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June 30, 2009

Political Leaders, Bubbles, and Misfits

"The real bubble (which citizens place around our political leaders) is a consequence of big government. The more the citizenry expects from the state, the more our political class will depend on ever-more-swollen Gulf emir-size retinues of staffers hovering at the elbow to steer you from one corner of the fishbowl to another 24/7.

"Why are politicians so weird?" a reader asked me after the (South Carolina Gov. Mark) Sanford press conference. Well, the majority of people willing to live like this will, almost by definition, be deeply weird. So big government more or less guarantees rule by creeps and misfits. It's just a question of how well they disguise it."

    ~ Mark Steyn, Columnist

HT Column in today's Washington Times

June 29, 2009

U.S. Long-Term Economic Outlook Gets Darker

In a Washington Post article last Friday, entitled, “CBO Paints Dire Portrait of Long-Term Revenue, Spending,” Lori Montgomery writes:

“The nation's long-term budget outlook has darkened considerably over the past six months, and President Obama's plan to extend an array of tax cuts and other policies adopted during the Bush administration has the potential to "create an explosive fiscal situation," congressional budget analysts reported yesterday.

“In a new report, the Congressional Budget Office found that extending the Bush administration tax cuts, reining in the alternative minimum tax and canceling a scheduled reduction in payments to Medicare doctors would dramatically slash tax collections at a time when federal spending would be "sharply rising." The resulting budget gap would drive the nation's debt over 100 percent of gross domestic product by 2023, the report says, and past 200 percent of GDP by the late 2030s.”

Yesterday, in one of their editorials, the Post raised the seriousness of their “dire” warning with the following title: “The Debt Tsunami: The CBO's latest warning on the long-term deficit is scarier than ever.” They point out:

“This huge mass of debt, which would stifle economic growth and reduce the American standard of living, can be avoided only through spending cuts, tax increases or some combination of the two. And the longer government waits to get its financial house in order, the more it will cost to do so, the CBO says.”

Here (require Adobe) is the Congressional Budget Office’s June “Long-Term Budget Outlook" that contains numerous charts and tables. In his blog about the release of their long-term outlook, the CBO director writes:

“CBO estimates that in the next two years, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. The higher debt results in permanently higher spending to pay interest on that debt (unless the debt is later paid off).”

Nicola Moore of the Heritage Foundation points out in a “web memo” today how entitlements “darken” the long-term outlook, noting the following from the CBO report:

“Almost all of the projected growth in federal spending other than interest payments on the debt comes from growth in spending on the three largest entitlement programs--Medicare, Medicaid, and Social Security.”

Finally, Sen. Judd Gregg (R) has an op-ed in Investor’s Business Daily wonders what The Founders would think of today’s debt, which could rise to 57% of GDP by the end of the year. Gregg concludes:

“The current budget plan puts us in over our heads, fiscally speaking, and we cannot continue to ignore the warning signals. Thomas Jefferson was right — no generation should take on more debt than it can pay off during its lifetime — and we should take his wise words to heart.”

And what does the House of Representatives do? Of course, they pass an energy/global warming/jobs bill that would make matters significantly worse.

June 28, 2009

Thought For The Day

“The free market is the most transformative of economic systems. It fosters creativity and inventiveness. It produces new industries, products, and services, as it improves upon existing ones. With millions of individuals freely engaged in an infinite  number and variety of transactions each day, it is impossible to even conceive all the changes and plans for changes occurring in our economy at any given time. The free market creates more wealth and opportunities for more people than any other economic model.”

    ~ Mark Levin, page 61, “Liberty and Tyranny”

Mark R. Levin, Liberty and Tyranny: A Conservative Manifesto

June 27, 2009

How Much Income Redistribution?

In a “special report,” the Tax Foundation asks: “How much should the nation's tax and spending programs move money down the income scale? Unfortunately, the basic questions needed to inform that debate have not been answered: "How much are we actually redistributing right now?" and "How would President Obama's proposals change the amount of redistribution?"”

The entire report is well-worth reading, including the many useful charts and tables, but here are the report’s five “key findings:”

  • Families' share of tax burdens is compared to their share of government benefits, by income class, yielding a comprehensive measure of income redistribution. Customarily, only tax burdens are analyzed by income class. We apply this framework to President Obama's Fiscal Year 2010 Budget released in May.
  • In FY 2012, when President Obama's policies have taken effect, income redistribution from the top-earning 1 percent of families will rise by an average of $64,000 per family. Families in the 95th-99th percentiles would pay slightly more, almost $2,000 per family.
  • On average, a family in the top 5 percent would have an additional 1.8 percent of its market income redistributed as a result of President Obama's policies (compared to baseline); for the top 1 percent only, that figure is over 3 percent.
  • President Obama's policies would reduce the amount of income redistribution from families in the 60th-95th percentiles.
  • President Obama's policies would increase the amount of income redistribution to families in the bottom 60 percent of the population, especially the bottom 20 percent.

In the report’s conclusion, the Tax Foundation writes:

“President Obama campaigned on a promise that he would pursue policies that promote a more even distribution of the economic pie. As our study shows, the extent of income re- distribution embedded in the policies he has outlined in his first budget as president do indeed intend to move the United States in that direction.

“For fiscal year 2012, the first full fiscal year in which President Obama’s full policy agenda would be in effect, we estimate that his policies would increase the amount of redistribution from those in the top five percent of the income spectrum to those outside the top five percent by $79 billion. The post-redistribution incomes of all other family income groups, including those in the top 20 percent yet outside the top five percent, would increase as a result of Obama’s proposed policies. We estimate that the greatest dollar amount increase per family would flow to families in the bottom 20 percent of the income spectrum.”

June 26, 2009

Suicide of the American Economy?

A "special" from the Washington Examiner reports:

“The highly publicized Waxman-Markey cap-and-trade bill (H.R. 2454) cleared the House Friday afternoon by a roll call vote of 219 to 212. (211 Democrats were joined by 8 Republicans)

“Proponents hailed its passage as a crucial step towards the creation of what prominent Democrats have called a new green energy economy.

