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November 01, 2014

Saturday Politics Thread: Fiscal Policy Scorecards [Y-not]

After a brief hiatus, we're back to our assessment of some of the prospective GOP candidates for 2016.

These were the top issues that the horde identified as being important to them in evaluating a Presidential candidate:
* Reducing the size of the Federal bureaucracy and regulation 16.1% (1,295 votes)
* Reining in Federal spending 14.13% (1,137 votes)
* Repealing Obamacare 12.01% (966 votes)
* Solving the illegal immigration problem 11.41% (918 votes)
Other top issues included national security, entitlement reform, the Federal tax code, energy independence, and terrorism. Each received votes from >5% of morons.

What I'd like to do in the upcoming weeks is try to assess where each of the top seven* vote-getters (from our highly unscientific candidate polls) stands on these issues: Gov. Scott Walker, Sen. Ted Cruz, Gov. Rick Perry, Gov. Bobby Jindal, Rep. Trey Gowdy, Gov. Nikki Haley, and Gov. Susana Martinez. Naturally, our opinions about how each measures up on these issues are going to differ, but I'm hoping that by trying to be systematic, we can at least generate some good discussion.

As it turns out, the top issue for the horde is Reducing the size of the Federal bureaucracy. And the number two issue is Reducing Federal spending. How are these related? To me, the former really has to do with rolling back areas in which the Federal government has gotten involved, whereas the latter is merely how much that costs. In other words, someone could be very adept at trimming budgets and managing services efficiently, without really reducing how the Federal government intrudes on our lives. I think many of the folks we call "RINOs" fall into this latter category. They're offering us a more efficiently-run government than most Democrats, not necessarily a smaller one. That's not to say that someone who has demonstrated an aptitude for cutting government waste is a RINO, merely that one can have an efficiently run Federal government that is still too big.

That said, as I started to research the top two issue areas, it became apparent that there are a lot more tools out there for voters to assess politicians on their fiscal management approach than there are on the size of government approach. So I've decided to cover the fiscal topic first simply because it's easier. (I'm hoping our discussions on this topic will help guide my research into the related topic.)

The resources I'll be using are from the Cato Institute, the Mercatus Center, the Tax Foundation, the Heritage Foundation, the Chamber of Commerce, and the American Conservative Union. Feel free to suggest other resources you think are helpful in the comments. If there's enough interest, I'll do a second post on fiscal issues next week.


Fiscal Policy Report Card on America's Governors released last month by the Cato Institute. Cato's grades rely heavily on cutting taxes and spending, but also weighs things like the size of state governments (as gauged by hiring figures). Four governors, all Republican, received As on the last biennial report card (McCrory, Brownback, LePage, and Pence) and eight governors, all Democrats, received Fs.

We have five current governors in our list of 2016 prospects. All of them received a "B" from Cato in this most recent report card. Their scores, from highest to lowest, with a brief explanation below:

Gov. Susana Martinez, New Mexico (Score = 60)
Legislature: Democrat
Took Office: January 2011

Governor Martinez scores above average on spending and has pushed major tax reforms. Her proposed general fund spending increases have averaged a modest 2.4 percent in recent years. She has pursued tax cuts to make New Mexico more economically competitive. In 2012 she signed a bill reducing gross receipts taxes on inputs to construction and manufacturing, and she has called for exempting 40,000 small businesses from the gross receipts tax. Her biggest tax policy success was pushing through a cut to the corporate income tax rate from 7.6 to 5.9 percent, phased in over five years.

Gov. Rick Perry, Texas (Score = 58 )
Legislature: Republican
Took Office: December 2000

In 2006 Governor Perry approved a business tax overhaul that replaced the corporate franchise tax with a modified gross receipts tax called the "margin tax." The new tax hit 180,000 additional businesses and greatly increased state-level taxes. The added state revenues were used to reduce local property taxes, but the overall effect of the package was to centralize government power in the state.
Nonetheless, Perry has proposed reforms to reduce the harm caused by taxes. In 2013 he signed into law tax cuts of more than $700 million annually. The cuts included extending a $1 million exemption for small business under the margin tax, a temporary cut to the margin tax rate, and various sales tax exemptions for business purchases.
The way the numbers add up for this report, Perry scored well on spending.

Gov. Nikki Haley, South Carolina (Score = 58 )
Legislature: Republican
Took Office: January 2011

Governor Haley has proposed several large tax cuts in recent years, but the South Carolina legislature has not approved her major reforms. In 2012 she proposed cutting the current six individual income tax brackets to three and phasing out the corporate income tax. The plan did not pass, but she did sign into law a cut in the tax rate on small business income from 5 to 3 percent. In 2014 her budget proposed eliminating the top individual income tax rate of 6 percent, which would be an excellent reform. Recently, she has argued for the full elimination of the state income tax altogether.
Haley's budgets have included about average spending increases. She opposes expanding Medicaid and creating a state health insurance exchange under the ACA.

