Sunday, December 27, 2015

It's Crazy (x2): South Dakota Has No Income Tax

     Yes indeed, there are two dimensions of craziness to the notion that South Dakota doesn't have an income tax.  Dimension 1) it's crazy that we don't have one. Dimension 2)  it's crazy to think that we ever will.
Wow
And We're Trying To Attract Workers?

Regarding that first dimension of derangement, consider how we stack up on some vital elements of public budgeting compared to our neighbors (ex-Wyoming, which is left out of this discussion because the state uniquely derives about 25% of its revenues from taxes on mineral production) and all but  5 other states in the country.  The Council of State Governments in 2011 produced a document that summarizes the contrasts, some of which are pretty stark indeed. On a national scale, individual income taxes generate about a third of total state tax revenues, with slightly less than that share coming from sales taxes. South Dakota is a much different story. Sans income tax revenues, South Dakota in 2013 got an astounding 80% of its total tax revenues from sales and excise taxes.  Talk about regressive, good grief.  The tax burden in this state falls heaviest on the lower tiers of wage earners, who carve out taxes from a much larger share of their incomes than the well-to-do. 
     South Dakota is a low tax state, no question.  State and local revenues consume just 8% of the state's total income, third lowest in the nation.  This is a feature of fiscal life here that is frequently pushed as an advantage of some sort, but I think that's bunk because the "advantage" is belied by our persistent worker shortage.  In fact,  the shortage is so acute that last May our state government started pushing an ad campaign  to lure workers and their families by claiming that South Dakota is a better place to live than the planet Mars. Uh-huh.  The tongue-in-cheekishness of the ad notwithstanding, I think it reflects the reality that our worker shortage isn't merely acute . . . it's desperate.  That desperation is created by issues that trump low taxes in the minds of people who might be thinking about migrating into South Dakota.  
     Now that our socialized stinginess has resulted in the manifestation of those serious issues on two fronts--abysmal teacher pay and infrastructure maintenance--our elected leadership is busy configuring ways to squeeze more money out of existing revenue streams.  Most notably, the mind-numbing gesticulations regarding property tax reform seem like nothing more than a "strife of interests masquerading as a contest of principles." **  And trying to squeeze more sales tax out of an already overburdened class of ordinary citizens isn't going to happen.
     Ergo, the craziness of the status quo.  As to the prospect for income taxes, you can count me as one of the crazy ones who think there might be some change in our thinking on them.  First off, we
SD Rich Folks Have It Made
Working Stiffs Not So Much
(graph from sdbpi.org)
need the money. Paying our state's 8,000 teachers another $10k/year comes out to $80 million, and that just gets them on the low end of the range of salaries immediately surrounding South Dakota. Secondly, a progressive tax that would shift some of the state's tax burden upward might have a shot at succeeding if people can be made to understand the connection between constructive government spending and the quality of their lives.  Because of two constitutional amendments, created in 1978 and 1996, the only ways South Dakota could impose an income tax are via voter initiative or a two-thirds vote in both houses of the state legislature. 

     You can forget about the politically impossible latter, but the former might fly.  I think enough signatures could be gathered to at least get an income tax initiative on a ballot and that the subsequent public debate could clarify and instruct voters about the possibilities that can accrue to a state that has a progressive tax system.  Limiting the tax to businesses that make quite a bit more than a typical  mom-and-pop operation would probably be a realistic place to start. If nothing else, it might start moving us out of the realm of states with the "most regressive tax systems in the United States."  

     
 ** Ambrose Bierce, "The Devil's Dictionary"         
     

Tuesday, December 22, 2015

Oh, Ya Better Watch Out, Get Ready To Die, Ya Better Not Doubt, I'm Tellin' Ya Why--Ho Chi Minh Is Comin' To Town (Reprise from 12/21/14)

It's Beginning To Look A Lot Like Christmas
Everywhere You Duck
I Was In This One.  Dong Ha, 1967
(photo from Photobucket.com)


