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March 31, 2014

A Thought on Entrepreneurship in American History

"The opportunities for people with ideas and a willingness to take risks are plentiful in America, and there is plenty of capital available to bring those ideas to life. On top of that, mechanisms to bring ideas and capital together are more robust than they have been in the past. So the future of entrepreneurship in this most entrepreneurial of countries remains bright. The only fear is that an overbearing government, bent on managing the American economy -- supposedly for the good of all, but actually for the benefit of bureaucrats and politicians -- will strangle the goose that has laid so many golden eggs. That is always a danger, for government is just as subject to the law of self-interest as the marketplace. Unfortunately, the process of creative destruction is far less vigorous in government, which is a monopoly by its nature.

"On the other hand, government regulation displays an incompetence so extraordinary that reform becomes possible. We are witnessing such a display now with the launch of Obamacare. Obamacare, of course, seeks to rid one-sixth of the American economy of even a vestige of entrepreneurship and turn it over to the public sector.

"I'm always an optimist, so I think good things will come out of this. Let's hope so."

~ John Steele Gordon, the conclusion of an adaptation of a speech delivered in San Diego, California, on November 15, 2013, at a Hillsdale College Free Mark Forum on the topic, "Markets, Government, and the Common Good"

HT The entire adaptation (February 2014) is available at the Imprimis archives.

March 30, 2014

The Difference Between Reaganomics and Obamanomics

At Investor's Business Daily this weekend, Vance Ginn, a staff economist at the free market Texas Public Policy  Institute in Austin, Texas compares the economics results of Presidents Reagan and Obama. He began by saying:

"Despite adding almost a trillion dollars to our national debt and failing to keep the unemployment rate at or below 8% as advertised, liberals consider President Obama's signature stimulus package — the American Recovery and Reinvestment Act — a success, in part because of the number of jobs it "saved."

"Beyond the obvious failings of the president's plan, now more than five years old, the approach is illustrative of how presidents sometimes try to stabilize an economy using fiscal policy.

"But there is a right way and a wrong way."

Ginn notes that finding a recession, President Obama tried "to reinvigorate the economy by passing the ARRA and other policies over the next four years. These included ObamaCare to regulate the health care market, Dodd-Frank to regulate banks, Cash for Clunkers and extending unemployment benefits that collectively increased economic uncertainty and reduced incentives to hire and work." A so-called Keynesian approach.

On the other hand, Ginn notes, President Reagan, too, found an economy that had "back-to-back recessions," but adds:

"Contrary to President Obama's prescription of more government spending and regulation, President Reagan diagnosed government as the problem and prescribed a plan of lowering tax rates and reducing regulations to free firms and workers from disincentives to invest and work.

"This limited-government prescription led to a 92-month expansion — one of the longest on record — and helped increase the percentage of the working population from 57% to 63%.

"A substantially different policy approach provided vastly different results."

The graph below shows exactly the different outcomes that result from the prescriptions employed by President Reagan and President Obama:

Is it any wonder that a Gallup Gallup poll two weeks ago showed jobs, government, and the economy  were the top three problems facing Americans?

Readers of Growls are urged to call or write their Congressional representatives. If you live in Virginia's Arlington County, they are:

  • 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 that ACTA sent you!

March 29, 2014

A Thought on Progressive Thinking

"The currency of progressivism isn’t policies, and it certainly isn’t results. It’s emotions. Back in 2008, Slate’s Emily Yoffe suggested that the newly elected Barack Obama had done nothing less than define and harness a new human emotion:

In his forthcoming book, Born to Be Good (which is not a biography of Obama), [Dacher Keltner, a professor of psychology at the University of California Berkeley] writes that he believes when we experience transcendence, it stimulates our vagus nerve, causing “a feeling of spreading, liquid warmth in the chest and a lump in the throat.” For the 66 million Americans who voted for Obama, that experience was shared on Election Day, producing a collective case of an emotion that has only recently gotten research attention. It’s called “elevation.” …

University of Virginia moral psychologist Jonathan Haidt, who coined the term elevation, writes, “Powerful moments of elevation sometimes seem to push a mental ‘reset button,’ wiping out feelings of cynicism and replacing them with feelings of hope, love, and optimism, and a sense of moral inspiration.”

"As long as a particular position or stance lets progressives feel good about themselves, they will embrace it. Thus the measuring stick of Obamacare is not whether it’s actually providing the uninsured with health insurance — the majority of the uninsured remain oblivious to even the most basic facts about the law — but whether a liberal feels that it’s a sign that he cares about the uninsured more than other people.

"Liberals will deem Obamacare a failure only if it stops making them feel good about themselves."

~ Jim Garaghty

HT His March 26, 2014 column, "Unruly Progressives," posted at National Review Online

March 28, 2014

Report on Yesterday's Arlington County Tax Rate Hearing

The Arlington County Board spent an estimated 30 minutes "listening" to county residents weigh-in on residents' views on Arlington County tax rates, according to Scott McCaffrey's report today in the online Arlington Sun Gazette. McCaffrey began his report saying:

"The few who took time out of their daily routine on March 27 to weigh in on the proposed Arlington real estate tax rate for 2014 were relatively evenly split between those who wanted the County Board to keep the rate unchanged, and those who said it should be lowered.

"In a brisk, 30-minute public hearing, fewer than 10 speakers offered their views, a miniscule number compared to those who weighed in two nights earlier to provide County Board members with input on budget priorities.

"Board members are all but assured of keeping last year’s real estate tax rate of $1.006 per $100 assessed value unchanged for 2014. Having advertised that rate for the public hearing, the board can’t take it any higher, and the government’s fiscal 2015 budget planning appears predicated on have no decrease."

Your humble scribe, and ACTA president, was quoted in the Sun Gazette news report along with several other speakers. Here is my complete presentation to the County Board:

"Good evening, Board members. My name is Timothy Wise, and I am president of the Arlington County Taxpayers Association.

"Let me first remind you, and those watching at home, that we are  here this evening only because state law requires the meeting be held whenever the Board wants to raise taxes by 1% above last year’s revenues, and not because Board members want to listen to what taxpayers have to say.

"And even though you you advertised NO increase in the real estate tax rate, that does not mean that revenues from the real estate tax flatline. For the record, even at no increase in the real estate tax  rate, you are effectively raising real estate taxes 4.6%. Put another way, the so-called average Arlington household will still pay than $30 more each month then they did last year.

"Let’s talk for a minute about that mid-year review, which the Manager provided you earlier in March. The Manager told the Board that for the first six months of Fiscal Year 2014, there would be $27.6 million available for the coming year, i.e., Fiscal Year 2015. At about $6.6 million for each 1-cent in the tax rate, you can easily reduce the real estate tax rate by more than 3-cents.

"Add in the potential savings from the second half of Fiscal Year 2014, and there is absolutely no reason the Board could not provide Arlington taxpayers with tax relief. Besides, for the past half-dozen or so years, the County has seen a fiscal windfall from the year-end closeout.

"That is, of course, the Board’s utopian dream is to continually grow the size of local government.

"Let me close by noting that your reelection campaign theme, Mr. Fisette, is to improve Arlington’s business climate. If so, then there is no better way to incentivize business than to reduce the overall tax burden for Arlington’s productive sector."

ACTA members and all Arlington County taxpayers are urged to contact the Arlington County Board, and weigh-in on your thoughts on whether the Board should keep the real estate tax rate the same, i.e., no increase from the prior year, or should the County Board cut the real estate tax rate by three cents ($0.03 per $100 of assessed value). You can use the link to the County Board in the right-hand column to send your message. And, tell them ACTA sent you.

March 27, 2014

CAGW Names Its March 2014 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."

