Newshoggers.com

Losing choke point control

By Fester

The best spot to be in most bidding situations is to be the marginally decisive point. At that point, an individual has a great deal of power because their acceptance or decline of a bid means that the market for action has been set. They are veto players, they are chokepoints of activity, they are rentiers of political space. In the US Senate, the two dominant chokepoints is whomever will be the 50th vote for passage if the bill is a Democraticly favored bill (as Democrats can count on VP Biden to break a tie in their favor) or the 51st vote for a conservatively favored bill, and the 60th vote to break a filibuster or waive certain rules. Until last week the 60th vote was the far more vital chokepoint.

The occupant of that 60th vote varied on each issue, but the membership of the club that controls the 60th vote on Democratic priorities is fairly small. Its frequent members are Senators Nelson of Nebraska, Landrieu of Lousiana, Pryor and Lincoln of Arkansas, Bayh of Indiana, Conrad of North Dakota and for the Republicans the potential pick-offs on some issues are the two Senators from Maine, Snowe and Collins as well as the occassional chance of picking off a few others on idiosyncratic issues.

If Senator Reid follows through on his threat to impose harsh party line discipline on cloture, then the 60th Vote Club is functionally irrelevant and powerless:

So, I suppose it should come as no surprise that, Senate leaders are now asking members of the Democratic caucus to vote party-line on procedural issues, reversing the stance they took on caucus unity just last week.

Reid is actually putting himself on the line. "On procedural votes," he predicted, "we'll keep Democrats together."

Roll Call notes that Reid and his leadership does not anticipate keeping the entire caucus on the final vote, but wants it on the cloture vote:

“They may vote against final passage on a bill. They may vote with Republicans on amendments,” he said. “But on this idea of allowing the filibuster to stop the whole Senate, I think, we have persuaded them more often than not that they shouldn’t let the Republicans control our agenda. We ought to control our own agenda.”

If this actually happens, consistent party unity on cloture votes means that the Group hanging around the 60th vote are almost irrelevant.  They will either be voting for “I Love Puppies and Ice Cream” bills that will run up an 85 to 12 majority or they are on the losing side of a 56 to 43 final count.  In either case their negoatiating leverage goes down massively.  The new, marginally decisive Democrat moves from being Nelson to someone like McCaskill from Missouri who is far closer to the Democratic median and average position that any concessions on most issues to get her vote will be fairly small. 

So I can understand the gang that comprise the 57th to 61st votes throwing a hissy fit as this move would effectively render them powerless and their fundraising pitch perilous.

 

The CBO Cudgel

By Fester:

The CBO has scored the HELP committee's full healtcare bill. The bill is the complete vision of what Senators Kennedy and Dodd want to do and it includes a reasonably strong public option, Medicaid expansion, comparative effectiveness research and an employer mandate. The goal is to expand coverage by a significant margin and introduce significant and well backed competition in regional health insurance markets that are overwhelmingly quasi-monopolosistic or duopolistic.

The CBO previously scored a partial version of the HELP framework that did not have the public option or the employer mandate in it. That partial scoring produced estimated costs of about 1 trillion dollars but with a significant portion of the population still uncovered. The marginal increase in coverage per dollar over the next decade was not good.

The new scoring of the bill that takes into account the actual coverage expansion and cost control measures is pretty damn impressive. From the AP:

The plan carries a 10-year price tag of slightly over $600 billion, and would lead toward an estimated 97 percent of all Americans having coverage, according to the Congressional Budget Office

Not a bad deal at all if we can get 97% coverage in even if there is a reasonable argument that the CBO score is a bit low as made by Jonathan Cohn. The real value of this CBO score with the complete HELP framework including the public option and the employer mandate is that it is a cudgel against the 'centrist' Democrats who don't want the public option overtly because it is 'too expensive' and potentially because it is a threat to major local employers and campaign contributors of regionally dominant health insurance providers. The public option is the best means of cost control and doing without it means a weaker bill for significantly more cost.

Congress has few philospher kings

By Fester:

I like to live in the real world. It is messy, it is confusing, it often produces non-optimal outcomes (depending on the relevant constraints) but it is tangible. I can also live in a normative world where everything is neat, clean, organized and optimized towards the relevant constraints. However that world seldom exists. I often look for satisficing improvements instead of optimal solutions because the improvements are achievable.