Gov. Scott Walker, Wisconsin (Score = 58 )
Legislature: Republican
Took Office: January 2011

Governor Walker has reformed retirement plans and union rules for government workers. Act 10, passed in 2011, imposed restrictions on collective bargaining and required increases in worker contributions for health and pension plans. Those changes are saving money at both the state and local levels of government. In addition, Walker signed a law requiring a two-thirds supermajority in both legislative chambers to raise income, sales, or franchise tax rates.
He approved individual income tax cuts in 2013, and followed up with further cuts in 2014. Wisconsin's five income tax rates were reduced to four lower rates... Those cuts, and other income tax reductions, will save Wisconsin residents more than $500 million annually. Walker has also approved substantial property tax relief.
He did not score as well on spending. His proposed increases have been a bit higher than the average governor, and actual spending increased 4.2 percent in 2013 and an estimated 4.8 percent in 2014.
His strategy on Medicaid under the ACA is to provide broader coverage without increasing the overall cost. Wisconsin's program already covered people with incomes up to the level required by the ACA.

Gov. Bobby Jindal, Louisiana (Score = 56)
Legislature: Democrat
Took Office: January 2008

Governor Jindal proposed a dramatic tax overhaul in 2013, which would have eliminated personal and corporate income taxes in exchange for increasing the sales tax rate and broadening the sales tax base. The overall plan was revenue neutral, but would have simplified the tax system and encouraged economic growth. Unfortunately, he had to put the plan aside because of some design flaws and resistance to such a large-scale policy change. Hopefully, Louisiana will revisit tax reform in the near future.
Jindal has been tight-fisted on spending. His recent budgets have proposed spending increases averaging just 1.9 percent a year. State government employment is down 18 percent since he came to office. He also opposes Medicaid expansion under the ACA.

One item that really appears to matter a lot in the Cato report is Medicaid expansion. For example, Gary Herbert and John Kasich both received Ds from Cato and both are expanding Medicaid. Via the Kaiser Family Foundation, here is a link to the status of state Medicaid expansion plans.

Read more about the issue here: Heritage debunks 10 myths about Medicaid expansion.

**There was some discussion about Kasich in the comments. Here's an article about how he brought about Medicaid expansion in Ohio. It's a pretty devastating read. I think Kasich is DOA with respect to a Presidential run.**

Another resource for assessing these candidates comes from the Mercatus Center's state rankings of fiscal federalism (January 2014).

New research from Sarah Arnett examines states' abilities to meet their financial obligations in the face of state budget challenges that have far outlasted the Great Recession. Fiscal simulations by the Government Accountability Office suggest that despite recent gains in tax revenues and pension assets, the long-term outlook for states' fiscal condition is negative (GAO 2013). These simulations predict that states will have yearly difficulties balancing revenues and expenditures due, in part, to rising health care costs and the cost of funding state and local pensions.
Arnett uses four different indices to analyze state solvency using each state's fiscal year 2012 Comprehensive Annual Financial Report data. She then weights these four indices to create the State Fiscal Condition Index

This assessment does not distinguish between the governor's actions and his or her legislature, nor does it specifically address FEDERAL issues, but I still think this is a good resource. Here's how our five governors' states stacked up:

MercatusChart.jpg

*"Service-level solvency is the most difficult to measure because it reflects whether state governments have the resources to provide their residents with an adequate level of services. A state's service-level solvency is measured using taxes and revenue per capita, along with expenditures per capita."

You can read more about how the author developed the rankings and see how all of the states fared here. Bear in mind that three of the governors (Walker, Martinez, and Haley) had only been in office a couple of years when the data was used to conduct this analysis.

This might also be of interest: Governors' spending priorities (published by Mercatus in March 2013).

As long as we're on the topic of states' fiscal health, here's an article summarizing the recently released rankings from Cato and from The Tax Foundation. I'm linking it to make a point: which is that Cato (or any of these places) have particular points of view that might render some of their rankings questionable, at best. For example, Republican Governor Herbert (Utah) ranked much lower by Cato than did New York's Democrat Governor Cuomo. Something is askew with a system that produces that result, imho.


Two of our prospective candidates, Cruz and Gowdy, are current members of Congress. Neither has been a governor, so there is no Cato Report Card on them. However, FreedomWorks maintains Congressional Scorecards:

FreedomWorks identifies the most important votes on issues of economic freedom and scores Members of Congress based on their votes. We use a scale of 100, so the higher the score the more often the Member is on our side fighting for lower taxes, less government and more freedom.

