALLEY-BROWN

Roster of Business Supporters Includes Fortune 500 Executives and Small Business Owners
Baltimore, MD (September 23, 2010) -- Today more than 200 business leaders from every corner of the state announced their support for the O'Malley-Brown ticket, stressing Governor O'Malley's focus on jobs and economic development in challenging times. The roster of supporters cuts across business sectors and ranges from Fortune 500 executives to small business owners.
"We're thrilled with the tremendous support we're receiving from the Maryland business community. Job creators are backing our campaign because they know we are making the tough choices to invest in the future and position our state for future economic success," said Governor Martin O'Malley.
The announcement of business community support builds on a series of television ads emphasizing O'Malley's efforts to boost small businesses and create 21st century manufacturing jobs in Maryland.
Baltimore business leader Mark Fetting had this say about his endorsement of O'Malley: "Governor O'Malley's leadership has helped steer Maryland through very difficult times in a fiscally responsible manner. As a chief executive, I understand the tough decisions he's had to make, and how those decisions have put Maryland in a strong position to grow out of this recession."

The full list is available below:

Ronald P. Adolph, The TAC Companies, LLC, President and CEO
Hussain Ali, All American Mechanical Inc., President
Stephen, J. Allen, Health Facilities Association, CEO
Paul Allen, Constellation Energy, Senior Vice President, Corporate Affairs
Eugene Amobi, Tech International, President

Continue reading "Eyebrow-raising business endorsements for O'Malley" »

Posted by Jay Hancock at 6:17 AM | Permalink | Comments (24)
Categories: Politics
        

Both Republican gubernatorial nominee Bob Ehrlich and Gov. Martin O'Malley talk about fiscal responsibility. But they need to get down to specifics of how to fix enormous Maryland pension deficits if they want to have any credibility.

Billions of unfunded liabilities for pension for state employees and health care for state retirees amount to one of the biggest fiscal challenges Maryland faces. The challenge has been building for years. Nobody wants to address it until after the election. But voters deserve to know how the candidates would respond.

So I sent this query to both camps and asked for a response by next week:

To:

The Hon. Bob Ehrlich

The Hon. Martin O’Malley

Gentlemen:

You have both indicated the need for Maryland to improve its long-term fiscal stance. Mr. Ehrlich, in his most recent ad, refers to “a mountain of debt.” Mr. O’Malley talks about “fiscal responsibility during difficult times.”

There are two critical issues with regard to increasing fiscal responsibility and ameliorating the mountain of debt and liabilities: Maryland’s obligations for pensions and other post-retirement employment benefits, ie., health insurance. Together the unfunded liabilities for these programs approach $30 billion.

Voters deserve to know your thoughts on how to solve these problems. Do you believe increased state contributions alone can cover unfunded OPEB and pension liabilities? Or do you believe that some reductions in benefits (changing the credit formula, pushing back the retirement age, increasing employee contributions, for example) will be necessary?

Please be as specific as you can. Thank you for your consideration.

Posted by Jay Hancock at 9:25 PM | Permalink | Comments (6)
Categories: Politics
        

Here's an interview with HBS's Joshua Coval about measuring the correlation between congressional power and railroading taxpayer dollars into one's state or district.

Q: One of your findings was that the chairs of powerful congressional committees truly bring home the bacon to their states in the forms of earmark spending. Can you give a sense of how large this effect is?

A: Sure. The average state experiences a 40 to 50 percent increase in earmark spending if its senator becomes chair of one of the top-three committees. In the House, the average is around 20 percent.

HT Marginal Revolution.

Posted by Jay Hancock at 7:54 AM | Permalink | Comments (0)
Categories: Politics
        

According to the election blog of the Guardian's Andrew Sparrow, convicted IRA sniper Michael Carragher was today working as a poll canvasser to re-elect a Sinn Fein member of Parliament. Swords into campaign buttons.

Posted by Jay Hancock at 4:44 PM | Permalink | Comments (0)
Categories: Politics
        

The Prince of Denmark Arbutus, who, seven months before the election, may or may not run for governor, sort of sounded like a candidate this morning. Addressing 50 people at the Pikesville Chamber of Commerce, he said Maryland is business-hostile and held out Virginian proposals to kill the corporate income tax as the way to go. Of course the Virginia measure failed.

