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June 30, 2010

U.S. Debt To Reach Highest Level Since WW II

According to today’s USA Today, “The federal debt will represent 62% of the nation's economy by the end of this year, the highest percentage since just after World War II, according to a long-term budget outlook released today by the non-partisan Congressional Budget Office.”

In a story on the CBO’s report, Michael O’Brien writes at The Hill’s Briefing Room blog:

“But the bigger long-term problem, according to CBO, remains Medicare.

“CBO Director Douglas Elmendorf wrote in a blog post explaining the new report that under current laws, "federal spending on major mandatory healthcare programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter."

“Keeping current policies in place would almost certainly force lawmakers to make steep spending cuts and raise taxes, Elmendorf argued, unless changes to address the problems were made sooner rather than later.”

The Wall Street Journal’s Laura Meckler reports from Racine, Wisconsin, where President Obama was holding a town hall meeting:

“President Barack Obama said Wednesday that the rising national debt is a "real and legitimate concern" and that the U.S.n must reorder its priorities to gain control over federal spending.”

Finally, let me cite from the CBO report (requires Adobe), specifically the concluding paragraphs from the report’s executive summary, which describes “the impact of growing deficits and debt:”

"In fact, CBO’s projections understate the severity of the long-term budget problem because they do not incorporate the significant negative effects that accumulating substantial amounts of additional federal debt would have on the economy:

  • Large budget deficits would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment -- which in turn would lower income growth in the United States.
  • Growing debt would also reduce lawmakers’ ability to respond to economic downturns and other challenges.
  • Over time, higher debt would increase the probability of a fiscal crisis in which investors would lose confidence in t he government’s ability to manage its budget, and the government would be forced to pay much more to borrow money.

“Keeping deficits and debt from growing to unsustainable levels would require raising revenues as a percentage of GDP significantly above past levels, reducing outlays sharply relative to CBO’s projections, or some combination of those approaches. Making such changes while economic activity remain well below their potential levels would probably slow the economic recover. However, the sooner that long-term changes to spending and revenues are agreed on, and the sooner they are carried out once the economic weakness ends, the smaller will be the damage to the economy from growing federal debt. Earlier action would require more sacrifices by earlier generations to benefit future generations, but it would also permit smaller or more gradual changes and would give people more time to adjust to them.”

June 29, 2010

The Rich and Their Fair Share?

Scott Hodge, president of the Tax Foundation, reports on a new report from the Congressional budget Office at the Foundation’s Tax Policy Blog. He writes:

“A new report by the Congressional Budget Office undermines President Obama's constant refrain that the "rich" are paying less than their share of federal taxes and that the middle class is over burdened. The report, Average Federal Tax Rates in 2007, shows that the wealthiest 20 percent of households earned 55.9 percent of all income but paid 86 percent of federal income taxes and 68.9 percent of all federal taxes.”

Hodge also points out that while the share of income earned by the top 1% of households has doubled, their share of income taxes paid grew even more. [see the Tax Foundation chart below] He writes:

“Since 1979, the top 1 percent's share of income has grown from 9.3 percent to 19.4 percent, more than double. However, their share of income taxes more than doubled, from 18.3 percent to 39.5 percent, while their share of the total tax burden almost doubled from 15.4 percent to 28.1 percent.”

June 28, 2010

Does Federal Government Get Too Many Tax Dollars?

Last week we growled about what Americans think of taxes, and yesterday we growled about federal spending. Today, let’s look at the revenue side of the federal budget by looking at taxes, again beginning with charts from the Heritage Foundation’s Budget Chart Book.

Even a cursory look at the chart below, which shows that the federal budget problem is not that the government gets too little tax dollars, but rather that it spends too much, or at least that federal politicians fail to set priorities. In inflation-adjusted dollars, the federal government collected $11,202 in taxes per household in 1965. By 1992, that amount increased to $16,357, and grew again to $23,947 by 2000. During the current decade, taxes have been on a roller-coaster ride, and are currently $16,543 per household.

 

For background information on the FY 2011 federal budget, take a few minutes to read Web Memo 2790, February 3, 2010 by Heritage Foundation senior analyst Curtis Dubay. He writes the budget has “tax hikes for everybody,” which he breaks down into six categories:

  1. Higher taxes on businesses
  2. Higher taxes on upper-income earners
  3. Death tax increase
  4. Higher energy taxes
  5. Health care taxes
  6. Other taxes

Dubay points out that President Obama said his number one goal for 2010 was job creation, but that all of the tax increases contradict that objective. As Dubay writes:

“Higher taxes on businesses, upper-income taxpayers, and fossil fuels; an increased death tax; and new taxes to pay for health care would destroy jobs and slow economic recovery. Congress should reject these higher taxes and the rest of its business-killing agenda to speed economic growth and encourage job creation.”

Nothing to disagree with there!

June 27, 2010

Your Federal Tax Dollars. At Work?

Taxpayers wishing a resource in order to better understand the federal budget need look no further than the Heritage Foundation’s Budget Chart Book for Fiscal Year 2010. It’s chock full of 39 charts on federal spending and revenue, debt and deficits, and entitlements. For example, there are 11 charts that show how “government is spending at unprecedented levels, (and) posing an expensive threat to limited government.”

