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June 29, 2012

Today's Thought

Yesterday, we Growled about the U.S. Supreme Court's decision to uphold the Patient Protection and Affordable Care Act, Obamacare, in which Chief Justice John Roberts writing for the majority allowed the term 'tax' could also embrace the term 'penalty,' as the New York Times phrased it.

But let me first quote the headline from one Christian Science Monitor story: "'Tax': The dirtiest word of them all." (emphasis added)

As in most issues relating to the Constitution, it's always helpful to see whether Thomas Jefferson had any thoughts on the subject, and in this case he did. With a HT to Patriot Post, we learn that Thomas Jefferson wrote to John Taylor in 1798:

"Excessive taxation ... will carry reason and reflection to every man's door, and particularly in the hour of election."

~ Thomas Jefferson, letter to John Taylor, 1798

Remember, the election is Tuesday, November 6, 2012, when "We the People" can overturn both Obamacare and the Supreme Court's decision. And be sure your family and friends are registered to vote, too.

June 28, 2012

Don't Call It ObamaCare, Call It the ObamaTax!

As you probably know by now, the United States Supreme Court issues released its health care ruling today in the case of the Patient Protection and Affordable Care Act, or "Obamacare." Here's a link to the full text of the Supreme Court's health care decision (requires Adobe; replaces link to decision at MSNBC website).

After the ruling was released, the National Taxpayers Union (NTU) issued a press release saying the ruling gutted the "Constitution's taxing-power limits," and suggesting it "will ignite (a) new taxpayer revolt." The press release included the following:

“Today’s Supreme Court decision marks a terribly dark day not only for health care freedom, but taxpayer freedom as well,” said NTU President Duane Parde. “The federal government has been given a whole new license to wield harsh powers over all Americans’ pocketbooks for any of a number of reasons, limited only to the imagination of bureaucrats. The Court has unleashed a threat to the rights and well-being of taxpayers which, unless beaten back by the people themselves, could eventually devour our country’s very economic fiber.”

"Parde noted that limitations inherent to the Constitution’s Commerce Clause had already been left in tatters by previous Supreme Court rulings, leaving citizens vulnerable to government expansion in many areas of everyday life. However, by relying on the taxing powers clause of the Constitution for cover to uphold the law, Chief Justice Roberts has, in Parde’s words, “opened a Pandora’s box of federal policies that could prey on taxpayers virtually unimpeded.” One potential silver lining, however, is the possibility that the Court’s blurring of the distinction between taxes and fees might force states and localities to revisit many of their exactions, some of which could be subjected to “supermajority” approval requirements or other safeguards.

"NTU has immediately begun planning for several activities in opposition to both the health care law and the Supreme Court ruling, including a new grassroots push to obtain full repeal of the law before its worst taxing elements take effect in the coming years, a potential class-action suit on behalf of injured taxpayers, and a stepped-up strategy to obtain passage of tax and expenditure limitations in the U.S. Constitution.

"Parde predicted that far from settling the question of the health care law’s legitimacy, the Supreme Court’s ruling will only ignite a new taxpayer revolt of unprecedented strength and depth."

NTU concluded their press release saying:

“Now is the time for the legislative branch to do its job in preventing an unaffordable and unworkable law from moving forward,” Parde concluded. “Congress must act to repeal Obamacare immediately and press the ‘reset’ button on debates over reforming our health system. Our leaders must also work to reestablish and strengthen constitutional boundaries on federal taxing, spending, and borrowing powers. Taxpayers deserve a limited government.”

Remember, the general election is Tuesday, November 6, 2012. As posted at Arlington County's Office of Voter Registration website, the "General Election for the electors for President and Vice President and for the offices of U.S. Senate, U.S. House of Representatives (8th District), County Board, and School Board (two seats). The ballot will also include a Special Election for to amendments to the Constitution of Virginia and several local bond referendum questions. The voter registration deadline for this election is Monday, Oct. 15." (emphases added and in the original)

June 27, 2012

Fiscal Malpractice in Arlington County?

According to Arlington County’s fiscal documents (Capital Improvement Plan, requires Adobe):

“The Capital Improvement Plan (CIP) is one of the most significant planning processes for Arlington County and Arlington Public Schools. This plan identifies the capital needs of the community over a ten-year period. This plan not only identifies the immediate needs but also seeks to capture longer-term capital needs.

< . . . >

“The CIP is the primary instrument for planning the funding and timing of the needs and priorities that have been approved by the County Board. The funding and implementation of CIP projects follow in the form of bond referenda; the annual appropriation of Pay-As-You-Go (PAYG) projects by the Board as part of the annual operating budget; and approval / receipt of other funding sources identified in this document.”

Last night, at the Arlington County Board’s public hearing on the CIP, Wayne Kubicki, Arlington’s government watchdog extraordinaire, raised just that issue in his testimony before the Board. His testimony follows:

“Madame Chairman, good evening.

“This process seems to have been entirely driven by the 10% debt service limitation as a percentage of total spending.  That test, however, is not the whole picture.

"You have an adopted policy - pg A-5 in the CIP - that says "the County will annually develop a six year forecast of General Fund revenues and expenditures."  Such an analysis would give the true picture of what kind of revenue growth would be needed to fund continuing services along with the Manager's CIP proposals.

"Where is this forecast? (emphasis added)

"I'll give you a hint - it's NOT in the CIP book.  Contrary to your policy, there was no six year forecast done at all last year.  As far as I have been able to ascertain, no such forecast currently exists, either.

"Consideration of this CIP, absent such an analysis, is fiscal malpractice.

"The CIP projects 3% annual revenue growth for FY14 through 16.

"The School Board applied that 3% growth number to their operating budget and CIP.  Including step increases, it showed budget shortfalls of $33M over the next three years, $13M for FY14 alone.
'Where is this analysis for the County budget? (emphasis added)
"If one existed, it would show a need for dramatically higher revenues.  Combining just the operating costs for new items such as Arlington Mill ($3.3M) and the Silver Line (our first year cost is $1.7M), and increased debt service costs, our FY14 budget already needs over $14M in growth - before increasing anything. (emphasis added)
"Funding the proposed CIP will necessitate major revenue growth, well over 3%, and unlike the past two fiscal years, where the burden of increased spending fell mostly on our commercial sector, the next several years will more heavily fall on homeowners.  Commercial assessments are very unlikely to jump a third straight year.
"There is one prime candidate for controlling some of this - the Long Bridge pools building, with its $73M price tag.

"With our admittedly deteriorating infrastructure, and pressing school capital & operating needs if enrollment growth continues, coupled with uncertain future revenues and the over $7M in annual operating subsidies for the two streetcar lines upcoming, is Long Bridge really a priority?  Can it seriously be called a “need”?

"Combining proposed debt service, including the $20M interim non-bond borrowing, with its projected operating subsidy, Long Bridge’s annual cost is nearly $7M per year.  That's over one cent on the current tax rate - for one single building, that most residents will never use, and that many would have trouble finding, even if you gave them a map.

"The Long Bridge project raises the term "vanity project" to a new level, and fiscally has the potential to be the Artisphere on steroids.

"If Long Bridge is on the fall ballot, it should be as a separate, stand-alone referendum, with nothing else attached to it, as the Civic Federation strongly recommended at its June meeting.  The fiscal ramifications of this project deserve separate discussion and a separate vote.

"Thank you for your time this evening."

Additional information about the 10% debt service limitation, as well as information about the the other assumptions, can be found in the CIP (Debt Capacity Analysis section, beginning on page B-15). Arlington County taxpayers should be concerned about the absence of the six-year forecast in the CIP. Kudos, Wayne, for a great presentation.

June 26, 2012

Research Shows Negative Effects of Minimum Wage Laws

Our concern with minimum wage laws has a long history, including its "steroid version," the so-called living wage. For example, we've growled as far back as April 23, 2003 and June 29, 2003; use the Growls search engine to find them.

