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August 31, 2016

Arlington's ART Buses Buck Trend of Decling Ridership

 The Arlington Sun Gazette reported this morning that except for the Arlington County ART bus system and Loudoun County Transit, "Transit ridership across Northern Virginia was down 6.1 percent in the fiscal year ending in June compared to a year before, according to new data, with nearly every regional bus and train system seeing declines."

The Sun Gazette continued, writing:

"A total of 148.5 million trips were taken  on the Metro system and seven other regional transit systems during the year ending June 30, down from 158.1 million a year before, according to figures to be presented Sept. 1 to the Northern Virginia Transportation Commission.

"More than two of every three transit trips taken in the region during the year (102.7 million) was on Metro’s rail system, which posted a ridership decline of 6.7 percent. Declines occurred at all stations in Virginia except the Greensboro, McLean and Tysons Corner stations on the Silver Line.

"Metrobus ridership totaled 20.1 million during the fiscal year, down 4.6 percent."

But the Sun Gazette also noted:

"Among local transit systems, only two – Arlington Transit (up 13.8 percent to 3.2 million rides) and Loudoun County Transit (up 0.9 percent to 1.8 million) saw year-over-year increases.

"Other bus and rail systems posted declines: Fairfax Connector (down 8 percent to 9 million rides), Prince William OmniRide and OmniLink (down 8.7 percent to 2.8 million), Virginia Railway Express (down 3.4 percent to 4.4 million), Alexandria’s DASH system (down 2.6 percent to 4.2 million) and Fairfax City’s CUE (down 12 percent to 679,000)."

Never fear, though, taxpayers of Northern Virginia, the Northern Virginia Transportation Commission (NVTC) is looking for answers. According to this news item posted Monday, August 29, 2016, NVTC says:

"Bus ridership is down in the United States but a definitive explanation is hard to come by, according to a panel convened by the Washington Metropolitan Area Transit Authority (WMATA) in July. Slate.com reports that bus trips have fallen nationwide from 5.86 billion in 2002, a peak year, to 5.11 billion last year, and dropped almost 3 percent from 2014 to 2015.

"During the same period, all NoVa bus systems experienced declines except DASH and Loudoun County Transit. When combined, trips on NoVa’s seven bus systems dropped about 3 percent from 2014 to 2015, in keeping with the national trend.

"Sixty percent of WMATA bus and rail customers cited these reasons for riding less:

  • lack of service reliability
  • lack of sense of safety
  • value of service for price paid
  • less traffic congestion

"Panelists cited other possible factors:

  • shifting demographics
  • changing land use patterns
  • availability of alternative modes
  • increased teleworking
  • fare increases

"NVTC will continue to work with WMATA and NoVa bus systems to explore the reasons underpinning the drop in ridership and find solutions that can be implemented at the local and regional levels." (emphasis added)

Unfortunately, the Sun Gazette story is not clear that ridership is being compared through EOFY 2016. Even worse, the NVTC website only contains ridership data through the end of FY 2015. We have asked NVTC to clarify, and will update this post as indicated.

And while ridership is useful information, it needs to be reported along with the cost of providing those rides, but the cost data is not available.

August 30, 2016

More Waste of Your Tax Dollars. This Time at the Pentagon.

In a story posted this afternoon, the Washington Free Beacon's Morgan Chalfant writes, " The Pentagon reimbursed employees for personal transactions made on government-issued charge cards, the agency’s inspector general found."

Chalfant continued, writing:

"Managers at the Department of Defense failed to prevent nearly two dozen employees from receiving $8,544 in reimbursements for personal uses of their government-issued travel cards, including ATM fees incurred at casinos, the Pentagon inspector general said in a Tuesday report.

"The inspector general first reported in May 2015 that officials had improperly used government travel cards at casinos and strip clubs, spending more than $1 million over the course of a year ending in June 2014. The latest audit, which was requested by the Senate Armed Services Committee, aimed to determine if Pentagon employees who used their cards for personal use were reimbursed for the charges and whether appropriate disciplinary action had been taken against them.

"Pentagon officials did not take appropriate action when they were notified of employees misusing their travel cards by the inspector general in the first probe, according to the new report. Pentagon managers did not adequately review employees flagged for possible card misuse and, in some cases, did not review them at all.

"Officials also did not review employees’ transaction histories to determine if they had misused their cards in the past. A Navy civilian employee in one case had used his or her card to charge nearly $30,000 at casinos and other locations in addition to nearly $2,500 in improper charges discovered by the inspector general in 2014. The transactions had not been flagged because managers did not examine the employee’s card history for misuse.

"Additionally, Pentagon officials failed to take steps to eliminate misuse of travel cards, including monitoring expenses of employees who had been cited for card misuse or restricting their travel credit."

Read Morgan Chalfant's entire article here.

The Department of Defense Inspector General's report, "DoD Officials did not Take Appropriate Action When Notified of Potential Travel Card Misuse at Casinos and Adult Entertainment Establishments" (DODIG-2016-127) is worth a read since some of the employee malfeasance is literally unbelievable.

Tired of taxpayers money being abused at "adult entertainment establishments?" Take a couple of minutes  and write one of your Congressional representative to tell them your thoughts about the abuse of government travel cards. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 29, 2016

Watching How the Sausage is Made

Washington Examiner columnist Tim Carney has a "must read" column, dated August 26, 2016, for taxpayers who are not familiar with how Washington works, or, affectionately, how the sausage is made.

Here's how Carney begins the column, titled, "In a federal mandate for waste, envelope lobby reveals Washington:"

"Five years ago, a new quirky-sounding consumer-rights group set up shop in a sleepy corner of Capitol Hill. "Consumers for Paper Options is a group of individuals and organizations who believe paper-based communications are critically important for millions of Americans," the group explained in a press release, "especially those who are not yet part of the online community."

"This week, Consumers for Paper Options scored a big win, according to the Wall Street Journal. Securities and Exchange Commission chairman Mary Jo White has abandoned her plan to loosen rules about the need to mail paper documents to investors in mutual funds.

"Mutual funds were lobbying for more freedom when it came to mailing prospectuses — those exhaustive, bulky, trash-can-bound explanations of the contents of your fund. In short, the funds wanted to be free to make electronic delivery the default, while allowing investors to insist on paper delivery. This is an obvious common-sense reform which would save whole forests of trees.

"Consumers for Paper Options fought back. The group warned that changing the default from paper to electronic delivery would "Confuse potentially millions of investors who suddenly stop seeing important printed fund performance material from investment firms."

"Ask Congress to stop the SEC from impeding access to paper-based investment materials," the group's website blared.

"Consumers for Paper Options seems to have won for now, the SEC's reported pullback suggests.

"If you're not familiar with how Washington works, you might be baffled that such a group exists. But if you understand how the sausage is made, you've probably guessed what Consumers for Paper Options really is: a front group for the companies and unions that profit from the federally required mailing of unread and unwanted materials. They defend tree-killers." (emphasis added; embedded links in the original)

Carney then goes on to say that Consumers for Paper Options (CFPO) "is based out of 8 E Street Southeast on Capitol Hill, and its executive director is John Runyan . . . the address of Runyan Public Affairs, a lobbying shop. Of note among Runyan's three clients are timber giant Rayonier, Inc., and the Envelope Manufacturers Association."

He then gets to the heart of the issue, writing:

"This is almost laughable: A D.C. lobbyist forming a sham "consumer" protection to fight for federal rules requiring more paper and envelopes be wasted, while getting paid by the envelope lobby.

"But the envelope CEOs and the paper lobbyists aren't the only ones who care about keeping this junkmail flowing. Those paper mills that exist in the U.S. are deeply threatened by digitization. Among the shrinking list of things that go on paper these days are things the government forces people to put on paper. Allow mutual funds to mail fewer prospectuses, and those paper mills will lose a significant amount of work.

"The employees at these mills will see their hours reduced, if they're not simply laid off. The added costs of mailing me unwanted paper nibbles away the value of my retirement account, but is a tiny uptick in my 401(k) really worth laying off paper mill worker in East Millinocket, Maine?

"This argument is emotionally compelling, and it may even be convincing until you remember the essence of it: that the government should require waste — literal waste, gratuitous destruction of assets — in order to preserve the jobs of the people who create an unwanted product.

"Here's the thing about the federal rule requiring the mailing of the prospectus: It's absurd and wasteful, and it differs only in degree from most subsidies whose defenders use the same "save the jobs" rhetoric."

Carney closes by thanking CFPO "for revealing so clearly the true nature of Washington."

You can visit CFPO's website here. Of special interest are the several news stories posted under the Newsroom icon. In addition, there is the op-ed in The Hill, the newspaper "for and about" mostly Congress. It  was written by  two of CFPO partners.

Tim Carney is Senior Political Columnist for the Washington Examiner and a visiting fellow at the American Enterprise Institute. He is also the author of "The Big Ripoff: How Big Business and Big Government Steal Your Money" (Wiley, 2006) and "Obamanomics" (Regnery, 2009). A collection of Carney's columns can be found here.

Not happy with how "the sausage is made?" If so, take a couple of minutes and read Carney's entire column, and then take write one of your Congressional representative to tell them your thoughts about lobbying. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 28, 2016

Is Anyone Paying Attention to the Deficit and National Debt?

An editorial posted last week by Investor's Business Daily pointed out that federal deficits were exploding, and asked, "Is anyone paying attention?"

Here's the basis for the financial newspaper's question:

"The Congressional Budget Office says the federal deficit will be 33% higher than last year's. Over the long term, the deficit picture is just as bleak. But on campaign trail, this looming threat gets zero attention from either Hillary Clinton or Donald Trump.

"The CBO's updated budget projections show that federal government's fiscal outlook has worsened considerably over the past year.

"Red ink in fiscal year 2016, which ends on Sept. 30, will hit $590 billion. That's much worse than the CBO had expected just a few months ago. It's also a big jump from last year's deficit, which was an already outrageously high $439 billion. Revenues climbed 1% this year, but spending jumped 5%.

