Bacon's Rebellion

by Peter Galuszka

In early October, Virginia’s tea party movement was on a roll. Hundreds of supporters crowded the Greater Richmond Convention Center for what was grandly called a “Patriots Convention.” Hallways and auditoriums were chockablock with budget hawks, Patrick Henry re-enactors, booksellers hawking Ayn Rand and middle-aged men packing .45-caliber Colt pistols in Velcro holsters with stickers that said “Guns Save Lives.”

Basking in the glow of the grass-roots protest movement against big government and taxes, Jamie Radtke, a 30-something former Republican political operative, was emerging as a bright new star. She’d pulled together about 300 volunteers and as many as 8,000 sympathizers for the movement. Their clout was felt the following month when Republicans took the House of Representatives in a stunning defeat for President Barack Obama and his Democrats, forcing such congressmen as liberal Tom Perriello out of office.

Fast forward to today. For weeks, the nation has been on a dangerous roller- coaster ride while the GOP-dominated House of Representatives has stubbornly refused to approve raising federal debt limits unless a budget with huge spending cuts goes with it. A breakthrough agreement on raising the federal debt limit appeared imminent Aug. 1 that would cut $2.4 trillion in spending with no tax increases. But the damage has been done in terms of diminishing America’s reputation abroad. China’s Xinhua news agency trashed the United States for “dangerously irresponsible conduct” that could tank not only its economy but also that of the rest of the world.

So how did we get to the precipice? The major reason is the tea party, which seems to have surfaced the day Obama was inaugurated. Eight years of George W. Bush’s blowout spending were forgotten. Jobs to help pull the country out of the worst recession were painted as evil. Government workers became lazy freeloaders. Washington was the focus of everything wrong. Freshmen Republican congressmen elected with tea party backing in 2010 did whatever they could to marginalize Obama and hold the nation’s finances hostage while they pursued their stubborn dogma.

Radtke, who’s running against former Gov. George Allen for the Republican nomination for U.S. Senate in 2012, is partly responsible for the tragedy of the past few weeks although she’s not in office, at least not yet. Like the rest of her gang, she was most willing to trash any chance at compromise. In the words of Washington Post columnist Kathleen Parker, Tea party members like her stood ready to “frag” responsible leaders in her own party just to appear tough.

It’s not the only time Radtke has shown her political immaturity. She made noise over the Metropolitan Washington Airports Authority, which oversees Dulles and Reagan National airports, as well as the expansion of the Metro rail line to Dulles. The authority has come under fire from conservatives because former Democratic Gov. Tim Kaine gave it power over the Dulles rail extension and the Dulles toll road that helps pay for it. Kaine also was blamed because the authority wants to allow labor rules to prevail for rail construction, as they do in most big U.S. cities.

Radtke’s solution was unworkable: to abolish the authority and turn jurisdiction for the Dulles rail line and the airports over to Virginia. Fat chance there. Some of her other positions are also questionable. She opposes Gov. Robert F. McDonnell’s plans to spend $4 billion on the state’s well-worn roads and bridges and opposed having business pay insurance for families with autistic children.

Meanwhile, the no-spending mantra that she espouses presents dangers of a more immediate type. Thanks to House Republicans under the influence of the tea party, funding hasn’t been provided to the Federal Aviation Administration. Some 4,000 furloughs have resulted and plans to upgrade the nation’s overworked air-traffic-control system with badly needed upgrades have been suspended. If your jetliner collides, you may know who to blame. Closer to home, McDonnell was shocked to learn that Virginia could lose its AAA credit rating if there was no deal on the debt ceiling because the state has so many federal workers — a dependence that may be news to Radtke.

In fact, more average voters are catching on to the fatuousness of the tea party. A new Public Policy Poll reports that of 500 Virginians asked this month, 79 percent didn’t have an opinion on Radtke and 16 percent didn’t like her. Only 5 percent supported her. If the upcoming Senate race were between Kaine and Radtke, Kaine would easily win. It would still be pretty much a toss- up if Kaine’s opponent were Allen.  Congress is coming off far worse in polls with 77 percent of Americans polled saying they behaved like spoiled children in the run up to the debt deal.

