Transportation Politics: The Emerging Deal and the 2013 GUV Contenders


    (Sorry, Paul, I disagree: Dems need to hang tough and RAISE the gas tax, not eliminate it. Also, I’m not convinced that transportation is going to be much of an issue in the 2013 campaign; we’ll see. Finally, I’m perfectly fine with Dems being the reasonable ones politically, getting something done, while Cuccinelli sticks with the far right wing/Tea Party types. Works for me. 🙂 – promoted by lowkell)

    by Paul Goldman

    Yes, Virginia, there really is a Santa Claus. But if Virginia Democrats and the Washington Post – based on its latest editorial – believe Governor McDonnell and House Republicans are going to agree to a $1 billion a year in new money transportation plan based on big increases in the gas tax, then we are living on different planets, not just in different states. THIS IS NOT GOING TO HAPPEN.

    Yeah, I could be wrong: we don’t do 20-20 hindsight here, or anything of the sort. We do real time politics, without a net. So out on the limb we go.

    There will be a transportation deal, the parameters outlined below. It will reject the silly moralizing by the Washington Post. On the other hand, it would be fun to see the General Assembly pass the Post package — and then hold a contest to see who could most accurately predict the size of Governor Cuccinelli’s landslide victory. And then of course there would be this: Governor Cuccinelli suing to shut down Kaplan University, the private college living off government funds, whose profits are keeping the Post from having to go 100% internet (or 100% belly up). Former Democratic Chairman Brian Moran – of the family the Post seems to despise – would then have to be hired to defend the newspaper. That would be priceless. Brian is a good lawyer, he might win the case. But Cuccinelli would sue the Post as surely as President Jefferson tried to get Chief Justice Marshall to find Aaron Burr guilty of treason. Yeah, there was some constitutional technicality with the evidence. Except for CJ Marshall, however, few others would have had the guts to back Burr over TJ.

    But alas: While I think the Governor and the Speaker would enjoy watching the spectacle, they also want to have a future in Republican politics. For Governor McDonnell and the Speaker to sign onto a bill that raises the PRICE OF GAS – I am using McD’s own analysis, which bases the brilliance of his own plan on the claim that it will LOWER the price of gas at the pump – would risk a mutiny in GOP ranks, national and in Richmond. Plus, the governor’s base – Tidewater – is already mad enough at him for forcing on them big tolls for a very questionable deal, not to mention outrage at his wasting a $1.3 billion on a “Road To Nowhere”

    As an aside: Why aren’t Democrats – and I am taking this brilliant point from a very brilliant guy, one of the top political thinkers in Virginia who unfortunately doesn’t want the credit – demanding that as any part of any transportation deal, the Road to Nowhere isn’t built, since even the governor’s own Transportation Department couldn’t find experts to justify the expense! Plus, we all know the $1.3 billion price tag is way low (it is just “spin” to get the thing approved; the actual cost will be way more, may $3 billion when all is said and done). Tidewater is thus going to be a potential hotbed for a populist anti-tax revolt if legislators raise the gas tax as proposed in the Democratic Plan.  

    But back to the real deal emerging (and yes, there will be one, in my view). We all have our own take on what is doable. True, as we are now in the 200-proof political zone where optics are key, even the smallest misstep can kill a deal this year. But Saslaw is a savvy player, McEachin too, and Speaker Howell in matters legislative. McD ain’t bad himself. So I am assuming no deal-breaking error.

    So let’s play the politics of the deal first, as regards the three GUV contenders.                    

    As I wrote yesterday, the warring transportation factions of the GOP gave Senate Democrats a once-in-a-lifetime chance to guarantee a 2013 Dem sweep. All they had to do was pass HB 2313 as is, easily done with the help of Senator Watkins, who would have voted for it had Senator Saslaw said this is all the Dems will support this year. That would have provided the 21 votes needed for a revenue bill  under the constitution. At which point: done deal, both houses passing the same bill.

    Saslaw decided to go another route. Thus, the Senate Finance Committee, led by Democrats, fundamentally altered HB 2313, a move expected to be endorsed, perhaps with minor changes, on the Senate floor today.

    Which gubernatorial contender potentially benefits the most from this Senate power play? Ken Cuccinelli. Ol’ Saint Nick couldn’t have given him a better gift. Fortunately, the AG has often been one to look a gift horse in the mouth, despite the adage. The Senate move gives him an opening he didn’t earn, indeed could never have gotten on his own. Right now, everyone in Richmond knows the AG isn’t backing the governor’s transportation plan. Cuccinelli prefers the one proposed by conservative GOP Senators. But that plan is DOA.