Now, just last week, the Cato Institute published another in their Policy Analysis series, The Negative Effects of Minimum Wage Laws (No. 701, June 21, 2012; requires Adobe). It is written by Mark Wilson, a former deputy assistant secretary of the U.S. Department of Labor and head of Applied Economic Strategies. Here is the policy analysis' executive summary:

"The federal government has imposed a minimum wage since 1938, and nearly all the states impose their own minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies.

There is no "free lunch" when the government mandates a minimum wage. If the government requires that certain workers be paid higher wages, then businesses make adjustments to pay for the added costs, such as reducing hiring, cutting employee work hours, reducing benefits, and charging higher prices. Some policymakers may believe that companies simply absorb the costs of minimum wage increases through reduced profits, but that's rarely the case. Instead, businesses rationally respond to such mandates by cutting employment and making other decisions to maintain their net earnings. These behavioral responses usually offset the positive labor market results that policymakers are hoping for.

This study reviews the economic models used to understand minimum wage laws and examines the empirical evidence. It describes why most of the academic evidence points to negative effects from minimum wages, and discusses why some studies may produce seemingly positive results.

Some federal and state policymakers are currently considering increases in minimum wages, but such policy changes would be particularly damaging in today's sluggish economy. Instead, federal and state governments should focus on policies that generate faster economic growth, which would generate rising wages and more opportunities for all workers."

The 16-page paper is well-worth reading for American taxpayers interested in economic growth. As Wilson notes in the conclusion, "In the American economy, low wages are usually paid to entry-level workers, but those workers usually do not earn these wages for extended periods . . . Rather than pursuing policies such as minimum wages increases that create winners and losers, policymakers should focus on policies that generate faster economic growth to benefit all workers. While minimum wages may be a well-meaning attempt to help workers, economic research clearly shows somebody must pay the price for any increase, and it is usually the least skilled and least fortunate among us.

June 25, 2012

Politics and Fairness

"One of the most versatile terms in the political vocabulary is "fairness." It has been used over a vast range of issues, from "fair trade" laws to the Fair Labor Standards Act. And recently we have heard that the rich don't pay their "fair share" of taxes.

"Some of us may want to see a definition of what is "fair." But a concrete definition would destroy the versatility of the word, which is what makes it so useful politically."

~ Thomas Sowell

HT Column at Investor's Business Daily

Previous quotes about "fairness" were made on February 23, 2012, April 24, 2012, April 27, 2012, May 8, 2012, and May 10, 2012.

June 24, 2012

Having the "Consent of the Governed"

The third paragraph of the Declaration of Independence begins (HT Patriot Post):

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed . . . .”

In a survey of 1,000 likely voters (HT Hot Air) conducted June 15-16, 2012, and reported today, Rasmussen Reports™ asked: “The Declaration of Independence says that governments derive their authority from the consent of the governed. Does the federal government today have the consent of the governed?” The margin of sampling error was +/- 3% with a 95% confidence level. Here is how Rasmussen reported the results:

“Democrats are happier with the status quo than Republicans and voters not affiliated with either of the major parties when it comes to the current Congress and the federal government.

“ . . . Only 22% of the nation’s likely voters believe the government today has such consent.

“A new Rasmussen Reports national telephone survey finds a wide partisan gap on the question. Democrats are evenly divided as to whether or not the government has the consent needed for legitimacy. Only eight percent (8%) Republicans and 21% of unaffiliated voters believe it does . . . “

In another survey reported today, Rasmussen found "that 63% of likely U.S. voters now feel U.S. society is generally fair and decent, up from 57% last month and 60% in April.  May was the first time the finding had fallen into the 50s since December 2008."

June 23, 2012

Arlington "County Board Members Go Ballistic"

Thanks to some good reporting yesterday from the Arlington Sun Gazette's Scott McCaffrey:

"From the outside, it seems like such a minor matter – how the state government cuts the checks to localities for transit projects.

"But to several members of the County Board, the change is another example of Richmond’s fear and loathing of Northern Virginia.

"“Unnecessary.” “An enormous waste of time and money.” “Punitive.” “Disruptive.” “Probably illegal.” That’s how County Board member Jay Fisette described the proposal of the Virginia Department of Rail and Public Transportation (DRPT), which wants to write checks directly to local governments and Metro, rather than send funds through the Northern Virginia Transportation Commission.

"Fisette this year is serving as chairman of the commission – which is made up of localities across the region – and used the June 19 County Board meeting to blast the McDonnell administration for demanding that local governments go along with the change.

"The administration still doesn’t understand this region,” Fisette said. The new plan, he said, would “add financial and administrative burdens” to local governments.

"The outcry makes little sense to DRPT director Thelma Drake, who says the amount of state transit aid ($133 million in the coming year plus $50 million more for Metro) won’t change, and local governments have the option to have the funds managed by the Northern Virginia Transportation Commission if they so choose."

Perhaps the County Board masterminds now know how some Arlington taxpayers react in response to some Arlington County Board decisions.

June 22, 2012

Thought on the Rule of Law

" . . . nothing distinguishes more clearly conditions in a free country from those in a country under arbitrary government than the observance in the former of the great principles known as the Rule of Law. Stripped of all technicalities, this means that government in all its actions is bound by rules fixed and announced beforehand—rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one’s individual affairs on the basis of this knowledge . . . [T]he discretion left to the executive organs wielding coercive power should be reduced as much as possible."

~ Friedrich Hayek

HT Essay by John B. Taylor, Published by Hoover Institution

June 21, 2012

Thought for Today

"The legislative department is everywhere extending the sphere of its activity and drawing all power into its impetuous vortex."

~ James Madison, Federalist No. 48, 1788

HT The Patriot Post

June 20, 2012

Faith in the Public Schools: Arlington vs. America?

Yesterday, the Arlington Sun Gazette's Scott McCaffrey reported on the 2012 "community satisfaction survey" that was presented to the Arlington School Board at their meeting last night (see monitoring item E-1 of the School Board's June 19, 2012 meeting for a summary of the results, requires Adobe). McCaffrey started his reporting this way:

"Despite generally positive results across the board, Arlington students and teachers don’t seem as enthralled about the county school system as parents and, to a lesser degree, the general public appear to be.

"That’s one of the results of a community-satisfaction survey slated to be reported to the School Board tonight.

"While 59 percent of parents surveyed, and 43 percent of the general public, gave the school system an overall grade of “A”, only 30 percent of teachers and 31 percent of staff members gave it the top grade – and only 29 percent of students thought the school system was doing “A” work.

"The percentage of teachers and staff rating the school system at the top declined significantly from 2009, when the last survey was taken, a time when the school system was just embarking on belt-tightening measures."

According to a Gallup survey published today, however, there's this news (HT Via Meadia, the blog of American Interest):

"Americans' confidence in public schools is down five percentage points from last year, with 29% expressing "a great deal" or "quite a lot" of confidence in them. That establishes a new low in public school confidence from the 33% measured in Gallup's 2007 and 2008 Confidence in Institutions polls. The high was 58% the first time Gallup included public schools, in 1973."

The Gallup survey shows  that confidence in the public school has dropped from 58% in 1973 to 29% today. Via Media's Walter Russell Mead comments on  the latest survey information:

"This decline is alarming but understandable. With each passing year it becomes increasingly clear that the big-box school model that carried America through much of the 20th century is no longer working. School expenditures have increased even as performance has declined or stagnated, and international comparisons consistently show America falling short relative to other developed nations. Meanwhile, across the country, parents who can afford it are pulling their children out of highly bureaucratized public schools and putting them into private ones where they can at least have some influence in the shape of their children’s education. Small wonder that public schools are losing the support of the public they were created to serve.

"The solution, as we have remarked before, is a decentralized system that puts more power into the hands of parents and teachers. This would work wonders to restore people’s confidence in our schools as a whole."

More competition for the public schools? What a concept?

