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January 31, 2013

Debt? The United States Has Debt?

Michael Tanner, senior fellow at the Cato Institute writes in an op-ed in National Review Online, "recently a number of liberal commentators have descended into the fever swamps of denialism by rejecting the most basic facts about our debt and deficit. Mind you, they are not arguing about the best policies to reduce the debt — taxe hikes vs. spending cuts — but actually denying that the problem exists at all." According to Tanner:

"Paul Krugman, for example, pronounces the debt problem “mostly solved.” Matt Yglesias of Slate asks, “What sovereign debt crisis? There certainly isn’t one in the United States.” Bruce Bartlett, every liberal economist’s favorite former conservative, adds that “our long-term budget situation is not nearly as severe as even many budget experts believe.”

"Bolstered by a study from the left-wing Center on Budget and Policy Priorities, the debt deniers claim that a combination of economic growth, tax hikes, and projected (but not yet realized) spending reductions have already significantly reduced deficits. They argue that a mere $1.2 trillion in additional tax hikes over the next ten years, and the resulting savings on interest, would enable us to “stabilize” our debt at a mere 73 percent of GDP by 2022.

"Now there’s something to get excited about: stabilizing our debt at an amount equal to nearly three-quarters of the value of all goods and services produced in this country each year. Yippee!"

Tanner begins by explaining what was left out of the CBPP study, writing:

"Left out of this analysis, however, is roughly $4.9 trillion in “intragovernmental” debt, which consists of the debts that the federal government owes to itself, through more than 100 government trust funds, revolving accounts, and special accounts, such as the Social Security and Medicare Trust Funds (worth $2.7 trillion and $344 billion respectively). The combination of debt held by the public and intergovernmental debt yields our current $16.4 trillion in total red ink.

"The debt deniers justify ignoring intragovernmental debt on the grounds that only debt held by the public competes with investment in the nongovernmental sector. Moreover, while interest on debt held by the public is paid in cash and creates a burden on current taxpayers, intragovernmental-debt holdings typically do not require cash payments from the current budget and don’t present a burden on today’s economy."

The entire op-ed is worth reading since Tanner makes several additional points. The CBPP debt stabilization study is available here.

January 30, 2013

A thought on Money, Government and Power

"As the old saying goes, 'money is power' and the more money the government takes, the more power it has over individuals."

~ Angela McGlowan

HT John Hawkins Column at Townhall.com

January 29, 2013

CAGW Names January 2013 Porker of the Month

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.

The January 2013 Porker of the Month is Rep. Peter Welch (D-Vermont) according to a news release published yesterday by Citizens Against Government Waste (CAGW) "for advocating a clean and unilateral debt ceiling hike by President Obama." CAGW further explained:

" . . . Rep. Welch began distributing a letter in December, 2012, citing the Fourteenth Amendment as the basis for the President to “preserve America’s full faith and credit and prevent further damage to our economy,” thus circumventing the legal authority to raise the debt ceiling that rests solely with the Congress.  The letter currently has 114 signatures.

"In addition to abrogating the law, Rep. Welch’s letter also failed to acknowledge that the accumulation of debt, not the debt ceiling vote, is the crux of the nation’s fiscal problems.  Congress has reached its own self-imposed borrowing limit sooner than expected because Washington cannot control its runaway spending.  Rep. Welch’s hand-wringing over the previous debt ceiling negotiations, which he claims resulted in “an additional $18.9 billion in interest over 10 years and America’s first ever credit downgrade,” is a shining example of confusing the symptom for the disease.  By far the biggest drivers of additional interest on the debt are the four consecutive trillion-dollar deficits racked up over the last four years.

“The Fourteenth Amendment, adopted in 1868, contains 33 words on the national debt,” said CAGW President Tom Schatz.  “It states that ‘the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.’  Since the debt ceiling did not exist in its current form until 1917, Rep. Welch’s interpretation of the Fourteenth Amendment is very loose indeed.”

"Rep. Welch has been busy this month.  On January 14, 2013, he revealed that he had founded the 26-member bipartisan “Problem Solvers” group on Capitol Hill in an effort to “break the gridlock in Congress.”  One wonders if a member of Congress so eager for the President to expand his powers for partisan reasons is the ideal founder of such a group.

"For demanding that Congress be allowed to continue ignoring its massive spending problem and for advocating unilateral executive power over borrowing, Rep. Peter Welch is CAGW’s January 2013 Porker of the Month." (emphasis added)

To read about CAGW's mission and history, click here.

January 28, 2013

Tax the Rich to Pay for Big Business Tax Breaks

In a Washington Examiner “Beltway Confidential” column earlier this month, Tim Carney wrote that “Obama’s corporate tax breaks look bigger than his tax.” Carney began by writing:

“Senate Republican staffers familiar with the fiscal cliff negotiation told me that the White House insisted on sticking Max Baucus’s raft of tax-break extenders — HR 3521 — into the fiscal cliff legislation.

“My column listed who was lobbying for these tax breaks — the likes of General Electric, Goldman Sachs, Citigroup, the Motion Picture Association of America, and the Biotechnology Industry Organization of America. This tax-extenders package is clearly a gift to big business.”

Carney included the following chart in his column:

Veronique de Rugy, senior research fellow at George Mason University’s Mercatus Center, separately, writes that "much ado was made about taxing the rich" in the so-called fiscal cliff New Year's Day tax deal but "scant attention has been paid to other provisions in the fiscal cliff bill, namely large tax credits filling the pockets of big businesses and energy projects."

