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November 29, 2015

A Thought on Political Corruption

(Since 1976) "earmarks increased from a handful to thousands of provisions slipped into bills. These appropriations were not 'approved' by Congress in any meaningful sense of the word. They were just stuck into bills at the behest of one or two members, and the entire bill was passed without anyone but the sponsors knowing they were in there. Or caring. A study by the Congressional Research Service in 2006 found that the federal budget in fiscal 2005 had 16,072 earmarks by its definitions, up from 4,203 in the first year of its survey, 1994.

The nakedness of the quid pro quos implicit in earmarks became a national scandal. As I write, a moratorium on earmarks passed in 2010 is still in effect. It is unclear how much of the earmark effort has been converted to alternative methods.

Washington is still not nearly as corrupt as real kleptocracies such as Equatorial Guinea, Uzbekistan, or Sudan. The people who run Washington are generally more honest, more committed to the public good, and less thuggish than the officials in a real kleptocracy. The proportional size of the take in Washington is far less than the take in a real kleptocracy. But the parallels in the ways that Washington and kleptocracies operate are many and troubling."

~ Charles Murray

Source: page 96, Murray's latest book, "By the People: Rebuilding Liberty Without Permission."

p.s., The CRS study mentioned above is CRS memorandum, dated January 26, 2006, from the "CRS Appropriations Team," and bears the subject: Earmarks in Appropriation Acts: FY1994, FY1996, FY1998, FY2000, FY2002, FY2004, FY2005. HT Federation of American Scientists. Footnotes in the original quote not included above.

November 28, 2015

Arlington Public Schools Has Highest Average Teacher Pay

On Monday, November 23, some Washington Post readers were surprised at the Metro section story, by Moriah Balingit, describing the wide range of teacher pay across Northern Virginia and its neighboring Maryland school districts.

According to the story's Web title, "Teachers can make $15,000 more just by moving to the district next door." Here's the lede:

"With 10 years of experience and a master’s degree, a mid-career teacher in Fairfax County can earn $15,000 more by moving slightly east, to Arlington County, the highest-paying suburban school district in the Washington region. In Maryland, the average teacher salary in wealthy Montgomery County is $9,300 more than the average teacher salary in neighboring Prince George’s County. (emphasis added)

"These disparities, highlighted in a report from the Washington Area Boards of Education (WABE), are making it difficult for districts that pay on the lower end of the spectrum to attract and retain teachers, school officials said, especially as the demand for teachers grows in tandem with student enrollment. A nationwide teacher shortage also has made it particularly difficult for districts to find qualified teachers for special-education students and for English-language learners.

"The report “clearly demonstrates the challenge we face in recruiting and retaining the very best teachers,” Fairfax Superintendent Karen Garza said in a statement. Fairfax County ranked fifth among the region’s Maryland and Virginia school districts — not including D.C. Public Schools — with an average teacher salary of $67,589.

"The annual WABE guide shows how 10 area school districts compare on several measures, offering stark contrasts between them. The region’s school districts vary widely in what they pay teachers, how crammed classrooms are and what they spend per student."

Ms. Balingit's report is worth reading in its entirety. In addition, the charts and graphs that accompanied her report were especially helpful in understanding how teacher pay changed over the years. Also, one chart compared teacher pay and per-student spending, showing a close correlation between teacher pay and per-student spending. A second chart showed average class size for elementary, meddle, and high school for the 10 school districts.

Balingit includes some specific reporting on the Arlington Public Schools (APS), writing:

"A district’s average salary also can be reflective of the kind of teacher a district can afford. Deirdra McLaughlin, the assistant superintendent for finance and management in Arlington, said the district’s high average salary is partially explained by the system’s tendency to hire experienced teachers with graduate degrees who command higher salaries.

< . . . >

"Arlington spends $18,616 per student, the most of any district in the WABE report. That money translates into high teacher salaries and some of the region’s lowest class sizes.

“If you really take excellence seriously, you have to pay for it,” McLaughlin said."

You can find the Washington Area Boards of Education (WABE) report at the following APS webpage.

We've growled at least annually in response to each year's WABE report. You can find the most recent ones here: December 29, 2013; November 13, 2014; and November 3, 2015.

Growls readers are encouraged to provide the Arlington County Board their thoughts on economic development in Arlington County. Just click-on the link below:

  • Call the County Board office at (703) 228-6015

And tell them ACTA sent you.

November 27, 2015

Updating Arlington County's Office and Hotel Occupancy Rates

On March 13, 2015, we posted an extensive Growls about the challenge of economic development in Arlington County as well as the "importance of maintaining Arlington's strong commercial tax base." We also reported on "the monthly meeting of the Arlington County Civic Federation on Tuesday evening, March 3, 2015," where "delegates heard the chair of Arlington County Economic Development Commission, Sally Duran, discuss 'the importance of a flourishing business community which will substantially benefit Arlington taxpayers.'"

Later, on June 26, our Growls included comments from the Board chair's State of the County speech, which were, "Facing record-setting office-vacancy rates that top 20 percent countywide and surpass 30 percent in some corridors, the county government has put additional resources into economic-development efforts."

With that in mind, we noted today's Arlington Sun Gazette contained two-related stories.  In one, the Sun Gazette reported on the "Mixed results for Arlington office-vacancy rate in 3rd quarter." The second was entitled, "Arlington hotel-occupancy rate remains healthy."

In the article regarding office occupancy, the Sun Gazette reported:

"Arlington’s third-quarter office-vacancy rate of 21.4 percent was up a tick from 21.3 percent in the second quarter, and was unchanged from a year before, according to new data.

"Among various sub-sectors of the commercial-office market, rates for the third quarter stood at 29.6 percent in Rosslyn, compared to 28.4 percent in the second quarter and 28.5 percent in the third quarter of 2014; 24.2 percent in Crystal City (compared to 25 percent and 23.6 percent); 18 percent in Ballston (19.3 percent and 19.5 percent); 17 percent in Clarendon/Courthouse (16.8 percent and 9.8 percent); and 10.3 percent in Virginia Square (10.6 percent and 21 percent).

"Figures come from CoStar and were reported by Arlington Economic Development."

The Sun Gazette also reported, "For Northern Virginia as a whole, the office-vacancy rate of 17.3 percent in the third quarter was down from 17.4 percent a quarter before, but was up from 17 percent in the third quarter of 2014."

As for hotel occupancy, the Sun Gazette wrote:

"Arlington’s hotel-occupancy rate for the first nine months of the year is up from the same period in 2014, as is the average daily room rate, according to new figures.

"The year-to-date occupancy rate of 79.3 percent from January to September is higher than the 78-percent rate reported in 2014, according to figures from Smith Travel Research, reported by Arlington Economic Development.

"For the same period, the average daily room rate of $160.01 was up from $152.33 in 2014."

The occupancy rates are updated month, and are included on the Economic Indicators page, part of Economic Development's Resource page.

Growls readers are encouraged to provide the Arlington County Board their thoughts on economic development in Arlington County. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

November 26, 2015

A Thought About Thanksgiving

"Rarely has it seemed quite so important to gather together on this Thanksgiving — this most American of holidays.

"In troubled times we crave the solace of friends and family, of warmth and familiarity even more than usual. And when bombs are going off in familiar places, when a second European capital spends days in lockdown, and when a wonderful young man from our own community is gunned down in the streets of Israel’s West Bank, there is no doubting these are troubled times indeed.

"So we cling a little more closely to those we love — whether they are near or not, whether face to face, or face to computer, whether around the table or around the world. They are, after all, at the top of our list of things to be thankful for — that we have made it to this time together, when so many have not. But we hold in our hearts the memory of those who are not with us and weep for families for whom the pain of loss is still so raw."

~ From a Boston Herald Editorial

Souce: Thanksgiving 2015 Editorial, Boston Herald.

November 25, 2015

CAGW Selects Its November 2015 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 selected Rep. Frank Pallone (D-N.J.) their November Porker of the Month "for his absurd attack on government watchdogs who discovered gaping holes in Obamacare’s enrollment verification system."

