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May 31, 2012

Maintenance and Upkeep of Arlington County Roads

According to Arlington County’s recently issued Capital Improvement Plan for FY 2013 -- FY 2022 (requires Adobe) our local, county government maintains and manages over 974 lane miles of paved streets. It uses several “strategies” to maintain them such as “Hot Mix Re-Surfacing, Slurry Seal (residential streets), Micro-Surfacing (Arterials and Collectors), and Re-Building." The CIP adds that "(a)bout 25 percent of the streets are arterial streets, 11 percent collector streets, and 64 percent residential streets.”

The write-up for paving maintenance on page E-91 of the CIP then goes on to say:

“Street pavement conditions are regularly assessed by a specialized contractor that generates a number called a Pavement Condition Index or PCI for every block evaluated. Using a scale from 100 for brand new pavement, down to 1, the worst possible condition, we develop a priority based needs system for resurfacing . . . Arlington’s average PCI is currently 68.9, with about 35 percent, over 1/3, of our streets below 60 PCI.” (emphasis added)

For those unfamiliar with the Pavement Condition Index, the Ontario Good Roads Association published a four-page “Pavement Condition Index 101” primer, which introduces the topic this way:

“There are two ways to measure the condition of a road network. The first way is to call it the Squeaky Wheel, sit back and wait for the complaints. The more complaints, the worse the condition of the roads. The second way is to use a more thorough, comprehensive and pro-active approach to review the entire road network.

“The Pavement Condition Index is a simple, convenient and inexpensive way to monitor the condition of the surface of roads, identify maintenance and rehabilitation needs, and ensure that road maintenance budgets are spent wisely.”

The OGRA booklet also goes to great pains to say that while the PCI index “is a useful tool . . . it has its limitations.” It adds that the index is subjective, and “only one tool. The PCI provides a broad overall measure of the state of a road network and can help prioritize specific road  maintenance and rehabilitation requirements.”

All that said, page E-91 goes on to say:

“In order to maintain current conditions (meaning the same distribution of lane miles in each PCI group and have an average PCI in the high 60s), we recommend that 72 lane miles of street should be paved each year which is an increase from the previously recommended 65 lane miles. This continues our long term philosophy of funding an amount that would allow for paving all the streets on a nominal 15 year cycle.   Some streets need more frequent paving due to their higher usage and others may be less frequently for less usage, but for planning purposes, 15 years cycle is an average.   This yields annual amounts of approximately 50 (57 if we increase funding from 65 to 72 lane miles) lane miles of Hot Mix Re-Surfacing, 40 lane miles of slurry seal, 10 lane miles of Micro-Surfacing and 1 lane mile of Re-Builds.

“The CIP proposes to gradually improve the overall street conditions from our average PCI of 68.9 to a target of about 85 over the next 12 years.  The rate of paving would accelerate in two key ways.  First, we would move from 65 lane miles of nominal funding, to 72 lane miles (11% increase).  Secondly, to address shortfalls in the previous decade that saw our average PCI drop from the low 80s to the high 60s, we would address all the streets in the PCI groups below 60. As proposed, over 10 year’s time, this will pave an additional 37.4 lane miles each year starting in FY 2015 in addition to the 72 lane miles that would be paved for maintenance.” (emphasis added)

The OGRA 101 booklet includes a “PCI Decision Matrix” showing an improvement timeframe for various road categories (bottom of page 3 of the document). For example:

  • The condition of Arlington’s arterial streets (as noted in the CIP document, 25% of Arlington’s streets are in the arterial category) would be considered “adequate” if their PCI was higher than 85%.
  • Arterials with PCIs of “76 to 85%” should be improved in “6 to 10 years.”
  • Arterials with PCIs of “56 to 75%” should be improved in “1 to 5 years.”
  • Arterials with PCIs of “50 to 55%” fall in the “NOW Rehabilitate” category.
  • Arterials with PCIs of less than 50% fall in the “NOW Reconstruct” category.

Note the highlighted sentence from page E-91 above that says the average PCI dropped “from the low 80s to the high 60s” during “the previous decade.” Our question: will someone on the Arlington County Board be held accountable for allowing Arlington’s streets to deteriorate from almost adequate (i.e., low 80s) to significantly below adequate (a current average PCI of 68.9)? Better question: How many County Board vanity projects were built in lieu of “adequate streets” (i.e., streets with PCIs of 85% or higher) in the county?

Use the link in the right hand column for County Board contact info, and then tell one or all Board members what you think of their maintenance of Arlington County roads. Tell them ACTA sent you!

May 30, 2012

CAGW Names Their May 2012 Porker

Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.

Citizens Against Government Waste (CAGW) named its Porker of the Month for the month of May today. He is U.S. Rep. Elijah E. Cummings (D-Md.). The reason for his selection:

". . . his continued pressure on acting Federal Housing Finance Agency (FHFA) Director Edward DeMarco to pursue principal write down on mortgages owned by the two housing government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.  Director DeMarco has steadfastly refused to move toward principal forgiveness, citing his obligation to protect taxpayers and minimize additional losses for Fannie and Freddie, which are currently under the longest federal conservatorship in American history at a present cost to taxpayers of $183 billion."

A more detailed justification for the award to Rep. Cummings includes the following:

"Principal reduction by FHFA would involve eliminating a portion of a mortgage holder’s outstanding debt; a $400,000 mortgage on a home valued at $300,000 might be written down to a lower valuation, and the difference would be absorbed by taxpayers.  Much of the political pressure to embark on this radical approach is driven by the fact that many of the Obama administration’s attempts to stem the mortgage meltdown have either had minimal success or been abject failures.  Rep. Cummings and other proponents of principal write down are eyeing the $50.2 billion in remaining TARP funds to fund this scheme.  They would rather throw that money down the drain than return it to the U.S. Treasury to help take the edge off of the deficit.

"Director DeMarco, whose mandate is to protect taxpayers and minimize the GSEs’ losses, favors principal forbearance, which would reduce monthly payments without altering the total amount owed.  Director DeMarco is correct that principal forgiveness could cause compliant mortgage holders, once they realize that their neighbors are getting principal write downs, to stop paying their mortgages in order to qualify for loan forgiveness and a write down.  Studies indicate that even though one-third of mortgage holders are currently underwater, nine out of ten continue to make their payments on time.  A significant percentage of them would certainly choose to stop making payments and obtain a principal write down on the taxpayers’ backs.

"For his refusal to saddle the taxpayers with additional costs, Rep. Cummings has called Director DeMarco “the biggest hurdle standing between our nation and the recovery of our housing market.”  Along with other House Democrats, he has also called for DeMarco’s resignation, and stated that “He and he alone [DeMarco] stands in the way of hundreds of thousands of people, if not millions, being able to literally get a new lease on life.”

“There is one thing that taxpayers can always count on in Washington: the learning curve is very, very steep and Congress hasn’t kicked its wasteful housing habit,” said CAGW President Tom Schatz.  “Political meddling got the country into this mortgage mess.  Yet Rep. Cummings and his allies at the U.S. Treasury and the Obama administration are pushing hard for more interference in the housing market and billions more in wasteful spending.”

I wonder if Rep. Cummings will announce his Porker of the Month Award at his "foreclosure prevention workshop event" on Saturday, June 16, 2012 in Gwynn Oak, Maryland. You can contact his office on Capital Hill by calling (202) 225-4741.

May 29, 2012

Coal, Electricity, Jobs and the Economy

Unless you’re an activist in the environmental movement, you probably are not aware of the public hearings last week on the Environmental Protection Agency’s new rules, “Carbon Pollution Standards on New Power Plants” since there was virtually no reporting by the mainstream media although special interest groups of the environmental movement reported on the hearings, e.g., by the Switchboard, the NRDC’s staff blog.

But thanks to the May 26 2012 issue of The Week That Was (page 3; requires Adobe), the newsletter of the Science & Environmental Policy Project, we know about the hearings -- both the one “in Chicago and one was in Washington. The Washington hearing was packed with environmental groups, all claiming that coal-fired power plants should be closed down for reasons of public health.”

According to the NRDC, “EPA’s proposed carbon standard represents a critical step towards protecting the health of our children and families from climate change.” Although climate is in a constant state of change, let’s take a closer look to see if there is “still a case for coal?”

