Sunday, June 18, 2017

GOP Healthcare Reform Is A Magical Mystery Tour

     Looks like the U.S. Congress is celebrating the golden anniversary of a great album (Magical Mystery Tour by The Beatles) by coming out with its own cover of it.  If there ever were such thing as a political "magical mystery
Healthcare Reform
tour," our reps in D.C. have created it.  I think they call this version of it "Obamacare repeal," but shrouded as it is in political mystery, I doubt that anyone really can put a title on it, much less define what it's actually supposed to accomplish. Our South Dakota congressional threesome, Noem, Rounds and Thune, seem to have a vague idea that they're tasked with repealing and replacing the Affordable Care Act that sprang to life during the Obama administration, but so far no specifics have emerged.  Actually, I don't think any generalities have emerged either.  This is mysterious and magical, all right.

    "Surreal" might also apply.  Just last week, President Trump disavowed a House of Representatives version of Obamacare repeal that passed in early May. He said it was "mean." Yet a month ago he was celebrating its passage in the House with a Rose Garden ceremony, vowing that "we want to brag about this plan."  Trump's surrogate in South Dakota, U.S. Representative Kristi Noem voted for its passage, saying the bill "reflected" the vision based "on the proposal we've been working on with President Trump."  Does Noem now share Trump's retrospective regrets about the bill and join in with the President, condemning the House product as "mean?"  I imagine she'll clam up on this one, even though she's been reflexively following his lead and his rhetoric on ending Obamacare every step of the way.
     Now that repealing and replacing ACA has been defaulted to the Senate, there isn't much clarity about the contents of the proposal in that chamber, either.  Long promised by President Trump, he repeatedly vowed to make repeal a "day one" priority, saying to a crowd in Florida just before the election "it's going to be so easy."  And how easy has it so far been in its political incubator in the Senate?  It's impossible to say.  There's no public dialogue about what the Senators are considering.  Our Senator John Thune claims that the internal "working group" meetings are "open to anybody," which doesn't square with reports that numerous healthcare organizations (the American Cancer Society, the Muscular Dystrophy Association--groups like that, about 120 of them) have been rebuffed in their efforts to meet with Senators working on the bill.  
     If the deliberations are as transparent as Thune claims, why are these organizations that are clamoring to be a legitimate part of the conversation being turned away? South Dakotans have every reason and right to get a sense of how our essential healthcare options are likely to be affected by discussions in the Senate.  Leaving all of us dangling like this is a poor excuse for representation.

Thursday, June 8, 2017

The Laffable Curve Flatlines In Kansas. South Dakotans, Take Heed

     In an eye-catching repudiation of the "Laffer Curve," the Kansas state legislature yesterday said "no thank you" to yet more of the economic self-flagellation that has driven that
Take Heed, South Dakotans
Brownback's A Huckster
state's economy into the ground.  
The pain started in 2012, when newly elected Governor Sam Brownback turned his state into a laboratory for litmus-testing Economist Arthur Laffer's theory that tax-cuts have a stimulative effect on the economy.  Laffer's "curve" reputed to show that lower tax rates boost economic growth, a dogma that is the centerpiece of trickle-down, Tea Party-ish economics.  Often dubbed a "miracle" by Brownback's devotees, the result after 4 years has been so disastrous for Kansas that Brownback's plan was trashed by his own heavily-Republican legislature.  State reps yesterday overrode the governor's veto of their plan to roll back those tax cuts, which have left a $1 billion hole in the state's budget.  

     Brownback's claims that his plan has boosted the Kansas economy are just as dubious as his promise that cutting taxes would increase state revenues.  Last October The Wichita Eagle did an item-by-item refutation of the governor's bragging points, which showed that the state's economy has been limping along, its economy growing at about half the national rate.  To me the final proof in that pudding is the sharp drop in anticipated tax revenues, which should have gone the other way if the state's economy was indeed doing well.  In any event, yesterday's legislative override couldn't be a starker assessment of how even devoted Republicans realize the futility of trickle-down economics.  There is no evidence, none, that shows tax-cuts have a stimulative effect on the economy and subsequent tax revenues.  In fact, using President George W. Bush's cuts as an example, exactly the opposite transpired.  Some say Reagan's worked well, but private sector job growth and tax revenue growth during the Reagan years were so-so at best.
     From our South Dakota perspective we should be wary of this nonsense on two levels. First,
We're Not In Kansas Anymore
We're In Brownbackistan

