SATURDAY, JULY 31, 2010 COLBERT I. KING


It’s the D.C. budget, not Michelle Rhee


M


ichelle Rhee is not the issue in the 2010 District elections. I made this point three weeks ago, and several parents wrote to voice their strong disagreement. The D.C. schools chancellor, they said, is the difference between the status quo, which governed the old school system, and the forward-looking, results-oriented aca- demic program they say Rhee is putting together. Whether their children remain in D.C. schools or leave, some parents said, depends on whether Rhee stays or goes. She is just that important to them. I agree that Michelle Rhee is a consequential


figure in D.C. public education, which, of course, is critical to the District’s future. It’s tempting to treat her as this year’s major issue. But she’s not. The city’s financial health, as I’ve said before and now say again, is issue No. 1. That’s a hard sell, I know. Municipal finance comes without a face.


There’s nothing sexy about abstract numbers and statistics. Balance sheets don’t preen when they are admired or respond to threats or cringe when yelled at. Annual financial audits don’t frown, pout, talk back, cry or quit to spend more time with their families.


But hard truths can be found in numbers. The pluses and minuses, lines pointing up or down, graphs and ratios help tell the fiscal tale. Within the District’s numbers is a story that must not be ignored this election year. Simply put, the city’s fiscal health is not all it should be. That should concern everyone. D.C. finances will have a strong bearing on the capacity of elected officials to deal with everything, including the public schools. How candidates running for mayor and the D.C. Council propose to tackle that issue ought to be paramount in the minds of voters. The city’s chief financial officer, Natwar Gan-


dhi, gave Mayor Adrian Fenty and D.C. Council Chairman Vincent Gray a taste of the problems this week, after his recent visit to Wall Street. While there, Gandhi got an earful from the three rating agencies. Two specific actions by city lead- ers have raised eyebrows and concerns among Wall Street analysts and potential investors in District bonds. Gandhi told Fenty and Gray that the rating


agencies expressed serious concerns about the city’s decision to get back into the hospital opera- tions business through the acquisition of United Medical Center, the successor to the failed Greater Southeast Community Hospital. They cited the city’s poor record of running hos- pitals — to wit, D.C. General — and the series of expensive government miscalls with Greater Southeast. Moreover, they want to know where the city will get the money to subsidize United Medical Center and to cover its liabilities. As the rating agencies told Gandhi, governments have amply demonstrated that they don’t run hospitals very well. The District of Columbia is Exhibit A. Wall Street, Gandhi said, is also worried about another development induced by the mayor and council and discussed in this column several weeks ago: the city’s declining general fund bal- ance. The politicians have been drawing down the


general fund balance to pay for deals and pro- grams that ought to be supported by operating revenue. But funding programs through the oper- ating budget would require cutting other pro- grams or raising taxes to cover the new schemes. Instead, the mayor and council have resorted to the easy way out: tapping the city’s reserves. The politicians have taken a fund balance that was a healthy $1.5 billion in fiscal 2007 down to $920 million by the end of fiscal 2009, “a reduc- tion of nearly 40 percent over just two years,” as Gandhi pointed out in his letter to Fenty and Gray. What’s worse, the city’s fiscal 2010 revised budget will probably draw the balance down another $80 million. After being warned by Gandhi weeks ago about the consequences of their raids, Fenty, Gray and company pledged to rebuild the fund balance. Ev- ery good wish. Wall Street knows better and, given all the neg-


ative scrutiny it has endured over the past year, will be quick to react to risky government deci- sions. Potential investors know better, too. So should D.C. voters. The time between now and Election Day should be used to pin down the candidates on the budget and spending. I know, I know, that’s a little like trying to nail Jell-O to the wall. But it is essential to find out where all the may-


oral and council candidates stand on issues such as drawing down the general fund, balancing the budget with cuts (where) or tax increases (on what or whom), and protecting the city’s bond rat- ing.


