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Before
the governor announced his deficit bombshell Friday
- a $1.3 billion dollar shortfall over the next two
years, essentially
confirming my earlier fiscal predictions of a
chronic structural deficit eating away at the
state's fiscal underpinning - I was going to write
about the historic honor of having being tarred and
feathered with Virginia's first smear trifecta.
That's right: This here Southern boy has now been
called the NL word, the JB word, and the WR word. A
friend mine gave me a white sheet the other day,
saying she couldn't resist.
Admittedly, state Sen. Benny Lambert,
D-Richmond, decried all the "crazy racial
stuff" including the charge of racism hurled at me
by the campaign orchestrated and/or financed by U.S.
Rep. Bobby Scott, D-3rd, state Sen. Henry Marsh,
D-Richmond, delegates Frank Hall, D-Dwight Jones,
D-Richmond, and other government officials in the
city.
Let me ask you: How many people can claim honorary
membership in the B'nai B'rith, NAACP and now the
KKK, all because he actually thought white and black
Virginians could think for themselves, that they
could be counted to judge a person or an idea on
merit, not race, religion, or the other things Dr.
King taught us were not truly relevant?
Imagine: A white person who can actually see a black
person as a man and not a black man.
Here is an Aesop fable for you: Bobby Scott, Henry
Marsh, Dwight Jones, Frank Hall, the Democratic
Party establishment et. al. actually seeing Paul
Goldman as a man, not a White Man, not a
Jewish-White Man. Imagine: These guys actually
admitting that maybe they said some hurtful things
and that things got out of hand.....
Which brings me to the budget debacle, a statewide
issue whose protagonists can learn something from
what we achieved in Richmond fighting back the
political establishment.
WAKE-UP CALL: Despite the happy talk coming from
the Secretary of Financeless and Less, the governor
tells us that the state
budget now faces another $1.3 billion in red
ink, with new deficits running all the way until
2006, long after Warner leaves office. Secretary of
Financeless and Less John Bennett originally had
promised the governor the deficits would end by now,
but others had warned the governor two years ago
they wouldn't. As they say, been there, done that: I
watched as the experts promised Governor Wilder that
their economic models said it would be over by the
middle of his term, but it lasted all the way to end
and then some.
Back
then, Democrats were blaming Wilder for the problem
right up to the end, with Dickie Cranwell even
saying the governor was making up the crisis for
political reasons. At least this time, they aren't
blaming Warner.
Earlier this year, I wrote, among other things, that
Gov. Warner's advisors were wrong in not telling him
to veto the state budget passed by General Assembly.
I said several things: (1) the "Deficit"
Jim Gilmore fiscal trickery was continuing despite
campaign promises to the contrary, and (2) the state
was facing a mushrooming ocean of red ink, a
structural deficit of $4.5 billion and counting, the
next billion around the budget corner.
FACT: Despite his public posture, Senate Finance
Chairman John Chichester, R-Stafford, has gone along
with all the Gilmore-type gimmicks of recent years,
even some "Deficit" Jim didn't think he
could pull off.
Because the editorial boards and the Big Business
Community are so desperate to raise taxes -- any tax
-- they are lionizing Chichester even though he is
the architect of as much of the structural deficit
as anyone currently serving in the General Assembly.
There is a reason Chichester lost the LG's race a
few years ago. Pundit Larry Sabato and
others still want to blame the color of his skin,
but those of us who were there know it was because
he didn't offer a single creative idea. All he did
was falsely attack Doug Wilder for being soft on
crime. But even more importantly, Mr. Chichester was
then, and is now, a creature of the senate
political establishment.
Chichester
thought he knew more than the people 18 years ago,
and I don't think his attitude has changed.
Right now, Warner is the one on the spot, because in
the end, the public holds the
top guy accountable. Most of them have never heard
of Chichester.
So
what should Warner do?
First, learn from Wilder's experience. In
retrospect, I gave Wilder the right fiscal and
budget advice which, as House Speaker William
Howell, R-Stafford, has now admitted, helped lead to
Virginia's boom.
But I gave Wilder the wrong political advice in
terms of General Assembly politics. He accomplished
things policy wise because he took
responsibility. For the same reason, he took all the
political blame, something his detractors used
against him quite skillfully.
For
sure, reality has caught up with perception and
Wilder is lionized today by both Gov. Warner and
Speaker Howell for being the model of fiscal
responsibility. But politics is a tough business, so
the damage never gets fully healed.
In that regard, Warner is playing it far smarter,
for he has managed to deflect any blame. It's a
brilliant stroke in my judgment. My hat is off to
him. I never would have bet he could adopt
all of Gilmore's gimmicks and tricks without the
press and General Assembly jumping on top of him.
Now, Warner may be changing his approach with all
this talk about a major tax reform package. Only
time will tell. So, I will leave the politics of it
to the governor, as he has been far shrewder than I
was. But on the policy side of the equation, I think
time has proven that my analysis and recommendations
of how to deal with budget shortfalls have withstood
the test of time, both under Wilder and now under
Warner.
Thus, it now comes as no surprise that Virginia
faces yet another billion-dollar deficit despite
the fact that Secretary of Red Ink John Bennett says
state revenues are running hundreds of millions
of dollars higher than projected just a few
months ago.
