Thursday, January 18, 2018

Howcum South Dakota Isn't Getting A Piece Of This Trump-Ignited Economic Wonderfulness?

     This morning the Dow Jones Industrial Average shot up 300 points, right through the 26,000 line, and momentum looks unstoppable.  The bull fever contagion is spread by the corporate tax cut and boosted by the collective realization that Trump's "trade war"  rhetoric during his campaign and early on in his presidency has softened, if not disappeared altogether.  This morning his Chief of Staff John Kelly even called Trump's bombast on the border wall and immigration "uninformed," politely re-stating the oft-expressed notion in this blog and so many others that the Prez is generally clueless about the reality behind his rhetoric. Given that there's at least one adult in his inner circle, I hope this means that Trump won't be upsetting the status quo and that the forward motion of an economy he inherited from President Obama will continue for a while.  With the boost it just got from the tax bonanza handed to corporate America, things look pretty good for a bit.
Rounds, Thune, Noem
So Where's The Beef?

     Which is why I'm wondering why South Dakota has yet to get a piece of this action.  For one thing, the wellsprings of our state's economy, grain and livestock production, have yet to get a price boost from a marketplace that is showering corporate America with good will and ever-increasing value.  South Dakotans are being left behind.  Grain and livestock prices since Trump's election are at best about even, while  stock averages are up anywhere from 15 to 20 percent.  State sales tax receipts have fallen below expectations, forcing lower take-home pay for South Dakota's employees, who are double-whammied by that news and higher prices created by inflation.   As to the rest of our state's residents, things aren't much better.  During the third quarter of last year, South Dakota's personal income growth was dead last (after being 44th worst the preceding quarter) in the country at a tenth of one percent compared to a national figure 7 times higher.  Our immediate neighbors outpaced us by anywhere from 3 to 7 times more growth.
     South Dakota's three-member congressional delegation, Republicans all, should come out and say something about this.  Congresswoman Kristi Noem and Senators John Thune and Mike Rounds all shared a common theme during their respective campaigns, one heard perpetually in this state from congressional aspirants.  In a nutshell they promised to make sure that South Dakota's priorities would be forcefully represented by their presence in Congress.  That they all support Trump's presidency and belong to the majority Republican party in Congress should have given them even more visibility, stature and power when it comes to representing our state.  Yet here we are, a year after Trump's inauguration, going nowhere fast. While the rest of America celebrates and Wall Street is on an orgiastic rave, South Dakota's economic performance and outlook make us look like wallflowers at best, utterly uninvited at worst.
     Actually, I'm only using the Trump presidency as a starting point because of all the economic hullabaloo attached to its first year.  Going back even further, let's say to the start of this decade, our people in D.C. have been duds when it comes to any improvement in South Dakota's economic fortunes.  The default explanation that grain and livestock prices are to blame doesn't work because during the decade we've had episodes of explosively high, record breaking prices in crop and cattle markets.  Meantime, our GDP per capita has actually declined from 2011 to 2016 (latest number available, though our last-place to nearly-last-place personal income performance in 2017 suggest little improvement is on tap for this year).  The rest of the nation, including our immediate neighbors have fared much better.  If these congressional reps are supposedly pounding their respective tables in Congress and demanding some voice for South Dakota, how come we're getting so far behind the rest of the country? Even more dismayingly,  how come we can't keep up with our surrounding states? 
     I have no doubt that our reps and their p.r. pogues can pull out lists of all the wonderful things they've done for the state.  Unfortunately the net results, economically, don't yield much to be proud about.  South Dakota went 62% for Trump.  When do we get something to show for that kind of support? 

Wednesday, January 10, 2018

Here Come Da Judge: Democrat Tim Bjorkman's Quest For South Dakota's Seat In The House Of Representatives

       Tim Bjorkman  will be the Democratic nominee running for South Dakota's lone congressional seat in November.  His task is Herculean, maybe Quixotic, given the recent history of
Tim Bjorkman
Here Come Da Judge
Republican domination of state politics during the last few election cycles. But the retired circuit court judge seems undaunted.  The Republican registration advantage over Democrats, 46% to 34% in South Dakota, is so wide that calling it an "edge" is an understatement.  No doubt the 20% of voters unaffiliated with either party can be a rich source of of potential support for Bjorkman, but Donald Trump's 62% share of South Dakota voters in 2016 makes a convincing case for the GOP's ability to gobble up a lion's share of unaffiliated voters here.  

     Given that built-in handicap, Bjorkman has already effectively acknowledged that he'll have to run against both Donald Trump and the Republican nominee, either Shantel Krebs or Dusty Johnson.  I say "effectively" because Bjorkman's website (refreshingly loaded with positions on specific issues, unlike the me-saturated, policy-devoid versions of his opponents) contains a long, regularly updated list of his takes on the legislative topics of the day, including healthcare, net neutrality, Muslim registry, taxes and DACA.  Bjorkman's commentaries (with one big exception) don't take aim at his GOP opponents but focus on each issue, underscoring the impression that he's running against Republicanism and its local minions in general.      
     The exception on that list is titled "Shantel Krebs' Muslim Registry."  Bjorkman unequivocally slams Krebs for "appealing to our lowest based fear instincts rather than our highest ideals."  Considering that a resurrection of Bush-era plans for a Muslim registry is a Donald Trump brainstorm that probably has a fair amount of  support among the huge majority of Trump's South Dakota voters, Bjorkman's unqualified condemnation of it is some serious risk-taking.  On other issues Bjorkman similarly doesn't stray far from basic Democratic ideals.  When he can, Bjorkman stakes out positions that also have some conservative, if not Republican (yes, there is a difference), support.  For example, on healthcare, Bjorkman cites the conservative-leaning Forbes magazine, noting that "Forbes has shown that if we enact sensible universal healthcare we will not only save money, we can actually balance our budget."  Note the keyword "universal," a bulwark of Democratic healthcare policy.  Provocative as the concept of universal healthcare can be to Republicans, it doesn't hurt to have Forbes going to bat for you as a teammate.  Bjorkman can push the right buttons.
      On other matters it's buttons be hanged.  He gets really worked up on net neutrality, the principle that internet service providers must give all content the same delivery speed and access, a principle that Bjorkman says our existing GOP congressional delegation "sadly" opposes.  He pledges to support legislation "that will statutorily enforce net neutrality."    You can go to his website to find a longer list of Bjorkman's positions, which are clear, unequivocal--and risky as all get out in this red state of ours.  It'll indeed take a mash-up of Hercules and Don Quixote to accomplish what Bjorkman is trying to do.  So far he seems up to the task.  We'll see.