     So, okay, wit wasn't exactly a common attribute among us Marine Corps riflemen stuck along the south edge of Vietnam's laughably mis-named Demilitarized Zone (DMZ) during the Christmas season of 1967. But what we lacked in wit we more than made up for in sarcasm, which was often so extreme that it lapsed into flat-out nihilism.  I guess war has a way of doing that to people, especially a military adventure that was as entangled in moral imperatives and hazards as the one we waged in Vietnam.
     We knew all about the violent ambivalence about the war that was tearing our country apart, but we were pretty much immune--maybe numb is a better word--to all the noise. Marines at the DMZ didn't care about any of that--we knew we were in Hell and that, as we routinely put it, "Hell sucks." We just wanted out, we counted the days until our tours were up.  We said of our dead that they had been "wasted." Not "killed."  Wasted.  Never did think about it much back then, but realize now how much pungency there was in the use of that word.  Considering Vietnam's post-war shambles and the nearly 60,000 Americans (and many times that number of Vietnamese) killed in action during that ill-starred escapade--which I still regard as the defining screw-up of my generation--"wasted" is a word that more than applies, and not just to the dead.
     So here we are a half-century later, still bogged down in wars that are saturated with political and economic and moral confusion.   Considering that this seems to be a cyclical recurrence since perhaps the Korean War in the 1950s and certainly my war in Vietnam, you just have to wonder if this is built into our modern destiny.  Do our Congressional reps stop to consider the relentless futility of their actions when they robotically re-authorize funding for these ventures?  I mean, we left Vietnam with a superb complex of ports and landing fields and excellent buildings (I saw them when I visited in 2009) throughout the south that we basically handed over to our enemies. Same thing seems to be happening in Iraq, and no doubt will lead to a recurrence in Afghanistan. 
     As to the long term cost, Stateside? Just as so many of my generation of warriors came back with serious post-war issues, I note
USMC Lance Corporal Me, 1966, Enroute To Vietnam
(photo from battlestory.org)
thamany veterans of our ventures in central Asia are having their own bouts with the traumas of battleI know that combat in its own right will lend itself to psychological and emotional consequences, but my experience in Vietnam tells me that the overriding issues of fighting a war with much-contested moral underpinnings against an enemy that poses no direct threat to the United States leaves a residual ache that can be consumptive for some.  It already started for me and my brothers-in-arms when we blithely referred to KIAs as having been wasted, when drug use by our troops became a common occurrence, and when our songs of the war were filled with sarcasm and contempt ("Jingle Bells, mortar shells, VC in the grass . . . take your merry Christmas and shove it up . . " well, you know). 
     Now I think about our combat forces deployed in central Asia and wonder if the incipient bitterness is beginning to creep into their souls.  For some of the vets I've talked to, I know it has. That hangs some sorrow on me, mainly because I know it never really goes away.  Such is the legacy of our political leaders who don't constantly examine and re-evaluate the basic assumptions that brought us here in the first place.  My wish this Christmas is for Thune, Noem and Rounds to demand an answer to the question "why?" before they vote another dime of American money to sustain what seems to be a stone much larger than the one Sisyphus was forever condemned to roll up that hill. The myth to the ancient Greeks has become the reality to us modern Americans.


News today of the death of 6 U.S. Airmen (one of them stationed here at Ellsworth) at Bagram, Afghanistan, prompted me to reprise this post from a year ago.  John
     
     

Monday, December 21, 2015

Not COOL. South Dakota Ranchers Get Stiffed By Noem, Rounds And, Sort Of, Thune

     Budget hawk-ish Republicans from South Dakota who are already irked by the easy
Ranchers And Consumers Want This
Why Aren't Our Reps Fighting For It?
(photo from foodsafetynews.com)
passage of the big "Omnibus" spending bill in Congress last week have more than its deficit-ballooning elements to get steamed about.
Tucked into the bill was a provision that would repeal the "country of origin labeling" (COOL) rule that many South Dakota ranchers fought for years to get implemented.  Voting in favor of the bill were Congresswoman Kristi Noem and Senator Mike Rounds.  Senator Thune voted against the measure, though on a prior spending bill (the "Bipartisan Budget Act")  a month earlier he did vote with every Senate Democrat to invoke cloture on furthering legislative discussions of that budget-stretching bill, a vote so politically and ideologically uncharacteristic that it was deemed "statiscially notable" by Govtrack.us.  Thune the budget-hawk then voted in favor of it. Why Thune would want to stall further debate of a budget bill and vote in favor of it, then, at the very next opportunity, vote against the spending bill that ended COOL is a political consideration that bears explaining.  You might say he was "for" government overspending before he was "against" it.  