Let’s start by taking a look at how household spending has increased over the years. On an inflation-adjusted basis, per household federal spending has increased from $11,337 in 1965 to $31,088 today, and is expected to grow to $36,139 by 2020. The chart below is from the Heritage Foundation’s Budget Chart Book.

 

For further background information on President Obama’s FY 2010 budget, take a few minutes to read Backgrounder No. 2382 (requires Adobe) by Heritage budget fellow Brian Riedl, and how he “lays out how a $3 trillion tax hike and an additional $74,000 debt burden on every U.S. household will affect the country.” You can also watch Mr. Riedl on C-SPAN, February 4, 2010.

HT Heritage Foundation

June 26, 2010

Your Federal Tax Dollars Hard At Work. Not!

The Wall Street Journal reported on Wednesday of this week that the IRS had “doled out more than $27 million in fraudulent claims for the home buyers' tax credit on returns for 2008, including claims by prisoners serving life sentences and people who purchased their home before the credit was in effect. Citing a .S. Treasury Department audit report, the Journal also reported:

“The IRS paid out $9.1 million to 1,295 people who were in jail at the time they said they bought a home, and 241 of those prisoners were serving life sentences, according to the report from the Treasury Inspector General for Tax Administration, which monitors the Internal Revenue Service. On average, that's slightly more than $7,000 per prisoner.

“Another $17.6 million went to 2,555 people who bought their homes before the tax credit became law--averaging out to about $6,890 per person.”

Two cases warrant special notice, though. In one case, 67 separate taxpayers claimed the credit on the same house. In a second noteworthy case, the auditors also found 87 IRS employees who filed fraudulent claims in 2008. Through February 2010, the Journal reported that 1.8 million taxpayers received $12.6 billion through the home-buyer credit.

A blogger at the NY Post adds:

“The IRS is set to get a new crop of 16,000 employees to implement Obamacare. Scary to think that the folks already working there are doing such a poor job that the agency is getting even more personnel.”

HT American Thinker

June 25, 2010

Accountability and the Metro Board

On Tuesday, June 22, the Washington Post’s Metro section featured a story headlined, “Few gains in safety since Metro crash.” The reporter, Ann Tyson, wrote the following lede paragraph:

“A year after the deadliest accident in Metro’s history, the transit authority's safety record has worsened, and officials acknowledge that there has been too little progress.”

That followed a story on June 17 in which two Post reporters wrote:

“Virginia Gov. Robert F. McDonnell's administration threatened Wednesday to unravel a $1.5 billion federal funding plan for Metro unless the state gets two members on the agency's board of directors.

“The governor's transportation chief said McDonnell (R) wants more accountability for an investment that would cover more than half of Virginia's contribution to Metro. The state and local jurisdictions both provide funding.”

That and another story the following day elicited a letter to the editor in the June 24 Washington Post by two Virginia members of the WMATA board of directors, including Arlington County Board member Chris Zimmerman. In the opinion piece, Zimmerman and Catherine Hudgins claimed, “The state should not break the promise (to provide $50 million annually to WMATA) made to its residents and regional partners.” All of this came after two federal representatives were named to the WMATA board in January “in an urgent bid to strengthen oversight of the troubled transit agency.”

Post reporter Anita Kumar has been kept busy with the back and forth at her Virginia Politics blog, first noting that the Northern Virginia Transportation Alliance was supporting Gov. McDonnell in his effort to add statewide appointees to the Metro board. Later she reported that Virginia had committed money to Metro. Finally, today, she reports that Metro acknowledges the committed funds, but the timing is uncertain.

Why am I writing all this? Because through County Board member Chris Zimmerman, Arlington taxpayers are  supposedly represented on the Metro board. However, as the Post reported on Tuesday, Metro’s safety record “has worsened” since the Red Line crash, which killed nine people, one year ago this week.

Let me also add that "net tax support" for Metro has increased 162% since 2000, according to the county’s FY 2009 Comprehensive Annual Financial Report (CAFR), available at the Department of Management and Finance’s webpage. That is significant because overall county spending over the same period has only increased 76.5%. In addition, the County Manager’s proposed FY 2011 budget would increase net tax support to 22.0 million, an increase of 7% from FY 2010. In FY 2009, net tax support was $18.4 million. Finally, on June 15, “The Arlington County Board committed to funding $121.6 million of the Washington Metropolitan Area Transit Authority’s six-year Capital Improvement Plan,” according to a county press release.

So what exactly are county taxpayers getting for all the millions of dollars dumped into the Metro system? If safety is not “priority 1,” what is? If safety has only gotten worse since the worst accident, as the Post reports, what has Arlington's Metro board member done to improve safety? Seems Virginia’s Gov. Bob McDonnell is spot on in wanting more accountability.

June 24, 2010

Kudos to Arlington Connection Reporter

Congratulations to Arlington Connection reporter Michael Lee Pope for his story on county spending in the June 23-29, 2010 issue of the Connection. Of special note is that his source for the article is the Virginia Auditor of Public Account’s “Comparative Report of Local Government Revenues and Expenditures.” To the best of our knowledge, it is the first time that we know of that the data in the Virginia APA's “comparative report” is the primary focus for a news report on local government spending.