Citizens Against Government Waste (CAGW) has named "Sen. Lisa Murkowski (R-Alaska) as its March Porker of the Month for her support of a parochial pet project involving the construction of a 38-mile dead-end “Road to Nowhere.”  Sen. Murkowski has personally, and so far unsuccessfully, campaigned for a road to connect salmon canneries in King Cove with the neighboring Cold Bay and its airport."

Here is a portion of CAGW's justification for honoring Sen. Murkowski with its March 2014 Porker of the Month award:

"In a March 11, 2014 Los Angeles Timesop-ed, former Secretary of the Interior Bruce Babbitt described the original push for the project.  In the 1990s, Sen. Murkowski’s father, former Alaska Senator Frank Murkowski (R), aided and abetted by partner in pork, the late Sen. Ted Stevens (R) colluded to scrounge taxpayer money to build a gravel road connecting the two towns in order to expedite the transportation of seafood.  Instead of building the road, the Clinton Administration and Alaska’s senators agreed in 1998 to use taxpayer money to purchase a state-of-the-art hovercraft, touted at the time as a way to expedite medical evacuations.  At $37.5 million, the hovercraft (along with port terminals, a road to the hovercraft terminal, and an upgraded telemedicine facility) was deemed more cost-effective than the road, which was estimated at $75 million, or $79,113 per King Cove resident. 

"Twenty years later, the hovercraft, called a “lifesaving machine” by the borough’s mayor, has been given away to another town to provide transportation for workers at an alternate seafood plant.  Sen. Murkowski has once again revved up her campaign for the Izembek road, this time using the rationale of access to emergency medical care.  In a March 14, 2014 op-ed in the Los Angeles Times, Sen. Murkowski responded to Babbitt’s allegations that the road would not only be financially burdensome to taxpayers, but pose both environmental and significant safety risks of its own, saying “Babbitt also makes much of the taxpayer dollars previously spent on alternatives to a road.  But his personal favorite, a hovercraft, only proves his opening declaration that ‘nothing dies harder than a bad idea.’”  If it was such a bad idea, one wonders why the Alaskans accepted the hovercraft in the first place.

"In fact, Sen. Murkowski has attacked anyone who has tried to hinder the development of the road project.  In February of 2013, she threatened to block the nomination of Interior Secretary Sally Jewell unless the road project got the green light.  When that strategy ultimately failed and Secretary Jewell formally rejected the project in December of 2013, Sen. Murkowski voiced her opposition to Rhea Suh, the administration’s nominee for Assistant Secretary for Fish and Wildlife and Parks and has maintained the pressure on the Obama Administration to overturn the decision.

"Regardless of Sen. Murkowski’s altered rationale, it remains clear that private commercial interests, not medical emergencies, are the primary driver of the project . . . ."

CAGW points out the "proposed road is so fiscally unjustifiable that it has has achieved the near-impossible in 2014: consensus between political parties." Kudos to Citizens Against Government Waste for their long history of working on behalf of America's taxpayers.

March 26, 2014

Is Congress Finally Getting Serious About The Federal Debt?

In a story yesterday at the Washington Free Beacon, Elizabeth Harrington wrote that "(a) group of bipartisan experts testified before the House Financial Services Committee on Tuesday warning that Congress must act to address the coming debt crisis." The lede of her article:

"The House held the first in a series of hearings on “Why Debt Matters,” to identify solutions to a national debt that currently stands at $17.548 trillion, or roughly $55,000 per American.

"Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office (CBO), cited the latest CBO projections in painting a dire picture for economic growth.

"The report found that tax revenue would remain high over the next 10 years above 18 percent of GDP. However, the federal government will spend $48 trillion “maintaining spending levels over 1.6 percentage points above historical levels.”

"Meanwhile, mandatory spending will exceed 62 percent of the federal budget, and interest payments on the debt will double in the coming decade, to nearly 15 percent.

On of the speakers at the Congressional hearing was the CEO of Fortune 100 company Honeywell. Here is what he had to say:

“While we can put our heads in the sand for a few years and talk about declining deficits, the demographic freight train caused by baby boomers is still coming,” said David Cote, the chairman and CEO Honeywell, a Fortune 100 technology and manufacturing company.

“In 2025 we’ll be spending $1 trillion a year just in interest,” he said. “So how do you put $1 trillion into perspective? If you had spent a million dollars a day since Jesus Christ was born, 2,013 years ago, you still would not have spent a trillion dollars, and that will be our annual interest bill. It’s unconscionable.”

"Cote said the problem is not just for those on Wall Street. Rising interest rates will affect home mortgages, and car loans. “Families will have fewer dollars,” he said. “It’s a main street problem.”

Not surprisingly, liberals on the committee don't see a problem. For example, Harrington writes, "Ranking Member Maxine Waters (D., Calif.) said Republicans are using the debt as “an excuse to slash funding for important government programs.” Harrington also wrote:

"A majority of the committee Democrats agreed with Jared Bernstein, the former White House economic adviser to Vice President Biden, who was the only witness to refuse to say that the nation is on an unsustainable path.

“This is only the case if policy makers fail to undertake further steps to put the debt on a sustainable path,” he said. Bernstein predicted that the unemployment rate would never rise above 8 percent if the 2009 stimulus was adopted, and has said the over $800 billion law was not big enough."

Two news stories today provide further impetus to the need for America's political elite to get serious about getting the nation's deficits and debt under control.

  • In the Washington Free Beacon, Bill McMorris writes, "President Barack Obama’s proposal to raise the minimum wage to $10.10 per hour will cost the private sector $15 billion and increase the deficit by $5 billion over the next 10 years, according to a Congressional Budget Office report released Wednesday."
  • At Breitbart's Big Government webpage, Wynton Hall writes, "The Congress Budget Office (CBO) now projects that by the end of the budget windwo in 2024, interest payments on the U.S. debt will quadruple, reaching a stratospheric $880 billion a year."

Finally, in a summary of the committee meeting, the Committee for a Responsible Federal Budget notes, "policymakers have yet to make the necessary changes to taxes and entitlement programs that would put the debt on a sustainable path." Their summary of the hearing listed five reasons "why high and growing levels of debt matter," which were::

  • Crowding out of other areas of the budget due to rising interest payments
  • Leaving the U.S. vulnerable to shifts in investor preferences and hindering foreign policy flexibility when large amounts of debt are held by foreign governments
  • Decreased policy flexibility to respond to unforeseen domestic and foreign events
  • Reduced hiring and investment from firms today anticipating a high-debt, low-growth economy
  • Public sector borrowing crowding out private investment"

Readers of Growls are urged to call or write their Congressional representatives. If you live in Virginia's Arlington County, they are:

  • 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
Tell them that ACTA sent you! And kudos to committee chairman Jeb Hensarling (R-Texas) for holding the hearings.

March 25, 2014

Arlington Schools Spend $169,000 for a PR Consultant

On March 10, 2014, staff responded to an Arlington School Board question concerning the amount being spent for "Public Relations and Communication consultants for (a) CIP community engagement?" (School Board Question #15-12, FY 2015 Budget Questions, March 18, 2014 Budget Work Session). The bottom line of the staff response was:

"Reingold Link is retained under a fixed price contract in the amount of $169,000 for FY 14 for various public relations and communication services, the most notable of which is the CIP."

The staff response described such services as assistance in brainstorming, preparation of mailers and flyers, and preparing for, rehearsing, and facilitating community meetings. According to staff, the CIP, as well as the APS Go! transportation initiative "demand massive outreach and engagement with individuals and stakeholder groups throughout the Arlington community." Besides, staff said the facilities organization "would be overwhelmed by the amount of interaction demanded by our community."

