“I stood there, wondering what lesson the young boy takes away from this transaction. Does he grow up with the faintest understanding of delayed gratification—that you have to earn your money before you can buy candy—or, in this case, an ice-cream treat? I wondered how we arrived at this point as a nation. I also felt like a chump.

< . . . >

“But over the last four decades, our government has quietly done away with almost all of the restrictions once placed on food assistance. SNAP cards (Supplemental Nutrition Assistance Program) can be used to purchase practically anything with the exception of liquor and cigarettes. These cards are also openly and illegally sold for cash, which allows the recipient to buy anything they want, including cigarettes and liquor.

“Food assistance is helping many families keep their heads above water when they would otherwise not get by, and many of these families watch every dime. But the system also allows people to flagrantly disregard the program's original purpose.” (emphases added)

Meanwhile, Judicial Watch’s blog, Corruption Chronicles, reports:

“To further expand the government’s bulging food-stamp program, the Obama Administration is allocating $4 million to provide farmers’ markets not currently participating in the welfare plan with the wireless technology necessary to redeem the benefits.

<. . . >

“It’s all part of the Obama Administration’s effort to eradicate “food insecure households.” In the last few years the administration has spent millions of dollars to recruit even more food-stamp recipients and has doled out hefty cash rewards to states that sign up the most people. One state even bragged about a $5 million performance bonus it got from the feds for its “swift processing of applications.”

Creating dependency as far as the eye can see?

“To the county school system’s efficiency consultants, who have offered a provocative question: Is Arlington Public Schools’ insistence on lowest-in-the-region class sizes actually hurting, rather than helping, student achievement?

“The consultants peg the cost of keeping class sizes artificially low at $30 million a year in personnel and facilities costs, and – without offering a recommendation either way – say school officials should investigate whether that money could be used for initiatives and programs that would better close the county’s appallingly large achievement gap, and push all student achievement higher. (emphasis added)

“School Board Chairman Abby Raphael and Superintendent Patrick Murphy each publicly promised to consider the provocative question. Having been raised, let’s hope the school system does so.”

For the record, we growled on May 11 when the efficiency review was presented to the school board, and growled again on May 13 when we took an initial look at peer group comparisons.

The extra tax burden born by Arlington County taxpayers may be even greater than that $30 million. Consider the cost-per-student of the Fairfax County Public Schools for FY 2012 was $12,820 while Arlington Public Schools had a cost-per-student for FY 2012 of $18,047. Multiplying that difference of $5,227 by Arlington’s 22,245 students means the extra tax burden may be as much as $116 million. Doing the same calculation with the Montgomery County Public Schools cost-per-student of $14,776 means the extra tax burden born by Arlington County taxpayers may be as much as $72 million. Sure is something to think about.

“The NBC Investigative Unit has raised questions about two grants totaling nearly $1.5 million dollars distributed to the University of California San Francisco. The money was part of the federal stimulus program and went to studies into the erectile dysfunction of overweight middle aged men and the accurate reporting of someone's sexual history.

< . . . >

“The Investigative Unit looked closely at the federal government's decision to spend nearly $1.5 million dollars of taxpayer money, money that came to California. Grant number 1R01HD056950-01A2 was among the thousands of grants funded, receiving $1.2 million dollars. This grant studied how to improve the accuracy of how people responded to questions about their sexual history.

"If you honestly report on your sexual activity and number of partners?" Scott Amey with asked with a sigh. "That's a good one."

“Amey is the general council for  POGO, the Project on Government Oversight, a Washington D.C., nonpartisan, non-profit government watchdog group. During our interview with an NBC crew he tried to explain why the government used so much tax money to improve self-reports about high-risk sexual behavior.”

If you’re not upset with the waste of your tax dollars, yet, the story has additional details.

UPDATE (5/16/12): Dan Mitchell comments on "great moments in government waste: stimulus spending on . . . um . . . stimulus," at Townhall.com today.

Since the private sector is often blamed for the 2008 financial crisis, one of the questions and the answer to it addresses the cause of the crisis:

“Decker: Banks are used as whipping boys to impute blame for the collapse of the housing market, but government played a central role in the mortgage crisis. Can you explain how Washington intervention manipulated the market with such disastrous results?

“Allison: Government policy is the primary cause of the financial crisis. The Federal Reserve “printed” too much money in the early 2000s to avoid a mild recession, which led to a massive misinvestment. The misinvestment was focused in the housing market due to the affordable housing (subprime) lending policies imposed by Congress on the giant Government Sponsored Enterprises (Freddie Mac and Fannie Mae), which would never have existed in a free market. When Freddie and Fannie failed, they owed $5.5 trillion and had $2 trillion in subprime loans. Because Freddie/Fannie had such a dominate share of home-mortgage lending in the United States (75 percent), they drove down the lending standards for the whole industry.”

