Two years after America voted overwhelmingly for change, polls, analysts and an angry election season suggest its voters are about to do so again.

Amid universal expectations of big Republican gains in Congress, Tuesday’s balloting is also likely to tip the scales of power in states across the country, and with them, partisan prospects for the elections of 2012 and the balance of the century’s second decade.

In Pennsylvania, the high-profile, high-spending races for governor and senator have been unavoidable to anyone with a television or radio. Both are at the top of the national parties’ priorities. But in an election in which the GOP needs 39 seats to wrest the speaker’s gavel from Nancy Pelosi, a spotlight has also cast Pennsylvania’s U.S. House contests in sharp relief. In a chamber in which 90 percent of incumbents typically win re-election, nearly half of Pennsylvania’s seats feature competitive contests.

Read it all.

As the country grapples with its worst economic downturn in decades and persistent unemployment, voters in Oklahoma next week will take up another issue ”” whether they should pass a constitutional amendment outlawing Sharia, or Islamic law.

Supporters of the initiative acknowledge that they do not know of a single case of Sharia being used in Oklahoma, which has only 15,000 Muslims.

“Oklahoma does not have that problem yet,” said Republican state Rep. Rex Duncan, the author of the ballot measure, who says supporters in more than a dozen states are ready to place similar initiatives before voters in 2012. “But why wait until it’s in the courts?”

Some conservative activists contend that the U.S. is at risk of falling under Sharia law. They point to Europe, with its larger Muslim population and various accommodations to the Islamic religious law.

Read it all.

A number of you know I (a) like politics and (b) follow it quite closely. From time to time it crops up as an element of focus on the blog, and the midterm elections 2010 is one of those times. There is no flawless indicator, but my favorite as some of you may remember is Intrade, since it involves real people and real money (and it has a very fine track record). By far the most revealing graph I have found is this one:

What does this mean? Think anti-incumbency and a disgust with business as usual in Washington at a minimum–KSH.

Jay Leno on undecided voters: “Do we vote for the people who got us into this mess, or the people who can’t get us out of this mess?”

Democrat Vincent Sheheen said Monday that the state must invest more in college and early childhood education as the economy improves, while Republican Nikki Haley said the state must ask businesses and faith-based groups to do more in the schools, from providing preschool to stocking public libraries.

Read it all.

The bailout became law because the legislative branch was stampeded with the threats of certain doom. It vested unprecedented economic authority in a single unelected official, the secretary of the Treasury. And it used public funds to insulate well-connected private actors from the consequences of their recklessness. Its creation short-circuited republican self-government, and its execution created moral hazard on an epic scale. It may have been an economic necessity, but it felt like a travesty nonetheless.

This is why it should be possible to both sympathize with the politicians who voted for the bailout and welcome their rebuke at the ballot box. Faced with extraordinary circumstances ”” wars, natural disasters, economic crises ”” political leaders will always incline toward a blunt utilitarianism, in which the need for stability trumps more high-minded ideals. But after a crisis has passed, it’s immensely important that the ideals reassert themselves, so that the moral compromises made amid extraordinary times aren’t repeated in ordinary ones as well.

Read it all.

On November 2, voters in Arizona and South Dakota decide whether to legalize marijuana for medical use, as 14 states and the District of Columbia already have. Meanwhile, in California, where medical marijuana is legal, voters are deciding whether to decriminalize recreational marijuana use. Is marijuana a gateway to harder drugs? Lucky Severson reports from Los Angeles.

BISHOP RON ALLEN (President, International Faith-Based Coalition, speaking in a church): It is because Satan has tried to make us think and have tried to make us believe that it’s nothing. Isn’t that just like the enemy? That it is less harmful than alcohol. Isn’t that how Satan comes in the back door to make you think that one sin is greater than another? You all have to say “amen.”

LUCKY SEVERSON, correspondent: It’s Sunday, so Bishop Ron Allen is guest preaching in church. Any other day of the week and he’ll be preaching the same message to anyone who will listen. Bishop Allen is president of the International Faith-Based Coalition, comprising what he says are over 4000 churches nationwide. His one mission is to teach drug prevention to church leaders, and more urgently to defeat Proposition 19, which would legalize marijuana in California.

Read or watch it all.

In September, Nevada’s unemployment rate held at 14.4 percent, again the highest among the states. The states with the next highest rates were Michigan, 13.0 percent, and California, 12.4 percent. North Dakota continued to register the lowest jobless rate, 3.7 percent, followed by South Dakota and Nebraska, at 4.4 and 4.6 percent, respectively. In total, 26 states posted jobless rates significantly lower than the U.S. figure of 9.6 percent, 7 states recorded measurably higher rates, and 17 states and the District of Columbia had rates that were not appreciably different from that of the nation.