Today's Arlington Sun Gazette (with its redesigned website called InsideNoVa) has a news item today about the PR contract, and include a response to the Schools spending by your humble scribe. Here's the lede to the story:

"Should the Arlington school system be spending nearly $170,000 on a private “strategic communications and stakeholder engagement firm” to get feedback from the public on the upcoming capital-improvement plan?

"That’s the question of a number of fiscal watchdogs, who wonder why – with more than 3,000 employees on staff – Arlington Public Schools can’t do the job itself."

"The school system agreed to pay $169,000 to Reingold LINK, which describes itself as a “boutique consulting and communications firm,” for services related to the planning process that will result in School Board adoption of its next capital-spending plan in late spring or early summer."
And here's Tim Wise's response:

"Tim Wise, president of the Arlington County Taxpayers Association, wasn’t buying the explanation.

“This example of wasteful spending is what happens when school bureaucrats are given too much money to operate the schools,” he said.

“There is an entire department of ‘school and community relations’ – why aren’t they being tasked to perform the CIP engagement?” Wise asked. “With everyone in Arlington government yakking about community engagement these days, hasn’t anyone in the bowels of bureaucracy thought to add it as a job requirement?”

It's interesting that such examples of extravagant spending are never provided by School Board members to explain why the Arlington Public Schools have the highest cost per student in the region.

March 24, 2014

How much do the Arlington County Pulbic Libraries Cost?

In an article posted February 20, 2014 at the Arlington Connection, Michael Lee Pope asks, "What is the future of the neighborhood library?" Lee adds:

"That's an open question as jurisdictions across America are rethinking their library system, a revaluation brought on by tight budgets and technological change. Here in Northern Virginia, jurisdictions have taken a variety of approaches to funding libraries. Some, such as Arlington, have restored almost all the funding cut during the recession. Others, such as Fairfax County, lag behind the statewide average."

The budget for Arlington County's libraries unfortunately has a ways to go if they are to catch up to their pre-recession numbers, however. Lee can be forgiven since his article was published before the Arlington County Manager released her proposed FY 2015 budget.

A look at the Department of Libraries budget trends (web page 579, Section C, General Fund Departments) shows that net tax support for the libraries now exceeds its FY 2006 amount ($12.3 million vs. $$11.3 in FY 2006), but staffing still significantly lags behind (133.85 FTE vs. 157.3 FTE in FY 2006).

Lee notes, however, the budget for the Fairfax County libraries "have been slashed about 20 percent." So how are taxpayers supposed to compare whether their libraries are being funded fairly. Well, Lee includes an interesting table of numbers that come from the Virginia Auditor of Public Accounts' comparative cost report. Consequently, we learn that while Fairfax County spends $28.6 million for its libraries, that amount is $26.12 per capita (92,41% of the statewide average).

The chart shows the Arlington County library spends $14.6 million, which comes to $68.28 per capita, a staggering 241.58% of the statewide average. Even Alexandria's spending per capita is just 148.76 by comparison.

Here's the chart included in the Arlington Connection article:

Although a great deal more analysis is needed before one can say what is the appropriate amount should be spent on a community's public libraries, Lee provides a starting point.

March 23, 2014

Arlington County Earns a 'Thumbs Up' and a 'Thumbs Down'

In a somewhat unusual move, the Arlington Sun Gazette's editorial page awarded Arlington's county government both a "Thumbs Up" and a "Thumbs Down" on a single issue in their March 20, 2014 weekly edition. Here's how they managed the feat:

"THUMBS UP: To the county government, for cautious budgeting that has resulted in a surplus of nearly $21 million at the halfway point of the government’s fiscal year.

"The bad news? Taxpayers are unlikely to see any of that money. And that garners a THUMBS DOWN. (Rare that we can do both related to a single issue, isn’t it?)" (emphasis in the original)

Although the explanation is not complicated, I won't try to summarize it -- I wouldn't do it justice. Besides, it's not that long, and it is worth reading in its entirety. The concluding paragraph is a gem, which, I'm sure, most Growls readers will wholeheartedly endorse:

"We live with the delusion that the government serves the public, not the other way around. But taxpayers just never seem to be the top priority when there’s extra money on hand."

Kudos to Scott McCaffrey, editor of the Arlington Sun Gazette, for a superb editorial.

March 22, 2014

A Thought on the Morality of Progressive Economics

"Far too many Americans behave as if government spending is “free money,” as if there is a free lunch if it’s paid for by Uncle Sam. But few things are more effective arguments with younger and slightly liberal voters than “You and your kids are going to pay for all this. They are bankrupting your future, and your children’s future. Isn’t that wrong no matter how they try to justify it?”

"Again, this isn’t a technical point; it’s a moral one: It is simply wrong to burden our children and their children with opportunity-destroying debt incurred in pursuit of buying votes, or even of buying “equality” or “free” birth control.

"If your parents created debt that was somehow passed down to you, even if it originated with a good intention of theirs (but not one to benefit your family), how would you feel about it, especially when paying off the debt meant you couldn’t buy a house or couldn’t put your own children through college?

"It’s not just unfair or rude; it’s wrong. And it is exactly what every “liberal” economic policy is doing to YOUR future and your children’s future.

"THIS is the argument that Republicans and conservatives fail to make in a convincing and repeated way. (Repetition is as important as the argument itself because people almost never take to heart a message they hear only a few times.)" (Emphases in the original)

~ Ross Kaminsky

His March 21, 2014 Essay, "The Immorality of Progressive Economics" at The American Spectator

March 21, 2014

Columbia Pike Streetcar Battle Erupts at Board Meeting

The Arlington Sun Gazette's (or as it's now know InsideNoVa) Scott McCaffrey reports on a "verbal battle" that erupted at the Arlington County Board's recessed meeting Tuesday afternoon, March 18. Here's an excerpt from McCaffrey's reporting:

"Verbal battles among Arlington County Board members over the Columbia Pike streetcar have taken Arlington residents on armchair-traveler journeys to communities as diverse Oregon’s Portland, Florida’s Tampa and Rob Ford’s Toronto. The latest front in the ongoing battle: Norfolk.

"County Board member Libby Garvey used the March 18 board meeting to showcase that city for, as she framed it, a light-rail system (the Tide) proving her case that those types of transit systems are not the wave of the future.

“This is about the lowest-performing streetcar in the nation,” Garvey scoffed at the meeting. “It’s a huge cost for extremely low benefits.”

Here's a second excerpt from McCaffrey's reporting:

"Not surprisingly, her board colleagues had a different take.

"County Board Chairman Jay Fisette said it was hardly surprising that weather caused the Portland streetcar system to come to a halt, since buses in that city also were stymied by the storm in question.

“Even our Metro system gets shut down at certain times,” he said.

"Fisette and fellow board members Mary Hynes and Walter Tejada long have supported the Columbia Pike streetcar proposal. Even if streetcar opponent John Vihstadt wins the April 8 County Board special election, supporters will still have the majority they need. That’s if they can come up with the funding for a five-mile system whose costs remains a work in progress but could top $300 million.

"Arlington officials have committed to paying 80 percent of the local cost of the project, with Fairfax County kicking in the remainder. Federal and state funds also are being sought.

"Hynes rebutted Garvey by saying that the streetcar, operating in tandem with existing bus service, would provide the capacity needed as the Columbia Pike corridor grows.

“We’re going to need a much more workhorse, higher-capacity vehicle,” she said.

"Garvey is waging a one-woman campaign on the County Board dais, and doesn’t exactly have the help of county staff in her efforts . . . ."