     My take?  Pubs got so much heat for shutting down the government two years ago that they just didn't have the political nerve to fight this budget proposal again by repeating that blunder of 2013. In the meantime, though, I'm a little steamed about how the COOL repudiation got stuck into this thing, as I believe our Congressional delegation owes it to their ranching community's voters to put this out as a separate item, worthy of consideration on its own merits. Slipping it inside a budget bill is chicken manure, and I'm surprised and perplexed as to why Noem, Rounds and Thune seem to have let it slide.  Where was the vigorous defense of COOL, a cornerstone of ranching industry economics that also just happens to be favored by 93% of American consumers? 
     As a former cattle feeder and trader I've never been that much of a fan of COOL, considering its labeling requirements to be burdensome and unnecessary.  Carcasses leaving meat packing plants in this country are inspected and graded to standards that apply to final products
Kowgirl Kristi, Defiance Personified
Why So Meek When It Comes To COOL?
(photo from sddp.org)
regardless of their origin. However, the law is the law--and I understand that consumers generally favor this type of labeling, so the practice has been in place and the industry has adapted to it, and that's that. That it has run afoul of international trade agreements is well enough known, with a recent WTO ruling against the American practice precipitating the repeal of the law.  

     The problem that South Dakotans should be having with this is clear.  Why did our U.S. reps roll over so easily and let COOL repeal slip through the process with nary a whimper?  They've been quite supportive up to now,  much to the delight of South Dakota's ranchers.  Now all of a sudden they've clammed up and pretty much acquiesced to the extermination of one their pet issues. Fear of retaliatory trade measures is certainly a matter to be considered here, but the categorical rejection of a program that means much to South Dakota livestock producers, as well as consumers throughout the country, merits more than a mere yea or nay vote on a surrounding bill that has nothing to do with COOL, per se. Sans pushback or explanation, it doesn't say much for our congressional delegation.  

Tuesday, December 15, 2015

Daugaard Needs To Talk Financial Turkey To The Legislature If He Wants Them To Support Medicaid Expansion In SD

     It's encouraging that Governor Daugaard has finally come around to supporting and
Can We Afford To Do This?
Can We Afford Not To?
(graphic from healthinsurance.org)
proposing ways of expanding Medicaid in South Dakota.  
His piece in yesterday's Rapid City Journal included 3 caveats.  The first two, getting the Feds to take over the costs of medical services given to Indians who for any number of good reasons get care outside the Indian Health Service and convincing the state's tribes to go along with the plan are challenges that seem meetable.
  I can see the Obama administration's HHS going along with taking over the $67 million/yr obligation (which I understand is consistent with the federal obligation to pay for Indian medical services in the first place) to pick up the cost of Indian health care as a condition for expanding Medicaid (an Obamacare feature) into South Dakota. Daugaard notes that transferring the $67 million cost from the state to the Feds will cover the state's share of Medicaid expansion costs through 2021. I won't presume to speak for the Indian community, but note that from the tribes' points of view, it doesn't look like anything will change in the delivery of non-IHS health care, the only difference being which government entity will pay for it. Of course, anything dealing with the IHS is a topic of considerable discussion and concern, so there's no telling how the Indian community will react to a proposal that affects its status as a significant stakeholder in Daugaard's plans.
    Those caveats duly considered, though, it seems to me that the more formidable task will come in getting the third condition met.  Of it, Daugaard unequivocally says  that he "will not support expansion unless the Legislature supports it."   My general observation is that our state legislature has a fair number of committed Obama-haters in it, and their reflexive reaction to the Obamacare-spawned program of Medicaid expansion will be opposition.  That about fifty thousand South Dakotans who now make too much money to qualify for conventional Medicaid but don't earn enough to pay for private health insurance will qualify for Medicaid if expansion occurs hasn't been a convincing enough reason for our state government to take this deal. That's actually pretty sad, considering that even Daugaard acknowledges that although this pool will include those who become government-dependent, it also includes "the single mother of three who cannot work enough hours"  to afford private healthcare.  
     My take?  The cost of letting system-gamers into the Medicaid expansion pool isn't enough to dissuade us from accepting the plan.  It just comes down to the greatest good for the greatest number of people.  When GOP Governor Chris Christie implemented Medicaid expansion
It Just Makes Too Much Sense
We Need "Smart" not "Stubborn"
(graphic from credomobilize.com)
in New Jersey in 2013 he said, "expanding Medicaid is the smart thing to do for our fiscal and public health."  In order to convince South Dakota's conservative legislature that this is the right way to go for us, I emphasize the words "fiscal health."  It is such an obvious financial windfall for our state that it seems amazing that political intransigience has been so willing to forgo billions of dollars over the next decade to nurture our legislature's hatred of everything Obama.  A couple of billion dollars pouring into South Dakota's economy during the next few years will generate a few times as much when the money rolls over.  You don't need to be an Economist to understand what that will do for state tax revenues in an era when we're scrambling to find enough money to pay teachers competitive wages and keep our infrastructure functioning properly.