Read it all.

Top state business leaders, lawmakers and small-business owners from a hodgepodge of industries are fuming over the S.C. Department of Revenue’s efforts to charge a tax on services.

A report in Saturday’s Post and Courier of a North Charleston business that waters plants and now faces a hefty tax bill for its services raised concern among other small business owners who service and repair items — heating and air-conditioning systems, computers, cars — prompting them to call on state lawmakers and trade associations for help.

“We’re just flabbergasted,” said S.C. Small Business Chamber of Commerce President Frank Knapp. “I didn’t know this existed.”

Read it all.

Bad news isn’t always a surprise. But knowing it’s coming doesn’t always help, either. And now that, as expected, South Carolina now faces a huge new bill due to Obama-Care, our state faces a terrible dilemma.

The president and his allies in Congress promised that their massive health care overhaul would extend coverage to roughly 30 million previously uninsured Americans. The bill’s critics, including S.C. Gov. Mark Sanford, warned that the states would have to cover large new tabs due to the bill’s vastly increased number of people eligible for Medicaid.

The critics were right. Tuesday’s Post and Courier reported that the ObamaCare Medicaid mandate is projected to cost our state “nearly $1 billion over the next decade, even with the federal government covering at least 90 percent of the cost.”

Read it all.

…five years after lawmakers tweaked South Carolina’s sales tax policy, state revenue collectors now say that service providers — people who repair equipment, fix cars and maintain boats, for example — should levy a sales tax on their services.

Charging a tax on those services, which are typically thought to be tax-free, could affect thousands of businesses across the state as the state begins enforcing the policy.

Greenery Gallery is caught in the crossfire. Its bill for five years of back sales taxes came to $41,971.16, a substantial amount for a company that brings in about $500,000 in annual revenue.

Read it all.

The budget accord that top lawmakers and Gov. Arnold Schwarzenegger have struck would rely on cuts to public schools and reduced state worker pay, optimistic revenue assumptions and more than $5 billion in help from Washington -”“ far more than previously estimated -”“ to eliminate California’s $19-billion deficit.

The details of the spending plan, released in a report of the Legislature’s joint budget conference committee Wednesday morning, come less than 24 hours before the Legislature is scheduled to vote on the package. The budget, for the fiscal year that began July 1, is 98 days overdue and already the latest in modern state history.

The agreement avoids the deepest cuts that Schwarzenegger had proposed, such as the elimination of California’s main welfare program and child care for 140,000 children of low-income families. But it would roll back a pension boost that state workers received at the height of the dot-com boom. The new, lower pension levels would only apply to future employees.

Read it all.

Harrisburg, the capital of Pennsylvania, dodged financial disaster last month by getting money from the state to make a payment to its bondholders.

It did so even though the state warned that the money had to be used for city workers’ pensions.

Now Harrisburg is calling on the state again. On Friday, the city said it could not meet its next payroll without money from the state’s distressed cities program.

Across the country, a growing number of towns, cities and other local governments are seeking refuge in similar havens that many states provide as alternatives to federal bankruptcy court. Pennsylvania will have 20 cities and smaller communities in its distressed-cities program if Harrisburg receives approval. Michigan has 37 in its program; New Jersey has seven; Illinois, Rhode Island and California each have at least one. This is on top of troubled housing, power and hospital authorities.

Read it all.

Lawmakers will consider a recommendation when they return in January to raise the gasoline tax by 5.5 cents, from 16.75 cents to 22.25 cents a gallon, along with a financial doom-and-gloom message from state Department of Transportation Secretary Buck Limehouse.

Limehouse told lawmakers in a letter he sent Monday that funding is the agency’s biggest challenge. The state gasoline tax pays for road improvements and construction, safety upgrades as well as bridge replacement. That cash is used to pull down federal highway dollars.

Read it all.

Eleven months out of the year, the parishioners of New York City can safely attend Sunday services with no reasonable fear of interlopers, television cameras or quizzical members of the press.

But this is the electoral playoff season of October, when aspiring statesmen show up on doorsteps more often than jack-o’-lanterns. That means politicians are descending on the pews.

By noon on Sunday, three churches along a single two-mile stretch of Bedford-Stuyvesant, Brooklyn, had played host to three of New York State’s more prominent elected officials: the state’s attorney general and comptroller, both of whom are running for statewide office, and the mayor of New York City.

Coincidence? In campaigns, there may be no such thing.

Read it all.

