Friday, July 27, 2012

And the Winner Is....Predicting the 2012 Presidential Election

Note: Several months ago I published an article predicting the 2012 presidential race.  On July 26, 2012 I was the keynote speaker at the Coalition of Greater Minnesota Cities Summer Conference/Annual Awards Dinner where I updated my prediction.  Here is a summary of my talk and prediction.

    Presidential public opinion polls are perplexing. Some polls put Obama ahead of Romney, some say the race is tightening. Others find Obama ahead in critical swing states while others describe swing voters as perhaps moving toward Romney. 

    Ignore all of these polls.  The only three numbers I think that are important are these:  10/10/270.   Let me explain.

    You should ignore the polls first because they are snapshots in time, more than almost four months before the November elections.  Too many things can happen–a collapsing economy, war in Syria, gas prices, campaign gaffes–which can impact the race in the next few months.  Ignore the polls also because they are national opinion polls reflecting aggregate opinion across the county.  As Florida in the 2000 presidential election taught us, one can win the popular vote in a presidential election (as Al Gore did) but still lose the presidency in the Electoral College.  What matters most is winning 270 electoral votes.  The presidency is a battle not across 50 states but in 50 states.  In contrast to the Republican presidential contest that has turned less from winning individual states than to amassing delegates, the general election in November is really one of winning enough electoral votes to reach 270–a majority of the 538 electoral votes at stake.

    What complicates the race to 270 is that with the exception of Maine and Nebraska, the remaining 48 states plus the District of Columbia award their electoral votes on a winner-take-all basis.  Whichever candidate wins a plurality of the popular vote in a particular state wins all of its electoral votes.  Thus the general election is both about winning states and amassing delegates.

    Why is all of this important?  Simply the presidential race is over in 40 states.  There are some states that are reliably Democratic or Republican.  No one seriously thinks a Republican is going to win New York and even though Mitt Romney is its former governor, neither he nor any other Republican has a prayer to win Massachusetts.  Conversely, even though Romney’s recent bad news was that he could not prevail in Alabama and Mississippi, the good news for him and Republicans is that no Democrat is going to win there.  The race for the presidency is simply over in these states and Democrats in Texas and Republicans in California might as well do something else besides casting presidential votes in November.

    Barack Obama is reasonably assured of winning California (55 electoral votes), Connecticut (7), Delaware (3), Hawaii (4), Illinois (20), Maine (4), Maryland (10), Massachusetts (11), New Jersey (14), New York (29),  Oregon (7),  Rhode Island (4), Vermont (3), Washington state (12) and Washington, D.C. (3).  And despite protests from Republicans that Minnesota (10) is competitive, that is a fairy tale. If Minnesota is a swing state then it is truly over for Obama. Don’t look for the candidates or TV ads to be here come October. Thus, Obama starts with 15 states (plus D.C.) and 196 electoral votes.

    Conversely, Mitt Romney or any other Republican nominee is reasonably assured of winning Alabama (9), Alaska (3), Arkansas (6), Georgia (16), Idaho (4), Kansas (6), Kentucky (8), Louisiana (8), Mississippi (6), Montana (3), Nebraska (5), North Dakota (3), Oklahoma (7), South Carolina (9), South Dakota (3), Tennessee (11), Texas (38), Utah (6), West Virginia (5) and Wyoming (3).  Moreover, it was luck in 2008 that Obama won Indiana (11) and that is not in the cards this year.  This is a total of 21 states and 170 electoral votes. 

    Initially, this means a total of 14 states, with 172 electoral votes, are potentially in play. These swing states will determine the outcome of the election and within them, swing voters–roughly 10-15% of the voters–will make the difference.  Thus, the battle for the presidency is really over what a handful of swing voters do in 14 swing states.  These states are:  Arizona (11), Colorado (9), Florida (29), Iowa (6), Michigan (16), Missouri (10), Nevada (6), New Hampshire (4), New Mexico (5), North Carolina (15) Ohio (18), Pennsylvania (20) Virginia (13), and Wisconsin (10).

    Now some of the states are debatable as swing.  It is a long shot for Democrats to win Arizona even with a strong Hispanic turnout.  In hopes of winning North Carolina Democrats are holding their convention in Charlotte.  But there is no evidence that there is a convention bump; look to the Republican National Convention in Minnesota in 2008 as rendering North Carolina a long shot.  Similarly, Republicans consistently see Pennsylvania as one that they can win, but the Keystone State, as well as Michigan, remain more Democratic than Republican.  The last time the GOP won Pennsylvania was in 1984 with Ronald Reagan. In the case of Michigan, Republicans running against the auto bailout seem to be a losing strategy.  Thus, the original 14 state list could be reduced to ten, leaving Obama with 232 electoral votes, and a Republican nominee with 196.  This leaves 110 electoral votes in contest.

