Thursday, March 16, 2017

Thune Figures It Out: Older South Dakotans Will Get Creamed By Trump/Ryan/Whoever-Care. Do Noem and Rounds Have A Clue?

Senior Senator
Senator For Seniors
     Our senior U.S. Senator, Republican John Thune, begged off on supporting the Obamacare replacement bill oozing out of the political entrails of a befuddled House of Representatives today. Thune told The Rapid City Journal that he and the rest of the Senate could work on a plan that would be "more helpful to people on the lower end."  Good idea, since it's the lower end where many oldsters in South Dakota will be feeling the most acute financial pain if this over-hyped and under-considered fiasco of a replacement bill ever becomes law.
     Disheartening as it is, our all-Republican congressional delegation has spent years dissing the Affordable Care Act and voting countless times in a wasted political show of disdain to end it--and all that time these reflexive partisan yes-people haven't had a clue as to what a replacement would look like.  Now that the House of Representatives--in a show of fealty to President Trump and his reckless promise to repeal and replace ACA immediately upon taking office--has hurriedly trotted out a poorly conceived and politically poisonous replacement, our elected reps are forced to pay attention to the details of healthcare policy.  
     Not much has been heard from Senator Rounds or Congresswoman Noem, who've long been part of the GOP chorus determined to undo ACA with nary an afterthought about what would occur next.  No surprise there, as neither has been much of a distinguishing force in Congress. Thanks to seniority, Thune has advanced far enough in party leadership to grab some attention now and then, though his lock-step voting behavior has been predictably partisan.  That he has some public reservations about the bill says much for the growing GOP hostility toward a replacement of its own party's creation.  An overhaul is likely now that enough recalcitrant Pubs in both houses may
Rounds, Noem
Opinion, Please?
be likely to sink this ship before it's even christened.  

     That should be welcome news to aging South Dakotans.  A study of the replacement bill by the Kaiser Family Foundation shows that it would raise health insurance costs for lower- and middle-income 60-year-olds on average by $3,000/year. Considering the rapid growth of the aging population of our state (South Dakota State University calls it a "dramatic increase"), our nearly 200,000 residents aged between mid-40s and mid-60s stand to get financially hammered as the years go by if the GOP plan goes into effect.  That's the aging group that probably most needs health insurance, just at a time when they're most likely to develop penny-watching retirement plans and budgets.

Thursday, March 9, 2017

Buen Comercio, SI! Mexit, NO!

Mexico City--Amazingly (color me facetious), Donald Trump and his anti-Mexico histrionics aren't on everybody's mind, every single minute of the day here.  The 8+ million inhabitants of this city (almost that many more in the greater area) have to contend with all the pressing urban issues that consume city dwellers.  For the most part, the local media devote most of their attention to parochial concerns, with the expected amount of limited op-ed attention paid to matters connected to relations with the U.S.

     Not that there's any love lost between Mexican editorialists and President Trump.  In its analysis of Trump's issues with the complications of repealing Obamacare, Mexican News Daily refers to Trump as "the Tangerine Tornado."  The rest of today's edition has a piece about Mexican avocado growers "not sweating over NAFTA" because they sell $2.2 billion worth of fruit to the USA every year and will continue to do so, NAFTA or no NAFTA.  I shouldn't have been, but was, taken aback by a note in the piece about local environmentalists concerned that rapacious avocado growers are continuing to expand by destroying Monarch butterfly habitat in order to plant more trees. Another reaction in the piece noted that the trade issues with the U.S.A. could be an opportunity in disguise, as Mexicans will be forced to seek out other markets and develop trade ties with a broader array of countries if relations with the U.S. continue to sour.  
     That prospect has already emerged.  A couple of weeks ago a bill requiring Mexico to buy its corn from Brazil and Argentina instead of the United States was discussed in the Mexican senate. Meantime, the Chinese global news giant YIBADA reported last month that while U.S.-Mexican trade tensions are building, China "is taking the opportunity to strengthen ties with Mexico." These are probably incremental, baby-sized steps at this stage of Trump administration's handling of the NAFTA relationship, but they are definitely going in the wrong direction from our local perspective. As I noted here last week, South Dakota's $400 billion a year in sales to Mexico (out of a total of $1.4 billion in exports) should be enough to keep us focused as our trade relationship evolves.  

     My sense is that Mexico--if not exactly defiant--is nevertheless developing its fallback options.  It's a country with considerable comparative advantages, particularly in the way of natural resources and a cheap but increasingly skilled labor force.  A revisit to NAFTA is probably way past due.  A Mexit wouldn't do us much good and could be exceptionally bad for South Dakota. 

Thursday, March 2, 2017

I'm South Of The Border, Down Mexico Way.

