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June 30, 2016

CAGW Recommendations Would Balance Budget in One-Year

The Washington Free Beacon's Ali Meyer wrote today, " If Congress were to cut unnecessary and ineffective spending in the federal government, it could balance the budget in one year by following the recommendations put forth by Citizens Against Government Waste, a non-partisan organization."

Meyer continues her reporting this way:

"The report, titled “Prime Cuts 2016,” outlines 618 recommendations to cut wasteful government spending that would not only balance the budget within one year but would save taxpayers $644.1 billion in the first year and $2.6 trillion over five years.

"The group finds wasteful spending in nearly every agency of the federal government including the Environmental Protection Agency, the Labor Department, the Treasury, Housing and Urban Development, the Justice Department, and the Department of Commerce.

"At the Department of Health and Human Services, if Congress were to reduce improper Medicare payments by 50 percent in five years, the department could save taxpayers $4.3 billion in just one year."

Her entire article is here.

The 56-page report, Prime Cuts 2016, from Citizens Against Government Waste's is available at CAGW's website here. A searchable 2016 Prime Cuts database is here.

The following infographic is a picture of waste in the federal government (a printable version is here):

Do you know what your members of Congress are doing to eliminate government waste? If not, take a few minutes, and write your representatives in Congress. Find out what they are doing to ensure a more effective, efficient, and economical federal government. Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you.

Not familiar with Citizens Against Government Waste? CAGW "is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government."

UPDATE (7/5/16): At Hot Air on Saturday, Matt Vespa has a nice summary of CAGW's Prime Cuts 2016 report. Here are his final two paragraphs:

"Of course, this is Washington—and it’s an election year. It’s not the time to look bipartisan or participate in anything that’s going to make the other party look good. Moreover, while there are certainly areas that we could reduce in the defense budget, the heightened level of awareness regarding our national security isn’t going beckon lawmakers to start talking about cutting DoD spending. No one wants to look soft on terror, even when the cuts are right and the political impact virtually nonexistent. These are politicians; they worry every time the masses have their shot to keep them or boot them.

"Nevertheless, this report does provide a good foundation of where the next president can look to reduce spending and save taxpayers’ money. Then again, if Clinton wins, you could definitely just light this outline on fire."

June 29, 2016

A Thought about Rights, Liberty and Western Values

"The vital achievement of the West was the concept of individual rights, which saw its birth with the Magna Carta in 1215. The idea emerged that individuals have certain inalienable rights. Individuals do not exist to serve government; governments exist to protect their rights.

"But it was not until the 19th century that ideas of liberty received broad recognition. In the West, it was mostly through the works of British philosophers, such as John Locke, David Hume, Adam Smith and John Stuart Mill.

"Personal liberty implies toleration of differences among people, whether those differences are racial, sexual, ideological or political. Liberty also implies a willingness to permit others who disagree with you to go their separate ways. This is not the vision of the new immigrants."

~ Walter E. Williams

Source: his 6/28-29/16 column, "Multiculturism -- A Failed Concept," posted at Investor's Business Daily."

June 28, 2016

A Thought about Politicians

"The fact that so many successful politicians are such shameless liars is not only a reflection on them, it is also a reflection on us. When the people want the impossible, only liars can satisfy them, and only in the short run. The current outbreaks of riots in Europe show what happens when the truth catches up with both the politicians and the people in the long run.

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

"There is, of course, the perennial fallacy that the government can simply raise taxes on "the rich" and use that additional revenue to pay for things that most people cannot afford. What is amazing is the implicit assumption that "the rich" are all such complete fools that they will do nothing to prevent their money from being taxed away. History shows otherwise.

"After the Constitution of the United States was amended to permit a federal income tax, in 1916, the number of people reporting taxable incomes of $300,000 a year or more fell from well over a thousand to fewer than three hundred by 1921.

"Were the rich all getting poorer? Not at all. They were investing huge sums of money in tax-exempt securities. The amount of money invested in tax-exempt securities was larger than the federal budget, and nearly half as large as the national debt.

"This was not unique to the United States or to that era. After the British government raised their income tax on the top income earners in 2010, they discovered that they collected less tax revenue than before. Other countries have had similar experiences. Apparently the rich are not all fools, after all."

~ Thomas Sowell

Source: his May 22, 2012 column, "Big Lies in Politics," posted at Townhall.com.

HT Mark J. Perry, Carpe Diem blog, American Enterprise Institute.

June 27, 2016

CAGW Announces Its June 2016 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.

Earlier this month, "Citizens Against Government Waste (CAGW) named Department of Homeland Security (DHS) Secretary Jeh Johnson its June Porker of the Month for failing to take sufficient steps to eliminate the “nightmarish” lines at Transportation Security Administration (TSA) airport checkpoints across the nation."

CAGW justified their selection this way:

"Since the beginning of 2016, airline passengers have been plagued with absurdly long lines at TSA security checkpoints.  American Airlines estimated that since February, long lines at Chicago’s O’Hare airport alone led to 4,000 passengers missing flights.  One of Secretary Johnson’s many feeble responses to this unprecedented and unnecessary problem was to tell passengers on May 13, 2016 to simply “contemplate increased wait times as you travel.”  He pledged to hire more TSA officers, while admitting that the additional staff would not improve the lengthy wait times during the summer travel season.  He assured air travelers that TSA would be asking airports for help with insignificant “nonsecurity” activities like moving bins that carry laptops, shoes, and other items through scanners even though airlines already spend millions to help move travelers through TSA’s inefficient process.

"Secretary Johnson and TSA officials not only blamed passengers for the delays; they also used the tired, old bureaucratic excuse that a lack of funding or resources is causing problems.  However, stubborn facts contradict these claims:  TSA’s fiscal year (FY) 2016 budget of $7.3 billion is one billion dollars and 16 percent higher than in FY 2007.  TSA’s full-time workforce rose by 4.3 percent over the last decade, even as air travel at major airports decreased.  To date, 22 airports have dropped TSA and switched to more cost-effective, flexible, and efficient private alternatives.  The massive lines of outraged passengers have caused airports in Atlanta, New York, and Seattle to announce they are strongly considering privatizing security as well.

"The true causes of these delays are the TSA’s bureaucratic ineptitude and its failure to reliably predict demand for TSA PreCheck, which allows passengers to bypass more intense security if they pay an $85 fee and provide a fingerprint and other background information.  TSA projected 25 million people would join this program, but to date less than three million have joined.

"For bringing America’s air travel to a screeching halt, failing to solve the problem, and using a bureaucratic cop-out, CAGW names Secretary Jeh Johnson its June Porker of the Month."

A video explaining CAGW's  selection of Secretary Johnson as its Porker of the Month is available at the press release here.

So take a few minutes to write your representatives in Congress. Find out what they are doing to ensure an effective, efficient, and economical Transportation Security Administration (TSA). Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you.

Not familiar with Citizens Against Government Waste? CAGW "is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government."

June 26, 2016

A Thought about Federalism

"The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite."

~ James Madison, Federalist No. 45

Source: The Patriot Post's Founder's Quote Database.

June 25, 2016

A Thought about the Constitution

"We the people are the rightful masters of both Congress and the courts, not to overthrow the Constitution but to overthrow the men who pervert the Constitution.”

~ Abraham Lincoln

Source: BrainyQuotes.

June 24, 2016

A Thought about Social Legislation

"I do not believe that the government should ask social legislation in the guise of taxation. If we are to adopt socialism, it should be presented to the people of this country as socialism and not under the guise of a law to collect revenue."

