So many privatization opportunities abound

Unless you live in the state of Virginia, you may have missed the news that our ubiquitous state owned ABC (Alcoholic Beverage Control) stores may be going the way of the dinosaur. Governor Bob McDonnell promised in his campaign to turn them over to the private sector. He says that the private sector would run liquor stores much more efficiently than the government. In addition, by selling more liquor these private stores would generate additional revenues to help address Virginia’s chronically under funded transportation system. This sure sounds sweet.

Yet, the governor recently ran the numbers again. Maybe turning over ABC stores to the private sector won’t be the VDOT’s salvation after all. While McDonnell swore he would not raise taxes, he did recently float the trial balloon of adding a “fee” to alcoholic beverages sold in the state. A “fee” apparently is not the same thing as a tax. This tax fee should help make up the $250 million dollars in revenues brought in across the state by these ABC stores. Wow! That’s a lot of fees!

It’s unclear to me what the advantage of turning over these ABC stores to the private sector actually is. Whether it does or does not save money seems to be beside the point. A good Republican, after all, believes that the private sector always operates more efficiently than the government. ABC stores were created after prohibition was repealed to control the hard liquor-drinking problem in the state as well as to assure that the state got its proper share of taxes on alcohol. If ABC stores are decommissioned, presumably, I could pick up a bottle of Jack Daniels at the local Shoppers Food Warehouse and save myself a trip to the state owned package store.

It strikes me that state owned package stores are just the tip of the “socialist” iceberg that enlightened Republicans could rid us of, thus giving us more freedom and keeping taxes low. Republicans in Congress, and particularly the Tea Party wing of the Republican Party, have their eyes on Social Security and Medicare. The latest groupthink seems to be that neither of these programs is sacrosanct and they can be “managed” by turning them into voucher programs. Send recipients vouchers and let them buy an annuity or old age health care with their voucher through this magic called shopping around for the best deal. If the voucher doesn’t quite cover living expenses to the same degree as the government has, well, that’s too bad but that’s better than “socialism”. At least costs are contained and thanks to the magic efficiency of the private sector, somehow people will be able to buy much more value with their vouchers than through some sort of “socialist” government-run program.

Republicans for years have been advocating for parents to use vouchers buy their way into private or charter schools instead of their local public school. Why settle for mediocre public schools, goes the thought, when some private charter school around the corner will give better results for less money? Likely, their staff would not belong to any stinking teachers’ union. This would help drive value, although it might also depress teachers’ wages.

Why stop with public schools? Why have public colleges or universities? Surely, the magic of the private sector can work its magic if they too were privatized. To a good Republican, even an institution as renown as Texas A&M should be on the chopping block. If the horror of socialism existing in our public schools can be dealt with through the magic of vouchers, surely “socialist” public colleges and universities can be run more efficiently as well if sold to the private sector. After all, tuition increases far exceed the cost of living. Something must be rotten in our public universities and competition is surely the solution.

Strangely, it doesn’t appear that private universities offer a better deal. The Washington Post, whose holding company also owns Kaplan University, calculated that students pay nearly four times as much from Kaplan for an associate’s degree in business administration as do students attending Northern Virginia Community College ($33,390 vs. $8500). It is also true that the state subsidizes NVCC and other public universities, but clearly not so much as to make up the staggering difference between NVCC and Kaplan. From all the evidence, it appears that public colleges and universities offer a much better value for students than private colleges and universities.

Clearly, NVCC is not in the business of making a profit, unlike Kaplan, whose shareholders want regular stock dividends. Kaplan may be targeting those who need more flexibility in their educational schedules and don’t mind paying extra for the privilege. Most students finance at least a portion of their education. Since our “socialist” governments seem to be in the student loan business, they are essentially funding many students’ private educations. Yet while nationwide only ten percent of college students go to private universities, 44% of student loan defaults happen to students attending private universities. Could it be that private universities care more about profits than whether their students actually graduate?