She also "modified Carney’s chart by “(u)sing data from the Congressional Budget Office and the White House, and says it “shows that the extension of business special-interest tax breaks is larger than the amount of money raised from increasing taxes on the rich.” Here's the chart:

de Rugy also includes a reference to a short piece she wrote in the National Review Onlin's blog, The Corner. We previously growled about the 'fiscal cliff' on January 5 and January 6, and in a short growl on January 8 we included a quote about taxing the rich.

January 27, 2013

A Thought about our National Debt

In a Financial Times op-ed last week, Harvard economics professor Ken Rogoff says the "world is right to worry about US debt." He writes:

"America must shortly answer a series of fundamental questions. For example, as its share of global gross domestic product shrinks from about 20 per cent today to as little as 10 per cent in five decades, should it try to continue to play the role of global policeman? The US spends more than 4 per cent of GDP a year on defence, roughly twice the global average. The Obama administration’s fiscal plans anticipate a peace dividend after withdrawals from wars in Iraq and Afghanistan. The Republican party has reasonably argued that it is unrealistic to expect this quiet to last. At the very least, if military expenditures continue to fall, it becomes more important to have the fiscal capacity to ramp them up in response to new threats. It is also worth noting that if the US were ever forced to surrender the mantle of world policeman to, say, China, foreigners may no longer have quite the same desire for its debt.

"Another huge area of disagreement surrounds the question of what services should be provided by the federal government versus the states or the private sector. There is a lot of “low-hanging fruit” here. Productivity improvements in government services have been glacial compared with many other sectors of the economy . . . ."

At the American Enterprise Institute's blog, AEIdeas, James Pethokoukis comments on the op-ed, saying:

"In this FT piece, Rogoff makes another good point: It’s one thing to cut defense spending as a way of reducing debt. But it’s quite another to de facto shift that spending to expanding the welfare state and leave the debt problem to metastasize. “At the very least, if military expenditures continue to fall, it becomes more important to have the fiscal capacity to ramp them up in response to new threats.”

Pethokoukis also incorporated the following graphic in his blog post:

Concluding the op-ed, Rogoff says the United States "remains an incredible franchise with many remarkable strengths," adding that the world generally assumes this will continue. However, he says "it is hard for many in the US to escape the nagging feeling that just maybe this time we won’t."

January 26, 2013

2012 Drought Cost Taxpayers $14 Billion

Taxpayers for Common Sense (TCS) reported last week that droughts last year "cost taxpayers a record $14 billion. TCS further reported:

"This week, the U.S. Department of Agriculture (USDA) confirmed what taxpayers have feared for months. After tallying losses from last year’s drought, the highly subsidized federal crop insurance program will cost at least $14 billion in FY12, shattering 2011’s record cost of $11.3 billion by 25 percent. In the hardest hit states of IL, MO, KS, and IA, insurance payouts far exceeded premiums, meaning that producers in these states received up to $5 back for every $1 they paid into the program. Taking the nation as a whole, crop insurance participants received $3 back for every $1 paid out of their own pockets for a second year in a row. That’s a great deal for agribusinesses, but not for taxpayers." (emphases added)

From 2003 through 2008, taxpayer subsidies did not exceed $4 billion. TCS's reporting went on to say:

"Federal crop insurance masquerades as a free market program—private crop insurance companies sell and administer policies purchased by farmers and ranchers—but closer inspection reveals a government program. The government approves both the companies that sell crop insurance and the policies that they can sell. Taxpayers also pay private companies for administrative expenses, cover the majority of losses in poor growing years, and subsidize nearly two-thirds of every dollar of insurance coverage to the tune of $7 billion last year.

"The explosion in costs of the crop insurance program over the last two years is something taxpayers cannot afford. If we’re going to rein in our trillion-dollar deficits, Congress must start with these kinds of out-of-control programs."

Kudos to Taxpayers for Common Sense for such reporting. Read their entire report for other highlights.

January 25, 2013

County Board Members Assessments Reviewed

Scott McCaffrey reported today on the Arlington Sun Gazette's annual accounting of the home-assessment values of County Board members, saying that three of the five saw higher home assessments. According to Mr. McCaffrey:

"Like most property owners across the county, the board members saw the assessed value of their homes balloon during the housing bubble of the early 2000s, only to fall by varying degrees once that bubble burst.

"In most cases, the assessed value of board members’ property today remains less than what it was during the boom.

"The good news for the board members: All purchased their homes before the boom arrived, at much lower prices than what similar properties would go to market for today."

Details of each Board member's property is included in McCaffrey's report. Kudos to Scott McCaffrey and the Arlington Sun Gazette for this reporting.

January 24, 2013

Marriage and Your Tax Burden

Two weeks ago, the Tax Foundation published Fiscal Fact No. 352 which says the "effects of marriage on tax burden vary greatly with income level, equality." According to the author, Nick Kasprak, the report says:

"In general, there tends to be a marriage tax bonus when the two partners have widely disparate incomes and a marriage tax penalty when they have similar or equal incomes. There are two countervailing forces at work—on the one hand, the higher tax rate brackets kick in at greater income levels for joint filers than for single filers, but on the other hand, adding two incomes together can more than compensate for this effect. The need to balance these two effects is inherent in any tax system with a joint filing status—efforts to reduce the marriage bonus for certain filers will necessarily lead to a marriage penalty for others and vice versa.

