The House of Representatives voted today to extend the Bush tax cuts affecting individuals earning less than $200,000 annually and families earning less than $250,000. The vote was 234 to 188, mostly along party lines. Iowa Democrats Bruce Braley, Dave Loebsack and Leonard Boswell all voted for the bill, while Republicans Tom Latham and Steve King voted against it. If you click on the roll call, you might notice the vote was on a “Motion to Concur in the Senate Amendment with an Amendment” to the Airport and Airway Extension Act of 2010, Part III. Adding the tax cut language to this vehicle, instead of introducing a new bill, was done to deny Republicans the chance to make a motion to recommit and attach the rest of the Bush tax cuts. David Waldman walks you through the House procedural weeds.

Only three House Republicans voted for this bill, which would permanently extend the Bush tax cuts for 98 percent of filers. Every recent poll shows a minority want to extend the tax cuts for the top income levels. It’s disgusting that Republicans can’t accept even this bill, which gives more money back to wealthier people anyway.

The White House response to today’s vote was even more disgraceful:

“The President continues to believe that extending middle class tax cuts is the most important thing we can do for our economy right now and he applauds the House for passing a permanent extension.  But, because Republicans have made it clear that they won’t pass a middle class extension without also extending tax cuts for the wealthy, the President has asked Director Lew and Secretary Geithner to work with Congress to find a way forward.  Those discussions started just yesterday and are continuing this afternoon.  The talks are ongoing and productive, but any reports that we are near a deal in the tax cuts negotiations are inaccurate and premature.”

Who still believes that Barack Obama wants to win this battle? He isn’t even trying. I wonder if he’s been planning to cave on this issue all along.

Meanwhile, the House passed the Healthy, Hunger-Free Kids Act of 2010 today by a vote of 264 to 157. All Iowa Democrats voted yes, as did Latham (one of just 17 Republicans to cross the aisle on this issue). King voted no, along with most of the Republican caucus. The Senate passed this bill by unanimous consent in August. It would improve the school lunch program and fund other child nutrition programs, but unfortunately food stamp funding was used to cover part of the cost. Senator Tom Harkin’s office summarized the bill’s provisions, and I’ve posted that statement after the jump. Referring to the food stamp funding, Harkin states, “President Obama, however, has committed to work with Congress to replace this offset before these SNAP [food stamp] cuts take place in November 2013.” I wouldn’t count on the president keeping that promise in light of today’s White House statement on tax cuts.

UPDATE: Senator Tom Harkin said on December 2 that if Obama caves on the Bush tax cuts, “He would then just be hoping and praying that Sarah Palin gets the nomination.”

Debi Durham’s appointment as economic development leader was the big news of the week from Governor-elect Terry Branstad’s camp, but he and his close advisers continue to lay the groundwork for his administration.

After the jump I catch up on stories about the state budget, inauguration plans, and top Branstad donors from the past year.

For a smart guy, President Barack Obama has surprisingly poor bargaining skills. Putting lots of tax cuts in the too-small stimulus without insisting on Republican concessions made the Recovery Act less stimulative but failed to win bipartisan support for it. Expanding off-shore oil drilling without gaining anything concrete from Republicans did nothing to advance a comprehensive energy bill.

Despite those failures, Obama still seems unable to start negotiations from a position of strength. To set the tone for his first post-election meeting with Congressional Republican leaders, the president announced a new policy designed to appeal to conservatives, with no strings attached. During yesterday’s meeting, he even apologized to top Republicans for not reaching out to them more.

Naturally, Republicans haven’t made any policy gestures toward the president this week, nor have they apologized for not working constructively with him.

Millions of Americans will pay the price for Obama’s inability to grasp basic negotiating tactics.

Advocates celebrated passage of a constitutional amendment creating a Natural Resources and Outdoor Recreation Trust Fund for Iowa, but there’s no guarantee new money will ever be allocated to protecting soil and water. Governor-elect Terry Branstad and incoming Iowa House Speaker Kraig Paulsen said yesterday a sales tax increase is off the table:

“This election was to a large extent driven by growth in government,’ said Paulsen, a Republican from Hiawatha. “Too much spending. Too much debt. The public did not elect Republicans so we could come down and raise taxes.”

“I don’t see House Republicans passing a sales tax increase for the forseeable future,” Paulsen said. “I don’t even think that will be under consideration.”

Said Branstad, of Boone: “I don’t support any tax increases. I made that clear during the election,” Branstad said. ” If it’s contingent on a sales tax increase, we’ve said there won’t be a sales tax increase. I’m supportive of conservation funding, but not raising taxes.”

Sean McMahon of Iowa’s Water & Land Legacy, the coalition that pushed for the new fund, on Tuesday said his organization is considering its next move. It may leave it up to individual Iowans and various environmental and recreation groups to push for the tax.  The group spent several years pushing the issue to a vote, and some of the preparation went back a decade.

Asking environmental groups and the “hook and bullet” crowd (Izaak Walton League, Pheasants Forever, Ducks Unlimited) to push for a sales tax increase would be a disastrous waste of time. The votes won’t be there in the legislature, and Branstad won’t want to break his promise on tax hikes as quickly as he did in 1983. Anyway, people like me didn’t get involved with the environmental movement to advocate for regressive taxes.

Groups that worked to pass this amendment should focus on lobbying for direct appropriations to the new fund. Voters approved the amendment by a wide margin. Making waterways safer for recreation and improving habitat for wildlife can be viewed as economic development tools for small towns and rural areas. Finding private donors who agree to match all or part of the state’s contribution to the fund might persuade legislators to get the conservation efforts going on a small scale. Successes would build a constituency for increasing the funding in future years.

That strategy may not work, but it’s better than pinning all hopes on a sales tax hike that won’t happen. Bleeding Heartland readers, please share your thoughts or suggestions for getting money allocated to the natural resources fund.

For your “no one could have predicted” file: going into today’s election, Mariannette Miller-Meeks is the Iowa Republican U.S. House challenger considered to have the best chance of winning. When she announced plans to run in the second Congressional district again last year, I thought she was way too conservative to have a shot against two-term incumbent Dave Loebsack. IA-02 has a partisan lean of D+7, and Miller-Meeks received less than 40 percent of the vote in 2008. For months the district was considered safely Democratic, while Iowa’s third Congressional district was rated a tossup.

Loebsack is still favored to win a third term, according to most election forecasters. The early vote numbers look strong for Democrats in his district. That said, Miller-Meeks has a realistic chance to become the first woman elected to Congress from Iowa, especially if Democratic House losses are on the high end of forecasts (60 to 80 seats).

Follow me after the jump for more on how Miller-Meeks and Loebsack have appealed to voters since the last time Bleeding Heartland discussed this race in detail.

Exactly one week before election day, State Auditor David Vaudt released his report on Iowa’s film tax credit program, which Governor Chet Culver halted in September 2009. The audit found problems with about $26 million of the $32 million in tax credits awarded under the program. The Des Moines Register summarized the key findings and covered the civil and criminal cases filed so far in connection with fraudulent film tax credits.

