State Watch

Murder in the Old Dominion

A great deal hinges on whether McDonnell is a solitary figure of tragedy or the model for future failures. 

By From the April 2013 issue

THERE'S BEEN A MURDER IN VIRGINIA. Or a suicide, anyway. In mid-February, Republican governor Bob McDonnell—only a year ago viewed as a possible vice-presidential candidate—publicly self-immolated, causing fatal injuries to both his promising political career and the state Republican Party, which had been poised to turn Virginia red.

 The weapon found at the scene was a collection of 10 tax hikes totaling $6 billion over the next five years—the largest increase in the history of the commonwealth of Virginia. The sales tax was raised. So too were taxes were on gasoline, cars, home sales, and hotels.

How did this happen? McDonnell was elected governor in 2009 with 58.6 percent of the vote only one year after Obama carried Virginia with 52.6 percent. This looked like the first step toward building a fully Republican Virginia. That year Republicans also strengthened their control of the House of Delegates to 59 of 100 seats. Redistricting and the 2011 election brought GOP strength up to 68 seats.

Republicans also made gains in the state senate. In 2009, they held 18 of the 40 senate seats. And while redistricting was supposed to give them a slim majority, they had to settle for a 20–20 tie after the 2011 election.

McDonnell’s decisive win as a Reagan Republican—he promised to oppose any and all tax hikes—meant there was every reason to believe Virginia was turning red.

IT ALL UNRAVELED: publicly, painfully, and in a cascading series of political blunders. For three years, things went smoothly. McDonnell and the Republicans in the legislature had a series of small victories and avoided backsliding. There were no show-stopping conservative victories as in Scott Walker’s Wisconsin or Bobby Jindal’s Louisiana, but much of that was due to the Democratic state senate. A major political issue in Virginia was “transportation,” which meant the need for expanded highways in the D.C. suburbs in the north and Hampton Roads in the southeast. McDonnell tried at first to prioritize spending on roads, and proposed privatizing the state’s liquor stores and using the resulting revenue on transportation. (Virginia is one of nine states that mimic Bulgaria in 1956 with liquor sold only in government-run shops.) A second effort was to direct any surplus into transportation rather than the state’s rainy day fund. Yet over the past three years the state posted a surplus of $1.4 billion, and less than $100 million was made available for transportation.

In his fourth and final year (Virginia governors are limited to one term), McDonnell chose to break his commitment to voters and support a $2.4 billion tax increase for “transportation.” He had the support of the Republican speaker of the house, William Howell, who had previously worked with Democrats to pass tax hikes in 2004 and 2007. This broke the Republican Party in two, between Reaganites committed to principle and those who could be controlled with offers of earmarks and rewards, not to mention promised campaign contributions.

Once McDonnell agreed to raise taxes, Democrats smelled blood and demanded more and more and more. Dick Saslaw, the Democratic leader of the senate, bragged that the final legislation was written by the Democrats, not by McDonnell.

Virginia Republicans voted on January 21, 2013, to redistrict the state senate to give the GOP a likely five- or six-seat majority for the rest of the decade. One senate Democrat had traveled to Washington, D.C., for the inauguration, which gave the GOP a one-vote advantage in the evenly split chamber. Republicans saw an opening, and they wisely pounced. 

But McDonnell was focused on his tax increase, not the health and strength of the Republican Party or conservative movement. He criticized the redistricting plan, and Speaker Howell unilaterally killed it in the statehouse, even though the strong majority of Republican members wanted to enact it. The first “cost” of McDonnell and Howell’s tax increase was control of the Virginia senate for the rest of this decade and perhaps the next.  

ONE COULD VIEW THIS AS A PERSONAL TRAGEDY for McDonnell and therefore unique to Virginia. Other Republican governors are moving in the opposite direction. Sam Brownback of Kansas, Bobby Jindal of Louisiana, and Dave Heineman of Nebraska have announced plans to abolish their state income taxes. Scott Walker of Wisconsin, John Kasich of Ohio, Mike Pence of Indiana, and Mary Fallin of Oklahoma are doing income tax cuts. Rick Perry of Texas and Rick Scott of Florida, lacking an income tax to abolish or cut, are working to reduce their consumption taxes.

So McDonnell stands almost alone. But nevertheless there are lessons for Republicans in other states from this Shakespearean tragedy.

First, the only possible position for a Republican is opposition to any and all tax increases. To open the door to the smallest tax hike is to begin a conversation monitored by the establishment press that puts Democrats in the driver’s seat and leads to ever-higher taxes. McDonnell thought he was in control of the process, but in raising taxes he cut himself loose from Reaganite moorings and natural allies. After that, the entire effort was controlled by Democrats and the editorial pages of the Washington Post

Second, the trap McDonnell fell into is being prepared in other states. For years, the left has opposed expanding the road system in Virginia. The greens don’t like cars. The teachers unions want any spare change found in taxpayer pockets. The social engineers loot what highway funds exist to build public transportation systems. Hence, a shortage of money for roads, a legitimate function of government the public actually “demands.” Democrats then explain that the only way to get money for roads is to raise taxes. Once taxes are raised, the money is redirected away and the game can be played again. The first money raised from McDonnell’s tax hikes is—no surprise—$300 million for the Washington, D.C., Metrorail and the state’s first funding for Amtrak. Promises were made that much of this tax hike will go to two highway projects in politically important areas, but that will do nothing to reduce congestion in northern Virginia. This guarantees that soon, very soon, the Democrats will be back demanding higher taxes to fix the transportation problem. Again.

Watch for this trick in your state. It fooled Bob McDonnell, a man with everything to lose. 

Third, transparency is necessary protection for taxpayers. Virginia’s 2004 tax increase, under Governor Mark Warner, was driven by false claims of growing deficits. Speaker Howell was fooled into supporting a tax hike that would never have passed if the state had made its bulging bank accounts transparent to voters. Back in 1978, California governor Jerry Brown campaigned against the property tax-cutting Proposition 13, saying that the state couldn’t afford it. At the time, California had $4 billion stashed away in bank accounts invisible to voters. 

Similarly, the Virginia tax hike would have never passed if it had been posted online and available to every Virginian to read before the legislature voted. The final agreement—which included a guarantee that Virginia will expand Medicaid as President Obama wants—was even kept secret from Republicans in the statehouse. Only the senate Democrats knew about the corrupt bargain, their final pound of flesh.

Fourth, it is a mistake to invest house speakers with extraordinary powers over centralized campaign funds. In Virginia, Howell sits on a pool of $1.36 million in campaign and PAC money that he can share or withhold at will. This alone explains why so many Reaganite delegates voted against their principles and the interests of their districts.

Finally, the “business community” can be corrupted if it becomes dominated by rent-seekers. In states like Kansas and Florida, the Chambers of Commerce speak for free markets, property rights, and taxpayers. In Virginia, the official “business community” has become a lobby for higher taxes, since the new revenue would flow to key dues-paying members at the expense of the small businesses, homeowners, and consumers, who do not pay significant dues to the state Chamber of Commerce.

A great deal hinges on whether McDonnell is a solitary figure of tragedy or the model for future failures. Let’s hope it’s not the latter. 

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About the Author

Grover G. Norquist is the president of Americans for Tax Reform.