In an “issues paper,” titled "Is There Still a Case for Coal?" this month by the Manhattan Institute, Robert Bryce argues that there is indeed a case. Here’s the paper’s executive summary:

“On March 27, the EPA proposed what it calls the first “Clean Air Act standard for carbon pollution for new power plants.”[1] The proposal, if enacted, will effectively outlaw the construction of new coal-fired power plants in the United States. It is one of a myriad of rules leading to what some have called the “regulatory death” of domestic coal-fired electricity production. Shortly after the EPA announcement, Democratic Senator Joe Manchin of West Virginia said the move shows that the EPA is engaged “in a war on coal.”

“There’s no denying that coal has earned its reputation as a relatively dirty fuel. Generating electricity by burning coal results in higher levels of carbon emissions than does burning oil or natural gas. But the EPA should not prohibit the use of coal based on its carbon dioxide emissions. Doing so ignores modern advances in plant design and construction that have steadily improved air quality. But more to the point, prohibiting coal will increase the cost of producing electricity—a cost which will ultimately be paid by consumers—while doing almost nothing to reduce global carbon-dioxide emissions.

“Despite its drawbacks, coal remains a cheap, easily accessed, and abundant domestic fuel source. In other words, there is still a case for coal.

“The EPA should revisit its proposed ban on new coal-fired power plants. It is bad policy for several reasons:

  1. The anti-coal regulatory regime reduces access to a vital source of energy.
  2. Electricity producers need to retain a balanced fuel mix. Prohibiting a specific fuel has been tried in the past by regulators.
  3. The newest coal plants are clean by traditional EPA measures.
  4. Prohibiting construction of new coal-fired generation units won’t do anything to achieve the EPA’s stated purpose of reducing global carbon dioxide emissions."

The paper is well-documented, and includes the following chart of global coal consumption.

By the way, SEPP's newsletter is great resource for staying up-to-date on global warming.

May 28, 2012

Thought for Today

"We must never forget why we have, and why we need our military. Our armed forces exist solely to ensure our nation is safe, so that each and every one of us can sleep soundly at night, knowing we have “guardians at the gate.”

"Those who serve today deserve our gratitude, those who are returning from the battlefield deserve our open arms, and those who will never return deserve our thoughts, tributes and remembrance."

~ Rep. Allen West, Florida's 22nd congressional district and a retired Army Lieutenant Colonel

HT Memorial Day column at Human Events

May 27, 2012

Workers Needed to Support One Social Security Retiree

As the following chart from the Peterson Foundation shows, the Social Security deficit is growing.

The Peterson Foundation explains it this way:

"According to the latest government estimates, Social Security has begun a period of permanent cash-flow deficits, paying out more in annual benefits than revenue it brings from taxes on payroll and benefits. Absent significant reform, Social Security will run out of authority to pay full scheduled benefits after 2036. At that time, projections by the Social Security actuary indicate that benefits will have to be cut by about 23 percent if laws are not changed. Such large cuts could be reduced if policymakers took action in advance by phasing in modest tax increases, benefit cuts, or both."

When Social Security was set-up before World War II, "there were few beneficiaries and a lot of workers," according to a footnote in a recent paper by Veronique de Rugy that was published last week by the Mercatus Center of George Mason University. She adds the number "is expected to drop to two workers per retiree by 2030." Her paper includes the following chart:

Take a few minutes to keep informed by reading the entire paper. It's a fairly short read.

May 26, 2012

How Fast Is President Obama Increasing Spending?

It started with Rex Nutting's article at MarketWatch on Tuesday, May 22, 2012: “Of all the falsehoods told about President Barack Obama, the biggest whopper is the one about his reckless spending spree.”

Well, for me it started a few minutes earlier on Tuesday when I saw the following chart showing the annualized spending growth of several presidents going back to 1980 at Blue Virginia. a left wing blog. Blue Virginia wasn’t alone, though, since a similar story was posted at Rachel Maddow’s blog although Blue Virginia's was much more smarmy, "Brain-Dead Teapublican 'Out-of-Control Spending' Meme Bites the Big One (or Should)."

What looked weird on the above chart was that President Obama’s term was shown as FY 2010 thru FY 2013 while President Bush’s second term was shown as FY 2006 through FY 2009. It was then that I found the original Rex Nutting article.

By the following day, the story was busted by James Pethokoukas, among many others. At the American Enterprise Institute’s blog, EnterpriseBlog, he has three posts, two on Wednesday, here and here, and a third one on Thursday. His first on Wednesday said, “Actually, the Obama spending binge really did happen.”

His third post on Thursday came after White House spokesman Jay Carney had cited the Rex Nutting story, and included the chart below, which presents a far different picture. Here’s what Pethokoukas had to say:

"The shocking, contrarian piece was widely circulated in liberal circles and was even cited on Wednesday by White House spokesman Jay Carney.

"But there were a few problems with Nutting’s numbers. Nutting’s methodology assumes spending in the first year of a presidential term should be credited to the previous president. OK, fine. But he attributed a $410 billion spending bill in March of 2009 to George W. Bush even though it was signed by Barack Obama. Nutting also didn’t use inflation adjusted numbers.

"But I did both of those and got wildly different results from Nutting, as seen in the chart at the top of this post. (Note: I looked at absolute spending as opposed to the rate of increase.)

"My numbers show that spending under the ’10-’13 Obama budgets far outstrips spending by a generation of presidential predecessors. This should not be surprising since spending as a share of GDP under Obama is the highest in U.S. history outside of World War II.

"We can disagree about whether all of Obama’s massive spending is a good idea or not. But we can’t factually argue about whether it happened or not. It did.

"The Obama spending binge really did happen."

At noted above, a number of people busted Nutting's methodology. They include the following:

  • At American Thinker: On May 23, Yossi Gestetner showed the "actual story is misleading at best." Gestetner wonders on May 24 how White House spokesman Jay Carney "has the blantant Chutzpa to use MarketWatch math." Then yesterday, Rick Moran noted that Pethokoukas's chart above is "devastating."

Last night, Glenn Kessler, The Fact Checker at the Washington Post gives "Three Pinocchios" to Jay Carney and the White House. (HT to Ed Morrissey at Hot Air). He does a superb job of breaking down the numbers, and concludes:

"Carney suggested the media were guilty of “sloth and laziness,” but he might do better next time than cite an article he plucked off the Web, no matter how much it might advance his political interests. The data in the article are flawed, and the analysis lacks context — context that could easily could be found in the budget documents released by the White House.

"The White House might have a case that some of the rhetoric concerning Obama’s spending patterns has been overblown, but the spokesman should do a better job of checking his facts before accusing reporters of failing to do so. The picture is not as rosy as he portrayed it when accurate numbers, taken in context, are used."

Washington Free Beacon notes yesterday that "President Obama referenced a dubious statistical report at a campaign event on Thursday, claiming: “Since I’ve been president, federal spending has actually risen at the lowest pace in nearly 60 years.” The online newspaper adds:

"The claim was drawn from a MarketWatch post by Rex Nutting titled “Obama spending binge never happened,” which has been resoundingly debunked and discredited by a number of experts.

"White House press secretary Jay Carney cited the same report on Wednesday when he told reporters that Obama “has demonstrated significant fiscal restraint” and urged members of the media not to “buy into the BS that you hear about spending and fiscal constraint with regard to this administration.”

"Carney said any reporting to the contrary could only be the result of “sloth and laziness.”

Then there are two editorials in the leading financial press:

  • Wall Street Journal. The editorial is titled, "The History Boys" with the subtitle reading, "Obama's fiscal blowout that never happened, according to Obama."

"You wouldn't think that, after adding $5 trillion to the U.S.' debt, President Obama would seriously claim he's a fiscal hawk. But thanks to a misleading article on CBS' MarketWatch site, that's just what he's doing.

'"Since I've been president, federal spending has risen at the lowest pace in nearly 60 years," Obama said on Wednesday. "Think about that."

"Obama didn't turn to his own Office of Management and Budget to support this fact, or even the non-partisan Congressional Budget Office.

"Instead, he went to a CBS MarketWatch column by Rex Nutting, which claims spending under Obama has risen by an average of just 1.4%."