~ Calvin Coolidge, 30th President of the United States

Source: page 140, "As Certain as Death: Quotations about Taxes," 2010, compiled by Jeffrey Yablon, TaxAnalysts.com.

June 23, 2016

County Board Says Hunt is on for New County Auditor

Last Friday, we growled that the resignation of the recently appointed County Manager was a victory for Arlington County's government bureaucracy.

In an online article today, the Arlington Sun Gazette reports:

"Six months after hiring their first internal auditor, Arlington County Board members are on the hunt for a new one.

"Jessica Tucker, who moved into the position in January after a career with the Fairfax County government, will be relocating to California, where she has accepted employment with the Marin County government.

“In her short tenure, she’s already laid a firm foundation,” said County Board member John Vihstadt, who made the hiring of an auditor or inspector general one of the themes of his two successful political victories in 2014.

"Tucker was hired after County Board members received permission in 2015 from the General Assembly to employ an auditor that reported directly to them rather than through the general government chain of command. Previously, the County Board only had the authority to hire and fire the county manager, county attorney and their clerk.

As we wrote last Friday, Growls readers are urged to write to members of the Arlington County Board to voice their concerns about the County Auditor's resignation, proper staffing of the office, and assurance there is no bureaucratic meddling in its proper functioning. See our June 17 Growls for background details. Just click-on the link below:

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

And tell them ACTA sent you.

June 22, 2016

Social Security and Medicare "In Dangerous Fiscal Positions"

A week ago yesterday, we growled, based upon an Investor's Business Daily (IBD) editorial, and asked if Social Security reform was possible in the next four years. According to the lead editorial in the past weekend's IBD, the newspaper wrote, "No matter who wins in November, it’s a virtual guarantee that Social Security reform won’t happen over the next four years. And that only means that the changes needed will be far more painful."

It was no surprise, then, to read the analysis of the Committee for a Responsible Federal Budget when the Social Security and Medicare Trustees released their annual annual report today on the financial status of the two programs. They wrote:

"The projections show that both programs are in dangerous fiscal positions and prompt action is necessary to secure these programs."

In their analysis, the Committee focused "specifically" on Social Security, and identified five key findings:

  • Social Security is Heading Toward Insolvency.
  • Social Security’s Deficits are Large and Growing.
  • The Shortfall is the Same as Last Year, Despite a Short-Term SSDI Fix.
  • Failure to Act Will Lead to Large, Abrupt Benefit Cuts.
  • The Latest Projections Highlight the Need to Focus on Solvency First.

Writing about the march towards insolvency, the Committee points out, "When the Social Security trust funds are exhausted in 2034, beneficiaries will face an immediate across-the-board 21 percent benefit cut. The size of the cut will grow over time, to 26 percent by 2090." The following graph is from CRFB's analysis:

Growls readers can read the CRFB's entire analysis, which is supplemented with very helpful charts; it is available here. In their conclusion, they write:

"The Social Security Trustees once again show the need to reform Social Security to make it solvent for future generations. The combined Social Security trust fund will run out of money within 18 years – when today’s 49-year-olds are just reaching the normal retirement age. Failure to make any changes would result in a 21 percent across-the-board benefit cut, a cut that would grow over time.

"Fortunately, the Social Security’s finances can still be fixed without making drastic tax or benefit changes. If policymakers are willing to act soon, they can develop and pass a plan that strengthens the program’s finances while phasing in changes gradually to give workers time to prepare, improving benefits for vulnerable beneficiaries, and promoting long-term economic growth. However the cost of delay is substantial and would take away the opportunity to act more gradually and thoughtfully."

You can read the Trustees' "Summary of the 2016 Annual Reports," here.

The Concord Coalition also advocates for a fiscally responsible federal government, and also commented today on the Social Security and Madicare Trustees reports. In their press release today, the group said in part:

"Today’s reports from the trustees of Social Security and Medicare confirm once again that these critical programs are on unsustainable paths and will put increasing pressure on the rest of the federal budget in the years ahead, according to The Concord Coalition.

"Concord urges the American public, elected officials and candidates for federal office this year to carefully consider the warnings of the trustees, who each year emphasize the need to quickly start reforming these programs.

“The trustees do not issue these reports for their own amusement,” says Concord Executive Director Robert L. Bixby. “The annual reports are required by law with the expectation that responsible lawmakers will heed their warnings and take appropriate action.”

“For the past several decades,” Bixby added, “that has been a vain hope. Time is now running short. The longer we delay corrective actions, the more difficult they will become and the more onerous the burden will be for future generations.”

"Today’s reports again show that Social Security and Medicare Part A (Hospital Insurance) are paying out more than they take in from their designated payroll taxes.

"In addition, still more general federal revenues are required to support Medicare Part B, which provides various medical services, and Part D, which helps pay for medication. The premiums that older Americans pay for these parts of Medicare only cover a fourth of the costs."

Earlier today, Forbes columnist Tim Worstall concluded:

" . . . The first major US political fight I can remember observing was the Social Security reforms of the 80s. All sorts of plans were put forward and bandied about. And what happened then was the result of exactly what I’ve diagnosed here – promises that politicians didn’t raise the cash to meet. So, the solution was to raise the taxes paid by those still in work so as to meet the promises to the earlier generation.

"This is what will happen again. The working young will be forced to pay more taxes for the things that were promised to their elders. It might even be true that most would be happy to do so to keep Grandpop independent and out of their spare bedroom. But it will still be the culmination of what some have been stating for decades. Contribution rates simply haven’t been high enough to pay for the benefits promised. On the very simple grounds that this is how politicians get elected, by promising sweeties and only charging half price for them. And as long as such systems, just like public sector pensions, are run by politicians that will always be our problem."

Other news coverage of the Trustees annual reports included:

  • CNN * Money, which said, "If lawmakers don't act, Social Security's trust fund will be tapped out in about 18 years," was "one takeaway."
  • Wall Street Journal (beware paywall). The lede said, "Medicare and Social Security will begin to spend more than they earn by the end of this decade, new projections showed Wednesday, putting a spotlight on an issue that has seen scant discussion in an election year—the programs’ solvency challenges facing the next president."
  • Reuters chose to focus on the Medicare program, and began with the lede, "The U.S. federal program that pays elderly Americans' hospital bills will exhaust its reserves in 2028, two years sooner than last year's estimate, trustees of the program said on Wednesday, but spending growth remained within forecasts."

Unfortunately, a Bing search produced very few stories in the so-called mainstream media.

At the moment, some Democratic members in the House of Representatives are holding a sit-in over gun legislation while Democrats in the Senate held four votes earlier in the week, according to CNN*Politics. Guess such political displays are the modern day version of "Bread & Circuses" held in Rome 2,000 years ago. Apparently, it's easier to stage such political displays rather than find ways to solve the promises made by earlier members of Congress, as noted by Tim Worstall above.

So take a few minutes to write your representatives in Congress. Find out what they are doing to ensure that Social Security and Medicate are sustainable for the children and grandchildren of today's Americans. Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you.

June 21, 2016

Diagnosing an 'Economic Sickness'

As I growled on May 9, 2016, "Frequent Growls readers know that economic growth is a frequent topic discussed here." I then linked to four past Growls. I growled again on May 28 about the need for tax reform to kickstart GDP. While economic growth will not solve every one of America's economic problems such as the national debt, a higher level of GDP growth would certainly make it easier.