    These states are: Colorado (9), Florida (29), Iowa (6), Missouri (10), Nevada (6), New Hampshire (4), New Mexico (5), Ohio (18), Virginia (13), and Wisconsin (10).

    If pressed I could even make the argument that it is over in Wisconsin (Obama) and Missouri (Romney) but will not.

    In these swing states the percentage of undecideds ranges from 10% in Colorado, Ohio, Florida, Tennessee, Iowa, and Missouri, to about 7 percent in Nevada, with the overall undecideds in the country at 10%. Thus this is how I arrive at 10/10/270–Ten percent of the voters in ten states determine who gets to 270.

    Now the question is who the undecideds are and what will move them. Politics is about moving marginals (swing voters) (politics as a bar fight) Consider who these voters are and the issues that concern them. 

    First they are the unemployed, struggling middle class affected by the economy gas prices, and unemployment. These are the white working class. Bad news for Obama is that he does not connect with them. Good news for Obama, they also do not connect with Romney.

    The second group of swing voters include moderate women concerned by recent debates over reproductive rights, birth control, and family issues. These are the soccer moms. The swing to the right has alienated many of these women from the GOP and Obama and the Democrats seem to be enjoying an unusually large gender gap this year.

    The third group of swing voters are young people under thirty. It is odd to call them swing voters especially since four years ago they came out strong for Obama. This time around they are nowhere near as excited by him as they were in 2008, mostly because of economic issues and the failure of Obama really to connect with them.. These voters should be part of Obama’s base but because of their unpredictable turnout it is apt to call them swing voters.  If they do show up they will vote for Obama.

    Potentially these three groups and issues overlap; making it difficult to decide which is the most important or will tip the balance in the election.  But assume for minute that this presidential election is similar to many others in that it is a economic referendum on the incumbent–then it is the economy that is the main issue.  How is the economy doing in these swing states?  It is a mixed bag, with unemployment levels stagnating along with economic growth.  Moreover, neither candidate seems to be doing a good job coming up with an election narrative except for saying “I’m not Obama” or “I’m not Romney.”

    Having said all that, here is how I think the remaining states are tipping now.

    Add to Obama’s 232 the following states: Colorado (9), Nevada (6), New Hampshire (4), New Mexico (5), and Wisconsin (10).  This is 34 more electoral votes that gets him to 268, two short of the necessary 270.

    Add to Romney’s 196 :  Missouri (10), Virginia (13).  This is 23 more electoral votes and gets him to 219,still 51 short.

    Three states, Florida (29), Iowa (6), Ohio (18), total 53 electoral votes, and they are too close to call at this time. Romney needs all three states to win, Obama one state to win.

    Unless this election is a replay of 1980 where disgust for the status quo and Carter was so strong that it tipped millions of swing voters in the last 72 hours to vote for Reagan, I do not see Romney presenting winning all three of these states.  Obama wins at least one of these states, thereby ensuring his re-election.  Obama wins with 274-321 electoral votes.

Friday, July 20, 2012

The Paranoid Style of Michele Bachmann

“In my opinion the State Department, which is one of the most important government departments, is thoroughly infested with communists.” –Senator Joseph McCarthy, 1950.


“Information has recently come to light that raises serious questions about Department of State policies and activities that appear to be a result of influence operations conducted by individuals and organizations associated with the Muslim Brotherhood."  –Congresswoman Michele Bachmann, 2012.

    Fear and prejudice make people do stupid things.

    *    In 1692 Salem, Massachusetts, fear of the new world and prejudice against the unknown resulted in the deaths of 24 people—19 hung, four dying in prison, and one crushed to death—all because they were accused of being witches. The story is told well in Arthur Miller’s The Crucible—a banned book.

    *    During WWI and the Depression 30s, fears arising out of hunger and desperation and prejudice against hope for a better life led to raids, beatings, and imprisonment for union members and those who wished to advocate for their political views.

    *    After Pearl Harbor, fear and prejudice against the Japanese led to the forcible relocation and internment of over125,000 loyal Americans into concentration camps.

    *    In the 1950s, fear of the Soviets and prejudice against those who saw the world differently from Senator Joe McCarthy were subject to communist witch hunts and Hollywood blacklists that led to the loss of life and livelihood of thousands.

    *    And in civil rights protests in the 1960s, and at the Stonewall Inn in 1969, fear and prejudice against those advocating equal rights for Blacks and gays were treated to beatings and police brutality.