Although the story’s title suggests the story involves welfare story, that is not the case. Rather, the story revolves around the below graph from the story, which shows whether Alexandria, Arlington, or Fairfax County spends more per capita for the various categories of local government. The graph below does not provide the dollar amounts spent, but does indicate the relative spending for each category. Pope explains the differences this way:

“Because Fairfax County enjoys a considerable economy of scale in terms of population, its per capita spending levels tend to be smaller than mid-size communities such as Arlington and Alexandria. And while Arlington and Alexandria tend to be similar in size and demographics, spending priorities between the two Northern Virginia comminutes highlight differences. For example, Arlington spends more on firefighters while Alexandria spends more on police.”

 

The dollar amounts for each category are available at the Commonwealth of Virginia’s Auditor of Public Account’s website for the “Comparative Report of Local Government Revenues and Expenditures.” You can obtain a larger version of the graph by using the link to the Arlington Connection at the top to access the story.

Once again, congratulations to Michael Lee Pope of the Arlington Connection.

June 23, 2010

Black Holes and Launching Pigs

Citizens Against Government Waste (CAGW) named Sen. Richard Shelby (R-Alabama) it’s June 2010 Porker of the Month. The award is a “dubious honor” for politicians or government officials “who have shown a blatant disregard for the interests of taxpayers, according to a CAGW press release.

Shelby is Ranking Member of the Senate Appropriations Subcommittee on Commerce, Justice and Science, and was named “for blocking the Obama administration’s attempts to eliminate funding for the Constellation program, a National Aeronautics and Space Administration (NASA) program which is chronically behind schedule and over budget.” The Constellation program was initiated under former President George W. Bush, and would be “NASA’s first major foray back into space.” CAGW points out, though:

“. . . However, the Government Accountability Office (GAO) has criticized NASA’s management of the program, saying that it “is still struggling to develop a solid business case - including firm requirements, mature technologies, a knowledge-based acquisition strategy, a realistic cost estimate, and sufficient funding and time - needed to justify moving the Constellation program forward into the implementation phase…NASA estimates that Ares I and Orion represent up to $49 billion of the over $97 billion estimated to be spent on the Constellation program through 2020 . . . .”

CAGW explains awarding the dubious honor this way:

“For launching pigs into space and contributing to the black hole of deficit spending, CAGW names Sen. Richard Shelby its June 2010 Porker of the Month.”

CAGW has joined with Reason.tv to co-produce this Porker of the Month video series. You can see it at either Big Government or Reason.com. Then take a few moments to call Sen. Shelby’s office (202-224-5744) to voice your opinion about the Constellation program.

June 22, 2010

What Do Americans Think About Taxes?

Karlyn Bowman, a senior fellow at the American Enterprise Institute where she studies public opinion and demographics, writes about the public’s views of taxes in articles that have also appeared in Tax Notes, which is published by Tax Analysts.

In April 2009, she wrote, “Today, Americans appear comfortable with, or resigned to, the level of federal income taxes they pay . . . Americans are generally skeptical of politicians tax promises, but Democrats have made gains on taxes,” She goes on:

“Americans aren’t very knowledgeable about progressivity, but they have consistent notions of the maximum amount people should pay. Trend questions provide little evidence that Americans are more concerned about inequality than they were in the late 1970s, although a few recent questions suggest that concern may be on the rise. At this early stage in his presidency, Americans, although deeply skeptical of politicians tax promises, have high hopes that President Obama will deliver a middle -income tax cut. The political coloration of the issue has changed also, and the antitax banner Republicans unfurled in the late 1970s and early 1980s is now tattered. Democrats have made gains on the tax issue as the Republican Party has become less popular. Finally, the political urgency of the tax issue has diminished.”

A year later, on May 24, 2010, she takes a look at how “have attitudes about taxes changes since President Obama took office? The president’s ratings have dropped, and Republicans have gained some ground on the issue. But cutting taxes isn’t a top priority for the public right now. Concerns about the deficit are swelling.” She does say, “Most of what I wrote holds up today.” However, she adds:

“In an early April 2010 poll, 48 percent of those surveyed told Gallup interviewers that their federal income taxes were too high, but almost as many, 45 percent, said they were about right. In response to a slightly different question in March, 50 percent told Pew Research Center interviewers that they paid about the right amount "considering what you get from the federal government," with 43 percent saying they paid too much.

“There has also been little or no change in perceptions of fairness. Sixty-two percent told CBS News/The New York Times interviewers in early April 2010 that they regarded the income tax they would pay this year as fair. Even 52 percent of self-identified tea party supporters gave that response. Few pollsters ask questions about progressivity, but in a Rasmussen poll from April, 75 percent said the average American should pay no more than 20 percent of his income in total taxes, a figure roughly in line with other surveys on the subject. There is little evidence that concern about inequality is growing, but that is not a subject pollsters take up very often.

“The changes we have seen in tax attitudes in the past year involve Obama and the Republicans. Concern about the deficit has risen, which has affected attitudes toward potential tax changes that might be made to address it.”