Getting this fiasco back in the spotlight is likely to hurt Culver and help GOP candidate Terry Branstad, whom Vaudt has endorsed and joined on the stump. Branstad’s campaign seized on the chance to slam inadequate oversight of the film tax credit program. Vaudt probably also benefits from making news just before voters will see his name on the ballot. The audit featured prominently in newscasts on October 26 and was a front-page story in many Iowa newspapers the following day. According to Radio Iowa,

Vaudt, a Republican, was asked about the timing of the release of the report the week before the election.

Vaudt says the governor actually requested the investigation, and his office worked in collaboration with the Department of Revenue and the Attorney General’s office. Vaudt says they handled this report like any other and released it once the report was completed.

More like two months after completing the report. Radio Iowa posted the full report here (pdf file). On page 6, a cover letter from Vaudt and his chief deputy, Warren Jenkins, states, “Copies of this report have been filed with the Department of Management, the Division of Criminal Investigation, the Attorney General’s Office and the Polk County Attorney’s Office.” That letter was dated August 19, 2010. What’s Vaudt’s excuse for waiting nearly ten weeks to release the report to journalists?

Culver told the Des Moines Register on Tuesday, “The timing is interesting. It was purely political but [Vaudt]’s been the most partisan auditor that we’ve ever had so it’s not a surprise.” Scott Harrington, campaign manager for Democratic candidate for state auditor Jon Murphy, on 26 October asked Vaudt “to provide a detailed timeline as to how today was determined to be the appropriate date to release this report.” I’m not holding my breath until that happens.

Governor Chet Culver and Republican Terry Branstad debate for the third and last time today at noon in the Iowa Public Television studios. You can watch live at the Des Moines Register website, IPTV.org or on Mediacom Channel 119. Tonight Iowa Public TV will rebroadcast the debate statewide at 8 pm.

After the jump I’ll cover recent news from the gubernatorial campaign and the main points Culver and Branstad are likely to emphasize today.  

In another sign of a competitive race in Iowa’s second Congressional district, the Democratic Congressional Campaign Committee has spent $90,000 to run a television commercial against Mariannette Miller-Meeks.

The ad targets Miller-Meeks’ support for a national sales tax, but does so in a misleading way. Video, script and a few comments are after the jump.

I figured Republican Mariannette Miller-Meeks was too conservative to have a chance against Representative Dave Loebsack in Iowa’s second Congressional district. Loebsack represents the most Democratic-leaning House district in the state (partisan index D+7), and Miller-Meeks failed to reach the 40 percent mark in 2008. But I was wrong. Plenty of House incumbents who cruised two years ago are in tough races now, and many signs point to a highly competitive rematch in IA-02.

It’s been too long since Bleeding Heartland last checked in on this race. Television commercials for Miller-Meeks and Loebsack are after the jump, as well as highlights from this week’s debate between the candidates.

Since last spring, I’ve thought conservatives who denied the Iowa Supreme Court’s authority to rule on marriage didn’t grasp the judicial review concept. But Reverend Cary K. Gordon of the Cornerstone World Outreach church in Sioux City proved me wrong with his prayer:

“Dear God, please allow the IRS to attack my church, so I can take them all the way to the U.S. Supreme Court.”

Gordon says he’ll defy federal tax laws this month by urging his congregation to vote against the retention of three Supreme Court justices because of the ruling that effectively legalized same-sex marriage in Iowa. He’s asked 1,000 church leaders to join him, prompting a complaint to the Internal Revenue Service.

Churches and other nonprofit organizations are prohibited from directly advocating for or against candidates. Their tax-exempt status is at risk if they do, although the IRS rarely goes so far.

Gordon is among church leaders who feel the restriction is unconstitutional. He apparently sees no irony in seeking court protection.

Gordon has been recruiting Iowa clergy to preach a “no” vote on judicial retention for the past month. He thinks he has a strong case on First Amendment grounds. There’s plenty of legal precedent for requiring tax-exempt organizations to refrain from certain kinds of political advocacy. But I’m more amused by Gordon’s desire to have the courts strike down part of a tax code adopted by the people’s representatives. How is that different from the Iowa Supreme Court striking down a key provision of Iowa’s Defense of Marriage Act?

Supreme Court Chief Justice Marsha Ternus, one of three high court judges on the ballot this year, noted Gordon’s hypocrisy in a speech at Iowa State University yesterday:

“The pastor claims this law is unconstitutional, and has vowed to challenge the law – where? In the courts,” she said. “It seems the pastor is quite comfortable arguing the will of the people, as expressed in this federal law, can be declared void in the courts.”

Ternus also asserted that activists urging a no vote on retention “are blinded by their own ideology.”

“They simply refuse to accept that an impartial, legally sound and fair reading of the law can lead to an unpopular decision.” […]

One of the main arguments for those wishing to oust the justices is centered around the idea that the justices did not have the authority to overturn the marriage law. As she extensively points out, judicial review is entrenched in both the American and Iowan judicial tradition, seeing support from the 1787 Constitutional Convention and from the authors of the Iowa Constitution. […]

Critics have also said justices subverted the will of the people by overturning a state law that is supported by a majority of Iowans. Ternus refutes this claim and other claims of judicial activism by saying the court fulfilled its constitutional role by acting in the interests of protecting constitutionally protected rights.

“When ruling that a statute violates the constitution the court does not usurp the powers of the other branches of government, the court exercises its own authority,” she said. “The court is not legislating from the bench, it is resolving a dispute between the parties by declaring the legislature’s act unenforceable because it violates the will of the people as expressed in their constitution.”

I’m concerned about the retention vote, partly because the judges’ opponents are spending so much money, and partly because about 25 percent of voters typically vote against retention even in a year without controversy. Share any thoughts about these election in this thread.

The House of Representatives approved the Small Business Jobs Act today by a vote of 237 to 187. Iowans Bruce Braley, Dave Loebsack and Leonard Boswell joined most House Democrats in supporting the bill; Tom Latham and Steve King joined all but one House Republican in voting no. CNN summarized the bill’s main provisions:

The Small Business Jobs Act authorizes the creation of a $30 billion fund run by the Treasury Department that would deliver ultra-cheap capital to banks with less than $10 billion in assets.

The idea is that community banks do the lion’s share of lending to small businesses, and pumping capital into them will get money in the hands of Main Street businesses.

Another provision aims to increase the flow of capital by providing $1.5 billion in grants to state lending programs that in turn support loans to small businesses. The state programs have proven themselves to be efficient, targeted and effective, but with many states struggling to balance their budgets, the programs are going broke.

The bill would also provide a slew of tax breaks that will cost $12 billion over a decade, according to a preliminary estimate from the Joint Committee on Taxation. The breaks aim to encourage small businesses to purchase new equipment, to incentivize venture capital firms to invest in small businesses, and to motivate entrepreneurs to start their own business.