“The bill's opponents, which included 168 Republicans and 44 Democrats, insisted that the legislation would raise consumer energy prices and would have negligible effects on global climate change.”

Reuters reports:

“At the core of the bill, which is around 1,500 pages long, is a "cap and trade" program designed to achieve the emissions reductions by industry.

“Under the plan, the government would issue a declining number of pollution permits to companies, which could sell those permits to each other as needed.”

Rep. Bob Goodlatte (R-Va) concluded his remarks saying, “We do not support this kind of suicide of the American economy," according to the “Briefing Room” blog of “The Hill” newspaper.

For background on “cap and trade,” see yesterday’s growls, which includes numerous linkks. We’ll growl more about this vote in the days ahead. In the meantime, House “roll call” number 477 provides the list of “yeas” and “nays” from this evening’s vote, which concluded at 7:17 PM. You can also watch the debate thanks to C-SPAN.

June 25, 2009

Off-Loading Economics to Pass a Climate Change Bill

MarketWatch reported earlier today that “President Barack Obama urged lawmakers . . . to approve a sweeping energy bill, that would set up a system for slashing greenhouse gases and boost renewable energy, a top campaign goal that he says will create jobs and wean Americans off of foreign sources of energy.”

On Tuesday, June 23, we growled that House Speaker Nancy Pelosi has scheduled a vote (for Friday)  on “a sprawling climate change bill,” and urged taxpayers to urge their representatives in Congress to vote NO on the Waxman-Markey. The Wall Street Journal editorializes now, discussing “cap and tax fiction.” writing:

“Despite House Energy and Commerce Chairman Henry Waxman's many payoffs to Members, rural and Blue Dog Democrats remain wary of voting for a bill that will impose crushing costs on their home-district businesses and consumers. The leadership's solution to this problem is to simply claim the bill defies the laws of economics.

“Their gambit got a boost this week, when the Congressional Budget Office did an analysis of what has come to be known as the Waxman-Markey bill. According to the CBO, the climate legislation would cost the average household only $175 a year by 2020. Edward Markey, Mr. Waxman's co-author, instantly set to crowing that the cost of upending the entire energy economy would be no more than a postage stamp a day for the average household. Amazing. A closer look at the CBO analysis finds that it contains so many caveats as to render it useless.

“For starters, the CBO estimate is a one-year snapshot of taxes that will extend to infinity. Under a cap-and-trade system, government sets a cap on the total amount of carbon that can be emitted nationally; companies then buy or sell permits to emit CO2. The cap gets cranked down over time to reduce total carbon emissions."

For a more complete explanation of how the Congressional Budget Office (CBO) “grossly underestimated the cost of cap and trade, see this Heritage Foundation “web memo” and this “fact sheet” explaining the “high cost of cap and trade” and “why the EPA and CBO are wrong,” see here and here, respectively. Heritage also released a video today explaining why “cap and trade won’t save the earth.”

The American Thinker also has two articles worth reading. One discusses how the “EPA makes a mocker of due process.” Marc Sheppard writes:

“But on the final day of the public commentary period, a dispatch was submitted to the EPA accusing them of attempting to cover-up an internal study that imperiled the outcome predetermined by both the agency and its puppeteers – the Obama administration. And the intraagency emails attached to the letter -- submitted by Competitive Enterprise Institute (CEI) general counsel Sam Kazman [PDF] -- leave little room for doubt.

“One EPA office director actually demanded that the endangerment-challenging study be barred from circulation within the agency, never disclosed to the public, and not placed in the docket of the proceeding.  And, as Kazman observed dead-on, the communications between that EPA National Center for Environmental Economics (NCEE) Office Director -- Al McGartland -- and study author Alan Carlin, an NCEE Senior Operations Research Analyst, made clear that it was the study’s conclusions rather than its merit that earned it its place on the trash heap.”

In the second American Thinker article, Larrey Anderson writes:

“Make no mistake: the big bad wolf of truth  is about to blow the straw house of global warming to bits. This is why there was a sudden shift. in the last nine months, from the use of "man made global warming" to "climate change" by the proponents of the theory.

"The scientific tug of war over whether or not the planet is heating or cooling has been going on for over 100 years. The difference between the past and our current situation is that governments around the world are passing (or attempting to pass) draconian laws and enforcing (or attempting to enforce) authoritarian treaties in order to "regulate" the planet's temperature.”

RealClearPolitics (RCP) also has two interesting views related to global warming and the so-called “green job” movement. In one, Robert Tracinski and Tom Minchin ask “could “Australia blow apart the great global warming scare?” They write:

“As the US Congress considers the Waxman-Markey cap-and-trade bill, the Australian Senate is on the verge of rejecting its own version of cap-and-trade. The story of this legislation's collapse offers advance notice for what might happen to similar legislation in the US—and to the whole global warming hysteria.

“Since the Australian government first introduced its Emission Trading Scheme (ETS) legislation—the Australian version of cap-and-trade energy rationing—there has been a sharp shift in public opinion and political momentum against the global warming crusade. This is a story that offers hope to defenders of industrial civilization—and a warning to American environmentalists that the climate change they should be afraid of just might be a shift in the intellectual climate.”

In the second RCP article, Washington Post columnist George Will wonders why America is emulating “the Spanish model for creating "green jobs" in "alternative energy" even though Spain's unemployment rate is 18.1 percent -- more than double the European Union average -- partly because of spending on such jobs?” Will then describes "a report, which, if true, is inconvenient for the Obama administration's green agenda, and for some budget assumptions that are dependet upon it."

Finally, in an editorial, entitled "Waxman-Markey: Man-Made Disaster," Investor’s Business Daily says: “The House of Representatives is preparing to vote on an anti-stimulus package that in the name of saving the earth will destroy the American economy. Smoot-Hawley will seem like a speed bump.” IBD explains:

“Not since a misguided piece of legislation imposed tariffs that turned a recession into a depression has there been a piece of legislation as bad as Waxman-Markey.