Consequently, the June 17, 2016 New York Times column by Gregory Mankiw, professor of economics at Harvard and chairman of President George W. Bush's council of economic advisers, caught your scribe's attention. His lede paragraph said, "Economists, like physicians, sometimes confront a patient with an obvious problem but no obvious diagnosis. That is precisely the situation we face right now."

He puts the the problem into perspective this way:

"There is no simple way to gauge an economy’s health. But if you had to choose just one statistic, it would be gross domestic product. Real G.D.P. measures the total income produced within an economy, adjusted for the overall level of prices.

"Here is the sad fact: Over the last decade, the growth rate of real G.D.P. per person has averaged just 0.44 percent per year, compared with the historical norm of 2.0 percent. At a rate of 2.0 percent, incomes double every 35 years. At a rate of 0.44 percent, it takes about 160 years to double.

"It may be tempting to blame the Great Recession of 2008-9 for the paltry 10-year growth rate. Indeed, this recession was a deep one.

"Yet the explanation for the poor long-run performance is not that simple. The recession of 1982 was also a deep one. The unemployment rate peaked at 10.8 percent in 1982, compared with a peak of 10 percent in 2009. But by the first quarter of 1989, as Ronald Reagan was leaving the White House, the 10-year growth rate was up to 2.1 percent.

"The difference: The 1982 recession was followed by a robust recovery, whereas the recession of 2008-9 has been followed by a meager one.

"So what’s wrong with the economy? No one knows for sure. But numerous theories are being bandied about."

He identified five such theories. I won't try to describe them, but here they are:

  • A statistical mirage
  • A handover from the (2008-2009) crisis
  • Secular stagnation
  • Slower innovation
  • Policy missteps

In conclusion, he writes, " So there they are. One sickness, five diagnoses. Unfortunately, I have no idea which one is right. The truth may well involve a bit of each."

On the last theory, Mankiw writes "there were reasons to doubt" the Keynesian intervention of the Obama administration, and points to "(a) 2002 study of United States fiscal policy by the economists Olivier Blanchard and Roberto Perotti found that “both increases in taxes and increases in government spending have a strong negative effect on private investment spending.” They noted that this finding is “difficult to reconcile with Keynesian theory.”  He links to this paper in The Quarterly Journal of Economics. He also points to a more recent study that suggests "tax cuts" over "spending increases."

Take a few minutes to write your representatives in Congress. Find out what they are doing for economic growth and jobs by promoting tax reform and reducing the regulatory burden. Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you.

June 20, 2016

A Thought about the 'Politics of Kindness'

"All conservatives are painfully aware that liberal activists and publicists have successfully weaponized compassion. “I am a liberal,” public radio host Garrison Keillor wrote in 2004, “and liberalism is the politics of kindness.” Last year President Obama said, “Kindness covers all of my political beliefs. When I think about what I’m fighting for, what gets me up every single day, that captures it just about as much as anything. Kindness; empathy—that sense that I have a stake in your success; that I’m going to make sure, just because [my daughters] are doing well, that’s not enough—I want your kids to do well also.” Empathetic kindness is “what binds us together, and . . . how we’ve always moved forward, based on the idea that we have a stake in each other’s success.”

"Well, if liberalism is the politics of kindness, it follows that its adversary, conservatism, is the politics of cruelty, greed, and callousness. Liberals have never been reluctant to connect those dots. In 1936 Franklin Roosevelt said, “Divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted in different scales. Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.” In 1984 the Democratic Speaker of the House of Representatives, “Tip” O’Neill, called President Reagan an “evil” man “who has no care and no concern for the working class of America and the future generations . . . . He’s cold. He’s mean. He’s got ice water for blood.” A 2013 Paul Krugman column accused conservatives of taking “positive glee in inflicting further suffering on the already miserable.” They were, he wrote, “infected by an almost pathological meanspiritedness . . . . If you’re an American, and you’re down on your luck, these people don’t want to help; they want to give you an extra kick.”

"Small-d democratic politics is Darwinian: Arguments and rhetoric that work—that impress voters and intimidate opponents—are used again and again. Those that prove ineffective are discarded. If conservatives had ever come up with a devastating, or even effective rebuttal to the accusation that they are heartless and mean-spirited: a) anyone could recite it by now; and, b) more importantly, liberals would have long ago stopped using rhetoric about liberal kindness versus conservative cruelty, for fear that the political risks of such language far outweighed any potential benefits. The fact that liberals are, if anything, increasingly disposed to frame the basic political choice before the nation in these terms suggests that conservatives have not presented an adequate response."

~ William Voegeli

Source: from an adaptation of his October 9, 2014 speech at Hillsdale College, posted at Hillsdales's Imprimis website.

June 19, 2016

A Thought about Governments Operating Prudently

"If the Nation is living within its income, its credit is good. If, in some crises, it lives beyond its income for a year or two, it can usually borrow temporarily at reasonable rates. But if, like a spendthrift, it throws discretion to the winds, and is willing to make no sacrifice at all in spending; if it extends its taxing to the limit of the people’s power to pay and continued to pile up deficits, then it is on the road to bankruptcy.”

    ~ Franklin D. Roosevelt

Source: page 47, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

June 18, 2016

Cost of Federal Tax Complaince in Billions -- Dollars & Hours

The Washington Free Beacon's Ali Meyer reported on Thursday, "Americans will spend more than 8.9 billion hours and $409 billion complying with the tax code in 2016, according to a report from the Tax Foundation." She adds:

“One often overlooked issue in tax reform is complexity,” the report states. “For decades, the tax code has become more and more detailed, with thousands of additional pages of statutes, regulations, and case law. This added complexity imposes a real cost on the U.S. economy.”

:The Internal Revenue Service (IRS) tax code in 1995 totaled 409,000 words and since then it has increased to a total of 2.4 million words.

"In addition to the tax code, there are 7.7 million words of tax regulations and there are 60,000 pages of tax-related case law, which accountants and tax lawyers use to decide how much their clients must pay."

The Tax Foundation's report, "The Compliance Cost of IRS Regulations (Fiscal Fact No. 512, June 2016) was written by president Scott Hodge. The report's four key findings are:

  • The growing complexity of the U.S. tax code has led to large compliance costs for households and businesses.
  • Using data from the Office of Information and Regulatory Affairs and the Bureau of Labor Statistics, it is possible to estimate the total cost of tax compliance on the U.S. economy.
  • Americans will spend more than 8.9 billion hours complying with IRS tax filing requirements in 2016.
  • All in all, tax compliance will cost the U.S. economy $409 billion this year.

Hodge concludes the report with the following conclusion:

"The time it takes to comply with the tax code imposes a real cost on the economy. Individuals and businesses need to devote resources to complying with the tax code instead of doing other productive activities. For example, a business owner who needs to file a complex tax return each year may hire an accountant or tax lawyer to do it. This tax professional may cost $70,000 a year or more. This is $70,000 that this business owner cannot devote to purchasing equipment or hiring workers. Economists refer to this as an opportunity cost, and it results in lost productivity.

"Put in dollar terms, the 8.9 billion hours needed to comply with the tax code computes to $409 billion each year in lost productivity, or greater than the gross product of 36 states (Table 1).

Paul Caron, editor of TaxProf Blog references the Tax Foundation study, too. At the moment, two reader comments are posted.

Take a few minutes to write your representatives in Congress. Find out what he or she is doing to ensure that tax reform simplifies the Internal Revenue Code -- preferably ending up with a flat tax or the FairTax (Note 1). Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you!

Note 1. The Center for Freedom and Prosperity provides several informative pieces about both the flat tax and the FairTax.