When the Senate approved the same bill on a mostly party-line vote, Democrat Tom Harkin voted for it, while Republican Chuck Grassley voted against. Several House Republicans today characterized the lending fund as another “bailout”; Grassley used the same talking point last week. Republicans have supported similar small business tax breaks in the past, and the House Republicans’ new “Pledge to America” mentions small business many times.

In other news from Congress, a motion to start debate on new campaign finance regulations fell one vote short in the Senate. All 59 senators who caucus with Democrats voted for the DISCLOSE Act, but 60 votes are needed to pass a cloture motion. Grassley was among 39 Senate Republicans to voted against starting debate on this bill. Open Congress summarized the DISCLOSE Act as follows:

This is the Democrats’ response to the Supreme Courts’ recent Citizens United v. FEC ruling. It seeks to increase transparency of corporate and special-interest money in national political campaigns. It would require organizations involved in political campaigning to disclose the identity of the large donors, and to reveal their identities in any political ads they fund. It would also bar foreign corporations, government contractors and TARP recipients from making political expenditures. Notably, the bill would exempt all long-standing, non-profit organizations with more than 500,000 members from having to disclose their donor lists.

The DISCLOSE Act wouldn’t do nearly enough to reduce the influence of money in American politics, but it’s amazing to see Republicans united against even these modest disclosure rules and restrictions. Democratic Senate candidate Roxanne Conlin’s campaign sharply criticized Grassley’s vote:

“Senator Charles Grassley voted today to allow foreign interference in U.S. elections.  This vote means that BP and other foreign companies, the Iranian government and other foreign governments, are free to spend any amount of money to affect the outcome of U.S. elections,” said Conlin spokesperson Paulee Lipsman.

“In voting against debate on the federal DISCLOSE ACT, meant to provide Iowans with information on who is funding campaign attack ads, Senator Grassley also sided with the Wall Street bankers, insurance companies, corporations and other special interests who have filled his campaign war chest.  The Senator is protecting those who want to anonymously produce the ads filled with distortions and lies that are intended to influence voters.”

Grassley also voted against ending the filibuster on the DISCLOSE ACT on July 27.

Senator Chuck Grassley remains a loud and proud voice for extending all the Bush tax cuts, as he and Democratic challenger Roxanne Conlin argue over who is the real advocate for small business interests.

That and other news from the U.S. Senate race is after the jump. You can also view Conlin’s second television commercial of the general election campaign, which introduces her as “one tough grandma.”

The Cedar Rapids Gazette said that Rep. Dave Loebsack is considering extending the Bush tax cuts for everyone, not just the middle class.  Here's the money quote:

…what do we do about those making over $200,000 a year and couples making over $250,000?  I've said all along that I didn't want to extend those tax cuts, but I'm rethinking that at the moment.

This is so out of character for Dave that its hard to believe he is serious.  Is there something in the water in DC?

Anyway, I have written him about this and I encourage any other second district voters to do the same.  Here is his congressional website:

              http://loebsack.house.gov/

 (The original Gazette article is “Loebsack considering extension of Bush tax cuts” by James Q. Lynch, Cedar Rapids Gazette, Sept. 11, 2010, p.7.)

Last week I highlighted the half-truths and misleading arguments that underpin Iowa Senate minority leader Paul McKinley’s case against Democratic governance in Iowa. I wasn’t planning to revisit the Republican leader’s fantasy world until I read the July 16 edition of his weekly e-mail blast. McKinley claims to offer five “big ideas” to “make Iowa again a state where jobs and prosperity can flourish.”

His premise is absurd when you consider that CNBC just ranked Iowa in the top 10 states for doing business (again), and number one in terms of the cost of doing business. Many of McKinley’s specific claims don’t stand up to scrutiny either, so follow me after the jump. There’s also a poll at the end of this post.

Between 1984 and 2007, “The gap between the wealth possessed by white and black families grew more than four times larger,” in part because of tax cuts and policies that favored high-income groups. Researchers from the Institute on Assets and Social Policy at Brandeis University also found in a new report that the average middle-income white family was able to accumulate more wealth (assets minus debts) than the average high-income African-American family: “Consumers of color face a gauntlet of barriers – in credit, housing and taxes – that dramatically reduce the chances of economic mobility.”

The growing wealth gap between the races in the U.S. is the focus of the new report, which you can download here. Other researchers have found equally damning evidence of the widening gap between the very rich and everyone else. This graph shows how “the top 10 per cent of income earners in the US took home an ever more outsized share of the total national income starting at the end of the 1970s.” From the World War II era to the early 1980s, the “top 10 percent took 30-35 per cent of total national income,” but by 2007 that figure had grown to about 50 percent–a level not seen since just before the Great Depression.

Ronald Reagan’s fiscal policies started this trend, but George W. Bush accelerated it with his enormous tax cuts for the highest earners. During Bush’s presidency, “The share of the nation’s income flowing to the top 1 percent of households increased sharply, from 16.9 percent in 2002 to 23.5 percent in 2007 – a larger share than at any point since 1928.” In addition, approximately “Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households […].”  

This enormous wealth gap is invisible to the Reagan-worshippers who now dominate the Republican Party. For them, any attempt to increase working-class wages is a “job-killer,” and tax cuts that disproportionately benefit the well-off are the solution to every problem. Look at how the Republican candidates for Iowa governor balk at spending $42 million to send more than 12,000 kids to pre-school but brag about plans to cut corporate taxes by $80 million to $160 million. Their priorities would be laughable if the real-world consequences were not so tragic.

Share any relevant thoughts in this thread.

Terry Branstad’s campaign launched its third television ad today, about a month after his first commercials started running statewide in Iowa. The new commercial depicts Branstad as “the real conservative change we needed then… and now.”

Here’s the ad script:

The farm crisis … Budget deficits… Skyrocketing unemployment…

That’s what Terry Branstad faced when he was elected governor.

But this Winnebago County farm kid put his rural values right to work, recruiting thousands of jobs, cutting out half the state agencies and taxes $124 million – leaving us record employment, and a $900 million surplus.

Terry Branstad is the real conservative change we needed then… and NOW.

Time for a reality check.

Branstad was first elected governor near the bottom of one economic cycle (at that time the most severe recession since World War II) and was fortunate to retire near the peak of the Clinton boom years. However, job gains during Branstad’s tenure as governor did not fulfill promises he made during his campaigns.

Iowa reorganized state government in 1985, eliminating some agencies and merging others into larger departments. On the other hand, total state government employment increased from 53,342 in 1983 to 61,400 in 1999. Total receipts in the state’s general fund increased from $1.899 billion in 1983 to $4.881 billion in 1999. That 166 percent increase was more than the rate of inflation during the same period, and Iowa’s population was no larger when Branstad retired than it was when he was first elected.

The huge growth in the general fund budget would not have been possible without various tax increases Branstad signed into law. Increased revenue from two sales tax hikes dwarfed the $124 million in tax cuts highlighted in Branstad’s new commercial. Those cuts came primarily from reducing income and estate taxes, delivering most of the benefits to wealthier Iowa families. Unfortunately, Branstad’s sales tax increases disproportionately hit lower-income families, who spend a greater share of their money on essentials.

