Our Post-Election Quandary

election2014

Another Election Day is in the books.  We can stare at the carnage, the breakthroughs, the piles of cash thrown into the winds of political expediency … or we can look ahead to the challenges that will determine the political future.

I choose to look forward in this post, although those piles of cash … estimated at $4 billion for the 2014 general election … is a disturbing image in my rearview mirror.

Nationally, it was a bad day for the Democrats.  Losing control of the U.S. Senate (52-45 Republicans, 2 Independents, Louisiana’s race into a runoff) and now facing a 65-seat Republican majority in the House of Representatives.

No doubt this was a referendum on President Obama and his administration, most particularly his Leadership or more appropriately the lack thereof.  In some parts of the world, such polling would result in a coalition-busting dissolution of Government and the forming of new coalitions.

OK … So maybe I am glancing back at Tuesday’s carnage.  Maybe in a bit of satisfaction … but you have to know where you are to get where you want to go.

My post-election quandary can be stated quite succinctly:

My kingdom for a Leader!

In my home state of Pennsylvania, the same storyline – described above – played out in the Governor’s race, only this time in favor of the Democrats.  No confidence in Governor Tom Corbett led to a loss of support across all demographic groups except those over the age of 65.

PA Governor-elect Tom Wolf

PA Governor-elect Tom Wolf

Now that he’s been elected, the real problem for Tom Wolf is he is faced with the same Republican-dominated legislature that denied Corbett some of his most cherished legislative initiatives, like liquor privatization and taking action on the State’s unsustainable public pension problem.

How will Mr. Wolf provide Leadership for a legislature completely controlled by the opposition party?  (Hint: Don’t look to The White House for an example!)

Leadership … a quality many believe our President fails to possess in any way, shape, or form.  From his refusal to get acquainted even with the Democrats in Congress, his hands-off management style, an administration fumbling the basic functions of government, and his failure to take quick, decisive action in times of international crisis, President Obama set out the finest silverware when inviting the poll whooping Democrats received last Tuesday.

Leadership … the one trait you want any Chief Executive to demonstrate regardless of whether you voted for them or against.

Tom Wolf will have his opportunity to show what kind of Leader he can be.  Can he work with those across the aisle, as he must to be successful?  Will he be able to build relationships with his powerful political opposition?  Can Wolf set a tone of Leadership that will allow him to cultivate alliances with a Republican Legislature and get things done?

Wolf’s off to a rocky start, choosing divisive Katie McGinty, Pennsylvania’s former Environmental Protection Secretary, as his Chief-of Staff and throwing down the gauntlet on Medicaid expansion, which the PA Legislature is all too aware will only be partially funded by Washington after the first years.

Not exactly your political olive branches …

Cats are plain creepy!

Creepier only on the face of a politician …

The President, given what we have seen over the past six years, most likely will not even try leading with the fully Republican-controlled Congress.  He will give lip service to working together and the fine Art of Compromise.  But in the wake of an election where most Congressional Democrats treated Obama like he himself was Ebola-infested, it’s doubtful the message from Tuesday’s shellacking will resonate with the country’s Chief Executive.

No, it’s far more likely he will give Congressional Republicans his best Cheshire cat smile while all along fingering the nuclear option … government-by-executive-fiat.

Now despite my proclivity to criticize Democrats, nothing here absolves our esteemed Republican representatives in Harrisburg or in Washington, D.C. from showing a bit of Leadership themselves.  In fact, it would be a breath of fresh air if perhaps we can expect the same kind of across-the-great-divide behavior from our legislative majorities!

As a close admirer (?) of mine recently cautioned, taking those first steps should never require that one abandon core principles.  And I agree.  But core principles rarely get anything accomplished on their own.  They are anchors that should define one’s approach to policy.  It’s the recognition of those principles as a foundation for making sound decisions and – when appropriate – suitable compromise that result in getting The People’s work done.

And somewhere in between perhaps the twain shall meet!

As I searched for a pithy way to wrap this up, I wanted something that would best characterize the implications of what occurred in voting booths this week and how it defines our political near-future, particularly for Mr. Wolf and our Pennsylvania State Legislator.  (Unfortunately, I have given up on the D.C. crowd.)

Instead of referring to the wisdom of Aristotle, Benjamin Disraeli, or Napoleon Bonaparte, I stumbled on this little gem written just weeks ago by a Lt.Col. Stacy Clements, Deputy Commander, 821st Air Base Group in a commentary on Leadership from the cozy confines of Thule Air Base, Greenland.

To me, it says it all …

Leadership: It’s not about you, it’s up to you!

Some relevant excerpts:

As a leader, you need to take the initiative to solve problems, take action to get results, and take ownership of the responsibility for getting things done.