While on the subject of the financial crisis and the private sector, the 2012 No. 1 issue of the Hoover Digest includes an essay by Nobel economist Gary Becker who writes, “Politicians were eager to cry “market failure” when the deeper problem was, and remains, government failure.” He concludes by saying:

“The widespread demand after the financial crisis for radical modifications to capitalism typically paid little attention to whether in fact proposed government substitutes would do better, rather than worse, than markets.

“Government regulations and laws are obviously essential to any well-functioning economy. Still, when the performance of markets is compared systematically to government alternatives, markets usually come out looking pretty darn good.”

If you have a few minutes, the entire contents of both the interview and Becker’s essay are well-worth reading.

“Q: Does the IRS pay billions in tax refunds to workers who are in the U.S. illegally?

“A: Yes. The Treasury Department’s Inspector General determined that $4.2 billion was paid in 2010, up from less than $1 billion in 2005. Leading Democrats are resisting a bill that would stop future payments.”

And here is the introduction to the their “full answer:”

“This is a rare case of an Internet rumor with some substance to it. In fact, it’s shaping up as a major dogfight in Congress. At issue here are the federal child tax credits that can be claimed by persons with dependent children under age 17. Some Democrats are already defending these child tax credit payments that have gone to those without a valid Social Security number, accusing Republicans who want to end them of a heartless attack on children.

“Several different versions of this viral email all cite a recent investigative story by an Indianapolis television station, but WTHR-TV is far from the first to notice. The Washington Post and others reported on this last year when the Treasury Department’s inspector general for tax administration issued a report on July 7, 2011.

“The title of the report summed up the IG’s finding: “Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable Credits.”

“The credits currently amount to $1,000 per child, and they are “refundable,” meaning that parents may receive refunds even when they do not owe any tax.

“The IG report stated that more than 2.3 million persons who did not have Social Security numbers valid for working in the U.S. got an average of roughly $1,800 each in 2010 in child tax credit refunds. That included 9,000 illegal immigrants who each got a total of $10,000 or more by retroactively claiming credits for tax years prior to 2010.”

Annenberg’s full answer includes how this happened, and what’s to be done. In addition, they include a video of Congress members discussing the issue in committee, and about a dozen resources.

Do you think Congress has passed the needed legislation, yet, to fix this? Ask your favorite member of Congress.  Our Growls dated May 3, 2012, ends with links to Arlington County’s three members of Congress (Senators Jim Webb and Mark Warner and Representative Jim Moran) to whom you can call or write.

We were correct about the report’s “data richness.” And to use the military/management term, the report is also “target rich.” Let’s start with two peer comparisons that appear in the report’s Appendix B, i.e., sources of revenues and dropout percentages:

• Sources of revenue for the school operating fund (Table B.3):

• Federal funds: Arlington -- 2.4%; peer division average -- 4.5%; others ranged from 1.8% (Loudoun) to 6.9% (Prince George’s County, MD).
• State funds: Arlington -- 12.6%; peer division average -- 34.4%; others ranged from 12.8% (Alexandria) to 54.4% (Manassas Park City).
• Local funds: Arlington -- 81.8%; peer division average -- 58.1%; others ranged from 38.3% (Prince George’s, MD) to 76.8% (Fall Church).
• Beginning balance: Arlington -- 2.5%; peer division average -- 1.6%; others ranged from 0% (Manassas Park City and Prince George’s, MD) to 3.9% (Fall Church).
• Other: Arlington -- 1.0%; peer division average -- 1.3%; others ranged from 0.4% (Prince William) to 3.6% (Manassas Park City).

• Dropout percentages (Table B.14):

• Arlington -- 2.74%
• Division Average -- 0.67%
• Alexandria -- 1.64%
• Falls Church -- 0.24%
• Loudoun -- 0.53%
• *All peers not reported.

The primary reason the source of revenues for the Arlington Public Schools is local sources, and why it's such a large percentage in comparison to most other Virginia school districts, has to do with what's called the Composite Index of Local Ability to Pay, which "determines a school division’s ability to pay education costs fundamental to the commonwealth’s Standards of Quality (SOQ)." (More information is available here. For "a critical analysis" from a Virginia Tech doctoral candidate click here. Memo No. 208, December 5, 2003, from Virginia's Superintendent of Public Instruction. Finally, from Del. David Albo's blog, Constituent's Corner, is his explanation of the composite index.).

Here are the 1990 and 2012 responses to Gallup’s question:

And what are the political differences? According to Gallup:

The implications, according to Gallup, are:

“The majority of Americans not only think it is good for society to have a class of rich people, but would themselves like to be rich. These attitudes have held constant over the last two decades -- even as politicians have decried the fact that the rich get richer while the middle class stagnates, and amid calls for increased taxes on the rich to help redistribute income. Thus, Gallup finds no signs -- at least, based on these measures -- that Americans are becoming more and more negative about the existence of people in society who have a lot more income and wealth than most of the rest.