given our propensity for shortfalls in state revenues that occur because of our regressive sales tax/no income tax structure and its dependence on high commodity prices to stimulate our economy, we need to think about reforming our tax system in a way that doesn't rely on swings in world market prices for grain and livestock.  Next, our congressional delegation should be wary of jumping on President Trump's promise to supercharge the economy with tax cuts for high earners.  Last Fall our Congresswoman Kristi Noem breezily and uncritically touted a tax reform package of tax cuts that she claimed would result in a 9.1% growth rate, which showed that she knows neither History, nor Economics, nor what she's talking about. The Kansas growth rate under Brownback has been 1.2%.  Given that the Laffer Curve has been a floppola at both the national and state levels,  this notion that cutting taxes automatically does all of us some good is the kind of snake oil that sells well to rubes but in the end only makes its hucksters some money.  

Tuesday, June 6, 2017

Could Trump Be Any Worse For South Dakota?

     South Dakotans, who went 2-to-1 for Trump last November in an outburst of euphoric infatuation, will soon be sobering up as they consider what the Trump administration's budget
Buyer's Remorse,  Anyone?
has in store for rural states like ours.  
We rank 4th among states in terms of how much of our state's revenues come from the federal government (at $1.6 billion, about 40% overall, amounting to nearly $2 thousand apiece in 2013, the latest year I could find). Trump's cuts in programs directed at South Dakota are a fine how-do-you-do to one of his politically friendliest states.  He's already shown serious disdain for South Dakota's economic interests, considering Trump's hostility toward international trade deals that have been a boon for our farmers and ranchers during the past few decades.  South Dakota's ag economy has much at stake in the world's markets for grain and livestock as Trump's new and severely constricted trading relationships evolve in coming years.  Major farm groups are already reacting with "shock and dismay" toward the possibilities in reports from ag information giant DTN. The recent fall of commodity prices will probably extend farther into the future if our NAFTA trading partners, Mexico in particular, turn to other sources for their grain imports should Trump's threats to dismantle that agreement play out.  

     As if that "drop dead" attitude toward our state's largest industry isn't enough to compel serious concern, the Trump administration's proposed budget looks to be a real kick in the rear end to South Dakotans.  If you're cheering the possibility of severe cutbacks in most areas of federal spending in order to raise extra money for the Defense Department, you should know that much more than our ag sector will be affected by Trump-o-nomics.  The budget cuts for rural programs overseen by the Department of Agriculture are more than mere snips.  In some cases (rural water and waste disposal, direct loans for single family housing are examples) the funding disappears altogether, amounting to amputation.  In others the cuts are merely severe: rural utilities will lose billions, rural business owners tens of millions.  Trump, who "loves the poorly educated"  will continue on his quest to expand that element of his base by zeroing out programs that fund community learning centers, literacy development, and other educational opportunity grants. 
     I suppose that some devoted guns-over-butter Trumpistas are willing to trade these programs in on another aircraft carrier or two, but for most of us rural denizens a bit of consideration seems to be in order at this point.  Our generally kowtowing Congressional reps are likely to feel some heat over their champion Trump's priorities, which is why the phrase "dead on arrival" is frequently applied to Trump's budget as it moves toward Congress for consideration.   Worthy outcome as that would be, there's a much more practical aftereffect, disclosing as it does the indifference that the Trump administration has for the impact of his rhetoric on the day to day lives of millions of rural Americans.  

Tuesday, May 30, 2017

Q For SD Senators Thune And Rounds: Why Do You Hate A Free And Open Internet?