Take a few minutes, and open the Adobe files to read Ms. Bowman’s complete articles, which she wrote for Tax Notes. They are rich with useful information. Especially interesting is the conclusion in the May 2010 article, where she writes:

“In the last year, attitudes on taxes themselves have changed very little. What has changed is Obama’s standing on the issue. He has clearly lost substantial ground on the perception of his handling of taxes. Whatever the reality, most Americans do not believe their taxes have gone down in the past year. What may be worse from the administration’s point of view, most people expect them to go up in the future. Public concern about the deficit is growing in virtually every poll that asks about it, and Obama is getting some of the lowest marks of his presidency for addressing it. Politicians need to be aware of what Americans are saying about ways to deal with the deficit, although the answers people give do not make solutions obvious.”

June 21, 2010

How Much Does It Cost To Save a Squirrel?

ABC News reported last Thursday that Arizona “is spending $1.25 million to build bridges for endangered squirrels over a mountain road so they don't become roadkill and then monitor their health.” The news report adds:

“The Federal Highway Administration grant (that) will be used to build rope bridges over the lone road through the squirrels' habitat, according to Arizona Department of Transportation Community Relations Director Timothy Tait. The DOT plans to install 41 of the "canopy tunnel crossings" at a cost of $400,000.

“Another $160,000 will be spent on cameras to monitor the bridges, and the rest of the money will fund a project to monitor the rodents.”

The cost per squirrel came to $5,000. (emphasis added) However, after news reports, ABC News reported the following day, “Arizona abruptly canceled plans today to spend $1.25 million to build bridges for a colony of 250 squirrels.”

The city manager of a nearby town said people there were “bewildered” by the proposed spending. Seems more like the transportation officials in Arizona and the FHA who approved use of transportation funds to build “squirrel bridges” are the ones who are bewildered. Or perhaps the environmentalists who lobbied for such legislation, or the politicians who voted for the legislation are the ones who are bewildered? Or just confused?

HT Tax Foundation’s Tax Policy Blog.

June 20, 2010

Give Them The Money, And They Will Spend It

In this case, it’s the Arlington Public Schools (APS).

We’ve growled many times about the high cost of the Arlington County Public Schools, e.g., most recently here, here, and here. And we growled on March 19, 2010 about the “you scratch my back, I’ll scratch yours” arrangement between the two Boards known as the Revenue Sharing Agreement.

However, it’s rare for anyone with insider knowledge of Schools or County operations admitting that cost is the least of the bureaucrats priorities. In the case of the Schools, though, we came across the following gem on page 2 of the May 2010 “Year End Report of the Budget Advisory Commission.” The report is agenda item E-3 of the June 3, 2010 School Board meeting:

“During the development of the FY 2011 Budget there were many cost-saving discussions regarding less-favored programs and suggestions for cutting around the edges to enable lower-cost delivery of existing programs. When unexpected revenues materialized late in the budget process, however, many of these potential cost savings ideas were abandoned. However FY 2012, and potentially FY 2013, may be even more challenging than FY 2011 due to costs associated with employee compensation, OPEB and VRS, among other cost increases. Therefore, all potential cost savings should remain on the table and be considered.” (emphasis added)

The staff response, contained in a follow-on report, agenda item E-4 of the School Board’s June 3, 2010 meeting, to BAC said, “The Superintendent and staff are committed to continuing to explore all areas for possible efficiencies.”

Rather than see those cost savings in FY 2011, perhaps, staff expects to see bigger cost savings when APS undergoes the School Efficiency Review process managed and funded by the Virginia Department of Planning and Budget (DPB). For the record, ACTA has been urging APS to undergo a School Efficiency Review ever since they were instituted by U.S. Sen. Mark Warner (D) when he was governor.

June 19, 2010

Thought for the Day

"Once politics become a tug-of-war for shares in the income pie, decent government is impossible.”"

   ~ Friedrich A. Hayek

HT OnPower.org

June 18, 2010

Growth of Arlington County Debt Service

General government spending in the county grew from $558.1 million in FY 2000 to $958.0 million in FY 2009, or 76.5%. Debt service, i.e, the payment of principal and interest on  the county’s borrowing, however, grew by 90.0%, going from $43.9 million to $83.6 million. The numbers can be found in Table D-1, “General Governmental Expenditures by Functions,” on page 167 of the FY 2009 Comprehensive Annual Financial Report, which contains the county’s audited financial statements -- at the Department of Management & Finance’s webpage.

Another way of looking at the increase is on a per capita basis. In 2000, Arlington County’s population was 189,453, resulting in a per capita debt service of $232.13. Ten years late, the county estimates its population at 209,300. As a result, the per capita debt service is $399.30.

Table D-1 is part of the CAFR’s statistical section, and provides expenditures in ten categories. Of the ten categories of expenditures, only two grew faster than debt service, i.e., public works/environmental services, which grew at 156.3% and “contributions” to WMATA, which grew by 162.0%.

Will the 90.0% growth in spending for debt service over the ten-year period 2000 -2009 risk the county’s Triple A bond rating? Not likely, especially in the short-term. However, it’s sure something to consider in the polling both when voting on bond referenda.