Tuesday, January 9, 2018

Grain And Livestock Futures All Down This Morning After Trump's Talk To The American Farm Bureau Yesterday.

     Ag futures markets this morning opened with a yawn after President Trump gave his speech to the American Farm Bureau convention in Nashville yesterday.  The trade is indfferent, and with good reason.  It wasn't long before it became clear  that Trump hasn't got much of a clue
Trump Talking Ag
Out Of His Element
about what's going on in farm and ranch country when he promised "I will take the first steps to expand access to broadband internet in rural America so you can compete."  Cripes, when I was trading and brokering cattle and grain (both in physical and futures markets) back in the '90s just about every producer I knew in South Dakota had access to real time news and pricing information via satellite or hardwired internet.  They were in a position to compete with the best of 'em when it came to "price discovery"--the technical term for market prices, both on exchanges or at local elevators and sale barns.  Fact is, after 12 years of trading options and ag futures in Chicago, I re-located to the beautiful Black Hills because the information technology revolution gave me the same access to markets in Rapid City, South Dakota, that I had at the intersection of Jackson and La Salle Streets in the heart of the Chicago Loop's financial district.  

     Trump's promise of better access to information is meaningless when it comes to dealing with the real problems in the farm and ranch belts.  Trump added to this diversion from those problems by crowing about the estate tax.  On this one he outright lied, saying that "most family farms" would be spared "the punishment of the deeply unfair estate tax."  No, most family farms, in fact about 98% of them, per USDA, would not have had to file estate tax returns in 2016.  Where Trump comes up with that "most family farms" bit is incomprehensible, but a lot of people out there continue to buy the fiction.  It remains a talking point that won't die
     Then there's NAFTA.  Trashing the trade deal was one of the pillars of Trump's presidential campaign, but South Dakota ag producers know its importance.  Giving it a few words in his speech yesterday, Trump said he is "working very hard to get a better deal for our country and our farmers."  I doubt that there's a better deal possible, considering North American ag sales by U.S. farmers have grown exponentially as a result of the existing deal.  Last November South Dakota Department of Agriculture sent out a news release saying that since NAFTA's inception, ag exports to Mexico and Canada grew from $9 billion annually to $38 billion last year. South Dakota ships 62% of its foreign ag exports to Mexico and Canada. Trump may be trying to get a "better deal" for American farmers, but the initiative, from an ag producers perspective, looks more like an effort to fix something that isn't broken.  Our ag industry has good reason to be concerned that our NAFTA partners can start seeking their farm goods elsewhere if Trump's revisions or outright abandonment of NAFTA make our products less financially competitive. 
     I couldn't find anywhere in the text of his speech a mention of the most pressing issue in our ag industry--money.  Mainly, ag producers have been seeing a steady drop in their income since 2013, and the widely followed USDA's Farm Futures site is looking for an income dropoff in 2018I've also seen forecasts for slight improvement next year, but nobody's talking about a reversal of the multi-year trend.  Trump's silence on the matter yesterday in Nashville reflects his lack of understanding about how global markets are essential to the health of American farms and ranches.  Exports represent about a 20% share of our ag sales and consistently account for a balance of trade surplus within their category.  Bashing global trade is anathema to farmers and ranchers, and given the steady erosion of farm income in recent years, Trump should be aggressively seeking out foreign markets as a way to prop up sales for Americans. 

Saturday, January 6, 2018

I Flush Out Dusty Johnson, Sort Of. The Candidate For The GOP Nod For Congress Responds To My Column

     I have to give it to Dusty Johnson, who's running for a spot on South Dakota's ballot as the
Hi There
Wanna Hug Me?
GOP candidate for Congress. 
He wasted no time responding to my column about him in the Rapid City Journal last week, the full copy of which is two posts below.  Here's the full text of Johnson's piece, which is featured in today's opinion section in the RCJ:

“Dusty Johnson has all it takes in the photogenics department.”
Well, I’ve never heard that before.
I’m used to being described with different terms, like “policy wonk” or “solutions-focused.” When John Tsitrian’s recent column in the Journal described me as “huggable” and “endearing,” I barely recognized myself.
While I appreciate John’s coverage of my campaign for United States Congress, I did want readers to understand there is more to me than the “optimism” and “boy next door” qualities he described.
We are living in serious times, and South Dakota deserves a member of Congress with the South Dakota values needed to represent our state well. Citizens learned about my views and stances during my six years as a state Public Utilities commissioner. More recently though, I’ve released video position statements and online posts outlining my views on the Second Amendment, federalism, private sector job creation, tax reform, net neutrality, the future of Social Security, sexual harassment and the president’s agenda.
I’ve touched on other issues in interviews conducted by the Rapid City Journal, including the drought, the culture of Washington, D.C., and how we should reform health care. Apparently, John missed all that.
South Dakotans don’t vote based on who is more “photogenic.” I’m grateful for that, because most wouldn’t find me (and my slender frame, thinning hair and glasses) all that attractive.
Instead, most South Dakotans vote for the candidate they feel shares their values, will fight for their interests, and who has vision and passion for improving our nation. If that (and being huggable) is what it takes to do the job, I’m ready to get to work."
     Johnson's claim that I "missed" the fact that he has indeed been talking about issues is so overblown that I decided to check the points he raised in his RCJ, one by one.  I googled Johnson and each topic and came up with this (my comments follow):
     1)  The Second Amendment:  Johnson last October told the Mitchell Daily Republic that he "supports the rights of law abiding citizens to own firearms," but that "he's more concerned with generalized violence throughout society."  He's also "willing to learn more" about bump stocks. (I call this pablum, considering he doesn't mention the most pressing issue of assault weapons.)
     2) Federalism:  Nothing found.  (Dusty?)
     3) Private Sector Job Creation:  Johnson last Fall told the Rapid City Journal that Washington, D.C. makes it harder to create jobs.  (Um, Dusty, have you noticed the job growth numbers and the lowest unemployment rate in nearly two decades lately?  They've been trending favorably for about 10 years now. Where have the federal stumbling blocks been placed?)
    4)  Tax Reform:  Moot now that the big GOP bill has passed. Wouldn't mind hearing his thoughts on the new tax code, though.
     5)  Net Neutrality:  Nothing found.  (Dusty?)
     6)  The Future of Social Security:  Nothing found.  (Dusty?)
     7)  Sexual Harassment:  He recently told WNAX radio that "more is expected of public figures."  (Couldn't download the podcast.  Would love to see the rest of his thoughts in writing.  Dusty?)
     8) The President's Agenda:  Nothing.  (I raised the issue of Trump's hatred of NAFTA and how that might affect South Dakota's largest industry, agriculture, which has benefited "bigly" (to use a Trumpian adverb), but Johnson hasn't said much that I can find.  (Dusty?)
     9) And while we're at it, what are "South Dakota values?"  I hear this phrase a lot from politicians and have never understood them.  The phrase implies a uniformity of belief that doesn't seem plausible to me, considering all the differences of opinion and attitude that I encounter here.  
     Johnson says that he has recently released video statements and online posts outlining his views, but as of January 2 they haven't made it to his campaign website.  Except for the requirements of this commentary, I'm not about to scour the internet looking for his posts on these topics, so, yes, Dusty, I have missed all that, "all that" being not much in the first place.  How about spending a few of your campaign funds on delivering your positions in the general media or at least to your website?  On the other hand, what I did find in your list is pretty thin gruel, so maybe it's best to keep it out of the public eye for as long as possible.  

Thursday, January 4, 2018

Does Shantel Krebs Know She Has Egg All Over Her Face?

     South Dakota Secretary of State Shantel Krebs and her Trump-allegiant campaign to win the GOP nomination for SD's congressional seat in November's election just got a bit of a jolt. 
Kobach & Krebs
Playing Charades
When Krebs last month trotted out Kansas Secretary of State Kris Kobach as a highly visible endorser of her campaign she was essentially embracing the voter fraud delusion that the Trump administration has been pushing since his election in November 2016.  Following through, Trump created a Voter Fraud Commission (co-chaired by Kobach and VP Mike Pence) to follow up on his paranoid claim that the reason he lost the popular vote was that millions of people voted against him illegally.  Per Trump "In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally."
     Trump's ludicrous assertion was taken seriously only within his brigade of sycophants and enablers, among whom we can count Krebs.  As to Kobach, I'm neutral.  For all I know he was doing a competent and objective job of managing the commission.  But his highly visible position at the head of it makes him a politically useful commodity by association with President Trump.  Krebs  unabashadly touted herself as being "all in" with Trump last September and made the most of her recent attachment to Kobach, even using it as a major campaign pitch, splattered as it was on her website during the past couple of weeks.
Going For The Bucks
Getting Trump Into The Act

     But as all fantasies eventually do, the "voter fraud" illusion dissolved into reality.  Yesterday Donald Trump himself pulled the plug on the commission, which he set up with no evidence in the first placeKobach's stature was supported by a charade that Shantel Krebs took as reality and foisted on her supporters as donation-worthy.  No doubt  Krebs and many other minions of Trump will continue to claim without evidence that voter fraud to the tune of millions of votes occurred in November, 2016. That's the nature of true believers.  If Shantel Krebs is "all in" with Trump she must endorse his assertions of voter fraud to be valid.  The question before us South Dakotans is whether or not we want somebody who embraces belief without evidence to represent us in Congress.  Ms. Krebs, explain yourself.

Wednesday, January 3, 2018

Will The-Boy-Next-Door Become Our Congressman-Next-Year? Maybe, But Dusty Johnson Can Only Go So Far On Optimism And Huggability