     With their recent votes against implementation of an internet privacy rule that would have barred service providers from selling our browsing histories, Senators John Thune and Mike Rounds (both
The Future Of The Internet?
R, SD) confirmed their  support for assaulting the neutrality of the internet.  A couple of years ago, when he lost his battle against maintaining the

internet's status as a public information highway, meaning the flow of information had to remain open and unfettered by service providers, Thune called a decision to retain oversight of the internet by the Federal Communications Commission "partisan . . . a power grab . . . and regulatory overreach." The telecom industry, which has provided Thune with $220,000 in direct campaign contributions since 2011 (placing the industry among his top ten contributors) took the political hit.  Its champion Thune dutifully responded.  Why Thune thought that allowing ISPs to create various channels of information with separate pricing for each of them would benefit us ordinary South Dakotans is still kind of a mystery to me.  The status quo lets us turn on our browsers and watch all the content that's out there without having to pay more for some information that's deemed "premium." I wish Thune would explain how his new set-up would be better for us.  
     I know the industry, via the new FCC commissioner, Trump-appointee Ajit Pai, claims that investment and innovation are stymied by the requirement that content should be provided on an equal-access basis.  Pai has repeatedly made that case over the years, and now that his political benefactor Donald Trump has ascended to power, Pai has his best chance ever at turning the internet into an online version of cable television.  When our Senator Thune (along with our Senator Rounds, whose $30k from Verizon makes that company his 3rd largest contributor) last month voted to repeal internet browser privacy rules set to go into effect (but delayed by the courts), the first shots were fired across the bow of consumer interests.  As to the lack of investment argument, it's really a bunch of hooey.  The telecom "group"  as of 2016 was by far the leading industry in terms of  spending, with the financial information giant Investopedia noting that in 2015 the industry "broke
out from the crowd" in terms of capital spending.  Meantime, using publicly available SEC data, The
The Fight Goes On
Keep It Free
Nation notes
that overall spending by the industry is up 5% in the past two years, with some areas of spending up as much as 50%. This is not an industry that lacks for growth and development opportunities.  

     What the industry lacks, and apparently sorely desires, is the chance to wrest control of the internet from public watchdogs like the FCC and turn it into their private universe of varying contents and speeds.  I don't get how allowing service providers to control content is an improvement on the status quo, and would like an explanation from our Senators Thune and Rounds as to why they believe it is. 

Sunday, May 21, 2017

Trump "Loves The Poorly Educated" So Much He Wants To Make More Of Them

   In its continuing crusade to weaken programs that help the poor,  President Trump's budget agenda wants Rapid City Area Schools to lose a significant chunk of  Title I funding. Title I of the
A Worthy Concept
It's Worth The Money
Elementary and Secondary Education Act, enacted in 1965 as one of President Lyndon Johnson's "War on Poverty" initiatives, provides direct federal money to schools and districts with significant concentrations of students from low-income families.  As Trump's proposed budget will cut Department of Education funding by about 14%, or about $9 billion, programs like Title I will follow suit, right down to the local level, with Rapid City public schools losing about $600 thousand from a $4.5 million annual grant.  This is in keeping with President Trump's budget, which will slash funding from 12 cabinet departments and increase it for three, Defense, Homeland Security, and Veterans Affairs.

      As a disabled vet I cheer the support for my brethren, but in the much bigger picture, I don't like this particular prioritization.  When it comes to veterans and defense, reducing support for our many economically-disadvantaged kids seems like a tough way to help our vets--and certainly a questionable method of paying for a Defense establishment that already spends more than the next 7 countries combined.  I wish the White House and our congressional reps would consider what we'd lose here in Rapid City (as well as every other school district in this state) if Trump's budget materializes.  Professional training and technology spending would be most immediately affected, taking away the extra attention and assets that are probably needed to give these disadvantaged kids an extra boost in school.
     Longitudinal (read:  follow-up) studies are probably impossible to find at a local level, but researchers have seen some correlation between Title I spending and individual achievement on a national scale.  Studies on academic success are a mixed bag, but a most interesting conclusion was reached in 2015 at the University of California, where researchers followed participants into their adult economic outcomes and found positive correlations between Title I funding increases and "higher earnings and work hours, reductions in incarceration" and reductions in poverty rates. The Trump administration, focused as it is on "jobs, jobs, jobs" should take note.  The link between poverty and poor academic achievement is a long standing reality in the world of public education, but as Trump, who "loves the poorly educated" should know, when it comes to economic success, the effects of good character are as meaningful as the effects of education.  If the UC researchers are correct, Title I and its strategies for developing self-motivation may have as much, possibly greater, impact on the former than it does on the latter.  
     The pedagogical magic of that connection seems clear enough to researchers.  It would be a shame to weaken an opportunity like that for South Dakota's neediest kids. 

