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Monday, April 21, 2008

South Carolina's Contender

The Wall Street Journal had a piece on Saturday on the the Vice-Presidential prospects of Mark Sanford. I point it out not because my phone is ringing off the hook with John McCain calling for my advice on a running mate, but because Sanford's victories as Governor as South Carolina should be a model for reforming Pennsylvania.

Over the past six years, he has helped shepherd through three big tax reforms: the state's first cut to its income tax; a grand tax swap that slashed property taxes and increased sales taxes; and the virtual elimination of grocery taxes. That last one is not the tax cut Mr. Sanford wanted to spur investment. But he took what he could get, explaining simply, "We're about returning money to the taxpayer."

On health care, he sums up his views succinctly: "Our contention has been that the fatal flaw with our health-care system is that someone else pays. And as long as someone else pays, there is unlimited demand for a product . . . someone is going to cap it. It's just a question of who it is going to be? A government bureaucrat? An HMO bureaucrat? Or is it going to be you? But it is going to be somebody, because we can't keep growing health care at double digits and expect to be competitive. . . .

"So we were the second state in the nation to offer health savings accounts to all state workers and all state retirees. We got that one through. We are the first state in the nation to be offering the health care choice system [for Medicaid]. . . that offers everything from traditional fee-for-service to HMOs to PPOs, but the big one that I like is the individual health savings accounts."

At this point Mr. Sanford takes a surprising detour to bring up hurricane insurance, and ends up touching on another Republican touted as a possible running mate for Mr. McCain, Florida Gov. Charlie Crist:

"Even in the insurance crisis with hurricanes . . . we very much disagreed with the . . . Charlie Crist model [which makes the state an insurer of last resort]. Basically the taxpayer is going to be zapped in the long run in that model, when the next storm hits. . . . We said, No, let's rely on private markets and let's look for ways to attract private capital to our state. One of the most interesting features in [our reform] was hurricane savings accounts. To say look, if you just flat out hate insurance companies and think they're ripping you off and don't like the way that they're pricing risk, take the risk yourself. . . . That's why, in fact, we put in a provision here with hurricane savings accounts, where if you want to tuck money aside, tax free from the state standpoint – we can't do anything about the feds – from a state standpoint, go for it."

Perhaps the hardest thing to reform in any state is education. And in South Carolina it is more difficult than elsewhere, for two reasons. The first is that the state's history of racial segregation ensures that any school choice debate will be charged with emotion. The second is because local politics drives resources and attention to a limited number of schools in politically powerful districts. The results: a 50% dropout rate, SAT and ACT scores among the lowest in the nation, and a wide achievement gap between black and white students.

Nonetheless, Mr. Sanford has enacted a voucher system for prekindergarten students, created a statewide charter school district (local districts won't approve new charters), and has pushed for, though not won, vouchers for nearly every child in the state.

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