A New Year or Encore? Across the United State, we are seeing an increase of political rhetoric in a presidential campaign that benefits a limited few on candidates' payrolls. The media and advertising sectors are scooping up contributions and absorbing them for a limited few.

There is also an emerging economic challenge for which government, Federal and local, must work with the private sector, which, after all, produces the income needed to fund government services. We need less bureaucracy of red tape.

Across Maryland we see a one-party political wall failing to respond to fears about increasing numbers of doctors leaving Maryland in a lawsuit abuse environment, and "special session" taxes being slid under the door of small computer service businesses critically needed to grow. Technology is becoming the replacement for Maryland's historic smokestack industrial base. The State House in Annapolis seems to be the last to "get the word"!

POLITICAL RHETORIC

At this front end of uncertainty, what is on the near and far horizons?

First, let's look at the political noise emerging from presidential candidates of both parties. Recently, I heard a long respected executive‘s observation that now may be the time to shift the priority from charges to performance. He suggests the viability of a Michael Bloomberg candidacyand the growing independent voter sentiment. Bloomberg is now the subject of a petition drive to draft him for a presidential bid. This comes in a year when increasing numbers of voters indicate anger with both parties in Washington, and at the lack of discipline by both Democratsand Republicans to control spending.

Bloomberg has the track record to cut through the promises of dramatic change to delivery of change. This delivery consists of experience in bringing discipline to America's most complex and largest city government, as well as managing a growing nationalcommunications business in a highly competitive environment. Combined with an independence from campaign contributors' pressures, it is the work product and the results that count if this type of government leader can bring it to cross party lines and GET THE WORK DONE.

Think about this Bloomberg observation in his recent "State of the City" address: "Keeping New York City and America at the front of the pack begins with openness to new energy ... meaning innovation. That's how I built a business and worked to bring to a city government that was insular and provincial and married to the conventional." Perhaps combined with the personal integrity of McCain and the idealism of Obama, the rhetoric can be narrowed down to real results.

And speaking of failure to move to real results, Bill Clinton has demeaned the responsibility of a former President by daily "charge-counter charge" rhetoric thatdoes nothing constructive and feeds the appetites of the "campaign hype" types, those handlers and advertising moguls who make more money the longer a campaign runs.

ECONOMIC CHALLENGE

In terms of direct results from action by a government agency, the Federal Reserve provides reality not rhetoric. The timing of action on interest rates by the Fed may be needed, near term, to stem the growing number of problems caused by the loss of home ownership in the subprime mortgage arena. But, the balance between Congressional calls for further tax cuts and stimulus packages is a delicate one that does not lend itself to promises and rhetoric. Chairman Bernankehas indicated that a 50 to 150 billion stimulus package seems reasonable with funds going to low and moderate income people. This will likely result in more economic recovery than if it only benefited people with high incomes. This means a separation of long term economic policy from short term stimuli, with a careful balance between the two.

The real factor in the longer term must be a discipline inspendingand the avoidance of hidden taxes. The alternative minimum tax and the complexity of deductions only slide under the door, giving primary benefit to tax accountants in their invoices to clients for whom our tax system has added a level of complexity to maintaining a fiscal discipline at the personal level.

The jury is still out on this quiet but increasingly serious impact on American taxpayers and moderate to lower income citizens. We need to stay tuned and avoid further encores of political rhetoric in the coming weeks of the campaign. Even more important, we need to heed action ratherthan promises.

Let 2008 be a real new year for less political rhetoric and more direct work on behalf of the economy. We need a sensible solution for restoring a strong and stable economy, not weakened by the hot air of political promises. We need a solution that is not weakened by the loss of essential doctors and health care providers or the departure of growing technology business in Maryland.

Labels: Bloomberg, Maryland, O'Malley

  10:53 AM •  0 Comments •

O'MALLEY ON THE YELLOW BRICK ROAD For the past month / even the past year, Maryland has been subjected to its version of the Wizard of Oz's yellow brick road. Instead of "we're off to see the wizard", a variety of messages come from Gov. "Wizard" O'Malley, as he travels a quixotic a campaign-like journey from a Towson housewife's kitchen to the attic window of a Baltimore tower, a stallion breeding barn, and stops along the way to "Oz".That journey is filled with promises to eliminate a $ 1.7 + billion dollar deficit begun 12 years ago, by Parris Glendenning, Maryland's non-stop, spending Governor ; a deficit which Gov. Bob Ehrlich attempted to slow down -- only to be blocked by the Miller-Busch axis in the General Assembly, 2002 - 2006.

