Growls

Just how bad is the long-term outlook for America’s fiscal future? Putting it mildly, it's a fiscal mess. An editorial in last week’s Washington Times summed it up rather well in the very first paragraph:

“In order to meet the promises made to Medicare and Social Security beneficiaries through 2082, the government would have to deposit $42.9 trillion in an interest-bearing account today and then draw down the cumulating funds as needed over the next 75 years. That is the essential conclusion from the latest reports by the Medicare and Social Security trustees.”

By the way, that $42.9 trillion is about triple today’s entire GDP. Here’s how the U.S. General Accountability Office introduces the problem:

“Over the next few decades, the nation’s fiscal outlook will be shaped largely by demographics and health care costs. As the baby boom generation retires, federal spending on retirement and health programs—Social Security, Medicare, and Medicaid—will grow dramatically. A range of other federal fiscal commitments, some explicit and some representing implicit public expectations, also bind the nation’s fiscal future. Absent policy change, a growing imbalance between expected federal spending and tax revenues will mean escalating and ultimately unsustainable federal deficits and debt.”

So you wonder exactly why the Congress and the President continue their merry spendthrift ways? Thankfully, there are people thinking about the problem of these so-called entitlements. According to the Wall Street Journal’s economic blog:

“A broad coalition of federal budget experts, spanning the ideological spectrum of Washington think tanks from left to right, proposed Monday that Congress and the president set explicit, “sustainable” long-term budgets for Social Security, Medicare and Medicaid and create a mechanism that would force changes when projected spending exceeds budgeted amounts.

“The proposal follows two years of discussions among 16 budget experts convened by the Brookings Institution, largely populated by liberal Democrats, and the Heritage Foundation, largely populated by conservative Republicans.”

Further information about the extent of the fiscal problem can be found at the GAO link cited above. More information is available at the Heritage Foundation (extensive discussion of the entitlement problem as well as detailed information about a fiscal wake-up tour). Participation in today’s forum included scholars from several organizations that span the political spectrum.

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One of Friday’s editorial in the Newport News Daily Press wondered whether local government officials “got the memo.” Presumably directed at local government officials in southeast Virginia, its message could have been directed just as well to Arlington County government officials. According to the editorial:

“the bottom line of that memo: In the current environment, raises for local government employees that are bigger than the raises that taxpayers are getting are out of line.”

The newspaper also noted:

“During lean times, some businesses scale back raises for their top executives. It's a practice local governments should consider, too. Top municipal managers aren't hired on an automated scale, and that needn't be how they're paid. In fact, the top managers might set an example by demonstrating that they understand the bind the taxpaying public is in.”

In conclusion, they said:

“To recap for local officials, here's what the memo says: We're in, or on the brink of, a recession. Your spending has been rising more steeply than growth or residents' taxpaying capacity can explain. One of the big drivers has been the pay scales and benefits of government workers. The public expects good public servants, and must compensate them appropriately — but that compensation should be in line with what those who fund it can expect for themselves, and what they can afford.”

Seems like advice the Arlington County Board should take to heart.

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We have growled on any number of occasions about the use and more often abuse of  so-called earmark spending in Congress. In an op-ed last week in the Washington Times, Andrew Moylan of the National Taxpayers Union discusses “Republicans and pork.” He begins by writing:

“In recent weeks, Republicans in just about every corner of the federal government have been given opportunities to put some teeth into reforms aimed at curbing earmarked spending in the budget process. But instead of backing up their tough rhetoric with real action, they've proposed a series of half-measures, hoping to drag their feet on the issue long enough for it to go away. As a result, they've demonstrated to conservatives that they won't straighten up and fly right.”

Moylan takes no prisoners in the op-ed, writing:

“For their part, House Republicans avoided an opportunity to strike a blow for taxpayers. When an opening appeared on the House Appropriations Committee, Republican leadership had a chance to appoint a reformer to the spot who would help fight earmarks. Having a true fiscal conservative on the committee would shake up the back-scratching culture of Congress' "third party" the bipartisan flock of "appropriations cardinals" who feather their nests with tax dollars. But instead of shaking a few of these birds out of their trees, Republican leadership appointed moderate Rep. Jo Bonner of Alabama to the slot.”

The Club for Growth maintains a webpage to track the brave Senate and House members who have sworn off earmarks. As of yesterday, 37 members of the House (33 Republican and 4 Democrats) have sworn off earmarks, and in the Senate, 7 members (4 Republicans and 3 Democrats) have done likewise.