“It also appears that the American dream is alive and well in the minds of young Americans, almost half of whom think it is at least somewhat likely that they themselves will be rich someday. But it's not solely young people. The fact that even 8% of those who are 65 and older hold on to the possibility that they might be rich someday suggests that the dream of being wealthy lives on in the hearts and minds of some Americans even as they approach the end of their lives.”

At his blog, Tibor's Space, Tibor Machan wrote last month, “rich bashing is unjust and vicious.” In the essay, Machan, professor emeritus in the department of philosophy at Auburn University, begins his essay by saying:

“The casual manner in which President Obama proposes that various progressive tax measures be implemented against the so called rich–ones who earn more than two million a year–is indicative of just how deep seated and widespread is the prejudice against wealthy people in the United States of America.”

But will Americans get battered with less class warfare between now and November 6? And will the Left discontinue whining about income inequality? It’s doubtful, but stay tuned!

HT Tax Prof Blog.

The 143-page report is “data rich,” to say the least, and we’ll be growling more about it as we slowly plow through the content. In the mean time, the Arlington Sun Gazette’s Scott McCaffrey had his notepad working last, and filed a comprehensive report in today’s online edition. Here’s the central finding of the consultant’s six-months of work, according to McCaffrey’s report:

“Could the county school system improve student learning, and close achievement gaps among pupils of difference races and ethnicities, by giving up its lowest-in-the-region class sizes?

“That’s a provocative question resulting from a six-month efficiency review of school-system operations, delivered by a consultant to School Board members on May 10.

“The consulting firm pegs the cost to Arlington taxpayers of keeping student-teacher ratios lowest in the region at $30 million a year, and asks whether those funds could be better used to more directly attack achievement issues. (emphases added)

“This is worth looking at,” said Greg Gibson of Gibson Consulting Group, who delivered results of the state efficiency review to school officials.

“Gibson arrived at the $30 million figure by factoring in both personnel and facilities costs, and noted that Arlington has a 30-percent lower pupil-teacher ratio than its peer group, a gap that grows even bigger at the secondary level.

“That’s pretty significant,” he said. “It is an expensive investment. I just want to make sure you’re getting a return. There might be some opportunity to redirect some of that money.”

“But Gibson phrased the suggestion as merely food for thought, not a mandate.

“We’re not second-guessing your values or your culture,” he said.

“School officials, who just saw the efficiency report that day, said on May 10 they would take the matter under advisement but offered no clear indication of how strongly they felt about the idea.

“Are we getting the academic return [from lower class sizes]? It’s a fair question,” School Board member Sally Baird said.

“A very fair question,” added Superintendent Patrick Murphy.”

The consultant also “found about $8.5 million in potential savings over five years, but also recommended $5.3 million in new investment that would streamline processes and result in savings down the road,” McCaffrey reported.

For the moment, that $30 million cost for having the area’s lowest student-teacher ratio is something to ask future school board candidates about, and how do candidates know that Arlington taxpayers are getting an academic return on their tax dollars.

Ed Fendley was the first School Board member to support the efficiency review, followed by Sally Baird and Abby Raphael. We congratulated the School Board for volunteering the school district to an efficiency review when we growled on April 1, 2009; the Growls post contains a short history of ACTA’s support for the reviews.

~ Arthur C. Brooks

HT Brainyquote

At ARLnow.com today, their headline reads, “Latest Artisphere Financial Results a Mixed Bag.” The story’s lede puts it like this:

“The good news for Artisphere, the county’s struggling cultural center in Rosslyn, is that it just had a certified hit in the form of its month-long Frida Kahlo photo exhibit. The bad news is that it’s still falling short of meeting a number of financial goals laid out in a new business plan last year.”

The ARLnow.com online news service also reported:

“The biggest revenue bright spot for Artisphere so far has been donations and event sponsorships, both of which are expected to meet or exceed the goal for the year. Most of that income, however, came from a single source: the Rosslyn Business Improvement District.

“Other numbers are trending in a positive direction. Despite the fact that Artisphere’s operating hours have been more than cut in half, overall visitorship has been largely unaffected. And, partially as a result of the cut in hours, the “density of visitors” has increased from an average of 7 visitors per hour in December to 54 visitors per hour in March. Still, attendance at three of Artisphere’s five performance venues — the Dome theater, Spectrum theater and education lab — are well below expectations.”

The following “plan vs. actual” chart is from the news story:

As a friend quipped, it's time to close the Arlington County Board's Officers' Club (aka Artisphere -- where the Board goes to party, free). This would be item #1 if Arlington had an Inspector General. Perhaps it's why it doesn't.  And that $22 million homeless shelter "eminent domain" project would be #2.

