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July 31, 2011

Arlington County Accused Of Obstructionism

Scott McCaffrey reports in an  online Arlington Sun Gazette story today that Arlington County is being accused of obstructionism by the Northern Virginia Transportation Alliance. According to McCaffrey:

“The Northern Virginia Transportation Alliance wants state transportation dollars moved away from Arlington, to penalize the County Board for its efforts at blocking high-occupancy-toll (HOT) lanes on Interstate 395.

“Arlington cost us all - Arlington should pay,” the private advocacy organization said in a statement issued in late July. “It’s only fair. Why should other communities pay for Arlington’s action?”

“The alliance wants the Commonwealth Transportation Board to reduce the approximately $60 million in state funding proposed for Arlington roadway and transit projects over the next six years, and to decline to put any funding into the proposed Columbia Pike streetcar system.

“It’s unfortunate that Arlington residents would be harmed by such actions. However, bad decisions have bad consequences,” alliance officials said in a statement.”

Well, I must say, Arlington County taxpayers don’t need the NVTA to tell us about the bad consequences that result from the bad decisions of the Arlington County Board.

July 30, 2011

Explain This Tax-and-Spenders!

Liberals or progressives like to say that a ‘balanced’ approach is needed to resolve the nation’s deficit and debt problems, not to mention the current debt ceiling imbroglio. If only conservatives would just go along with demands that taxes be raised to balance demands for cuts in federal spending under a regime such as Cut, Cap and Balance. In addition, take the Cut, Cap and Balance Pledge.

If the out-of-control budget could be brought under control by raising taxes, then how do the “tax-and-spenders” explain that “federal spending is growing faster than federal revenue” or that "federal spending is outpacing inflation,” as depicted in the two charts below from the  Heritage Foundation’s 2011 Budget Chart Book?

First, federal spending vs. federal revenue. According to the depiction of the first chart below:

“Since 1965, spending has risen constantly. Federal revenues have dropped recently due to the economic recession, but spending has reached a record high.”

Federal Spending Is Growing Faster Than Federal Revenue

 

The second chart shows that federal spending is outpacing inflation. The depiction for the chart says:

“Prices of goods and services normally rise year to year, but federal spending has risen even faster. Although spending grew substantially after 9/11, less than half of the increase can be attributed to defense and homeland security spending.”

Federal Spending Is Outpacing Inflation

 

Take a few minutes to browse through the other charts from Heritage’s 2011 Budget Chart Book. You may find you understand the federal budget better than your Congressional representatives, and are able to better discuss the federal budget with your neighbors.

July 29, 2011

Quote of the Day

“Based on the history of the past few decades, voters have learned that politicians promising unspecified spending cuts should be treated with all the credibility of a six-year old boy caught with his hand in the cookie jar promising to be good for the rest of his life."

~ Scott Rasmussen

HT Column at Rasmussen Reports (tm)

July 28, 2011

Arlington County’s Bond Rating Faces Downgrade

Bloomberg News reported this afternoon the debt ceiling drama taking place at both ends of Pennsylvania Avenue in Washington, D.C. has spilled over into Northern Virginia and some other parts of the country. According to Bloomberg:

“Moody’s Investors Service placed 177 top-rated municipal-bond issuers with a combined $69 billion of debt outstanding on review for possible downgrades as it evaluates its Aaa rating of the U.S. government.

“The change affects 162 local governments in 31 states, 14 housing-finance programs and the University of Washington in Seattle, the company said today in a statement. All have high exposure to federal spending changes and market volatility, Moody’s said. The largest numbers of local issuers on review are in Virginia, with 15, and Massachusetts, with 14, Moody’s said.”

This is how Moody’s explains their move in the Bloomberg report:

“The ratings of these local governments, particularly those with a high economic dependence on federal activity, would be vulnerable to a downgrade of the U.S. government,” Matt Jones, a Moody’s senior vice president whose team covers local governments, said in the statement. The company also cited “sensitivity to deteriorating macroeconomic conditions and vulnerability to disruptions in the financial markets.”

To show that Arlington County’s enlightened leadership is still in place, the PR apparatchiks rushed out a press release announcing “Arlington financial fundamentals remain strong.” The press release went on to say:

“Arlington County’s economy and its overall financial picture remain strong, County Board Chairman Christopher Zimmerman said today, in response to Moody’s Investors Service decision to place 15 Aaa-rated Virginia localities – including all of Northern Virginia and Arlington County – on its “Creditwatch list” due to the impasse over federal debt limit. Zimmerman called on the federal government to protect states and localities from financial harm by immediately resolving its impasse over raising the debt limit.

“Moody’s action followed the ratings agency’s previous placement of the U.S. government’s debt rating – and that of the Commonwealth of Virginia -- on review for possible downgrade due to well-publicized issues relating to the federal debt limit. A total of 162 Aaa-rated communities in 31 states were put on Creditwatch today.”

The announcement by Moody’s provides a lesson for Arlington County taxpayers, however. The county’s panjandrums want voters to think it’s triple A bond rating is entirely the result of the enlighted manner in which the Arlington County Board manages and administers the county. Now we learn the county’s triple A bond rating is due to it’s geographical location. Unfortunately, it could be a very expensive lesson for Arlington taxpayers.

Not to worry, though, the press release says there are “no plans to sell bonds in the next  3-9 months.” But if a downgrade does occur, it could make some projects appreciably more expensive. For example, projects  just getting underway (construction of the new Wakefield High School) or on the drawing board (the trolley or the pools building at Long Bridge/North Tract).

UPDATE (7/30/11): An item by Scott McCaffrey posted a news item this morning in the Arlington Sun Gazette, that says the debt ceiling debate at both ends of Pennsylvania Avenue in the District "has Arlington, Fairfax officials hot under (the) collar." He then adds:

"The top elected officials in Arlington and Fairfax counties are expressing displeasure that congressional bickering over the federal debt ceiling is filtering down and could affect each county’s bond rating.

“To put it simply: Fairfax County does not have a debt problem, the federal government does,” Fairfax Board of Supervisors Chairman Sharon Bulova (D) harrumphed after her county government was notified it was among 162 communities in 31 states to be put on a “watch list” by Moody’s Investor Services."

July 27, 2011

The Cost of Wakefield H.S. Isn’t A Surprise, Either

This morning in the online Arlington Sun Gazette, Scott McCaffrey reports that “so far, no construction surprises” have occured in the building of the new Wakefield High School. McCaffrey writes:

“All is proceeding according to plans - no surprises to date,” said Linda Erdos, the school system’s assistant superintendent for school and community relations, as crews worked to level existing ballfields where the new 380,000-square-foot Wakefield will be constructed adjacent to the existing, 1950s-era school.

[ . . . ]

“School Board members in May approved an $88.4 million contract with Forrester Construction Co., which was the low bidder among seven firms seeking the project. The construction contract is part of an overall projected cost of $115 million for the new Wakefield, mostly funded by bonds approved by voters in 2008 and 2010.”

According to information from the Virginia Department of Education, however, there may may be a surprise, or not. During the 2010-2011 school year, three new high schools in Virginia were put under construction. The Annual Cost Data Report does show a couple of surprises, however, based upon at least two measures:

  • Wakefield High School -- building cost, $77,399,376; site cost, $11,000,623; total cost, $88,399,999; total square feet, 382,102; square feet/pupil, 175; total cost/square feet, $231.35; building only cost/square foot, $202.56; and total cost/pupil, $40,681.
  • NEW Clarke County High School -- building cost, $19,550,000; site cost, $3,750,000; total cost, $23,000,000; total square feet, 162,050; square feet/pupil, 183; total cost/square foot, $143,78; building only cost/square foot, $120.64; and total cost/pupil, $26,357.
  • Loudoun County HS-7 -- building cost, $40,996,000; site cost, $19,766,000; total cost, $60,762,000; total square feet, 275,574; square feet/pupil, 140; total cost/square feet, $220.49; building only cost/square foot, $148.77; and total cost/pupil, $31,080.

So on the basis of the building cost per sq. ft. and the total cost per pupil, the cost of the new Wakefield High School is far and away the highest of the three Virginia high schools put under construction during the 2010-2011 school year. Just wondering: what is it that the Arlington School Board actually do? It's obviously not oversight. Taxpayers should want to know!

Capital construction information for the Arlington Public Schools is available here, and for Wakefileld High School is here.

July 26, 2011

How Much Is The Interest On The National Debt?

 While the politicians in Washington attempt to resolve how to raise the debt ceiling, it's worth considering just how much Americans spend on the national debt. Following is a chart from the Heritage Foundation's 2011 Budget Chart Book. It shows that:

"In 2010, the U.S. spent more on interest on the national debt than it spent on many federal departments, including Education and Veterans Affairs."

The chart below from the Heritage Foundation's 2011 Budget Chart Book is in billions of dollars, and shows that in just one year, the federal government spends on interest on the national debt than it does funding most programs.

          

Imagine how the interest expense will grow if inflation heats up!

July 25, 2011

A Debt Ceiling And Budget Process Tutorial

Russ Roberts, one of two George Mason University economic professors who blog at Cafe Hayek, points to a podcast that should interest Growls readers. Roberts writes:

“This week’s EconTalk is with Keith Hennessey talking about the debt ceiling, the budget process, and what’s going on behind closed doors. He is very clear and I learned a lot talking to him. You will, too.”