Senators John Warner and Jim Webb and Representative Jim Moran have yet to swear off of earmarks. Please call their office and encourage them to join their colleagues who have done so. The Capitol switchboard phone number is (202) 224-3121.

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After spending $105 million to replace Washington-Lee High School and $25 million to reconstruct Yorktown High School, and scheduled to spend another $75 million for a second phase at Yorktown, Arlington officials are learning there are limits to how much can be spend without risking their coveted Triple-A bond rating.

According to yesterday’s DC Examiner newspaper, “funds are in jeopardy of drying up before the county’s third and lowest-income-area high school gets a makeover.” The newspaper notes that:

“County Manager Ron Carlee has indicated the county will cap the amount of money schools can finance through bonds, saying Arlington’s debt will reach a perilously high level unless the county and the schools curb their construction rates.”

The paper went on to note:

“But according to a January memo from Carlee, the schools likely will be limited to between $34 million and $56 million in bond financing this cycle to keep the county’s debt at a tenable level.”

Read the Manager’s entire memo as well as a memo from the county’s financial advisors at the Department of Management & Finance’s homepage (listed under heading “county’s debt capacity”).

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Just how easy is it to raise cigarette taxes? After all, won’t higher cigarette taxes discourage smoking? Besides, the additional revenue will pay for the extra health care smokers require, and the liberal mainstream media will make you out to be a hero. Not so face, according to a new study by the National Taxpayers Union. In fact, the study “convincingly debunks the myth that tobacco hikes don’t affect non-smokers.” According to yesterday’s press release from NTU:

"Significant segments of the non-smoking population go along with efforts to raise tobacco excise taxes because these taxpayers believe they can avoid the resulting pinch by simply not buying cigarettes -- a classic case of the 'tax thee, but not me' mentality," said NTU Director of Government Affairs Kristina Rasmussen, who authored the study. "As the data shows, however, the end result is often 'tax we' -- tobacco tax hikes have very real fiscal implications for non-smoking taxpayers."

Rasmussen cites five reasons why non-smokers should oppose higher tobacco taxes:

• States with low cigarette taxes tend to have lower overall tax burdens.
• Tobacco tax hikes rarely result in other cuts.
• Tobacco tax increases don't prevent other hikes.
• Cigarette tax hikes may encourage other increases.
• Tobacco taxes don't spur economic growth.

Besides, said Rasmussen, "Whether or not an individual uses tobacco, tax hikes hurt everyone by encouraging the growth of government.” We’re convinced!

You can find the link to download the entire report at the bottom of the press release.

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Mark Twain said, “Facts are stubborn, but statistics are more pliable.” That seems to explain how states report high school graduation rates, according to a report in today’s New York Times, which was headlined: “States’ Data Obscure How Few Finish High School.” It begins:

“When it comes to high school graduation rates, Mississippi keeps two sets of books.

“One team of statisticians working at the state education headquarters here recently calculated the official graduation rate at a respectable 87 percent, which Mississippi reported to Washington. But in another office piled with computer printouts, a second team of number crunchers came up with a different rate: a more sobering 63 percent.”

But it’s not just Mississippi. California and Delaware were among nine states cited in the newspaper for cooking their graduation statistics; the paper wrote:

“After several research groups questioned graduation rates, the federal Department of Education in 2005 published an estimated rate for each state, to identify those that were reporting least accurately. The figures suggested that nine states had overstated their graduation rates by 10 to 22 percentage points.”

Thankfully, Virginia is not listed in the Times’ story. Nevertheless, it’s worth keeping in mind the next time the political elite try to bamboozle taxpayers with statistics.

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Yesterday, I growled that Arlington County government was digging ever deeper into the wallets of Arlington taxpayers, noting the tax burden had grown from 8.4% in 2004 to 9.7% in 2007.

With a bit more research, taxpayers can look back two more years, to 2002. The additional numbers for taxes  come from page B-33 of the Manager’s proposed FY 2007 budget. Consequently, below are the tax burdens, i.e., taxes as a percentage of per capita income, for the six years from 2002 through 2007:

• 2002 -- 7.01%
• 2003 -- 7.73%
• 2004 -- 8.40%
• 2005 -- 9.11%
• 2006 -- 9.83%
• 2007 -- 9.70%

Talk about “growing government.” Was Henry Ward Beecher, the 19th century abolitionist and clergyman, right when he said, “The worst thing in this world, next to anarchy, is government?"

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Yesterday, we urged Arlington taxpayers to visit the county’s management and finance website and begin looking at the financial documents that are available.