Kudos to Board member Libby Garvey for keeping up her "one-woman campaign" against the Arlington County Board's super expensive vanity project.  And while the addition of John Vihstadt won't add the "deciding vote" against the Columbia Pike Streetcar project, it would certainly send a strong message from Arlington County taxpayers. Also, take a minute, and read Scott McCaffrey's complete reporting.

March 20, 2014

A Thought on the Erosion of the Constitution

"The administration of Franklin D. Roosevelt dealt our Constitution a grave blow. When the Supreme Court rubber-stamped the New Deal, the framework of limited and enumerated federal powers — which shaped the very structure of our Constitution — was swept away. Federal power over every aspect of our lives has been expanding ever since, with no end in sight.

"Conservatives understand that much. What they don’t yet understand is why this happened. That’s a problem. After all, how much good can a doctor do if he doesn’t understand what’s making the patient sick? In recent years, luminaries of constitutional history such as Richard A. Epstein and Michael Greve have made important strides in helping us understand how the progressive movement of the last hundred years has ravaged our Constitution. Some of their insights are startling.

"The great internal danger to the democratic form of government is its vulnerability to capture by political elites. James Madison called them “factions”; today we call them “special interests.” The Constitution was designed to protect against them, chiefly by limiting the federal government’s power and guaranteeing strong property rights and freedom of exchange.

"The Bill of Rights contains important protections. But the greatest protections the Constitution provides are the structural limitations it places on federal power. In key areas, those limitations have eroded, leading to the very expansion of federal power that opponents of the original Constitution warned about during the ratification debates."

~ Mario Loyola, Senior Fellow, Texas Public Policy Foundation

HT His March 19, 2014 Essay, "The Two Towers of Progressivism, at National Review Online

March 19, 2014

Are High Taxes Pushing New Jersey Taxpayers Out?

At the Washington Free Beacon today, Mary Lou Byrd writes that "New Jersey’s high taxes may be costing the state billions of dollars a year in lost revenue as high-earning residents flee, according to a recent study."

Here's what she says about the study:

"The study, Exodus on the Parkway, was completed by Regent Atlantic last year but held for publication until after the November 2013 elections. The study stated it “intentionally” held its results “as 2014 is not an election year for state legislators” and it will “hopefully encourage a serious and objective dialogue aimed at addressing and solving the challenges that New Jersey currently faces.”

"The study shows the state has been steadily losing high-net-worth residents since 2004, when Democratic Gov. Jim McGreevey signed the millionaire’s tax into law. The law raised the state income tax 41 percent on those earning $500,000 or more a year."

The Regent Atlantic study focuses on wealthy residents, but it's not the only study that highlights the high tax burden on New Jersey's taxpayers. The Tax Foundation just released its Facts & Figures 2014 (see Table 2), which ranks New Jersey as #2 (12.3%) for its state-local tax burden as a share of state income. New York ranked first with a 12.6% state-local tax burden. The dollar amount of New Jersey's #2 tax burden was $6,675.

By comparison, Virginia ranked #30 (9.2%; $$4,469).

Byrd adds that New Jersey's politicians are not out after just the rich, however, writing:

"The wealthy aren’t the only ones being asked to pony up. This week Democratic State Sen. Ray Lesniak proposed a 5-cent per gallon gas tax to pay for transportation repairs and improvements and Assembly Speaker Vincent Prieto (D.) has indicated he would be open to considering several new taxes and fees to boost revenue for the state, including a tax on water consumption.

"Such tax hikes are driving residents to states with lower tax rates: In 2010 alone, New Jersey lost taxable income of $5.5 billion because residents changed their state of domicile.

“Prior to the millionaire’s tax, more wealth was coming into the state than was leaving. Over a four-year period the aggregate net worth increased by $98 billion,” the study states. “However, the 2004-2008 post-millionaire’s-tax period shows more wealth leaving the state than coming in. The net outflow during this period reversed 70 percent of the wealth gained in the prior four years.”

She adds a final important point: "This study contradicts previous studies that claimed higher taxes on the wealthy have negligible impact and do not drive the wealthy to move."

Kudos to both the Washington Free Beacon and the Tax Foundation.

March 18, 2014

Two Thoughts on Economics

"At Bretton Woods, it was clear enough that (John Maynard) Keynes had forgotten about the General Theory and was once again preoccupied with restoring the pre-1914 currency system in a way that respected current geostrategic realities. As World War II was ending, Keynes was reorienting himself toward the issues he had introduced not in 1936, but in 1923 in his Tract on Monetary Reform. In a fateful development, the economics profession did not follow his lead and stayed with the General Theory. Shortly after Bretton Woods, after a meeting in Washington with American economists, Keynes quipped, "I found myself the only non-Keynesian present."

~ Brian Domitrovic, page 255, "Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity"


". . . The price revolution in economic theory, which began in the early 1960s at Chicago, had made a profound case that prices are the most imperative datum in the economy. Anything that distorts them -- regulation, taxes, monetaryy policy -- will cause confusion and entrepreneurial hesitation among economic actors. Nobel Prize after Nobel Prize was awarded to economists arguing that government has to interfere with the economy as little as possible.

"And yet the economics discipline's free-market revolution found it difficult to penetrate the realm of policy . . . ."

~ Brian Domitrovic, page 256, "Econoclasts: The Rebels Who Sparked the Supply-Side Revolution and Restored American Prosperity"

HT Barnes & Noble

March 17, 2014

Another Thought on Power

"Who can seriously doubt that the power which a millionaire, who may be my employer, has over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work?”

~ Friedrich August Hayek

HT ThinkExist.com

March 16, 2014

Empty Government Buildings Cost Taxpayers Billions

Last Wednesday, March 12, 2014, National Public Radio's Laura Sullivan reported (HT Erika Johnsen, Hot Air):

"Government estimates suggest there may be 77,000 empty or underutilized buildings across the country. Taxpayers own them, and even vacant, they're expensive. The Office of Management and Budget says these buildings could be costing taxpayers $1.7 billion a year.

"That's because someone has to mow the lawns, keep the pipes from freezing, maintain security fences, pay for some basic power — even when the buildings are just sitting empty."

According to Sullivan, one of the problems is that:

"But doing something with these buildings is a complicated job, partly because the federal government does not know what it owns.

" . . . the only known centralized database that the government has, the Federal Real Property Profile,  and it's not reliable, he says.

"We'd see a building that maybe looked something like this, and the data would say it was 100 percent utilized, and we'd look around and see nobody," he says. "We'd go to other buildings, and [the list would] say it was unutilized, and we'd find that the building was overcrowded."

"Some buildings listed as being in great shape had trees growing through the roofs. And many buildings weren't even on the list."

Ms. Sullivan writes there is one member of Congress trying to do something about this, writing:

"Sen. Tom Carper, a Democrat from Delaware, is one of the lawmakers pushing to get a clearer picture.

"We don't know how many properties we have, we don't know which ones we own, which ones are leased," he says. "We don't know whether we ought to be building or buying instead of leasing."

"But Carper says that even when an agency knows it has a building it would like to sell, bureaucratic hurdles limit what it can do. No federal agency can sell anything unless it's uncontaminated, asbestos-free and environmentally safe. Those are expensive fixes.

"Then the agency has to make sure another one doesn't want it. Then state and local governments get a crack at it, then nonprofits — and finally, a 25-year-old law requires the government to see whether it could be used as a homeless shelter.

"Many agencies just lock the doors and say forget it."

At the Washington Post's new blog, Volokh Conspiracy, Ilya Somin provides much of the same NOR background as above, and then cites the Marginal Revolution blog, noting, "Economist Alex Tabarrok points out that the NPR article actually understates the extent of the problem." Somin explains:

"The whole situation is an unintended lesson in the advantages of private property rights. If a private owner has a piece of unused property, he or she has strong incentives to find some valuable use for it. If he can’t, he has a strong incentive to sell it to someone else who can do better. In both cases, he gets to keep the profit. For that reason, he also has incentives to keep track of the property he owns, and avoid imposing burdensome bureaucratic procedures that make it difficult to sell unused land.