As a leader, your actions can inspire and influence others – or can create a toxic environment where work may get done, but not as effectively as it could be. To help and influence others, you need to be trustworthy and approachable; try to understand those you lead, what motivates them, and be open to helping them achieve their goals.

Don’t focus all your attention on the image in the mirror – focus your efforts on making things better and helping people become better. Remember, it’s not about you, but it is up to you.

Hopefully, someone will take the advice!

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Why Pennsylvania needs Public Sector pension reform

Governor Corbett discusses pension reform in Dresher

Governor Corbett discusses pension reform in Dresher

Last week I had an opportunity to attend one of Governor Tom Corbett‘s mini-town hall meetings on Pennsylvania‘s precarious public pension situation.

The Governor is spending a lot of time this Summer pushing the need for public sector pension reform to improve the State’s financial health and put a lid on spiraling property taxes.  The problem he is facing is that the Pennsylvanians who pay taxes do not view Pension Reform as a problem let alone a problem-with-high-priority.

Much of this disconnect comes from the plain fact that most voters do not understand how State pensions work; how much they cost; or how they affect the other real problems with which my fellow Pennsylvanians can readily identify.

Recent polls (Quinnipiac University 2013, Franklin & Marshall 2014) found that Pennsylvanians recognized Unemployment, the Economy, Education, and Taxes as the biggest problems being faced in the Keystone State. These opinions are even more disconcerting from a taxpayer’s point-of-view, because it illustrates a very basic fact about the magnitude of the pension problem …

Few appreciate how the State’s pension mess plays into the perceived problems in Education, Taxes and the Economic Health of Pennsylvania.

For that you must look at the numbers.

  • $47,000,000,000. (billion with a capital “B”) … The current pension funding gap in Pennsylvania
  • $65,000,000,000. (also with a “B”) … The projected pension gap by 2019.
  • 63 cents of every $1 in revenue … 63% of PA State revenue currently goes to cover State pension responsibilities
    • That is, $2 Billion per year, all covered by PA tax payers
  • $13,000. … The amount each Pennsylvanian would have to pay to cover the current pension fund gap.

State-pensionsForty-one percent (41%) of the annual State budget goes to Education funding.  Another 40% goes to support Health and Human Services (and yes, that’s BEFORE you factor in the potential of accepting ObamaCare’s proposed Medicaid expansion, which will be funded by the Federal Government to only 90% of costs after 2016) …

The budget percentages for Education and HHS are equally important in understanding the overall picture.  Why?

For one, they illustrate the impact both Education and Social Services have on the State budget.  When you spend 81-82% of your budget in two specific areas, it does not leave much room for the other good things State government can do.  These huge obligations place the State in a financial straight jacket.  Pension costs make up a significant burden to school districts and public healthcare providers insofar as those costs are a subset of whatever funding is provided by the State.

As an example, when a School District receives its annual budgeted funding, they must – each and every year – immediately set aside a significant portion of that funding to be applied towards that school district’s allotment of pension coverage.  As pensions costs grow, school districts are forced to pay more and more for their pension service; meaning they will have less and less to spend on actual education.

pension-reformSo when you speak of those “real problems” facing Pennsylvania … Education, Unemployment, the Economy and Taxes … there is a genuine, behind-the-scenes connection between pension costs obligations and all those REAL problems.  And more importantly, to financing any solutions to those REAL problems.

So what’s State and local Government to do?  What tough choices do you make now?  Do you raise Property Taxes again?  Do you raise Corporate Taxes in a state which is already has the HIGHEST corporate tax rate in the country?  Or do you do something about the most easily identifiable and underlying problem?

As a taxpayer, this is a chilling reality.  If you subscribe to the theory that high taxes kill Economic Growth, raising Corporate Taxes is not the BEST alternative.  (And yes, that also goes for a Job Creator like the Natural Gas Industry.)  Neither is raising Property Taxes, which is what school districts must do to meet the growing pension budget hole.

Pension reform won’t lower current property taxes however.  Replacing pension plans does nothing to alleviate the pension obligations already facing the State and local school districts.  It’s a solution for the future, by putting a lid on rising property taxes by replacing an unsustainable pension structure with one that lessens the future burden on taxpayers!

If you are not yet convinced, take a look at recent examples in countries like Greece and Italy, where excessive pension costs drove cataclysmic threats to economic stability.  Or take a look closer to home …

CT Emanuel_Method_04.JPG

Chicago Mayor – and former White House Chief-of-Staff Rahm Emanuel

When uber-Liberal Rahm Emanuel left the cozy confines of The White House as President Obama’s Chief-of-Staff to become the Mayor of Chicago, the first major initiative he undertook was to tackle Chicago’s financially threatening pension problem.  To take a peek at what could happen to cities in Pennsylvania if leaders do nothing, look at what has happened in Detroit!