Sunday, May 14, 2017

Some Dot-Connecting Between Fairness And Efficiency

   What, again?  Governor Daugaard last week ordered immediate cuts in state agency budgets because tax receipts this year have come up short by 10-15 million bucks.  In his typical
caretaker-like fashion, the governor is being re-active when what we need is pro-active leadership.
Banking On Tourists
The chronic problem with the falloff in sales tax receipts in this state isn't likely to get solved by doing nothing but cutting overhead, or, more to the point, by standing around and crossing our fingers that grain and livestock prices will reverse course, go significantly higher, and pull enough revenues into this state to get the cash streams flowing again.  This rather calcified process that masquerades as policy has been the bane of the Daugaard administration for years now.  In 2014, SD forecasts for sales taxes fell significantly short of estimates, much as they have this year, with no 2017 relief in sight beyond the hope of a strong tourist season bringing in a surge of cash to help the state pay its bills.  

     Even should that occur, we're continuing to rely on broad economic and market forces beyond our control to determine our state's fiscal destiny.  Twice now in the past 3 years, forecasters have gotten it wrong and there's no reason to expect their crystal balls to get any more prescient. Meantime, our sales tax revenues fluctuate with the whims of the commodity markets, which seems amazingly inefficient, considering that taxation based on personal income would probably be a much more stable alternative.  The ag sector in South Dakota now has 76% less money to spend than it did in 2011, to the tune of around $3 billion. That debacle, as noted by our elected officials, is probably the most responsible for our sales tax woes.  Meantime, I was startled to discover in a report from
And Inefficient
the U.S. Commerce Department's Bureau of Economic Analysis that our  personal income--derived from a wide array of non-ag related businesses in South Dakota--during the decade from 2006-2016 grew at a compound annual rate of 4.2%, substantially faster than the U.S. growth rate of 3.5%. 

     We're too self-fixated on our status as a state with no income taxes, as I often hear, but I think some comprehensive tax reform that reduces sales taxes, puts a freeze on property taxes with strict limitations on annual increases, and initiates a progressive tax on income, both personal and corporate, merits consideration.  Ideally it would result in a tax shift, not a tax increase.  Using U.S. Census Bureau data, the financial information website 24/7 Wall Street reports that income growth in South Dakota households from 2011-2015 ranged from 5% in the middle levels to nearly 10% in the upper.  The story lists us as one of the 9 states in the country where the middle class is being left behind,  income growth disparity (definitely a subject worth pursuing in another post) being a good reason why. Given the trend, a graduated income tax seems like a reasonable way to expect people making good money here to bear their share of the burden, which they now escape given our regressive and bumpy sales tax-dependent system. The dots between tax fairness and smoother government revenue streams look connectable to me.  

Sunday, May 7, 2017

Repeal, Replace, Repent

      Giddy with the consequences of her recent vote to repeal and replace Obamacare, South Dakota's lone congresswoman, Republican Kristi Noem, was clear about what it meant to her.
Working?  Maybe
Thinking?  Um, I Doubt It
She said "it's a very significant day for me" because "I loved the fact that we repealed the mandates." Apparently, getting rid of those mandates was the main driver of her vote to toss ACA out altogether, circumspection about the full implications of her vote be hanged.  In their rush to create the appearance of a legislative victory for the Trump administration, Noem and her fellow Republicans in the House of Representatives abandoned all pretense of deliberation and put together a bill that even Noem acknowledges has its flaws.  She knows the House whipped up a batch of hasty pudding and even reiterates its pitfalls, particularly in the way it gives states so much leeway in developing requirements for insurers on matters like "essential services" and price protections for older and sicker folk. To questions about that, Noem plaintively responds, "I didn't get to shut the door to my office and write it myself."  Please.