"By contrast, government officials get little or no reward for finding better uses for underutilized government land. Indeed, a conscientious bureaucrat who tries to do so may just end up annoying his colleagues and superiors, for whom it means extra hassle with little chance of any gain. For similar reasons, government agencies sometimes have little incentive to even keep track of the land they own, or to make it easy to sell unneeded property."

In conclusion, Ilya Somin writes, "Some government ownership of land may be an unavoidable necessity. But we would be better off if a substantial part of the federal government’s vast landholdings were privatized."

Oh, note the first building in the NPR article. It's a "132-year-old brick structure is sitting on prime real estate six blocks from the White House. It was once a school, but it's been vacant for almost three decades."

So let me get this straight. The federal government reportedly owns or controls 77,000 buildings that could be costing American taxpayers as much as $1.7 billion. Yet some members of Congress and the President believe the federal government is capable of managing 1/6th of the U.S. economy, i.e., through ObamaCare. Amazing! Absolutely amazing! Talk about hubris or Thomas Sowell's Vision of the Anointed? Or to quote F.A. Hayek (from ThinkExist.com)::

“To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

March 15, 2014

A Thought on Inequality and the Public Schools

"The topic du jour on the left these days is inequality. But why does the left care about inequality? Do they really want to lift those at the bottom of the income ladder? Or are they just looking for one more reason to increase the power of government?

"If you care about those at the bottom then you are wasting your time and everyone else’s time unless you focus on one and only one phenomenon: the inequality of educational opportunity. Poor kids are almost always enrolled in bad schools. Rich kids are almost always in good schools.

"So what does the left have to say about the public school system? Almost nothing. Nothing? That's right. Nothing. I can't remember ever seeing an editorial by Paul Krugman on how to reform the public schools. So I Googled to see if I have missed something. The only thing I found was a negative post about vouchers. And Krugman is not alone.

"You almost never see anything written by left-of-center folks on reforming the public schools. And I have noticed on TV talk shows that it's almost impossible to get liberals to agree to the most modest of all reform ideas: getting rid of bad teachers and making sure we keep the good ones.

~ John C. Goodman

HT His 3/15/14 Column at Townhall.com

March 14, 2014

Arlington County Likely To Keep Windfall Revenues. Greedy?

At the Arlington County Board budget work session on Tuesday, March 11, 2014, the County Manager summarized the status of the FY 2014 budget in a mid-year review, which covered the period July 1, 2013 through December 31, 2013. The Manager put the bottom line this way, which incidentally she bolded for emphasis:

"The County share of unallocated one-time funding from revenues above budget and expenditure savings is $18.0 million. Based on local tax sharing with the Arlington County Schools, the Schools would receive an additional $9.6 million."

Here's the lede from the Arlington Sun Gazette's Scott McCaffrey in his report on the Manager's mid-year review:

"Arlington taxpayers are unlikely to see any of the nearly $21 million in county-government surplus funds funneled back into their pockets in the form of a reduction in the real estate tax rate this year.

:County Manager Barbara Donnellan on March 11 outlined both the additional funding that is accumulating in government coffers, and how she plans to spend it, in a review of the government’s mid-fiscal-year financial situation.

"The bulk of the extra money will come from higher-than-anticipated property values, which would add $23 million to government coffers when the first half of 2014 tax bills are paid in June. In creating their fiscal 2014 budget, county officials assumed a 2-percent increase in assessments, while the actual amount was 5.8 percent."

Although the Manager's report goes on for five pages, she explains that revenues will increase by $20.8 million, resulting primarily from increased real estate tax revenues. In addition, there are $6.8 million in "expense adjustments" available, including $3.5 million from debt service savings. The result was $27.6 million in "midyear funds available." Using a revenue sharing formula to increase the "transfer" to the Schools, there would be a "one-time balance" of $18.0 million "available for the county."

Your humble scribe was asked to comment on the FY 2014 Mid-Year Review. In essence, I told the Sun Gazette that "property owners deserve some relief from a tax burden that continued to rise through the recession." In addition, it should be noted there are currently at least two more candidates debates between now and the April 8 County Board special election, and, consequently, "the question of whether the County Board should use their revenue windfall to cut the real estate tax rate by 3 or 4 cents should be topics one, two and three.”

More importantly, McCaffrey reminds readers of the scheduled tax rate hearing, writing:

"County Board members will hold a public hearing on the fiscal 2015 budget on Tuesday, March 25 at 7 p.m. in the board room at 2100 Clarendon Blvd. A public hearing on tax rates will be held on March 27 at 7 p.m." (emphasis added)

Arlington taxpayers who are unable to attend the March 27 hearing can send an e-mail to the Arlington County Board by using the link in the right-column.

March 13, 2014

The Cost of State and Local Government Workers

Today at Breitbart.com's Big Government website, Chriss Street reports that "government workers cost 45% more than private sector workers." Street's article (also published by American Thinker here) is well-worth reading in its entirety, but here's the lede:

"The United States Bureau of Labor Statistics (BLS) announced on March 12th that the total cost of employing a state or local government worker is 45% more than an equivalent worker in the private sector.

"For the month of December 2013, employers in private industry spent an average of $29.63 per employee hour worked, but the equivalent cost for a government worker averaged $42.89 per hour. Not only do government employees average 33% higher pay than those in the private sector, their pension and retirement benefit costs are now an incredible 254% higher also. Given that compensation formulas for federal, state, and local government are comparable, it should come as no surprise that this year spending by the U.S. government will exceed revenue by an all-time high of $744.2 billion, and our gross national debt is a stunning $18.5 trillion.

"The BLS reported that private employers spent $20.76 on average for wages and salaries, plus $8.87 for benefits per hour worked. State and local government paid $27.66 for wages and salaries, plus $15.23 for benefits per hour worked. Government employees cost 33% more in wages and 71% more in benefits. The biggest difference is that government pension costs are 254% higher than the private sector."

Street adds this bit of historical context:

"Back in 1979, higher public sector pensions were considered fair compensation since the private sector paid higher wages. At the time, federal government debt was only about a third of America’s GDP. But every year since then, public sector wages and benefits have grown at about 1% faster than the private sector. As the Bureau of Labor Statistics report demonstrates, the faster compounding of total compensation for the government workers has now reached a record 45% higher than the private sector. This generous treatment of public employees at least partially explains why America’s federal debt has more than tripled to 110% of GDP."

At the Wall Street Journal's Real Time Economics blog yesterday, Sarah Portlock also reports on the BLS employer costs for employee compensation report. She focuses on the private sector, emphasizing that benefits are surging faster than wages. However, she reports that in the private sector, U.S. firms "spent an average of $29.63 per hour for total compensation" in December 2013 while "(s)tate and local governments spent an average of $42.89 per hour for each worker in December." She also provides a warning: "The Labor Department has cautioned against directly comparing payments between the private sector and state and local governments because of variations in work activities and job structure."

Unfortunately, the data in BLS' ECEC report does not lend itself to making comparisons with Arlington County employee costs, especially since almost all the data in the ECEC report is on an hourly basis. However, page 61 in the county's proposed FY 2015 budget provides a high level picture of Arlington County employee compensation. When divided by the number of full-time equivalent (FTE) employees, we get a glimpse of comparable data, specifically:

General Fund

  • Pay (Salaries) -- $73,853
  • Total -- $114,207

All Funds

  • Pay (Salaries -- $73,072
  • Total -- $111,970

Kudos to Breitbart and the Wall Street Journal for their reporting on the BLS employee compensation report since a Google news search disclosed, onc e again, the silence of the MSM on an important driver of the cost of our Leviathan government.