"What's more, the CBO projects that in 10 years the annual deficit is on track to more than double, topping $1.3 trillion by 2026. That's equal to 4.9% of the nation's economy, a scale that has been reached only seven times since World War II (and four of those years were under President Obama).

"Compared with last year's forecast, all these numbers are all worse. The CBO now says that from 2015 to 2025, deficits will total $8.4 trillion. Last year, it projected deficits over these same years would total $7.4 trillion.

"The CBO now expects the national debt to equal 84% of GDP by 2025. Last year, it said the debt-to-GDP ratio would be 77% by 2025.

"And this depends on interest rates remaining low. As the CBO notes, "federal spending on interest payments would increase substantially as a result of increases in interest rates."

"What's driving this dire picture? One word: Entitlements.

"As the CBO notes, in 2016 alone, spending for Social Security, Medicare, Medicaid, ObamaCare and other federal welfare programs climbed 6%.

"Over the next decade, spending on these programs will jump almost 70%. Federal spending on health care programs will rocket up 81% over those years, topping $2 trillion in 2026 and accounting for about a third of all federal spending. (So much for President Obama's promise that ObamaCare would fix the nation's deficit problem.)

"As the CBO has long explained, the massive debt the nation is on track to accumulate poses risks to the economy, productivity, wages, the nation's capital stock and increases the likelihood of a fiscal crisis.

"So what are Clinton and Trump proposing in the face of this increasingly dire outlook? They both want to add more debt."

The IBD editorial concludes by observing, "But if Trump and Hillary have their way, the country will face another, far worse problem: runaway entitlements and growth-choking national debt."

As we have frequently growled -- most recently August 10, 2016 and August 23, 2016 -- the main stream media appears uninterested in delving deeply into the long-term economic problems facing the nation.

So, take a couple of minutes to read the entire editorial, and then write to one of your Congressional representative to tell them your thoughts about deficits and the national debt. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 27, 2016

Compare Worldwide Corporate Income Tax Rates

The Tax Foundation's map feature this week shows "how the U.S. corporate tax rate compares to the rest of the world."

The post at the Tax Foundation's Tax Policy blog is by Anton Aurenius. He describes the map this way:

"Most countries tax some form of corporate income. However, the rates differ around the world, ranging from 0% in Bermuda to 55% in United Arab Emirates. The rest of the world, of course, falls somewhere in between. The GDP-weighted worldwide average is just under 30 percent. With most countries falling under the average, the United States faces strong competition for business investment.

"The map shows statutory tax rates for corporate income around the world. These rates include the federal, state, and local taxes where there are multiple levels of government. For example, the United States has the highest corporate income tax rate set at 35 percent at the federal level, but the average tax on corporate income at the state and local levels amounts to an additional 4 percent, which brings the total tax rate to 39 percent.

"The majority of countries fall below the GDP-weighted worldwide average rate of around 30 percent. Most European countries fall below the worldwide average. Only France and Germany are above the average. Argentina, Brazil, France, India, Venezuela, the United States, and several African countries have corporate tax rates notably greater than the worldwide average."

And here is the map that Aurenius describes:

 

Finally, read the details at the Tax Foundation's study of 2016 Corporate Tax Rates Around the World (Fiscal Fact 525).

If you don't have the Tax Foundation bookmarked, you may want to do so for its wealth of tax-related information.

August 26, 2016

Peanuts, Politicians, and 'the Train Wreck of Farm Subsidies'

In today's Commentary section of The Washington Times, James Bovard says, The peanut program is trypical of the train wreck of farm subsidies." The lede paragraph to his comments about "politicians and peanut pilfering" says:

"The history of federal peanut policy is the perfect antidote to anyone who still believes that Congress could competently manage a lemonade stand. Federal spending for peanut subsidies will rise eight-fold between last year and next year — reaching almost a billion dollars and approaching the total value of the peanut harvest. This debacle is only the latest pratfall in a long history of horrendous federal mismanagement."

Bovard is "a libertarian author and lecturer whose political commentary targets examples of waste, failures, corruption, cronyism and abuses of power in government," according to Wikipedia.

Here is how he begins his explanation of why peanut subsidies are "the train wreck of farm subsidies:"

"The peanut program long combined the worst traits of feudalism and central economic planning. In 1949, to curtail subsidy outlays, Congress made it a federal crime to grow peanuts for fellow Americans without a federal license. The feds closed off the peanut industry, distributing licenses to existing farmers and prohibiting anyone else from entering the business.

"The federal government maintained draconian controls to prevent any unlicensed peanuts from entering Americans’ stomachs. The Washington Post noted in 1993, “USDA employees study aerial photographs to help identify farmers who are planting more than their allotted amount of peanuts. Violators are heavily fined. USDA also issues each farmer a card imbedded with a computer chip that lists his quota. The farmer must present that card before he can sell his peanuts at a buying point.”

"The peanut program was created to help save family farms. But the number of peanut farmers plunged by more than 75 percent after the licensing scheme began. The program also sharply decreased productivity since the licenses were long locked into the same area (peanuts are a soil depleting crop). Many farmers sold their licenses to investors. The program sharply inflated the cost of production because most farmers had to rent the license to raise their crop. The General Accounting Office estimated in 1993 that the program cost consumers more than half a billion dollars a year in higher prices.

"Strict controls on farmers were complimented by draconian import restrictions. Americans were long permitted to annually buy only 1.7 million pounds of foreign peanuts — roughly two foreign peanuts per year for each American citizen. That quota ended thanks to a 1990s-era trade agreement. Unfortunately, the Clinton administration placated U.S. peanut growers by slapping a 155 percent tariff on peanut butter imports — a sneak attack on the mainstay of freelance writers’ diets. The peanut program guaranteed American farmers prices that are roughly double world market levels, thereby forcing every person who bought a bag of Jumbo goobers to pay tribute to Congress’s favorites.

"Congress ended the peanut licensing scheme in 2002 with a $4 billion buyout that provided a windfall to license-holders. The largest “peanut buyout” payment went to the John Hancock Insurance Company, which collected $2 million. There was no more justification for “bailing out” peanut license holders than there was for compensating slaveowners after Lincoln’s Emancipation Proclamation but the payouts bred generosity that redounded on congressional candidates." (emphasis added)

Bovard isn't done explaining about this "train wreck of farm subsidies," however. Read the rest here.

Now the government, apparently, does not want to sully its image by providing subsidies to peanut farmer. Rather,  according to Wikipedia, there is a "peanut price support program," which Wikipedia described as follows:

"The 2002 farm bill (P.L. 107-171, Sec. 1301-1310) replaced the longtime (65-year) support program for peanuts with a framework identical in structure to the program for the so-called covered commodities (wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans, and other oilseeds). The three components of the Peanut Price Support Program are fixed direct payments (at $36/ton), counter-cyclical payments (based on a target price of $495/ton), and marketing assistance loans or loan deficiency payments (LDPs) (based on a loan rate of $355/ton). The peanut poundage quota and the two-tiered pricing features of the old program were repealed. Only historic peanut producers are eligible for the Direct and Counter-cyclical Program (DCP). All current production is eligible for marketing assistance loans and LDPs. Previous owners of peanut quota were compensated through a buy-out program at a rate of 55¢/lb. ($1,100/ton) over a 5-year period."(see original for links to source materials)

In a November 2015 op-ed at CNS News, Dan Mitchell writes that "Department of Agriculture's Soviet-style nonsense is a welfare scam," explaining:

"But the more I read about the bizarre handouts and subsidies showered on big agribusiness producers by the Department of Agriculture, the more I think there’s a very compelling argument that (the Department of Agriculture) should be at top of my list (of federal departments to close).

"Indeed, these giveaways are so disgusting and corrupt that not only should the department be abolished, but the headquarters should be razed and then the ground should be covered by a foot of salt to make sure nothing ever springs back to life.

"That’s a bit of hyperbole, I realize, but you’ll hopefully feel the same way after today. That’s because we’re going to look at a few examples of the bad results caused by government intervention.

"To get an idea of the Soviet-style nonsense of American agricultural programs, a Reuters report on the peanut programs reveals how subsidies and intervention are bad news for taxpayers and consumers. Here’s the big picture:

“A mountain of peanuts is piling up in the U.S. south, threatening to hand American taxpayers a near $2-billion bailout bill over the next three years, and leaving the government with a big chunk of the crop on its books. … experts say it is the unintended consequence of recent changes in farm policies that create incentives for farmers to keep adding to excess supply.”

"And here’s a description of the perverse and contradictory interventions that have been created in Washington.

“First, the U.S. Department of Agriculture (USDA) is paying farmers most of the difference between the “reference price” of $535 per ton (26.75 cents per lb) and market prices, now below $400 per ton. A Nov. 18 report to Congress estimates such payments this year for peanuts exceed those for corn and soybeans by more than $100 per acre. Secondly, government loan guarantees mean once prices fall below levels used to value their crops as collateral, farmers have an incentive to default on the loans and hand over the peanuts to the USDA rather than sell them to make the payments.”

"Gee, what a nice scam. Uncle Sam tells these farmers welfare recipients that they can take out loans and then not pay back the money if peanut prices aren’t at some arbitrary level decided by the commissars politicians and bureaucrats in Washington.

"In other words, assuming the peanut lobbyists have cleverly worked the system (and unfortunately they have), it’s a license to steal money from the general population by over-producing peanuts. And we’re talking a lot of peanuts.

“Through forfeitures, the USDA amassed 145,000 tons of peanuts from last year’s crop, its largest stockpile in at least nine years, according to data compiled by Reuters. … That stockpile is enough to satisfy the average annual consumption of over 20 million Americans – more than the population of Florida – and puts the administration in a bind. … As peanut carryover inventories are forecast to hit a record of 1.4 million tons by end-July 2016 and as loans begin to come due next summer, farmers are expected to fork over more peanuts to the USDA.”

"Moreover, because the perverse interaction of the various handouts, there’s no solution (other than … gasp! … allowing a free market to operate).