    Then there is Michele Bachmann who seems to be cornering the market on fear and prejudice with her defamatory remarks about Congressman Keith Ellison and Huma Abedin as being members of the Muslim Brotherhood.  Bachmann’s latest accusations are so ugly and dirty that even Republicans such as John McCain and Speaker John Boehner are condemning them.  Her comments  and accusations about Muslims and the State Department take a page from Senator McCarthy’s comments about Communists and the State Department in 1950.
    America is a beautiful nation, often filled with hope and promise of a better life for us and our children. Yet this country has an ugly side to it that we often forget and ignore.  It is the story of America as told so well by Richard Hofstadter in his The Paranoid Style of American Politics. We often cloak fear and prejudice in the flag and persecute minorities or blame individual liberties as the cause of our insecurities.  If only the government had more power or authority, if only people had less rights, some promise, then we could root out witches, communists, disloyal Americans, homosexuals,  immigrants, terrorists, and Muslims and make the country safe for the rest of us God-fearing Christian Americans.
    Yet Bachmann’s recent attacks are only the most recent episode of her appeal to fear, prejudice, and ignorance. Recall again her 2012 presidential candidacy.  After a first place victory in the August, 2011 Iowa straw poll, she was on top of the world.  Yet she suddenly fell from political grace.  Yes the entrance of Texas Governor Rick Perry hurt her campaign by carving into her political base, but it was also her comments about vaccines that doomed her.  In a September 12, 2001 presidential debate Bachmann criticized Perry for an executive order he issued mandating that all sixth-grade girls be vaccinated against the human papillomavirus (HPV) as a measure to prevent cervical cancer.  Bachmann’s criticism was that such an order was an overreach of government authority and an infringement upon individual liberty.  This is a fair criticism.  But she continued her attack the next day on the NBC Today Show.  Describing her conversation with a woman after the debate Bachmann recounted:  “She told me that her little daughter took that vaccine, that injection, and she suffered from mental retardation thereafter. There is no second chance for these little girls if there is any dangerous consequences to their bodies.”.
    Bachmann’s repeating of the urban legend that vaccines cause cognitive problems—retardation—was swiftly condemned by the medical community.  The source of this claim was a long discredited and doctored study that purported to find this link.  The medical evidence was significant—there was no connection and instead one could argue, as Governor Perry had correctly suggested in the debate, that HPV and other vaccines would be medically beneficial and would better promote public health than not getting the vaccine.  Yet because of this urban legend connecting vaccines with autism, parents were refusing to inoculate their children.
    Bachmann’s repeating and apparent embrace of this myth was roundly criticized.  Suddenly she looked like some type of crackpot, ready to embrace outlandish and fringe ideas.  Some might have concluded that Michele Bachmann believes the world is flat, the Earth is at the center of a universe God created on the evening of Sunday, October 23, 4004 BC (according to calculations by Medieval Bishop James Ussher), and that Elvis is still alive and well and living in hiding somewhere, thereby explaining why she wished him happy birthday on the anniversary of his alleged death.
    Bachmann boiled a cauldron of fringe views and crank beliefs. She was often criticized for factual inaccuracies in many claims, ranging from assertions that the American Constitutional framers freed the slaves (they did not) to the claim that Dodd-Frank (the bill passed in 2010 to regulate Wall Street financial transactions to the Patient Protection and Affordable Care Act (Obamacare) have already lead to the loss of millions of American jobs or increased health care costs despite the fact that most of the major provisions of both had yet to go into effect.  She also simply and repeatedly made other assertions that were simply wrong or widely exaggerated.  Louis Jacobson of Polifact points out that Bachmann through 2010 had earned five “Pants on Fire” on the Truth-O-Meter and has never scored better than “false” in her five truth tests.  She is the hall of famer of political lies and inaccuracies.
    I am not sure what is worse.  Is she lying for political advantage?  Is she that ignorant about  facts and history?  Is she dumb, lying, or appealing to prejudice?  Neither of these explanations are praiseworthy.  With the comments about the Muslim brotherhood I am not sure if her main failing  is the falsehood about Ellison and Abedin or equating being Muslim with being un-American?
    Joseph McCarthy’s end came in 1952 whenJoseph Welch, Special Counsel to the Army asked of him in a hearing:  “Have you no sense of decency sir, at long last? Have you left no sense of decency?”
    I wonder the same about Bachmann.  Maybe the turning point came this week when Senator  John McCain declared: "When anyone, not least a member of Congress, launches specious and degrading attacks against fellow Americans on the basis of nothing more than fear of who they are and ignorance of what they stand for, it defames the spirit of our nation, and we all grow poorer because of it.”

