Unprincipled Agreement

Posted by By at 15 October, at 18 : 57 PM Print

On June 29, 2010, in the midst of the heated budget mess, the Governor – looking to pass his first on time budget in his last at bat – announced they had a deal.
With a catch.  There was included an “agreement in principle” to pass an enabling law for a tax on the Marcellus shale.  This portion of the budget remained “complete” but unresolved until a self imposed deadline of October 1, 2010.
At the time, I was somewhat pleased – I am in favor of a limited tax properly directed, as I will discuss in a later piece.  But I was also skeptical.  “Agreement in principle” sounded to me an awful lot like a punt.  You see, in order for any agreement to have weight it has to be enforceable.  And for an “agreement in principle” without enforcement provisions to work the parties must be, well, principled.
In this case, with stakes this high, with a lame- duck governor with no leverage, with an emboldened GOP, and with a weakened Democratic party weeks on the verge of losing the Speaker’s chair and the Governor’s Mansion – well, let’s just say that when political principles (a gnat) meet political opportunity (a windshield at the Gov’s usual 110 MPH), the results are what you’d expect – and about as subtle.
All the “agreement in principle” accomplished was to set in motion some very predictable forces.  The producers and the anti-tax forces mobilized to demonize any tax scheme.  The Greens ran around demanding that we either halt production or so encumber it with levies so as to render the result the same.  And as the late summer morphed into a film festival for Gasland and a contract for Gov. Ridge, the general public became aware of the new wealth under their feet.
The “agreement in principle” was, in short, nothing more than a signal to all the opposing forces (and their respective PACs) to pay attention, damn it!  This is a big issue. And once they started paying attention, “agreement in principle” became issues of contention.  From there, they became stumbling blocks and ultimately impasse.  The progression was as foreseeable on June 29th as it is now, a fortnight past the deadline.
The fact is Ed gave away his best leverage when he agreed to burn white smoke (that is a papal reference for you non-Catholics) without an actual law generating the tax revenue they were spending.  And the GOP is returning the favor by giving away its best leverage to get a good tax policy by waiting out the end of Ed’s reign – a poorly conceived move.
There are two things I believe are inarguable facts, 1) we are going to take the gas out of the ground; and 2) it is going to taxed.  These are facts – eventually.  It may not happen at first, well, or even responsibly – but the gas is too valuable both economically and strategically to leave in the ground, and the revenue stream is too enticing for the government to ignore.
If you accept the premise that – someday – there will be a tax on gas, then now is the time the GOP can get the best deal.  Consider:  you have a Democratic governor who has a lot riding on getting this tax in place; a Democratic majority that can be had for a much lower price (in terms of expenditure policy) than in the future; and you have the budgetary basis for passing it.  As an added bonus, most Pennsylvanians will understand the rationale for this tax – and will support it once they understand it.
By moving now – or even in a lame duck, perish the thought (even though we have a tradition of “sign and die”) – the GOP can leverage the Democrats policy interest in getting the “something” into getting something more palatable and equitable.
If they wait, they go into the next administration with either an opposition Governor or a Republican committed against taxing the shale, a political need to now “buy” votes from the Democrats for less favorable policy terms, and the added hole created in this past year’s budget by the revenue shortfall.  That is just plain silly to me.
The time to act is now – on the revenue structure side.  Get the tax passed.  Get Ed to sign it.  Then we can argue over the expenditure policy in the reality of a tax that will be the previous administration’s political liability.  Its good politics and its good policy.
And then, of course, there is that “agreement in principle… ”.


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- who has written 77 posts for Rock The Capital
Scott Paterno is an accomplished policy analyst and political consultant based in Hershey, PA. Mr. Paterno, never one to sit still, has practiced law, run for a house seat, and worked as lobbyist in Harrisburg and Washington. Paterno is Vice Chairman of the Sustainable Energy Fund and is currently pursuing a master’s degree in Political Science. He is happily married with three children. - Email scottp

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