"Storing the peanuts in shellers’ and growers’ warehouses comes at a cost. Selling them could depress the market further and in turn would add to the price subsidy bill.”

And, in a January 2014 op-ed at CNS News, Adam Andrzejewski comments:

"The historic purpose of the farm bill was to "ensure a stable food supply" and "to preserve the family farm." But, when issuing our The Federal Transfer ReportTM- Farm Subsidies & The Big Dogs, OpenTheBooks.com found that some of the largest subsidies were received by government in fiscal years 2008-2011. Federal farm subsidies have grown to such an extent that Uncle Sam's smaller cousins -- who aren't traditional farmers, but smaller units of government -- are receiving millions."

He then cites examples of $8.5 million going to the Montana Department of Natural Resources and $3.7 million going to the Washington Department of Natural Resources. Even the "Grissom Municipal Airport, in Bedford, IN of Lawrence County, has received over $15,000 in subsidy in just three years."

Finally, let's look at two reports from Congress' General Accountability Office (GAO). First, from the 41-page report, "Considerations in Reducing Federal Premium Subsidies," (GAO-14-700. published August 8, 2014), we learn:

"The cost of the federal crop insurance program and farm sector income and wealth grew significantly from 2003 through 2012. The cost of crop insurance averaged $3.4 billion a year from fiscal years 2003 through 2007, but it increased to $8.4 billion a year for fiscal years 2008 through 2012. According to the U.S. Department of Agriculture's (USDA) Risk Management Agency (RMA), the agency that administers the crop insurance program, subsidies for crop insurance premiums accounted for $42.1 billion─or about 72 percent─of the $58.7 billion total program costs from 2003 through 2012. Revenue policies, the most frequently purchased crop insurance option, accounted for $30.9 billion of the total premium subsidy costs for 2003 through 2012. Crop insurance premium subsidy rates—the percentage of premiums paid by the government—are set by Congress and would require congressional action to be changed. For most policies, the rates range from 38 to 80 percent, depending on the policy type, coverage level chosen, and geographic diversity of crops insured. As premium subsidy costs increased, farm sector income and wealth indicators also increased. For example, for each year from 2003 through 2012, median farm household income exceeded median U.S. household income. Specifically, on average, median farm household income was $7,205, or 13.8 percent, greater each year than U.S. household income, in constant 2012 dollars. Farm sector income also grew from $73.8 billion in 2003 to $113.8 billion in 2012, in constant 2012 dollars. Farm real estate values, another measure of farm prosperity, increased by 72 percent from 2003 through 2012, in constant 2012 dollars, and farmers relied less on borrowed funds to finance their holdings.

"Reducing premium subsidies for revenue policies could potentially result in hundreds of millions of dollars in annual budgetary savings with limited costs to individual farmers . . . ."

In a second report -- 75 pages, this time -- on USDA farm programs in 2014, "Farmers Have Been Eligible for Multiple Programs and Further Efforts Could Help Prevent Duplicative Payments (GAO-14-428, published July 8, 2014), GAO found:

"From fiscal years 2008 through 2012, the U.S. Department of Agriculture (USDA) reported spending about $114 billion on 60 programs providing financial assistance to farmers, including about $28 billion in crop insurance subsidies. Those programs existed during the effective period of the Food, Conservation, and Energy Act of 2008 (2008 farm bill). Most were administered by the Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), and Risk Management Agency (RMA). The 2014 farm bill eliminated some programs covered by this report, including FSA's Direct Payments Program, and added or expanded other programs. Under the 2008 farm bill, farmers were eligible for multiple programs depending on the commodities they produce and other factors. Some of these programs were overlapping, meaning they have similar goals, engage in similar activities or strategies, or target similar beneficiaries. However, based on a review of the programs, GAO did not find sufficient evidence to conclude that these programs were duplicative, meaning that they engaged in the same activities or provided the same services to the same beneficiaries.

"Annually, USDA surveys individual farm costs and returns, including government payments. The survey among other things is aimed at estimating the farm sector's financial condition. The survey allows linking payments to farm characteristics, but it does not account for all payments in a given fiscal year. Based on these survey data, except crop insurance subsidies, most of the estimated 2.2 million farms reported receiving no program payments from 2008 through 2011, and about 37 percent (800,000) received a payment from at least one farm program. Farms receiving payments reported receiving $11,293 on average (median payment of $3,719) annually from various programs. Payments were higher if a farm received assistance from multiple farm programs—less than 1 percent of farms received payments of $57,899 on average (median payment of $27,412) annually from multiple programs. Larger farms or farms producing cash grains such as corn were more likely to receive payments from multiple programs than small farms or farms producing other crops. Larger farms also received more crop insurance premium subsidies than other farms.

"The three largest USDA programs that pay for crop losses are FSA's Noninsured Crop Disaster Assistance Program (NAP), FSA's Supplemental Revenue Assistance Payments (SURE) Program, and RMA's Federal Crop Insurance Program. SURE and NAP assist farmers with losses due to natural disasters. Crop insurance, the largest program covering losses, makes payments based on revenue and production losses. These programs have controls to help prevent duplicative payments; however, GAO asked FSA to conduct data matching to compare payment data for RMA's Adjusted Gross Revenue crop insurance policy and FSA's NAP from 2010 through 2012, and that effort, with RMA analyses, identified 13 duplicative payments that may amount to about $188,000. It is possible there were other duplicative payments made by NAP and other crop insurance policies, but USDA has not taken steps to compare or monitor these payments. Without monitoring by engaging in activities such as data matching, agencies will find it difficult to identify such payments. In addition, a 2013 FSA decision to allow farmers in six states to have coverage for forage under both NAP and a pilot RMA crop insurance policy could result in duplicative payments in the 2014 crop year. FSA officials said they estimated potential duplicative payments to be less than $10 million resulting from this decision. RMA and FSA officials told GAO that they had not developed a plan to prevent or recover duplicative payments that may result from FSA's decision."

For background information about the U.S. Department of Agriculture (USDA), which says USDA "will spend $154 billion in 2016, or $1,230 for every U.S. household," visit the Cato Institute's Downsizing the Federal Government project. Note, too, the three charts depicting how USDA spends taxpayer money.

Americans should be ashamed of the train wreck of farm subsidies designed by the Congress, not to mention the members of Congress who put it together.

So, take some time, and write to one of your Congressional representative to tell them your thoughts about the need for an agricultural bureaucracy such as the U.S. Department of Agriculture (USDA). Contact information is available at the Library of Congress' Congress.gov website. 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.

August 25, 2016

Good News and Bad News for Virginia's Finances

First, the bad news. The Richmond Times-Dispatch's Michael Martz reported today that "Gov. Terry McAuliffe will announce a shortfall of roughly $1.5 billion in the two-year state budget to the General Assembly money committees on Friday, according to a source familiar with the revised revenue forecast." The Washington Post story is available here. Martz explains:

"The governor will reduce anticipated revenues by about $850 million in the current fiscal year in response to a shortfall of almost $270 million in the year that ended June 30 and increasing pessimism about growth in income and sales tax collections. He will reduce projected revenues in the second year by about $630 million.
The revised forecast, required under state law because last year’s shortfall exceeded 1 percent of major state revenues, substantially reduces projected growth rates for both withholding and non-withholding income taxes, as well as sales tax revenues, the source said.

"The size of the projected shortfall comes almost two weeks after McAuliffe consulted with state political and business leaders in a meeting that one legislator called “cautiously pessimistic” about Virginia’s economy, especially with the possibility of potential cuts in federal spending under budget sequestration in the budget’s second year.

"In the last fiscal year, total state general fund revenues grew about 1.7 percent, lagging well behind the forecast of 3.2 percent growth."

The Washington Post story by Laura Vozzella and Greg Schneider notes, "The (budget) shortfall would be among the biggest in state history. The worst was in 2010, when the General Assembly had to confront a $4.5 billion hole."

The good news comes from George Mason University's Mercatus Center, which recently released its 2016 edition of "Ranking the States by Fiscal Condition." Separate files are available for the entire report, map, research summary, and dataset. The state fiscal rankings were prepared by Eileen Norcross, a senior research fellow and director for the State and Local Policy Project at the Mercatus Center, and Olivia Gonzalez, a research assistant for the State and Local Policy Project.

We growled about the 2015 edition here, noting that "Virginia ranks #21 in Norcross' ranking of state fiscal conditions, just ahead of Colorado, Washington and Kansas, and just behind New Hampshire and Texas. Virginia ranked from 5th to 30th in the various categories used to compile the overall #21 ranking. These include:

  • Cash solvency -- 30th
  • Budget solvency -- 29th
  • Long-run solvency -- 27th
  • Service-level solvency -- 5th
  • Trust fund solvency -- 15th"

But in 2016 ranking, Virginia improved by two places relative to the other states, moving up to #19. Before writing about Virginia, however, here's the background on the fiscal rankings:

"A new study for the Mercatus Center at George Mason University ranks each US state’s financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pen­sions and healthcare benefits. This 2016 edition updates the version the Mercatus Center pub­lished in 2015. Using the approach pioneered in 2015, the 2016 edition presents information from each state’s audited financial report in an easily accessible format, this time including Puerto Rico to provide a benchmark of poor fiscal performance.

"Growing long-term obligations for pensions and healthcare benefits continue to strain the finances of state governments, highlighting the fact that state policymakers must be vigilant to consider both the short-term and the long-term consequences of their decisions. Understanding how each state is performing in regard to a variety of fiscal indicators can help policymakers as they consider the consequences of policy decisions.

"The study also highlights some of the limits of the financial data reported by state governments. States release these data years after they are most relevant, and because the information is highly aggregated, analysts and the public have difficulty discerning the true fiscal position of any state."