Monday, July 16, 2012

Vice-Presidential Running Mates: They Really Don’t Matter Much

Speculation over who Mitt Romney will select as his vice-presidential running mate is reaching a fever pitch.  Will it be Rob Portman from Ohio to help him capture that swing state, or will it be Mark Rubio from Florida to shore up that state and support with Hispanic voters?  Or will it be Tim Pawlenty from Minnesota, a working class social conservative to balance Romney’s Richy Rich image and mercurial support from the religious conservatives?
            While tremendous fuss is made over vice-presidential selection and convention wisdom declares that Veep selection can balance a ticket and offset presidential liabilities, the truth of the matter is that their value in terms of winning an election is of limited value.  Instead, it is more apt to say that the primary goal in selecting a vice-president is to find one who can do no harm.  Beyond that, locating one that adds real electoral value to the ticket is simply a bonus.
            Think about the office of the vice presidency.  It is an odd office with no comparable political office anywhere else in the world.  The two constitutional duties of the vice-president are to president over the Senate and vote to break ties, and then to succeed the president in the event the latter dies or is incapacitated.  As president pro temp vice presidents rarely vote.  Joe Biden has yet to cast a tie-breaking vote, Dick Cheney cast 8, Al Gore 4.  Instead, the Senate role for the vice-president is mostly ceremonial.  The other duty–waiting for the president to die or become incapacitated–does occur.  Gerald Ford became president upon Richard Nixon’s resignation, Johnson became president when Kennedy was assassinated, and Truman assumed the presidency when FDR died.  
            Succession is an important duty and that is why perhaps so much concern is raised over whom presidential candidates select for their Veep. But otherwise, vice-presidents have duties determined at the pleasure of the president.  They can range from purely ceremonial–attend funerals–to more substantive such as under Carter and Bush where Mondale and Cheney had significant policy roles. One great line about the vice-presidency tells the story of two brothers–one who becomes a missionary to Africa and the other vice-president, and neither were ever heard of again.
            Over time the criteria for vice-presidential select has varied.  In the early days of the republic the vice-president was the presidential runner up.  Federalist Party John Adams won the presidency and his Democratic-Republican rival Thomas Jefferson assumed the vice presidency.  Yet the election of 1800 where Jefferson and his vice-presidential candidate Aaron Burr tied in the Electoral College produced the Twelfth Amendment that made the presidential and vice-presidential candidates a ticket selected together.
            Throughout most of the nineteenth century geography was the preferred factor that dominated vice-presidential selection.  Presidential candidates from the north had to select southern or western running mates.  There is little evidence that such geographic balance really meant anything, but it nonetheless persisted as a legend important to presidential prospects well into the twentieth century.  Some point to JFK placing LBJ on the 1960 ticket as crucial to Democrats winning Texas, the south, and the election.  Yet in 1960 the south was still Democratic–at least nominally–even as late as 1968 Humphrey won Texas.
            Where geography actually seems important is with favorite son factors.  A vice-presidential   candidate might be useful in terms of helping a candidate when the Veep’s home state.  However, Lloyd Bentsen did not bring Texas over to Dukakis in 1988 and in 1980 Carter would have won Minnesota regardless of Mondale, Bush would have won Indiana without Quayle, and Bush would have won Wyoming without Cheney.   Clinton did win Tennessee in 1992 and 1996 with Gore in the ticket after Bush won the state in 1988.  Yet in 2000 as president Gore failed to win his home state as president.  Obama won Delaware in 2008 with Biden on the ticket but Kerry also won the state in 2004 with John Edwards on the ticket (who failed to win his state of North Carolina). Vice presidents as favorite sons who deliver their home states are inconclusive.
            There is little evidence that vice-presidential candidates affect voter turnout or presidential choice in any significant way.  Political science research indicates that for the most part voters select presidential candidates based on the person at the top of the ticket, not because of who is vice president.  Maybe vice-presidential choice sways one perhaps two percent of the voters, but it is not even clear this is the case.  Individuals who are most likely to be swayed by a presidential  selection–swing voters–are often those least likely to be politically informed or know who the vice-presidential candidate is.  Survey research in general suggests that only 59% of the population according to a Pew study can name who the vice-president is, let alone the candidate, suggesting the limited impact of a running mate in terms of affecting voter choice.
            Yet there are possible exceptions. Sarah Palin is potentially one.  By election day 2008 approximately 60%-65% of population thought she was unqualified to be president or vice president.  This was significant because a sizable portion of the population also expressed concern about John McCain’s age of 72 and whether he would survive four years.  Palin’s perceived lack of qualifications and high name recognition may have cost McCain two or three points in the election, but even then, Obama’s large victory and the other liabilities that McCain had question whether he really could have beaten Obama even with a different running mate.  Palin is more an example of another criteria of vice-presidential selection–at least pick someone who will not hurt the ticket even if a nominee cannot help.
            So what factors make sense in terms of guiding vice-presidential selection?  Discounting favorite son criteria (will the Veep help win his or her home state) which as noted above is questionable, several factors do make sense.  There are four possibilities.  First, will the vice-presidential candidate make an effective fund raiser?  Presidential campaigns are expensive big businesses and running mates who can generate cash are useful.  Second, will the vice-president be an effective pit bill in attacking or criticizing the opponent?  Often presidents do not want to do the dirty work of attacking the opposition so having a vice-presidential candidate such as a Robert Dole or a Spiro Agnew is good. 
            A third factor to consider is whether the vice-presidential candidate serves as an effective symbolic fig leaf to a faction within the party.  Maybe a candidate can reach out to the conservatives or moderates or other constituencies as part of a deal to win support or make them feel better about supporting the winner.  This type of selection criteria was more important in days of brokered conventions but one still hears of vice presidents serving a role in forging unity in a party.  Again, there is limited evidence that a vice-presidential candidate selected for this person actually delivers what is promised. Finally, a vice-presidential candidate may be selected simply because the president and this person get along or are friends.  The choice here has little to do with politics, it is simply personal.
            Overall, there is no magic bullet or evidence that declares who Romney should select.  Vice-presidential choices matter far less than the media and many political pundits seem to think.  Romney is best advised to go with the person he wants, using it as evidence of what types of decisions or choices he would make as president.  After all, the choice of vice-president is potentially the first and most important choice a president can make.