“We basically have two bankrupt parties bankrupting the country,” said the Stanford University political scientist Larry Diamond. Indeed, our two-party system is ossified; it lacks integrity and creativity and any sense of courage or high-aspiration in confronting our problems. We simply will not be able to do the things we need to do as a country to move forward “with all the vested interests that have accrued around these two parties,” added Diamond. “They cannot think about the overall public good and the longer term anymore because both parties are trapped in short-term, zero-sum calculations,” where each one’s gains are seen as the other’s losses.

We have to rip open this two-party duopoly and have it challenged by a serious third party that will talk about education reform, without worrying about offending unions; financial reform, without worrying about losing donations from Wall Street; corporate tax reductions to stimulate jobs, without worrying about offending the far left; energy and climate reform, without worrying about offending the far right and coal-state Democrats; and proper health care reform, without worrying about offending insurers and drug companies.

“If competition is good for our economy,” asks Diamond, “why isn’t it good for our politics?”

Read it all.

For the past few decades, many local and state governments evaded… [certain set] requirements, using an array of accounting gimmicks and rosy economic predictions to routinely understate pension fund liabilities and overstate assets. All the while, cozy arrangements between politicians and public employee unions fueled pension benefit increases. According to a study by the Pew Center, state and local governments today face at least $1 trillion of unfunded pension promises.

The problem is exacerbated by significant differences between the laws governing public pensions and those in the private sector.

Private sector pensions are required by federal law (Employee Retirement Income Security Act) to conform to certain minimum pension funding rules. These rules require more accurate measurement of pension liabilities and assets and prevent companies with significantly underfunded pension plans from making new promises they can’t afford to keep. State and local government plans are not subject to these federal laws, and many failed to take it upon themselves to responsibly ensure that they would be able to make good on their promises….

Read it all.

Harrisburg Mayor Linda Thompson requested enrollment in Pennsylvania’s recovery and oversight program for distressed municipalities, saying the capital city stands “on the precipice of a full-blown financial crisis.”

Harrisburg faces “imminent and inevitable” defaults on about $44 million in bond payments due by Dec. 15, according to Thompson’s application for the state’s Act 47 recovery program. The city of 47,000 will miss payroll within a month, as well as its payment to the police pension fund due by Dec. 31, unless it obtains short-term loans, the application says.

Harrisburg officials have been weighing bankruptcy after the city missed debt payments for a trash-to-energy incinerator. Under Act 47 protection, Pennsylvania would help the city devise a recovery plan and give it priority in seeking state aid. The designation might also bolster the city’s standing in the credit markets through guarantees of financial support, Thompson said.

Read it all.

The U.S. government will face pressure to bail out struggling states in the next 12 months, said Meredith Whitney, the banking analyst who correctly predicted Citigroup Inc.’s dividend cut in 2008.

While saying a bailout might not be politically viable, Whitney joined investor Warren Buffett in raising alarm bells about the potential for widespread defaults in the $2.8 trillion municipal bond market. She said state and local issuers have taken on too much debt and that the gap between public spending and revenue is unsustainable.

“People will think the federal government will bail these states out,” Whitney, 40, the founder of Meredith Whitney Advisory Group Inc., said in an interview on Bloomberg Television’s “In the Loop.” “It’s going to be an incredibly divisive issue.”

Read it all.

Sometimes it’s hard to remember what good government looks like: government that disciplines itself but looks to the long term; government that inspires trust; government that promotes social mobility without busting the budget.

That kind of government existed for decades right here in California. Between 1911 and the ’60s, California had a series of governors ”” like Hiram Johnson, Earl Warren, Goodwin Knight and Pat Brown ”” who were pro-market and pro-business, but also progressive reformers.

They rode a great wave of prosperity, and people flocked to the Golden State, but they used the fruits of that prosperity in a disciplined way to lay the groundwork for even more growth. They built an outstanding school and university system. They started a series of gigantic public works projects that today are seen as engineering miracles. These included monumental water projects, harbors and ports, the sprawling highway system and even mental health facilities.

They disdained partisanship. They continually reorganized government to make it more businesslike and cost effective….

Read it all.

The last time the state’s budget was this small, gasoline cost a buck a gallon and South Carolina had a half-million fewer residents.

That was in the fall of 1999, when George W. Bush was running for his first term as president and the Internet stock bubble had yet to pop.

Now, more than a decade later, we’ve been through two recessions and just about everything costs more — fuel costs have more than doubled, college tuition has nearly tripled, health care has soared.

Read it all.

Earlier this year, Illinois said it had found a way to save billions of dollars. It would slash the pensions of workers it had not yet hired. The real-world savings would not materialize for decades, of course, but thanks to an actuarial trick, the state could start counting the savings this year and use it to help balance its budget.