June 17, 2010

IRS, the New Welfare Agency

The Tax Foundation’s Tax Policy blog reported yesterday that “millions pay no income or payroll taxes thanks to refundable credits.”

“In 2008, the IRS paid out over $70 billion in refundable credits to people who had no income tax liability. Congress's Joint Committee on Taxation recently produced some estimates on the number of tax filers who receive refundable credits larger than what they pay in payroll taxes. This is an important contribution to the debate over the use of credits because in any discussion about the record number of non-payers, we frequently hear the refrain that "well, they do at least pay FICA taxes."

“In a May 28, 2010 letter to Representative Dave Camp and Senator Kent Conrad, JCT reports that between 2000 and 2006 the number of returns with refundable credits in excess of the employee's share of payroll taxes increased from 11.8 million to 16.1 million. In 2009 and 2010, those figures jumped to 23 million because of such things as the making work pay credit and the lowering of the income threshold for determining the refundable portion of the child credit to $3,000.

“JCT projects that the number of returns with refundable credits exceeding the employee's share of payroll taxes will hover between 14 million and 15 million for the next ten years.”

Scott Hodge, president of the Tax Foundation, points out the “two elements to this story:

“The obvious first one is the increased role of the IRS in delivering what are essentially welfare benefits to people who don't pay income taxes. Whatever we think of the IRS, this is generally not a function it should play. As I've said repeatedly, too many people see April 15th as payday, not Tax Day.
“Lastly, not only are these people not paying any income taxes to fund the general cost of government from which they benefit, but they are effectively not paying into the Social Security or Medicare systems for which they will benefit in retirement. That's a free ride in any book.” (emphasis added)

We couldn't agree more. 

June 16, 2010

Taxpayers Lobbying Against Themselves

On Saturday, the Wall Street Journal reported that President Obama “sent a letter to lawmakers calling for swift action to help small businesses and state and local governments facing budget cuts following the economic downturn. He didn't specify in the letter where funds would come from, but he said he had called for a three-year freeze in non-security discretionary spending.” The newspaper adds:

“The letter said budget cuts at the state and local levels were leading to "massive layoffs of teachers, police and firefighters," and that 84,000 jobs in state and local governments had already been lost this year. Mr. Obama said "hundreds of thousands of additional jobs" could be lost if action wasn't taken, according to the letter.

“The issue poses a quandary for policymakers, who want to boost the economy and create more jobs ahead of midterm elections in November, but who worry about increasing the federal government's record budget deficits. Polls have suggested that voters are concerned about both issues.”

On Monday, Citizens Against Government Waste (CAGW) “slammed” President Obama’s proposal for funds that “would be used to avoid layoffs of teachers, police, and firefighters, as well as stimulate local economies.” According to the CAGW press said:

“Unfortunately, taxpayers have seen this type of misguided and ineffective spending before and found out the hard way that it doesn’t stimulate the economy,” said CAGW President Tom Schatz.  “The year-and-a-half old $862 billion stimulus bill has been an abysmal failure, so it makes no sense whatsoever to repeat the pattern.  The President promised back then that 90 percent of the jobs created would be in the private sector and that unemployment would drop to 8 percent.  Yet, the only positive job creation has been in the public sector, and private-sector unemployment has hovered at 9.7 percent.  Taxpayers’ wallets have been pilfered to fund a litany of excessively wasteful stimulus spending projects, such as $3.4 million for a turtle crossing in Florida, $1.15 million to replace an old guardrail around an empty lake in Oklahoma, and $21,000 to resurface tennis courts in Livingston, Montana.  The President has touted the stimulus as part of the effort to get the country out of the Great Recession, but all it has done is create the Great Debt.”

Today, Tim Carney explains in his Washington Examiner column just why Congress and the Obama administration look so favorably on the public employee unions. According to Carney:

“Government employee unions — through their employees and political action committees — have contributed more money to congressional candidates this election than all the PACs, executives and employees of the entire oil industry, according to data from the Center for Responsive Politics. Because 92 percent of public-employee union money goes to Democrats, President Obama’s party has raised more money from these unions this cycle than Republicans have raised from Wall Street.

“Along the same lines, local and state governments have spent more on lobbying this year than the health insurance industry or defense contractors.

“By any measure, local and state governments and public sector unions are an entrenched special interest. By any measure, they are also the prime beneficiary of President Obama’s latest $50 billion spending proposal.

“Obama’s proposed $50 billion aid package for local and state governments is yet another instance of Obama’s reform talk evaporating in the light of concrete proposals and real dollar amounts. Whatever the supposed virtues of this huge handout to profligate politicians and bloated bureaucracies, it is, objectively, a proposed $50 billion transfer of wealth from ordinary taxpayers to a politically connected special interest that overwhelmingly and aggressively favors the party in power.

“Public employee unions’ political activism and Democratic partisanship have been well documented. The PAC of the American Federation of State, County, and Municipal Employees had, through the end of April, already spent $10.2 million this election cycle, between contributions to candidates and independent expenditures. That’s three times as much as the PAC spending of Goldman Sachs, JP Morgan, Morgan Stanley, Bank of America and Wells Fargo combined.

