Our very Jimmy Stewartesque Governor went to Washington to answer a few questions about the Toll Road privatization. Sylvia Smith has the article.
The only exchange of consequence appears to have been:
Rep. Peter DeFazio, D-Ore., demanded to know why, if operating the Toll Road could produce enough money to pay the state a lump sum and still make a profit, Indiana didn’t do it itself.
“I like collecting interest better than paying interest,†Daniels said after scolding DeFazio for describing Macquarie-Cintra’s anticipated profit as “excess.â€
“It’s not a dirty word in our state, congressman,†Daniels said.
DeFazio suggested the lease-holder will raise tolls, something the state could have done to generate more income. “You’re saying there’s no political will to raise the tolls,†he said. “Are we outsourcing political will to a private entity?â€
“I don’t expect you to understand our state,†Daniels said. “Governors of both parties declined to raise tolls by one cent since 1985. You make an assumption about human nature that all future governors will be different than all past governors.â€
Translation: Hoosiers won’t like me if I raise their toll taxes directly. If I do it indirectly, the rubes won’t figure it out until after 2008.
Misdirection, Doug. That’s the key to being a good politician. ;-)
Daniels is right. I don’t recall hearing Pat Bauer asking for the state to raise tolls instead; of course, when he talks, I’m trying not to laugh.
I at least give Daniels credit for not raising spending while cutting taxes. If the State is in the black, he gets kudos from me for that.
Doug,‎
I think Daniels puts DeFazio in his place, as DeFazio is clearly wrong.‎ If you recall, Daniels has been very open about ‎wanting to raise some taxes, including a temporary tax on the rich and increasing the ‎cigarette tax. If Daniels raised the toll fee instead of leasing the toll road, he would have ‎taken fewer hits politically. Thus I don’t think anyone can claim leasing the toll road was ‎misdirection by Daniels. ‎
Whether or not you agree with the toll road, Daniels is right in his argument. The ‎likelihood of future governors or legislators raising the toll rates to a profitable amount is ‎slim to none, based on how the road has been operated for 20 years. Thus the best way to ‎make a profit was leasing the road. ‎
No, Daniels is wrong. That’s not to say Bauer is right. But locking in 70 years of toll increases is bad public policy. I think what they ought to do is raise the tolls enough to pay off the outstanding debt on the Toll Road. Once that’s done, turn it into a “free” highway.
If they want money to build new roads in Indiana, raise general taxes enough to pay for it. Don’t charge the citizens of Northern Indiana 70 years of increased taxes to pay for road construction today in the rest of the state.
Taxes aren’t especially pleasant, but they’re a duty of citizenship. Republicans, particularly, have demonized taxation so much that they have to resort to slight of hand to fund government projects.
I think you’re incorrect that Daniels is not raising spending. He’s proposing to spend piles of cash on these new highways. He and the General Assembly have also “balanced” the budget by shoving a bunch of costs down onto local governments.
I’m glad he is concerned about fiscal restraint, but to date I think he’s accomplished most of what he’s accomplished through slight of hand that we’ll be paying for in coming generations — much as he was party to shifting piles of costs to future generations when he was Director of the Office of Management and Budget in the Bush administration, running up the better part of $1 trillion in debt for the federal government.
Obviously you (and he) are right that future Governors — and I think Gov. Daniels — lack the will to push through an increase on tolls.
As to making a profit on the toll road, I’m not sure we are. We get $3.8 billion now and we pay ever-increasing tolls to use the road over the next 70 years.
Over the long haul, I think we’re going to pay more for that $3.8 billion than we would if our leaders (and our citizenry) had the stomach for the State increasing tolls directly.
Joe- What taxes has Daniels cut? You’re kidding, right?
By its nature, a toll road is always going to need to have toll increases, unless the costs of operation are going to go down. And making the road free, while politically popular, would jack up the operations costs (more wear/tear from more cars) and the money would still have to be found to support it. That would mean less road money going to go the rest of the state. So the cost of a free toll road would probably be higher gas taxes for the rest of the State.