     Governor Daugaard has some well thought-out reservations going into this, but it's clear that he's coming to the same conclusion.  We have to find a way to make this deal work.  

     

Saturday, December 12, 2015

Bollen, Bollen, Bollen . . . Is That Money Stolen? . . . Keep Them Lawsuits Rollin' . . . And Hide! **

     It took me a couple of days to get to Seth Tupper's piece on the latest act in the EB-5 drama
Bollen And Former Gov.  Rounds
I Invite A Caption Contest.  Readers?
(photo from teapartytribune.com.)
in the Rapid City Journal last Thursday.  
In Thursdays piece in RCJ
Tupper reports some details in the ongoing sue-a-thon between the State of South Dakota and former EB-5 facilitator Joop Bollen. Left out in this episode is the continuing saga of the Chinese investors who are suing everybody in sight because they believe they got royally ewed-scray (to the tune of $18 million) during their participation in the FUBAR ("Fouled Up Beyond All Recognition"--although in the Marines we didn't say "fouled") investment scheme.  Seems like one of the things Bollen (through his firm SDRC, Inc.) did, according to the State of South Dakota (that's us, folks) was help himself to a million bucks that he collected in fees from foreign investors, fees that were supposed to go into an indemnification fund (read "emergency cash needed for unexpected expenses, including lawsuits") that was part of his contract with our state.
     If this is indeed what happened, Bollen ripped us off.  The state claims, per Tupper's piece, "the accounts holding these indemnification funds were closed without notice to the State" and that "unbenownst to the State SDRC transferred the funds into a new third account."  I'm sure we'll get a counterclaim or some sort of explanation from Bollen as to how that money migrated from a fund in which the state has a stake to a checking account that is owned exclusively by SDRC.  We enquiring minds and short-changed citizens of South Dakota, who've lost what appears to be $120 million or so in the EB-5 program, would like to know.  
    And while we're at it, how about some information on just how this lucrative deal passed from the state's control to Joop Bollen's?  The latest batch of lawsuits and subsequent media copy
Meantime . . .
How Did Bollen Get Away Wth This?
(photo from madvilletimes.com--Thanks, Cory)
being dedicated to them are having the effect of taking attention away from the main point in this messed up deal--the main point being, just how the H did Joop Bollen, who was running the EB-5 program for the State of South Dakota, manage to hijack it and all of its subsequent fees by turning the operation over to himself via his corporation SDRC, Inc.?  

     Meantime, if the State of South Dakota is so sure that Bollen essentially stole money from us--sure enough to pursue the matter in civil court, anyway--why isn't our Attorney General Marty Jackley doing something about this?  I mean, the taking "without notice" of public money and then transferring that money "unbenownst" to us sounds like plain old fashioned "theft" to me.  It also coincides with every legal definition of theft that I've found on-line, which basically comes down to intentionally and fraudulently taking someone's property without that person's consent. That's the gist of South Dakota's civil claim.  Why doesn't the criminal justice system see it the same way?  