Here's how CAGW justified awarding Rep. Pallone this dubious honor:

"In 2014, at the request of the House Ways and Means Subcommittee on Oversight, the Government Accountability Office (GAO) began testing the verification system by creating 12 fake identities and attempting to obtain coverage through the federal Exchange.  The GAO published the full results on July 22, 2014, and revealed that 11 of the 12 fake applicants were each able to qualify and receive $2,500 worth of subsidized coverage, even though they had used forged documentation for proof of income or citizenship.  On July 16, 2015, a follow-up GAO investigation found that all 11 fake applicants were automatically re-enrolled for the next year.  Six of the 11 were temporarily cancelled based on new information, but five of those six were able to apply for reinstatement and successfully reacquired their coverage.  Such “secret shopper” investigations are a common practice to test verification systems in order to determine if they are subject to waste and mismanagement.

"After finding these gaping holes in the federal Exchange, GAO released preliminary findings on October 23, 2015, during testimony before the Energy and Commerce Subcommittee on Health, of how 10 new “secret shoppers” were able to obtain coverage in the federal marketplace from New Jersey and North Dakota, and from the California and Kentucky state exchanges.  GAO found that, “although 8 of these 10 fictitious applications failed the initial identity-checking process, all 10 were subsequently approved by the federal Marketplace or the selected state marketplaces.”  Four of the approved fake applicants used Social Security numbers that were never issued, such as ones beginning with “000.”

"While taxpayers and most members of the Energy and Commerce Committee greeted GAO’s efforts with admiration and disgust at the failure of the Obamacare verification system, the committee’s Ranking Member, Frank Pallone (D-N.J.), had the opposite reaction during the October 23 hearing.  His ire toward the GAO investigators themselves was evident when he said, “For you to spend your time and your effort, taxpayer money, in trying to make it more difficult [to get coverage] or trying to highlight the difficulties, I just don’t understand,” he said.  He went on to unfairly smear the investigators as partisan attack dogs and claimed that exposing fraud “is just not a priority.”  Apparently, Rep. Pallone, who is a longstanding member of the Energy and Commerce Committee, has either forgotten or no longer cares that GAO’s mission is “to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people.”  And if he had another or better method to test the accuracy of the verification system, he did not express it at the hearing.

"CAGW President Tom Schatz said, "The GAO should be applauded for their work to expose waste, fraud, and abuse in the federal government.  Rep. Pallone’s shameful attacks are not only false, they are an insult to every taxpayer who expects his or her money to be used wisely and thriftily.  Comments like these are prime examples of why Congress has abysmal approval ratings."

"For his reprehensible and erroneous attack on the investigators who exposed more examples of Obamacare’s vast flaws, CAGW names Rep. Frank Pallone its November 2015 Porker of the Month."

If you're not familiar with Citizens Against Government Waste, CAGW "is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government." Kudos to CAGW for pointing out GAO's role in assisting Congress in conducting oversight and for their continued efforts to fight government waste.

November 24, 2015

Why Its Important to Broaden the U.S. Tax Base

In a paper published by the non-partisan, non-profit  Tax Foundation today, Scott Greenberg, a federal tax analyst,   introduces the subject at the Tax Foundation's Tax Policy blog:

"Over the past few years, politicians in both parties have expressed enthusiasm for lowering federal tax rates. This makes sense: many economists have found that high tax rates hurt economic growth and international competitiveness. Meanwhile, the U.S. levies some of the highest rates in the world on corporations, capital gains, and dividends.

"Lowering federal tax rates would be easy, if it weren’t so expensive: lower rates means less revenue that the federal government is able to collect, leading to a larger budget deficit. Many politicians promise to pay for rate cuts with equally large spending cuts, but these promises seem unrealistic in the current political climate.

"As a result, the only practical way to cut tax rates significantly without increasing the deficit is by broadening the tax base: eliminating tax preferences (such as deductions, exclusions, and other narrow provisions) that reduce federal revenue. These tax preferences are often inefficient, unfair, and complex – which makes “broadening the base and lowering rates” a win-win strategy for tax reform.

"As a general rule, recent tax reform plans have not been nearly imaginative enough in proposing measures to broaden the U.S. tax base. Congressman Dave Camp’s tax reform proposal contained dozens of small base broadening measures, which would only have raised enough revenue for modest rate cuts. Meanwhile, most of the 2016 presidential candidate plans are estimated to cost over $1 trillion – which means that candidates have pursued ambitious rate cuts without proposing equally ambitious base-broadening measures."

Here are the "key findings" from his report (Fiscal Fact No. 492, Options for Broadening the U.S. Tax Base):

  • Broadening the U.S. tax base and using the revenues to lower marginal tax rates remains a sound template for tax reform. Moving to a broader tax base and lower rates would simplify the tax code, remove unfair preferences, and create economic growth.
  • In recent tax reform proposals, policymakers have declined to pursue ambitious base-broadening measures, limiting their ability to cut tax rates.
  • Three promising directions for broadening the U.S. tax base are ending the exclusion of employer-sponsored health insurance, removing the cap on the Social Security payroll tax, and capping itemized deductions at a fixed dollar level.
  • Each of these options would have negative economic effects, if implemented without accompanying rate cuts. However, combined with marginal rate cuts, each would lead to economic growth.
  • Together, all three options would raise enough revenue on a static basis to lower the corporate tax rate to 20 percent, the top rate on ordinary income to 29.5 percent, and the top rate on capital gains and dividends to 13 percent. Doing so would grow the U.S. economy by 6.0 percent over the long term.

Take a few minutes to scan Greenberg's report on broadening the U.S. tax base. It should be useful as you compare presidential candidates' tax plans. And kudos to the Tax Foundation for continuing their mission of improving lives through tax research and education.

November 23, 2015

When the Budget Guidance Misses the Elephant in the Room

Over the weekend, we growled about the budget guidance, which the Arlington County Board provided the Acting County Manager on Thursday for preparing the FY 2017 budget that begins July 1, 2016.

Although we pointed out that the Board's very first budget guidance was to "(p)resent a balanced budget that assumes no increase in tax rates," items 2 through 11 on the Board's list of guidance failed to recognize just how fast Arlington County spending has increased over the period 2001 through 2014. According to Table D-1, General Government Expenditures by Functions, in the Statistical Section of the FY 2010 and FY 2014 Comprehensive Annual Financial Reports (CAFR's), total spending has increased 5.5% annually although annual inflation has averaged about 2.6%.

Let's take a look at how fast spending increased from 2001 through 2014 for those functions:

  • General Government -- 3.9%
  • Public Safety -- 6.0%
  • Public Works/Environmental Services -- 8.4%
  • Health and Welfare -- 2.9%
  • Culture/Recreation --  4.4%
  • Education -- 5.3%
  • Non-Departmental -- 16.5%
  • Debt Service -- 6.2%
  • Regional Contributions, Transit -- 9.0%
  • Regional Contributions, Other -- 3.6%

Let's also look at how the Arlington County Board controlled spending according to inflation and population growth.  Last December, we growled about how increased transparency by the Commonwealh of Virginia seems to have slowed the growth of spending. In their annual report on state spending, the General Assembly's Joint Legislative Audit and Review Commission (JLARC) shows trends in spending when controlled for inflation and population. We did the same with Arlington County's general government expenditures for FY 2001 through FY 2014. Let's take a look:

In 2001, total expenditures were $594.9 million, and population, according to the CAFR's Table K was 189,983, meaning that per capita expenditures came to $3,131. By 2014, total expenditures grew to $1,186 million, and population was 215,000, which means that expenditures per capita was $5,516.

We then adjusted the 2001 per capita expenditures using the Department of Labor's Bureau of Labor Statistics' CPI Inflation Calculator to arrive at an inflation-adjusted expenditures per capita for 2014 of $4,185.32, which multiplied by the 2014 population gives a total expenditures amount for FY 2014 of $899,843,800 when adjusted for inflation and population.

