Monday, January 28, 2013

As Governor Pence Leads State Towards Income Tax Cut, Indy Republicans Unite to Wipe Out Pence Tax Cut with Huge Tax Increases

Governor Mike Pence campaigned as a fiscal conservative, promoting a "road map" that called for a 10% income tax cut.  Once in office, Pence immediately lived up to that pledge calling for the tax cut despite some push back in his own party.  Governor Pence understands that to control spending you have to limit how much money government is taking from its citizen.  That is Republican Politics 101.
Governor Mike Pence

As Pence and his family settles into the Governor's Mansion in Indianapolis, he will find local elected Republicans not following his tax-cutting lead and, in fact, heading in completely the opposite direction.  The Mayor's Office and members of the Indianapolis City-County Council have united to push through a 50% increase in car rental tax and a 67% increase in the admissions tax on all events held at CIB facilities.  Instead of that money going to general revenues, 75% of it will go into the already-flush coffers of the Capital Improvement Board which runs the City's sports facilities and convention center. The CIB is expected to use the increased revenue to push for a publicly-funded downtown soccer facility which the CIB will no doubt pay to run while giving the profits to the private owners.  In addition, a administration-backed measure has been introduced in the Indianapolis City-County Council to repeal the local homestead tax credit.  Finally, a 19% increase in the local income tax for a major mass transit plan is being advocated..  A fiscal analysis of the plan already shows the local income tax being insufficient for the transit plan and would have to eventually be raised more. That's not to mention tax dollars that will be coming from the state and federal government, all of which tax dollars originate from taxpayers.  Taking the money from a different pocket of the taxpayer doesn't change the fact that the money is coming from the taxpayer.

Although many of the local Democrats support these massive local tax increases, the astonishing thing is that local Republicans have cast aside Pence-style fiscal conservatism to support these tax increases.  Few objecting voices are heard in the Republican caucus.  Northside Republican Councilor Christine Scales, one of the few fiscal conservatives on the council, may attempt to buck her caucus and oppose some of the tax increases.  But in the past her independent streak has only made her a target of party retaliation and resulted in her getting a well-funded Democratic opponent in 2011 who strangely campaigned against her on the basis she was not sufficiently supportive of Republican Mayor Ballard's tax/fee increases and spending on corporate welfare instead of city services.

Councilor Christine Scales
Republican Scales is not the only one targeted for speaking out for fiscal conservatism.  Michael Kalscheur, a Republican member of the Perry Township Board and 2011 candidate for at-large City-County Council was on his way to winning the vacancy left in District 23 when incumbent councilor Jeff Cardwell moved on to the Pence administration.  Prior to the caucus at which the vacancy was being filled, Kalscheur made the mistake of telling the truth - that as a fiscally conservative Republican he had a problem with the massive tax increases being proposed by Mayor Greg Ballard.   Faced with the possibility of a Republican being on the council who wouldn't support large tax increases, the local GOP establishment quickly recruited Jefferson Shreve a businessman and large political contributor, to replace Cardwell instead. Saturday Shreve won the caucus and immediately pledged to support the proposed tax increases.  It now appears that Shreve, a longtime resident of Bloomington, may very well not satisfy the two year residency requirement to sit on the council.

After graduating in 1986 from the Indiana University at Indianapolis Law School, Pence did the wise thing and moved back to his more rural roots.  In that environment, Pence built a political career by being a strong conservative, both on fiscal and social issues.  Pence, however, will find that the Indianapolis GOP establishment isn't fueled by conservatism   I remember in 1986 when I first started going to GOP meetings in Indianapolis.  I expected to find like-minded conservatives.  Instead I found people who had Pence-type conservative views were often ridiculed by Indianapolis GOP establishment types for their beliefs.  The view of the establishment was that government was about getting power for personal profit, not standing up for taxpayers or for conservative beliefs.

But conservatism makes the grass roots of a GOP strong.  Conservatism is what motivates most Republicans to become involved in the party and do the grunt work needed to help elect candidates and make the party successful.  Since my initial involvement in 1986, the formerly strong grass roots Marion County GOP organization has disintegrated.  The local GOP organization is now a shell of its former self, a top heavy organization that rules by controlling the slating process while ceding more and more elected offices to the Democrats.  You talk to local conservatives living in Marion County today and they are almost universally unhappy with the liberal direction of the local GOP.