“The American Federation of Teachers has also spent more this election — $7.1 million — than any business PAC.

According to Carney, here's the bottom line:

"Local government officials are using your money to hire former government officials to ask current federal officials to give local governments more federal money — and future taxpayers will foot the bill for this whole racket." (emphasis added)

Tad deHaven adds at Cato@Liberty:

"Of more fundamental concern is the continued relegation of the states to being administrative outposts of the federal government. The employment of firefighters, teachers, and police officers is an issue for the states to be concerned with. However, so long as the federal government continues to overstep its constitutional bounds, the states will have little incentive to tackle issues like excessive employee compensation. State and local policymakers can avoid the hassle of taking on the government employee unions by cashing Uncle Sam’s checks instead."

June 15, 2010

Thought for the Day

“A citizen who casts his ballot without having to the best of his abilities studied as much economics as he can fails in his civic duties.”

   ~ Ludwig von Mises

HT The Beacon, Independent Institute

June 14, 2010

Minimum Wages and Their Impact on Jobs

According to today’s Mansfield, Ohio “News Journal,” unemployment for young people is at its worst since 1947. That’s not to mention the current unemployment rate of 9.7%, which the Wall Street Journal described last Thursday as “still persistently high.”

If you’ve been wondering how the minimum wage is a “job-killer,” a new video from the Center for Freedom and Prosperity “explains their job-killing impact. Orphe Divounguy, a graduate student from the University of Southampton in England, explains that minimum wage laws hinder the ability of low-skilled workers to get jobs. “how the minimum wage hurts young workers and others with low skill levels.”

The video’s executive summary reads:

“Minimum wage laws seem like a good idea, but arbitrarily mandating a certain wage can have terrible consequences. Business are not charities, so if the minimum wage is set above the market level, this eliminates job opportunities - particularly for the less fortunate members of society. Since employees and employers should have freedom of contract, the right minimum wage is zero.”

To watch the "Job-Killing Impact of the Minimum Wage" video via You Tube, click here.

To view other CF&P video, visit the click-on the CF&P website.

June 13, 2010

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, Economic Journalist

HT OnPower.org

June 12, 2010

The Nonsense of “Green Jobs”

Columnist Byron York digs out the details of just how much nonsense is involved in so-called “green jobs” in yesterday’s Washington Examiner. A Google “advanced search” for "green jobs" resulted in 2.4 million hits, for example.

Although York reports the Department of Labor has announced hundreds of millions of dollars in “green job” training grants, there is still plenty of taxpayer money to be shoveled out the door for green jobs since the February 2009 “stimulus bill” “contains more than $80 billion in clean energy funding to promote economic recovery and develop clean energy jobs.” After shoveling all that hard-earned taxpayer money out the door, York writes the Bureau of Labor Statistics at the Department of Labor has decided to figure out what a “green job” is, saying:

“Buried deep inside a federal newsletter on March 16 was something called a "notice of solicitation of comments" from the Bureau of Labor Statistics at the Department of Labor.

"BLS is responsible for developing and implementing the collection of new data on green jobs," said the note in the Federal Register, which is widely read by government bureaucrats and almost never seen by the general public. But the notice said there is "no widely accepted standard definition of 'green jobs.'" To help find that definition, the Labor Department asked that readers send in suggestions.

“The notice came only after the department scoured studies from government, academia, and business in search of a definition. "The common thread through the studies and discussions is that green jobs are jobs related to preserving or restoring the environment," the notice said. Duh! Beyond that, a precise definition has eluded Labor Department officials.”

It doesn’t matter the Department of Labor can’t define a “green job.” York writes:

“Meanwhile . . . the Labor Department is assuring Congress that everything is going gangbusters on the green job front. "The demand for green job training opportunities is enormous," (Labor Secretary Hilda) Solis told a Senate committee in March, adding that the Labor Department had by that time already spent $500 million on green jobs, with more to come. "The department has been unable to keep pace with the record number of applications for grants."

As always, the productive sector subsidizing the unproductive section according to the mandates of the political elite. Sheesh!

June 11, 2010

Who knew the Arlington County Board had priorities?

Arlington County taxpayers might be tempted to think the five panjandrums on the Arlington County Board were fiscally responsiblel because of their penchant to use such words and phrases as sustainability and fiscal responsibility. You would be wrong. The lede in a story in this morning's online Arlington Sun Gazette begins this way:

“A few weeks from now, the Arlington County government is going to reduce library hours systemwide, just one way to contend with the “budget crisis” that county leaders say exists.

“And yet ... as we report today ... that same county government has now spent nearly $750,000 on its lawsuit against the federal and state governments on the high-occupancy-toll (HOT) lanes on Interstates 395 and 95.

“Yep, three-quarters of a million smackeroonies paid out to a D.C. law firm to handle the case. All in the midst of the aforementioned “‘budget crisis.’”

McCaffrey closes the piece, saying:

“Arlington officials increasingly are isolated on the HOT-lanes issue, but seem not to either know and/or care. They show no intention of cutting their losses and wriggling out of the web they have spun.”

Sheesh! You can use the “Contact the County Board” link in the right column to contact the Arlington County Board.