June 17, 2016

A Victory for Arlington County's Government Bureaucracy?

Along with the Revenues & Expenditures Committee of the Arlington County Civic Federation, the Arlington County Taxpayers Association (ACTA) has had a long history of supporting the need for a strong, watchdog, internal audit function for the billion dollar plus county government.

On August 4, 2014, we growled, "Arlington County taxpayers may finally be able to see a light at the end of the proverbial tunnel as the county press office confirmed on Friday the county government has hired the first auditor for what is hoped to be an independent and fully-staffed internal audit function." Later in the Growls, we wrote:

"ACTA has growled repeatedly about the need for Arlington County government and its government schools, i.e., Arlington Public Schools, to have an independent and fully-staffed internal audit function. This includes our May 7, 2013 and October 2, 2013 Growls, and more recently the April 5, 2014 and May 10, 2014 Growls. (embedded links available in the original)

"Kudos to Arlington County Board member John Vihstadt and the Arlington County Civic Federation's Revenues & Expenditures Committee for their continuing support of a strong internal audit function. And kudos to the Arlington Sun Gazette's Scott McCaffrey for the clarity in his reporting on this subject."

Then, on January 15, 2015, we growled, we asked if Arlington County was closer to having an internal auditor. In addition, we observed, "It is difficult to understand just how the Arlington County government, with more than a billion dollar annual budget and Triple-A bond ratings, manages to pass its annual financial audits without a vibrant and dynamic internal audit function."

Several months later, on July 14, 2015, we growled that the Arlington County Board was "moving forward . . . slowly" in selecting a County Auditor. A week later, we growled, saying "Scott McCaffrey of the Arlington Sun Gazette reports this morning on the squabbling that occurred at the Arlington County Board's recessed meeting yesterday." But, we were pleased to report when we growled on December 16, 2015:

"After several years, the Arlington County Board finally voted last night to hire a County Auditor, according to a report today by the Arlington Sun Gazette."

Consequently, we were sorry to learn this week that Arlington County's new auditor is leaving the job," as reported Wednesday afternoon by ARLnow.com. According to the online local news site:

"Arlington is searching for a new auditor, the county announced this afternoon.

Jessica Tucker, the county’s first independent auditor to report directly to the County Board, is resigning as of July 8 and taking a new job in California.

"Tucker’s tenure at the county started on Jan. 25, and seemed to be going well. She announced that she was seeking audit suggestions from residents last month."

The county's press release announcing Ms. Tucker's resignation is here.

Your humble scribe first learned about the County Auditor's resignation last night in reading Mark Kelly's weekly The Right Note column. Admittedly, discerning a victory for the county bureaucracy requires a bit of reading between the lines, but here's what Kelly wrote about the County Auditor's resignation:

"Unfortunately, the efforts of Garvey and Vihstadt on the new audit function of the county took a blow this week when County Auditor Jessica Tucker announced her resignation. Tucker came to Arlington from Fairfax County and she brought a background as a government auditor from the local to the federal level.

"As the County Board re-opens the search, they should also use the opportunity to re-examine the charge for the position.

"First, the Board should consider candidates with a private sector background. If we truly want to evaluate the efficiency and effectiveness of our government operations, maybe we should consider someone with experience outside of other government bodies. It doesn’t mean we have to run government exclusively like a business, but running it more like a business could be helpful.

"Second, the Board should provide the budget for at least one or two additional dedicated staff members who report directly to the Auditor, not the County Manager. If we are going to have an independent audit function, the office needs to be able to have the capacity to operate independently.

"Third, the Board should consider removing the County Manager and Director of the Department of Management and Finance from the Audit Committee. If this function is to be truly independent and report only to the Board, then why does the county staff have a direct say in what will be audited?

"Starting over with a new person is an unfortunate step backward. Hopefully the Board will use the opportunity to move toward more independence while working diligently to fill the position as quickly as possible."

With one exception, I fully concur with Mark Kelly's advice for the county. Kelly says "the Board should provide the budget for at least one or two additional dedicated staff members who report directly to the Auditor, not the County Manager." Without doing a complete risk analysis, I don't know the appropriate staffing level for the County Auditor. However, a "back of the napkin" analysis using comparably sized government entities across the Commonwealth suggests "one or two" is too few although it would be a good start. In addition, I would urge the Board to seek to consolidate the County's and School's audit functions.

Several residents of McHenry County, Illinois were so irate at rising property tax bills that they "paid thousands of dollars of real estate taxes with $1 bills at the county treasurer's office and vowed to do so again in September and every due date afterward until the taxes stop increasing," according to the June 15, 2016 Chicago Tribune. Perhaps it's time for Arlington County taxpayers to make a similar statement about the need for Arlington County government to have a properly staffed County Auditor function.

Growls readers are urged to write to members of the Arlington County Board to voice their concerns about the County Auditor's resignation, proper staffing of the office, and assurance there is no bureaucratic meddling in its proper functioning. Just click-on the link below:

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

And tell them ACTA sent you.

June 16, 2016

Poor Contracting Practices Costs Virginia Taxpayers Millions

The Richmond Times-Dispatch's Michael Martz reported on Monday, "A year after Virginia swallowed a more than $250 million loss on an ill-advised contract to build a toll expressway along U.S. 460, state lawmakers are confronted again with evidence that state agencies don’t do enough to minimize risks in contracting for billions of dollars in state services."

Martz then goes on to report on the details from the audit, released Monday, by the Virgina General Assembly's Joint Legislative Audit and Review Commission (JLARC) that looked at "whether the state’s policies ensure that contracts provide good value to the state and mitigate the risks to agencies and the public." He reports:

"A new study by the Joint Legislative Audit and Review Commission found that the state’s decentralized procurement system allows agencies to agree to high-risk contracts in many cases without including penalties, incentives, and performance measures to ensure the state gets its money’s worth from the deals, or a termination clause to get out of them.

"The 152-page report, based on a 15-month investigation that ended in March, also found that few agencies seek legal advice from the Office of the Attorney General, even for contracts that include provisions that are not standard state practice, and when they do, they rarely go beyond the legality of the contract to its protections against risks to the state.

"Managing the risks associated with contracts is essential to protecting the state from negative consequences when contracts do not perform as planned, but risk management is not sufficiently emphasized in Virginia,” the report states.

"Tracey Smith, project leader on the study, put it more bluntly in a presentation to the commission on Monday: “Risk management isn’t on the radar.”

"Legislators on the commission, particularly the lawyers, expressed shock that state agencies routinely enter into big, often risky contracts without legal advice from the Attorney General’s Office.

"Del. David B. Albo, R-Fairfax, chairman of the House Courts of Justice Committee, called it “ludicrous” that agencies would draft major contracts without lawyers."

The Staunton News Leader published an Associated Press story Monday, which began:

"Virginia’s $6 billion-a-year contracting system has serious flaws — including multi-million dollar contracts managed by untrained staff and contracts that are prepared without legal review, according to a new state report issued Monday.

"The General Assembly’s watchdog agency, the Joint Legislative Audit and Review Commission, said in a report that the state’s procurement system sometimes leads to the state overpaying for services or receiving poor quality goods and services.

"JLARC said some public funds have been wasted because some state contracts don’t have sufficient built-in legal protections. The report identified one unnamed agency that paid $25,000 for materials and work that were never used and another agency that paid $325,000 for 'faulty equipment.'"