June 19, 2012

Updating the "Artisphere Situtation"

From a story at the online Arlington Sun Gazette today, we learn the Arlington County Board is monitoring the fiscal condition of the Artisphere in Rosslyn "a quarter at a time." The news report cited this year's County Board chairman, Mary Hynes, remarks at a State of the County forum. The Sun Gazette continued:

"The government-run arts center opened in late 2010 but quickly found itself awash in a sea of red ink. Last year, County Manager Barbara Donnellan ordered a restructuring of operations, and transferred oversight of the facility (and other cultural program) from the Department of Parks and Recreation to Arlington Economic Development.

"The changes came after a damning consultant’s report, issued last year, that painted a portrait of a facility conceived without realistic expectations and a with a shaky business plan.

< . . . >

"But pressure on county officials to either cut the facility’s deficits or close it down intensified in April. That month, Civic Federation delegates voted 30-12 on a motion calling on county officials to come to some decision by the end of the year, before formal planning for the fiscal 2014 budget begins.

The Sun Gazette also reported that "taxpayer support for the Artisphere totaled $2.1 million in fiscal 2011, $2.7 million in fiscal 2012 and is expected to be $1.6 million in fiscal 2013."

We previously growled about the Artisphere on April 6, 2012 and May 9, 2012.

June 18, 2012

Federal Sugar Boondoggle

Most taxpayers are probably familiar with the crop subsidies handed out by members of Congress. But sugar subsidies? Not so much?

In his Washington Examiner column today, Tim Carney spells out just how much of a boondoggle the federal sugar subsidies really are:

"In America's panoply of pork, corporate welfare and special-interest boondoggles, perhaps few programs are less defensible than the federal sugar program. So it was dispiriting, but no surprise, that the Senate voted last week to preserve it.

"The sugar program drives up prices for American consumers, kills U.S. jobs, distorts markets and enriches a few well-connected companies. Here's how it works:

First, the U.S. Department of Agriculture guarantees a minimum price for sugar growers through a special loan program. The USDA lends money to growers, with sugar as collateral -- about 18 cents per pound for cane sugar and about 23 cents per pound for beet sugar. The easy financing is sweet, and it gets even sweeter: Sugar growers can surrender their collateral and welch on their loan from taxpayers, at no penalty.

"In effect, the USDA is always willing to buy the sugar from growers at 18 or 23 cents a pound if prices fall too low.

"But the second aspect of the sugar program guarantees that U.S. prices rarely fall that low.

"Washington artificially keeps the U.S. sugar price high by limiting how much sugar can be imported. Crimping supply boosts the price, hurting consumers -- including candy and soda makers -- and helping producers."

Mr. Carney writes that a GAO study in 2000 pointed out the sugar subsidies may cost Americans about $2 billion annual. He also writes:

"The case against the program is clear. It would save consumers money. It would save American jobs. It would end unfair corporate welfare. It would reduce unnecessary federal bureaucracy. That was the argument of Sen. Jeanne Shaheen, a New Hampshire Democrat, who brought an amendment to the Senate floor last week to end the sugar program. It's why her co-sponsors include conservatives like Sen. Pat Toomey, moderates like Richard Lugar and liberals like Dick Durbin.

"But the lobby for the sugar program is strong. Most famously, the Fanjul family in Florida, owner of Florida Crystals, are deeply embedded in Washington politics . . . ."

The amendment to phase out the Federal sugar program was brought to the Senate floor by Sen. Shaheen (D-New Hampshire). It met an unfortunate death when it was tabled by a 50-46 vote (Roll Call Vote No. 119, June 13), generally along a bipartisan basis with 35 Democrats and 15 Republicans voting to table the amendment while 16 Democrats and 30 Republicans voting against tabling the amendment. Four senators did not vote. Congratulations to Virginia Sen. Jim Webb (D) who voted against the motion to table. Unfortunately, Virginia's other senator, U.S. Sen. Mark Warner (D) did not vote. Call Sen. Webb on Capitol Hill (202-224-3121) to thank him for voting not to table the amendment.

June 17, 2012

Will Columbia Pike Transit be Another Boondoggle?

According to Arlington County’s website, “The Columbia Pike Transit Initiative is an important element in the effort by Arlington County and Fairfax County to accommodate growing demand for transit services along the quickly redeveloping urban corridor of Columbia Pike. Many in the local community have expressed a desire for a modern, higher capacity transit system that supports expected levels of ridership and reinforces the "Main Street" environment envisioned for the Pike.”

But, Steve Thurston of the Arlington Mercury, an online news website (June 8 here and June 13 here), reported on the efforts of some to get the masterminds on the Arlington County Board to move from a  street car version towards a bus alternative. In his first report, Thurston wrote about a meeting that “was an opportunity for the county staffs from Fairfax and Arlington to present a report of four alternative transportation plans for the Pike and the environmental impact of each.” Then in the June 13 report, Thurston wrote:

“The Arlington Transit Advisory Committee does not support articulated buses over an electric streetcar system along Columbia Pike. The committee voted six to five last night against a resolution that supported the bus service, rather than an electric streetcar that the county management favors. We reported last week that this vote was coming.

“By bypassing this [the streetcar], we may be missing a long-sighted opportunity that the county has, for a limited amount of time,” said committee chair John Carten.

“However, bus proponents cite studies that show the articulated bus plan is more cost effective to build and maintain than streetcars. Streetcar capital costs are over $250 million compared to $39 to $68 million for an articulated bus service, according to county documents. The $250 million price tag would be paid for with a special business tax.

“Annual operating costs for the streetcar are also $3.5 million higher than the $22.1 million estimated for articulated buses, according to the "Alternative Analysis/Environmental Assessment" report written by the county government.”

Given that most Arlingtonians, including yours truly, may not be familiar with all the alternatives associated with streetcars and the various forms of buses that can be implemented, let’s turn to a recognized expert on the subject, Randal O’Toole, a senior fellow with the Cato Institute and author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future.

Last week, the Cato Institute published his policy analysis, “The Great Streetcar Conspiracy” (No. 699, June 14, 2012, requires Adobe). Here’s is the report’s executive summary:

“Streetcars are the latest urban planning fad, stimulated partly by the Obama administration's preference for funding transportation projects that promote "livability" (meaning living without automobiles) rather than mobility or cost-effective transportation. Toward that end, the administration wants to eliminate cost-effectiveness requirements for federal transportation grants, instead allowing non-cost-effective grants for projects promoting so-called livability. In anticipation of this change, numerous cities are preparing to apply for federal funds to build streetcar lines.

“The real push for streetcars comes from engineering firms that stand to earn millions of dollars planning, designing, and building streetcar lines. These companies and other streetcar advocates make two major arguments in favor of streetcar construction. The first argument is that streetcars promote economic development. This claim is largely based on the experience of Portland, Oregon, where installation of a $103-million, 4-mile streetcar line supposedly resulted in $3.5 billion worth of new construction.

“What streetcar advocates rarely if ever mention is that the city also gave developers hundreds of millions of dollars of infrastructure subsidies, tax breaks, and other incentives to build in the streetcar corridor. Almost no new development took place on portions of the streetcar route where developers received no additional subsidies.

“The second argument is that streetcars are "quality transit," superior to buses in terms of capacities, potential to attract riders, operating costs, and environmental quality. In fact, a typical bus has more seats than a streetcar, and a bus route can move up to five times as many people per hour, in greater comfort, than a streetcar line. Numerous private bus operators provide successful upscale bus service in both urban and intercity settings.

“Streetcars cost roughly twice as much to operate, per vehicle mile, as buses. They also cost far more to build and maintain. Streetcars are no more energy efficient than buses and, at least in regions that get most electricity from burning fossil fuels, the electricity powering streetcars produces as much or more greenhouse gases and other air emissions as buses.

“Based on 19th-century technology, the streetcar has no place in American cities today except when it functions as part of a completely self-supporting tourist line. Instead of subsidizing streetcars, cities should concentrate on basic — and modern — services such as fixing streets, coordinating traffic signals, and improving roadway safety.”