"With disparate incomes, a bonus results, because the addition of a small income to a much larger one is usually not enough to lift the return into the raised bracket, but in other cases, the combination of two incomes of similar size can bring the return into the higher tax bracket even despite the generally raised bracket levels for joint filers. The strongest impact is therefore on two-earner couples. If a couple has one wage earner and the nonworking spouse is trying to decide whether or not to re-enter the workforce, he or she will need to consider the high marginal tax rates that will be levied on the second salary."

According to the Tax Foundation report, the chart, shown below, illustrates "how filing status affects tax liability . . . plots the two most important variables against each other—on the Y axis, equality of incomes between the two spouses, and on the X axis, total household wage income. The color represents the theoretical marriage penalty or bonus for a household with only wage income, no children, and no itemized deductions."

For more information about the Tax Foundation, click here. To make donations, click here.

January 23, 2013

A Thought on Liberalism and the Welfare State

Yesterday we followed-up on a growl in which we looked at the 2012 financial report of the federal government, which certainly didn't contain much good news, and referenced a Washington Times op-ed by Cato Institute senior fellow Richard Rahn who wrote, in part:

"The current debate about the debt vote is minor league compared to what will happen when the government literally cannot spend more than it is taking in. That time may be nearer than you think."

At the 'must read' Power Line Blog, John Hinderaker makes the astute observation:

"Liberals are feeling triumphant these days, but in the backs of their minds there must be a sense of foreboding. They won this year by demonizing Republicans and by bribing various demographic groups with government largesse. But the Left’s tactical victory can’t conceal the fact that its ideology is bankrupt. The left’s real enemy isn’t Republicans, it is arithmetic.

"Welfare states are collapsing all around the world. Ours is on the same course. It is commonly observed that America’s entitlement programs are Ponzi schemes, which is correct. What is less often noted is that federal government spending in general is a Ponzi scheme, sustained only by influxes of new money–real money from China and a handful of others, and fake money from the Fed–that cannot long continue."

He concludes saying, "I think it is clear that Progressivism is doomed; what is not clear to me is whether America is doomed to collapse along with its misbegotten Left." He's not alone in holding that thought.

January 22, 2013

A Thought on America's Economic Course

Last week, we growled whether the federal government is a 'going concern' --a principle in accounting that assumes a company will continue to operate in the foreseeable future. We also commented on the 2012 annual financial report of the federal government.

In today's Washington Times, Richard Rahn, a senior fellow at the Cato Institute, begins an op-ed this way:

"The current debate about the debt vote is minor league compared to what will happen when the government literally cannot spend more than it is taking in. That time may be nearer than you think. It is true that the U.S. government can always “print” money to pay its bills, but at some point, printing more money becomes self-defeating because the resulting increase in the government bond interest rate and required interest payment will spiral out of control. At that point, the government will be forced to operate on a pay-as-you-go basis, as any individual or business is forced to do when they can no longer get credit. Several California cities are now in this situation.

"The U.S. government now receives about $200 billion a month in revenue and spends about $320 billion a month. Any responsible business or individual faced with a situation where receipts are only 60 percent of expenditures would make changes before their credit was cut off or, at the very minimum, have a plan for which bills to pay first — but not the U.S. government."

Rahn concludes the op-ed saying:

" , , , The current spending and debt crisis eventually will force debate on the role of the federal government — which programs necessitate taxpayer funding and which can be eliminated. The time is closer than most think — just ask any Greek citizen or resident of Stockton, Calif."

Arlington taxpayers concerned about the economy and the state of the nation's financial management are urged to write their members of Congress. Contact information:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Jim Moran (D) -- write to him or call (202) 225-4376
And tell them ACTA sent you.

January 21, 2013

Are 'Entitlement' Programs Really 'Entitlements'?

"Almost everyone seems to agree that some combination of Social Security reform, Medicare reform and Medicaid reform is essential to any long-term fix of the federal government’s fiscal woes. But few in Washington are prepared to face the political challenges of such reform. Perhaps it would help if we stopped calling these federally financed benefits “entitlements.”

"In any legal sense of the term, Social Security, Medicare and Medicaid are not entitlements. Unlike public employee pensions, which are contractual obligations now threatening to bankrupt state and local governments, Social Security, Medicare and Medicaid benefits can be modified, or even eliminated, by a majority vote of both houses of Congress along with the president’s signature. They are benefits, not entitlements."

~ Jim Huffman, Dean Emeritus, Lewis & Clark Law School

HT Op-Ed at the Daily Caller

January 20, 2013

Does the Future Hold a Real Estate Tax Increase?

The county released 2013 real estate property assessments on Friday afternoon, according to this press release. Here's the three takeaways, according to the county:

  • Single-family residential values up 1.0%; commercial properties flat
  • Assessments available online 5 p.m. Jan. 18
  • Average home value rises to $524,700

Detailed information such as how single-family homes are assessed, how to appeal your  assessment, or information about exemptions for disabled veterans can be obtained at this webpage. You can look-up real estate assessments here.

Here is what the county had to say about residential assessments:

"The average assessment for existing single-family properties, including condominiums, townhouses and detached homes, increased approximately 1.0%, from $519,400 in Calendar Year (CY) 2012, to $524,700 in CY 2013.

