Category Archives: Business and economics

Repeal, and then what?

By Steve Brawner

© 2017 by Steve Brawner Communications, Inc.

The Senate health care bill is dead. Senate Majority Leader Mitch McConnell killed it Monday after it did what President Obama couldn’t do – make Obamacare more popular – and after too many Republican senators said they’d vote against it and none expressed enthusiasm for it.

The unenthusiastic included Arkansas Sens. Tom Cotton and John Boozman, who both remained noncommittal even though Cotton was one of 13 Republican senators who wrote the bill behind closed doors.

McConnell’s new plan is to repeal Obamacare now, but it wouldn’t take effect for two years while Congress creates a replacement. In response, Cotton told conservative radio host Hugh Hewitt Tuesday that he was “pleased” with that direction. He said Congress already voted to repeal Obamacare in 2015, a move supported by all six members of Arkansas’ congressional delegation.

Of course, in 2015 everyone knew President Obama would veto the bill. This vote would actually count because President Trump would sign it.

Cotton seems to think this could happen and seems to support it, even though he told “Meet the Press” in January that any repeal vote should include a path forward and that “kicking the can down the road a year or two years is not going to make it any easier to solve.” He told Hewitt that senators who voted once to repeal Obamacare would have no choice politically but to do so again. Boozman also is on board with the idea.

Let’s hope they don’t get that chance.

Here’s the thing about businesses, including health care-related ones such as insurance companies and hospitals: Like a tree growing on the side of a cliff, they can thrive in difficult environments as long as they know the rules. They can make a profit even when taxes are too high, regulations are too onerous, and government is too big.

But it’s much harder to thrive amidst the shifting sands of uncertainty. In that environment, free market providers can’t make business decisions, so they play it safe and wait to see what happens next. If the Affordable Care Act (Obamacare) were repealed with only a vague promise from politicians of something coming later, the entire system would be thrown into disarray, leading insurers to leave markets and making health care more expensive and less available.

Besides, working off a deadline is not exactly Congress’ strong suit these days. Time and again, it’s funded the government through continuing resolutions – spending what it did last year, plus some, because it didn’t have time to do a real budget. It’s repeatedly extended the debt ceiling at the last minute, and it’s delayed important legislation because it couldn’t get its act together. One example: After the No Child Left Behind education law expired in 2007, Congress didn’t do anything about it until 2015, when it finally replaced it.

We can’t have years of limbo with health care, because people will die. If Republicans don’t have an answer seven years after Obamacare was passed, they won’t have one in two more. It’s not hard to foresee an inconclusive election in 2018, and then the two-year deadline passes with no consensus, so there’s a new deadline, and then another.

Since “repeal and replace” is dead and “repeal, then replace” is a terrible idea, what’s left? There’s “return” – just go back to the old system, where insurance companies denied coverage based on pre-existing conditions, set lifetime limits, and cut people off based on technicalities. In other words, sell you insurance as long as you don’t need it. Want to go back?

Instead of repeal, replace or return, there’s a fourth “R” – reform. Change current law  incrementally, and then change it again as needed. This would require a bipartisan approach, along with listening to health care providers and other stakeholders, which did not happen this time. It would anger some supporters and media blowhards, and it would mean accepting that you can’t get everything you want in a democracy. But the health care system would be better.

There is another option, offered by President Trump: Let Obamacare “fail,” and then create a new system.

Presumably, he still could get the health care he needs after the system “fails” and policymakers try to figure out how to pick up the pieces.

The rest of us shouldn’t have to live with such uncertainty. Let’s go with the fourth “R.”

Steve Brawner is an independent journalist in Arkansas. Email him at brawnersteve@mac.com. Follow him on Twitter at @stevebrawner.

Lawyers vs. legislators

By Steve Brawner
© 2017 by Steve Brawner Communications, Inc.

It could be argued that two of the three most important votes this year in Arkansas state politics occurred Feb. 16 and Feb. 27, and the third will occur this Friday.

The first two votes are when the Arkansas Senate and Arkansas House advanced a proposed constitutional amendment limiting lawsuit awards. We voters will decide its fate in the November 2018 elections.

The third will be in Hot Springs June 16, when the Arkansas Bar Association’s House of Delegates votes on whether to pursue a dueling proposal barring such lawsuit limits that also would appear on the November 2018 ballot.

The one proposed by legislators would limit punitive damages in civil lawsuits to the greater of $500,000 or three times the compensatory damages awarded in the case, except when the harm was caused intentionally. Noneconomic damages, sort of a vague term, would be limited to $500,000. The Legislature would be empowered to increase both of those amounts with a two-thirds vote. Lawyers’ contingency fees would be limited to one-third the judgment.