For example, the chart on page 6 of the executive summary of the Manager’s proposed FY 2009 budget “summarizes the major residential taxes and fees for Arlington County for the average household.” Looking only at the right-hand column, things don’t look terribly bad since taxes for the average household would increase 'only' 4%. A little more number-crunching shows the tax bill for the average household increases 31.68% from CY 2004 ($4,858) to the proposed CY 2008 bill ($6,397), or almost 8% annually. How many taxpayers saw their income increase 8% annually over the last four years?

Don’t stop just at the executive summary of the Manager’s proposed budget, though. Page 179 of the county’s Comprehensive Annual Financial Report (CAFR), which includes the audited financial statements, provides per  capita income data that can be matched to the average household tax bills. A bit more number-crunching provides the shocking realization that our local government is indeed reaching further and further into our wallets. Taxes as a percentage of per capita income for the four years 2004-2007 grew from 8.40% to 9.70%

• 2004 -- 8.40%
• 2005 -- 9.11%
• 2006 -- 9.83%
• 2007 -- 9.70%

Anyone wish to wager a guess as to which year the average household's tax burden will reach 10%?

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DM&F? Well, the acronym is sure quicker than saying Department of Management & Finance. Yes, taxpayers need to thank DM&F for enriching the department’s website with more, and more useful, financial information.

The latest addition is a schedule of proposed work sessions with the County Board, which is useful because that is where virtually all of the Board's budget decision-making is done. The schedule also provides links to the Manager’s/staff’s PowerPoint presentations for the Board. These often provide information that is difficult to ferret out of the 2-volume budgets. In addition, reports from the Board’s Fiscal Affairs Advisory Commission (FAAC) are also available.

Today’s Board work session with employees and employee groups provides links to a compensation fact sheet and to comments submitted to the Board.

DM&F also provides links to two important pieces of correspondence. The first is a memo from the County Manager discussing the county’s debt capacity while the second is a letter from the county financial advisors about the county’s fiscal policies.

So visit the DM&F website, and begin looking at some of the documents that directly affect your economic well-being. And don’t hesitate to use the contact form if you have any questions about information published there. Again, thanks DM&F.

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That’s how Senator Claire McCaskill (D-Mo) describes the process of so-called earmarking, or what is generally known more commonly as Congressional pork-barrel spending. In what Andrew Roth of the economically conservative Club for Growth called “the best speech of the day,” McCaskill told her fellow Senators, “We all have to remember it’s not our money.”

You can watch her entire speech here. In it. She is co-sponsoring the “earmark moratorium” with Sen. Jim DeMint (R-SC). She said that earmarking should not be based on political party, state represented, committee assignment, or a Member’s political vulnerability, but rather on merit and “bang for the buck.”

ACTA members can contact their legislators at the following links:

• Senator John Warner (R)
• Senator Jim Webb (D)
• Representative Jim Moran (D)

And a heartfelt thanks to Missouri Senator Claire McCaskill for reminding Senators who rightfully owns  the money they are spending and for co-sponsoring the earmark moratorium amendment with South Carolina Senator Jim DeMint. Who knows, Congress might next start thinking they should bring entitlement spending under control.

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That’s how a tentative agreement on the Virginia budget was described by Charles Colgan (D-Prince William), chairman of the Senate finance committee. According to the report in today’s Washington Times:

“House and Senate negotiators resolved differences on a new two-year state budget yesterday, setting up a final vote on the $78 billion package this week.

“Six senators and six delegates agreed on simmering disputes over teacher pay raises, community care for the mentally disabled and a provision tying state college support to incentives to hold down tuition rates.”

The Washington Times also reported:

“For days, progress had been stymied by frustrations that festered between the two negotiating teams, each accusing the other of being disingenuous, intractable and even "radical."

“But yesterday, with negotiators dressed more casually and without a crowd of lobbyists, the mood brightened noticeably. As the two sides broke one last time to consider a proposal, House Appropriations Committee Chairman Lacey E. Putney, Bedford independent, asked how much time they would need.”

Amazing, absolutely amazing.

Other newspapers reports include: Richmond Times-Dispatch and Roanoke Times.

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We have growled on numerous occasions that Arlington County government has been unable to control the spending of our tax dollars. Yet the political crowd in the Commonwealth have not done any better. The Virginia General Assembly ended their so-call “long session” on Saturday without agreeing on a budget for the FY 2009-2010 biennium. Members are now scheduled to return to Richmond “for an overtime session” tomorrow to try and decide on a budget and see where they are headed on transportation funding.

