Venturing capital, or, If not this, then what?

When people on opposite sides of the ideological divide are skeptical about something, you too should be skeptical. (When they agree on something, you should also be skeptical, but that’s a subject for another day.)

Milwaukee Magazine’s Bruce Murphy and the Milwaukee Journal Sentinel’s Patrick McIlheran are similarly skeptical about the venture capital bill in the Legislature. So is Thomas Hefty, who has for years campaigned for a better business climate in this state.

One reason for our business climate problems is the small amount of venture capital — money invested in companies that usually fit in the “high risk/high reward” investment category. Promoting venture capital was part of nearly every economic development study conducted in 2010 in advance of the election.

The Milwaukee Journal Sentinel reports:

The program is called the Jobs Now Fund and represents part of the $400 million Wisconsin Jobs Act. It aims to jump-start job creation in Wisconsin by promising $200 million in future tax credits in exchange for $250 million raised from insurance companies.

The money would be invested in Wisconsin businesses through management companies known as certified capital companies, or “CAPCOs.” …

In written testimony submitted for the hearing, Tom Hefty, the former chief executive of Blue Cross/Blue Shield of Wisconsin, called the program “the largest special interest Wisconsin tax cut in history masquerading as an economic development initiative.”

The $200 million in tax credits would never have to be repaid to the state. The payback, supporters say, would come from the job creation and business growth that would result from the investments.

There is no question this state needs more business investors. Not only have we lagged the national average in personal income growth for the past three decades, but we are low on business start-ups as well. (And for all the left’s braying about the evil “rich,” Wisconsin has very few people who could be defined as really “rich,” which helps show the state’s economic problems as well. The fact that the really “rich” can be named by those who pay attention to such things shows we don’t have nearly enough of them.) The question is how to encourage business investment, particularly in the fast-growth companies that were meant for venture capital.

Wisconsin Technology Council President Tom Still explains how the bill would work:

 The bill would create two funds totaling $400 million under the umbrella of a new Wisconsin Venture Capital Authority. The complementary funds — the Jobs Now Fund and the Badger Jobs Fund — are designed, respectively, to address Wisconsin’s short-term and long-term investment needs.

The proposal builds on the success of the widely acclaimed and often duplicated Act 255 Tax Credits, which were passed in 2005 and enhanced in 2009. Those tax credits have helped enhance early-stage investing in Wisconsin — but largely at the “angel” capital level, thus creating a need for follow-up investing by venture capital firms in emerging companies.

The credits helped spawn angel networks across Wisconsin, and those networks have dramatically increased both the number of deals and the dollars invested in those deals. But many angels are tapped out. They need “exits” — company mergers, acquisitions or venture investments — to recoup their money. And the companies in which those angels have invested are struggling to survive.

Senate Bill 94 would create the Wisconsin Venture Capital Authority and two funds:

The Jobs Now Fund is envisioned as rapid-response fund. It would issue $200 million in tax credits to insurance companies over time in return for investments in certified capital funds. The tax credits would be for 80% of the value of the investments made, so $200 million in credits could attract $250 million in investments. The credits could not be claimed for a minimum of five years, so the money would be put to work well before the credits are paid. It would invest only in Wisconsin companies that meet specific guidelines. In other states, this approach is called a “certified capital company,” or CAPCO, approach.

The Badger Jobs Fund is the longer-term tool. It would invest in qualified venture capital funds on a “fund of funds” basis. The authority could issue up to $200 million in private placement bonds for the Badger Jobs Fund, with the bonds supported by investment returns, the incremental growth of state tax collections from financed companies and contingent tax credits. Bonds would not be a debt of the state, and no more than 15% of the funds could go to any single venture capital firm. For every $1 a qualified venture capital fund receives from the Badger Jobs Fund, it would need to raise $3 on its own.

Murphy goes so far, commenting on the Journal Sentinel story, as calling the Jobs Now Fund a scam:

… the law allows the CAPCOs to keep all the money invested in them by the state, plus 80 percent of the profits generated.  Critics have called it a “massive corporate giveaway,” [reporter Kathleen Gallagher] writes.

One new point in her story is a Minnesota study of Wisconsin’s earlier CAPCO program, which found that rather than increasing it may have actually displaced the total amount of venture capital funding in Wisconsin. …

The language of the bill is quite convoluted, and most legislators never understand it.  I’d love to hear a detailed explanation of the Wisconsin bill by its sponsors, Sen. Randy Hopper (R-Fond du Lac) and Rep. Gary Tauchen (R-Bonduel).

The CAPCOs have a set game plan and typically grab all the state funding before any real venture capital companies can get a dollar of it. “Local venture capital people often support the bill because they think they’ll get the money,” says [Rutgers University Prof. Sass] Rubin. “But they never do. It’s a con.” …

Rubin cites an earlier law passed in Wisconsin, a 25 percent tax credit for angel investors, as a far more sensible way to go. “It’s just enough money to encourage investment, but you’re not screwing up the market and becoming the only reason they invest.”

Rubin’s aforementioned position happens to dovetail with a previous Murphy column that describes CAPCOs thusly:

Wisconsin previously passed a CAPCO bill in 1998 which created a $50 million venture capital fund.  Normally, experts say, a venture capital fund attracts money from investors, invests it in start-up companies and then returns the principal plus 70 to 80 percent of the profits to the investors. But under the CAPCO model, the state was the investor and got nothing back: None of the profits flowed back to it, and none of the principal was returned.

The state Legislative Audit Bureau found it cost $90,000 per job for that CAPCO program. That’s an outrageous cost, but actually better than the experience in most states. Florida spent $150 million and lost 150 jobs. New York spent $280 million but lost 88 jobs.

A study done for the National Association of Seed and Venture Funds found that state subsidized CAPCOs  gained  “10 times the return” of unsubsidized companies.

One problem is that your favorite lefty (go here and find the list under “Left” for starters) inevitably describes anything that promotes business development, including business investment, as a giveaway for the “rich.” The same people President Obama has been ordering to hire more employees are the same people accused of trying to run the state (the Koch brothers, owners of Georgia–Pacific, one of this state’s largest employers), ruin the state (any business that objects to the overregulation of the Department of Natural Resources), or rob the state (any business person who complains about the state’s tax hell, as in the fourth highest state and local taxes in the U.S.).

Tax credits for business should not be used because businesses should not be taxed on their income. The benefits of a profitable business — employees being paid, customers being served and contributions made to their communities — are sufficient to our society if a business was not taxed on any of its income. And businesses don’t pay taxes anyway; every tax assessed on a business — corporate income taxes, personal property taxes, payroll taxes, and taxes to fund Unemployment Compensation, among others — is part of what the business charges for its products or services. Every dollar of cost government dumps upon a business means one less dollar that can go into employee salaries, into owner dividends (and half the households in this country are in the stock market, directly or indirectly), or back into the business.

McIlheran identifies the specific problem and the general solution:

The plan would offer $200 million in future tax credits to insurers not because anyone likes them but because they’re giant pools of investment money. They’d put up the cash, $250 million, that other management companies would parcel out to entrepreneurs, and the tax credits would ensure they wouldn’t lose their shirts. The credits are a lure, nothing more.