**My thanks to the anonymous reader who has a taste for great old TV westerns, in this case Rawhide.
     

Tuesday, December 8, 2015

I Didn't Think Anybody Could Out-Crazy Trump, But Ted Cruz Just Pulled It Off. Pubs Will Be Cruz-in' For A Bruiz-in' If Ted Gets The Nod

     Ted Cruz is making some headway in the GOP primary polls, apparently deciding that
Tailgunner Ted
Jab That Finger.  Curl That Lip.  You Be Baaad.
(photo from businessinsider.com)
the 
crazier you get these days, the better your standing among Republican primary voters.  If you thought Trump's recent bashing of religious freedom  (which even that right wing stalwart Dick Cheney considers an affront to American valuespushed the "crazy" envelope to its limits, consider the "can-you-top-this?" nuttiness that Ted Cruz just came up with while hustling a bunch of Republicans in Iowa over the weekend:  "If I am elected president, we will utterly destroy ISIS. We won’t weaken them. We won’t degrade them. We will utterly destroy them. We will carpet bomb them into oblivion."  Then Mister Tough Guy added, "I don't know if sand can glow in the dark, but we're going to find out." 
     
    My oh my, that guy sounds baaaad.  The chicken-hawkish Cruz, who never served in the military and "regrets" that he never did (yeah, right, tell that to the Marines) hasn't got a clue about carpet bombing, its effects or its military value. And that bit about "sand glowing in the dark?"  Is he saying he's ready to use nuclear weapons?  Good grief, where did this madman come from?  First off, Cruz might check with some Vietnam vets and get their opinions on how our "Rolling Thunder" carpet-bombing campaign worked over there.  From my vantage point at the DMZ I'd say it did squat, which I think is borne out by history. It wasn't but a couple of years after the U.S. departure that our enemy's flags were flying over big swatches of territory that, per Cruz's strategy, we were "bombing into oblivion." Not only are they not "oblivion" but they now contain some of the world's largest rubber plantations. I saw them a few years ago with my own eyes when I went back to the Nam
Carpet Bombing In Vietnam
I Watched Us Doing This.  Didn't Work.
(photo from wikipedia.com)
to check things out.  Fact is (and military historians, feel free to help me out with this), I don't think carpet-bombing as a strategic plan of action has ever had anything in the way of lasting success.  

     In the second place, could you imagine the civilian casualties that a carpet-bombing campaign would inflict?  I'd say that a program like that would create exponentially more enemies, both military and political, than it would ever destroy.  Even that forum of level-headed conservatism, The American Conservative, calls Ted Cruz's idea "atrocious."  The man is plain crazy and dangerous.  That he and Trump are contending for first place in the hearts of Republicans is a sure sign that the GOP is ready to go down the paths of Goldwater and Alf Landon (1936, check it out), so mired in rhetoric and bombast that the surest destination is political oblivion itself.  

Wednesday, December 2, 2015

A-one And A-two And A-three, Altogether Gang, Let's Sing The EB-5 "Sue Me, Sue You Blues . . ." **

     Lessee if I got this right.  The aftermath of South Dakota's EB-5 fiasco has turned into a medley of lawsuits.  First off, the State of South Dakota is suing Joop Bollen (actually his corporation SDRC, inc.) for screwing things up in the operation of the program.  That's a-one.  Then we have Bollen counterclaiming that the state messed everything up and wants $1.5 million in
Former Gov. Rounds With EB-5 Investor
A Fateful Handshake(photo from sddp.org)
damages. That's a-two.  Now all of a sudden, I see from
 Cory Heidelberger's excellent blog Dakota Free Press, that 35 Chinese investors are suing both South Dakota and Joop Bollen for $18.55 million, apparently contending that both parties lied about a slew of things and conned them into believing all was hunky-dory with their investments being managed in South Dakota.  And that's a-three.