In addition to a list of reading “assignments,” here’s more information on Mr. Hennessey and why you might find the podcast of interest:

“Keith Hennessey of Stanford University's Hoover Institution talks with EconTalk host Russ Roberts about the debt ceiling and the budget process. Hennessey, who worked for Senate Majority Leader Trent Lott on budget issues in the late 1990s, explains the politics of the debt ceiling and the budget process. Using his past experience as a staffer, Hennessey gives those of us on the outside a window into what is actually going on in the hallways, who has power, and how information flows up and down in the chain of constituents, members, party leaders. The conversation closes with Hennessey's best guess of which outcomes of the current negotiations are most likely and why.”

EconTalk includes a link to another podcast -- an interview with economics professor John Taylor on fiscal and monetary policy, also hosted by Russ Roberts.

The first podcast is an hour and 11 minutes, and the second is 59 minutes. After listening to them, you may know more than some members of Congress.

July 24, 2011

An Update on Cut, Cap and Balance

On June 17, we growled, and urged Senators Webb and Warner to support the Cut, Cap, and Balance initiative that was passed by the House of Representatives in order to gain control of the federal budget. Since then, we’ve growled because neither Senator Mark Warner (July 6, 2011) nor Senator Jim Webb (July 7, 2011) told your scribe in writing they support Cut, Cap and Balance (CCB).

Last Friday, July 22, 2011, Senate Majority Leader Harry Reid (D-Nevada) brought the measure up in order to kill it through a motion to table; the vote to kill CCB was 51-46 in a strictly partisan vote (Senate Roll Call No. 116), and included the votes of Virginia Senators Webb and Warner to table the bill. See here for comments on Senator Reid's rant about the CCB legislation.

Jeff Dircksen of the National Taxpayers Union blogged on Friday at NTU’s Government Bytes blog: “While this result might not have been much of a surprise to anyone, a quick look at the fiscal record of Senators from the previous Congress suggests that the outcome was determined before the vote was even taken.” He goes on to explain:

“As they say in the financial industry, past performance is not an indication of future behavior, but a review of BillTally data for those Senators who served in the Senate during the 111th Congress shows that they might not have been inclined to support Cut, Cap, and Balance.  Eighty-three Senators who served in the previous Congress, and who were included in the BillTally data set for that Congress, are still serving.  (NTUF's BillTally program computes a net legislative spending agenda for each Member of Congress by analyzing the costs – and savings – of the bills that Members sponsor and cosponsor.)

“Those who voted to consider Cut, Cap, and Balance had, on average, a net spending agenda of $10.3 billion in the previous Congress.  Those who voted to kill Cut, Cap, and Balance had, on average, a net spending agenda of $214.9 billion.  The chart below breaks out net spending agendas by party.”

In addition at Government Bytes on Friday, Brandon Greife cites CNN polling data that shows “Americans are ‘sold’ on Cut, Cap and Balance, not tax hikes” despite presidential assertions to the contrary.

Finally, in a press release on Friday, Pete Sepp, NTU’s executive vice president, said the “Senate vote will not end Cut, Cap, and Balance debate,” which is “the only comprehensive blueprint to raise the federal debt ceiling and bring government spending under control for the long-term.” Added Andrew Moylan:

“The Senate's action today is not an epitaph for Cut, Cap, and Balance, but rather an indication that an honest debate is still within reach . . . The fact is, this bill remains the only debt plan of any kind to pass the House, and is just a few votes shy of getting the consideration it deserves in the upper chamber. It is also the only legislative proposal that provides for an increase in the federal debt while delivering the reforms to federal programs and budgeting procedures that recent polls – such as CNN’s – show the public overwhelmingly supports . . . As much as opponents would like to bury Cut, Cap, and Balance, this plan is alive and well with the American people because they know it is still the one path that will guide the nation's finances back to sustainability -- and guide our economy back to prosperity."

Thanks NTU for the update, Growls readers are invited to regularly visit the National Taxpayers Union website to keep up to date on tax issues.

July 23, 2011

A Need To Revise A Shaky Business Model?

Growls fans know your scribe is a stalwart fan of the Mark Steyn fan club (here, here and here), both of his book, America Alone: The End of the World as We Know It, and his syndicated weekly columns at Investor’s Business Daily (IBD) as well as his guest host appearances for Rush Limbaugh.

In this weekend’s column at (IBD), he writes about the Western world’s shaky business model, paying particular attention to the efforts of the political class in Washington to resolve the nation’s deficit and debt woes. Mark Steyn fans will consider it a “must read,” but the following may be the most memorable quote:

"The ruling party in Washington is wedded to the principle that an 80-year-old social program is inviolable. That's like Blockbuster insisting in 2011 that there's no problem with its business model for rentals of silent movies with live orchestral accompaniment.

"To be sure, there are some problems parking the musicians' bus in residential streets, but nothing that can't be worked out."

Mr. Steyn, thank you for a memorable column. Be sure to keep your eye out for for what is sure to be another blockbuster, “After America: Get Ready for Armageddon, due out in August."

July 22, 2011

The Lesson of California's Big Creek Project

In a column posted yesterday at Real Clear Politics, Victor Davis Hanson points out that “even as American infrastructure is crumbling, the private sector is moribund, and national timidity prevents any new large, visionary construction. Prior generations gave us space projects; ours is about ending them. Boeing once ruled the skies; now the government sues to stop Boeing from opening a new plant.

He goes on to say that “it was not always so,” and goes into detail about the Big Creek Hydroelectric Project in California’s San Joaquin valley, noting that it was the nation’s first hydroelectricity project. Hanson writes:

“Industrialist and entrepreneur Henry Huntington conceived the gargantuan effort, begun in 1911. In just 157 days, a supply railroad up the mountains was built with picks, shovels and horse-drawn scrapers by thousands of workers struggling at over 6,000 feet in elevation. In just two years, electricity was flowing southward from a new powerhouse generating unit at Big Creek that harnessed San Joaquin River water released from the new Huntington Lake reservoir.

“Huntington's dream project -- eventually expanded, and today managed by the Southern California Edison power company -- would eventually encompass six major lakes, 27 dams, and 24 powerhouse generating units that repeatedly capture the descending High Sierra water to generate over 1,000 megawatts of clean electricity.

“The interconnected lakes store precious water for 1 million acres of irrigated California farmland thousands of feet below. The thriving High Sierra sailing, sports and tourist industry grew up around the new lakes and roads. Far from destroying the environment, the Big Creek project created beautiful alpine reservoirs and gave millions of middle-class Californians access for the first time to the beauty of the Sierra Nevada Mountains. Few appreciate that the entire project was built with private funds.”

Hanson laments that a similarly sized project “(q)uite simply . . . could not be built today in the United States.” Why? According to Hanson:

“Environmentalists would claim that the pristine nature of the San Joaquin River would be unnecessarily altered, citing a newly discovered colony of spotted newts or dappled dragonflies in the way of the proposed penstocks. Unions would demand blanket representation without elections -- and every imaginable compensation for such hazardous duty. Workers would apply for stress-related disability benefits given the dizzying heights and the dank subterranean mining. Government regulators and inspectors would outnumber project engineers. Private entrepreneurs world never risk such a chancy investment without ironclad government guarantees of profits despite enormous cost overruns. And the public would be as skeptical of the risk as they would be eager to enjoy its dividends when completed.”

So, what is the lesson of Big Creek? According to Hanson:

'We should remember the lesson of Henry Huntington's Big Creek Project, started 100 years ago this year, as we let rich irrigated farm acreage lay idle and pass on exploiting new oil and gas fields -- preferring to argue endlessly over how to redistribute our inherited but ever-shrinking national pie."

Something to think about as the politicians in the nation’s capital struggle to pull the country out of the economic tar sands of debt and deficits. And in Arlington County, the "clock" wouldn't even have started ticking on the so-called Arlington Way.

July 21, 2011

The Wisdom of . . . and Claudia Rosett

Earlier this month, Claudia Rosett, blogging at Pamajas Media and author of the Rosett Report, wrote about “the wisdom of Fouad Ajama and F.A. Hayek.” She was commenting on an essay that Ajami had written for the Wall Street Journal, and wrote (her blog post provides the link):

“Writing in Friday’s Wall Street Journal, Hoover fellow Fouad Ajami has just brought us one of the wisest articles yet on the tumult in the Middle East: “The Road to Serfdom and the Arab Revolt.” As the headline suggests, Ajami starts by citing one of the great economists of the 20th century, F.A. Hayek, author of “The Road to Serfdom.” Hayek’s mighty contribution was to explain in brilliant and persuasive detail how economic and political liberty are inextricably intertwined. When the state controls economic choices, when government diktats, programs and subsidies curtail individual options and warp the information and latitude entailed in free pricing in free markets, the most profound cost — and it is vast — is a loss of the freedom necessary both to satisfy the soul and allow economies to thrive.”

Rosett then wrote about Ajami’s WSJ article, saying “Ajami does an exquisite job of applying Hayek’s insights to explain the autocratic devil’s deals, wrecked economies and massive discontent in the Middle East.”