“The 1,000-plus-page American Clean Energy and Security Act (H.R. 2454) is being rushed to a vote by House Speaker Nancy Pelosi before anyone can seriously object to this economic suicide pact.

“It's what Janet Napolitano, secretary of Homeland Security, might call a "man-caused disaster," a phrase she coined to replace the politically incorrect "terrorist attack." But no terrorist could ever dream of inflicting as much damage as this bill.

“Its centerpiece is a "cap and trade" provision that has been rightfully derided as "cap and tax." It is in fact a tax on energy everywhere it is consumed on everything it is used to make or provide.

“It is the largest tax increase in American history — a tax on all Americans — even the 95% that President Obama pledged would never see a tax increase.

“It's a political bill that could come to a vote now that a deal was struck with farm-state legislators concerned about the taxation of even bovine flatulence.”

My apologies for the length of this growls, but it was important for it to be complete. Please call Rep. Jim Moran (D-Virginia) at (202) 225-4376, and tell him to vote NO on Waxman-Markey, H.R. 2454. To submit your comments to Rep. Moran in writing, use his "web-form (click-on Rep. Jim Moran).

June 24, 2009

Warren Buffet Says U.S. Economy in "Shambles"

CNBC’s Alex Crippen posted a summary transcript of a live interview today between Betsy Quick and Warren Buffet (includes a link to the full transcript). Here’s a portion of the interview from the summary:

“While the economy is a "shambles" and likely to stay that way for some time, he remains optimistic there will eventually be a recovery over a period of years.

“BECKY:  The last time we sat down to talk to you was on May 4, and at that point you told us that you think we're in an economic war right now.  How much progress do you think we've made in that war?

“BUFFETT:  Well, it's been pretty flat. I get figures on 70-odd businesses, a lot of them daily.  Everything that I see about the economy is that we've had no bounce.  The financial system was really where the crisis was last September and October, and that's been surmounted and that's enormously important.   But in terms of the economy coming back, it takes a while.  There were a lot of excesses to be wrung out and that process is still underway and it looks to me like it will be underway for quite a while.  In the (Berkshire Hathaway) annual report I said the economy would be in a shambles this year and probably well beyond.  I'm afraid that's true.”

With a vote scheduled on cap-and-trade legislation in the House of Representation on Friday, and considering the growls about cap-and-trade posted yesterday, the following excerpt from the interview summary is especially relevant:

“Buffett repeated his criticism of "cap and trade" as a method to control pollution, saying it would be a huge, regressive tax.” (emphasis added)

June 23, 2009

Say NO to Cap-and-Trade

Tomorrow’s Wall Street Journal will report “House Speaker Nancy Pelosi has scheduled a vote Friday on a sprawling climate-change bill, signaling the Democratic leadership's confidence that it can overcome objections from Farm Belt Democrats.” The Journal also wrote:

“Opponents and supporters of landmark climate legislation are ramping up their public-relations campaigns ahead of the planned vote. The Obama administration is pushing the measure as a job-creator, while critics, including many Republicans, are portraying the bill as an energy tax that could slow the economy.

“The legislation, co-sponsored by House Energy and Commerce Committee Chairman Henry A. Waxman (D., Calif.) and Rep. Edward Markey (D., Mass.), had stalled last week because of opposition from Farm Belt Democrats concerned their states will face heavier costs under the proposed law to curb greenhouse-gas emissions.”

We’ve growled before about this global warming legislation -- most recently on May 19 -- that would have negative impacts that could accumulate to over $133,000 per household by 2035.

Last week, the Heritage Foundation released a “web memo,” written by Daniella Markheim. She writes this energy legislation threatens American prosperity, saying:

“As the debate on climate change legislation moves forward, Members of Congress are diligently carving out exceptions and special benefits for favored groups of voters. Of course, higher energy costs will hurt all of their constituents, but Members are working hard to soften the blow for those whose political support they enjoy or need.

“Of singular concern is ensuring that U.S. firms hurt by the higher energy costs that Congress itself mandates will face minimal competition from foreign companies not hamstrung by similar domestic policy constraints. Knowing that the costs associated with cap and trade will send hard-pressed U.S. consumers and producers to lower-priced imports, some legislators seem keen on trade barriers as the easy solution--thereby raising the costs of foreign products and making them less competitive in the U.S. marketplace. For these legislators, the potential risks of global warming trump all other policy concerns, including the long-term prosperity of Americans. From their point of view, if protectionism in U.S. cap and trade becomes the standard for other countries to follow--or ignites a trade war with countries refusing to trade economic growth for curbs on emissions--all the better.”

Listen to Mark Levin explain the issue during his radio show this evening.

Call (202-225-4376 or write (using his “web form”) Rep. Jim Moran (D-Virginia) to voice your concerns.

June 22, 2009

The Future of America’s “Welfare State”

Washington Post columnist Robert Samuelson takes a sobering look at America’s “welfare state” today. Especially thought-provoking are some of the numbers he uses to support his premise that “the United States has a welfare state, and its future is precarious,” and that:

“The true significance of General Motors' bankruptcy lies more with this welfare state than with the battered condition of American capitalism.”

In the next paragraph, he explains:

“Broadly speaking, the U.S. welfare system divides into two parts -- the private, run by firms; and the public, provided by government. Both are besieged: private companies by competitive pressures; government by rising debt and taxes. GM exemplified the large corporation as private welfare state. In contracts with the United Auto Workers, GM promised high wages, lifetime employment, generous pensions and comprehensive health insurance. All this is ancient history: New workers get skimpier benefits.”

Here are a few examples of the statistics Samuelson uses to buttress his premise:

  • “Last year, about 50 percent of male workers ages 50 to 54 had been with the same employer at least 10 years; in 1983, that was 62 percent.”
  • “Health insurance and pensions tell similar stories. In 2007, employer-provided insurance covered 177 million Americans, 59.3 percent of the population; in 1999, coverage was 63.9 percent. Since 1980, companies have gradually moved from "defined benefit" to "defined contribution" pensions, notably 401(k)s."
  • “Since 1960, government has changed radically. Then, 52 percent of federal spending went for defense, 26 percent for "payments for individuals" -- the welfare state. By 2008, 61 percent consisted of "payments for individuals," 21 percent for defense.”