Branstad was far from reluctant to raise taxes. He asked the state legislature to increase the sales tax in his very first budget address, within days of being inaugurated in 1983.

I expect Branstad to win the Republican primary on June 8 despite his accountability problem. Bob Vander Plaats is a strong speaker but doesn’t have the financial resources to publicize his case against the former governor. Rod Roberts isn’t trying to make a case against Branstad, as far as I can tell. His function in the campaign seems to be to prevent Vander Plaats from consolidating the conservative vote in the primary.

However, during the general election campaign, Branstad will face an opponent with the resources to compare his record with his rhetoric. I wonder how many conservative Republicans will either stay home in November or check the Libertarian box in the governor’s race.

UPDATE: Kathie Obradovich says the $124 million figure “is the campaign’s calculation of the net result of all the tax changes enacted under Branstad – an overall reduction of $124 million, in 2008 inflation-adjusted dollars.” I would like to see a calculation of all the Branstad-era sales and gas tax increases in 2008 dollars. Hint: it would work out to a lot more than $124 million.

SECOND UPDATE: Branstad “had an elective heart procedure” today to put a stent in a partially blocked artery. I hope he feels better soon. His campaign released a statement from his doctor saying, “Governor Branstad should be able to resume his normal campaign schedule within the next few days and should quickly return to his normal lifestyle without limitations. He should be fully capable of performing the activities of a candidate and a Governor.”  

The Libertarian Party of Iowa convened on April 24 to nominate several candidates for statewide offices. The Libertarian candidate for governor is Eric Cooper, a neuroscience expert in the Iowa State University Psychology department. In his speech to the delegates, Cooper said frankly that the Libertarian Party had not been effective in the past. He laid out a “10 percent strategy” for Libertarians to “get everything we want without ever winning an election.” You can watch Cooper’s whole speech here, but I posted a rough transcript of some interesting parts after the jump.

Minnesota Governor Tim Pawlenty was in Iowa this weekend to headline an event organized by Iowans for Tax Relief. The crowd cheered the future presidential candidate after Pawlenty blasted the Obama administration and proposed one bad idea after another.

Pawlenty’s “economic bill of rights” includes requiring Congress to balance the budget every year. Freezing or reducing federal spending every time revenue drops is great if you like turning recessions into depressions, but basic economic facts won’t stop Pawlenty from pandering to the “Party of Hoover” set. I wonder whether Pawlenty’s proposed balanced budget amendment still includes “exceptions for war, natural disasters and other emergencies.”

Pawlenty also wants line-item veto powers for the president. The U.S. Supreme Court has already ruled that unconstitutional at the federal level, and it’s unlikely Congress would ever approve a constitutional amendment on this matter.

In addition, Pawlenty favors extending the Bush tax cuts for the wealthiest Americans. Those tax cuts didn’t prevent the most severe economic recession since World War II, but they did manage to massively increase our national debt and deficit while delivering most of the benefits to the top few percent of the population.

But wait, there’s more to Pawlenty’s wish list: “He also called for requiring a supermajority of Congress to raise taxes or the debt ceiling.” Unfortunately, that would exacerbate our budget problems. When the Pew Center on the States examined state fiscal problems last year, a common feature of the states deemed “most like California” was a supermajority requirement for tax increases or budget decisions.

By the way, Iowa received higher overall marks than Minnesota in that Pew Center on the States report, which looked at six indicators to determine each state’s fiscal health.

Speaking to the Iowans for Tax Relief crowd, Pawlenty bragged about getting Minnesota out of the top 10 states for taxes but glossed over other aspects of his record as governor. Iowa Republicans have hammered Democrats for supposedly “overspending,” even though our state leaders have kept our budget balanced without depleting our state’s reserve accounts. What would they say if they knew about Pawlenty’s record?

During Pawlenty’s first year as governor, the state drew down its reserves and relied too heavily on one-time revenue to address its budget problem.  As a result, the state lost its Aaa bond rating from Moody’s Investors Service; the state has yet to regain its Aaa rating from Moody’s.

The 2009 report of the bi-partisan Minnesota Budget Trends Study Commission has recommended that the state build up its budget reserves and cash flow account in response to an increasingly unstable revenue outlook.  All members of the Commission, including the five appointed by Governor Pawlenty, endorsed this recommendation.

Pawlenty and state legislators couldn’t agree on an approach to balance the Minnesota budget. As a result, last year “Minnesota’s [projected] budget gap was the largest in the nation on a per capita basis.” Pawlenty can bash President Obama, but his state desperately needed the roughly $2.6 billion it received through the federal stimulus bill to help cover the shortfall. Even with the stimulus money, Minnesota was still billions of dollars short. So, in addition to some spending cuts, Pawlenty proposed “a bond issue that would be paid for by existing and forecast revenues from the tobacco settlement-a one-time fix disliked by some because it aimed to use long-term borrowing to pay for current state operations.”

To be clear: Pawlenty wanted the state of Minnesota to borrow money to pay its bills. In contrast, Iowa’s state borrowing program (I-JOBS) is funding capital investments in infrastructure. Last summer, Iowans for Tax Relief in effect ran the Republican campaign for a special election in Iowa House district 90. During that campaign, the Republican candidate made false and misleading claims about Iowa’s state budget and borrowing. How ironic that the Iowans for Tax Relief crowd gave a standing ovation to a panderer with a much worse record of fiscal management.

Not only did Pawlenty want Minnesota to borrow money to pay its bills, he also decided that underfunding local governments and forcing them to draw down their own reserves was a good way to control spending for the 2010-2011 budget period. Yes, Pawlenty decided in 2009 that cutting aid to local governments by hundreds of millions of dollars was a good way to balance the state budget:

“Many [cities], if not all, have reserve funds, or rainy day funds, and they should use them,” Pawlenty said.

He also talked of the option cities have of raising property taxes to make up for any LGA [local government aid] cuts.

One of the Republican talking points against Iowa Governor Chet Culver is that his midyear budget cuts supposedly forced local governments to raise property taxes. Yet Pawlenty gets a free pass from his Iowa Republican friends. Culver’s across-the-board budget cut last October wasn’t popular, but it did keep state government from overspending. In contrast, late last year Minnesota’s cash flow was so poor that state officials considered short-term borrowing to meet budget obligations.

“It’s a bad sign,” said former state Finance Commissioner Peggy Ingison, now chief financial officer with Minneapolis public schools. “It signals you didn’t have good fiscal discipline.”

Minnesota has muddled through without borrowing money to pay bills so far, but prospects for later this year are dicey:

State budget officials updated lawmakers [April 12] on Minnesota’s precarious cash-flow situation. They all but ruled out short-term borrowing for the 2010 budget year that ends June 30.

Budget director Jim Schowalter says “deep cash problems” loom for the 2011 fiscal year. Barring law changes, spending cuts and upticks in revenue, he says the state might have to take out short-term loans to meet its obligations.

