Friday, October 17, 2014

Candidates’ jobs promises unrealistic

“Jobs, jobs, jobs.”  That’s what candidates promise in Maine and all over the country.  Their experience specially qualifies them, they say, to use their sought-after job in government to create employment for others.

It’s mostly a false promise.  No single position in government, including the presidency, can with certainty guarantee more jobs.  And candidates, who have created jobs in the private sector, are often amazingly short on details about how they would do the same thing in government.

Candidates like to give the impression they can translate business success into job creation once they are in government.  But this is a case of unrealistic political promises facing off against reality we should have learned in high school civics class.

There are hundreds of people in Congress and legislatures.  A legislative candidate can promise results, but he or she cannot produce them without the agreement of a majority of people, their fellow legislators, many of whom they barely know.

Even worse, the legislative body may be under the control of the opposition party, meaning they have no real chance of their job creation proposals succeeding.

Then, of course, there’s the president or governor.  Executive approval is almost always needed before a legislator’s hot idea can be adopted.

And that also works the other way around.  The chief executive depends on legislative approval to adopt most job-creation proposals.

Besides these very real institutional obstacles, there is the nitty-gritty of the proposals themselves.  How would the candidate have government create jobs?

Government can do many things to promote job growth, and most of them are controversial.  When a candidate promises to promote more and better jobs, the political hopeful should be asked which of the many difficult choices should be made.

With more funding, government itself can create jobs by hiring more people.  Or public funds can be used to hire private sector and non-profit entities to carry out public functions, like building roads and bridges.  But that could mean either higher taxes or more debt.

Another government policy, with a less certain result, is cutting taxes.  That allows employers to keep more of their profits, which presumably can be used to finance expansion and more jobs. 

Government can subsidize energy development by favorable tax credits.  In fact, there is a broad array of tax subsidies at the federal and state levels that reduce the cost of conducting a business in the hope that the resulting growth will create employment.

Tax cutting is “trickle down” economics.  But corporate chiefs are free to pay shareholders bigger dividends and not hire any new employees.  Tax reductions directly tied to job creation have not proved broadly effective.

Many candidates want to cut government regulation in the belief that the easier it is to do business, the more business will be done. 

If environmental rules are reduced, the private sector saves the cost of compliance.  For many voters that trade-off is too costly, making it risky as a specific job-creation plan.

Regulators can control utility prices, keeping costs down for business.  But an elected official usually cannot force such regulatory action, unless a legislative mandate is enacted.

Interest rates may be cut, making it easier for business to finance expansion by using cheaper money.  But that’s mostly a function of the Federal Reserve, which is intentionally isolated from the kind of political pressures that elected officials exert.

If older people leave the work force at a younger age, they open new job opportunities for younger workers.  For government to encourage that shift, it must assure retirees of access to a better retirement income and health care.

This is a partial laundry list of possible job creation measures.  None of them can be produced by any single elected official, so candidates can easily over-promise, hoping to sway uncritical voters.

Rather than look at candidates’ promises, it’s better to look at their party’s programs and orientation.  Most legislators will follow the party line, and most presidents and governors must rely on their party’s legislative support.

Politicians take the credit for job growth, but seldom take responsibility for economic slowdowns.  That should be a sign for voters to be skeptical of political promises about matters public officials may influence but not control.

Remember that much if not most job growth is not the result of government action but of the innovation, risk-taking and skills of business managers.

When candidates say their ability to create jobs is proved by their private sector accomplishments, it’s possible the best thing they can do to create jobs is stay in the private sector.

Wednesday, October 15, 2014

Maine bond issues misleading; matching funds questionable

In addition to my weekly post based on my newspaper column, I add an occasional mid-week brief on a current issue.

Maine voters will be faced with six bond issues in November, but they may be forced to make uninformed choices.

With all the attention being paid to the bear hunting referendum, many people may not become aware of the six bond issues on the ballot this November before they vote.

Even if they read the Secretary of State’s election guide or carefully scan the ballot itself, they will see an incomplete and potentially misleading description of the issues.