What is this Governor's message? It depends on to whom he speaks or what media camera is pointed in his direction. The messages are all over the lot:

putting " constructive" taxes on small / mid-sized businesses who can allegedly "afford it" -- in reality, these taxes may implement the dreams of accountants/ lawyers that are translated from hidden bureaucratic maneuvers into penalizing taxes.

pledging no tax changes/ even reductions for the "little people" except at the sales counters of retail stores where thousands have to buy home and family goods;

"painting" vague descriptions of tobacco taxes that are touted to take care of most of the problem;

touting slots as being able to cut the deficit / when - for the past 5 years - the Legislature has ignored a horse breeding and racing industry, blocking any chance of controlled management of this form of gaming to a limited number of tracks ; l

promoting the gas tax as another "cure-all" to help eliminate the deficit , as the yellow brick road orator contends that this tax is not much of an addition to escalating gasoline prices -- and no move to make a gas tax be applied primarily to essential highway/ bridge maintenance , repairs.

This commentary was intended to be completed in mid-September, when there would some sign of what the Governor was going to do. I have waited for a full month for that indicator --- and there are still words,words, words! The citizens of Maryland are being reassured that all problems will be solved by 30 days of a General Assembly session.

To carry the "Wizard of Oz -- yellow brick road" analogy forward, does this mean that Wizard O'Malley is in front of a curtain with 3 "managers" behind the Governor: Senate President Mike Miller/ House Speaker Michael Busch and leftward spending leaning Comptroller Peter Franchot. Are they doing a "puppet pulling" routine?

To borrow Winston Churchill's description of appeasement Prime Minister Neville Chamberlain : Maryland's current Governor appears to be a "mystery wrapped in an enigma" : many themes, as he now indicates that a November "special session" will satisfy citizens of a State falling back into a troubling pattern : described by my long-time Maine summer friend mentored by that State's remarkable Sen. Margaret Chase Smith : 95 year old "liberal Republican" Linwood Palmer, recently asked me "if Maryland , is returning as ' a dome (the State House) with a cash register under it ' " ?

The time has come for straight talk with the citizens of Maryland and honesty about an accumulated deficit in the management of State Government. The missing link is acceptance that two essential steps must be taken : set priorities among policy choices and reduce in government waste / unnecessary spending .

Maryland's political leaders need to come forward with what they will actually do, if there is a special session. The last such session was marked by rejection of then-Governor Erhlich's attempts to put limits on lawsuit abuse that still can threaten to drive doctors out of practice in Maryland. Healthcare reform and other problems are not solved just by increase of taxes -- but by setting/implementing serious choices among competing options for the use of taxpayer money. As one small example , when will there be a shift of education spending for a large administrative bureaucracy to needed teachers given opportunity to be creative/ innovative and flexible in working with their "end product" ; the students .

Governor O'Malley , this journey is not a dance along the yellow brick road with a scarecrow, tin woodman and your background music. We are at the beginning of "truth time" --- almost a full year after your election -- during which little beyond talk has happened. The politicians must be prepared to make tough fiscal decisions ; not provide more promises along Maryland's "yellow brick road" .

Labels: budgets, Maryland, O'Malley, taxes

  9:48 PM •  0 Comments •

ELECTRICITY RATE INCREASE & MOUNTING STATE DEBT: WHERE'S THE LEADERSHIP? This week , Maryland citizens / taxpayers have received BGE bills that were recently described , by The Baltimore Sun, as having "arrived quietly" . Rates go up 50% for all households and individuals, unless a "delay on the full amount, but pay the balance later" option is exercised by BGE customers . As this commentary is written, Gov. Martin O'Malley is campaigning in New Hampshire for candidate Hillary Clinton. Comptroller Peter Franchot is speaking out for more expenditures in public transportation/teacher salaries/healthcare benefits --- but appearing as "looking the other way" from the highest responsibility of the Comptroller: to insure sufficient revenue and its collection.

And, to top it all: the role of the Public Service Commission (PSC) in the current electricity rate increase, adding to create a "double hit " on Marylanders if we take into account the O'Malley Adminsitration and the Legislature's delay in reducing the $ 1.6 billion Maryland debt. What insight do we gain on the 2nd floor and the Governor's offices during this "double hit" ?

Let's put the Public Service Commission under the microscope: In the 2006 campaign, O'Malley lambasted then Gov. Erhlich's PSC for approving a 72% BGE rate increase. With maneuvering by the Legislature for a 15% increase, the bottom line of the former/ current PSC has little difference in what Marylanders have to pay in higher electric bills.

And,how much experience in the energy/ energy markets does the new PSC have? Steve Larsen, the Chair appointed by O'Malley has a strong record as a consumer advocate. His knowledge of and views towards the complexities of the energy industry are guarded -- and that may have an impact on just how much in depth the PSC is prepared to go in the proper balance between a regulated and deregulated environment for energy production/ distribution .

