Monday, May 31, 2010

Daniels Applies Cost/Benefit to Politics/Health Care Politics Continue

Rep. Mark Souder resigned from the House of Representatives, meaning that Indiana will not have full representation for a period of time. Governor Daniels has the sole discretion to determine when to hold a special election to replace Souder and has decided to hold that election to coincide with the general election in November. This will save the tax[ayers of Indiana almost $1 million, but the rationale for holding the election in November provides a glimpse into the Governors decision-making: doing so would only provide Indiana with 20-30 days of representation over the last six months of Souder's term, due to multiple recesses, the election and holidays. Also, since whomever is elected in the fall will be immediately eligible to serve, Indiana will benefit from the new Member's seniority (the new Member will be seated ahead of the Class of 2010).

A previous post discussed Daniels' contention that the new health care law will cost Indiana $3.5 billion, which has been disputed by Democrats and is now being disputed by the Kaiser Family Foundation. The contention is over the state share of the costs: yes, the federal government will be providing funds to extend coverage, essentially subsidizing state residents. However, if Medicaid is such a great financial deal for the states, then why is it a significant driver of state budgets, which are currently out of balance by over $150 billion?

Friday, May 28, 2010

Daniels Sides with Card Counter; Brings Chinese Jobs to US

Mitch Daniels went from the best governor in the country (and hopefully next President) to a champion for social justice when he cited a card counter as inspiration to college graduates --- and indirectly criticized an outrageous casino practice. For those who have never played blackjack as a way to earn money for school (as some of us have), card counting allows the gambler to mitigate (and even overturn) the house's edge based on the cards that are dealt. Card counting is the process of remembering what cards were dealt and then calculating the probabilities of potential hands dealt. If certain quantities of cards remain in the deck, the player is at an advantage --- and can raise his bet at that time. 

Essentially, this requires the counter to do simultaneously exercise a number of skills in a distracting environment --- in addition to having an intuitive strategy of both statistics and the game of blackjack. First, the player must focus on every hand dealt to every player (including the dealer) --- normally eight at a time. The player must then categorize the cards dealt (there are a number of categorization schema), add the current hand to previous hands. After this, the player must determine which cards remain in the deck and calculate his odds --- which will determine whether he ups his bet. This is all done without pencil, paper or calculator. Only a small fractions of people have the capability, willingness and patience to pull this off --- yet casinos find them and throw them out. In other words, despite taking money from 98% of their "clients" casinos are determined to eliminate the 2% that try to beat them. Daniels stepped up and said that the casino should have no right to throw people out, just because they figured out how to beat the house. He's absolutely right --- and if there's a time for enforcing the equal protection clause, preventing casinos from discriminating on the basis of a person's unwillingness to be a sucker is it.

Oh, and by the way, Daniels recruited a Chinese company (Wanxiang) to create thousands of jobs in Indiana and announced that Indiana is creating jobs at three times the national rate. 

Monday, May 24, 2010

The Case for Competent Government: Mitch Daniels and I-69

Conservatives often lose the rhetorical debate due to the inability to effectively articulate and exemplify the benefits of limited, prudent government. Liberals often win this argument by showing some social ill, asking for a seeming pittance and then connecting the resolution of the ill with the payment of the pittance. In essence, this is the issue of a concentrated benefit and a diffuse cost, people are willing to spend a little more themselves (and a lot more of others money) to alleviate an ill they find unjust. The problem with that, to paraphrase Margaret Thatcher is that, eventually you run out of other people's money.

Conservatives have the near-impossible task of arguing that we should conserve funds even when we could afford to hire another teacher or police officer, provide more benefits to seniors, expand program X or subsidize good cause Y. Governor Daniels provides a great example as to why a government should not spend all they have when they have a surplus and instead wait to invest later.   (And let's be clear that in this context invest means generate a significant return to the taxpayers in a real, economic context, not a euphemism for "spend on pet project of politician.") When Daniels came to office he faced a deficit and chronic underinvestment in infrastructure. To solve this problem, he leased a tollway in Indiana and divided the proceeds between paying off state debt, immediate infrastructure upgrades and the endowing an infrastructure fund for the future. Let's be clear, a currently serving politician came into a windfall and his instinct was to conserve the gain for future politicians to spend. (In other words, Daniels is the one guy in the neighborhood who, during the housing boom, took out a home equity loan to actually pay down high interest debt, not go on a spending binge.)

So, how has Daniels planning to take a concentrated benefit and diffuse it over time (as opposed to concentrating the spending all at once to benefit his personal political standing) --- turns out the major project on which the funds are being spent is ahead of schedule and under budget. Why? The editorial sums it up best:

"Bids on the highway are coming in between 25 percent and 35 percent below engineers' estimates. Because surrounding states are in no financial condition to fund major construction projects because of the recession, Indiana is getting much more for its construction dollars as more bidders are looking for work. Hence the rush, to take advantage of the current market as quickly as possible."

So, thanks to Illinois, Ohio and Michigan greedily taxing and spending as much as possible when they had the money (while Indiana held some power dry), now Indiana is one of the few states that actually has money --- which means fierce competition between contractors, resulting in significant value when Daniels decides to spend the taxpayer money. Thus by conserving funds when  everyone else was spending them, Daniels was able to follow the investment advice of Warren Buffett: be fearful when others are greedy and greedy when others are fearful.