Nonetheless, public universities should be a choice target for Republicans. Why not just issue tuition vouchers for students to use where they want and privatize our public universities as well? Shouldn’t it just invigorate competition in the educational marketplace and thus drive down costs? Oddly, it just doesn’t seem to be working out that way. Private universities seem to be targeting the high-end market, not the low-end. It looks like outsourcing our public colleges and universities would only make college less affordable to those who need it the most. But when ideology is more important than facts, why be bothered? Think of all the money taxpayers could save by not maintaining those colleges, universities and public schools. Just give them a voucher if they whine and let people shop around!

If they return to power in November, there are all sorts of opportunities for Republicans to deliver on their privatization agenda. I was going to suggest that our public roads could be turned over to the private sector, but that’s already underway here in Northern Virginia, where High Occupancy Toll (HOT) lanes are being added to the Capital Beltway, ensuring that the well moneyed won’t have to deal with the inconvenience of traffic. VDOT can no longer be bothered to run the Dulles Toll Road, and turned it over to the local airport authority. Prisons are also being outsourced in many states; the Corrections Corporation of America apparently provides cells for many if not most Arizona prison inmates. In addition, as the Bush Administration demonstrated, war can largely be outsourced these days too. Ask Blackwater. Their stockholders did quite well in the last decade, although the value of their services looks suspect. Even the Obama Administration is getting into the outsourcing act. It wants the private sector to provide rockets to ferry astronauts into space. Curiously, most Republicans are against the idea. It’s probably because it was proposed by a Democrat.

In any event, we have just scratched the surface at innovative ways to reduce “socialism” here in America. It is true that Thomas Jefferson might roll in his grave at Monticello if his beloved public University of Virginia went private, but when it comes to ideology we must not let two hundred years of tradition and a dead president’s feelings stand in the way of innovating the private sector.

It simply has to be all for the best!

A new inconvenient truth: we need to raise taxes

Way back in 2003, I penned this post that more than five years later still gets regular hits. (It has received eighty hits since the start of the year, according to Google Analytics.) I was very politically incorrect back then when I suggested that we are not paying enough in taxes. I still feel this way and I am sad to say that recent news articles bear me out. We are woefully behind simply maintaining the infrastructure that we have. This was tragically borne out a year ago with the catastrophic bridge collapse of the I-35W Mississippi River Bridge in Minneapolis that killed thirteen people. As a direct result of this event, federal and state money suddenly materialized to replace this bridge. The replacement bridge will cost $234 million and is scheduled for completion by Christmas.

You would think that this event might have changed the dynamics. However, as the Associated Press found, just twelve percent of our most structurally deficient high use bridges have been repaired. It would cost an estimated $140 billion to repair just the bridges that need to be repaired right now. Yet, President Bush is threatening to veto a transportation bill because it spends $1 billion more than he likes. It will not surprise you to learn that Bush’s motives are wholly ideological. He is a conservative and conservatives do not believe in raising taxes or spending money on projects not considered essential. Apparently, despite overwhelming evidence to the contrary, bridge construction is not essential to this president. Our War in Iraq though is essential, and at least some of that money is going to build new bridges for Iraqis. Apparently, bridges are essential for Iraq, but are not essential for the United States. Go figure.

I picked bridge repair as an example only because it is easy to see the consequences of inaction. In fact, our infrastructure is crumbling all around us. Here in Virginia, our state House of Delegates once again bollixed up attempts to raise transportation taxes. The result is that not just bridges that are suffering, but cars spend much time sitting in traffic and consequently unnecessarily spewing emissions. So far this year there have been three Code Red air quality days for the Washington region, and twelve Code Orange days.

Better air quality, like safe bridges, are solvable problems. Neither is solved by rocket science but by the application of money and will. Just as maintaining your car means you extend its useful life, bridge life can be extended through regular maintenance too. Instead, we would rather defer the cost of maintenance to have a little more cash in our pockets today. The result is like driving your car on a half a quart of oil. You can do it for a while, but at some point, you are looking at some very expensive consequences. It is pennywise and pound-foolish.

