Steve Urquhart

Division of Securities Audit

2009-06-30T14:06:00.002-06:00

Utah has a fraud problem, as illustrated by the recent Ponzi-scheme conviction of Val Southwick and the indictment of Rick Koerber, alleged Ponziist. Koerber stories often mention that criticism or pressure has been aimed at the Utah Division of Securities by 2 members of the Utah House of Representatives and by the AG’s office. More accurately, that criticism/pressure often is aimed at the Director of the Department of Commerce, Francine Giani. Some of the criticism is pretty heated, including a recent claim by one of the Representatives that the Division is “corrupt.” The criticism is vaguely shored up by passing reference to a legislative audit of the Division. Yet, at least as far as I’ve noticed, none of the stories actually link to the audit report. (And that’s a shame, when it is so easy to empower people with a link to source material).

Here is the audit report. (It is item #7 in the link; I linked to the main page for all 2008 audits, to give a flavor for the type of work performed by the Utah Legislative Auditor General’s office (“LAG”)). I am proud of the LAG. Our legislative auditors play a key role in making Utah a well-managed state. They are thorough, professional, and fair. Much good legislation and/or agency reform flows from the LAG’s findings and suggestions.

The Performance Audit of the Division of Securities should (and did) give pause and direction to the Division, the Department of Commerce, and the Legislature. However, the audit itself does not paint the nightmare scenario that Koerber and others attempt to paint by referencing “the audit.” Like most audits, problems were identified and course-corrections were suggested. Basically, the audit found that the Division did not have adequate policies and procedures; as a result, the Division suffered personnel problems, a confusion of roles, and it overreached in some instances. The problems identified have been corrected. And, concerning the present discussion, I fail to see how the audit could support in any way a claim that the Division acted inappropriately in investigating Koerber and in working with the United States Attorney to secure an indictment.

Successful Ponziists are charismatic, believable, and rich. Charismatic, believable, rich people are tough to investigate. Hence, investigators have to be tough. Francine Giani is tough. And she is professional, and she is fair. She has faced inappropriate obstacles in investigating and securing an indictment against Koerber. She continues to face inappropriate criticism for “the audit” (that no one seems to actually read when bumping forward broadbrush criticisms that have nothing to do with anything actually in the audit). It's not fair to her, but again it's a tough business, and fortunately Francine is not faint-hearted. Utah needs vigorous enforcement of laws against Ponziists and scammers. I am proud that Francine is on the job.

International Competitiveness

2009-06-04T15:51:00.003-06:00

Capital goes where it is treated well. As much as planners would like to think otherwise, capital can't be forced to stay where it is not welcome.

Capital seeks 2 things: nice returns and a predictable legal environment. Many second- and third-world nations have tremendous natural resources and human capital. But, those countries effectively have forced their citizens to take a vow of poverty, by chasing away capital. They don't attract capital, because they unduly restrict profits (typically through high taxes) and/or they lack stability.

By contrast, the United States has maintained a good balance of allowing nice returns and creating a legally predictable environment. (The more predictable the legal environment, the lower the returns have to be attract capital). As a result, the United States has enjoyed an amazing inflow of financial and human capital.

The Administration has chased capital away from the automotive industry. "Non-governmental capital" I should say. And, not just away from GM and Chrysler; I can't see investors plowing lots of money into companies that will compete against the federal purse and against the people who regulate the entire industry.

If it does not take a wiser approach toward the flow of capital, the Administration could chase capital away from the entire nation. It cannot be overstated how important it is to our national prosperity (education, roads, law enforcement, national defense, welfare programs, individual opportunity, etc. etc.) that the rest of the world continue to push its money our way. Remember: half of every dollar Government currently spends was loaned to it.

Before we even get to "the rest of the world," this article describes how American-based companies (whose management and employees vote 90% Democrat, I would guess) are threatening to move resources out of the United States, if current tax proposals move forward. A quick response might be that the Government won't allow it. But, remember, as much as planners would like to think otherwise, capital can't be forced to stay where it is not welcome.

Climate Change

2009-06-01T14:33:00.001-06:00

If we give science a chance, it will humble us by showing us how little we do know, and it will inspire us by hinting how much there is to know. I think I’ve been pretty careful and clear to describe my frustration with the militant, close-minded attitude that has operated to smack down meaningful scientific inquiry into climate change.

One intriguing theory emerged – that human activity was causing global warming. That theory (1) manifestly fails to coordinate with centuries of observed data concerning solar activity and the Earth’s temperature and (2) stands on untested theoretical underpinnings. That theory, however, became the political flavor of the day. Walls were erected and moats were dug, to protect the theory from challenge.

And that’s when – just like many other antiscience episodes in human history – science was raped by politics. Science is combative. It is about challenging and disproving dogma. Science needs dissent. But, science-as-political-weapon requires the silencing of dissent. Science-as-political-weapon is about wielding “consensus” to bludgeon dissent, in order to achieve political goals.

As I have always been clear to say, global warming might or might not be human caused. It is an intriguing, ingenious. and troubling theory that should be studied. Now, thank heavens and helios, I see a significant sign that the antagonism toward scientific inquiry might be dissipating. NASA states:

According to the forecast, the sun should remain generally calm for at least another year. From a research point of view, that's good news because solar minimum has proven to be more interesting than anyone imagined. Low solar activity has a profound effect on Earth’s atmosphere, allowing it to cool and contract. Space junk accumulates in Earth orbit because there is less aerodynamic drag. The becalmed solar wind whips up fewer magnetic storms around Earth's poles. Cosmic rays that are normally pushed back by solar wind instead intrude on the near-Earth environment. There are other side-effects, too, that can be studied only so long as the sun remains quiet.

As silly as it seems, acknowledgement that "solar activity has a profound effect on Earth's atmosphere" is a significant step forward. The plain reality is that we haven't scratched the surface to know what that effect is. This solar minimum “has proven to be more interesting than anyone imagined,” because it is posing some challenges to the as-yet-untested theory of anthropogenic global warming. Maybe those challenges will be addressed, and the theory will hold. Maybe they won’t be addressed, and the theory won’t hold. As mostly happens in science, the theory -- if science is allowed to work -- likely will be modified, tweaked, revisited, remodified, etc., etc.

