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Capitol View Commentary: Friday, August 12, 2011

Capitol View Commentary: Friday, August 12, 2011

CREATED Aug 12, 2011

CAPITOL VIEW

By Pat Nolan, DVL Public Relations & Advertising

August 12, 2011

WHAT A WEEK; CONGRESSMAN JIM COOPER ON INSIDE POLITICS; REACTING TO THE DOWNTURN; GOP PRESIDENTIAL RACE; ANOTHER CHARTER CHALLENGE; SOME FINAL METRO ELECTION TIDBITS

What a week!

Is it 2008 all over again as the United States faces the second part of a double-dip recession?

For the first time in history, the credit rating of the United States has been downgraded from AAA.

The move occurred just hours after I filed last week's column on Friday. The move, while shocking, was not totally unexpected given the recent (and continuing) struggles in Washington over the debt ceiling and the still growing national debt and budget issues.

First, there were efforts to minimize the move and make the Standard & Poors (S&P) rating agency (which downgraded the federal government) look like an outlier (two other rating agencies did not downgrade). That was coupled with charges of bad math (the company apparently made a multi-billion dollar miscalculation in its backup for the downgrade).

There has also been renewed talk about the big mistake S&P made by highly rating those really bad sub-prime mortgage packages that almost took down the entire financial system back in 2008. Nevertheless, the financial markets all over the world seemed to have bought into S&P's charges that the political leadership is not stepping up to the plate to deal with these debt problems (both here and in Europe).

So as soon as the markets opened worldwide (starting on Sunday) and throughout the week, there have been more ups and down (mostly downs) than an amusement park roller coaster, with no definite end in sight. In fact Wall Street set a dubious record moving up or down over 400 points on 4 consecutive days. On Friday (today), the markets seemed to calm down and move slightly higher, although no one is predicting there won't be any more unexpected, wild point swings, up or down in the days ahead.

So how is Washington reacting? Not so well, really. President Barack Obama went on national TV Monday to assure the markets that "this is the United States of America and we will always be a AAA nation." The markets ignored him and continued to slide. The Federal Reserve had a little better reaction when it announced it would not raise interest rates until at least 2013. That rallied Wall Street over 400 points, but then continuing concerns about the banks, the debt and the currency in Europe took over and dragged the numbers down again before the late week rally.

But perhaps the worst response (it was almost stupid in my mind) came from Congress, as House and Senate leaders appointed their representatives to the 12-member "Super Congress" that will decide what further cuts will be made and/or what tax changes (increases) need to be enacted. Otherwise, automatic cuts will take effect.

The problem is…much like that famous line in the movie, CASABLANCA, those appointed to the Super Congress amount to "rounding up the usual suspects." All the Democrats are committed to maintaining entitlements and are for tax hikes, while all the Republicans are for caps and have taken the pledge against any kind of tax increase for any reason.

So look for more gridlock and hostage taking once Congress comes back in session in September. That should continue right up until the Thanksgiving deadline for the Super Congress to make its recommendations. And while automatic cuts will result without the agreement of the full Congress, those don't take effect until 2013, leaving the entire 2012 election year wide open for still more uncertainty and confusion.

And as for President Obama, he ends the week with another loss for his health care plan in the federal courts as an appeals court has ruled the requirement to mandate the purchase of health care is unconstitutional. This matter is also pending in other appeals courts, so don't jump to any conclusions. Nothing will be decided for sure on this matter until it gets to the full Supreme Court maybe sometime next year.

CONGRESMAN JIM COOPER ON INSIDE POLITICS

To give some further perspective on these financial and political issues, Nashville Congressman Jim Cooper is my guest this weekend on INSIDE POLITICS.

After first calling for members of Congress to forfeit their pay if they didn't solve the debt crisis (they haven't with the result of the loss of the nation's AAA bond rating), now the Congressman has asked House Speaker John Boehner to call lawmakers back to Washington and forgo the rest of their August vacations.

Cooper, a Democrat but a long-time budget hawk, says Congress needs to get back to work as soon as possible to begin to address all the financial issues the nation faces, although he admits Congress coming back and doing nothing is still a strong possibility.

It's a sobering discussion about the where the nation stands. Even Congressman Cooper admits he's sometimes a little embarrassed to be a member of Congress these days.