     You can find details in the links and a very good summary in Cory's blog. I'm grateful to Heidelberger for his yeoman's job in keeping us informed about this bit of unpleasantness, the worst of which is that a key state official named Richard Benda apparently committed suicide on the eve of his arrest for stealing and misdirecting money from the state during his work on the EB-5 program.   The U.S. Department of Homeland Security, which oversees the program through the U.S. Citizen and Immigration Services, got so fed up with South Dakota's mangling of it that they sent us a Notice Of Intent To Terminate our state as a regional center.
     Meantime, has any state official or investigative body ever produced a comprehensive account of just exactly how this mess occurred?  Not that I've seen.  There was a brief investigation a year ago by the SD state legislature's Government Audit and Operations Committee that basically singled out Benda as the fall guy.  It was a pretty lame effort, one that didn't even require Joop Bollen to testify in person--all he had to do was submit written answers to written questions.  A bunch of Perry Masons our elected officials were not.  Just the same little bits
Still Under Scrutiny
After All These Years
(image from ksfy.com)
and pieces of information kept popping up during the past 12 months, culminating to some extent with that Notice of Intent to Terminate.  As part of the process the state has undertaken to restore its status as a regional center for EB-5, the state apparently has to convince the feds that it is doing whatever it can to recover lost public money, which means suing Bollen.  Thus the counterclaim by Bollen, suddenly followed by this week's filing by the Chinese investors who claim they got ripped off by South Dakota and Bollen.  


     Oh well, if getting substantive information from our public officials isn't going to happen, I imagine a lot of details will emerge in the courts as these lawsuits progress, barring some settlements that will scuttle the process along the way.  The Washington, D.C.-based Center for Immigration Studies thinks South Dakota's citizens lost $120 million in this debacle.  As the criminal justice system hasn't been able to shed much light on how it happened, it looks like civil jurisprudence just might.  We'll see, I guess.  If nothing else, I'm anxious to see where this cash-strapped state will find the $18 million if the Chinese investors get a favorable judgement.  


**Thanks,  George Harrison
     

He Seems Okay, But I'm Leery Of Marco Rubio's Block Grants . . . And His Obstinance On The Cuban Trade Embargo

     Marco Rubio has one major thing going for him in this GOP primary season:  He isn't
Rubio
Says He's For "The New American Century"
(photo from cnn.com)
nuts.  
Unlike the incomprehensibly uninformed Ben Carson or the megalomaniacally delusional Donald Trump, Rubio and his campaign are subject to rational analysis and discussion.  If for that reason alone, I'd take him in a heartbeat over Carson or Trump--both of whom are anathema to realistic Republicans--and would support him because
 I believe he actually stands a chance against Hillary, unlike those other two towers of ignorance and demogoguery.                                       In general, Rubio's campaign themes seem tolerable enough to suit most Republicans.  His "platform" generally stays inside the parameters of GOP dogma, and even leans toward enlightenment on a couple of big social issues, like abortion and gay marriage.  But I am leery of one major policy proposal, which is to federally fund "safety net" programs via block grants and then turn over the operation of them to states.  Yes, there are strong practical and philosophical bases for doing so: some duplication of administration could be eliminated and states know best how to dispense and manage the funding and other resources internally.  On that basis the Rubio concept makes sense. But speaking as a South Dakotan who's sick and tired of the way federally designed and funded programs have turned into boondoggles with tragic consequences--of course I'm talking about
Rubio's Cuban Policy?
Strictly From The Old American Century
(photo from miamiherald.com)
EB-5 and GEAR UP--after being turned over to state administrators to operate and oversee, I'm having my doubts about our state's ability to run these programs very well.  
     When it comes to our policy toward Cuba, Rubio's levels of rationalism and common sense drop sharply.  He's definitely stuck in the 1960s, much to the detriment of our country as a whole and South Dakotans, specifically. History is pretty clear on one matter:  improved trade relations between former enemies has done much to reduce tensions and add to the general prosperity of people.  I'm old enough to remember when China referred to us as "running dog imperialists" and we called them "the yellow peril."  That all changed when Richard Nixon opened up trade and diplomatic relations. Both of our countries have since profited from  private and public sector connections that have evolved over the decades.  Being in the tourism biz myself, I certainly know how my industry has benefitted from the huge numbers of Chinese who come to visit every year. That other mainstay of South Dakota's economy, agriculture, would stand to benefit even more directly.  Rubio needs to get with the program on this one and look toward the future when it comes to Cuba, not dwell on the past.  

     My take?  These reservations aside, I think he's the Pub with the best chance of winning the general.  I also think he's a guy I could do business with.  I'm in for now.