After all, the city’s fiscal health, not Michelle Rhee, is the issue.


kingc@washpost.com


others. Then, when you’re not looking, another one gets out of line. States are much the same way. The eyes of the na- tion are fixed on Arizona, the undisputed problem child in our national immigration debate. But there are other states where lawmakers are eager to fol- low Arizona’s lead and blame Washington for not solving a problem that, in truth, their own residents (i.e., employers) helped create. At least half a dozen of the states thinking about


going on this suicide run can perhaps be forgiven their ignorance because the experience of having a sizable population of illegal immigrants is new to them. In Utah, Georgia, Ohio, Maryland, Oklahoma and South Carolina, illegal immigrants are still a rather exotic import. But then there’s Texas, which used to be part of


At the cliff’s edge on immigration P


by Ruben Navarrette Jr.


arents, you know how it is with kids. One acts up, and so you have to focus your attention on the troublemaker and take your eye off the


Mexico and where lenient immigration policies toward white settlers from the South and Northeast led to a famous tenant dispute that included a dust- up at the Alamo in 1836. In Tejas, Latinos are indig- enous and as ubiquitous as bluebonnets. In the Lone Star State, where my mother and grand- parents and great-grandparents were born and raised and where I spent five years writing about immigration and other issues for the Dallas Morn- ing News, legislators should know better than to even flirt with the idea of adopting a divisive and dangerous law like the one in Arizona. This was true even before U.S. District Judge Su- san Bolton, in defense of the Constitution, ripped the guts out of the Arizona law by striking down its most egregious and indefensible parts. Bolton had her pick of seven lawsuits seeking to block the law’s implementation, and she based her ruling on the lawsuit filed by the Obama administration. The Jus- tice Department argued that Arizona had exceeded its authority and trampled on powers reserved for the federal government. Bolton agreed. She was particularly bothered by


BY LUCKOVICH FOR THE ATLANTA JOURNAL-CONSTITUTION Drawing Board


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This spending goal is too small


by Matt Miller I


don’t want to overreact. I’d hate to premature- ly dis President Obama’s National Commission on Fiscal Responsibility and Reform, which held its fourth public meeting Wednesday. But the commission’s Democratic co-chair, Erskine Bowles, may have already blown it. In little-noticed remarks a few weeks ago, Bowles suggested that the long-term goal the commission should adopt for federal spending should be 21 percent of gross domestic product. This sounds like a bookkeeping matter. But Bowles’s goal would end progressive ambition, ratify America’s declining competitiveness and bury the American dream. Why? For starters, federal spending under Ron- ald Reagan averaged 22 percent of GDP. Under Bowles’s view, therefore, the outer limits of the Democratic Party’s 21st-century


aspirations


would be to run government at a size smaller than did a 20th-century conservative icon. What’s more, Reagan ran government at this


BY LISA BENSON


size at a time when 76 million baby boomers weren’t about to hit their rocking chairs. In 1988, 32 million retirees received Social Security and 33 million were on Medicare, our two biggest domes- tic programs. By 2020, about 48 million elderly Americans will receive Social Security, and 62 million Americans will be on Medicare (then the numbers really soar). As a matter of math, if you run the government


at a smaller level than did Ronald Reagan while accommodating this massive increase in the number of seniors on our health and pension pro- grams, you have to decimate the rest of the budg- et.


That’s especially the case when you consider


that health costs in the Reagan era were around 10 percent of GDP, while they’re now 17 percent, headed toward 20 percent. Obviously we need a national crusade to make health-care delivery more efficient. But until there’s progress on this front, the 21 percent goal would be tantamount to Democrats agreeing that Uncle Sam should han- dle health care, pensions, defense and little else. And that’s before factoring in the odds that cor-