     Dusty Johnson has all it takes in the photogenics department.  The native South Dakotan, who's vying for the Republican nomination for our state's lone seat in the U.S. House of
Dusty Johnson
You Just Want To Hug Him!
Representatives, is a model boy-next-door, as huggable as a Paddington Bear and just as endearing.  Shrewdly building on that "aw shucks" persona, Johnson's  standout claim to qualifying for a place on the November ballot is "I'm an optimist.  That's why I'm running for Congress."
     Disarmingly genuine, Johnson's campaign will go far on telegenics.  As to substance, though, he comes up way short.  In fact, it's just about impossible to pin this guy down on where he stands on some of the big issues he'll be contending with should he make it all the way to Congress.  There's probably a lot of calculation in that politically safe approach, but I doubt it will carry him over the top.  Johnson's website boasts of his accomplishments as an elected Public Utilities Commissioner, though all of those decisions were made by the Commission, not Johnson himself.  Then there's that four year stint as Governor Daugaard's Chief of Staff.  Johnson makes the audacious claim that while serving Daugaard he was "overseeing much of state government."  A Chief of Staff doesn't "oversee" government and I'd be surprised if Dennis Daugaard would cede the role of government oversight to what is effectively an office manager with some advisory roles.  More to the point, considering South Dakota's feeble economic performance during Daugaard's tenure, I wonder if Johnson's close association with the Governor's office is the asset that he believes it to be.
     As to Johnson's stands on issues that matter right now, I don't see much.  His interview in the Rapid City Journal last Summer was dismissive toward the agricultural sector in this state, with Johnson saying that "ranchers and row-crop folks don't need a lot" and that "government's not going to make them whole."  He completely overlooked the importance of international trade to our state's largest industry and how he would deal with the Trump administration's hostility toward NAFTA and other trade agreements that are uniformly supported by all the major ag groups.  On health care, Johnson makes the un-stunning (for a Republican) announcement that he'd "like to have a plan that does even more to empower states." Actually, state-empowerment is already a feature of one of  one of our country's largest (to the tune of a half-trillion bucks) healthcare programs, Medicaid.  Does Johnson know that when Mike Pence was Governor of Indiana he devised an Indiana-specific plan to expand Medicaid into his state?  And that Governor Daugaard did the same here but was stymied by a recalcitrant legislature?  States already have the power that Johnson seeks, and it's funded by federal money.  He should know that.
      Meantime we have major fights on the 2018 horizon whose outcomes will mean much to South Dakotans.  At some point Johnson's positions on things like net neutrality, infrastructure spending, the "wall" and other immigration issues will be flushed out and voters will get a sense of who he is.  We'll then find out if the boy next door is capable of being our Congressman next year.

Tuesday, December 26, 2017

Will Kissing Up To Trump Work For Shantel Krebs?

           South  Dakota Secretary of State Shantel Krebs, looking to win the Republican nod for a place on the ballot, hasn't made much news yet, but as of last August her campaign had
Her Own Woman
Or Just Another Trump-bot?
compiled $230 thousand,  probably a good start toward matching the current seatholder Kristi Noem's first campaign war chest of $1.1 million in 2010.
  Her campaign is still fairly light on specifics but some general impressions make it pretty clear just who Shantel is and the voters she wants to win over.  She made a broad proclamation to the Rapid City Journal last September, telling the paper that when Trump was elected she was "all in," and that her motivating force is that she "wants to help him deliver results."  Her slogan is "Get it done."  I admire that she rejects procrastination, but I also wonder what the "it" is that she's determined to "get done."  If "it" references her complete devotion and dedication to Trump and his policies, I wouldn't give Krebs much consideration as a congressional  representative.  "All in" is inclusive, which sounds to me like she's determined to be a rubber stamp for the administration.  If elected would she have the mettle to assert some independence when White House policies may not be the best for South Dakota?  For example, is she "all in" with Trump's hostility toward NAFTA?  He's on the record as calling it the "worst trade deal" ever approved by the United States, yet the benefits to farm states since the treaty's inception a quarter-century ago are self-evidently positive, as our senior Senator John Thune noted in a radio interview recently.  
     No doubt Krebs has her eyes on the huge margin of victory that Donald Trump got in the 2016 vote in South Dakota and plans to ride some vestigial coattails associated with it.  But given Trump and his administration's general antipathy toward free trade, corn-based ethanol and wind power, my guess is that Krebs will be quick to reconsider the notion that she'd be a surrogate for the White House.  I mean, given what we know about Trump at this stage of his administration, who on earth would go on record as being one of his toadies?  Aberdeen, SD, just lost a 400-job windpower-connected factory because of  Trump's pro-fossil fuel policies. Is Krebs all in with that?  Her website provides a nice bio and the usual platitudes along the lines of making Washington "responsive" to the needs of our state, but doesn't touch on many specifics.  One exception: her hostility toward the Supplemental Nutrition Assistance Program, aka Food Stamps.  Oddly for someone claiming to be a voice for agriculture, she opposes the American Farm Bureau's unqualified support for the program, which someone with her farming background should know has been a boon for the ag industry.  
     Sellable as it will be to many Republicans in South Dakota, Krebs' "I'm all in with Trump" campaign is a risky venture.   Next time up I'll think about whether Dusty Johnson will provide a viable Republican alternative.

Friday, December 15, 2017

Deficits? What Are Those?