The bottom line is that if the Arlington County Board was truly fiscally responsible -- by limiting county spending to inflation and growth in population -- the County Board would have spent $286,117,581 less in FY 2014 than they did. In other words, Arlington County government would be 31.8% smaller.

So although the Arlington County Board annually shouts to the heavens that it has the lowest real estate tax rate in the region, when real estate assessments shows regular annual growth, the County Board gets a bonus without having to receive any political flak from increasing the real estate tax rate. Not to mention their annual practice of using carryover funds for so-called one-time spending.

Growls readers are encouraged to provide the Arlington County Board their thoughts on FY 2017 budget. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

November 22, 2015

Another Reason for a Flat Tax?

"In the matter of taxation, every privilege is an injustice."

~ Voltaire

Source: page 130, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

UPDATE (11/23/15): I just corrected a mispelled "if" to a correct "is." Thanks for a sharp-eyed friend.

November 21, 2015

Your Arlington County Real Estate Taxes to Increase in 2017

At their recessed carryover meeting Thursday evening, November 19, the Arlington County Board set in motion a FY 2017  budget process that will likely increase your real estate taxes by a projected increase of 1.9% to 2.4%, according to the "third bullet" in the county's press release.

Further into the press release, however, we read this:

". . . The County is projecting the overall real estate tax base to rise 2.7%, with residential real estate assessments rising approximately 3%, while commercial assessments are projected to be flat or slightly negative.

"While the commercial vacancy rate has fallen slightly, commercial values continue to be under pressure from vacancy rates, and growing regional competition in the commercial office market. Real estate taxes, which are based on assessments, are the single largest source of revenue for the County."

Your real estate taxes could be much higher, however, if the Board eventually adopts the FY 2017 budget with increases in the real estate tax rate. In the budget guidance adopted Thursday evening, which the Manager will use in preparing the FY 2017 budget, the first thing the Manager is to do is present "a balanced budget that assumes no increase in tax rates," but the Board added "(p)roposed expenditure or service enhancements that are fully offset by fee revenue or by re-allocations are permitted."

The Board's guidance to the Manager for preparing the FY 2017 budget gets more complex after that since there are 10 more specific items to guide the Manager in preparing the FY 2017 budget, which will go into effect on July 1, 2016.

Taxpayers are encouraged to review the Manager's report to the Board since it includes an FY 2017 financial forecast. It is Agenda Item #43 on the Board's recessed carryover meeting agenda.

ARLnow.com reported on the forthcoming budget guidance in a report on Tuesday by Jennifer Currier. Two items were of specific interest. The first concerns real estate assessments:

"Increases in the real estate assessments for single-family homes, townhouses and condos will provide the county with most of its revenue growth. On average, such assessments are expected to rise 3 percent, causing tax bills for Arlington residents to increase by approximately $175 at current tax rates.

"Assessments for commercial real estate, however, are expected to remain flat or turn slightly negative “due to vacancy rates in office buildings and the slowing demand in multi-family residential.” Commercial property taxes are half of Arlington County’s tax base, and by staying flat or going negative it will “shift the tax burden to the average homeowner.”

The second item of interest involves the county's revenue-sharing with the Arlington Public Schools:

"The county shares 46.5 percent of all local tax revenue with Arlington Public Schools. Given that revenue split, current tax rates, planned one-time outlays and budgetary projections, county government is expected to face a $1-3 million funding gap during FY 2017, while schools may face a deficit of more than $12 million."

Growls readers are encouraged to provide the Arlington County Board their thoughts on FY 2017 budget. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

November 20, 2015

Crony Capitalism, Arlington Variety

At its recessed meeting on Tuesday, November 17, the Arlington County Board voted to "invest" $56 million with the hope to receive "dividends from Ballston development," to use a portion of the heading from the Arlington Sun Gazette story posted yesterday.

Here's the overview from the Sun Gazette story:

"Arlington government officials say their planned investment of about $56 million in the redevelopment of Ballston Common Mall will pay off in increased tax revenues throughout the corridor.

"County Board members on Nov. 17 voted unanimously to approve a public-private partnership with Ballston Common’s owner to move forward with a $300-million-plus makeover of the moribund mall.

"The county government’s direct contribution will total about $10 million, with the remainder coming from a bond to be issued by a newly-formed community development authority. Payments on the bond will be made using a share of expected increases in property taxes, sales taxes and meals taxes in the corridor.

"Approval of the specifics is expected in early 2016. If adopted, it will be the first public-private partnership of its kind in Arlington’s history.

"County Board members on Nov. 17 also approved a package of site-plan changes allowing Forest City Enterprises to move forward on its mall renovation."

The Washington Post's Patricia Sullivan provides a more fact-filled report today, including:

"By a vote of 5 to 0, the board voted to allocate $10 million in public revenue for garage and transportation improvements and create a tax increment financing district that would generate an additional $45.5 million.

"It would be the first time the county has tried that strategy, which has been in use across the Commonwealth and the country — including the District — for years.

“This has an enormous potential to be successful,” said J. Walter Tejada (D), the board’s vice chairman. Board Chairman Mary H. Hynes (D) agreed, calling the deal “a measured risk for a great return.”

Forest City, which owns the mall, intends to expand the property with new retail and office space and add a 22-story, 406-unit residential tower. The cost of the project is about $317 million.

Arlington’s $10 million grant would go toward improving the county-owned garage that serves the mall and such projects as rebuilding Wilson Boulevard, removing and rebuilding a pedestrian bridge and improving the streetscape.

"The $45.5 million in tax increment financing would be provided through the use of bonds, which Forest City would repay with the increased tax revenue the mall is expected to generate. If that revenue falls short, the county could impose a special tax to cover the shortage. That financing plan could be formally created early next year, and bonds could be issued by summer."

In his weekly column at ARLnow.org yesterday, former County Board GOP candidate Mark Kelly discusses Tax Increment Financing (TIF) in more detail, including:

"The argument for TIFs is that the development being paid for by the TIFs will increase revenue to the County above what we would have otherwise received. Therefore, despite setting aside a portion of that revenue to subsidize development, it is still a net benefit to the taxpayer.

"However, if a private developer cannot secure financing for a project in one of the most attractive real estate markets in the country, why should taxpayers agree to make up the difference?" (emphasis added)

Arlington County will receive "community benefits" from the developer,, Forest City Enterprises, according to the county's press release, which includes even more details than the news reports. Here's what the press release says about the so-called community benefits:

"The developer will comply with the Zoning Ordinance requirement for affordable housing either through a contribution to the County’s Affordable Housing Investment Fund (AHIF) or through the provision of on-site units.  The redevelopment also includes:

  • $1.8 million in site streetscape improvements
  • $106,296 in utility undergrounding fund contribution
  • $75,000 public art fund contribution

"Other benefits include improved $4.8 million in open space access and $4.6 million in connections between the mall and the Ballston area. These newly created spaces – including two plazas and mews — will be open for public use. The developer is also contributing $2.8 million for the pedestrian bridge, $4.7 million for Wilson Boulevard, Glebe Road and Randolph streetscape improvements, and up to $8.9 million in parking garage improvements."

In addition, the FAAC report from County Board's Fiscal Affairs Advisory Commission reports, "the residential buildings planned for the redevelopment will receive a rating of silver from the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program," a significant added cost for the developer.

The utopians on the County Board's Planning Commission, however, outdid their colleagues on FAAC. In their November 10, 2015 letter concerning the Letter of Intent related to the proposed public-private partnership, the commission chairman wrote (link not available):

"In several ways, Commissioners believe the main risk is that the partnership and the County's effort more generally may not go far enough. The general view is that the substandard streetscape surrounding the Ballston garage, the uninviting garage entrances, and the nature of the Glebe Road today present the County with important opportunities to secure out community's investment . . . Glebe Road needs the immediate attention of County staff, the Transportation Commission, VDOT, and other stakeholders to ensure it presents a humanized and inviting front and not a barrier to the revitalized Ballston Quarter . . . ." (emphasis added)

The Manager's reports to the County Board for the November 17, 2015 Ballston Quarter hearing can be found here, specifically agenda items 41.A. through 41.F. Items 41.A-C. discuss site plan changes; 41.D. involves a vacation; 41.E. involves an easement, but is deferred until the December 2015 Board meeting; and, 41.F. is the Letter of Intent, and contains the financial details of the public-private partnership.