Three of the six, for a total of $20.6 million also mention $23.7 million in matching funds.  But, unlike the usual highway matches provided by the federal government, there’s no indication of the source of the matches.

Even more important, whatever the legislative intent, none of these three bond questions says that either the bonds should not be issued until the matching money is committed or, if the funds are raised, they should not be disbursed without the matching cash having been lined up.

These bond issues note the funds will be made available through competitive bid.  But the legislative history suggests the likely winners in the three cases are the University of New England, the Jackson Labs on MDI, and Coastal Enterprises, Inc.

In order to avoid simply voting funds to specific entities, a poor legislative practice, the seemingly neutral public bidding provision was substituted for the original designations.  But the number of eligible bidders is limited.

Item 7 on the ballot talks about promoting the “marine sector” in Maine.  Lacking the legislative history, a voter would not know the funds are intended for the development of in-state lobster processing.  Nowhere are voters informed they are being asked to support this new enterprise.

At the hearing on that proposal, only one person spoke.  He was the representative of Coastal Enterprises, Inc., and he suggested that his agency could help raise the matching funds.

Each of the six bond issues appears to be for a worthy cause, but their real purposes may only be understandable if a voter digs deeply enough into their background. 

Because of the superficial appearance of benefit and the lack of informed public debate, proponents have given the impression, intentional or not, of trying to put something past the voters.

Friday, October 10, 2014

If the recession is over, why am I depressed?

Economists say a recession ends when the economy begins to turn upward.

Many people believe a recession ends when the economy returns to where it was before its decline.

By both measures, the recession is over.

So why do many of us feel that it continues?

Not only is the rate of recovery uncomfortably slow, but the post-recession economy is markedly different from the boom times of just a few years ago.

Many people have found lower level jobs paying less than they had earned previously.  Other people have simply left the labor force, giving a somewhat false impression about the true scope of unemployment.

Christine Lagarde, the chief of the International Monetary Fund, recently said that recovery had produced the “new mediocre.”  By that, she meant that growth and employment may have returned to previous levels, but they have fallen short of the kind of activity needed to provide a sense of prosperity.

In her view, without government action and leaving hope for a stronger recovery entirely to the private sector, the world could not produce real improvement.

She called for more steps in tax policy to promote growth.  She wants to see serious efforts to control tax evasion, greater government efficiency to reduce costs and a cut in payroll taxes.

Lagarde said tax breaks for energy producers should be ended, because they “mostly benefit the relatively affluent, not the poor.  They also harm the environment.”  The money saved could be used for other purposes without a tax increase.

More people should be brought into the labor force, increasing jobs and creating customers.  In the U.S., that could mean finally agreeing on an immigration policy.  In other countries, more women should be allowed to work.

Yet another area deserving attention is the repair of roads, bridges, airports and other basic elements of the economic structure of countries, she said.  This would not be wild public spending.  By simply devoting public funds to essential measures, the economy would benefit both now and in the future.

None of this is rocket science, but our current political stalemate is likely to cause it to be ignored.

Tax policy won’t change so long as influential political leaders worry that any change will mean that somebody’s taxes will increase.  Even worse, those who get tax breaks have enough money to pour into the political process to block change.

Immigration policy reform will be delayed so long as uneasiness with new ethnic groups stands in the way of including those who will perform the jobs nobody else wants to do and become consumers whose purchases will push the need for new jobs.

And government won’t have resources to spend on research leading to new technologies and new jobs.  Instead, “the new mediocre” economy is likely to grow slowly as government and business try to make outmoded methods work.

Maine, with its diversified economy of small businesses, usually misses both economic booms and busts.  But it is not immune from change, which calls for innovative policy, not a struggle to keep the past alive.

The recent announcement of the closing of the Verso mill in Bucksport, the Great Northern bankruptcy, and the devaluation of Madison Paper and Sappi Somerset facilities are signs of significant change in the paper sector, once the largest single element of the state’s economy.