June 10, 2010

Thought for the Day

"There are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations."

    ~ James Madison (speech to the Virginia Ratifying Convention,16 June 1788)

HT PatriotPost.US

June 09, 2010

Thought for the Day

"Taxation: how the sheep are shorn."

    ~ Edward Albee, Author and Environmentalism

HT OnPower.org

June 08, 2010

Thought for the Day

"We are losing what’s made our country great. Instead of moving toward greater liberty, we’re moving toward greater government control of our lives."

   ~ Walter E. Williams

HT Townhall.com 10/21/10 Column

June 07, 2010

Thought for the Day

"From the nature of man, we may be sure that those who have power in their hands ... will always, when they can ... increase it."

   ~ George Mason

HT American Thinker

June 06, 2010

Cashing in on Porkulus?

A Pell Grant “is a type of post-secondary, educational federal grant program sponsored by the U.S. Department of Education. It is named after U.S. Senator Claiborne Pell of Rhode Island, according to Wikipedia. For 2009- 2010, the maximum award amount is $5,350.

A story in today’s Atlanta Journal-Constitution reports that “for-profit colleges reap big benefit from stimulus.” The paper reports that last February's stimulus bill, i.e., the American Recovery and Reinvestment Act, included $17.1 billion in funding for Pell grants with about $9.8 billion having so far been distributed. However, the story’s lede questions how a quarter of the money has been spent:

“Massage and beauty schools, online universities and other for-profit colleges in Georgia and across the nation are cashing in on federal stimulus spending, collecting $2.2 billion in tuition grants for low-income students, public records show.”

The Journal-Constitution lays out the arguments of the two sides for these schools as follows:

“Critics, however, question the quality of some for-profit schools and the wisdom of sending so much taxpayer-funded assistance to them. They point to statistics that show such schools generally have higher percentages of students defaulting on government loans compared to public and nonprofit schools.

“Profit-making schools are collecting a growing share of federal aid. In fiscal year 2008, they received more than $16 billion in federal loans, grants and other aid. Their share of Pell grants increased from 16 percent in 2007 to 21 percent last fiscal year, when the stimulus money started to flow.

“Proponents say some of the arguments against for-profit schools are elitist. Proprietary schools, supporter say, are meeting the top goal of the stimulus program by preparing people for work. They say they also serve as an alternative for people who can’t — or don’t want to — attend traditional community colleges or four-year schools, some of which have crowded classrooms.

“The reality is that without the high-quality education we provide and the availability of Pell grants, many of our students might not have access to the skills-based, post-secondary education so critical to our nation’s economic recovery and growth,” said Jeff Leshay, a spokesman for Illinois-based Career Education Corp., which owns several for-profit schools that are receiving stimulus funds and have campuses in Georgia and other states.”

To paraphrase Fox News, we report, you decide.

June 05, 2010

$13 Trillion, and Climbing!

The mainstream media was besides itself as the national debt passed the $13 trillion mark this past week. CBS’s White House correspondent provided his readers a bit of a perspective, noting that “It would buy 16,270,337,922 top-of-the-line iPads, 34,210,526 Rolls Royce Phantoms, or 83 Googles at its current market cap.”

To be exact, the debt on Tuesday, June 2, was almost $12.996 trillion, according to ABC News. And as of 7:00 PM, June 5, 2010, according to the U.S. Debt Clock, the debt stands at just over $13.046 trillion, or almost $$42,162 per citizen.

At the Christian Science Monitor, Economist Mom explains that while it is possible to pay off the national debt “to do that . . . would be stupid; unless it were done very progressively such that only old and idle wealth were confiscated (rather than income), it would cripple the economy." Economist Mom goes on to say the nation does indeed need to get:

“ . . . net debt to GDP stabilized at some level not too far from where we are now–which is 60 percent of GDP–but not because that level of debt is anything that special or significant or sufficient for fiscal sustainability, but because to stabilize at the level of debt where we’re at now, we’ll have to start changing policy paths now–emphasis on policy and paths and now. And the sooner we start the better, or else we’ll be perpetually counting on the economically foolish and grossly unfair idea that future generations will have to eliminate all our debt “tomorrow.”

At the Wall Street Journal’s MarketWatch, Kurt Brouwer points out that current options are limited, noting:

“Our current problem is that the economy is still very sluggish.  We are no longer in a recession, but we face serious impediments to strong economic growth such as high unemployment, a stagnant real estate sector and gloom in the small business sector.  Cutting back on government spending is very difficult now.  Unfortunately, government at every level went wild on spending during the boom times, so now we have so much accumulated debt that our options are limited.”

Finally, in writing yesterday at Minyanville that U.S. debt is out of control, Robert Barone says:

“All of the public debt was originated by governments and most of the private debt by banks or other financial institutions. In feudal times, serfs owed a significant portion of their toil to their lords. Have times really changed? The lords are now the politicians and "Too Big to Fail" bankers. Many ordinary people are serfs, highly indebted either voluntarily (private debt) or involuntarily (public debt). Looking at debt in this way helps to explain the unholy alliance between Washington and Wall Street (see The Unholy Washington-Wall Street Alliance) and why the "Too Big to Fail" and Washington politicians get richer and richer at the public's expense.” (emphasis added)

For the current amount of the national debt, refer to USDebtClock.org. To fight back, visit DefeattheDebt.con. For more information about the public debt, see the reports webpage of the Treasury Department's Bureau of the Public Debt.