"Each homeowner will receive an assessment reflecting the value of his or her property. The 1.0% average increase is just that -- an average; 47% of residential owners will see no change in their assessment; 22% will see declines of varying amounts. Of the 31% with increased values, the amount also will vary. Variations in property assessments for 2013 reflect the diversity of Arlington’s neighborhood and housing stock."

Let's talk about the possible real estate tax rate increase. As we growled on October 25, 2012, the County Manager told Arlington County Board members at a joint meeting with the School Board, "the rabbit is dead" -- suggesting there is no more magical money to be found and no accounting tricks to be pulled out of the hat." She also estimated a $50 million budget gap that would be roughly divided between the county ($25 million) and schools ($25 million). Here's how the press release describes the budget outlook:

"Slower revenue growth and projected expenditures have resulted in an estimate that combined County-School expenditures will outpace revenue (at current tax rates) by $50 million for fiscal year 2014.  The County and Schools have been working aggressively to reduce expenses.

"The County Manager and School Superintendent will propose their budgets in February and will include a mix of cost cutting and proposed tax and fee increases.   Real estate tax revenues represent approximately 56% of total County revenues; other sources, particularly state and federal grant funding, are increasingly uncertain."

FY 2014 budget information is available here, which includes access to budget guidance the County Board provided to County Manager Barbara Donnellan last fall.

So if assessments are flat, and other revenue sources are not much different, you get three guesses as to how the five eminences on the Arlington County Board will raise $50 million. If you guessed they'll do it by raising the real estate tax rate, you are most likely correct.

UPDATE (1/21/13): Arlington Sun Gazette reports online about the 2013 real estate assessments.

January 19, 2013

Is the Federal Government a ‘Going Concern’?

According to BusinessDictionary.com, the term ‘going concern’ is “(a) basic principle in accounting that assumes a company will continue to operate in the foreseeable future. The significance of this principle becomes apparent when the value of a running business is compared with the value of one being liquidated.

After seeing the following chart, which appears on page iv of the U.S. Treasury Department’s “Citizens Guide to the 2012 Financial Report of the United States Government,” American taxpayers cannot help but wonder how much longer America can continue on its present course. (the Guide available here as a single document)

Note: the chart was copied from AEIdeas, the blog of the American Enterprise Institute, and was posted by James Pethokoukis.

In the conclusion of the Citizens Guide, the Treasury Department wrote:

The Government took potentially significant steps towards fiscal sustainability by enacting: (1) the ACA in 2010 and (2) the BCA in 2011. The ACA holds the prospect of lowering the long-term per beneficiary spending growth for Medicare and Medicaid, and the BCA significantly curtails discretionary spending. Together, these two laws substantially reduce the estimated long-term fiscal gap. But even with these new laws, the Government’s debt-to-GDP ratio is projected to increase continuously over the next 75 years and beyond if current policy is kept in place, which implies that current policy is not sustainable. Subject to the important caveat that changes in policy not be so abrupt that they slow the economy’s recovery, the sooner policies are put in place to avert these trends, the smaller the revenue increases and/or spending decreases will need to be to return the Government to a sustainable fiscal path." (emphases added)

Yesterday, the Huffington Post began their reporting of the news of the financial 2012 audit of the federal government this way:

"The Government Accountability Office said Thursday that it could not complete an audit of the federal government, pointing to serious problems with the Department of Defense.

"Along with the Pentagon, the GAO cited the Department of Homeland Security as having problems so significant that it was impossible for investigators to audit it. The DHS got a qualified audit for fiscal year 2012, and is seeking an unqualified audit for 2013.

"The report released by the GAO on Friday indicates serious accounting problems at two of the largest government agencies: the Pentagon and the Department of Homeland Security. The Department of Defense has a net cost of $799.1 billion to the federal budget, while the Department of Homeland Security has a net cost of $48.7 billion."

The blog Conservativebyte chose to begin their reporting this way:

"The Government Accountability Office warned in a report that if cuts are not made to mandatory spending — including Social Security and Medicare — there will be a fundamental gap between spending and revenue as more baby boomers retire."

Unfortunately, there has been very little reporting so far by such stalwart news outlets as the Washington Post, the New York Times, or the cable news outlets on this major financial management event.

As Pethokoukis notes in the title of his blog article, "USA Inc.’s balance sheet: Assets $2.7 trillion, Liabilities $18.8 trillion." Virtually any private sector corporation having such balance sheet numbers would have long-ago declared bankruptcy. What a legacy have Members of Congress and the President given America's citizens.

Additional Resources: In addition to the Citizens Guide (prints to 8 pages), which includes several explanatory charts, the Treasury report and the U.S. General Accountability Office (GAO) transmittal letter should also be a must-read (prints to 7 pages). However, if you're a policy geek or a masochist, the full report, chapters of the report, or back reports are available at the Treasury Department's Financial Management Service.

January 18, 2013

Kudos to the Institute for Justice

Joe Henchman writes at the Tax Foundation’s tax policy blog that the U.S. District Court for the District of Column has struck down the IRS’s “arbitrary tax preparer licensing requirement.” According to Henchman:

“Back in March, the libertarian public interest law firm the Institute for Justice (IJ) sued the IRS over its new and arbitrary requirement that tax preparers pay fees, pass a government exam, and take 15 hours of continuing education classes every year. Attorneys, CPAs, and other politically-connected groups are exempt from the requirement . . . .