Doug, while I agree that taxes should be raised, we both know that taxes aren’t going to be raised. All I ever hear from citizens is that “taxes are too high” while in the next breath, they’re adding more & more to the list of things government should take care of.
What exactly you do when facing a populace that wants something for nothing is something politicians haven’t found an answer to yet. Most politicans prefer budget deficits & just ignore the problem. I’d prefer less services and not going into debt.
I always go back to the lottery example. It wasn’t always in the state budget as a revenue item – it was a rainy day fund. It got added because it was easier for the Legislature to do that then to raise taxes.
If you want to complete the cycle of stereotypes, Republicans hate taxes and Democrats love the government to do everything for them. So the Republicans cut taxes and the Democrats make sure services don’t get cut. They get to keep being re-elected, and we get stuck with the bill.
Mike: I didn’t say he cut taxes, I was just glad he wasn’t passing taxes cuts at the same time he was increasing spending ala the folks in Washington.
Last time I checked, the state still owed money to local officials. IMO that should be paid back before any talk to tax cuts is entertained.
Doug,
A while back you linked to an article by Daniel Gross who writes for Slate on just how bad the Indiana Tollroad deal is for Hoosiers.
Gross pointed out that a immediate 20-25% increase in tolls could have been reinvested into automating the toolbooths lowering operating expenses as was the case with the Illinois Tollroad. Doing so would have helped change the longterm financial health of the tollroad. Even if Daniels wanted to still wanted to sell the tollroad, he could have then negociated a much better price.
But, like I have said before selling the tollroad in order to finance additional downstate road projects is monumentally stupid. If the billions from the tollroad sale were used to bargain for federal matching funds for mass transit, high speed long distance rail, new freight rail lines and any number of clean, cleaner or alternative energy projects I would be all for it.
Doug,
Nothing bugs me more than the term Tax Cut. If ever there was a misleading propagandistic phase it is Tax Cut. It is bad enough that the lying Republicans have built 25 years of fiscally insane politics on top of it. But, what galls me almost as much, is when triangulating, split the difference, me too, Republican-lite, DLCer Democrats either use the tax cut paradigm to woo voters. They are just as guilty as the Republican when it comes to polluting the quality of discussion of public finance.
To be specific there is almost never no such thing as a Tax Cut. A true tax cut only occurs when a degreed decrease in revenue is matched with a planned verifiable increase in efficiency, which naturally occurs very very rarely, or a cut in public services, goods or resources. All other decreases in public revenues should otherwise be defined as TAX SHIFTS. With the most common forms of Tax Shifts coming in forms of ruinious increased public debt to be paid by future generations, hidden user fees(as in the tollroad case) and adjusted for inflation decreases in public goods and services.
When one hears the term Tax Shift one immediately asks oneself the question from who and onto whom. Also who stands the benefit the most, the rich, middle class, working class or poor? However, Tax Shifts in and among themselves are not bad things.
In fact Tax Shifts are a critical part of active Government Keyensian economics. It makes sense to use deficit finance shifting the burden on to future generations if the purpose is to fund infastructure projects whose economic benefits will extend long into the future, laying the ground work for real future economic growth and in the short run stimulate the economy and provide jobs. Major wars almost alway have to be financed by shifting Tax Burdens onto future generations. However government bonds can be used to see that bulk of the debt is financed by the current generation without the resulting in inflation. The term Tax Shift implies that deficits will have to be reduced in the future by real increases in Tax Revenue in the future.
It is also important to recognize that Tax Shifts alter the balance between Public and Private goods.
Public goods can only be financed by direct public revenue or subsidy, think “tax-free” municipal bonds. The advantage of Public goods is that one has a much better idea just how many jobs will be created and who will benefit and the future economic contribution of what is purchased.