The Minnesota Budget Bites blog takes a more detailed look at the state’s “troublesome” picture for fiscal year 2011. BulliedPulpit posted a good rebuttal of “TPawnomics” at MN Progressive Project.

The last thing our country needs is budget advice from Tim Pawlenty.  

I was disappointed by some compromises made to pass the stimulus (the American Recovery and Reinvestment Act) in February 2009. I felt President Obama made too many concessions in the fruitless pursuit of Republican votes, and that too much of the cost went toward tax cuts that would be slower-acting and less stimulative than certain forms of government spending.

That said, the tax cuts in the stimulus will help tens of millions of American families, particularly those with working-class or middle-class incomes. Citizens for Tax Justice has calculated that “the major tax cuts enacted in the 2009 economic stimulus bill actually reduced federal income taxes for tax year 2009 for 98 percent of all working families and individuals. ”

In terms of the number of Americans who benefited, the stimulus bill was the biggest tax cut in history. That is, “the estimated $282 billion in tax cuts [from the stimulus] over two years is more than either of the 2001-2002 or the 2004-2005 Bush tax cuts or the Kennedy or Reagan tax cuts.” George W. Bush’s tax cuts were more costly to the U.S. Treasury over a 10-year period, but as Anonymous Liberal noted last year,

The Bush tax cuts were skewed dramatically toward the wealthy. In 2004, 60% of the tax cuts went to the top 20 percent of income earners with over 25% going to the top 1% of income earners. Those numbers have increased since then as the cuts to the estate tax have taken effect.

Tomorrow is the deadline for most Americans to file their tax returns, and Republicans will try to harness the tea party movement’s anger at what they view as excessive taxes and spending. However, many ordinary people may be shocked to learn how large their refunds are this year. According to the White House, “the average tax refund is up nearly 10 percent this year.”

Democrats should not be afraid to vigorously defend the stimulus bill during this year’s Congressional campaigns. I wish the recovery act had been larger and better targeted, but the bottom line is that Republicans voted against the largest ever middle-class tax cut.

The White House website has this Recovery Act Tax Savings Tool to help people find benefits to which they are entitled. After the jump I’ve posted a fact sheet on this subject, which the White House press office released on April 12. Note: if you have already filed your taxes, you can amend them after April 15 to collect on any credits from the stimulus bill that you missed.

Last night I watched the Republican gubernatorial debate on Iowa Public Television. If you missed it, you can read the full transcript here. Some Iowa stations are rebroadcasting the debate this Sunday too.

One of the worst things about televised debates is the lack of follow-up by the journalists who moderate. Wednesday’s exchange provided a classic example of this problem.  

I have a tasty-smelling homemade rosemary-crust, turkey pepperoni pizza in the oven, but I just got a wacky-tax phone survey and wanted to report.  I wonder who is looking for what in the suburbs of our fair city?

At 1 pm today Terry Branstad, Bob Vander Plaats and Rod Roberts will face off in the first of three debates before the gubernatorial primary in June. I won’t be able to watch the live stream at KTIV’s site, so I’ll have to catch the repeat on Iowa Public Television, whenever that will be shown. I wanted to put up this thread so Bleeding Heartland readers can chat about the debate. I will update this post later with early write-ups about the event. Rod Roberts seems to have the most to gain from this debate, since he is the least-known candidate in the field.

The Republicans will throw around lots of numbers about taxes and spending, and those will need a lot of fact-checking. The truth is that Iowa doesn’t have a budget deficit, and the independent analysts who have given our state the highest bond rating recognize our relatively strong fiscal position. Like every other state, Iowa experienced a steep drop in revenues because of the recession, but unlike most other states, we have not fully depleted our cash reserves.

Which Republican candidate will come across as the most fiscally responsible person today? Will it be:

Terry Branstad, whose mismanagement was so legendary that a number of elected Republicans favored his primary challenger in 1994?

Bob Vander Plaats, whose management skills don’t seem to have helped his non-profit thrive financially, and who did a 180-degree turn on tax credits between March 2009 and January 2010?

Or Rod Roberts, who is so very serious about the governor’s responsibilities that he thinks adopting a state budget is of secondary importance to stopping same-sex marriage?

The floor is yours.

UPDATE: I still haven’t had a chance to watch the debate, but fortunately, Iowa Public Television will air it tonight at 8 pm. Over at Iowa Independent, Jason Hancock thought Vander Plaats won but “never achieved the game-changing moment his campaign needed.” Todd Dorman didn’t see a lot of substance or new ideas on display and partly blamed the debate format.

Later today the three Republican candidates for governor will hold their first debate. When discussing state fiscal issues, they are likely to advance two contradictory arguments. First, they will criticize alleged “overspending” by Iowa Democrats, ignoring the good marks our state has received for fiscal management and the fact that severe state budget cuts would be a big drag on the economy. I will address those points in a future post.

Second, the Republican candidates for governor will criticize spending reductions Democrats included in next year’s budget, on the grounds that those cuts will force corresponding increases in property taxes statewide. It’s true that many Iowans will pay more in property taxes because of changes related to the “rollback” calculation, which “determines the percentage of a property’s actual value that will be taxable” in a given year. Former GOP gubernatorial candidate Chris Rants explained here why the rollback figure is on the rise. It has nothing to do with the tough choices Democrats made on the 2011 budget.

Rants and other Republicans are wrong to suggest that any cut in state spending will automatically lead to further property tax hikes. (They’ve been making that claim since Governor Chet Culver’s across-the-board budget cut last October.) Here’s just one example of why their assumptions are flawed. The Des Moines Register reported Tuesday on how Des Moines area school districts are coping with budget shortages. All of the districts will receive less from the state in the next fiscal year. Thankfully, the cuts are smaller than the worst-case scenarios floated in February, because Iowa House and Senate Democrats sought to protect K-12 education from severe budget cuts.

Anyway, all Iowa school districts are adapting to the reduction in state funding. But contrary to what Iowa Republicans are telling you, many districts, including the state’s largest in Des Moines, have ruled out property tax increases. Of the 10 central Iowa school districts mentioned in this article, only three are raising property taxes, and one more is considering that step. The others are cutting expenses and in some cases using money from cash reserves to cover the shortfalls in the coming fiscal year.

Some local governments in Iowa will raise property tax rates, but as with school districts, many will get by with spending or service cuts instead. I support additional federal fiscal aid to local and state governments, because the collapse in revenues is the most severe in six decades, and spending cuts could hamper the economic recovery. But naturally, the same Republicans who scream about property tax hikes are against using “one-time federal money” to help balance budgets.

Share any relevant thoughts in this thread.

Representative Steve King doesn’t come across as the most compassionate guy in the world, bragging about opposing aid for Hurricane Katrina victims and questioning the need to stop deporting undocumented Haitian immigrants after last month’s earthquake.

