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Political Animal

A Lousy Gamble

By Brian Morton | Posted 9/12/2007

Ever since Ronald Reagan graced the national scene, Republicans across the country at both state and national levels have always run against Democrats using the same mantra: "They'll raise your taxes." Part of this is the legacy of Reagan's belief in "the Laffer Curve," an economic shell game of a theory that says the more you cut taxes, the more revenues go up. This is akin to saying that the more air you let out of your tires, the fuller they'll be when you hit the road. Eventually you'll be running on the rims.

Later on, once the fat cats who supported Reagan got their payoff, the Gipper's budget director David Stockman admitted that the whole shebang was premised on the goal of lowering the top tax rate--a gimme to the rich. Ever since, the Grand Old Party has become what I call "the freeloader party," wanting to have it all and make the other guy pay for it. In this case, the "other guy" is you.

The Freeloader Party believes, like Dick Cheney once said, "this is our due." When elections come along, they argue that the Democrats will raise your taxes. Sadly they tend to be right, because eventually, roads and schools and sewers and buildings need upkeep. When Robert Ehrlich ran for governor, like every other Republican, he talked about two things: cutting taxes and bringing slots to the state. Cutting taxes, of course, because this makes the business community happy, and then they have lots of money to give re-election campaigns. And slots, because if you're cutting taxes, the money's got to come from somewhere, and who better to take it from than suckers who'll give it away?

Legalized gambling--most especially lotteries, but slots as well--have often been dubbed "a tax on the stupid." You go in knowing the odds aren't in your favor, but you throw the money away anyway because you have hope. As we all know, however, hope is a lousy business plan, and the bank examiner will give you quite the fishy eye before chucking you out of his office when you list it as part of your assets when you go to get that second mortgage.

So slots and lotteries take advantage of your hope, and then make money off of it. And that money then goes to big businesses like the gambling industry, which already does pretty damn well, and in many cases the racing industry, which has defied old-fashioned conservative economic principles and not gone off and died. Normally, when your business is failing, you do what you can to attract new customers by offering a better product. You'd slap a coat of fresh paint on your buildings, offer better food, figure out discounts, promote yourself better. What does the racing industry do? Call the state begging for handouts, asking to nose into another realm of gambling (aka finding new suckers), and annually threatening to move its premier event, the Preakness, to another shabby track it also hasn't fixed up, as emotional blackmail over a long-standing tradition.

As Andrew Green pointed out back in June in The Sun, more than a decade ago Delaware allowed slot machines at its tracks. In addition, Delaware did all the little things--billboards all over neighboring states, cheap parking, bigger purses on the races--and still nobody goes to the track. I'm no economist, but of what little I can see of it, this is called "failing."

For once, I'm even in agreement with a type of organization whose opinions I usually find myself on the opposite side, a "market-oriented think tank." Yet Christopher B. Summers of the Maryland Public Policy Institute said of propping up the racing industry, "It really comes down to a great question of public welfare, which is: Should we continue to subsidize an industry, one that appears to be losing customers . . . and can't stand on its own?"

In the next few months, Gov. Martin O'Malley will be looking at ways to curb Maryland's projected $1.5 billion shortfall, and in addition to making the annual gibe from Republicans come true--he'll have to raise taxes--once again the idea of making money from slot machines is on the table.

In some ways, I can see the allure. Nobody likes paying taxes, but nobody likes driving on crappy roads or worrying about bridges falling down either. And states are in the bind where, if you raise taxes on the people who have the most money--rich people and businesses--they'll move to another state, leaving you worse off than you were before. Which is why the Republicans' tendency at the national level to both spend and cut taxes over the last seven years has been such a disaster. Less money trickles down to the states (since the overall pot is smaller, plus all the money going to those two wars we're fighting), and suddenly O'Malley, who once called slots a "morally bankrupt" way of balancing a budget, is seeing his words on the potential menu with a side order of crow.

Except in the end, when slots aren't doing it (and we can already see the results of that in Delaware), the call for casino gambling will be next. Bring on the suckers!

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