It’s a wonderful mystery and a challenge! Along with human causes, let’s please allow all the room necessary to study the effect of solar weather on the Earth’s climate.

GM Deal: Our Socialist Experiment

2009-05-29T15:16:00.004-06:00

Here’s the box score for the GM deal:

US Govt invested $19.4 billion in GM, and will get 72.5% of the company. (19.4B = 72.5)
UAW’s trust is owed $20 billion by GM, and will get 17.5% of the company. (20B = 17.5)
Bondholders invested $27 billion in GM, and will get 10% of the company. (27B = 10)
Stockholders who invested billions will get hosed. (Billions = 0).

Government and the Union will come out good on this deal. Individuals and organizations that invested in GM or loaned the company money were made to be schlubs. They simply pitched into the pot for the benefit of Government and the Union. People with money to invest or loan typically try to avoid being schlubs. Thus, it can be expected that they won’t make that mistake again. Speaking of which, investors greeted the unveiling of Government Motors by returning its stock values to where they were in the 1930s.

Having chased away non-governmental investors and creditors, the only way that Government Motors can work is by hobbling competitors with regulations and restrictions and/or by continuing to utilize additional taxpayer money.

We’ve seen socialism attempted time and time again. Other than for the people privileged to be in positions of power, it doesn’t work. Socialism robs people of liberty, and it kills the economy (further robbing people -- especially vulnerable people -- of liberty). And, for folks who get exercised about use of the word “socialism,” 72.5% ownership of General Motors qualifies.

UPDATE: Okay, I'm not falling for this. Though the URL says NY Times, this story about a critical player in the GM/socialism experiment having no relevant experience surely is something from The Onion:

WASHINGTON — It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — “he’s got this beard that appears and disappears,” says Steven Rattner, one of the leaders of President Obama’s automotive task force — Mr. Deese was thrown into the auto industry’s maelstrom as soon the election-night parties ended.

“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”

But now, according to those who joined him in the middle of his crash course about the automakers’ downward spiral, he has emerged as one of the most influential voices in what may become President Obama’s biggest experiment yet in federal economic intervention.

Lt. Governor David Clark

2009-05-29T09:26:00.003-06:00

That does have a nice ring to it. The speculation continues regarding the next Lt. Governor. Here is a snippet on House Speaker David Clark.

Speaker Clark would be an outstanding choice (as would be President Waddoups, Sen. Bell and SL County Council Member Michael Jensen, who also were mentioned in the article). The key is to get someone who is proven. Rather than base the decision on superficial concerns about the 2010 election, I am rooting for (soon-to-be) Gov. Gary Herbert to pick someone who has proven himself/herself to be superlative at governing or something that immediately translates to governing. The economy and issues we face in the next 18 months are far more important than political positioning for a 2010 campaign. Let’s get a proven hand.

Speaking of 2010 concerns, though, (sorry, I am a politician) an added value of having Dave Clark on the ticket is that Dave stands at the head of the pack of likely 2010 challengers. Anyone paying attention to State government is taking note of Speaker Clark’s rare combination of intelligence, toughness, savvy, and steadiness. No doubt, (soon-to-be) Gov. Herbert and his people have taken note.

And, by the way, thank you, voters, for giving us the opportunity to vote on our Governor at the next opportunity. 2010 will be Gary’s to lose, but it is only appropriate that voters have the opportunity to decide.

An interesting historical note: I originally was going to draft the Gubernatorial Succession amendment to the Utah Constitution so that the victor of the (2010) mid-term election would then serve 4 years. (Soon-to-be) Governor Herbert was extremely supportive of the amendment to let voters decide, and it was Gary who wanted the term to only be 2 years, so that we’d stay on the 4-year cycle we’re currently on (e.g., 2000, 2004, 2008, (2010), 2012, 2016). I asked him if he understood that he potentially was the person most disadvantaged by that decision. He laughed, acknowledged that the thought had occurred to him, but said that staying on cycle was best for the State.

California, Initiatives, and Referenda

2009-05-27T08:46:00.002-06:00

Responding to my post about California, State Bailouts and Term Limits, "just me" opines that California's woes relate to the State's initiative and referendum system. He writes:

I don't think it's the specific issue of term limits so much as the general abuse of the initiative system that has made the legislature ineffective. California voters over the last 30 years have passed referenda that basically locked in a governing plan based on limited taxes, unlimited spending, and a balanced budget. At this point, I don't think it even matters who is in the legislature or the governor's chair, which party they belong to, or how much experience they have. These three things the voters want are not possible simultaneously. It's possible to be low tax/low spend/balanced budget (Utah) or high tax/high spend/balanced budget. (Massachusetts) It's also possible to do what DC does and cut taxes on 95% of the population, increase spending to obsene levels and not care about the budget being in balance. But you can't have all 3 things.

Now it may be that the voters of the other 49 states would also prove themselves to be idiots if given the chance. But most of the other states have some constraints on the initiative process to make it somewhat idiot proof--constraints that don't exist in California.

Here are some of my thoughts on Utah's referendum process. In short, initiatives and referenda on policy questions are good and necessary tools in our democracy toolbox. Believing in our representative form of government, however, I think the initiative and referenda process needs more rigor than California has. And I think that initiatives and referenda on budgetary issues probably are a bad idea, since budgets are a composite; in isolation, just about every funding choice looks like a winner.

California, State Bailouts, and Term Limits

2009-05-25T23:20:00.002-06:00

The federal government should not bail out California. In the long-run, a bailout would be very harmful.

States have always balanced their budgets. When they have dug holes for themselves, they have been forced to pull themselves out. If California now is bailed out of a bad situation, that practice will end. Because states legally are on an equal footing with each other, a bailout for California would have to mean a bailout for each state when it foolishly overspends and lacks the will/talent to cut.