According to O’Toole, Arlington County is just one of “more than 45 American cities (that) are expanding, building, planning, or considering streetcar lines.” In his conclusion, he writes:

“Transit advocates who believe streetcars offer a “quality” alternative to buses are fooling   themselves. Their low average speeds, limited number of seats, and inflexibility make streetcars inferior to buses in every respect except in their ability to consume large amounts of taxpayer money.

“City officials who believe that streetcars alone will revitalize blighted parts of their urban areas have been deceived by smooth-talking consultants and dissembling politicians who were foolish enough to build streetcars in their cities. Cities with a billion dollars or so to burn could spend $100 million on a streetcar line, support it with $900 million in other subsidies to developers, and still not get the success of Portland’s Pearl District unless they do it in an area that is already rapidly growing.

"Streetcars are a long-obsolete technology. Cities that wish to revitalize neighborhoods would do better to invest in modern transportation, including repairing their streets, installing the latest traffic signal coordination systems, and improving safety for all travelers.”

Don’t be put off by the 20 pages in O’Toole’s analysis. Take a few minutes to go through it. Then use our contact information to write the County Board masterminds to tell them what you think about the Columbia Pike Transit Initiative.

June 16, 2012

From Theatrical Black Box to Financial Black Hole?

In a story posted earlier this week, Michael Lee Pope of the weekly Arlington Connection writes:

“When the Arlington County Board approved a new nine-story mixed-use commercial building in Virginia Square earlier this year, it was a deal that seemed too good to be true. Herndon-based developer Crimson Partners would construct a $3.7 million “black box” theater with seating for 150 people in exchange for $1.3 million worth of bonus density. The community would get an amenity identified in its sector plan, and the developer would get to build a larger building. But now that the project is moving forward, some are starting to wonder about whether or not the black box would become a black hole.

< . . . >

“Budget documents show that the county spends $3 million a year on the Rosslyn cultural center known as Artisphere, which takes in about $1.5 million in revenue. Ballston residents are concerned that the new 13,000-square-foot theater proposed in Virginia Square would be a similar burden. Although the main use of the new facility would be for theatrical productions, the list of allowed uses includes events, conferences, religious uses and civic events. County officials say the ancillary uses will not inhibit the theater’s revenue potential. Some aren’t so sure.”

The site at 3901 Fairfax has been home to the Arlington Funeral Home. Arlington County’s Economic Development Department has more information about the “first purpose-built black box” at their website.

In his reporting, Pope also noted the following comments, which should be troubling to Arlington taxpayers:

“Even before the proposal was approved, doubts were already building about the financial viability of the theater. Planning Commissioner Charles Monfort expressed concerns when the commission considered the proposal, noting that the experience with Artisphere indicated that the county does not have a good track record in planning art facilities. Commissioner Steve Cole said it was troubling the Planning Commission was expected to advise the County Board on the proposal without first seeing a business plan . . . .”

And the inimitable Bob Atkins was not to be outdone. He added:

“Instead of a black box theater, this is a financial black hole theater,” said Robert Atkins during the public hearing. “This will be a net loss as opposed to a net benefit.”

More information about the 3901 Fairfax Drive site plan amendment and the black box theatre can be found in the staff report to the Arlington County Board (item 39 on the Board’s January 21, 2012 agenda). Additional detail about the black box is in a supplemental report, specifically site plan conditions 78 and 78 and a 17-page “scope of work,” dated January 19, 2012, which governs “the design and construction and fit out for the Black Box Theatre.”

In a separate letter available at the Board's meetings and agenda page, the Board-appointed Commission for the Arts endorsed the project, and added the theatre is "an amenity that is an investment in the community well beyond the arts. A black box theater in Virginia Square helps realize the vision of our community . . . ." (emphasis in the original) The letter from the Commission for the Arts also noted the applicant had received $1 million in bonus density in exchange for the theatre as the so-called community benefit.

June 15, 2012

Today's Thought

". . . what is called a “solution” in politics is often simply a patch put over problems caused by previous political “solutions,” which in turn were patches put over other political “solutions” before that."

~ Thomas Sowell, Page 123, "The Housing Boom and Bust"

HT RightWingNews

June 14, 2012

Today's Thought

"The president's first term has added $5 trillion to the debt — a degree of catastrophe unique to us. In an Obama budget, the entire cost of the Greek government would barely rate a line-item. Debt-to-GDP and other comparative measures are less relevant than the hard-dollar numbers: It's not just that American government has outspent America's ability to fund it, but that it's outspending the planet's."

~ Mark Steyn

Source: His column at Investor's Business Daily. HT Rick Moran at American Thinker.

June 13, 2012

North Dakota Voters Fail to Repeal Property Tax

We learn from Joe Henchman at the Tax Foundation's Tax Policy Blog that North Dakota voters yesterday "rejected a ballot initiative that would have repealed property taxes in the state. The initiative, Measure 2, failed by a vote of about 40,000 (23.45%) to 131,000 (76.55%)" even though the property tax is the most hated tax in America.

Henchman provided the following additional information:

"Measure 2 would have been, depending on the perspective, an $800 million blow to essential government services or merely the latest of a long string of taxpayer restraints on property taxation in the footsteps of California’s Proposition 13, Massachusetts’s Proposition 2-1/2, and recent property tax caps in Indiana, New Jersey, and New York. (We analyzed Measure 2 here.)

"One should not, however, interpret this defeat as North Dakotans rejecting tax relief. With an oil boom that has pushed the state's tax revenues up 44% in one year, and an average of 9% a year over the last fifteen years, reducing tax burdens is certainly possible. Many other resource-rich states do without one of the major taxes (although all have property taxes). Here, I think proponents had trouble with their contention that the solution to bursting state tax coffers is to eliminate the funding source and source of autonomy for local government. Because the repeal effort predates the oil boom, they did not emphasize, with numbers, that the state can both fund essential government services and reduce tax burdens."

Reuters concluded their story by noting:

"Supporters of getting rid of the property tax system argued that the state's oil surplus funds should be directed to local costs in lieu of property taxes. The problem is that North Dakota's oil income is already promised to fund other budget items in the state.

< . . . >

"The defeat of the measure doesn't mean that property taxes in the state of North Dakota will remain untouched. A complete abolishment is off the table but property tax reform is likely according to The Bismarck Tribune. In the long run, property tax opponents may win the war despite losing this battle.

The Associated Press story in the state's Devil's Lake Journal closed by providing the following additional context:

"The state has had the nation's lowest unemployment rate, and the measure's supporters say North Dakota's government could afford to replace the local revenues.

"However, the amendment raised concerns among a diverse coalition of organizations, from the Chamber of Commerce to the state Farmers Union and groups representing local governments, public employees and school teachers.

"They organized a vocal, well-financed campaign, arguing the measure would transfer budget power from local governments to the Legislature and leave questions about which local projects lawmakers would have to pay for.

"We had all these diverse groups that came together and said, 'Listen, this is bad for North Dakota,'" Anderson said."

The AP also noted the leader of the coalition opposed to repealing the property tax was the president of the North Dakota Chamber of Commerce. In addition, the AP said that "No state has eliminated local property taxes," and cited the National Conference of State Legislatures as the source.

News of rejection of the effort to repeal the property tax even made it across the Atlantic where the UK's Daily Mail reported:

"Public school teachers and local governments throughout the state strongly opposed the measure as it would greatly affect the bulk of their revenues.

< . . . >

"States often tweak tax rates but it is an unusual step to see a major tax completely abolished.

"The thorny issue of property tax was brought to public attention in 1978 when California's 'Proposition 13' to significantly reduce property tax rates in the state triggered a national campaign to limit property taxes."

Despite rejection of the referendum, the Wall Street Journal reported "the ballot initiative is expected to pressure legislators to take steps to lower property taxes when they go into session in January."

