Just got the monthly e-newsletter from North Carolina Treasurer Janet Cowell. While I am finding a few more reasons now and then not to completely agree with her, I do believe she has done a great job as State Treasurer over the past four years, proving to be a strong and resourceful financial manager and politician.
I also believe that had chosen to run for Governor or Lieutenant Governor, there is a good chance she might have won (unlike soon-to-be Former Gov. Perdue, who is acting quite delusional this week).
Regardless, Treasurer Cowell’s latest message is one of the most unusual you are likely to receive from an elected official, executive or legislative. It’s introspective without being too self-centered, eliciting strength and confidence while upholding a balance of humility.
The full text is included below (cannot post a link, had to copy and paste). You will quickly surmize that Treasurer Cowell has grown into the role, and while not exactly noticeable on the outside (because she was already in good command when she took office), the Erskine Bowles’ protoge believes she has matured and learned a great deal over the course of her first term in office.
Reading the words, I recognize something else. Whether she wanted the role or not, Janet Cowell is not the public face and leader or the Democratic Party in North Carolina.
Technically, Secretary of State Elaine Marshall and Attorney General Roy Cooper are longer-serving and more prominent Democrats in the Council of State. However, with the Governor’s Office and General Assembly now solidly under Republican control, and conservative policy finding success as legislative action, fiscal policy and its impact on state obligations and responsibilities will become the centerpiece of statewide debate in the coming years.
Treasurer Cowell has maintained a reasonable, calm approach over the past two years as the Republican-controlled General Assembly battled and eventually neutered Governor Perdue on most issues, including the state budget. Moving into the start of the McCrory Administration and the return of the long term, the agenda appears to be focused squarely on North Carolina’s fiscal policy, notably reforming the state tax code.
Earlier this month, Treasurer Cowell penned an editorial picked up by several newspapers across the state expressing concern about Washington’s inability to reach a solution to the legislative clustermuck known as the “fiscal cliff.” Without resorting to tired rhetoric, Cowell focused squarely on the impact the coming tax and budgeting quagmire could have within North Carolina’s fiscal policy.
“As North Carolina State Treasurer, I am concerned about potential impacts on our pension fund, our bond rating and the state budget.
“With time running out before year-end, investors get nervous, causing market volatility and accompanying unpredictable pension returns. If returns are low, North Carolina’s taxpayers will need to make up the difference.
“Punting on the fiscal cliff would send rating agencies the wrong message – that our federal government is truly dysfunctional. As Alan Krueger, Chairman of the Council of Economic Advisors, put it, the message would be that government cannot solve the problems it is there to solve. If the federal rating is downgraded another notch, North Carolina’s AAA bond rating will be automatically knocked down a rung on the ladder making it harder to fund roads, schools and other capital improvements.”
Cowell also proved to be relatively accurate in her predictions of what the lack of a “deal” from Washington would mean to broader markets.
“So far, world markets have not reacted strongly to the lack of urgency from Washington. But the markets will take notice the closer we get to December 31 without a solution. The question we face is whether to go over the cliff and deal with our issues only after being compelled by a financial crisis or preemptively address the problem by putting on the brakes now and walking away from the cliff.”
To be clear, Treasurer Cowell did advance the notion of increasing top marginal income tax rates as part of a plan to address the problem. While I do not agree with that specific approach, her justification was tied to the need to reduce the Federal deficit, where she and most rational people on both sides of the aisle believe action must be taken.
“Federal debt now stands at 70 percent of GDP, the highest level since 1950. Over 10 years, federal deficits must be reduced by $4 trillion if the debt to GDP ratio is to be stabilized or reduced. If the debt as a percent of GDP is not reduced, fiscal crises will become more frequent and the ability of policymakers to respond will become severely limited.”
More than likely, the Treasurer will find herself in a position of having to make sure the Republican’s tax and budget proposals this year achieve desired economic growth objectives while avoiding deterioration of the State’s fiscal condition. With Democrats in the General Assembly virtually unable to do anything with respect to counter-legislation, and progressive social activist groups only likely to contribute political theatre to the debate, Treasurer Cowell will be the only respected “opposition” to majority proposals.