Maryland is never going to repeal its corporate income tax, which doesn't raise that much money anyway. What it ought to do is consider reducing it personal income-tax rates, which discourage entrepreneurs because startup companies pay taxes on the personal schedule. But anybody who made such a proposal would sound like s/he was catering to the rich. Maybe Ehrlich is running.  

Posted by Jay Hancock at 11:47 AM | Permalink | Comments (15)
Categories: Politics
        

At least there's something Democrats and Republicans can agree on, Paul West shows in today's story: Spreading around the pork. In an excellent expose of how Washington really works, West reveals how President Obama's desire to shut down NASA's program to revisit the moon has turned into a fund-raising bonanza for Maryland's senior senator -- with Republican help. The cash is rolling into Mikulski's campaign till from Huntsville, Ala., where NASA has a big operation that works on the moon project. She was in Huntsville for a breakfast fundraiser in October, where she got tens of thousands of dollars from Huntsvillians who respect her pro-choice stance on abortion work for NASA contractors. Mikulski is up for re-election this year.

Behind the scenes, West reports, was Alabama Republican Sen. Richard Shelby, making sure the thing went off. A key part of the rainmaking formula here is Mikulski's studied indecision. If she announced her position there would be no reason to ply her with money. She told West: "As I review NASA's plans for human space flight, I will evaluate them the way I do all decisions about NASA funding - with carefully thought through principles."

Pffft. Here are the principles that really matter, from Paul's story:

From the Alabama space community, Mikulski received $14,400 from Francisco J. Collazo of COLSA Corp., a contractor on NASA's moon rocket program, and five members of his family, FEC records show. Collazo has also contributed more than $400,000 to Shelby campaigns and committees over the years, Bloomberg News reported in a 2006 article that said Shelby had steered at least $50 million in government earmarks to COLSA.

Continue reading "Mikulski fundraising shows bipartisan sleaze" »

Posted by Jay Hancock at 11:18 AM | Permalink | Comments (15)
Categories: Politics
        

Maybe I'm trying too hard, but I detect tea-party anger in the opposition to Gov. O'Malley's plan to rescue the empty unemployment-insurance pool with federal stimulus money. That's the topic of today's column.

Opposition to a federal bailout of Maryland's unemployment fund is channeling the anti-government energy that gets aimed at less humdrum targets elsewhere. Gov. Martin O'Malley's plan to accept $127 million in stimulus dollars to fix the fund has assumed a symbolic importance greater than its substance.

It's hard to believe the protest is mainly about money.

Read the whole thing here.

Posted by Jay Hancock at 10:30 AM | Permalink | Comments (2)
Categories: Politics
        

Here is a good bill, HB344, to be promoted Thursday by Del. Heather Mizeur and others, that deserves to be passed. It would:

• Allow the public free and total access to services provided on the General Assembly’s website, including elimination of the $800 access fee charged for “up-to-the-minute” legislative tracking

• Webcast General Assembly committee hearings and Board of Public Works meetings over the Internet

• Post General Assembly committee hearing agendas at least one day in advance

• Allow online sign-up for those wishing to testify before a General Assembly committee

• Publish the votes of standing committees on the General Assembly website

• Post Board of Public Works proposed budget actions at least two weeks in advance

• Allow for a public comment period in advance of Board of Public Works budget actions

Posted by Jay Hancock at 3:36 PM | Permalink | Comments (1)
Categories: Politics
        

So it appears that Democrats do understand the importance of controlling costs and avoiding deficits. (Make no mistake: Republicans have had a lot of trouble with the concept lately, too.) The Maryland Democratic Party has moved to a new office, which officials are praising for its lower energy costs and phone bills. Now if only they could demonstrate the same concern and expertise in Annapolis.

If you visited our office in recent years, you know that our old office lacked much needed cell phone reception and natural light. While these may seem like simple perks, the natural light will help reduce our energy consumption while the cell phone reception will allow us to host many more phone bankers during the height of the election year.

We’ve also upgraded our phones to a VOIP (Voice Over Internet Protocol) system, which will dramatically reduce our monthly telephone bill, freeing up more resources to invest in our coordinated campaign this fall.

Thanks to your support last year, we’ve been able to make these key investments and have hit the ground running this year. By contrast, The Washington Post reported last Friday that the MD GOP “remains saddled with debt.”

