Tuesday, December 26, 2017

Will Kissing Up To Trump Work For Shantel Krebs?

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

Friday, December 15, 2017

Deficits? What Are Those?

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

Friday, December 8, 2017

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

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

Tuesday, December 5, 2017

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

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


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

Monday, December 4, 2017

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

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