In his concluson, Samuelson writes:

“The U.S. welfare state is weakening; insecurity is rising. The sensible thing would be to decide which forms of public welfare are needed to protect the vulnerable and to begin paring others. Our inaction poses another dreary parallel with GM. It was obvious a quarter-century ago that GM the auto company could not support GM the welfare state. But the union wouldn't surrender benefits, and the company acquiesced. Inertia prevailed, and the reckoning came.

“The same cycle, repeated on a national scale with sums many multiples higher, would be correspondingly more fearsome.”

Take a few minutes to read the entire column. When you’ve finished, call Senators Jim Webb (202-224-4024) and Mark Warner (202-224-2023) and Rep. Jim Moran (202-225-4376) and urge them to read it.

June 21, 2009

Getting Crazy With Washington’s Mandarins

In an op-ed today at the America Thinker, Eric Singer writes:

“In a Freudian slip, "Cash for Clunkers" is the latest Washington brainstorm to goose car sales while striking a fashion pose of being green. "Pimp my ride" would be more accurate.  The legislation, which is passed and awaiting President Obama’s signature this next week, offers up to $4,500 in vouchers to purchase a new car if it gets between 2 and 10 mpg more than the old car it replaces.

“The industry, led by Undead Motors (formerly GM) and Zombie Motors (formerly Chrysler), is more than willing to grab a free lunch at our expense. Along for the ride are the Japanese car makers, the UAW, and everyone else dining off the US taxpayers' carcass. With apologies to the Eagles' Lyin Eyes, has Congress ever wondered how it got this crazy?

“It got this crazy because we forgot about the employees, shareholders and bondholders of Ford, let alone those of GM and Chrysler and the taxpayers.  Ford deserves to expand its market share because it fought its way to survival against competition. Now, prospectively, Ford will lose market share, and therefore, the full appreciation shareholders deserve in Ford's stock price, because the government is now a deep pockets partner of its competitors.  I guess Ford, which has a stock market value of $ 18 billion, would be worth $26 billion today had the government let GM and Chrysler alone so the Ford shareholders have lost something like $8 billion (or more than $2.50 per share) courtesy of congressional wealth destruction.”

And if you think members of Congress look out for your health, consider the following from Mr. Singer:

“It got this crazy in part because of Federal mileage and other requirements that ignore what people really want in a car and in a fuel supply.  As recently reported by the Insurance Institute for Highway Safety, the death rate per million vehicles was 44 for SUVs and 35 for large cars, while for small cars it was 96, or more than double!.

“If 15,000,000 clunkers are turned in over the life of this program (considering there are 100,000,000 vehicles at least 10 years old still on the road and that government programs take on a life of their own), and we all start driving Fiats and instead of Chevy Tahoes, we could roughly project 4,000 additional deaths over the life of the program in order to pay for our gasoline savings. This would about equal our total fatalities in the Iraq War so far, to which many Democrats chanted "No more blood for oil!" Why is this blood for oil any different?  And at least 43.3% of these predictable fatalities are likely to be Democrats based on current party affiliation statistics.

“What eludes our mandarins is that many people, on balance, would often prefer to survive a car crash, and sometimes would also prefer to have their kids survive crashes, and actually don't care so much what their mileage is compared to feeling that their family is safer and prepared for any kind of weather.  Certainly, based on his convoy of SUVs used when visiting Congress, Noble Laureate Al Gore would seem to have made the same choice in favor of safety.”

A couple more details:

  • Reuters reports the bill was “(t)ucked” into a military spending bill that just passed Congress.” The Seattle Post Intelligencer reports that Washington State Sen. Maria Cantwell (D-WA) had “changed her vote to support the bill Thursday and spoke by phone with President Barack Obama during the vote.”
  • Finally, according to Senate Roll Call Vote 209, Democrats, including Virginia Senators Jim Webb and Mark Warner, were joined by four Republican senators (Bond of Missouri, Cochran of Mississippi, Collins of Maine, and Voinovich of Ohio) in passing the conference report on H.R. 2346 by a vote of  60-36 with three senators not voting.

Guess Congress and the President, who reportedly will sign the bill, don’t worry that future generations will get to pay for the “clunkers,” reportedly a cost of $1,000,000,000. Getting crazy? How about gone crazy, already.

Cartoon below is courtesy of William Warren:

June 20, 2009

Thought for the Day

“The mounting burden of taxation not only undermines individual incentives to increased work and earnings, but in a score of ways discourages capital accumulation and distorts, unbalances, and shrinks production. Total real wealth and income is made smaller than it would otherwise be. On net balance there is more poverty rather than less.”

    ~Henry Hazlitt (1894-1993), American Economist, Journalist and Author

HT Quotes on Power at OnPower.org

June 19, 2009

You Mean Government Health Care Isn’t Free?

In the June 2009 issue (No. 57) of the Cato Institute’s “Tax & Budget Bulletin," Michael Tanner and Chris Edwards ask whether President Obama will “raise middle-class taxes” to pay for “a big expansion in federal health care spending” while “Democratic leaders are scrambling to find ways to pay for it.”  Tanner and Edwards note that:

“Obama has also made strong promises that he won’t raise any taxes on lower- and middle-income Americans. Tax increases are a bad idea in general, but the Democrats are finding out that there is no way to fund their vision of expansive government health care without walloping average families with higher tax burdens.”