The upshot seems to be that for all of Radtke’s promise at political organizing, Radtke just isn’t ready for prime time. Washington needs mature, thoughtful leaders — not kids on an ego trip. The global stakes are just too high for a bunch of people running around packing heat and playing Patrick Henry.

(first published in Style Weekly)

I hate it when my pet theories don’t work out. But in the cause of evidence-based punditry, I re-evaluate my thinking in light of the latest information available. The latest data compelling an attitude adjustment on my part is a report from the state Bureau of Insurance detailing the pitiful market performance of “mandate-lite” insurance policies.

In 2009 the General Assembly passed legislation allowing insurance companies in Virginia to sell “basic health insurance coverage” to small employers in Virginia. The hope was that exempting these insurance plans from most of Virginia’s mandated health benefits would make medical insurance coverage more affordable and accessible — an idea that I have endorsed for a long time. Displaying extraordinary foresight for a government body, the Assembly asked the Bureau of Insurance to report back on how the idea was working.

Well, the results aren’t anything to write home about. In fact, they’re pitiful. In the report just released, the Bureau of Insurance surveyed 33 insurance carriers offering coverage in the small employer market. Of those, only four had approved mandate-lite plans. As of March 2001, only one insurer had actually sold a mandate-lite plan, and that was to a mere three groups covering 10 employees. That carrier ended sales on July 1, 2011. A second carrier, having sold not a single plan, said that it will stop marketing them as well.

In other words, “mandates lite” has been a total bust.

Some readers of this blog will chortle with satisfaction at the idea that this timid step toward a more free-market approach in health insurance is such an obvious failure. This is proof, they will likely argue, that more government intervention in the insurance marketplace is the solution. They may be proven right, but it’s too early to jump to conclusions.

The passage last year of the Patient Protection and Affordable Care Act, otherwise known as Obamacare, likely undercut the market for the insurance policies. As the Bureau of Insurance report concludes, “The potential conflict between federal legislation and subsequent regulations with current state legislation is a deterrent to the development of mandate-lite plans at this time.”

The federal law requires the states to set up health insurance exchanges by 2013 to provide coverage for those who can’t get it from their employer. The legislation requires “essential benefits” that include hospitalization, ambulatory care, emergency services, maternity and newborn care, mental health and substance-abuse, prescription drugs, rehab, laboratory services, preventive and chronic-disease-management, and pediatric services including oral and vision care.

In 2013, in other words, federal insurance requirements will trump state law, putting the “mandate lite” insurance products out of business. I would conjecture that Virginia insurance carriers concluded that there is no point in investing resources into developing the “mandate lite” market knowing that it is scheduled for extinction. What we don’t know is why the preliminary experience was so disappointing. Was it due to a lack of demand… or a reluctance of insurance carriers, seeing Obamacare coming down the line, to invest meaningful resources? It’s too bad the Bureau of Insurance report didn’t address that question.

Here’s one thing we do know: Obamacare has extinguished any competing vision in Virginia for how health insurance should operate. Marketplace experimentation will cease. Lawmakers, regulators and the special interests who influence them will make the decisions for us.

by James A. Bacon

The McDonnell administration is putting the Route 460 project on fast forward.  The state has dedicated up to $500 million to support a public-private partnership to rebuild the four-lane road to interstate quality between Suffolk and Petersburg, a job that could run between $1.44 billion to $1.8 billion, reports the Virginian-Pilot.

Meanwhile, the Virginia Department of Transportation has issued a request for detailed proposals from Cintra Infraestructuras S.A.U., 460 Partners, Inc. and Multimodal Solutions LLC, the two firms that have presented conceptual proposals. The project entails the design and construction of 55 miles of new tolled roadway south of the existing Route 460 with seven interchanges to project access to communities along the corridor. (Click on map for more legible image.)