The time for sound fiscal planning in case of downturns is before the downturn hits. States get themselves in trouble during the good times, by funding everything, as if economic downturns have been outlawed. Foolishness should not be rewarded. (But, past being prologue, I’m not about to bet it won’t be; lots of electoral votes at stake).

Each state is a laboratory, largely free to pass laws and budgets as it sees fit. By analyzing the results of each experiment, other States and the federal government can determine what works best. California ran a big-government experiment, with lots of entitlement programs and with high taxes and debt loads to pay for those programs. (That, by the way, is the model the federal government is utilizing; that course clearly predates the Obama Administration, but the pedal is now to the floor). The fiscal effectiveness of that plan is illustrated by California’s current situation.

During the good times, California extravagantly funded everything and over-utilized debt, while it neglected basic (unsexy) maintenance programs. It was the M.C. Hammer of states. A simple drive along its deteriorating, once-great highways quickly showed that California was poorly positioned to face the next downturn. California made its bed; now it should sleep in it. It’s their experiment. It’s their problem.

California can dig out, (1) if it chooses and (2) if it knows how. Issue one – willpower – is not unique to California. Issue two – lack of political ability – is unique, or at least new, to California. Bluntly, California’s elected officials lack the experience and skill necessary to avoid/address an economic crisis.

Gov. Schwarzenegger brought to office a wealth of experience in body building and film making. And the legislative branch is even worse off. Since 1990, Assembly members have been term-limited after 6 years; Senate members after 8 years.

Those short limits mean that members of Assembly leadership are elected with only 0- to 4-years experience. Senate leadership members would have 0- to 6-years experience (and, likely, some years in the Assembly). That’s not enough time to gain the knowledge and experience necessary to run the show. (See Malcolm Gladwell’s Outliers, positing that people who are great at something aren’t freaks of nature but, instead, have put in 10,000 hours doing that thing). As a result, the elected officials don’t run the show in California. Rather, the knowledge and experience necessary to govern are held by staff and special interests.

Legislative bodies are tremendous problem-solving groups. By design, we toss society’s most complex issues into legislative bodies, and, usually, workable solutions emerge. However, that process is being frustrated in California, since the requisite knowledge base and the decision makers aren’t actually in the Legislature but, rather, are behind the veil.

Even without term limits, Utah’s legislators have short legislative life spans (averaging just over 4 years for House members and 6 years for Senate members). Thank heavens, though, we have members of leadership who have been around long enough to gain valuable experience and weather an economic cycle or two. All 7 members of House majority leadership have been serving for more than 6 years. Senate majority leadership averages well-over a decade of legislative experience. (Sen. Dayton has 2 years in the Senate and a prior decade in the House; Sen. Killpack and Sen. Bell each have 6-years of Senate experience; Sen. Jenkins has 8-years in the Senate; Sen. Knudson and President Waddoups blister my fingers, as I work the abacus to figure out how long they’ve been serving; and Sen. Hillyard, I believe, was first appointed by Brigham Young).

Newer members can add to leadership teams. I think of now-Speaker Clark serving as House appropriations vice-chair, and now-Senate Majority Leader Killpack serving as Senate Assistant Whip, both after only 4 years. Those roles, however, were supporting positions on experienced leadership teams. By their participation, younger classes were more directly involved. But, as I’m sure Dave and Sheldon would quickly agree, they likely weren’t ready to run the show after such a short time.

It will be interesting to watch the ultimate fate of term limits. I doubt that enough people will see the inside-politics of legislatures, to understand the danger of term limits that are too short. And, given the obvious failings of California’s legislature, it is extremely counterintuitive that the people would rise up and say, “These guys simply need more time to work their magic.”

We Have Met the Speculators . . .

2009-05-22T15:44:00.002-06:00

. . . and they are us. As this article describes, when the Administration ignored the rule of law in the Chrysler takeover, to show favoritism to the United Auto Workers over secured creditors -- who were derided as "speculators" -- the people who got the shaft are normal people. Police and teacher pension funds paid a premium to be secured creditors, with superior payment rights in bankruptcy proceedings, only to be pushed to the back of the bus by the Administration.

Regarding the Indiana Treasurer, the article says: We've worried that the Chrysler sandbagging would discourage bond investment. And, sure enough, Mr. Mourdock says that from now on no funds under his control will invest in the secured debt of "General Motors, other manufacturing companies, or those insurance companies who have or will be receiving bailout funds." Given the recent actions by the feds, he adds, "the risk is too great for any prudent investor to accept."

No matter the personal popularity or charisma of the person doing it or the urgency that is (always) cited as the cause, we ignore the rule of law at our own peril.

Rule of Law: Good Thing

2009-05-04T23:10:00.005-06:00

In my last post, I mentioned good things about America that shouldn't be destroyed. I'll add the Rule of Law to that list (meaning that we are governed by laws -- not trends, opinions, dictates, etc.).

Here is a very well-written article that fleshes out my point number 3 (capitalism) from that previous post. The article highlights the beating that the rule of law is taking in the auto bailouts.

Bill Frezza asks, "Has it dawned on you what the consequences will be if the President gets his way and consideration is given to creditors not according to contracts, rules, and established legal precedents but according to which group is most politically favored?" According to Frezza, the consequences are:

troubled companies will be unable to raise capital;
everyone will pay higher interest rates;
heavily-unionized companies might not attract outside capital;
TARP-backed companies might not attract outside capital;
Foreign capital could dry up; and
Private credit markets will go sideways.

The federal government, of course, can do many things to promote its automakers and hobble competitors -- in America. But, those protectionist measures likely would make the government automakers less competitive abroad.

America always is a running experiment. I think the thing being experimented now is capitalism v. governmentalism. The future of the automakers will be a good test to see how governmentalism works.

Every American has benefited tremendously from the rest of the world investing ("speculating") in our companies. If we upset the legal certainty that has accompanied those investments, and the world invests elsewhere, we will be hurt. It's good political sport to beat up on faceless investors, but it's not very wise to send the signal that once-stable rules now will be replaced by . . . whatever sounds bold, populist and decisive in the moment.