Still, why the special inducements? Why the tax gimmicks, which are what high-tax, regulatory hells offer? Why not stick with the program of making taxes more reasonable generally and regulation more rational for all? Sen. Glenn Grothman called it “the most dubious giveaway I’ve seen since I’ve been in the legislature,” and Tom Hefty, Mr. Business Climate, calls it suspect. Experts get quoted by the Journal Sentinel as saying it’s a deal of dubious worth.

Hit the brakes. Read the prospectus carefully, as they say in those ads, because if forgoing future tax revenue is to be considered an investment in luring capital to Wisconsin start-ups, it isn’t an investment that state lawmakers have spent enough time examining.

The “tax gimmicks, which are what high-tax, regulatory hells offer,” were the preferred approach of the Doyle Administration. They worked well for the companies that were able to take advantage of them. They were better than no tax incentives at all, but the state’s business climate certainly did not improve during the 2000s. Had the state’s business climate improved at all, then the trend of per-capita personal income growth trailing the nation’s, which started during the Patrick Lucey administration (for those ignorant of Wisconsin political history, Lucey was governor in the 1970s), would have ended during the Doyle administration. It hasn’t.

There is also a potential problem with any kind of state-sponsored venture capital approach that has been demonstrated  by the alternative energy industry in the past few years. The Obama administration has offered huge amounts of tax credits to encourage use of wind and solar power and other green energy technology. People and businesses take advantage of the tax credits, and then when they expire, business drops off the face of the earth, so to speak. And one should hesitate when the government anoints a preferred business sector (in the present case, any business with the word “green” in its title), because government operates on politics and not on what is the best potential investment.

I do not believe the proponents of this bill are trying to perpetuate a scam on the state. I think there are reasonable objections to what they propose that are more meaningful than the reflexive anti-business attitude we’ve seen in this state for far too long. It is, for one thing, easier to pass one bill than to pass an entire program, contained within several pieces of legislation, to eliminate business taxes, cut personal income taxes, reduce regulation and defang the regulators. That is what needs to happen in Wisconsin.

When I started opposing the drug war

As I age, I’ve discovered that I am prone to getting sinus infections from the bug du jour, from things growing, or from wherever else, thanks probably to my amazing luck in inheriting bad sinuses from both of my parents. I rarely go to my doctor for treatment, because I don’t believe in running to doctors every time I get a malady, and I certainly don’t believe in taking antibiotics to fix every cold I have.

The only thing that provided real relief for my sinus maladies is pseudoephedrine, found in such products as Sudafed, Mucinex D and Claritin. I’ve tried several alternatives, but products with pseudoephedrine are the only thing that allows me to breathe without causing excessive drying (a problem for those of us who wear contact lenses), or the other effects of antihistamines. Pseudoephedrine has been used for years for those who suffer from allergies and prefer not to take medications that induce drowsiness.

But pseudoephedrine is one of the ingredients of methamphetamine, thus requiring, in the mind of legislators continually running for reelection, bold and decisive action to prevent the ill among us from getting relief without running to the doctor … I mean, to protect us citizens from the scourge of meth-heads invading Wal–Mart for ingredients for their next fix.

2005 Wisconsin Act 14 requires that pseudoephedrine be sold only by pharmacists or employees working under registered pharmacists, and that no one can purchase more than 7.5 grams within a 30-day period without the approval of a physician, dentist, or veterinarian. The pharmacy is required to get photo ID from the buyer, and must record the buyer’s name and address and how much he or she purchased; those records must be kept by the pharmacy for two years. Similar legislation was passed by Congress as part of the renewal of the Patriot Act in 2006.

This law — unanimously passed in the Senate and passed 92–6 in the Assembly, which means there is bipartisan blame — is an inconvenience, to say the least, to the ill, in addition to being a burden on business. In the week I started at Marketplace in 2008, I (1) was barred from purchasing the correct medication because the pharmacy was closed even though the store was open; (2) had to have my wife get it with the usual legal third degree, and (3) stood in line at another pharmacy with other sick people so that I could buy a medication that does not require a prescription. Can’t sleep because you can’t breathe? To quote a former coworker of mine, then it sucks to be you.

I suppose I should be grateful that I can still get pseudoephedrine, since Oregon, where this began, makes pseudoephedrine available only by prescription. As it is, cold medications with pseudoephedrine are now not available in any store that doesn’t have a pharmacy, which includes most grocery stores and convenience stores — a case of government telling businesses what they can and cannot sell to their customers. Some countries are phasing out pseudoephedrine. Drug manufacturers have also removed pseudoephedrine from some cold medications or replacing it with phenylephrine, which does not work.

This is all because meth is the current popular target in the “war on drugs”: “With the help of the press, they're once again frightening the public with tales of a drug so seductive it instantly turns masses of upstanding citizens into addicts who ruin their health, their lives and their families,” wrote the New York Times’ John Tierney in 2005, when state legislatures were falling over each other trying to regulate pseudoephedrine. This is the same non-thinking that has helped turn flying into such a drill-holes-into-your-skull experience, when grandmothers and babies are subject to random searches because they could be terrorists. A 42-year-old man who can barely breathe apparently is a potential meth-head, so let’s inconvenience everyone and invade the privacy of the ill for this supposed wave of the use of the popular drug of the day.

The rationale, as always, is that, to quote Hillary Clinton, “We’re going to take things away from you on behalf of the common good.” Or, to quote U.S. Sen. Evan Bayh (D–Indiana), who sponsored the Senate bill, “Your ordinary, law-abiding citizen isn’t going to object.” Evidently Bayh feels no need to be bothered by constitutional rights.

Or whether pseudoephedrine overregulation will actually work. Just one-fifth of the meth in this country is domestically produced, which means this law will do almost nothing to combat meth use. There is always a way for the motivated druggie to get more drugs — in the case of meth, from Mexico (whose organized crime has gotten quite a shot in the arm, so to speak, from efforts to curb domestic production, according to the New York Times), or by purchasing the ingredients on the Internet.

This, as usual, does nothing to curb the demand for illegal drugs. And, as always, the Law of Unintended Consequences applies: Burglaries in one Iowa county “skyrocketed,” according to the New York Times, after a state crackdown on large meth labs, since what cost $50 to make on a stovetop ended up costing $800 to $1,500 on the street. And the more profit there is in an illegal activity, the more incentive there is to commit crime to support or fund that illegal activity.

Using the same logic, the state should ban alcoholic beverages, since alcohol leads to drunk driving. Then again, perhaps I shouldn’t have written that, since a Missouri legislator in 2007 proposed similarly heavily regulating a key ingredient in crack cocaine … baking soda.

This is an issue of the trade-offs between societal liberty and safety (which has been happening since before 9/11, but has been more noticeable since 9/11) more than the personal freedom to use the controlled substance of your choice. It is also an issue of the effectiveness of those trade-offs. Infringing on everyone's liberty to not particularly improve safety is not a trade-off we should be making.