The project will be financed through a combination of public subsidy, private investment and user fees.

“This project is a top priority of the Commonwealth and will provide substantial benefits related to emergency evacuations and enhance the movement of freight to and from the ports,” said VDOT Commissioner Greg Whirley in making the announcement. “Additionally, the new Route 460 will provide greater connectivity between the Richmond/Petersburg and Hampton Roads regions increasing economic development opportunities and job creation.”

I don’t want to pre-judge the value of this project. My only comment at this point is that this massive public investment requires much closer public scrutiny than it has received so far.

From Plow Horses to Race Horses – the Equine Contribution to Virginia’s Economy
Weldon Cooper Center for Public Service
Horse racing and horse shows have spurred the revitalization of Virginia’s equine industry.

Is Policing Racially Biased? No Easy Answer
Rand Corporation
Police agencies are collecting more data than ever on the stops made by their officers. But there is still no definitive way to determine if they engage in racial profiling.

The Most Effective Schools Excel… at Recruiting Good Teachers
National Bureau of Economic Education
Want to improve educational performance at your school? Put into place personnel policies that enable you to recruit the most effective teachers.

Constraints to Increased Biomass Generation
Rand Corporation
Using biomass to generate electricity and reduce greenhouse gas emissions makes the most sense when used in conjunction with coal-fired power plants. But significant constraints limit biomass’ appeal.

Seven Questions to Ask the People Who Run Your Schools
Von Mises Institute
The mass standardization of American public education and the mass of regulation that supports it has been a miserable failure.

Jim Bacon logging in from Wilkesboro, N.C…. People in the hill country of North Carolina may be forgiven if they don’t believe that the recession is over. Omtron USA, a poultry processing plant, is shutting down its Townsends’ Crestwoods Farms division, eliminating 680 jobs in Siler City and 476 more in Mocksville, reports the Winston-Salem Journal today. That announcement comes on the heels of news that unemployment in the Winston-Salem metropolitan region remained stuck right around 10.0% in May.

The poultry industry, which has a big presence in the Shenandoah Valley and the Eastern Shore here in Virginia, is hurting right now. Pilgrim’s Pride has announced its intention to close a poultry processing plant in Dallas in September, killing another 1,000 jobs. Google “poultry layoffs” and you will find more stories of a similar nature.

To some people, the loss of jobs for blue-collar jobs like these represents a failure of the free-market economy that can be fixed only by government intervention such as tariffs, government stimulus spending or the imposition of higher tax rates on greedy “millionaires and billionaires” who “aren’t paying their fair share.” Such commentary is blind to the real causes of job destruction, which in many cases can be traced to some other government intervention designed to solve some other problem.

In the case of the poultry industry, the primary culprit is the rising price of corn, the food source for chicken, which has shot from $3.41 per barrel in June last year to $6.58 in June this year. That added $1 million a month to the Mocksville plant’s operating expenses. And why has the price of corn shot so high? Rising global demand spurred, in part, by the voracious demand for corn as a feedstock for ethanol. In other words, North Carolina poultry workers are among the victims of the rent-seeking ethanol industry which uses its clout in Washington to create a market for a fuel that cannot compete with gasoline without government support and consumes so much energy in production that environmentalists deem a detriment in the campaign against greenhouse gas emissions.

In an interesting twist, the two North Carolina plants would have closed earlier this year were it not for the intervention of Ukrainian billionaire Oleg Bakhmatyuk, who purchased the business out of bankruptcy and spent $10 million on plant upgrades. Bakhmatyuk had hoped to import corn from the Ukraine at less than half the price paid in the U.S. but regulatory changes there eliminated the price differential. Bakhmatyuk’s entrepreneurial gamble failed, but you can be sure that if it had paid off, someone would be attacking him for his profits and his greed.

If we want to jump-start the American economy and reduce the “wealth gap,” much of it caused by rampant unemployment, a good place to start would be to stop bestowing subsidies, tax credits and market preferences upon politically connected corporate interests like the ethanol lobby and stop talk of foisting higher taxes upon risk-taking millionaires and billionaires.