Let's stop here for a moment. How could Virginia
have gotten itself into such a fiscal mess, a state
that was ranked as the best managed one in the
country just a few years ago, a state that had
nearly a billion-dollar Rainy Day Fund two years
ago, one of the biggest in the nation? The reason is
simple: The red ink, hidden by phony budget numbers concocted to sweep the structural deficit
under the rug and make everyone look good, is
flooding out of control. So much of the stuff is
spreading like that famous scene in the Ten
Commandments when Moses changes the color of the
Nile.
NEW FACT: But for the illegal use of the Rainy Day
Fund this year -- Secretary of Red Ink Bennett knows
full well the Rainy Day Fund was never meant to be a
bailout mechanism to allow the politicians to hide
the true extent of the fiscal mess -- the budget
mess would have been harder to paper over during the
Spring.
This is one reason Moody's is so focused on
rebuilding the Rainy Day Fund, for the bond-rating
agency knows the politicians have been acting
illegally.
So, again, what should Warner do now?
He needs to understand the crucial difference
between the situation he faces and the one Wilder
faced.
My strategy in the Wilder years was based on an
analysis of what would happen to state revenues once
the worst recession since the Great Depression was
over: state revenues would grow mightily, providing
the money needed to raise teacher salaries, build a
first-class education system, cut the food tax,
invest in jobs, and provide for our children.
Now, admittedly, the size of the tech boom in NOVA
caught me by surprise.
"Deficit" Jim Gilmore got the benefit of
what Wilder's budget-cutting and the boom produced,
not Don Beyer who had a lot more fiscal integrity, a
lot more.
I ask you: Would Gov. Warner even be thinking of
raising taxes but for the car tax program and its
price tag, double, triple, who knows how much
greater
than promised by Gilmore and one of the crafters of
the final legislation, Mr. Chichester?
Of course not.
Warner thus faces a far different dilemma than
Wilder. For as I have been saying, there is no
foreseeable boom that can dig us out of the
structural fiscal mess, for reasons articulated now
over the years, starting with my piece in the Washington
Post of 2001 defining the "structural
deficit" I have been talking about ever since.
Wilder decided to make his choices up front at the
beginning: Warner has opted to wait, until into his
third year.
So, Wilder had more clout to get things done even
though Warner has the higher polling numbers.
Yet the irony is this: Wilder, by choosing early,
gambled that his view of the economy five years
after he left office would prevail. He was right and,
so, his reputation has been made.
Warner, on the other hand, now realizes that his
time is now, that five years from now, the economy
can not be trusted to bail out his reputation one
way or another, nor can he assume any successor will
be looking out for a predecessor's reputation.
Thus, in terms of his reputation, he has now two
choices. Play out the string politically, and leave
office with high poll ratings but with the editorial
writers and historians on his case; or try something
no other Governor has done in any major way since
Virginia became a true two-party state: Enact into
law a sizable tax increase for general fund
revenues.
Governor Baliles raised money for the transportation
fund, not the general fund.
So you ask: What would I advise him to do?
Easy, I just did it in Richmond, and defeated the
political establishment, albeit the Democratic One.
I would put the tax reform issue on the 2004 ballot,
and let the people decide. The public is savvy.
People have common sense. They are going to the
polls to elect a president. No reason why they can't
also be trusted to make a fundamental decision on
the future of Virginia.
Accordingly, I would call a special session of the
GA for April to enact the necessary referendum
legislation.
Speaker Howell and Attorney General Kilgore have thrown down the gauntlet, a risk the
governor took by not announcing his plan prior to
the 2003 elections. He bought time, but he also
created a vacuum. Thus, the regular General Assembly
Session is not going to give Warner what he can get
by going directly to the people.
In political terms, Warner is putting all his eggs
in Chichester's basket, which from experience I
would not do. This is not meant as disrespect to
Senator Chichester, who loves his state as much as
anyone. But I have seen nothing to tell me he is the
guy to deliver what this state needs in the 2004 GA
Session.
I am not talking politics here: I am talking
substance on finance and budgets.
So, I would rather go to the people, the voters of
Virginia, and thus go over the heads of the
Establishment. As I told Doug Wilder, Virginia is a
very establishment state so if you challenge the
Establishment, you take a big hit politically, even
if you win.
But if you don't challenge the Establishment, then
you can not leave any mark.
The voters of Richmond were smart enough to see
through all that "racial crazy stuff" as
Democratic Senator Benjamin Lambert put it the other
day when he decided to join me, and not his fellow
legislators, in doing what was right for Richmond,
backing the creation of an at-large mayor.
Gov. Warner backed my efforts in Richmond,
admittedly from the bleacher seats, but it wasn't
his fight. Besides, those of us with front-line
experience had the situation under control. Now it
is his turn, and that of Lt. Governor Kaine to
deliver what they promised: passage of enabling
legislation by the General
Assembly.
Warner has far more money, far more help and far
more power than I did when I went door to door to
get referendum on the ballot.
If
he is willing to do what I did in Richmond - putting
everything into the pot -- then my bet is he can
make a lot bigger history.
Virginia's finances are in a mess, and he knows it.
But the problem requires more than a facelift,
smoothing out the wrinkles in the tax code.
It is time for a vision quest right now.
It is a truism that you sell a vision to
the people, and the details to the legislature.
The General Assembly will give Gov. Warner a
referendum election election, because the
Republicans are convinced it will fail.
In
1985, I trusted the people while everyone else,
including the governor, were certain Mr. Chichester
was a sure winner. Nothing has changed in the last
18 years to make me change my view: Trust the people
if you want to make a positive, fundamental change
that will stand the test of time, not the senate
political establishment.
-- November 17, 2003
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