Some of the middle-class tax increases under consideration by the Democrats to fund health care are discussed” by Tanner and Edwards. The increases come from the U.S. Senate Finance Committee’s May 20, 2009 report, “Financing Comprehensive Health Care Reform.” The tax increases discussed in the "Tax & Budget Bulletin" include:

  • Taxing Employer-Provided Health Insurance
  • Eliminating HSAs and FSAs
  • Limiting the Deductibility of Medical Expenses
  • Alcohol and Beverage Taxes
  • Higher Corporate Taxes
In summary, Tanner and Edwards write, “Adding up the possible increases listed above to income taxes, payroll taxes, excise taxes, and corporate taxes would raise about $700 billion over the next decade. But that large tax increase would be less than half of the $1.5 trillion needed to fund the new health care spending being considered by the Democrats.” They conclude:

“In sum, expanding government health care will likely involve huge tax increases on the middle class. Aside from the tax options discussed above, there has also been talk of using revenues from a cap-and-trade global warming plan to fund health care. Obama’s budget included an $80 billion per year revenue increase for cap-and-trade, and economists calculate that the relative burden of such a plan would be far greater on lower-income than higher-income families. Thus, as Americans consider the current health care debate in Congress, they should remember the words of humorist P.J. O’Rourke: “If you think health care is expensive now—just wait until it’s free.” (emphasis added)

The following William Warren cartoon is used with permission:

June 18, 2009

Clearest Definition, Yet, Of Affordable Housing

"The political meaning of "affordable housing" is housing that is made more affordable by politicians intervening to create government subsidies, rent control or other gimmicks for which politicians can take credit."

   ~ Thomas Sowell

June 17, 2009

Frills And Folly Of County Employment

The Arlington Sun Gazette’s Scott McCaffrey posted this online story earlier today noting the Arlington County Board approved a resolution at their recessed meeting:

“directing the county manager to stop purchasing water in plastic bottles, except in specific circumstances. The measure, which parallels a recent executive order signed by Gov. Kaine and applying to the state government, will help both the environment and the county budget, said County Board Vice Chairman Jay Fisette, who proposed the measure.”

Ain’t that special? “Taxpayer-funded bottled water” for the poor dears. McCaffrey also wrote:

“In recent years, the county government has scaled back its purchases of bottled water, in part as a cost-saving measure, although County Manager Ron Carlee could not provide specific figures.

“We’re doing very little of it,” the manager said of providing bottled water to staff and at community events. “We’re trying to make prudent, cost-effective choices.”

“Fisette said the cost of providing 1,000 gallons of county tap water was $3.35, compared to $2,560 for an equivalent amount of bottled water.”

When the County Board approved the FY 2010 budget in April, the chairman said it was the “hardest budget” that she has worked on. Since the cost of that taxpayer-funded bottled water was in that FY 2010 budget, it seems the Board didn’t really work very hard after all. Instead, county employment seems to be filled with a lot of frills and folly.

June 16, 2009

Worried About The Answer?

On Saturday, June 13, 2009, the Arlington County Board “approved a few preliminaries, clearing the way for what is expected to be formal approval” in July “of a new publicly-supported cultural center to be located in the former Newseum space on Wilson Boulevard in Rosslyn,” wrote Scott McCaffrey in this report in the Arlington Sun Gazette. He also wrote:

“Board members and County Manager Ron Carlee said Saturday’s action did not obligate the government to move forward on the project. But the expectation is that the proposal, long sought both by the arts community and Rosslyn civic and business interests, was on a track to win approval in July.”

For more information, read the Manager’s “Board report,” which was item #45 on the Board’s agenda on Saturday. In an unusual move, the county "spinners" issued a press release the day before the County Board's approval to move the project forward. Here is the “fiscal impact” as described by the County Manager in his Board report:

“The proposed Cultural Center will have an estimated $10 million in annual economic impact resulting from 250,000 annual visitors. No new tax support for the proposed Cultural Center’s operating costs is anticipated at this time. Appropriations from the Rosslyn Business Improvement District and the Rosslyn Fund Trust and Agency account, program and facility rental fees, and consolidation and reallocation of existing County programs and staff are anticipated to be sufficient to cover operating costs.

“The proposed Second Amendment to the deed of Lease and significant rent abatement (estimated value of over $14 million) provides a significant financial benefit to the County in covering operating and capital costs of the proposed Cultural Center.

“Capital renovation costs are currently estimated at $6.7 million, and will be funded from $1.1 million from the Rosslyn Fund Trust & Agency Account and $5.6 million in reallocated General Fund PAYG projects, which in turn will be funded with available, unprogrammed bond proceeds.”

The Sun Gazette also reported on the comments of two fiscal watchdogs:

“This is simply not realistic,” Robert Atkins said of the proposal. “It is simply a farce. These [financial] numbers do not make sense.”

“Wayne Kubicki, another fiscal watchdog, said the costs to taxpayers for capital improvements to the space have ballooned up 70 percent from just six months ago, to $6.7 million, and could go higher. He said county officials should put the entire project to voters in a bond referendum, “or are you worried about the answer you might get?”

Scott McCaffrey of the Sun Gazette ended his article with this quote by Wayne Kubicki, Arlington's SuperWatchdog:

"This project has ‘done deal’ written all over it."

June 11, 2009

Thought For The Day

"Every child in America should be acquainted with his own country. He should read books that furnish him with ideas that will be useful to him in life and practice. As soon as he opens his lips, he should rehearse the history of his own country."

    -- Noah Webster, On the Education of Youth in America, 1788

HT Patriot Post 

P.S. El Growler Grande will be gone for a few days, and should return on Tuesday.

June 10, 2009

The Future Of Your Healthcare?

Sarah McIntosh, a lecturer in constitutional law and American politics at Wichita State University in Kansas, wrote in the Heartland Institute’s June 2009 Health Care News that “Oregon becomes (the) first state to officially ration health care,” explaining:

“The Oregon Health Services Commission has drawn up a formal procedure for rationing health care services available to recipients of taxpayer-subsidized coverage.

“The rationing policy may surprise low-income individuals on the state health care program, who could see treatments they need become unavailable due to changes in state-determined priorities.

“The commission listed 680 common medical procedures and treatments and ranked them in order of priority. Beginning in 2009, the commission will reimburse physicians only for procedures and treatments ranking in the top 503 of 680.

“This means a Medicaid recipient in need of a procedure the commission decided to rank 504th would be ineligible for that procedure.”

