« January 2009 | Main | March 2009 »

February 28, 2009

Analyzing the Arlington County Budget, Part 1

In his proposed Fiscal Year 2010 budget, the Manager proposes reductions totaling $23.7 million, including $14.5 million in administration, management and operations (including 56 FTE) and  almost $9.2 million in services (including 50 FTE). Some of the positions are not currently filled, however.

Virtually every department is affected; some more than others. Unfortunately, citizens do not have the detailed knowledge of county operations in comparison to county managers. However, it is evident the Manager did not take an “across the board” cut from all departments, but rather used a scalpel instead of an ax. For example:

  • The Manager proposes reducing police and fire by 15 FTE, or 14.2%. By comparison, those two departments accounted for 23.5% of all general fund positions in the FY 2009 adopted budget.
  • In the department of environmental services, he proposes reducing 11 FTE, or 10.4%, although DES accounted for 11.7% of general fund positions in FY 2009.

The analysis of the FY 2010 county budget will be updated as we dig deeper into the beast so return to Growls as often as you can.

February 27, 2009

Dismantling Welfare Reform in Virginia?

An editorial in today’s Washington Times argues that Virginia is about to take “a large step backward - in the direction of greater dependency. And it will provide some important lessons about the problems that result when conservatives and Republicans sign on to irresponsible legislation in the name of bipartisanship.” The newspaper begins their editorial thus:

“The most unreported story in Virginia politics this year is Gov. Tim Kaine and the Virginia General Assembly, in a demonstration of bipartisanship at its worst, taking a step toward dismantling welfare reforms. The reforms were enacted more than a decade ago under the leadership of Republican Gov. George Allen, when Virginia instituted time limits for welfare assistance and required able-bodied welfare recipients to work. As a result, since 1995 the number of persons on welfare dropped by about 85 percent. Now these achievements are in danger. The House and Senate have passed and Kaine will soon sign into law a welfare bill that takes a huge step towards dismantling the Allen reforms and making welfare an attractive option once again for Virginia's underclass. Last month, the House of Delegates, where Republicans command a majority, voted 96-0 for HB 1714, a bill that dramatically transforms "diversionary" assistance from a temporary program helping welfare recipients in emergencies into something resembling an entitlement program.”

The bill (HB 1714 and its companion in the Senate, SB 1045) would:

“Revises the limitation on receipt of one-time diversionary TANF cash assistance from one payment per 60-month period to one payment per 12-month period.”

The economic impact statements claim the change would save taxpayers $1.5 million over five years, However, I share the observation by Norm Leahy, blogging at Tertium Quids that:

“Something about a fool and his money being soon parted comes to mind. Then again, if someone can make a persuasive case on how paying people TANF benefits every year, as opposed to once every five years, saves money, I'm all ears.”

In an “update," Norm points out the actual vote was 88-10 and not 96-0 (although an earlier vote on the bill was was indeed 96-0), reported in the editorial, and  results  in Norm saying, “That means ten folks got it. The rest?”

February 26, 2009

Superintendent Proposes Cutting Schools Budget

Superintendent Robert Smith proposed a $431.8 million budget for Fiscal Year 2010 this evening, which is $12.6 million (2.8%) less than the current budget. The proposed budget includes a shortfall of $11.7 million for which the Superintendent recommends measures to balance the budget.

The budget projects enrollment to increase by 2.8% (from 19,534 to 20,084). As a result of the lower budget and the increased enrollment, the cost per student will actually decrease $1,282 per student (6.6%), decreasing from $19,538 in the current year to $18,256.

The Superintendent’s proposed budget is here. More details about the budget, including  the measures making up the $11.7 million shortfall are in this press release.

February 25, 2009

Not Seen Much, Heard Even Less

Gene Healy, a vice president at the Cato Institute, had a very good column in yesterday’s DC Examiner (also here at the Cato website), prior to President Obama’s first address to a joint session of Congress. Healy provides a historical view of State of the Union (SOTU) speeches delivered by U.S. presidents. For example, he writes:

“Our founding fathers didn't want a president who'd perpetually pound the bully pulpit.  They viewed presidential speechifying as a sign of demagoguery, and thought Congress should take the lead on most matters of national policy.  They expected the nation's chief executive to pipe down, mind his constitutional business, and keep his hands to himself.

“The "permanent campaign" that dominates modern presidential politics would have appalled our forefathers. Accepting the 1844 Democratic nomination, James K. Polk described the custom of the time: "the office of president of the United States should neither be sought nor declined." (emphasis added)

“When 19th-century candidates spoke publicly, they sometimes felt compelled to apologize, as 1872 Democratic contender Horace Greeley did, for breaking "the unwritten law of our country that a candidate for President may not make speeches." (emphasis added)

From Washington to Jackson, presidents gave about three speeches a year on average. In his first year in office, President Clinton gave over 600. Things have changed, but it's not clear they've changed for the better.” (emphasis added)

Healy further writes:

“In early SOTUs, presidents rarely went on at Castro-like length.  George Washington's first SOTU was a humble affair, just over 1000 words, devoid of imperious demands for congressional action.

“That wasn't humble enough for President Thoma Jefferson, however, who disapproved of his two predecessors giving the SOTU in person before Congress assembled.  Jefferson saw that practice as "an English habit, tending to familiarize the public with monarchical ideas," much like the British king's "speech from the throne."

So our third president wrote out his SOTU speeches and had them hand-delivered to Congress. The Jeffersonian custom held for over 100 years, until the power-hungry Woodrow Wilson overthrew it. Of 219 SOTUs, only 71 have been delivered in person.” (emphasis added)

Saying that “(i)t's hard to imagine the camera-and-mike-hungry Barack Obama simply "mailing it in," he suggests the president “ought to think about making himself a little scarcer and pounding the pulpit less,” and concludes saying:

“There was wisdom in the old ways.  A president who talks less might be able to make his words matter more. And a president who promises less might be able to deliver more of what he promises.”