Actuaries, including some who serve on the profession’s governing boards, got wind of what Illinois was doing and began to look more closely. Many thought Illinois was using an unorthodox maneuver to starve its pension fund of billions of dollars, while papering over a widening gap between what it owed and how much it had. Alarmed, they began looking for a way to discourage Illinois’s method before other states could adopt it.

They are too late. The maneuver, and techniques that have similar effects, are already in use in Rhode Island, Texas, Ohio, Arkansas and a number of other places, allowing those states to harvest savings today by imposing cuts on workers in the future.

Read it all.

Efforts to tame America’s ballooning budget deficit could soon confront a daunting reality: Nearly half of all Americans live in a household in which someone receives government benefits, more than at any time in history.

At the same time, the fraction of American households not paying federal income taxes has also grown””to an estimated 45% in 2010, from 39% five years ago, according to the Tax Policy Center, a nonpartisan research organization.

A little more than half don’t earn enough to be taxed; the rest take so many credits and deductions they don’t owe anything. Most still get hit with Medicare and Social Security payroll taxes, but 13% of all U.S. households pay neither federal income nor payroll taxes.

“We have a very large share of the American population that is getting checks from the government,” says Keith Hennessey, an economic adviser to President George W. Bush and now a fellow at the conservative Hoover Institution, “and an increasingly smaller portion of the population that’s paying for it.”

Read it all.

After 40 years of continual declines, the smoking rate in the United States has stabilized for the past five years, with one in every five Americans still lighting up regularly, the Centers for Disease Control and Prevention said Tuesday.

Moreover, more than half of all children are exposed to toxic secondhand smoke and 98% of those who live with a smoker have measurable levels of toxic chemicals in their blood stream, setting them up for future harm from cancer, heart disease and a variety of other ailments.

“If you smoke and have children, don’t kid yourself. Your smoke is harming your children,” Dr. Thomas R. Frieden, CDC director, said in a news conference.

Read it all.

Every gallon of gasoline you pump would cost you 5.5 cents more.

You’d pay 19 cents more each month to run the water from your tap.

The medicines you take to treat your illnesses would cost an additional 88 cents a month.

Turning on the lights and the television would help run up an additional 79 cents a month on the electricity bill for the typical South Carolina household.

You would have to open your wallets for new taxes at the grocery store and get used to paying for sales taxes on more of the services you buy, such as home pest control treatment, pampering at the beauty salon and a storage unit to stash your stuff.

Read it all.

California insurance regulators cleared the way Wednesday for Anthem Blue Cross to implement scaled-back rate hikes after a previous increase was canceled amid an uproar over its size.

Anthem said it intends to put the new rates ”” averaging 14% and as high as 20% ”” into effect Oct. 1 for nearly 800,000 individual California policyholders.

Regulators also allowed one of Anthem’s nonprofit competitors, Blue Shield of California, to move ahead with rate increases ”” averaging 19% and as high as 29% ”” for 250,000 individual policyholders.

Read it all.

Despite years of talk by Democrats and Republicans about the need to control spending, farm out work to private businesses and make government finances more transparent, the opposite has occurred.

Rather than becoming leaner, the state work force increased by 7.1 percent since 2005 — outpacing Oregon’s population growth.

The number of top state employees earning more than $100,000 a year more than doubled during the past decade.

Read it all.

Cities and states across the nation are selling and leasing everything from airports to zoos””a fire sale that could help plug budget holes now but worsen their financial woes over the long run.

California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it’s parking meters. In Louisiana and Georgia, airports are up for grabs.

About 35 deals now are in the pipeline in the U.S., according to research by Royal Bank of Scotland’s RBS Global Banking & Markets. Those assets have a market value of about $45 billion””more than ten times the $4 billion or so two years ago, estimates Dana Levenson, head of infrastructure banking at RBS. Hundreds more deals are being considered, analysts say.

Read it all.

Every day, an average of 112 people — most of them the newly poor — sign up for free government health care in South Carolina.

Since the recession officially hit in December 2007, some 3,300 people a month, on average, have signed up for Medicaid in a state that outpaces the nation for poverty, obesity and diseases such as diabetes. Yet, South Carolina’s political leaders have been among the most vocal in the country in opposition of the new health care law….

Read it all.

Gay marriage is not going away as a highly emotional, contested issue. Proposition 8, the California ballot measure that bans same-sex marriage, has seen to that, as it winds its way through the federal courts.

But perhaps the public has reached a turning point.

A CNN poll this month found that a narrow majority of Americans supported same-sex marriage ”” the first poll to find majority support. Other poll results did not go that far, but still, on average, showed that support for gay marriage had risen to 45 percent or more (with the rest either opposed or undecided).

Read it all.