But if you thought King was incapable of feeling empathy, you’re wrong. Over the weekend he spoke to a panel on immigration at the Conservative Political Action Conference:

During his closing remarks, King veered into a complaint about high taxes, and said he could “empathize” with the man who flew a plane into an IRS building last week.

During the question and answer session, the Media Matters staffer asked King to clarify his comment, reminding him of his sworn duty to protect the American people from all sworn enemies, foreign and domestic. In response, said the staffer, King gave a long and convoluted answer about having been personally audited by the IRS, and ended by saying he intended to hold a fundraiser to help people “implode” their local IRS office.

That’s right, King feels empathy for a guy who crashed his plane into a federal building, intending to harm the IRS employees inside. In the process, the man killed a loving family man and longtime federal worker who served two terms in Vietnam.

Following King’s remarks at the CPAC panel, a man with a video camera gave the congressman a chance to clarify his remarks. King dug deeper. (continues after the jump)

The Iowa Legislature has been moving at an unusually fast pace during the shortened 2010 session. It’s time to catch up on what’s happened at the statehouse over the past three weeks. From here on out I will try to post a legislative roundup at the end of every week.

February 12 was the first “funnel” deadline. In order to have a chance of moving forward in 2010, all legislation except for tax and appropriations bills must have cleared at least one Iowa House or Senate committee by the end of last Friday.

After the jump I’ve included links on lots of bills that have passed or are still under consideration, as well as bills I took an interest in that failed to clear the funnel. I have grouped bills by subject area. This post is not an exhaustive list; way too many bills are under consideration for me to discuss them all. I recommend this funnel day roundup by Rod Boshart for the Mason City Globe-Gazette.

Note: the Iowa legislature’s second funnel deadline is coming up on March 5. To remain alive after that point, all bills except tax and appropriations bills must have been approved by either the full House or Senate and by a committee in the opposite chamber. Many bills that cleared the first funnel week will die in the second.  

Republicans have complained for years about Democrats allegedly spending too much on “big government,” but a majority of Iowans think state government is about the right size, according to the latest poll by Selzer and Co. for the Des Moines Register. The poll surveyed 805 Iowa adults between January 31 and February 3 and has a margin of error of plus or minus 3.5 percent. Respondents were asked, “In general, do you think the size of state government is too big, about right, or too small?” 52 percent said “about right” and only 39 percent said “too small.”

The Des Moines Register poll also indicates that Iowans would rather tap into the state’s tax reserves, raise fees and perhaps even raise taxes than impose massive service cuts or lay off hundreds of state workers.

The poll tested eleven options for balancing the budget and asked whether that option should be considered, strongly considered or taken off the table. The largest majority (76 percent) said consolidating some state government services should be considered or strongly considered. The Iowa legislature will pass a government reorganization bill this session, but the savings won’t be large enough to avoid other painful budget decisions.

The next largest majority (61 percent) supported considering taking up to $200 million from the state’s cash reserves. But even that probably wouldn’t be enough to balance the 2011 budget.

The other three options that at least half of respondents said should be considered were “increase fines, license fees and other user fees” (53 percent), expand gambling by allowing casinos to host large poker tournaments (51 percent) and raise the sales tax by 1 percent (51 percent).

The Register reported that several political observers found the sales tax numbers most surprising. I was more surprised to see the public evenly divided on raising the income tax. Some 48 percent of respondents said “lawmakers should consider raising state income taxes by a half percentage point; 50 percent said that idea should come off the table.”

The Register’s poll found much less support for “cutting services to thousands of Iowans” (just 33 percent favored considering that option, while 60 percent said it should be taken off the table). Only 42 percent favored considering laying off hundreds of state employees or consolidating school districts. Only 43 percent said legislators should consider eliminating all business tax credits. Just 45 percent said reducing the number of Iowa counties should be on the table.

My point is not that politicians should put blind faith in the wisdom of crowds. I don’t agree with every finding in this poll. I’d rather reduce the number of counties and scrap many business tax credits than raise the sales tax, and I find Iowans’ support for the film tax credit baffling.

The larger message from this poll is that Iowa Democrats should not cower in fear when Republicans bash “big government.” Offered a range of choices for balancing the state budget, most Iowans would prefer not to see services slashed. The Register’s November 2009 poll pointed to the same conclusion, finding broad support for spending increases Democrats have adopted in recent years.

Republicans will be cheered by the portion of Selzer’s latest poll that found one-third of Iowans called themselves supporters of the “tea party” movement, and a majority believe state government is spending too much money. To me that suggests the framing of the budget issue will be critical for this November’s elections. Democrats need to convince voters that they did all they could to find efficiencies in state government without cutting priority areas. If Republicans object, for instance, that the state could have saved tens of millions of dollars by ending the preschool initiative started in 2007, Democrats must point out that doing so would have cut off early childhood education for about 13,000 Iowa kids.

Governor Chet Culver submitted his draft budget to the Iowa legislature last Wednesday, but with the State of the Union and other news of the day, I didn’t have time to write up the story.

The complete budget document can be downloaded at the governor’s official website, and you can view Culver’s press conference on the budget here.

For more links, reactions and commentaries, follow me after the jump.

Representative Bruce Braley advocated a four-point “Blueprint for Recovery” in Politico yesterday. The House Populist Caucus, which Braley formed last year, has endorsed these proposals to “require Wall Street to pay for economic development on Main Street and to pay down our nation’s deficit.”

Compensation. We need to change the culture of limitless bonuses by passing the Wall Street Bonus Tax Act (H.R. 4426). America’s middle-class families saw their savings wiped out by Wall Street’s gambling addictions and then watched as their tax dollars went to save troubled banks. The targeted tax would apply only to executives at banks that received Troubled Asset Relief Program funding who took bonuses in excess of $50,000. The Bonus Tax Act would generate billions of dollars of new revenue that would be directed exclusively to reward small businesses that are investing in new jobs.

Speculation. We need to stop excessive and risky speculation on Wall Street by passing the Let Wall Street Pay for the Restoration of Main Street Act (H.R. 4191). This legislation would reinstate a tiny transaction fee on speculative stock transactions by Wall Street traders, creating $150 billion annually in new revenue that would be dedicated to job creation and reducing the deficit.

Job creation. A “jobless recovery” is not a recovery for the middle class. With a national unemployment rate hovering around 10 percent, it’s clear America’s middle-class families are still struggling to make ends meet.

That’s why we need to take the following two-pronged approach to creating good-paying jobs that can’t be outsourced: We need to pass the National Infrastructure Development Bank Act (H.R. 2521), which would establish a wholly owned government corporation to prioritize infrastructure improvement projects that would create good-paying jobs. We also need to pass the Buy American Improvement Act (H.R. 4351) to eliminate loopholes in existing domestic sourcing laws and ensure that taxpayer money is used to purchase American-made products and support American jobs whenever possible.

Click here for more details on the Wall Street transaction fees the Populist Caucus supports. The idea is worthwhile, but I am skeptical that the current economic team in the Obama administration would get behind it.