February 24, 2009

Tax Rates, Tax Burdens, Blah, Blah, Blah

At their meeting on Saturday, the Arlington County Board voted to advertise a real estate tax rate increase of 3 cents (3.6%) over the current rate of 83.8 cents per $100 of assessed value. Since total assessed real estate value, net of new construction or improvements, decreased by 0.6%, the “effective rate increase,” computed according to the state required formula, would be 2.9%.

To his credit, the Manager recommended an increase of 2.7 cents, but Board member Jay Fisette thought the Board needed “a little bit of wiggle room, just a little . . . There are still a few unknowns,” according to the Arlington Sun-Gazette.

Board members will likely emphasize that real estate tax rates in other Northern Virginia jurisdictions are expected to see significant increases because of the significant decreases in assessed real estate values in those localities. According to the county’s press release, the average residential property will see an increase of just over $50.

The Sun-Gazette added:

“The increase in real estate taxes would be in addition to a host of hikes in service fees, including higher water, sewer and trash-collection bills and an increase in the cost for car decals. The personal-property tax rate for vehicles would remain at $5 for every $100 assessed value.

“At the Feb. 21 meeting, Carlee showcased only the outlines of the budget proposal. More details are slated for release this week.

“The county manager said that while the proposed budget involves “serious belt-tightening,” it “does not represent a fundamental restructuring of government.”

As we growled on Friday, the municipal cost index has increased by 2.4% (January to January). Nevertheless, it’s surprising the Board was able to keep the effective rate increase to 2.9%. The complete budget is available here. We will have more about the budget in the days ahead.

February 23, 2009

The Stupid Things Government Does

We’ve growled about many stupid things that governments have done. However, what Washington State just did may win the prize for downright stupidity. An Associated Press article in Washington State’s tricityherald.com newspaper and the Seattle Post-Intelligencer reports:

“The state of Washington sent out $1 checks to the 250,000 food stamp recipients in the state.

“The director of the Community Services Division for the Department of Social and Health Services, Leo Ribas, says the checks mailed Feb. 17 trigger an additional $43 million in federal food benefits. They also connect recipients to an energy assistance program.

“Ribas says the $1 check is a one-time move to leverage the federal money. He says next year the state will be able to trigger the federal assistance through a routine deposit in food stamp accounts.”

Add the other costs to the cost of postage, and it’s very likely the state of Washington spent more than $1 per check to mail out each $1 check. Let's hope the federal government is more efficient with the $787 billion so-called stimulus money.

February 22, 2009

Celebrating America's First President

David Boaz of the Cato Institute ends a short article on the nation’s first president writing:

“George Washington was the man who established the American republic. He led the revolutionary army against the British Empire, he served as the first president, and most importantly he stepped down from power.”

Boaz explains just why that act was so important:

“What’s so great about leaving office? Surely it matters more what a president does in office. But think about other great military commanders and revolutionary leaders before and after Washington—Caesar, Cromwell, Napoleon, Lenin. They all seized the power they had won and held it until death or military defeat.”

He then closes the article writing:

“Give the last word to Washington’s great adversary, King George III. The king asked his American painter, Benjamin West, what Washington would do after winning independence. West replied, “They say he will return to his farm.”

“If he does that,” the incredulous monarch said, “he will be the greatest man in the world.”

Americans once celebrated our first president's birthday on February 22 as this print reminds us:

February 21, 2009

February’s Porker of the Month

Citizens Against Government Waste (CAGW) has named U.S. Sen. John Kerry (D-MA) it’s February 2009 Porker of the Month for his February 6, 2009 speech “on the Senate floor in support of the $787 billion stimulus package.” In the speech Kerry said:

“I have heard a lot of talk about we ought to do a tax cut, we ought to do a tax cut.  I have supported many tax cuts during my years here, and there are tax cuts in this proposal.  But a tax cut is non-targeted.  If you put a tax cut into the hands of either a business or an individual today, there is no guarantee they are going to invest their money.  There is no guarantee that they are going to invest their money in the United States.  They are free to go to invest anywhere they want, if they choose to invest. … The fact is none of those people are guaranteed to invest that money in any of the new projects that we are.  So government yes government has the ability to be able to make a decision that the private sector won’t necessarily make today.” (emphasis added)

CAGW president Tom Schatz said taxpayers should thank Kerry for “at least coming clean," adding:

“He graciously made explicit what many have suspected for years; namely that many members of Congress believe that taxpayers cannot be trusted with their own money and that government is better positioned to make investment and spending decisions.” (emphasis added)

CAGW also points out, “While Sen. Kerry claimed in his comments to have supported tax cuts many times in his over-long and less-than-illustrious career, the National Taxpayers Union has consistently awarded him an “F” for his voting record on tax policy.” (emphasis added)

Here is the You Tube video of Kerry's speech. Thanks for being so trusting, Senator!

The CAGW press release includes a link to Sen. Kerry's official webpage so that you can tell him what you think about his trust in America's taxpayers.

February 20, 2009

It’s Not Just The Real Estate Tax Increase

The Arlington County Board will vote tomorrow to advertise numerous taxes and fees in addition to the real estate tax rate. On the Board’s agenda Saturday, each tax or fee has its own agenda item number, specifically going from item 22A through 22V.

  • Item 22F involves the water/sewer rate, which the County Manager recommends increasing $0.66, from $10.54 to $11.20 per thousand gallons, or an increase of 6.3%. The Manager’s report to the Board indicates the “rate increases are projected to continue at a rate of up to 5-10% for the next several years” as construction continues on the new sewage treatment plant.
  • Item 22G involves the household solid waste rate, which the Manager proposes increasing by $19.12 annually, going from $306.56 to $$325.68 per household per year. If approved, the increase will be 6.2%.