Patrolling the state budget

Three years ago in Oconto, I met state Sen. Dave Hansen (D–Green Bay), who made a valid point about those of us who believe government spends too much money.

Hansen correctly pointed out that many people advocate that government spend less money without saying what they specifically prefer less government spending.

My proposed budget cut would not only save money, but provide a particular and popular function of government much more efficiently: Eliminate the Wisconsin State Patrol.

The State Patrol is an oddly designed function of state government, because the State Patrol is not a law enforcement agency in the same way that county sheriff’s departments are, or for that matter state police departments in other states. The State Patrol, which is part of the state Department of Transportation, “enforces criminal and traffic laws, conducts criminal highway interdiction programs, and helps local law enforcement agencies with traffic safety, civil disturbances and disasters (natural and man-made).”

In other words, the stormtroopers of the state highways enforce the laws created by the busybodies in Madison and Washington, including mandatory seat-belt laws at a time when any idiot ought to realize they are safer wearing belts than not, to ridiculous levels, such as, in one case I was told by a trusted source, ticketing someone for driving 3 mph — yes, 3 mph — faster than the speed limit. The State Patrol also operates the state’s truck weigh stations, which rarely seem to be open whenever I drive past them.

State troopers (the State Patrol is authorized to have 399 of them) are sworn police officers, but they have no police responsibilities that aren’t related to motor vehicles, and they are legally subordinate to the county sheriff. (Like all bureaucracies, though, the State Patrol is looking to grow itself, having created a K–9 unit for which it had no legislative authorization. And like other bureaucracies, the State Patrol has a public relations arm that distributes news releases and creates pretty-looking reports in which it takes credit for things for which it doesn’t deserve credit, including a drop in traffic crashes.)

The State Patrol might have more of a reason for existence if its jurisdiction were limited to the state’s four-lane highways, the most traveled roads in the state, but that is not now the case. There is no evidence that crime in Wisconsin (particularly crime of a statewide nature) is at such a level as to warrant expanding police powers to the State Patrol, either.

Other than inspecting tractor–trailers and operating the State Patrol Academy, there is nothing the State Patrol does that county sheriff’s departments don’t do, and could do more efficiently with dollars the state currently spends on the State Patrol. That is already occurring in one place, in fact: The State Patrol is really the State-Except-Milwaukee-County Patrol, because the State Patrol has no responsibilities to patrol Milwaukee County freeways, and if they don’t patrol the freeways of the largest metropolitan area in the state, what is their purpose?

The State Patrol has done two things that stood out over the past year: (1) What appeared to be most of them patrolled the roads around the PGA Championship in August, and (2) they provided security at the State Capitol during Protestorama earlier this year. As for the latter, you won't be surprised to know state troopers are unionized. They should not be, since no government employee should be in a union, and the protests of earlier this year demonstrated why. Moreover, do you really want law enforcement intervening in a political dispute?

Interestingly, I've talked to a lot of people about this idea over the past few years — elected officials, political observers, and taxpayers. I've yet to have a single person who didn't have some direct connection to the State Patrol say that this was a bad idea, particularly the part about giving the money the state spends on the State Patrol to county sheriff's departments. (Perhaps that State Patrol PR arm isn't working so well after all.)

At this point, I’d like to tell you that the state spends X dollars on the State Patrol. I can’t do that, because the State Patrol’s budget is well hidden within the Department of Transportation budget. I do know that county sheriff’s departments, which are responsible for their own counties instead of the whole state, would spend dollars being used on the State Patrol more wisely. In fact, that already happens in Milwaukee County, which gets $3 million in state funds to patrol Milwaukee County freeways.

Gov.  James Doyle once proposed creating a state police force under the Justice Department, which would have combined the State Patrol, the Justice Department’s Division of Criminal Investigation, and the Department of Administration’s Capitol Police and State Fair Park Police. Such a department perhaps could include the University of Wisconsin police departments on the Madison, Oshkosh, Eau Claire, Milwaukee, Parkside, Platteville, Stout and Whitewater campuses. (I’ll pause while you mull over that bureaucratic snarl.)

That is one of those ideas that seems good in theory until you consider one fact: That statewide police department would be run by the Attorney General. Doyle, who was elected attorney general in 1990, and his one-term successor Peg Lautenschlager grossly politicized the Justice Department as Democrats seem to want to do. The history of Democrat Kathleen Falk, a former associate attorney general and public intervenor (the taxpayer-funded anti-development bottleneck that no longer exists), indicates that that would have continued had Falk not (fortunately) lost to Republican J.B. Van Hollen in 2006. (Unfortunately, though that position doesn't exist, there is an assistant attorney general whose job is to harass businesses over picayune environmental law disputes. That person's name? Joanne Kloppenburg.) Doyle and Lautenschlager did nothing to assist actual working law enforcement, but did wander off into areas that, whether or not you agree with their positions, were not about law enforcement.

Those who are not conservatives should be concerned as well about law enforcement being run by elected officials. (Am I saying sheriffs shouldn't be elected either? That's a valid argument, in fact; at a minimum, sheriff positions should not be partisan offices. Enforcing the law should not depend on whether the chief law enforcement officer is a Democrat or a Republican.) We all know that elected officials pander to voters. That reality makes one wonder if the law can be enforced fairly and effectively by someone who does what politicians do to keep their offices.

It is one thing to have a statewide investigative force for crimes of a statewide or specialized nature. (The Division of Criminal Investigation could be said to serve as Wisconsin's FBI right down to the "special agent" position names.) That is not what the State Patrol does. Either the State Patrol should have its responsibilities expanded, or it should be disbanded. In an era of state budget crises that are bigger than widely believed but not rampant statewide crime, the latter is the preferred route.

In case you missed it ...

My appearance on "Sunday Insight with Charlie Sykes" on WTMJ-TV in Milwaukee can be seen here. The show featured breaking news (Herb Kohl's upcoming retirement, which pushed school choice off the agenda) and a guest who forgot to take off his visitor name tag before the open. (That's called a "continuity error" in film.)

The other thing is that this might be the last "Sunday Insight" show (among other things) of all time ... if this guy is right. (See the Winners and Losers segment to see what I mean, or read this blog Friday.)

After Kohl

U.S. Sen. Herb Kohl (D–Wisconsin) announced Friday that four terms in the U.S. Senate was enough. (Which means you can ignore this.)

Kohl was in the Senate for four terms, you ask? How can you tell?

Part of me says I shouldn't be critical of Kohl for two reasons. First, he did note $25 million of the $72 million cost for the University of Wisconsin's Kohl Center, one of the premier college sports facilities in the U.S., particularly compared to the UW Fieldhouse, which had great views from the front of the upper deck and little else to recommend it.

Second, Kohl probably didn't do any damage to the country, unlike former U.S. Sen. Russ Feingold (D–Wisconsin), whose McCain–Feingold campaign finance deform bill ushered in the era of the nasty campaign ads we all enjoyed in 2010 and violates the First Amendment. Better inaction than the wrong action, I suppose.

