Greetings:

This is the eleventh edition of the New Hampshire Progressive Newsletter for 2009.

In this issue:

Item 1: Probably no one is happy with the proposed State budget that has been prepared by the House Finance Committee. Jobs and programs are being cut, and even with those cuts, several tax increases are part of the plan (cigarettes, gas and the rooms and meals tax). The plan also includes two new taxes: a capital gains tax and a return of the estate tax. I spoke with a Republican the other day, and he said the two new taxes would be terrible for the NH economy. He thought the property tax would be a better way to raise the needed funds. Someone please explain to me why some people think that a progressive tax is bad for the economy, while regressive taxes are good for the economy?

Item 2: A good summary of the budget from AP

Item 3: Op-ed advocating for the estate tax, written by a former state rep who apparently is well off.

Item 4: A bill to delay installation of the mercury scrubbers on the Bow plant gets an unfavorable vote in committee

Item 5: An excellent article on how to respond to right-wing criticism of President Obama’s proposed budget.

Item 6: The #1 priority of organized labor, card check, appears to be in trouble.

1. Budget presents hard choices in tough times By NORMA LOVE The Associated Press

April 04, 2009 - 12:00 am

The vote to reject adding $83 million for school construction aid to the House's version of the New Hampshire budget fell along party lines this week - but not the usual party lines.

In a strange bit of role reversal, Democrats, in the majority for only the third year, voted no. Republicans, whose package of deep spending cuts had just failed, voted yes.

"This feels like Alice in Wonderland," said House Finance Chairwoman Marjorie Smith, whose party had battled Republicans for years to add spending to budgets when it was in the minority.

Nevertheless, Smith and Democrats produced an $11 billion budget for the House to vote on Wednesday that does not include the state's share of promised school construction aid. Nor is the money in the capital budget where Gov. John Lynch parked it.

Democrats on the Public Works and Highways Committee cut the school construction funding to make room for other construction projects, including new bathrooms and a seashell stage at Hampton Beach. If the money is not added at some point, property taxpayers will have to pay the state's share.

The school construction aid is one example of the difficult choices New Hampshire lawmakers face in crafting a budget for the two years beginning July 1. At one point during deliberations this week, Stoddard Democrat Daniel Eaton characterized the budget as "a horrible, a horrible budget."

"No one will be exempt from feeling pain," agreed Smith, a Democrat from Durham.

Gov. John Lynch is unhappy with many of the changes the House made, spokesman Colin Manning said. But Lynch - like Smith - recognizes the document is far from final and has said nothing about vetoing it. If the House approves it, the Senate weighs in and then the two chambers confer over a compromise. The committee's budget spends only $85 million more, or almost 3 percent from general taxes, than the current two-year budget. Some department budgets would be cut to 2008 levels.

It contains few additions, most notably using $117 million in stimulus funding to partially restore aid to municipalities that Lynch had cut in his spending plan. Democrats rejected Republican attempts to restore another $50 million in municipal aid, but did shift some retirement costs from municipalities onto workers by temporarily increasing workers' contribution rates.

Democratic committee members also are recommending increases in existing taxes on dining out, renting hotel rooms, cigarettes and new taxes on gambling winnings, a 5 percent tax on capital gains above $5,000 and an 8 percent tax on estates larger than $2 million. They also proposed freezing an insurance tax scheduled to decrease.

The package also includes a 15 cent hike in the state's 19.6 cent gas tax, spreading the increase over three years on gas and over 9 years on diesel. The tax hike, approved once by the House already, would be in place of a $10 surcharge on vehicle registrations and a series of toll increases Lynch proposed in his plan.

Republican committee members acknowledged they support most of the budget, but felt deeper cuts were preferable to raising taxes. They tried and failed to substitute a $324 million, across-the-board spending cut for the tax increases. They also proposed cutting funding for a conservation program, a deeper cut to the state's share of retirement, cutting $8 million from the courts' budget, cutting higher education aid and funding to a variety of social service programs ranging from cancer prevention to services for the disabled.