“IJ argued on behalf of several small tax preparers that the IRS had no authority to impose such regulations, noting that Congress had considered it on a number of occasions but never passed it. The IRS pointed to 31 U.S.C. § 330, which permits the government to "regulate the practice of representatives of persons before the Department of the Treasury"; IJ convincingly argued that this refers to establishing rules for hearings and appeals within the IRS, not tax preparation.”

Additional information is available at the tax policy blog and here and here (video) at the Institute for Justice’s website. Here's how IJ explained why they filed the lawsuit:

"This lawsuit continues IJ’s long tradition of fighting for the economic liberty of entrepreneurs against regulations that do little more than expand government power and protect politically powerful groups from competition. Tax preparers like Sabina, Elmer and John have a right to earn a living without getting permission from the IRS. A win for them will be a win for the estimated 350,000 tax return preparers nationwide who will be subject to these regulations and to the tens of millions of taxpayer customers they serve each year."

We join the Tax Foundation in congratulating the Institute for Justice and taxpayers.

January 17, 2013

The Nation at a Crossroad

"This country is at a crossroad. We have to choose between raising taxes on everyone to pay for big government or keeping taxes low and seriously cutting spending. Big government spending and relatively lower taxes are not an option. We learned that during the Bush years."

~ Veronique de Rugy

HT Her Column in the Washington Examiner

January 16, 2013

A Thought on Liberalism and the Left

"The left needs the idea of vast corporate power to populate its tableau of oppression.  It needs oppression to justify its lust for government power.  And it needs to divide employers and employees to maintain its power."

~ Christopher Chantrill

HT His Column at American Thinker

January 15, 2013

More Highway Robbery

At the National Taxpayers Union’s blog, Government Bytes, Michael Tasselmyer provides a detailed write-up yesterday of “pay-per-mile tax proposals.” The lede of his write-up:

“As the push for more fuel efficient transportation intensifies, U.S. officials are warning of major future deficits for the Highway Trust Fund, established in 1956 to support the construction and maintenance of the Interstate Highway System.

“The Highway Trust Fund is financed through transportation-related excise taxes, the most significant of which is the federal gasoline tax. However, as fuel efficiency standards become stricter and Americans head to the pump less often, gas tax collections are expected to decrease over the next decade, and federal transportation funds could face substantial long-term deficits. A May 2012 report from the Congressional Budget Office showed that at 2012 spending and taxation levels, the Highway Trust Fund is looking at a $147 billion shortfall by 2022. After factoring in a 21-percent reduction in gas tax receipts due to increased fuel efficiency standards, that deficit increases to $204 billion.

“The CBO determined that the government has 3 options to address the looming problem:

  • Reduce transportation spending;
  • Transfer money from the Treasury's general fund; or
  • Levy additional taxes.”

Tasselmyer also cites a December 2012 report from the U.S. General Accountability Office (GAO) on the Highway Trust Fund, noting that GAO “examined some of the costs and benefits of three different types of mileage tax methods: GPS, "pay-at-the-pump," and prepaid systems.” According to Tasselmyer:

“The GAO report modeled the effect of a 0.9 to 2.2 cent per mile tax on a typical American driver, and found that even at those levels, taxpayers could expect to pay $108 to $248 per year in fees. Currently, the average driver pays about $96 in gas taxes each year. That would mean an increase of at least 12.5% in annual transportation expenses for the typical driver if Congress decides to follow through on these proposals.” (emphasis added)

Separately, in an online Washington Examiner article posted in “Washington Secrets” yesterday (HT Mark Levin Show), Paul Bedard begins:

“An on-again, off-again move by the Obama administration to scrap the federal gas tax in favor of a pay-per-mile fee would boost the tab to Americans as high as 250 percent, raising their current tax of 18.4 cents a gallon to as high as 46 cents, according to a new government study.”

Bedard concludes his “Washington Secrets” article writing:

“The administration floated that plan in the first term, but scrapped it when it was met with public outrage. However, several states and some in Congress are now eyeing the plan, keeping it alive as a federal option.”

If politicians and government bureaucrats would only make the same efforts to reduce the cost of government services as they do at finding new ways to raise the burdens on productive taxpayers, America would be a more prosperous nation.

January 14, 2013

Deficits. What Deficits? Part I.

In a featured article in TaxAnalysts’ Tax Notes today, David Cay Johnston “argues that the fiscal cliff compromise (details from the Tax Foundation) will make it harder to solve the United States' long-term deficit and debt problems.” (HT Tax Prof Blog). Johnston covered tax policy for the New York Times and now teaches in Syracuse University’s law school.

Johnston first lists 10 things that were in the tax deal of the so-called ‘fiscal cliff” passed on New Year’s Day. For example, here are the first and the last of the 10 items:
  • “The Reaganite idea of broadening the tax base to allow lower rates is not just dead, but forgotten.”
  • “Despite all the rhetoric about balanced budgets and increasing federal debt, our elected leaders are unwilling to raise taxes more or cut the programs that actually add to the debt and weaken the economy.”

After that last point, Johnston adds:

“The scale of that last point is vividly illustrated in Congressional Budget Office projections in the accompanying chart. A quarter-century from now, all else being equal, the federal debt will be twice the amount of the economy's total annual output. Of course, as the CBO points out, all else will not be equal if the federal debt continues to grow at unsustainable levels.