June 12, 2012

Thoughts About Rent-Seeking

"The regime of public spending has at last drawn so many groups into the public arena in search of public dollars that it has paralyzed the political process and driven governments to the edge of bankruptcy. These groups are widely varied: trade associations, educational lobbies, public employee unions, government contractors, ideological and advocacy organizations, health-care providers, hospital associations that earn revenues from Medicare and Medicaid programs, and the like. These are what economists call rent-seeking groups because they are concerned with the distribution of resources rather than with the creation of wealth. They consume rather than create wealth. These groups are highly influential in the political process because they are willing to invest large sums in lobbying and election campaigns in order to protect their sources of income. While rent-seeking groups can be found in both political parties, the largest and most influential of them (at least on the spending side) have congregated within the Democratic Party. To expand on what was said earlier, one might describe the Democratic Party as a coalition of rent-seekers."

~ James Piereson

The above quote is from Mr. Piereson's essay, "Future tense, X: The fourth revolution," published by The New Criterion, which, by the way is an excellent read. According to Piereson, the first revolution was Jefferson's in 1800, then the Civil War, and the third, the New Deal. Now he predicts the fourth may be occurring with the last gasps of the so-called blue social model. Piereson is president of the William E. Simon Foundation.

June 11, 2012

Americans' Wealth Plummets 40% from 2007 to 2010

The Washington Post is reporting this evening that government data from the Federal Reserve Board's Survey of Consumer Finance (requires Adobe) shows that Americans' wealth plummeted nearly 40% from 2007 to 2010. (HT Breitbart's Big Government). The Post story, written by Yian Mui, goes on to say:

"The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were back in 1992.

"The data represent one of the most detailed looks to date of how the economic downturn altered the landscape of family finance. Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most. Homeownership, once heralded as a pathway to wealth, became an albatross.

"Those findings underscore the depth of the wounds of the financial crisis and how far many families remain from healing. If the recession set Americans back 20 years, economists say, the road forward is sure to be a long one. And so far, the country has only seen a halting recovery."

Fox News went on to report:

"The median family's net worth dropped 38.8 percent during the three-year period, the Fed said in its latest report on changes in U.S. Family Finances, derived from a survey of consumer finances. Fed economists told reporters that this was the biggest drop in net worth since the survey started in 1989.

"The median net worth, which is the value of assets minus debt, plunged to $77.3 trillion in 2010 from $126.4 trillion in 2007. Net worth in 2010 was at levels last seen in 1992."

In their reporting, the Miami Herald added a political twist, saying:

"The survey findings provide fodder for both the re-election efforts of President Barack Obama and the campaign of presumptive GOP presidential nominee Mitt Romney. Obama can use the data to show what a terrible economy he inherited, while Romney can use the data to show how bad things remain."

And to put the 40% drop firmly in perspective, the Wall Street Journal's economics blog wrote:

"That is a very big drop, a drop big enough to change people’s world views and long-term attitudes toward what they can and cannot buy. And those decisions, of course, drive the level of economic activity and employment, and around and around it goes.

"As it is, in our land of economic data overflow, many of us are willing to change our outlooks, with implications for everything from monetary policy to budget deficit reduction, on the basis of a couple of months of employment figures.

"These consumer-finances numbers are much more telling, reinforcing the notion that our post-financial-crisis world is not one we will exit easily and, as we know by now, certainly not quickly.

< . . . >

"Things may look modestly brighter for many U.S. families since 2010. There are some reasons to think home prices, at least in much of the country, have bottomed. Despite disappointments, there are net new jobs being created. But that 40% figure is a sobering one, and speaks to the depths of the impact on so many."

Sobering indeed! And the Arlington County Board probably doesn't know how well off the county really is. sitting as it does across from the Potomac River from the nation's parasitic capital.

UPDATE (6/12/12): First, the American Thinker cites the same Washington Post article, and then opines:

"This would seem to buttress Obama's campaign narrative that the situation he inherited was worse than anything any president has had to face since the Great Depression. But it really doesn't. The fact that Obama's policies haven't helped, and may have even slowed the recovery is a far more powerful argument at this point, given the economic circumstances.

"The issue isn't the past, but rather the present and future. And Obama is losing that argument."

Second, CNN*Money features the following chart in their story on the plummeting net worth:


June 10, 2012

Kudos to Rep. Tom McClintock and Selected House Freshmen

The Club for Growth announced a study last month of how freshmen members of the U.S. House of Representatives voted once arriving on Capitol Hill. In announcing the study results, the Club for Growth said:

“In the 2010 election, 87 freshmen House Republicans came to Washington pledging fealty to the Tea Party movement and the ideals of limited government and economic freedom. The mainstream media likes to say that the freshman class is the most uncompromising group of fiscal conservatives in history...but just how Tea Party are they? Did all 87 freshmen always vote to cut spending and limit the size of government, or did some of them vote like the big-spending R.I.N.Os of the past?

“This study was compiled from the Club for Growth's Congressional Scorecard, which evaluates lawmakers based upon their commitment to limited government and pro-growth policies. What we found was that while some freshmen have lived up to the promises they made to the tea party movement, dozens of them are big-spenders and are no different from many of the veteran Republicans they serve with.”

If you follow the link, you can see the names and Club scores. The average score for a freshman Republican was 71%. At their blog, the Club for Growth also said they “found that for many of the freshmen Republicans, promises of fiscal responsibility have proven to be empty.” Other notable findings in the Club for Growth Freshmen Study include:

  • A majority of freshmen Republicans voted against the conservative Republican Study Committee budget.
  • Only 14 freshmen Republicans signed a pledge promising never to raise the debt ceiling until “Cut, Cap, and Balance” had passed.
  • The two freshmen in the Republican Leadership received vastly different scores, with Rep. Tim Scott receiving a 92% and Rep. Kristi Noem receiving a 60%.
  • Charlie Bass ran for the seat he lost in 2006 by declaring that the agenda of the tea party “is exactly the same as mine.” He received a pathetic 48% in 2011. (emphasis added)
  • The Ten Highest scoring freshmen Republicans were Reps. Amash (100%), Huelskamp (100%), Labrador (100%), Mulvaney (99%), Walsh (99%), Stutzman (99%), Quayle (98%), Duncan (97%), Gowdy (97%) and Ross (96%). (emphasis added)
  • The Ten Lowest scoring freshmen Republicans were Reps. Rivera (47%), Grimm (46%), Stivers (45%), Runyan (45%), Gibson (44%), Hanna (44%), Fitzpatrick (43%), Dold (42%), Meehan (42%) and McKinley (37%). (emphasis added)

FWIW, Rep. Charles Bass is from New Hampshire, and his phone number on Capitol Hill is (202) 225-5206, according to THOMAS.

A day or so later, Tad DeHaven of the Cato Institute took a look at how the 87 freshmen voted on three selected pieces of legislation. DeHaven wrote in his May 17 post at Cato@Liberty, which quipped that "freshmen Republicans switch from tea to Kool-Aid:"

“The study comes on the heels of three telling votes taken last week in the House that should have been slam-dunks for members who possess the slightest regard for limited government and free markets. Alas, only 26 of the 87 members of the “Tea Party class” voted to defund both the Economic Development Administration and the president’s new Advanced Manufacturing Technology Consortia program (see my previous discussion of these votes here) and against reauthorizing the Export-Import Bank (see my colleague Sallie James’s excoriation of that vote here).

“I assembled the following table, which shows how each of the 87 freshman voted. The 26 who voted for liberty in all three cases are highlighted. Only 49 percent voted to defund the EDA. Only 56 percent voted to defund a new corporate welfare program requested by the Obama administration. And only a dismal 44 percent voted against reauthorizing “Boeing’s bank.” That’s pathetic.” (emphasis added)

The 26 freshmen are easily identified on the chart that DeHaven posted with his explanation.

DeHaven’s post caused me to take a closer look at the scores of the 26 freshmen in the Club for Growth study as well as their scores from the National Taxpayers Union in rating how members of Congress voted in the 112th Congress.

  • The Club for Growth gave three of the 26 freshmen class members a perfect score of 100%. Nine received scores of 90-99%; six received scores of 80-89%; four received scores of 70-79%; and four received scores of 60-69%.
  • The National Taxpayers Union rated the 26 freshmen this way: twelve received an A; three received a B+; nine received a B; and two received a B-.

