Thursday, October 27, 2011

Peter Franchot, the Progressive Conservative

I continue to be impressed with Comptroller Peter Franchot and his maneuvering toward the 2014 gubernatorial contest. With the redistricting "battle" behind us and the special legislative session of the General Assembly adjourned, all attention has shifted to the upcoming regular session and the question of tax increases. A panel convened by Governor O’Malley and tasked with identifying new revenue streams to pay for transportation infrastructure improvements has endorsed a $0.15 a gallon increase in the state's gas tax, they also endorsed significant increases in automobile titling and registration fees and a doubling of the vehicle emissions inspection fee. Not to be outdone, A state task force is considering doubling and then tripling the state's so-called "flush tax" from its current $30 per year to $90 by 2015.

In response to these proposals, Franchot has called for a two year freeze on all new taxes and fees to “give businesses and consumers time to catch their breath.”

A few months ago, Franchot made headlines arguning Maryland needed to be less reliant on the federal sector for job creation. I argued at the time that it was a smart move and showed Franchot was trying to position himself as the conservative option in a Democratic gubernatorial primary that is likely to feature two well-known, and progressive, Democrats - Attorney General Doug Gansler and Lt. Gov. Anthony Brown.

Democrats' routinely win about 60% of the statewide vote so winning the Democratic primary is a doorway to the governorship. Gansler is an unabashed liberal and Brown, the state's first African-American Lt. Governor and an accomplished legislator with an impressive resume, will undoubtedly lay an early claim to the significant African-American vote.  So Gansler and Brown will split two of the most reliable segments of the Democratic primary voting population - liberals and African-Americans.

This creates an opening for a moderate to conservative Democrat to lay claim to white, moderate and conservative Democrats, of whom there are many in Maryland.

But the situation is even better for Franchot. The three Democratic power centers in Maryland are Baltimore City, Montgomery county, and Prince Georges county. Democrats routinely lose most of the other counties in the state, but win those population centers. In a primary contest, a candidate who could claim those regions would be unbeatable - but if they are divided then the state's remaining, and far more conservative counties, become crucial.  Brown hails from Prince Georges county and if he is able to consolidate the African-American vote then he is likely to claim Prince Georges county and Baltimore City - much as Kweisi Mfume did in the 2006 Senate primary against Ben Cardin. Cardin bested Mfume by winning Montgomery county, Baltimore county and Anne Arundel county by nearly 2-to-1 margins.

Gansler and Franchot are from Montgomery county and both have held elective office there. They would likely split the county's vote. If one were to return to the 2006 Senate primary, a cursory review of election results would seem to suggest that Gansler and Franchot splitting the vote outside of Baltimore City and Prince Georges county would benefit Brown. But the 2006 Senate primary was missing something, something Franchot is looking to bring to the 2014 gubernatorial contest - a moderate/conservative option for Democratic primary voters. In 2006, Democratic turnout in more conservative counties (Allegheny, Carroll, Frederick, Washington) was below overall turnout. If Franchot offers moderate and conservative Democrats a reason to vote in a primary contest there is reason to suspect that turn-out in more conservative parts of the state would increase - this presents Franchot with his path to victory.

The greatest obstacle to Franchot would be the entry into the race of another moderate/conservative Democrat - like Howard county Executive Ken Ulman. Not only would Ulman lay claim to Howard county's crucial bloc of voters, he would divide the moderate/conservative primary vote. If that were to be the case, Brown would cruise to victory.

Franchot has one path to the nomination and it requires an undivided appeal to the state's sizeable bloc of moderate and conservative Democrats. His opposition to new tax increases stakes an early claim to those voters and is a wise move.

That said, there is cause for progressives to rally behind him as well. All of the tax increases currently being debated are incredibly regressive taxes that will disproportionately harm low-income and working class families. Raising taxes on gas and increasing fees for auto registration is not like raising the cigarette tax - people can simply decide to stop smoking to avoid that tax. But there is no substitute for gas and in most parts of Maryland public transportation is not an option. Worse, in a weak economy, people have to take jobs wherever they can find them and in a weak housing market they cannot simply sell their home and move to where jobs may be - so they need to drive to work and sometimes they need to drive a considerable distance (especially if you live in rural areas... conservative, rural areas). For low-income and working class families, cars and gasoline are not conveniences, they are crucial lifelines.

That the Governor and the General Assembly would even consider such a regressive assault on the economic well-being of working families is unconscionable. Democrats raising taxes and fees on working families is no less egregious than Republican attempts to cut services to these folks. But Democrats are avoiding more progressive forms of taxation and targeting the poor for the same reason Republicans refuse to consider tax increases for the wealthy and cut programs for the poor - the wealthy vote, but turn-out drops sharply as income levels fall.

Of course the counter argument would be that the new taxes and fees would effect everyone, rich and poor alike. But the poor lose a much greater share of their income to excise taxes and fees. Although state and county-level data is difficult to obtain, federal tax data does demonstrate the regressive nature of excise taxes in general and on fuel specifically. According to the Congressional Budget Office, the bottom 20% of wage earners pay nearly 1% of their income on excise taxes on gasoline and motor fuel alone. By contrast, the top 20% pay only 0.3% of their income on such taxes. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly 2.8%, while the burden placed on the top 20% is only 0.5%. A 3% burden compared to a 0.5% burden... that's the very definition of regressive folks.

Franchot's latest smart move is doubly smart - it appeals to more conservative minded Democrats by calling for greater fiscal responsibility AND it may play well with true progressives offended by the state's attempt to balance its books on the backs of the poor.

Well played Mr. Franchot.