     We South Dakotans have to hope that our GOP Senators Rounds and Thune can give this package a serious once-over before they go the Kristi Noem-esque rubber stamp route.  Besides the matters of making sure all of us get adequate and affordable health care, there are broader economic implications that seem to have whizzed right past the partisan heads in the House.  For one thing, the job-conscious Trump administration should consider that the growth in healthcare jobs (about 10% faster than the overall rate of job growth) in this country during the past few years has more than offset the loss of manufacturing and construction jobs.  Healthcare consulting firm Oliver, Wyman tells CNN "Obamacare was a de facto jobs program
Our Dynamic Duo
Rounds and Thune
whether it was intended that way or not." Researchers at Trump's alma mater UPenn say that the expected decrease in healthcare spending "will translate into a contraction in the healthcare sector."  

     Besides job losses, which are bound to hit South Dakota's 30,000 healthcare pros and technicians, there's the vulnerability of our rural hospitals to consider.  They've been having a tough enough time as it is, especially in states like South Dakota that have refused to expand Medicaid and bring more of its rural populations into that federal insurance pool, which would only add to the revenues of small hospitals. The National Rural Health Association notes that 70 rural hospitals have closed in recent years, with another 700 at risk as it appears that states are likely to get less federal money to treat the poor.  Can South Dakota make up the difference if that transpires? Given our perenially cash-starved fiscal status, I doubt it.  Maybe Rounds and Thune can explain what will happen to our poorer rural residents with the plan they have in mind.

Sunday, April 30, 2017

I Thought Being A Blogger Would Be Easier

     President Trump's public airing of his moment of self-examination was understandable enough.  He told Face the Nation last week that he "loved" his previous life and that he thought the
Did You Ever Have To Make Up Your Mind?
The Presidency Is No Lovin' Spoonful
Presidency "would be easier."  Who hasn't had the same experience?  In my case the feeling came over me during the first few hours of Marine Corps boot camp back in '66.  Lasted for three years, it did.  I have a feeling it will similarly linger for the President. But much as I can empathize, I wonder if Trump knows how his tenure in office has so far been anything but easy for us common folk.

     Here in South Dakota I get the sense that everything is on hold when it comes to matters that affect our state.  Trump's ambivalence about our trade relations with Canada and Mexico come immediately to mind.  Last Wednesday he said he was preparing an executive order to set a timeline for withdrawing from NAFTA after just telling a crowd in Kenosha, WI, that "NAFTA's been very bad for our country." Trump followed up by submitting a draft of the order for executive review.  The subsequent selloff in corn and soybean futures signaled to our agriculturally-dependent state that a continuation of ultra-low and economy-damaging grain prices would continue for a good long while as one of our best customers, Mexico, would probably start shopping elsewhere for their grain supplies.  So what transpired?  The very next day, President Consistency changes his mind and decides he wants to negotiate, after all.  Along with flip-flops on immigration policy, healthcare reform, NATO, marriage equality--the list goes on--Trump's vacillation has made presidential life for himself and the country a lot more difficult than it has to be
     And just where the heck has our trio of Republican congresspeople been during this waffling-in-lieu-of-government era?  In a pro forma recitation of political fealty, Senator Rounds
Congresswoman Noem
What, Me Worry?
last week in the RCJ proudly claimed that Trump is saving Americans billions of dollars via executive orders rescinding regulations. Right.  I wonder how much will be lost by Americans to financial brokers who no longer have to commit themselves to working in the best interests of their clients now that Trump has removed the "fiduciary rule" as part of his regulation-expungement program?  Meantime, all three of our GOP reps (Noem in the House and Thune in the Senate along with Rounds) have been mum about Trump's budget plan that would slash agricultural spending by 21%.   As consistency and coherence have been banished from the White House, it's no surprise that mum's the word.  Yeats' chilling vision seems to have materialized:  "the falcon cannot hear the falconer/things fall apart; the center cannot hold/mere anarchy is loosed upon the world."