I don't understand the critique of Waxman-Markley that Andrew Samwick and others are advancing in that it is a satisficaing improvement but non-optimal on several grounds:

Much as you may like the idea, this is another 1300 pages of complexity and loopholes. Buried in there, I'll wager, are more than enough ways for large organizations (the ones who hire lobbyists) to get all the exemption and evasion they'll need. Consider the alternative of a carbon tax calibrated to achieve the same emission reductions, and applied to all sectors including vehicle fuel consumption. I'm no expert on translating ideas into pages of a bill, but that can't be much. And given that it allows us to do away with the CAFE standards, I figure we've done a great service of dramatically simplifying the whole regulatory process for carbon emissions.

Economically, a clean carbon tax and a clean cap and trade bill will do the same thing. They will both internalize the currently externalize cost of carbon dioxide emissions. There are two big differences. The first is that a a carbon tax is a price certain option while the cap and trade system is a quantity certain feature.  Secondly, cap and trade is economically more efficient as it allows for market discovery of prices of a scarce good instead of hoping that Congress can hit the right number at any given time for optimal economic efficiency for a given amount of emissions.  

 

His argument is that a carbon tax would be neater and less messy.  Lobbyists would not be able to claw out special interest exemptions and transfers and the legislation would be only several pages long.  He is arguing a straw man here in my opinion.  A properly designed cap and trade system could also be written in a fairly short and concise manner as well.

 

He is bitching and moaning about basic political incentives here.  A complex bill with exemptions, curlicues and who knows what else in it for concentrated interests is far more profitable to the relevant players than a simple, clean sheet proposal with no exemptions.  Dr. Samwick is implicitly arguing that a carbon tax would be less susceptible to this type of manipulation than a cap and trade regime.  I have severe doubts about that.  We have plenty of evidence that tax bills, even comparatively simple tax bills that are mere modifications of existing tax laws can and will be massively abused with exemptions, exceptions, partially refundable credits, donut hole deductions and anything else that concentrated interests can muster to improve their interests against the counterfactual of a clean bill.  The classic example is the agricultural bill where there are significant subsidies for sugar, mohair, honey and other products because there is a strong lobby for those interests while the public purpose of food security, public health and reasonably low prices for a wide selection of goods is often ignored. 

 

I have yet to see a good political reason why the concessions that the Democrats on the Agricultural Committee wanted and received to weaken the bill and make the bill more complex for cap and trade would not also be granted in a carbon tax system.  I think it is very reasonable to assume that Agricultural Committee Democrats would want land use carbon emissions to be exempted from the carbon tax or at least counted under a friendly system.  Those are the concessions that they basically got in cap and trade, and those would be the concessions they would have wanted from a carbon tax regime.  Otherwise they most likely and there would be nothing. 

 

Now if Dr. Samwick wants to argue that doing nothing now is a superior option as the costs of action and inaction escalate the pressure to pass a much cleaner bill that is more to his liking at some uncertain point in the future, that is a defensible argument.  However that is not the argument he is making.  He is whining that Congress is acting like politicians engaged in politics with attendant incentives instead of philosopher king technocrats who will agree with his preferred solutions.  Me, I’m happy for an improvement with the hope that institutional inertia will lead to a good process and outcome over time. 

 

 

Lucy's Football

By Fester:

Ian Welsh has the outline of the Senate Finance Committee’s health insurance plan. The shorter version of the short version is that it sucks. Here is the short version of the plan:

1) Lower the medicaid coverage rate from 150% to 100% of the Federal poverty line, 133% for kids and pregnant women (once you have the baby, too bad for you)

2) Subsidies stop at 300% of the poverty line (was 400%)

3) No Public Option mentioned

4) Insurance exchanges at the State level

5) Must buy insurance unless it costs more than 15% of your income

6) A fine if you don’t buy insurance unless you’re below the Federal poverty line

For the most part, as Walker discusses, this is actually identical to or slightly worse than the plan put forward by America’s Health Insurance Plans (AHIP). Yes, worse than the insurance industry’s plan. Remarkable. Baucus is really earning his campaign donations these days…. Without a public option, the insurance companies will have no check on their prices, let alone pressure to actually reduce them. Because people will be forced to buy bad insurance, they’ll hate the plan, and because “reform” has been passed, we’ll have to wait another 10 or 12 years for another shot....

