Thursday, April 03, 2008

Why Is Doug Denneny Running to the Right of Gerry Connolly?

It could be because Leslie Byrne has staked out the truly progressive position and there's no place else to go.

I mean they all basically are anti-Iraq and pro-choice. No Democrat is going to be publicly anti-environment - at least until he's already in office - that's practically a "mom and apple pie" issue. Petroleum and oil companies run pro-environmental ads. True, those ads are lies, where they attempt to convince the public that theirs is "clean energy." But the point is nobody comes out directly against green policy so much as they try to subvert it.

But when it comes to the economy, Denneny appears to be taking his policy right out of George Stigler and Milton Friedman and other architects of the free market, supply side Chicago School of economics.

Here's what his campaign sent out as an "editorial memo."

Though his intent is laudable, Gerry Connolly's recent proposal for Fairfax County to buy foreclosed homes and sell them back to working families reveals his commitment to a dated and unsuccessful big government approach to economic issues.

As Democrats, we all agree that we need to ensure Fairfax has housing options for teachers, nurses, police officers, firefighters and others who serve our community. The only question is how to best achieve this goal...

...When public servants in government craft policy with the intent to improve people's lives, their first rule should be 'do no harm.' By buying foreclosed properties and selling them to working families below market value, the County would be artificially lowering the property values of other homes in the area, effectively taking money out of the pockets of citizens and families that are near the foreclosed properties.

Since housing markets are currently in a period of decline, working families who buy houses from the County at below current market prices will quite possibly see an appreciation in the value of their home as the market stabilizes and begins to grow. As home values appreciate, home owners' county tax bills will increase. Working families who struggle to buy a home at below market prices today could be challenged to pay their Fairfax County tax bill tomorrow.

On the other hand, if home prices continue to depreciate, Connolly's plan will have placed working families in financial predicaments that they would not have been able to enter without the County government's intervention.

Connolly continues to embrace the hackneyed notion that heavy-handed government intervention is the solution to everything. This approach may sound appealing in an election year, but it in the long run Connolly's plan will limit the ability of the free market to create choices for working families. Certainly this approach is better than the 'you're on your own' ideology of the Republicans, but Democrats can do better.
His "doing better," unfortunately, comes right out the Republican playbook of the last eight years, and the twelve years of the Reagan-Bush administrations before that.

As a New Generation Democrat, Doug Denneny believes in using policy levers to respond to the needs of working families without skewing the private market. Doug believes the best way to help struggling families in Fairfax County is to offer substantial and targeted relief from property taxes.
Now, relief from property taxes during an economic downturn is not necessarily a bad thing. But the biggest problem with this is that the property tax is the main revenue source for county government. With less money coming in, how would Doug propose that Fairfax County fund necessary programs like police and fire protection, emergency services, schools, teachers' and other county workers' salaries, and a host of social services for the disabled. What about parks, after school programs? Those are all the things that make Fairfax among the best communities to live.

Indeed, it's those services that make Fairfax one of the best places to do business as well. That's because businesses want to go where they can get an educated, skilled workforce. And good education and amenities attract the workers that modern, high tech businesses need.

In addition, philosophically, a progressive populist, like me, sees nothing wrong with government helping out and giving the little guy an economic boost into the middle class.

Actually buying up foreclosed homes and selling them below market value to provide affordable housing to firefighters, policemen and policewomen, teachers, emergency technicians, and other county employees is one of Connolly's more creative ideas. Making sure that the people who respond to citizens' needs and teach their children are also members of their community is a way to ensure that those valuable employees are stakeholders in the well being of our community rather than outsiders who merely punch a time clock.

Denneny also declined to sign on to the Responsible Plan to End the War in Iraq, which both Leslie Byrne and Tom Periello signed. The list of signers also includes Darcy Burner, Donna Edwards, and Jeff Merkley. Doug responded with his own plan, which I am not about to criticize. As a decorated combat veteran with experience in Iraq, he has important suggestions that must be heard and taken seriously.

The truth, though, is that the Responsible Plan is a good broad platform that Democrats can run on. By adding his expertise to shaping the plan and supporting it, rather than going his own way, while basically saying the same things, I think he weakens both his own position and that of the others. A bunch of people running around with individual plans is never as powerful a statement as a coherent group with a strong, broad platform that provides an easily understandable road map that everybody can support. I have no quarrel with the particulars of Denneny's plan but a great deal of skepticism about the effectiveness of his method of going his own way.

But it's really on his economic statement where Denneny baffles me.