Wednesday, May 19, 2010

"For Mitch"; David Brooks Endorses Mitch

Slow news day for Mitch Daniels news, so I wanted to point out "For Mitch" which also aggregates news and information about Mitch Daniels in the hopes that he will take the plunge in 2012. Also David Brooks says Daniels is most likely the 2012 nominee. It's great to see Brooks speaking up for Daniels, but this is also the guy who thinks that it was a "damn outrage" that Utah Republicans chose someone other than the sitting Senator to represent then in the fall. While all politicians should appreciate their supporters, getting the endorsement of someone who gets "outraged" over people voting for non-preferred candidates can cut both ways.

Tuesday, May 18, 2010

John Kass' Profile of Mitch Daniels; Daniels Republican Address on Energy

The Chicago Tribune's John Kass discusses how Mitch Daniels is both supportive of the Tea Party movement, but also cognizant of the need for the movement to exist outside of the traditional party structure (read: the Republicans were part of the big spending problem). The profile is rather long, but worth the read. The part that caught my attention is Daniels knowledge of history and his understanding of the essence of American values:

"There are those who said democracy can work only when you have certain virtues," Daniels said. "Self-reliance, personal responsibility, willingness to set aside personal gratification. And when those atrophy — the Founding Fathers were worried about this — when those virtues weaken, then the whole enterprise is threatened."

Daniels also gives the Republican radio address in which he discusses the new Cap-and-Trade/Energy Tax bill that is heading to the Senate floor. 

Thursday, May 13, 2010

Daniels and Indiana Tell IBM to Eat the Bill

The state of Indiana entered into a $1.34 billion contract with IBM in which IBM was tasked with developing a system to provide welfare and social services to Indiana residents. IBM failed to deliver and it was reported today that IBM and Indiana are suing each other. IBM is claiming that they are owed money for work and equipment and Indiana (and this is news) said that they fired IBM for cause. In other words, this was not the state choosing to go a different direction, this was IBM failing to meet their commitments and being fired for  ineptitude. Under Indiana law, the state can collect triple damages (the state is suing for $437 million, so they could collect $1.3 billion).

This will be an interesting case to watch develop --- how a pro-business governor is demanding that corporate America keep its commitments and be held accountable if they do not. A welcome change from the behaviors of most recent policymakers.

Coats: "Hard to Find Someone Better"; HC Law Saddles IN with $3.6B in Costs

In an interview on RealClearPolitics, Ex-Sen. (and current candidate) Dan Coats stated that it would be difficult for the GOP to "find someone better" than Daniels. Granted, the Governor has a 70% approval rating, Coats needs to make nice with IN GOPers and Daniels is a favored son. However, Coats points out the most important aspect of Daniels' record: in a region in which almost every bordering state is functionally bankrupt, Indiana is fiscally sound with a tax cap in place.

The actuary for the state of Indiana also released a study showing that the new health care law could put Indiana on the hook for $3.6 billion in additional costs. Democrats are arguing that the cost estimate is overstated --- but I still have not heard what Democrats propose if the costs of the law outstrip the revenues.

Wednesday, May 12, 2010

Daniels Hybrid Welfare Approach Demonstrates Improvement

The story of Indiana's attempts at welfare reform demonstrate the promise that competent management of state resources can both improve lives and save money --- but also the pitfalls that face any public servant who attempts to modify current practices. Specifically, entrenched interests and political opponents will invariably find something that is not quite as good as under the old system, when the real issue is whether the locality/state/country is better off overall.

Indiana privatized the management of many social service programs to IBM, but after the Governor decided that the program was not working for residents, he terminated the contract with IBM. In its place, he combined some of the automated features of the IBM system with featured of the previous system to form a hybrid approach. Like any good manager, he tested this approach in a limited number of counties and, based on the success it has achieved, is looking to roll it out in other areas of the state. (Most measures of efficiency and service for welfare programs improved after the introduction of the hybrid approach).

However, opponents are citing the fact that enrollment in Medicaid is lower in the hybrid counties as evidence that the new approach is failing. First, this is only one metric --- so it does not address whether residents are better off today than they were before the program was implemented. Second, it does not account for individuals and families enrolled in the Healthy Indiana Plan --- a free market program for low income individuals and families. Third, the lag is less than 2% --- which could be caused by a number of factors, one of which is that the Healthy Indiana Plan was prevented from enrolling more single individuals because they reached the federal cap and was then forced to only enroll families with children.

As grand policy debates move forward, we all need to realize the competent management is as important, if not more important, than political ideology --- and Daniels, unlike most, has demonstrated that he is both comfortable and capable in both worlds.

Tuesday, May 11, 2010

Daniels Health Care Presser; CNN profile

As a typical demonstration of the Governor's competence, this video shows him systematically answering all of the questions posed to him regarding the new health care law. Most impressively (when compared to today's elected leaders), he demonstrates intellectual honesty by correcting his initial answer about suspending the Healthy Indiana Plan, the most innovative health care plan in the country --- because it emphasizes personal responsibility and choice.

This piece on CNN makes the typical media case for Daniels: he's too competent and not enough of a camera hound. However, if people are looking for that anti-Obama, Daniels is it: instead of talking big and making incremental steps to increase government control, Daniels goes the opposite direction: he is nonthreatening and straightforward in tone, but then executes perfectly: cutting government, expanding services and cutting taxes at the same time --- all through competence.