BY OHMAN FOR THE OREGONIAN


porate America will come to its senses in a few years and ask government to relieve it of its crazy health-cost burden, at which point the 4 percent of GDP that big companies now spend on health care might sensibly shift to public ledgers (a shift, by the way, that Kevin Hassett, an economic ad- viser to John McCain, says would be economically fine). This makes Bowles’s 21 percent goal an even more dramatically unrealistic straitjacket. So what was Bowles thinking? Perhaps he wasn’t. Or perhaps Bowles was thinking of the contours of a bipartisan deal for the commission. Federal spending, thanks to anti-recession measures, is at a high of 24 percent of GDP today. Taxes, meanwhile, have sunk in the sour economy to 15 percent, well below their long- term average of 18 percent. Split the difference, Bowles could have thought: Bring spending down 3 from 24, taxes up 3 from the average of 18 and call it a day. That can’t be too big a lift, he must have reckoned — af- ter all, Bill Clinton left office with surpluses via spending at 18.2 percent and taxes at 20.6. But here’s what Bowles forgot. Clinton didn’t


have to retire the boomers. And Clinton aban- doned the public investments that many ad- vocates in both parties know are overdue — from our massive infrastructure backlog, to our lag- ging research and development, to remedying the shameful fiscal inequities between rich and poor school districts, to luring a new generation of teaching talent to America’s toughest classrooms. And on and on. Let me be clear: I’m all for ending ineffective


BY STANTIS FOR THE CHICAGO TRIBUNE


programs and reallocating the cash; trimming the bloated Pentagon; and reforming tax subsidies for mortgage interest and charitable contribu- tions, which reserve their greatest benefits for people the wealthier they are. (Obama and de- parting Office of Management and Budget chief Peter Orszag pushed these last ideas despite in- tense opposition, for which they deserve credit.) But even the most ambitious such efforts won’t change the fatal chains of 21 percent in an aging America. This fall we’ll have a phony debate about ex- tending the Bush tax cuts, when it’s inevitable that taxes will rise as the boomers age. It may sound arcane, but the real shape of America’s fu- ture will be set by the level of GDP at which we aim to finally balance the federal budget again — whether at 21 percent, say, or more like 28 per- cent. (If we do it right, the economy will thrive with the latter, but that’s another column.) If Bowles’s Democratic colleagues don’t make him walk back his blunder, the great debate this com- mission should spark about how to marry pru- dent public finance with America’s values and as- pirations will be lost before it’s even begun.


Matt Miller, a senior fellow at the Center for American Progress and co-host of public radio’s "Left, Right & Center," writes a weekly column for The Post. He can be reached at mattino2@gmail.com.


those elements of the law that all but required racial profiling by forcing police officers to arrest people they suspect are in the country illegally, made it a state crime for the undocumented to seek work, re- quired legal immigrants to carry papers proving their status, and allowed police to detain and arrest people who could not prove their legal status. So the judge issued a preliminary injunction against those parts. The rest of the law — which did things such as making it a state crime to transport illegal im- migrants — was allowed to go into effect. So much for Gov. Jan Brewer’s bravado in telling the federal government that Arizona would “meet you in court.” This battle is far from over, and the is- sue is probably headed to the Supreme Court. So far, it’s Common Sense, 1, Arizona, 0. But like the saying goes, common sense isn’t al-


ways common — even in Texas. State Rep. Leo Ber- man, a Republican, is drafting an Arizona-style bill for Texas and plans to introduce it next session. Adding fuel to the bonfire, Texas Republicans re- cently adopted an over-the-top platform at their state convention that, among other things, encouraged


the Legislature to create a Class A misdemeanor criminal offense “for an illegal alien to intentionally or knowingly be within the state of Texas,” and to “oppose amnesty in any form leading to citizenship.” Texas Republicans also want to deny citizenship to the U.S.-born children of ille- gal immigrants, ban day-labor work centers, limit bilin- gual education to three years, and deny non-U.S. citizens access to state or federal financial assistance for college. In Texas, Latinos are forecast to make up nearly 80 percent of the population growth over the next 30 years (compared with only 4 percent for whites), and Latinos could outnumber whites by 2015, the San Antonio Ex- press-News reported last month. What the Texas GOP drafted was a pact with the devil. All of which leads me to ask my friends in the Lone Star State the same question my mom used to ask me growing up: “If all the other kids jumped off a cliff, would you do the same?” Apparently they would.


Ruben Navarrette Jr. is syndicated by the Washington Post Writers Group. His e-mail address is ruben@rubennavarrette.com.


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