Given that Louisiana treasurer John Kennedy’s campaign has been largely alone in attempting to make political hay out of the Murder In The Bayou allegations – namely that Rep. Charles Boustany, Kennedy’s chief potential rival for the Louisiana Senate seat being vacated by Sen. David Vitter’s retirement, employed the owner of a whorehouse on his legislative staff and even may have been a client of multiple murdered prostitutes who plied their trade there, it was inevitable that Boustany’s campaign would do more in response than just accuse Kennedy of sleaze.
Now Boustany’s attacks on Kennedy focus on something which is an actual real weakness of Kennedy’s at times. A 30 second spot released today…
Is this a legitimate attack? Actually, yes – at least to an extent.
Kennedy has held himself out as the keyholder to the secrets of fiscal responsibility in Louisiana by at various times demanding that the state reduce its public employee workforce through attrition and that it renegotiate its contracts in an attempt to make the contractors take a haircut of, say, 10 percent. He’s currently pushing an effort to rein in fraud and waste within Louisiana’s multi-billion dollar Medicaid system, which is a much more accurate shot at fiscal responsibility.
But when Boustany trashes Kennedy for peddling snake oil where it comes to the budget, there is a legitimate argument in his attack – and it’s more than just the fact that what we’re seeing in Boustany’s attacks is the perpetuation of the Jindal-Vitter feud within the state GOP that Boustany and Kennedy are proxies for. Kennedy has for several years pushed a legislative fiscal agenda that the various committees on budgetmaking have looked at and found unworkable.
Particularly with respect to state contracts. The Kennedy argument has essentially held that Louisiana wastes too much money on consulting contracts and so forth, and that many of those contracts are little more than payoffs to cronies of Louisiana’s politicians. And while he’s correct in some instances, Kennedy also argues that the state could go a long way toward resolving its chronic budget problems by unilaterally renegotiating those contracts.
There are three key problems with this. The first one is that most of the contracts the state has entered into actually save the state money, because by using private-sector contractors Louisiana avoids having to carry additional public employees who tend to be awfully expensive with respect to benefits and then carry enormous legacy costs in terms of pension obligations. If those contracts were to be canceled, or renegotiated down to the point where the contractor was no longer willing to perform, you then come to the question of either growing government to meet the same public expectation of service, or eliminating a government function currently performed by use of a contractor. We’re fond of the latter in a lot of cases, but the legislature is perfectly capable of making that determination outside the realm of contract negotiations – and it’s a policy question, not a budgetary one, whether to actually shrink the size and scope of government.
The second problem is that the truly egregious state contracts, the ones where the state is getting gouged, are generally very small potatoes. It’s a lot like the Wastebook that Sen. Tom Coburn, who Kennedy would probably emulate were he to win this race, used to put out every year. The idiotic junk-science studies, the gold-plated graft and the lavish junkets detailed in Coburn’s annual Wastebook were absolutely abuses of the public fisc and should be eliminated, but the problem is that none of them involved what you’d call “real” money. You could have gotten rid of everything in the Wastebook and it would save maybe $30 billion out of a $3.5 trillion budget. We’re all for doing so, of course, but nobody should be under the illusion that winning that battle conquers the enemy. Likewise, Kennedy’s vignettes about the contract to teach Hispanic kids how to enjoy recess in Rapides Parish public schools, for example, surely highlights waste which ought to be eliminated – but to truly solve the structural problems in the state budget would involve a whole lot more pain than he’s promising.
And the third problem has to do with the structure of those contracts, something Kennedy either hasn’t accounted for or refuses to. Let’s say there’s a contract which nobody argues is necessary – for example, we’ll say it’s the information-technology contract for the Department of Transportation and Development. And let’s say, using a nice round number that might not be realistic, that the contract is worth $10 million per year. The kind of work needed to perform that contract is going to be highly technical and very specialized, so there are likely only two or three companies in the country who can do it. And let’s say the one who has that contract is ABC, Inc. in New Orleans, which would exist only coincidentally as this is a hypothetical example.
Along comes Kennedy who has convinced the powers that be to allow him to give all the state contractors their haircut. And he plops down in the CEO’s office at ABC, Inc. to tell them they’re due for a 10 percent haircut on their $10 million contract. He says it’s now worth $9 million as a result. And the response would be to tell Kennedy that the state is in breach of the contract should that be his position, and ABC will be walking off the job as a result.
So the state is now in chaos with respect to the computers at DOTD, and it has to re-bid the contract. And the two other companies who lost the bid to ABC on the current contract may not even be interested in bidding on the new contract – both because ABC was likely the low bidder at $10 million, and also because who wants to do business with the state of Louisiana when it doesn’t honor its contracts? So they don’t bid, and ABC does. But does ABC bid the $9 million Kennedy demanded? No. ABC bids $12 million, because they can do so without losing the contract. And Kennedy has actually cost the state $2 million by trying to save that money.
Does this invalidate Kennedy as a candidate? No. It’s a weakness. It’s not a disqualifer. It does cast some doubt on his self-portrayal as the fiscal hawk in the race, but as a member of Congress Boustany might have a hill to climb in casting himself as being a whole lot better.
What’s interesting about this is that other Republicans are now attacking Kennedy as a fake conservative. We figured that was inevitable, but it took a long while for such attacks to be sharpened and let loose so publicly. That it was Boustany probably indicates the remnant of the Jindal-Vitter fight plus the bad blood from the Murder In The Bayou accusations, but it would have surfaced sooner or later.