By comparison, the “municipal cost index,” maintained by American City & County magazine has increased only 2.4% from January 2008 to January 2009. Just another way of reaching deeper into taxpayers' pockets?

February 19, 2009

A Modern Tea Party in Chicago

Let’s hear it for CNBC’s Rick Santelli! On the floor of the Chicago Board of Trade this morning, “Santelli and the traders on the floor of the CBOE express outrage over the notion they may have to pay their neighbor's mortgage, particularly if they bought far more house than they could actually afford.” The outrage is a response to President Obama's plan (see also here) to prevent home foreclosures, which he announced yesterday.

Watch Rick Santelli speak the truth.

Norm Leahy at Tertium Quids hits it perfectly, saying:

“Those of us who have been responsible and paid our bills are being played for suckers under the current regime. At some point, the responsible people will say "enough."

As radio talk show host Sean Hannity would say, “Rick Santelli, you are a great American.”

February 18, 2009

A Golden Age for K Street

We’ve growled a lot recently (e.g., here, here and here) that the so-called economic stimulus bill signed into law yesterday by President Obama is not likely to stimulate the economy and is little more than a wealth redistribution scheme.

Timothy Carney writes in today’s DC Examiner that a major beneficiary are K Street lobbyists, saying, “H.R. 1, the Economic Recovery and Reinvestment Act, has already triggered a lobbying boom, suggesting once again that the Age of Obama will be a golden age for K Street.” How much of a boom? Carney explains:

“For example, the National Association of Home Builders hired Baker & Hostetler a week after Barack Obama’s inauguration to lobby explicitly on the stimulus bill, which, in the end, included an $8,000 credit for home purchases.

“Better Place Inc. is an electric car company that hired its first lobbyist — Steve McBee, a former staffer for House appropriator Norm Dicks, D-Wash. — to push for electric car incentives in the stimulus. The resulting cornucopia included an expanded tax credit for plug-in cars, $2 billion in funding for electric car batteries and $400 million to build an electric car infrastructure, complete with recharging stations.

“Media giant Time Warner added to its lobbying army, hiring the firm Parven Pomper Strategies to lobby for broadband subsidies in the bill. These subsidies included $2.5 billion to underwrite loans to get broadband out to rural areas and an additional $4.7 billion in spending on other broadband projects. Similarly, network giant Cisco Systems lobbied for the broadband subsidies in H.R. 1.

“In all, dozens of lobbying firms have landed new business thanks to the stimulus bill, a review of federal lobbying files reveals. In the first weeks of this year, about 50 companies, trade associations, municipalities or nonprofits retained new lobbyists explicitly to lobby on the stimulus bill.

“Luring states, counties and towns into the lobbying scrum has been a primary effect of the Economic Recovery and Reinvestment Act. Since Election Day, 27 counties and 45 cities or towns have hired new lobbyists.

“On this score, Holland & Knight might take top honors. Since Election Day, the Florida-based global law firm with offices on Pennsylvania Avenue has landed six cities, four counties, five local government agencies, one village, one confederation of Indian tribes and the League of California Cities.”

Carney concludes his column saying: “The stimulus bill will be just the first example of a lesson unsurprising only to those unfamiliar with the way government works: Obama cannot simultaneously make government bigger and make lobbyists less influential.” And all paid for by America's taxpayers, or rather by the children and grandchildren of today's taxpayers.. Sheesh!

February 16, 2009

Here Comes The Arlington County Board

On Saturday, the Arlington County Board will vote to advertise the calendar year real estate tax rate. The advertised rate will be the maximum real estate rate the Board can set when it adopts the FY 2010 budget in April although it can adopt a lower rate. The advertisement is item 22 on Saturday’s agenda. In the summary of his report to the Board, the Manager wrote:

“Real estate tax revenue represents 53% of the County’s revenues and is one of the few tax sources where the County Board has flexibility in setting the rate. The current tax rate is $.838 per $100 of assessed value. To keep the average residential tax bill the same would require an advertisement of $0.855 (an increase of $1.7 cents).

“To provide a current services budget without major reductions to County services, based on a full sharing of revenue with the Schools, would require an advertised rate of $0.956 (an increase of 11.8 cents).

“The overall assessed value for all properties in the County is up 0.4%, while the average home value is down 2.0%. However, all general fund revenues for the County are projected to decline 3.1%, which will generate $28.9 million less than the adopted Fiscal Year 2009 budget.

“When these revenues from current tax rates are apportioned based on the Revenue Sharing Agreement with the Schools, the Schools tax revenue transfer increases .65% (an increase of $2.3 million) and the County’s portion of shared local taxes decreases by 3.30% (a decrease of $12.5 million), a total difference in tax revenue of $14.9 million. The disparity between the County and the Schools is based on an automatic adjustment in the revenue sharing formula based on the increased number of students enrolled in the current school year.”

Importantly, however, the Manager also writes:

“In developing a recommended budget for FY 2010, I found an increase of 1.7 cents inadequate to meet the County’s needs. In the budget that I will recommend for Fiscal Year 2010, I will ask the County Board to consider a minimum tax rate change of 2.7 cents. This increase will enable the Board to at least consider proposals that will avoid severe reductions in County services, mitigate the impacts from the automatic adjustment in the revenue sharing formula, and meet critical safety net needs. Even at this rate, over $20 million in County programs will be recommended for reduction. An increase of this amount would add $51 to the average tax bill and represent an increase of 1.1% over CY 2008. The County Board would still retain the option to set the rate at an increase of 1.7 cents and will have before it alternatives to further reduce County services. (emphasis added)

The County Board should also consider additional flexibility beyond 2.7 cents . . . .” (emphasis added)

Guess we don’t want the County Board to make too many tough decisions in adopting the FY 2010 budget, do we? Guess it’s only taxpayers who must make tough decisions.