Sunday, April 23, 2017

South Dakota's Fiscal Policy Is Based On Finger-Crossing

     It looks like there's no relief in sight for South Dakota's chronic fiscal problem, a shortfall in sales tax revenues.  As RCJ correspondent Bob Mercer put it in his report on a legislative board
SD Makes Projections On This?
Give Me A Break
meeting discussing the issue a few days ago, "the news is getting worse."  Mercer notes that Sioux Falls GOP Representative Mark Mickelson called the downturn in state revenues "the No. 1 issue" facing state government, adding that his concern is "the erosion of our ability to keep pace."  Rising expenses and falling revenues are a persistent reality for South Dakota government, which is headed for a second straight year of declining sales tax revenues, even as our state's population has increased by a bit over a percentage point since 2015.  Little wonder that Mickelson is concerned about our ability to keep pace.  

     Even more wondrous to me is that nobody in Pierre acknowledges the obvious, which is that our fiscal policy is based on finger-crossing.  South Dakota's agriculturally-dependent economy has suffered a three billion dollar hit in the past few years, seriously cutting down the flow of cash that streams through the state and surfaces as taxable sales.  For the government to base its cash-flow projections on any assumptions about commodity prices is folly, as we've seen the past couple of years. Our state's rigid dependence on sales and, more locally, property taxes for the lion's share of operating revenues is the stuff of gambling and hoping that lady luck will be with our commodity markets every crop year.
     A comprehensive review with an eye toward tax reform should be on Governor Daugaard's order of business for the remaining months of his term.  Our regressive sales tax-based system (4th most regressive in the nation) plants its burdensome feet most heavily on our lower-income residents, and our high property taxes (16th highest in the country at 1.4% of valuation--mine being closer to 2%) could stand some downward adjustment.  Taking those taxes down significantly and replacing the revenues with corporate and possibly individual income taxes
An Impractical Set-Up
That's Also Unfair
would smooth out the state's revenue stream and give property owners some long-needed relief.  It would also inject some equity into our state's financial structure.  It might even give our area ag producers some relief from the pain of paying the same property taxes every year whether they've made money or not.  The impracticality of the status quo is self-evident.  Fixing it would also be a way of having the word "fairness" applied more judiciously to South Dakota's tax system, which is profoundly indifferent to the equitable distribution of its burden.  

Tuesday, April 18, 2017

Commodity Trading Is No Way To Run An Economy

         South Dakota Governor Dennis Daugaard once told me that as a law student in Chicago he worked for a while as a clerk/runner on the floor of the Chicago Mercantile Exchange.  It might have been about the same time that I was there, getting a grip on the livestock markets as I prepared for my brokerage operation here in South Dakota.  The decades I spent trading stock options and ag futures, both in the Windy City and right here in the Black Hills, taught me a lesson that apparently was lost on Daugaard--don't bank on the commodity markets as the basis for making your financial decisions. 
     That truism is common knowledge in the culture of the trading world, but when it comes to South Dakota's financial governance and planning it's an axiom that has no relevance.  Just a
Trading Floor Madness
Or Budget-Planning In South Dakota?
few day ago, RCJ ran a story titled "State revenues come up short," which reported that various state tax revenues for the first two months of this year have missed their cumulative targets by about $10 million.  Some sales tax loss to e-commerce might be part of the issue, but I'd be amazed if planners haven't accounted for the relatively steady growth of internet sales when they made their budget projections.  If they haven't, they need to be fired.  In reality, State Economist Jim Terwilliger's explanation for the shortfall goes right to the heart of the problem inherent to commodity-based budgeting.  Noting that our state's farm income fell from $3.8 billion in 2011 to $800 million in 2016, Terwilleger fatalistically said, "you're seeing some adjustments going on in the ag economy.  It takes time to adjust to those lower prices."  

