The PJ Tatler

What Happened, Bob?

Governor Bob McDonnell (R- Virginia) went from rising star – and a possible running mate for Mitt Romney – to a pariah within the conservative movement in less than four years.  Granted, Virginia governors aren’t allowed to run for consecutive terms in office, but he managed to construct policies that resulted in the largest tax increase in the commonwealth’s history.

He has remained firm against the Medicaid expansion, which is the most expensive provision of Obama’s health care law.  However, as John Fund wrote for National Review on February 22, 16 of the 20 Republicans in the state senate voted for the budget that would allow for such an expansion.

Virginian Republicans have decided that Medicaid expansion isn’t as important as the fiscal battle over how to pay for increasing the state’s transportation bills.

According to Erick Erickson of RedState:

The initial McDonnell package amounted to a $2.4 billion tax increase over five years. By the time the Virginia legislature was done with it, it had exploded into a $6.1 billion increase. These tax hikes include:

  • Sales tax hike from 5 to 5.3 percent
  • Additional sales tax hike of .7 percent in Hampton Roads and Northern Virginia
  • Personal property tax hike from 3.5 percent to 4.3 percent
  • Tangible personal property tax hike to 5 percent
  • 3 percent Northern Virginia hotel tax
  • Diesel tax hike from 17.5 cents per gallon to 6 percent tax on wholesale diesel, roughly a 5 cent per gallon increase
  • Car tax hike from 3 percent to 4 percent in 2013, 4.1 percent in 2014, 4.2 percent in 2015, and 4.3 percent in 2016 (Remember when Republicans got elected in Virginia by saying we should get rid of the car tax? Good times.)

The legislative package wasn’t even posted online for Virginians to read before it was voted through. Oh, and that’s not all: if Congress rejects the federal internet tax scheme McDonnell supports (McDonnell apparently, like Maryland Gov. Martin O’Malley, now supports the tax on every iTunes download), the tax on wholesale gasoline in 2015 will increase from 3.5 percent to 5.1 percent, without a provision to revert back. In other words: this tax burden could get even worse if Republicans on Capitol Hill don’t go along with Bob McDonnell’s tax raising ways.

What tells you that Bob McDonnell isn’t really a conservative is that there was never any interest on the part of his administration in finding funding for roads through cuts or privatizing state services. Contrast this with what a real conservative does, like Wisconsin’s Scott Walker – when a state commission recommended he raise the gas tax to pay for roads, he said he’d sell off state property and privatize other functions to pay for it rather than raise taxes. McDonnell was never interested in doing that.

But it gets worse. Because McDonnell was so desperate for this gigantic tax hike, he was willing to wheel and deal on Obamacare, too.

Senate Democrats in Virginia sensed that McDonnell was desperate. He needed their votes to pass his proposal since enough Republicans refused to go along with him. So they demanded more from McDonnell. They insisted they’d only vote for the tax hike if they got to expand Medicaid under Obamacare, something McDonnell had just days earlier swore he would not do.

But we already know McDonnell’s word is meaningless. So he wrote a letter saying he’d support a state commission to expand Medicaid instead, paired with “cost cutting reforms” and impossible-to-enforce commitments from the government and the like. It was just more meaningless talk to get political cover for expanding the worst-run entitlement program in the country. Leadership on both sides will make sure the bicameral commission will be nothing but a speed bump towards expanding the program and exploding the same program whose outcomes are so awful, a University of Virginia study recently found you were more likely to die on the table as a Medicaid recipient than if you had no insurance at all.

In other words, Bob McDonnell was so desperate to raise taxes, he was willing to sell out on Obamacare, too. He was willing to sell out his party, his base, and his principles. And he did it with a smile.

This little maneuver by the Governor has only added more obstacles in front of Virginia Attorney General – and 2013 gubernatorial candidate – Ken Cuccinelli.  The Washingtion Times wrote yesterday that, “National Review Online editorialized that the bill is politically ‘problematic,’ putting Attorney General Ken Cuccinelli, who’s running for Mr. McDonnell’s seat, in an awkward position. Mr. Cuccinelli opposed the transportation plan, but his opposition, Democrat Terry McAuliffe, favored it. [Cuccinelli] could have used an assist from his party, rather than another hurdle, the site said.”

What is Bob so squishy?  Why did he opt for the quick liberal move of just raising taxes?  Fund added:

Grover Norquist, the president of Americans for Tax Reform, says the Virginia tax binge is even more disappointing in light of what other states are doing. “North Carolina, Louisiana, Kansas, and Nebraska are trying to eliminate their state income taxes,” he notes. “Ohio, Oklahoma, Indiana, and Wisconsin are cutting their income taxes. Florida and Texas are cutting their sales taxes because they have no income tax. All of these states have roads, and elected officials that stand with taxpayers rather than against them.”

Indeed, there are many creative ways that Virginia could restructure its budget to ensure there is enough money for transportation. The state has run a $1.2 billion surplus over the last three years, but the surplus was not returned to taxpayers; it went into a rainy-day fund. The legislature saw fit to spend less than 7 percent of that rainy-day fund on transportation. Gabriel Roth, who worked on transportation economics for 20 years at the World Bank, told National Journal that the governor’s plan “places highway financing in the hands of Virginia’s politicians, whose recent experience in financing transport infrastructure has been unfortunate.” If you can’t prioritize roads when you have unexpected revenue surpluses because the economy grew faster than you were planning, when can you prioritize roads? Previous tax increases in Virginia were sold on the premise that they would be dedicated to either roads or education, but lawmakers did not follow through on those promises.

What Virginia needs is a sweeping tax reform, one that recognizes that the state has a 21st-century economy burdened by an archaic corporate- and personal-tax system that badly needs streamlining.

However, these are things we should expect from a conservative in office, not Bob McDonnell.