Now to Virginia. The state's overall ranking increased two positions to #19. Here is Virginia's narrative summary:

"On the basis of its fiscal solvency in five separate categories, Virginia ranks 19th among the US states and Puerto Rico for its fiscal health. On a cash basis, Virginia has between 1.63 and 2.40 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 3 percent, for a surplus of $151 per capita. Virginia’s net asset ratio of −0.005 indicates that the state has no assets remaining after meeting its debts. Total liabilities are 30 percent of total assets. Total debt is $6.86 billion. Unfunded pension liabilities are $87.66 billion, and other postemployment benefits (OPEB) are $5.19 billion. These three liabilities are equal to 24 percent of total state personal income."

And here are the five component categories:

  • Cash solvency -- 28th (up 2 from 2015)
  • Budget solvency -- 28th (up 1 from 2015)
  • Long-run solvency -- 26th (up 1 from 2015)
  • Service-level solvency -- 5th (same as 2015)
  • Trust fund solvency -- 14th (up 1 from 2015)

Kudos once again to the researchers for preparing and publishing their 2016 edition of the Ranking the States by Fiscal Condition.

Unfortunately, the Rankings do not explain what actions Virginia's governing management took to achieve improving its ranking from #21 to #19, but the improvement is worth nothing, however. Growls readers are urged to tell their members of the Virginia General Assembly to continue making sure that Virginia keeps improving its ranking. 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.

August 24, 2016

A Thought about America's Future

"For the U.S. to continue to triumph in spite of self-righteously suicidal and willfully blind policies in all manner of areas would be unique in the human experience —though the timing and duration of such a decline is hard to predict.

"History shows that coddling and appeasing our enemies will likely lead them to attack us. Our unsustainable debts will at some point come due. Commerce may very well come to a standstill if the state so wills it.

"We may be enjoying the residue of a past that has provided us with capital of all kinds that today is being largely consumed rather than grown, save for a technology sector that has been swiftly lawyering and lobbying up.

"And too, we may be enjoying material wealth at a time of declining spiritual health.

"What is amazing about humans for all of our folly is that save for the most apocalyptic of collapses, life will go on. Out of the ashes, a phoenix can rise. The choice, as always, is ours."

~ Benjamin Weingarten

Source: his August 23, 2016 colum, "Doom, Gloom, or Boom? Will the American Experiment Survive 2016??" posted at Conservative Review.

August 23, 2016

Massive Accounting Failure at HUD

Kathryn Watson of the Daily Caller News Foundation reported yesterday that "Department of Housing and Urban Development (HUD) officials have ignored 63 financial management recommendations from Congress’ investigative arm since 2012 and only half-heartedly followed many more, resulting in the $43 billion agency’s books to be all but useless." In addition, she wrote:

"Things have gotten so bad at HUD so rapidly, that auditors who found only one “material weakness” in the department’s accounting in 2012 found nine in 2015, according to a Government Accountability Office (GAO) report published Monday."

According to Auditing Standard No. 5, "A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis." In other words, says Investopedia, if unresolved, "a material misstatement could eventually occur in a company's financial statements, which would have a tangible effect on a company's valuation. For example, a $100 million overstatement in revenue would be a material misstatement for a company generating sales of $500 million annually." Government Finance Officers Association guidance is similar, and provided here.

Ms. Watson continued her reporting of what GAO found in their audit at HUD:

"The Department of Housing and Urban Development (HUD) has struggled to resolve persistent management challenges, in part because it has not consistently incorporated requirements and key practices identified by GAO to help ensure effective management into its operations,” GAO said. “In addition, HUD’s past remedial actions were not always effective because they were not sustained.”

“Turnover among senior leadership, shifting priorities, and resource constraints have contributed to HUD’s difficulties in implementing needed changes,” the report continued. “As a result, GAO and others continue to find deficiencies in numerous aspects of HUD’s operations.”

"The report — drawing from 15 years of GAO and HUD Office of Inspector General (IG) audits — particularly faulted HUD officials for failing to fix seven of eight financial accountability recommendations, and neglecting to dedicate staff members or policies to preventing waste, fraud and abuse.

"GAO’s concern for HUD’s financial state surrounded poor audits. Auditors found more “material weaknesses” with each passing year; the number jumped from one in fiscal year 2012 to nine in fiscal year 2015. HUD’s books, which auditors gave a “clean” opinion for 13 consecutive years until 2013, were in such bad shape in 2014 and 2015 that auditors couldn’t issue an opinion on them.

"GAO also criticized HUD for neglecting its oversight duties. The department “has not formalized key practices for program oversight and evaluation,” or “formally designated entities to manage fraud risk,” GAO said. HUD’s complicated structure, consisting of thousands of local housing authorities and contractors and dozens of programs, makes it ripe for waste and fraud, GAO said."

The U.S. General Accountability Office (GAO) in question is "Department of Housing and Urban Development: Actions Needed to Incorporate Key Practices into Management Functions and Program Oversight" (GAO 16-497). It was published July 20, 2016, and publicly released August 19. The full report is 148 pages, but a two-page summary is available.

The summary includes the following infographic that shows the extent to which HUD met requirements or was following key practices for management functions.

 

In all my years of reading GAO audit reports, I cannot recall reading of a more massive accounting failure in the government sector. In the private sector, its equivalent could be the Enron Corporation scandal, which also resulted in the "de facto dissolution of Arthur Andersen." At the time, Arthur Andersen was one of the five largest audit and accounting partnerships in the world, according to Wikipedia.

For background information about the Department of Housing and Urban Development, see the HUD write-up at the Cato Institute's DownsizingGovernment.org project.

Add in the "Pentagon Money Pit," which we growled about on August 20, 2016, not to mention others, including the IRS scandal -- currently at day number 1202 according to the Tax Prof Blog, and you have to wonder if anyone in the federal government has a clue.

To paraphrase Dave Lindorff at CounterPunch.org. it's incredible that virtually no mainstream reporter or editor in the United States has seen fit to report this story to the American public. So kudos to Katie Watson for reporting on the GAO audit of HUD.

So, take a few minutes, and write to one of your Congressional representative to tell them your thoughts about the need for appropriate financial accountability and control as well as information security. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 22, 2016

It Costs How Much to Protect Us from Climate Change?

In a story at CNS News today, Terry Jeffrey writes that a new climate change regulation will increase the cost of a tractor-trailer over $15,000.

Here is part of Jeffrey's report:

"The Environmental Protection Agency and the National Highway Traffic Safety Administration jointly issued a new regulation last week that is meant to help protect the world from "climate change" by limiting “greenhouse gas emissions” and improving fuel efficiency in medium- and heavy-duty vehicles operated in the United States.

"The 1,690-page regulation is approximately 700,000 words long.

"A “regulatory impact analysis” published by EPA and NHTSA estimates the regulation will add an average of as much as $13,749 to the cost of a tractor truck and $1,370 to a trailer, making some tractor-trailer combinations $15,119 more expensive in 2027 than they would be under current regulations.

"While admitting that the regulation will increase the cost of trucks and the other vehicles it effects, the administration argues that the owners of these vehicles will actually save money by using less fuel and that the regulation “will result in up to $230 billion in net benefits to society.”

"These “net benefits to society” include what the administration calls “health benefits” and “energy security benefits.”

"The new regulations cover a range of vehicles running from heavy-duty pickup trucks and passenger vans, through “vocational vehicles” (such as garbage trucks, emergency vehicles and school buses), to large cargo trucks such as tractor-trailers.

"In a co-authored blog published on the White House website, EPA Administrator Gina McCarthy and Transportation Secretary Anthony Foxx said the regulation is part of President Obama’s 'Climate Action Plan.'"

You can read the complete article here.

Last month, we growled that "a new energy efficiency regulation issued by the U.S. Department of Energy to regulate wine refrigerators will 'cost small businesses $12,500 each.'"

We've growled repeatedly about the need to reduce both the tax burden and the regulatory burden shouldered by Americans in order to get the economy growing. For example, on May 24, 2016, we growled that individuals and business were drowning in ever more red tape, citing the Heritage Foundation's latest report on the regulatory state. See also the May 9, 2016 Growls about economic growth. And on December 15, 2015, we growled that the Obama administration would set a new record in 2015 for adding regulations, citing a Washington Times article by Stephen Dinan and a study by the Competitive Enterprise Institute. Talk about the costs that will be passed on to consumers? They were a trickle when the regulatory state began, but they are drowning individuals and businesses in a tsunami.

As we suggested in several recent Growls -- June 16, 2014; August 16, 2014; and September 20, 2014 -- but use the search facility (scroll down in the right-hand column) for others, we remain skeptical of the science, and, consequently, view the climate change regulations as little more than a scheme to redistribute wealth.

So, take a few minutes, and write one of your Congressional representative to tell them your thoughts on the latest climate change regulations. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 21, 2016

Is Virginia Prepared for the Next Recession?

In a new study published earlier this year by George Mason University's Mercatus Center, Erick M. Elder, professor of economics at the University of Arkansas at Little Rock, looks at how prepared the 50 states are to weather the next recession. The study's key finding is:

"To understand how prepared a state is to handle revenue shortfalls during a recession, policymakers need to answer two key questions: What target level of savings would be an appropriate buffer for revenue declines, and what proportion of possible recessions could the state weather with its current level of savings?"

Professor Elder provides this background:

"When recessions strike, state governments must often contend with revenue shortfalls resulting from declines in overall economic activity. Because many states have balanced budget requirements, falling revenues often mean states must raise taxes, cut spending, or do both. Most states have rainy day funds to smooth state spending across business cycles and reduce the need for tax hikes or budget cuts during recessions. Even with historically high rainy day fund balances before the Great Recession, many states did not have enough saved to avoid cutting spending or increasing taxes in 2009 and 2010. The rapid exhaustion of rainy day funds during the Great Recession raises the question of how well states have prepared for the next recession.

"A new study for the Mercatus Center at George Mason University examines the current condition of state rainy day funds from across the United States. By comparing the balances of individual states’ rainy day funds as a percentage of their annual revenue with various levels of potential revenue shortfalls based on recession severity, the study finds that the vast majority of states have not saved enough to weather the average decline in revenue associated with the full range of potential recessions.