March 12, 2014

Explaining the Cost of the Artisphere, $1 Million Bus Stop . . .

A very interesting article was posted on Monday at The Week in which Ryan Cooper explains "(w)hy is it so expensive to build a bridge in America" (HT Thomas Lifson, American Thinker) The short answer, according to Cooper, is a "greedy and undemocratic political culture."

Cooper identifies three specific "major factors," which he says "researchers have identified." The three (emphasis in the original):

  1. "Expensive labor. From the top brass at New York's Metropolitan Transportation Authority: "The MTA is required to overstaff projects so that the same [tunnel boring machine] work, for instance, that can be done in Spain with nine workers must be done in [New York City] with 25 workers."
  2. "Out-of-control private contractors. From Stephen Smith at Bloomberg: "Agencies can't keep their private contractors in check. Starved of funds and expertise for in-house planning, officials contract out the project management and early design concepts to private companies that have little incentive to keep costs down and quality up."
  3. "A crap procurement process. The classic American way to pay for a big project is to round up about half of the funding (or even less), start construction, and then use a sunk-cost-fallacy to get the rest. This, obviously, is not conducive to efficient or speedy projects. (Looking at you, California high-speed rail.)"

He says there may be other factors, but "(t)he reality is that when it comes to cost and quality, America is doing basically everything wrong." Cooper delves extensively into the reasons why American infrastructure is more expensive. However, the following paragraph pretty much sums up the problem:

"Every American infrastructure project features a scramble on the part of all parties to skim as much for themselves as possible. This leads to a self-defeating cycle in which voters are reluctant to pay for new stuff, so elites try to fund new projects in a duplicitous way, which only leads to more cost overruns."

At American Thinker, Lifson lists some of the causes for the large cost overrun in American projects, and puts the problem this way:

"I would add the host of bells and whistles that are required by American regulations. Public art and  bicycle lanes, for instance (The Eastern Span of the Bay Bridge has a bicycle lane, but the original Western Span that leads into San Francisco does not. So taxpayers and toll-payers expended scores if not hundreds of millions of dollars to enable people to bicycle from Oakland to Yerba Buena Island. There is really not much there.) Then there is the Davis-Bacon Act, which requires contractors to pay “prevailing wages” – meaning the highest union scale."

If the Arlington County Board submitted several of their vanity projects to the researchers referenced by Ryan Cooper, I have no doubt that Cooper could list several more "major factors." Or would "greedy and opaque political culture" just about cover it. Let's see: Artisphere; Columbia Pike Streetcar; aquatics facility (see here, here and here); and $1 million bus stop. And that's just a very short list.

March 11, 2014

70% of Federal Spending is 'Writing Checks'

In a great analytical piece yesterday at Investor's Business Daily, the inestimable John Merline writes:

"Buried deep in a section of President Obama's budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high.

"In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP.

"What's more, the cost of these direct payments is exploding. Even after adjusting for inflation, they've shot up 29% under Obama."

Even the so-called 1% get checks, according to Merline:

"An IBD analysis found that the richest 1% of Americans, in fact, receive roughly $10 billion each year in federal checks.

"Outgoing Sen. Tom Coburn, R-Okla., who exposed these vast payment programs available to the rich, said "this reverse Robin Hood-style of wealth distribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit."

Merline closes his article this way:

"This massive shift in federal spending toward direct payments to individuals not only balloons the size of the federal government, it makes cutting the budget all the harder, since any meaningful spending reductions will invariably mean cutting back on some of these check-writing programs.

"The Congressional Budget Office figures that, by 2038, Medicare and Social Security alone will eat up 42% of the budget.

"The explosive growth in these direct-payment programs is also squeezing traditional government functions, such as national defense, which Obama wants to sharply cut. His budget calls for Pentagon spending to drop from $623 billion in 2015 to $570 billion in 2017."

The article is worth reading in its entirety. It's that good. You'll refer to it often when discussing the size of our Leviathan-sized federal government with your liberal friends.

March 10, 2014

Global Debt Now Exceeds $100 Trillion

Both Bloomberg News and Zero Hedge featured articles yesterday, which noted that global debt has broken through the $100 trillion level. The essence of the story, according to Bloomberg was:

"The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates.

"The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion, according to the Bank for International Settlements and data compiled by Bloomberg. The jump in debt as measured by the Basel, Switzerland-based BIS in its quarterly review is almost twice the U.S. economy.

"Borrowing has soared as central banks suppress benchmark interest rates to spur growth after the U.S. subprime mortgage market collapsed and Lehman Brothers Holdings Inc.’s bankruptcy sent the world into its worst financial crisis since the Great Depression. Yields on all types of bonds, from governments to corporates and mortgages, average about 2 percent, down from more than 4.8 percent in 2007, according to the Bank of America Merrill Lynch Global Broad Market Index."

Tyler Durden of Zero Hedge has a lot more detail, as well as several useful graphs. Although repeating some of Bloomberg's reporting, the following point from Zero Hedge is worth repeating:

"It should come as no surprise to anyone by now, but the only reason why global stocks haven't plummeted since the Lehman collapse is simple: governments have become the final backstop for onboarding risk, with a Central Bank stamp of approval - in other words, the very framework of the fiat system is at stake should global equity levels collapse. The BIS admits as much: “Given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers,” according to Branimir Gruic, an analyst, and Andreas Schrimpf, an economist at the BIS." (emphasis in the original)

At American Thinker today, Rick Moran responds to the Bloomberg news story by raising the following questions:

"So what did the world buy with that $30 trillion? The weakest recovery from a recession in history. That's quite an accomplishment considering what I would have done with $30 trillion. Send everyone on the planet to Disney World. A visit to Disney World would be a civilizing experience for the half of the world's populations who think it's kewl to behead people or chop them up with machetes. It would no doubt bring peace in our time.

"But we didn't spend $30 trillion on trips to The Magic Kingdom (no, not Saudi Arabia). We spent it on crap like Obamacare; and feathering the nests of unions; and subsidizing sloth; and lining the pockets of Third World kleptocrats.

"In other words, very little of it was used productively. Even businesses misused that cash. Chevy Volt, anyone? How about Coke Zero?

"Oh - by the way. Someone, somewhere, someday is going to have to pay all that money back. That's why it's called "debt." Of course, many of us will be worm food when the bill comes due. Good thing, too. We wouldn't want to hear what our grandchildren are saying about us as governments seize their property to forestall the inevitable collapse.

The global picture provides an interesting background to the looming financial crisis facing the United States. Indeed!

March 09, 2014

The Cost of Those Green Car Subsidies in Arlington County

Before paying your "car tax" (i.e., personal property tax) later this year, take a look at pages 79-81 in the County Manager's FY 2015 Proposed Budget (Section B - Revenues), especially if you have a "conventional vehicle" rather than a "qualified clean fuel vehicle."

The Manager's proposed budget even provides some of the needed history, first explaining that "(v)ehicles in Arlington County are assessed using the average loan value from the NADA Used Car Guide." In Calendar Year (CY) 2014, the average assessed value of a car in Arlington County is expected to be $9,284, up 5.0% from the CY 2013 average of $8,842. At a rate of $5.00 per $100, the total tax on that "average vehicle," thus, would be $464.

But, as the Manager points out, in 2004, the Virginia General Assembly "fundamentally changed" how the state reimbursed local Virginia governments for "car tax relief." As the Manager explains:

"Beginning in CY 2006, Arlington is no longer reimbursed for 70 percent of vehicle taxes for automobiles assessed below $20,000. Rather the State reimburses Arlington County a fixed amount ($31.3 million) annually as a fixed block grant for vehicle tax reductions.