I’m not clear on why a new government corporation on infrastructure projects needs to be created (as opposed to just appropriating more funds for existing agencies to spend on high-speed rail, affordable housing or other infrastructure needs). I asked Braley’s office for comment on that part of the blueprint and received this reply:

The Populist Caucus believes we need a National Infrastructure Bank (NIB) now to invest in merit-based infrastructure projects-both traditional and technological-by leveraging private capital. In recent years, the private sector has raised more than $100 billion in dedicated infrastructure funds, but most of that money is being invested overseas.  We need an NIB to attract those funds into a U.S. market for infrastructure development.

It’s notable that the Populist Caucus is not backing broader populist measures, such as tax hikes for corporations and the top 1 percent of individual earners. Then again, Braley’s caucus prepared and approved this “blueprint” before Oregon residents approved two tax-raising ballot initiatives this week.

Some frankly amazing, to me anyway*, news out of Oregon on Tuesday. The Oregonian reports:

It looks like Oregon corporations and high-income earners will pay higher state taxes as voters weighed in Tuesday on two hotly debated measures. […]

Measure 66 raises the income tax paid by households earning at or above $250,000 a year or individual filers who make $125,000 or more.

Measure 67 raises the state's $10 minimum corporate income tax. Together they generate an estimated $727 million, which has already been budgeted by the 2009 Legislature for public schools and other state services.

The tax measures were strongly supported by the state's teachers and other public employee unions. They argued that schools and public services would face damaging cuts.

A coalition of Oregon businesses, including the state's grocers, mounted a campaign to defeat the taxes, arguing that they would cost jobs at a time when the economy is already struggling.

*Not always the best guide to what is actually amazing.

More analysis after the jump…

Governor Chet Culver addresses the Iowa House and Senate this morning. Kathie Obradovich’s latest column emphasizes that Culver has broken with tradition this year by not submitting his draft 2011 budget to lawmakers before the big speech. (The governor submitted a draft budget for fiscal year 2010 in late December 2008.) Obradovich concludes that Culver needs to be in the “spotlight” without focusing on the budget.

She doesn’t mention other factors that seem likely to have delayed the budget draft. The Tax Credit Review Panel, which Culver appointed after the film tax credit fiasco, only just submitted its recommendations on January 8. I can’t imagine how the governor’s staff would put together a draft budget without knowing which tax credits deserve to be continued, scaled back or eliminated. Another possible source of delay is the State Government Reorganization Commission made up of Iowa House and Senate members, which voted on a list of cost-saving measures last month. Those measures would affect assumptions on state spending in the coming fiscal year.

Republican former governor Terry Branstad bragged to Obradovich that he always submitted his budgets early, adding that state legislators now face a shorter session without having the budget in hand.

However, Senate Majority Leader Mike Gronstal told Radio Iowa this week that lawmakers will move a major bill on reorganizing state government before they start work on next year’s budget. It makes sense, because you can’t make accurate spending projections without knowing how state agencies will be restructured.

I’ll update this post later with more details of Culver’s speech.

UPDATE: The Burlington Hawk Eye posted the transcript. He asked legislators “to pass a supplemental appropriations bill early this session to restore some of the cuts to the Department of Public Defense” (Culver cut the current-year budget across the board in October.) For the fiscal 2011 budget, Culver asked lawmakers “to fully fund community college job training, and to adequately fund the Department of Workforce Development. And, to create more ‘green collar jobs,’ of the future, to fully fund the Iowa Power Fund.” Longer excerpts from the speech are after the jump.

I expected 2009 to be a relatively quiet year in Iowa politics, but was I ever wrong.

The governor’s race heated up, state revenues melted down, key bills lived and died during the legislative session, and the Iowa Supreme Court’s unanimous ruling in Varnum v Brien became one of this state’s major events of the decade.

After the jump I’ve posted links to Bleeding Heartland’s coverage of Iowa politics from January through June 2009. Any comments about the year that passed are welcome in this thread.

Although I wrote a lot of posts last year, there were many important stories I didn’t manage to cover. I recommend reading Iowa Independent’s compilation of “Iowa’s most overlooked and under reported stories of 2009,” as well as that blog’s review of “stories that will continue to impact Iowa in 2010.”

Assuming the House and the Senate pass whatever health insurance bill comes out of the conference committee, Republicans and Democrats are likely to highlight the reform during next year’s campaigns. Recent polls have shown that most Americans don’t expect action by this Congress to improve the quality of their own health care or reduce its cost. Complicating matters for Democrats, key provisions of the bill won’t take effect until 2013 or 2014, giving Republicans plenty of time to exploit fears about the so-called “government takeover” of health care.

After the jump, Mariannette Miller-Meeks and Senator Chuck Grassley preview messages we’ll hear from GOP candidates across the country, while Senator Tom Harkin summarizes some “immediate benefits” of the health insurance reform.

For a guy who claims to be proud of his record, former governor Terry Branstad sure has a funny way of showing it.

On one issue after another, Branstad takes credit for things he didn’t do and evades responsibility for things he did. So, the governor who kept two sets of books boasts about enacting budget reforms that that other people pushed in response to his fiscal mismanagement.

The governor who used state bonding more than once says that politicians who create debt should be voted out of office.

Pressed on his record of expanding gambling in Iowa, Branstad has suggested he had little choice in the matter: “What was I supposed to do? Over 70% of the people wanted it even though I was personally opposed to it.”

Now Branstad is playing the same game on the Road Use Tax Fund and the idea of eliminating federal deductibility from Iowa’s tax system.

2008 was a good election for Iowa Democrats, but we still lost several very close statehouse races. In House district 37 (map here), Republican Renee Schulte defeated first-term incumbent Art Staed by 13 votes (0.07 percent).

This week Cedar Rapids attorney Mark Seidl announced his plans to run in this district and laid out his priorities:

“Although no one would have wished for any of them, the natural, fiscal, and economic disasters that have struck us in recent years present unique opportunities for rethinking each level of our government,” Seidl said.  “In going forward, we must concentrate on reconstituting and enhancing our advantages-recreating two cities which are an essential part of Iowa’s character, conserving our tremendous natural resources in agriculture and renewable energy production, and preparing the next generation of Iowans to be leaders and innovators in the future.”

This district is winnable in light of Schulte’s tiny margin of victory and a slight Democratic voter registration advantage. Nevertheless, Seidl will need to pound the pavement to win back this seat. Schulte is a hard worker who was out door-knocking last Friday, 11 months before the election when the temperature was in the 20s. Also, Schulte may benefit from an “enthusiasm gap” if Democratic voters are demoralized and Republicans energized next November.

Schulte bucked the majority of her party by voting for a bill that allowed authorities to impose a local option sales tax in disaster areas. Linn County voters approved the 1-cent tax in March, and the proposal received a majority of votes in Cedar Rapids as a whole. I don’t know whether it carried the Cedar Rapids precincts that are in House district 37.

Like other House Republicans, Schulte voted against the I-JOBS state bonding initiative, which allocated $45 million to Linn County for disaster relief (here is how that money was allocated).

