Category: porkbarrel politics

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Accountability crime and punishment government transparency insider corruption local leaders moral hazard porkbarrel politics

Interfering With a Sweet Racket?

Seattle, City Light, corruption, security, police, scandal, cronyism

One way for governments and enterprises to save money is to contract out some or all of their services. Towns, cities, counties, states — even the federal government — engage in such practices all the time.

It is really just outsourcing, as business lingo dubs it.* But, like any system for shifting responsibility away from direct management, it can be corrupted.

As Seattle citizens now learn, courtesy of Seattle Times reporters Mike Carter and Steve Miletich.

It appears that Seattle City Light, the public utility providing electricity to the city, has been contracting exclusively with Seattle’s Finest Security & Traffic Control. For a half a decade. Despite there being direct competition from another firm.

The utility paid “more than $7.8 million over the past five years to provide off-duty police officers for traffic control or security work,” the Times tells us.

The whole story came to light (no pun intended) when a new outfit offering similar services, but based on “gig economy” principles, sought to enter the market. Seattle’s Finest challenged the firm’s licensing, and, allegedly, directed abuse at the firm’s chief executive officer.

A Seattle detective off-handedly described the dominance of Seattle’s Finest “in organized-crime terms — using the word ‘mafia’ — and said nobody would be allowed to interfere with it.”

The FBI has now been called in.

Usually, local government may seem rather humdrum. But a lot of money can go through powerful, privileged hands. Things can get exciting. Terms like “murky” and “intimidation” abound.

Is this a surprise?

Remember: power corrupts; local power corrupts locally.

Right there where we live.

This is Common Sense. I’m Paul Jacob.

 

* An economist, R. H. Coase, got a Nobel Prize in no small part for explaining why this sort of contract can work better than establishing a complete firm-employee wage system.

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Accountability folly local leaders moral hazard porkbarrel politics responsibility term limits too much government

Most Messed Up

Illinois, budget crisis, garbage, term limits, spending, responsibility, Junk Bond, Moody's

“Politicians are notorious for making promises they can’t keep,” Matt Egan reports at CNN Money. “But they really outdid themselves in Illinois — and now the state is paying for it.”

Egan dubs the state “America’s most messed-up.”*

No wonder the state has the worst outbound migration in the nation — or, as Egan puts it: “people are leaving in droves.”

On June 1, Moody’s and S&P Global Ratings downgraded the state’s credit rating to one notch above so-called “junk bond” status. “Illinois has suffered 21 downgrades from the three major ratings agencies since 2009,” the Illinois Policy Institute informs, and now has the lowest credit rating of any state, making it more expensive to borrow. Even with passage of a budget — finally, after three years of the legislature failing to fulfill its constitutional duty — the threat of a further downgrade still looms.

“After decades of historic mismanagement, Illinois is now grappling with $15 billion of unpaid bills and an unthinkable quarter-trillion dollars owed to public employees when they retire,” the article explains.

Decades of mismanagement? Perhaps the problem was inexperienced legislators, lacking the necessary expertise to do their crucial jobs, because of term limits. Except that Illinois doesn’t have term limits.

In fact, Illinois sports the nation’s longest-serving Speaker of the House in modern times. Mike Madigan has been speaker for 32 of the last 34 years, since 1983. Call him “Mr. Experience.” Madigan is recognized as the most powerful man in state government.

All that leadership experience . . . leading citizens to experience much pain and suffering.

This is Common Sense. I’m Paul Jacob.

 

* That’s in the headline. In the article, Egan explains the mess as “the inevitable result of spending more on pensions and services than the state could afford — then covering it up with reckless budget tricks.”

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Accountability folly free trade & free markets general freedom initiative, referendum, and recall local leaders moral hazard porkbarrel politics responsibility too much government

Go Nats?

stadium, Potomac Nationals, pork, free markets, taxes, referendum, crony, welfare

Just a few miles away from where I live sits the stadium of the Potomac Nationals. I’m a fan. I’d hate to see the team we call the P-Nats leave.

But . . . Hasta la vista.

The owner of this minor league affiliate of Major League Baseball’s Washington Nationals is demanding a new stadium. He threatens to move out of Prince William County, Virginia, if he does not get it.

The Prince William County board of supervisors has already expressed interest in floating bonds to raise the $35 million the fancy new stadium would require — with the privately owned team paying the money back, with interest, over the next 30 years.