Gov. LePage’s effort to find a new buyer for the Bucksport mill may miss the point that the world needs less paper.  Mike Michaud, a former paper worker, has correctly said the state cannot go back to the paper industry as it once was.  Eliot Cutler proposes the state buy the mill’s power plant and sell lower cost electricity for economic development.

The role of government needs to be reexamined.  Federal and state government must be serious about the trade-offs to be made between regulation and growth.  Too often, each new rule or economic development measure is adopted without understanding its full effects.

For a candidate to say the most important issue is “jobs, jobs, jobs” is not enough.  What kind of jobs do we need and what sacrifices would we make to get them?

And it’s also time to recognize government’s role in the economy as the biggest single customer, the provider of the social safety net, and the entity responsible for building roads and bridges.  It is overly simplistic to oppose government spending on the grounds that government has grown too big. 

The recession seems to have imposed the “new mediocre” on us.  To avoid that fate may require new leadership.

Friday, October 3, 2014

Congress avoids declaring war on ISIS

Is the U.S. at war with ISIS?  Is its military action in the Middle East legal?

The answers to those questions could affect the 2014 elections.

The U.S. Constitution clearly states that Congress has the power to declare war, while the president is the Commander in Chief of the armed forces.  It does not say that the president can commit those armed forces to war without the approval of Congress.

Today, American warplanes are engaged in attacking the personnel and facilities of ISIS and other terrorist groups in Iraq and Syria.  U.S. boots are on the ground, worn by military “advisors.”

Leaders of both parties in Congress have made sure that neither the Republican-controlled House of Representatives nor the Democratic-controlled Senate will vote to authorize or ban American military action in the Middle East.

Whatever members of Congress may think of the deployment of American forces – and many approve of it or want even more involvement – they don’t want to vote on it, at least not until after the elections.

Billions of dollars are being spent pursuing the fight against ISIS.  Eventually, Congress will have to come up with the money and deal with the effect of that spending on efforts to cut the deficit.  But it won’t touch the question with elections looming.

By keeping the conflict in the Middle East out of the elections, they believe they can avoid the risk associated with introducing such a potentially volatile issue into the campaigns.  Neither side knows the way the voters would decide, and the debate could draw attention away from pet issues of the day.

So the president and Congress both dance around the use of the term “war.”  Politicians have performed verbal acrobatics to avoid calling “war” the aerial attacks on ISIS and the deployment of U.S. troops in Iraq.

The Constitution does not define “war.”  One authoritative dictionary calls it “open and declared armed hostile conflict.”  That seems to fit.

In fighting today’s terrorists, President Obama has declared that the American objective is to defeat and eliminate ISIS by the use of American attack aircraft.  He seeks to legitimize this action, partly by creating a coalition of nations sharing the same objectives and willing to play a supporting role.

To justify attacking ISIS, Obama has cited a questionable law allowing the use of U.S. forces against Al Qaeda, the group that staged the 9/11 attacks, and its allies.  But he has also said that law should be repealed, because it is so vague that it could be misused.

This situation raises two basic questions about the state of the American political system.

First, isn’t this supposed to be a democratic republic in which the will of the people, expressed through their elected representatives, rules?

According to public opinion polls, which seem to have become a substitute for elections, popular opinion is divided on the extent of American military involvement in Iraq and Syria.  So Washington leaders simply avoid consulting the voters on what may be the most important question of the day.

No wonder that half the eligible voters fail to show up to vote on Election Day.  The politicians may do whatever they want without seeking the will of the voters.  Why bother voting, when you are being so obviously manipulated and not respected as the ultimate source of political power?

Has the American system evolved into a form of paternalism under which the president and Congress know what’s best for the rest of us and no longer believe it is necessary to ask?

Second, should elected officials act as our leaders or is it acceptable for them to survive elections by avoiding issues?

If the American people are uncertain about the proper course of action in the Middle East, perhaps because of a lack of good information, our leaders could lay out the facts and options and then advocate what they believe to be the best course of action.