But in talking about wisdom, Rosett makes a a very wise observation herself, writing:

“How right (Ajami) is. And reading his article, I was struck – not for the first time– by how far from that wisdom the politics of America has strayed. In Washington, as the haggling goes on over debts and deficits of titanic dimensions, the focus is over and over on the financial cost. That cost is horrific, to be sure. But the real cost here involves the individual freedom that has been eaten away, traded away, politicked away, in exchange for government programs promising endless relief from the risks, costs, effort and responsibilities of adult life. What ails the American economy right now is no great mystery. The past decade brought an accelerating process of smothering the markets; of government proposing to fix government-generated problems, such as the housing market debacle, or the medical cost mess, with yet more government fixes — further curtailing the freedom of Americans to adapt, create and come up with their own wealth-generating decisions about trade-offs in the use of resources. (emphasis added)

“There are plenty of Americans who know this, or who sense where the real problem lies. Thus the Tea Party, the 2010 congressional turnover, the anger at government which I saw a few weeks ago when I dropped by a small-town Town Hall meeting. There are universal principles at work here. Fouad Ajami applies these principles beautifully in his diagnosis of the Arab Revolt. But his wisdom serves also as a reminder that Hayek’s “Road to Serfdom” was a warning to the West. It bears remembering and re-reading and reapplying, now more than ever. (emphasis added)

Three wise writers? Yes indeed.

July 20, 2011

The Good, Bad, and Ugly in the Debt-Ceiling Debate

Dan Mitchell blogs at Big Government that “the Gang of Six is back from the dead.” In addition he points out their “plan,” such as it is since it seems to exist only in five pages of so-called talking points (with a link). An example of each of the major points follows:

  • The Good: “Unlike President Obama, the Gang of Six is not consumed by class-warfare resentment. The plan envisions that the top personal income tax rate will fall to no higher than 29 percent.”
  • The Bad: “The much-heralded spending caps do not apply to entitlement programs. This is like going to the doctor because you have cancer and getting treated for a sprained wrist.”
  • The Ugly: “Speaking of spending, why is there no information, anywhere in the summary document, showing how big government will be five years from now? Ten years from now? The perhaps-all-too-convenient absence of this critical information should set off alarm bells.”

In summary, Mitchell points out that his “quick analysis leaves many questions unanswered,” which he spells out.

At National Review Online’s blog, The Corner, Robert Costa talks about Sen. Tom Coburn “rejointing” the bipartisan so-called Gang of Six.” Also at The Corner, the inimitable Mark Steyn describes some of the Gang of Six’s “bag of tricks” used to arrive at their $3.7 trillion in savings, including this:

“If you take the Gang’s figure of half-a-trillion dollars in immediate “aggressive deficit reduction” seriously, that represents about what the U.S. government borrows every four months. What’s “aggressive” about that? And what’s immediate about it? It’s all unspecified “discretionary spending caps” and “process reforms” that will collapse like soufflés ten minutes after the signing ceremony. Obviously it’s appealing to Democrats: It accepts their view that 25 percent of GDP should be the new baseline for national (“federal” no longer seems quite the word) government spending. But what’s in it for Republicans?”

Finally, at the NRO’s The Corner, James C. Capretta writes of “The Gang of Six Disaster: The Worst Plan So Far.” Briefly, he says:

“In short, the Gang of Six has essentially offered a plan in which Republicans would hand over control of the budget process to Democratic senators and hope for the best. Enough said.”

Capretta’s piece explains the three parts of the Gang's approach. It's not that long, and is worth reading.

UPDATE (7/21/11): At the National Taxpayers Union blog, Government Bytes, yesterday, Brandon Greife writes that the "Gang of Six Returns to Haunt Taxpayers." His conclusion:

"Overall, the plan promises to provide $1.5 trillion in tax relief relative to the CBO March baseline. But this is nothing more than a dishonest budgetary trick designed to hide the real impact on taxpayers. “The CBO baseline assumes the expiration of tax relief, resulting in a $3.5 trillion revenue increase. As a result, the plan appears to include a $2 trillion revenue increase relative to a current policy baseline,” says the House Budget Committee in their analysis of the proposal. “If the $800 billion in tax increases from the new health care law are included, the plan appears to increase revenues by $2.8 trillion, without addressing unsustainable health care spending that is driving our debt problems.”

$2.8 trillion in tax hikes?!? The Gang of Six may be baa-aack, but if that’s the best they can do, they should have stayed gone."

July 19, 2011

Virginia One Of Five States That Could See Credit Downgrade

Joe Henchman reports today at the Tax Foundation’s tax policy blog that “Moody’s announces five states with Aaa bond ratings might see credit downgrades.” Other states include Maryland, New Mexico, South Carolina, and Tennessee. According to “Alphaville” of the Financial Times, which is cited by Henchman:

“Moody’s Tuesday action was forewarned last week when it placed the US sovereign’s AAA rating on review for possible downgrade. The credit rating agencies are busy at the moment, working out the consequences of any sovereign action on the thousands of securities directly or indirectly linked to the hub of the global bond market.

“Moody’s rates 15 states as Aaa. The 10 not downgraded are Alaska, Delaware, Georgia, Indiana, Iowa, Missouri, North Carolina, Texas, Utah and Vermont.

Alphaville said Moody’s would consider such factors as employment volatility, percentage of federal employment, and Medicaid as a percentage of total state expenditures. Alphaville adds:

“At first glance, some of these factors — especially Medicaid payments — appear more vulnerable to a large debt reduction deal than they do to a downgrade because of a deal’s absence. The high levels of variable rate debt exposure are probably the most worrisome criterion, but it’s not clear what weightings were put on the different factors.”

For additional reporting, there is the Baltimore Sun’s blog, Bloomberg, Reuters, MarketWatch, TheStreet.com, and the Sacramento Bee. As of 8:30 PM, Gov. McDonnell's office had not issued a press release.

July 18, 2011

Europeans Moving Away From Class Warfare?

At the Center for Freedom and Prosperity, Dan Mitchell suggested on July 9 that “Europeans are trying to undo the mistakes of Obama-style class warfare. He writes:

“President Obama is stubbornly clinging to his ideological agenda of bigger government and class warfare. Wasteful programs magically become “investments” for growth, and higher tax rates get turned into “shared sacrifice.”

“Interestingly, we already know what eventually happens with this approach. Europe’s welfare states are now dealing with the wreckage of Obamanomics-type policies and the results are not pretty.

“We already know about the fiscal crises in nations such as Greece and Portugal, and it’s probably just a matter of time before Spain, Italy, and Belgium face similar problems (and because of demographics, even the market-oriented welfare states of Northern Europe may be on borrowed time).

“To put it bluntly, European nations have spent themselves into a fiscal ditch and they’re now trying to figure out how to deal with the carnage.

“But while there’s been lots of attention paid to the spending crisis in Europe, there’s also a very interesting – albeit under-reported – story on the revenue side of the budget ledger.

“Europeans appear to be learning, slowly but surely, that it is a mistake to saddle an economy with punitive tax rates. Here’s a chart from a recently released European Commission report. It shows average top tax rates for European Union nations (the top line is for the subset of nations that use the euro currency and the bottom line shows the average of all EU nations).”


Here’s how Mitchell explains the above chart:

“As you can see, the average top tax rate in Europe has dropped by about 10 percentage points since 1995. Perhaps most remarkable, the average top tax on individuals is now down to about 37 percent – lower than the 39.6 percent rate that Obama wants for the United States. And that doesn’t even count the higher payroll tax rate endorsed by the President!”

Although Mitchell admits it’s a bit early to make long-term conclusions, he says the “same lessons have not been learned in America.” Indeed!

July 17, 2011

Tax Burden of Upper-Income Households

Florida’s Sunshine State News reported on Friday that President Obama was renewing his “push for tax hikes on ‘millionaires and billionaires.’” In their reporting on the president’s remark’s concerning the debt ceiling talks, the news organization reported:

“Obama warned that failure to raise the $14.6 trillion debt ceiling would put the nation into default and could raise consumer interest rates – “which would effectively be a tax hike.”

“He blamed Republicans for the impasse, saying they had "boxed themselves in ideologically."

“Though declining to provide specifics, the president said his “balanced approach” would include Medicare reform, up to $4 trillion in discretionary spending cuts and a host of “revenue increases [on] millionaires and billionaires.”

“Republicans say they are united in opposing any tax hikes and support passage of a balanced budget amendment to the Constitution – a move that Obama opposes.”

On April 3, 2011, we growled about how much the U.S. really lean on  the rich compared to other better-off countries, i.e., the 24 members of the Organization of Economic Cooperation and Development (OECD). We cited a post by Scott Hodge, Tax Foundation president, then, and with a HT to Mark Levin, we repeat the reference to Scott Hodge’s March 21, 2011 Tax Foundation policy blog post.

Here’s the bottom line. Comparing “the rich” in America (the top decile) to “the rich” of the 24 OECD countries (again using the top decile) shows:

  • United States: share of taxes of richest decile -- 45.1%; share of market income of richest decile -- 33.5%%; ratio of shares of richest deciles -- 1.35.
  • 24 OECD Countries: share of taxes of richest decile -- 31.6%; share of market income of richest decile -- 28.4%; shares of market income of richest decile -- 1.11.

Why can't progressives or liberals ever get their facts straight? Or do they just enjoy pandering by engaging in class warfare?

July 16, 2011

A Waste of $130,000 of ‘Stimulus Money’?