I suspect that in this district, much will depend on how voters perceive the effectiveness of the state’s response to the 2008 floods.

UPDATE: Schulte is already organizing volunteers to help with voter contacts. We will need all hands on deck in this district.

The House of Representatives approved the Tax Extenders Act of 2009 on Wednesday by a vote of 241 to 181. As you can see from the roll call, all but ten Democrats voted for the bill, including Iowa’s Bruce Braley, Dave Loebsack and Leonard Boswell. All but two Republicans voted against it, including Iowa’s Tom Latham and Steve King. After the jump I’ve posted more details about the business tax credits that would be extended if this bill becomes law.

On December 3, the House passed the Permanent Estate Tax Relief for Families Farmers and Small Businesses Act, which caps the estate tax at 45 percent and exempts estates worth up to $3.5 million (preserving this tax at 2009 levels). Again, all of Iowa’s Democrats voted for the bill. Iowa’s Republicans voted against it. If Congress had not acted, the estate tax would have been repealed in 2010 and then would have reverted to its 2001 level in 2011 (a 55 percent tax on estates valued above $1 million).

Republicans claim the so-called “death tax” is a burden to small business owners and farmers. Candidate Jim Gibbons already used this canard in a press release targeting Boswell. Right-wingers can’t find any real-world families who had to sell the farm because of the estate tax. The Center on Budget and Policy Priorities has concluded (emphasis added),

If the 2009 estate tax rules are extended, only 100 small business and farm estates in the entire nation will owe any estate tax at all in 2011, according to the new estimates by the Tax Policy Center, and virtually none of those businesses and farms would have to be sold to pay the tax. […]

Under 2009 law, the estates of more than 997 of every 1,000 people who die will owe no estate tax whatsoever. […] In its latest analysis, the Tax Policy Center projects that only 0.25 percent of the estates of people who die in 2011 – i.e., the estates of 1 of every 400 people who die – will be subject to the estate tax if the 2009 estate tax rules are continued.

Less than 1 percent of estates in Iowa were subject to the estate tax in recent years.

To sum up: Republicans are for saving farmers and small business owners from the so-called “death tax” that doesn’t apply to them. But when they had a chance on Wednesday to extend tax credits affecting farms and small businesses, House Republicans said no.

Why am I not surprised?

Members of the House Populist Caucus, chaired by Representative Bruce Braley (IA-01), held a press conference on Thursday to endorse a bill that would “assess a small fee on Wall Street day traders to pay down the national deficit and invest in America’s middle class families.”

Details about the bill are after the jump.

Speaking to the annual meeting of the Iowa Farm Bureau Federation today, Governor Chet Culver said the way Iowa drafts its budgets should be changed:

Currently, the governor said he is required to submit a state budget by the end of January based on projections set by the state Revenue Estimating Conference in December, but then lawmakers craft their spending plan after the REC’s next quarterly estimates in March.

“That makes no sense at all. For three months, we sit around and wait for the March number in many cases before serious budget discussions take place,” he said. “We have a moving target. It is terribly frustrating and we need to make some changes.”

Several accounting experts have told me that it is impossible to estimate state revenues accurately. The current system leads to budget surpluses when the economy is doing well and shortfalls requiring rapid cuts when the economy heads downhill.

As usual, Iowa State University economist Dave Swenson has a better idea. Speaking to the Des Moines Register in October,

Swenson said he believes the budget-setting system is backward. Government should look at annual needs and adjust taxes and fees to accomplish goals. Instead, officials adjust needs by what’s available.

“It is a stupid system and makes no sense,” Swenson said.

The most recent Iowa poll for the Des Moines Register showed that broad majorities support increased state spending on various programs that Democrats have expanded in recent years. Even a majority of self-identified conservatives supported maintaining higher spending levels for teacher pay, state aid to schools, renewable energy research and development, health care coverage for children and repairing roads and bridges.

If politicians evaluate our state’s needs and then search for a way to fund them, we are likely to get some changes on the revenue side of the equation. Eliminating certain tax credits could increase revenue, and Culver has created a panel that will evaluate all of the state’s current tax credits before making recommendations for state legislators.

Our state income tax structure should also be on the table. A new poll by Selzer and Associates for the Iowa Fiscal Partnership found that a majority of Iowans would support eliminating federal deductibility, which mainly benefits high-income taxpayers. During the 2009 legislative session, Culver and legislative leaders agreed on a tax reform package that would have ended federal deductibility, but Iowa House leaders were unable to find 51 votes to pass that bill.

UPDATE: More details from the Des Moines Register are after the jump.

State Representative Chris Rants will “debate” former Des Moines School Board member Jonathan Narcisse on various issues during the first half of December. The Iowa Republican blog has the preliminary schedule for the debates in Bettendorf, Ankeny, Council Bluffs, Cedar Rapids, Dubuque and Waterloo, as well as footage from yesterday’s joint press conference by Rants and Narcisse.

Scheduling the “debates” is a clever move by Rants, who is running the best gubernatorial campaign in the GOP field so far. These events will not be good news for Governor Chet Culver.

Shortly after the film tax credit scandal broke in September, Governor Chet Culver promised a “comprehensive review” of all tax credits. On Thursday we learned more about how this review will be conducted. Recommendations are likely before the state legislature convenes in January 2010.

Join me after the jump for additional details and analysis.

While you’re waiting for tonight’s election returns, check out the television commercial Governor Chet Culver’s campaign launched today:

Like the commercial Culver ran last month, this ad emphasizes that the governor cut spending and his own salary in order to balance the state budget during this recession without raising taxes. I think the ad is well-crafted in terms of script and visuals, but like Bleeding Heartland users IowaVoter and dricey, I am concerned when Democrats rely heavily on Republican anti-tax messaging. Culver may be reinforcing conservative frames and limiting his future policy options if he does win re-election.

Kathie Obradovich highlighted another potential problem not long ago:

Gov. Chet Culver vowed to balance the state budget without raising taxes. And yet a third or more of Iowa school districts might end up raising property taxes as a direct result of the cut to state school aid ordered by Culver.

Is the governor breaking his promise? Well, no. And yes.

When Culver talks about avoiding a tax increase, he really means income and sales taxes – the two major revenue streams for the state. He’s referring to tax increases that he would have to sign into law. In that sense, he hasn’t raised taxes.

But he acknowledges that property taxes are a concern. Culver says he’ll ask the Legislature next year to require school districts to use their cash reserves before raising taxes.

Republicans are already blaming Democrats for the property tax increases many Iowans will experience next year. Their outrage is hypocritical, because the state cuts affecting education and local governments would have been far more severe if not for the federal stimulus bill, which included aid to state governments. Of course, Republicans denounced the stimulus package and bashed Culver for using these federal funds for their intended purpose: to help backfill the 2009 budget.

In any event, Democrats should be wary about staking next year’s campaign on “we didn’t raise your taxes during this recession.” That won’t be a comforting message to Iowans who have to pay a larger property tax bill in September 2010.