Saturday, July 14, 2012

Pity the Banker: The Lessons of Financial Meltdown

“Which is the greater crime, to rob a bank or own one?
–Bertold Brecht

“I'm pleased to offer a full repeal of the job-killing Dodd-Frank financial regulatory bill.”
–Michelle Bachmann

            It must be tough times to be a banker.  If one listens to the likes of Michelle Bachmann and the Wall Street Journal crowd the federal government is simply picking on banks too much.  The government so over-regulates the banks that they can no longer make money.  Regulations such as Sarbanes-Oxley (passed in 2002 in response to significant corporate fraud and financial misstatements on Wall Street in companies such as Enron, Credit Swiss, and Arthur Andersen among scores of others) and Dodd-Frank (passed in 2010) to address Wall Street financial self-dealing , conflicts of interest and gambling) are job killers draining down the economy.  Obama is Wall Street’s public enemy number one, with record amounts of their money directed at opposing his re-election after record amounts of their money endorsed his candidacy in 2008.
            All of this pity for banks seems so ironic, and wrong.  Bachmann, as she is prone so often to, proves she don’t know much about history as Sam Cooke once sung, and the Wall Street sympathizers have forgotten the role of the banks in bringing about the worst economic crashes in American history.
            One does not have to go back to the Credit Mobilier scandal of the 1870s in the US which involved the self-dealing of construction contracts by a major bank in building of railroads.  Nor does one have to go back to the roaring 1920s when banks so speculated on securities that their behavior helped precipitate Black Friday and the Depression.  It was this speculation which lead to banking reform in 1933 including the Glass-Steagall Act which created the Federal Deposit Insurance Corporation (FDIC) to ensure depositor’s money and separated investment bankers (those that speculate in securities) from commercial banks (which do mortgages).  Instead, one needs only to look at more recent history to see how banking and Wall Street speculation has wrought economic destruction in America...and across the world.
            The American economy crashed in 2002 after “irrational exuberance” of late 1990s revealed that many companies such as Enron and WorldCom simply lied about their financial health.  Jeffrey Skilling and Bernie Ebbers among others simply lied to the SEC and investors about their finances.  Cynthia Cooper, former chief auditor for WorldCom tells of the misdeeds in Extraordinary Circumstances and the movie/book The Smartest Guys in the Room tells the same at Enron.  Enron financial manipulation was amazing, bankrupting California, bringing down its governor, and wiping out the savings of tens of thousands of investors and employees.  Because of these scandals Congress adopted Sarbanes-Oxley to require companies to impose controls to make sure their balance sheets were accurate, requiring CEOS and CFOs to swear under penalty of perjury that their SEC reports were true and accurate.
            And then it all hit the fan in 2008.  Investment banks, speculating on mortgages and on Wall Street as a result of repeal of Glass-Steagall by the Gramm-Leach-Bliley Act in 1999, extended sub-prime loans to many individuals, often without income verification, sold off the loans to the secondary mortgage market, and then used the proceedings to gamble on Wall Street.  All of the collapsed in 2008 when the bets came due, banks lacked the resources to cover their losses, and the economic crash spread around the world. 
            The Bush presidency offered TARP to bail out the banks and the Obama administration followed up with trillions in credit and loans to help Wall Street.  In fact, Obama was perceived by Wall Street as their savior, bestowing on him record amounts of cash to help him win election.  Obama was the best friend Wall Street could have at the time.  Banks got bailed out ahead of consumers and homeowners and profitability was restored to the financial sector.   Moreover in a effort to prevent some of the worst excesses from returning Congress passed Dodd-Frank in 2010 which imposed minimal new regulations and order to banks and investment houses.
            For all of this, banks and Wall Street demonstrated their gratitude by turning on him.  They accused Obama of using a rhetoric that made them the enemy.  They were instead simply innocent victims of federal regulatory excess.  They were being robbed at gunpoint by federal regulation.
            But look at where banking and Wall Street is today.
            *          Jamie Dimon and JPMorgan fraud on trading hits $5.8 billion
            *          Barclays and other banks have manipulated Libor (London Interbank Offered Rate)
            *          Wells-Fargo agrees to a record payout to settle charges of race discrimination in their steering of people of color to sub-prime loans.