Use the link in the column to the right to tell the Board what you think about the real estate tax rates.

February 15, 2009

Greedy? Not the Arlington County Board!

Yep! And the evidence is in Arlington County’s Fiscal Year Comprehensive Annual Financial Report (CAFR), which contains the audited financial statements.

Take a look at pages 183 and 192. General Fund spending increased from $532.3 million in 1999 to $968.6 million in 2008, an increase of 82.0%. Citizens ability to pay, on the other hand, increased from $45,703 in 1999 to $67,500 in 2008 for an increase of 47.7%. The bottom line? The Arlington County Board oversaw spending that increased 71.9% faster than did citizens ability to pay as measured by per capita spending.

Over the next few months, as the County Board ponders cuts in the FY 2010 budget, taxpayers will hear much moaning from Board members. Give them no mind. After all, they had no sympathy for taxpayers as they ratcheted-up government spending over the past decade.

February 14, 2009

If You Are Reading The Stimulus Bill

Some online news stories encourage readers to read the so-called economic stimulus bill, passed by Congress yesterday. As the Wall Street Journal points out, the final bill is "anything but transparent" and totals 1,073 pages, Consequently, you may need some advice before starting out.

George Mason University economics professor Walter Williams included the following advice, which is from his January 28, 2009 Townhall.com column:

"In stimulus package language, if Congress taxes to hand out money, one person is stimulated at the expense of another, who pays the tax, who is unstimulated. A visual representation of the stimulus package is: Imagine you see a person at work taking buckets of water from the deep end of a swimming pool and dumping them into the shallow end in an attempt to make it deeper. You would deem him stupid. That scenario is equivalent to what Congress and the new president proposes for the economy."

    -- Walter E. Williams

February 13, 2009

Radical Change? Indeed!

Michael Tanner, senior fellow at the Cato Institute, has an op-ed in today’s New York Post concerning stealth aspects of the so-called stimulus bill. He writes:

“Much of the "stimulus" bill is devoted to a backdoor undoing of one of Washington's greatest achievements of recent years - welfare reform.”

“One of the most important changes of the Clinton-era reform law was replacing the individual entitlement to welfare with a block grant to the states. In the old system, the more people a state signed up for welfare, the more money it got from Washington. The block grant broke this link, creating an incentive for states to help people become self-supporting.

“But, as The Post's Charles Hurt has reported, slipped into the stimulus bill is a provision establishing a new $3 billion emergency fund to help states pay for added welfare recipients, with the federal government footing 80 percent of the cost for the new "clients."

“Plus, the bill would reward states for increasing caseloads, even if the growth came because the state had loosened its requirements for recipients to work.”

Tanner explains that it is “radical change,” explaining “the measure will erode all the barriers to long-term welfare dependency that were at the heart of the 1996 reform.” He explains it this way:

“States that succeed in getting people off welfare would lose the opportunity for increased federal funding. And states that make it easier to stay on welfare (by, say, raising the time limit from two years to five) would get rewarded with more taxpayer cash. The bill would even let states with rising welfare rolls still collect their "case-load reduction" bonuses.”

And that’s just part of it. Tanner concludes by saying:

“Since Lyndon Johnson declared a "war on poverty" in 1965, this country has spent nearly $10 trillion on that cause. Yet, 44 years later, the poverty rate remains perilously close to where it was. By now we should have learned that throwing money at the problem doesn't work.

“As a state senator, Barack Obama opposed the 1996 welfare reform. As a candidate for president, he praised its results. Where does he stand now? Does he really want to return to welfare as we knew it before 1996 and put millions more Americans on the public dole?”

Good questions, indeed!

February 12, 2009

Goodbye, America?

The irrepressible Ann Coulter writes the following about the so-called economic stimulus bill in her column today:

“The stimulus bill isn't as bad as we had expected -- it's much worse. Instead of merely creating useless, make-work jobs digging ditches -- or "shovel-ready," in the Democrats' felicitous phrase -- the "stimulus" bill will create an endless army of government bureaucrats aggressively intervening in our lives. Instead of digging ditches, American taxpayers will be digging our own graves.”

Coulter concludes the column with the following:

“ . . . thanks to the stimulus bill, the private sector will gradually shrivel and die. According to the Congressional Budget Office, the cost of servicing the bill's nearly trillion-dollar debt will shrink the economy within a decade.

“Robert Kennedy famously said: "There are those who look at things the way they are and ask, 'Why?' I dream of things that never were and ask, 'Why not?'"

“The new liberal version is: There are those who look at things and ask, "Why on earth should the government be paying for that?" I dream of things that never were funded by the government and ask, "Why not?"”

Kevin O’Brien, a Cleveland Plain Dealer columnist, has an even more depressing outlook in a column titled, “The real price of the stimulus will be individual liberty.” He writes:

“Mere pork has never been the problem with this monstrosity. Pork we can digest.

“The deeper problem is two-fold: This bill will do almost nothing to ease the current financial crisis and, far worse than that, it tightens the federal government's fist on the future of education, energy research, industrial policy and especially health care. And all without so much consideration as a congressional committee hearing.

“Do we really need Education and Energy departments double their current size?”

O’Brien concludes his column saying:

“Our government was never meant for this.

“What it was designed to do was to safeguard individual liberty; to put the power of self-government in the hands of the people.

“We're witnessing the end of that grand experiment, and at horrendous financial cost.

“As Arnold Kling, a Cato Institute economist, put it this week: "I think about the stimulus as an economist, but I feel it as a father. Barack Obama is destroying my daughters' future. It is like sitting there, watching my house ransacked by a gang of thugs."