Compared to other crony-ish deals around the country, not such a terrible taxpayer swindle. Still, zillions of wrongs don’t make this right. County taxpayers would be on the hook in case of default. And if the marketplace believed the team could actually make such payments, a bank or other investors would come to the rescue.

Thankfully, a monkey wrench has been thrown into the deal. A county supervisor has proposed that voters should get a chance to decide, via a November referendum. The board of supervisors will consider the referendum tonight.

Voters should get the final say. But if there is a referendum, as much as I love having the team here, I will vote NO. I don’t cotton to forcing others to pay for my preferred entertainment.

Government has certain legitimate roles. Subsidizing sports is not one.

Even if the new stadium would be closer to my home than the old one.

This is Common Sense. I’m Paul Jacob.

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Accountability insider corruption moral hazard national politics & policies porkbarrel politics too much government

Cronyism Pays

CATO, FEE, crony, cronyism, Washington, corruption, elites, lobbyist, politicians, privilege, power

Daniel Mitchell, a senior fellow in fiscal policy at the Cato Institute, is a nice guy. But he’s sort of depressing, too.

Weeks ago, writing for the Foundation for Economic Education (FEE), Mitchell offered that “The Washington, DC Gilded Class Is Thriving.” He even provided a “depressing chart” graphing “median inflation-adjusted household income for the entire nation and for the District of Columbia.”

There is a graphic divide: while “the nation’s capital used to be somewhat similar to the rest of the nation . . . over the past 10 years, DC residents have become an economic elite, with a representative household ‘earning’ almost $14,000 more than the national average.”

Dan Mitchell highlights that “the entire region is prospering at the expense of the rest of the nation.” Among the nation’s counties, the top four wealthiest are in suburban Washington, D.C. The nation’s capital region boasts nine of the country’s top 20 richest counties.

Now Mitchell’s back with another FEE column exclaiming more bad news: “The ROI for Cronyism is Huge.” (ROI is “return on investment.”)

Mitchell cites a study entitled, “All the President’s Friends: Political Access and Firm Value,” conducted by University of Illinois professors Jeffrey R. Brown and Jiekun Huang. “Using novel data on White House visitors from 2009 through 2015,” they explain, “we find that corporate executives’ meetings with key policymakers are associated with positive abnormal stock returns. . . .”

The authors find a lot evidence showing that “political access is of significant value to corporations.”

None of this should surprise. Cronyism pays, and it sticks close to power, even geographically.

This is Common Sense. I’m Paul Jacob.

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Accountability free trade & free markets general freedom local leaders media and media people nannyism national politics & policies porkbarrel politics responsibility tax policy too much government

Ballots & Books

New York Times, taxes, tax, libraries, tax cuts, big government, public services, free markets

The people of Roseburg, Oregon, aren’t paying enough in taxes. That’s the upshot of Kirk Johnson’s recent New York Times article, “Where Anti-Tax Fervor Means ‘All Services Will Cease.’”

“For generations in America,” readers are informed, “small cities . . . declared their optimism and civic purpose with grand libraries that rose above the clutter of daily life and commerce.”

And then, the unthinkable: “last fall, Douglas County residents voted down a ballot measure that would have added about $6 a month to the tax bill on a median-priced home and saved the libraries from a funding crisis.”

How dare voters so vote? Didn’t they know the Times wanted those libraries fully funded? Where was the “optimism and civic purpose” of Roseburgians?

“We pay enough taxes,” said auto mechanic Zach Holly.

“The trust is gone from people who are paying the bills,” acknowledged an elected commissioner one county over.

Even Jerry Wyatt, who voted for the library tax, decried that, “There’s no end of waste” in government, adding, “We need less people on the county payroll.”

Meanwhile, the Times reporter explained that “few places” are confronting “the tangled implications . . . more vividly than in southwest Oregon.” It’s not merely “lights out, one by one, for the [library] system’s 11 branches.” There have also been “cuts to the sheriff’s budget . . . [ending] round-the-clock staffing.”

“If a crime is reported after midnight there,” Johnson wrote, “best not hold your breath for a response.”

This is “what happens when citizens push the logic of shrinking government to its extremes.”

To the extreme, eh? Hmmm. Doesn’t seem bad at all.

Douglas County voters made a free choice about libraries and taxes.

Close the book on it.

This is Common Sense. I’m Paul Jacob.

 

* There have also been worthwhile innovations in county government due to the budget cuts. Nearby Curry County combined its juvenile justice department with its parks department to save scarce funds. Then, the parks department began using juvenile offenders to clean up the parks. By engaging teenagers in meaningful work, the policy pushed recidivism rates way down and now Curry County has one of the lowest rates of youths committing a second offense.