McIntosh quotes Linda Gorman, a health care economist, who said, “When government is given control over medical decision-making, politics is going to play a role in deciding what is funded.” McIntosh also comments on so-called “preventive care,” a subject frequently touted as a way to reduce health care costs. She writes:

“According to the commission, the state’s priorities emphasize preventive care because it is less expensive and more effective than treating those conditions later. But Gorman notes, “There is no evidence that preventive care will reduce expenditures for the general population.”

The Associated Press just reported: “President Barack Obama urged lawmakers Wednesday to work through partisan differences that are threatening health care legislation just as it starts moving through Congress.” The AP then wrote that after the meeting, “committee leaders said Obama was willing to listen to all sides but insisted that Congress must pass a bill this year that reins in costs and helps provide coverage to nearly 50 million uninsured people.”

Be sure your U.S. senators and representatives know your views on health care. You. You can send them e-mail by using the following “Web Forms” or phone them on Capital Hill at (202) 224-3121.

June 09, 2009

Shortchanging Motorists

In a Heritage Foundation study published yesterday (Backgrounder #2283), Wendell Cox and Ronald Utt point out

“In 2007, motorists and truckers paid $39.3 billion in fuel tax revenues and excise taxes into the trust fund but received only about 60 percent of those revenues in the form of federal spending on general-purpose roads.

“In contrast to motorists and commercial airlines, transit users pay no federal taxes or fees and instead benefit by receiving a share of the taxes paid by motorists and funding from general federal tax revenues.”

What’s going on? And how is that fair? Cox and Utt explain:

“In December 2004, the Bureau of Transportation Statistics at the U.S. Department of Transportation (USDOT) published its first and last report on the cost of the federal subsidies provided to each mode of transportation per passenger per 1,000 miles: cars, buses, airplanes, transit, and passenger railroad. The survey covered the years 1990 to 2002 and demonstrated that motorists received the lowest federal subsidy per 1,000 passenger-miles and that transit and Amtrak received by far the largest federal subsidies.

<snip>

“In this paper, The Heritage Foundation has updated and replicated the original 2004 USDOT study by adding new data for 2003 through 2006.”

The two charts below provide federal transportation 2002 subsidies by mode the original U.S. Department of Transportation study and the authors update for 2003 through 2006.

No wonder "transit and train advocates in Congress" were embarrassed, and "discouraged" the bureaucrats in the U.S. DoT "from further exercises in transparency" and "the 2004 report was the first and last of its kind." Consequently, the Heritage Foundation is to be congratulated for updating the original study.

June 08, 2009

America’s Own Nomenklatura

The “nomenklatura” in the former Soviet Union, according to an American Thinker story last week, described “the plutocrats who ruled that society and lived lavishly without benefit of huge personal wealth.” They also write:

“The new ruling elite of America consists of those favored by government power. You can forget about working your way up via honest hard work. The fruits will be confiscated, and given to those with political sway.”

Also last week, the Wall Street Journal reported that members of Congress were billing taxpayers for TVs, cameras, and Lexus automobiles, writing:

“Florida Rep. Alcee Hastings spent $24,730 in taxpayer money last year to lease a 2008 luxury Lexus hybrid sedan. Ohio Rep. Michael Turner expensed a $1,435 digital camera. Eni Faleomavaega, the House delegate from American Samoa, bought two 46-inch Sony TVs.

“The expenditures were legal, properly accounted for and drawn from allowances the U.S. government grants to lawmakers. Equipment purchased with office expense accounts must be returned to the House or the federal General Services Administration when a lawmaker leaves office.”

Later last week, Fox News reported: “House leaders move to impose more transparency on lawmakers’ expense reports,” writing:

“House leaders are moving to post the expense reports of U.S. lawmakers on its Web site after the Wall Street Journal highlighted the eye-popping purchases some lawmakers have made with taxpayer money, including $25,000 for a luxury car lease and $1,500 for a digital camera.

"How they manage that account and how they spend that is really a lens into how they manage the federal budget," said Steve Ellis, the vice president of Taxpayers for Common Sense.

“The expense reports are currently published in hard copies, detailing how lawmakers spend their yearly allowances, which range from $1.3 million to $4.5 million dollars. The allowances largely pay for staff salaries, equipment, office space and travel to lawmakers' districts.”

Progress? We'll see!

June 07, 2009

Revenue Sharing Agreement Revisited

Tuesday evening, June 2, the venue for the latest round in the effort to return accountability to the Arlington School Board was the monthly meeting of the Arlington County Civic Federation. At its May 2009 meeting, a resolution was presented during 'new business' calling for the County and School Boards to look at ways to improve the current Revenue Sharing Agreement (RSA).

To that end, the Revenues & Expenditures and Schools committees of the Civic Federation revised the resolution, and on Tuesday presented delegates an opportunity to urge the two Boards to take another look at the RSA. According to the committees' joint report (requires Adobe):

“Prior to the FY2002 budget process, the School Board would prepare its annual budget   request, including a proposed amount for the transfer payment to the Schools from the County General Fund budget. This transfer payment is the primary (but not the only) source of revenue in the Schools budget.

“The County Board would then consider the School Board’s transfer payment request, along with the budget proposal from the County Manager, and finalize the County Budget for each year, setting various tax rates and setting the amount of the transfer payment to the Schools.”

The impetus for the RSA was that the Schools were taking an increasing share of taxpayer dollars. For example, in fiscal year 1985, 33.7% of the general fund was devoted to K-12 education. That percentage climbed to 38.1% in FY2000 and was 36.8% in FY2008. (Those percentages are from the county’s audited financial statements).

The percentage alloted to the Schools in the original RSA was 48.6%, but has seen minor revisions. The percentages in the paragraph above is much lower than the School share in the RSA since the RSA primarily divides “Arlington taxes” while the general fund includes revenue from the federal and state government as well as such things as fees, fines, and miscellaneous revenues. Of particular note in the joint committee report is the following, suggesting the increasingly dysfunctional nature of the RSA:

"For the FY2010 budget, the County Board, citing enabling language in the RSA, excluded the incremental revenue from the 2.7 cent increase in the real estate tax rate for CY2009 from the RSA, retaining all of this revenue within the County budget."

