So THAT’S where all the money went in Virginia

The Gilmore-Warner Senate debate this morning will certainly have plenty of material for the Warnerese-English translator, but there was one point of disagreement that peaked piqued (thanks, Shaun) my curiosity (excerpt from Vivian Paige, emphasis added):

Warner: Let’s revisit one of the issues that was one of the ideological hot buttons for you, Jim. It was your reluctance to support any kind of children’s health insurance program. Even though the legislature said please let’s put in place this children’s health insurance program you said it offended your philosophical positions. Instead Virginia during your term sent back 56 million in federal dollars that were supposed to come into Virginia that instead got spent in other states to sign up kids for children’s health insurance. Jim was that the right decision, to not sign up those kids for children’s health insurance?

Gilmore:Here’s the answer, Mark. We established that FAMIS program and started it, and we actually created a program that was correct philosophically and in terms of what was best for families. It was a private health insurance, families had to have some responsibility of their own and pay a co-payment. It was not a welfare program, and gave people the dignity to know that they were taking care of themselves with the assistance of a state program like FAMIS. But when Mark Warner came in he concluded that the measure of success was simply putting people on a government welfare program and as a result he lowered the thresholds and then signed everybody up into Medicaid. And what happened was this program went up because everybody went on Medicaid the numbers on Medicaid went up. And that’s what the difference is that he hasn’t told you today. But it reflective of something. And the question is, what are the health care policies that we’re going to face in the United States Senate. Barack Obama has come forward with a health care plan that is gonna say that employers have to pay to play and that in fact they have to offer a certain type of program or they will be taxed if they are an employer, and government will impose that on you. It says that insurance companies have to offer particular kinds of benefits and control certain types of programs. And then for extra measure he puts in a government-controlled program which will squeeze out private insurance. And in fact the more Medicaid goes up like Mark’s type of program, the harder it is on private insurance options. And so the question I’ve got for you Mark, when you get to the United States Senate are you going to be supporting Barack Obama’s health care program, or will you be supporting John McCain and myself, who want to put in place a more private kind of program, a private program that creates associations and more opportunities for private care, and more opportunities for guaranteed admission into private programs, so that in fact you can utilize the private sector, or you gonna go to in fact this type of government control that Barack Obama would like to do? And I think that’s the fundamental question that we have to ask and I think we already know the answer, because when the time came on SCHIP and FAMIS, you put ‘em in a government program.

Now, as you can see, this is a serious ideological difference, but after noticing that, another thought quickly came into my head - if Warner expanded Medicaid like that, it should show up in budget numbers.  So, after doing some digging, I found out where Medicaid spending shows up in the budget (Department of Medical Assistance Services), and started looking at the changes from budget to budget.  Here’s what I found (Dept. of Planning and Budget):

Fiscal Year	DMAS Spending	Increase
2003	$3,719,897,469	13.7%
2004	$4,030,280,698	8.3%
2005	$4,563,474,648	13.2%
2006	$4,921,099,602	7.8%
2007	$5,320,510,865	8.1%
2008	$5,662,663,577	6.4%
2009 (Projected)	$5,841,781,048	3.2%
2010 (Projected)	$6,165,171,257	5.5%

As you can see, the increases were quite dramatic during Warner’s term (FY2003-FY2006).  Certainly, Warner’s decision to turn Gilmore’s private-insurance plan into another part Medicaid had something to do with that.  The question is, how much?