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Accountability folly general freedom moral hazard porkbarrel politics property rights responsibility tax policy too much government

No Rich No More

Connecticut, taxes, revenue, budget, tax and spend, wealth, common sense

Connecticut has a budget problem. There’s not enough money to spend.

WTNH-TV in New Haven paraphrased the situation along with the response of Connecticut’s very progressive governor: “Income tax revenue collapses; Malloy says taxing the rich doesn’t work.”

The news story explains, “Connecticut’s state budget woes are compounding with collections from the state income tax collapsing, despite two high-end tax hikes in the past six years.”

Hmmm. Despite the tax increases? Or . . . “because the state of Connecticut depends too much on its wealthy residents,” as the report continued, “and wealthy residents are leaving . . .”

A Yankee Institute report notes that “the exodus of wealth from the state as top earners and businesses relocate to more tax-friendly states” is a major problem. Institute President Carol Platt Liebau calls it a “terrible cycle of tax increases followed by deficits followed by even more tax increases.”

Yet, state legislative Democrats are back pushing more tax hikes on “the rich.” Senate legislation would jack up the tax rate — retroactively — on those with income of $500,000 or more. House legislation would slap a 19 percent surcharge on some hedge fund earnings. In response, the head of the Connecticut Hedge Fund Association testified that his “industry is populated by exactly that type of person that will move based on tax policy.”*

A song by Ten Years After comes to mind:  

Tax the rich, feed the poor
Till there are no rich no more

Doesn’t sound like a good idea even in song.

This is Common Sense. I’m Paul Jacob.

 

* It’s worth noting that Gov. Malloy is now “against raising taxes again to fill the deficits and is instead focusing on spending cuts . . .”

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Accountability free trade & free markets initiative, referendum, and recall insider corruption moral hazard national politics & policies porkbarrel politics too much government

A Wall of Separation

cronyism, pork, stadium, Tom Hanks, ballot initiative, welfare

Whatever you think of Thomas Jefferson’s letter to the Danbury Baptists, wherein he celebrated the First Amendment for “building a wall of separation between Church & State,” let’s agree that it would have been nice had he penned another letter — to the Waterbury Methodists or someone — urging a wall of separation between Sports and State.

Last week, actor Tom Hanks became another brick in my hoped-for wall. “It’s a billion-dollar industry,” Hanks said of the National Football League.

[T]hey have billion-dollar TV contracts. All the owners are billionaires. And yet when they want to build a stadium they’re going to use for 10 weeks out of the year, they expect the city taxpayers to buy the building.

Hanks is livid. The recent “deal” that lured his beloved Oakland Raiders to Las Vegas included $750 million in public funds to build a $1.9 billion stadium. The Raiders are planning to stay in Oakland for the 2017 and 2018 seasons, while that new stadium is built. “When the Raiders leave,” the beloved star declared, “I am going on an NFL moratorium for two years.”

Unfortunately, Hanks appears more angry that his team is leaving (eventually), than with the principle that taxpayers ought not be ripped off.

Subsidizing businesses is cronyism, not capitalism. It’s even more outrageous when the poor must pay for the rich.

But how to stop it? In every city where citizens can propose ballot initiatives, let’s petition and pass measures requiring a public vote before any such subsidy.

It may not be the great wall I’d prefer, but it’s a high hurdle providing taxpayers some important protection.

This is Common Sense. I’m Paul Jacob.

 

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Accountability folly free trade & free markets moral hazard national politics & policies porkbarrel politics

Super-Subsidize Me

welfare, taxes, charity, subsidy, subsidize, shrimp, stadium, Tesla

“In American political discourse, those on the side of the sick, poor, and underprivileged tend to favor more federal government intervention,” writes Heartland Institute policy advisor David D’Amato at The Hill. He explains that many “see government as . . . rather like a charity . . .”

Sure, government can act charitably, except that its money isn’t given voluntarily, and the recipients are often not so needy.

Earlier this month, the stock price of electric car company Tesla, Inc. rose high enough to overshadow General Motors. That’s great news for billionaire Elon Musk, Tesla’s CEO. But an Investor’s Business Daily editorial noted, “[T]he company is heavily reliant on taxpayer support.”