Finally, at Bacon's Rebellion, arguably Virginia's premier policy blog, Jim Bacon wrote Tuesday:

"Bacon’s bottom line: State procurement laws reformed corrupt practices of an era in which politicians routinely gave contracts to their friends and supporters. The laws emphasized putting contracts out for competitive bids, procuring the lowest price and making the process transparent. The nature of business has changed over the decades, but with one important exception, the state procurement process has not kept pace. (emphasis in the original)

"Unless you’re procuring commodity products like office supplies or janitorial services, the lowest price is almost meaningless. The quality of work is often a critical but hard-to-define variable. Another is the allocation of risk — who pays when something goes wrong? Identifying and allocating risk is why we have lawyers. Sometimes the lawyers get carried away, picking at nits, but they perform a critical business function because things often do go wrong. Accidents occur. Disagreement arise. Unanticipated events throw everyone for a loop.

"Government employees are not trained to think about risk. Politicians aren’t inclined to worry about risks that might explode on someone else’s watch.But as contracts grow increasingly complex with the trends to outsourcing and public-private partnerships, the allocation of risk can be as important as the price.

"There is one outfit in state government that has been acquiring the competencies to engage in sophisticated risk management — the Office of Public-Private Partnerships (OP3), which oversees contracts for some of the state’s most complex transportation projects. As I recall, OP3 raised red flags relating to the infamous U.S. 460 project but its warnings were overruled for political reasons. The office has developed a network of contacts it can call upon to supplement the skills of its in-house staff. Virginia’s Secretary of Technology and the head of the Department of General Services should have comparable capabilities.

"Good management doesn’t excite the electorate like, say, banning guns or restricting bathroom options for transexuals. But billions of taxpayer dollars are at stake. And that makes it a sexy topic for me."

The Arlington County Board recently appointed their first County Auditor. More information here. It will be interesting to read her first report on Arlington County's procurement process.

Growls readers are urged to provide their comments to their state legislators. The following legislators represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Mark Levine). 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. To write to members of the Arlington County Board to voice concerns about the county's procurement process, click-on the link below:

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

And tell them ACTA sent you.

June 15, 2016

A Thought about the 'Money in Politics'

"According to a New York Post article (May 22, 2016), in just two years, Hillary Clinton -- former first lady, senator from New York and secretary of state -- collected over $21 million in speaking fees. These fees were paid by Goldman Sachs, Morgan Stanley, Deutsche Bank, Fidelity Investments, UBS, Bank of America and several hedge fund companies.

"In 2015, lobbyists spent $3.22 billion lobbying Congress. In 2013 and 2014, just 10 chemical companies and allied organizations spent more than $154 million lobbying the federal government. The Center for Responsive Politics in 2013 reported that The Dow Chemical Co. "posted record lobbying expenditures" in 2012, "spending nearly $12 million," and was "on pace to eclipse" that amount. Fourteen labor unions were among the top 25 political campaign contributors between 1989 and 2014.

"Many Americans lament the fact that so much money goes to Washington. Let's ask ourselves why corporations, labor unions and other groups spend billions upon billions of dollars on political campaigns, pay hundreds of thousands of dollars for a speech and wine and dine politicians and their staffs. Do you think that these are just civic-minded Americans who want to encourage elected officials to live up to their oath of office to uphold and defend the U.S. Constitution? Do you think that people who spend billions of dollars on politicians just love participating in the political process? If you believe that either one of those notions applies, you're probably a candidate for a straitjacket and padded cell."

~ Walter E. Williams

Source: his 6/15/16 column, posted  at Townhall.com.

Dr. Williams is professor of economics at George Mason University. Visit Dr. Williams' homepage.

June 14, 2016

Is Reform of Social Security Possible in the Next Four Years?

The lead editorial in the past weekend's Investor's Business Daily (IBD) said, "No matter who wins in November, it’s a virtual guarantee that Social Security reform won’t happen over the next four years. And that only means that the changes needed will be far more painful."

Here's why time is of the essence, according to the IBD editorial:

“As time goes on, it will be more difficult to secure the Social Security programs for current and future generations.” That is the message delivered by Social Security’s trustees in their annual report. Delaying reforms, they say, will likely mean “abrupt benefit cuts or tax increases.” The trustees, by the way, include three Obama Cabinet secretaries.

"Look at the data and you can see why they are so concerned.

"After decades of running annual surpluses, Social Security has been running in the red since 2010. This year’s losses are expected to total $66 billion. By the end of Clinton’s or Trump’s first term, Social Security’s annual deficits could be as high $182 billion, and could top 2% of GDP by as soon as 2031. (To put that in perspective, the total federal deficit averaged 1.1% of GDP from 1950 to 2008.)

"The “Trust Fund” currently covering these annual deficits will be completely exhausted by 2035, according to the trustees’ latest report. But it’s more likely to be sooner than that, since Social Security’s long-term forecasts are notoriously optimistic.

"After 2035, Social Security would have to cut benefits by 23% across the board, or massively raise payroll taxes, or some combination of the two. That’s why the trustees are insistent on reforms being made now, so they can be phased in over time."

The editorial then looks at the positions taken by the two major party candidates, and concludes, saying:

"There are only three viable fixes for Social Security: cut benefits, raise taxes or privatize the program. Pretending it can be “preserved” without doing any of those is like saying you can lose weight without diet or exercise."

A Summary of the 2015 Trustees Annual Reports can be found here with links to the full 2015 report. The U.S. Treasury provides a "fact sheet" of the Social Security and Medicare Trustees Report here.

In a paper, dated September 4, 2014, George Mason University's Mercatus Center senior research fellow Veronique de Rugy explains why "Social Security remains on an unsustainable path." One of the charts in her paper shows how the number of workers supporting one Social Security retiree has changed over the years, specifically:

  

A free enterprise view of the "difficult realities" facing Social Security was provided earlier this year in a paper for the Manhattan Institute of Public Policy's Economics21 project by Charles Blahous, who recently served as a public trustee for Social Security and Medicare. He is also a senior research fellow for the Mercatus Center and a research fellow for the Hoover Institution. He identified nine such "realities," including:

  1. Social Security faces a large and growing financing shortfall.
  2. The program's trustees have unanimously called for prompt financing reforms.
  3. Literally "not to touch Social Security" would mean allowing it to become insolvent, triggering sudden, deep benefit reductions.
  4. Because it's unlikely lawmakers would allow a literal "no action" scenario to suddenly slash benefit payments, the more probable consequence of a protracted "don't touch" policy would be the abandonment of Social Security's financing structure.
  5. The reason Social Security faces a shortfall is that scheduled benefits substantially exceed worker contributions.
  6. Social Security benefit costs are growing much faster than the economy's ability to keep pace, an unsustainable rate of increase requiring corrections.
  7. Under a "don't touch" scenario the program will make mounting demands upon federal taxpayers in upcoming years.
  8. Under current law younger generations will face significant net income losses through Social Security, even if they receive all scheduled benefits.
  9. Currently workers can claim Social Security benefits three years younger than in FDR's time, despite lifespans having lengthened considerably since then.

Take a few minutes to write your representatives in Congress. Find out what he or she is doing to ensure that Social Security remains fiscally sustainable for the children and grandchildren of today's Baby Boomers. Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you!

June 13, 2016

A Thought about Income Taxes and 'Free Stuff'

"For people who pay no income tax, general government is practically a free good. They embrace higher taxes and more government spend- ing, because someone else seems to be paying for it."