Fortunately, a few secured creditors had the mettle to force the Chrysler issue into a court of law -- where it should have gone in the first place. (I'm reading a fine biography of John Marshall (by Jean Edward Smith), who cemented the independence of the judiciary. Go, Third Branch! Preserve the rule of law.).

UPDATE: Megan McArdle weighs in: "The administration is beating up the creditors because a) it wants to give the UAW a much better deal than they'd get in liquidation and b) they'd like someone else to pay for it. I recognize that the law is always kind of messy, but as far as I know, this kind of blatant political intervention between debt claims is unprecedented, and worse, it's a dress rehearsal for doing the same thing at GM. I don't think this is good for the rule of law, I'm pretty sure it will be bad for capital markets, and I'm nearly positive it's going to make it hard for any heavily unionized company to get substantial capital for the next decade."

Governing Ain't Easy

2009-05-02T15:26:00.003-06:00

It looks like President Obama is considering reversing course on Guantanamo. Representative Don Ipson and I were together when we heard President Obama announce that he was closing Gitmo. We wondered whether he had an alternative. The answer seems to be “no.”

I actually am greatly encouraged by the fact that President Obama is willing to take a deeper look at the issues, and, if necessary, change course. He has little governing experience, and, no doubt, he will discover that many things are more complex than originally thought. Republicans will skewer him for any change – because that’s what happens in the tribal warfare we call politics; but I hope Democrats will give him some room to learn and adapt.

I have no idea what the answer is to Gitmo, but I agree with the President that it is complex.

I’ve mentioned before some of the instruction I received 9 years ago at legislative orientation. Representative Kevin Garn also said in that orientation, “The easy stuff already has been figured out.” He meant that the act of governing is complex – knowing that each of us came loaded with silver bullets that we thought would solve everything.

Americans have a tremendous zeal to change things. We are hungry. That plays a big part in making us innovative and productive. I can’t help but think back, though, to my first big landscaping project.

Fifteen years ago, Sara and I bought a new house, and, wanting a different look, I ripped up EVERYTHING in the yard. After a few weeks, I was bogged down. My neighbor, Leon Johnson, an experienced farmer/school administrator/former mayor of Mantua, had been watching the ordeal with some amusement. Finally, I asked, “Leon, where did I go wrong?” He said, “You tore up everything – the good and the bad. You first have to identify what’s good, and then build around that.”

America is a great nation. As polls indicated, though, most people wanted to move away from President Bush for one reason or another. So, let’s move. But, let’s first identify the things we don’t want to change. I’ll share my quick list of 4 good things we should build around.

1. Free speech. Though it’s pop culture, I find the Perez Hilton / Miss California kerfuffle broadly revealing. (Disagreement now equals “dumb bitch” or some other pejorative). We do not tolerate competing ideas well. This dumbed-down dialogue has allowed our political class to run free.

2. Capitalism. I spend time contemplating why America is so great. I’ve come to the boring conclusion that much of it is simply access to capital. We’re rapidly learning that people everywhere have great ideas. Americans have had an advantage attracting capital to make ideas come to life. This has to do with markets that are made stable by reasoned regulation and legal predictability – which is why it is so troubling that secured creditors are being hectored for not jumping on board the auto-maker train wrecks in the making. Treat capital poorly, and it will go elsewhere. It has many options. By bullying the choir (the ones who actually had ponied up money for the automakers) the administration has chased away future investors and guaranteed the ultimate demise or total socialization of the automakers.

3. Small government. Government gets its power from the people. Beyond a certain point, big government means small people.

4. American greatness is important. There always have been and always will be forces that abhor liberty. While the scope of our involvement always should be debatable, our willingness and ability to stand against such forces should be certain. This requires production and wealth.

Online Legal Notices

2009-03-09T18:46:00.002-06:00

Regarding SB 208 (legal notices), I received the following letter today from Jim Wall – Publisher Deseret News, Randy Wright – Editor Provo Daily Herald, Brent Low – President MediaOne Utah (Newspaper Agency Corporation):

On the issue of publishing legal notices, newspapers have been remiss in not communicating sufficiently with the Legislature on prospective solutions that would provide notice to a wider range of Utahns in light of new and emerging technologies for the dissemination of information.

After conversations with Sen. Urquhart, Rep. Dougall, and Lincoln Shurtz from the Utah League of Cities and Towns, we believe that the most effective solution that works in the best interest of the public would be dual publication encompassing both print and online until the time set by the Legislature for the sunset of print requirements in counties of the first and second class. Publication of legal notices would remain in the private sector, and allow links from government Web sites.

We are requesting amendments to SB208 that recognize the following commitments – to be implemented at our cost – with respect to Utah newspapers in counties of the first and second class:

1. Provide a fully functional Web site (UtahLegals.com) that includes but is not limited to input, archiving, site maintenance, links from newspaper Web sites and others, and allowing links from government Web sites.

2. Provide for dual publication of legal notices in both printed newspapers and on the UtahLegals.com Web site beginning January 1, 2010.

3. Provide an option for legal notices to be published in print or solely on the newspapers’ UtahLegals.com web site beginning January 1, 2012.

Thank you for your consideration. Going forward, we are committed to ongoing communication on technology solutions that will improve public notification and help to reduce costs to customers.

This is a good-faith proposition that could lead to something wonderful for Utah citizens, providing far broader reach to legal notices at a fraction of the current cost.

Liquor Law Revisions

2009-02-27T12:47:00.003-07:00

The Utah House and Senate have liquor law bills set on a collision course. The way things currently stand, my guess is that private club laws will not be changed, unless – as a trade off – restaurants such as Iggy’s and Applebee’s reconfigure their restaurants to move mixing to a back room. In my opinion, that’s not a trade worth making. (Here are some of my earlier thoughts on alcohol policy).