Miscellaneous references:

  • Ann Coulter writes in her column posted at NewsBusters that "Ed Schultz claimed the chart exposed 'the big myth' about Obama's spending: "This chart -- the truth -- very clearly shows the truth undoubtedly." And the truth was, the "growth in spending under President Obama is the slowest out of the last five presidents."
  • John Lott's Website. First, Lott writes, "I didn't think that I could be so stunned by Obama's claim in Colorado. At the US Air Force Academy Obama today claims: "After inheriting a $1 trillion deficit, I signed $2 trillion of spending cuts into law. My opponent won't admit it, but it's been starting to appear in places -- real liberal outlets like the Wall Street Journal," linking to a Colorado Statesman story that included reporting on a Denver fundraiser. Second, Lott posts a radio clip from the Larry Elder radio show, which includes embedded clips of Chris Mathews referencing the same Rex Nutting story.
  • In two separate columns (May 23 and May 24) at CNS News, Terence Jeffrey goes into great detail in clarifying  the issues raised in the Rex Nutting column. The latter includes a video of President Obama's comments at a Denver campaign event.
  • At Townhall.com, Kevin Glass writes about the Nutting column, and how it has "made the rounds on the blogosphere. It got fact-checked by Politico. White House spokesman Jay Carney cited it. It's the latest left-wing talking point that President Obama has actually put a slow to the growth of government spending." But, he adds, " it's completely false."

One by Mike Brownfield on Friday morning starts out: "There are some things that are so apparent that they’re not even worth mentioning. What goes up must come down. The earth is round. President Barack Obama is a big spender. But this week, some in the media and in the White House are denying one of these totally obvious truths. It shouldn’t be a big surprise which one it is."

A second by J.D. Foster took on the "Carney Kool-Aid," and noted that: " But in the press gaggle yesterday, White House spokesperson Jay Carney dropped a doozy, suggesting anew that the Obama Administration is living in a fantasyland all its own . . . Carney broke off answering a question about Baghdad to insert the following: The rate at which spending has increased is lower under President Obama than all of his predecessors since Dwight Eisenhower."

Then, Brian Dowling provides a thoroughly detailed takedown of Rex Nutting's column.

And finally, Emily Goff covers yet more details surrounding Rex Nutting's controversial column, including a helpful federal budgeting chart.

This is not the first time that someone has questioned statements by MarketWatch and/or Mr. Nutting. At NewsBusters in 2009, Tom Blumer questioned Mr. Nutting's reporting of GDP history. Two points are worth making, however. First, beware of people tossing numbers at you. It is obvious in this case that people using Mr. Nutting's numbers to support their argument ended up looking foolish. And second, learn to use "audited" accounting data. The numbers may still be incorrect, but the risk of using them is far, far lower. And as Larry Elder noted at the second John Lott post, President Obama didn't cite either his own Office of Management and Budget or the Congressional Budget Office, but a researcher/columnist. So a third point is to know your sources.

UPDATE (5/27/12): Four additional members of the alternative media takedown Rex Nutting.

  • Two posts at Americans for Tax Reform. In one post, Hugh Johnson opines, "Pethokoukis is correct in pointing out Nutting’s flawed analysis and wins the Twitter war with a nice counterfactual that ATR likes to cite: How much higher would spending be if Democrats still had huge congressional majorities?" In the second post, Mattie Duppler offers the opinion that "Federal spending historically averages 21 percent of GDP. During Obama's four years, spending has been well above 24 percent."
  • On Friday afternoon, Washington Post uber-blogger Ezra Klein begins saying, "There’s a confused and confusing debate going on over whether President Obama has presided over a “spending binge,” as Republicans claim, or whether, under Obama, “federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.” However, he adds to the confusion by wandering off into a partisan blame game.
  • Tom Blumer, who took down a previous Nutting column in 2009, as mentioned above, once again cuts through the fog at Pajamas Media yesterday with a detailed explanation that includes three helpful spreadsheets.
  • Finally, and perhaps keeping the best for last, Dan Mitchell weighs in at the Cato Institute's blog, Cato@Liberty on Friday. And yes, President Obama "does win the prize for being the most fiscally conservative president" if only "primary spending" is counted.  However, if you count "primary spending minus defense and bailouts," then President Obama "drops from second to second-to-last." But Mitchell also writes that "Obama's track record does show that he favors an expanding social welfare state." Mitchell does a good job, though, of walking through the various numbers. His post also shows the importance of being clear about the numbers you are using.

UPDATE (5/28/12): At the Competitive Enterprise Institute's blog, OpenMarkets.org last Friday, Hans Bader took down not only Rex Hutting, but also Rick Ungar, who used his Forbes column to continue the Rex Nutting silliness.

UPDATE (5/29/12): Re: Dan Mitchell provides Part II on whether President Obama is a big spender (see last bullet above) at Cato@Libert today. He writes:

"And how can these numbers make sense when the President saddled the nation with the faux stimulus and ObamaCare?

"Good questions. It turns out that Obama’s supposed frugality is largely the result of how TARP is measured in the federal budget. To put it simply, TARP pushed spending up in Bush’s final fiscal year (FY2009, which began October 1, 2008) and then repayments from the banks (which count as “negative spending”) artificially reduced spending in subsequent years."

UPDATE (8/13/12): Not to be outdone in all the backlash to Rex Nutting's fiscal wisdom was the comprehensive response posted by Peter Ferrara on May 30, 2012 in the American Spectator. Here's a very small portion of it:

"Nutting begins his stumbling by explaining to us, "What people forget (or never knew) is that the first year of every presidential term starts with a budget approved by the previous administration and Congress." Not exactly.

"The previous administration, or President, proposes a budget. The previous Congress approves a budget. And what Congress approves can be radically different from what the President proposes.

"For fiscal year 2009, President Bush in February, 2008 proposed a budget with a 3 percent spending increase over the prior year. But Nutting seems to have no memory that the Congress in 2008 was controlled by Democrat majorities, with the renowned budget skinflint Nancy Pelosi as Speaker of the House, and the restless Senator Obama already running for President, just four years removed from his glorious career as a state Senator in the Illinois legislature.

"As Hans Bader reported on May 26 for the more careful Washington Examiner, the budget approved and implemented by Pelosi, Obama, and the rest of the Congressional Democrat majorities provided for a 17.9 percent increase in spending for fiscal 2009! Not that President Bush was a fiscal conservative. Far from it. But Obama and Pelosi have served as drunken sailors to Bush's comparative Boy Scout on the issue."

May 25, 2012

Today's Quote

"Among the biggest lies of the welfare states on both sides of the Atlantic is the notion that the government can supply the people with things they want but cannot afford. Since the government gets its resources from the people, if the people as a whole cannot afford something, neither can the government."

~ Thomas Sowell

HT "Shameless Lies of Politics" Column at Investor's Business Daily

May 24, 2012

Kudos to Demian Brady at the National Taxpayers Union

Today, at Government Bytes, the National Taxpayers Union blog, Demian Brady makes an astute observation about many of the reports produced by the General Accountability Office (GAO) of the U.S. Congress. According to Brady:

". . . Most of their reports have a common theme: if only the federal agencies had more resources or better management and oversight, they would be be able to fulfill their responsibilities and wouldn't waste so much money. A sampling of the titles of their recent reports and testimonies give an indication that the government is failing or showing a mediocre performance on many fronts, but GAO's analysts excel at finding ways to put as positive a spin as they can on wasteful or redundant programs."

Just a few of the report titles in Brady's sample include the following:

  • "Information Technology Reform: Progress Made; More Needs to Be Done to Complete Actions and Measure Results.
  • "Uranium Mining: Opportunities Exist to Improve Oversight of Financial Assurances.
  • "Bureau of the Public Debt: Areas for Improvement in Information Systems Controls.
  • "Defense Management: Actions Needed to Evaluate the Impact of Efforts to Estimate Costs of Reports and Studies.
  • "Homelessness: Fragmentation and Overlap in Programs Highlight the Need to Identify, Assess, and Reduce Inefficiencies."

Full disclosure: before retirement, I was an internal auditor in the federal government, and occasionally worked with GAO auditors who, invariably, are very knowledgeable and highly professional. Unfortunately, they understand well who they work for.

That said, it's worth remembering Mr. Brady's concluding advice:

"Something to ponder next time you here a politician talking about the need for a new federal program when we can't effectively operate many of those already established."

