"Dishonest scales are an abomination to the Lord,
But a just weight is His delight."
Whoa, whoa...wait a second...sssay whaaaaaat?!?
A couple of years ago, famed billionaire Warren Buffett got into the auto dealer business without realizing a protectionist state law could stop him from selling cars in Texas.So...a liberal billionaire who helped raise money for Obama and Hillary Clinton visits the Capitol and a "narrowly tailored" bill starts moving while the bill that repeals the entire law in question languishes in committee?!?
On Monday, Buffett met with Lt. Gov. Dan Patrick and — according to multiple Capitol sources and an unchallenged news story — Gov. Greg Abbott.
On Tuesday, the Texas Senate used emergency powers to introduce what was quickly dubbed the “Buffett Bill,” Senate Bill 2279, granting the Oracle of Omaha a special exemption. On Wednesday the author set the bill for a public hearing in a Senate committee. And on Thursday it shot out of the panel like a lightning bolt toward the Senate floor.
In Capitol parlance, what Buffett is getting is known as a “carve-out,” a special deal for one company. In the case of Buffett’s Berkshire Hathaway Automotive, it was an exemption from the supposedly hallowed rule that vehicle manufacturers can’t be vehicle dealers. Berkshire Hathaway also owns an RV manufacturer, Forest River Inc., in Indiana.
If the Legislature fixes Buffett’s problem, it won’t be the first time lawmakers have come to the aid of powerful interests. What makes the Buffett carve-out extraordinary is the speed with which it passed through the often clunky legislative process, the powerful auto dealer alliance supporting it and the stark contrast with other attempts — including by electric car maker Tesla Motors — to open up the state’s heavily-regulated auto market.
The special treatment for Buffett’s bill also lays bare the tensions between the statewide political establishment — led by Abbott and Patrick — and the drain-the-swamp grassroots that have helped put them in their current jobs.
“I do have a problem with a gazillionaire blowing into Texas and meeting with our officials and suddenly a bill gets fast-tracked,” said East Texas Tea Party activist JoAnn Fleming, one of the early and most enthusiastic backers of establishment-busting U.S. Sen. Ted Cruz. “Republicans all run on being free market people except where there’s an asterisk, and then there’s a bunch of exceptions.’’
Economic protectionism is a touchy subject in the offices of the governor and lieutenant governor, neither of which answered questions about the Buffet Bill or the auto dealers’ firm grip on the Texas Legislature. Patrick’s office did confirm he met with Buffett.
A bill being pushed by Tesla Motors — arch enemy of an auto dealer network that has pumped millions into the campaign coffers of Abbott and others — is heading into oblivion faster than the company’s sleek Model X.
The Tesla bill hasn’t even gotten a public hearing, and nobody in the know at the Capitol is predicting the bill will go anywhere even if it does. That leaves Texas increasingly isolated from other big economies that have embraced the direct-to-consumer sales model Tesla has pioneered around the world — including in approximately 30 U.S. states.
But Tesla represents a direct threat to auto dealers because the bill would allow any manufacturer — not just the electric carmaker — to bypass car dealers altogether and sell directly to consumers. And a threat to auto dealers is a threat to the establishment.
In recent years, auto dealer interests, led in large part by one of Abbott’s largest donors — Houston billionaire Dan Friedkin of Gulf States Toyota — have poured money into the campaigns of the state’s top elected officials as part of a well-financed fight against Tesla, according to a 2015 study by Texans for Public Justice, a liberal watchdog group that tracks money and influence. Auto dealer interests have given nearly $11 million to state politicians between 2013 and 2016, with Abbott and Patrick, respectively, at the top of the heap, according to preliminary TPJ figures.
As it turns out, Friedkin, whom Abbott appointed to the board of the Texas Parks and Wildlife Department, has his own carve-out of sorts. His company is the exclusive distributor of Toyotas in Texas and four other states — while also having ownership interests in dealerships.
Friedkin's business empire might have run afoul of state laws designed to stop both manufacturers and distributors from becoming dealers themselves. But Carroll Smith, chairman of the Texas Auto Dealers Association, said Friedkin was cut out of the law because he had pre-existing dealerships when the bills were passed more than a decade ago. It's known as the "Friedkin exemption."
In fairness to those pushing the bill, an argument can be made that RV's and consumer automobiles are fundamentally different businesses and that a law intended to cover the latter shouldn't apply to the former. Then there's the issue of what's politically feasible. It isn't a crazy argument, but it is incredibly weak.
It's also the type of argument we normally hear from the House...but this time we're hearing it from the Senate.
For the most part, this session, the Senate has been moving the ball in the right direction. While we certainly don't agree with every action they've taken, it's hard to deny that they're considering and passing bills that deliver tangible progress on a wide range of priorities. From property taxes, to taxpayer funded lobbying, to corporate welfare on the local level, to dismemberment abortion, to university tuition, to sharing economy issues, to any number of other issues, if the bills working their way through the Senate cross the finish line they will represent tangible (if imperfect and incomplete) progress.
And, similarly, the contrast with the House speaks for itself.
But if they press forward with a carve out bill for a liberal Obama donor while killing a much stronger free market bill that addresses the same issue, it doesn't take a genius to see how it would be used against them. The (basically accurate) Senate good/House bad narrative becomes muddied and more difficult to explain. This becomes even truer if Straus ultimately kills this measure.
[Note: If we were Joe Straus, and we got this bill from the Senate, we would kill it just to mess with Patrick.]
We spent several hours this morning working Senate sources and, to the best of our knowledge, nobody seems to have any clue what's going on besides Dan Patrick and Kelly Hancock. That's both a bad thing and a good thing. It's bad because it's incredibly shady but it's good because it suggests that, in the club-like atmosphere of the Senate, there doesn't seem to be consensus among the members to move forward...yet.
One silver lining: If this bill does move forward, it's vulnerable to a floor amendment that could substitute the Tesla bill for the "Buffett bill." All it would take would be to have a Senator force the vote during floor debate. But we've also learned from experience that courage from an individual Texas senator is...fleeting.
Bottom Line: This is...difficult to understand.
Office of the Lieutenant Governor: (512) 463-0001
Senator Kelly Hancock: (512) 463-0599