"The State requires localities to distribute the fixed block grant to qualifying vehicle values below $20,000. The The State allows localities wide discretion in determining how the money should be spread among the qualifying vehicle value range. For CY 2014, the County will provide 100 percent tax relief for assessed vehicle value at or below $3,000. For assessed value between $3,001 and $20,000 for conventional vehicles, it is projected that the taxpayer will pay 73 percent of the tax liability, with the State block grant funds contributing the remaining 27 percent . . . ."

The exact amounts of the State "subsidy" will not be known, however, until July when the Commissioner of Revenue finalizes the assessment data.

But hey, things get better if you have one of those "green" vehicles, as the Environmental Protection Agency" calls them (see here). Or in the county's technical jargon, "qualified clean fuel vehicles." Note, however, the method for computing the subsidy for owners of conventional vehicles differs from the owners of those "green vehicles." Here's the Manager's explanation of how the subsidy is computed for "green vehicles:" (page 80 of the proposed budget):

"Owners of cars that the Virginia Department of Motor Vehicles has designated as "clean special fuel" vehicles -- a designation that includes most hybrid vehicles -- will receive 50 percent tax relief on the portion of vehicle value between $3,000 and $20,000. It is estimated that the average clean fuel vehicle in the County will have an assessed value of roughly $13,850 in CY 2014. Thus, under  the adopted tax relief formula, the owner of an average clean fuel vehicle would have a tax bill of $271. This CY 2014 bill is roughly $125 less than what the owner of a comparably priced conventional fuel vehicle would pay."

So if you own a regular car, the next time you run into your favorite Arlington County Board mastermind, ask her or him to justify why you should subsidize the car tax of owners of so-called green cars. Beware, you may get them to mumble. Something to think about, though, if you can only afford taking the family to McDonald's for that week's big meal. Note, too, that once again, the government benefits from the increased value of your car rather than you, the owner.

The "greenies" will argue that consumers are achieving "estimated savings" from the better fuel economy of their "green vehicles." Hey, consumers would have achieved those savings anyway from automakers' efforts to build more efficient cars without government acting as middleman with a hand out.

March 08, 2014

President's FY 2015 Budget Released

On Tuesday, March 4, President Obama released his FY 2015 budget for the year that starts on October 1, 2014. The White House press release is here, and the press briefing is here. The actual FY 2015 budget -- with a link to past budgets -- can be found at the Office of Management and Budget's website here.

Perhaps the most non-partisan analysis of the budget is that performed by the Committee for a Responsible Federal Budget, which is here. The "main findings" from their analysis include:

  • "Relative to the President's own baseline, the budget includes $2.15 trillion of deficit reductiion. Relative to current law with continued reductions in war spending, the budget calls for about $730 billion of deficit reduction.
  • "Under the President's budget, debt would peak at 74.6 percent of GDP in 2015 and then fall continuously to 69 percent by 2024. In dollar terms, debt will rise from about $12.5 trillion today to almost $19 trillion by 2024.
  • "Adjusted for timing shifts, deficits will fall from 4.1 percent of GDP in 2013 to 2.2 percent by 2017, and will remain around 2 percent through 2024.
  • "Spending will average 21.4 percent of GDP over the decade and reach 21.7 percent by 2024 while revenue will average 19.2 percent and reach 19.9 percent by 2024. Historically, spending and revenue have averaged 20.4 and 17.4 percent of GDP, respectively.
  • "OMB's economic assumptions are more optimistic than CBO -- they assume real GDP will be more than 2 percent higher in 2024 than CBO does. This difference could be the result of immigration reform, which CBO has estimated could raise GDP by over 3 percent.

Those points, admittedly, are high level, but they are worth keeping in mind. CFRB's preliminary analysis is eight pages, and includes a number of very useful tables that are worth remembering as you read news reports about the budget. We will growl further about the budget throughout the year.

March 07, 2014

Free Food, Free Booze at Government Conference

When the Washington Times sees especially egregious examples of government waste, fraud, and abuse, they award those examples with a "Golden Hammer" award. The latest recipient of a Golden Hammer is the National Institute of Standards and Technology (NIST). Here's the lede from the Washington Times' Jim McElhatton's reporting:

"Just weeks after President Obama expressed outrage in 2012 over lavish conference spending by federal employees, the government laid out more than $1.1 million for another gathering in Florida that involved free food, alcohol and live entertainment.

"The 2012 National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership conference in Orlando, Fla., in May 2012, which the Commerce Department inspector general detailed in a new report last month, was even more expensive than the $823,000 conference in Las Vegas that had sparked the president's ire.

"Budget watchdogs said the report shows wasteful conferences weren't limited to just the big-name agencies that have already been identified, such as the IRS, the Veterans Affairs Department and the General Services Administration, whose 2010 conference in Las Vegas, including a booze-filled red carpet experience complete with a mind reader, magician and clowns, ignited new scrutiny and rules changes."

In addition, McElhatton also reported:

"At no cost to attendees, the conference included a $113,995 reception at the World Marriott Center Resort with live music, alcohol and food, as well as free transportation to and from Walt Disney World, according to the audit, which Sen. Susan Collins, Maine Republican, requested. NIST officials said Wednesday no taxpayer money was used in the reception.

“It shows the Commerce Department was no different than some of these other agencies that sponsored these conferences and did not really think through the use of taxpayer money for this,” Inspector General Todd J. Zinser said in a phone interview last week. “I think the day has come when these types of conferences have come to an end.”

"The auditor also found that the private event planner kept or spent nearly a quarter-million dollars in conference sponsorship fees, while holding onto Marriott benefits like golf green fees, free rooms and travel points that could have been used to help cut conference costs for the government."

Interestingly, NIST "declined to comment" on this report, and instead pointed to their written comments in the IG report.

Kudos to the Washington Times for continuing to focus a light on government waste, fraud and abuse.

March 06, 2014

Global Warming Needs an Honest Debate

Last week, the Wall Street Journal published a short essay by Pete duPont on whether an honest public debate is needed on global warming. A portion of duPont's essay included:

"The warming alarmists might earn more support if they acted less like they had something to hide and actually allowed open debate. Perhaps they could respond to their critics rationally instead of reflexively branding them heretics, suitable for whatever is the modern university and research center equivalent of burning at the stake. Real science does not fear those who challenge it, does not work to have challengers' articles banned from science journals, and does not compare skeptics to Holocaust deniers or, as Mr. Kerry did in Jakarta, members of the "Flat Earth Society."

"A movement with confidence in its scientific theories would be able to admit there are many climate factors beyond carbon dioxide that are not yet well understood, and that some climate models have been shown to be unreliable. Such a movement would not downplay or whitewash leaked emails evincing the possibility of massaged data. When it criticizes its skeptics as hired guns of the fossil-fuel industry who are influenced by money, it would be willing to acknowledge that it thrives on government and private funding that would shrink if its research did not continue to say warming is here and getting worse. And there would be more confessions such as Al Gore's belated acknowledgment that his support for ethanol was misguided.

"All that might not be easy, but what comes next would be downright difficult. The alarmists must admit that every policy decision involves an equation and that polices directed at reducing carbon emissions come with costs. Robert Bryce, a senior fellow at the Manhattan Institute, just issued a study that points to European Union climate polices (renewable energy subsidies and mandates, as well as a carbon cap-and-trade scheme) as a significant reason the 27 EU nations pay on average more than twice what we pay in the U.S. per residential kilowatt-hour of electricity, with Germany paying three times as much. Following such policies in the U.S. would shrink our economy as it would cost more not just to run our homes, but to power our offices and factories and operate our schools and hospitals. It's fine if the alarmists feel these higher costs and the impact on jobs and our economy are worth bearing, but they need to admit these negative impacts and justify them to the public."