Having written that, Kohl was sort of the unflavored gelatin of Wisconsin politics — inoffensive for the most part, yet ineffective. I wrote in the 1990s that with Kohl's lack of noticeable accomplishment for the state and Feingold's fixation on campaign finance deform, I wondered when Wisconsin gave up the right to have U.S. senators.

When asked Friday about what he considered his greatest accomplishment in his political career, Kohl pointed to the Marinette Marine Littoral Combat Ship project. That is an important project for Marinette and Northeast Wisconsin, but (assuming the U.S. Navy buys more than one) it is not a project one would think would be on the top of the list of a senator who first arrived in Washington in 1989.

I covered the 1988 Senate race when candidates would come to Lancaster. That included exactly two Democrats, Ed Garvey (yes, this Ed Garvey), who had narrowly lost in 1986 to Republican Sen. Robert Kasten, and Secretary of State Douglas La Follette. The other Democratic candidates were former Gov. Anthony Earl, who had been upset in 1986 by then-Assembly Minority Leader Tommy Thompson, and perennial candidate Edmond Hou-Seye. Kohl did not deign to show up in Lancaster; I don't recall if Earl did.

Kohl's sole qualification for office was his millions of dollars as part of the Kohl family of Kohl's grocery stores and Kohls Corp. department stores. Kohl nonetheless won the Democratic primary with 47 percent of the vote, and then got 52 percent of the vote against Republican Susan Engeleiter in the general election.

I was assigned to write an editorial endorsing Kohl because of his business experience. That must have impressed some Republicans as well because I recall a group calling itself "Republicans for Kohl" consisting of some older male Republicans. I was not sure if they were convinced of Kohl's business experience or turned off by Engeleiter's gender.

That business experience part is one of the ironies of Kohl's career. At no point was his name attached to something remotely pro-business — that is, something that could benefit all businesses, not just business sectors in current favor such as alternative energy firms. Business tax cuts (not breaks)? Regulatory reform? Employment law reform?

His voting record (which ultimately is the only thing any politician should be judged upon) was standard Democrat, which is odd for someone who had enough money that he didn't need national Democratic support. No Democrat you've heard of ever ran against him after 1988, and he would have crushed any Democrat who did. Yet, like Feingold, Kohl listened to only Democrats back in Wisconsin, and could not be accused of being a moderate. Which is one reason why Democrats cannot be accused of being pro-business; their voting records get in the way of their rhetoric.

Kohl's future replacement was topic one on WTMJ-TV's "Sunday Insight with Charlie Sykes." The big question was whether U.S. Rep. Paul Ryan (R–Janesville), who would be the instant favorite if he decided to run, will try for the Senate, which he's believed to be interested in, or if he would stay in the House of Representatives, where he theoretically has much more power as the House Budget Committee chairman. Everything on the right side will flow from whatever decision Ryan makes.

(Regardless of Ryan's decision, ponder this: Ron Johnson, whom few had heard of even a year ago, will be the senior senator from Wisconsin in January 2013.)

If not Ryan, another candidate might be Attorney General J.B. Van Hollen, who has won two statewide elections.

Another candidate I'm skeptical about is Assembly Speaker Jeff Fitzgerald, who I think isn't well known enough statewide. I don't think Assembly speakers are good candidates for higher office anyway, given the experiences of GOP speakers David Prosser and John Gard, who were collectively 0 for 3 in congressional elections — as leaders of majority parties, they tend to be controversy magnets.

Kohl's departure adds another headache for Wisconsin Democrats and their supporters, regardless of what they say. Democrats either are being or will be asked to financially back (1) Joanne Kloppenburg's quixotic quest to get elected to the Supreme Court by invalidating votes; (2) Democrats involved, on the offensive or defensive side, in state Senate recall elections; (3) President Obama's reelection efforts in this (supposedly) swing state; (4) whoever decides to run against freshman U.S. Reps. Sean Duffy and Reid Ribble; (5) efforts to retake the Legislature in 2012; and now (6) whoever runs to replace Kohl.

The obvious Democrat to run is Feingold, largely because he (and his most fervent supporters) has acted as though Feingold's birthright was taken away from him when he lost Nov. 2. Senator Left Ear was simultaneously a phony maverick and ineffective on issues that actually matter to Wisconsin voters, which is why they fired Feingold Nov. 2. His "listening sessions" were an excuse for his leftist allies to claim that government is not big enough (to which Feingold agreed on such subjects as single-payer health care). It is faint praise that no one would accuse him of being two-faced; based on those who had to deal with him, if he disagreed with you, you might as well have been talking to the door.

Assuming Feingold doesn't challenge President Obama in the Democratic primary (a persistent rumor since his loss), I have to believe Feingold will run. Almost as likely, and absolutely likely if he doesn't run, is U.S. Rep. Tammy Baldwin (D–Madison), who will be making a huge mistake if she does run because, while she can probably be elected to Congress from the People's Republic of Madison indefinitely, she is unlikely to do well in the conservative parts of the state, which will be able to find at least three reasons to not vote for her. (Her party is one, where she's from is another, and you can guess about number three.) Another name from the People's Republic is Dane County Executive Kathleen Falk, who has, however, already lost two statewide races — the Democratic gubernatorial primary in 2002 and the attorney general race (after knocking off incumbent Peg Lautenschlager) in 2006.

The Democrat who should run but is probably 50–50 at best is U.S. Rep. Ron Kind (D–La Crosse), a former Kohl aid. Kind represents the Third Congressional District, a swing district bordered by the Mississippi River. Kind, who would have been a better candidate for governor than Tom Barrett, is that rarest of things, a 2010 Democratic winner. The latter half of the 50–50 is that, like Baldwin but for different reasons, Kind would be giving up a safe Congressional seat for a not-at-all-assured result in November 2012.

The craziest suggestion I've read — which means: Go for it, Democrats! — is that someone from the Fleeing Fourteen should run. This suggestion, forwarded from The Capital Times' John Nichols, is the result of the delusion that Wisconsinites widely oppose Gov. Scott Walker's budget reforms. Had that been the case, we'd be talking about Supreme Court Justice-Elect Joanne Kloppenburg, instead of Kloppenburg the Meaningless Lawsuit Machine, and Democratic Sens. Dave Hansen, James Holperin and Robert Wirch wouldn't be facing recall elections this summer. Apparently the closer you get to Madison, the farther away you get from reality.

Johnson, interestingly, is a model for Democrats in this election. Not because of Johnson's ideology (the only reason liberals read Atlas Shrugged is so they can denigrate it), but because of Johnson's backstory. The mythology of Wisconsin politics is that we like mavericks or, in the case of Feingold, politicians who seem like mavericks though they are not. This is one of those periods (which seem more numerous than they actually are) where being an insider is a bit of a disadvantage. People regardless of ideology are disgusted by politics more by the day, and someone who seems outside the process — as Kohl was in 1988, as Feingold (who defeated two Democratic opponents who vastly outspent him) was in 1992, and as Johnson was in 2010 — is probably the ideal Democratic candidate in 2012. As Marquette University Prof. John McAdams said on WTMJ radio Friday, you don't know that person yet.