At NTU’s blog, Government Bytes, the NTU meets with some of the winners of their Taxpayers’ Friend Awards.

Finally, on Friday, Mr. DeHaven looked at three additional votes at Cato@Liberty, writing:

“Rep. Tom McClintock (R-CA) introduced three amendments to the recently passed Energy & Water appropriations bill that would have eliminated a slew of business subsidies at the Department of Energy. Unfortunately, House Republicans once again teamed up with their Democratic colleagues to keep the corporate welfare spigot flowing.”

DeHaven then made two more points to show how bipartisanship really works on Capitol, i.e, how "Republicans join Democrats to save corporate welfare (again):

“First, Democrats voted overwhelmingly to continue to subsidize commercial interests. And here I thought Democrats were concerned about the have and have-nots.

“Second, Rep. McClintock deserves a round of applause for his efforts. These votes speak volumes about a member’s beliefs about the proper role of the federal government. A lot of members—especially Republicans—talk a good game when it comes to spending, limited government, free markets, etc. However, when the time comes to put their money where their mouths are, many choose to instead put other people’s money in the mouths of special interests.”

Not surprisingly, only 16 of the 26 freshmen who voted for all three of the previous three votes analyzed by DeHaven, voted for all three of Rep. McClintock’s amendments. Rep. McClintock writes more about the three amendments at Breitbart’s Big Government. The 16 freshmen Representatives were:

  1. Sandy Adams (FL)
  2. Justin Amash (MI)
  3. Steven Chabot (OH)
  4. Blake Farenthold (TX)
  5. Paul Gosar (AZ)
  6. Tim Huelskamp (KS)
  7. Raul Labrador (ID)
  8. Jeff Landy (LA)
  9. Mick Mulvaney (SC)
  10. Mike Pompeo (KS)
  11. Ben Quayle (AZ)
  12. Todd Rokita (IN)
  13. Dennis Ross (FL)
  14. David Schweikert (AZ)
  15. Marlin Stutzman (IN)
  16. Rob Woodall (GA)

So kudos to California’s Rep. Tom McClintock and to the 16 representatives listed above. And the lesson to be learned is that ratings from such groups as the National Taxpayers Union are worth reviewing before you walk into the walk into the polling booth. If you have the time, take a few moments to telephone the Capitol Hill (202-224-3121) offices of Rep. Tom McClintock and the 16 freshmen members listed above, and congratulate them on their fiscally responsible votes.

June 09, 2012

Thought for Today

"The core institutions, ideas and expectations that shaped American life for the sixty years after the New Deal don’t work anymore. The gaps between the social system we inhabit and the one we now need are becoming so wide that we can no longer paper over them. But even as the failures of the old system become more inescapable and more damaging, our national discourse remains stuck in a bygone age. The end is here, but we can’t quite take it in."

~ Walter Russell Mead, Professor of Foreign Affairs and Humanities, Bard College

Source: March/April 2012 Issue of American Interest (HT Steven Hayward, Power Line)

June 08, 2012

Book Review -- “Too Big To Fail”

A book review in The Freeman, published by the Foundation for Economic Education (FEE) caught my eye because I’m most of the way through Andrew Ross Sorkin’s book, “Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System -- and Themselves.” The book was reviewed by Chidem Kurdas, an economist and financial journalist in New York.

Rather than provide an amateur’s review of Sorkin’s book, I’m sure Growls’ readers would much prefer a professional’s review. Kurdas’ begins her review this way:

“Books about the 2008 financial crisis keep coming, and New York Times reporter Andrew Ross Sorkin offers one of the better accounts of the meltdown. Using a large number of interviews, he reconstructs the words and acts of key people during the six months from the near-collapse of Bear Stearns in March to the bankruptcy of Lehman Brothers in September.

“The book is somewhat bloated, but the tale is compelling. It starts as Bear Stearns, the smallest of the five Wall Street investment houses, wobbles on the edge of bankruptcy. Treasury Secretary Henry Paulson and the Federal Reserve facilitate JP Morgan’s takeover of Bear, leaving Lehman the smallest of the remaining investment banks. Its stock drops precipitously.

“From a huge cast of characters, one man emerges as a tragic figure—Lehman chief executive Richard Fuld. He became obsessed with short sellers (traders who borrow and sell shares to profit from a future price decline), blaming them for spreading malicious rumors about Lehman instead of confronting the bank’s real weakness. That was one in a series of dreadful mistakes. With Fuld’s backing, Lehman president Joseph Gregory had pushed the bank into mortgages, commercial real estate, and leveraged loans. He put inexperienced managers in charge of those activities and got rid of specialists who warned of danger. Catastrophic losses from the real-estate slump were killing Lehman by 2008. Short selling the stock was a symptom rather than a cause of the disease.

“Sorkin recounts Lehman’s destruction, which occurred despite Fuld’s increasingly frantic efforts to raise capital or sell the company. Bank of America bought Merrill Lynch instead of Lehman, with the blessing of the Treasury and the Fed. A deal was worked out with Barclays Capital but scuttled at the last minute by British regulators, a debacle their American counterparts could almost certainly have prevented.”

Ms. Kurdas’ bottom line? It’s this:

“These events raise the question of why government agents can dispose of other people’s property. They certainly don’t seem to worry about preserving the value of businesses or reducing taxpayer liability.

“What’s the lesson in this? Unfortunately, Sorkin doesn’t make the big picture clear. The boom-and-bust happened because the Fed opened the floodgates to easy money. That’s what got everybody, from the second-mortgaged homeowner to Lehman Brothers, to leverage up. Our supposedly expert government players apparently never realized this: Their conceit that they know how to manage the economy is the root of our trouble.”

As Kurdas points out, “Books about the 2008 financial crisis keep coming.” But let me include an excerpt from page 186 of Sorkin’s book:

“But in 1999, under pressure from the Clinton administration, Fannie Mae and Freddie began underwriting subprime mortgages. The move was presented in the press as a way to put homes within the reach of countless Americans, but providing loans to people who wouldn’t ordinarily qualify for them was an inherently risky business , as telegraphed by the New York Times the day the program was announced:

“In moving even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to  that of the savings and loan industry in the 1980s.”

“The success of the two companies in both the financial and political arena inevitably fostered a culture of arrogance . . . .”

Although Sorkin’s book has no reference to the notorious Community Reinvestment Act,  the above quote reinforces the bottom-line lesson that Ms. Kurdas makes.

Here's  the book's cover, and here's the the link to the book at the Barnes & Noble website.


June 07, 2012

How One Man Became a Global Warming Skeptic

"Ten years ago I simply parroted what the IPCC (Intergovernmental Panel on Climate Change) told us. One day I started checking the facts and data – first I started with a sense of doubt but then I became outraged when I discovered that much of what the IPCC and the media were telling us was sheer nonsense and was not even supported by any scientific facts and measurements. To this day I still feel shame that as a scientist I made presentations of their science without first checking it. The CO2-climate hysteria in Germany is propagated by people who are in it for lots of money, attention and power."

~ Klaus-Eckart Puls, German physicist and meteorologist

Source/HT: John Hinderaker at Power Line

June 06, 2012

Kudos to Civic Federation Vote on “Stand-Alone Referendum”

At it’s membership meeting last night, delegates of the Arlington County Civic Federation voted 25-6 urging “County Board members to pull funding for Long Bridge Park out of the proposed parks and recreation bond, and instead send it to voters as a stand-alone referendum question,” as the Arlington Sun Gazette put it in an online report today.

The context, according to the Sun Gazette:

“County Manager Barbara Donnellan has proposed including $42.5 million for the second phase of the Crystal City park complex as part of a larger park bond that would go to voters on Nov. 6. But Civic Federation delegates, on a 25-6 vote, determined that the project was big, and controversial, enough to merit stand-alone status on the ballot.

“The proposed second phase of the park complex would include an indoor aquatic center, long sought by some advocates. But the impact of the second phase, both on the county government’s overall indebtedness and on the annual cost of servicing the debt, would be “considerable,” the Civic Federation noted, estimating it would cost taxpayers about $7 million a year in the initial years.