“I addressed something similar but shorter to my 17-year-old son when I walked in the door from work Tuesday, the day the Senate passed its version of the stimulus: ‘Good luck getting your country back. By the time you pull it off, if you ever do, I'll be long dead.’"

Michael Franc, blogging at the National Review Online’s “The Corner,” says, “this one bill contains a generation’s worth of liberal policymaking, an entire Great Society-scale agenda, one that advances the liberals’ view of man and his relationship to government enough to cause LBJ himself to turn red with envy.” He then provides a list of “just the serious concerns that have been uncovered thus far.” The list includes:

  • Reversing the 1996 welfare reforms
  • Expanding the welfare state
  • The stealth health care agenda
  • Bailing out irresponsible state governments
  • Stimulus bill could incite new global trade war
  • The limits of creating jobs through infrastructure spending
  • 300,000 jobs for illegal immigrants

Finally, Jim Harper at Cato@Liberty points to comments by a Sunlight Foundation blogger who notes:

“(I]t is not just Republicans who are being denied access to the bill. Reporters, bloggers, and the general public are being denied an opportunity to review one of the most important pieces of legislation sent through Congress in a long time. . . This is a dangerous practice that the Democrats ran against in 2006 and now, in the majority, are unfortunately using to block their opposition’s attacks.”

Want more information? Visit the following websites of organizations that have done yeoman work informing the public about “porkulus:”

Finally, to contact your members of Congress, the phone number on Capitol Hill is (202) 224-3121.

February 11, 2009

I Beg To Differ, Mr. President, Part 2

Yesterday, I growled because I thought President Obama was wrong about the severity of the current recession. Today, an Investor’s Business Daily (IBD) editorial says pretty much the same on the issue of tax cuts:

“ President Obama, a smart man, says that tax cuts for the wealthy are the main reason we're now in such economic trouble. Someone needs to tell him how utterly — and dangerously — wrong that is.”

The editorial explains it this way:

“We have tried that strategy time and time again," the president said Monday of "tax cuts for the wealthiest few Americans," and "it's only helped lead us to the crisis we face right now."

“Well, he's half-right: We have tried it again and again. But rather than create crises, economic growth has been restored. The evidence is pretty much beyond dispute.

"Since World War I — the start of the modern financial era — we've suffered four major downturns. In three of them, the government cut tax rates. And each time an economic boom ensued.

“In only one did the government respond by raising taxes, erecting trade barriers and enacting massive new spending programs to get out of the slump. Today, we call that time the Great Depression.

“As noted in a recent study by UCLA economists Harold Cole and Lee Ohanian, President Roosevelt's efforts at government direction of the economy likely extended the Depression by seven years.

“As history shows, lower taxes, not more government, work best . . . .”

The editorial then goes on to present the evidence, before concluding:

“We all want our new president to succeed. But to do so, he needs to drop the class-warfare rhetoric on taxes and cut them instead. Like Coolidge. Like Kennedy. Like Reagan.”

Well said, IBD!

February 10, 2009

I Beg To Differ, Mr. President

In his first press conference yesterday evening, President Obama referenced the Great Depression on two separate occasions, first in his opening remarks and again in answering the first question:

  • “Now, my administration inherited a deficit of over $1 trillion, but because we also inherited the most profound economic emergency since the Great Depression, doing little or nothing at all will result in even greater deficits, even greater job loss, even greater loss of income, and even greater loss of confidence.”
  • “So what I'm trying to underscore is what the people in Elkhart already understand, that this is not your ordinary, run-of-the-mill recession. We are going through the worst economic crisis since the Great Depression.”

Let’s look at what economists say about recessions. Greg Mankiw, economics professor at Harvard and former chairman of the President’s Council of Economic Advisers, has a chart at his blog that compares job losses in six previous recessions. According to the evidence, each recession is different. However, it’s clear the current recession is not the worst since the Great Depression.

Mankiw copied the following graphic from Time magazine’s business and economics reporter Justin Fox’s blog, The Curious Capitalist.

Fox writes:

“ . . . So far the fall in employment is comparable to that in 1974-1975 and 1981-1982. If the comparison holds, the declines should end within the next four or five months. But we of course have no idea whether the comparison will hold. Past performance is no guarantee of future results.

“Another lesson brought home by the chart is how weak the recovery from the 2001 recession was. It was a mild recession, but it took four years for employment to return to its February 2001 peak. Setting aside the worst-case scenario of a continued downward employment spiral that puts 1974-1975 and 1981-1982 to shame, a recession that combines a severity akin to that of 1974-1975 and 1981-1982 with a recovery as anemic as 2001-2002-2003-2004-2005 would be not a whole lotta fun.”

Fox also points to an economist whose chart includes every recession back to World War II. As Fox News’s motto says, “we report, you decide. “

February 09, 2009

Sustainable? Oh, Really!

Sustainable, or sustainability, are two of Arlington County government’s favorite words. A search for “sustainable” at the county’s website resulted in about 2,200 “hits” while “sustainability” resulted in about 1,450 “hits.” For example, just one program in the department of environmental services' FY 2004 proposed budged used the word “sustainable” four times while one Board member’s “remarks” at the January 1, 2008 organizational meeting contained three instances of “sustainability.”

Sustainability always comes to mind whenever we see how fast the county government spends our money. The latest example is in the 2008 Comprehensive Annual Financial Report (CAFR), which includes the audited financial statements. Page 189 provides several ratios of outstanding debt, including the “net bonded debt per capita.”

For the latest year, net bonded debt per capita grew by 5.03% (from $2,924 to $3,071). By contrast, inflation, represented by the consumer price index (CPI), increased by only 3.92%, according to the CPI numbers at the American City & County magazine website.