Which is better: regulation or deregulation? Consumers want the lower prices or deregulated energy policy when supply, through the grid system is strong. When tight, the lower price can be achieved through a wise PSC oversight. But, the bottom line remains: neither all regulation from a government agency "on high" nor a the idea free market economy can be the ideal solution for power availability all at reasonable rates.

The politicians have proven that they cannot magically deliver lower prices. Example: the General Assembly sat on this issue for too long -- through most of the Glendenning Administration -- as a matter of political "convenience" whereby Annapolis posed as the consumers' "best friend". This inaction forced a response by then-Gov. Erhlich's PSC which was attacked as anti-consumer. There was an attempt at some balanced decision -- but, now the rate meters at our homes have "come home to roost": too high on the nest!

This means that analysis must come first: the Cato Institute's forthcoming report "The Maryland Electricity Market: a Primer" is expected to provide more substance and less politics. When he returns from the New Hampshire circuit of an election a year and a half away, Gov. O'Malley and his still-learning PSC Chair Steve Larsen had better become more analytical and less political. Mike Miller and Michael Busch -- as the Legislature's control force will look for an easy out , to be able to tell Marylanders: "look how much we love you".

What is the "big picture" that looms overhead? If the world of fiction --- including huge stock and salary benefits for too many top tiers of corporate American -- continues , one solution might be considered for both the electricity rate levels and the huge mounting State government deficit which is being postponed by Maryland's political power structure. The public should demand a high-level, objective analysis --- and , soon.

Suggestion for how to do the objective analyis: the appointment of a bipartisan commission with fiscal/ nonpolitical analysts to do the work on these two urgent policy issues:

1) electricity rates / supply and demand --- with a balanced approach that works in the long-term to recognize the challenges facing the suppliers and the consumers.
2) Deficit control by those who know both the worlds of the private sector / business and the government.

Suggestions for REAL leadership? Here's a recommendation , Governor O'Malley and your "spendrift" comptroller Peter Franchot:

Take the national model of honest bipartisanship: the Baker (James Baker/ former Secy. of State ) / Hamilton (Lee Hamilton , former Congressman and now Chair of the Woodrow Wilson Policy Center) Commission .

Make Maryland work through these two series problems of electric rate costs and an escalating state government debt. How? This Governor needs to stop[ campaigning long enough to appoint a Commission co-chaired by Aris Melissarotis, former Secy. of Economic Development, and Cas Taylor, former Speaker of the Md. House of Delegates. Action and action NOW is needed; not the delay of waiting for a "special session" where a band-aid will be applied in the same way as 2 years ago when the trial lawyer Legislature papered over the climate of lawsuit excess that could drive doctors out of practice in Maryland.

Labels: Constellation, Energy, O'Malley, Prices

  3:20 PM •  0 Comments •

Maryland's Smoking Gun - $1.5 Billion Deficit. Vanished Fiscal Discipline. The facade of a working session of the 2007 General Assembly is being wiped out by the fiscal reality of a $1.5 billion structural deficit. In a one party state where "cover up" of excessive spending is the order of the day.

In office less than 6 months, Gov. O'Malley suddenly ordered his Cabinet secretaries to cut spending by $225 million in the next 2 years -- with overtime labor costs amounting to more than $ 38 million in just one agency. This cost reminds me of a run-in with the Baltimore City School system when a professional firm I represented had been awarded a contract to modernize the maintenance/ cleaning system for school buildings -- reducing costs by 1/3 . The maintenance employees' union blocked any attempt for "cleaning house" through computer programming/ planning --- Why? Because the union wanted to keep overtime benefits flowing . To top it all, Carmen Russo, former Supt.of the City Schools told me " I have no control over the unions" -- and , then-Mayor O'Malley remained silent. The firm that proposed the valid efficiency recommendation, refunded the cost of its proposal to the School System because its was not used to improve service and put funds where needed : to the students and teachers.

On the revenue front, Maryland has an income tax structure that is driving seniors, with productive professional lives, to states like Florida and New Hampshire. Yet, at the same time , what has been called Maryland's "shrinking deep pockets" is becoming a hard fact of life -- to the tune of that $ 1.5 billion. Legislatures and some Governors -- past and present -- prove a critical point: the politicians have lacked the discipline that any small business owner must apply to essential result of the work program/ services provide by that business: What is that discipline?

The answer is not rocket science, but -- unlike business -- states and the federal government are generally unable to exercise the discipline of spending less than income from taxes. Customer income somehow provides a clear discipline of controlled spending by small business CEO's than the typical bureaucrat's perception of unlimited income from taxpayers without sufficient quid pro quo of demonstrable results. One major factor facing businesses is competition in pricing and service. Government lacks that competition, with one exception : political party competition at the policy / decision-making level.