" . . .    Class warriors scream about imposing “fairness” on the rich, but their shouts become mumbles when asked what precise tax rate achieves “fairness.”

"Liberals fall mum amid these facts: In 2009, the latest IRS figures demonstrate, the much-maligned top 1 percent of taxpayers earned 17 percent of national income and paid 37 percent of federal income taxes. The top 10 percent made 43 percent of national income and surrendered 70.5 percent of income-tax revenues. Meanwhile, the bottom 50 percent scored 13.5 percent of national income and paid just 2.3 percent of income taxes.

"Unfair? If so, the Left should specify what heavier tax burden on the wealthy or lighter tax load on the lower half of taxpayers would constitute 'fairness.'”

Citing bloggers at The Foundry, Morrison points out that some of the ObamaCare taxes “will hit Americans at all levels of the income scale.” For example, takes note that the Foundry bloggers write:

“They emphasize that, over time, the normal process of inflation will pull an ever-larger number of Americans into the pool of individuals subject to higher payroll taxes:

“Obamacare raises taxes by more than $500 billion in a decade, and a number of these will hit Americans at all levels of the income scale.

“Beginning in 2013, the law increases the Hospital Insurance (HI) payroll tax from 2.9 percent to 3.8 percent for individuals earning above $200,000 and couples earning more than $250,000. The payroll tax is also applied to these earners’ investment income for the first time. But since the increased tax rates aimed at these higher income brackets are not indexed to inflation, they will impact more middle-class Americans every year.

“In fact, the higher payroll tax rate will eventually hit a huge majority of Americans. (emphasis added)

Morrison posts the following chart, which comes a Heritage Foundation 2010 report:

UDATE (5/17/12): In his latest column for Investor's Business Daily, Lawrence Kudlow talks about the "looming 'fiscal cliff' of tax hikes," aka taxmageddon, threatening the United States.

The Foundation provides a Federal Budget Primer for those seeking an introduction to the fiscal challenges facing America today. It begins with a set of basic numbers that tell you the percentage of the gross domestic product (GDP) for the years 2010 and 2040 for several important factors, e.g. (data from the Congressional Budget Office; compiled by the Foundation):

                               2010        2040

• Federal Spending -- 23.5%     38.5
• Net Interest --         1.3%      11.1%
• Federal Revenues -- 14.7%     19.3%
• Deficit --                   8.8%     19.2%

The primer provides easy to understand definitions related to federal budgeting. One of them deals with the federal deficit and how high deficits will slow the rate of economic growth. The primer puts it this way:

“Because the value of money changes over time, it is helpful to compare the deficit and debt to the recession. Since the Great Depression federal deficits are more the norm than the exception.  In the last 40 years alone, the budget has run deficits in all but four years, averaging 2.6 percent of GDP. Larger deficits put the budget at risk of incurring interest costs that grow faster than the economy, creating greater and greater pressure on the budget, increasing federal borrowing to a point that eventually could crowd out private investment and lower future standards of living.  The Congressional Budget Office (CBO) estimates that if the projected deficits do cause crowding out of private investments, within the next two years, economic growth could slow to the point where national output per person stops increasing, and in twenty five years CBO estimates that there would be about $10,300 per person less to go around.”

The primer shows that effect in the following chart showing the projected economic output per person:

The primer has other helpful charts, and includes links to such resources as the Congressional Budget Office and the Office of Manage and Budet. It also links to the "left of center" Center on Budget and Policy Priorities. Another resource you shouldn't miss is the "right of center" Heritage Foundation since it provides links to numerous Heritage budget resources.

That sure is something for America’s young people to think about.

The “gap” between taxes paid and what you paid for food, clothing and shelter reached a maximum of over 19% in 2000 when Americans paid $2,903.6 billion in taxes compared to $2,427 billion for food, clothing and housing.

The study also talks of “total spending” by adding in spending on transportation and healthcare, and then goes on to show the effect of transfer payments (i.e., welfare, food stamps, etc.) on total spending. According to the Tax Foundation:

“ . . . in 1929 transfer payments represented only 0.5 percent of private expenditures on housing, food, clothing, healthcare, and transportation. By 1965, when Medicare began, this percentage had grown to about 11 percent. Today it stands at close to 35 percent. While some money spent on transfer programs is spent on other items besides healthcare, food, clothing, transportation, and housing, the strong prevalence of in-kind benefits, or government transfer payments for a specific item or service, keeps this as a small fraction of overall expenditures.”

This is shown in the following graph from the study:

Thanks to Kevin Duncan who prepared the study for the Tax Foundation. Incidentally, the study includes a table of total taxes and total living expenses for the years 1929 to 2011 should you want to construct your own chart. They also include several other charts.

~ Robert Samuelson

Source: His Column at RealClearPolitics.com or Washington Post