~ Stephen J. Entin

Source: page 92, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

June 12, 2016

A Thought about the Rule of Law

"We should never forget that everything Adolph Hitler did in Germany was 'legal' and everything the Hungarian freedom fighters did was 'illegal'"

~ Martin L. King, Jr.

Source: The Patriot Post, posted 6/10/16.

June 11, 2016

U.S. Treasury Grabs $14,164 Per Worker in First 8 Months, FY 2016

CNS News' Terry Jeffrey reported yesterday the U.S. Treasury collected a record $2.14 trillion in the first 8 months of FY 2016, or almost $14,164 per worker. However, the federal government still ran a deficit of $407 billion.

He described the bad news about the deficit this way:

"Despite collecting record revenues in the first eight months of fiscal 2016, the federal government still ran a deficit of $407,099,000,000 during the period--as federal government spent approximately $2,546,353,000,000 in those eight months.

"The record eight-month tax haul of $2,139,254,000,000 equaled approximately $14,164 for each of the 151,030,000 people in the country who, according to the Bureau of Labor Statistics had a full or part-time job in May."

He included the following chart in his report:

 

Additional reporting on the May 2016 U.S. Treasury monthly statement was provided by Ali Meyer of the Washington Free Beacon. She writes:

"One year ago, the government collected $2.12 trillion in inflation-adjusted revenues in the first eight months of fiscal year 2015. The Treasury Department has been tracking these data on its website since 1998. In that fiscal year, the federal government collected $1.65 trillion in inflation-adjusted revenue in the first eight months of that fiscal year. This means that since 1998, tax revenues have increased 30 percent.

"Although the federal government brought in a record of approximately $2.14 trillion in revenue in the first eight months of fiscal 2016, according to the Treasury, it also spent approximately $2.55 trillion, leaving a deficit of approximately $407 billion."

She includes a short video from the Washington Times on the same topic.

Here's the link to the 36-page U.S. Treasury's Monthly Statement for FY 2016 through May 31, 2016. It the chart above is too small, there's a larger version on page 1.

Take a few minutes to write your representatives in Congress. Find out what he or she is doing to first bring about an annual budget surplus and then to reducing the national debt. Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you!

June 10, 2016

A Thought about Politics

"I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing.”

~ Milton Friedman

HT Robert Zimmerman's blog, Behind the Black, post dated June 7, 2016.

June 09, 2016

ObamaPhone Fraud Could Approach $500 Million

"The federal subsidy known as the "Obamaphone" or "Obamanet" program could be losing nearly $500 million to fraud annually, according to a top Republican on the Federal Communications Commission," reports Rudy Takala of the Washington Examiner yesterday."

"The program was originally established to help low-income consumers in rural areas obtain access to 911 services. It was expanded to include cellular devices in more recent years, and expanded in March to include Internet service," writes Takala, and then reports the story this way:

"Commissioner Ajit Pai made the accusation Wednesday in letter to the Universal Service Administrative Company, referring to the FCC's Universal Service Fund, which provides a monthly $9.95 subsidy for telecom service to low-income consumers.

"The subsidy is limited to one per "independent economic household," or IEH, but telecom companies have the ability to override that restriction if applicants check a box stating they represent a separate household, even if they have the same address.

"The Universal Service Administrative Company is a nonprofit organization designated by the FCC to administer the fund.

"Pai wrote that data obtained by the FCC last month revealed carriers had enrolled nearly 4.3 million subscribers using the IEH override process between October 2014-April 2016, or 35.5 percent of total subscribers for the period. "It is alarming that over one-third of subscribers — costing taxpayers almost half a billion dollars a year — were registered through an IEH override.

"Just one year of service for these apparent duplicates costs taxpayers $476 million," added Pai, who now is asking the Universal Service Administrative Corporation for answers to several questions."

Further information about the "Lifeline" program, which was started in 1983, is available here. An alternative source of information about the Obama Phone, likely provided by a cell phone or Internet provider is available at ObamaPhone.com.

Meanwhile, at NewsMax, Sandy Fitzgerald reported on April 18, 2016:

"The five members of the Federal Communications Commission were told to stay quiet about an investigation into whether a California cell phone company had defrauded the federal Lifeline, or "Obamaphone" program, out of millions of dollars until the federal agency could announce its plans to expand the program, one of the commissioners said Monday.

"I think it's an outrage, not just as a commissioner but as a citizen for this program to be administered the way it has been, overlooking the fraud and expanding it even further," Commissioner Ajit Pai, a Republican member of the group, told Fox News' "Fox & Friends" program.

"I'm hoping that shining a light on their operations will encourage and the American people to take a closer look at this program," he continued. "There's a lot of fraud that's basically under wraps and that needs to come out into the open. This is only the tip of the iceberg, I expect."

Four days earlier, Fox News' Lachlan Markay reported the same story under the headline, "FCC kept 'Obamaphone' fraud under wraps until after it expanded program."

Take a few minutes to write your representative in Congress. Find out what he or she is doing to stop fraud and abuse in this federal program. Contact information is available at the Library of Congress' Thomas website (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

Ask for a written response. And tell them ACTA sent you!

June 08, 2016

"American Success Story" Costs Americans $176 Billion

In a story posted Monday at National Review Online, Robert Bryce wrote about the "enormous amounts of taxpayer cash to make wind energy seem affordable."

Bryce begins with the following lede:

"Last month, during its annual conference, the American Wind Energy Association issued a press release trumpeting the growth of wind-energy capacity. It quoted the association’s CEO, Tom Kiernan, who declared that the wind business is 'an American success story.'" (emphasis added)

He then proceeds to explain the success story is nothing more than "$176 billion of crony capitalism," explaining:

"There’s no doubt that wind-energy capacity has grown substantially in recent years. But that growth has been fueled not by consumer demand, but by billions of dollars’ worth of taxpayer money. According to data from Subsidy Tracker — a database maintained by Good Jobs First, a Washington, D.C.–based organization that promotes “corporate and government accountability in economic development and smart growth for working families” — the total value of the subsidies given to the biggest players in the U.S. wind industry is now $176 billion.

"That sum includes all local, state, and federal subsidies as well as federal loans and loan guarantees received by companies on the American Wind Energy Association’s board of directors since 2000. (Most of the federal grants have been awarded since 2007.) Of the $176 billion provided to the wind-energy sector, $2.9 billion came from local and state governments; $9.4 billion came from federal grants and tax credits; and $163.9 billion was provided in the form of federal loans or loan guarantees."

He notes, too, that General Electric is the biggest recipient of those subsidies, receiving over $160 billion of it. Wonder why the corporation is such a big believer in global warming? My guess is that it has a lot to do with the crony capitalism it receives. By comparison, the research grants handed out by the fossil fuel companies to the scientists who the believers of global warming describe as skeptics pale in magnitude.

In addition, he writes that $6.8 billion of that crony capitalism went to three foreign corporations. Those three companies have seats on the AWEA board of directors.

The crony capitalism gets much worse, though. According to Bryce:

"Keep in mind that the $176 billion figure in wind-energy subsidies is a minimum number. It counts only subsidies given to companies on AWEA’s board. Not counted are subsidies handed out to companies like Google, which got part of a $490 million federal cash grant for investing in an Oregon wind project. Nor does it include the $1.5 billion in subsidies given to SunEdison, the now-bankrupt company that used to have a seat on AWEA’s board. (To download the full list of subsidies garnered by AWEA’s board members, click here.)