The ten-year comparison is equally dismal. Net bonded debt per capita grew by 48.57% (from $2,067 to $3,071) while inflation increased 29.24%.

Some important numbers to keep in mind the next time an Arlington County Board member asks for your vote. You can also express your concerns to the Board using the links in the column to the right. And tell them ACTA sent you.

February 08, 2009

Primum Non Nocere

According to Wikipedia, that is “a Latin phrase that means "First, not to harm," which "expresses one of the principal precepts all medical students are taught in medical school and is a fundamental principle for the emergency medical services of the nations of the world. It reminds the physician and other health care providers that he or she must consider the possible harm that any intervention might do. This is most often mentioned when debating use of an intervention with an obvious chance of harm but a less certain chance of benefit.”

Robert Higgs, senior fellow in political economy for The Independent Institute and author of "Depression, War, and Cold War." provides just that advice in this op-ed that will be in tomorrow’s Christian Science Monitor. He writes:

“Our greatest need at present is for the government to go in the opposite direction, to do much less, rather than much more. As recently as the major recession of 1920-21, the government took a hands-off position, and the downturn, though sharp, quickly reversed itself into full recovery. In contrast, Hoover responded to the downturn of 1929 by raising tariffs, propping up wage rates, bailing out farmers, banks, and other businesses, and financing state relief efforts. Roosevelt moved even more vigorously in the same activist direction, and the outcome was a protracted period of depression (and wartime privation) from which complete recovery did not come until 1946.

“The US government has shown repeatedly that as an economic manager it is not to be trusted. What we need most are authorities wise enough to follow the dictum, "First, do no harm." The stimulus package will do enormous harm. The huge debt burden it entails, by itself, ought to condemn the measure. America is already drowning in debt. But the measure will also wreak harm in countless other directions by effectively reallocating resources on a grand scale according to political priorities, rather than according to individual preferences and economic rationality. As our history shows, the economy can recover strongly on its own, if only the politicians will stay out of the way.”

Even though the Wall Street Journal writes in an editorial on Friday that “(e)veryone agrees that some kind of fiscal stimulus might help the economy,” they conclude:

“The biggest gamble with this stimulus is what it means if the economy doesn't recover. Monetary policy is already as stimulative as it can safely get, and the Obama Administration is set to announce its big financial fix on Monday. Stocks rallied Friday on expectations of the latter, despite the job loss report, with big bank stocks leading the way. If done right, this will help reduce risk aversion and gradually restore financial confidence.

“We hope it does, because the size and waste of the stimulus means we won't have much ammunition left. The spending will take the U.S. budget deficit up to some 12% of GDP, about double the peak of the 1980s and into uncharted territory. The tragedy of the Obama stimulus is that we are getting so little for all that money.”

The Wall Street Journal also points out:

“ . . . Mr. Obama is now endorsing a sort of reductionist Keynesianism that argues that any government spending is an economic stimulus. This is so manifestly false that we doubt Mr. Obama really believes it. He has to know that it matters what the government spends the money on, as well as how it is financed. A dollar doled out in jobless benefits may well be spent by the worker who receives it. That $1 of spending will count as economic activity and add to GDP.

But that same dollar can't be conjured out of thin air. The government has to take that dollar away from someone else -- either in higher taxes, or by issuing new debt in the form of a bond. The person who is taxed or buys the bond will have $1 less to spend. If the beneficiary of that $1 spends it on something less productive than the taxed American or the lender would have, then the net impact on growth will be negative.” (emphasis added)

Be sure to let your members of Congress know what you think about the so-called economic stimulus, aka the porkulus. The switchboard phone number on Capitol Hill is (202) 224-3121.

February 07, 2009

Serfdom Redux

The Heritage Foundation’s Robert Rector has a great “WebMemo” on the so-called economic stimulus bill, which some call “porkulus” or spendulus." He writes that the House version “will cost taxpayers $787 billion in new welfare spending,” explaining:

“The recently passed U.S. House of Representatives stimulus bill contains $816 billion in new spending and tax cuts. Of this sum, $264 billion (32 percent) is new means-tested welfare spending. This represents about $6,700 in new welfare spending for every poor person in the U.S.

“But this welfare spending is only the tip of the iceberg. The bill sets in motion another $523 billion in new welfare spending that is hidden by budgetary gimmicks. If the bill is enacted, the total 10-year extra welfare cost is likely to be $787 billion.

“The claim that Congress is temporarily increasing welfare spending for Keynesian purposes (to spark the economy by boosting consumer spending) is a red herring. The real goal is to get "the camel's nose under the tent" for a massive permanent expansion of the welfare state.

“In the first year after enactment of the stimulus bill, federal welfare spending will explode upward by more than 20 percent, rising from $491 billion in FY 2008 to $601 billion in FY 2009. This one-year explosion in welfare spending is, by far, the largest in U.S. history. But spending will continue to rise even further in future years. The stimulus bill is a welfare spendathon, a massive down payment on Obama's promise to "spread the wealth."

“Once the hidden welfare spending in the bill is counted, the total 10-year fiscal burden (added to the national debt) will not be $816 billion, as claimed, but $1.34 trillion. This amounts to $17,400 for each household paying income tax in the U.S.

“Even without the extra spending in the stimulus bill, means-tested welfare spending is already at a historic high and growing rapidly. In 2008, federal, state, and local means-tested spending hit $679 billion per year. Without any legislative expansions, given historic rates of growth in welfare programs, federal, state, and local means-tested welfare spending over the next decade will total $8.97 trillion. The House stimulus bill adds another $787 billion to this total, yielding a 10-year total of $9.8 trillion. The total 10-year cost of means-tested welfare will then amount to $127,000 for each household paying federal income tax.”