Return to Janesville?

On Wednesday, the Milwaukee Journal Sentinel reported that the United Auto Workers has not given up on convincing General Motors to reopen its Janesville assembly plant.

GM plans to "add or keep 4,000 jobs in the U.S. by hiring new employees or calling back furloughed workers" over the next 18 months. GM plans to spend $2 billion at 17 plants in eight states. Besides Janesville, GM has as options the late Saturn plant in Spring Hill, Tenn. (remember "A new kind of company, a new kind of car?" That turned out to be less than half right), and a Shreveport, La., plant GM had planned to close.

The Janesville closing -- production ended in 2008, and the plant closed in 2010 -- hit a lot of Wisconsinites personally. The father of a high school classmate of mine drove 40 miles one way every day from up the street in Madison to Janesville to work at GM. We owned a Janesville-built Chevrolet Caprice, which lasted more than 130,000 miles at a time when hitting 100,000 miles was a big accomplishment. Manufacturing is obviously a big part of Wisconsin's economy, and car manufacturing in particular has a certain status that manufacturing of other things doesn't have. So the closing of the Janesville GM facility and the Kenosha Chrysler engine plant, both in 2010, felt bad, whether or not it made business sense.

That last sentence is the first of several questions that come to mind. Back in 2008, Catherine Madden of Global Insight, said GM "simply has too many facilities in the system, if you look at where its [declining] market share is today."

It's been apparent for many years that GM's main problem was not the quality of its cars, but the quality, or lack thereof, of its P&Ls. Through their combination of sales incentives, loss leaders (as in small cars) and the few vehicles on which they made money -- in GM's case, pickup trucks and SUVs and, interestingly, the Corvette -- the Big Three sought to make money on volume, a formula that only worked as long as the automakers had a lot of sales volume. That formula fell apart in 2008, leading to GM's bankruptcy and Chrysler's sale to Fiat.

If any automaker is to make money in the future, it will have to do by building fewer vehicles more profitably. Big Three cars used to have a reputation for poor quality. (Unfortunately, I can attest to that in at least two cases.) Poor build quality has been substantially reduced, in part through design and in part through improvements in manufacturing quality. That means cars last longer, so people replace them less often. The profit-through-volume model runs out of gas when that happens.
 

Lakeshore Laments doubts GM's profitability:

Would I like to see Janesville re-open?  Absolutely, but I seriously wonder if GM has the capability, not to mention the revenue and cash flow from its post-bankruptcy operations to make re-opening Janesville a possibility instead of a pipe dream. Simply put, a lot of GM's numbers are not adding up.

A review of quarterly GM 10Q SEC filings reveals that, over the past six months, GM's cash and cash equivalents has gone down from $27.5 billion at the end of 3rd quarter 2010 to $21 billion at the end of 1st quarter 2011. GM continuing its old habits of burning money may be part of the reason its share price is stuck below the IPO price of $33 and well below the $53 per share needed for taxpayers to be paid back on the portion of money put in during the Obama term.
GM seems to be focusing on politically driven public relations campaigns (as also demonstrated by the Chevy Volt hype) rather than on maximizing profits. Investors should be wary if the trend continues.

If the above numbers are true, they indicate that General Motors is still bleeding cash.  Such finances don't seem to warrant re-opening the Janesville plant for the long-term.

GM's profitability is a bigger issue than any concessions the UAW says it's willing to make to reopen Janesville. This may look like a drive down the same path of Mercury Marine and Harley–Davidson, both of whose unions agreed to givebacks to keep their Wisconsin facilities open.

But what would be built in Janesville? To respect history, GM should bring back the aforementioned Caprice (which is still being built in Australia and the Middle East), which it plans to sell to law enforcement agencies, but for the entire marketplace. GM made a huge error in killing full-size rear-drive cars in 1996, a mistake Ford is about to repeat by finally ending production of its ancient (as in first built in 1979) Ford Crown Victoria. Irrespective of $4-a-gallon gas, there is still a market among police departments and taxi companies for body-on-frame rear-drive cars. (The Dodge Charger, now appearing in a rear-view mirror near you, is not as large as the Crown Victoria.)

It’s unfortunate, but a fact of life, that workers bear the brunt of bad decisions made by management. I think GM erred by not offering diesel engines in their SUVs, which would have resulted in better fuel economy, even at, in 2008, 70 cents per gallon more than unleaded. GM was the only one of the Big Three to manufacture its own diesel engine, instead of getting outsourced diesels — Ford's previous truck diesel was made by Navistar, and Dodge's is made by Cummins — until Ford started producing its own diesel engine for its Super Duty pickups. (It's taken more than a decade for GM to undo the damage created by its first move into diesels, a product so bad that it is credited for having damaged the entire market for diesel cars in North America. Not until GM got its Detroit Diesel division to build a V-8 for pickups and the Suburban did that stigma start to go away.)

GM’s gas V-8 engines have Active Fuel Management, which turns off half the cylinders when not needed, when attached to automatic transmissions, but I suspect buyers remember GM’s first crack at that, the V-8-6-4 on 1980s Cadillacs. (And not fondly; Time.com called the system “the Titanic of engine options. The cars jerked, bucked, stalled, made rude noises and generally misbehaved until wild-eyed owners took the cars to have the systems disconnected.”) The Chevy Tahoe and GMC Yukon have a hybrid system option based on shutting off and restarting the engine when needed (i.e. in traffic), which seems to me antithetical to long engine life. GM dragged its corporate feet on equipping its cars and trucks with six-speed automatic transmissions (the more gears you have, the better a vehicle will perform, in both acceleration and in fuel economy), and pretty much eliminated manual transmissions, which still get better fuel economy (in the hands of the right driver), on vehicles bigger than subcompacts.

GM pushed trucks and SUVs because GM made much more money on trucks and SUVs than they did in cars, and particularly small cars. The aforementioned Spring Hill plant was the exclusive home for GM's Saturn to build small cars. Unfortunately, there was nothing Saturn built that was particularly better than its Japanese competition. (I can speak with authority on that, having test-driven and rejected their SC2 and SW2 due in large part to the noise of their twin-cam engines.

People bought Suburbans and Yukons because they felt a need for them — either to pull boats or campers, or just because they preferred their roominess and their higher driving position to smaller cars. Those smaller cars, incidentally, are the result of increasingly stringent fuel economy standards, which helped kill off large rear-drive cars, and particularly station wagons, in this country; an SUV is nothing more than a station wagon body on top of a truck chassis. SUVs weren't subject to those fuel economy regulations, so those who wanted a vehicle more like the old big cars (for instance, tall people) voted with their feet and purchased SUVs. If they wanted small cars, they purchased small cars from companies that had more experience in designing, building and selling them -- Toyota, for instance.

There are lessons from the Janesville closing for both workers and for government. The days of having the same employer for your entire career (40½ years in my father’s case) are over. The days where someone can make $54,000 (the average GM Janesville assembly line worker's salary by 2008, according to the Milwaukee Journal Sentinel) after walking into the plant with your only marketable skill being your work ethic are over too. 