The Rahm Emanuel story is critically important for one reason many people might overlook.  It illustrates that this is not a problem restricted to one political party or the other.  Pension costs with all its ramifications – from taxes to education to health services to economic vitality – is a Democrat and Republican problem.

So what is the real problem with Pennsylvania’s nightmare pension scenario?  It’s reliance upon Defined-Benefit public pensions …

This is not a new problem, not in the pubic sector, not in the private sector, not in the manufacturing sector, not in the financial industry.  Individual companies, whole industries, other States, even the Federal Government have recognized the threat to financial stability presented by growing defined-benefit pension obligations.

In the interest of full disclosure, I am employed in the Public Sector by the Federal Government since 1980.  In 1986 the federal government introduced a two-tier retirement system under the Federal Employees Retirement System Act of 1986.  The Act essentially grand-fathered all existing employees under the existing Civil Service Retirement System (CSRS), while requiring all new employees – hired after the laws effective date – to participate in the Federal Employees Retirement System (FERS).  The reasoning behind the switch from a Defined-Benefit CSRS to a hybrid Defined-Benefit/Defined-Contribution plan was much the same in 1986 as it is now for Pennsylvania in 2014.

This is pretty solid framework for changing Pennsylvania’s Pension Problem.  Allow those already vested in current defined-benefit pensions alone.  Address a change in pension structure only towards new employees at all levels of government!

In the Federal Government, FERS provides its own two-tiered approach, consisting of a Defined-Benefit where a minimum government contribution is mandated.  Then the federal government fully matches any employee contributions up to 5% of salary (the percentage matched drops on additional employee contributions) made to the Thrift Savings Plan (TSP), which acts essentially like a 401(k) with employees able to choose investment options of differing risk and return.

That the Federal Government is out in front of Pennsylvania on anything – by nearly three decades no less – should be more than a little troubling to Pennsylvania tax payers!  And this again is a problem whose responsibility falls squarely on BOTH political parties.

Former Gov Tom Ridge, not exactly the brightest light on pension sanity

Former Gov Tom Ridge, not exactly the brightest light on pension sanity

In 2001 it was the Tom Ridge Republican administration that cut a foggy-headed deal with the Pennsylvania House of Representatives, where both Democrats and Republicans agreed to significantly increase the pension benefits of Legislators, state workers, and teachers.  (Not surprisingly, those same Legislators all got fat pay increases as part of the deal!)  Then they compounded their stupidity by slashing the taxpayer contribution to service that very same pension obligation. 

It’s a case of an entire government turning a blind eye towards its very own economic future!

Changes to the way employee pensions are managed and financed have been rippling through the entire U.S. economy, most drastically of course in the private sector, where change depends not on the consensus of 250 State Legislators, who are so intimately tied to the very benefits economic reality demands must change.  It is virtually impossible – in this day and age – to find an employer who will provide an employee with a defined-benefit pension plan.

It’s a Republican-Democrat problem that will need both parties in the State Legislator to step up to the plate and get fixed.

Now, I’m not sure Governor Corbett’s approach is necessarily the best alternative for Pennsylvania’s particular pension situation. The devil is always in the details.  However, you must admire Corbett’s tenacity in pushing for pubic awareness of a problem very difficult to fully understand and always controversial … And for doing so during an election year!

That – my friends – is Leadership with all its risks and political exposures.  Like the national bi-annual conniption over Social Security insolvency, it’s always the first person who goes through the door that gets bloodied. 

Yet this is a problem to which even tax & spend liberal Tom Wolf has begun to awaken.  Oh wait a minute … That was for his furniture company, not necessarily the tax-paying citizens of Pennsylvania!

All politics aside, the message is clear.

If you live in Pennsylvania and believe that the REAL problems we face are Education, Taxes, and Economic Growth, you simply must recognize the threat that growing pension costs pose to the economic health of The Keystone State.  Tell this story to your Pennsylvania neighbors.  Let your voice be heard by demanding your State Representatives and Senators act together with Governor Corbett to address pension reform NOW!

Reflections on the Spirit of Independence

Declaration_independenceI admit it.  I’m a bit of a history nerd.

Make that an American history nerd.  It’s difficult for me to get interested in the ancient history of Old Europe or the Greeks or the Roman Empire.  For me, it’s a matter of direct effect.  Although American society has its foundation atop the successful and advanced societies that preceded, it’s difficult for those ancient predecessors to elicit an excitement in me that overshadows the more recent authors of purely American success.

But that’s just me …

What really holds my fascination whenever I take the opportunity to reflect on our earliest American history is the foresight and fortitude demonstrated by our Founding Fathers, and the difficult and sordid compromises they made to bring to fruition a tenuous but entirely necessary experiment in Independence from tyranny.