Even then, her role will be that of a Devil’s advocate, should she be able to prove that proposals to abolish the state income tax or eliminate funding in certain areas pose a fiscal risk to the State. Luckily for her, Governor McCrory has a record of bipartisanship and responsible governance as Charlotte Mayor, and will probably listen to Treasurer Cowell as he moves forward with the General Assembly on a bold fiscal agenda.
At the same time, McCrory will need Cowell’s support and logical, data-driven approach to address other critical fiscal issues, including upholding the State’s excellent credit rating and addressing long-standing issues involving pension benefits. Specifically, the Governor and Treasurer will need to bring the legislature and state and local government workers together to craft a permanent plan to address employee retirement and cover liabilities associated with health care benefits for retired state workers. Continued pressure from the Governmental Accounting Standards Bureau (GASB), ratings agencies and Congress to emphasize accurate reporting and conservative approaching to calculating unfunded liabilities and annual contributions will only complicate this process.
Once the new year rolls around, Treasurer Cowell will find herself among the familiar surrounds of an office she has grown into and gained respect for. She will also find herself as the only credible “break” on the legislative train Republicans probably have in mind for 2013.
Reading between her lines, it appears the she is well aware of and preparing for the challenges ahead.
Text of Cowell’s December E-Newsletter:
My best gift
My best gift of the season came in the form of observations from several people that I respect noticing that I have changed, evolved, and grown in my office. The feedback means the world to me because it recognizes a lot of effort and growing pains during my first four-year term as North Carolina’s State Treasurer.
More broadly, this provides hope that all of us have the capacity to do things differently, move outside of our comfort zones. Given challenges in unemployment, education, healthcare, and budgets here at home in North Carolina, along with fiscal cliff and debt ceiling negotiations in Washington, our capacity and willingness to learn and change is a welcome message and will keep us moving in the right direction.
The phrase “Dance With the One Who Brung You” is popular, but not always good advice. Certain skill sets bring you so far in life, but must be complimented to remain competitive and at a top level. In my case, singularity of focus, “heads-down” intensity, and independent-mindedness helped me improve operations in the Department of State Treasurer. However, I realized in my first two years that I needed some new dance partners to be more effective for the people of North Carolina. I adapted to spend more time outwardly focused and utilize partnerships with the best and brightest of our state, ensuring we are always aligned to make the best decisions for North Carolina.
A number of you receiving this email were catalysts for my personal change on issues ranging broadly from increased public speaking on issues affecting North Carolinians to pushing the limits of physical fitness outside of the office. I am incredibly grateful for those of you who have believed in me, advised me, worked alongside of me, and made me laugh along the way. One friend even told me he was going to tell people he was a senior advisor to the State Treasurer. “On fiscal matters?” I asked. “No,” he replied, “on wardrobe.” While that may be further down my priority list, the care to make things better down to that level of detail is refreshing and appreciated.
This is not to say that I do not have room for growth and a need for improvement. However, I do believe that we should all recognize and celebrate life’s small (and medium-sized) victories. Being State Treasurer has given me a front row seat to fiscal matters and, right now, there is more to worry about than celebrate.
While we have many things to be grateful for here in North Carolina, there are a number of pressing issues facing us. We need to create more jobs. One of the biggest missed opportunities is better maximizing the good ideas coming out of our universities. We have increased our high school graduation rate to 80%, but need to continue to increase the number of students graduating from our community colleges and universities with job-ready skill sets. We need to collectively improve our health to better our quality of life and reduce health care costs. Given our past successes at reinvention when needed, I am optimistic about North Carolina’s capacity to change to make us even stronger and better prepared for the future.
At the National level, our federal leaders must find the will to change how they have been conducting business, because their current approach is not working. A down payment is desperately needed on our national debt and we must create a long-term framework for reducing that debt. Otherwise, our debt payments will crowd out investments in things like education and research and development that will provide a brighter future for our children.
As we ring in the New Year and bring in new leaders at the federal, state, and local level, my hope is that we individually and collectively do things differently and strive for better results. And as we work together to find solutions, I hope that we celebrate our victories, large and small, and recognize the efforts and growth around us. I look forward to working with you, as we continue to build and maintain a fiscally strong and prosperous North Carolina. I am glad we are on this journey together.