  As you read this I'm in Mexico City, soaking in the history and culture--and trying to get a sense of how the drama of our relationship with this country will affect us in South Dakota.  My
It's A Big Market
And We Need The Business
(from Colombia Post)
take on departure is that the rockiness of our association can only hurt where we'll feel it the most--in the pocketbook.  Mexico, since the inception of NAFTA, has turned into an immense market for South Dakota during the past couple of decades, particularly when it comes to our agricultural production. I watched much of this happen during my years in local cattle production and marketing back in the '80s and '90s, but even as things were heating up on the free trade front back then, it hardly seemed realistic that we'd get to where we are now with our sales to Mexico.  In 1995 total SD exports to Mexico amounted to a virtually negligible $6 million.  Mexico 
was then our 10th largest market. In 2015 that number swelled to $400 million as Mexico became our 2nd largest foreign market. 
      This broadly tracks the overall growth of American sales to Mexico, which jumped from $46 billion to $230 billion during the same period.  But that's where South Dakota's experience parts company with the United States as a whole.  Where our national macro-experience has resulted in the much-derided but insufficiently understood  (It's too simplistic to call them "bad" despite what politicians say.) trade deficit of $63 billion, South Dakota's experience with Mexican trade has resulted in a huge surplus.  The U.S. Census Bureau calculates that South Dakota imports (in 2015) just $70 million of goods from Mexico, which gives us a state-surplus of well over $300 million. This sounds nice but isn't particularly reflective of anything other than the fact that we sell more to
Closing Doors?
Bad Way To Relate
Mexicans than we buy from them.  What we need to focus on is the amount of our sales, not the net dollar differential in our trade.  

     And that's where the more insidious problem resides.  If Mexico responds to our protective trade impulses with retaliatory trade measures of their own, we're off and running to a trade war, which could easily result in a serious slowdown of South Dakota's agricultural sales to Mexico.  In the meantime, tariffed, goods that we buy from Mexico will get more expensive.  Of such dynamics are international financial crises bred.  That anybody thinks a scenario like that will get American workers back to the production lines because we'll all be "buying American" again is a poor reflection on our collective grasp of history.  

Monday, February 27, 2017

The "Border Adjustment Tax" Is A Bad Deal For South Dakotans

     It's arcane, complicated, wonkish and nearly indecipherable, but in the end it looks to me like the "border adjustment tax" that's being floated in D.C. these days is a bad deal for South
A Tax On Guacamole?
What Next?
It fails this state on two fronts and I hope our congressional delegation will put our interests ahead of their party's when they mull this proposal and make a decision on it.  The big-picture economic considerations are certainly a factor, but in both the long- and short-runs, South Dakotans get hurt by this idea.  

     The first impact of this tax will be on us consumers.  The plan is to slap an immediate 20% tax on all foreign imports. That to me is crazy on the face of it because of who will take the hit. Attention Wal-Mart shoppers, you'll be feeling it in your wallet right away--and that goes for retail consumers across the board. It's little wonder that the National Retail Federation is crying "foul"  over this proposal, claiming that it could cost the typical American family as much as $1700 hundred a year.  Analyses that I've read consider that a stretch, but nobody disputes that consumers will be shelling out more money for the products they buy on a day-to-day basis.  Every shopper in town knows that their households are loaded with imported food and other retail goods.  For a state like South Dakota, where median incomes are slightly below the national average while the cost of living is slightly above it, consumers will feel--if not entirely understand--the pain induced by this gratuitous tax on them.
     Meantime, what about the long term effect of this tax on our state's ag industry?  First off,
Who Pays?
(graphic from UC Davis)
the BAT, according to The Tax Foundation"will have an impact on the U.S. Dollar, resulting in an increase in its value." The American Farm Bureau--already uneasy about the Trump administration's immigration reform plan affecting the currently strained agricultural labor supply--said last week that it is "still studying" the adjustment tax and "wants to make sure it doesn't roll over into a trade situation and cause a trade war that would not be good for anyone in agriculture."  I'm quite a bit less circumspect because an appreciating dollar has never been good for exporters in this country, ag producers or otherwise.  Considering that it looks like the immediate reason for this proposal is to make up for revenues to be lost by the Trump administration's plan for cutting corporate income taxes, I'd say it's a bad deal.  Long run projections by economists believing that all will fall into place somewhere down the road don't convince me that the immediate dislocations are worth the risk of imposing this tax, which takes aim at the little guys first.  

Sunday, February 19, 2017

A Chance For Accountability In South Dakota Government

     South Dakota's House of Representatives has a chance at advancing the cause of government accountability on Wednesday, February 22.  A bill (HB 1076) that would establish a
Why Is This Man Laughing?
SD Is The 49th On The Integrity Scale
bi-partisan board empowered to investigate charges of official misconduct in state government goes to a committee hearing that day.  Its fate is a test of our SD government's commitment to pursue the intent of the voters when the legislature and Governor Daugaard quashed a law (Initiated Measure 22, an omnibus campaign and government reform measure) passed by the people last November.  In their cavalier revocation of IM 22, government officials repeatedly--and independently of final judicial affirmation--called IM 22 "unconstitutional" and vowed to propose a set of laws that would reflect voter intent.  