Posted by Jay Hancock at 10:47 AM | Permalink | Comments (1)
Categories: Politics
        

Missed this until now. Andy Green, editorial page editor of The Sun, has an excellent summary of O'Malley's budget and the bad and worse choices facing Maryland policymakers.

It will certainly be tempting for Mr. O'Malley's fellow Democrats in Maryland's General Assembly to accept the governor's accounting gimmicks and hope for the best in the 2010 election, but it should be clear to them that Maryland's current tax revenues can't support our present level of spending and won't be able to any time in the near future. It is past time to look at the state government and decide what we can live without. Every program has a constituency, but some are more deserving than others, and we elect our legislators to make those decisions. It is also past time we stopped protecting the alcohol industry and raised beer, wine and spirits taxes to reasonable levels.

Posted by Jay Hancock at 6:19 PM | Permalink | Comments (5)
Categories: Politics
        

My friend Bill Glauber says. Curse of the Bambino, indeed.

UPDATE: In comments Charlie says they're actually very different:

Several notable differences.  Buckner could string a coherent sentence together.  Coakley could not.

Buckner apologized and admitted the mistake was his.  Coakley didn't.

Buckner took a vacation after the World Series was over. Coakley took a week's vacation in the MIDDLE of the campaign!!

But Jay you are right.  They both blew what should have been a sure

thing!!!!!l

Posted by Jay Hancock at 11:39 AM | Permalink | Comments (1)
Categories: Politics
        

In a piece for the Daily Beast, Meghan McCain rises to Michael Steel's defense. But not that high. While she does argue for giving him more time as RNC chairman, she also compiles an impressive list of gaffes.

Last week brought yet another example of his troubles representing the party: an outburst during an interview in which he said his critics should “fire him or shut up.” It was alarmingly immature coming from someone who is supposed to be a leader.

Steele also protested recently that he “didn’t ask for and didn’t seek” the job of RNC chairman.

Unfortunately for him, there are those records of him attending the RNC election last January, not to mention videos announcing his candidacy where he states, “I want the gig. I’m ready, I’m ready to lead this party.”

When a leader is so indecisive about whether he wants his own job, how is anyone supposed to want to follow him? When Steele was initially elected chairman of the RNC, like many others in my party I was excited about a fresh and different voice, especially because Republicans were in need of new inspiration after the last election. However, since his appointment, it’s been one snafu after another, giving the impression that he’s disorganized and full of mixed messages. From his early criticism of Rush Limbaugh as an “entertainer” to recent reports of his $20,000 speaking fees, one thing is certain: From a public-relations standpoint, his actions are killing him in the eyes of the GOP.

Posted by Jay Hancock at 12:25 PM | Permalink | Comments (0)
Categories: Politics
        

Deferred costs are a key theme of American management in the past 50 years. CEOs in business as well as government have been tempted and tempted to make financial commitments that do not come out of current income. They almost always succumbed. Bosses of General Motors in the 1960s and 1970s helped set the stage for this year's bankruptcy by giving unions generous pension and retirement health benefits. It seemed like a great deal for everybody. Workers got promises of gold-plated retirement benefits, and the cost wasn't deducted from quarterly earnings. So bosses still got their bonuses tied to profits and the shareholders still had the illusion of a prosperous enterprise.

I don't need to belabor how this dynamic is playing out with the federal government. Because states need to balance their operating budgets, they have less leeway to stick future taxpayers with present costs. But of course politicians will figure out ways to do it. Today's column is about health benefits for retired Maryland state workers. Hardly anybody in the private sector gets this kind of deal these days. From an accountant's point of view, promising people to pay millions in future benefits as a condition of present employment is a present liability, but states haven't been recording these liabilities on their books. Even worse, they haven't been putting money aside to pay these future costs. If it keeps up, that will leave future taxpayers with a huge balloon payment when the bill comes due. From today's column:

No wonder Gov. Martin O'Malley and the legislature are ignoring the $16.3 billion in liabilities Maryland has racked up to finance generous health plans for retired state employees.

By one measure, Maryland's burden for future retiree medical costs is the heaviest of any state in the country. A new report shows that the program's unfunded expense grew by $1.3 billion just in the past two years.

Acknowledging the bill would require doing something. We certainly can't have that.

Read the whole thing here.