    So there are only two horses to ride right now if you want a deal: the House/Governor’s plan or the

    Senate Dems/some GOP Senators plan.

    Remember: The media is watching. So either the AG wants to let the press spin his image as opposed to any deal, not engaged, or supportive of one or the other.  He is the AG, he has a platform unlike say Terry. He stayed AG instead of resigning, for a reason presumably to have this platform. Standing on the sidelines raises the question: Why take the heat for not resigning if you aren’t going to use the platform on something this big?

    At this point, his play, his only play is making it clear he backs the governor’s plan. It is a sure winner thanks to Senate Democrats. Why? Run the computer program. As Joe Louis said about Billy Conn (who had the champ beat), he can run but he can’t hide.

    Cuccinelli is running for governor, so he will have to take a position at some point on the transportation situation. If he thinks it through, the perfect play is for him to come out now and back the governor’s plan. Yes, he doesn’t really support it because it is not “revenue neutral.” So yes, backing it will get him a lot of grief on the anti-tax and spending Tea Party right.

    I ask: Where are those people going in November? Are they going to desert the most conservative guy ever to get a Republican nomination for governor, a guy who likes to say he was “tea party before there was a tea party” or words to that effect? If they wanted to back Bolling, they would not have changed the rules to run him out of the party. They surely aren’t backing Terry Mac.

    The Tea Party has no place to go, and they aren’t staying home. Most successful politicians had to go against type and their constituency at some point to win. So Cuccinelli can afford to make them mad on this one, indeed it might be necessary to do it. What he can’t afford to do is oppose any reasonable deal McDonnell can make with the Democrats, unless Cuccinelli is prepared to go “all in” on a daring populist gamble as I outlined yesterday. It might work, depending on how the transportation deal details finally come down.

    But there is no evidence he is considering that route. He has never done it before. Given his financial backers, he might not even have room to run on the side of the field. So let’s assume all this true.  Accordingly, Cuccinelli has backed himself into this corner: he has to go along with whatever McDonnell and the House Republicans want right now. He is too smart politically to think he can win for governor running against the McD transportation plan unless, like I say, he is counting on McD to make a huge blunder and agree to a plan that is clearly rejected by the people of Virginia.

    That being the case, Cuccinelli has to make a virtue out of a necessity. As long as he stays quiet, he gains nothing by waiting and then backing the compromise deal. McAuliffe and Bolling will do the same: it is a wash, meaning Terry is the big winner since he is the front runner.

    But the chess board changes if Cuccinelli suddenly backs McD. Given the current optics, it can be spun as Cuccinelli, even though this isn’t his first choice, making a “governing move”, showing a practical side on the bread-and-butter type issues, as opposed to being a one-note ideologue on social stuff. This is almost surely going to be the best, if not the only, high profile moment for the AG to address a huge political problem with his image.

    But you say: “Paul, the Governor’s plan can’t pass, Democrats will laugh at him.” My response: Like that’s bad for Cuccinelli? He earns real street cred with Governor McD, the business community (now not big fans of him), and in doing so, makes it harder for Bolling to justify an independent run. Plus, it allows Cuccinelli to attack the gas tax increases in the Dem plan without being seen as just another anti-everything Tea Party idol.

    While I know a lot Democrats think the sales tax is more regressive, that is not what the people think, and not what is easily the facts with a little tweaking of the final transportation plan. In this regard, Bolling can’t be critical of him. As for Terry, as we said yesterday, he is rightfully leery of doing anything which gets him crosswise with Saslaw and crew right now.

    Suddenly, it is the McD/Cuccinelli plan for transportation, based on eliminating a tax, always good seller, especially one as disliked as the gas tax.

    Now comes the negotiation between McD and Saslaw and Howell. Here is my real-time guess on a solution. Democrats will have to accept a phaseout of the gas tax over, say, 5 years. McDonnell will have to accept a phase in of the sales tax increase to 5.8% (this is selling cars, I don’t see how he can go to 6%, bad optics but maybe not) over 5 years. The idea here is to balance stuff so Republicans can keep their politics in balance too.

    Democrats will have to drop their idea for a new “rack tax” on gas at the wholesale level and cross their fingers on the Congress changing the law to overrule the Supreme Court decision allowing Amazon, etc. not to collect sales taxes. This is really not much of a concession, since this change is coming, as Amazon has indicated; it is a matter of basic economic fairness to local homegrown merchants.