Well, while it’s impossible to know the exact budgetary numbers if Gilmore’s plan had been maintained, I calculated what the increases would have been if the numbers were just held to population growth (averaged at 1.2% a year) and inflation.  I should note that I did not use the regular CPI, but the health care CPI as calculated by the federal Department of Health and Human Services.  The resulting numbers were as follows:

Fiscal Year	Health Care Inf.	Pop. Growth	Spending growth	Proj. Spending ($B)	Diff. from Actual ($B)
2003	4.6%	1.2%	5.9%	$3.46	$0.26
2004	4.6%	1.2%	5.9%	$3.67	$0.36
2005	4.0%	1.2%	5.2%	$3.86	$0.70
2006	4.4%	1.2%	5.7%	$4.08	$0.84
2007	4.2%	1.2%	5.5%	$4.30	$1.02
2008	4.0%	1.2%	5.2%	$4.52	$1.14
2009	Budget # used		3.2%	$4.67	$1.17
2010	Budget # used		5.5%	$4.93	$1.24

The numbers are mind-boggling.  The extra $1.5 billion for FY05-06 is more than Warner’s entire tax hike.  Over the entire eight years, the difference is $6.7 billion - $2.2B more than raised by Warner’s tax hike over that six year period.  Imagine how that $2.2 billion could have been improved, say, our transportation network.

So, if you want to know why your taxes went up, and (for Northern Virginia and Hampton Roads) why you’re snarled in traffic, today’s debate gave the answer: it was so Mark Warner could knock out low-income private health insurance and expand government controlled health care.

Do we really want to reward the author of this costly and ideological mistake with a seat in the U.S. Senate?  Shouldn’t we instead choose the fellow who tried to prevent this budget-buster?

Cross-posted to Bloggers 4 JimGilmore

Not even Warner’s 2001 comments are immune from the translator

Sixteen seconds were more than enough for the then-would-be-Governor to slip into Warnerese.  Write Side goes to the videotape (well, sort of).  As usual, the English is bold and in italics:

I will finish the repeal of the car tax . . .

Oh, the car tax repeal will be finished, alright.  “Completed” is a whole different story . . .

. . . and Mark, I think I’ve counted - you’ve now said thirteen times that I’m going to raise taxes.

. . . and Mark, I think it’s been thirteen times you’ve made me lie to the voters.

You’ve got that one-trick pony; it’s just not going to work.

You ought to know by now that I’m a pro at lying through my teeth.  Do you really think I’m going to crack now?

The fact is, I will not raise taxes.

The fact is, I will say over and over again that I will not raise taxes until the rubes vote me in.

The rest, of course, is history.

Cross-posted to Bloggers 4 JimGilmore

Now, about the Greater Washington Board of Trade . . . (UPDATED)

Well, know I can focus on the actual Examiner story (again, h/t TQ), in which the Greater Washington Board of Trade tries to throw down the gauntlet:

The Greater Washington Board of Trade, which has helped bankroll dozens of Republican and Democratic political campaigns in Northern Virginia, says it will not give another cent to General Assembly candidates until the legislature passes broad new transportation funding.

This, of course, comes as a result of the transportation special session.  In fact, it’s a thinly-veiled threat to the Delegates and Senators: pass a tax increase or else.  As it turns out, the GWBoT could end up being Exhibit A in the law of unintended consequences.

If you look at the Board’s contributions over the last eight years in VPAP, you’ll find what looks like a middle-of-the-road profile.  However, dig a little deeper and you’ll find that the majority of donations to Republicans ($21,798 out of $41,764) were to GOP legislators who supported Mark Warner’s 2004 tax hike.  Moreover, the “other” $15K went to a “transportation” group which existed solely to convince Northern Virginians to vote for the tax hike in the 2002 referendum.  All told, more than 79% of this groups contributions were for Warner tax hike proposals or for legislators who supported them.  Take out the folks who are no longer in office, and the number passes 90%.  Keep in mind that I’m not including the $7,000 that went to supporters of HB3202 ($4,500 of which came only after the bill was passed) because most of them, led by Speaker Howell, changed their tune this year.

In other words, the legislators most likely to be hurt by this are the ones closest to the Board’s thinking anyway.  Truth be told, few of the would-be-but-no-more recipients are in close races.  On the Republican side, only two won with less then 52% of the vote last year: Danny Marshall in Southwest Virginia, and Thomas Davis Rust - who voted for the Senate tax hike (and who I hope will be facing a primary challenge anyway).  If Rust does go down one way or another, it will simply make it less likely that the GOP Delegates remaining will support a tax hike. 