Posted by Jay Hancock at 8:15 AM | Permalink | Comments (3)
Categories: Politics
        

Today's column is about the "political business cycle," the attempts by incumbent politicians to goose the economy so times are (relatively) good when they're trying to get re-elected. Today's announcement by Treasury Secretary Tim Geithner is a prime, shameless example of what goes on. Geithner and Obama are renewing the TARP fund, the magical bailout fund that keeps getting reinvented for whatever purposes the administration wants to put it. First it was supposed to buy toxic mortgage bonds. Then it was used to buy bank preferred stock. Now they want to use it for small business loans.

In any event, Geithner is extending TARP beyond its planned roll-up date of the end of this year. That's no surprise, but check the new expiration date: Oct. 3, 2010. Just a month before the midterm elections.

Posted by Jay Hancock at 11:58 AM | Permalink | Comments (4)
Categories: Politics
        

Talking with Dan Rodricks on WYPR about Maryland's budget, noon to 1. 88.1 FM.

Posted by Jay Hancock at 10:46 AM | Permalink | Comments (0)
Categories: Politics
        

Good story by Paul West on the connection between Democratic Sen. Barbara Mikulski's earmarked federal defense spending and donors to her campaign. She directed tens of millions of dollars in defense spending to top campaign donors Northrop Grumman, Thales Communications and L-3 Communications. She responds by saying it's all for the country and the hard-fighting troops.

"My top priority," the senator said in a statement, "is to ensure that Americans serving on the front lines have the funding, equipment and technology they need to protect our nation."

Republican Rep. Roscoe Bartlett, another Maryland defense-earmark overachiever, has a more interesting response. He doesn't know who his campaign donors are, an aide says.

Lisa Wright, a longtime Bartlett aide, said the Western Maryland congressman relies on his experience as a scientist in requesting earmarks and deliberately stays ignorant about campaign donors.

Bartlett "avoids anything to do with campaign funding," she said. His campaign organization routinely makes the names of his donors public, as required by federal election law. But the aide, asked if Bartlett knew that Northrop Grumman was a prime funding source for his re-election efforts, replied, "I sincerely doubt it."

Bartlett is enough of a nonconformist and idealist that I believe her.

Posted by Jay Hancock at 10:13 AM | Permalink | Comments (3)
Categories: Politics
        

Researchers at the University of Maryland found that -- surprise! -- most Twitter content from Congress was self-promoting stuff linked to press releases or media appearances. What sort of vain, self-promoting kind of person would use the Internet to talk about a media appearance? (Hint: I'll be on WBAL at 2 this afternoon to talk about Constellation Energy and Electricite de France.)

Actually, vacuous Twitter content is what we want to see from our public servants, if we're going to see anything. It can easily be produced by lackeys and interns, saving the congresswoman or senator or governor or whoever for important stuff. Thus, Maryland Comptroller Peter Franchot's tweet, in reponse to the Congress/Twitter story:

i'm all about constituent interaction, could teach those congressmen

may not be the greatest thing. Do we need the chief executive of the state's revenue authority frequently tweeting and twerping in person? Maybe when we can fit the Maryland tax form on Twitter, but not until.

Likewise, Missouri Sen. Claire McCaskill was named best tweeter by the UM folks because it's obvious she creates her own content, like this:

Yes @tigeranniemac that was me at Target in the soap aisle. You shoulda said hi. Was with my daughter Lily. We're very friendly."

No. Please Sen. McCaskill. This is not good use of your time. You're on the Committee on Armed Services and the Committee on Homeland Security and Governmental Affairs. Please go learn about terrorists and Afghanistan. Leave the tweets to the PR people.

Posted by Jay Hancock at 11:11 AM | Permalink | Comments (1)
Categories: Politics
        

The new, projected numbers from the Board of Revenue Esimates are shocking. After all the cuts the state has already made (~$4 billion), it looks like it will have $2 billion too little to balance the books next fiscal year, writes Laura Smitherman. That's on top of another $230 million in cuts that will probably be needed this year. People knew there would be new hole. They didn't know it would look this big.

It's true the economy is hurting and Maryland has a long-term structural budget imbalance. But I find it hard to believe that next year's gap will be as big as $2 billion. The economy seems to be recovering. My guess is that the Board of Revenue estimates is being too pessimistic. After having repeatedly revised tax-collection projections downward, they probably don't want to do it again. That big, scary number will also increase political pressure to get slots up and going, and that could fill a decent part of the void by itself.

