Thursday, December 31, 2015

Royally Bamboozled

The way I see it, a whole lot of Montanans, including Sen. Doug Kary, have been royally bamboozled.

In a guest column that’s appeared in several Montana newspapers, Kary, a Billings Republican, cites a recent study by the Bureau of Business and Economic Research to claim that closing the coal fired power plants at Colstrip would be an intolerable disaster for Montana’s economy. And so, he argues, in implementing the Clean Power Plan, the state should do whatever is necessary to keep Colstrip up and running.

Whether or not the Colstrip plants should be closed is a decision that deserves a lot of careful thought and attention, but unfortunately that’s not what it’s getting from Kary, who so misunderstands the actual findings of the BBER study as to turn them on their head.

Kary says that the BBER forecasts that “Montana’s economy will shrink by $1.5 billion if the Colstrip facility is forced to close. Compare that with the $1.2 billion reduction in economic output Montana experienced between 2008 and 2009.”  Had Kary read the BBER study carefully, he would know that it predicts that even if all the plants at Colstrip were shut down, Montana’s inflation adjusted output would increase every single year from 2019 to 2050; it would never shrink as it did during the 2008 recession. The $1.5 billion shrinkage Kary cites, without putting a date on it, is how much lower the BBER projects output would be, in 2025, if Colstrip were closed down rather than left open. So the numbers Kary is comparing don’t measure the same thing. In fact, according to the BBER, between 2024 and 2025 output will rise about $1.7 billion, even if Colstrip is closed.

By the way, the “output” measure BBER is using when it computes the $1.5 billion shortfall is gross receipts (or sales) of businesses and other entities. This is not the measure economists usually use, because it overstates the value of output by allowing a lot of stuff to be counted twice.* Sales usually exceed the accepted measure of output, gross domestic product, by a wide margin – about 70% in the BBER model. Using GDP, the 2025 output shortfall is about $1 billion, rather than $1.5 billion.**

Kary says that if Colstrip is shuttered, “Montana will lose over 7,000 good jobs.” Again, he doesn’t say when this is going to happen. But the BBER study does not predict a decline of 7,000 jobs; it predicts, rather, that in 2025, with the CPP in place, there be 7,000, or about 1.1%, fewer jobs available in the state than there otherwise would be. Between 2024 and 2025, the number of jobs is projected to decline by 735, or one tenth of one percent.

Kary says that closing Colstrip would produce a “$145 million to $155 million a year tax hit” to the state, “about 1 in 10 of the dollars the state collects in tax revenue each year.” Actually, if he had read the BBER study carefully, he would know that $145 million represents the BBER’s estimate of how much lower state revenue from all sources (not just taxes) will be in 2025. In 2013, state revenue from those sources was about $8 billion. We don’t know what that revenue will be in 2025, but something in the neighborhood of $10 billion is a conservative estimate. In that case, $145 million in reduced revenue will translate into 1 out of every 69 dollars the state collects, not 1 out of 10, as Kary would have it.

Kary says that closing Colstrip will cause “double digit” increases in electricity prices without explaining what that means (10 percent? 99 percent?) but doesn’t recognize that  the BBER study predicts that despite increases in the cost of living, real per capita disposable income will increase every single year through 2050, even if Colstrip is entirely closed down. So will population, the labor force, real pay per job, real pay per worker, real gross state product, and real total personal income.

If you’re wondering how Kary managed to so badly garble the results of the BBER study, well, that’s where the bamboozling comes in. And the outfit doing the bamboozling is none other than BBER itself.

BBER wanted the impacts of a Colstrip closure to look as scary as possible, and presented its results so that would happen. It filled tables and graphs with calculations of what it called losses – the difference in what would happen with and without Colstrip being shut down – and suggested closure was a calamity in the making. And Kary bought it.

The only way Kary could have known that virtually every meaningful measure of economic performance would continuously improve, even after Colstrip was completely shut down, would have been to dig around in the numbers in an appendix, because BBER never bothered to point those results out.

The only way Kary could have known that the “losses” depicted in the study were not declines, and not comparable to real recessionary declines, would have been to read the fine print, because BBER itself didn’t succeed in avoiding that particular confusion.

The only way Kary could have known that the “losses” BBER attributed to closure were quite small in percentage terms, or that they would quickly be erased by normal growth, was again to have gone to the numbers in the appendix, because BBER never told him that.

The only way Kary could have known that real per capita income would continue to increase despite higher electricity prices was, you guessed it, to have gone to the numbers and calculated it for himself, since BBER never did it for him.