The anti-tax crowds, epitomized by nuts like Grover Norquist, are pennywise folk. They are convinced that all expenditures of money by governments are ultimately wasteful no matter how much they address a public need. Their philosophy though amounts to living in the moment and closing their ears when the application of their philosophy results in inconvenient news, like what happened in Minneapolis one year ago exactly on August 1, 2007. These problems do not go away by ignoring them. They simply get worse and more expensive to fix.

The irony is that if instead of aggressively cutting taxes we had prudently kept the old tax rates then we would have had the money back then to fix many of the systemic problems that are cropping up all over the place today. Our tax rates seemed quite acceptable to the American public when our president was inaugurated. We were even paying back some of our massive debt. Granted, even back in 2000 we were not quite spending what we needed to spend to address problems like deteriorating bridges. This was due in part to federal gas taxes not having changed since 1993. However, construction costs have increased during that time. The result is that there is less money available to fund projects like bridge maintenance. Rather than raise gas taxes, thus far Congress’ solution is to charge it. Hopefully only as an interim measure, the House of Representatives voted overwhelmingly to add eight billion dollars to the Highway Trust Fund by supplementing it with money from general Treasury funds. In other words, we will go into more debt to pay for it and pass its cost on to future generations.

Our fiscal crisis in many ways mirrors our blindness with the oil crisis. We buy more foreign oil because we are used to an oil-based economy and do not want to think about how hard it would be to change to something else. We know that recoverable oil is a finite resource that in general will only get pricier because it will be harder to extract. Similarly, we borrow money from creditors on the expectation that they will always be willing to lend it to us. As some overleveraged homeowners are finding out, if your liabilities exceed your assets no one is willing to loan you any money. The same can happen to the United States government. Our weak dollar, trading at record lows, suggests the time may not be that far off.

To solve the oil crisis we must realize that we cannot drill our way back to our previous lifestyle. To solve our fiscal crisis, we have to realize that we cannot indefinitely depend on our creditors unless we first show a willingness as a nation to roll up our sleeves to fix some of these problems. In short, we need to raise taxes.

Raising taxes is never convenient, particularly at a time when so many Americans are struggling. That is why my suggestion will go over like a lead balloon. That is also why if I were ever inclined to move my fantasy run for president into a real run for president, my message would fall mainly on deaf ears. Like John Anderson in 1980, I would lose spectacularly.

Still, most of us, if we stop listening to the spin and start listening to our hearts, know that we face a new inconvenient truth. The cost of not raising taxes today simply means that to fix these problems tomorrow will cost even more. So yes, for a while, those extra taxes would hurt. At some point, you sufficiently address the under-funded infrastructure problems and taxes can be eased. Nevertheless, taxes must never be eased beyond the point that we can adequately maintain the infrastructure we need to run our modern society.

Instead of running for president, all I can do is be that fly in the ointment. I am more than willing to pony up my share of additional taxes. Most likely, I would pay disproportionately more in taxes than many of you, since I have a six-figure income. I do not like paying more taxes either, but I am willing to do so. I do know that despite laughably naïve men like Grover Norquist, we are interconnected. We critically depend on our infrastructure and our social safety nets. Since like you I get great value from these things, I am not afraid to pay my share.

As was true when I wrote about it in 2003, things cost money! They cost what they cost because that is how much it costs! No ideology can change this. I expect to pay close to $200 on Monday to have a locksmith fix a bad lock, which must work with our house key. It seemed like a lot of money to me too, but that is the going rate for fixing a problem that I cannot fix by myself. I would rather pay the $200 than find that anyone could get into my house or that I could not get out when I needed to.

We have a great nation that thanks to the low tax mantra is rapidly moving from first-class status to second-class status. I think I am a patriot by coming forward to proclaim that I am willing to have my taxes raised to make sure we remain a first class nation.