Now, anything can happen between now and next November, but on first glance, I really think the Board shot itself in the foot here.

UPDATE: Riley at VV noticed that the Board’s biggest investment of 2007 didn’t get them much of a return:

The top candidate they gave to?  Chris Brown, who ran against Del. Jeff Frederick and was utterly crushed.  Good investment with that $4K, guys.

Ouch!

The DC Examiner is usually better than this (UPDATED: correction coming)

I’ll get to the main point of this DC Examiner story (h/t: Tertium Quids) in a later post, but William Flook made a bad mistake recapping the special session in the piece:

Each party in Richmond rejected the other’s tax proposals during the session .  .  . House Republicans pushed a bill that would raise money solely in Northern Virginia and Hampton Roads, which died in the Senate.

Wrong!  The House plan that was sent to the Senate did not include any tax increases.  Once again, readers will think the Republicans backed a tax increase when in fact that they didn’t.

UPDATE: After corresponding with the reporter who wrote this story (William Flook), I received an apology and was informed that a correction would run in tomorrow’s edition.  I’ve liked the Examiner for some time, and this quick reaction (less than an hour) only makes me like it more.

Lieutenant Governor Bill Bolling for re-election

As readers of this blog know, I do not give my support to candidates without serious consideration, especially before the nomination process is complete.  Even though Bob McDonnell and Bill Bolling are the presumptive Republican nominees, I need more, and when the special session approached and they kept the door open to regional tax hikes, I was not comfortable endorsing either.

Bolling, however, improved dramatically, categorically ruling out all tax increases, before the special session convened.  After the session ended, Bolling once again made clear that any tax increases were unacceptable (for an idea of a more problematic post-mortem, take a look at Delegate Danny Marshall’s op-ed - at I’m Not Emeril - in which he’ll only publicly oppose statewide tax increases).

Lieutenant Governor Bill Bolling, like Cuccinelli, learned from his mistake, did not repeat it, and won’t repeat it.  For that reason, I enthusiastically support his re-election.

Ken Cuccinelli for Attorney General

Although it will surprise some to read this, my decision on whom to support for Attorney General was not made until the special session ended, for reasons I will discuss later in this post.

Of the three candidates in the running, only Cuccinelli has been in Richmond dealing with the vital issues of the state.  That’s more important than it sounds.  Ever since 1993, when Jim Gilmore radically changed the image of the job, people have focused on the crime-fighting aspects of the Attorney General’s office. However, an AG does far more than that; the AG represents the state on every constitutional and national policy issue that ends up before the courts.  I particularly remember my shock at seeing Mark Earley, representing Virginia, favoring re-regulation of the airline industry less than a year into his term.  That was never an issue during the 1997 campaign; had it been, the primary might have gone very differently.

That segues to my second reason for backing Cuccinelli; the odds are very good that whoever is elected Attorney General in 2009 will be our nominee for Governor in 2017.  Earley’s record as State Senator (where he had weaknesses on economic issues) was repeated both as Attorney General and as a candidate for Governor in 2001.  It was in the latter capacity that his penchant for deviating from limited-government views opened the door for Mark Warner.  The rest is history.

So, for me, Cuccinelli’s record in Richmond was the reason I am supporting his campaign; yet it is also the reason I took so long.  As many remember, Ken made one fatal mistake last year, he backed HB3202 during one of the three votes on it in the State Senate.  He did not vote for the Kaine version, which included the unconstitutional regional taxes, but the “aye” vote he did cast turned me away from him.

When the Supreme Court invalidated the regional taxes, Ken had a reprieve.  That said, I informed him that if he expected my support, he;d have to both oppose any tax increases and propose an alternative.  Well, he did both; for me, that’s proper atonement for his error.

I have nothing against either David Foster or John Brownlee, and I would gladly support either next fall should one of them be nominated (and truth be told, I consider Brownlee the favorite), but neither has the state experience that Cuccinelli has, which will be critical for supporters of limited government - both in the AG office and the future gubernatorial campaign.