"Credit rating agencies and professional organizations for state policymakers have suggested that states should aim to save enough to cover between 5 percent and 16.7 percent of their annual spending or revenue, but this one-size-fits-all solution ignores variances in business cycle duration and severity among the states. This study accounts for differences among the states by using state-level public finance data and economic indicators to create potential distributions of savings goals for each state."

The following map is color-coded to show how each state is prepared to weather the next recession:

 

On my last eye exam, my ophthalmologist made no mention of color blindness; consequently, that puts Virginia in the unprepared category. Or as the study's author says, "Virginia could weather a mild recession, but not an average or severe recession."

A more complete description of how prepared Virginia is to weather a recession is here, and includes:

"Based on its business cycle characteristics, Virginia would need $1.15 billion to make it through a recession of average severity if the state decided to rely on its combined rainy day fund and general fund balances rather than cutting spending or raising tax rates. To weather a severe recession (at the 90th percentile of all possible economic contractions), Virginia would need funds that make up 17 percent of its revenue, or $3.08 billion. Using its current rainy day fund and general fund balances, the state is not prepared for the revenue shortfalls that would occur during a recession of average severity."

The author provides the following chart comparing Virginia's available cash and amounts needed to weather a hypothetical recession:

Incidentally, we look forward to completion of the analysis of Arlington County's financial reserves, which the Arlington County Board directed the County Manager to complete by October 1, 2016. It's item #22 on the Board's guidance and notes that accompanied the adopted FY 2017 budget, and we growled about it on May 7, 2016, specifically:

"Reserves: The County Manager will provide, no later than October 1, 2016, an analysis of the County’s various reserves and funding levels, including criteria for utilization of certain reserves, which will inform a possible update of the County’s financial and debt management policies."

Growls readers are urged to tell their members of the Virginia General Assembly to make sure that Virginia is prepared for the next recession. Ask them for the answers to the two key questions raised by the study's author in the key finding. 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.

August 20, 2016

Are Army Accountants Epic Failures?

The American' Thinker's Rick Moran blogged today that "Army accountants make trillions of dollars in illegal  entries," citing a Defense Department inspector general (IG) report and a Reuters story.

Here's the lede, according to Moran:

"Our army may be a superior war-fighting force, but when it comes to keeping track of where the taxpayer's money is going, they are epic failures.

"A report by the inspector general of the Defense Department reveals that accountants made trillions of dollars in illegal entries – sometimes just pulling numbers out of thin air – in order to show the books balancing."

Here are  few of the details, according to Scot Paltrow of Reuters yesterday:

"The United States Army’s finances are so jumbled it had to make trillions of dollars of improper accounting adjustments to create an illusion that its books are balanced.

"The Defense Department’s Inspector General, in a June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year. Yet the Army lacked receipts and invoices to support those numbers or simply made them up.

"As a result, the Army’s financial statements for 2015 were “materially misstated,” the report concluded. The “forced” adjustments rendered the statements useless because “DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions.”

"Disclosure of the Army’s manipulation of numbers is the latest example of the severe accounting problems plaguing the Defense Department for decades.

"The report affirms a 2013 Reuters series revealing how the Defense Department falsified accounting on a large scale as it scrambled to close its books. As a result, there has been no way to know how the Defense Department – far and away the biggest chunk of Congress’ annual budget – spends the public’s money.

"The new report focused on the Army’s General Fund, the bigger of its two main accounts, with assets of $282.6 billion in 2015. The Army lost or didn’t keep required data, and much of the data it had was inaccurate, the IG said.

"Where is the money going? Nobody knows,” said Franklin Spinney, a retired military analyst for the Pentagon and critic of Defense Department planning.

"The significance of the accounting problem goes beyond mere concern for balancing books, Spinney said. Both presidential candidates have called for increasing defense spending amid current global tension.

"An accurate accounting could reveal deeper problems in how the Defense Department spends its money. Its 2016 budget is $573 billion, more than half of the annual budget appropriated by Congress."

If you're wondering how you can have trillions of dollars in accounting adjustments when the entire Department of Defense's FY 2016 budget is $573 billion, Reuters provides this explanation:

"At first glance adjustments totaling trillions may seem impossible. The amounts dwarf the Defense Department’s entire budget. Making changes to one account also require making changes to multiple levels of sub-accounts, however. That created a domino effect where, essentially, falsifications kept falling down the line. In many instances this daisy-chain was repeated multiple times for the same accounting item."

Moran concludes his American Thinker blog post, writing:

"Congress has ordered an audit for next year, at which time we're likely to receive a shock regarding how much taxpayer money is wasted.  With so much accounting tomfoolery, it's likely that waste and even fraud total tens of billions of dollars.

"It's painful to contemplate where that money might be spent."

Seems like the Defense Finance and Accounting Services (DFAS) is little more than a government jobs program for accountants.

A summary of the Defense IG report in question seems to be the one entitled, Army General Fund Adjustments Not Adequately Documented or Supported (Project No. D2015-D000FL-0243.000), and includes a link to the complete report.

Take a few minutes to read Rick Moran's entire blog post. Better, read the Reuters story and/or the Defense IG audit report, and then take a few more minutes to write one of your Congressional representative to tell them your thoughts on the Army's accountant's slipshod accounting. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 19, 2016

No Surprise, Arlington's General Assembly Delegation Trails

Yesterday, we growled about a ranking by the libertarian Cato Institute about the degree of freedom among the 50 states. Today, we turn our attention to a ranking by the pro-business group, Virginia FREE.

Not surprisingly, the headline of this morning's online Arlington Sun Gazette story reads, "Arlington legislators in back of the pack on new business ranking."

Here's the introduction of the Sun Gazette story:

"Members of the Arlington delegation to the General Assembly scored near the bottom in the annual ranking put out by a pro-business group.

"Like many other organizations, Virginia FREE annually ranks members of the state Senate and House of Delegates on specific pieces of legislation during the past session.

“Unless we get government right, we can’t get our economy right,” said Pia Trigiani, who chairs the group’s board of directors. “We must constantly measure, manage and provide our representatives with the business knowledge to help grow our economy with pro-business legislative initiatives.”

"The ranking tends to favor the GOP; the highest-scoring Democrat in each house was lower on the rungs than the lowest-scoring Republican. But not one legislator, Republican or Democrat, scored lower than 50 on the 0-to-100 scale."

Here are the rankings of Arlington's General Assembly delegation. The Sun Gazette points out that in the Senate, "state Sen. Janet Howell (D-32nd) ranked 24th with a score of 71.2. State Sen. Barbara Favola (D-31st) ranked 31st at 66.6, while state Sen. Adam Ebbin (D-30th) was 39th and last at 58.9. (The organization did not include the 40th state senator, Newport News Democrat John Miller, who died in April.) . . . In the House of Delegates, Del. Rip Sullivan (D-48th) ranked 77th of 100 at 66.5, with Del. Mark Levine (D-45th) 95th at 58.1, Del. Alfonso Lopez (D-49th) 96th at 57.1 and Del. Patrick Hope (D-47th) 98th at 56.0."

If you're wondering about the accuracy of the Virginia FREE rankings, consider the headline of an article yesterday at Blue Virginia, which admits it views "Virginia politics from a progressive and Democratic perspective." In a story headlined, "Taking the Reverse of the New “Virginia FREE” Rankings is Far More Accurate," the opening two paragraphs read:

"I’m sure you’re all as excited as I am to know that rankings by pro-business group “Virginia FREE” for the 2016 Virginia General Assembly session are now out. Wait, you’re not excited by an anti-labor, anti-anything-progressive, business front group headed by (hard-right-wing) former Del. Chris Saxman? (note: for more on Saxman, see Project Vote Smart, which clearly shows how anti-labor, anti-LGBT equality, anti-choice, anti-environment, etc. Saxman was as a delegate)

"So yeah, this group is the absolute pits, which means that if they grade you highly, you’re almost certainly bad, and if they grade you poorly, you’re probably good. With that, here are a few things that jumped out me about “Virginia FREE”‘s latest rankings."

Growls readers, who are interested in communicating with members of the Virginia General Assembly about the results of the latest Virginia FREE rankings 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.

And tell them ACTA sent you.

August 18, 2016

Virginia is Slightly More Free Than in 2012

The Cato Institute, a libertarian think tank, has just published its 2016 edition of Freedom in the 50 States, which "presents a completely revised and updated ranking of the American states based on how their policies promote freedom in the fiscal, regulatory, and personal realms." More about the 4th edition:

"This edition again improves upon the methodology for weighting and combining state and local policies in order to create a comprehensive index. Authors William Ruger and Jason Sorens introduce many new policy variables suggested by readers. More than 230 policy variables and their sources are now available to the public on a new website for the study. Scholars, policymakers, and concerned citizens can assign new weights to every policy and create customized indices of freedom, or download the data for their own analyses."

A one-minute video introduction to Freedom in the 50 States is available. A print edition can be purchased here. A print edition can be purchased here. A .pdf edition of the print edition is available here.

Overall, the Commonwealth of Virginia ranked #12, moving up three places from 2012. It scores best on fiscal measures with a ranking of #12, down one place since 2012. Its regulatory rating is #23, also down one since 2012. Its personal ranking is #34, an improvement of 11 since 2012. In addition, Virginia's economic ranking was #15, down two from 2012. Visit the website to see how Virginia ranked on other factors.

Virginia's state tax burden is ranked #12, down one from 2012 while its local tax burden in 2011 was #26.

The authors provide a detailed analysis for each state. Here's Virginia's:

"As a historically conservative southern state, Virginia has usually done much better on economic than personal freedom. However, we record some significant improvements in personal freedom in recent years. Due in part to rising cost of living, the Old Dominion has had one of the worst growth records in the country since 2006, though still better than neighbor Maryland.

"Virginia is a somewhat fiscally decentralized state with an average local tax burden (about 3.8 percent of income) and a below-average state tax burden (about 4.4 percent of income, a significant decline from FY 2007). Virginians’ choice in local government is subpar, with just half a competing jurisdiction per 100 square miles. Government subsidies and debt are low, and employment is average. These policies show little change over time.