Consequently, it’s a timely reminder to look at how successful, or not, the General Assembly and the Governor have been at keeping Virginia’s budget under control. One need only look at the 2007 Update to the annual Review of State Spending (study #361), released on November 28, 2007 by the Joint Legislative Audit and Review Commission for the answer. Key findings in their report include:

• “Virginia’s operating budget increased 99 percent over the past decade.”
• “Adjusting for the effects of inflation and population growth, the budget increased by 38 percent, an average annual increase of 3.7 percent.”

Remember those two points the next time you get to vote for governor and state legislators.

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Oh how the Arlington County Board enjoys playing Robin Hood in Reverse.  First, a little background from a recent Manager’s so-called “Board Report” (item 27G on the February 26 agenda), which requested the advertisement “for a public hearing on the personal property tax rate and the allocation method of the State’s vehicle tax relief:”

“In 2004, the State General Assembly fundamentally changed the Personal Property Tax Relief Act (PPTRA) enacted in 1998 (Virginia Code § 58.1-3523 et al.).  Beginning in FY 2007, the County began receiving an annual fixed block grant from the state as a replacement of the 70% reimbursement for vehicle taxes assessed below $20,000, which was previously provided under PPTRA.”

Kirstin Dowiey reports in today’s Washington Post that:

“Arlington County’s leadership on environmental initiatives could cost people who own conventional gas-guzzling cars even more money in personal property taxes in the coming year than those who drive cars that operate on clean fuels.”

Since the liberal County Board is comprised of global warming alarmists, they consider it important to subsidize so-called clean fuel, hybrid vehicles such as the Prius or the high-priced Lexus RX 400h. Consequently, the Board is being asked to approve a change in the allocation method from the prior year:

“One change is recommended for the allocation method of State funds provided to Arlington County ($31.3 million).  The amount of the subsidy that can be provided to the value of conventional fuel vehicles between $3,001 and $20,000 will be reduced from 33% to 30% to account for the projected growth in the vehicle assessment base and the rapidly increasing number of clean fuel vehicles owned by County residents.”

Arlington’s super-watchdog Wayne Kubicki questions changing the allocation method. According to the Post report:

“Arlington resident Wayne Kubicki thinks the program makes little sense, because it gives big tax breaks to people who are affluent enough to buy high-priced hybrid cars. If Carlee's plan is adopted by the board, owners of conventional-fuel cars, even if they get excellent gas mileage, will pay disproportionately more than they did last year, he said.

"Everybody else's car tax bill is going up," he said. "That big a credit for hybrids seems silly to me."

Couldn’t have said it better myself. Just another symptom of a county government with too much of our taxes and too out of touch with the general public?

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On his WMAL 630 radio show this evening, host Mark Levin pointed out:

“The right and left are becoming more agressive (sic) in regulating behavior, especially in the economic sectors. The beauty of America is that it allows freedom. Freedom means responsibility of the individual to live and perform and succeed as much as they can. The problem with liberals is that they are power-hungry, and power trumps liberty in their eyes.”

Levin then went on to read excerpts from an op-ed by former Senator, and 1972 presidential candidate George McGovern (D), which appeared in today’s Wall Street Journal, including:

“Under the guise of protecting us from ourselves, the right and the left are becoming ever more aggressive in regulating behavior. Much paternalist scrutiny has recently centered on personal economics, including calls to regulate subprime mortgages.

“With liberalized credit rules, many people with limited income could access a mortgage and choose, for the first time, if they wanted to own a home. And most of those who chose to do so are hanging on to their mortgages. According to the national delinquency survey released yesterday, the vast majority of subprime, adjustable-rate mortgages are in good condition,their holders neither delinquent nor in default.”

McGovern also addressed so-called payday loans in his op-ed:

“Economic paternalism takes its newest form with the campaign against short-term small loans, commonly known as "payday lending” . . . With payday lending, people in need of immediate money can borrow against their future paychecks, allowing emergency purchases or bill payments they could not otherwise make . . . Anguished at the fact that payday lending isn't perfect, some people would outlaw the service entirely, or cap fees at such low levels that no lender will provide the service. Anyone who's familiar with the law of unintended consequences should be able to guess what happens next.”

Levin’s comments and McGovern’s op-ed came to mind while reading in today’s Washington Times that Virginia Gov. Tim Kaine (D) “indicated that he would sign the legislation.” According to the Times, “Virginians took out more than 3.5 million payday loans” last year.

As economist C. Newmark writes at Newmark's Door:

"Why do we think we are helping adult consumers by taking away their options? We don't take away cars because we don't like some people driving. We allow state lotteries despite knowing some people are betting their grocery money . . . We should do our best to educate them, but without diminishing choice for everyone."