      The tax bill working its way into completion in Congress with the unqualified support of South Dakota's congressional delegation continues to look like a venture in legislative
Noem, Rounds, Thune
Deficits?  What Are Those?
First off I keep wondering if this silly notion of filing our tax returns on a postcard has ever made any sense.   Who in their right minds would send personal information--especially Social Security numbers--into the mails on a post card?  Not only does the nonpartisan Tax Policy Center think the idea is ludicrous, the center notes that the equivalent of a one-page postcard already exists.  It's called  Form 1040EZ.  TPC thinks the number of taxpayers who will be able to simplify their returns into a single-page format created by the tax bill will grow to 29 million, a 12% slice of the 240 million returns that are filed each year.  How many of those are likely to use a tax-preparation service is impossible to determine, but Turbotax and Jackson-Hewitt, among other such services, court short-form filers, so they must be a market of some consequence.  Indeed, the IRS estimates that 90% of Americans use tax-prep services, many of them short-formers.  I doubt that number will change much under the new code, simplification or no simplification.  Meantime, 210 million filers will still have to do it the hard way.  Thanks for not much, tax reformers.
     more unnerving embrace of surrealism is the casual manner in which deficit hawks have waved off the specter of increasing federal debt built into this bill.  South Dakota Senators John Thune and Mike Rounds have both called existing deficits "unsustainable," but enthusiastically embrace this bill just the same.  Congress' Joint Committee On Taxation says that the $1.4 trillion in revenues lost by the tax cuts will only be partially offset by $458 billion in revenues gained by its boost to the economy.  That leaves a $1 trillion dollar hole in the federal balance sheet in 10 years.  Thune, Rounds and their equally indifferent counterpart in the House of Representatives, SD Congresswoman Kristi Noem, have built their careers on complaints about federal deficits, yet here they are, cheering on the addition of another trillion bucks to our federal ocean of red ink.  Their collective admiration for the notion that tax cuts will stimulate enough economic growth to pay for the deficit has been pooh-poohed by history so many times that you wonder if our elected reps go catatonic when confronted by this type of analysis.  Moody's Analytics says the economic stimulus argument is baloney, as does the track record of tax-cutting itself.  Reagan, George W. Bush, Kansas Governor Sam Brownback--all have tried this gambit and failed. Sharp increases in debt followed their much-ballyhooed tax cuts.
     Adding to this Salvador Dali-esque dreamscape is the sudden appearance of the flaws in Congresswoman Noem's tale of tax-devastation to her family in 1994 when her father died.  An examination of it last week in USA Today headlines that Noem's "family saga doesn't add up." The piece concludes that the story "does not line up with some very basic tenets of the tax code." The bit about not "adding up" seems appropo.  Not much in this tax bill adds up.

Friday, December 8, 2017

South Dakota Governor Daugaard Calls Me Out In Today's Rapid City Journal. He's Mistaken. There's GDP, And Then There's GDP Per Capita.

     Daugaard doesn't address the difference between GDP and GDP per capita in a piece directed at  me in this morning's Rapid City Journal.  In his op-ed column Daugaard claims that I erred in comparing U.S. GDP
Governor Daugaard
Not Seeing Eye To Eye With Me
with South Dakota's GDP in my own RCJ op-ed piece last week.  He's mistaken.  I compared per capita  GDPs, which are a vastly different and far more informative depiction of economic growth.  It takes into account population changes.  For example if GDP growth is 2%, but population growth is 3%, per capita GDP has actually declined because economic growth hasn't kept pace with the growth of the population. Here's a concise definition of why the difference is important:  
"GDP per capita is a measure that results from GDP divided by the size of the nation’s overall population. So in essence, it is theoretically the amount of money that each individual gets in that particular country. The GDP per capita provides a much better determination of living standards as compared to GDP alone."  In other words, the macro (GDP) number is one thing, its per capita counterpart is another.
     It's wonkish, I know, but Daugaard's correct cite of GDP growth has nothing to do with my comparison of GDP per capita growth.  Using the Commerce Department's Bureau of Economic Analysis data, Daugaard would clearly see that U.S. GDP per capita growth has vastly outperformed South Dakota's, with the U.S. figure coming in at about +6%, and South Dakota's declining a bit.  I stand by my characterization of South Dakota's performance as "pathetic" and my belief that holding the state's governing class to an objective standard when it comes to issuing pay raises seems reasonable and consistent with many private sector benchmarks for performance.  The Governor himself even applies the principle.  In his FY 2018 budget message, Daugaard delayed until next year a state employee pay-for-performance component available to some of them "due to lack of available funding" and no pay increase outside the "market adjustment" for all other classified state employees.  A no-growth economy resulting in a drop of government revenues means nobody gets a real raise, which is basically the point I made in the first place.  
     Also, Governor Daugaard in the course of his piece noted that I often refer to myself as a Republican, but that my "op-eds and blog demonstrate [my] liberal bent on most issues." Coming from a lawyer presumably trained in the rudimentary principles of logic, Daugaard's ad hominem distraction is a surprise, though I suppose in this politically tribalistic culture of ours, fallacious reasoning  and its subsequent diversions can come to be expected.  In any event, I'm no longer a Republican, having changed my registration to Independent several months ago. What hasn't changed is that on a per capita basis, South Dakota's economy has fallen significantly behind that of the United States and five of six of our surrounding neighbors.  
     That said, I do appreciate that Governor Daugaard has given my work his time and attention, especially in a forum like The Rapid City Journal.  Our differences are obvious and profound, but in the long run everybody's awareness and understanding are elevated by public conversations like this. I wish the Governor well as he comes into the concluding year of his administration.  

Tuesday, December 5, 2017

Iowa Native And Great Friend Diane Grant Reacts To Iowa Senator Chuck Grassley's Patronizing And Disdainful Remarks About Ending The Estate Tax

     Here's what Grassley said:  "I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it's on booze or women or movies,"

     Here's Diane's reply:  Despite the fact that Iowa is often characterized as backwards and full of country bumpkins, and that I haven't lived there for more than 40 years, I have always been proud that I am a native Iowan. The state consistently ranks in the top ten for education, it has a healthy two-party system where one's vote counts for something, and the general quality of life is high. But Mr. Grassley, you have diminished my pride. I have refrained from commenting on recent political actions, but this time I could not stay silent.
My father considered you his friend. He campaigned for you. He entertained you in his home a few times. He had the highest regard for you, and since I respected my father's opinion, I also held you in high esteem, even though I did not concur with you on many issues. My father passed away almost a year ago, and I can't help but wonder how he would view you now.
Mr. Grassley, would you please define for me just exactly who those people are "just spending every darn penny they have, whether it's on booze or women or movies?" Many of us would like to know. Please explain to me how you can justify your vote for a tax bill that truly only benefits the top 1%, that essentially raises taxes for the lower and middle classes, that takes away medical coverage for 13 million people, and increases the deficit by more than 1.4 trillion dollars. Who are you really serving? In my view, it is not your constituents; it's not the majority of the American populace. Is it the narcissist who currently occupies the Oval Office?
You are not alone - I am just as disgusted and disappointed in the South Dakota senators who also put party ties, class and nepotism ahead of conscience and what they know is morally right. I am utterly discouraged by the current divisive partisan politics. However, I am a believer in karma - what goes around, comes around. Eventually - and I hope sooner than later - a reckoning will come.
- Diane Rasdal Grant

Monday, December 4, 2017

South Dakota's Budgeteers Are In A Self-Induced Hypnotic Trance.