Yet despite these scandals, the Financial Times also notes how Wells-Fargo and JPMorgan have economically recovered, with the former experiencing a 17% increase in second quarter profits.
            Banks and Wall Street today are again solvent thanks to trillions of tax dollar credits and investments.  Many are experiencing record profits, yet many are also continuing to speculate, self-deal, or engage in other anti-social behavior.  And then there is the call for repeal of Sarbanes-Oxley and Dodd-Frank and the ouster of Obama from the presidency.  Biting the hand that feeds them is the understatement of the year.
            Recent news events point not to the need to weaken regulation but to the imperative to do even more.  Banks and Wall Street still lack the oversight and controls necessary to ensure that they serve the interests of the American public.  Restoring Glass-Steagall, further limits on self-dealing, more Wall Street prosecutions, use of anti-trust laws, and even more serious consideration of public control of credit are needed if we want to ensure that the financial sector serves the interests of the people and investors and not simply those who run those institutions.

Monday, July 9, 2012

Government Shutdown One Year Later: Reforming the Minnesota Budget Process

It is now the one year anniversary of the Minnesota government shutdown and proposals are flying off the shelf regarding what needs to be done to avert future budget impasses. Solutions range from cutting off legislative pay to exempting certain organizations from the shutdown (the zoo and the state lottery) to even saying that simply creating one party government (vote DFL and throw the bum GOP out this November) is what is needed.  All these are worse than band aid solutions; they really are going after the symptom and not the cause.
            The real problem is the flawed budget process in Minnesota. It is a process built for the horse and buggy days trying to operate in the 21st century. Government is so much more complex, the budget numbers so much larger, the functions more diverse, that it is perhaps impossible to reach consensus and make decisions between the beginning of January and ending on the first Monday following the third Saturday in May as specified by the State Constitution. These are deadlines from the nineteenth century and reflect a different era for the state. There simply may not be enough time to do the budget by law in the 21st century.
            But think also how flawed the current budget process is right now.   We have elections in November, The state then receives a fiscal forecast at the end of November telling the governor what the economic assumptions and budget situation in the state will look like in the coming months.  The governor then finalizes a budget premised on these assumptions.  If there then is a new governor (as there was in 2010) then the new governor when he takes office finishes the budget of the old governor.
            Now the new legislature comes to work in early January and then it waits until late January or so for the governor to release the budget. Then they all wait until late February for the updated fiscal forecast. Thus, it is really not until late February or March that the work on the budget commences. And even then, there are separate hearings in the House and Senate, forcing conference committees to act. The budget also is really ten separate bills, with spending distinct from taxation, and no real work gets done until there are agreements on the different spending targets for each of the areas such as HHS, K-12, and so on.
            Sound confusing? It is. It is also inefficient. At least two months are wasted at the beginning of every budget cycle waiting for the governor’s budget, the fiscal forecast, and then agreement on budget targets. Now add more wrinkle–budgets are created right after state elections when often many new legislators or constitutional officers are elected. They are green, often learning on the job while creating a new budget. This is what happened in 2011 after the 2010 elections.  The same will be true in 2013 when the 2012 elections produce a legislature with at least 25% of the legislators being new.  These new legislators are barely in office, barely understand the state government when they are asked to review the budget.  This makes no sense. In a distant past when life and budgets were less complicated (and smaller), perhaps it was possible to do all this with a part-time citizen legislature. But those days have passed. A new budget process is needed, with new time lines and ways to move the work along.
            Is there a better way to do the budget?  For nearly a decade I have argued that the current budget process is backwards and that a new mechanism is needed.  Many of these reforms are found in our neighbor state of Wisconsin.  What are these reforms?
            In Wisconsin there is a joint House (Assembly)  and Senate committee that does the budget.  It is one bipartisan committee and not separate committees in the two chambers as in Minnesota. Second, there should be one budget bill and not ten separate ones as is currently the case in Minnesota.  Moving to create one budget with one committee primarily but not exclusively responsible for it is a necessary correction and centralization to the highly decentralized process that currently occurs in Minnesota.  Additionally link budget and tax bill together.  Spending and revenue need to be connected.
            But in addition, one of the best ideas from Wisconsin is that of an automatic continuing resolution.  By that, if the budget is not passed on time in Wisconsin then the existing budget continues in force until the budget is agreed to.  This reform alone would prevent a shutdown.
            There other possibilities for reform.  One would be to pass the Truth in Budget Act. It would do two things.  First, it would undo the current asymmetry or stupidity in the law that counts inflation for the purposes of revenue but not obligations in Minnesota.  This law dates back to the 2002 when Roger Moe and Tim Pawlenty, in running for governor while they were still in the legislature, creating the gimmick to avoid having to deal with the real budget problems during the election.  The Truth in Budget Act would also ban spending shifts (shifting spending obligations past July 1, to push the matter off in the next budget year) and “borrowing” from schools and other entities with the false claim of paying them back in the future.  These are truly gimmicks.
            But even other reforms could take place.  Why should the legislature do the budget in the odd years right after the election?  Why not move the budget year to the even years and give legislative members a year to learn about the state government before tacking it?  Other possibilities include changing the timing of the budget, or when the legislature is called into session.  Instead of the legislature coming into session in early January, then waiting for the governor’s budget and then the fiscal forecast, change the timing of one or all of these to create a process that makes more sense.
            The point here is that there are many ways to fix the budget process to avert future government shutdowns.  The proposals being floated now will do little to correct the process.  Broader structural changes, such as those described here, are needed and can work.

Friday, July 6, 2012

Government by Ballot Will Minnesota Learn from Wisconsin and California?

This piece originally appeared last week in Politics in Minnesota.