In times of crisis, voters need proven, thoughtful leadership – not flawed, feel-good election year proposals. Gerry Connolly has responded to the housing crisis for working families in Fairfax with the fruitless policies of the past. The Republicans are silent on this issue. Doug Denneny, a New Generation Democrat, has a better approach that relies on competition and market forces to improve the lives of working families.
Actually, his solution is exactly what a Republican would propose. There's nothing either "new generation" or Democratic about it. And calling it a fruitless big government solution from the past is right out of the Republican playbook of criticisms. Frankly, that's the kind of rhetoric you can read every day at Bearing Drift and Too Conservative.

You're a good guy, Doug, but you can do better than this.


AnonymousIsAWoman said...

And talk about the law of unintended consequences, if you cut property taxes and limit your revenue source, then you probably have to keep county employees' salaries flat, or cut their salaries, making housing even more unaffordable in the long run.

The real solution is to find other funding streams to raise workers' salaries while keeping housing affordable.

Through zoning laws, you can allocate certain land specifically for moderate income, high density housing.

More houses on the market also would make housing more affordable since the law of supply and demand would then kick in.

Anonymous said...

Another Leslie surrogate attacking Denneny for substance and giving their own candidate a pass...

1. What exactly are Leslie's "truly progressive position"?!?

- I don't see anything on here website, or Gerry's for that matter about positions or policy

2. "They are all basically anti-Iraq"
- I hate to break it to you, but there is nothing 'basic' about Iraq. This same kind of simplistic, arm chair analysis is what got us into this mess in the first place.

3. Not sure what the reference to oil company ads is doing here. Also not sure if your familiar with Logic, or its rules but this is what we would call a 'Logical Fallacy' due to the fact it is an Irrelevant Appeal:

"Irrelevant appeals attempt to sway the listener with information that, though persuasive, is irrelevant to the matter at hand. There are many different types of irrelevant appeal, many different ways of influencing what people think without using evidence. Each is a different type of fallacy of relevance."

4. You source Wikipedia for Economic Policy? Really? Perhaps that is Leslie’s standard, but other people tend to look for what we call “Primary Sources” = legitimate, academic, peer reviewed information.

5. To the plan itself- The long and short of it is, it seems Gerry wants to buy your foreclosed house and then sell it right back to you.

6. If your someone who happens to have a house in a neighborhood where there is such an unfortunate foreclosure- Since it appears neither you or Leslie have completed a undergraduate or graduate education Ill make this simple. If the county buys your neighbors house at a lower value- This negatively affects the value of your house!

For example: if person A and B have equally valued houses- say $150,000.
Persona A has their house foreclosed and bought back at a lower value- say $100,000- (Typical loss on a foreclosed house is 30-40%) and Fairfax County then sells it at $95,000 (making a bare minimum to cover administrative and cleanup fees)
Person B- who had a house that they paid $150,000 for now lives next to a house which just lost $50,000 in value. Person B, who might have had a home equity lone or might be thinking about moving is now in deep trouble.

7. Of course Fairfax housing is ridiculous- but county spending is out of control- and Guess What?!? These funding shortfalls did not just happen overnight! Perhaps it would have been a better idea to tax developers who are selling townhouses that cost them $150,000 for $500,000 to pay more than $8,000 in taxes….

8. Have your read this ‘responsible plan’ ? It is nothing more than a summary of pending congressional legislation. Again, just because you call something a ‘responsible plan’ does not mean that it is

9. Again, your full of what we call “Logical Fallacies” I did not see any language about cutting the salaries of county employees. This is a “False Dilemma or bifurcation fallacy” Which is committed when a false dilemma is presented, i.e. when someone is asked to choose between two options when there is at least one other option available. Of course, arguments that restrict the options to more than two but less than there really are- are similarly fallacious.

Example: when George W Bush launched the war on terror, insisting that other nations were either for or against America in her campaign, excluding the quite real possibility of neutrality.

Silence Dogood said...

I have concerns about Gerry's plan, but I need to know more about it before I'm going to open up on it. In the meantime, I'm happy whenever anyone recognizes that this is a big enough problem that it needs to be addressed now.

I would offer a couple of observations about the housing market, however:

1. The market is going to readjust eventually and drive down home prices. All of the extra money that flooded the market through bad loans drove up prices, and as people start defaulting on those loans, prices will fall again. There isn't an end-game to this recession that doesn't end with devaluing home prices, except for the one that sends us into an actual economic depression.

2. THIS IS A GOOD THING. People who default on their mortgages will have bad credit, a difficult time getting a new loan, and they're still going to need someplace to live. As the housing markets readjusts, it will be easier for them either to (a) find a house they can actually afford on a fixed 30 year mortgage, or (b) find cheaper rental property acquired by someone else who bought a smaller second home in a buyer's market as an investment.