You can watch INSIDE POLITICS several times each weekend on THE NEWSCHANNEL5 NETWORK. That includes Sunday morning at 5:00 a.m. on the main channel, WTVF-TV, Channel 5. You can also see INSIDE POLITICS several times each weekend on NEWSCHANNEL5 PLUS. That would be at 7:00 p.m. Friday; 5:00 a.m. & 5:30 p.m. Saturday, and 5:00 a.m. & 12:30 p.m. Sunday.

NEWSCHANNEL5 PLUS airs on Comcast Cable channel 250, Charter Cable channel 150 and on Channel 5's over the air digital channel 5.2. If you are outside the Nashville area (or don't have cable or an over-the-air TV), excerpts of the interview will soon be posted here on NewsChannel5.com

 

REACTING TO THE DOWNTURN

In light of a possible downgrade in the state's high bond rating ( which ranges from AAA to AAa), Tennessee government leaders are scrambling to New York City to convince finance officials that the state should be spared that penalty because we are doing a good job with our government funds. But there is a concern about how dependent Tennessee is on federal government funds. While no downgrade appears imminent, this is a matter to watch.

Also watch closely how Governor Bill Haslam is handling ongoing negotiations with Amazon about whether that on-line company should pay state sales tax. As it has done in several states, Amazon has promised to build up to three distribution centers in Tennessee, in return for not having to pay sales tax on what its customers buy. Not fair, say many other large and small businesses in the state, arguing, logically, that not including the tax gives Amazon a major competitive advantage.

At first, the Haslam administration was standing behind the no-tax agreement with Amazon even though it was negotiated during the waning days of Governor Phil Bredesen. Now the Governor is telling reporters that he hopeful that before the end of the year, he will be able to announce some kind of revised agreement that will require Amazon to pay some sales tax, which the state "badly needs" he says.

Really? Hasn't Amazon pulled out of deals with other states over this issue? What's different here? Stay tuned, this has gotten very interesting. LATE BREAKING: News reports on THE TENNESSEAN's web site seem to indicate Governor Haslam is now walking back on his comments that there will likely be an agreement for Amazon to pay sales tax. The Governor says while he would really like for Amazon to pay taxes (especially for any additional Amazon facilities in Tennessee), he plans to honor the current agreement. Confused? Me too

As for Metro Government, it is watching the markets. In fact, another bond debt refinancing plan by the city (a major way it has avoided a property tax increase the last couple of years) has been put off because of all the volatility and uncertainty out there.

As for looking ahead to the city's tax base, recent property reappraisals in other counties are not reassuring. According to an Associated Press story (August 10) a half-dozen Tennessee counties have seen real properties values decrease with reappraisals this year. That includes Humphreys, DeKalb, Jackson, Meigs, Sevier and Wilson Counties.

Now you can argue that Nashville/Davidson County is a whole different type of economy and tax base. But property value declines like these can't be reassuring to officials of the Dean administration as they start their second term in office trying to figure out if, when, and by how much, property taxes might need to be raised.

And the costs to operate Metro government, especially schools, continue to rise. School board officials are set to vote August 23 on a new school calendar for the 2012-13 academic year. It would add 7 more instructional days (173 to 180) but at a cost of an additional $20 million. Now there is a fall-back plan that doesn't need the extra funds, but Schools Director Jesse Register is clearly pushing the new balanced school year plan that would begin classes as early as July 25 but allow longer breaks during the year. The idea is that keeping children in the classroom longer with more frequent, shorter breaks will allow students to learn more and retain more. The question is can Metro afford the extra $20 million just to add 7 days?

THE GOP PRESIDENTIAL RACE

The contest for the 2012 Republican presidential nomination seemed to have gone all but dormant in recent weeks while the nation focused on our debt crisis.

But now the race faces a fruit basket turnover while many of the leading candidates are in Iowa grasping at straws.

After a Thursday night FOX-sponsored TV debate (where the candidates once again attacked the President and, for first time, really went after each other), it's time on Saturday (August 13) for one of the most important events leading up to the February Iowa caucuses. That would be the straw poll held at the Iowa State Fair. It's an early test of the candidates' skills at organizing and turning out voters.

But while in most presidential election cycles, the straw poll and its results would be the overwhelming political story of the weekend and a few days beyond, the event is being greatly overshadowed by the entrance of another candidate, Texas Governor, Rick Perry.