As Wisconsin goes, so goes Minnesota?  Or perhaps is it California?  The choice of Minnesota’s future and the fate of its two constitutional amendments this fall might lie in the lessons one learns from these two states when it comes to direct democracy and citizen’s initiatives.  But beyond whatever lessons Wisconsin and California offer, there are reasons to question the wisdom of three hallmark reforms of the Progressive Era.
            Wisconsin is a state of political contradictions.  In 1854 the Republican Party was founded in Ripon.  Wisconsin is also the home of Robert “Fighting Bob” Lafollette and the Progressive Party.  The state has produced senators Joe McCarthy and Gaylord Nelson, and governors Patrick Lucey and most recently Scott Walker.  It is a state once at the forefront of union movements and most recently retrenching on these rights.  But it is also the state that gave birth to a movement that eventually trumpeted initiative, referendum, and recall as tools of reform. Yet Wisconsin may also be the state the spells the end of these three reforms.
            Yes the Democrats and labor failed in their efforts to recall Governor Walker.  But the failure was perhaps not for reasons thought.  Exit poll in the June 5, election indicated that 60% of the voters did not support using recall for the purposes of ousting someone because of their political views.  Recall is for malfeasance or misfeasance–doing something illegal–and not to be used lightly to remove people you simply do not like or with whom you disagree.  The failure of the Walker effort in Wisconsin has sparked talk of tightening and reforming the state’s recall process, perhaps requiring grounds to remove someone from office.
            Now consider California–home base to government by ballot measures.  It is the state that recalled Governor Gray Davis in 2003 and replaced him with Arnold Schwarzenegger. They literally pass scores of initiatives, from Proposition 13 in 1978 that froze property taxes and has nearly bankrupted the state, to Proposition187 in 1994 that denied public services to immigrants, to most recently Prop 8 –The California Marriage Protection Act–banning same-sex marriage in the state.  Government by ballot initiative has practically destroyed the state, turning it from a leader in so many areas such as education and environmentalism to one where California is practically ungovernable.
            Will Minnesota learn from experiences of Wisconsin and reject the marriage amendment this November or will it follow the direction of California and use constitutional politics to bypass the normal legislative route to enact legislation?   While opponents of both of these measures have emphasized equality, fairness, and cost as reasons to oppose both, perhaps they should also settle on the arguments from Wisconsin suggesting that the Minnesota Constitution is not the place for legislation such a gay marriage bans and voter ID, or that this is the road of turning the North Star State into California.  Making a vote on these two amendments de facto a referendum on constitutional politics is a strategy opponents should not foreclose.
            But beyond whatever happens in Minnesota this fall, the lessons of Wisconsin and California bring into question the wisdom of initiative, referendum, and recall as tools of democracy.  Once heralded by Progressives as measures to break special interest and entrenched legislative politics by bringing democracy to the people, one can really question the wisdom of these reforms.  There are several problems with these tools.
            Money Spent for Initiatives and Referenda cannot be limited.  In its 1978 decision First National Bank v. Bellotti the United State Supreme Court declared that money on ballot initiatives was core political speech and that efforts to place limits on the amount of money spent or contributed for these purposes was unconstitutional.  More importantly, the Court stated in Bellotti that limits on corporate spending violated the First Amendment, with that message reaffirmed and extended in the 2010 Citizens United decision.