"Nor does that figure include federal money given to J. P. Morgan and Bank of America, both of which have a seat on AWEA’s board. The two banks received federal loans or loan guarantees worth $1.29 trillion and $3.49 trillion, respectively. In an e-mail, Phil Mattera, the research director for Good Jobs First, told me that the loan and loan-guarantee figures for the banks include the federal bailout package known as the Troubled Asset Relief Program as well as “programs instituted by the Federal Reserve in the wake of the financial meltdown.” When all of the subsidies, loans, and loan guarantees given to the companies on AWEA’s board are counted, the grand total comes to a staggering $5.1 trillion."

The kicker, however, is what Warren Buffett has to say about the profitability of wind projects. According to Bryce:

"MidAmerican Energy Company, a subsidiary of Berkshire Hathaway, has a seat on AWEA’s board. Berkshire’s subsidy total: $1.5 billion — and it’s primed to collect lots more. In April, the company announced plans to spend $3.6 billion on wind projects in Iowa. Two years ago, Berkshire’s CEO, Warren Buffett, explained why his companies are in the wind business. “We get a tax credit if we build a lot of wind farms. That’s the only reason to build them,” he said. 'They don’t make sense without the tax credit.'" (emphasis added)

Robert Bryce is a senior fellow at the Manhattan Institute. Click here for his biography. His latest book is "Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong."

See the embedded links in the original.

Read Bryce's entire article here. Then take a few minutes to write your representative in Congress to tell her or him to stop wasting taxpayer money by voting for useless tax credits and other wasteful corporate handouts. Contact information is available at the Library of Congress' Thomas website (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

Be sure to ask for a written response. And tell them ACTA sent you!

June 07, 2016

A Thought about 'Fairness' in Taxation

"(I)deas of fairness in taxation are usually nebulous."

~ Roy Blough and Carl Shoup

Source: page 131, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

June 06, 2016

Swiss Say 'No' to a Guaranteed Income

USA Today's Helena Bachmann reported this morning that "(v)oters overwhelmingly rejected a referendum Sunday that would have made Switzerland the world's first country to guarantee a generous monthly income to all 8.1 million residents."

She went on to explain:

"Nearly 77% of the voters opposed the controversial measure that would mandate the government to pay $2,600 a month to each adult — regardless of work status or wealth — and $650 to each child. Only 23% favored the referendum.

"The results demonstrate that voters are satisfied with the way our economy functions and don't think it needs to be revolutionized," said Alain Berset, head of the Federal Department of Home Affairs.

"Member of Parliament Marcel Dobler echoed the government's statement: 'The majority of people are clearly not ready for such a radical experiment.'"

Ms. Bachmann also reported:

"Legislators urged voters to turn down the proposal, arguing that, if passed, it would weaken Switzerland’s prosperous economy and diminish its workforce.

"The government warned that the $200 billion a year needed to fund the plan would lead to tax hikes and cuts in public spending.

"A survey released Sunday by gfs.bern research institute showed the majority of voters rejected the proposal because they did not see it as financially feasible. They also cited concerns that unconditional income would attract more foreigners to Switzerland and diminish the incentive to work."

In addition, she notes, "The referendum was started by a group of artists, writers and other intellectuals. The Swiss system of direct democracy allows citizens to bring an issue to a nationwide vote if they collect 100,000 signatures on a petition."

The story is worth reading in its entirety at the USA Today website since the editors included a picture of a poster in Geneva that read, "What would you do if your income were taken care of?"

Besides the above USA  Today story, it was covered in the United States by the NY Times yesterday, which reported, "Swiss voters on Sunday overwhelmingly rejected a proposal to guarantee an income to Switzerland’s residents, whether or not they are employed, an idea that has also been raised in other countries amid an intensifying debate over wealth disparities and dwindling employment opportunities." CNN.com also reported the story yesterday, saying in their headline,"A proposal to dramatically change social welfare policy has been soundly rejected in Switzerland." The story was covered in the foreign press, but received very little coverage in America's MSM.

A very thoughtful explanation of the Swiss wisdom in defeating the "basic income" referendum is provided by Dan Mitchell at his website, "International Liberty, yesterday. He notes this wasn't the first "sensible" vote by the Swiss, according to Mitchell. They have also rejected an income tax proposal, a  minimum wage mandate, and single-payer healthcare. He comments:

"Voters were asked today to decide whether every adult should automatically receive more than $2,500 per month as part of a guaranteed basic income.

"Sounds like a nice free lunch, right? That offer might be very attractive in a place like France, but Swiss voters apparently understand that government can’t give all that money to people without first taking that amount of money from people. They rejected Bernie-nomics by an overwhelming margin."

Mitchell includes a 5-minute segment from a panel discussion on the "basic income" in which he explains its downside at a Swiss conference. He also links to the entire conference. In his concluding remarks, Mitchell writes:

"But that’s not a plausible scenario. In the real world, a guaranteed basic income might start small and the current welfare state might be curtailed as part of the original deal, but I would be very worried about subsequent reforms that would expand the size of the handout (much as the EITC has been expanded in America) and reinstate misguided redistribution programs.

"Perhaps this is why, in a column for the Financial Times, John Kay is not very sanguine about the numbers.

Bernie Sanders, a candidate for the Democratic presidential nomination, has expressed sympathy for basic income while stopping short of endorsement. Yanis Varoufakis, the former finance minister of Greece, is a proponent. …Yet simple arithmetic shows why these schemes cannot work. Decide what proportion of average income per head would be appropriate for basic income. Thirty per cent seems mean; perhaps 50 per cent is more reasonable? The figure you write down is the share of national income that would be absorbed by public expenditure on basic income. The Swiss government reckoned spending on social welfare would approximately double. To see the average tax rate implied, add the share of national income taken by other public sector activities — education, health, defence and transport. Either the basic income is impossibly low, or the expenditure on it is impossibly high.

"Exactly."

Kudos to the Swiss for understanding that the utopian dreams of the left are only that: dreams in their fevered brains. Let's hope that Americans will be equally wise if the issue should make it to the ballot in one of the states. Unfortunately, given the political pandering on issues such as the $15 minimum wage, it's questionable whether Americans will have the same wisdom as the Swiss.

If you're looking for the address to write to a member of Congress, visit the bottom of our June 4, 2016 Growls.

June 05, 2016

A Thought about Tax Simplification

"Would it not be better to simplify the system of taxation rather than to spread it over such a variety of subjects and pass through so many new hands."

~ Thomas Jefferson, Letter to James Madison, 1784

Source: Founders' Quote Database at The Patriot Post.

June 04, 2016

Priorities for the Next President?

A news story, posted Wednesday at CNS News, reports, "The economy, immigration, and healthcare (costs and reform) top the list of concerns for Americans as they prepare to elect a new president, a new Gallup Poll finds."

The article, written by Susan Jones, explains:

"Regardless of who wins the election, what single issue or challenge are you most interested in having the next president address when he or she takes office next January?" Gallup asked in telephone interviews conducted May 18-22, 2016, with a random sample of 1,530 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

"Nineteen percent said the economy; 14 percent said immigration; and 10 percent said healthcare/healthcare costs/healthcare reform.

"Rounding out the top ten top-of-mind priorities: Defense/national security (9 percent); education (8 percent); federal deficit/budget (7 percent); wages/decline of middle class (6 percent); jobs/unemployment (6 percent); terrorism (5 percent); and foreign policy (4 percent).

"At the very bottom of the list, only 2 percent of Americans mentioned taxes; poverty/homelessness; environment/pollution; gun control; uniting Americans; and moral issues/ethics/religion.