"Virginia’s land-use freedom is generally good, although local zoning rules have tightened
in recent years, especially in the northern part of the state. Eminent domain reform has been effective. Labor law is well above average, with a right-to-work law, no minimum wage, fairly relaxed workers’ comp rules, and a federally consistent anti-discrimination law. Health insurance mandates have long been much higher than the national average and amount to more than 50 percent of the cost of an average premium. Cable and telecommunications have been liberalized. Occupational licensing is more extensive than in the average state. Nurses and dental hygienists enjoy little practice freedom. Insurance freedom is a bit above average, but Virginia has a CON law, price-gouging law, and mover licensing. The civil liability system is about average.

"Virginia’s criminal justice policies are worsen- ing. It now has one of the highest incarceration rates in the country, even controlling for crime rates. Victimless crime arrest rates are about average. Asset forfeiture is virtually unreformed, and local police frequently circumvent it anyway with equitable sharing. The state’s approach to cannabis producers and consumers is draconian. Even low-level cultivation carries a yearlong mandatory minimum sentence, and life imprisonment is possible for a single marijuana offense not involving minors. Virginia is one of the best states for gun rights and has improved over time. Alcohol freedom is subpar but improved in the early 2000s as some regulations were withdrawn. State liquor store markups are still huge. Virginia has little legal gambling. Educational freedom grew substantially in 2011–12 with a new tax credit scholarship law. Tobacco freedom is better than average, with comparatively low cigarette taxes and respect for the property rights of private workplaces. The state was forced to legalize same-sex marriage in 2014, which also overturned the state’s oppressive super-DOMA banning all relationship-style contracts between two gay people."

The authors also make several policy recommendations. The rankings and analysis are combined into a single-page fore each state. Virginia's is here.

At Bacon's Rebellion yesterday, arguably Virginia's finest policy blog, Jim Bacon comments on Virginia's ranking, saying:

"If there’s any consolation, the overall score has improved three notches since 2012. Fascinating: In the four years between Republican Governor Bob McDonnell and Democratic Governor Terry McAuliffe, Virginia has become more libertarian…. at least by Cato’s reckoning."

The best news about freedom is saved for last. John Gray, writing at Conservative Review yesterday, points out that New Hampshire has an overall Freedom Ranking of #1 in the Cato study. The top five states are:

  • #1 -- New Hampshire
  • #2 -- Alaska
  • #3 -- Oklahoma
  • #4 -- Indiana
  • #5 -- South Dakota

On July 14, 2016, we growled that Virginia had slipped as a place to do business.

Growls readers, who are concerned that Virginia and Virginians suffer from a lack of freedom, 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.

The importance of contacting your legislators can be seen in a story in the Harrisonburg Daily News-Record today. Unfortunately, most of it is behind the paper's paywall. However, the story's title says that "lawmakers blast tax burden, regulations." Although there is no way of knowing if the Cato story is one of the "multiple rankings," the story's lede says:

"Multiple rankings indicate that Virginia’s status as a business-friendly state continues to slip, a panel of lawmakers representing the Shenandoah Valley acknowledged Wednesday."

And tell them ACTA sent you.

August 17, 2016

A Thought about Taxes

"My friends, don't you believe that our taxes are too high, too complicated, and utterly unfair?"

~ Ronald Reagan

Source: page 29, "As Certain as Death: Quotations about Taxes," 2010, compiled by Jeffrey Yablon, TaxAnalysts.com.

August 16, 2016

Solving the Problem of Wage Stagnation

In an op-ed in yesterday's Wall Street Journal (beware the WSJ paywall), two American Enterprise Institute economists -- Kevin Hassett and Aparna Mathur -- argue that "a plethora of studies from around the world" show that "lower corporate tax rates equal higher wages."

Hassett and Mathur begin the op-ed this way:

"The populist anger of this election cycle stems, at least in part, from consistently bad economic news. While the overall U.S. economy has been inching forward, most peoples’ lives have barely been improving at all. The average hourly wage for manufacturing workers was $20.83 in June 2006, in current dollars, according to Bureau of Labor Statistics data. Adjusted for inflation, it is only about a dollar higher today.

"The dissatisfaction of working-class voters in both parties is understandable. Yet this presents a once in a lifetime policy opportunity. If the next president has a plan to increase wages that is based on well-documented and widely accepted empirical evidence, he should have little trouble finding bipartisan support. If politicians in Washington oppose the president’s ideas, he can, as Ronald Reagan did, go over their heads to the outraged voters.

"Fortunately, such a plan exists. Regardless of who is elected in November, workers from both parties should unite and demand a cut in corporate tax rates. The economic theory behind this proposition is uncontroversial. More productive workers earn higher wages. Workers become more productive when they acquire better skills or have better tools. Lower corporate rates create the right incentives for firms to give workers better tools.

"Leaders from both parties have proposed lowering America’s 35% corporate tax rate, the highest in the developed world. President Obama has called for cutting it to 28% (25% for manufacturers), while Donald Trumpproposes 15%. Hillary Clinton is the outlier. To the detriment of her working-class supporters, she has failed to back even a minor cut to corporate taxes.

"What proof is there that lower corporate rates equal higher wages? Quite a lot. In 2006 we co-wrote the first empirical study on the direct link between corporate taxes and manufacturing wages. Our approach was highly intuitive and drew on a large literature exploring who really pays the taxes that government collects."

Here are two examples cited by the authors:

"In a 2007 paper Federal Reserve economist Alison Felix used data from the Luxembourg Income Study, which tracks individual incomes across 30 countries, to show that a 10% increase in corporate tax rates reduces wages by about 7%. In a 2009 paper Ms. Felix found similar patterns across the U.S., where states with higher corporate tax rates have significantly lower wages. In another 2009 paper, Ms. Felix and co-author James R. Hines of the University of Michigan discovered that the effects of lower tax rates are especially strong for union workers.

< . . . >

"The most recent paper to find significant effects on wages was released in May and will soon be published by Canadian economists Kenneth McKenzie and Ergete Ferede. They found that wages in Canadian provinces drop by more than a dollar when corporate tax revenue is increased by a dollar. Similar patterns have been identified when Canadian economists have studied individual-level income data."

Hassett and Mathur conclude, explaining why wages continue to be stagnant, writing:

"Why are we stuck in such a bad place? A key factor has been the intransigence of Democratic politicians, such as Mrs. Clinton, whose plan to increase wages is to keep taxes high at the corporate level, increase taxes on business income at the individual level, and to punish firms that move overseas in response to these high taxes.

"This anti-corporate policy may be music to the ears of supporters of Bernie Sanders and Elizabeth Warren and the Democratic Party’s left wing, but it will make the lives of ordinary Americans worse. Wage growth will continue to be disappointing as long as the U.S. has the world’s highest corporate tax rate. Denying the need for lower corporate rates may be effective populism, but it is causing real harm to America’s workers."

Unfortunately, the op-ed wasn't available to Southside Virginia elected officials of Martinsville and Henry County when they met with Senator Mark Warner (D-Virginia) last night. According to Brian Carlton, editor, in today's Martinsville Bulletin:

"In order for areas like Southside Virginia to rebuild their economy, it’s going to take long term thinking. That’s how U.S. Sen. Mark Warner outlined the situation Monday night in a meeting with elected officials from Martinsville and Henry County. Warner was in the area to discuss economic changes he hopes to push through Congress. The problem, he told the audience, is the mindset of companies and politicians.

“It feels to me that a lot of our business practices in this country have become so focused on the short term that nobody creates long term value,” Warner said. Businesses cut back on workers to save money immediately, not considering what a smaller workforce could do to their productivity. Then as productivity drops, it brings the need for more cutbacks. He gave the example that in 1971, the average time people held a public stock for was eight years. In 2016, the average time a public stock is held is four months.

“Twenty-five years ago, public companies would invest 50 percent of their profits into their business,” Warner said. “That meant hiring more people, building more equipment. In the last quarter, 95 percent of all corporate profits were paid out in dividends or share buybacks. We’ve never seen capitalism like this before, where it’s all about the short term.”

"Warner used Martinsville as an example of the changing face of American economics. Before manufacturing shut down in the area, there was plenty of steady work here, Warner said. It wasn't just the big companies, but those larger groups also had multiple “mom and pop” operations that produced the parts and materials needed. “You could work in the same job for 20 to 30 years, but increasingly, those kind of jobs are gone from our society.”

"To fix that, Warner wants to see several changes on the federal level. The first is a transformation of the social insurance system from one traditionally run by the government into something more portable."

Kudos to Senator Warner for his efforts to meet with local elected officials to discuss needed economic changes. However, he should also support lowering the corporate income tax rate in order to boost stagnant wages and economic growth.

Take a few minutes to write Senator Warner or another Congressional representative to tell them your thoughts on cutting the corporate income tax rate, currently the highest among developed nations. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 15, 2016

Is Anyone in Charge at the Department of Verterans Affairs?

Twice this month already, we've growled about issues at the VA. Once, on August 5, we growled after reading an op-ed in Investor's Business Daily by John Merline who questioned just how much this administration is delivering  for today's veterans.

We growled again on August 9 after reading a story by Morgan Chalfant in the Washington Free Beacon that VA had spent "$408 million in taxpayer money spent by the VA on 'delayed solar power projects.'"

Today we learn from Mr. Chalfant in the Washington Free Beacon that the VA "spent nearly $300,000 on televisions that have sat unused in storage for more than two years." Here are just a few of the details:

"The John. D. Dingell VA Medical Center in Detroit, Michigan, bought 300 televisions in September 2013 as part of a project to overhaul the patient TV system at the hospital. However, a recent probe by the agency’s inspector general found that VA officials purchased televisions that were incompatible with the wiring installed during the renovations, so 282 of them—costing $292,000—have been boxed up in storage for two and a half years.

