Popularity Over Principle

The political fortunes of first-term Maryland governor Martin O'Malley won't be determined until he faces voters again in 2010 — unless, remarkably, he escapes Annapolis as the vice-presidential candidate for Hillary Clinton or Barack Obama — but in the aftermath of the General Assembly's recently concluded three-week "emergency session," one thing is certain: citizens of this already highly taxed state have had their pockets picked.

Mr. O'Malley, a Democrat, who works in conjunction with a legislature that is overwhelmingly populated by members of his own party, celebrated just before Thanksgiving an enormous $1.4 billion package of tax hikes — the highest in decades — along with undetermined spending cuts that will allegedly close a $1.7 billion budget deficit.

The governor and his Democratic enablers, ensconced in frantic meetings and backroom arm-twisting for three weeks in November, apparently didn't take into account the darkening national economic climate, or perhaps just chose to ignore it.

The strategy employed by Mr. O'Malley was curious, to say the least. The 44-year-old former mayor of Baltimore is an ambitious politician who is far more comfortable campaigning than actually governing — he barnstormed the state in early October in defense of his special legislative session — and he may rue the consequences of his recent achievements.

When the governor first announced his proposal last September, he claimed that 83% of Maryland residents would actually pay less in taxes, a number that gave him the public ammunition to force grumbling state senators and delegates to convene in Annapolis for the short convocation. (Mercifully, Maryland's legislative session is just 90 days at the beginning of each year, and that suits elected officials just fine.)

After the haggling on the scope and severity of taxes — and they are punitive —it turned out that just 45% of citizens will realize a decrease in taxes. That's due in large part to the scuttling of a modest property tax decrease; an out-of-nowhere tax on previously exempt computer services; an increase in the state's sales tax from five to six percent; an additional dollar tax on a pack of cigarettes; and an extra $200 titling taxes when a new car is purchased.

So, Mr. O'Malley, who poses as a champion of the middle class (and opponent of corporations and the most affluent residents), has in reality managed to anger almost everyone in the state, save the editorialists at the Baltimore Sun and Washington Post.

Last week I was speaking to a local real estate agent, who voted for Mr. O'Malley last year over Republican incumbent Bob Ehrlich, and she was not in a forgiving mood. In the past year Maryland's housing market has tumbled more precipitously than the rest of the country — 28.6% compared to the national average of 13.7% — which is troubling enough for her industry.

She acknowledged that the housing market is subject to various cycles and hopes for an upswing in 18 months, but Mr. O'Malley's increase of the corporate tax to 8.25% from 7% is an obvious disincentive for companies considering either starting up or moving to Maryland. Maybe the governor is banking on a Democratic administration in Washington after next fall's national elections, which would provide an uptick of people relocating to Maryland, but that's a gamble. It's said that Mr. O'Malley consulted with former Virginia governor (and current senate candidate) Mark Warner before embarking on his audacious tax overhaul. Mr. Warner burnished his national reputation by raising taxes in Virginia; however, unlike his Democratic compatriot, who was crafty enough to pass his tax hikes with the help of a Republican-dominated legislature, Mr. O'Malley received almost no assistance from the opposition party.

In fact, Maryland's comptroller, Peter Franchot, also a Democrat, criticized Mr. O'Malley, telling a Washington Post reporter that the tax hikes were "regressive" and "may damage the Maryland economy, which is in a volatile and soft position right now."

Mr. Franchot, elected last fall, has no shortage of ambition and should Maryland's economy suffer because of Mr. O'Malley's profligate tax hikes, he'd be a logical candidate to take on the incumbent in the Democratic primary a bit less than three years from now. And Mr. Ehrlich, a budget hawk who was personally popular in the state but was swept away in the anti-GOP tide of 2006, hasn't disappeared, making frequent appearances on television and talk radio. So far, Mr. Ehrlich has been somewhat charitable toward his successor, but political observers here don't expect that to continue.

Predictably, Mr. O'Malley was hailed by self-described "progressives" in the media. The Post's op-ed columnist, E.J. Dionne, was noxiously fulsome in his praise of the governor, writing on Nov. 23, "[I]magine a place where… politicians are grown-ups and decide that closing budget deficits requires a mix of tax increase and spending cuts." Mr. Dionne also contrasts Mr. O'Malley to those in Washington who practice "right-wing ideology that demonizes taxes and government while preaching that the public interest depends upon solicitude toward the comfortable and the privileged."

It's likely that the pundit, an affluent resident of Bethesda, won't feel the pinch of the 20% hike in the state's sales tax, but I don't think his lionizing of Mr. O'Malley will be shared by fellow Marylanders whose income is much more modest.

The one facet of Mr. O'Malley's new budget — and it's here where he receives a slap on the wrist from the moralists at the Sun and the Post — that's left up in the air is the issue of increased gambling in the form of slot machines. Mr. Ehrlich made slots one of his signature proposals for four years and got nowhere with the Democratic legislature, but apparently opinions can change when a Democratic governor takes over. In 2008, on Election Day, an up or down referendum on adding some 15,000 slot machines in the state will be on the ballot; right now, polling suggests it will pass but it's certain an expensive campaign will be waged for and against the question.

Frankly, Mr. O'Malley's punting on a decision about slots — and thus delaying hundreds of millions in projected revenue — is indicative of his indecisiveness. As it happens, I believe slots, and for that matter, casinos, should've been legalized a long time ago, regardless of those who condescendingly preach "gambling parlors tend to soak working stiffs" (according to a Post editorial).

It's not as if Baltimore's Inner Harbor, for example, isn't already a gaudy commercial district that features chain stores and restaurants, souvenir kiosks, and the high-priced refreshments of the Orioles's Camden Yards. Aesthetics aside, these tourist attractions provide jobs and a revenue stream for the city; a source of income that legalized gambling would surely increase.

I suspect in the coming months, before the effects of Mr. O'Malley's new budget are fully implemented, he'll maintain his popularity. In the long run, however, the new governor's desire to be perceived as a "leader" is more likely to put an end to his political career.

Mr. Smith, founder of three weekly newspapers, lives in Baltimore.