The legislation was HB12 sponsored by Del. Glenn Oder (R); note, however, that the vote tally in the Times report differs from the General Assembly’s information system tally.

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The Arlington County Board’s “vision statement” for the county is plastered on many documents. It says:

“Arlington will be a diverse and inclusive world-class urban community with secure, attractive residential and commercial neighborhoods where people unite to form a caring, learning, participating, sustainable community in which each person is important.”

The U.S. Census Bureau, which released its 2007 County and City Data Book today, says it “is the most comprehensive source of information about the individual counties and cities in the United States.” Table B-9 (requires Adobe) contain information about personal income, including per capita income for all of America’s counties. For Arlington County, the table (page 429) shows:

Per capita income increased from $49,555 in 2000 to $59,389 in 2005; an increase of 19.84%.

Let’s compare that to the growth in real estate taxes paid by Arlington County taxpayers during the same period for the average residential property. According to numbers on page 79 of the county’s FY 2008 Adopted Budget:

Average real estate tax payment increased from $2,074 in 2000 to $4,023 in 2005; an increase of 93.97%.

So, is the Arlington County Board “caring” for it’s taxpayers? Not in these eyes. Rather, it seems Arlington County’s taxpayers can more easily complain they were plundered by the Board during the period 2000 to 2005. Not to mention the Board's greediness, or the Board's willingness to profit off the backs of Arlington's hard-working taxpayers.

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Hardly a day goes by that a "tax-and-spend" politician somewhere doesn’t stoop to play the class warfare card. As we growled November 3 last year, the liberal rhetoric doesn’t match the facts. They like to rant about tax breaks going to the rich, but ignore the fact that “the rich” pay most of the taxes.

Last October, the Tax Foundation reported that the “top 1% pay greater amount in income taxes to federal government than bottom 90%." Sounds hard to believe, doesn’t it? Well, take a look at the table summarizing IRS data for individual income tax data for 2005 (emphasis added):

• Altogether, 132.6 million tax returns were filed in 2005, which paid $934.7 billion dollars in federal income taxes.

• The top 1% of taxpayers, i.e., those above $364,657 paid a total of $368.1 billion in taxes.

• On the other hand, the bottom 90% of taxpayers (119.3 million returns, with incomes below $103,912) paid $277.6 billion in federal income taxes.

Ah, yes, inconvenient facts, but more reliable than convenient rhetoric. We've said it many times, and will surely repeat it many more times: The country, the state, and our local governments don't have a revenue problem, but rather there are too many politicians who cannot control their urge to spend other peoples' money.

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When talking with friends not familiar with Arlington County politics, many conservatives simply refer to Arlington County as “Berkeley on the Potomac” or even better as “The Peoples’ Republic of Arlington.”

That came to mind this afternoon when I visited Arlington Central Library, and saw a display for a “social justice art show” to be held May 2008 at Central Library. Here is one of the marketing pieces from the display:

Artists are advised that “(a)ll entries must address the theme of social justice (see above).” The four themes listed are: equality/inequality, justice/injustice, inclusion/exclusion, and hope/despair, which are “typically associated with left wing or socialist analyses, policies and prescriptions” according to Walter Block.

Has Arlington’s library system now been enlisted as part of Arlington’s communist-model re-education campaign to instill socialist principles in those who might otherwise stray towards capitalism, limited government, and individual responsibility, concepts which might cause one to doubt the wisdom of higher taxes?

Supported by the work of Friedrich Hayek, Michael Novak explains the problem of defining social justice in  this essay:

“Last year marked the one hundredth anniversary of the birth of Friedrich Hayek, among whose many contributions to the twentieth century was a sustained and animated put-down of most of the usages of the term “social justice.” I have never encountered a writer, religious or philosophical, who directly answers Hayek’s criticisms. In trying to understand social justice in our own time, there is no better place to start than with the man who, in his own intellectual life, exemplified the virtue whose common misuse he so deplored.

“The trouble with “social justice” begins with the very meaning of the term. Hayek points out that whole books and treatises have been written about social justice without ever offering a definition of it. It is allowed to float in the air as if everyone will recognize an instance of it when it appears. This vagueness seems indispensable. The minute one begins to define social justice, one runs into embarrassing intellectual difficulties. It becomes, most often, a term of art whose operational meaning is, “We need a law against that.” In other words, it becomes an instrument of ideological intimidation, for the purpose of gaining the power of legal coercion.”

Rather than promoting leftist art shows, the library should be promoting the reading of such recognized works as Hayek’s The Road to Serfdom.

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