May 23, 2012

Confronting ‘Tax Cuts for the Rich’ Demagoguery

In his American Spectator column today, Thomas Sowell writes, “(t)he 'tax cuts for the rich' demagoguery collapses like a house of cards when you subject it to logic and evidence.

Sowell’s argument goes like this:

“Democrats have been having a field day with the cry of "tax cuts for the rich" -- for which Republicans seem to have no reply. This is especially surprising, because Democrats made the same arguments back in the 1920s, and the Republicans then not only had a reply, but one that eventually carried the day, when the top tax rate was brought down from 73 percent to 24 percent.

“What was the difference then?

“The biggest difference is that Secretary of the Treasury Andrew Mellon took the trouble to articulate the case for lower tax rates, in articles that appeared in popular publications, using plain language that ordinary people could understand. Seldom do Republican leaders today even attempt to do any such thing.

“In 1924, the ideas from these articles were collected in a book which Mellon titled "Taxation: The People's Business." That book has recently been reprinted by the University of Minnesota Law Library. Today's Republicans would do well to get a copy of Mellon's book, which shows how demagoguery about "tax cuts for the rich" can be exposed for the nonsense that it is.”

He concludes this “must read” column by saying:

“Something similar happened in later years, after tax rates were cut under Presidents Kennedy, Reagan and G.W. Bush. The record is clear. Barack Obama admitted during the 2008 election campaign that he understood that raising tax rates does not necessarily mean raising tax revenues.

“Why then is he pushing so hard for higher tax rates on "the rich" this election year? Because class warfare politics can increase votes for his reelection, even if it raises no more tax revenues for the government.”

Here's the book cover at Barnes & Noble.


May 22, 2012

More of Your Tax Dollars Being Wasted?

At the Washington Examiner this afternoon Paul Bedard reported the U.S. Department of Health and Human Services has awarded a public relations contract for $20 million to “Porter Novelli to tell the public how to stay healthy, an education mandate in the Affordable Care Act.” more frequently referred to as ObamaCare.

Bedard also said the PR contract “is coming under heavy GOP fire as a propaganda effort to prop up the embattled health reform law and the president.” However, he also wrote, “Federal officials dismissed the calls to kill the contract, arguing that it is required under the law. They have also refused to stall implementation of Obamacare while the Supreme Court decides its future.”

Despite that, an Investor’s Business Daily editorial reported:

“A Health and Human Services official let slip the real reason, telling Roll Call that the PR effort is meant "to inform the American people about the many preventive benefits now available ... as a result of the Affordable Care Act."

“In other words, this is more about burnishing ObamaCare's image before the election than meeting some public health imperative.

“Plus, since the law passed, the administration has been relentless in selling it to the public. As the Heritage Foundation notes, HHS pushed Congress to quadruple its public affairs budget. It also spent $1.4 million for an online search ad campaign designed to drive traffic to the ObamaCare website. And it worked extensively with liberal advocacy groups to sell the law.

“Too bad none of it is working. More than two-thirds of the public — including half of Democrats surveyed — want the Supreme Court to kill at least the individual mandate, according to a recent IBD/TIPP poll.

“The public knows that ObamaCare is a disaster."

In addition, the Heritage Foundation’s blog, The Foundry, reported “(a) Freedom of Information Act request filed by the group Judicial Watch last year revealed the lengths to which HHS has gone to attempt to sell Obamacare to a skeptical public,” citing such examples as:

  • “A number of documents address the need to target the Obamacare propaganda campaign to Hispanics, blacks, and women. For example, according to an email from Chris Beakey, vice president of Ogilvy PR Worldwide, to HHS officials on Dec. 16, 2010, summarizing a conference call, “You want to utilize the bulk of their paid media efforts (which would include expenditures for Radio One and Univision) on media that reaches African Americans and Hispanics. The money will go farther and these audiences continue to be a top priority.”
  • “A Jan. 18, 2011, email from Ogilvy to HHS New Media Communications Director Julia Eisman notes with respect to a Spanish banner ad campaign, “I realize we really can’t use the blond mom and child for this audience.”

The Heritage Foundation blog also noted:

“The Obama administration has also coordinated with liberal activist groups and friendly media organizations to spin the law in a positive light. Scribe published a four-page strategy memo in March that revealed the White House’s comprehensive public-relations campaign for the second anniversary of Obamacare and Supreme Court oral arguments.”

Not to be outdone, the left-liberal blog, Think Progres Health says, "In comparison, more than $262 million has been spent campaigning against Obamacare so far. Educating people about the benefits of Obamacare, such as that preventive services are available at no additional cost, and counteracting the misinformation campaign will be vital to the law’s success." As usual, though, liberals forget the government's so-called education campaign is paid for by the taxpayers.

UPDATE (5/24/12): The editorial in today's Washington Examiner concludes by saying:

" . . . A March 2012 Congressional Research Service Report found government agencies spent more than $900 million on contracts for advertising services in 2010 alone. Aside from the Pentagon, which uses advertising to recruit, the biggest spenders are HHS and the Treasury Department. Is any of this really necessary?

"Americans still hate Obamacare. According to a recent survey by Rasmussen Reports, 56 percent of likely voters want it repealed. It is bad enough that American citizens have to pay for the management and execution of federal programs they never wanted. They shouldn't have to pay for propaganda promoting these programs as well."

And the Washington Times also editorializes against the PR effort by HHS to support ObamaCare, saying in the lede paragraph:

"President Obama’s health care takeover is so unpopular with voters that he has stopped talking about it in public. Behind the scenes, however, he’s tapping into taxpayers’ pockets for a multimillion-dollar advertising campaign to change their minds. Congress wants answers."

May 21, 2012

2012 Snapshot of the Federal Regulatory State Released

Among other principles, America’s prosperity is based upon ideas such as free markets, limited government, low taxes, and economic freedom. And regulation is a component of economic freedom, according to the Concise Encyclopedia of Economics at the Library of Economics and Liberty.

Consequently, it was good to see last week that the Competitive Enterprise Institute published their 2012 edition of Ten Thousand Commandments, their “annual snapshot of the Federal regulatory state.” The snapshot is the work of Clyde Wayne Crews, the institute’s vice president for policy. Here is the short version of the overview:

“The scope of federal government spending and deficits is sobering. Yet the government’s reach extends well beyond the taxes Washington collects and its deficit spending and borrowing. Federal environmental, safety and health, and economic regulations cost hundreds of billions—perhaps trillions—of dollars every year over and above the costs of the official federal outlays that dominate the policy debate.

“Economics 101 on tax incidence explains how and why firms generally pass along to consumers the costs of some taxes. Likewise, some regulatory compliance costs that businesses face will find their way into the prices consumers pay and into wages earned. Precise regulatory costs can never be fully known because, unlike taxes, they are unbudgeted and often indirect—even unmeasurable as such. But scattered government and private data exist on scores of regulations and on the agencies that issue them, as well as estimates of regulatory costs and benefits. Compiling some of that information can make the regulatory state somewhat more comprehensible. That is one purpose of the annual Ten Thousand Commandments report.”

Here are the first three of the report’s highlights:

  • “Estimated regulatory costs, while "off budget," are equivalent to over 48% the level of federal spending itself.
  • “The 2011 Federal Register finished at 81,247 pages, just shy of 2010’s all-time record-high 81,405 pages.
  • “Regulatory compliance costs dwarf corporate income taxes of $198 billion, and exceed individual income taxes and even pre-tax corporate profits.”

Here’s one of the charts from the report, showing how regulatory costs compared with selected taxes and corporate profits:

A great job, Mr. Crews. Thank you.

May 20, 2012

American Households $12,984 Closer to the Fiscal Cliff

Terence Jeffrey wrote at CNS News last week that since March 2, 2011, when “the White House and leaders of both parties in Congress” agreed to “a continuing resolution to keep the government funded past March 4, “the federal debt has climbed from $14,182,627,184,881.03 to $15,708,753,671,767.64 . . . an increase of $1,526,126,486,886.61.”