But, Maryland does lacks that competition. We are a single party state where either a Governor from the opposite party (eg. Bob Erhlich) had challenges in overcoming the "iron curtain" held firmly in place by the General Assembly power base of Mike Miller and Michael Busch. In the case of a new Governor (Martin O'Malley), the leverage from the State House first floor is too heavy to infer little more than " We will handle it , Governor -- just smile and agree with us." Softer, but not overly different from the excessive lawsuit environment that is driving doctors out Maryland medical practice -- here , the courageous initiatives of former Gov. Erhlich were blocked.

Historically, has been occasional discipline from the Comptroller's Office. Legendary Louis Goldstein was able to give sufficient fiscal discipline within the Board of Public Works that Maryland's AAA bond rating held reasonably firm. "Louie's" successor, the colorful William Donald Schaefer, was able to at least provide some heat on the nonstop spender Gov. Parris Glendenning , for 8 years. Now, indications are that new Comptroller Peter Franchot appears to have enthusiasm for check writing that is not expected of Maryland's chief fiscal officer.

This problem that is beginning to get media attention ; an example is the solid editorial analysis of Marta Hummel, editorial editor of The Baltimore Examiner. In today's May 14 edition, she notes that "Government, at all levels, must be efficient -- regardless of fat or thin budget years. Maryland faces an estimated $1.5 billion 'structural deficit next year. It is 'structural' because long-term budgeting shows revenues consistently lower than expectations, not a one-time shortfall" . The editorial gives O'Malley a "positive" for ordering his cabinet secretaries to cut $200 million from the State budget. But,as Ms. Hummel notes, "hard choices are ahead. O'Malley paved the way for discussion on the best route for Maryland's budget impasse by "calling for cutting waste in state government". But there is an essential reality applied to that generalization.That reality notes that "taxpayers deserve leaders who turn the mirror on themselves before asking those taxpayers to sacrifice". Will O'Malley, Miller, Busch be able to turn the mirror on themselves?

The real test -- where politicians must be honest and hone in on the real problems -- will come in the 2008 General Assembly session. 2008 is when the rubber meets the road on the need to cut government spending --- not just talk about it.

One barrier is still present : objectivity . As noted in his weekly Montgomery Gazette column , longtime policy/political analyst Blair Lee speaks of the need for serious objectivity by the "4th estate" An example : the Baltimore Sun's periodic attacks on former Governor Erhlich , as if he were still Governor. In reality, he is not.

Maryland urgently needs more attention -- policy and media -- focused on elected officials and the State's bureaucracy to provide real leadership, NOT rhetoric, give those of us who pay the taxes. Thanks to The Baltimore Examiner and Montgomery County Gazette for getting the ball rolling. Let's see if the one-party state will act !

Labels: deficit, Ehrlich, Maryland, O'Malley

  6:34 PM •  0 Comments •

CELEBRITIES, POLITICIANS: HAD ENOUGH? This week's media articles hovered over us about celebrities -- of the movie and political variety -- "showing up" too much . Two categories have been identified and covered with names by Sunpapers reporter John Woestenkiek after a month's balloting from 215,000 readers in a survey -- "March Madness:Celebrity Version!":

"The Talking Head Division" in which Rev. Al Sharpton narrowly won out over Paris Hilton! These two outdistanced such "revered" figures as Britney Spears, the late Anna Nicole Smith, Ann Coulter, and presidential candidates Hillary Clinton/ Newt Gingrich ; political manipulators James Carville, Pat Buchanan; media writer/ voice Robert Novak.

"The Can't Seem to Stop Talking Division": Here, the intense competition is even more intense with Rosie O'Donnell who won by 62% over Tom Cruise. Donald Trump was a close runner up followed by such names as O.J. Simpson, and opinionated television commentators Bill O'Reilly and Nancy Grace.

Now, MARYLAND: Dear Readers, a challenge for you: come up with some local and statewide names from which you would may want some relief!

To get the process moving, a few suggestions: House Speaker Michael Busch, Senate President Mike Miller , the new "taxing" (?) overnor O"Malley, former State Senator / still wheeler dealer Tommy Bromwell -- and, from the Orioles as the baseball season begins: owner Peter Angelos who, hopefully , will soon be outshown by a re-habilitated team for the 2007 season!

Is notority a temporary status, or are there lasting impacts of longtime public involvement? One has to come up with two who have ultimately been on the positive side : the late Louis Goldstein, colorful personality and Comptroller for more than 30 years; and the equally colorful William Donald Schaefer, 4-term Mayor; Governor/Comptroller, 8 years in each job.

Any others? -- from the the worlds of government/politics, business, sports, entertainment.

Suggestions welcome: national and state; good/not so good/or "had enough"!

Labels: Clebrities, Maryland, Media, O'Malley

  12:54 PM •  0 Comments •