I propose a third way. Utah should institute a 10-day travelling pass. Residents and non-residents could get the pass, by paying a fee at a participating club and, thereafter, use it at any participating club. Clubs would be free to opt in. In addition, or alternatively, clubs can sell annual memberships under the current regulatory framework.

This is how I foresee it working. A tourist would buy a 10-day pass and use it at participating clubs. That is a pretty simple concept to explain. I imagine that Utahns might have a few annual memberships at places they like to frequent and, occasionally, a 10-day pass. For example, a Salt Lake City resident might have memberships at a few places in the valley, and, when staying in Park City for a week, also would pick up a 10-day pass.

As is currently the practice, clubs would keep revenues from annual memberships. Other than a handling fee that the club would keep, I envision that revenue from the travelling pass would go back to the State for enforcement purposes.

One additional thought. On these issues, I believe the diversity of interests involved are not always appreciated. While it often is portrayed as Mormons vs. Gentiles, many stakeholders have interests they fight to protect. For example, several clubs make a lot of money selling memberships. Quietly, they might fight to keep laws exactly as they are. Also, if clubs and restaurants are pitted against each other, as currently seems to be the alignment, I worry that policy might be based on the respective political strength of each group, instead of the overall good of the State.

Your thoughts on this idea?

Food Tax – Government Needs You to Do More

2009-02-18T11:08:00.002-07:00

Rep. Kay McIff seeks to double the taxes that Utahns pay for the food they eat.

He explains that Utah should raise its most regressive tax (meaning that the food tax disproportionately impacts poor people), in order to . . . wait for it . . . help poor people.

Government gets its money by taking it from people. Government now has less money, because people have less money. As Rep. McIff points out, sales tax revenue from food sales has not dropped off significantly. Why not? Because citizens still eat. When our citizens are struggling, the correct response is not to take more of their money by going after something they cannot live without.

A Civics Lesson – Clay’s Law

2009-02-17T09:32:00.000-07:00

No one has more at stake this session than the advocates of Clay’s Law (parents of autistic children, arguing that autism therapies should be covered by insurance). I candidly explained my opposition to insurance mandates in this post. If you want some proof that civility is alive and well, check out the comments to that post. Parents who likely are stretched to the breaking point in many ways explain their position in a tremendous example of firmness and civility.

For the reasons I expressed in the original post, I can’t go all the way to mandatory coverage, but I have been moved to support a mandatory rider. As I expressed in my latest comment, I suspect the bill will pass as drafted, in part because of the civil advocacy of the proponents.

Blogger Conference Today

2009-02-10T12:01:00.002-07:00

Today at 4:00, I will hold a blogger conference on my SB 208 (Utah Public Notice Website Amendments).

Ric Cantrell provides details here.

I have to take exception to Ric's comment that I am "the oldest living politician who blogs." I'm increasingly feeling that way. But, I think it might be more accurate to say that I have been blogging longer than any elected officeholder in the US.

You can tune in here.

Autism Insurance Coverage

2009-02-06T10:00:00.002-07:00

In America, complex and important issues find their way to Congress and state legislatures. On the list of complex and important issues, healthcare vies for top billing.

Every year, the Legislature addresses insurance mandate bills. Mandate bills seek to force private health insurers to cover some illness or segment of the population or alternative provider. Groups with that illness and healthcare providers who treat that illness put forward compelling human-interest stories: in many instances, truly heart-rending stories. Faced with those heart-rending stories, politicians routinely force insurers to cover those illnesses. I believe the number of government-mandated coverage items in the US insurance market now approaches 2,000.

Government should do whatever it can to help promote better healthcare. So, government must constantly answer the question: does this mandate promote better healthcare?

We all want a health insurance policy that covers everything. We can’t pay for it, we don’t want to pay for it, and we don’t really expect to pay for it. But the reality, of course, is that someone has to pay for it. If government determines that some treatment must be provided regardless of cost, the better policy is for government to then pay for that treatment – spreading the cost over the entire tax base. By contrast, pushing the cost onto the insurance market makes insurance less available – thereby decreasing the availability of healthcare to our citizens.

It is easy for a politician to declare that citizens should have a few more bells and whistles on their insurance policies. Politicians live to declare that every citizen should have a Cadillac-like insurance policy. But, the reality, is that those declarations mean that more people end up walking.

Some people would be happy to have (and be able to afford) a Honda-like policy. And, given the huge potential market that exists for basic coverage, many insurers would love to offer Honda-like health insurance policies. But, Governmental mandates preclude such marketplace responsiveness. Remember, Government has declared that all policies must be Cadillac-like; no citizen should have anything less. As a result no citizen can get anything less, even if they don’t have a prayer of getting the Cadillac plan.

This year’s big mandate is SB 43 – Insurance Coverage for Autism Spectrum Disorders, Clay’s Law. Autism clearly pegs the meter when it comes to heart-rending stories. At this point, we all know a family (or several) with autistic children. The difficulties they face likely cannot be appreciated by people without autistic children. Fortunately, as this bill notes, wonderful advances in autism treatment have been made. So, how do we best ensure that Utah families benefit from those advances?

The legislature will address whether an insurance mandate is the way to go to help our citizens obtain better healthcare. As I explained above, mandates actually decrease the availability of health insurance. Mandates work great for the people whose employers provide health insurance (unless the increased cost of the mandates forces the employer to drop coverage). But, they’re lousy for everyone else who struggles to find affordable insurance (including uninsured people who have the very illnesses addressed by the mandates). Thus, overall, mandates do more collective harm than good.

If Government believes that citizens absolutely must have something, Government should fund it, instead of conveniently (and quietly) passing the costs off to the market. (And, remember, in the case of mandates to cover certain illnesses, Government is only telling the private sector to provide coverage for the select portion of the population that has health insurance; everyone else with the illness is left out in an even-colder cold, as treatment costs rise and insurance availability decreases.). If politicians determine that people must have X, politicians need to step up to the plate and make sure that ALL citizens get X, and politicians need to be willing to pay the cost to make sure that happens.

