Wednesday, January 20, 2010

Mitch Daniels & Greg Ballard: Ingenious Republican Strategems - Part II

Last week I talked about Todd Rokita's disingenuous pursuit of legislative districts that are not drawn by "politicians." I got great feedback, but I haven't heard from Rokita's camp in response to my challenge for him to prove his "concept map" creates more competitive districts than currently exist.

Today, I do a two-for-one and talk about Governor Daniel's decision to lease the toll road and Indianapolis Mayor Greg Ballard's decision to lease Indianapolis parking meter collections and operations.

Probably the greatest failing of democracy is its ineptitude at stopping politicians from mortgaging our children's future. It's easier to push expenses into the 2030s then make us square up now because the people who will ultimately pay the tab are too enthralled with Handy Manny and his screwdriver to notice they're the ones being screwed. Buying now and making people who can't vote pay later is a tried and true political gambit.

But what if, instead of pushing expenses into the future, you could bring money you were going to earn...back from the future like Marty and Doc Brown?

Oh, the political brilliance of this idea is so profound, you'll be amazed to know the Governor and Mayor Ballard were probably inspired to adopt it by a J.G. Wentworth commercial.

Here's a typical script, if you haven't seen one of those:

A J.G. Wentworth success story. Felicia and the annuity.

Felicia: A few years ago, I inherited an annuity from my grandfather. I started receiving monthly payments from his insurance company. Then everything seemed to happen at once.

Narrator: Felicia's employer moved to another state, and she was left unemployed.

Felicia: Your money starts to go pretty fast when there's no cash coming in.

Narrator: J.G. Wentworth knows that a big change in life's circumstances can change how you view your annuity.

Felicia: I heard about J.G. Wentworth through TV ads.

Narrator: If you have an annuity that is no longer serving your needs, and you need cash now, call J.G. Wentworth. You'll get a free appraisal and have all your questions answered. Don't wait. The sooner you call, the faster you'll have your money.

The premise of annuity conversion is pretty simple, and politically-speaking, breath-takingly shrewd. Say you have an asset that will create revenue for you into the indefinite future, like a toll road or a ton of parking meters. You could wait and get the money year to year, but if you're a Governor or Mayor, wouldn't it be more fun to get all the money for the next 10 to 90 years or so right now? All you have to do is enter into a long-term lease with a company that will give you a big lump sum now because, unlike you, they'll be around after eight years still making money hand over first.

If you do this, not only will you have more money for roads or billionaire sports owner prop-ups, this tactic is also a handy middle finger to the guy or gal who unseats you. That's money they won't get! Heh heh.

You think I'm wrong? Tell me this script wouldn't have worked as well as the original:

A J.G. Wentworth success story. Mitch and the toll road.

Mitch: Back in 2004, I inherited a state in pretty good fiscal shape. I started receiving monthly payments from the toll road. Then everything seemed to happen at once.

Narrator: Mitch's Indiana employers moved to other states, and Mitch was left with growing numbers of unemployed.

Mitch: Your money starts to go pretty fast when there's no cash coming in.

Narrator: J.G. Wentworth knows that a big change in life's circumstances can change how you view your toll road revenues.


Mitch: I heard about J.G. Wentworth through TV ads.

Narrator: If you own a toll road that is no longer serving your needs, and you need cash now, call J.G. Wentworth. You'll get a free long-term lease appraisal and have all your questions answered. Don't wait. The sooner you call, the faster you'll have your money from an international conglomerate.


I rest my case.

Also, you notice how Mayor Ballard won't tell us how many years the contract for parking services with be? He'll just say that it will be long enough that the company can recover its investment. I promise you it will extend beyond his term.

Why should this concern you? Right after the toll road transferred hands, the rates went up big time. Expect the same with parking downtown, friends.....because (in their minds)...it's "their money and they want it now!"


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8 comments:

Akla said...

Yep, get it and spend it now so no one can get it later and use it. That is the plan. Always the short term in mind, never the long term.

Anonymous said...

If Ballard ever had an original thought, he would be truly dangerous. Thanks for pointing out his stupidity once again.

Indy Student said...

The point of privatization is to do a service more efficiently (IE cheaper) than the government can. Ideally by taking government out of it.

If rates go up, such as it did with the Toll Road, such as it has with the water company, and such as it probably will with parking, then privatization has already failed.

Furthermore, handing ONE company an extended decade or two (or longer) contract does nothing to institute market values. They can jack up the rates as much as they want with little risk of losing their contract.

So how can we truly institute market values and competition in what is currently public parking?

Simple. Open up the bids on individual meters and individual spaces, and let anyone purchase them. Then the owners can set the rates, collect them, etc...for say, 2-5 years. Parking can be managed by the people most familiar with the traffic neighborhoods attract.

iPOPA said...

Indy Student:

Your idea intrigues me, but in fairness, if the companies don't have a long-term contract, they don't put in the nifty new meters that use credit cards. Of course, there's a simple solution. Don't change the current meters. Then your idea works great, but can you imagine the chaos if every single meter in the city had a different cost?!? Holy crap! HOWEVER, we could have companies bid on streets (say all the meters on Market between Delaware and Penn). Then we would limit the number so that there would never be less than two companies bidding on the service, and we'd have a "public option" (some government run meters just in case the private boys start gouging). Then the copies could bid up the hot real estate and let people decide whether it's worth the walk, just like they do with parking garages. If somebody will pay $50 to park right outside Conseco on game night, let 'em.

Anonymous said...

iPOPA I agree with your point on the meters but disagree on the toll road. You forget, as do many others who still complaint about the toll road lease, that the toll road was a net expense for the State. It did generate revenues but the cost to operate it far outweighed those revenues. In that case, the lease was a win for the State. No expense on upkeep and a large upfront payment. On the other hand, the meters generate large amounts of revenues (if you can keep IMPD from bagging them) and require very little in expense to operate. In that case, a lease is a loser for the city.

Paul K. Ogden said...

IPOPA,

The trouble is what you're talking about with long term contracts is not privatization - its monopolization. Privatization works when government can throw out a bad provider and hire a new one. You can't do that with a long-term contract. I hear what you're saying about the meters, but the problem is there is no market competition which is essential for privatization to wori.

Anonymous said...

Great post!

When government owns the assets like parking meters or toll roads, and elected officials want to raise the fees, for whatever reasons, they get that tax and spend label and are voted out of office. Elected officials like Ballard and Daniels sell government assets, get the quick influx of cash, make all kinds of claims like balancing budgets and trimming government, and the purchaser of those assets raises fees and its called free enterprise.

So Ballard and Daniels get fast cash and avoid half of the tax and spend label. They are still spending the money from the sale of the assets but the taxing function has been transferred to the purchaser of those assets. It’s really nothing more than a shell game for political leadership and responsibility.

Cato said...

Ogden turned me onto this blog. Nice analysis, with a due measure of smugness.

At the time, many of us beat the hell out of this on TDW and FH, but the Republicans are not guided by principal, only power.

Ballard is running whatever playbook Mitch and Goldsmith hand him. Hell, the Tyrannical Two could be receiving a broker's fee on the meter deal, for all we know.

By the way, if you call it a "sale," you'll quickly torque off the Republicans. They like the soft implications contained in the vague conveyance of a lease, as that instrument lets them middle their politics.

Good to see Paul below lamenting the Republicans' preferred method of creating "privatization." They want to run this with the Lottery, so be careful.