Former Republican House speaker Douglas Scamman insisted the combination of taxes will force the wealthy to move to states with more favorable tax laws.

The House plan agrees with Lynch's proposal to close a prison in Laconia and to lay off as many as 250 of the state's 11,500 workers. The House adjusted Lynch's plan to save 20 corrections officers' jobs that would have been lost when the prison closed. About 40 people who work at a school for children with behavioral problems got a reprieve as the House committee rejected Lynch's plan to close the facility on July 1. Lawmakers put another year's funding in the budget.

The committee also restored funding to a catastrophic illness program Lynch had eliminated, added $16 million in funding to reduce the wait by the disabled for services and added funding for senior volunteers, foster grandparents, senior companions, family planning, AIDS services, a cancer prevention program and alcohol prevention and treatment. All received less or no money in Lynch's budget.

The committee decided to study whether to close district courts in Claremont, Milford and Colebrook rather than closing them in July.

The committee also rejected Lynch's plan to give broad authority to the Liquor Commission, but agreed to soften controls on the commission's power to close underperforming stores.

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2. Highlights of House plan

The Associated Press

April 04, 2009 - 12:00 am

Taxes and fees • 35 cent-per-pack cigarette tax hike, to $1.68. Raises $70 million. House and Gov. John Lynch agree on tax. • Under Lynch, tolls would rise 50 cents at Hooksett and Bedford, 25 cents at Dover and Rochester and 25 cents at the Hooksett and Hampton ramps. Fifty-cent increase in main Hampton toll to buy part of Interstate 95. The move would allow the state to offer "open tolling," which allows drivers with E-ZPass transponders to go through the toll without slowing down. Lynch and Executive Council would set toll rates. The House agrees with the changes on I-95, but rejected aggregating turnpike and interstate systems and using tolls to pay for maintenance. • The House rejected Lynch's proposal to reduce E-ZPass discount and cap commuters' monthly fees at $30. House instead proposes a 15-cent hike in 19.6-cent gas tax, spreading the hike over three years on gas and over 9 years on diesel. Increase is in place of Lynch toll plan. • Lynch's $10 surcharge on vehicle registrations to pay for highway work replaced with gas tax by House. • 0.75 percentage point increase in the 8 percent tax on dining out and renting hotel rooms. Raises $40 million. House, Lynch agree. • 10 percent tax on charitable gambling winnings above $600. Raises $16 million. House, Lynch agree. • 5 percent capital gains tax. Exempts $500,000 of home sale. Raises $75 million. House proposed. • 8 percent inheritance tax. Exempts first $2 million. Spouses exempt. Raises $10 million. House proposed. Other highlights • Less than 1 percent across-the-board cut in general-fund spending. • Lays off about 250 workers. Eliminates another 400 vacant positions. Lynch and House would end "bumping" rights that let senior workers whose jobs are cut displace lower seniority workers in other work areas whose jobs require different skills. Most of the layoffs would be in the departments of corrections, health and human services, safety, and cultural affairs. • Closes the state prison in Laconia. Speeds up deportation of illegal immigrants in custody and makes a gym at the Berlin prison into a dorm to handle about 100 Laconia inmates. House agrees with Lynch but cuts corrections' overtime budget $1.4 million to save 20 corrections officers' jobs. • Lynch would close the Tobey School in Concord for students with behavioral problems on July 1, but House proposes delaying closure one year. Students would be taught in home districts or other settings. • House restores the catastrophic illness program Lynch eliminated.

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3. My Turn

Estate tax would be a fair way to raise revenue The rich will still move here and remain here

By MICHAEL MARSH For the Monitor

April 04, 2009 - 12:00 am

New Hampshire is known for low taxes and frugal government, but our low taxes don't extend to everyone. Working people here pay four times more of their income in state and local taxes than do the wealthiest residents of our state. In fact, according to the respected Institute on Taxation and Economic Policy, New Hampshire has the seventh most unfair and unbalanced tax system in the country. One way to make our tax system fairer is to bring back our longstanding tax on very large estates, which was in existence in New Hampshire since the 1930s.