As things currently stand with mandates, politicians decree that SOME privileged people get X (while the politicians quietly push the costs elsewhere). At the same time, when citizens tell politicians that they can’t afford health insurance, politicians – with no sense of hypocrisy – beat up on insurers for rising costs. It’s bad government, bad economics, and ultimately bad healthcare. It is politicized “stealthcare.”

If the Legislature determines that the treatments covered by SB 43 must be provided, then Utah should fund the treatments. Likely, the State’s answer here, and with other mandates, will be that it can’t afford to cover the mandate. That’s not true. The State can cover any mandate. It simply would have to take money from less important items in the budget or, if it couldn’t do that, take more money from citizens. We know how to balance a budget, and we know how to impose taxes. Rather than transparently face that music, though, it’s much too easy for politicians to quietly force those costs into the market (and then wring their hands over the increasing cost of insurance). Instead of the State’s broad tax base paying for the services that have been declared necessary, the costs are spread among a decreasing percentage of the population that has health insurance. And why is that insured population decreasing? See discussion above regarding mandates and costs.

By raising economic issues and governmental process concerns, I mean no disrespect or lack of concern for families facing autism or any other illness the Legislature has considered or will consider. Your situations are very real and very concerning. I am trying to do what is best overall in the complex and important arena of healthcare. The challenges are vexing. I acknowledge that everyone involved in these discussions is trying their best. I lay out my thinking on this blog, so that it can be challenged and, where appropriate, changed. To the advocates of SB 43: I believe that your involvement (and passionate advocacy) will help us do what is best.

Federal Pork – An Intervention

2009-02-04T23:27:00.004-07:00

The number of earmarks in federal transportation bills:

1982 – 10
1987 – 152 (earning a veto)
1991 – 538
1998 – 1,800
2005 – (drum roll, please) . . . 6,371

It’s not an appropriations process. It’s a cry for help.

In pork-barrel politics, little compares with the opportunity that highway bills present Congressmen and Senators. Gas-tax money is apportioned to states based on formula. But, forwarding the money without some flare does little to help to the political fortunes of Congress-types. So, instead of the money being spent on the priorities of transportation departments and commissions, Congress-types specify that portions of the money go to patronage-based projects (e.g., the “Bridge to Nowhere”). Press releases, ribbon cuttings, and robust chest pounding accompany the earmarks.

Early in his tenure, President Bush declared, “"Across the spectrum of transportation programs, congressional earmarks undercut the [Transportation] Department's ability to fund projects that have successfully proved their merits." Later, he added, “However, undercutting meritorious projects is not necessarily a bad thing.” Okay. He didn’t add that last part. He merely signed a transportation bill with 6,371 earmarks.

Nothing indicates that Congress will end the bender. So, I propose an intervention.

SB 134 (Transportation Funding Amendments) makes it illegal for Utah to spend money that has been porked out of formula-based money. In other words, when a member of Congress specifies that X has to be funded with Utah’s share, the money disappears. So, Utah’s delegation simply should avoid the pork.

As I described previously, Congress-types and the local jurisdictions that are good at the game don’t like the bill (and might muster the collective mojo to defeat it). However, my Mayor, Dan McArthur, came up with a good compromise that the cities back. The compromise is that the feds can specify projects, so long as those projects are included on Utah’s list of priorities (the State Transportation Implementation Plan (the “STIP”)).

Our Congress-types still could specify a project that is not on the STIP. By doing that, they would, in effect, be daring Utah to not add it to the STIP and, thereby, kiss the money goodbye. I'm okay with that. That situation would draw light to the earmark. People from the area that would receive the money could be invited to testify – as could people from the areas that have had their higher-priority projects delayed by the earmark. Because pork is supposed to only have beneficiaries, not victims, this just might work to slow down Congressional binging.

With my agreement to amend the bill (to add the STIP provision) and with the cities' resulting support, the bill passed committee today unanimously (link to the audio). I discuss the bill with the association of counties Thursday morning, to enlist their support.

The Old Ba' Game

2009-01-31T16:59:00.005-07:00

Every year I get Glenn Stout’s The Best American Sports Writing. One of its pieces, Eli Saslow’s article on the old ba’ game in Kirkwall, Scotland (originally published in the Washington Post), is a must read. It reminded me of 3 of my favorite activities.

One, Hall Ball. Like ba’, my brother and I each tried to get the ball to respective ends of the playing field (the central hallway of our house). Also like ba’, there were no rules and tremendous amounts of pain. Had we known about Kirkwall’s tradition, we could have answered our Mother’s repeated inquiries of “why on earth do you do this?” by claiming to honor our Scottish heritage. We played because we could.

Two, Killer. Four players in my college dorm (Williams E) each claimed a doorway in a 6’x6’ entry. The goal was to defend your doorway and get a soccer ball in any of the other 3 doorways (mostly by kicking, though bodies and body parts, otherwise, could be used in any way). Alliances were more slippery in Killer than in politics.

Three, the Legislature. Like ba’, groups push on each other to reach a goal, playing hard, but, for the most part, obeying basic rules of civility. When played well, winners and losers celebrate the opportunity to participate more than the specific outcome – realizing that the outcome is temporary and that the important thing is that the game be honored and that it be played again.

Attorney Fee Awards

2009-01-30T11:47:00.001-07:00

I have fielded a few nervous calls about my SB 53 Awarding of Attorneys Fees. I’ll explain the bill.

Typically, jurisdictions in the US, including Utah, require that each side to litigation pay its own attorney fees (a.k.a. the “American Rule”). (This contrasts with the “English Rule” – where the loser typically pays). The big exceptions to that rule are (1) when some agreement of the parties (e.g., a contract) specifies that the loser should pay the other side’s legal fees in the event of a lawsuit, (2) when one of the parties acts in bad faith (brings a ridiculous lawsuit or acts irresponsibly in prosecuting a lawsuit), and (3) when a statute specifies that attorney fees can be awarded (e.g., this one).

Sometimes – without contract, bad faith, or statutory authorization – courts determine that a loser should pay, because, in the court’s opinion, the lawsuit was brought in the public interest (a common-law private attorney general theory).