So, let me get this straight. The County Board will plunder county taxpayers so the developer will provide community benefits, including contributions to an affordable housing slush fund, and be able to spend extra to "buy" something called a silver LEED rating. Is life great when you're a county bureaucrat?

Growls readers are encouraged to provide the Arlington County Board their thoughts on what they've wrought on the redevelopment of Ballston Quarter. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

November 19, 2015

A Thought on Tyranny and the Bill of Rights

"The Framers believed they had done what they could, through the Constitution, to fend off tyranny by the few and the many.

"Still, the Anti-Federalists were not convinced, and ratification of the Constitution in several states was in jeopardy. Madison and others tried to alleviate the objections. In Federalist 39, Madison argued that the federal government had only "certain enumerated" powers and the states retained "residuary and inviolable sovereignty" over all else. In Federalist 45, he asserted that the proposed federal powers were "few and limited" and the power in the states remained "numerous and indefinite." Nonetheless, Virginia's George Mason, among many others, insisted that more was needed to contain federal authority and safeguard the states' plenary power. In order to secure the Constitution's ratification, the Federalists eventually agreed to introduce a set of amendments in the 1st Congress, which had been widely accepted in advance, further delineating  and underscoring the limits of the federal government respecting its potential abuse against the individual and usurpation of the sttes. They became known as the Bill of Rights."

~ Mark R. Levin

Source: pages 186-187, Ameritopia: The Unmaking of America.

November 18, 2015

Crony Capitalism, Airline Style

An NBC4 - Washington News4 I-Team story, posted yesterday at Taxpayers for Common Sense, discusses how how federal subsidies are used to pay for "little-used, sometimes empty commercial flights . . . from Hagerstown Regional Airport in Hagerstown, Maryland and Shenandoah Valley Regional Airport in Weyers Cave, Virginia."

The flights "are part of a controversial federal program called Essential Air Service." Here's more:

"The program, which costs $246 million nationwide each year and supports several dozen airports in small cities, is under increasing scrutiny amid tight federal budgets. The I-Team’s review found some of the local flights depart without passengers or nearly empty loads.

"Federal regulations require the planes to be flown, with or without passengers.

"Essential Air Service supporter, including federal regulators and the air carriers who fly the routes, champion Essential Air Service as a link between remote cities and the nation’s aviation system.

"The program is overseen by the U.S. Department of Transportation. Federal regulations require several daily flights be flown under the program. Taxpayer watchdog groups say the flights have limited popularity and require subsidies from federal taxpayers.

"The I-Team’s review of federal records show an average of two to three passengers takes each of the daily flights from Hagerstown, which head to either Dulles International Airport or Pittsburgh International Airport. Taxpayer money offsets the cost of the flights. The I-Team found each passenger’s ticket required a $560 subsidy from taxpayers in 2015.

"At the Shenandoah airport, $128 in taxpayer subsidies are needed for each passenger who flies on one of the airport’s regular Essential Air Service flights to Dulles.

"Taxpayers for Common Sense vice president Steve Ellis said the program is a poor use of federal funding, because of its low passenger loads.

“All of these small towns think it’s part of their identity," he said. "[They think] there wouldn’t be as much of a town if they didn’t have their own airport.”

“These flights are little used, but they have passionate backers," Ellis said.

"I-Team cameras filmed an empty flight departing Hagerstown for Pittsburgh on a Thursday afternoon in September. They also captured video of an empty flight arriving to the airport the same afternoon."

The argument in support of the Essential Air Services program ssems to be that it's essential to keeping small towns afloat, as voiced by a resident of Maryland's Frederick County. The report includes a 3-page table showing the communities served and the annual subsidy rates.

Fed up with another example of the waste of your tax dollars? Then write to one of your Congressional representatives. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County can contact:

  • 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 Don Beyer (D) -- write to him or call (202) 225-4376

Remember to ask for a written response, and tell them ACTA sent you.

November 17, 2015

A Thought about Western Society

"Some financial institutions may be considered "too big to fail," but contemporary Western society may be too frivolous to survive. The Romans had bread and circuses to keep the masses passive and unthinking. We have electronic gadgets, drugs and pornography. Like the Roman Empire, we too may decline and fall. What happened in Paris may be just the beginning."

~ Thomas Sowell

Source: his November 17, 2015 Random Thoughts column, posted at Investor's Business Daily.

November 16, 2015

Arlington County Grows Government: A Little Bit at a Time

At its meeting on Saturday, November 14, the Arlington County Board "OKs year-round yard-waste collection," according to the headline of an article posted today by the Arlington Sun Gazette. Here's the Sun Gazette report:

"Arlington County Board members voted unanimously on Nov. 14 to begin providing year-round collection of yard waste next April, a move that will increase costs to those whose trash and recyclables are picked up by the county government, but is expected to divert thousands of tons of material that currently go into the waste stream.

"The change, which has been sought by some county leaders for years, will have no impact on rates charged to property owners through next June. After that, it is expected to bump up costs about $35 a year from the current $271.

"The county government requires most single-family households to participate in its trash-collection program. Most condominiums, apartment complexes and commercial entities use private trash haulers."

We growled about year-round yard waste collection on October 18, 2015. and October 7, 2013.

A more thorough discussion of the issues related to year-round yard waste collection is available in the November newsletter of the Arlington County Civic Federation (pages 7 and 8). The analysis by the Revenues & Expenditures Committee (R&E) is especially relevant. Here is R&E's concluding comments:

"There are 33,000 households using the county’s trash and recycling collection services. According to recent billing statements (obtained via a FOIA request), Covanta charged $43.16 per ton for trash sent to the WTE facility in FY2015. The cost for the collection and disposal of 9,000 tons of yard waste annually for composting will be $46.80 x 33,000, or $1,544,400 (including cart purchasing costs) a year.

"Based on these figures, the cost per ton for the 9,000 tons of yard waste would be $171.60 per ton. In FY2013, the cost per ton for Montgomery County’s yard-waste disposal program and compost facility was $38.90 per ton. [Note: Montgomery’s costs are partly offset by the sale of compost.] Beginning in 2025, Arlington’s disposal fee at the WTE plant will be $0 per ton.

"Staff reports that 60% of respondents to a recent online survey supported a year-round yard-waste collection and a separate yard waste cart. However, the survey was advertised to all Arlington residents, not just to households participating in the county’s solid waste collection program.

"It unclear how many survey respondents who approved of the yard-waste collection and cart would not be subject to those costs. R&E has been unable to confirm whether the survey included responses from those who do not participate in the county’s collection."

The County Manager provides three separate reports to the County Board (39.A -- implementation process; 39.B. -- recodify Chapter 10, Code of Arlington County; and, 39.C. -- resolution, to be heard 11/19/15, to adopt a Zero Waste Goal -- available at the 11/14/15 Board agenda).
The county's press release on the new collection procedures is here, and highlighted the following comment by the Board chair:
“Year-round yard waste collection is an important new service for our residents,” Arlington County Board Chair Mary Hynes said. “For a modest increase in the household solid waste rate, we can make a real difference in our recycling rate, and a difference in our environment. This is a service that our residents have said they want, and we are glad to at last be able to provide it.”
Also from the press release is this brief portion from the discussion about the "optional new carts" that will be used in residential collections:
"Residents will have the option of having a County-provided organics yard waste cart for yard waste recycling. The carts will be delivered in February and March 2016. Opting out of the cart, however, will not change the household solid waste rate." (emphasis added)
The ARLnow.com news site includes the following observation from its reporting today:
"Critics have said that the extra cost will hurt already-burdened Arlington homeowners. Critics also say that the extra trucks required to haul the yard waste may produce more greenhouse gasses than are saved by not sending the yard waste with other trash to a waste-to-energy plant, as is current practice."
In a review of a New York Times article last week at the Foundation for Economic Education (FEE), Michael Makovi asks, "Do Capitalists Manipulate, Deceive, and Cheat?" His short answer is, "Not as Much as Politicians Do." The reason has to do with the concept of concentrated benefits and dispersed costs. According to Makovi:
"In politics, benefits are concentrated on those whom the politician wishes to favor — such as financial donors and special interests whose attention is narrowly focused — while costs are dispersed among those whose attention is elsewhere, including many who focus on producing wealth instead of transferring it.