If you think that’s just what’s in the House version, that’s true, but also note this caution from Mr. Rector:

“The welfare provisions in the Senate stimulus bill are very similar to those in the House bill. Both bills use the idea of economic stimulus as a Trojan horse to conceal massive, permanent increases in the U.S. welfare system. The goal of the bills is "spreading the wealth," not reviving the economy.” (emphasis added)

Thanks to Mark Perry at Carpe Diem for pointing to the following Washington Post graphic of the $819 billion House-approved bill. To call your member of Congress, the phone number on Capitol Hill is (202) 224-3121.

For full-page version Washington Post 

February 06, 2009

How Do These People Get Elected?

That thought came to mind as “US senators on Friday reached a tentative compromise agreement on an emergency economic stimulus package worth around 780 billion dollars, after days of intense debate and negotiations.”  According to the Google/AFP, “Earlier Friday, the package was estimated at 937 billion dollars.”

So just how did “a group of moderate Democrats and Republicans” reach a comprise and trim $157 billion in less than one day? Sen. Ben Nelson (D-NE) explained:

"We trimmed the fat, fried the bacon, and milked the sacred cows." (emphasis added)

We’re not sure about the political math because the news agency also reported that Nelson “said the exercise saved 110 billion dollars.”

February 05, 2009

Less Keynes, More Hayek on Stimulus Bill

Dick Armey, former economics professor, former majority leader of the House of Representatives, and current chairman of FreedomWorks Foundation, had a highly informative op-ed in yesterday’s Wall Street Journal in which he “offered good reasons to be skeptical of government action.” Two points from Armey’s op-ed:

  • “President Barack Obama and congressional Democrats (very few of whom likely have read Keynes's 1936 book "The General Theory of Employment, Interest and Money") have dug up the dead economist's convenient justification for deficit spending in defense of their bloated stimulus legislation. But none ask the most important question: Was Keynes right?”
  • “A father of public choice economics, Nobel laureate James Buchanan, argues that the great flaw in Keynesianism is that it ignores the obvious, self-interested incentives of government actors implementing fiscal policy and creates intellectual cover for what would otherwise be viewed as self-serving and irresponsible behavior by politicians. It is also very difficult to turn off the spigot in better economic times, and Keynes blithely ignored the long-term effects of financing an expanded deficit.”

Armey concludes the essay saying:

"The real question," according to Hayek, "is not whether man is, or ought to be, guided by selfish motives but whether we can allow him to be guided in his actions by those immediate consequences which we can know and care for or whether he ought to be made to do what seems appropriate to somebody else who is supposed to possess a fuller comprehension of the significance of these actions to society as a whole."

“In reality, no one spends someone else's money better than they spend their own. The charade of the current stimulus package, chockablock with earmarks to favored pet constituencies and virtually devoid of national policy considerations, is the logical consequence of Keynesianism in action. It is about politics and power, not sound economics, and I believe that the American people will reject it.” (emphasis added)

Well said, Mr. Armey. The whole essay makes a good read.

February 04, 2009

Smithfield Has That Much Pork?

Pete Sepp, with the National Taxpayers Union, has an op-ed in today’s Investor’s Business Daily (IBD) about the so-called economic stiumus although some it porkulus. Sepp begins:

“At roughly $850 billion and 650 pages and counting, the American Recovery and Reinvestment Act of 2009 is a hugely expensive gamble that the Congress and the president are apparently willing to take in a desperate effort to jump-start our economy.

“Unfortunately, our lawmakers, now giddy with a wide-open, taxpayer-funded checkbook, have shoved more pork into this "recovery act" than a truckload of Smithfield hams.

“The single largest spending bill in congressional history, this $850 billion "stimulus" is a massive expansion of government that will ultimately shortchange its financiers — American taxpayers. Shifting resources from the private to the public sector is a time-proven failure that threatens to widen our deficit and stall economic recovery.

“With an actual price tag of $1.2 trillion when interest payments on this deficit spending are factored in, this is money that will come from an empty pocket. Congress will raise taxes at a time when Americans can least afford them, or it will borrow the funds and pass the astronomical debt onto the next generation of taxpayers.”

Sepp concludes by writing:

“A better approach is a pro-growth tax policy that will lay the groundwork for sustainable economic expansion.  Otherwise, the government is defying its pledge as a responsible steward of taxpayer money.

“In the rush to "do something quickly" to prevent the economy from sinking further, Congress and the new administration should proceed with caution before they drown us — and our children — in a sea of red ink.”

On Monday, we growled about nations that spend like Smithfield can provide an infinite supply of pork. However, it seems that “a pro-growth tax policy” is a vastly better approach to resolving the nation’s economic woes. We also provided links to Arlington's three members of Congress.

February 03, 2009

Has Hell Frozen Over?

Yessiree, Bob! An “official” public school study says that Hamiliton County (Chattanooga) taxpayers are doing enough. According to this article in Sunday’s Chattanooga Times Free Press:

“Public schools receive adequate local taxpayer support, which will force administrators to attack “inefficient” spending to wipe out a $20 million deficit, according to a recent budget analysis.

“This is not a revenue issue from the county’s perspective. Local funding appears to be sufficient,” said Bob Greving, Unum’s chief financial officer who completed the analysis for a citizens advisory panel charged with reviewing the budget.

“We’re actually getting more from the county than other districts,” he said.”

The newspaper article went on to report:

“Mr. Greving’s analysis shows that compared with Tennessee’s other large school districts, Hamilton County Schools has one staff member for every six students; the average in other major districts is one staff member for every eight students. (emphasis added)

“The report suggests the school district has about 1,420 “excess staff” members; cutting them would save $54.4 million. (emphasis added)

“Compared with other major school districts in the state, Hamilton County also has more schools for fewer students: The average number of students per school is 513 compared with an average of 620 among the other districts, the report shows. Closing 14 “excess” buildings would save about $5.2 million.