2b.) Some people--including, apparently, Doug Denney--think that the biggest problem facing tax payers is the fact that their homes aren't going to be worth as much. I'm sorry to say that train left the station around the same time people thought it was a good idea to pay twice what the same housing unit had sold for a decade earlier. It's not that people are underselling you now, it's that people overpaid before.

3.) The longer we go without letting this readjustment happen, the more time we're going to spend in this recession because very few people are going to have the credit rating and cash on hand necessary to purchase property, and banks are tightening their mortgage guidelines.

4.) Our overarching goal, therefore, isn't to keep housing prices from shrinking too much, but to keep market volume from shrinking too much. Allowing homes to devalue, helping distressed home owners quickly transition into more-affordable housing and ensuring that no one sector of the economy gets stuck holding the proverbial buck will help us make sure that this recession is at least relatively short-lived.

The inescapable fact of the matter is this: a lot of people bought houses they can't actually afford, and they're going to have to get out of them one way or another. As a society, we should do everything we can to help these folks through that transition to make it as easy and painless as possible without rushing for the buckets and doing something silly like bailing out an unsustainable status quo.

At the same time, we have to get to work on energy independence, and geez, I don't even have the time or the space to address that here....

AnonymousIsAWoman said...

First of all, anonymous 11:20, I am indeed schooled in the rules of rhetoric and logical fallacies, one of which is about avoiding ad hominem attacks. The gratuitious attacks on either my college education - I have a degree - or Leslie's is beside the point. So is the assumption that I am Leslie's surrogate. I'm a supporter, something very different.

I don't speak for her. Nor do I even agree with all of her positions. So what she thinks of this is also irrelevant.

Beyond that, the post clearly said that I was responding to an issues memo that Doug's campaign sent out. Leslie's policy positions are irrelevant to that except in so far as she appears to be more progressive than Doug does, based on his "market based' solution that sees no role for the local government.

As for my opening, it was not irrelevant. I was merely pointing out the areas where all the Democrats agree, they all are anti-war and pro-environment.

For more information about my beliefs on the war in Iraq, read the rest of my blog. I've written extensively and in depth about why I opposed the invasion and how I think we will have to get out - carefully.

You're right that it's not basic or simple. But because the candidates don't actually disagree signficantly on it, that wasn't the topic of my post.

I was simply pointing out an area where I disagreed with Doug's solution and thought it was to the right of Gerry's. When a candidate is more pro-market than Gerry Connolly it's worth writing about.

Also, I did not bring up the so-called option of cutting county employees' salaries because I am actually opposed to that. It's a stupid option.

One of the reasons that county employees frequently can't afford to live in Fairfax County is precisely because they already don't make enough money and their cost of living increases are not competitive with other surrounding urban counties in Maryland and DC. Comparing their salaries with rural areas far south of Fairfax would not be fair since the cost of living, in general, in those areas is lower. Comparing salaries with other communities in the DC metro area is a more accurate metric.

Also, the issue wasn't buying foreclosed homes to sell them to the general public, it was to specifically sell them to county workers so that they could afford to live in the area where they work.

I have a great suggestion for providing for affordable housing. It's not a popular one and I'm pretty sure even Leslie wouldn't support it.

What about paying county workers a better salary and raising the revenue stream by taxing developers more for putting up McMansions and giving them tax or other benefits for building more affordable, high density housing along Metro routes, which would also begin to address some of our transportation problems and human development patterns.

Also, Silence Dogood, didn't mean to ignore you. You are right that the housing bubble was created by the flow of capital into the housing market, fueled by bad loans. The easy availability of cash, the demand for expensive housing, and the lack of oversight into lending practices all combined to create this situation.

It wasn't blind market forces alone that brought about the current recession. And while the market will correct for the high prices, which is a good thing, there is a role for government in the solution.

It is not to the advantage of the national economy to let this crisis spiral into further chaos by allowing a wave of unabated loan defaults. This is no longer simply a housing bubble being burst or a credit and mortage crisis.

It's spread to other sectors. And there are other downward pressures on the economy such as high energy prices, rising inflation and a weak dollar, all of which are heavily related to each other.

If you want a crash of the magnitude of 1929, let the blind market run its course with no aid. If you want to prevent human misery, find ways to ameliorate the damage, without destroying the fundamental market. And provide the needed oversight in the future to prevent further bubbles and crisis, which are human made, not blind market forces.

Sorry, I know that is a simplistic summary, but this is a comment, not a scholarly paper. It's already gone on longer than most posts.

jsrutstein said...

The latest Denneny headscratcher is described at Bryan Scrafford's blog which is linked to in a post by James Martin at RK.

AnonymousIsAWoman said...

I read both those. As I said on Bryan's blog, I chalk that up to inexperienced campaign staff and an inexperienced candidate more than to genuine lack of ethics.

I just think they are confused.