In 1776, an eclectic collection of leaders, renown primarily within their regional communities, met for a second time in Philadelphia.  (The first Continental Congress met in 1774.)  They brought with them the depth and breadth of institutions, economics, religious beliefs, and governing philosophies prominent where they lived to Philadelphia in order to argue and decide the fate of British colonies chafing under the capricious actions of rulers residing a full ocean away.

These men were far from perfect.  Some held some views on women and slavery that many – living now – would characterize as appallingly backward or downright inhumane.  Some of them surely recognized – or at least refused to confront – their conflicted positions on the Equality of all Men, while themselves holding men in slavery.  And in the end, we like to think their better angels had no choice but to kick several very large cans of worms into the future.  These cans or worms required generations to resolve.  The biggest unresolvable issue – Slavery – eventually demanded the sacrifice of hundreds of thousands 85 years later in a civil war that threatened to tear apart a still fragile Union.

These compromises they made because they were blessed with a yearning that rendered one choice paramount to all irreconcilable differences …

Independence from England …. Freedom from oppressive rulers!

What I find most fascinating of all is that this Second Continental Congress was successful at all!

Think of the mindsets that drove a loose collection of men from geographically extended colonies with no standing army or navy; rife with regional differences; and faced with moral shortcomings that differed not just on Equality, but the actual definition of Man to slap the insolent glove of challenge across the face of the largest and strongest empire that existed on Earth at the time!

Battle_of_Guiliford_Courthouse_15_March_1781Yes, they were fallible; and perhaps they were morally weak by today’s standards.  But they were also the social and political elite, who in the end had the most to lose if the insurrection failed.  Many of them would have been hunted down and killed, and their families as well.  Their property scattered among the triumphant British generals, if the miracle of victory was not somehow accomplished.

When I read about those days in the latter stages of the 1700s, I like to think that the stronger minds that were present knew that what they were putting into motion was an imperfect solution to an unavoidable problem.  That their only choice was a somewhat soiled compromise to accomplish a greater good.

They had faith that an initial success, no matter how unlikely to succeed against a well-trained British military, would allow for growth and an abiding strength for future generations to tackle the problems they could not resolve when forming a less perfect Union.  If they did think that way, they were prescient, even if those changes came by way of dramatic sacrifice and untold sufferings.

The image that comes to me this year on Independence Day is a fanciful look back through these 238 years into that hot, stuffy room in Philadelphia.  In that moment those brave men can also see the progress, the obstacles, the conflicts, and the sacrifices that have been experienced and overcome; and what those efforts have wrought.  They can see exactly how far their not-so-little experiment has grown.

At either ends of this fantastic time tunnel, both groups stand 238 years apart and in absolute awe of each other.

Enjoy your 4th of July!

 

Random thoughts for Primary drowsiness

Slow, slow, slow today at the polls …

Saw an interesting blog post from The Philadelphia Inquirer’s Editorial Board that lauds Pennsylvania Governor Tom Corbett for adding 100,000 jobs in the State since January 2011!  It’s a powerful statement for no other reason than it comes from The Inqy’s Editorial Board …

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Just voted and I was #34 at our polling location.  We might be up to 40 now.

Have I mentioned how slow Primary Days are?

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In our little slice of Horsham heaven I note that the Philadelphia labor and trade unions are nowhere to be found.  The unions have a history for sending union outsiders here to “work” Horsham’s polls as Democrat “volunteers”. Given the almost uniquely Democrat event today’s primary is, it’s obvious the Unions are sitting this one out.

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Geez … Is it really only noon?!?

 

A Primary plan

primary-electionPrimary days … I hate them.

Off year elections can at least be interesting.  The upcoming November ballot will be much more intriguing with Pennsylvania Governor and mid-term Congressional elections to be decided.

That one will be fun.

Primary elections?  bleah …

As a Republican committee representative, it’s always a long day at the polls.  What makes it most interesting however, when the political conditions are right, are the interactions and discussions you can have.  People who make sure they get out to vote are those most likely to be keeping abreast of the political news.

The greater the interest, the more voters show up, the better the day …

Tomorrow, with only one significant Republican race (PA 13th Congressional District) in my district (Horsham 1-3) and a slate of State Republican committee nominees to select, there’s not a lot of sexiness to attract much attention.  I guess I’ll pass the day baiting what Democrats turn out for their primaries for Governor and the PA 13th, which is like trying to pick The Golden Ticket out of a bag of lemons.

For those waiting patiently for my PA 13th Congressional Republican endorsement, you won’t find one.  I am disappointed in what little I have heard – which is nothing – from Beverly Plosa-BowserDee Adcock put me to sleep in 2010.  To win the 13th, you must have the connection and the energy to make inroads into the Northeast Philly chunk of the district.  Neither has convinced me they will have what it takes, so let the voters decide!

I will be at the Horsham firehouse on Meetinghouse Road for most of the day tomorrow.  Stop in and keep me from falling asleep!