Jeffrey then takes that $1.53 trillion and divides it by the number of households reported by the Census Bureau. He writes:

“Given that the Census Bureau estimates there are about 117,538,000 households in the United States, the per household increase in the federal debt since Congress enacted its March 4, 2011 bipartisan spending deal has been approximately $12,984. (emphasis added)

Want to know more about the ‘fiscal cliff’ as some call it? Some talk of Boomergeddon, which Jim Bacon defines as “the day investors stop buying U.S. Treasuries — the day the U.S. government goes into default, the global economy is thrown into turmoil, the American empire begins to crumble, and the social safety net starts to unravel.” For more about Boomergeddon, check out Jim’s book at Barnes & Noble; here’s the cover:


May 19, 2012

What Is the Value of Bipartisanship?

"Since 2001, (bipartisanship) has produced No Child Left Behind, a counterproductive federal intrusion in primary and secondary education; the McCain-Feingold speech rationing law (the Bipartisan) Campaign Reform Act); an unfunded prescription drug entitlement; troublemaking by Fannie Mae and Freddie Mac; government-directed capitalism from the Export-Import Bank; crony capitalism from energy subsidies; unseemly agriculture and transportation bills; bailouts of an unreformed Postal Service; housing subsidies; subsidies for state and local governments; and many other bipartisan deeds."

~ George Will

HT's Will's column at Investor's Business Daily

May 18, 2012

Food Stamps, $41 Ice Cream Cakes, and WiFi

After first reminding us that Benjamin Franklin once said, “Beware of little expenses. A small leak will sink a great ship,” Warren Kozak writes in yesterday’s Wall Street Journal’s opinion pages ($) about a woman’s purchase of an ice cream cake for $41 in a “high priced” grocery chain with her food stamp benefits card. She was accompanied by her young son. According to Kozak:

“I stood there, wondering what lesson the young boy takes away from this transaction. Does he grow up with the faintest understanding of delayed gratification—that you have to earn your money before you can buy candy—or, in this case, an ice-cream treat? I wondered how we arrived at this point as a nation. I also felt like a chump.

< . . . >

“But over the last four decades, our government has quietly done away with almost all of the restrictions once placed on food assistance. SNAP cards (Supplemental Nutrition Assistance Program) can be used to purchase practically anything with the exception of liquor and cigarettes. These cards are also openly and illegally sold for cash, which allows the recipient to buy anything they want, including cigarettes and liquor.

“Food assistance is helping many families keep their heads above water when they would otherwise not get by, and many of these families watch every dime. But the system also allows people to flagrantly disregard the program's original purpose.” (emphases added)

Meanwhile, Judicial Watch’s blog, Corruption Chronicles, reports:

“To further expand the government’s bulging food-stamp program, the Obama Administration is allocating $4 million to provide farmers’ markets not currently participating in the welfare plan with the wireless technology necessary to redeem the benefits.

<. . . >

“It’s all part of the Obama Administration’s effort to eradicate “food insecure households.” In the last few years the administration has spent millions of dollars to recruit even more food-stamp recipients and has doled out hefty cash rewards to states that sign up the most people. One state even bragged about a $5 million performance bonus it got from the feds for its “swift processing of applications.”

Creating dependency as far as the eye can see?

UPDATE (5/26/12): Wall Street Journal readers from Tuczon, AZ and Chamblee, GA provide "different takes on aid formerly known as food stamps." Need additional letters to the editor?

May 17, 2012

Efficiency Review of Arlington Public Schools, Part III

The consultants who performed the efficiency review of the Arlington Public Schools got a “thumbs up” from the editors of the Arlington Sun Gazette this week. According to the Sun Gazette’s editors:

“To the county school system’s efficiency consultants, who have offered a provocative question: Is Arlington Public Schools’ insistence on lowest-in-the-region class sizes actually hurting, rather than helping, student achievement?

“The consultants peg the cost of keeping class sizes artificially low at $30 million a year in personnel and facilities costs, and – without offering a recommendation either way – say school officials should investigate whether that money could be used for initiatives and programs that would better close the county’s appallingly large achievement gap, and push all student achievement higher. (emphasis added)

“School Board Chairman Abby Raphael and Superintendent Patrick Murphy each publicly promised to consider the provocative question. Having been raised, let’s hope the school system does so.”

For the record, we growled on May 11 when the efficiency review was presented to the school board, and growled again on May 13 when we took an initial look at peer group comparisons.

The extra tax burden born by Arlington County taxpayers may be even greater than that $30 million. Consider the cost-per-student of the Fairfax County Public Schools for FY 2012 was $12,820 while Arlington Public Schools had a cost-per-student for FY 2012 of $18,047. Multiplying that difference of $5,227 by Arlington’s 22,245 students means the extra tax burden may be as much as $116 million. Doing the same calculation with the Montgomery County Public Schools cost-per-student of $14,776 means the extra tax burden born by Arlington County taxpayers may be as much as $72 million. Sure is something to think about.

May 16, 2012

‘Stimulus’ Tax Dollars at Work Studying . . . Sexual History

Where else, but in the San Francisco Bay area. According to the Investigative Unit of the NBC Bay Area news outlet:

“The NBC Investigative Unit has raised questions about two grants totaling nearly $1.5 million dollars distributed to the University of California San Francisco. The money was part of the federal stimulus program and went to studies into the erectile dysfunction of overweight middle aged men and the accurate reporting of someone's sexual history.

< . . . >

“The Investigative Unit looked closely at the federal government's decision to spend nearly $1.5 million dollars of taxpayer money, money that came to California. Grant number 1R01HD056950-01A2 was among the thousands of grants funded, receiving $1.2 million dollars. This grant studied how to improve the accuracy of how people responded to questions about their sexual history.

"If you honestly report on your sexual activity and number of partners?" Scott Amey with asked with a sigh. "That's a good one."

“Amey is the general council for  POGO, the Project on Government Oversight, a Washington D.C., nonpartisan, non-profit government watchdog group. During our interview with an NBC crew he tried to explain why the government used so much tax money to improve self-reports about high-risk sexual behavior.”

If you’re not upset with the waste of your tax dollars, yet, the story has additional details.

UPDATE (5/16/12): Dan Mitchell comments on "great moments in government waste: stimulus spending on . . . um . . . stimulus," at Townhall.com today.

May 15, 2012

Government Intervention and the Financial Crisis

On the front-page of the commentary section of yesterday’s Washington Times, John A. Allison, former chairman and CEO of BB&T Bank was interviewed by Brett Decker, the Times’ editorial page editor. Under Allison’s leadership, BB&T became the 10th largest financial services company, and earned him “a spot on Harvard Business Review’s list of top 100 most successful CEOs in the world." He currently teaches at Wake Forest University.

Since the private sector is often blamed for the 2008 financial crisis, one of the questions and the answer to it addresses the cause of the crisis:

“Decker: Banks are used as whipping boys to impute blame for the collapse of the housing market, but government played a central role in the mortgage crisis. Can you explain how Washington intervention manipulated the market with such disastrous results?

“Allison: Government policy is the primary cause of the financial crisis. The Federal Reserve “printed” too much money in the early 2000s to avoid a mild recession, which led to a massive misinvestment. The misinvestment was focused in the housing market due to the affordable housing (subprime) lending policies imposed by Congress on the giant Government Sponsored Enterprises (Freddie Mac and Fannie Mae), which would never have existed in a free market. When Freddie and Fannie failed, they owed $5.5 trillion and had $2 trillion in subprime loans. Because Freddie/Fannie had such a dominate share of home-mortgage lending in the United States (75 percent), they drove down the lending standards for the whole industry.”

While on the subject of the financial crisis and the private sector, the 2012 No. 1 issue of the Hoover Digest includes an essay by Nobel economist Gary Becker who writes, “Politicians were eager to cry “market failure” when the deeper problem was, and remains, government failure.” He concludes by saying:

“The widespread demand after the financial crisis for radical modifications to capitalism typically paid little attention to whether in fact proposed government substitutes would do better, rather than worse, than markets.

“Government regulations and laws are obviously essential to any well-functioning economy. Still, when the performance of markets is compared systematically to government alternatives, markets usually come out looking pretty darn good.”

If you have a few minutes, the entire contents of both the interview and Becker’s essay are well-worth reading.

May 14, 2012

Illegal Aliens Get Billions From IRS, Redux

We growled about this on September 2, 2011, but thanks to the Internet and Indianapolis’ WTHR Channel 13's broadcast of the story on April 26, 2012, it’s worth repeating again. Here’s the short Q&A from today's FactCheck.org, a project of the Annenberg Public Policy Center (HT Tax Prof Blog, May 14, 2012):

“Q: Does the IRS pay billions in tax refunds to workers who are in the U.S. illegally?