According to the Arlington Sun Gazette:

“On a 17-16 vote, delegates overruled the recommendation of the organization’s schools and revenues-expenditures committee, which had agreed the revenue-share proposal needed to be taken a look at.

“Arlington is one of about 15 percent of jurisdictions across Virginia that have in place some kind of formula for funneling local tax dollars directly to schools. In the other localities, schools vie with other interests - from road-building to public safety to social services - for public tax dollars each year.

“Arlington put the revenue-sharing agreement in place in fiscal 2002, hoping to reduce what had been political conflicts between the elected School Board and elected County Board. Under the agreement, 48.6 percent of general tax revenue went directly for school operations, a figure that has since risen to 49.1 percent.” 

The Sun Gazette’s Scott McCaffrey also reported:

“some of the wording in the resolution irked enough delegates to sink the proposal.
“Peter Owen, a member of the Civic Federation’s executive committee, said the proposal was offered only “very vague and generalized criticism that doesn’t bring a lot to the table.” Incoming Civic Federation vice president Mark Antell voiced concern that scrapping the agreement “leads us back to the fighting between the School Board and County Board.”
“There are those who believe that’s what governing and budgeting is supposed to be about,” said Wayne Kubicki, who chairs the federation’s revenues and expenditures committee.
“While some who voted against the proposal had voiced concern that the school system might lose funding if the revenue-sharing agreement disappears, Kubicki predicted that keeping the plan in place is what could harm schools.”

Full disclosure: Mr. Kubicki is an ACTA delegate to the Civic Federation.

June 06, 2009

Analysis of Issues, House of Delegates 47th District

In addition to races for Governor and Lieutenant Governor on Tuesday, June 9, 2009 in the Democratic primary, five candidates are vying for the seat of retiring Del. Albert Eisenberg for the Virginia House of Delegates, 47th District (see Google map of district). The five are Miles F. Grant, Andres Tobar, Patrick A. Hope, Alan E. Howze, and Adam J. Parkhomenko.

The Arlington Sun Gazette editorializes “There is no perfect candidate among the five Democrats for the 47th House of Delegates seat” and that it’s “clearly a two-tier race” with Hope and Tobar in the top tier and the other three forming a lower tier, saying, “Each has his advantages, each his drawbacks”

Julia O’Donoghue of the Arlington Connection writes, “The five men . . . may all be members of the same political party but it is hard to imagine candidates with a wider range of life experiences.” She then points out the five candidates “share similar views on most political issues but would focus on different areas of policy as an elected official,” and then briefly comments on each candidate.

Each of the five candidates’ websites includes a webpage devoted to “issues,” and every one includes most of the liberal/progressive issues such as clean energy and climate action; mass transit; education, and especially universal pre-K; affordable housing; reducing gun violence through closing the so-called gun show loophole and opposing concealed carry. One candidate emphasizes health and human service issues while another candidate wants to improve the “tone” in Richmond or urge election reforms.

There is a general concern about budgets and economic issues. Generally, the solution involves clean energy, e.g., tax incentives for homeowners/businesses making investments in energy/water efficiency. For others it includes expanding mass transit and support for universal pre-K. Others want to grow the small business part of the economy or rebuild the economy with green jobs. While all advocate issues or programs that require spending tax dollars, Parkhomenko highlights his support for small business tax relief in addition to his support for a homestead exemption to provide tax relief for homeowners as well as growth limits on residential taxes.

Are the two “tax issues” sufficient to distinguish a candidate from the pack? Or sufficient to push a candidate into the Sun Gazette’s top tier? Probably not, but then Miles Grant emphasizes community engagement and civic activism while Andres Tobar supports a more flexible Dillon Rule and “stop legislative efforts that attack the most vulnerable in our society.” To repeat what the Sun Gazette writes, “advantages . . drawbacks.”

For more information, visit Arlington’s Office of Voter Registration.

p.s. To appreciate how editorial writers never make anyone happy, note the many comments readers posted in response to the Sun Gazette's editorial.

June 05, 2009

Manufacturing Excuses

Larry Elder asks “who drove this Chevy off the levy? in his Investor’s Business Daily (IBD) column posted today, noting that General Motors “once employed more than 500,000 workers and had a 50% market share" before crumbling into bankrupcy and ownership by the U.S. government and the United Auto Workers union.

While attending law school in Michigan in the 1970’s, Elder writes that foreign automakers “steadily shaved off market share” from the Big Three automakers. He then describes how America’s appliance makers responded by studying Japanese manufacturing methods before noting “domestic makers of large appliances still dominate the U.S. market” today while “the automotive Big Three manufactured excuses.”

Elder compares the response to foreign competition by the appliance manufacturers to the response by the Big Three, who turned to Washington instead. He writes:

“The Big Three then turned to Washington. Their lobbying paid off through protectionist policies: "voluntary" import quotas (forcing American consumers to pay more for Japanese cars); domestic content rules (requiring foreign automakers to use a certain amount of American-produced equipment in their cars); and demands that foreigners "open" their markets to American car products or stand accused of "unfair trade."

“All of this shielded the Big Three from the rule of business that determines success or failure: improve or die.”

After describing the experience of his uncle Thurman who worked as a machine operator at a GM plant in Cleveland as an example of poor work practices at Big Three plants, Elder concludes:

“Back in Michigan in the '70s, I read article after article about how the Big Three should/could/would respond to the foreign invasion. But in practice, I saw excuses and pleas for protectionism.

“Why," I asked my roommate, "doesn't GM offer a boatload of money, steal Toyota's No. 2 executive and put him in charge?" My roommate laughed, "Because he doesn't speak English and wouldn't be able to understand the American market." I said, "And General Motors does?"

“Today I know my idea of stealing a Toyota exec was bad. GM should have picked up the phone, asked the government to buy a majority share in the company, handed the office keys to the president of the United States, and said, "Here. You run it."

