Voodoo Economics

The Missoulian reported this week that Reps. Art Wittich and Keith Regier appeared in front of the House Tax Committee Tuesday, seeking approval for a couple of great big tax cut bills and dishing out the usual conservative Republican assurances about how wonderful the results would be.

You’ve probably heard all this before: If we cut tax rates and let people (and especially rich people) hold on to the money they make, they’ll want to make a lot more of it. The economy will flourish, the tax base will expand, and lo and behold, total tax revenues will rise. This notion, that a cut in tax rates will produce an increase in tax revenue, is usually attributed to the economist Art Laffer, who allegedly hit on the idea while drinking with some buddies in a D.C. bar. Laffer was an adviser to Ronald Reagan, who became enamored of the idea and put it into practice, thereby becoming the first president in 35 years to grow the national debt faster than the economy as a whole.* In 1980, George H.W. Bush, anticipating the train wreck that was to come, famously accused Reagan of espousing "voodoo economics."

Wittich also argues that we are sitting on a great big pile of money - $350 million idling in the checking account – and that it’s only right to give it back to the taxpayers. The problem is that we are about to have a battle royal about whether that money is really there to give back.

The first thing we have to do when we start to build a budget – that is, figure out what services we want to provide, what we can pay for them, how much of a cushion we need to leave in the bank, how much we can afford to cut taxes, and so forth – is to estimate revenue. And it turns out that right now the Governor’s budget director thinks we will have a lot more revenue than the Legislature’s own analysts are forecasting. How much more? Well, coincidentally, a little more than $350 million.

Now usually when Republicans are presented with several revenue estimates, they gravitate towards the smallest one they can see. What better way is there to “shrink government.” The irony here for Wittich is that if he’s going to do business as usual, he’ll want to low ball the revenue estimate. But that will eat up all the money he wants to give back. What to do, what to do?

Stay tuned on this one. It’s going to get interesting. And don’t be surprised if the conservatives figure out that the only way to low ball the revenue estimate and give back a lot of tax money is to gut programs. It’s what Paul Ryan would do.

*When Reagan entered office in 1981, total public debt equaled 30.8% of gross domestic product. When he left office 8 years later, it was 49.6% Prior to 1981, the debt had declined in relation to GDP under every president, Republican or Democrat, since the end of the WW II.

It's a Miracle!

You may have read a couple of weeks ago about the miraculous ability of Republican senators to multitask. As the Montana Street Fighter reported recently, Senate Republicans this year have managed to generously pad their majorities on several key committees, and the way they did it was to appoint four of their number to each serve on two committees that meet every day at the same time. I’m not sure how that’s working out for those four – they must be awfully busy flying back and forth between committee meetings, trying to be in two places at the same time – but I imagine they can take some comfort in the fact that they are not the only GOP senators working miracles.

Take, for example, John Brenden.

Brenden, who comes from Scobey, had a bill in the Senate this week requiring the publication of a state government telephone directory, on paper, every two years.  You might wonder why, with both a state phone book and state employee directory instantly available on line, Brenden thinks such a throwback is needed. Well, if you listen to his presentation of the bill on the floor (click here), it will all become clear, sort of.

Suppose, Brenden says, that a constituent calls when you are driving down the road, and you need to give her contact information for someone in state government. And suppose you are in an area where there is no cell service, so you can’t access the on-line directories on your smart phone. Well gee, if you have that phone book with you, you’re all set.

Here’s where that miraculous Republican multitasking comes in. Brenden is apparently able to drive, read a phone directory, and talk on the phone without access to cell service, all at the same time! How he does that plumb evades me.

Gone Fishing

One of the features of the Confederated Salish and Kootenai Tribes water compact that’s guaranteed to rile up compact opponents (case in point: Verdell Jackson) is its recognition of tribal rights to in-stream flows on rivers outside the boundaries of the Flathead Reservation. The Tribes’ “off-reservation” claims derive from the Hellgate Treaty, which, in establishing the reservation, also recognized the right of tribal members to “taking fish in all usual and accustomed places...” Courts have ruled that the right to “take fish” means more than just the right to go fishing; it should actually be possible to catch fish. And tribes have argued that if they have a right to actually catch fish, they also have a right to enough water in streams to assure the fish will be there. So since historically the Salish and Kootenai usually fished all over the western half of the state (take a look at the map below), they now claim in-stream flow rights to maintain fisheries well beyond the current reservation boundaries.

All that may seem pretty cut and dried, but now we have former senator Verdell Jackson, arguing in a Great Falls Tribune piece that the Hellgate Treaty, rather than validating off-reservation rights, actually “forbids” them!  Jackson reaches this rather novel conclusion based on his reading of Article I of the treaty, which he thinks means that the Tribes, when they gave up their claims on land outside the reservation, gave up their rights to hunt and fish there as well. This is, in a word, nonsense. Tribal rights to hunt and fish off reservations are robust and have been repeatedly upheld by the courts.

If there is any grey area here, it concerns whether an off-reservation fishing right necessarily implies an off-reservation in-stream flow water right as well. The US Supreme Court has never ruled on this point, but lower courts have, with some denying, and others recognizing, such in-stream rights. Jackson has this all wrong too, when he claims that no off-reservation in-stream rights have ever been recognized in “Montana or any other state.” Whatever the case, from the point of view of the Compact Commission, it was far better to agree to a limited number of off-reservation rights, with little expected impact on other water users, than to throw the state into a protracted legal battle over the many off-reservation claims that Tribes would file in the absence of a settlement.

Jackson asks how anyone who has sworn to uphold the U.S. and Montana constitutions can support a compact that gives the Tribes “authority over rivers that affect 330,000 people in 11 counties in Western Montana.” Well, he has nothing to worry about. All the compact does is give the Tribes rights to non-consumptive use of the water from these rivers – rights that cannot be changed, leased or sold and that are no different than the thousands of other water rights held by individuals all across the state. They confer the right of use but no “authority” or control over rivers and the water in them.  Water in Montana belongs to the state and it is the state that has the authority to manage it. That's what the Montana Constitution says, and nothing in the CSKT compact alters that fact.