     Self-hypnosis seems to be the governing style that defines how South Dakota keeps ignoring some fundamental causes of the state's persistent shortfalls in tax collection.  Governor
Costs Are Up, Revenues Are Down
Daugaard last month announced that we're headed for another lean
 budget year because of lower than expected receipts from sales and contractor excise taxes.  As if hypnotically transfixed into denial of the obvious, Daugaard blames a trend toward more spending on medical expenses, which are exempt from sales taxes, noting that healthcare takes 20% of consumer spending, up from 15% in 1997.
     This is a new excuse and it doesn't wash.  There's no reason to doubt its conclusions about the growth of healthcare spending, but why it was suddenly discovered and declared to be the whipping boy for our state's anemic showing on tax receipts is open to question.  For one thing, the growth of healthcare as a portion of South Dakota's economy matches closely  with the national trend, so there's good reason to wonder why it seems to come as a surprise to our state's leadership.  The trend has been clear and well-known for decades.  Daugaard's revelation of it merits a big "duh." 
     The national economy, which has performed vastly better than South Dakota's, has successfully absorbed the shift in consumer spending toward healthcare.  Why hasn't South Dakota's?  It's a compelling question, and Daugaard needs to address it.  The fact is, South Dakota's economy hasn't come close to matching the overall growth of the U.S. economy, which on a per capita basis has grown 30 times more than South Dakota's.  Ours actually has a declined a bit during the period since Daugaard's first year in office, 2011.  It's little wonder that the increased spending on healthcare has had such a major impact on our state's revenues while the more robustly growing national economy hasn't been hampered by it.  
     A rising share of healthcare spending and it's effect on South Dakota state revenues only exposes the inefficiency and inadequacy of our state's tax system.  82% of SD's revenues are generated by sales and gross receipts taxes, which are disproportionately paid by lower income earners, leading USA Today to rank us the 4th worst state in the country when it comes to regressive taxation.  Turns out that healthcare spending hits lower income folks disproportionately harder also, so if Daugaard is contemplating slapping a sales tax on healthcare goods and services, South Dakota's lower-earning households will be more burdened than their higher-income neighbors.  The contempt for our poor and lower-income-bracket citizens that is built into South Dakota's tax system would only have its meanness intensified by taxing healthcare services.
     Meantime, as long as we're looking at sales tax-exempt goods and services, a scan of how much those tax exemptions cost South Dakota is long overdue.  The SD Department of Revenue in 2015 calculated that all exemptions, if taxed, would yield $1.1 billion to the state.  Our agriculture sector receives about 15% of those breaks while healthcare gets about 12%. The rest of the list is long and studded with special interest categories.  Unfair as the system is, there's a way to spread out some of the burden by putting those interests on to the sales tax rolls.  It probably amounts to a short term fix, but it might be a way to get South Dakota on the road to real tax reform.  

Monday, November 27, 2017

South Dakota Legislators Need A Pay Raise, But It Shouldn't Be Automatic

     Though it shouldn't necessarily be automatic, South Dakota legislators need a pay raise.  As it is now, the salary that state reps and senators get is $6,000 a year plus $142 per diem for each
For This Kind Of Money?
I Don't Think So
legislative day and some compensation for work done away from the legislature. Sessions last from around January 10 through late March, each containing either 35 or 40 (depending on even or odd numbered years) legislative days. The salary has been fixed for 20 years while the per diem is adjusted by the legislature itself.   

     This kind of money is actually awful for the time and effort our elected officials put into their work.  Calculated on a daily or hourly basis, it's roughly entry-level compensation by private sector standards. Though the number of "work" days when the legislature is actually in session seems limited, the fact is that legislators (at least every one I've ever known) are tied up in the process for virtually the entire 70 or so days that it takes to get an annual session completed.  Then there's the year-around commitment to their positions that require attention to matters of state government, including a lot of constituent contacts that go with the job.
     Our state's legislative compensation has fallen so far behind inflation that it's probably keeping a lot of good people from running for office.  They simply can't afford to.  With good reason, the Legislature's Executive Board two weeks ago advanced a plan to increase pay via a constitutional amendment that will be up for debate in the coming session.  The plan would immediately raise the salary to $10,200/year, using a formula based on the growth of South Dakota's median household income.  Historically, that matches up with an average inflation rate of 2.75% during the past 20 years, so it's reasonable enough.  
     But as the need and request for a raise are overdue and merited, the automatic aspect of it from this point forward can be called into question. Given the nature of the job, I'd be more inclined to use an incentive-based system than one tied to household incomes or inflation By using changes in our state's Gross Domestic Product as the measure by which legislative incomes are set, our elected officials would have a performance-based standard for setting their wages. On that basis, long term growth justifies an immediate increase. The last six years, however, have been slow-growing, averaging less than 1% a year since 2011, Governor Daugaard's first year in office.   During that period, U.S. per capita GDP has gone up at 30 times the rate of South Dakota's.  This is pathetic.                                                                                                                                                             The feebleness of our state's agriculturally-based economy only highlights the failure of our elected leadership to find avenues of economic growth that would offset the poor grain and livestock prices of recent years.  Legislators should be held accountable for that failure by seeing their salary growth remain as listless as South Dakota's economy.  Tying compensation to performance would certainly be consistent with the business-like model for running our government that many extol, including Governor Daugaard himselfLet's adjust for the past 20 years, but remember that pay raises are earned, not automatically granted.   