The GM closing obscured a couple of interesting facts about Janesville. The Wisconsin State Journal in Madison pointed out in 2008 that GM had fewer employees in Janesville than Mercy Health Care. By 2008 86 percent of new jobs in the post-9/11 recovery were created by companies of 100 or fewer employees, and 65 percent of new jobs were created by companies of five or fewer employees. GM and its suppliers total 6.3 percent of the jobs in the Janesville area, half of the total at GM's peak in Janesville, so it's obvious that economic development officials in the Janesville area did in fact get the message years ago. As Doug Pearson, the former executive director of Chamco, the nonprofit Oshkosh development corporation, pointed out, "If you've got 50 small companies, it's a lot less likely you're going to have something that's going to affect all those companies."

Tyranny of the enviroexpert

My blog Monday on Red Fred Clark may have made you think that, among other things, I am skeptical about the value of the Progressive Era in Wisconsin politics.

Which you may think odd for a graduate of, yes, Robert M. La Follette High School in Madison. (For some reason, our sports teams were named the Lancers, not the Fighting Bobs.) Voting reforms like direct election of U.S. senators, primary elections and referenda were indeed worthwhile reforms. The ballooning growth of government --- in response to actual problems, it should be noted -- and the reflexive distrust of business and the "rich" (that is, anyone with more money than you) stand as progressivism's less positive contributions to the body politic.

Another feature of the Progressive Era was the concept of "government by expert." To a point, it makes sense to, for instance, have experts in forestry oversee conservation efforts, as Theodore Roosevelt hired. But the executive branch, which manages the government, is not the legislative branch, which is supposed to make policy.

A Milwaukee Journal Sentinel column by outdoors writer Paul A. Smith opines that the environment in Wisconsin is going to hell because of -- the horror! -- politics:

With an eye to scientific resource management, William Aberg, Aldo Leopold and contemporaries helped create a nonpartisan conservation commission in Wisconsin in the late 1920s. The idea was to keep politics out.

"Conservation cannot afford to enter the political arena as a candidate or partisan." said Aberg, a Madison attorney, former chairman of the Wisconsin Conservation Commission and 2000 inductee in the Wisconsin Conservation Hall of Fame.

Though Aberg was a prominent Republican, he was adamant about keeping politics separate from resource management.

Leopold, the lauded University of Wisconsin professor and author, expressed his contempt for politics in his book "Round River": "I believe that many of the economic forces inside the modern body-politic are pathogenic in respect to harmony with land." ...

Oh, those robber baron capitalists ... whose tax dollars pay the largest share of government costs.

Smith has for a long time advocated for returning control of the Department of Natural Resources to the Natural Resources Board and away from the governor. Gov. Tommy Thompson gave himself (with legislative approval, of course) the authority to name the DNR head in 1995, despite the opposition of Attorney General James Doyle. Gov. James Doyle, however, decided to keep Thompson's appointment ability.

But with the "Wisconsin is open for business" mantra espoused by the administration, to say many in the conservation community are wary is an understatement.

The legislature has made others nervous by introducing and moving quickly on several measures, including AB99, a deer hunting bill that would take away the DNR's ability to use Earn-A-Buck regulations and T-Zone antlerless deer hunts.

"At some point in Wisconsin history, our citizens decided there needed to be one more buffer between elected officials and our natural resources, and that is the NRB," said Christine Thomas of Stevens Point, board member since 2004 and dean of the College of Natural Resources at UW-Stevens Point, speaking at last week's board meeting in Madison. "In my opinion, this board is one of the best things about Wisconsin."

Thomas made it clear she'd prefer the legislature stay out of conservation issues. Although most on the board argued for more aggressive herd control measures for 2011, it eventually approved a 2011 deer hunting season format without Earn-A-Buck and without an October gun hunt for antlerless deer.

"We live in a democracy, and the people will have their say at the end of the day," Thomas said. "But when it comes time to make a tough decision, this board looks at all the information and over time has done what's best for the resource. You don't know what you get out of the political process."

No, we know exactly what we get out of the political process -- democracy, as messy and slow and occasionally disagreeable for your tastes as it is. What we get out of the political process is representation of the voters and taxpayers, some of whom, it may surprise Thomas to know, see, for instance, revitalizing the state's economy as more important than following the whims of the (unelected) Natural Resources Board.

Smith quotes Herb Behnke of Shawano, who was appointed to the first state Natural Resources Board in 1968, but inadvertently identifies as a virtue something that is not:

Most DNR regulations are made by "administrative rule." When the legislature gets involved and passes a law on a conservation issue, it makes it "virtually impossible to change it back," Behnke said.

"I know lawmakers think they are making some lobbyists and voters happy, but it's not the way to go," Behnke said.

Legislation by administrative rule is in fact one of the worst features of Wisconsin government. When the Legislature passes a law, like it or not, a majority of the voters are represented, and when the voters decide they are no longer being adequately represented, legislators are involuntarily retired. (See Nov. 2, 2010.) No one in this state has voted for anyone to serve on the Natural Resources Board, and no one in this state who doesn't work for the DNR has ever authorized the hiring of anyone in the DNR. For that matter, no non-legislator has ever approved of the state's spending $86 million per year to take land permanently off the tax rolls in the name of conservation, either.

This is one of those cases that proves the political principle of expediency -- the correct level of government to solve a problem is whatever level of government will solve the problem in your preferred way. I have yet to read an environmentalist suggest electing the Natural Resources Board, or an every-other-year statewide authorization referendum on the Knowles–Nelson Stewardship Fund-financed state land grab.

Smith decries politics in the environment:

The North American Model of Wildlife Conservation is crumbling; Wisconsin has been negligent in finding a solution for the future. It will require political involvement.

But items such as deer hunting regulations are best left to the DNR and NRB.

Politicians look after their own interests, principally re-election. That's the way the system works.

But the resource is better served when objective, well-informed people apart from the political process look after it.

In other words, pay up, you ignorant taxpayer, and shut up.

I don't expect an outdoors writer to admit this, but conservation and the environment is one of many, many issues we entrust to our elected officials. It is important -- for one thing, tourism and agriculture are two of the state's biggest industries -- but it is not the most important. It is, for instance, difficult to drive to some part of the 16 percent of land in this state that is owned by a unit of government if you don't have a job. It's hard to spend money on fishing or hunting equipment if you don't have money for outdoors equipment because your state has trailed the nation in per capita income growth for more than three decades.

#41 to #24: How?

Readers of the late Marketplace of Ideas column and blog know that I kept regular watch over the various state business climate comparisons.

That is something one would expect a regional business magazine to do. My following the state's business climate, however, dates much farther back than my arrival at Marketplace in 1994. Ten years earlier, I wrote about the state's business climate and perceptions thereof for a term paper in my introduction to state government course at the University of Wisconsin. (Foreshadowing, perhaps?)