Tim at Balloon Juice is very curious why Obama is not actively selling a strong public option proposal.

Watching Democrats try to fix health care I see a photo negative of the Bush years. Here is an issue with obvious urgency. Setting aside our shameful infant mortality rate, uninsured rate and other statistics, medical bills are by far the leading cause of personal bankruptcies. Insurer misconducy wrecks lives every day in every city in America. The right options are obvious and relatively few in number. Huge majorities support doing the right thing.

Even self-interest is similarly one sided. Remember how much Republicans invested in realigning the destroying Social Security? Imagine if they had an issue that would realign the country in their favor and instead of huge majorities violently hating it, most Americans strongly supported what they wanted to do. Republican strategists would give two of their first three kids for a shot at an issue with this much going for it....

I hear that Obama supports the public option. That would mean more if it felt even a little more urgent than his idea that we should have a college football playoff series.

Belaboring the obvious, people who care about what they’re doing normally enter negotiations with some firm goal in mind. Most would agree that it is moronic to make negotiating itself the point.

Many others, including Steve have noted that if a major and effective health financing reform bill passed with either a pathway to de facto single payer for baseline care or at least a strong public option, major fundraising avenues will be closed off to some of the current veto points in the Senate and the House. I think that is part of the problem with the Democrats.

However, I would like to get a little more cynical for a moment. What if healthcare reform is to Democrats what abortion and anti-feminism is to Republicans in that both are seem by significant portions of their respective bases as high salience issues that are best served by never fully addressing? Gotta keep the activists in line and ready to donate and phone bank for two more incremental steps in the 'right' direction instead of attempting to systemically change the constraints of power and the political process.

Tim is right that an effective public plan option would be a system changer that would effectively tilt the political playing field to Democrats for at least a generation or two in much the same way that Social Security and Medicare are high salience, high effectiveness boundary conditions for Democrats to lean on. However the Democrats who would benefit from these changes are not neccessarily the Democrats who are currently in power or more importantly, currently occupying critical blocking positions. So reform that can shave off several points of GDP on health expenditures, improve coverage and re-align US politics is not a winning solution for the key set of stakeholders; instead their winning solution is to do just enough to avoid overwhelming political costs and pressure.

The High Stakes Health Care Race

Commentary By Ron Beasley

The health care industry has a horse in the health care race but so do the Republicans, the Democrats and Obama. 

For the Republicans this race is about more than money - it's about survival.  If Obama and the Democrats get a public option it will be successful and popular.  The Republicans know this and that's why they are fighting it.  Of course there's the money to.  Robert Parry tells us to look at one of the most vocal critics of the public plan, Senator Grassley:

For instance, since 2005, Grassley’s various political action committees have collected nearly $1.3 million in donations from the industries related to the health insurance debate, according to OpenSecrets.org. Grassley’s top four donor groups were Health ($411,956); Insurance ($307,348); Pharmaceuticals ($233,850); and Hospitals ($197,137). Eighth on Grassley’s donor list were HMOs at $130,684.

If the Democrats and the Obama administration don't get at least a public plan the Obama administration will be seen as a failure.  Robert Reich rightly demands a "real" public health care option:

Here's the latest contortion from Senate Dems trying to win over a few Republicans to a "public option": Let nonprofits create healthcare cooperatives, then call them the public option. Kent Conrad, of North Dakota, chair of the Senate Budget Committee, came up with this bamboozle. Finance Committee chair Max Baucus, D-Mont., is impressed, and some Republicans — even Chuck Grassley of Iowa — seem interested. Watch your wallets.

Nonprofit healthcare cooperatives won't have any real bargaining leverage to get lower prices because they'll be too small and too numerous. Pharma and Insurance know they can roll them. That's why the Conrad compromise is getting a good reception from across the aisle, just as Olympia Snowe's "trigger" (whereby there's no public option until sometime down the pike, and only if Pharma and Insurance don't bring down costs and extend coverage a tad) is also gaining traction.