Saturday, November 18, 2017

South Dakota Senator John Thune's Bait-And-Switch On Tax Cuts

     Talk about your deceptive marketing practices.  South Dakota Senator John Thune in last Friday's Rapid City Journal repeated the dubious claim that the tax cuts being considered in the
Turning an opportunity
into a problem
U.S. Senate "will directly benefit middle income South Dakota families."  In support of his argument, Thune uses a Tax Foundation analysis that says the tax plan will result in a "$2,528 boost in after tax income for middle-income families" and "2,700 more new full time jobs for South Dakota workers."     
     With all due respect to the Senator, I'm skeptical about exclusively using data gathered by the Tax Foundation.  The Tax Foundation's base of support comes from well-known conservative groups like The Charles Koch Institute, the foundation's second largest donor between 2012 and 2015 at nearly $500 thousand.  Along with other conservative institutions, the Koch interests make up 9 out of the 10 largest donors to the Tax Foundation.  That by itself, of course, does not invalidate the Foundation's work and conclusions, but I believe that Thune could have gone to a source that is not so reliably conservative before trying to convince us South Dakotans that the plan he's touting is unwaveringly good for us.  At the very least our senator could have called attention and responded to analyses that reach opposite conclusions.  
     For one thing, Thune could have consulted Congress's in-house studies.  In a report on the Senate tax bill released last week by the non-partisan congressional Joint Committee on Taxation, the full story has a less rosy cast to it than Thune's characterization.  According to the congressional analysts, by 2019  Americans at every level do indeed get a tax reduction.  But by 2027, anyone making less than $75 thousand a year would get a tax increase, while those earning more will continue get their taxes cut.  
     As to the Senator's promise that the bill will create "2700 new full time jobs for South Dakota workers," I'd like to know what the heck he's talking about.  We have more jobs than workers as it is. As an employer in this state who is in full contact with the situation every day, I know that we have a serious labor shortage in South Dakota. Our dairy industry is seeking workers from Puerto Rico, and our persistent problem with a shortage of construction workers is an ongoing challenge. And don't even tell me about the situation on my home turf, the tourism industry.  Tax cut or no tax cut, how does South Dakota create jobs when we can't fill the ones we have?  More to the specific point, though, Thune's contention about job growth is pie-in-the-sky.  Job growth was weak after George W. Bush's national tax cuts. Same goes for Kansas Governor Sam Brownback's in his state during the past few years.  I have yet to see a connection between business tax cuts and job creation, at least during economic expansions like the one we're in now. I challenge Thune and his supporters to find some evidence backing up that claim. 
     Short of that, I'm calling bait-and-switch on Thune and the tax cut he's touting.   

Addendum (posted 11/18/17 @2029):  Here's a Ted Talk that covers the "tax cut=jobs creation" myth.

Monday, November 13, 2017

There Are Myths, There Are Legends, There Are Tax Cuts

   The persistent mythology that tax cuts stimulate economic growth keeps making its way into South Dakota's Republican pitch for the reform plan making its way through Congress.  Last week our Congresswoman Kristi Noem used a hypothetical pizza business owned by "Beth" as
Yeah, Right.
The National Debt Doubled Under Bush
an example of how her savings of $3 thousand dollars a year under the new proposal could "free up money to install a new oven or give her employees a little raise."  This is actually pretty laughable, considering the average cost of the 5 pizza ovens featured on Google is $12 thousand.  Take out the two counter-top models and the average jumps to $18 thousand.  It would take 4 to 6 years for Beth's tax savings to pay for even an average oven. Some "free up."   As to that "little raise," Noem is right about one thing. In this day and age, $3 thousand spread out over a staff of people needed to operate "Beth's Pizza Parlor" is "little" indeed.  And from "Beth's" perspective, that salary increase would result in higher federal and state employment taxes, to the tune of several hundred dollars a year. 

      Like many of the enterprises owned by my peers in the business community, mine would probably gain a "little" something from Noem's plan, but I doubt that the cumulative effect would amount to much.  We South Dakotans know from personal experience that there isn't any correlation between lower income taxes and economic stimulation.  The fact that we don't even have a state income tax hasn't done much to spur economic growth in our state.  We've certainly had an awful track record since 2011, the first year of Governor Dennis Daugaard's term.  Since then our cumulative per capita GDP growth through 2016 has been .2% (yep, the decimal is in front of the "2").  That compares to a 6% total, nationally.   In other words, U.S. growth during that period has been 30 times greater than South Dakota's.  Tell me again how low or no income taxes stimulate economic growth.  
     If this anemic performance were a regional phenomenon, that would be one thing.  But it's not.  With the exception of energy market-hammered Wyoming, all of South Dakota's surrounding states have done significantly better than we have, and 5 of the 7 have state income taxes.  Our state's "no income tax" appeal has been an illusion.  Meantime, leapfrog Nebraska and check out Kansas.  The results of Kansas' tax-cutting regimen based on the notion that lower taxes stimulate economic growth have been a complete bust.  When Governor Sam Brownback took over in 2011 he vowed to turn Kansas into a fiscal conservative paradise by slashing state income taxes.  The result actually turned out to be "paradise lost," with economic growth coming in at a fraction of the national rate and a budget shortfall this year of nearly $1 billion.  
     The national track record on tax cuts is just as bad.  George W. Bush's cuts were followed by the worst recession since the 1930s and a doubling of the national debt.  Reagan's led to a tripling of the national debt.  I'll take a tax cut anytime, but spare me the baloney about how it will stimulate the economy.  