Let them fail

The transportation special session had barely ended when the troubles of Fannie Mae and Freddie Mac began to dominate MSM reporting (oddly enough, bloggers have been largely quiet about it).  I mention that juxtaposition because it enabled a few things to come into focus and stark clarity, leading to one ominous, painful, yet inevitable conclusion: we must let these mortgage giants fail. That’s right: fail - as in declare bankruptcy, fall into receivership, have the assets unloaded, etc.

If one looks at several issues we face here in Virginia and elsewhere (traffic, environment, land-use, the ”popped” real estate bubble, inflation, etc.), one finds that much of it is driven by settlement patterns that Jim Bacon has been skewering for years (inflation is the obvious exception, I’ll get to that one later).  Oddly enough, Bacon et al seem to miss the biggest factor in leading to spread-too-thin settlements and all the problems they cause - government-driven, artificial inflation in the demand for property, and the two biggest culprits are Fannie Mae and Freddie Mac.

Fannie Mae began in 1938 as the Federal National Mortgage Association a New Deal government agency set up to provide loans to banks that they themselves could loan out to homeowners (David Fum, National Post).  Since these were government loans created from a policy deliberately designed to make homes “affordable,” the banks treated it like the free money it really was, and loaned it out like they were supposed to do.  Thus did the government begin artificially inflating property demand (to hear FDR fans tell it, the FNMA was just part of the great New Deal vision that rescued America from the Depression; more and more economists now understand that the rescue can be best attributed to World War II).

For thirty years, FNMA kept property demand artificially high (which likely had a lot to do with the first suburban wave of the post-World War II era), but by the 1960s, the program was doing its job so well that it was becoming a budgetary eyesore.  So the Johnson Administration decided to “privatize” it.

Why do I put it in quotes?  Because Johnson’s motives were hardly pure (Frum):

In 1968, the Johnson administration decided to privatize Fannie — not for any free-market reason, but because the federal government’s debt was rising fast, and the administration realized it could make the government’s accounts look better by moving Fannie Mae’s obligations off the books.

In other words, LBJ had no problem with the government continuing to underwrite the mortgage industry; he just didn’t want the accountants to notice.  So instead, he and the Congress of the time (Democrat-dominated, although I doubt the pre-Reagan GOP would have done much better) came up with a half-hearted scheme that moved FNMA cost off the government books but still gave it all the perks of a government agency (no real regulatory oversight, White House appointments to the the board of directors, and - here’s the kicker - Fannie Mae never had to pay taxes).  Making matters worse, the Congress and LBJ created a second such monster (the Federal Home Loan and Mortgage Loan Corporation, a.k.a. Freddie Mac) as “competition” for the new “private” Fannie Mae.

So now, there were two companies, both ostensibly private but with obvious government favors, government ties, and the implied government backing that came with them, artificially driving up property demand for forty years.

Until about ten years ago, that meant suburban stretched farther and farther out.  Then the campaign against “sprawl” went national.  Spurred largely by liberals at the national level and a politicalhodgepodge at the local level, the movement focused not on the demand for developed property, but the supply.  The result was a slew of zoning regulations, purchase of development rights programs, proffer demands - and, inevitably, a steep upward climb in home prices as demand lapped supply.

The final nail in the coffin came in the mortgage rush of the early 21st century.  We’ve all heard about folks signing up for mortgages they couldn’t afford, and lenders who ignored economic reality and let them sign.  How much attention, however, has been given to the government-sponsored corporations who continued to make it far easier and more profitable for lenders than any free-market would allow?  Even when Fannie Mae was caught inflating its own profits by $6 billion (roughly four times the size of Enron’s transgression), not a thought went to what this meant for the housing market.

Well, supposedly, we all know better now - except that no one is considering the one option that will ensure these mistakes are never repeated: letting these two behemoths fail.