The truth is that there's only one "public option" that will truly bring down costs and premiums — one that's national in scale and combines its bargaining power with Medicare, and that's allowed to negotiate lower drug prices and lower doctor and hospital fees. And that's precisely what Pharma and Insurance detest, for exactly the same reason.

And then we have the insurance companies.  They know change is going to happen but maybe, just maybe they can turn it to their advantage.  Robert Parry again:

To understand the financial stakes involved in the battle over U.S. health-care reform, it’s useful to keep two numbers in mind: 50 million and 119 million.

The first number is the approximate total of Americans without health insurance, a new market that the private health insurance industry is salivating to get its hands on. The industry’s hope is that the government will mandate that those Americans sign up for private insurance and offer subsidies for those who can’t afford to pay the premiums.

Fifty million new customers and government largesse to help pay the bills would be a huge windfall for the insurance industry, which otherwise faces a decline in its market because Baby Boomers are reaching the age to qualify for Medicare and because rising unemployment is draining the pool of Americans who have insurance through their employers.

And the 119 million?  That's the number the insurance companies might lose to a real public option according to Senator Grassley.  And that's probably optimistic - a successful public option would probably eventually morph into single payer because the private insurance companies would not be able to compete.  So in this horse race there is no place or show -  it's win or nothing for the insurance companies.

So the question is how hard will Obama fight for the public option?  I wish I could be more optimistic.  The current economic crisis has left bankers about as popular as the H1N virus and the banking industry ripe for restructuring and regulation but we haven't seen it.  The insurance companies are even less popular and the socialized medicine ads are having little effect on public opinion I fear they are having an effect on the politicians.  You can forget about the economy and the wars health care will be the thing that makes or breaks the Obama presidency.

Update

While it appeared the conservative AMA came out in opposition to a public plan now they are saying maybe not:

The remarks came just several hours after the American Medical Association said it would oppose a public option for coverage. But in a reflection of just how delicate this debate has become, the 250,000 member physician group largely backtracked from its opposition later in the day.

"Make no mistake: health reform that covers the uninsured is AMA's top priority this year," a clarifying statement from the group read. "Every American deserves affordable, high-quality health care coverage.

"Today's New York Times story creates a false impression about the AMA's position on a public plan option in health care reform legislation. The AMA opposes any public plan that forces physicians to participate, expands the fiscally-challenged Medicare program or pays Medicare rates, but the AMA is willing to consider other variations of the public plan that are currently under discussion in Congress. This includes a federally chartered co-op health plan or a level playing field option for all plans. The AMA is working to achieve meaningful health reform this year and is ready to stand behind legislation that includes coverage options that work for patients and physicians."

Could this be a writing on the wall moment?

The scorpion and the turtle

Commentary By Ron Beasley

Will serious health reform meet the fate of the scorpion and the turtle? In that fable, the scorpion pleads with the turtle to carry him across a river. The turtle resists, fearing the scorpion's sting, but the scorpion reassures him that he'd do nothing so foolish, since both would drown if he did. Finally the turtle agrees. Halfway across, the scorpion betrays his promise with a lethal sting. As the turtle begins to drown, he asks why he took both their lives. "It's just who I am," the scorpion replies.

~Paul Rogat Loeb

The D's and the R's may change places but in DC it's still the 30,000 plus lobbyists that make the policy.  No where is this more evident than in health care "reform."  Single payer was taken off the table at once.  Ezra Klein explains what is left.

For most of you, this is the big one. The inclusion of a strong public insurance option has become, for most observers I know, the single most recognizable marker for victory. If the public plan exists, liberals have won. If it's eliminated, or neutered, then conservatives have triumphed.

[.....]

The private insurance market is a mess. It's supposed to cover the sick and instead competes to insure the well. It employs platoons of adjusters whose sole job is to get out of paying for needed health care services that members thought were covered.

Moreover, public insurance is simply more efficient. Medicare holds costs down better than private health insurance. The substantially public systems employed by every other industrialized nation cost less and cover more than the American model. So the question became how to marry the policy need for public insurance with the political need to preserve the status quo.