    In return, McD has to drop his proposal to increase from 1/2 to 3/4 percent the share of the current sales tax on non-Internet stuff going to transportation, a big part of his current transportation “solution.” Plus, the Governor will have to agree to a change in his proposed distribution formula for Internet sales tax revenue to an equation more pro-education. Finally, McD agrees to a small refundable tax credit for the very poor should Dems propose it, as they might well do.

    Those are the big items that I see. The other stuff – registration fees, some other wrinkles – are not deal breakers at all, just politics in the final analysis. This then is the outlines of a deal that I think it doable. The amount of new transportation revenue would be roughly $500 million a year, in the zone of fixing the maintenance funding hole. As for local option stuff, there doesn’t seem to be a lot of support for it in NOVA, I am not sure about Tidewater or Central Virginia. It raises less money than either the McD or Senate Dem plan, only half of what the Post wants.

                                              Perfect? Of course not. But a good first step given the realities. As to reality: Cuccinelli can back this deal because it eliminates the gas tax. Moreover, unlike Gilmore’s “no car tax”, there is a guaranteed funding stream to make it happen.

    Yeah, the increased sales tax is an issue, but the voters Cuccinelli needs to win have historically been generally receptive to small such increases when carefully explained. Besides, the actual increase in the sales tax starting July 1 will be less than 5.8% — and the gas tax will be cut, a good political point for November.

    If Bolling were going to run as a populist, then Cuccinelli might worry about someone saying the gas tax cut will only help the oil interests to get windfall profits. But Terry MAC ain’t going that route if the Dem cut the deal outlined above, and neither is Bolling.

                                                    THEREFORE: Cuccinelli can back the compromise deal and get credit for helping the governor stand firm to do it. Like I say, my analysis is based on a belief that Governor McDonnell and Speaker Howell need to have at least the fig leaf of a gas tax elimination to justify their rhetoric.

                                                    Could they live with a big cut in the gas tax offset by a rise in the sales tax? It doesn’t seem to me to be the kind of political play both have been pushing, and used to sell the McD plan to a skeptical House Republican Caucus. Working class voters don’t like the gas tax. This is an election year for the House Republicans, not the Senate Dems. So you asked me to choose, I would say no. But assume they say yes.

    At which point, Cuccinelli can say: Sorry guys, I was willing to back the McD plan, but the governor has gone back on his word, and I am not going that route. He would technically be going against McD, but what could McD, the Democrats or the press say credibility in that regard since the AG had been willing to support the original GOP plan passed by the House? Thus Cuccinelli may preserve a populist-lite play if he simply can’t abide the compromise plan.

                                                        Where does this leave Terry Mac? Again, he  has to wait until he knows where Saslaw and posse are going. At which point, he really can only be seen as lending help, not leading the pack. So that’s why it is tricky for Terry to do anything now, since the risk of getting out front seems way to high given the likely rewards.

                                                       As for Bolling, his whole rationale for running is that Cuccinelli isn’t a mainstream player. That analysis doesn’t hold if Cuccinelli is seen as backing the governor or a compromise transportation plan. It only holds if Cuccinelli goes populist. Thus Bolling is not in control of his own destiny here.

    SUMMARY: While it is tricky, a transportation deal with a gas tax phase out seemingly can work for McDonnell if he gets the numbers right. Democrats would be giving up the most, but in 2004, Republicans gave up the most on the Warner tax deal. This how the thing goes. Cuccinelli has the most to win, and thus the most to lose. Presumably he knows that.

    To me, of all the players, Cuccinelli has the best possible move in terms of the potential political upside. It would be out of character no doubt. But he is the underdog, so a tie goes to the front-runner.  Terry would likely make a good deal maker in these kinds of situations. But I don’t how he gets into the game publicly. And even if he does, then he takes on a big risk. Why do it? As for Bolling, he will need to do more than bang the Senate gavel to get into the game. But if he is seen as pressuring or complicating the governor’s situation, it could be fatal.

                                                        Saslaw is playing Santa right now for Cuccinelli. I understand the Democrats’ thinking on user fees and policy. But my analysis says they will have to let it go unless McD makes a huge mistake somewhere in the next week or so. This is why I wrote what I wrote yesterday. For if in the end you are going to have to agree to eliminate the gas tax, why not just “man up” as they say, pass the governor’s plan, block the Cuccinelli move, and basically set it up so that McD would have Terry’s back on taxes and transportation?

                                                            As I run the simulation, it seems a better move politically. But in politics, the wheel is always spinning and the game can change at any moment. Stay tuned.

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