June 04, 2009

America’s Credit Rating At Risk

In a WebMemo earlier this week, J.D. Foster, a senior fellow in economics at the Heritage Foundation writes:

“The credit rating company Standard & Poor's (S&P) recently lowered the United Kingdom's debt rating from "stable" to "negative" as its debt-to-GDP ratio approaches 100. On May 21, Bill Gross, the co-chief investment officer of PIMCO, a leading bond trading house, said the U.S. may lose its credit rating as the federal government issues trillions in additional debt.

“The consequences of such a development would be significantly higher interest rates facing the U.S. Treasury and possibly throughout the economy. The dangers are real, and an imminent fundamental policy course correction appears inevitable.”

Using data from the Congressional Budget Office, Foster includes the following two charts of U.S. debt:



In conclusion, he says, “The U.S. credit rating is at risk,” before outlining actions that can be taken to mitigate “the risk to the U.S. government credit rating from runaway debt.”

June 03, 2009

Another Fine Mess From Congress?

The Wall Street Journal writes in an editorial today:

“The Obama Administration is pushing a big expansion in ethanol, including a mandate to increase the share of the corn-based fuel required in gasoline to 15% from 10%. Apparently no one in the Administration has read a pair of new studies, one from its own EPA, that expose ethanol as a bad deal for consumers with little environmental benefit.”

The Journal reports the biofuels industry “receives a 45 cent tax credit for every gallon of ethanol produced, or about $3 billion a year” and that “import tariffs of 54 cents a gallon and an ad valorem tariff of four to seven cents a gallon keep out sugar-based ethanol from Brazil and the Caribbean.” The bottom line for the Journal:

“The federal 10% blending requirement insures a market for ethanol whether consumers want it or not -- a market Congress has mandated will double to 20.5 billion gallons in 2015.”

About the two studies, they write:

“The Congressional Budget Office reported last month that Americans pay another surcharge for ethanol in higher food prices. CBO estimates that from April 2007 to April 2008 "the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices." Ethanol raises food prices because millions of acres of farmland and three billion bushels of corn were diverted to ethanol from food production. Americans spend about $1.1 trillion a year on food, so in 2007 the ethanol subsidy cost families between $5.5 billion and $8.8 billion in higher grocery bills.

“A second study -- by the Environmental Protection Agency's Office of Transportation and Air Quality -- explains that the reduction in CO2 emissions from burning ethanol are minimal and maybe negative. Making ethanol requires new land from clearing forest and grasslands that would otherwise sequester carbon emissions. "As with petroleum based fuels," the report concludes: "GHG [greenhouse gas] emissions are associated with the conversion and combustion of bio-fuels and every year they are produced GHG emissions could be released through time if new acres are needed to produce corn or other crops for biofuels."”

In Business Week last month, Ed Wallace writes:

“The new push to get a 15% ethanol mandate out of Washington is simply to restore profitability to a failed industry. Only this time around those promoting more ethanol in our gas say there's no scientific proof that adding more ethanol will damage vehicles or small gas-powered engines. With that statement they've gone from shilling the public to outright falsehoods, because ethanol-laced gasoline is already destroying engines across the country in ever larger numbers.”

Finally, Tim Carney wrote in his March 11, 2009 Washington Examiner column:

“Goldman Sachs’ bets that green investments are profitable are also based on expected or existing environmental regulations. The company in 2007 helped pass federal mandates for cellulosic ethanol — fuel made from grass, wood chips or similar materials — after investing in a Canadian cellulosic ethanol firm, which set up its U.S. headquarters in the D.C. area.”

Aren’t we going to have a fine mess if Congress and the Obama Administrqtion ever complete their remake of the U.S. healthcare industry, not to mention its multibillion dollar cap-and-trade tax?

UPDATE (6/6/09) From Betsy's Page:

"So what's to like? Well, corn farmers are making out like bandits. And both Republican and Democratic senators from corn-growing states love pleasing those agricultural interests. And environmentalists love the illusion that they're supporting a program that will benefit the environment despite research to the contrary. This is a bipartisan boondoggle, but when has that ever stopped our government?"

June 02, 2009

Ready For Internet Taxes?

In this press release yesterday, the National Taxpayers Union (NTU) “sounded the alarm over quiet, behind-the-scenes efforts to force Internet businesses of all sizes to collect billions of dollars in brand new sales taxes – a scheme NTU once identified as a possibility in a paper called “Ten Tax Hike Threats in t he 111th Congress.”

NTU said, “The plan would irrevocably tear down the wall that protects the Internet from oppressive taxation, a wall that NTU has fought to fortify for years,” and went on to explain:

“Congressional sources say that introduction of federal legislation to implement the “Streamlined Sales Tax Project” (SSTP) could happen as early as this week. This comes in response to ongoing deliberation surrounding the issue of tax policy toward the Internet and the SSTP, a campaign that would allow states to collect sales taxes on transactions made by residents beyond their borders. States need Congress’s blessing for SSTP because of previous court rulings that governments cannot force firms within their jurisdiction to collect taxes on sales made to out-of-state customers.”

<snip>

“As many states continue to face record budget shortfalls, it is not surprising that they have turned to taxing online commerce in a desperate attempt to pay for their profligate spending. State and local government officials are leaning hard on Members of Congress to pass the bill to provide them new avenues into taxpayer wallets. They are particularly focusing on convincing Republicans to join the effort, in the hopes that bipartisan support of the tax hike will improve its prospects.”

Well said. Very well said!

June 01, 2009

Thinking About The Free Market

“The Conservative sees in the free market the harmony of interests and rules of cooperation that also underlie the civil society. For example, the free market promotes self-worth, self-sufficiency, shared values, and honest dealings, which enhance the individual, the family, and the community. It discriminates against no race, religion, or gender. The truck driver does not know the skin color of the individuals who produce the diesel fuel for his vehicle; the cook does not know the religion of the dairy farmers who supply milk to his restaurant; and the airline passengers does not know the gender of the factory workers who manufacture the commercial aircraft that transports him -- nor do they care.

The free market is an intricate system of voluntary economic, social, and cultural interactions that are motivated by the desires and needs of the individual community . . . .

    -- Mark R. Levin, “Liberty and Tyranny,” pages 61-62

See Mark Levin Show for more on the book.