"The combination of rationally ignorant voters and informed and motivated special interests encourages rent seeking. Private benefit and social cost diverge as the political process encourages the creation of new externalities. While markets tend to internalize the costs, politics encourages externalities."
In their write-up for the Civic Federation's November newsletter, the Environmental Affairs Committee pointed out that "Arlington’s Department of Environmental Services, Solid Waste Bureau, has long been a proponent of year-round yard waste collection." The last thing this department should be doing is increasing the sized of Arlington County government. Your humble scribe recently analyzed general government expenditures for the period 2001 -- 2014. During that period, inflation averaged about 2.4% while total expenditures increased by an average of 5.5%. However, spending in the Department of Public Works/Environmental Services increased by an annual average of 8.4%.
Growls readers, please take a few minutes to tell the Arlington County Board to stop catering to their special interests, and stop growing government a little bit at a time. And tell the Board chair that if a special interest wants a special favor, let them pay for it. Just click-on the link below:
  • Call the County Board office at (703) 228-3130
And tell them ACTA sent you.

UPDATE (11/17/15): The Washington Post's Patricia Sullivan reported on the County Board's approval of year-round yard waste collection in the paper's Sunday edition. Here's the lede from her report:
"Arlington residents, who are used to recycling grass clippings and leaves during 16 spring and fall weeks of the year, will be able to recycle yard waste all year, at an additional cost of about $35 per year.

"The Arlington County Board voted unanimously Saturday to adopt the new curbside service starting in April 2016. The service is expected to divert up to 9,000 more tons of compostable material from the waste stream, which should help boost the county’s recycling rate from its current 47.2 percent to about 60 percent, county staff said.

"Residential taxpayers currently pay an annual solid waste fee of $271.04. That will rise to no more than $308 in the next fiscal year, which starts July 2016. Residents can get a new cart for the yard waste, but opting out of it will not reduce the solid waste fee."

November 15, 2015

A Thought on College Student Radicalization

"As campus demonstrations spread across American colleges, inquiring minds wonder what is causing the seemingly irrational demands on race, gender and sustainability.

"Campus mobs are gaining strength ever since the ouster of the president of the University of Missouri. Demands are escalating by a vocal minority of students who seem out of the mainstream.

"Yet, for those like the National Association of Scholars (NAS), who have been watching carefully, American higher education has been in the process of a fundamental transformation for decades.

"Are these uprisings a spontaneous student-led effort, or are there puppet-masters pulling the strings with paid activists aligned with radical left ideologies? In late August, The Daily Caller featured a video interview of NAS’s Peter Wood and Rachelle Peterson, who’ve exposed how the Left was instigating chaos and radicalism across colleges in order to fundamentally transform the nation using our youth. Their March report, which is the basis of this interview, was titled “Sustainability: Higher Education’s New Fundamentalism.” (RELATED: Scholars: Campus ‘Sustainability’ Indoctrinates College Students)

"This week, a new and second comprehensive report was issued from NAS called, “Inside Divestment: The Illiberal Movement to Turn a Generation Against Fossil Fuels.” It critiques the fastest growing student movement on campuses to turn students against fossil fuel. It also exposes the radical, well-funded puppet-masters, like Bill McKibben of 350.org and progressive financier Tom Steyer. These puppet-masters are using students as pawns for their agenda, according to this new NAS report." (links in the source)

~ Ginni Thomas

Source: her November 14, 2015, article, "Scholars Expose Student Radicalization Across College Campuses, posted at the Daily Caller.

November 14, 2015

A Thought on Corporate Taxes

"Another year of slow economic growth, and another year of zero progress reforming the U.S. tax system. This week the Tax Foundation will release its annual International Tax Competitiveness Index and once again the U.S. ranks a dismal 32nd out of 34 industrialized nations.

"On Saturday we explained how President Obama’s year-long campaign to stop so-called corporate inversions has failed to keep American corporate headquarters from moving offshore. The latest global rankings show how badly Washington is abusing the companies that remain.

"The index measures various factors that determine how friendly a government is to business and investment, including the amount of taxation and the complexity of tax rules. While Washington gets credit for refraining from a value-added tax on top of its other levies, the U.S. comes in dead last among the 34 developed countries in the Organization for Economic Cooperation and Development (OECD) when it comes to taxing corporate income.

"The U.S. has the highest top marginal corporate income tax rate at 39%, reports the Tax Foundation, and it has a complex method of collecting it. The U.S. rate—the 35% federal rate plus the average state rate—is a full 14 points above the OECD average of 25%. It’s worse if your CEO and board are crazy enough to be based in Pennsylvania with its 9.99% rate. The U.S. could also attract investment and spur growth by reducing regulation and tort-law plundering, but the U.S. isn’t pursuing those options either.

< . . . >

"President Obama has sometimes questioned whether the U.S. is exceptional. His absence from the tax reform debate suggests he’s happy if the U.S. is the land of the highest taxes."

~ Editorial, Wall Street Journal

Source: Wall Street Journal, September 27, 2015, posted at the WSJ's Opinion/ Review & Outlook (behind the WSJ paywall).

HT Tax Foundation. For the Tax Foundation's International Tax Competitiveness Index, click here.

November 13, 2015

Will General Assembly Give Back Taxing Authority?

In a story posted at noon today, the Arlington Sun Gazette reports that "Arlington officials aim to get taxing authority back." Here's a portion of their reporting:

"Arlington County Board members appear ready to take another shot at resurrecting taxing authority they saw stripped away by an irritated General Assembly five years ago.

"Restoration of a 0.25-percent surtax on hotel and motel stays is among the items included in the board’s draft 2016 legislative package, which highlights the priorities of county leaders heading into the 2016 General Assembly session.

"Before the General Assembly removed Arlington’s right to levy the 0.25-percent surtax atop the 5-percent tax on hotel and motel stays, the county government received nearly $1 million a year, which was used to promote Arlington as a destination for tourists and business travelers.

"The taxing authority was allowed to “sunset” – die – in 2011 by state legislators of both parties appalled by the County Board’s lawsuit targeting the state and federal governments over high-occupancy-toll lanes on Interstates 95 and 395.

"To bring it back would require a two-thirds majority of each house of the legislature."

At a time when Arlington County officials are whining about a 20% vacancy rate in the county's commercial property, why would they want to increase the tax burden on the end-users of some of that commercial property. Instead of additional taxing authority, Arlington County Board members need a good Economics 101 class.

November 12, 2015

A Thought on the Regulatory State

"Regulatory law as it has evolved since the 1930s amounts to an exercise of prerogative power. Thousands of regulations, including ones that carry the penalties of the criminal-justice system, have been written by bureaucrats and are enforced by bureaucrats with legislative guidance barely more specific than 'Do what you think appropriate.'"

~ Charles Murray

Source: page 70, We the People: Rebuilding Liberty Without Permission.

November 11, 2015

A Thought on the 'Campus Left'

"As a lot of people have suggested, no one at Yale can rightly claim to be “systemically oppressed” or subjected to the assaults of “privilege” by others.  The notion is laughable on its face. And then there is the University of Missouri graduate student hunger striker. I tweeted this morning that the headline could read, “Graduate Student Goes on Hunger Strike: Ramen Noodle Sales Plummet.”

"But lo and behold, the Missouri hunger striker, Jonathan Butler, comes of a family with a net worth near $20 million. You really can’t make this stuff up; The Onion staff must be sitting at their desks today in a state of despair."