     A $3 billion hit, ratcheting steadily downward in 5 years to an economy the size of South Dakota's calls for an awful tough "adjustment."  But the fact is, swings in commodity prices have been the norm since the days when ancient Greek merchants haggled with Phoenecian traders over future prices for grapes and olives.  Modern day state officials held captive to those swings need to examine the concepts of risk management in order to avoid the pain of these endless and inevitable price cycles.  Ratcheting up their dedication to spreading out the state's economic base, mainly via
Yup.  That's What We Need
In South Dakota
manufacturing is probably first on the to-do list, but we've been hearing that for years with not much to show for it. A more practical and realistic approach is comprehensive tax reform, weaning the state away from from its dependence on the vagaries of sales taxes and spreading the tax burden out more equitably. By "comprehensive" I mean that everything--as that great Republican dealmaker Donald Trump likes to say--"is on the table." Space constraints intervene for now, so I'll explore the tantalizing concepts of "comprehensive, everything, and on the table" when it comes to tax reform next week.  


Monday, April 10, 2017

The Cat Came Back The Very Next Day

     We'll see if the rejection of Initiated Measure 22 by a combo of legislative and executive fiat during the just-ended legislative session will be a watershed event in South Dakota political
Blowback From I-22
Will They Quickly Forget?
(photo from Capital Journal)
IM 22 was a voter-approved (by 52%) package of campaign and governing reforms that put severe limits on campaign finance and lobbying efforts.  Unsurprisingly, it ran into unified resistance in Pierre during this Winter's legislative session, where it was trashed by Governor Daugaard as "unconstitutional," who went on to chastise voters by telling them they were "deceived" and "misled" into voting for the reforms. Our Republican-dominated legislature went along with Daugaard's de facto defense of our status quo:  A state government that gets an "F" grade from The Center For Public Integrity.  IM-22 was effectively repealed, posthaste.  Its replacement was a basket of bills that addressed some of the issues raised by IM-22, but lack the severity and scope of the defunct initiative, at least as far as I and many of its proponents understand it.

    So determined are those proponents that they have produced not one, but two, reform measures that they hope to get to the voters in 2018.  Represent South Dakota just sent the "Voter Protection And Anti-Corruption Amendment" to the state's Legislative Research Council for stylistic and substantive review.  Almost simultaneously, South Dakota Voter Protection sent the LRC 3 drafts of its Voter Initiative Protection Amendment.  Cory Heidelberger in his excellent Dakota Free Press blog provides the complete text and analysis of both efforts.  Complicated and comprehensive as they are, these initiatives represent the yearnings of a substantial (make that a majority, going by how IM-22 did at the polls last year) number of South Dakotans who are fed up with a government that they
The Very Next Day
And It Kept Coming Back
believe is hobbled by its inertia, its one-party domination, and its susceptibility to special interest influence.  

     A lot of South Dakotans were angered by the cavalier rejection of their will by Governor Daugaard and a huge Republican majority in the legislature.  People tell me that the voters will forget and that we'll go back to business-as-usual soon enough.  I'm not so sure. Government reassurances that watered down replacement bills have satisfied the will of the voters are probably not compelling enough to put this matter to rest. The reform movement showed its political muscle at the polls last year and there's no reason to think that voter attitudes have changed enough to forget about the reasons they voted for IM-22 in the first place.  Like the cat in that great old camp song, they came back the very next day.  

Monday, April 3, 2017

Keep It Clean, Commenters

I won't post comments that contain commonly known expletives.  I was once a Sergeant in the Marine Corps and can out-cuss anybody, but it won't happen here on the Constant Commoner.

Sunday, April 2, 2017

Mike Rounds And The Mastery Of Nothingness

     Our Senator Mike Rounds' typically platitudinous observations about the ag sector of South Dakota's economy in last Sunday's Rapid City Journal was unsurprisingly long on
Senator Rounds
Not Much Substance
rhetoric and short on specifics.  
I think the Senator may have finally realized that his political paramour President Donald Trump stands to be a real problem for our state's largest industry.  In his RCJ piece, Rounds laments the painful drop in ag commodity prices in recent years but provides no hint of how to improve on the situation.  He offers some meek hope that with the new administration "burdensome and unnecessary rules don't hamper production capabilities," which is his usual canard about how he'll be the champion of agricultural interests in this state.  As to the substantial stuff, better markets for our farmers and ranchers, Rounds has no ideas and can only say "in the long term, only a return to stronger commodity prices will actually provide real relief," a conclusion that merits a "duh."