Stupid is as stupid does

Apparently, I missed this law enacted in 2005 before Republicans were routed out of control of Congress. The bill was labeled the “Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users” otherwise known by that ever popular acronym SAFETEA-LU. What? You never heard of it either? Well, these things happen. I had not until I read this story in today’s Washington Post. Only a very stupid Congress could pass such an asinine law. It had to be one vested in obsessive and anal adherence to its bizarre political ideology at the expense of all common sense. Doubtless it was a congress full of bizarre ideologues like this one. In other words, it comes courtesy of our late and unlamented Republican congress. Moreover, only a very stupid president could have signed it into law, and we sure have one of those now.

It would be much more appropriate to have called it the STUPID: The Scatterbrained Transportation Umbrella Program from Insipid Dunderheads. The provision of note is the one that cuts federal funding for regional transportation systems that provide charter buses for special events. Apparently, by doing so private charter bus services might be undermined. The effect of this law locally is to make it difficult or impossible for Metrobus to provide buses for special events that it is uniquely qualified to handle safely, efficiently and conveniently.

For example, not everyone drives to FedEx Field in Lanham, Maryland to see the Washington Redskins play. Some want to take the Metro. Unfortunately, Metrorail does not have a station at FedEx field, so Metro has been conveniently providing shuttle bus service pre and post games for fans. According to Metro, 1300 buses last year alone were chartered to get people to and from Fedex Field. Patrons get off at Metro’s Landover Metrorail Station and give the bus driver a five-dollar bill. In return, they are quickly driven to the stadium in time for their game and get a convenient ride back to the Metro station after the game.

Thanks to SAFETEA-LU, this is ending. Metro would first have to check with dozens of charter bus companies in the region to see if they are interested in providing the service. The law discourages metropolitan transit systems from competing with the private sector for these events even though they already have the infrastructure in place to provide the service, and all parties are comfortable with the service provided.

It is not as if Metro is making any profit from the service. Part of its “problem” is that it is a non-profit agency. Maybe that was the real issue that chafed at Congressional Republicans. According to Metro’s press release in 2007, it provided 2,500-chartered buses and earned $1.6 million dollars for these services. It made no profit off these deals. Turn the job over to the private sector, assuming it could provide the number of buses needed for the event, and the price is likely to rise substantially.

Is Metro particularly concerned about this loss of business? Not really, since they never earned more than pocket change off the service. They are concerned about chartered bus services delivering customers to Metro stations where they are currently not allowed. The drivers who operate these charter buses are not familiar with Metro’s rules. Likely some of these buses are too long or too high to even get into the Metro stations. As for passengers, primarily they want to get to and from the game. Yet because of SAFETEA-LU they are likely to have to pay more for the privilege. Ah, the joys of free enterprise!

In short, the law creates a new large and unnecessary inconvenience for riders and Metro. Moreover, not only Redskins fans will be inconvenienced. Also affected are patrons who want to take Metrorail to Wolf Trap Farm Park in Vienna, Virginia. The Filene Center there holds myriad concerts during the summer. In 2009, patrons will not be able to step onto a Metrobus at the West Falls Church Metro Station to get to Wolf Trap. For 2008, Metro has received a waiver to continue the service, perhaps because shows start this weekend and it is impossible to find a chartered bus service in time. The waiver might also have something to do with Wolf Trap Farm Park patrons tending to be pretty well moneyed. It may not be a good thing to tick these people off.

In satisfying the holy grail of competition, our unlamented late Republican congress once again conveniently bypassed the sanity test. This portion of the law at least is shortsighted and dumb. It is also bothersome and likely more expensive to riders. It adds to Metro’s hassles, since they have to deal with the logistics of training charter bus companies to adhere to its rules and regulations. It is also likely wasteful, because Metrobus has the buses and the drivers readily at hand who can provide the service.

“Stupid is as stupid does,” Forrest Gump informed us back in the 1994 movie. I guess compared to squandering trillions on an unnecessary war in Iraq, this is a venial sin. Nonetheless, we will be dealing with the legacy of stupid laws like this one for some time to come. I hope in the wash of pressing business for our new Democratic president and our expanded Democratic congressional majority next year, rescinding these silly provisions of this law will not be overlooked.