“A: Yes. The Treasury Department’s Inspector General determined that $4.2 billion was paid in 2010, up from less than $1 billion in 2005. Leading Democrats are resisting a bill that would stop future payments.”

And here is the introduction to the their “full answer:”

“This is a rare case of an Internet rumor with some substance to it. In fact, it’s shaping up as a major dogfight in Congress. At issue here are the federal child tax credits that can be claimed by persons with dependent children under age 17. Some Democrats are already defending these child tax credit payments that have gone to those without a valid Social Security number, accusing Republicans who want to end them of a heartless attack on children.

“Several different versions of this viral email all cite a recent investigative story by an Indianapolis television station, but WTHR-TV is far from the first to notice. The Washington Post and others reported on this last year when the Treasury Department’s inspector general for tax administration issued a report on July 7, 2011.

“The title of the report summed up the IG’s finding: “Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable Credits.”

“The credits currently amount to $1,000 per child, and they are “refundable,” meaning that parents may receive refunds even when they do not owe any tax.

“The IG report stated that more than 2.3 million persons who did not have Social Security numbers valid for working in the U.S. got an average of roughly $1,800 each in 2010 in child tax credit refunds. That included 9,000 illegal immigrants who each got a total of $10,000 or more by retroactively claiming credits for tax years prior to 2010.”

Annenberg’s full answer includes how this happened, and what’s to be done. In addition, they include a video of Congress members discussing the issue in committee, and about a dozen resources.

Do you think Congress has passed the needed legislation, yet, to fix this? Ask your favorite member of Congress.  Our Growls dated May 3, 2012, ends with links to Arlington County’s three members of Congress (Senators Jim Webb and Mark Warner and Representative Jim Moran) to whom you can call or write.

May 13, 2012

Efficiency Review of Arlington Public Schools, Part II

When we growled on Friday, May 11, about the efficiency review of the Arlington Public Schools conducted by Gibson Consulting under a program of the Virginia Department of Education, we said the report was “data rich” and that we’d be growling more about it as we plowed through it.

We were correct about the report’s “data richness.” And to use the military/management term, the report is also “target rich.” Let’s start with two peer comparisons that appear in the report’s Appendix B, i.e., sources of revenues and dropout percentages:

  • Sources of revenue for the school operating fund (Table B.3):
  • Federal funds: Arlington -- 2.4%; peer division average -- 4.5%; others ranged from 1.8% (Loudoun) to 6.9% (Prince George’s County, MD).
  • State funds: Arlington -- 12.6%; peer division average -- 34.4%; others ranged from 12.8% (Alexandria) to 54.4% (Manassas Park City).
  • Local funds: Arlington -- 81.8%; peer division average -- 58.1%; others ranged from 38.3% (Prince George’s, MD) to 76.8% (Fall Church).
  • Beginning balance: Arlington -- 2.5%; peer division average -- 1.6%; others ranged from 0% (Manassas Park City and Prince George’s, MD) to 3.9% (Fall Church).
  • Other: Arlington -- 1.0%; peer division average -- 1.3%; others ranged from 0.4% (Prince William) to 3.6% (Manassas Park City).
  • Dropout percentages (Table B.14):
  • Arlington -- 2.74%
  • Division Average -- 0.67%
  • Alexandria -- 1.64%
  • Falls Church -- 0.24%
  • Loudoun -- 0.53%
  • *All peers not reported.

The primary reason the source of revenues for the Arlington Public Schools is local sources, and why it's such a large percentage in comparison to most other Virginia school districts, has to do with what's called the Composite Index of Local Ability to Pay, which "determines a school division’s ability to pay education costs fundamental to the commonwealth’s Standards of Quality (SOQ)." (More information is available here. For "a critical analysis" from a Virginia Tech doctoral candidate click here. Memo No. 208, December 5, 2003, from Virginia's Superintendent of Public Instruction. Finally, from Del. David Albo's blog, Constituent's Corner, is his explanation of the composite index.).

May 12, 2012

Can We Stop The 'Class Warfare' Now?

In a new poll released yesterday, Gallup reports, “Despite the recent political emphasis on wealth inequality and the call for higher taxes on the rich, more than six in 10 Americans think the United States benefits from having a class of rich people, unchanged from 22 years ago.”

Here are the 1990 and 2012 responses to Gallup’s question:

And what are the political differences? According to Gallup:

The implications, according to Gallup, are:

“The majority of Americans not only think it is good for society to have a class of rich people, but would themselves like to be rich. These attitudes have held constant over the last two decades -- even as politicians have decried the fact that the rich get richer while the middle class stagnates, and amid calls for increased taxes on the rich to help redistribute income. Thus, Gallup finds no signs -- at least, based on these measures -- that Americans are becoming more and more negative about the existence of people in society who have a lot more income and wealth than most of the rest.

“It also appears that the American dream is alive and well in the minds of young Americans, almost half of whom think it is at least somewhat likely that they themselves will be rich someday. But it's not solely young people. The fact that even 8% of those who are 65 and older hold on to the possibility that they might be rich someday suggests that the dream of being wealthy lives on in the hearts and minds of some Americans even as they approach the end of their lives.”

At his blog, Tibor's Space, Tibor Machan wrote last month, “rich bashing is unjust and vicious.” In the essay, Machan, professor emeritus in the department of philosophy at Auburn University, begins his essay by saying:

“The casual manner in which President Obama proposes that various progressive tax measures be implemented against the so called rich–ones who earn more than two million a year–is indicative of just how deep seated and widespread is the prejudice against wealthy people in the United States of America.”

But will Americans get battered with less class warfare between now and November 6? And will the Left discontinue whining about income inequality? It’s doubtful, but stay tuned!

HT Tax Prof Blog.

May 11, 2012

Efficiency Review Presented to Arlington School Board

At it’s meeting last night, the Arlington School Board received the final report of the School Efficiency Review performed by the Gibson Consulting Group (available here at the Virginia Department of Education's webpage). The reviews began in 2005, and were part of then Governor Mark Warner’s Education for a Lifetime initiative, "a comprehensive school efficiency review program (that) was created in the Commonwealth of Virginia to ensure that Virginia’s education dollars were being spent wisely and effectively.”

The 143-page report is “data rich,” to say the least, and we’ll be growling more about it as we slowly plow through the content. In the mean time, the Arlington Sun Gazette’s Scott McCaffrey had his notepad working last, and filed a comprehensive report in today’s online edition. Here’s the central finding of the consultant’s six-months of work, according to McCaffrey’s report:

“Could the county school system improve student learning, and close achievement gaps among pupils of difference races and ethnicities, by giving up its lowest-in-the-region class sizes?

“That’s a provocative question resulting from a six-month efficiency review of school-system operations, delivered by a consultant to School Board members on May 10.

The consulting firm pegs the cost to Arlington taxpayers of keeping student-teacher ratios lowest in the region at $30 million a year, and asks whether those funds could be better used to more directly attack achievement issues. (emphases added)

“This is worth looking at,” said Greg Gibson of Gibson Consulting Group, who delivered results of the state efficiency review to school officials.

“Gibson arrived at the $30 million figure by factoring in both personnel and facilities costs, and noted that Arlington has a 30-percent lower pupil-teacher ratio than its peer group, a gap that grows even bigger at the secondary level.

“That’s pretty significant,” he said. “It is an expensive investment. I just want to make sure you’re getting a return. There might be some opportunity to redirect some of that money.”

“But Gibson phrased the suggestion as merely food for thought, not a mandate.

“We’re not second-guessing your values or your culture,” he said.

“School officials, who just saw the efficiency report that day, said on May 10 they would take the matter under advisement but offered no clear indication of how strongly they felt about the idea.

“Are we getting the academic return [from lower class sizes]? It’s a fair question,” School Board member Sally Baird said.

“A very fair question,” added Superintendent Patrick Murphy.”

The consultant also “found about $8.5 million in potential savings over five years, but also recommended $5.3 million in new investment that would streamline processes and result in savings down the road,” McCaffrey reported.

For the moment, that $30 million cost for having the area’s lowest student-teacher ratio is something to ask future school board candidates about, and how do candidates know that Arlington taxpayers are getting an academic return on their tax dollars.