The bill clarifies that the English Rule will only apply where specified by statute. Some are concerned that this would do away attorney fee awards pursuant to contract and bad faith. It would not. Contractual and bad faith attorney fees would be alive and well under this bill. Currently, statutes allow attorney fee awards for bad faith and where specified by agreement; those provisions would not change.

The Amazing Scotty Riding

2009-01-30T09:59:00.002-07:00

Scotty Riding makes is easy to know who your Senator/Representative is.

This is a direct reflection on the training he received as my intern, and has NOTHING to do with any parenting (sorry, Ann), teaching, past experiences, etc. that he might have received.

Way to go, Scotty!

Please Don't Pass the Pork

2009-01-29T09:57:00.003-07:00

Utah – and 49 other states – are grappling to match expenditures with revenues. (For the federal types, that’s a financial principle called “balancing a budget”). It is frustrating to watch the feds ladle the pork. Their efforts won’t stimulate the economy. Congress is simply piling debt on future generations, courting inflation, and pushing favors to friends. (And, as a side note, it’s tough to be too impressed with the Republicans' new-found religion on this score, since it was only 4 months ago that they were gaga for government bailouts.)

I’m running a transportation funding bill that might be a starting point in deterring some of the fed's pork-barrel practices. The feds collect gas tax money and send it back out to the States on a formula basis. In other words, a state will receive $X for transportation projects. But, to build patronage, congressional-types earmark many of those funds, so that they can brag to Mayor So-and-so that they delivered his road project.

But, in that process, they don't add any money to the State's cut. The total is still $X. Instead, on the basis of political patronage, they reshuffle the money. To curry political favor, they take money from a higher-priority project and point it to a lower-priority project (i.e., bridges to nowhere). (And, of course, the braggadocio press releases that accompany the reallocations don't point out, "And, guess what, Mayor What's-your-name. We used your money to do it. Eat that!"). They know that there are too many steps to track back to them the fact that they bumped back a more worthwhile project. It's another way for Congress to gain political power, while marking time on society's pressing issues that they should be addressing.

My bill would prevent the State and local communities from spending any transportation money that has been earmarked as described above. If it were to pass, our Congressional types would be locked out of the earmark game. Any earmark they secured would simply deduct from the total money Utah would receive. Pretty simple.

Here's how this will play out. Feds aren't overly worried about many things -- national debt, immigration, social security viability, etc. But they care very much about re-election. Mess with patronage, and you get their attention.

First, starting with my city, they will threaten all mayors that they will be locked out of the game, if their Sen/Rep supports the bill. And that perfectly illustrates what's wrong with the status quo; rather than serving the people, they have built up a system where they can require support of themselves.

Second, they will say that the simpletons back home don't understand the issue. We do. This one is pretty straight-forward.

Third, they will say this is a power struggle. It's not. The Legislature has ceded much of its authority to prioritize projects to the Transportation Commission -- attempting to ensure that transportation funding is based on need more than patronage.

This is worth discussing. Buckle up and join the debate!

Legislative Orientation

2009-01-09T09:22:00.002-07:00

As a new Senator, I attended legislative orientation yesterday. (I’m pleased to report that the upperclassmen kept the hazing to a minimum). It occurred to me that I have never blogged about the non-partisan status of legislative staff.

Research and bill drafting are handled by the Legislative Office of Research and General Counsel (“LRGC”). Budget issues are handled by the Office of the Legislative Fiscal Analyst (“LFA”). Auditing responsibilities fall to the Legislative Auditor General (“OLAG”).

Republicans and Democrats – House and Senate – share the services of those offices. Staff is non-partisan, and extremely disciplined about honoring that status. I’ve worked closely with staff for 8 years, and I could only guess at their political leanings. Thus, the research and counsel they give us are dedicated to (1) accuracy and (2) maintaining the integrity of the Legislature.

Removing the temptation of partisanship from staff creates a wonderful system for the production of good information (and saves some money, by avoiding redundancies). An added benefit is that shared staff tends to reduce partisanship among the elected officials, while partisan staff likely would increase it. (By that, I don’t mean the positive philosophical differences that drive good debate, but, rather, the negative factionalism of electioneering).

Lest anyone use his estimation of legislative action as the measure of staff’s services, I point out that clients are free to do whatever they want with the best advice of lawyers and financial advisors. Our staff gives us sharp, accurate, and effective tools. If the products turn out skiwampus at times, don’t blame the tools; talk with your Representative or Senator about using the tools more effectively.

Along with those 3 offices, we are supported by great clerks and administrative staff (House/Senate (no link available)).

As another member and I discussed yesterday, these people are seriously dedicated to the institution. They do a great job of respecting and supporting the decision-making responsibility of the elected officials (which is a respect paid to the electorate), while reminding us with their every deed that they have devoted their working lives to the institution and have an expectation that, during the brief season we fill the seats, we will act to honor the citizens and those members who served before us and those who will come after us.

I often reflect back to the sound – though unglamorous – counsel I received 8 years ago at my House orientation. Rep. Kevin Garn said, “Just remember, Utah managed to get by before you entered the Legislature. It will get by after you are gone. So, at the very least, don’t do anything to mess it up while you are here.”

I also think about my first real introduction to the continuity of the institution. My first session, I lost total control of a meeting I was chairing. It ended like a session of the Taiwanese legislature. That day, Speaker Stephens and 3 former Speakers took time to pull me aside to tell me what a great addition I made to the House. Smarting from that morning’s failure, I knew it was a fiction to buoy me up, but I appreciated it and realized more fully that my service is a sacred trust that I will hold for a season.

Newspapers and Informed Citizens

2009-01-06T11:01:00.006-07:00

Newspapers are on a downhill slide. The reasons for that are many, but I think poor reporting must be one. Witness this article from today’s Tribune.

To set up a vague description of transparency efforts that Salt Lake City is contemplating, the article superficially contrasts Salt Lake’s (good) plans to the Legislature’s (bad) conduct. The article suggests that the Legislature, in contrast to Salt Lake’s possible actions, is not open, inclusive, responsive or accountable.