            The importance of Bellotti and Citizens United for Minnesota are twofold.  First, were initiative and referendum enacted, the state could not limit the amount of money spent by any party.  Second, while Minnesota has had a ban on corporate political spending dating back over 80 years, that ban could not be applied to ballot initiatives.  Minnesota is already witnesses this flood of money as it applies to the marriage amendment. Hence, adoption of initiative and referendum would open an even larger hole in out existing campaign finance laws, permitting corporations and any other party to spend unlimited amounts of money to influence the outcome.
            Money Spent on Initiative and Referenda Circumvent Populism.  In perhaps the best study to date on initiative and referenda, Thomas Cronin indicates in his book Direct Democracy that money has a decisive influence on the outcome of ballot measures.  For example, he notes that corporate-backed sponsors win 80% of the ballot initiatives and that when big money opposes a poorly funded ballot measure, “the evidence suggests that the wealthier side has about a 75 percent or better chance of defeating it.” In addition, evidence demonstrates strong correlations between the amount of money spent and the number of votes cast and that while money cannot guarantee victory, the amount of money spent is decisive in defeating a ballot proposition.
            Overall, the evidence suggests that a popular ballot measure is more often than not defeat by corporate and big money and that corporate and special interest money and not the will of the people is what generally prevails in initiative and referendum decisions. Elizabeth Gerber’s book The Populist Paradox sees money as defeating but not passing ballot measures.
            Big Money Distorts Public Deliberation.  What big money buys in debates on ballot measures is media exposure.  According to several studies, media exposure is the single most important factor influencing and swaying voter decisions.  Given the cost of the media, for the most part, the public will be asked to make critical public policy decisions based upon 15 second sound bites financed by interests that have the most money to spend on the media.  Clearly our constitutional framers the original supporters of initiative and referendum did not envision policy making premised upon sound bites and the cash nexus yet the evidence suggests in California and other states that this is exactly what has happened.
            Initiative and Referendum has Little Impact on Voter Turnout.  Advocates of initiative and referendum claim that letting the voters decide increases turnout.  In some cases yes it does, but as a rule it does not. When appropriate variables are held constant, there is little difference in voter turnout in states that have initiative and referendum versus those that do not.  In addition, in some states, such as California, the presence of often 10, 20, or more initiatives on the ballot has lead to voter burnout where citizens, unable to digest the information necessary to make intelligent choices on all the ballot measures, have opted not to vote on them.
            Initiative and Referendum often  hurt Minority Rights.  Thomas Cronin notes in Direct Democracy that minority rights are often targets of initiatives and referenda.  While it is no doubt the case that some ballot measures have supported minority rights, the truth is that more often than not ballot measures have become another measures for special interest groups to push their agenda, often at the expense of individual rights.  It is unlikely that debates on the rights of unpopular or minority groups or other politically salient issues can be adequately undertaken in a media campaign where dollars buy sound bites.  Deliberation of public policy requires more than that.  In sum, democracy and populism stand for more than pure unmediated majority rule.  Democracy requires a careful balance of rights and policy considerations often not adequately suited to initiative and referendum.
            The lessons of direct democracy are not comforting.  They have not necessarily strengthened citizens’ rule or promoted good government.  Instead, they are used often to push special interests and persecute minority rights–as is the case with the two Minnesota constitutional amendments this fall.  Opponents of these amendments should emphasize these lessons in their campaign to defeat both this November.