For a lot of people, including Doug Kary, whether or not Colstrip closes down is a make or break question when it comes to implementing the Clean Power Plan. That concern is not hard to understand, particularly when it’s coming from the people who live and work in Colstrip. But from a statewide perspective, it’s important not to go off half cocked here, and make decisions based on a contorted view of their consequences. None of us, including Doug Kary, is well served by having the wool pulled over our eyes.

*For example, when a farmer sells barley to a brewery, the barley is included in the economy’s output for the first time. When the brewery sells a keg to your favorite watering hole, the barley is counted again, transformed into beer. And when the bartender draws you a pint, it’s counted a third time.

** It’s hard to avoid concluding that BBER used sales rather than GDP because a “loss” of $1.5 billion sounds scarier than a loss of $1 billion.

Tuesday, December 29, 2015

Divisive Politics

You’ve got to feel sorry for Matt Rosendale and his Republican colleagues in the Montana legislature. All they are trying to do is to keep you safe from international terrorism, and for their trouble, Democrats are calling them out as hypocrites. It just isn’t fair.

Here’s the way Rosendale, the majority leader in the Montana Senate, tells the story in a column in the Missoulian:

Last month, after the massacre in Paris, Republicans in the legislature, including Rosendale, wrote to Governor Bullock to express their concern about the safety of Montanans in the face of terrorism. They were particularly concerned, Rosendale says, by the lack of “vigorous screening” prior to allowing “vast numbers of unknown refugees to enter our state or country.” All they were doing was “trying to protect our citizens,” just being “prudent,” simply taking “every precaution.”

And how prescient they were! Just days after they wrote to the governor, 14 people were gunned down in San Bernardino, and one of the killers, Tashfeen Malik, was an immigrant who had managed to make it through the vaunted but clearly inadequate screening process. If only we had listened.

But we didn’t. No, all that happened, Rosendale says, is that legislative Democrats (I was one of them) said that the letter to the governor was “divisive politics.” And worse, the President and other Democrats took advantage of the San Bernardino shootings to again attack the Second Amendment, and deflect attention from their failure to stop people like Malik at the border. The fact that the Second Amendment allows for virtually unfettered access to guns, and that Malik took advantage of that access to arm herself, was irrelevant. What we need to do to stop gun violence is to keep people like Malik out of the country. And since that is not always going to work, what we need to keep mass murderers at bay is to arm ourselves to the teeth.

It’s hard to know where to start with this nonsense, but try this:

The Republican letter to the governor did not simply call for more vigorous screening of refugees. It called upon the governor to "use all legal means to block or resist the placement of Syrian refugees in our great state at this time." Unless the signers of the letter were inconceivably ignorant, they had to know that Governor Bullock had no means to bar Syrian refugees from the state. Their call on him to do so was at best an empty gesture and at worst, deeply cynical.

And they weren’t urging greater caution in admitting immigrants like Malik. They were asking for a ban on Syrian refugees. Those are the people, you’ll remember, who are desperate to get away from the barrel bombs and poison gas their own government is killing them with, from Russian jets dropping outlawed cluster bombs, and from the savagery of ISIS. They are the people who are so desperate to leave that they climb into rubber rafts with their little kids and try to cross the Aegean in the middle of winter. They are the thousands of people, including kids, who are drowning in the ocean, suffocating in closed trucks, and dying on top of trains under the English channel, just trying to get to safety. They are among the more than one million refugees to whom Europe has opened its arms and whom volunteers from all over the world, including Montana, have rushed to help. They are the people who hope to be among the 10,000 Syrians to be admitted to the United States, but only after being screened much more stringently than Malik was. And they are the people whom Matt Rosendale and his Republican colleagues urged Governor Bullock – impossibly - to slam the door on. How is that not politically divisive?

When it comes to guns, and the Second Amendment, it’s not hard to figure out that if Malik had never been admitted to the country, she wouldn’t have ended up slaughtering innocent people in San Bernardino. Rosendale’s got that right, but it’s hardly the point, which is that no screening of immigrants and refugees, no matter how rigorous, is going to stop the incessant gun violence plaguing this country. In 2013, more than 33 thousand people in the United States, the vast majority of them native born Americans, picked up a gun and shot themselves, or somebody else, to death. Seal the borders, and that number will hardly move.

The fact is that we are awash in guns, and any terrorist, any felon, any deranged person can, by hook or by crook, get their hands on one.  And we can’t do a thing about it, because thanks to the efforts of gun rights zealots, including politicians like Matt Rosendale, the Second Amendment has come to mean that virtually no measure to restrict access to guns, however limited, can be enacted.

So the only solution is more guns: arm the teachers, keep a pistol in your bedside table, make sure you are packing when you go out with your kids for dinner and a movie. This is the level to which we have descended, and you’d better watch your back, because nobody  - certainly not a pack of Republican legislators fretting about Syrian refugees - is going to watch it for you.