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Editor's
Note:
This
column
first ran yesterday in the Washington
Post. I thought it significant enough that I
prevailed upon Paul Goldman to let me republish it
on Bacon's Rebellion and then to expand upon
his thoughts based upon further reflection and the
feedback he received from Post readers.
Having
agreed to sign a GOP budget he once deemed
"fiscally irresponsible," Virginia Gov.
Mark R. Warner has now decided to risk his legacy --
and his party's future -- on the issue of an
increase in state taxes.
True,
he uses the term "tax reform," not
"increase," and he will not say whether
his real aim is to increase the overall tax burden
on Virginians. But transparent evasions of the
obvious are only going to undermine his image as a
straight-shooter.
If
Warner truly wants to win on tax reform, he must
level with the people so they know the reasons for
his stance. Yet this raises a more fundamental
question:
Why
have the governor and key leaders of the state's
Democratic Party decided to risk the party's future
on what could be a $1 billion or more increase in
taxes?
Accordingly,
I feel obligated to take up the mantle of the
"Great Dissenter," Justice John Marshall
Harlan. Harlan earned his nickname by being the lone
dissenter in the 8 to 1 Supreme Court decision of
1896, Plessy v. Ferguson, that upheld
segregation in the South.
Democrats
were given a golden opportunity when the GOP badly
bungled finances during the Gilmore administration.
But instead of forcing the GOP to fix its gimmicks
and mismanagement of the past 16 months, Warner has
basically signed on to more of the same, even
agreeing to accept phony revenue estimates despite
having criticized that practice in the campaign.
From
a policy and political perspective, Virginia
Democrats would have been much better off had Warner
vetoed the GOP budget and called the legislators
back for a special session this month to repair the
effects of their fiscal recklessness. Such a bold
political stroke would have led to a seven-week
gubernatorial-led crash course in educating the
public on the GOP's Enron-style bookkeeping, both in
terms of the annual budget, which already faces a
projected deficit next year, and the
"structural deficit" -- the off-the-books
debt the state has piled up in recent times.
Instead,
Warner proposes to use the seven months leading up
to the November elections to challenge the GOP to
pass tax increases under the code term "tax
reform."
To
repeat: Democrats had the Republican leadership in a
sure-lose position on the fiscal issue. Instead, the
governor let the GOP off the hook -- and put himself
and his party on it instead -- with his
all-but-declared call for higher taxes in an
election year.
House
Speaker William J. Howell, R-Fredericksburg, is
publicly calling on the governor to come clean on
his intentions and daring him to propose a tax
increase. At the same time, Howell buddy Sen. John
Chichester, R-Fredericksburg, the Senate Finance
Committee chairman, is privately telling Warner not
to worry about the speaker, that the speaker and
other GOP leaders are just "posturing" for
the 2003 election.
This
GOP bad cop-good cop routine on taxes -- with the
wink and nod about how everyone will do the
"right" thing once elected -- is
calculated to make Warner gamble with the future of
the Democratic Party. Others may want to follow
blindly. But call me the Great Dissenter.
--
May 4, 2003
Dear
Jimbo:
You are right, I have received a fair amount of
feedback on the article, both pro and con, from
predictable and unpredictable sources. As a writer
would say, the article wrote itself, for it
discussed what any honest and knowledgeable
political observer would be required to write, if
not in May than surely by June or July.
Let me cut to the chase: Right now, the state's
finances, based on sound, fiscally conservative
accounting principles, is teetering on the edge of a
fiscal cliff, as I predicted it would in another Washington
Post column in 2001.
I knew this when I was plotting the Warner campaign
strategy on budget and fiscal stuff. But given what
has again transpired in this last budget session,
what I
called the "structural deficit" two years
ago has only gotten worse. For example: The
politicians in Richmond have effectively wiped out
the Rainy Day Fund by treating it as their personal
bailout fund, despite the fact it was never intended
to protect them from chronic fiscal mismanagement.
Now the state is on the hook to refill the fund,
plus make up for all the other off-the-books
maneuvers.