Who benefits (in addition to Musk)? “A study published by the National Bureau of Economic Research found that 90% of electric car subsidies go to the top 20% of households,” the editorial stated. IBD added that it was “a lot of welfare-for-the-rich for very little environmental benefit.”

In addition to funding advanced technology, American taxpayers have spent $6.7 billion over the last few decades to subsidize stadiums for wealthy sports team owners. The latest? In Clark County, Nevada, taxpayers forked over $750 million ($354 for every resident) to bribe — er, bring — the Oakland Raiders to Las Vegas.

The ridiculous Minnesota legislation to feed $5 million in state funds to start two shrimp farms almost seems reasonable in comparison. Almost.

“Maybe growing shrimp in Minnesota is a great idea,” admits John Hinderaker of the Center of the American Experiment. “If so, the owners should do what other small businessmen do: either find investors, or get a bank loan.”

Government’s crony capitalism taxes the poor to give to the rich.

This is Common Sense. I’m Paul Jacob.

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Accountability government transparency ideological culture moral hazard nannyism national politics & policies political challengers porkbarrel politics responsibility too much government

Legislating in the Real World

Steve Bannon, Trump, Freedom Caucus, big government, Ryancare, Trumpcare, Obamacare

Rolling back Big Government is not easy, especially when you are not that into it.

Robert Draper, profiling Steve Bannon in the New York Times, gives us a view into the mind of Trump’s right-hand man, who appears to think GOP insiders are obsessed with principles. “[I]t’s all this theoretical Cato Institute, Austrian economics, limited government — which just doesn’t have any depth to it. They’re not living in the real world.”

At best, this only fits the Freedom Caucus members, who killed RyanCare. But who is avoiding reality, here?

“Bannon clearly is not as familiar with the mindset of congressional Republicans as he imagines,” counters Jeff Deist, head of the “Austrian” Mises Institute. “They are primarily concerned with how the whole ‘repeal and replace’ debacle plays back home.”

Like Deist, I see the spectacular fizzle of RyanCare as evidence of the increasing irrelevance of Republican compromising. “The GOP is the party of trillion dollar military budgets,” Deist insists, noting that it “won’t even kill an openly cronyist program like the Export-Import Bank.”

If keeping Big Government secure is all Republicans can do, what use are they?

“All around us are the almost unimaginable benefits of markets, cooperation, and technology,” Deist explains, “yet somehow we’re naïve if we don’t want to funnel human activity through government cattle chutes.”

Bannon will not secure solid GOP support if he keeps pushing the usual establishment compromises while pretending they are either realistic or revolutionary. Freedom Caucus Republicans seem bent on doing something Republicans usually avoid: change “the real world” for the better by practically limiting government.

Not just in theory.

Bannon seems to have other goals.

This is Common Sense. I’m Paul Jacob.

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Accountability free trade & free markets moral hazard national politics & policies political challengers porkbarrel politics responsibility subsidy too much government

Trump Proposes a Budget

Trump, budget, spending, big government, entitlements, welfare, cuts, pig

Will Donald Trump, infamously successful businessman, actually do something about the federal government’s out-of-control deficits and mounting debt?

Economist Pierre Lemieux, writing in the Financial Post, finds some reason for hope in President Trump’s “America First: A Budget Blueprint to Make America Great Again”:

The proposal to eliminate funding for agencies like the Corporation for Public Broadcasting, the National Endowment for the Arts, and the National Endowment for the Humanities is welcome. Artists should be able to stand on their own two feet with the support of private sponsors and organizations, of which there are many in America. Lovers of concerts should finance their own passion.

Though Lemieux gives good reason to want to cut “official arts and humanities” subsidies even sans their budgetary implications, imagine the backlash from Democrats, the media and the whole collegiate sector!

Actually, the backlash has already begun.

Can united government under the GOP cut even these most obviously least necessary aspects of government subsidy?

I’m not holding any pockets of air in my two lungs.

“Many monstrous bureaucracies would be reined in,” Lemieux goes on, listing proposed cuts to the Environmental Protection Agency (-31 percent), Department of Labor (-21 percent), and other departments of the so-called “discretionary” budget. But this is all small potatoes. “Really cutting federal expenditures would require reducing the welfare state — which Trump has no intention of doing.”

And the fortunes Trump wishes to throw at the military? No knack for parsimony there.

Though we can expect a little exceptional hack-and-slashery from Trump, Lemieux remains skeptical of any overall major effect.

Get used to ballooning debt.

Like you haven’t already.

This is Common Sense. I’m Paul Jacob.

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