At OpenMarkets.org on Thursday, Hans Bader writes of how the Omaha, Nebraska, Public Schools “spent $130,000 in federal stimulus funds to buy a diversity manual for 8,000 teachers, administrators, support staffers — even janitors," citing a long news report from the Omaha World-Herald.

According to the World-Herald:

“The book by Virginia education consultants could raise some eyebrows with its viewpoints.

“The authors assert that American government and institutions create advantages that “channel wealth and power to white people,” that color-blindness will not end racism and that educators should “take action for social justice.”

“The book says that teachers should acknowledge historical systemic oppression in schools, including racism, sexism, homophobia and “ableism,” defined by the authors as discrimination or prejudice against people with disabilities.

“The authors argue that public school teachers must raise their cultural awareness to better serve minority students and improve academic achievement.

“The Omaha school board approved buying 8,000 copies of the book — one for every employee, including members of the custodial staff — in April. The decision to buy the book was made 11-0, with board member Mary Ellen Drickey passing on the vote.”

The World-Herald story identified the book this way:

“The book that OPS bought, “The Cultural Proficiency Journey: Moving Beyond Ethical Barriers Toward Profound School Change,” includes a worksheet for teachers to score themselves on a continuum of cultural sensitivity. The continuum ranges from “cultural destructiveness,” as evidenced by genocide and ethnocide, to “cultural proficiency,” depicted as the highest level of awareness.

“Only those educators who acknowledge the existence of white privilege in America, that “white” is a culture in America and that race “is a definer for social and economic status” can reach proficiency, the authors contend. Those who score poorly on the worksheet are asked in the book what they will do “to align yourself with the values expressed.”

As noted above, the book’s authors are Virginia educators. A Google search identifed their website on the Internet.

Mr. Bader uses the $130,000 grant as an introduction to a longer discussion about the wasteful stimulus bill, which itself makes for interesting reading.

A search of the Arlington Public Schools website, however, reveals that APS has a program of “cultural competence,” including the following two sections of APS's “cultural competence” webpages:

Council for Cultural Competence

“The Arlington Public Schools Council for Cultural Competence was established in the Fall of 2003 in response to School Board budget direction and request by the Superintendent to provide diversity training. The primary role of the Council is to develop the framework (infrastructure) for permanent systemwide cultural competence activities including ongoing diversity training for all staff. The Council is made up of diverse representatives from different scale groups and departments. The Council serves as bridge builders, data collectors, educators, promoters of the diversity initiatives, reviewers of policies and procedures, and special events sponsors. The Council also networks with affinity groups and advises the Superintendent on matter related to diversity.

“The Council began the process of directing this initiative by engaging in thoughtful discussions, participating in diversity awareness exercises, viewing media materials, and exploring various actions that needed to occur to develop a system of sustained professional development. Such activities support the school systems’ goals of rising student achievement, eliminating the achievement gap between White and Black students and White and Hispanic students, effective relationships, and responsive education while formally acknowledging and valuing the contributions of all groups represented in the Arlington Public Schools workforce.”

APS 2006 Staff Cultural Audit

"Background" of the "Executive Summary"

“The Audit was conducted from January through April, 2006 and consisted of a series of focus groups to collect qualitative data and review of key documents relevant to APS’ diversity goals. A total of 89 participants, drawn from all areas of the school system workforce, participated in seven (7) focus groups conducted by NMCI. The review of key documents assessed the degree to which APS policies, procedures and strategic direction support its diversity goals. The methods used by NMCI to conduct the Audit allowed an assessment of the strengths, challenges and needs of APS related to building an inclusive environment throughout the school system. It should be noted that the focus group data was collected from a very small sample of APS employees (about .030% of the workforce) and, therefore, is not representative of the thoughts or experiences of all employees nor are the results necessarily reflective of employees’ full experience in the workplace.”

Just wondering: how much of APS’ estimated cost per pupil of $18,115 for FY 2012 results from the cultural competency program, not to mention the cost of the 2006 staff cultural audit. When we obtain the costs, we will update this Growls.

July 15, 2011

Arlington County Board Tries to Rescue Artisphere

Today’s Washington Examiner reports that “Arlington County officials hope a new rental agreement will be the first step in rescuing the money-losing Artisphere, while artists are pushing for more flexibility in a building that doesn't allow them to hang signs on the wall without permission.” Reporter Liz Essley went by writing:

“The Rosslyn arts center, which formerly housed the Newseum, is bringing in only 22 percent of its expected admission and ticket revenue, after receiving millions in renovations and $2.5 million in fiscal 2011 from county taxpayers. Now the county is scrambling to rethink expectations, promising a new business plan by the end of the summer.

“A new short-term rental agreement could be the first step in drawing more business.

"Sometimes people are like, 'Wow, I want to have a party there for an hour and I have to sign a 15-page legal agreement?" said Artisphere spokeswoman Annalisa Meyer.

"So the County Board of Supervisors slashed pages from the rental agreement in hopes that more people will use the space.

“But that doesn't change concerns that artists have about the rules included in both the new and old rental agreements.”

We previously growled about the Artisphere on January 1, 2011, April 2, 2011, and June 24, 2011. Detailed background information about the revised rental agreement is available in agenda item #32 of the Arlington County Board’s July 9, 2011 board meeting.

Sheesh! As we growled yesterday, “the arts” is one of Arlington County’s special interests. Think the panjandrums on the Arlington County Board view taxpayers as little more than cash registers?

July 14, 2011

Today’s Special Interest -- Arlington County’s Arts Community

This week’s Arlington Sun Gazette reports the Arlington County Board approved so-called "arts grants" at their Saturday, July 9 meeting:

“County Board members on July 9 approved just over $249,000 in arts grants for the coming fiscal year, about one-quarter the amount requested by individual artists and arts groups.

“More than one-third of the total will go to two big-name troupes - Signature Theatre and Synetic Theater, which each will get $44,625 - while the remainder will be spread out among other organizations under a proposal submitted by the Arlington Arts Commission.

“All told, 52 applicants requested a total of $1.023 million in funding for the coming year, in addition to seeking support for facility space and technical services. Members of the arts commission winnowed the requests to meet the amount of funding appropriated by the County Board for the year."

The press release prepared by the County Board's spinmeisters said the 25 grants approved by the Board ranged “from a high of $44,625.14 each to support Signature and Synetic theaters, to $274.79 to the ProBolivian Committee.” The press release assured readers that:

“ . . . The applications are reviewed by advisory panels of art experts and County staff. The Commission reviewed each application, then made its recommendation to the County Board. The Commission recommended 22 General Operating Grants, meant to assist organizations with the expenses involved with overall administration and program offerings, and three projects grants to support specific projects.”

A more detailed background of the county’s support for the “arts,” and a complete list of the 25 "arts" taxeaters at the July 9 Arlington County Board meeting, as opposed to taxpayers, is available from the “Board Report” for agenda item #39 from the Saturday, July 9, County Board meeting. The press release include the following quote from Board chairman Chris Zimmerman:

“The County views support of the arts as an important priority, and the Board is pleased to be able to make this contribution.”

Sounds like the Board was acting in a perfectly progressive manner. Oh, that's right, they profess to being progressives. Sheesh!

July 13, 2011

Debt Talks, Budgets, and Other People’s Money

At Betsy’s Page yesterday, Betsy has a great post of why the two sides in the debt-ceiling talks can’t agree. First, she let’s Rich Lowry of National Review Online clarify why Speaker Boehner did not agree to the supposed “grand bargain” -- because it wasn’t so grand. She also includes this observation by Lowry:

“The two parties have a conflict of visions. Republicans view the current levels of spending — an astonishing 24 percent of GDP — as a bizarre exception to peacetime norms in America. Democrats view it as the new normal. For them, any reduction in the inexorable growth of the entitlement state is a cruel betrayal. “

Pretty clear, I’d say. In addition she includes portions of a John Hinderaker post at Power Line and portions of a NY Post column by John Podhoretz.

In a second “must reads,” the July 18, 2011 issue of the Weekly Standard contains an essay by Arthur C. Brooks, president of the American Enterprise Institute. He asks whether “not taking other people’s money” is in effect “the morally decent thing to do?” He notes: “The president talks in moral terms about the need to raise taxes. It is, he claims, a matter of basic fairness.” Brooks first makes a “practiclal argument” that includes this:

“The government can learn from families. In fact, the data show that when countries are trying to find their way out of a debt crisis, the more they rely on tax increases as opposed to spending cuts, the more likely they are to fail. My colleagues Kevin Hassett, Andrew Biggs, and Matt Jensen studied 21 developed countries that have attempted fiscal consolidation over the last 37 years. Some succeeded and returned to economic health; - others failed.

“On average, failed attempts to close budget gaps relied 53 percent on tax increases and 47 percent on spending cuts. Successful consolidations averaged 85 percent spending cuts and 15 percent tax increases. Some of the most successful financial comebacks—like Finland’s in the late 1990s—involved more than 100 percent spending cuts, so that taxes could be lowered. The spending cuts by the successful countries centered on entitlements and government personnel.”

Brooks then turns to making a moral argument, saying in part:

“For the administration, it’s not about the money—as we have heard again and again, it’s about “fairness.” The president believes that we will be a better nation if we redistribute more money from those who have more to those who have less. How much more do we need to redistribute until our system is fair?