This tax takes a small portion from the estates of the wealthiest residents here and was at one time an important contributor to state revenue. Before 2001 the estate tax and the related legacy and succession tax brought in $30 million to the state annually. But in that year our estate tax and that of most other states was effectively killed by Congress as part of the "anti-death tax" movement. Other states reacted to actions by the federal government by changing their laws, but in New Hampshire we allowed Congress to dictate our tax policy. As a result, an important revenue source that brought in millions in state revenue and funded badly needed social programs disappeared.

The current economy has created unprecedented challenges to our state government. Every revenue source the state depends on is below projections; at the same time the number of people who depend on the state for assistance has increased. To help solve this problem, there is a proposal in this year's state budget to restore our tax on estates that are larger than $2 million (or $4 million for a married couple).

This affects very few of us - more than 99 percent of all estates will pay not be subject to this tax. The size of the tax is modest: The effective tax rate is less than 2 percent for a married couple with $5 million in assets. Charitable contributions are not taxed, and there are other important provisions in the law to protect family farms and small businesses.

Opponents claim that the tax will drive wealthy people out of New Hampshire. It will not, any more than it has made them leave New York, California, Maine, Massachusetts, Vermont or the 27 other states that have already restored their estate tax laws.

People, even wealthy people, choose to live in New Hampshire for many reasons: to be near family and lifelong friends; to participate in New Hampshire's special sense of community; to take advantage of the natural beauty of our four seasons and our wonderful outdoor recreation; and to live in the state that is regularly rated the most livable as well as the safest state in the country.

To argue that a wealthy couple will give all this up because they want to make sure their heirs inherit a percent or two more money someday far off in the future after they are gone is not believable.

Bringing back our estate tax is a modest attempt to improve tax fairness in New Hampshire. It will provide some of the money the state desperately needs to fund our police and judicial system, our public education system, our roads and bridges, and healthcare and other services for low-income children and seniors. While no one likes to pay taxes, this tax will fall on a portion of the population that currently bears the lightest tax burden relative to income.

As one of those who will pay the estate tax, I know that my family and I have benefited greatly from all that New Hampshire has given us over the years. We believe that we have an obligation to future generations to make New Hampshire as wonderful a place to live for them as it has been for us. We realize it will not be so unless everyone who can help is willing to do his or her fair share, and we accept this responsibility. That's why we ask the Legislature to also act responsibly and restore this fair tax.

(Michael Marsh, a former state representative, lives in Greenland.)

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4. Efforts to curb plant upgrade scrubbed Panel

By Chelsea Conaboy Monitor staff

April 03, 2009 - 12:00 am

A Senate panel voted yesterday not to ask the Public Utilities Commission to review whether a $457 million upgrade to the coal power plant in Bow now under way is the best option for ratepayers. Sponsors expected the unanimous "no" vote but were hoping to amend a different bill with a plan that, among other things, required Public Service of New Hampshire to submit a detailed report of the cost of the project. That effort largely failed as well.

The Legislature in 2006 mandated that PSNH install a scrubber to reduce mercury emissions. But the project was estimated then to cost $250 million.

Commercial ratepayers, environmental groups and competitors are challenging the project before the commission and in court, and they have questioned whether keeping the plant online is the best investment for the state.

Some have argued that, in the 15 years that ratepayers will pay for the scrubber, carbon regulations and other environmental laws will make the plant increasingly expensive to operate. Others said that the state would be vulnerable to lawsuits if it reneged on its 2006 mandate and that construction is already under way.

Sen. Harold Janeway, a Webster Democrat and prime sponsor of the bill to review the scrubber, said he wanted more information.

"Obviously, I'm disappointed," Janeway said. "From the very beginning our objective was to learn more . . . about the project in light of all of the changes that have occurred over the last few years, the least of which was the cost. I was thinking, who could argue with that? But then the issue got framed by the opposition as one of jobs and closing Merrimack Station."

Janeway called it ironic that the committee rejected the bill on the same day a NASA climate scientist gave a State House presentation in which he warned against continuing to burn coal for fuel. PSNH and the Building and Construction Trades union mobilized opposition to the bill, saying hundreds of jobs were at stake.