Posted by Jay Hancock at 12:05 PM | Permalink | Comments (13)
Categories: Politics
        

Monday on the Rodricks show on WYPR (FM-88.1) at 1:00 we'll be discussing the budget problems facing Maryland and Baltimore and this post I made last week: Union should be thrilled with furloughs, not outraged.

Talk about it here. Or call us on air after 1:00 at 410/662-8780. Here is some homework to put things in perspective and give you some ideas.

-- State spending will decline for the second year in a row for the fiscal year that ends in June, to under $14 billion for the General Fund. Two years ago it was $14.6 billion.

-- Gov. O'Malley has cut more than $4 billion in spending since he took office. (The slide says $3.5 billion, but it has gone up.)

-- Until now he has cut more than 2,000 positions with state government, but hardly any were layoffs. Last week the Board of Public Works approved layoffs for a couple hundred state workers as well as more extensive furloughs for those who remain.

-- Even with the cuts announced last week, there is probably still a gap between projected revenue and projected spending.

-- To avoid layoffs and reduce furloughs, the government employees union wanted the legislature to approve combined tax reporting for businesses.which reduces companies' opportunity to game one state's tax system against another's. But the assembly can't do that until next year, and O'Malley faces a budget crisis now. Combined reporting would raise between $40 million, on the low end of estimates, to more than $100 million a year, on the high end. In a vacuum, combined reporting is a decent idea, but O'Malley already signed off on huge tax increases two years ago, including on corporations. It'll be tough to raise corporate taxes again now.

-- After the 2007 increases, Maryland's state and local tax burden is 4th highest in the nation, according to the Tax Foundation.

Posted by Jay Hancock at 7:51 PM | Permalink | Comments (4)
Categories: Politics
        

I hope Patrick Moran, Maryland head of the American Federation of State, County and Municipal Employees, is profusely thanking Gov. Martin O'Malley behind the scenes after having blasted him publicly for cost-cutting plans emerging this week.

The union is "incredibly disappointed" that O'Malley will furlough lay off a couple hundred employees and furlough 70,000 others for a few days, Moran told WBAL TV. O'Malley decided to "balance the budget on the backs of state workers and residents," he said on the union's Web site. "Even in these tough times, it is essential that we remember our priorities in Maryland, and that the people of this state come first."

The people of this state! The people of this state face a 7.4 percent unemployment rate. About 224,000 are unemployed. That's over 100,000 more than two years ago. The people of this state got one of the biggest tax increases in history two years ago, when O'Malley increased the sales tax, the income tax, the cigarette tax, the corporate income tax and the vehicle titling tax all at the same time. The people of this state have seen the value of their houses plunge, medical costs rise and take-home pay go flat.

And yet as the recession has deepened O'Malley has bent himself into curlicues to avoid reducing state government employment, which is one of the biggest expenses and a natural place to look for crucial savings. State government has been immune to the kind of layoff pain that has been routine at manufacturers, banks and construction companies. The economy is shrinking. Tax revenue is plunging. What O'Malley is doing is the minimum. Moran ought to be thrilled.

UPDATE: A commenter notes correctly that O'Malley has eliminated 2,700 positions already, which I should have mentioned. But most of these did not involve layoffs, and in the grand scheme such action is still pretty minimal. Look at what's going on in California.

Posted by Jay Hancock at 6:00 AM | Permalink | Comments (64)
Categories: Politics
        

The New York Times reports:

Gov. Arnold Schwarzenegger returned home from a White House visit on Wednesday to find the state dangerously broke, his constituents defiant after a special election on Tuesday and calls for a constitutional convention — six months ago little more than a wonkish whisper — a cacophony.

As the notion of California as ungovernable grows stronger than ever, Mr. Schwarzenegger, a Republican, has expressed support for a convention to address such things as the state’s arcane budget requirements and its process for proliferate ballot initiatives, both of which necessitated Tuesday’s statewide vote on budget matters approved months ago by state lawmakers.

H.L Mencken: "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

California's tendency to require statewide ballots on anything and everything is the latest evidence that direct, Athenian-style democracy may not be a great idea. The founders set up a system of representative democracy for a good reason.

Posted by Jay Hancock at 10:51 AM | Permalink | Comments (1)
Categories: Politics