Ed Fendley was the first School Board member to support the efficiency review, followed by Sally Baird and Abby Raphael. We congratulated the School Board for volunteering the school district to an efficiency review when we growled on April 1, 2009; the Growls post contains a short history of ACTA’s support for the reviews.

May 10, 2012

An Odd Definition of Fairness?

"If you think spreading money around by force seems like an odd definition of fairness, you're not alone."

~ Arthur C. Brooks

HT Brainyquote

May 09, 2012

What will the Arlington County Board do now?

On April 6, 2012, we growled about the message sent to the County Board by the county’s Civic Federation earlier that week to either “fix it or close” the Artisphere -- the cultural center in Rosslyn that is struggling financially.

At ARLnow.com today, their headline reads, “Latest Artisphere Financial Results a Mixed Bag.” The story’s lede puts it like this:

“The good news for Artisphere, the county’s struggling cultural center in Rosslyn, is that it just had a certified hit in the form of its month-long Frida Kahlo photo exhibit. The bad news is that it’s still falling short of meeting a number of financial goals laid out in a new business plan last year.”

The ARLnow.com online news service also reported:

“The biggest revenue bright spot for Artisphere so far has been donations and event sponsorships, both of which are expected to meet or exceed the goal for the year. Most of that income, however, came from a single source: the Rosslyn Business Improvement District.

“Other numbers are trending in a positive direction. Despite the fact that Artisphere’s operating hours have been more than cut in half, overall visitorship has been largely unaffected. And, partially as a result of the cut in hours, the “density of visitors” has increased from an average of 7 visitors per hour in December to 54 visitors per hour in March. Still, attendance at three of Artisphere’s five performance venues — the Dome theater, Spectrum theater and education lab — are well below expectations.”

The following “plan vs. actual” chart is from the news story:

As a friend quipped, it's time to close the Arlington County Board's Officers' Club (aka Artisphere -- where the Board goes to party, free). This would be item #1 if Arlington had an Inspector General. Perhaps it's why it doesn't.  And that $22 million homeless shelter "eminent domain" project would be #2.

May 08, 2012

Yet More on Tax Fairness

We growled about "tax fairness" on April 24, 2012 and April 27, 2012. Now comes Deroy Murdock positing at National Review Online earlier this week that "rather than lifting the lobby, the Left would plunge the penthouse." According to Mr. Murdock:

" . . .    Class warriors scream about imposing “fairness” on the rich, but their shouts become mumbles when asked what precise tax rate achieves “fairness.”

"Liberals fall mum amid these facts: In 2009, the latest IRS figures demonstrate, the much-maligned top 1 percent of taxpayers earned 17 percent of national income and paid 37 percent of federal income taxes. The top 10 percent made 43 percent of national income and surrendered 70.5 percent of income-tax revenues. Meanwhile, the bottom 50 percent scored 13.5 percent of national income and paid just 2.3 percent of income taxes.

"Unfair? If so, the Left should specify what heavier tax burden on the wealthy or lighter tax load on the lower half of taxpayers would constitute 'fairness.'”

HT Dan Mitchell at Townhall.com

May 07, 2012

Taxmageddon Bad? Wait for ObamaCare to Kick-in.

Two weeks ago on April 18, 2012, we growled that Taxmageddon loomed above the country like a dark storm cloud. At the Tax Foundation’s blog, Tax Policy Blog, today, Richard Morrison estimates the tax costs of ObamaCare.

Citing bloggers at The Foundry, Morrison points out that some of the ObamaCare taxes “will hit Americans at all levels of the income scale.” For example, takes note that the Foundry bloggers write:

“They emphasize that, over time, the normal process of inflation will pull an ever-larger number of Americans into the pool of individuals subject to higher payroll taxes:

“Obamacare raises taxes by more than $500 billion in a decade, and a number of these will hit Americans at all levels of the income scale.

“Beginning in 2013, the law increases the Hospital Insurance (HI) payroll tax from 2.9 percent to 3.8 percent for individuals earning above $200,000 and couples earning more than $250,000. The payroll tax is also applied to these earners’ investment income for the first time. But since the increased tax rates aimed at these higher income brackets are not indexed to inflation, they will impact more middle-class Americans every year.

“In fact, the higher payroll tax rate will eventually hit a huge majority of Americans. (emphasis added)

Morrison posts the following chart, which comes a Heritage Foundation 2010 report:

Sheesh! ObamaCare not only raises taxes, but “adds 17 new taxes or penalties.” Ready to boot out every last member of Congress who voted for ObamaCare?

UDATE (5/17/12): In his latest column for Investor's Business Daily, Lawrence Kudlow talks about the "looming 'fiscal cliff' of tax hikes," aka taxmageddon, threatening the United States.

May 06, 2012

A Federal Budget Primer

The Peter G. Peterson Foundation sees as it’s mission “to increase public awareness of the nature and urgency of key fiscal challenges threatening America's future and to accelerate action on them.” In order to do this, it strives “to find and implement sensible, long-term solutions that transcend age, party lines and ideological divides in order to achieve real results.

The Foundation provides a Federal Budget Primer for those seeking an introduction to the fiscal challenges facing America today. It begins with a set of basic numbers that tell you the percentage of the gross domestic product (GDP) for the years 2010 and 2040 for several important factors, e.g. (data from the Congressional Budget Office; compiled by the Foundation):

                               2010        2040

  • Federal Spending -- 23.5%     38.5
  • Net Interest --         1.3%      11.1%
  • Federal Revenues -- 14.7%     19.3%
  • Deficit --                   8.8%     19.2%

The primer provides easy to understand definitions related to federal budgeting. One of them deals with the federal deficit and how high deficits will slow the rate of economic growth. The primer puts it this way:

“Because the value of money changes over time, it is helpful to compare the deficit and debt to the recession. Since the Great Depression federal deficits are more the norm than the exception.  In the last 40 years alone, the budget has run deficits in all but four years, averaging 2.6 percent of GDP. Larger deficits put the budget at risk of incurring interest costs that grow faster than the economy, creating greater and greater pressure on the budget, increasing federal borrowing to a point that eventually could crowd out private investment and lower future standards of living.  The Congressional Budget Office (CBO) estimates that if the projected deficits do cause crowding out of private investments, within the next two years, economic growth could slow to the point where national output per person stops increasing, and in twenty five years CBO estimates that there would be about $10,300 per person less to go around.”

The primer shows that effect in the following chart showing the projected economic output per person:

The primer has other helpful charts, and includes links to such resources as the Congressional Budget Office and the Office of Manage and Budet. It also links to the "left of center" Center on Budget and Policy Priorities. Another resource you shouldn't miss is the "right of center" Heritage Foundation since it provides links to numerous Heritage budget resources.

May 05, 2012

Paying more in Taxes than for Food, Clothing, and Shelter

In a new Tax Foundation study (Fiscal Fact No. 299, May 3, 2012), we learn that in 1929, Americans spent $41.6 billion on housing, food, and clothing while paying just $10 billion in taxes, or 24%. By contrast, in 2011, Americans spent $3,760.3 billion on housing, food, and clothing, but paying $3,742.6 billion in taxes, or 99.5%.

That sure is something for America’s young people to think about.

The “gap” between taxes paid and what you paid for food, clothing and shelter reached a maximum of over 19% in 2000 when Americans paid $2,903.6 billion in taxes compared to $2,427 billion for food, clothing and housing.

The study also talks of “total spending” by adding in spending on transportation and healthcare, and then goes on to show the effect of transfer payments (i.e., welfare, food stamps, etc.) on total spending. According to the Tax Foundation:

“ . . . in 1929 transfer payments represented only 0.5 percent of private expenditures on housing, food, clothing, healthcare, and transportation. By 1965, when Medicare began, this percentage had grown to about 11 percent. Today it stands at close to 35 percent. While some money spent on transfer programs is spent on other items besides healthcare, food, clothing, transportation, and housing, the strong prevalence of in-kind benefits, or government transfer payments for a specific item or service, keeps this as a small fraction of overall expenditures.”

This is shown in the following graph from the study:

Thanks to Kevin Duncan who prepared the study for the Tax Foundation. Incidentally, the study includes a table of total taxes and total living expenses for the years 1929 to 2011 should you want to construct your own chart. They also include several other charts.