"Officials at the Detroit VA did not communicate with the contractor “in a timely manner” to make sure that the TVs the agency bought were right for the project, the inspector general found. The agency was forced to modify the contract by adding $19,000 in additional funds to change the project specifications to accommodate the televisions.

"The hospital still had not selected a contractor to install the televisions as of June, when the inspector general completed the probe."

Chalfant cites several additional projects where taxpayer money was misspent before quoting Rep. Jeff Miller (R-Florida), chair of the House Veterans Affairs Committee saying:

“If VA’s job was mismanaging money, it would have a near-perfect record of achievement . . . Yet despite this and other high-profile budgetary failures, all too often the department’s knee-jerk response to challenges is to ask taxpayers for more money. This is more proof the department doesn’t have a money problem, it has a management problem.”

Take a few minutes to review Morgan Chalfant's entire news report, and then write a Congressional representative to tell her or him your thoughts on the priorities of veterans care. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 14, 2016

Major Political Parties Competing Tax Plans

At the Tax Foundation's Tax Policy blog on Friday, Scott Goldberg pointed out that "Trump and Clinton's tax plans leave out key details." He continues, writing:

"This week, both Donald Trump and Hillary Clinton gave speeches in Michigan outlining their respective economic policy platforms. Tax policy featured prominently in both speeches: Trump took the opportunity to announce revisions to his tax plan, while Clinton reiterated her call for higher taxes on corporations and the wealthy.

"However, one important takeaway from both speeches is that neither Trump nor Clinton has released all of the details of their tax plans, leaving large gaps up to the public’s imagination.

"While Trump’s speech on Monday clarified several details of his revised tax plan, it also raised several new questions. For instance, Trump called for three brackets of 12 percent, 25 percent, and 33 percent, but didn’t specify the thresholds at which each bracket would apply. His original plan called for a very wide 0 percent bracket, but Monday’s speech did not address whether the revised tax plan would retain this large tax cut for middle-income taxpayers. More generally, Trump has called for closing tax “loopholes” for high-income individuals, but has only specified one tax provision he would change, the current treatment of carried interest.

"Meanwhile, Clinton said in yesterday’s speech that she would “cut taxes for middle-class families,” as her campaign has been promising for over half a year. However, the Clinton campaign has yet to specify the details of this tax cut: how large it would be, whether it would take the form of lower rates or expanded credits, which taxpayers would benefit, and so on. Given that the Clinton campaign has released dozens of very detailed policy proposals, it is surprising that the campaign hasn’t yet specified what its middle-class tax cut would look like."

He concluded the post, writing, "Certainly, this presidential election hasn’t focused much on policy questions so far. However, we should continue to hold candidates to the expectation that they spell out the details of their policy proposals. In this sense, the Trump and Clinton campaigns both have more work to do."

In Accounting Today on Friday, Michael Cohn also compares the two candidates tax plans; he writes in part:

"Donald Trump’s revamped tax plan stands in stark contrast to his rival Hillary Clinton’s plan, although many of the differences go back to the traditional split between the Republican and Democratic approaches to tax reform.

“In terms of the big picture, it tends to be traditional Republican vs. traditional Democrat on the tax side,” said Bill Smith, managing director of CBIZ MHM’s National Tax Office, who has compiled an infographic contrasting the two candidates’ tax plans.

"Hillary is not surprising,” he noted. “Most of what she thinks is kind of in alignment with what President Obama has been putting forth in his budget every year and getting nowhere with. There’s not that much that’s new.”

"Trump’s latest plan changes the tax rates he originally proposed and refines his approach to taxing carried interest income earned by hedge fund managers.

“Initially he was talking about it as if he had come up with the idea, whereas it has been pushed by everybody for years and years on both sides of the aisle,” said Smith. “Under his original plan it’s either going to be a tax break for them if carried interest is covered under his 15 percent pass-through business tax, and then it would be an even lower rate than they were paying, or if it was taxed as ordinary income, assuming they were paying 23.8, and he came in at 25 percent, it was only a bump up of 1.2 percent. The fact that he was talking about carried interest at all, given the rest of his plan, seemed kind of silly to me. Now that he has gotten with the Republican powers that be and upped the brackets to 12, 25 and 33 [percent], it’s a much more important question about how that is going to be taxed, if it’s going to be subject to the 15 percent business income flow-through rate or whether it will truly be taxed as ordinary income, because then it would be a significant increase if it’s subject to the 33 percent.”

Columnist Cal Thomas took on Mrs. Clinton's speech in his Baltimore Sun column on Friday, wrote:

"Reacting to Donald Trump's speech Monday to the Detroit Economic Club, Hillary Clinton said her Republican opponent tried to "make his old, tired ideas sound new." As opposed to her old, tired ideas of higher taxes on the wealthy with government as redistributor.

Let's consider some important quotes from the economic club speech.

"... the most direct and significant kind of federal action aiding economic growth is to make possible an increase in private consumption and investment demand -- to cut the fetters which hold back private spending."

"Increasing federal spending, as Ms. Clinton has proposed, would, said the economic club speaker, "soon demoralize both the government and our economy. If government is to retain the confidence of the people, it must not spend more than can be justified on grounds of national need ..."

And from National Public Radio yesterday, Danielle Kurtzleben compared both candidates economic and tax plans. On their tax plans, she wrote:

"Trump's tax plan is where he hews much more closely to other Republicans' ideas. In fact, he recently overhauled his initial tax plan (which has been removed from his website) in favor of a new plan with brackets that match those proposed by House Republicans, though Trump has said would also add in a zero bracket. His new plan would lower the top rate from 39.6 percent to 33 percent, and with that zero bracket would have only four brackets, down from the current seven.

"Those consolidated, lower rates would largely benefit wealthier taxpayers. Not only that, but Trump would drastically lower the corporate tax rate and eliminate the estate tax — both of which are standard Republican talking points.

"An analysis from the Tax Foundation found that those House Republican income tax brackets would provide tax cuts across the economic spectrum, but that the benefits would be much bigger for rich Americans. The top 1 percent would see their after-tax incomes grow by 5.3 percent, while people below the 80th percentile would see little change, with their incomes growing by less than 1 percent (these figures do not take into account any additional economic effects the plan would have).

"Altogether, Trump's plan would slash revenues and thereby grow the deficit. His former plan would have added $9.5 trillion to the deficit over a decade, according to the Tax Policy Center. This one, with its higher income tax rates, would cut that figure, though it's unclear by how much. Larry Kudlow, a CNBC commentator and informal advisor to Trump, said the addition to the deficit would now total $3 trillion.

"Clinton's plan, meanwhile, goes in the opposite direction: she relies heavily upon taxing the rich, a major way she pays for her other programs. Lower and middle-income people, meanwhile, would see their incomes change little — some with a slight decline — while the richest one percent would see their incomes fall by 5 percent or more, according to an analysis from the Tax Policy Center. The Tax Foundation likewise found few income changes for people who aren't the very highest earners.

"The Tax Policy Center has estimated that Clinton's tax proposals would boost revenue by $1.1 trillion over a decade."

Finally, on July 28, American's for Tax Reform's John Kartch and Alexander Hendrie provided a "full list" of Clinton's "tax hikes." The best has to be the 'fairness' tax, and would include a 'fairness' surcharge. According to Kartch and Hendrie, a 'fairness' tax would provide $400 billion of the estimated $1 trillion of net tax increases in her plan by "restoring basic fairness to our tax code" (quoted from the Clinton tax plan).

When we find better or newer information on the presidential candidates tax plans, we will post it for you. However, we would expect to growl at least one more time before the November 8 elections about the major candidates tax plans.

August 13, 2016

A Thought on Economic Growth

"America’s foremost economic problem is sclerotic growth. If the economy continues to expand at only 1% to 2% a year, instead of the historical 3% to 4%, then current economic and political problems will become crises. Almost everything depends on growth: progress for the middle class, hope for the unfortunate, solvency for social programs, environmental protection, defense.

"This is not a contentious or partisan statement. Larry Summers, Democratic economic adviser extraordinaire, wrote recently in the Washington Post that growth is “the single most important determinant of almost every aspect of economic performance,” and that trying to boost it 'has been discredited in the minds of too many progressives.'"

~ John H. Cochrane, Senior Fellow, Hoover Institution

Source: His August 12, 2016 op-ed in the Wall Street Journal (beware WSJ's paywall).

Cochrane is also an economist at the University of Chicago -- faculty homepage here. He also blogs at the Grumpy Economist.

Several recent Growls about economic growth include: diagnosing an 'economic sickness' on June 21, 2016; GDP and the need for tax reform on May 28, 2016; how slow can the U.S. economy grow on July 29, 2016; economic growth and America's future on May 9, 2016; and, GDP growth, or the worst economic growth in 70 years on July 30, 2015l. Use the search facility in the right column for additional Growls.

August 12, 2016

Arlington County 'Leads Pack' in Yet Another Category

The headline of an online story today in the  Arlington Sun Gazette reads, "Arlington leads regional pack in per-square-foot housing costs." The story's lede paragraph reads:

"A typical 2,500-square-foot home that might go for $397,500 in Stafford County would fetch $472,500 in Prince William County, $715,000 in Loudoun County and an eye-opening $1.13 million in Arlington, at least based on new per-square-foot figures from RealEstate Business Intelligence, an arm of the local multiple-listing service."

Additional details from the story include:

"Arlington led the pack among Northern Virginia jurisdictions with a median sales price of $453 square foot for sales of existing homes, according to figures reported Aug. 12. Second was the city of Falls Church at $417 per square foot.

"(The median home-sales price in Falls Church exceeds that in Arlington, $708,000 to $627,000, in the most recent report, with the difference due mainly to the larger percentage of single-family homes in the city.)

"Also on the per-square-foot list: Alexandria at $417, Fairfax County at $359, the city of Fairfax at $286, Loudoun County at $203, Manassas Park at $195, Prince William County at $189, Manassas at $175 and Stafford County at $159.