Friday, November 3, 2017

Take Action Against Mass Murderers? Depends On Who's Doing The Killing

     South Dakota Senator John Thune's infamously impotent advice to Americans caught in the crosshairs of a mass murderer immediately after the recent massacre in Las Vegas is a 
Helpless Today, Determined Tomorrow
revealing glimpse of enfeebled leadership. 
His cluelessness was disastrously highlighted by last Sunday's massacre in Texas.  Thune's eunuch-like behavior is also a dismayingly sharp contrast to his reaction to the ISIS terrorist who went on a rampage in New York City last week.  Apparently, Thune's commitment to Congressional pro-activity aimed at heading off wholesale bloodshed depends on who is doing the killing.  

     After the carnage in Vegas, Thune talked to NBC's Hallie Jackson.  Telling her that "we'll look at the facts when we get them all in here," Thune went on to say "it's an open society.  And when somebody does what he wants to do--it's going to be hard to prevent anything.  I think people are going to have to take steps in their own lives to take precautions . . . As somebody said--get small."  In other words, we're virtually helpless to stop mass shooters, so people need to get small--as if that advice would have done any good to the targets in Vegas and Sutherland, Texas, who were shot randomly and en masse. As to waiting for the facts to get in, it's been a month since the freakout in Vegas and the bump stocks that turned the shooter's semi-automatic into a virtual machine gun are now back on saleAny steps at regulating or banning them by Congress have gone nowhere, with the National Rifle Association calling bills to ban them "intentionally overreaching."
     Having fired countless bursts of automatic fire from my M-16 when I was a Marine in Vietnam, I'd call Congressional apathy toward banning these devices intentionally indifferent and appallingly apathetic.  I know during his tenure in Congress that our Senator Thune received $181 thousand from gun lobbyists through the 2016 election cycle, but I think he can keep the gun lobby happy and do something to regulate bump stocks at the same time.  
     Meanwhile on another front in the war against mass murderers, terrorism, Thune abandoned his fatalistic "hard to prevent" rhetoric and called for immediate congressional action.  Just a day after that ISIS-inspired truck massacre in New York City last week, Thune said of terrorists, "They're always coming up with new ways to be lethal.  And we've got to do everything we can to stop them."   We're all with you on that, Senator, but I wonder why your boldness and determination applies to one scenario but not another.  
     Scientific American magazine looked at this a month ago. It calculated that since 1970 fewer than 100 Americans a year (and that average includes the 3,000 killed on 9/11) are killed by terrorists.  11,000 Americans are murdered by perps using firearms (another 20,000 die by self-inflicted gunfire) every year.  Like anybody with a lick of sense and some serious experience with firearms, I know that gun control has its limits.  I also know that the war on terrorists, both domestic and foreign, has its limits.  But to shrug one off with a response as feeble as "it's going to be hard to prevent anything" while at the same time vowing "to do everything we can" to keep the other in check is a disheartening contrast of commitments.  Why isn't Thune troubled by this?

Monday, October 30, 2017

South Dakota Keeps Betting On Commodities . . . And Keeps Coming Up Short

     South Dakota continues to hinge its economic well-being on the vagaries of the commodity markets.  In a piece published last week in the Pierre Capitol-Journal, Bob Mercer reports that
Time For A Revised Edition
South Dakota Is Going Backwards
South Dakota's adjusted sales tax revenues for the fiscal year that ended last June 30 were nearly 2% lower than those of the preceding year, which is really 4% accounting for inflation.  State economist Jim Terwilleger, addressing South Dakota's Council of Economic Advisors, says in the piece that the shortfall is tied  "directly to weakness in the agricultural economy."  

     Terwilliger went on to call FY '17 a "trough" in ag spending in South Dakota.  He added that it was the third consecutive year of "slumping crop prices."  There's no question that crop and livestock prices have been in a prolonged slump, but I do wonder how Terwilliger concludes that we're in a "trough," which in econo-speak means a low turning point, suggesting that prices will soon be trending up.  After reviewing price charts for corn and feeder cattle to be delivered a year from now, I see nothing particularly cyclical showing up in the futures markets  that would make prices now look like they're in a trough and about to swing higher.  It'll take a major natural or political cataclysm to make that happen.  Otherwise, sentiment across the board is saying that 2018 is likely to be the same-oh, same-oh.  
     And that's where South Dakota's collective finger-crossing in hopes of strong commodity prices continues to come across as a poor alternative to more conventional forecasting and state financing methods.  Noting that our state's 2018 budget is built on an assumption of 4% growth, Terwilleger says that "I don't know if we're going to get there."  Nobody knows, but there's good reason to be pessimistic. More to the point, there's good reason to be fed up--South Dakota continues to be commodity-price dependent because so much of our state's revenues are gathered up by sales taxes, which account for about 83% of the funds that Pierre collects every year, more than twice the amount collected nationally.  Facing facts that consumption taxes in our state are directly dependent on crop prices, Terwilleger notes that sales tax revenues from the sale of agricultural equipment were down $10 million in 2016, to levels that were about the same as they were 20 years ago.  More broadly, lower crop prices, to the tune of about $3 billion annually from 2011 to 2016 reduce the flow of spendable, sales taxable, cash.
     Betting on strong commodity prices year after year is a dumb and irresponsible way for South Dakota to do its budgetary planning.  We need to reform taxes in a manner that will wean us away from agricultural market dependence, and that includes reviewing sales tax exemptions (about $1.1 billion--with a "b"--in 2015) and putting some progressive corporate and individual income taxes into consideration.  As it is, we've been going nowhere fast of late.  During the 5 years that ended in 2016, South Dakota's per capita GDP growth was a feeble .2% compared to a national number that exceeded 6%.  We're stuck in reverse.  It's time to shake up the status quo.