ANALYSIS: Perdue capital gains veto made winners of losers

ATLANTA - Having a bill vetoed by the governor tends to make a legislator feel a little like Miss California USA, Carrie Prejean - even a bill with as little sex appeal as one that would have cut capital-gains taxes.


But sometimes there's as much mileage in losing as in winning.

For Prejean, she might have become runner-up in the Miss USA pageant for her opposition to gay marriage when asked about it during the final stage of the event, but her name instantly became a household word. Who can recite the name of the ultimate pageant winner?

If looking good in a white bikini wasn't enough to become the sweetheart of the conservative crowd, her televised defense of the traditional marriage definition nailed it.

So when Gov. Sonny Perdue vetoed House Bill 481 last week, he catapulted its defenders to the Conservatives Hall of Fame right next to the toothy California blonde. Topping the list are Rep. Tom Graves, R-Ranger, who authored the bill, and Senate Majority Leader Chip Rogers, R-Woodstock, who championed it in the media.

Coincidentally, Graves and Rogers look a lot alike. Both are slim, tall baritones with moussed black hair and a polished speaking voice. Each was first elected to the General Assembly in 2002, and both are considered up-and-comers.

Perdue said the tax cut just wasn't affordable, although he said he liked other provisions in the bill that would have reduced some filing fees for businesses and given them a tax credit for hiring the unemployed. But, with tax collections in the current fiscal year expected to be 13.3 percent below the previous year and a budget just passed that didn't reduce spending enough to equal HB-481's estimated $1.5 billion in tax cuts, he said it wouldn't work.

Supply-side argument

The argument for the bill was straight out of supply-side economist Arthur Laffer's playbook. He was President Ronald Reagan's adviser who coined the Laffer Curve, which purports to prove that as tax rates are cut, tax collections increase even faster because economic activity accelerates.

Rogers frequently said he had consulted with Laffer on HB-481, a bill that has become a model for supply-side legislators in states across the fruited plain.

The tax cuts in HB-481 just wouldn't have worked fast enough to keep the budget in balance, according to Perdue spokesman Bert Brantley.

"The governor is a supply-sider," Brantley said, noting 13 other tax exemptions he did sign, from renewal of the sales-tax holidays to extension of a sales-tax exemption on airplane parts.

He even signed a bill by Rep. Ron Stephens, R-Savannah, that will grant a new $1,800 tax credit for people who purchase a house. But they have to do it within the next six months, and they take the tax credit over two years.

Pragmatic veto

Perdue won praise from pragmatists and liberals for his veto of HB-481. For example, the Georgia Budget and Policy Institute's executive director, Alan Essig, issued a statement from the Atlanta think tank applauding the veto as sound judgment.

"Governor Perdue has been a good financial steward of the state. He has reduced waste and now has risen above special-interest pressure that ignores vital services the state must provide," Essig said.

Praise from an economist like Essig may be flattering, but Perdue won't run again. Graves and Rogers will.

They can wear their veto like a badge of honor to gain political favor among business executives and conservatives, said Dan Franklin, an associate professor of political science at Georgia State University and author of a book on political power.

He asserts that reckless legislation rarely becomes law, but it often becomes political fodder.

"For legislators, it's a twofer. They can pass this bill and get the credit for it, and they can blame the governor for it not becoming law," Franklin said. "They figured out a way for the governor to get the blame and they get the credit for passing it."

Dough vs. show

That might explain the muted response from Rogers and Graves. Neither called for a veto override, like the 12 bills the House overrode in 2008 that Perdue had vetoed in 2007.

"I remain convinced our effort to give tax credits to those Georgia businesses willing to hire is the right thing to do," Rogers said in a statement to the press. "While I understand the governor's reason for vetoing this important legislation, I remain undeterred in my effort to lower taxes in Georgia."

Graves issued a statement just as reserved.

"Yesterday's veto is a setback for the job creation movement in Georgia, but it is not the end," he said. "I will continue working throughout the summer to return next session with more legislation to create, expand and attract jobs for Georgians by making Georgia the most business friendly state in the nation."

Franklin tells his students to distinguish between what's for "dough" and what's just for "show" in the legislature. He contends that dramatic legislation like HB-481 is more for show, and Perdue's veto of it was more for substance, or the actual dough.

In that case, don't be surprised to hear more about the veto from the supporters of tax cuts. But Franklin would say, don't be fooled by what's just for show.

Walter Jones is Atlanta bureau chief for Morris News Service and has been covering state politics since 1998.



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