For starters, the collapse of Fannie Mae and Freddie Mac will put a swift end to the nonsense of ”government-sponsored enterprises” (yes, that’s their name).  An organization can be a private firm or a government agency, but not both.

More importantly, all of the housing-based issues that we are facing today (everything I listed above except inflation), wold be consigned to history, because the demand for property will finally be restored to its natural level.  On the financial front, that removes the danger of future massive housingcorrections like the one we’ve seen recently - a correction that has placed so much pressure on the Federal Reserve to keep interest rates low that the American economy is almost entirely disarmed from fighting inflation (unless Congress is willing to reduce overall demand pressure by cutting spending - yeah, I know, they’ll start with the Flying Pork Squad).  On the “quality of life” front, it means the inflated property demand that led to “sprawl” in the first place would vanish.

Now, I don’t expect our political leadership to have the courage to let Fannie Mae and Freddie Mac fall, especially not in an election year.  If these companies must survive, then they must become companies, forced to act like any other private firm with the same risks, obligations, costs, etc.  If the free market has a genuine place for Fannie Mae and Freddie Mac (and it probably does, but not to the tune of $5.3 trillion in mortgage debt holdings), then let them find and operate in that place.

The important thing is - get the government out of the real estate business, once and for all.

More Richmond Times-Disptach follies: Jeff Schapiro

Jeff Schapiro’s abysmal post-mortem on the special session didn’t surprise me; after all, I’m already on record calling for him to be fired.  Still, I was gratified to see Tim Watson (I’m Surrounded by Idiots) fillet the piece while I dealt with the Free Lance-Black Hole.

Among the many things Tim mentioned in his rebuttal post (and you really should read the whole thing):

Back to RT-D:

The House version was carried by Del. Phil Hamilton, R-Newport News, an inartful dodger carrying water for the big companies angling to run, for fun and profit, vast hunks of the Hampton Roads road-tunnel-and-bridge network.

As Christina Nuckols, of The Virginian-Pilot, reminded her readers: Those firms are represented by lobbyists who sit in the privy council of Speaker Bill Howell, ensuring Republicans receive only objective, dispassionate advice on what could prove a giant government giveaway.

Oh my God! Those evil “big companies”!

They have some nerve employing people and giving them a paycheck for work! Those saps that work for those evil “big companies” should just quit, get on welfare, and live off the government.

What’s even worst is that the companies hire people (lobbyists) to represent themselves to the legislature. Those bastards should be executed for using their First Amendment rights.

Remember that hating corporations is #82 on Stuff White People Like (RWL Note: maybe I need to pay more atttention to SWPL; he may be more perceptive than I thought).

 . . .

Does anyone notice that this reporter has time to go through and check out every little resolution that the General Assembly dealt with and proceeded to complain about the unimportance of them?

Did he write a story about the transportation bills that were dealt with? No, of course not; those aren’t important.

Is this not the very height of irony?

. . .

Second, while Jeff was tracking down every resolution the General Assembly dealt with, he missed the following:

The Republicans went from wanting (unconstitutional) regional taxes imposed on Northern Virginia and Hampton Roads to offering a no-tax solution: The Republican solution include appropriating money to NoVA and Hampton Roads from airport fees and taxes and port revenues to pay for the transports needs that are partly caused by the airports and port!

Where’s the story about Jeff Frederick’s bill that would give money to localities to pay for their own roads instead of giving money to the monstrosity that is VDOT (HB6025)? That bill didn’t even make it out of the House.

How about the bill that would implement the 2002 Governor’s Commission on Efficiency and Effectiveness that died in the House Rules Committee (HJ6061)?

How about the the great idea for the state to stop paying for roads in subdivisions (HB6041)? Why should I be paying for someone else’s subdivision roads that I and 99.99% of the state will never see or use?

How about the bill that would required an independent audit of the monstrosity-known-as-VDOT (HB6023)? The Senate refused to act on that bill.

RT-D had time to nitpick about every little resolution that was passed by the General Assembly, but couldn’t do their jobs and actually tell the people what did occur during the session.