Enter the public insurance option. It doesn't replace the insurance individuals already rely on. But it provides an alternative. It lets them make the decision. It's the health care equivalent of being pro-choice. And it thus serves two purposes. The first is to act as a public insurer. To use market share to bargain down the prices of services, much as Medicare does. To lower administrative costs. To operate outside the need for profit, and quarterly results. The Commonwealth Fund estimated that this would result in savings of 20%-30% over traditional private insurance:

The second is to apply competitive pressure to the rest of the insurance industry. If the public plan is ruthlessly lowering its administrative costs and garnering a reputation for decent, good-faith service, it will take market share from the private insurers. The private insurers will have to respond in kind to retain their customers. If they fail to adapt, the system could become something resembling a single-payer structure.

But of course the private insurance companies don't want competition because they know they can't compete with a plan that sucks 20 plus percent out of every health care dollar for profit and million dollar salaries for CEO's.  But a public plan appears to be a done deal so attempts are being made to neuter it.

• The "Trigger" Plan: Olympia Snowe is pushing this compromise, as are some conservative Democrats. The basic idea is that the public plan would act as an invisible threat: It would be "triggered" into existence if the private insurance market was unable to offer, say, enough options in a particular region, or enough cost control. In addition, the public plan would only come into existence in this or that region, or this or that state. It would be effectively useless as an insurer. It could potentially have some competitive effect in that private insurers would still work to avoid its existence. Some have argued, however, that the conditions being mentioned in the "trigger" proposals have already been met.

• The Weak Public Plan: This is what people are talking about when they refer to a "level-playing field." This incarnation of the public plan -- first proposed by Len Nichols at the New America Foundation and later echoed by Peter Harbage and Karen Davenport at the Center for American Progress -- would have no special advantages over private insurers. It couldn't use the low rates that Medicare sets or access taxpayer subsidies. It couldn't force its way into networks. It would simply be another insurer, albeit with different incentives than traditional insurers.

Paul Rogat Loeb:

I fear we're about to get stung again. When people look back at the failure of the Clinton-era health care initiative, they point, accurately, to an opaque process that produced a baroque Rube Goldberg mess that satisfied no one. That happened even before the insurance industry went on the attack with their Harry and Louise ads. But another missing element parallels our current challenge-appeasement of the insurance companies as the plan's centerpiece, and the inevitability that these same interests will betray us again. 

[......]

But why assume that the insurance companies are our friends? Why appease them at all?  It's not as if they've played a helpful role in our current system.  Rather, they've gamed it in every possible way, leaving our country with the highest health care costs in the world and worst health outcomes of any advanced industrial country.  While they've made promises to cut costs, their promises are only that (like the scorpion's), and they're already lobbying with everything they have to gut any seriously competitive public option. Add in examples like former HCA/Columbia CEO Rick Scott.  after his company paid a $1.7 billion fine (the largest in US history) for defrauding Medicare, Medicaid, and the program that serves our armed forces, he is now organizing attacks on any public program (hiring the PR firm that coordinated the "Swift Boat" attacks on John Kerry). We need to challenge the insurance companies, not appease them. There's no evidence that suggests they're constructive players, or are likely to do anything except defend their own parochial interest.

The insurance companies and other major financial interests are talking a good line of late. They have no choice if they don't want to be cut out of the game. But ultimately, they are who they are, and their behavior reflects this.  It makes no sense to embrace a partner who you know will ultimately betray you.

So will we give the scorpion a ride across the river again?  Probably - the scorpion has deep pockets and the lawmakers of both parties are for sale.  But one blue dog, Ben Nelson, says he won't filibuster a public plan so maybe, just maybe.

Note:

See related post here:

Health Care Myths

 

Health Care Myths

Commentary By Ron Beasley

Kennedy has come out with his draft of a health plan.    I disagree with the mandatory employer requirements - I think we need to get employers out of the health care business.  But it probably really doesn't matter because once again appears possible that the deep pockets of big pharma and big insurance will win another round in the health care debate.  One thing we have heard already and will hear a lot more of are the "horrors" of the Canadian Health Care system.  Well a Canadian living in the US debunks Canadian Health Care Myths. 