“The total cost for the second phase is estimated at more than $72 million. County officials have nearly $10 million on hand from a previous bond package, and aim to get $20 million in contributions – perhaps through transfers of development rights – from the business sector.”

The resolution was put forth by the group’s Revenues & Expenditures Committee and it’s chairman Wayne Kubicki. Kudos to the R&E committee and Mr. Kubicki.

You can find the entire resolution here (requires Adobe) with all the WHEREASes and the THEREFORE on the Federation’s website. Here’s the link to the county’s May 16, 2012 press release on the Manager’s proposed FY 2013-2022 Capital Improvement Plan. The full CIP and various briefing materials can be found on the FY 2013-2022 CIP webpage.

UPDATE (6/6/12). Steve Thurston, reporting for the Arlington Mercury, an online news webpage (HT Suzanne Sundborg) writes:

"The Arlington County Board will ask voters in November to approve about $164 million in new debt to cover everything from pavement and bridge repair to Metro system improvements and school construction. The problem for some Arlington Civic Federation delegates is that voters will consider that money bundled in broad categories, not as individual projects.

< . . . >

"A couple delegates argued that the money for the aquatics center had already been discussed and vetted and that voters knew it would be paid for with bond money. But supporters were not buying it.

“The point of this is to give the voters a chance to do some line-item voting,” said one delegate.

Another delegate, Wayne Kubicki, argued that the federation had just spent over an hour discussing the legality of hanging signs in neighborhoods, so “maybe it’s worth a little bit of time to talk about $72 million,” he said.

June 05, 2012

Taxpayer Dollars Pay for OECD Class Warfare

Earlier this year, the Center for Freedom and Prosperity (CF & P) released a policy brief that focused on the "statist agenda" of the Organisation for Economic Co-operation and Development (OECD). According to Wikepedia, (t)he  OECD originated in 1948 as the Organisation for European Economic Co-operation (OEEC) . . . to help administer the Marshall Plan for the reconstruction of Europe after World War II.

Entitled, “OECD Subsidies Are Against U.S. Interests,” the policy brief says that OECD "works against the interests of U.S. taxpayers." The CF & P press release announcing the brief includes two quotes:

"Andrew Quinlan, President of the Center for Freedom & Prosperity, noted, “The OECD has been pushing a destructive class-warfare agenda.” He concluded, “It is simply inexcusable for U.S. taxpayers to be forced to subsidize OECD bureaucrats so they can push a partisan, big-government agenda.”

"The OECD is advocating policies that would erode American competitiveness, undermine free markets, and expand the burden of government,” added Dan Mitchell, a Senior Fellow at the Cato Institute and Chairman of CF&P’s Board. “Even worse, they are doing it with money from American taxpayers.”
The Libertas policy brief provides the following justification:

'U.S. taxpayers shoulder a disproportionate share – nearly one-fourth – of the OECD’s budget, yet receive little to no benefit in return. In fact, the OECD frequently pushes for policies both within the U.S. and internationally that are not in the interest of the United States, and would increase the tax burdens on U.S. citizens, inhibit the free flow of capital, and reduce economic prosperity. With a direct contribution from American taxpayers of almost $100 million, and other expenses on the U.S. delegation in Paris and U.S. agencies that participate in OECD activities, this negative return is unacceptable. Funding of the OECD should be cutoff until such time as the organization ends its campaign against low-tax jurisdictions and the principles of limited government."

And what has OECD done to undermine the interests of U.S. taxpayers? Here are just the top three items from the brief:

  • "Repeated urging of the United States to adopt a value-added tax and a plethora of other tax increases."
  • "Support for big government style healthcare and other spending programs."
  • "A decade-plus anti-tax competition project that poses a threat to national sovereignty. Bureaucrats in Paris should have no right to dictate tax policy to sovereign jurisdictions."

The CF&P press release includes a video that highlights "the OECD’s work pushing a big-government agenda." Take a few minutes to watch the video, and then study the two-page policy brief.

June 04, 2012

Comments on Friday's May Jobs Report

Last October, we growled on October 8 about the monthly jobs reports published by the U.S. Department of Labor’s Bureau of Labor Statistics. A bit of context that we included in that Growls:

“In the second edition of his book, “The Secrets of Economic Indicators,” Bernard Baumohl says the monthly jobs report, published the first Friday of each month, is “(t)he most eagerly awaited news on the economy.” According to Baumohl, “No single economic indicator can jolt the stock and bond markets as much as the jobs report,” and the unemployment rate is the centerpiece of the jobs report.”

The two major data points from the May jobs report, released at 8:30 A.M. on Friday, June 1, 2012, was the unemployment rate increased from 8.1% to 8.2% and that “job growth fell sharply to 69,000 during the month, the weakest growth in a year,” according to today’s Washington Times. In addition, “revisions showed that only 77,000 jobs were created in April, far below the 115,000 previously reported.” The paper also reported:

“This is a major disappointment. There was major weakness in construction,” an industry that had seen unusual job gains in the winter because of mild weather, said John Silvia, chief economist at Wachovia Securities. The Dow Jones Industrial Average immediately dropped more than 150 points at the start of trading Friday morning, as Wall Street economists had predicted the job gains would be twice as large.”

"The slowdown was seen in many other industries besides construction, which has been whipsawed by unusual weather patterns this year. The vital business services sector, which is the heart of the U.S. economy and has created 1.4 million jobs since the end of the recession, lost 1,000 jobs in May. About the only businesses to see healthy job gains were health care, transportation and wholesaling.”

In a report on Friday titled, "Rotten May jobs report underscores weak recovery," CBS News also reported:

" . . . Given that this month represents the three-year anniversary of the end of the Great Recession (according to the National Bureau of Economic Research, the 18-month recession ended in June 2009), now is a good time to discuss how things are going in the recovery.

"Reports released over the past two days confirm what many have been feeling: Corporate America has participated in the recovery, while many workers have not. The all-important monthly employment report and its less important cousins - weekly jobless claims, Challenger, Gray & Christmas job cut report and the ADP private sector employment report - all paint a picture of an uneven jobs recovery."

Peter Coy, writing for Bloomberg Business Weekend, wondered if the economy had slipped below the 'Mendoza Line," baseball lingo about a shortshop who batted less than .200 in five of his nine seasons, implying a "dividing line between mediocrity and badness."

For a comprehensive look at the May jobs report, James Sherk and Rea Hederman prepared an Issues Brief (No. 3619) that includes the following chart:

Josh Mitchell also provides a comprehensive look of the May jobs report for the Wall Street Journal. This Journal story is rich with useful charts, too. As was James Pethokoukis at EnterpriseBlog for the American Enterprise Institute (here, here, and here). and includes several good charts. And in his column for Investor's Business Daily, Larry Kudlow went "inside the number," saying:

" . . . the data are just as bad. The unemployment rate rose slightly from 8.1% to 8.2%. The so-called U6 unemployment rate, tracking the marginally employed or completely discouraged, increased to 14.8% from 14.5%. And labor earnings are barely rising at 1.7% over the past year, almost in line with the inflation rate. In fact, through April, after-tax, after-inflation income is scarcely rising at 0.6% for the past year.

"The private workweek also fell in May. So did the manufacturing workweek and aggregate hours worked for all employees. The small-business household survey did rise, but that follows declines in the prior two months."

Virtually unnoticed in the reporting of the monthly jobs report is the 'margin of error.' I first picked this up in a post by Keith Edwards at the American Thinker's blog. He points out "the BLS margin of error for month job numbers is +/- 100,000," meaning the actual number could range from -31,000 to 169,000. A New Yorker story picks-up on this little-known statistical fact.