     House Bill 1076 is one of those measures.  Conceptually it does answer the crying need for some sort of accountability enforcement structure in state government, a need highlighted in recent years by the twin and tragic (suicides and murders were left in their wakes) fiascoes of EB-5 and Gear-Up.  The first involved investment money from foreigners seeking American residency, costing the state more than $100 million according to the Center for Immigration Studies.  The second was a badly managed educational opportunities program that diverted millions of dollars from its intended recipients.  Since then it has become clear that SD Government needs oversight, needs it badly, and needs it now. The Center For Public Integrity ranks us 49th on the integrity scale, a status that became disturbingly obvious during the state legislature's kid glove investigation of the EB-5 mess, in which the chief perp Joop Bollen wasn't pressed personally, but allowed to provide written answers to written questions.  That joke of an official examination was at least partially ameliorated in recent weeks when SD Attorney General Marty Jackley successfully prosecuted Bollen, gaining a felony conviction for at least one aspect of Bollen's involvement in the EB-5 money machine.  
     Bollen's conviction still leaves so many questions unanswered, questions about how and
49th Worst In The U.S.
Wrong Side Of The Curve
under whose noses he was able to scam the state, that a satisfactory conclusion may never be reached.
The accountability board envisioned by HB 1076 would probably make it tougher for future EB-5s to materialize. That it "may" (according to the language of the bill) instead of "shall" refer alleged violations to state or local prosecutors weakens it a bit. But just having the board in place would be a start toward enforcing integrity in South Dakota government. Rejecting this opportunity to do so will be a signal that our political class has no intention of finding a way to police itself, at least not now.  

Tuesday, February 14, 2017

Hi Mom

     Four Republican senators were having a good time sporting their mock gold watches in Pierre yesterday.  They were handed out as a Valentine's Day treat by a lobbyist. The watches might or might not be a joking reference to the fact that gifts to legislators from lobbyists were a central theme of Initiated Measure 22, the campaign and governing reform bill that won at the polls last November. It was effectively repealed in South Dakota's legislature by House Bill 1069, which was immediately signed by Governor Daugaard.  For some background, each Senator's district passed the measure by margins surpassing the statewide victory margin of 51.6%. Nevertheless, just saying "no" to their constituents, all four of the senators voted to repeal IM 22.  

From left to right, the Senator, the district, and the percentage of yes votes for IM 22 in that district:  Jeff Partridge (R 34  52.3%), Deb Peters (R 09  56.1%), Jordan Youngberg (R 08  54.9%), and Terri Haverly (R 35  59.5%).  (Note:  the photo comes from blogger Bob Mercer's Pure Pierre Politics, the voting percentage information from Represent South Dakota)

Sunday, February 12, 2017

I Thought SD Politicos Already Knew The Will Of The Voters. So What's Up With A Task Force Assigned To Find Out The Same?

    When our Governor Dennis Daugaard last week signed the death warrant for Initiated Measure 22, the law passed by voters last November that seriously reformed South Dakota's
Complaining In Pierre
Didn't Do Much Good
(photo from AP)
campaign and governing procedures, he was unequivocal about one thing.  
Said the Governor upon signing House Bill 1069, effectively repealing the law put into place by a majority of voters:  "I will work with legislators to honor the will of the voters."  Our collective decision as expressed at the ballot box is utterly irrelevant to our governing class, so they've taken it on themselves to write a spectrum of laws that they believe are more closely aligned with what they deem to be "the will of the voters."  

    Or have they?  Sure, about a dozen or so bills are in the hoppers of both houses that are connected to government reform.  The 2-year hold on lobbying activities by officials exiting government is a nice one to see, as is the thinly (mostly Democratically) sponsored bill establishing a government accountability board. Progress on that one (HB 1076) will be a true test of Pierre's resolve to honor the voters' will.  Others seem vague and limited in effect--about what you'd expect from legislators who write laws that will affect their longstanding operations. One example? In the spirit of reform (and redundancy--isn't there already a law like this in place?), Senate Bill 27 makes it a crime for public officials to take any actions that "result in a direct financial benefit" to themselves, which I think leaves the door open to "indirect" financial benefits being okay. Even casual students of the English language would understand that a word like "direct" can be subjected to a wide range of interpretations and legally-parsed manipulation.  Another example? House Bill 1073 keeps IM 22's $100 gift limit from lobbyists to elected officials intact, but (as Aberdeen blogger Cory Heidelberger's excellent analysis notes) waters down the voters' intent by restricting fewer recipients, leaving out altogether legislative and executive staffers. And, oh yes, meals with beverages costing up to $75 don't count as gifts.  Bon apetit!
     If the sense of wiggle-rooming their way out of honoring the will of the voters is starting to
How Others See Us
Does Anybody In Pierre Even Care?
creep into the conversation, there's also a stalling device to liven up--maybe "deaden" is a better way to put it--the discussion. Similar bills in both houses 
(SB 171 and HB 1141)  will set up a task force to study government accountability and report back to Pierre in time for next year's legislative session.  Both bills envision a task force consisting of government officials and a small number of hand-picked (by them) state residents. The House bill calls for the state Chamber of Commerce to have a seat.  Nothing against the Chamber, a great organization of which I am a long-standing member, but the representation on these proposed task forces doesn't reflect much in the way of a broad swath of South Dakotans.  It looks to me like the only task this force, laden with entrenched state officials, is likely to undertake is finding a way to sustain the status quo under the guise of "honoring the voters' will."