In the nearly two decades since then, state business climate comparisons have become what one might call objective subjective science. Most of the comparisons use objective rankings, but which rankings are important, and to what extent, is of course a subjective decision. Every ranking I have ever seen uses taxes (personal and corporate, plus property and sales taxes, and exemptions to all), but other factors also are included depending on the survey, including per capita gross domestic product or income growth, business startups, unemployment rates, quality of labor force (including education thereof), regulatory and legal burden, percentage of unionized workers, worker compensation insurance costs, and quality of life comparisons.

In the 10 years since I started professionally following business climate comparisons, two things  became apparent: (1) Wisconsin, with rare exception, ranked in the bottom fourth of business climate comparisons regardless of who conducted the comparison, and (2) said comparisons were always criticized by either Democratic politicians or their fifth column in the media or blogosphere under the rationale that low rankings were criticisms and therefore invalid.

One example of truism number one was last October's ranking by Forbes magazine,  which placed Wisconsin 43rd. Forbes' comparison used two other comparisons, the Pollina Corporate Real Estate site selection survey, which ranked Wisconsin 46th, and the Tax Foundation's State Business Climate Index, which ranked Wisconsin 42nd. Another was Chief Executive magazine's survey of "More than 500 CEOs" who "considered a wide range of criteria, from taxation and regulation to workforce quality and living environment," in which Wisconsin came out 41st in 2010.

Earlier this month, Chief Executive released its 2011 comparison, in which Wisconsin jumped from 41st to 24th, the highest positive jump of any state. Wisconsin is mid-pack in the Midwest, below Indiana (sixth, up from 16th), Iowa (22nd, down from 17th) and Missouri (23rd, up from 26th), but above Minnesota (29th, up from 31st), Ohio (41st, up from 43rd), Michigan (46th, up from 48th) and Illinois (48th, down from 45th). Texas ranks best, and California ranks worst.

This is great news that, however, begs this question: How did Wisconsin jump that high?

First, Chief Executive's methodology:

We asked CEOs to consider three criteria:  Taxes & Regulation, Workforce Quality and Living Environment. In most companies, the CEO makes the ultimate decisions about where to locate and/or expand the business, making his or her perceptions of each state critically important. 556 CEOs completed our detailed survey, which was conducted between Jan. 14 and Feb. 1, 2011. They were each asked to provide their selections for the 4 best states for doing business and the 4 worst states for doing business. ...

Chief Executive also asked CEOs to provide ratings for the states that they ranked, as well as other states for which they had opinions, along 3 key criteria: 1) taxes and regulations, 2) workforce quality and 3) living environment. They were asked to rate the states on these criteria using a 1-10 scale, with 10 = outstanding, 5= average and 1= poor.

Wisconsin ranked 33rd in taxation and regulation, 11th in workforce quality, 20th in "living environment," 33rd in 2005–09 state gross domestic product growth (2.72 percent less than the national average), 21st in unemployment rate (2.2 percent better than the national average), 26th in domestic net migration rate (people moving in vs. people moving out), 19th in state government debt per resident ($3,707), and 10th highest in state and local tax burden.

The Chief Executive story doesn't talk much about Wisconsin other than to note its 17-place improvement. More generally, the story says:

Business leaders graded the states on a variety of categories grouped under taxation and regulation, workforce quality and living environment. “Do not overtax business,” offered one CEO. “Make sure your tax scheme does not drive business to another state. Have a regulatory environment and regulators that encourage good business—not one that punishes businesses for minor infractions. Good employment laws help too. Let companies decide what benefits and terms will attract and keep the quality of employee they need. Rules that make it hard, if not impossible, to separate from a non-productive employee make companies fearful to hire or locate in a state.”

Not surprisingly, states with punitive tax and regulatory regimes are punished with lower rankings, and this can offset even positive scores on quality of living environment. While state incentives are always welcome, what CEOs often seek are areas with consistent policies and regulations that allow them to plan, as well as intangible factors such as a state’s overall attitude toward business and the work ethic of its population.

This is one reason Texas has consistently held the No. 1 position since 2005. It gets strong marks in all areas important for business creation, and has the second-lowest taxes in the nation. The state has created more jobs than any other—about 250,000 last year. Not surprisingly, it also enjoys the highest inward net migration rate of any state.

Interestingly, that first excerpted paragraph would not appear to describe Wisconsin. "... regulators that encourage good business" instead of punishing "businesses for minor infractions"? Three letters: DNR. If "good employment laws" include the ability for a worker to decide whether or not to join a union, well, that doesn't describe Wisconsin either. Those who claim that Wisconsin's corporate income taxes aren't that high usually ignore Wisconsin's high personal income taxes, and the owners of S corporations and other corporate bodies are assessed the corporate income taxes that are assessed on C corporations.

There is one difference between Chief Executive's 2010 comparison and its 2011 comparison. That difference took place between the 2010 and 2011 surveys, on Nov. 2:

New Jersey Gov. Chris Christie, who confronts one of the nation’s worst pension underfunding problems, is using the prospect of insolvency to push for significant pension reductions. In his move to end public sector collective bargaining to get control of the state’s budget, Wisconsin’s Scott Walker made Chris Christie appear reasonable. Indiana Governor Mitch Daniels slowed state government payrolls to the point where Indiana has the nation’s fewest state employees per capita. In addition, while at least 35 states raised taxes during the recession, Indiana cut them.

These are some of the actions that encourage business leaders. As another CEO respondent remarked, “We need some political backbone to control spending, address out-of-control debts, and use common sense on environmental and other governmental regulations. Quit demonizing businesses. Who do they think provide real jobs?”

In Wisconsin before Nov. 2, the answer to that last question might as well have been: Why, public sector employee unions, of course! While that may indeed be the correct answer in the People's Republic of Madison, it is not in the rest of Wisconsin. But voters Nov. 2 noticed the state's poor economy, and may have actually noticed the fact that per capita income growth has trailed the national average since the late 1970s, and voted for change.

Some change has occurred. WISN radio morning host Jay Weber asked his listeners after the Nov. 2 election what they wanted the new governor and Legislature to do, and got a lengthy list. The items on the list that pertain to business climate include (accomplishments in boldface):

5. Repeal combined reporting and pass a package of pro-business legislation.(done)

7. Kill off the Regional Transit Authority Board. Don’t create any boards that have taxing authority. (soon)

8. Bring back TABOR or some taxpayer bill of rights.

9. End the minimum markup law

14. Allow school districts to negotiate for health insurance on the free market. (done, as part of collective bargaining changes)

15. Create a rainy day fund from excess or unexpected  revenues that pour into the state coffers during boom times. (only talk of this so far, so far as I know)

16. Eliminate the  state income tax on retiree pensions to help keep them in Wisconsin.

17. Freeze the property taxes of retirees to keep retirees in Wisconsin.

18. Move on reasonable Tort reform.  (done, but we could go further in the future)

20. Ten percent across the board pay cuts for all state employees. (lets call this done, as part of collective bargaining changes)

24. End early retirement for public employees, so they can no longer live off of a state pension longer than they ever worked at the job.