Myth: Taxes in Canada are extremely high, mostly because of national health care.

In actuality, taxes are nearly equal on both sides of the border. Overall, Canada's taxes are slightly higher than those in the U.S. However, Canadians are afforded many benefits for their tax dollars, even beyond health care (e.g., tax credits, family allowance, cheaper higher education), so the end result is a wash. At the end of the day, the average after-tax income of Canadian workers is equal to about 82 percent of their gross pay. In the U.S., that average is 81.9 percent.

Myth: Canada's health care system is a cumbersome bureaucracy.

The U.S. has the most bureaucratic health care system in the world. More than 31 percent of every dollar spent on health care in the U.S. goes to paperwork, overhead, CEO salaries, profits, etc. The provincial single-payer system in Canada operates with just a 1 percent overhead. Think about it. It is not necessary to spend a huge amount of money to decide who gets care and who doesn't when everybody is covered.

Myth: The Canadian system is significantly more expensive than that of the U.S.

Ten percent of Canada's GDP is spent on health care for 100 percent of the population. The U.S. spends 17 percent of its GDP but 15 percent of its population has no coverage whatsoever and millions of others have inadequate coverage. In essence, the U.S. system is considerably more expensive than Canada's. Part of the reason for this is uninsured and underinsured people in the U.S. still get sick and eventually seek care. People who cannot afford care wait until advanced stages of an illness to see a doctor and then do so through emergency rooms, which cost considerably more than primary care services.

What the American taxpayer may not realize is that such care costs about $45 billion per year, and someone has to pay it. This is why insurance premiums increase every year for insured patients while co-pays and deductibles also rise rapidly.

Myth: Canada's government decides who gets health care and when they get it.

While HMOs and other private medical insurers in the U.S. do indeed make such decisions, the only people in Canada to do so are physicians. In Canada, the government has absolutely no say in who gets care or how they get it. Medical decisions are left entirely up to doctors, as they should be.

There are no requirements for pre-authorization whatsoever. If your family doctor says you need an MRI, you get one. In the U.S., if an insurance administrator says you are not getting an MRI, you don't get one no matter what your doctor thinks - unless, of course, you have the money to cover the cost.

And there is more at the above link.  The bottom line is that the only ones who will suffer if there is major health care reform are the people who are making huge profits now.  Write your representatives and tell them to vote against any reform bill that does not include a public option.  The insurance companies are fighting this because they know they can't compete.  A majority of Americans want the public option.  I think there is a better chance to get a better health care bill next year - election year.  The health insurance industry thinks they can get something more favorable this year.  The voters are more likely to get what they want right before and election.  So no public option no bill.

 

Framing Fear

Commentary By Ron Beasley

In an effort to return to power the Republicans are once again playing the fear card.

GOP Sees Road to Revival Starting at Guantanamo

Fights Over Prison Closure, Transfer and Treatment of Detainees Gives Republicans Momentum for First Time Since Election

Republicans have been able to drive the Washington agenda for the first time in months, and dent the top two Democrats' armor, by hammering away on antiterror policy and keeping the debate squarely in the GOP comfort zone of national security.

Some Republicans see in events of the past two weeks -- the culmination of a carefully developed GOP strategy and missteps by Democrats -- the beginning of a political comeback, and they plan to keep pressing the issue. Democrats say they still hold an advantage with the public on a matter more urgent to most Americans: fixing the economy.

But will it work?  It just might.  The Republicans are very good at using irrational fear to their advantage - framing the issue.  It worked in the past but they have much less credibility now.  But they are so good at it.  Their arguments are absurd but when framed properly can be effective.  While the Republicans are very good at the verbal gymnastics required to twist realty to their advantage the Democrats are very bad at it.  By and large the Democrats are still afraid of the Republicans when it comes to national defense.  So how can the Democrats gain the upper hand?  That question has been answered in a couple of books that I wish Democratic lawmakers and leaders would read.

• Thinking Points: Communicating Our American Values, by George Lakoff.  (Steve's Review Here)

  and

• Cracking The Code, by Thom Hartmann

   

All too often in American politics it's not a matter of being right or wrong but how you frame it.