In his conclusion, duPont says those who "sincerely" believe that mankind is primarily causing global warming "may be correct." However, he adds, "If they truly feel they are right, they have an even greater responsibility to drop their insular and defensive attitude and debate these issues openly."

Unfortunately, virtually none seem willing to put their money where their mouths are. Rather, they only seem willing to spend taxpayers money to put additional burdens on the American economy.

March 05, 2014

Civic Federation Resolution Would Cut Real Estate Tax Rate

At last night's meeting of Arlington County Civic Federation delegates, two resolutions were referred to the Revenues & Expenditures Committee for further review before being returned to the full membership at its April 1, 2014 meeting.

Here's what the Arlington Sun Gazette's Scott McCaffrey wrote today about a proposal to cut the real estate tax rate by three cents:

"The tax resolution, proposed by Tim Wise of the Arlington County Taxpayers Association, calls on the County Board to set a real estate tax rate no higher than 97.6 cents per $100 for the calendar year – 3 cents lower than both the 2013 rate and the rate advertised by board members in February.

"The resolution notes that the rate of increase in real estate tax bills on homeowners has been twice the inflation rate over the past four years, and suggests that increasing assessment values of residential and commercial property should make it possible for County Board members to fund their billion-dollar budget and still cut tax rates.

"Whether the proposal, if passed, will have any impact is debatable. County officials have telegraphed their intention to keep the tax rate where it was last year, although they retain the option of cutting it.

"Without a cut in rates, the owner of an average-priced Arlington home would pay $5,560 in real estate taxes this year, up 15.4 percent over the past four years, and would pay an average of $7,372 in overall county taxes and fees (including real estate taxes) for the year, up 15.2 percent during the same period.

"Owners of commercial property pay the base real estate tax rate, plus a surcharge of 12.5 cents per $100 assessed value, plus in many cases additional surcharges if their properties are located in the business-improvement districts in Ballston/Virginia Square, Rosslyn or Crystal City."

A second resolution concerning the Aquaticsphere, the County Board's vanity project to build an aquatics center that is fast approaching a cost of $100 million, was presented by the group's parks and recreation committee. Again, according to Scott McCaffrey:

"Jay Wind, who chairs the committee and has been active in support of recent park-bond referendums, said taxpayers may have had enough with the spiraling cost of the facility, funding for which was included in two previous bond referendums.

“I’m going to find it a very hard sell to Arlington voters if this appears on the ballot,” he said.

"Voters in 2012 approved a $50 million park bond, with the bulk of the funding destined for construction of the aquatics center. While the bond passed with support of more than 60 percent of voters, the level of support trailed well behind bonds for schools and transportation also on the ballot.

"A number of bond referendums are expected to be on the ballot Nov. 4. County Board members will finalize the bond packages by July.

"In recent months, the aquatics center – seen by supporters as a future jewel in Arlington’s recreation facilities – has faced significant headwinds."

Stay tuned as we growl about further news about the county and schools FY 2015 budget proposals.

March 02, 2014

Legislation to "Crack Down on Social Security Fraud"

In a report today for the Washington Examiner, Kenric Ward writes about H.R. 4078, ITIN Reform Act of 2014, a measure that "would crack down on Social Security fraud by illegal immigrants."

While the bill "doesn't stop illegal immigrants from obtaining Individual Taxpayer Identification Numbers and receiving $1,000 child tax-credit checks," the bill "would require first-time ITIN applicants appear in person at a Taxpayer Assistance Center or diplomatic consulate." Currently, ITINs can be obtained either "by mail or through a third party," according to Ward.

Here are some of the details in Ward's reporting:

"When Congress passed the child tax credit, it did not specify legal residency as a requirement. Lawmakers assumed that Social Security numbers -- held by legal residents -- would be used by tax filers.

"Then ITIN use exploded, and so did the refunds.

"Created by the IRS for undocumented individuals barred from legally obtaining Social Security cards, ITINs enable illegal immigrants to file tax returns and claim refunds, including a $1,000-per-child credit — even when no taxes are owed.

"Johnson, who represents a suburban north Dallas congressional district, has fought for years to make Social Security cards a requirement for tax filers.

"Watchdog.org journalists reported last fall that the IRS has mailed thousands of child-credit checks to single addresses across the country. Virtually all went to homes of ITIN filers."

What is the impact of the bill introduced by Rep. Sam Johnson (R-Texas)? According to Ward, "The Joint Committee on Taxation projects that the Johnson-Cornyn bill could net $7.6 billion in new savings. Critics say that’s a stretch."  But, he also points out:

"Last October, Watchdog.org reported that while harrying and stalling Tea Party groups seeking nonprofit status, the IRS mailed $4.2 billion in child-credit checks to undocumented immigrants in 2012."

David North, a policy analyst with the conservative-leaning Center for Immigration Studies, said the personal-appearance clause in the Johnson-Cornyn bill would at least prevent “make-believe kids” from receiving ITINs.

“It is a step in the right direction, but only that,” North said."

Kudos to Rep. Johnson for his efforts to reduce waste, fraud, and abuse in the federal government.

March 01, 2014

U.S. Economy Not Sustainable When . . . .

Are you having difficulty determining the state of the U.S. economy these days? As the chairman of the Gallup polling organization, Jim Clifton, wrote last week at Gallup's chairman's blog:

"The White House keeps telling you that unemployment is going down (“It’s under 7%!”) and Wall Street wants you to think the economy is coming back (“The Dow just passed 16,000!”)

"It’s time for a reality check. These two institutions want to persuade you that things are getting better -- spreading good news is great politically and drives up markets -- but they aren’t living in the world that you and I wake up to every day."

According to Clifton, American "(s)mall buisiness is dying." As a result, he says, "this will have catastrophic consequences for our economy and way of life" His explanation:

"Business deaths now outnumber business births. According to the U.S. Census Bureau, the total number of new business startups and business closures per year -- the birth and death rates of American companies -- have just crossed for the first time since the measurement began. Here, I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are now being born annually nationwide, while 470,000 are dying annually nationwide. (emphasis in the original)

"Up to 2008, startups outpaced business failures by about 100,000 per year. But in the past six years, that number turned upside down. As you read this, we are at minus 70,000 in terms of business survival."

Clifton makes two more points. First, he says, "The federal government’s unemployment rate has little bearing on reality." (emphasis in the original) To stress the point, he writes:

"If the unemployment rate is really going down, then why did the issue become the new No. 1 problem facing Americans today? And why did Federal Reserve Chair Janet Yellen, in her first congressional testimony this month, say, “Those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and the number of people who are working part time but would prefer a full-time job remains very high”? She also said, “…the recovery in the labor market is far from complete. The unemployment rate is still well above levels that Federal Open Market Committee participants estimate is consistent with maximum sustainable employment.”

The final point Clifton makes has to do with GDP growth, and it's continual failure to meet expectations. As he says, "Many economists, both left- and right-leaning, predicted U.S. GDP would grow 3% last year. It only grew 1.9%, which was even worse than the 2.8% growth in 2012 -- so the pie shrunk. Now we’re seeing predictions of 3% growth this year. Here is the big question: Based on what?"

In summary, Clifton believes the three data points identified above are the "most important indicators to watch in gauging whether or not America will ever recover from the 2008 financial crash."

Last month, Clifton wrote wrote that small businesses are dying, and said there is a need for "new metrics," noting one developed by Gallup, i.e., Payroll-to-Population, which he claims is "a very clear metric with no messiness or complicated formulas."