"Gallup said the responses to its May 18-22 "benchmark" survey were similar to those measured in January, 'showing  that the issues on which the public wants the next president to focus haven't changed after five additional months of intense campaigning and issue discussion in the string of debates held during that time.''

She also reported:

"Gallup's conclusion, based on the May poll: "The presidential candidates and, in turn, the next president of the United States, would be well-advised to keep a strong focus on the economy, which -- although not the dominant issue it has been in previous elections -- is clearly a common concern.

"Americans also want their next president to focus on several fundamental issues: immigration, defense and national security, healthcare and education."

The Gallup survey is linked from Ms. Jones' report, but can also be found here. These four priorities sound about right:

  • The economy (19%)
  • Immigration (14%)
  • Healthcare/Healthcare costs/Healthcare reform (10%)
  • Defense/National Defense/Homeland security (9%)

So take a few minutes to write your representative in Congress to tell her or him your priorities for putting America back to work. Contact information is available at the Library of Congress' Thomas website (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

Be sure to ask them for a written response. And tell them ACTA sent you!

June 03, 2016

A Thought about 'Inequality'

"In the real world, two individuals, living next door to each other, make different choices about education, careers, spouses, where to live, and if and how to invest. Even if they make exactly the same income, one might live below his or her means, prudently saving money, while the other might choose to regularly buy new cars and fancy clothes and go on expensive vacations. Is there any question that the first person will end up with a higher net worth than the latter? Is their "inequality" something that government should address?

"Although Beyoncé is a good singer, is there any question that there are others with superior voices? But Beyoncé is also blessed with "unequally" good looks, charisma and perhaps better management -- maybe better than the other two ladies in her musical trio, Destiny's Child, whom she once sang with. Three singers, in the same group, have had "unequal" outcomes.

"Communism, collectivism and socialism rest on the same premise -- that government possesses the kindness, aptitude, judgment and ability to take from some and give to others to achieve "equality." Karl Marx wrote, "From each according to his ability, to each according to his needs." And that's the problem. The statement implicitly acknowledges that some have more aptitude, drive, energy and ability than others. To take from some and give to others reduces the initiative of both the giver and the givee.

"This is the fundamental flaw with income redistribution, the very foundation of communism, socialism and collectivism. One would think that Bernie Sanders would have figured this out by now. But wisdom among 74-years-olds, like outcome, is not distributed equally."

~ Larry Elder

Source: his 6/2/16 Investor's Business Day column, "The Insanity of Government Fighting 'Inequality.'"

Larry Elder is  an author and talk-show host. The bio of the "Sage from South Central" is here.

June 02, 2016

Earned Income Tax Credit (EITC): A $16 Billion 'Black Hole'

According to Michelle Malkin, yesterday at Townhall.com, "President Obama and GOP House Speaker Paul Ryan want to expand it. Tax preparation companies and illegal immigrants are cashing in on it. Fraudsters have found bottomless ways to exploit it." Why, it's the earned income tax credit. She explains:

"The earned income tax credit, a bipartisan-supported "anti-poverty" benefit, is robbing honest, law-abiding Americans blind. Originally intended to help low- to moderate-income working individuals and couples with children, the refundable tax credit has ballooned into a massive welfare entitlement for politically correct constituents who pay no income taxes -- yet are still eligible for payouts." (emphasis added)

Since the beginning of 2015, we've growled about government waste and the earned-income tax credit (EITC) on March 8, 2015, June 6, 2015, October 9, 2015, and, October 17, 2015.

Malkin goes on to describe the $16 billion EITC black hole:

"The earned income tax credit, a bipartisan-supported "anti-poverty" benefit, is robbing honest, law-abiding Americans blind. Originally intended to help low- to moderate-income working individuals and couples with children, the refundable tax credit has ballooned into a massive welfare entitlement for politically correct constituents who pay no income taxes -- yet are still eligible for payouts.

"According to a new report from the Treasury Department's Inspector General for Tax Administration, a whopping 23.8 percent of EITC payments, worth an estimated $15.6 billion, were issued improperly in fiscal year 2015 alone. The Office of Management and Budget singled out the $69 billion federal cash transfer program as "high risk". (It's the only IRS program that carries the designation).

"Shady accountants help clients falsify income in order to claim the credits, then charge exorbitant fees for the "service." Self-employed filers also inflate their income with little chance of getting caught. Everyone's red flags are flapping, but the hole just keeps getting bigger. The Internal Revenue Service can identify "erroneous" claims, but it doesn't currently have any authority to do anything to rectify them.

"Instead of stopping the rip-offs, the Obama administration has fueled an entire industry of illegal immigration vultures gaming the already fraud-plagued system.

She concludes by saying:

"A hand up for the working poor has morphed into a cash cow for grifters from around the world. Economists add that the well-intentioned program has paved a path to reduced work incentives, lower wages and distorted family decisions (married couples are penalized).

"When the enormous costs of such tax code social engineering outweigh the benefits in an era of unfettered open borders, it's time to pull the plug."

If readers wonder why we devote so much time to so-called improper payments and government waste, let me say that if members of Congress don't have the wisdom and courage to close down the EITC and improper payments honey pot, they will never have the backbone to take up the really big issues of so-called entitlements and the national debt.

So, take a few minutes to read Ms. Malkin's entire article, and then write your member of of Congress to tell them the harm they are doing to American's fiscal sustainability. Contact information is available at the Library of Congress' Thomas website (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

Be sure to ask them for a written response. And tell them ACTA sent you!

June 01, 2016

Arlington's Legislative Delegation: Near the Bottom, Again.

On June 4, 2013, we growled after the Arlington Sun Gazette noted that Arlington's General Assembly delegation veered leftward on an American Conservative Union legislative scorecard.

In an online story today, the Arlington Sun Gazette's Scott McCaffrey writes, "Shocker! Arlington legislative delegation scores low in gun-rights ranking." He further explains, writing:

"Five of Arlington’s seven-member legislative delegation scored in single digits based on their votes on legislation rated by the Virginia Citizens Defense League, a pro-gun-rights group, and the two other lawmakers also were well down in a rating that split clearly along partisan lines.

"Based on a host of bills rated by the organization, the highest approval rating given to any legislator representing Arlington went to state Sen. Adam Ebbin (D-30th), at 21 percent, followed by state Sen. Barbara Favola (D-31st), at 17 percent.

"All other legislators were in single-digit territory: 9 percent for state Sen. Janet Howell (D-32nd), 8 percent for Del. Rip Sullivan (D-48th), 7 percent for Del. Alfonso Lopez (D-49th), 4 percent for Del. Patrick Hope (D-47th) and 2 percent for Del. Mark Levine (D-45th).

"In releasing statewide figures, the Virginia Citizens Defense League noted that it had been an unusual legislative session in Richmond, with many anti-gun-rights Democrats siding with pro-gun activists in ratifying a deal between legislative Republicans and Gov. McAuliffe on reciprocity related to out-of-state concealed-carry permits. As a result, not a single legislator in either house scored zero in the ranking based on votes in the 2016 session, which ran from January to March.

"But the overall results show a dramatic divergence based on political party: The lowest Republican score in the House (75 percent) was 21 points higher than that highest Democratic ranking in the same body, and in the state Senate, the lowest-scoring Republican was rated 16 points higher than the highest-scoring Democrat."

You can find the VCDL legislative rankings here. The 2016 bills that VCDL scored are here.

Readers of Growls are encouraged to contact their Delegate and Senator in the General Assembly to express their position on gun-rights issues. The following legislators represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Mark Levine). 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!