The amendment is supported by powerful groups, including the Arkansas State Chamber of Commerce and those representing health care providers. They want to reduce the risk of jackpot jury verdicts that produce a climate of uncertainty, raise insurance rates, and require costly cover-your-rear actions ultimately paid by consumers and resulting in lost jobs. If your local hospital no longer delivers babies, it’s because the insurance is too high and the fear of a lawsuit is too great.

Opponents, including the Arkansas Bar Association, which represents attorneys, of course don’t see it that way. They say juries should be trusted, not limited, and that the awards prescribed by the amendment are so low that big, bad actors won’t be deterred from harmful activities. They say the upfront costs of lawsuits can be daunting with no guarantee of a payout, so capping attorneys’ fees will make it harder for Arkansans to find a lawyer willing to represent their case.

This already was going to be a heavyweight brawl between two groups with access to money and reasons to spend it. Aside from the legitimate philosophical differences, we’re talking about rich people’s livelihoods – those of business executives and medical providers who say enough is enough, and those of attorneys whose bottom lines would be significantly shortened. So Arkansas voters next year presumably will see plenty of 30-second ads defining the bad guys (evil corporations or unscrupulous lawyers, depending on who is funding the spot) and the heroes/victims (average Arkansans, either way).

But then the Arkansas Bar Association came up with another idea – pass its own, equally far-reaching amendment. It would do away with all the caps included in the Legislature’s measure while also taking more than a few shots at the legislators themselves – increasing transparency for campaign contributions, prohibiting legislators from directing how state funds are spent locally, reducing their authority over state agency decisions, and increasing the number of votes needed to override a governor’s veto from the current simple majority to two-thirds.

An added twist occurred last week, when the State Chamber’s President and CEO, Randy Zook, sent a letter to its members asking them to encourage their hired law firms to vote against the measure.

On Friday, the ABA’s House of Delegates will vote on whether to pursue the amendment, which its Legislation Committee unanimously endorsed.

The pluses? As a political strategy, the amendment would enable the ABA to play offense rather than just defense. Also, instead of the campaign being mostly lawyers vs. business owners and doctors, it also would be a more winnable lawyers vs. legislators.

But unlike the Legislature’s amendment, getting the proposal on the ballot would require supporters to collect 84,859 signatures, which would cost millions of dollars and inevitably lead to a lawsuit by opponents hoping to block the measure.

Things will get really interesting if they’re both on the ballot. One limits jury awards. The other says jury awards can’t be limited. One or the other could pass. If they both pass, the one with the most votes wins. If neither passes, things stay the same – meaning no lawsuit limits.

That means the Bar Association would have more paths to victory than the Chamber-supported amendment. Not necessarily better, but more.

Castro’s death moves Cuba farther into the market for Arkansas rice, ideas

By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

Fidel Castro is dead. How does that affect people in Arkansas? Maybe a lot, especially if they work in the rice industry or are elected to represent people who do.

Cuba’s 11 million people import 400,000 tons of rice each year, mostly from Vietnam, which means the rice arrives after a long boat ride from a country on the other side of the globe. Rep. Rick Crawford’s eastern Arkansas 1st District includes half of America’s rice acreage, so it’s understandable that his reaction to Castro’s death focused on the future, not the past.

“Fidel Castro’s death is an opportunity for America to end its ineffective policies so we can influence the future direction of that nation,” he tweeted, then added, “Through my own visits to Cuba I’ve seen people ready for change. With Fidel dead, America needs to help lead Cuba toward a better future.”

Crawford for some time has been an outspoken supporter of prying open Cuba’s markets, which have been largely closed since Oct. 19, 1960, because of the American trade embargo. He’s pushed legislation to allow Cubans to purchase agricultural products on credit rather than the currently required cash, of which Cubans don’t have much, so they could replace that Vietnamese rice with fresher, cheaper rice grown here.

Two other Arkansas officials who represent those same eastern Arkansas agricultural producers (and voters) took a similar forward-looking approach. Sen. John Boozman tweeted, “I hope the death of Fidel Castro marks a new beginning for an American-Cuban partnership and brings light to democracy in #Cuba.” Speaking to reporters, Gov. Asa Hutchinson called Castro’s death a “moment that I believe needs to be seized.”

President-elect Donald Trump said he would terminate the current opening with Cuba initiated by President Obama unless Cuba makes a better deal for its own people, for Cuban-Americans, and for the United States. That threat may have just been the country’s new dealmaker-in-chief doing what he does, which is start the negotiating process by taking a hard line and then moving away from it.

In response, the governor said Trump’s stance is “understandable,” but while change must be accompanied by enhanced freedom for Cubans, “I hope that we do not go back to the simple, straightforward, rigid embargo that we have tried for 50-plus years.”

Hutchinson and Boozman represent the state while Crawford represents his district, so their remarks were meant for those audiences. Sen. Tom Cotton has an additional audience – a national one. It includes many people who, like him, have argued that this thawing of relations between America and Cuba will only help the Castro regime. Cotton released a two-sentence comment focused on the past, except for one assertion of Castro’s future: “Fidel Castro created hell on earth for the Cuban people. He will now become intimately familiar with what he wrought.”