Mapping Released Prisoners
Urban Institute and the Providence Plan
The police map crime. Why shouldn’t probation officers map the whereabouts of released convicts?

Cut Federal Red Tape to Improve School Performance
American Enterprise Institute
Reforming federal compliance rules could lead to better educational outcomes than throwing more federal money at schools.

State Education Secretaries as Agents of Change
Center for American Progress
The heads of state education agencies have more responsibility than ever before but they are hindered by state and federal regulations. It’s time to cut them loose.

Do Gun Law Awareness Campaigns Work?
Rand Corporation
In a controlled experiment in Los Angeles gun markets, sending letters to gun purchasers resulted in an increased rate of reporting stolen guns.

Toward Data-Driven Pediatric Care in Washington, D.C.
National Academy for State Health Policy
The District of Columbia medical establishment has an opportunity to improve the quality of pediatric care by adopting electronic health records and the measurement of quality data.

Impact of School Improvement Grants Uneven
Government Accountability Office
The federal School Improvements Grants (SIG) program spent $3.5 billion in the 2010-2011 school year.  Short time-frames and differences in local administrative capacity meant that states varied in their ability to implement the program.

States’ Budget Cuts Harm Education, Health Care, Economy
Center for Budget and Policy Priorities
Cumulative state budget cuts over four years have devastated funding for schools and health care, and have harmed state economies.

By Peter Galuszka

As minutes tick by, the behavior of Republicans in Congress, especially Virginia’s ultra-rogue junior elephant, Eric Cantor, becomes increasingly fascinating.

They have become, suggests  David P. Barash, psychology professor at the University of Washington, elephants in “must,” meaning that the usual rules of rationality and brinksmanship have become moot. Mind you, the elephant has long been extremely accurate symbol of the GOP (I don’t go for the “clan” nonsense Risse dishes out any more than I respect his “vocabulary,” hah!)

It does seem that elephants fit the bill. They are big, ungainly and overfed. They like tax breaks, especially for the fatter elephants. And, from time to time, they get a little ditzy and when they do, brother, watch out!

This is what has happened. After years of blowing out the federal budget under their Chief Elephant George W. Bush, the herd went nutzy in January 2009 when Barack Obama was inaugurated. We were entering a terrible recession and suddenly, overnight, the elephants got the religion of fiscal discipline. It all became Obama’s fault, the elephants agreed.

So now comes the debt ceiling. The Elephants want to link that to all kinds of spending cuts. They do not care that by doing so they may well crash our anemic economy back into recession. They forget that the late King of Elephants, Ronald Reagan, raised the debt ceiling 18 times.

Oh no. They want to stampede. Rationality doesn’t apply. And here’s what psychologist Barash reports will happen. The elephants have reached a state of “must.” It isn’t a pretty picture:

“It’s a tactic that works surprisingly well, because male elephants can be in fact temporarily “crazy.” One of the most terrifying sights in the animal world is an elephant in a state of must: Huge bulls, oozing a weird, foul-smelling greenish glop from glands near their eyes, behave with violent abandon, taking risks, and defying the basic rules of pachyderm propriety(and also giving rise to the term “rogue elephant”). Facing an elephant in must, other elephants  –not to mention people — are well advised to get out of the way. ”

So you have it from the animal world.

by James A. Bacon

The Commonwealth Institute has peered into Virginia’s fiscal future and doesn’t like what it sees. The state faces another $500 million budget gap next year, and a $300 million gap the year after that, meaning that the prospects of restoring cuts to education, health care and public safety are bleak.

Although tax revenues are recovering, they remain below pre-recession levels, write Sara Okos, Laura Goren, and Michael Cassidy in “In the Red: Early Warnings About Virginia’s Fiscal Outlook.” (Click chart for more legible image.) Meanwhile, prolonged joblessness and poverty require more spending on social services such as food stamps, Medicaid and Temporary Assistance for Needy Families (TANF).