I know of what I speak, as the idea to consider
creating the fund was first suggested by me to then
former Gov. Doug Wilder. If you look at the original
proposal, it was not intended to save the elected
elite from their bungling but to protect against
unforeseen revenue shortfalls.
The
current fiscal mess is the most advertised and
predicted in state history.
Yet
for some reason, Democratic leaders backed away from
challenging the Republicans on the true dimensions
of our fiscal and budget mess. I can understand
Gov.-elect Warner not wanting to challenge the
General Assembly to face the truth of the state's
structural budget and financial problems during his
first GA Session: I didn't agree with that strategy
but I could understand it.
However, the failure to draw the line in 2003 now
risks playing into the hands of Republicans.
Why? Naturally, nothing is sure in politics. But the
foreseeable dynamics of political strategy say the
situation will logically drive Warner and General
Assembly Republicans to defend their records of
fiscal management, thus in effect, making Warner run
political interference for Republicans. In theory --
and again, we strategy guys have to analyze all the
moves -- this could deprive the 2005 Democratic
ticket, indeed all Democrats but Warner the fiscal
issue going forward.
Unless, that is, some of us force a debate on
what is happening.
Right now, the "tax reform" issue hangs
like an ominous shadow over the DEM party. Warner's
press office was quoted last year as saying he still
intends to keep his deal with former Speaker Vance
Wilkins and will propose 100 percent car tax repeal
in his last budget. The governor also has said he
would accept the elimination of the estate tax as
part of his "tax reform" package. Several
years ago, his chief lobbyist, Republican Jimmy
Hazel, wrote an article saying that we needed
"tax reform"; but his only suggestion was
to give localities 6 percent of the state's income
tax revenue.
These three proposals will reduce state budget
revenue by well over a billion dollars a year,
ballooning the very problem the governor correctly
says Virginia must solve. Meaning: The governor and
the Democrats will have to come up with an
equivalent amount in new taxes just to keep the
state budget from going further into the red; and
the Governor has said Virginia needs additional
revenues behind that.
Conclusion: The governor is putting Democrats in the
posture of agreeing to popular tax-cutting and
revenue-sharing GOP suggestions. What do Democrats
get in return? The obligation to take the lead in
proposing highly unpopular tax increases to offset
these popular, GOP measures!
Thus, from the standpoint of political strategy, it
seems to me that Democrats assume all the risk
and yet stand to get little if any potential reward.
Now, you might say: But Paul, this is the
"right" thing to do.
To which I would retort: Oh really?
I have yet to hear where this new tax money is going
and who pays more and who pays less. All I know is
that local schools and teachers, for example,
currently are being shortchanged by a billion
dollars. Is this new tax money going to cover prior
made-but-unmet promises, thereby taking the GOP off
the hook for explaining how they spent billions on
less important matters? Are we going to repeal 100
percent of the car tax before we cover our debts to
our school children?
The future is now. No doubt, the usual "shoot
the messenger" talk will emerge as regards to
this column as it has in the past.
So much for the peanut gallery.
That being said, I will concede that if Mark Warner,
a super-salesman, puts his mind to it, he can
probably sell a "tax reform" plan that is
fair, balanced, detailed, forward-looking and
increases taxes.
That, of course, is his decision.
I suppose the political correct thing would be to do
what so many others are doing now: Talk privately
but say nothing publicly so as not to upset their
standing in Governor's Office.
That is not my style.
Mark Warner and I have long been political allies,
so either I tell him beforehand or forever hold my
tongue. So I have done it in a way to make sure it
gets done, in person, in discussion and now in
writing once again.
I have learned that at the gubernatorial level, the
most important advice any governor needs is the
advice he gets from someone with the willingness to
have that be the last advice he or she ever gives
that Governor directly.
I have fought hard to make changes in Virginia.
Right now, I see a lot of what I worked for being
undone on many fronts, from budget and fiscal
integrity, to racial equality, to ethical reform, to
political strategy.
Hopefully, we will not go backwards. But if we do,
then at least I wasn't waiting in the on-deck circle
with my bat on my shoulder.
-- May 5, 2003
(c) Copyright. All rights reserved. Paul Goldman.
2003.
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