“But do not expect any serious solutions, just bandages.”

For an idea of what the 112th Congress and the President gave us, take a look at the following graph that Johnston included in the article:

Finally, Johnston ends the article by reminding taxpayers:

"As the debate over spending cuts and the debt ceiling advances, keep in mind your tax burdens. And remember the scale of the numbers. Here is one comparison to keep in the forefront of your mind:

The Obama administration says that the fiscal cliff deal it made will mean $737 billion less in federal debt over the next 10 years. CBO data show that interest on the growing national debt will cost more than $770 billion just in the 10th year, assuming interest rates remain at current low levels."

Johnston's article is worth reading in its entirety. Especially if you watched the President's press conference this morning (White House Blog, includes 53-minute video; transcript from the White House Press Office; Associated Press report on the press conference; and, NBC News reporting of the press conference.)

We growled about the fiscal cliff deal previously with quotes by Kevin Williamson on January 5, 2013 and by Mark Steyn on January 6, 2013.

January 13, 2013

Newest Porker of the Month Named

Citizens Against Government Waste (CAGW) named Representative Donna Edwards (D-Maryland's 4th District) its December 2012 Porker of the Month "for her disdain for the priorities of elected officials and voters who do not wish to continue funding high-speed rail projects in their states." CAGW justified their selection saying:

"In the December 6, 2012 edition of the Washington Post, Rep. Edwards suggested that high-speed rail should move forward regardless of the wishes of those who could be left with the tab, such as taxpayers in Florida, Ohio, or Wisconsin, whose governors rejected federal high-speed rail subsidies in 2009. In response to statements from California Representatives Kevin McCarthy (R) and Jeff Denham (R), who agreed that the high-speed rail being planned in California is prohibitively expensive, Rep. Edwards insisted, “We need to get started. I know when the interstates were being built there were areas that didn’t want them. Who doesn’t want a highway now?”

"Rep. Edwards apparently has not gotten the message from her colleagues in the House of Representatives or the Senate. Both bodies of Congress have twice rejected requests by President Obama for high-speed rail funding; first in April 2011, when $2.5 billion in funding was rescinded, and again in April 2012, when a budget request for $1 billion was denied. Her comments also ignore high-speed rail’s track record of creating a black hole for public funds. On average, the final cost of high-speed rail projects across the globe runs 45 percent above initial projections. For example, the California High-Speed Rail Authority’s original estimate of a San Francisco-to-Anaheim line was pegged at $35.7 billion, but that price tag has since risen by 90 percent, to $68 billion."

In addition, CAGW said:

"Truckloads of highway earmarks have done nothing to improve West Virginia’s economy, and shiny new trains will not save California, Florida, Ohio, or Wisconsin. Rep. Edwards would do well to spend more time finding ways for the federal government to afford the services it already provides and less time promoting new, wasteful projects.”

Take a few minutes to contact Rep. Edwards' office on Capitol Hill at (202) 225-8699. Unfortunately, she only accepts e-mail from constituents within her district, but you can view her homepage.

January 12, 2013

U.S. Spent Record $80.4 Billion on Food Stamps in 2012

Earlier this week, the Judicial Watch’s blog, Corruption Chronicles, reported that news, writing:

“The program has exploded with a record number of people—46 million and growing—getting free groceries from Uncle Sam. Adding insult to injury, a federal audit revealed last year that many who don’t qualify for food stamps receive them under a special “broad-based” eligibility program that disregards income and asset requirements. This is sticking American taxpayers with a multi-million-dollar tab to feed hundreds of thousands of people who can well afford to feed themselves.

“As 2013 gets rolling, the government reveals this month that in fiscal year 2012 it spent a record $80.4 billion on food stamps. That’s a whopping $2.7 billion increase from the previous fiscal year! This doesn’t even include other taxpayer-funded food programs for low-income populations like “Child Nutrition Programs” that received an additional $18.3 billion last year.”

On October 11, 2012, Corruption Chronicles, also reported that: “The government’s food stamp program has gotten so out of control under President Obama that a United States senator is demanding an end to the madness, especially the administration’s aggressive promotion campaigns to recruit even more recipients.”

Finally, the General Accountability Office (GAO) reported on July 26, 2012 that “improved oversight of state eligibility expansions (are) needed.” In their highlights, GAO wrote:

“In fiscal year 2010, GAO estimates that 2.6 percent (473,000) of households that received Supplemental Nutrition Assistance Program (SNAP) benefits would not have been eligible for the program without broad-based categorical eligibility (BBCE) because their incomes were over the federal SNAP eligibility limits. The characteristics of these households were generally similar to other SNAP households, although they were more likely to work or receive unemployment benefits. BBCE removes asset limits in most states, and while reliable data on participants’ assets are not available, other data suggest few likely had assets over these limits. Although BBCE contributed to recent increases in SNAP participation, other factors, notably the recent recession, had a greater effect.

“GAO estimates that BBCE increased SNAP benefit costs, which are borne by the federal government, by less than 1 percent in fiscal year 2010. In that year, total SNAP benefits provided to households that, without BBCE, would not have been eligible for the program because their incomes were over the federal SNAP eligibility limits were an estimated $38 million monthly or about $460 million for the year. These households received an estimated average monthly SNAP benefit of $81 compared to $293 for other households. BBCE’s effect on SNAP administrative costs, which are shared by the federal and state governments, is unclear, in part because of other recent changes that affect this spending, such as state budget and staffing reductions in the recent recession.