June 04, 2010

Federal Income Tax Burden Varies Among States

A new study (Fiscal Fact No. 231, June 2, 2010) released earlier this week by the Tax Foundation shows the nation's tax system has become more progressive. They write:

“Recently released IRS data for 2008 shows how progressive the U.S. income tax system has become. Taxpayers earning under $50,000 collectively earned 22 percent of the total adjusted gross income (AGI), but paid just 8 percent of all income taxes at an effective tax rate of 5 percent. Meanwhile, taxpayers earning over $200,000 collectively earned 29 percent of total AGI but paid more than half of all income taxes at an effective rate of 22 percent.

“While the national figures are quite progressive, the distribution of federal income taxes varies quite widely for each state. Some states have a fairly even distribution of federal income tax liability while other states have a far more progressive distribution than the national average.”

According to the Tax Foundation, Connecticut taxpayers have the most progressive distribution of federal income taxes:

“Taxpayers earning under $50,000 earned 13 percent of the AGI in the state, but paid 5 percent of the federal income taxes paid by all taxpayers in the state. By contrast, taxpayers earning over $200,000 earned 44 percent of the AGI, but paid 66 percent of the income taxes.”

The study says the state with “perhaps the flattest distribution” is West Virginia, followed by Maine. Other states having “low distribution” include Hawaii, Indiana, Iowa and Kentucky.

Virginia federal taxpayers earning under $50,000 collectively earned 19% of the total adjusted gross income (AGI), but paid just 7% of all income taxes at an effective tax rate of 5%. Meanwhile, taxpayers earning over $200,000 collectively earned 28% percent of total AGI and paid almost half of all income taxes at an effective rate of 22% percent, which places the Commonwealth near the U.S. averages.

The table in the study provides the statistics for each state so tell your friends to forward the study to their friends in other states.

June 03, 2010

Thought for the Day

"“The standard of living of the common man is higher in those countries which have the greatest number of wealthy entrepreneurs.”"

   ~ Ludwig von Mises, 1881-1973, Austrian Economist and Author

HT OnPower.org

June 02, 2010

Thought for the Day

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

   ~ Warren Buffett, American Investor

HT Op-ed, NY Times, October 17, 2008

June 01, 2010

Truth and ObamaCare

Seniors were recently sent a brochure from the federal Centers for Medicare & Medicaid Services (CMS) entitled “Medicare and the New Health Care Law -- What it Means for You” (CMS Product No. 11467 available in English and Spanish). Also on the front was the message: A Message from Kathleen Sebelius, Secretary of Health & Human Services.

As the editorial in the Washington Examiner’s weekend edition explained:

“How does the brochure misrepresent the facts about Obamacare? First, the brochure claims that under the new law, "the guaranteed Medicare benefits you currently receive will remain the same." But the CMS' own experts said in a report earlier this year that the new law's cuts in Medicare spending may push as many as 15 percent of hospitals and other institutional providers into the red, "possibly jeopardizing access" to needed care for millions of seniors. There is no way that current Medicare benefits will remain the same if one of every seven medical providers is no longer profitable.

“Second, the brochure claims Obamacare includes "improvements to Medicare Advantage," but says nothing about the fact that the new law includes at least $130 billion in spending cuts for that program. Only in Obamaworld does a $130 billion spending cut in a program for millions of seniors qualify as an "improvement."

Sen. Mitch McConnell (R-Kentucky) took off after the CMS brochure in a floor speech last week, including:

“Another method was the stifling of critics, as was done by the Department of Health and Human Services.

“I’ve spoken out repeatedly on the gag order HHS issued against private companies for doing nothing more than informing seniors about provisions of the bill that could affect their benefits.

“Well, now you can add another layer of outrage to that unfortunate chapter in this debate because just yesterday, I came across a recent flyer from the Department Health and Human Services that does the very thing the administration didn’t want private companies to do.

“The flyer purports to inform seniors about what the health care bill would mean for them.

“Much of it directly contradicts what the administration’s own experts have said about the law.

“And all this is bought and paid for by the American taxpayer.

“So this is a complete outrage, and it’s precisely the kind of thing Americans are so angry about at the moment.

“Here’s the federal government telling a private business it can’t communicate with its clients about important legislation, then doing the same thing itself, on the taxpayers’ dime.

“The administration’s own actuary at the Centers for Medicare and Medicaid Services says seniors who use Medicare Advantage will lose benefits as a result of this bill. Yet the flyer they’re putting out says nothing about this. Instead, it implies nothing will change for these seniors.

“But perhaps most egregious is the claim that a bill which cuts Medicare by half a trillion dollars will actually ‘preserve and strengthen’ Medicare.

“This is nothing short of government propaganda, paid for by the taxpayer.

Finally, the American Thinker's Rick Moran opines, "The administration can't seem to get around to telling the people the truth about what Obamacare means to them."