“As you ponder this question, remember the facts: The wealthiest 5 percent of Americans already account for 59 percent of federal income taxes. Nearly half of our citizens pay no federal income taxes at all—yet two-thirds of us believe that everybody should at least pay something, even if just to remind ourselves that government isn’t free. The Tax Foundation reports that the percentage of Americans who are net takers from the tax system is nearing 70 percent.

“If our system is not yet “fair,” what will make it so? If the top 5 percent paid 75 percent of the total? Or 95 percent? If they could, would it be ideal for the top 1 percent to carry all the rest of us so we could finally have a tax code that is “fair and balanced”?

In closing, Brooks says, “This is not the America that our Founders believed in.” He closes by writing:

“To the Founders, fairness was a question of rewarding merit. Thomas Jefferson spoke of the need to guarantee to every citizen “a free exercise of his industry and the fruits acquired by it.” He even wrote to John Adams about their shared belief in “a natural aristocracy among men.” The basis of this hierarchy was not nobleness of birth but “virtue and talents.” Alexander Hamilton praised a community in which “each individual can find his proper element and call into activity the whole vigour of his nature.” And in the following century, Abraham Lincoln declared, “I don’t believe in a law to prevent a man from getting rich” but rather a law that will “allow the humblest man an equal chance to get rich with everybody else.”

“Since the time of the Founders, America has not been a magnet for immigrants seeking a system that penalizes success to pay for largesse. Letters from my great-grandparents who came through Ellis Island suggest they were desperate to get to America to earn their success, not to get great government programs like ‘cash for clunkers.’”

Finally, a third worthwhile read (or listen since the video is also available) was made available last week at Real Clear Politics -- a floor speech made by Sen. Marco Rubio (R-Florida). Rubio says, “We Don’t Need New Taxes, We Need New Taxpayers” to bring the nation’s deficit into balance; not more spending. Here’s what I consider the key portion of Rubio’s speech:

"Yesterday, we saw, and I know tomorrow the majority leader, we'll be voting here on the floor on something the majority leader has offered up, something called the 'sense of the Senate,' which people watching at home may wonder, 'What is that?' Well, that basically means what's on the Senate's mind. The 'sense of the Senate,' this thing that we're going to be voting on tomorrow, is basically that you've got a bunch of people in this country that make over a million dollars, and that these people need to do more to help with the debt. That's basically the 'sense of the Senate' that there's going to be a vote on tomorrow -- very interesting things.

"So, I looked at it because ultimately this is a serious issue. So, let's explore this with an open mind. Let's not be doctrinaire, let's not be blindly ideological. Let's look at this from a common sense perspective, this idea that all these millionaires and billionaires, if they just paid more taxes, these problems would be solved. Let's analyze it. This is all about math.

"And here's the fact: the fact is it doesn't solve the problem. First of all, if you taxed these people at 100 percent, basically next year you said, 'Look, every penny you make next year the government's going to take it from you,' it still doesn't solve the debt. Not only does that not solve the debt problem, but I looked at a host of other -- a great publication that came out today from the Joint Economics Committee, our colleague Sen. DeMint chairs it. And it kind of outlines some of the tax increases being proposed by our colleagues in the Democratic Party and the president to solve the debt problem. And you add them all up, you add all of these things up -- the jet airplanes, the oil companies, all of the other things they talk about -- you put them all together in one big batch, and you know what it does? It basically deals with nine days and 23 hours worth of deficit spending. Nine days and 23 hours of deficit spending. That's how much it solves. So all this talk about going after people that make all this money, it buys you nine days and 23 hours. Let's round it off. Let's give them the benefit of the doubt. It buys them 10 days of deficit spending reduction. That's what all this stuff rounds up to.

“So, here's the bottom line: These tax increases they're talking about. These so-called revenue enhancers, they don't solve the problem. So what do we do then? Because clearly we have to do two things.

"One, we have to hold the line on spending, if you keep digging yourself in the hole, the hole is going to bury you. But the other thing is, how do you start generating revenue for government so we can start paying down this debt? And that’s what the debate should be about.”

Three great reads in the opinion of your scribe.

July 12, 2011

Quote of the Day

"It is proper here to remark, that the authority to lay and collect taxes is the most important of any power that can be granted; it connects with it almost all other powers, or at least will in process of time draw all others after it; it is the great mean of protection, security and defense, in a good government, and the great engine of oppression and tyranny in a bad one."

~ "Brutus," Anonymous Author of Anti-Federalist Paper Number 17

HT Page 211, "As Certain As Taxes: Quotations About Taxes." Tax Analysts, Inc.

July 11, 2011

Quote of the Day

"[States progressing towards the ideals of the Communist Manifesto will enact] a heavy progress income tax.

~ Karl Marx and Friedrich Engels

HT Page 138, "As Certain as Death: Questions about Taxes," Tax Analysts,Inc.

July 10, 2011

Quote of the Day

"It is all too tempting to attack classical liberals for their outdated attachment to natural law, supposed extreme individualism, and rigid constitutional conceptions. But today’s progressive legacy—the creaking structures of government at both the federal and state level—makes you want to go out and attend the nearest Tea Party rally."

~ Richard A. Epstein

HT Hoover Digest

July 09, 2011

"Employment Report With No Redeeming Features"

A sample of the lede paragraphs from several news reports shows the sorry news about jobs and the rise in the unemployment rate from 9.1% to 9.2%. However, they pretty much cover the gamut of the current economy:

  • Wall Street Journal: “The U.S. economy added painfully few jobs for the second month in a row, undermining hopes that the sluggish recovery was getting back on track, depressing financial markets and putting new pressure on policy makers to come to the rescue.” (If you enjoy reading readers' comments to news article, there were 1,104 on Saturday evening)
  • Washington Times: “A second straight month of paltry job growth in June sent the unemployment rate rising to 9.2 percent, showing that the economy remained in a deep pause, the Labor Department reported Friday morning.”
  • Washington Post: “Midway through a year that began with expectations that the ailing U.S. economy would finally take off, the nation is stuck in a muddle, growing too slowly to keep the jobless rate from rising, let alone to put some of the 14 million people looking for work back to earning paychecks. The odds that job creation will take off in the remainder of the year look slimmer with every new piece of data.” (The following Washington Post chart may be especially helpful)

 

How bad was the June jobs report? According to the headline of Tyler Durden blogging at Zero Hedge on Friday (HT Mark Levin Show):

“US Needs To Generate 254,000 Jobs A Month For 65 Months To Get To Pre-Depression Employment By End Of Obama Second Term”

Durden adds this explanatory comment:

“As a reminder this chart looks for the breakeven number that has be attained to restore (not surpass) the jobs that the US economy had back in December 2007 as the Depression started, when accounting for the natural increase of 90,000 people/month in the labor force. Needless to say, there is no way in hell the US economy can create a quarter million jobs per month from now for the next 65 months, as long as the president continues to pander to Wall Street's "wealth creation" via asset returns instead of directing capital into actual economically viable projects that focus on wealth creation through labor.” (emphasis in the original)

Things are even worse, says Thomas Lifson, pointing to a Bloomberg report. According to Lifson, writing at American Thinker:

“Of course, the official unemployment rate understates actual unemployment, since those who have given up searching for work magically disappear. Bloomberg reports that the real situation has gotten much worse than a .1% rise in the rate:

The so-called underemployment rate -- which includes part- time workers who'd prefer a full-time position and people who want work but have given up looking -- increased to 16.2 percent from 15.8 percent.”

Reuters’ James Pethokoukis and Peter Kirsanow at National Review Online’s blog The Corner provide perhaps the worst news of all. As Pethokoukis reports:

“Indeed, if the labor force, which shrank again, was as big as it was when President Obama took office, the unemployment rate would be north of 11 percent. As it is, the broader U-6 measure surged to 16.2 percent from 15.8 percent. But with an economy growing at just 2 percent or so, expectations should be low.  If the economy picks up in the second half, so should job growth.

“But we have a long way to go before getting the unemployment even back to 8 percent or so by Election Day 2012, needing some 255,00 jobs a month . . . .”

How important a factor will jobs be in the 2012 presidential elections. Not much apparently, according to White House advisor David Plouffe. At Big Government, Publius writes:

“The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers,” Plouffe said, according to Bloomberg. “People won’t vote based on the unemployment rate, they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’”

Another example of the sour nature of the jobs report came in Commentary magazine’s blog Contentions where Peter Wehner concluded:

“But of course the problem isn’t simply the anemic recovery and high unemployment; it is, as I’ve argued before, the broader belief that America is on a road toward decline and mediocrity, that our best days are behind us, and that our progeny face a less hopeful future than we did.

“This is very corrosive stuff for an American president. And with every passing month, it seems, the news gets worse . .  .”

In Virginia, one of Arlington County’s major lobbyists, the Virginia Municipal League (for which Arlington taxpayers shell out about $36,000 annually) reports:

“Across Virginia, the unemployment rate rose from 5.8 percent in April to 6 percent in May. Martinsville’s non-seasonally adjusted unemployment rate increased to 16.9 percent from 16.7 percent in April. Unemployment increased in the New River Valley, jumping from 6.4 percent in April to 7 percent in May. In the Roanoke Valley, the rate rose just a bit from 6.2 percent to 6.3 percent. Roanoke City remained flat at 8 percent unemployment.