A statement from the commercial ratepayers challenging the project, led by Gary Hirshberg of Stonyfield Farm Yogurt, said the group's intention was not to put jobs at risk. According to the group, legislators would "rather not know" the long-term cost of maintaining the plant, which the group has estimated at more than $2 billion.

"We consider this to be very poor public policy," the statement said.

Sen. Martha Fuller Clark, a Portsmouth Democrat and chairwoman of the committee, said she worked with Janeway, Brad Kuster, who is a lobbyist working with Hirshberg's group, and others to craft the amendment. She said the authors disagreed over which tact to take, which seemed to show in its sprawling nature.

The amendment called for four things: a legislative study committee to examine how information on electricity and its environmental impacts is disseminated to ratepayers; a 19-member advisory board to create a new energy plan for the state; a report from PSNH by June 30 on the progress of the scrubber project, including a detailed description of construction costs; and the addition of a pre-construction review process by the Public Utilities Commission of any modification PSNH makes to its plants. Committee members voted unanimously to approve only the legislative study committee. They heard testimony from state officials worried about the cost of the advisory board and about duplicating efforts already under way by a collaborative charged with implementing the new climate action plan. PSNH President Gary Long called portions of the amendment " disturbing" and said it was "a very obvious attempt to aid the ongoing litigation."

He said requiring a pre-construction review process would have created a "litigation bonanza."

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5. Debt, Deficits, and Deception Monday 30 March 2009

Here it comes - an avalanche of misleading and mistaken "facts" about President Obama's budget. Last week, the House and Senate Budget Committees approved versions of the fiscal 2010 budget resolution, working from an extraordinary proposal by Barack Obama. The House version is fairly close to what the President proposed, while the Senate bill is a bit different - but still 98 percent of what the President requested. This week, the budget will come to the floor of the House and Senate, including votes on a series of amendments to slash or weaken progressive programs. Senator Judd Gregg laid out the conservative talking points against the Obama budget during the Republicans' Saturday radio address:

What concerns many of us are Obama's proposals in the budget he recently sent to the Congress that dramatically grow the size and cost of government, and move it to the left.

It is our opinion that this plan spends too much, taxes too much, and borrows too much.... In the next five years, President Obama's budget will double the national debt; in the next ten years it will triple the national debt....

His budget assumes the deficit will average $1 trillion dollars every year for the next 10 years and will add well over $9 trillion dollars in new debts to our children's backs.

He is proposing the largest tax increase in history, much of it aimed at taxing small business people ... and a massive new national sales tax on your electric bill.

The mud of fabrication and misinformation is so deep, we'll have to peel it off in layers.

Huge Hypocrisy

First and foremost, conservatives are being supremely hypocritical about deficits and debt because their deficits caused the current national debt. Ronald Reagan's tax cuts for the rich and profligate military spending tripled the national debt. George W. Bush's tax cuts for the rich and war spending doubled the national debt. In fact, nearly 80 percent of the current debt - about which conservatives now bitterly complain - was caused by the three most recent conservative presidents: Reagan, Bush Senior, and Bush Junior.

Adding insult to injury, Republican budgets have been notorious for containing gimmicks designed to hide the full extent of their irresponsibility - the most egregious was funding the Iraq war with special appropriations outside of the budget.

This year, President Obama changed all that. His budget described a comprehensive plan covering 10 years. It included contingency funds that may or may not have to be spent. It was, quite simply, the most honest budget ever proposed.

So if you hear someone attack the Obama budget because of the deficits it honestly lays out, first say, "Where were you and your deficit-hawk arguments when George W. Bush turned Bill Clinton's $200 billion budget surplus into a $1 trillion budget deficit?"

Revenue Ruse

Now come the three big lies about revenues. Obama is not "proposing the largest tax increase in history." He is proposing to restore a measure of tax fairness by letting George W. Bush's tax cuts for the rich expire next year. He is proposing to return to the tax policies that were in place during America's great economic expansion of the late 1990s. Under the Obama program, only the rich will see their taxes increase - those with incomes over $250,000 per year. For all the rest of us, our tax rates will decline. In fact, Obama's plan will deliver the largest middle-class tax cut in history.