Another interesting comment about the monthly jobs reports was made by the Calafia Beach Pundit, Scott Grannis, former chief economist of a large fixed-income portfolio, who opined:

"It's been more than 30 years that I've been following the monthly employment report, and I've never understood why it is that the market places so much importance on a single number. Especially since that number can and most likely will be revised significantly in the future, it is subject to seasonal adjustment factors that are never completely accurate, and it is volatile from month to month. I've also never understood why the market focuses on just the establishment survey of jobs and almost completely neglects the household survey. Both have their problems, and sometimes they can diverge a lot, but over time they tell the same story, only from different perspectives. I've found that looking at both surveys can be very useful, and I make a point of doing that on this blog. The household survey is especially important to follow in the early years of a business cycle expansion, because it can pick up the growth of small start-up companies which aren't covered at all by the establishment survey until future revisions which match the survey data to tax records."

On Friday, at the Cato Institute blog, Cato@Liberty, Dan Mitchell says the numbers in the May jobs report are "(a)t best, the results are mediocre," adding the numbers are "particularly painful" because of the passage of the $800+ billion stimulus bill. He includes the following chart, and also a link to the highly informative, interactive website of the Minneapolis Federal Reserve Bank.

Additional resources can be found at the following:

  1. James Taranto, Wall Street Journal’s Best of the Web, June 1, 2012 reminds us the unemployment rate was supposed to be 5.7% by now.
  2. At CNBC, Diane Olick, June 1, thinks the jobs report triggers trouble for housing.
  3. Allahpundit opines at Hot Air says the White House response to the jobs report is that the problems in the labor market won’t be solved ‘overnight.’
  4. Mike Brownfield provides additional context, including the global and political, for the jobs report at Heritage Foundation’s blog, the Foundry.
  5. At Via Media, Walter Russell Mead notes the possible effect of the jobs report on the presidential race.
  6. At National Review Online, Kevin Hennesy says the “jobs numbers are so weak that financial-market participants are beginning to see another abyss in our future.
  7. Roger Simon writes that “America gets a wake-up call” at Pajamas Media.
  8. In a Power Line post, John Hinderaker notes the unemployment rate in January 2009 when President Obama took office was 7.6%.

June 03, 2012

Tariff and Duty Suspension Bills . . . Arcane maybe, but . . .

We haven’t Growled about a Taxpayer’s Tab since August 15, 2011. They feature news from the National Taxpayers Union Foundation’s BillTally Project. This week’s issue of Taxpayer’s Tab focuses on what some might call an arcane area of Congressional legislation. According to the Merriam-Webster dictionary, the main definition of a tariff is “a schedule of duties imposed by a government on imported or in some countries exported goods.”

Jeff Dircksen summarizes the findings of the latest Taxpayer’s Tab at Government Bytes, the blog of the National Taxpayers Union blog this way:

“This week NTUF took a look at the vast array of tariff and duty suspension bills that have been introduced in Congress.  While NTUF's BillTally system only counts spending, the popularity of these bills made it an interesting point of analysis.

“Roughly one-third of all Representatives and Senators either authored or cosponsored individual suspension bills that they would like to have included in the omnibus tariff bill that Congress will take up soon. We have counted 2,073 such bills introduced between February 7 and May 17 in the House and Senate. There is some overlap of companion bills between the two Chambers. According to Roll Call, around 1,300 suspensions are under consideration for inclusion in the final package.

“These types of bills proliferate because under Congressional rules, individual suspensions can reduce revenues to the Treasury by no more that $500,000. Members often draft several different but related bills to keep each one under the limit. The following examples were introduced by Representative Brett Guthrie (R-KY) and Senator John Kerry (D-MA):

  • H.R. 4711/S. 2797: A bill to extend the temporary suspension of duty on leather basketballs;
  • H.R. 4713/S. 2799: To suspend temporarily the duty on rubber basketballs; and
  • H.R. 4714/S. 2798: A bill to extend the temporary reduction of duty on basketballs having an external surface other than leather or rubber.

“Individually, the budgetary impacts are small, but when thousands of suspensions are rolled into a single bill, the effects add up. CBO estimated that the most recent tariff bill, which passed two years ago, reduced revenues by nearly $300 million over three years. (emphasis added)

The Tab includes tables on who is sponsoring and cosponsoring the most suspension bills in each chamber as well as which state delegations have sponsored the most bills.  Give it a look.”

Thanks Jeff. And note our added emphasis, which shows that in total, the cost of the bills can be significant. By the way, you can sign-up to receive your own copy of Taxpayer’s Tab here.

June 02, 2012

And It’s Not a Bad Joke

A blogger at Judicial Watch’s blog, Corruption Chronicles, wrote on May 31 that the U.S. Department of Housing and Urban Development (HUD) “awarded $70 million in grants to help communities and nonprofit organizations use their taxpayer dollars more efficaciously. The agency announcement justifies the allocation by explaining that the nation is in a “budget climate where state and local governments are challenged to do more with less.” They add the $70 million “comes on the heels of a separate $20 million HUD allocation for pretty much the same cause.”

The Corruption Chronicles blogger then adds the following:

“Here is how HUD’s Assistant Secretary, Mercedes Marquez explains it: The cash will complement a program to help communities “ensure that scarce federal dollars are targeted to where they are needed most and can achieve the highest impact.” As a result the money will go a long way toward meeting the agency’s goals of community development, affordable housing and homeless assistance, Marquez added.”

In a related post at Corruption Chronicles on May 30, they write about two government studies that justify the “need for costly minority ‘housing counselling,’” describing the spending of taxpayer money this way:

“In an apparent effort to justify giving leftist groups tens of millions of dollars to provide low-income populations and minorities with “housing counseling,” the Obama Administration has released two in-depth studies that conclude the government-funded program is the best thing since sliced bread.

"Furthermore, Uncle Sam must keep doling out the cash for this noble cause, according to the government’s own findings. This seems to be a response to coming under fire for pouring huge sums of taxpayer dollars into the coffers of leftwing community groups that help minorities seeking a good home or struggling to keep one on the verge of foreclosure. In the last few months alone, the nonprofits have received $42 million.

“Among them are hundreds of national, regional and local organizations like the powerful open borders group with close ties to the president, the National Council of La Raza (NCLR). Earlier this year the NCLR, whose federal funding has skyrocketed since one of its top officials got a job on the Obama White House, got nearly $2 million to help combat predatory lending, train poor Latinos about financial literacy and help them become homeowners.

“The National Community Reinvestment Corporation, a famously liberal activist group that seeks to eliminate “discrimination” in housing and mortgage lending, and the equally leftist National Urban League, which advocates for social justice and claims voter identification laws are racist also got a chunk of change this year. The first group received $2.5 million from Uncle Sam and the second got $1.05 million.

“The money couldn’t go to a better cause, according to a pair of studies financed by American taxpayers to justify the waste. The first is documented in a 197-page report titled “Foreclosure Counseling Outcome Study” and the second in a 91-page “Pre-Purchase Counseling Outcome Study.” Nearly 70% of those who received housing counseling were able to avoid foreclosure, according to the first report and pre-purchase counseling really helped a “diverse group of low- to moderate-income individuals obtain useful information” that led to home ownership.

“In short, “housing counseling significantly improved the likelihood homeowners remained in their homes” according to a Housing and Urban Development (HUD) press release announcing the reports this month. The announcement is appropriately titled “HUD Studies Show Housing Counseling Helps Families Prepare for Home Ownership and Keep the Homes They Have.”

An absolutely amazing tale of how government spends taxpayers’ money. Business as usual at HUD?

June 01, 2012

Thought for Today

"The Founders knew that the role of a moral government is to create the conditions of liberty and opportunity so that each of us can define success as we see fit and then work with all our might to attain it. Their visionary insight was that allowing us to earn our success is precisely what gives each of us the best chance at achieving real happiness.

"Modern evidence shows that the Founders were absolutely correct. The General Social Survey reveals that people who say they feel “very successful” or “completely successful” in their work lives are twice as likely to say they are very happy about their lives than people who feel “somewhat successful.” And it doesn’t matter if they earn more or less income; the differences persist."

~ Arthur C. Brooks, "The Road to Freedom: How to Win the Fight for Free Enterprise

And the book's cover:

HT EnterpriseBlog