25. Change the state law to make MATC and other tech school boards elected positions and accountable to the taxpayers.  (Lazich, Darling are on it..vote not pending, though)

26. Reinstitute the QEO for teacher pay. (Again, call it done, Walker’s fixes are better)

41. Review and repeal the so-called ‘smart growth’ environmental requirements and restrictions, which have hit the point of absurdity.

That is not a bad list for merely four months of work (apparently enough CEOs have noticed what has been done, or at least a change in attitude from Madison, to make 17 places of difference) , but it's not nearly enough. For that matter, going from the bottom quarter to mid-pack isn't enough. We do not have lower income taxes, we still have too many employees at all levels of government (fewest government employees per capita -- now there's a goal worth pursuing), we still have too much spending and too much debt in all levels of government, and we have not defanged the regulators. Changing the Department of Commerce to the Wisconsin Economic Development Corp. may help.

Walker tweeted that his goal is for the state to have the nation's best business climate, which will not happen as long as we have anti-business Democrats in this state. (And as long as the state Democratic Party remains in thrall to the public employee unions, the last pro-business Democrats in Wisconsin will remain Democrat-turned-independent Rep. Bob Ziegelbauer, the Manitowoc County executive, and before him Gov. Patrick Lucey, who signed into law the machinery and equipment property tax exemption.)

The aforementioned part about "consistent policies and regulations that allows them to plan" poses a future problem for Wisconsin. The right people are in charge on the Capitol Square now, but at some point Democrats will recapture state government. The last time that happened, we got $2 billion in tax increases. Merely repealing past tax increases is an incomplete answer; tax increases must be largely prevented from happening in the future, which is why the inclusion of a Taxpayer Bill of Rights-like mechanism in the state Constitution is imperative.

Improving one state business climate ranking is one step. Many, many, many more steps are needed.

Who is Fred Clark?

The Ripon Commonwealth Press performed a valuable act of public service last week by interviewing state Rep. Fred Clark (D–Baraboo), who wants to defeat Sen. Luther Olsen (R–Ripon) in the 14th Senate District recall election sometime this summer, when Clark stopped by the newspaper office.

Before we continue, two points you've read here. First: No elected official should be recalled from office for one vote. Recalls should be meant for elective officials' misconduct in public office, such as, oh, bugging out of the state to prevent a vote they're going to lose. Second: Olsen is going to win the recall election for several reasons because, for one thing, he's never faced a Democrat, which means that no Democrat between 1994 and 2008 felt they could defeat Olsen.

The headline starts things off: "Clark: Philosophical differences mark distinctions between himself and Olsen," which could also read: "Philosophical differences mark distinctions between Clark and Olsen's Senate district."

Red Fred's website claims that his being "a contractor and small business owner, and rural farm resident, serves him well as a representative to a rural area." I wonder how often he'll mention in the truncated campaign that he used to work for the Department of Natural Resources, which is not exactly popular for more reasons than I have time to list in this "rural area." Maybe Clark's definition of "rural Wisconsin's progressive tradition" (hence my "Red Fred" reference) works in the Baraboo and Wisconsin Dells areas; it is unlikely to go over as well in the rest of the 14th Senate District, a majority of whose voters do not see government as the be-all and end-all of their lives.

The people who do see government as the be-all and end-all of their lives — and Baraboo is just 40 miles away from the People's Republic of Madison — would include Clark's endorsers in his 2010 reelection, a list that includes AFSCME, Citizen Action of Wisconsin, the Clean Wisconsin Action Fund, the National Association of Social Workers, the Wisconsin Laborer's District Council, the Wisconsin League of Conservation Voters, Wisconsin Progress, the Wisconsin State AFL–CIO — organizations that do not represent the mainstream of 14th Senate District thought, based on past election results.

Clark asserts that "Sen. Olsen did not represent his district," without giving any evidence that Olsen did, other than, one assumes, assertions from Clark's buddies from AFSCME, the AFL–CIO and teacher unions. "He failed to do that on one of the most important issues a lot of people have seen in a generation," as if public employee collective bargaining rights (which he calls a "fundamental human right," irrespective of that right appearing nowhere in the U.S. or Wisconsin constitutions) are more important than the state's Lake Michigan-size vat of red ink.

What would be amusing if it wasn't so pathetic is that Clark appears to have no better answers for the state's godawful finances. Consider:
• "We have a structural deficit; we have to address that. We can't tax our way out of it; we do need to make cuts."
• "I do not disagree that many public employee unions had bargained for benefit packages that were unaffordable."
• "I firmly believe that everything should be on the table. ... I always believed that we need to be doing something to lower costs of benefits. Did we need to require [public employees] to contribute more to health care benefits? Yes."
• "I'm not a proponent of raising anybody's taxes, but a lot of people aren't [paying what they are supposed to be paying]. We should fund the Department of Revenue more to have more examiners."
• "The change I talk about is not getting us there; it doesn't get even get us halfway" to the $2.5 billion budget deficit.
• "We've made more commitments ... than we can really support. ... We need to ask the public — how much do you want to invest to" keep those commitments.

The summary of these quotes is that Clark didn't like what Olsen voted for, but Clark doesn't have better answers than what Olsen voted for and Clark voted against. Clark's union buddies believe the solution to our fiscal disaster area is to raise taxes, which Clark eschews if you believe the Commonwealth Press story.

The last time Clark's party controlled the Legislature and the governor's mansion, the Legislature increased taxes by $2.1 billion, yet managed the novel feat of significantly worsening state finances. The last complete fiscal year Democrats were in charge in Madison left us with a $2.9 billion deficit as correctly measured by Generally Accepted Accounting Principles, and a structural deficit of more than that heading into the 2011-13 state budget cycle.

Clark the entrepreneur has the following to say about the state's business climate, which was made significantly worse in the years his party controlled the governor's mansion:
• "We need to set up a tax environment where small businesses can survive and thrive. We need to balance a growing economy and the environmental value of our ... lands. We should should have an economy that can grow and protect our resources at the same time."
• "At the end of the day, the way we want to grow our state ... is we need to grow the tax base. I don't think cutting government to the bone is the way to do that. Creating an environment where businesses can thrive" will.

Clark's assertion about the economy and the environment is made about a state that has spent billions of dollars and is spending $86 million a year to buy land and take it off the tax rolls in the guise of preservation, and a state where its environmental agency, Clark's former employer, earned the nickname "Damn Near Russia" decades ago. (I wonder how voters in the "rural area" think about that.) And this is a state where agriculture and tourism, two obviously environment-dependent industries, dwarf every other industry. If anything, in Wisconsin the teeter-totter between the economy and the environment has giant weights on the environment's seat.

Clark's assertion about "cutting government to the bone" — which is a straw man since those elected Nov. 2 aren't anywhere close to "cutting government to the bone" — is an accusation in a state with the fourth highest state and local taxes in the nation. That ranking also occurred under the Democrats' watch.

Olsen — who ironically has been criticized for being not conservative enough, as demonstrated by his past opposition to the Taxpayer Bill of Rights and concealed-carry legislation — is being punished for being an adult and making the financially responsible vote his opponent's party failed to do when it controlled the Legislature. For that and other reasons, voters fired Democrats left and, well, left Nov. 2.