“In the Richmond area, the seasonally unadjusted unemployment rate rose slightly from 6.5 percent in April to 6.7 percent in May. Unemployment in the Charlottesville metropolitan area rose from 4.7 percent to 4.9 percent between April and May. The rise comes after three months of steady declines. For the Danville metropolitan statistical area, unemployment fell from 9.4 percent to 9.3 percent. Danville City dropped slightly form 12 percent to 11.6 percent.”

What about Arlington? Last week, Scott McCaffrey of the Arlington Sun Gazette reported that: "Arlington’s unemployment rate bumped up from April to May, but the jump - and a similar region-wide rise - may suggest that big March-to-April declines in reported joblessness were statistical anomalies."

'No redeeming features,' indeed. To use another description that Pethokoukis used in his reporting for Reuters, this one from Goldman Sachs:

“Overall the June Employment Report was quite disappointing, with basically no positive offsets to the poor headline results.”

July 08, 2011

Senate Jackasses?

On March 3, 2011, we growled about a GAO report documenting the large number of duplicate federal government programs. We noted that after releasing the report, Senator Tom Coburn (R-Oklahoma), who added legislation requiring the GAO report, quipped that the report “will make us look like jackasses.”

Fast forward to last Thursday, June 29, 2011. According to the Swine Line blog at Citizens Against Government Waste (also reported by the Floor Action blog of The Hill newspaper on June 29, 2011):

“Yesterday, the Senate threw logic to the wind and voted down Senator Tom Coburn’s (R-Okla.) amendment, which would have prevented the creation of duplicative and overlapping federal programs.  Senators voted 63 – 34 in favor of the amendment, but Senator Coburn still failed to gain the necessary 67 votes to secure passage.”

Swine Line explains the importance of Sen. Coburn’s amendment:

“While it is gratifying to have a nonpartisan government oversight entity endorse so many of the cuts and consolidations that Citizens Against Government Waste has long supported, Congress can no longer claim ignorance of these duplicative, bloated programs.  Senator Coburn’s amendment would have required an independent review by the Congressional Research Service of every bill to determine if it creates new programs that duplicate existing programs before the legislation can be considered by the Senate.  It would have also required an explanation as to why the creation of each new program, office or initiative is necessary if a similar program, office or initiative already exists.  Such a commonsense solution would help protect taxpayers from unnecessary and wasteful expansions of government.

“Senator Coburn’s amendment would have helped prevent the creation of any new duplicative programs and provided a new level of transparency for lawmakers and taxpayers.  It is baffling to think that any lawmaker could oppose such a sensible and rational solution to a major problem.  And yet, 34 of them did.  I knew Washington was a “logic-free zone,” but this takes it to a whole new level…”

Now let’s take a look at how senators voted, including how Virginia’s two senators voted. As noted above, the Senate voted 63-34, according to Roll Call Vote 102 of Congress’ Thomas system:

  • Yeas: 46 Republicans, 17 Democrats.
  • Nays: 34 Democrats.
  • Not Voting: 3, including 2 Democrats and 1 Republican.

Senators of 16 states voted “differently," i.e., one voting yea, the other voting nay. In seven of the 16 states, both senators were Democrats (or Independents who caucus with the Democrats). In the remaining nine states, one senator is a Democrat and the other a Republican.

We regret to report that both of Virginia’s senators -- Jim Webb and Mark Warner -- voted against Sen. Coburn’s amendment. Perhaps they enjoy, to use Sen. Coburn’s words, “looking like jackasses." Or perhaps they see nothing wrong with duplicate programs? Or maybe they just enjoy wasting taxpayers’ money? As Fox News says, we report, you decide. You can contact them on Capitol Hill by using the following information:

July 07, 2011

Senator Webb Responds to Cut, Cap and Balance

Yesterday, we growled about the need for our representatives on Capitol Hill to support Cut, Cap and Balance, a plan to “get us back to a point where increases in the debt limit are no longer necessary."

We also included the response of Sen. Mark Warner, one of Virginia’s two U.S. senators in the Growls. Today, we provide you the response of Sen. Jim Webb, who responded on June 27, 2011. He did not comment on whether he supports Cut, Cap, and Balance, but he did express concern about "unchecked deficit spending." His wrote:

“Dear Mr. Wise:

Thank you for contacting my office regarding budget and spending issues. I appreciate your taking the time to share your concerns with me.

“On May 25, 2011, I voted against several budget proposals offered by Democrats and Republicans for fiscal year 2012. None of these bills had been considered by a Senate committee or debated in the Senate, and the House Republican budget, in particular, raised concerns regarding its impact on the long-term viability of Medicare. I look forward to working with my Senate colleagues on a responsible path forward on the federal budget.

“In the coming weeks, Congress will debate raising the statutory debt ceiling, which has restricted total federal debt levels since 1917. As you may know, the federal debt reached reach its statutory limit, $14.3 trillion, on May 16, 2011, although extraordinary measures will extend the U.S. Treasury's borrowing capacity until August 2, 2011. It is imperative Congress act to avoid downgrades to the U.S. credit rating or default on U.S. debt obligations.

“I believe that curbing the growth of our deficit and accumulated national debt stands as the most formidable domestic challenge facing Congress and the President. Unchecked deficit spending impedes economic growth, increases the cost of borrowing, and leaves younger generations an unacceptable economic and tax burden.

“I am committed to addressing our nation's long-term fiscal challenges. Within a year, the first of the 78 million strong baby boomer generation will be eligible for full Social Security and Medicare benefits. To come to grips with these many challenges, we will need to contain entitlement - particularly health - costs, the main driver of our long-term debt problem, curb spending, and increase revenues while ensuring the fragile economic recovery continues to gather steam. I also recognize that the need for fiscal discipline must be balanced with maintaining access to essential services for our nation's most vulnerable populations.

“I appreciate hearing from my constituents. Your correspondence helps me serve you better in the Senate. I hope that you will continue to share your views with me and my staff in the years ahead.

“I would also invite you to visit my website at www.webb.senate.gov for regular updates about my activities and positions on matters that are important to Virginia and our nation.

“Thank you once again for contacting my office.

“Sincerely,
“Jim Webb
“United States Senator”

We regret that neither of Virginia’s two senators support the initiative known as Cut, Cap and Balance to return the nation to a point where increases in the debt limit are no longer necessary. However you can contact your representatives on Capitol Hill using the following information:

At the moment, I’m not aware of Rep. Moran’s position on Cut, Cap and Balance. A review of his 2011 press releases revealed one on May 16, 2011 that involved the “federal government tapping federal pensions as debt limit reached.” In addition, ARLnow.com reports on the following July 11 meeting where we may learn Rep. Moran's position:

“Rep. Jim Moran is teaming up with the nonpartisan Concord Coalition to host “Priniciples & Priorities,” described as an “interactive exercise in which participants team up to tackle the federal budget deficit by making many of the policy decisions facing lawmakers today.”

“The event, which is open to members of the public who register online, will take place at the National Rural Electric Cooperative building in Ballston (4301 Wilson Boulevard), from 7:00 to 9:00 p.m. on Monday, July 11.

"Moran is not exactly known as a fiscal conservative, thanks in part to public remarks about “earmark[ing] a lot of money through the appropriations process.” Still, the long-time congressman acknowledges that “difficult choices must be made” regarding the budget."

Perhaps we will learn of Rep. Moran’s position on Cut, Cap, and Balance next Monday, July 11. Register online at Rep. Moran's website.

UPDATE (7/20/11): ARLnow.com reports that Rep. Jim Moran (D-Virginia) is "proud" of his vote against the "Cut, Cap, and Balanced Budget." last evening in the House of Reresentatives." According to ARLnow, is proud of his vote against "Cut, Cap, and Balance" because (italics in the original):

I was proud to vote against the “Cut, Cap and Balance Act” tonight. The House Republicans have presented us with their vision for America’s future. This is a vision in which the country turns its back on the achievements of the last century and chooses not to invest in meeting the challenges of the next century.

The 18 percent spending cap mandated by the bill would return the government to spending levels not seen since the establishment of Medicare and Medicaid. This would necessarily result in unprecedented cuts in student loans and grants, transportation, education, environmental protection and enforcement, in other words, the physical and human infrastructure of our economy.

The bill also demands that in return for avoiding an economically disastrous default on our debt, we make $111 billion in immediate spending cuts, seriously increasing the likelihood of a double-dip recession.

As an appropriator I have learned that budgets are the firmest expression of our values. This is not the time for the Democratic Party to sacrifice our values, values held by a majority of the American people even in the face of opposition that has reached unprecedented levels of ideological radicalization. We must address our long-term deficits, but we must do so in a balanced manner, combining rational spending cuts and increased revenues.

July 06, 2011

Senator Warner Responds to Cut, Cap and Balance

Despite the nation’s staggering $14.4 trillion debt, many Members of the U.S. House and Senate who want to raise our nation’s debt limit without making permanent reforms in our fiscal policies.

We growled on June 17, 2011 urging Virginia's two U.S. senators to support "Cut, Cap, and Balance," a "plan for substantial spending cuts in FY 2012, a statutory spending cap, and Congressional passage of a Balanced Budget Amendment to the Constitution is the minimum necessary precondition to raising the debt limit. The ultimate goal is to get us back to a point where increases in the debt limit are no longer necessary."