Perry has been toying with the idea of running for months (and toying with the media and voters as well). Now he is clearly running and that could have a profound impact on the rest of the race. Some see the Texas governor as the kind of unifying candidate the GOP has been looking for many months but hasn't been able to find. His job-creation record in Texas has appeal to the more moderate business wing of the Republican Party while evangelicals and Tea Party folks like him too for his seemingly God-fearing, no tax increase ways.

That should make him a real threat to displace the co-favorites in Iowa, former MA Governor Mitt Romney and next-door Congresswoman Michelle Bachman of Minnesota. His presence could also signal the end of days coming for several other candidates who haven't been able to get far up in the polls. But then again, let's see how Perry does on the campaign trail, especially in the key early states like Iowa and then New Hampshire. Will he be the messiah that the GOP has been looking for to defeat Barack Obama or is he the 2012 version of Fred Thompson?

Speaking of Tennessee politicians, one of them is quickly jumping on the Perry bandwagon. Lt. Governor Ron Ramsey had a chance to meet with the governor a few days ago and issued a strong news release endorsing him. But then a couple of problems cropped up.

It seems Governor Perry once supported Democrat Al Gore for President in 1988. So what? Well, last year, when Ramsey was running for Governor, he was highly critical of one of his opponents, (now Governor) Bill Haslam, for doing the same thing. Ramsey even spent money on campaign ads to push the point.

Oops! Ramsey says that the Al Gore of 1988 is not the same guy politically as the one today (and as if on cue, Gore's recent profanity-laden speech on global warming surfaced). But what changed from 2010 to 2011, Governor Ramsey? Why criticize Bill Haslam, but now endorse Governor Perry? The Lt. Governor says he is now supportive of both men. The question is: is this another example of how candidates will say almost anything in order to help get themselves elected? Then hope voters just forget exactly what they said?

There was one other problem for Governor Ramsey in endorsing Perry. The news release that was sent was accidentally put out on the state's e-mail system, which is against the law. Oops, again!

Another Tennessean jumping into national presidential politics is Tom Ingram. The legendary state political guru, who has saved and/or molded the political campaigns of Lamar Alexander, Fred Thompson and Bob Corker among others, is now a "general strategist" for former Utah Governor Jon Huntsman. Once again, Ingram has hit work cut out for him. Huntsman is far down in the polls and has several problems to seemingly overcome with GOP voters, including serving as an ambassador under President Obama. Just serving my country says Huntsman, who touts his record of job creation in Utah.

By the way, despite what you may have read or heard, this is not Ingram's first presidential foray. You'll remember he was twice in involved in Senator Alexander's efforts to win the White House (including recycling those red plaid shirts and those LAMAR! bumper stickers).

ANOTHER CHARTER CHALLENGE

As the Metro Charter approaches its 50th birthday (approved by Nashville voters in June, 1962) it seems more and more groups want to do away with parts of it.

That now includes the satellite city of Forest Hills which wants to set up its own city court with its own judge. The purpose of the consolidated metro government was to eliminate duplication and competition to deliver city services. Clearly the Metro Charter sets up its own city courts for all of Davidson County, so Forest Hills doesn't need its own.

Now complaints by Forest Hills officials that Metro has been ignoring the needs of its citizens in dealing with environmental and other codes issues in its community should be taken seriously and dealt with promptly. But setting up duplicative government is not the answer. Hopefully, Metro and Forest Hills can work things out and the lawsuit filed by the Metro Legal Department can be quickly settled.

SOME FINAL METRO ELECTION TIDBITS

From looking over the precinct-level returns from the August 4 Metro elections, I found a couple of interesting things.

First, not unexpectedly, Mayor Karl Dean's sweep was truly countywide. He carried every voting place. Vice Mayor Diane Neighbors was also strong in her easy victory, carrying all but 5 precincts out of 165.

As for the fairgrounds charter amendment, it too was strong throughout all parts of the county, expect one. Council District 18, the area around Hillsboro Village, Vanderbilt and Belmont Universities, was the only part of town that said no to the proposal. Only 8 precincts said no countywide and all the rest were near District 18 in southwest Nashville (precincts in districts 23, 24, 25 and 34).

This makes the re-election of Metro Councilwoman Sandra Moore even more remarkable. She represents the Fairgrounds area and has been a strong supporter of Mayor Dean's efforts to redevelop the property. The Fairgrounds vote in her district went against the councilwoman, 929 to preserve the Fairgrounds to 570 against. But even running against 3 other opponents, Councilwoman Moore won re-election outright (no runoff) by garnering many more votes (1179) than the Fairgrounds issue. Now that's strong!