~ Steven Hayward

He goes on to quote from a St. Louis Post-Dispatch story.

Source: his Power Line blog 11/11/15 post.

November 10, 2015

Arlington School Board still spars over cost of new Woodlawn

At the Arlington Sun Gazette website this morning, Scott McCaffrey posted a news article discussing how the Arlington School Board is "still sparring" about the cost of the new H-B Woodlawn school.

Here's how McCaffrey starts out the article:

"A final showdown among School Board members over the size and cost of the new home for the H-B Woodlawn Secondary Program is approaching just over the horizon.

"Board members sparred Nov. 5 over how much above the approved $80.2 million budget for the new school would be acceptable, given the host of construction projects waiting in the wings for funding.

“We have to find places where we can all tighten our belts,” said School Board Vice Chairman Nancy Van Doren, who – with colleague James Lander – has led the charge to keep costs in line with the budget.

"It was Van Doren and Lander who hit the roof several months ago when school officials brought in a proposal totaling $100 million to house Woodlawn and the smaller Stratford Program on a parcel in western Rosslyn. Their reaction sent school planners and those in the community scurrying to find potential ways to cut costs.

"Several options outlined by Superintendent Patrick Murphy on Nov. 5 would bring the cost down to between $85 million and $88 million, but not without trimming some instructional space.

"School Board member Abby Raphael was among those who urged board members not to be penny wise and pound foolish in settling on a final design."

The entire article is well-worth reading since it has several more juicy budgetary tidbits. Here's just one example:

"Raphael suggested that the school system could tap some of the $9.9 million currently sitting in reserve funds to help cover any overage for the Woodlawn project, which led Murphy to predict “that money will move fast” to keep up with construction needs countywide.

"Murphy, who has sounded of late as fiscally hawkish as Van Doren and Lander, said the school system needed to “operate within our means.”

Earlier in the article, McCaffrey pointed out that School Board member Abby Raphael "was critical of one option that would cut 21,000 square feet out of the school." But as we noted in our Growls of October 8, 2015, and also on October 24, 2015, the Arlington School Board has been than generous in providing needed space. For example, in the October 24,Growls, we compared space per student at the new Discovery Elementary School (143 square feet) with the square foot per student at the Devlin Road E.S in Prince William County (119 square feet per student).

Given the implications for taxpayers, we urge Growls readers to growl to members of the Arlington School Board about constructing ordinary schools at extraordinary prices. Tell School Board members to direct the Superintendent and staff that Chevrolet schools are good, but not at Cadillac prices, especially in a Pabst Blue Ribbon budget environment. Just click-on the link below:

  • Call the School Board office at (703) 228-6015

And tell them ACTA sent you.

UPDATE (11/11/15): In his Editor's Notebook yesterday, Scott McCaffrey adds a few poignant comments to the discussion of the "sparring over Woodlawn."

November 09, 2015

How would You Grade the President on the Economy?

In an op-ed in today's Washington Times, Stephen Moore, economic consultant with Freedom Works, analyzes eight factors to consider in arriving at a grade to give the president on the economy. Here's his introduction:

"Hillary Rodham Clinton got the laugh line of the week when she said that President Obama deserves “an A” for his economic performance. Oh, wait. she wasn’t joking.

"Talk about grade inflation. Not many Americans agree with Hillary’s charitable assessment. We just had a report of 1.5 percent growth in the last quarter. Every poll for five years shows that voters are most concerned about jobs, falling incomes, and the debt. (Climate change always ranks last or near last, by the way.) Anywhere between 40 and 70 percent of Americans, depending on the poll, say that the United States is still in a recession six and a half years into the Obama presidency.

"To be sure, there have been some successes. We finally got a good jobs report on Friday and job growth has been steady — but slow. Inflation is tame. And most impressive: the stock market has been on a tear since Obama entered office.

"But the areas where things have gone off the tracks far outweigh the good news. So here’s a real report card on the Obama economy."

Moore then gives a concise one-word grade for each of eight factors before explaining the grade in greater detail Here is how Moore grades the eight factors:

  1. Economic growth: Anemic.
  2. College and Health Costs: Skyrocketing.
  3. Real Unemployment Rate in America: 10 percent.
  4. Take Home Pay: Falling.
  5. Income Gaps Rising.
  6. National Debt: Now Tops $220,000 per Family.
  7. Taxes: Up.
  8. Cost of Government Regulations: Up.

In the print copy, Moore includes a graphic showing a $3 trillion "growth deficit." The current recovery, he explains, has a GDP of $17.9 trillion, but if the economy grew as fast as post-1960 recoveries, GDP would be $19.9 trillion. However, if there had been a "Reagan-style" recovery, GDP would have been $20.9 trillion.

The bottom line, according to Moore, "The recovery is a bust and the federal debt has soared. As a result, he gives President Obama a D.

So, if you're looking to understand why the economy hasn't seemed to improved, take a couple of minutes to read the entire op-ed.

For a different take on the "Obama economy," Chris Isidore and Patrick Gillespie provided a more balanced and optimistic view at CNN*Money on December 5, 2014, "after a particularly strong jobs report." They point out:

"Critics of the Obama administration say the economic recovery has taken too long and that the unemployment rate still hasn't fallen back to pre-recession levels. They argue the true unemployment rate is even higher than 5.8% because so many workers hadn't dropped out of the labor force altogether in the last six years.

"Obama's supporters see it differently. They point out the president took office during the worst economic downturn since the Great Depression and has managed to turn things around and get growth back on track."

Finally, at the WSJ's Real Time Economics blog, on August 4, 2014, Josh Zumbrun asks, "Have most economic indicators improved under Obama?" He also makes several important points, including:

"One challenge with judging the economic records of presidents, however, is that much of the economy is outside the control of the Commander in Chief. Congress can thwart good legislation or pass bad legislation. The Federal Reserve, many members of which were appointed by the previous guy, may make policy errors or set great policy. Demographics and international economic conditions can drive much of the economy too.

"Evaluating economic indicators over the course of Mr. Obama’s presidency is especially perilous because he took office in the middle of a deep recession, amid the collapse of a massive housing bubble, that left many measures of the nation’s economic health at their worst level in decades. Does Mr. Obama or natural economic forces deserve credit for the rebound? Did Mr. Obama’s policies make the economy rebound too slowly, or do bursting financial bubbles always leave economies that take years to recover?

"Two Princeton University professors recently waded into this debate. Alan Blinder, a former Fed vice chairman appointed by Bill Clinton and Mark Watson, a career academic, studied the economy across presidencies and found that economic growth was stronger during Democratic presidencies. They cautioned, however, against attributing this to successful policy.

“Democrats would no doubt like to attribute the large D-R growth gap to macroeconomic policy choices, but the data do not support such a claim,” they wrote.

“It seems we must look instead to several variables that are mostly `good luck,’ with perhaps a touch of `good policy.’ Specifically, Democratic presidents have experienced, on average, better oil shocks than Republicans (some of which may have been induced by foreign policy), a better legacy of productivity shocks, more favorable international conditions, and perhaps more optimistic consumer expectations,” they concluded.

"For more on the challenges of evaluating presidents, see two earlier posts on presidential records on poverty and job creation."

Zumbrun, too, includes several helpful charts in his post.

Since the October jobs report was released last Friday, here are two posts from the Wall Street Journal's Real Time Economics. First, Nick Timiraos and Josh Zumbrun explain the jobs report in 12 charts.The second post is Jeffrey Sparshott's highlight of the numbers in the jobs report.

November 08, 2015

Are We Headed for an Economic Civil War?

At the Daily Beast today, Joel Kotkin, presidential fellow in urban futures at Chapman University asks that question in an essay posted today (HT Hot Air Headlines). Here's the introduction, but the entire essay is much longer.

"Forget that red state-blue state stuff. The real chasm dividing the US is economic, with one economy for industry and one for tech, and the friction between them is getting fierce.

"When we speak about the ever-expanding chasm that defines modern American politics, we usually focus on cultural issues such as gay marriage, race, or religion. But as often has been the case throughout our history, the biggest source of division may be largely economic.