Unfortunately, Senator Mark Warner responded that he does "not support binding the ability of a future Congress to set federal spending levels," nor did he respond to the "cut, and cap" portions of "cut, capt, and balance." Here is Senator Mark Warner's June 23, 2011 response to my request that he support the effort "to to get us back to a point where increases in the debt limit are no longer necessary:"

"Dear Mr. Wise,

"Thank you for contacting me about amending our Constitution to require a balanced budget. I appreciate hearing from you on this important matter.

"On March 2, 2011 the Senate voted on S. Amdt. 115 to the Patent Reform Act of 2011 (S. 23), which would have expressed a sense of the Senate in support of a balanced budget amendment to the Constitution. This amendment was not agreed to.

"I voted against this amendment because I do not support binding the ability of a future Congress to set federal spending levels. I am pleased that there are a variety of proposals being discussed to address our debt and deficit. The Congressional Budget Office estimates that, if current laws and policies continue unchanged, the federal budget deficit will reach $1.4 trillion for fiscal year 2011.  This is why I am working with a bipartisan coalition of Senators who are willing to tackle our debt and deficit challenges to bring fiscal sanity back to the budget process.

"Last year, the President issued an Executive Order to create a bipartisan commission, led by Alan Simpson and Erskine Bowles, to identify specific policies to reach long-term fiscal sustainability. On December 1, 2010, the Commission released its report, entitled "The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform," which detailed its proposals for deficit reduction.  In an effort to build on the Commission's work, Senator Saxby Chambliss (R-GA) and I are working with a bipartisan group of Senators to introduce a bill, based on the Commission's recommendations that will put everything on the table; including spending, entitlement programs and tax reform.

"Again, thank you for contacting me. For further information or to sign up for my newsletter, please visit my website at http://warner.senate.gov."

"Sincerely,
"MARK R. WARNER
"United States Senator"

Tomorrow, I will provide you Senator Jim Webb's response to my request that he support "Cut, Cap, and Balance." In the meantime, take a few minutes to contact Senator Warner:

  • Call his Capitol Hill office at (202) 224-2023. (1-877-676-2759 toll-free for Virginia residents)

July 05, 2011

Quote of the Day

"It is hard to understand politics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not."

~ Thomas Sowell

HT Column at National Review Online

July 04, 2011

Torn by Two Visions

Robert J. Samuelson writes in his weekend column posted at Investor’s Business Daily (also available today at the Washington Post) that America is in its “summer of our discontent” because there is one group of Americans (liberals or reactionaries) who “want yet-bigger government to enhance social justice” while the other group (conservatives or radicals) have an “obsession with tax cuts when even today's taxes don't cover today's spending implies radically shrinking government programs that are woven into our social fabric.”

According to Samuelson, “(b)oth visions are unrealistic,” and here’s why says Samuelson:

“Given an aging population — which boosts Social Security and Medicare spending — government is automatically expanding. Since 1971, federal spending has averaged 21% of the economy (gross domestic product); just continuing present programs could easily raise that to 28% of GDP by 2021.

“The liberal-reactionaries can't smoothly finance that. In 2011, the deficit is already twice the entire defense budget. The richest 10% already pay 55% of federal taxes. The blanket embrace of all benefits for the elderly — no matter how rich — will require much higher taxes or steep cuts in other programs, including those for the poor.

“The conservative-radicals are no better. Since 1971, federal taxes have averaged about 18% of GDP. There is no believable plan to reduce federal spending below that level, even with sizable cuts in Social Security and Medicare benefits. So promises of more tax cuts either border on dishonesty or imply huge unspecified spending cuts that would devastate national defense, states and localities, and the poor."

Samuelson saves his heaviest salvo for the nation's politicians, however. He concludes the column by saying:

“Our politicians prefer self-serving fantasies. Democrats won't admit the need for major benefit cuts in Social Security and Medicare; Republicans won't concede the necessity for higher taxes.

“The result is that our leaders are now playing a game of brinksmanship over raising the federal debt ceiling or defaulting. Liberals say spending cuts now would subvert the recovery; conservatives find that an excuse not to cut. Surely a compromise would be phasing in credible future cuts.

“All this from "the world's greatest nation." It lowers our competence and elevates our national embarrassment. Altogether, an unhappy birthday.”

A very explanatory essay of our national divide although I am still not convinced that tax increases are needed. Thank you, Mr. Samuelson. The entire column is well-worth reading.

July 03, 2011

Some Thoughts as We Celebrate the Fourth of July

Four items I read yesterday point to two disparate ways of looking at America’s future on this Fourth of July.

In his weekly column posted at National Review Online, Mark Steyn wonders what’s left of the Founding vision. He notes that while “dozens of countries” have ‘Independence Days,’ “in America ‘Independence’ seemed as much a statement about the character of a people as a designation of jurisdictional status.”However, he goes on to show that slowly America’s self-reliant citizenry has acceded to Big Government, and concludes:

“. . . it’s not republican in any sense the Founders would recognize . . . For the rest, it ought to be a source of shame to today’s Americans that this will be the first generation in U.S. history to bequeath its children the certainty of poorer, meaner lives — if not a broader decay into a fetid swamp divided between a well-connected Latin American–style elite enjoying their waivers and a vast downwardly mobile morass. On Independence Day 2011, debt-ridden America is now dependent, not on far-off kings but on global bond and currency markets, which fulfill the same role the cliff edge does in a Wile E. Coyote cartoon. At some point, Wile looks down and realizes he’s outrun solid ground. You know what happens next.

“That’s all folks!”

A second essay comes from the Hoover Institution’s “defining ideas” series. William Damon, a senior fellow and member of the Virtues of a Free Society Task Force at Hoover, writes about "American Amnesia," saying: “Young people in this country are failing civics, which is a crisis for the nation.” Damon is concerned because: “A free society requires an informed and virtuous citizenry.” He explains:

“For the past ten years, our research team at Stanford has interviewed broad cross-sections of American youth about what U. S. citizenship means to them. Here is one high school student's reply, not atypical: "We just had (American citizenship) the other day in history. I forget what it was." Another student told us that "being American is not really special….I don’t find being an American citizen very important." Another replied, "I don’t want to belong to any country. It just feels like you are obligated to this country. I don’t like the whole thing of citizen...I don’t like that whole thing. It’s like, citizen, no citizen; it doesn’t make sense to me. It’s like to be a good citizen—I don’t know, I don’t want to be a citizen...it’s stupid to me."

“Such statements reflect more than an ignorance of citizenship—though they may provide us with clues about the source of students' present-day lack of knowledge. Beyond not knowing what U.S. citizenship entails, many young Americans today are not motivated to learn about how to become a fully engaged citizen of their country. They simply do not care about their status as American citizens. Notions such as civic virtue, civic duty, or devotion to their country mean little to them. This is not true of all young people today—there are exceptions in virtually every community—but it accurately describes a growing trend that encompasses a large portion of our younger generation.”

In the weekend edition of the Wall Street Journal, however, Walter Russell Mead, professor of foreign affairs and humanities at Bard College and editor-in-chief of the American Interest, writes in an essay entitled, “The Future Still Belongs to America" ($) saying, “This century will throw challenges at everyone. The U.S. is better positioned to adapt than China, Europe or the Arab world.” Essentially, Mead argues:

“But what is unique about the United States is not our problems. Every major country in the world today faces extraordinary challenges—and the 21st century will throw more at us. Yet looking toward the tumultuous century ahead, no country is better positioned to take advantage of the opportunities or manage the dangers than the United States.”

Finally, in a Heritage Foundation First Principles” essay entitled “Independence Forever: Why America Celebrates the Fourth of July” Matthew Spalding writes:

“The Fourth of July is a great opportunity to renew our dedication to the principles of liberty and equality enshrined in what Thomas Jefferson called "the declaratory charter of our rights."

“As a practical matter, the Declaration of Independence publicly announced to the world the unanimous decision of the American colonies to declare themselves free and independent states, absolved from any allegiance to Great Britain. But its greater meaning-then as well as now-is as a statement of the conditions of legitimate political authority and the proper ends of government, and its proclamation of a new ground of political rule in the sovereignty of the people. "If the American Revolution had produced nothing but the Declaration of Independence," wrote the great historian Samuel Eliot Morrison, "it would have been worthwhile."

Spalding includes a dozen or so quotations about the Declaration of Independence as well as some notes about the signers of the Declaration. A few quotations on the Declaration of Independence:

“The flames kindled on the 4th of July 1776, have spread over too much of the globe to be extinguished by the feeble engines of despotism; on the contrary, they will consume these engines and all who work them.”

~ Thomas Jefferson, letter to John Adams, September 12, 1821

“Independence Forever.”

~ John Adams, toast for the 50th Anniversary of the Declaration of Independence, July 4, 1826

“I have said that the Declaration of Independence is the ring-bolt to the chain of your nation's destiny; so, indeed, I regard it. The principles contained in that instrument are saving principles. Stand by those principles, be true to them on all occasions, in all places, against all foes, and at whatever cost.”

~ Frederick Douglass, "What to the Slave is the Fourth of July?" July 5, 1852

“Today, 186 years later, that Declaration whose yellowing parchment and fading, almost illegible lines I saw in the past week in the National Archives in Washington is still a revolutionary document. To read it today is to hear a trumpet call. For that Declaration unleashed not merely a revolution against the British, but a revolution in human affairs. . . . The theory of independence is as old as man himself, and it was not invented in this hall. But it was in this hall that the theory became a practice; that the word went out to all, in Thomas Jefferson's phrase, that "the God who gave us life, gave us liberty at the same time." And today this Nation-conceived in revolution, nurtured in liberty, maturing in independence-has no intention of abdicating its leadership in that worldwide movement for independence to any nation or society committed to systematic human oppression.”