Similarly, Obama's plan is not "aimed at taxing small-business people." This talking point is based on a fictional definition of a small businessperson invented by the Bush Administration and explained in footnote 1 of this paper. Even using that definition, less than 9 percent of Americans with small-business income make more than $250,000 a year. Only 2 percent are in the top two tax brackets. So at least 91 percent, and more likely 98 percent, of them will see no tax increase at all.

And I'll bet you're wondering, what is this "massive new national sales tax on your electric bill"? There is none. This is right-wing framing for the "cap-and-trade" system that experts insist is the only practical way to get a handle on global warming. This system forces companies to pay for their pollution, thereby encouraging clean, green technologies.

So to review the conservative tax trickery, the truth is that Obama's budget delivers a substantial tax cut to 95 percent of Americans. The only ones who will see their taxes increase are the wealthy - and the corporate polluters!

Debt Double-Talk

We are currently in the worst economic downturn since the Great Depression. Basic macroeconomics tells us that the time to cut deficits is during an economic boom. During a recession, the deficit must increase in order to save jobs and halt the downward slide.

In this context we are supposed to be up in arms over the deficit projections for 2013 or 2019? This is a bit like someone complaining about the lawn not being mowed at a time when the house is on fire, it's just not the first priority. And the media all seem to go along with the charade ...

The moral to this story is that the economy must take priority, not only because the state of the economy is what most directly determines people's well-being, but also because the state of the economy will be the most important determinant of the deficit.

The experience of the 1990s provides an example of exactly this sort of story. In January of 1994 the Congressional Budget Office projected that the deficit in 1999 would be $204 billion or 2.4 percent of GDP. This projection incorporated the impact of President Clinton's tax increase and spending cuts. It turned out that there was a surplus of $125 billion in 1999, or 1.4 percent of GDP. This shift from deficit to surplus of 3.8 percentage points of GDP (equivalent to $540 billion in 2009) was not caused by further spending cuts or tax increases; it was caused by the strong economic growth of the period.

If we spend to build the American economy, long-term deficits will go down. If we don't spend, the recession will linger and deficits will skyrocket. It's as simple as that.

And that brings us to the false argument that cutting the current budget is good for "our children." If we don't invest in our nation's infrastructure, if we don't restructure the pathetic economy handed down to us by George W. Bush and his conservative allies, if we don't create a sustainable health care system, if we don't take necessary steps to achieve energy independence and fight global warming - then we will be placing a terrible burden on our children. For them, and for us, we've got to change course, now.

Absurd Alternative

President Obama challenged his conservative opponents to put up their own budget proposal - or shut up.

After a great deal of hoopla, House Republicans called a press conference last Thursday to issue a 19-page document that they called an alternative budget. But the document contained no spending amounts or deficit projections. None. It's a phony budget.

No doubt the GOP will offer one or more alternative budgets on the House and Senate floors later this week. No doubt they will be just like the alternative Republican stimulus packages in February - full of tax cuts for the rich and spending cuts for the rest of us.

The bottom line is: Conservatives caused this mess and now are running away from any responsibility for cleaning it up.

The writer is a Senior Fellow at Campaign for America's Future and author of the recent book, "Framing the Future: How Progressive Values Can Win Elections and Influence People."

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6. Union Bill's Declining Chances Give Rise to Alternatives Sunday 29 March 2009 by: Alec MacGillis | Visit article original @ The Washington Post

With the prospects for a landmark pro-union proposal looking increasingly shaky in Congress, senators in both parties are seeking other ways to reform labor laws, potentially reshaping what many expected to be a defining showdown of Barack Obama's presidency.

The Employee Free Choice Act, also called "card check," was dealt two blows last week. Whole Foods, Costco and Starbucks proposed a " third way" to reform labor laws that threatened to draw away conservative Democrats from card check. More damaging was the announcement by Sen. Arlen Specter (R-Pa.) that he would reverse his support for the bill.