Pence's fiscal conservatism, epitomized by his income tax cut proposal, is in a sharp contrast with the local GOP establishment clamoring to greatly increase local taxes to fuel more spending.  While Indiana's constitution calls for a great deal of home rule, there may be a point where Pence has to assert himself into Indianapolis GOP politics to stop the seemingly limitless liberal taxing and spending that threaten to undercut his conservative philosophy.


Nicolas Martin said...

I do not understand why profligate spending is considered "liberal," when conservatives historically spend at least as much, and more in Washington.

To quote the American Enterprise Institute's economist-demographer Nicholas Eberstadt:

"In current political discourse, it is common to think of the Democrats as the party of entitlements, but long-term trends seem to tell a somewhat different tale. From a purely statistical standpoint, the growth of entitlement spending over the past half-century has been distinctly greater under Republican administrations than Democratic ones. Between 1960 and 2010, the growth of entitlement spending was exponential, but in any given year, it was on the whole roughly 8% higher if the president happened to be a Republican rather than a Democrat.

Have all the Republican presidents since 1960 been more "liberal" than the Democrats have? No. The Republicans have just been bigger and less responsible spenders. So, let's sweep the myth of tight-fisted Republicans aside. It is a lie, in the main.

Nicolas Martin said...

Was the conservative deity Reagan the exception to big spending Republicanism? Nope. This 1988 article tells some of the story:

Even Ford and Carter did a better job at cutting government. Their combined presidential terms account for an increase of 1.4%—compared with Reagan's 3%—in the government's take of "national income." And in nominal terms, there has been a 60% increase in government spending, thanks mainly to Reagan's requested budgets, which were only marginally smaller than the spending Congress voted.

The budget for the Department of Education, which candidate Reagan promised to abolish along with the Department of Energy, has more than doubled to $22.7 billion, Social Security spending has risen from $179 billion in 1981 to $269 billion in 1986. The price of farm programs went from $21.4 billion in 1981 to $51.4 billion in 1987, a 140% increase. And this doesn't count the recently signed $4 billion "drought-relief" measure. Medicare spending in 1981 was $43.5 billion; in 1987 it hit $80 billion. Federal entitlements cost $197.1 billion in 1981—and $477 billion in 1987.

Foreign aid has also risen, from $10 billion to $22 billion. Every year, Reagan asked for more foreign-aid money than the Congress was willing to spend. He also pushed through Congress an $8.4 billion increase in the U.S. "contribution" to the International Monetary Fund.

His budget cuts were actually cuts in projected spending, not absolute cuts in current spending levels. As Reagan put it, "We're not attempting to cut either spending or taxing levels below that which we presently have."

The result has been unprecedented government debt. Reagan has tripled the Gross Federal Debt, from $900 billion to $2.7 trillion. Ford and Carter in their combined terms could only double it. It took 31 years to accomplish the first postwar debt tripling, yet Reagan did it in eight.

When the Democrats vacate the White House, the Republicans have their hands even deeper into the till. But they lie endlessly about their intentions and practices. Without it anti-big government myth, the Republican party would cease to exist.

Flogger said...

Pence could object to the Crony-Capitalism that pervades Marion County, in the form of CIB. I will not hold my breath waiting for that happen.

I feel certain that when the CIB needs more "help" from the State, Pence will not stand in the way.

Pete Boggs said...


Paul K. Ogden said...


I hate it when people talk about the Presidents spending money. Congress does that. Trying to analyze how much is spent under a President's term makes no sense if you don't look at which party controls Congress. If Reagan had a Republican House, which he never did, of course there would have been a lot less money spent during his tenure.

You're certainly right about defense spending. Republicans generally want to expand it while Democrats generally want less. But the notion that the Republicans are as in favor of social spending as Democrats is utterly preposterous.

Nicolas Martin said...

In his two terms, Grover Cleveland exercised 584 vetoes and just 7 were overridden. This is how a president effectively controls spending.

In his two terms Reagan had a paltry 78 vetoes and G. W. Bush a mere 12.

It is disingenuous to suggest that presidents cannot control spending when they can wield the rapier veto if they choose.

Downtown Indy said...

I just can't figure out why the city needs to increase taxes, what with the fact we are supposed to be in a permanent economic boom thanks to the cashflow from pro sports.


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