Friday, August 17, 2007

Congressman Conaway's "Open" House

U.S. Congressman Mike Conaway-R, TX hosted an open house last night in San Angelo. In his opening remarks he stressed a few things that shouldn't have surprised me, but did.

1. He put Osama Bin Laden, Ayman al-Zawahiri and Mahmoud Ahmadinejad in the same boat as planning harm to the U.S. and its citizens. Of course he mentioned the questionable translation of the Iranian leader's comments on Israel and stated the explosive devices coming from Iran are "a clear act of war". (He failed to mention armor piercing weapons going from the U.S. into Mexico and their deleterious impact on security.)

2. That we can't afford the promises we've already made and he wants to cut taxes. Huh? Isn't that illogical, unless he wants to make far fewer promises?
3. Mike cited all the bad things in Iraq that could happen if we left, (as if they aren't happening today). He seemed ready to jettison al Maliki or at least acknowledged he was on a thin rope. He talked about David Petraeus as the new savior, but skated when challenged about the White House writing the report, not the brilliant Petraeus.

4. He sounded rather pitiful in talking about all the difficulties of serving in Congress as a member of the minority party. In other words, he wants a Republican majority to do "the people's work". What happens when the people choose Democrats or Independents to do their work? He did speak honestly to Republican mistakes, about not managing the store during their twelve year run.

5. He spoke to a number of head fakes used by Congress. One, they sometimes posture to get other country's attention, ex. China, regarding their economic policies. And two, they pander to special interest groups at home with the intention of not doing anything. How does a constituent know when they're being treated seriously or being pandered to?
As for the Q & A portion of the event, I was surprised by the deep concerns people shared. It was no preselected Republican fest like President Bush engineers. Even a few long time Republicans shared their disappointment in the direction of their party. Conaway got hammered for veteran's care, struggles of low income retirees, earmarks, immigration, the SPP/American Union (US/Canada/Mexico), health care and China.

One gentleman pleaded the cause of independent pharmacists and durable medical equipment sellers. He shared how patients would get worse service, causing their health care problems to grow, thus adding more costs to the system. At the end someone asked about lowering business taxes and the agriculture bill. I asked a question about the impact of private equity buyouts and future lower tax receipts in the Treasury:

As an accountant you are aware of the need to balance revenues with expenses. What is the impact of the recent flurry of private equity deals on expected Treasury receipts in 2008 and beyond? In the case of recently bought out HCA and Triad Hospitals, the additional interest for their new owners is a combined $2 billion. As private sector companies have to balance the revenue expense equation, this means more health care price increases or significant hospital expense cuts. Spreading the new Community Health Systems debt over their facilities amounts to $2 million per hospital. The new debt taken on by SACMC’s corporate parent is enough to wipe out their merged company’s bottom line for all of last year. This would be a $200 million hit to the Treasury. HCA just announced their profits are down 50%, mainly due to increased interest costs. What are you as an accountant doing to monitor and address this, and specifically the revenue side of the federal government?

Conaway used it as a softball. "He trusts the capital gains from those sales make up for any decreased business income taxes." After a five minute answer, the end result is the federal government does not monitor major shifts like buyouts and their subsequent impact on tax receipts. There is nothing concerning about private equity firms in his mind. (Note: he does receive donations from PAC's of firms owned by major PEU's. Carlyle's Vought Aircraft Industries, WCAS's U.S. Oncology, and soon to be KKR's TXU. Vought benefited from the largest earmark to date, $2.4 billion to buy new military planes)
The Congressman was slicker than goose poop, frequently bear hugging the upset questioner with "that would be offensive to all of us". Despite all the deep concerns people shared, I believe he only asked two or three people to connect with one of his 5-6 staffers in the back. My friend who scored a big hit with an earmark question said afterwards. "He's good. I don't think he answered one question." Mike said his earmarks are available, he just didn't say where. I searched the web and found two, $5 million for brush eradication along the Rio Grand and $600,000 for an addition to the fitness center at Goodfellow Air Force Base. One might expect a Congressman who vilified the opposition on lack of openness and transparency to post them on his website.

After I left, I wondered if we'd been an exclusive Republican group what we might have heard. My guess is there would have been much less conciliation and a clearer delineation of the Republican stance. Would the crowd understand its underlying philosophy, "might makes right", "he who dies with the most toys, wins" and "you're on your own"? It doesn't resonate with this Independent voter...

Update 9-30-15:  Years of tax optimization shows how the PEU set lightened their tax load.  Still no word from CPA Congressman Mike Conaway on how the government tracks or forecasts