This has left its supporters struggling to line up 60 senators to avoid a filibuster. Meanwhile, an increasing number of members of Congress are broaching a new question: Is there another way to help out organized labor?

"This is not the time or the place" for card check, said Sen. Blanche Lincoln (D-Ark.), who backed the bill in 2007. "To continue to attempt to bring up something that has already worked its way into being so divisive and distracting is unproductive."

The stakes go beyond the entrenched camps of business and organized labor. In a time of rising anti-corporate sentiment and awareness of income inequality, how Obama and congressional leaders decide to craft pro-union legislation will help determine the outlines of the post-recession economy and the shape of the Democratic Party.

More than a third of private-sector workers belonged to unions in the early 1950s; today, less than 8 percent do. As unions declined in the past three decades, wages have lagged behind rising productivity.

Unions still win more than half of the elections held at workplaces, but fewer organizing efforts are even attempted. Nearly half of new unions do not secure a first contract - the law requires only that employers bargain in "good faith."

The card-check bill would let workers form a union by getting a majority in a workplace to sign pro-union cards, instead of having to hold a secret-ballot election, as most employers insist on; toughening penalties for employer violations; and requiring binding arbitration, similar to that used with public-sector unions, when employers and unions cannot agree on a first contract within 120 days.

Unions say the bill would let workers express their preference free of employer threats and prevent employer stalling during bargaining. Employers say it would expose workers to union intimidation and force them to give up control over how they run their business.

Few expect a true compromise, given how polarized the sides are. But Obama himself has signaled that he is open to alternatives that could gain broader backing, even as he continues to promote support for the bill.

Even many on the business side concede that the laws need updating. The last major reform was the anti-union Taft-Hartley Act of 1947, and complaints about the slow-moving National Labor Relations Board are legion.

"Labor law reform is long overdue," said Mike Asensio, a Columbus, Ohio, lawyer with Baker Hostetler who represents corporations. Joel Rogers, a pro-labor law professor at the University of Wisconsin, called the rules "ossified."

Alternative ideas run the gamut. The retailers' plan leaves out card check and mandatory arbitration but strengthens penalties, proposes fixed election dates to give employers less time to exert pressure and improves unions' access to workers. Unions called it inadequate; business reaction was mixed.

Specter, who faces a primary challenge next year, listed a series of reforms he could support, among them a requirement that elections be held within three weeks after organizers request one, tougher penalties for employers that illegally fire workers and steps to promote bargaining.

Rogers supports card check but said there may be other ways to limit intimidation by employers, such as exceedingly high penalties. "The problem is not secret ballot versus card check, it's the fear that workers have," he said.

But Robert Bruno, a labor relations professor at the University of Illinois at Chicago, doubts reforms short of card check can work. It is unrealistic, he said, to create neutral, civic-style elections in workplaces dominated by employers.

Employers "would have to agree to an environment where they give up a lot of control, a lot of prerogative," he said.

An equivalent debate is underway on the business side. Although some warn against any compromise, others say that if Congress does not take up limited reforms, card check could get a second wind. Specter himself warned of this, saying in an interview that if he loses in his primary to his conservative rival, the Democrats will definitely win his seat and gain a 60th vote.

"The business community has to look at the potential for my not being there after 2010," he said. He also amended part of last week's statement, in which he had said he might support card check in the future if lesser reforms do not work. He said in the interview that was intended only to encourage serious labor reform and that he would never vote for card check.

David Radelet, a Chicago lawyer who represents corporations, said Specter's 2010 warnings should be heeded. "It does create pressure for the business community to get something done now," he said.

Keith Smith, director of employment policy at the National Association of Manufacturers, said his group is asking its members which reforms they might accept. "We're going to see something again soon. It's all a matter of what it will look like and how it will move," he said.

Union leaders say they can still get 60 senators by amending the bill in committee but without undermining its fundamentals.

Business groups warn against this and say the debate will not advance until union supporters scrap the bill and start over. "If they make it all or nothing, they enhance their chances of getting nothing," Asensio said.