“BBCE has potentially had a negative effect on SNAP program integrity. In recent years, the SNAP payment error rate declined to an historic low, but evidence suggests the decline is primarily due to changes other than BBCE. While BBCE may improve administrative efficiency, both national data and discussions with local staff suggest BBCE may also be associated with more errors. In addition, BBCE has led to unintended consequences for SNAP and related programs . . . .”

We growled on December 16, 2012 about the skyrocketing use of food stamps in Northern Virginia. Consequently, it’s not surprising that food stamp use is likewise setting new records nationally.

Incidentally, if you're wondering just how much $80.4 billion is, let's do a little division. With something like 77 million families in America, it means spending about $1,040 for each and every family.

January 11, 2013

More Waste of Your Federal Tax Dollars

Penny Starr of CNS News reported on Wednesday the U.S. Department of Labor has made "$5 billion in 'improper' unemployment insurance payments for the period July 1, 2011 through June 30, 2012. According to Starr:

"The U.S. Labor Department's website includes a database that shows $5,159,629,434 in improper unemployment insurance payments for all 50 states, U.S. territories and the District of Columbia for the period July 1, 2011 to June 30, 2012.

"The database also shows that 2.85 percent, or $1.28 billion, of the total unemployment insurance payments ($45.2 billion) in that timeframe were the result of fraud.  (See here and click on XLS sheet for “2012 Calendar Year data.”)

"On the “browse by topic” section of the Department of Labor website is a link for “Unemployment Insurance” that takes visitors to the page devoted to that topic, including “Unemployment Insurance (UI) Improper Payments by State.”

"Visitors who click on that link are taken to an interactive map where clicking on an individual state reveals the three-year rates of fraud and improper payment and recovery efforts on “established improper payments.”

Starr notes that in 2012 Pennsylvania had the highest estimated improper payments with over $715 million and a "three-year fraud rate" of 5.07%.  On the other hand, Vermont had the lowest estimated improper payments at $4,302,876 and a 1.25% fraud rate.

Just wondering, but shouldn't there be a few heads rolling for such fiscal malfeasance?

January 10, 2013

A Thought on Education

"Schools were once thought of as places where a society’s knowledge and experience were passed on to the younger generation. But, about a hundred years ago, Professor John Dewey of Columbia University came up with a very different conception of education — one that has spread through American schools and even influenced education in countries overseas.

"John Dewey saw the role of the teacher not as a transmitter of a society’s culture to the young, but as an agent of change — someone strategically placed with an opportunity to condition students to want a different kind of society.

"A century later, we are seeing schools across America indoctrinating students to believe in all sorts of politically correct notions. The history that is taught in too many of our schools is a history that emphasizes everything that has gone bad, or can be made to look bad, in America — and that gives little, if any, attention to the great achievements of this country.

"If you think that is an exaggeration, get a copy of A People’s History of the United States by Howard Zinn and read it. As someone who used to read translations of official Communist newspapers in the days of the Soviet Union, I know that those papers’ attempts to degrade the United States did not sink quite as low as Howard Zinn’s book."

~ Thomas Sowell

HT His "Role of 'Educators'" Column at National Review Online

January 09, 2013

World-Class Community Flunks Budget Transparency Test



In a survey of the Internet websites of Virginia's 134 counties and independent cites by the Virginia Coalition for Open Government (VCOG), Arlington County ranked #21, earning 44 out of a possible 50 points, and received a score of B+. The city of Fairfax score 50 points, and earned the solitary A+ of all 134 jurisdictions.

According to VCOG's introductory letter, here is the essence of the survey methodology:

"After a comprehensive survey of the websites for all 134 counties and independent cities in the state, the Virginia Coalition for Open Government can tell you that in King George County it takes six clicks of a mouse to get to this fiscal year’s current operating budget. It takes five in Norfolk, four in Tazewell County, three in Harrisonburg, two in Amelia County, and just one in Manassas. Unfortunately, in 26 localities, no amount of clicks would reach a current budget, because none was posted.

"VCOG didn’t just count clicks, however. We also surveyed the localities for how easy it was to find and follow each click to the budget. We examined whether the budget was available in one comparative document, in sections or both. We looked at formats and whether it was searchable by keyword. We looked at whether the budget could be found on a home-page search box or a site map. We wondered if past budgets were available
and how many. We searched for context, explanations and summaries. And we took note of helpful information along the way: explanations of the budget process, a budget calendar, citizen input, offers of free budget CDs.

"We gathered all this data and then asked 10 basic questions of each site. Based on the answers to each of these questions we then came up with a grade for each county."

If you're wondering why VCOG chose to focus on the budget, here's their reasoning:

"Why did VCOG choose to search out the budget on each locality’s website? Why, out of all the services a local government provides, did we home in on just one document?

It’s simple, really: Without the budget there’s nothing else.

"Everyone knows what a budget is. Whether it’s your personal finances, a business balance sheet, Congress, a wedding plan, a PTA bake sale, most adults (and hopefully some kids out there!) understand money in and money out. For a local government budget, the money in is from taxpayers’ pockets (federal funds and grants, too, of course), and the money out is the spending of those taxpayer funds.