“About 80 percent of Hamilton County’s schools enroll too few students to cover costs of maintaining, heating, cooling and staffing, school records show.

We’re operating on a philosophical approach that embraces small schools,” Mr. Greving said. ‘It’s an inefficient model.’” (emphasis added)

And how did the school district grow? The newspaper also reports:

“Kurt Faires, a lawyer with Chambliss, Bahner and Stophel and a member of the advisory panel, said that over the years, the school system has allowed “some creep” in its personnel and buildings count.

“I think it was probably the political path of least resistance until a crisis arose,” he said. “We need to take a machete to this thing and make it right so we don’t have this problem every year.”

Maybe it’s time that Arlington School Board members start taking seriously the comparative numbers from the Washington Boards of Education (WABE) that we’ve repeatedly growled about over the past several years and start asking the Superintendent some tough questions rather than whining for more taxpayer money.

HT: Taxing Tennessean

February 02, 2009

Where Nations Go to Die

That’s the headline of Mark Steyn’s column posted this weekend at National Review Online. In the column, Steyn has fun with the language used to talk about the economic stimulus bill that recently passed the U.S. House of Representatives, and is to be debated this week in the Senate. Mark explains it this way:

“In a media age, politics is a battle of language, and “stimulus” is too good a word to cede to porked-up statist hacks. “Stimulus” has to stimulate—i.e., it’s short-term, like, say, an immediate cut in payroll taxes that will put real actual money in your pocket in next month’s paycheck. That way, you don’t need to wait for ACORN: You can start “stabilizing” your own “neighborhood” right now.”

We’ve growled numerous timel, most recently last Thursday, about the stimulus bill, which is often called “porkulus” by conservative talk show hosts. However, Mark Steyn, describes it best in the last paragraph of his weekend column:

“But, if this fraudulent “stimulus” does pass, it will, in fact, de-stimulate, and much more than the disastrous protectionist measures of the Thirties did: Back then, America was dealing with a far less globalized economy, and with far fewer competitors. “In the long run, we are all dead,” Lord Keynes, the newly fashionable economist, famously said. But, if this bill passes, in the medium term, we’re all dead. It’s a massive expansion of the state in the same direction that has brought sclerosis to Europe. A report issued last week in London found that government spending now accounts for 49 percent of the U.K. economy—and in the Celtic corners of the kingdom the state’s share of the economy is way higher, from 71.6 percent in Wales to 77.6 percent in Northern Ireland. In the western world, countries that were once the crucible of freedom are slipping remorselessly into a thinly disguised serfdom in which an ever-higher proportion of your assets are annexed by the state as super-landlord. Big government is where nations go to die—not in Keynes’ “long run,” but sooner than you think.” (emphasis added)

If you are outraged about the pork-laden stimulus bill, contact your members of Congress, and tell them to vote against the so-called stimuls bill. The phone number of the switchboard on Capitol Hill is (202) 224-3121. or send them e-mail using the following contact information:

Sen. Jim Webb

Sen. Mark Warner

Rep. Jim Moran 

February 01, 2009

Real Turnover in the Richest 400 Taxpayers

We’ve growled on numerous occasions about liberals whining about the need to increase taxes “on the rich,” e.g., on October 31, 2008. Nor do liberals seem to believe that government revenues increase when tax rates are cut. Well, a new report from the IRS (requires Adobe) proves just how wrong liberals are.

The IRS report analyzes “the 400 individual tax returns with the highest AGIs in each year between 1992 and 2006 clearly shows that wealthy Americans are not a static elite club that no one can penetrate. Indeed, the report indicates a great deal of churning among the top 400 over the 15-year period analyzed . . . some 40 percent of the richest 400 are new to the club each year and only about 27 percent have been on the list more than once,” as the Tax Foundation describes it at their tax policy blog:

Mark Perry, who publishes the Carpe Diem blog, writes that the data show (see especially Figure 4 in the IRS report):

  1. Of the group of 3,305 top earners from 1992-2006, 2,394 individuals made it into the top 400 only one time during the 15-year period. Those 2,394 one-timers represent 72.44% of the total (3,305), so only 27.56% made it into the top 400 more than once (see columns 2 and 3).
  2. Moreover, 2,394 earners made it into the top 400 once (72.44%), and another 408 (12.34%) made it into the top group twice. So 84.78% made it into the top group either once or twice, and only 15.22% made it into the top group more than twice (see columns 2 and 3).
  3. There were only 8 taxpayers out of 3,305 (1/4 of 1%) who were in the top 400 in all of the 15 years. (emphasis added)
  4. In any given year, on average, about 40% of the returns were filed by taxpayers that are not in any of the other 14 years (see columns 4 and 5).

Dr. Perry points out that according to the IRS, "the data shown in the table mostly represent a changing group of taxpayers over time, rather than a fixed group of taxpayers."

The Tax Prof also has links to several news sources and blogosphere coverage. However, it seems the IRS has it exactly right when they say “the data . . . represent a changing group of taxpayers over time.” The data also raise a question of whether President Obama’s fully understands how America’s economy works.

According to the transcript of his speech, at Real Clear Politics, which announced the creation of his “middle class task force” on Friday, President Obama said:

“ . . . when I talk about the middle class, I'm talking about folks who are currently on the middle class, but also people who aspire to be in the middle class. We're not forgetting the poor. They are going to be front and center, because they, too, share our American Dream. And we're going to make sure that they can get a piece of that American Dream if they're willing to work for it.”

Well, Mr. President, why should anyone aspire only to be in the middle-class. Shouldn’t every American aspire to be the best they can be no matter what class that might mean? Mr. President, you and Congress should be lowering tax rates, eliminating unncessary regulations, and encouraging entrepreneurship rather than catering to special interest groups.