~ John F. Kennedy, address at Independence Hall, July 4, 1962

It is always difficult to argue against Mark Steyn. Adding in the arguments made by William Damon, and the future certainly looks bleak. However, as Walter Russell Mead said, America has big problems, but more importantly, America has a history provided by the Founders that enables us to build on a strong foundation. If it has been awhile since reading the Declaration of Independence, you will want to read all of Matthew Spalding's First Principles essay.

July 02, 2011

CBO’s 2011 Long-Term Budget Outlook

During the past two weeks (June 22, June 23, and June 30), Growls made mention of the Congressional Budget Office’s 2011 Long-Term Budget Outlook, even including a paragraph or two. Instead of just referring to it, let’s let the CBO speak for themselves.

The CBO’s webpage for the 2011 Long-Term Budget Outlook contains four “sub-documents,” including:

  1. Entire Document in Adobe (.pdf) fomat
  2. Full Summary in Adobe (.pdf) format
  3. CBO’s Blog Post on the Outlook
  4. Data Underlying Scenarios and Figures in Excel (.xls) format

The entire document is 108 pages while the full summary is only four pages. The CBO director’s blog post is less than two pages, single-spaced. For today’s Growls, I’ll use a portion of the director’s blog since it is an abridged version of the full report, and it includes the below graph:

“Recently, the federal government has been recording budget deficits that are the largest as a share of the economy since 1945. Consequently, the amount of federal debt held by the public has surged. By the end of this year, CBO projects, federal debt will reach roughly 70 percent of gross domestic product (GDP)—the highest percentage since shortly after World War II. As the economy continues to recover and the policies adopted to counteract the recession phase out, budget deficits will probably decline markedly in the next few years. But with the aging of the population and growing health care costs, the budget outlook, for both the coming decade and beyond, is daunting.

"This morning CBO released the latest in its series of reports on the long-term budget outlook. The report examines the pressures on the federal budget by presenting our  projections of federal spending and revenues—under two different scenarios discussed below—over the next 25 years. Tomorrow, I will testify on the key findings of the report before the House Budget Committee.

The Key Points

“The retirement of the baby-boom generation is a key factor in the nation’s long-term fiscal outlook. It portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and Medicaid. Moreover, under current law, per capita spending for health care is likely to continue rising faster than spending per person on other goods and services.

"As a result, if current laws remained in place, the federal government’s spending on Social Security and the major mandatory health care programs (Medicare, Medicaid, the Children’s Health Insurance Program, and the health insurance subsidies that will be provided through insurance exchanges) is projected to grow from roughly 10 percent of GDP today to about 15 percent of GDP 25 years from now. (By comparison, spending on all of the federal government’s programs and activities, excluding interest payments on debt, has averaged about 18.5 percent of GDP over the past 40 years.) That combined increase of roughly 5 percentage points of GDP is equivalent to about $750 billion today.

“CBO presents the long-term budget outlook under two scenarios that embody different assumptions about future policies governing federal revenues and spending.

  • The extended-baseline scenario adheres closely to current law, following CBO’s 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. Under that scenario, revenues would reach 23 percent of GDP by 2035—much higher than has typically been seen in recent decades—and larger percentages thereafter. Nevertheless, annual spending would be greater, and federal debt held by the public would grow from an estimated 69 percent of GDP this year to 84 percent by 2035. (At the end of 2008, that debt was equal to 40 percent of GDP.)
  • "The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. Under that scenario, which many budget analysts believe is a more realistic picture of the nation’s underlying fiscal policies, revenues would remain close to their historical average of 18 percent of GDP, and federal debt would exceed 100 percent of GDP by 2021 and would balloon to nearly 190 percent by 2035.

"Federal Debt Held by the Public (Percentage of GDP)

     

“Those projections of federal debt under the long-term scenarios do not include the harmful effects that rising debt would have on economic growth and interest rates. If those effects were taken into account, projected debt would increase even faster.”

The CBO director proceeds with a short analysis of the "extended-baseline scenario" and the "alternative fiscal scenario" before writing about "the impact of growing deficits and debt," which he puts this way:

"CBO’s projections in most of the report understate the severity of the long-term budget problem because they do not incorporate the negative effects that accumulating additional federal debt would have on the economy, nor do they include the impact of higher tax rates on people’s incentives to work and save. In particular, large budget deficits and growing debt 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. (Chapter 2 of the report presents estimates of the economic effects of growing debt and the impact of those economic changes on the trajectory of debt under both scenarios.)

"Rising levels of debt also would have other negative consequences:

  • Higher levels of debt imply higher interest payments on that debt, which would eventually require either higher taxes or a reduction in government benefits and services.
  • Rising debt would increasingly restrict policymakers’ ability to use tax and spending policies to respond to unexpected challenges, such as economic downturns or financial crises.
  • Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates.

"The implications of this analysis are clear: There is a substantial mismatch between what the government would have to spend to maintain existing programs in their current form and the revenues that taxpayers are accustomed to providing the government to pay for those programs.

"To keep deficits and debt from climbing to unsustainable levels, policymakers will need to increase revenues substantially as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two approaches. Making such changes while economic activity and employment remain well below their potential levels would probably slow the economic recovery. However, the sooner that medium- and long-term changes to tax and spending policies are agreed on, and the sooner they are carried out once the economy recovers, the smaller will be the damage to the economy from growing federal debt. Earlier action would permit smaller or more gradual changes and would give people more time to adjust to them, but it would require more sacrifices sooner from current older workers and retirees for the benefit of younger workers and future generations."

Makes you wonder why the panjandrums on Capitol Hill and in the White House don't feel the emergency of solving our deficit and debt problems.

July 01, 2011

GAO Audit of the Metro Board's Governance

Today’s Washington Examiner and Washington Post both report on a new report from Congress’ General Accountability Office (GAO). The Examiner reported:

“Metro's board of directors has been too concerned with day-to-day operations such as picking train seat colors and hiring non-management-level workers instead of pursuing multiyear strategic plans, according to a new federal report.

“The Government Accountability Office report released Thursday said board members and senior officials "described a culture in which there is a lack of clarity about the roles of the board and individual board members, which has resulted in their overreach into management responsibilities. (link to the summary of the GAO report added; access available via Adobe to the "highlights" and "full report")

[ . . . ]

“The report detailed how some board members had "excessive contact with midlevel managers" rather than working through established channels, asking for changes to board presentations before meetings.

“The board also meets more than nearly all of its peer agencies, the report said. From the end of April 2010 to May 2011, the board met 84 times in committee meetings, executive sessions and full board meetings. Only New York City's transit authority met more frequently of the six other agencies the GAO reviewed. Such frequency can indicate that the board is too involved in day-to-day operations, board members told the GAO investigators. And, the report noted, preparations for the meetings eat into staff time better spent running the agency.

“The board has had no way of assessing its own performance or procedures for investigating its own members, the report said. The agency suffered from a lack of formal orientation for new board members and a chairmanship that rotated annually, with board procedures changing alongside. It also hasn't been involved in long-term strategic planning.”

In their reporting, the Washington Post also wrote:

“The GAO interviewed Metro’s senior management, current board members and officials from oversight agencies and local jurisdictions.

“The audit credited the 14 members on the Metro board with implementing some improvements, such as creating bylaws. GAO called the bylaws a “good first step” toward addressing some of the agency’s concerns about governance. But it noted that the new policies will have to be “effectively implemented to achieve their desired effect.”

“The report also said that some of the metrics Metro uses to judge its rail and train performance are outdated and that the lack of compensation for the federal board seats — two principal members and two alternates — is a deterrent to recruiting qualified candidates. The General Services Administration has appointed two principal federal members to the board and one alternate.”

I’m not sure either newspaper fully captured the depth of GAO’s concerns with the ability of the Metro board  to effectively govern the system. In the conclusion of their report, GAO wrote in part:

“WMATA faces challenges in many areas, including projected shortfalls in meeting long-term capital costs, increases in ridership levels, and plans for system expansion. In addition, following the fatal June 2009 rail accident, WMATA board members and management have been tasked by NTSB and other stakeholders with making WMATA a safer system. However, the absence of a clear delineation of the board’s roles and responsibilities for providing oversight of management as well as the absence of a board- driven strategic vision raise concerns about WMATA’s ability to systematically and effectively confront its many challenges.

“WMATA currently has some elements of effective governance in place. However, board members and WMATA senior officials described a culture in which there is a lack of clarity about the roles of the board and individual board members, which has resulted in their overreach into management responsibilities. Such a culture limits the ability of the board to provide leadership, direction, and a strategic vision to management. Without a long-term strategic vision, board members approve priorities such as new technology and capital needs during the annual budget process rather than proactively prioritize needs over the long term.”

GAO’s conclusions seem a lot more serious than the picture drawn by either news organization, which focused more on the Metro board’s involvement in daily minutiae rather than governing the Metro system. While the news media's reporting provides a flavor of Metro's problems, reading the GAO is necessary to obtain a full understanding of the problems facing the Metro board.