"Today we see a growing conflict between the economy that produces consumable, tangible goods and another economy, now ascendant, that deals largely in the intangible world of media, software, and entertainment. Like the old divide between the agrarian South and the industrial North before the Civil War, this threatens to become what President Lincoln’s Secretary of State, William Seward, defined as an “irrepressible conflict.”

"Other major economic divides—between capital and labor, Wall Street versus Main Street—defined politics for much of the 20th century. But today’s tangible-intangible divide is particularly tragic because it undermines America’s peculiar advantage in being a powerhouse in both the material and non-material worlds. No other large country can say that, certainly not China, Japan, or Germany, industrial powerhouses short on resources, while our closest cousins, such as Canada, Australia, and New Zealand, remain, for the most part, dependent on commodity trade."

Take a few minutes to read Kotkin's entire essay, "Are We Heading for An Economic Civil War?"

November 07, 2015

Bureaucratic Failure in the Federal Government

The Cato Institute's Chris Edwards, Director of Tax Policy Studies, posted an essay in September that looks at the "structural features of the executive branch that are generating frequent failures in federal policies." It is well-documented, with 55 footnotes.

Following is what amounts to the essay's executive summary (footnote numbering deleted) :

"The federal government spends almost $4 trillion a year. It has hundreds of agencies and runs more than 2,300 subsidy programs. It employs 2.1 million civilian workers, 1.4 million uniformed military personnel, and 560,000 postal workers. It is a huge organization.

"Most Americans think that the federal government does a poor job. Only one-third of people believe that it gives competent service, and people think that more than half of the tax dollars sent to Washington are wasted. The public's "customer satisfaction" with federal services is lower than their satisfaction with nearly all private services. After studying polling data, Yale University law professor Peter Schuck concluded, "the public views the federal government as a chronically clumsy, ineffectual, bloated giant that cannot be counted upon to do the right thing, much less do it well."

"This poor view of the federal government is not surprising given its many high-profile failures. In recent years, scandals have erupted at the Department of Veteran's Affairs, Internal Revenue Service, Secret Service, and other agencies. Federal auditors regularly uncover waste, fraud, and abuse in many departments, and federal projects often have large cost overruns.

"In a 2014 report, Paul Light of the Brookings Institution studied dozens of federal failures, including the response to Hurricane Katrina in 2005, the botched launch of HealthCare.gov in 2013, and the ongoing mismanagement of veterans' health care. He found that the number of such failures has increased over the years and "have become so common that they are less of a shock to the public than an expectation."

"Peter Schuck critiqued federal management in his 2014 book, Why Government Fails So Often. He examined dozens of programs and found widespread failure. Many programs are not delivering promised results, and they have costs that are higher than the benefits. Schuck concluded that federal performance is "dismal" and failure is "endemic."

"Federal failure is a critical issue because the government controls so many aspects of our lives. Federal spending represents more than one-fifth of the nation's economic output, and federal regulations infiltrate many state, local, and private activities. When the government fails, it can create widespread harm. This essay examines structural features of the executive branch that are generating frequent failures in federal policies."

An especially helpful aspect of Edwards' essay is his list of the causes of federal bureaucratic failure. While federal workers and private sector workers pursue many of the same goals, the federal bureaucracy has many "failure-causing features," as Edwards refers to them. These include:

  • Absence of Profit
  • Absence of Losses
  • Monopoly
  • Output Measurement
  • Monitoring and Transparency
  • Rigid Compensation
  • Lack of Firing
  • Red Tape
  • Bureaucratic Layering
  • Political Priorities
  • Agency Capture
  • Principal-Agent Problem

He describes and provides examples for each of those features before citing the many efforts to reform the federal bureaucracy, which date back to President Theodore Roosevelt's Keep Commission (1905) and President William Howard Taft's Committee on Economy and Efficiency (1910).

Many, if not most, of tho causes of bureaucratic failure on the above list apply equally to state and local government as well as to the federal bureaucracy.

Kudos to Mr. Edwards for his essay on bureaucratic failure. In addition to his duties as director of tax policy studies, he is the editor of DownsizingGovernment.org, a Cato project, which contains a wealth of essays to help "policymakers and the public understand where federal funds are being spent and how to reform each government department."

November 06, 2015

A Concise Summary of Fiscal Year 2015 from the CBO

In their monthly budget review, published today, the Congressional Budget Office (CBO) provides a concise, 5-page summary for Fiscal Year 2015. Here's the CBO's three-paragraph summary:

"In fiscal year 2015, which ended on September 30, the federal budget deficit totaled $439 billion—$44 billion less than the shortfall in 2014. Fiscal year 2015 was the sixth consecutive year in which the deficit declined as a share of the nation's gross domestic product (GDP). The deficit peaked at 9.8 percent of GDP in 2009; it fell to 2.8 percent in 2014 and to 2.5 percent in 2015.

"In 2015, the government’s revenues were $3.2 trillion, $228 billion (or almost 8 percent) more than receipts in 2014. As a percentage of GDP, revenues rose from 17.6 percent in 2014 to 18.2 percent in 2015, the highest level since 2001 and greater than the average over the past 50 years (17.4 percent) for the second year in a row.

"Net spending by the government was $3.7 trillion in 2015—$184 billion (or about 5 percent) more than outlays in 2014, and the highest that it has been, in nominal terms, since 2011. Outlays amounted to 20.7 percent of GDP in 2015, compared with 20.4 percent in 2014. The percentage in 2015 was well below the recent peak of 24.4 percent in 2009 but above the 50-year average of 20.2 percent."

The 5-page document consists primary of tables, charts, and bullet points, which makes for a rather easy read.  For example:

  • The table on page 1 shows receipts, outlays, deficit amount, and the deficit as a percentage of GDP for fiscal years 2010-2015. Specifically, receipts grew from almost $2.2 trillion to just over $3.2 trillion while outlays grew from almost $3.5 trillion to almost $3.7 trillion. Consequently, deficits dropped from $1,294 billion to $439 billion.
  • Page 2 includes a chart of federal revenues and outlays from 1980 to 2015 as a percentage of GDP. The graph includes two important points. First, average revenues from 1966 to 2015 were 17.4%. Second, average outlays for 1966 to 2015 were 20.2%. Those two numbers are important because they reinforce the fact the federal budget, in the long run, is not sustainable. Put another way, at some point, the national credit card is going to run out.
  • Page 3 provides a summary table of the four major sources of receipts for fiscal years 2013, 2014, and 2015. For example, in 2015 the four major sources were: individual income taxes -- 1,154 billion; payroll taxes -- 1,065 billion; corporate income taxes -- 344 billion; and, other receipts -- 299 billion. They totaled $3,249 billion, and represented 18.2% of GDP.
  • The final chart, on page 4, shows total outlays by major program or category. Note the the three major entitlement programs -- Social Security, Medicare, and Medicaid -- increased by 7.3% from 2014 to 2015. Over that same period, DoD-Military decreased 2.7%; Net Interest on the Public Debt decreased 4.1%; ACA exchange subsidies increased from $13 billion to $27 billion (108.3%); and other outlays increased by 2.4%. Thus, total outlays increased 5.2%.

Let's return to the chart on page 2 once again. Two points are worth remembering. The first is there was only one brief period when revenues exceeded outlays, and that would be the final years of the Clinton Administration. The second point is that despite the tax cuts during the Reagan Administration, average revenues never significantly decreased, and some would argue powered the steep increase during the 1990's.

You may want to keep this CBO monthly review handy as you watch the 2016 presidential debates. Remember, the national debt is the cumulative total of past annual deficits. Is your candidate talking about growing the national debt, or reducing it.

