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Archives for Cronyism and Politics

The GOP’s Decline-to-Win Strategy

Aug
26
2009

The California Republican Party has finally found a way to make its September convention in Rancho Mirage relevant. It’s going to take up a proposal to make the Republican Party irrelevant in California elections for decades to come.

Party Vice Chairman Jon Fleischman is proposing that the state GOP close its primary and limit participation exclusively to registered Republican voters. As Vice Chairman Fleischman sees it, the proposal, “is about the long-term view about whether my political party is ultimately centered around the idea that people with common ideas and beliefs willingly come together and belong to a party out of common interest.”

By excluding decline-to-state voters from Republicans primaries for state offices, the California GOP will not only further alienate itself from mainstream of Californian, but it could cause irreparable harm to its party’s candidates up and down the ticket. Decline-to-state is – what my colleague Chris Nolan calls the “none of the above” party – is after all, the fastest growing voter block out there.

Which is why Fleishman’s proposal is not about winning elections. Not even he makes that claim. Voters who self-select to register Republican make up about 31 percent of voters in California – and that’s falling. The number of those who ascribe to Fleischman’s “Big-Government on Social Issues, Small-Government on Tax Policy” thinking is even smaller. Many have left and only a few Republicans like me have chosen to stick around and fight to make a party that believes in true conservative values like limited government, fundamental freedoms and personal responsibility. In Fleischman’s world, even I would not be welcomed in his party, if I wanted in.

So, who are these decline-to-state voters that Fleishman is afraid to have participate in the Republican primaries? As noted, many are former Republicans who have abandoned the party because they feel that the party abandoned them when it veered into a club for right-wing Theocrats. Others are centrist Democrats, voters we used to call “Reagan Democrats” who don’t ascribe to that party’s shilling for public employee unions at the expense of the taxpayer and might be willing to listen to a sensible, centrist Republican candidate.

Excluding these decline-to-state voters from Republican primaries will harm Republican candidates running in all but the safest, gerrymandered seats. That is why Sacramento veteran Tony Quinn likened the CRP Executive Committee to a “Death Panel” when he considered Fleischman’s proposal and Senator Abel Maldonado, who represents one of California’s few “swing” districts along the Central Coast, calls the plan “suicidal.”

To begin with, consider the psychology of the voter. I do not know about you, but when I vote for someone, I want my candidate to win. There is a psychological bond that is developed between candidate and voter when they punch that card at the ballot box. If you support a candidate in the primary and your candidate prevails, you are probably going to vote for that person again in the General Election. if decline-to-state voters are only allowed to vote in Democratic Primaries in California, you can guess what will happen in the fall elections.

Beyond psychology, there is a practical question of politicking here. The Fleischman plan to ban decline-to-state voters from participating in Republican primaries will effectively keep Republican candidates from communicating to these critical swing voters until after the primary. There is no reason that a Republican candidate would want to spend money speaking to voters who can not vote in their primary election. But during the weeks and months leading up to the primary, Democratic candidates and their messages will go out and fill that vacuum. Advantage: Democrats.

So my proposal for next month’s meeting is a simple one: Rather than ask whether decline-to-state voters should be allowed to participate in the Party’s primaries, the California Republican Party should ask if it wants to change its bylaws to, “Decline-to-Win.”

Posted by Scott Olin Schmidt at 4:56 PM | Permalink

Critiquing “Cash for Clunkers”

Aug
4
2009

Nearly six months after President Obama and the Democratic Congress passed a near-trillion dollar economic stimulus package, the American people finally saw results last week when the three-month “Cash for Clunkers” program exhausted all of its funding in just over three days, leading the Administration to seek more funding for the program from Congress.

Republicans, doing their best to hold on to the “Party of No” label they have been assigned are calling Cash for Clunkers a failure. But they’re using all the wrong reasons. Calling the program “Corporate welfare,” or “stupidity” neither adds to the national discussion or advances the public perception of Republicans. Instead, the GOP should be leveraging this lone success of the Obama Administration to ask key questions about his other programs and policies.

Cash for Clunkers did what billions of bailout dollars to Detroit could not. It got Americans to buy cars. Americans responded positively to the Cash for Clunkers program, and it boosted auto sales. That, my friends, is what I would call a success, even if it violates rational economic theory.