"The budget is thus the most literal way government can be held accountable. The budget’s numbers tell us what the government’s priorities are. The numbers by themselves don’t have spin. It is up to citizens to decide if the money is being spent appropriately, in the right amounts and for the things we value.

"As we are what we eat, our governments are what they spend. We should have some way of keeping track of that."

For the record, "(t)he Virginia Coalition for Open Government engages citizens to monitor the actions of their state and local governments as part of the democratic process." It "is a non-profit, non-partisan membership organization that presses for access to public records, meetings and judicial proceedings." You can learn more at their website. The "project was funded by a grant from the John S. and James L. Knight Foundation and the National Freedom of Information Coalition."

For a county that considers itself to be "world-class," we would have expected better. The county should either stop thinking of itself as world-class or use the VCOG report to launch a discussion of how to improve the presentation of the budget and other important public documents.

UPDATE (1/14/13) In a rather detailed online story today, the Arlington Sun Gazette reports: "County-government officials are defending their transparency on budget issues, after receiving a better-than-average but not best-in-show grade from a statewide watchdog group."

January 08, 2013

A Thought on 'Taxing the Rich'

"The empirical evidence is that in the United States and other countries, the way to get the “rich” people to pay more is to keep rates low enough for them to voluntarily work, save and invest rather than put their smarts and energy into avoiding confiscatory taxes. You can bet that increasingly, rich Californians and New Yorkers are going to move their legal residences to low-tax states such as Texas, and some even to foreign countries."

~ Richard Rahn, Senior Fellow, Cato Institute

HT His Column in Today's Washington Times

January 07, 2013

More Taxes, Or Do We Have A Spending Problem?

In an opinion piece in today's Wall Street Journal, Stephen Moore writes:

"What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with (President) Barack Obama was this revelation: "At one point several weeks ago," Mr. Boehner says, "the president said to me, 'We don't have a spending problem.'" (emphasis added)

Moore adds that he was "talking to Mr. Boehner in his office on the second floor of the Capitol, 72 hours after the historic House vote to take America off the so-called fiscal cliff by making permanent the Bush tax cuts on most Americans, but also to raise taxes on high earners."

January 06, 2013

Another Thought on the So-Called Fiscal Cliff

" . . . . The political class has just spent two months on a down-to-the-wire nail-biting white-knuckle thrill-ride negotiation the result of which is more business as usual. At the end, as always, Dr. Obama and Dr. Boehner emerge in white coats, surgical masks around their necks, bloody scalpels in hand, and announce that it was touch-and-go for awhile but the operation was a complete success – and all they've done is applied another temporary Band-Aid that's peeling off even as they speak. They're already prepping the OR for the next life-or-death surgery on the debt ceiling, tentatively scheduled for next Tuesday or a week on Thursday or the third Sunday after Epiphany."

~ Mark Steyn

HT His Orange County Register Column

January 05, 2013

A Thought on the So-Called Fiscal Cliff

"The so-called fiscal cliff is one installment in a series of manufactured crises, the purpose of which is to provide the political establishment with small problems it can solve or pretend to solve while steadfastly refusing to address the much thornier problem of the long-term non-sustainability of U.S. public finances. Watching the melodrama unfold, I sometimes think I should be reviewing it in my theater column over at The New Criterion rather than analyzing it for National Review."

~ Kevin D. Williamson

HT His National Review Online Article

January 01, 2013

Columbia Pike Streetcar Remains County Board Issue

The Arlington Sun Gazette's Scott McCaffrey posted an online report earlier this afternoon on the Arlington County Board's so-called New Year's Day organizational meeting. Here's the lede of McCaffrey's report:

"The controversial Columbia Pike streetcar proposal dominated County Board members’ Jan. 1 organizational meeting, with a majority of board members working to fend off calls for a broad community dialogue before the quarter-billion-dollar transit line moves forward.

"County Board member Libby  Garvey, the lone board opponent of the streetcar plan, used the annual gathering to press her calls that the community be involved before elected officials agree to the five-mile transit line.

“I could be wrong in my conclusions about the streetcar. But I know I’m right about the need to have a robust and informed conversation,” said Garvey, who for months has pushed for a cheaper, “bus rapid transit” alternative for the Pike."

McCaffrey also reported on Board contretemps, writing:

"Rather than rebut Garvey directly, several County Board members used their own remarks to suggest, indirectly, that the time for discussing the proposal is over.

“Having had full and open discussion, do come to conclusions, we implement them and we move on to the next challenge,” said County Board member Chris Zimmerman, who – while speaking in generalities – almost assuredly had the streetcar proposal in mind.

< . . .>

"Like Zimmerman, other board members addressed the issue only circuitously; one needed an advanced degree in County Board 101 to parse the nuances:"

Looks like the makings of an interesting 2013.

UPDATE (1/5/13): On January 3, McCaffrey added an item under the title, "Garvey Appears Unfazed, Undaunted in Streetcar Battle," writing:

"Libby Garvey’s quest to derail the Columbia Pike streetcar has won her dirty looks and grumbling in public – lord only knows what else in private – from her fellow County Board members. But she seems to be drawing strength from the public’s reaction to her efforts.

< . . . >

" Garvey’s speech on New Year’s Day was interrupted twice by smatterings of applause, the only time that happened during the day’s proceedings."