Remember the words of Boston University Economics Professor Laurence Kotlikoff, which we growled on December 15, 2013:

"The US is bankrupt -- not in 30 years, 20 years, or 10 days. It's bankrupt today." (emphasis added)

If the national debt, which is currently over $18 trillion, doesn't scare you, there is also the "fiscal gap," which includes the unfunded promises for Social Security, Medicare, Medicaid, and all the other so-called entitlement programs, e.g., Veterans benefits, civil service pensions, etc. This so-called "fiscal gap" currently exceeds $211 trillion. For more about the fiscal gap, see our June 30, 2011 Growls.

What is your candidate going to do to extricate the United States from its bankruptcy and stop the "war on children"?

November 05, 2015

Appomattox Residents Reject a Meals Tax

The Lynchburg News & Advance's Ashlie Walter reported Tuesday evening that residents of Appomattox County voted down a meals tax. Here's the portion of her report that dealt with the meals tax:

"Residents of Appomattox County have decided they do not want a meals tax.

"The referendum was defeated by 566 votes or 67.8 percent of the vote, on Tuesday.

"The tax would have applied only to prepared meals and not to eateries within the town of Appomattox because the town already has an 8 percent meals tax.

"If the meals tax had been approved by voters, the money collected from it would have been used for education and economic development purposes, and estimated revenues would have been between $10,000 and $15,000, as previously reported by The News & Advance."Mar

We've growled about the meals tax on several occasions, e.g., November 9, 2005, when voters in Pittsylvania County turned down a meals tax, or March 9, 2005, when voters in Henrico County rejected a meals tax, or October 25, 2004 and November 3, 2004, when we discussed how democracy bypassed Arlington County as the county's political elite slipped a tax noose around the necks of Arlington taxpayers. Thanks to some political legerdemain in the General Assembly in the early 1990's, Arlington residents never got to vote on whether there should be a meals tax in Arlington County.

As we growled many times before, we encourage readers of Growls to communicate with their favorite Delegate and Senator in the General Assembly to learn how they are working to uphold the freedom and liberty of their constituents in Arlington County. Legislators representing Arlington County in the Virginia General Assembly include: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, and Alfonso Lopez). Contact information for members of the General Assembly can be found here -- use one of the "quick links" to locate the senator and delegate who represent you.

And tell them ACTA sent you!

November 04, 2015

A Thought on Consumption Taxes

"The justification for consumption taxes rests on their built-in incentives to save and invest. By exempting investment from taxation, consumption taxes encourage investment and discourages spending."

~ Robert E. Hall and Alvin Rabushka

Source: page 20, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

November 03, 2015

Arlington Public Schools Remain the Costliest in Region

The Washington Area Boards of Education (WABE) Guide for Fiscal Year 2016 was published last month, and the Arlington Public Schools (APS) remain  the costliest on a per-student basis (available back to FY 2006 on the APS website and back to FY 2000 on the Fairfax County Public Schools website).

The WABE Guide compares the school divisions on an "apples-to-apples" basis on such factors as cost per pupil, average teacher salary, enrollment, sources of revenue, authorized positions, and SAT scores.

So, let's start by looking at the cost per pupil and the total SAT scores:

                                             Cost per Pupil     Total SAT Scores

Arlington                                     $18,616               1680

Falls Church                                 $18,032               1766

Alexandria                                    $16,561               1433                           

Montgomery County                      $15,341               1629

Fairfax County                              $13,718                1669

Prince George's County                  $12,992                1199

Loudoun County                             $12,700               1612

Manassa City                                 $12,393                1433

Manassas Park City                         $11,143               1437

Prince William County                    $10,724             1507

We also looked to see how fast the cost per pupil grew from FY 2004 through FY 2016. The growth of per-pupil spending of the Virginia school districts ranged from 30.7% for Prince William County (2.6% on an annual basis) to 37.1% for Manassas City's school district (3.1% on an annual basis). By comparison, the APS cost per student grew 33.4% over those 13 years, or 2.8% annually. The two Maryland school districts were outliers in this analysis with Montgomery County's cost per student growing by 44.1%; PG County's grew 62.1%, albeit from a far lower base.

We also computed the change in K-12 enrollment for each school district, and compared it to the change in the number of teachers at each school district. In this regard, the number of K-12 students in the Arlington schools grew 34.6% while the number of teachers grew 33.9%. That is not quite as good as in Alexandria where the number of students grew 31.2%, but the number of teachers 26.8%. By comparison, the number of K-12 students in Falls Church grew 27.2%, but the number of teachers grew 39.0%. So, while APS continued as the costliest, APS management managed to control the growth of the teachers it employs.

Finally, let's look at the two factors that undoubtedly contribute the most to the cost per student, i.e., teacher salaries and class size. We could have selected several numbers for each category, e.g., average salary or beginning 10th year with masters degree for teacher pay or elementary, middle/intermediate or secondary/high for class size, but we selected those shown:

                            Average Salary     Middle/Intermediate

Alexandria                    $74,431                   22.5

Arlington                       $78,002                  20.1

Fairfax County                $67,589                 24.6 

Falls Church                   $76,495                  24.2

Loudoun County             $65,581                  25.1

Manassas City                $64,121                  23.9

Manassas Park City         $57,633                  26.1

Montgomery County        $76,029                  26.1

Prince George's County    $66,720                  n/a

Prince William County      $64,523                  29.6

Given the implications for taxpayers, we urge Growls readers to growl to members of the Arlington School Board about the cost of public education in Arlington County. Tell School Board members there is no need to pay Cadillac prices for a Chevrolet education. Just click-on the link below:

  • Call the School Board office at (703) 228-6015

And tell them ACTA sent you.

UPDATE (11.12.15): The Arlington Sun Gazette posted their story this morning on the high cost of the Arlington Public Schools. I'm including the following explanation from the article since one commenter, Starbucks Drinker, misses the point that WABE compiles the numbers so they provide apples-to-apples comparability:

"Each year, Fairfax County Public Schools staff compile an apples-to-apples comparison of spending among participating school systems in the region. Most years for the past decade, Arlington has led the ranking – something school officials and county leaders used to trumpet, before public discontent over total county spending caused them to be a little less vocal."

For the record, it's our understanding that staff from each school district are involved in compiling the WABE report.

November 02, 2015

A Thought on the Tooth Fairy and "Middle Class Taxes"

"There is no tooth fairy. Republicans and Democrats take note. Taxes will surely continue to play a big role in the presidential campaign. The Republicans contend that cutting rates will do the trick; the pickup in economic growth will generate additional tax revenues. Democrats retort that raising taxes on the rich will provide needed revenues to expand progressive government.

"Both parties are likely to be disappointed.

"That's significant, because these partisan beliefs — though dramatically different — have something in common. They obviate the need for middle-class tax increases to pay for government. This sounds self-serving and too good to be true, because it is — as studies by two Washington think tanks make clear."

~ Robert J. Samuelson

Source: His November 2, 2015 column, posted at Investory's Business Daily.

November 01, 2015

A Thought on Entrepreneurship

"Over the last decade, (Deidre) McCloskey has explored the roots of the Industrial Revolution and the 16-fold increase in per capita wealth it produced — a magnificent result she calls the “Great Fact.” The magnitude of these gains, she notes, cannot be explained solely by the causes generally advanced—trade, capital accumulation, natural resources.

"Rather, the Great Fact, she believes, was made possible by the greater social acceptance of the rising bourgeois commercial class, and how that acceptance was expressed in the changed language, rhetoric, and dialogue of the industrial era. Society shifted from a blanket condemnation of the entrepreneurial Scrooges of the world, as dramatic economic gains caused many to recognize the virtues of the entrepreneurs who produced those gains.

"In her latest book, Bourgeois Dignity, McCloskey further elaborates on this theme, arguing that the slowly growing esteem accorded to entrepreneurs liberated mankind’s creative spirit, by raising the social esteem of the dynamic entrepreneurial virtues of hope, courage, love, and faith, to stand alongside the traditional, less dynamic virtues of prudence, temperance, and justice."

~ Deidre McCloskey, Distinguished Professor of Economics, History, English, and Communication, University of Illinois at Chicago

Source: Article by Fred L. Smith, 8/6/13, posted at the Competitive Enterprise Institute, and originally published in Forbes.