A fine takedown of a sorry columnist for a once-elite newspaper that has devolved into an “elite” newspaper whose better days seem to be behind it.

Dear Richmond Times-Dispatch, please DON’T recycle columns

Normally, I’m very happy to see a Bob Marshall column in a Virginia newspaper.  However, I do think the Richmond Times-Dispatch fumbled the ball on Marshall’s latest column.  Why do I sat that?  Because the column - which the RTD touted as a post-mortem on the special session - was actually written before the sessions pivotal last day, and I know that because it ran on the morning of July 9 (before the session re-convened) in the Daily Press.

Now, I will give the RTD editors some credit, in that they edited the verbal tenses where applicable.  However, they needed to look a little harder at the nouns, because the outdated language led to some embarrassing errors.

For example, in the DP, Marshall laments that his bills had not gotten out of the House Rules Committee:

Sadly, these and similar measures have been sent by House Speaker William J. “Bill” Howell to his Rules Committee, where he is simply sitting on them.

The RTD ran it like this:

Sadly, these and similar measures were sent by Speaker Bill Howell to his Rules Committee, where he simply sat on them.

That’s not exactly correct; two bills (on ethanol and the spending oversight commission) were actually sent to the floor of the House.  Neither were passed, so this is largely a distinction without a difference, but it does reveal the age of the piece, which was of much more importance up in the fourth paragraph:

No Democrat (SB 6009) or Republican (HB 6055) tax proposal in the General Assembly during the recently adjourned special session raised more than $1.1 billion a year.

This is completely wrong.  HB6055 was not a tax proposal at all when it passed the House and was killed in the Senate three days before the RTD ran this piece.  Had the editors actually paid attention to the House activity, they might have caught that mistake.  Instead, readers in Richmond, Henrico, Chesterfield, Powhatan, Hanover, and everywhere else in the Richmond metropolitan area who read that piece came away from it still thinking the House GOP had proposed a tax increase - the exact opposite of what really happened.

Again, when Marshall wrote the piece (before the session reconvened) HB6055 was still the disastrous tax-hike that had set off activists, bloggers, and other conservatives for nearly two weeks.  Why the RTD didn’t bother to notice the discrepancy created by the passage of time is a complete mystery to me.

MSM special session follies: the Roanoke Times

Given what I have seen of the Roanoke Times from Jerry Fuhrman (From On High), it doesn’t surprise me that the paper missed the entire point of the special session.  That said, the Times really outdid themselves with their awful editorial.

We’ll start with the childish bombast:

So Virginians will face a choice in November 2009: Keep in power a recalcitrant House leadership that refuses to view transportation as a statewide issue in need of a statewide solution, or elect delegates willing to put governance ahead of ideology.

Who’s putting governance ahead of ideology?  The House Republicans came up with a creative plan that doesn’t raise taxes, ties transportation funding closer to transportation activity, and could still bring more money to Northern Virginia and Hampton Roads than the Senate Democrats’ plan.  Yet the Senate Finance Committee and Governor Kaine dismissed it out of hand because it didn’t include a tax increase.  Sounds to me like we could use some a new Governor who will “put governance ahead of ideology.”

Of course, you wouldn’t know that the House plan was without tax increases, because the Times never bothers to mention that.  All they do is rip the Republicans and offer a false choice:

Republicans stuck to their insistence on concentrating solely on the regional problems, ignoring a mounting maintenance shortfall that was forcing the state to divert more and more funds from new construction.

Wrong!  No one is “forcing the state to divert more and more funds from new construction” - except for Governor Kaine, who wants the money to go to his pet projects first.  If he had decided to swallow hard, defer his wish list, and implement the Wilder Commission budget recommendations, he would have had ample funds for new road construction.  Instead he took the easy way out and demanded Virginians pay more.  Because the House Republicans refused to knuckle under, he and his MSM friends have gone ballistic.  That the Roanoke Times has joined them is no surprise; neither is it a surprise that they did it in the same juvenile way everyone else has outside of the Washington Post.