Just imagine the impact on General Motors and Chrysler had their tens of billions of bailout dollars gone to car-buyers and not to their shareholders. Each $4500 rebate would have been matched multi-fold by car-buyers. Inventory would be moving, plants would stay open, and sales tax dollars would plump up local governments, which would need less of a federal bailout to balance their budgets. Now that would have been a successful program that addressed several of the challenges facing the nation’s economy, from unemployment to local government finance.

Looking ahead, Republicans would be well-served to tone down their vocal opinions of Cash for Clunkers in light of the other major issue in Washington these days–healthcare–and hold it up as a model for fixing the nation’s healthcare system. Believe it or not, there are similarities. Cash for Clunkers represents how government can leverage the free market to help individuals accomplish a public good.

The goal of healthcare reform and Cash for Clunkers are fundamentally the same. Both use government assistance to get people to do what they would not otherwise not do. In the case of Cash for Clunkers, it was to get people driving more fuel efficient cars. In the case of healthcare, it is to get people who won’t or cannot pay for healthcare insurance to get healthcare.

Yet the two solutions offered by the Obama Administration are drastically different. Cash for Cluckers, the successful effort, empowers people to make the best choices for what fits them. Its plans for healthcare reform create a “government option.” Unless you consider buying a GM car a “government option,” the Cash for Clunkers program was about empowerment and choice – the exact opposite of what is being considered for healthcare.

The “government option” for healthcare actually reduces choice. Those who have health insurance now and like their plans may be able to keep them. But want to change to something better or lose your plan for some reason and the “government option” becomes the only option.

Economic theory and basic common sense tell us that when something is free, people will use more of it. With our nation’s healthcare problems like addiction to prescription drugs, obesity and and aging populace, how many more doctor visits will people take if access to healthcare is free and easy? Can we even know and when would rationing begin, as it did with the Cash for Clunkers campaign?

Cash for clunkers program should also serve as a warning sign. While I hate to agree with Fox News Channel’s Steve Doocey, what will happen if the funding for healthcare runs out after a month or two or three? Will Congress have to authorize more funding and how will people get treatment while they wait for a cloture vote on the Senate floor?

Even my fellow Republicans should understand that a stopped clock is right twice a day, and that the Obama Administration should credit when their twelve hours come past. Using the successes – and shortcomings – of Cash for Clunkers as a model to critique other Obama administration would be more constructive, and politically rewarding, than simply saying, “no!”

Posted by Scott Olin Schmidt at 4:55 PM | Permalink

Suze Orman For Governor

Jul
23
2009

I was an early and ardent supporter of Governor Arnold Schwarzenegger but the compromises he made to achieve a “balanced” budget in 2009 now make me believe that the Golden State elected the wrong celebrity. We should have elected Suze Orman. Only the CNBC talk show host would have the backbone to tell the Legislature and special interests, “Sorry, honey, you can’t afford this. DENIED.”

In a sixty-second TV ad running across California this past week, the Republican governor promises not to raise taxes, and that he, “will not sign a budget that pushes our financial problems down the road, because the road stops here.”

Unfortunately, the Legislative leaders and governor seemed to have used a few billion dollars in deficit financing to build an extension on the financial problems highway that pushes the deficits down the road and into the next administration.

Among the budget “solutions” agreed to by the governor are many gimmicks that take money from future years and use it to balance the 2009-10 budget. And, of course, no one has said how they will account for the gimmickry in future years.

Two billion dollars will be “borrowed” from cities and counties, to be paid back in 2013. That’s two billion-plus that the next governor will have to find.

One billion of the budget balance comes from pushing one round of paychecks for state workers from June 30, 2010 – the end of the current fiscal year – to July 1, 2010, with no word on when or if their paychecks will come in 2011.

Taxpayers also get caught in this mess. Individual withholdings for estimated taxes for 2011 will be taken out of paychecks at an accelerated rate in 2010. Does that mean that the government will collect NO witholdings from personal income taxes the following year? I doubt they could afford that.

This game is not just limited to revenues. Even the vaunted $16 billion in “cuts” involve kicking the can along the budget-balancing highway. For example, the compromise proposes not buying any new textbooks for K-12 schools for five years, yet takes all of the savings in 2009.