Tax Shifts that are designed to stimulate purely Private Consumption are very difficult to gauge at to their benefit. Dubya’s Tax Shifts created so few jobs because first of all trickle down economics is so inefficient in creating good jobs for those who need them most. The truely wealthy have a habit of creating lots of low paying service jobs, landscapers, cooks, nannies, maids etc. Second in a global economy consumer spending may only create jobs overseas in countries like China that increasingly supply us our imported goods. Worse because our creditors are now foreignors it has weakened America’s non-military political strength on the world stage.
Finally, Tax Shifts designed to increase Private Goods may result in massive market distortions. What comes to mind is the recent massive increase in the US of ownership of second and third homes, hotels, resorts, and condominums. The wealthy have used their Bush tax cuts to spend lavishly on private goods that are subject to massive price devaluation in a coming recession. Not to mention the mass disutility of new private property that is highly dependent of cheap liquid fuels to provide transportation to and from right as the world is on the brink of peak oil and global warming. Empty resort homes and condos in Vail, Las Vegas and Miami are hardly worth the massive debt burden placed on the country’s future generations.
I credit Doug as one of the very few people who is honest, thoughtful and careful enough to use the term Tax Shift instead of Tax Cut.
In my world politicians who repeatedly intentionally lie by using the phrase tax cut should loose a digit starting from the pinky to the thumb. Pretty soon it would be easy to spot the lying politicians as they would be the one with missing fingers.
Stupid Politicians like lots of DLCer Democrats who foolishly attempt to debate Republicans using their own misleading Tax Cut framing instead of the correct TAX SHIFT terminology should be slapped upside the head enough so that their permanently swollen and red ears would warn the public that they can do better by finding a smarter more progressive Democrat.
As far as woefully misguided libertarians who foolishly refuse to recognize that there are true public goods worth paying taxes for, I would hope that they could begin to recognize the true childishness of their political naivety. Perhaps they should start with this wonderful and brilliant critique of libertarianism.
http://www.radicalruss.net/blog/2005/11/whats_wrong_with_libertarianis_1.html
I do not have contempt for lots of self-styled Indiana Libertarians. Most of them that I have met are simple not terribly politically astute. My sense is that their politics are deeply rooted in unfortunate experiences of being bullied by those who wanted to force their very narrow fundamentalist views down their throats at an early age. Otherwise it may have been a case of unpleasant contact with a person of authority like a teacher, principal or even a police officer who needlessly abused their position. That left them a life long profound uneasiness at any institution of authority or government.
True thoughtful intellegent discussion of public finance and taxes involves the debate between on one side Liberal, New Deal, Keyensian economist like the recently passed John Kenneth Galbraith and traditional, old fashioned, increasingly rare, fiscal conservative, chamber of commerce, Republicans of the Eisenhower mold on the other. You can argue whether or not Public vs Private Goods should be split 60-40 or 70-30 one way or another in our economy. But the idea that Taxes are evil and the public must be pandered to should be put away for good.
Llama- The critiques on Libertarians in general are fair, but in this state, we have indeed become more politically astute, speaking about issues that really matter to people, and taking incremental positions rather than absurd radical absolutist ones.
I’m not aware of even a single person within the Libertarian Party of Indiana’s leadership or candidate ranks who matches the description put forth in Post #10 or the linked critique. Again, it does match in other states, but not here. We have worked hard to shift our culture from philosophical debate squad members to political activists involved in the real world.
I would recommend visiting the LPIN’s website and its companion legislative page to see what we have been touting. I doubt you will find it terribly radical or absent of a public good approach. Indeed, Libertarians were deeply involved in the recently passed eminent domain legislation, and I was one who addressed the joint committee. Within my remarks was the acknowledgement of a place for eminent domain- for truly public uses, such as roads, bridges, sewers, schools, and hospitals.
As you point out, we will always have a difference of opinion with other political camps over the scale of taxation and public good. But be assured, the tinfoil hats are a thing of the past.
http://www.lpin.org