Count me with Crawford, Boozman and Hutchinson on this one. The American people are supposed to be practical-minded problem-solvers who, when something doesn’t work, try something else. We’re the country where Thomas Edison invented the light bulb through experimentation, failure and more experimentation. And yet when it comes to its Cuba policy, we’ve stubbornly tried the same thing for 56 years that clearly didn’t work. Only old age and death, not the American trade embargo, removed Castro from power. Now his brother, Raul, remains in charge. He’s 85, by the way.

Pry open the doors to Cuba, let in a little freedom, and see what happens. Arkansas rice will be more than just an item on the dinner table. It will be a taste of what a free market economy offers. As Cuba opens itself to visitors from Arkansas and elsewhere, it will not be able to choke off ideas that are contrary to its glorious revolution. Fifty-five years after the failed Bay of Pigs invasion, an army of businessmen, tourists and missionaries will descend on an island 90 miles from Florida, accomplishing what the embargo never could.

Somebody’s going to sell rice to the Cubans, and when they do they’ll also export their ideas and way of life. Currently, that exporter is Vietnam, another repressive communist regime. I think Arkansas offers a better deal.

Casino vote makes strange bedfellows

By Steve Brawner
© 2016 by Steve Brawner Communications, Inc.

There’s a lot more to this debate over the proposed casino amendment than just whether or not Arkansas should have more slot machines than it already does – which is quite a lot between Oaklawn and Southland.

Issue 5 would create a constitutional amendment authorizing the building of one casino each in Washington County, Miller County and Boone County. The casinos would be required to pay the state 18% of their net and would pay 1.5% to the city where they are located and .5% to their local counties. An Arkansas Gaming Commission would regulate.

The amendment’s backers, Arkansas Wins in 2016, say Arkansas should have casinos here because they’re already just across the border elsewhere – in Mississippi, in western Oklahoma; in Caruthersville, Missouri; and in Shreveport, Louisiana. Adding three casinos in Arkansas would keep Arkansas gamblers at home and attract some out-of-staters. A lot of people think going to casinos is fun. If they’re going to gamble, eat at buffets and go to shows, they might as well do it in Arkansas, employing Arkansans, boosting tourism and paying state taxes.

Politics makes strange bedfellows, and that’s definitely true with this issue. Opposed to the effort are faith-based groups such as the Family Council along with the state’s existing gambling providers, Oaklawn and Southland, which race horses and greyhounds on a part-time basis and operate casino-like entities full-time. The Family Council doesn’t want the gambling; Oaklawn and Southland don’t want the competition.

They’ll be working in parallel but not really together. The Family Council will spread through its grassroots network of churches its message that gambling leads to social ills – addiction, divorce, etc. – without the promised economic benefits. Meanwhile, Oaklawn along with Southland’s parent corporation in August donated a total of $109,500 to the Committee to Protect Arkansas’ Values/Stop Casinos Now. In fact, they’re the only donors listed in the required campaign filing with the Arkansas Ethics Commission. That money is funding a lawsuit in the Arkansas Supreme Court to disqualify the amendment.

Four years ago, a group with a similar name and the same chairman, former Arkansas Sheriffs Association Executive Director Chuck Lange, raised more than $1 million from Southland, so that $109,500 is probably just seed money.

The Committee’s messaging so far has focused less on gambling’s ills and more on what the proposed amendment does and doesn’t do. The amendment defines gambling as whatever is legal in Arkansas’ surrounding states and in Nevada, meaning Arkansas policymakers would be handcuffed in defining terms and setting limits. It would allow sports betting and alcohol sales.

Like previous casino amendments that have either been tossed from the ballot or voted down by Arkansans, this one is backed by those who would make money off it. It would embed in the Arkansas Constitution a permanent monopoly granted to two Missouri businessmen, Bob Womack of Branson and Jim Thompson of Blue Eye, and their successors and assignees.

That means no one else could operate a casino anywhere in Arkansas except those two along with Oaklawn and Southland. Those two existing casinos are limited by law, for now, to “electronic games of skill,” such as blackjack tables with electronic “cards” rather than those dealt by humans.

So expect to hear opponents use the words “out of state” a lot, even though Arkansas’ two current gambling establishments also are owned by out-of-state entities – Oaklawn by the Cella family of St. Louis, and Southland by Buffalo-based Delaware North.

All of this very easily could become moot. The issue is now in the hands of the Arkansas Supreme Court, which is considering whether the ballot title is misleading and whether the signatures were collected improperly.

In fact, all four voter-led ballot initiatives – this, two that would legalize medical marijuana, and one that would limit judgments in medical lawsuits – are being sued for one reason or another.

Will at least one of them be disqualified? History shows that’s a pretty safe bet.