      Having spent more than a decade in close contact with South Dakota's grain and livestock producers as a broker and cattle feeder, I'd say the burden of regulations is meaningful enough, but not really the issue.  EPA and USDA regulations can often be a pain, but those regulations didn't cause the halving of corn and feeder cattle prices during the past few years.  Rounds somewhat helplessly acknowledges that  producers "may continue to see low commodity prices in 2017," a likelihood borne out by prices in the futures markets. That's a reflection of the lack of enthusiasm for the Trump administration and its political handmaidens, our Congressional trio of Rounds, Thune and Noem included.  They're mired in mixed signals about the future of corn-based ethanol, which uses about a third of our corn production.  As to the outlook for
Noem, Rounds, Thune
Say, What's Up With COOL?
exports, considering that Trump's general approach to the growth of free trade has been negative, even brutal, American ag producers--who export about 20% of our total crop production--have good reason to be concerned.  

      Mike Rounds bypassed those compelling issues but singled out "economic growth" and "consumer demand" as the basis for better prices.  Actually, we've had excellent consumer demand and a steadily growing economy during the past few years and the ag markets did nothing but go down.  Domestic issues aren't the drivers of commodity prices that they once were, mainly because trade expansion has been the name of the game for the ag industry, which has to compete in a take-no-prisoners global environment.  Markets are skittish about the big policy picture, particularly trade, which Rounds and his fellow SD congressional reps continue to ignore.

ADDENDUM.  And from today's New York Times:  Mexico is about to play the corn card in trade talks.

Monday, March 27, 2017

Okay, Back To Medicaid Expansion In South Dakota

Making The Case
Let's Get 'Er Done
     Now that President Trump's campaign promises to end the Affordable Care Act couldn't get past his own Republican party's tumultuous rejection of them, it's time for South Dakota to move ahead on one major aspect of the law.  That would be expanding Medicaid coverage in our state, a plan that our Governor Daugaard did a pretty admirable job of crafting a year ago before everything went on political hold.  The postponement, of course, was a by-product of the presidential campaign and subsequent election of Trump, whose fervent promises of doing away with ACA (also known as "Obamacare") seemed achievable, considering his party had Republican majorities in both houses of Congress.  But calling the program "toast" was way premature, and Trump's failure to push its repeal and replacement through Congress leaves everything intact.  As a chagrined House Speaker Paul Ryan put it in his concession speech last week, "ACA remains the law of the land."
     As tough as that fact is for many Republicans to swallow, it does give South Dakotans a shot at using ACA as a vehicle for advancing healthcare opportunities and giving our state a much-needed economic boost.  First off, recent history demonstrates that the in-state political fallout isn't as potentially ominous as first meets the eye. Consider that 16 Republican governors have already expanded Medicaid in their states.  That they were probably part of the reason that a fair number of GOP reps in Congress couldn't get behind Trump's rush to destroy ACA is one thing.  That Vice-President Pence, when he was Governor of Indiana, expanded Medicaid for his state is another. Indiana's decision should make it pretty clear to recalcitrant Republicans here in South Dakota that expansion has some tangible benefits.  
     Those benefits are twofold.  The general consensus is that about 50,000 South Dakotans will become eligible for Medicaid benefits under Daugaard's expansion plan, which in the governor's words last year had the support of "80 hospitals and clinics, as well as 50 other organizations in South Dakota." There's no organized opposition that I can find coming from the healthcare industry
A Great Deal For SD
Too Good To Pass Up
in the state. On the second front, political opposition seems to be focused on ideological and partisan issues, which on a broader scale turned out to be hopeless when the entire ACA came under consideration in Congress. The same was true when Medicaid expansion specifically was adopted by so many GOP governors, Pence of Indiana included, around the country. Rejecting literally billions of dollars of federal Medicaid disbursements that will support this plan over the next few years makes no sense to me, especially as our Governor Daugaard's proposal makes it revenue-neutral for state budgeting purposes.    

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.