Leadership means taking risks; the voters may not agree with the policy favored by a member of Congress.  Candidates should explain the facts and make the case for what’s best for the country.  Avoiding the issue entirely is not leadership, just risk avoidance.

Where does your congressional candidate stand?

The ISIS conflict surely looks like war.  In case of doubt about a conflict, it should be considered to be war, subject to congressional approval and funding.   

Before American lives are committed to the risk of death in combat, members of Congress should accept the risk of defeat in elections.

Saturday, September 27, 2014

Ads, polls and images decide elections

Political campaigns are now well underway, and television is flooded with political ads.

The outcome of this year’s elections will be a judgment on the strongly conservative politics of the Tea Party and its friends, but it looks like there will be no landslide either way, only a shift at the margins.

A few elections or a relatively few votes in many elections will determine the broader result of this year’s balloting.

For voters still considering their choices, a number of factors are at play that can influence the outcome.  And, unfortunately for some candidates, these factors may have little to do with the issues and proposals.

Recently published research suggests that many voters make up their minds based on their initial impression of the candidate’s personality.  If they like the person, they may be inclined to give no further thought to the elections and simply vote for the candidate.

For incumbents, those initial impressions are long past, but the voters tend to stick with their previous voting behavior.  Most incumbents win.

First impressions can be created by the candidate’s television spots.  Even if you do not watch the news, you will it find it almost impossible to avoid commercials pushing politicians and causes.
That allows the candidate to project the image that he or she favors.

Watching the Maine candidates for governor, I come way seeing independent Eliot Cutler seeking to show his breadth of experience and knowledge, Democrat Mike Michaud stressing his proven ability to work across the aisle, and incumbent Republican Paul LePage emphasizing his business-like approach to governing.

If any of these messages resonates with me, my mind could be easily made up.  I would not have to look at their record or even if they are telling the truth.

Of course, media spots are not limited to candidates’ positive messages.  Negative ads, attacking the opposition, are frowned upon though they are a part of American political history.  Plus, they work.

And candidates are always looking for a “gotcha” moment, when a negative revelation may be enough to change perceptions and sink their opponent.  Sometimes the truth has to be stretched to make “gotcha” work, but there are almost always a partisan ready to try.

Recently, a Maine GOP spokesman tried to tie Michaud to a posting by an independent supporter in which an off-color reference, unknown to most voters, was made.  The effort failed and could end up helping Michaud.

Raising “gotcha” issues is an attempt to create a single, election-changing event.  Underdogs hope that something will happen between now and Election Day that will change voters’ perceptions of a leading candidate. 

That can happen, and sometimes it’s a gaffe or the emergence of a hidden problem from the candidate’s past.  Such errors or revelations can cause voters to take a second look at a race on which they had already made up their minds.

Then, there’s polling.  Almost every day, there are reports of new polling results, meant not only to inform, but to create bandwagon effects or to stimulate more effort.

We tend to treat polling information as fact rather than as one indicator among many.  The recent Scottish independent vote was forecast by several polls to be a squeaker, but it wasn’t.  Union with the UK won by 10 percent.

We gloss over the so-called “margin of error.” or the fact that one time in 20, the poll will be off the mark.  In close races, the marginal difference in results can virtually make the survey valueless.  Still, thanks to the polls, we allow ourselves to be influenced by the way we believe a campaign is going.

Elections can be influenced by campaigns that either round off the facts excessively or downright lie.  If campaigns fling false information back and forth, people decide either based on perceptions and prejudices or, out of disgust, simply don’t vote.

But the situation is not hopeless.

The media must go beyond reporting what each side says in providing objective and complete coverage.  Online news, newspapers, television and radio should ferret out and reveal the truth, risking some candidates claiming bias.

Of course, such reporting has to be based on real research and the facts, not packaging unsupported opinion as if it were news.

The real solution is up to voters, who have to work at understanding candidates and issues.  Votes do matter, but only if voters take the trouble to dig into elections.

It’s dangerous to our system of government if people spend more time on fantasy football than on real elections.