Recidivism and Gitmo

By Fester:

Recidism is the big news today as the Pentagon is claiming roughly 1 in 7 Gitmo releasees have been engaged in violent terrorism after they were released. That is about a 15% recidivism rate.
That is actually an exceptionally low recidivism rate for individuals released from US prisons. The Bureau of Justice Statistics has looked at recidivism numerous times, and usually at least half of all individuals released from a US prison will be convicted of another crime within a few years of release. Here is some data from 2004:

Of the 272,111 persons released from prisons in 15 States in 1994, an estimated 67.5% were rearrested for a felony or serious misdemeanor within 3 years, 46.9% were reconvicted, and 25.4% resentenced to prison for a new crime.

So a 15% recidivism rate in almost any other context would be a near best of class program. Mark Kleiman's advocacy of the HOPE intensive monitoring probation program produce's a lower recidivism rate, as well as some mental health court programs but those are the exceptions. So either Gitmo releasees received amazing rehabilitation services in Gitmo OR most of them really were not involved in much besides trying to get by with their lives.

Again, America, grow a pair.

Assessment food fight

By Fester:

The very big news for the very small community of Western Pennsylvania financial wonk bloggers (we meet monthly in the phone booth at the Monroeville Mall by the Dairy Queen --- plenty of space for new faces) this week is the Pennsylvania Supreme Court affirmed Judge Wettick's order that Allegheny County can not use the 2002 base year system for property taxes as that system is fraught with errors and violates the uniform taxation clause of the Pennsylvania Constitution. 

"[T]he Allegheny County scheme, which permits a single base year assessment to be used indefinitely, has resulted in significant disparities in the ratio of assessed value to current actual value in Allegheny County. The disparity is most often to the disadvantage of owners of properties in lower-value neighborhoods where property values often appreciate at a lower rate than in higher-value neighborhoods, if they appreciate at all."

The base year property assessment system was not declared unconstitutional as the Courts are kicking it to the Legislature to figure out how to fix things.  My bet is two fold:  First Harrisburg will attempt to duck the issue for as long as they can and then some more, secondly, whatever mangled compromise that no one claims credit for passes, it will be declared unconstitutional. 

So what does this mean.  On the very practical level, it means that Judge Wettick will be ordering a re-assessment of all property in the county.  New values will be calculated and new tax bills will be prepared.  And then the fights begin.

This is political dynamite as property owners (who are high propensity voters) do not like to see their assessed values increase as that means their taxes will increase without any other actions taken.  Pissed off voters make for very scared elected officials.  County Executive Dan Onorato is one of those very scared elected officials, especially as he is strongly rumored to be ready to run for the Democratic nomination for governor.  His angle would be the only candidate from Western Pennsylvania and as a pragmatic executive who did not raise taxes on old people during his time in office.  He has vowed to fight the re-assessment and delay it for as long as possible.

On the more pragmatic level, a reassessment within the next eighteen months blows a massive hole in the county budget.  The best guesstimates say a complete re-assessment will cost the county more than $30 million dollars in general revenue funds.  The county is effectively broke right now and it can not afford that type of payment without dramatic cuts in general revenue expenditures such as the police and courts.  The drink tax is a potential source of revenue if the County can get the Legislature to give it permission to raise the drink tax back to 10% from the current 7% and devote the increment to re-assessment.  If that proposal was approved,two years of incremental drink tax revenue would be sufficient to pay for the reassessment.  I would wager that the courts would allow for tri-annual or quadrennial re-assessments as constitutionally valid, so a smaller tax increment may be possible. 

The biggest story that has yet to be talked about is the impact that this ruling has on other counties in the region.  Most of Pennsylvania uses the base year system.  The surrounding suburban and exurban counties use the base year system.  Most of the counties have assessed no more than once in my lifetime.  This gives them a massive advantage on giving new development low assessment values instead of something approximating fair market value assessments, so it is an implicit subsidy from older. pre-assessment built-up properties to new properties.  Requiring regular re-assessment removes this implicit subsidy which should marginally help Allegheny County attract new retail and light office developments near the county lines. 

Be ready for one hell of a food fight on this issue over the next three years....