Senator Ted Cruz (TX)has a lifetime score of 94%. He earned a perfect score from FreedomWorks in 2013. In 2014 they dinged him for his vote on H.R. 3370, the Homeowner Flood Insurance Affordability Act. He also failed to vote on On Cloture: S.Amdt. 2874 to H.R. 3979 - To Retroactively Extend Federal Unemployment Benefits for Six Months and On Cloture: S.Amdt. 2874 to H.R. 3979 - To Retroactively Extend Federal Unemployment Benefits for Six Months.

Here's a bit more about the "Yea" vote that hurt Cruz's score:

On Passage: H.R. 3370 - Homeowner Flood Insurance Affordability Act
This bill would delay a major reform to the National Flood Insurance Program (NFIP) that would have returned some semblance of market rates to flood insurance premiums. Currently, NFIP is over $25 billion in debt because homeowners in frequently flooded areas do not have to pay an amount that is equal to the risk they incur, meaning that the government takes a loss when the inevitable floods occur. By delaying the scheduled reforms, the NFIP will require a taxpayer bailout for billions of dollars.

As a frame of reference, the lowest scoring Republican Senator is Susan Collins (ME) who has a lifetime score of 32%. The highest scoring GOP Senator is Mike Lee (UT) at 100%. (Orrin Hatch's overall score is 74%.)

Representative Trey Gowdy (SC) lifetime score 91%. He has a 94% so far this year. His worst year was 2013 when he scored an 84%, owing to Yea votes on raising the Debt Limit, continuing to fund the government and the Farm Bill. He also failed to support the Meadows Letter to defund Obamacare. More about that here:

Congressman Mark Meadows solicited signatures for a letter to Speaker Boehner, asking that the House Republicans stand firm in their commitment to defund ObamaCare through the Continuing Resolution (CR) to fund the federal government. Members who signed the letter affirmed their commitment to resist ObamaCare using a must-pass bill (the CR), rather than continuing to take ineffectual, symbolic votes to that effect.

As a frame of reference, the lowest scoring Republican Representative is David Valadao (CA-21) with a lifetime score of 42%. The highest scoring GOP Representative is Justin Amash (MI-3) with a 100%.

Another resource for assessing legislators is from the Chamber of Commerce Scorecard. I think many (most?) of us are justifiably distrustful of the CoC. Their priorities surround business interests, which do not always align with what's best for the country. Amnesty is the biggest example, but there are others. That said, their scorecards are based on concrete legislative votes (such as raising the debt limit, which the CoC supports), so I think they're still useful.

Ted Cruz received a 63% from the Chamber based on his 2013 voting record in the Senate. He voted against the Chamber with respect to raising the debt limit, the Helium Stewardship Act, and S. 744 (Border Security, Economic Opportunity, and Immigration Modernization Act).

Cruz voted with the Chamber in regards to the Director of the Consumer Financial Protection Bureau appointee, amending the farm bill to reform the Federal sugar program, supporting transportation bill S. 601, opposing S. Con. Res. 8 (the Congressional budget bill that passed 50-49), and opposing S. 388 (the American Family Economic Protection Act).

The Senators receiving the Chamber's highest scores were Lamar Alexander, Jeff Chiesa, and Kelly Ayotte (100%). The lowest score was a 38%, received by Democrats Harkin, Mikulski, and Bennet.

Trey Gowdy received an 85% on his 2013 scorecard from the Chamber (88% overall). He voted against the Chamber on H.R. 5, the Student Success Act, which was passed by a vote of 221-207 along close to party lines (the Chamber opposed this measure). He also voted against H.R. 2775, which ended the shutdown. He voted with the Chamber on all other issues.

The Representatives scoring highest last year were LoBiondo (NJ) and Reichert (WA), who each scored 100%. (A name you'll recognize, Darrell Issa, received a 92%.) The lowest score, a 23%, was received by 15 Democrats, including Elijah Cummings.

Finally, the American Conservative Union produces scorecards for both national and state legislators. The votes used to produce these scores are not restricted to fiscal issues, but they are useful nonetheless. In the Senate, Ted Cruz earned a 100% for 2013. (The senior senator from Texas, Cornyn, earned a 96% and has a lifetime rating of 93%.) On the House side, Trey Gowdy also earned a perfect score. Follow the links to see which issues ACU factored into their assessments.


Was your mind changed with respect to any of these potential candidates?

So, did you learn anything about any of these candidates that makes you feel either more or less positively toward them? I did not know about Gov. Martinez's decision to expand Medicaid in New Mexico. She has a Democrat legislature, so I don't know to what extent that affected her options. It made me think more about her as a candidate given how popular she is in that state and how well she scored by Cato and in some of the Mercatus rankings. She may have a small RINO horn, but perhaps we could file it off of her during the primary! LOL

How about you? Any change in how you view these folks?


Next week we can either continue digging into their fiscal track-records or move onto the "size of government" issue. You choose.

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posted by Open Blogger at 08:55 AM

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