May 04, 2012

Something to Think About

"Political leaders don't lead. They take the path of least resistance, which has been to do little except to find scapegoats -- "the rich," "special interests," "liberals," "conservatives" -- that arouse their supporters' angriest antagonisms. It helps explain polarization. This is really what Washington does. It's a demoralizing commentary on the state of American democracy."

~ Robert Samuelson

Source: His Column at RealClearPolitics.com or Washington Post

May 03, 2012

U.S. Tax Complexity Costing Americans Billions

The National Taxpayers Union released their annual report on U.S. tax complexity two weeks ago. The press release introduces the report this way:

“Our complex tax system continues to be one of the most expensive in the world, costing the American economy $228.4 billion and 6.38 billion hours per year; combined with recent Congressional legislation, it threatens to become a full-blown civil liberty crisis where no personal financial detail is your own, according to the 362,000-member National Taxpayer’s Union’s (NTU’s) 14th annual study of tax complexity.”

A bit more of the report’s overview, this time from the report’s introduction (NTU Policy Paper #130, “A Taxing Trend: The Rise in Complexity, Forms and Paperwork Burdens,” April 17, 2012):

“Like old age, tax complexity has been creeping up on us. We may not notice it one year at a time, but a review of past years’ tax documents compared to today’s forms and instructions reveals just how shockingly complicated taxes have become. And the situation may soon get even worse.

“The most recent estimate of the current paperwork burden generated by the Treasury Department, nearly all accounted for by the Internal Revenue Service (IRS), now totals 6.38 billion hours, according to data from the Office of Management and Budget (OMB). That is the equivalent of about 3.19 million employees working 40-hour weeks year-round with just two weeks off. Incredibly, it comes close to the number of workers at the four biggest retailers among Fortune 500 companies – more than all the workers at Wal-Mart Stores, McDonald’s, Target, and Kroger combined! It’s more than triple the number of workers employed at the top four banks -- Bank of America Corp., Wells Fargo, Citigroup, and J.P. Morgan Chase & Co.”

The report, authored by David Keating, NTU senior counselor, provides numerous measures of complexity. Here are a few of them:

  • Line by line: in 1935, Form 1040 was 34 lines while the instruction booklet was just two pages. By 2011, Form 1040 has 77 lines, and the instruction booklelt has 189 pages.
  • Compliance time burden: According to the report:

“The United States now ranks an embarrassing 131st out of 183 countries worldwide in total tax rate, a decline from 124th in the previous year’s report. Additionally, the U.S. ranked 66th worldwide for time spent complying with corporate tax filings, according to “Paying Taxes 2012,” a study jointly published by the accounting firm PricewaterhouseCoopers and the World Bank Group. In this analysis, a ranking of “1” would mean a country’s economy had the lowest rate and least onerous compliance regime, respectively.

< . . . >

Tellingly, the U.S. did even worse when ranked by total tax rate alone – 131st out of 183, dropping from 124th in 2011, 118th in 2010 and 92nd out of 181 in 2009. Thirty-three countries made corporate taxpaying easier last year by cutting rates or streamlining filing processes. Unfortunately, America could not be counted among them.”

  • Paid professionals now prepare most tax returns: In 1980, paid preparers signed 38.0% of all tax returns, but in 2009, that number has jumped to 60.0%.
  • Tax preparation costs and fees are rising: First, NTU’s report notes, “The efficiency gain of computers and printers has been overwhelmed by the increases in complexity.” A table in the report shows the “nominal” charge by H&R Block has increased from $27.36 in 1980 to $179.07 in 2011.

Other points made in the NTU report include the opinion that “tax complexity to get worse;” perhaps even worse, “the rising threat from the specter of the AMT, a parallel and complex tax system once aimed at ensuring the rich paid a substantial tax bill;” and “experts agree they can’t agree on tax bills.”

The report’s conclusion makes several points, especially the following:

“Though there are many obstacles to reaching the simpler and less burdensome Tax Code Americans deserve, bipartisan efforts continue to make gradual inroads. The Reforming America’s Taxes Equitably (RATE) Coalition has recently been formed to unite Republicans and Democrats behind a prudent cutback in the uncompetitive federal corporate tax rate.

“Aside from the burden of paying taxes, the burden of filing taxes has become onerous in its own right. For the sake of our personal freedom and a more productive economy, policymakers must reform our tax system and reduce its complexity.”

Although the report is 11-pages long, the entire report is worth reading by American taxpayers wanting to understand just what a leviathan the Federal tax code really is. Then call one of Arlington County's Congressional representatives. Here are their phone numbers and links for e-mailing them:

  • Senator Jim Webb (D) -- write to him or call (202) 224-4024
  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Representative Jim Moran (D) -- write to him or call (202) 225-4376

May 02, 2012

Who Needs a Budget Anyway?

Matt Cover of CNSNews.com noted yesterday that "Sunday marked the three-year anniversary since the Senate last passed a budget." He goes on to write in part:

"April 29 was the record 1,096th day without a federal budget since passing a budget was required by law in 1974. Normally, each house of Congress passes its own budget, reconciles the differences, and then sends the final bill to the president for his signature.

"However, the Senate, which is controlled by the Democrats, has not passed a budget since 2009.

"The federal government, meanwhile, has continued to spend money, doling out a total of $10.4 trillion in the three years since a federal budget was last passed.

"While budgets don’t directly spend money, they do set overall levels of federal spending and serve as a blueprint for congressional appropriators--setting out the nation’s taxing and spending priorities. By not passing a budget, the Senate has effectively blocked the government from changing those priorities.

< . . . >

"This year, Senate Budget Chairman Kent Conrad (D-N.D.) has declined to hold a vote on the latest iteration of a Senate budget resolution, holding a hearing on his proposal but refusing to allow amendments or a vote on the measure.

“This is the wrong time to vote in committee; this is the wrong time to vote on the floor," Conrad said April 17. "I don’t think we will be prepared to vote before the election."

If you wish to express your concern about the U.S. Senate's failure to pass a budget, here is contact information for Arlington’s two Senators, here  are their phone numbers and links for e-mailing them:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023

May 01, 2012

The Big Spenders at the Arlington School Board

The Virginia Department of Education’s construction cost report for 2010-2011 (requires Adobe) lists cost date for three “new high schools,” including Wakefield High School and ones in Clarke and Loudoun counties.

We’ve growled on numerous occasions about the extravagance of School Boards on school construction, most recently on May 6, 2010. However, on August 21, 2008, we growled about the price of ‘civic charisma’ in Arlington County. In looking through VDoE’s 2010-2011 construction cost report, we learn once again just how expensive ‘civic charisma’ can be.

Information about the three high schools on the report include:

  • Wakefield High School: contract award date - May 2011; maximum operating capacity - 2,173 students (although the APS webpage for the new school says the school will “accommodate just over 1,900 students, but the square footage is also different, too); total cost - $88,399,999; total square feet - 382,102; square feet per student -- 176; total cost per square foot - $231.35; building only cost per square foot - $202.56; and total cost per pupil (aka cost per seat) - $40,681.
  • Clarke County High School: contract award date - July 2010; maximum operating capacity - 884 students; total cost - $23,300,000; total square feet - 162,050; square feet per student -- 183; total cost per square foot - $143.78; building only cost per square foot - $120.64; and total cost per pupil (aka cost per seat) - $26,357.
  • Loudoun County High School: contract award date - January 2011; maximum operating capacity - 1,955 students; total cost - $60,762,000; total square feet - 275,574; square feet per student -- 141; total cost per square foot - $220.49; building only cost per square foot - $148.77; and total cost per pupil (aka cost per seat) - $31,080.

Assuming School Board members follow the lead of the global warmistas on the County Board, it’s a safe bet that some of the difference between Arlington’s higher cost is due to the so-called “LEED Green Building Considerations” that are incorporated into the Wakefield design, and listed on the Wakefield construction webpage. Items such as a geothermal HVAC system; solar hot water panels; rain garden landscape feature; “daylight harvesting;” and a “reforestation” area.” Now those considerations are sure to increase students’ SAT scores. But surely, those "green considerations" are responsible for only a small part of the cost differences.

Guess that 'civic charisma' stuff is expensive, though. Yessiree, Bob!