Governor Schwarzenegger asks us to “Stand up for California,” in his ads, when it looks like he was using crutches – at best – in the budget negotiations he held with the legislature’s Democrats.

The basic problem in California is that we want to spend more money than we have. In fact, it seems to be an epidemic in America. Some blame our budget mess on Proposition 13, which limits property tax assessments; others cite Proposition 98, which sets school funding levels on auto-pilot.

Everyone has a favor budgetary whipping boy. What we really need is a firm matronly voice telling us, “Sorry, honey, you cannot afford that!” We need Suze Orman to stand up to the legislature and tell them their credit card is DENIED.

Posted by Scott Olin Schmidt at 4:54 PM | Permalink

The Single-Payer is the Taxpayer

Jul
16
2009

Saying “time is a wasting,” to pass healthcare reform, senior White House Advisor David Axelrod dismissed efforts to reach consensus on legislation as secondary to getting a new law passed. “We’d like to do it with the votes of members of both parties,” Axelrod said. “But the worst result would be to not get health-care reform done.”

Axelrod could not be less correct. There is something worse than not getting healthcare reform – getting healthcare reform wrong.

The House leadership, led by House Commerce Energy & Committee Chairman Henry Waxman, has unveiled a hybrid plan – which at 1000 pages I doubt he’s even read – making healthcare a “right” in the United States, much like speech, assembly, religion and the right to bear arms. Of course, if you choose not to exercise any of these rights, you don’t have to pay a tax to the government. Not so with this new healthcare “right.”

Since debacle known as Hillarycare in the early 1990′s, the business community has warmed to the idea of a “single-payer” healthcare system. Their logic stated is simple: if they no longer bear the financial obligation of offering healthcare to their employees, it’s good for business.

The single-payer system is attractive to many in business and labor, but has spooked politicians because of its failures in other countries and its failure to pass political muster in the states. So concepts like “universal healthcare” have morphed into “universal coverage” and “cost-cutting reforms” which poll better with the American voters. The current proposal in the U.S. House of Representatives aims to create universal coverage by requiring that employers either provide healthcare benefits or pay a new payroll tax of 8%. Anyone who opts against healthcare coverage also must pay a 2.5% levy on their wages. This money, along with a tax “surcharge” on families making more than $500,000, or individuals making significantly less, will fund a government-run health insurance benefit to catch all of those not insured by their employers.

This House healthcare bill may be the beginnings of a single-payer system. By establishing an insurance program of last resort – funded, of couse, by taxing the most productive members of society – many businesses will opt to pay the payroll tax penalty and force their employees into the government-run system.

Once we are all in a government-backed insurance program, the goal of having a single-payer system will have become real. And that “single payer” is the taxpayer. But is that what we really want?

Yesterday, I had lunch with a friend who used to operate a small business in West Hollywood with two employees. Outside of salaries, two of his highest expenses were healthcare insurance and parking benefits. Shifting the cost of healthcare to the government would have helped him stay in business.

The proposition got me thinking about what else we could create a single-payer system for and have the government pay? What if, for example, West Hollywood created a single-payer parking system that would allow everyone to get to park their cars for free?

Businesses would like that idea on two counts. They’d no longer have to pay for employees to park their cars, and with free parking, more customers could come and visit.

The users of the single-payer parking system would like it, because they could park for free.

But ultimately, such a system is unsustainable. Eventually, the quality and availability of parking options would diminish as demand created by a zero-cost parking system would surely exceed supply, and the slippery slope would begin.

A single-payer parking system would then have to be regulated! Access to parking would have to be restricted and entrepreneurial business owners would develop separate fee-based parking systems that would guarantee access. In the end, only those who were willing and able to pay for parking would have access to quality, available parking options. Which is not much different than where we are today, where limited on-street free parking is available, and private lots and meters fill the rest of the demand for parking.

It isn’t hard to imagine the same thing happening in a world with government-run healthcare insurance. It’s a future where only those who can afford something better than the government policy can – and will – get better care. That inequality is what is fueling the debate today. So we’ll be brought back to square one, only we’ll be billions of dollars poorer for the effort.

If healthcare reform is as important as Axelrod and the Obama Administration say it is, then it is important enough to have a healthy national debate and consider the consequences of our actions before we take them.

Posted by Scott Olin Schmidt at 4:54 PM | Permalink

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