Not only is the economic recovery anemic, the state has significant obligations like replenishing the Rainy Day Fund, repaying the Virginia Retirement System funds it borrowed, and repaying the federal government for unemployment-insurance money it borrowed. Also, funds from the federal stimulus package (the American Recovery and Reinvestment Act) will have expired. Write the authors:

Inadequate revenue growth, coupled with the loss of Recovery Act funds, and increasing other demands on state resources will likely place Virginia on red alert unless action is taken. This could hinder much-needed investments and innovation in public education, health care, public safety, and economic and workforce development.

I share the Commonwealth Institute that Virginia’s conviction that the fiscal situation looks dire, and I believe the think tank deserves credit for bringing the issue to the public’s attention in a more authoritative way than I have been able to do. However, I do take issue with conclusions it draws from its fiscal analysis.

The Institute contends that state and local spending cuts and accompanying layoff of 6,000 employees have “impeded” the economic recovery. Not so. Given the reality that state and local governments must balance their budgets, the only alternative to layoffs would have been increasing taxes. Higher taxes would have killed jobs. Moreover, higher taxes kill private-sector jobs, not public jobs. As some commentators on this blog need reminding, private-sector jobs are more valuable fiscally than public-sector jobs because private-sector employers pay taxes — property taxes, BPOL taxes and corporate income taxes — that governments do not. Offsetting the loss of private-sector jobs with public jobs is a sure-fire way to erode the tax base.

Likewise, the Institute argues that a “cuts-only approach” to balancing the budget will hurt economic recovery. Maybe, but it would hurt less than raising taxes a like amount. The fact is, Virginia is in a fiscal jam and there is no easy way out. Instead of adopting a strategy of spending more money to meet core responsibilities, we should prioritize spending on programs that offer the greatest economic, fiscal and social return on investment.

How to Hold Higher Ed More Accountable
National Governors Association
States need to insist  upon greater productivity at public colleges. A starting point is to track basic data like how many students are graduating, and how well are colleges meeting industry’s needs for an educated workforce?

How Much Is that College Degree Really Worth?
National Bureau of Economic Research
Parents would like to know, and policy makers should know, how much a college education contributes to a students’ future earnings. This study finds that the earnings premium of prestigious state universities is close to zero.

How Community Colleges Can Help Build a STEM-Savvy Workforce
National Governors Association
At least eight million of the jobs available to college graduates in 2018 will be in the science, technology, engineering and mathematics (STEM) professions. States should look to community to colleges to help build that workforce.

Reengaging College Dropouts
National Governors Association
Nearly 400,000 kids drop out of school every year. States need to set goals to reduce the dropout rate, track the data and provide more options for recovered dropouts.

A Demographic Portrait of Charlottesville
Weldon Cooper Center for Public Service
The Demographics and Workforce Group at the Weldon Cooper Center has published a demographic profile of Charlottesville. It’s worth a look to see the analysis of rising housing prices and gentrification.

The Latest Effort by Wine Wholesalers to Thwart Competition
Competitive Enterprise Institute
Recent court rulings have challenged anti-competitive state laws regulating alcohol wholesalers. Now wholesalers are trying are lobbying Congress to allow states to discriminate against out-of-state wineries.

Tax Holidays Are Poor Public Policy
Tax Foundation
Tax holidays like Virginia’s yearly sales tax exemptions for the purchase of back-to-school and hurricane supplies are an ineffective gimmick that distracts lawmakers from fundamental tax reform.

Should States Exempt Groceries from the Sales Tax?
American Enterprise Institute
Virginia is one of 43 states that provides a full or partial exemption for groceries from the sales tax. There are more efficient ways to help the poor.

Local Law Enforcement Needs to Do a Better Job of Reporting Missing Children
Government Accountability Office
Missing children who are not found quickly are at increased risk of victimization. Local law enforcement efforts to report missing children to the national database are patchy.