Okay. So, what are Mayor Becker’s plans? Well, basically, to be as open, inclusive, responsive and accountable as the Legislature is currently. (Compare Mayor Becker’s plan, as it is somewhat described in the article, to the actual contents of the Legislature’s website. Pick a topic on the Legislature’s site and drill down a few layers into the information that is available – committee and floor debates, history, briefing papers, votes, etc.).

The Tribune’s repeated portrayal of the Legislature, regarding openness, inclusiveness, responsiveness and accountability, doesn’t wholly mesh with fact – at least when the Utah Legislature is actually compared to other governmental entities. By no means do I think the Legislature is perfect. But, I believe the reality is that it is better than most other governmental entities, including Salt Lake City, when it comes to openness, inclusiveness, responsiveness or accountability. If not, I’d like to gather examples of stars by which we should navigate.

Rather than stake out a position of scholarly detachment, newspapers made a move to match the “approachability” (a.k.a., shallowness) of other media, such as television and radio. Those other media forms are more immediate and more transient. Things are said, to be quickly rebutted and/or forgotten. If a radio personality or blogger botches something, he can easily elaborate or describe and correct the error. Newsprint, by contrast, is static. It is intended to be contemplated. To have value, it has to be accurate from the outset. And, it needs to have depth that the other media forms aren’t as well suited to provide.

Read a well-reported story from a great reporter, and imagine television or radio trying to convey the same detailed analysis. Newsprint is a unique communication venue. The story comes unchallenged from one writer – without other talking heads, without callers, without links (unfortunately), and without “active” feedback (unlike bloggers, newspaper writers don’t engage commenters to their on-line stories (unfortunately)). Where newspapers sacrifice accuracy and depth, they give up their reason for existing.

Apologists for Old Media believe it offers something new media doesn’t. It can and it should. But, does it? Look at the Tribune story again. What substance does it convey that a blogger couldn’t convey or, more to the point, wouldn’t convey with more depth and accuracy?

In any event, I’ll give you one reform I would like to see at the Legislature. Documents handed out to committees or on the floor should be made available on-line. Those “last-minute” documents are intended to sway outcomes, and often do sway outcomes. Thus, they should be open to the public’s examination.

Many of those documents are embarrassingly simplistic and deceptive – intended to stir passions at the time of voting, when it is too late to fact-check the documents’ assertions. If they became part of an open and permanent record, the documents might become more honest and substantive. Or, even if they remain trite and deceptive, they could be used as “smoking guns” for future reform. Someone could later argue, “At the time of the vote, advocates of the law argued X, as you can see here. I now submit clear evidence to show that the argument was false and that advocates had to know it was false at that time the document was circulated.”

I am always interested in improving the Legislature and doing a better job of opening state government to public examination – and, with that, public participation. I think I’ve walked the walk on that score, and I think the Legislature has too. And I again want to express my understanding that the Legislature can do better. But, meaningful improvement requires meaningful dialogue. Items have to be thoughtfully presented and thoroughly contemplated. I am very grateful that many Utahns take the time to discuss politics on-line. I think it helps the process.

UPDATE (9 p.m.): the on-line article has changed significantly, since I wrote the post above. Perhaps the print article was more detailed than the online version originally posted and that content was added. Or maybe the Trib just fleshed it out a bit. In any event, the new version is much better, and it even contains a link to SLC's webpage on the project. Hooray!

By the way, I'm a Becker fan. I support this initiative, and I am proud of the way he's mayoring our Capital City. I disagree with some of his decisions, but I think he's solidly in line with his constituency. And, as he did while in the Legislature, I think he handles himself with class.

Liquor Laws

2008-12-31T14:03:00.004-07:00

In the political arena, alcohol issues tend to stir great passion and little meaningful dialogue. (In Utah -- and 49 other states). Thus, I was pleased to read comments from the Governor’s Office that he will be active on alcohol issues. A strong voice and a measured approach would be helpful. The possibilities between the two extremes of abolishing private club laws and doing nothing are considerable. I hear from many Utahns, drinkers and non-drinkers alike, that they would like the Legislature to explore some of those possibilities.

Unlike many states, Utah does not have “dry” counties (where alcohol is completely banned). Thus, it seems that State policy should (1) discourage overconsumption and underage consumption and (2) allow adults to get a drink without undue hassle. I’m not convinced that Utah’s current private club law is the best way to accomplish those policy concerns, and I would like to take a look at the issue.

Utah has improved its alcohol laws over the past 6 years, by promoting the 2 policy interests I described above. We're a better place, because of it. I am hopeful that progress on this front will continue.

Is Caroline Qualified?

2008-12-29T13:48:00.002-07:00

Is Caroline Kennedy qualified to be a United States Senator?

Yes. Absolutely.

If she were a man, the question wouldn’t gain any traction.

I don’t like her politics. For many, many reasons, I would not like to see her in the Senate. But, let’s stop asking whether serious devotion to motherhood is a disqualifying activity (which really is the question being asked – without, of course, actually being voiced).

Along with being a mother, Kennedy has accomplished much. Along with being a mother, she is very well educated. Along with being a mother, Kennedy is a serious writer and editor. Along with being a mother, she is a serious player in the public education arena. Along with being a mother, she is a political heavyweight.

Flawed and naive in some areas? Of course.

Unqualified? Give me a break.

If she were a man, the narrative would be much different. If, for example, her brother John were alive and being considered, the question of qualifications would not gain traction in the media (though, in that case, it should).

Everyone should be vetted. That’s fine and necessary. So, vet her. Don’t mock her and dismiss her. Don’t dehumanize her. But in the spin cycle that makes up so much of our politics, serious devotion to motherhood is a red crayon left in the pocket. It ruins the whole load.

Many amazing women chose to spend most of their time with their children. The chattering class does not understand that such a choice does not make them dumb or, in any way, less amazing.

This is not a Left or Right issue. It is a societal blind spot.