"All jurisdictions posted increases from a year before, ranging from 0.2 percent in Arlington to 10.8 percent in Manassas Park.

"Topping the list among local jurisdictions was the District of Columbia at $520 per square foot. Among Maryland jurisdictions, median sales prices were $256 in Montgomery County, $215 in Howard County, $204 in Anne Arundel County and $165 in Prince George’s County."

Let's do a little math. According to the above numbers, a 2,500 square foot house in Arlington County sold for $1,130,000 while a similarly-sized house in Loudoun County sold for $715,000. According to the Northern Virginia Association of Realtors, the tax rate in Arlington County is $0.996 per $100 of valuation while the tax rate on the Loudoun County house was $1.135 per $100 of valuation. The annual real estate property taxes work out this way:

  • Arlington County -- $11,255
  • Loudoun County -- $8,115

Bottom line? The owner of a 2,500 square foot home in Arlington County will pay $3,445 more than a comparably-sized home in Loudoun County, which works out to a difference of slightly more than 42%. Rembember to bring this analysis up the next time a County Board member starts yakking about Arlington County having "the lowest real estate tax rate in the region."

Do Arlington County taxpayers get 42% more serverices than residents of Loudoun County? As Fox News likes to say, "We report, you decide." If Arlington County taxpayers don't think they're getting their money's worth, write to the Arlington County Board. Just click-on the link below:

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

And tell them ACTA sent you.

UPDATE (8/13/16): I added the comment about County Board members continually touting the county's "lowest real estate tax rate in the region."

UPDATE (8/14/16): moneyworth's corrected to money's worth. Thanks to an astute reader.

August 11, 2016

Arlington County "Officials still Waiting on Gondola Report"

A report today at the online Arlington Sun Gazette says, "Arlington elected officials should know by the time they return from their summer hiatus the feasibility of a gondola spanning the Potomac River and connecting Rosslyn with Georgetown." From the story:

"Preliminary findings of a study are expected to be available in “late summer,” with an analysis made available to the public in the fall, said Carol Mitten, an Arlington deputy county manager.

"County Board members in the spring agreed to kick in $35,000 toward the $250,000 feasibility study, which is backed by the District of Columbia government, business-improvement districts and other entities.

"But having come off the bruising battle over the Columbia Pike streetcar, county officials appear reluctant to launch full-throttle into support for what critics say is another transportation fad."

If the Arlington County Board members see a few more letters to the editor, however, like the lead letter on the opinion page in this week's Arlington Sun Gazette, gondola boosters will know the game is up. Arlington resident Chip Watkins begins by writing:

"Has the County Board gone mad? Did they learn nothing from the streetcar debacle? Or the Artisphere debacle?

"Why should Arlington taxpayers be asked to pay $4 million to $5 million per year in debt service and operating deficits for an aquatics center that should be paid for by those who use it [news story, Aug. 4]?

"And which “Arlington officials” ordered up the “re-imagining” of the Rosslyn “waterfront” [news story, Aug. 4]?"

For the record, we growled about the Aquatics Center last Thursday, August 4 where we noted, "And talk about hair-brained, backwards planning, McCaffrey writes that "a cost structure for users won’t come until the facility is approaching completion." While a cost structure might not be step 1 in the entrepreneur's manual, it would certainly get done long before project completion." We also growled about the gondola study on January 30, 2016.

Kudos to Arlington resident Chip Watkins for taking the time to write to the Sun Gazette editor to voice his concerns about the taxpayer subsidies needed to support the proposed aquatics center. Add in spending $35,000 for the county share of the $250,000 gondola feasibility study, and you begin to see just how profligate the Arlington County Board really is. If you haven't told the board what you think about either the aquatics center or the gondola project, take a few minutes to write the Board. Just click-on the link below:

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

And tell them ACTA sent you.

August 10, 2016

Who Collected $19.9 Trillion in Taxes; Upped Debt $8.8 Trillion?

CNS News' editor Terrence Jeffrey, reported today:

"During the 90 full months President Barack Obama has completed serving in the White House—February 2009 through July 2016--the U.S. Treasury collected approximately $19,966,110,000,000 in tax revenues (in non-inflation-adjusted dollars), according to the Monthly Treasury Statements.

"During those same 90 months, the federal debt rose from $10,632,005,246,736.97 to $19,427,694,579,786.64—an increase of $8,795,689,333,049.67."

Jeffrey went on to report:

"So far in fiscal 2016, according the Treasury statement, the federal government has collected approximately $2,678,824,000,000 in taxes and spent approximately $3,192,487,000,000—running a deficit of $513,662,000,000 for the first ten months of the fiscal year.

"Given that the Bureau of Labor Statistics has reported that there were 151,517,000 people employed in the United States in July, the $19,966,110,000,000 in taxes the Treasury has collected during Obama’s first 90 full months in office equals approximately $131,775 per worker.

"The $8,795,689,333,049.67 in additional debt the federal government incurred during Obama’s first 90 full months in office equals approximately $58,051 per worker.

"The Treasury only needs to pull in another $33.89 billion in taxes to reach the $20 trillion mark for Obama’s presidency. (The $19,966,110,000,000 the Treasury pulled in during the first 90 full months of Obama’s presidency equals approximately $221,845,666,666.67 per month).

"During the first 90 full months George W. Bush was president (February 2001 through July 2008), according to the Monthly Treasury Statements, the Treasury collected approximately $16,048,182,000,000 in taxes.

Add in the cost of implementing the tsunami of regulations that have been mandated by the Obama administration, and it's no wonder the country is undergoing the slowest economic recovery since 1949. The following chart accompanied Terry Jeffrey's article, and compares the taxes collected and debt incurred in the first 90 months of the George W. Bush and Barack Obama administrations.

 

Jeffrey also points out that of "(t)he $16,048,182,000,000 in taxes the Treasury collected during Bush’s first 90 full months in office equaled approximately $110,273 for each of the 145,532,000 persons who had a job as of July 2008." In addition, he says, "During the first 90 full months of George W. Bush’s presidency, the debt rose from $5,716,070,587,057.36 to $9,585,479,639,200.33—an increase of $3,869,409,052,142.97. That equaled approximately $26,588 in added debt for each of the 145,532,000 persons who had a job as July 2008." emphasis added)

(The comparable per worker numbers for the Obama administration are: taxes -- $131,775; and, increase in debt -- $58,051.)

Let me add one more significant data point, i.e., annual average economic growth as measured by GDP during the Bush II and Obama administrations. The numbers come from the table that accompanied Richard Rahn's column in yesterday's Washington Times,  and represents the annual growth rates during the "recovery period (first 24 months from the bottom of the recession)."

  • George W. Bush. Recession March 2001 -- November 2001. Average annual economic growth rate = 2.81%.
  • Barack Obama. Recession December 2007 -- June 2009. Average annual economic growth rate = 2.23%.

By comparison, the average annual economic growth rate during the first 24 months of the recovery after the July 1981 -- November 1982 of the Ronald Reagan administration was 4.84%.

Since the two major political party candidates in the 2016 elections haven't focused on the economy, jobs and economic growth -- at least in any sustained way -- and the mainstream media doesn't seem interested in holding the two candidates accountable, take a few minutes to review Terrence Jeffrey's entire report, and then write your Congressional representative to tell her or him your thoughts on the economy, jobs, and economic growth. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 09, 2016

Where are the Priorities at Veterans Affairs?

Just last Friday, we growled about the problems at Veterans Affairs medical facilities, and included this quote from an Investors' Business Daily commentary by John Merline:

"As IBD has pointed out many times, wait times for veterans seeking care are as bad as ever, if not worse. When National Public Radio looked into the so-called "Choice" program -- which was supposed to let veterans access private doctors if a VA doctor wasn't available -- it found that it had become another bureaucratic boondoggle.

"An audit by the VA's inspector general found that veterans at the VA Medical Center in Houston often experienced extremely long wait times, and that even after the scandal broke, the clinic had been cooking the books to make them seem shorter."

We were disappointed, consequently, to read yesterday about the $408 million in taxpayer money spent by the VA on "delayed solar power projects." According to the Washington Free Beacon's Morgan Chalfant yesterday:

"The Department of Veterans Affairs has spent more than $408 million to install solar panels on its medical facilities in recent years, despite many of the projects experiencing significant delays and some of the systems not becoming operational at all.

"The VA has failed to effectively plan and manage these solar panel projects, resulting in significant delays and additional costs, according to a report released by the agency’s inspector general last week. (link to report in the original).

"The watchdog conducted an audit of 11 of the 15 solar projects awarded between fiscal years 2010 and 2013 that were still in progress as of May last year. The investigation, which was completed in March, found that only two of the 11 solar panel projects were fully completed.

“This occurred because of planning errors, design changes, a lengthy interconnection process, and contractor delays,” the inspector general concluded. “As a result, VA did not increase renewable energy for those solar projects in the time frame planned and incurred additional costs through needed contract modifications.”

"The VA subsequently told the inspector general in July that five of the 11 projects had been fully completed and eight were generating solar power. Three of the planned systems, including one in Little Rock, Arkansas, that precipitated the investigation, still are not generating solar power at all.

"According to investigators, all of the projects were supposed to be finished in about seven to 12 months but instead were completed—or remain expected to be completed—on average, within 42 months.

"The contracts for the 11 projects reviewed by investigators totaled about $95 million, though some have become more expensive because of poor planning and delays. The VA spent more than $408 million on its “green management program” solar panel projects between fiscal years 2010 and 2015, according to annual budget records. During the same period, veterans died waiting for care at VA hospitals where employees were using dishonest record keeping practices to conceal long waits for care.

"The inspector general initiated the investigation at the request of Arkansas Sens. John Boozman and French Hill, both Republicans, who asked the watchdog to examine a significantly delayed $8 million solar panel project at the John L. McClellan Memorial Veterans Hospital in Little Rock last April."

Chalfant concludes his reporting, writing:

"The VA has been under fire for wasting federal dollars as veterans’ wait times and other failings have persisted at the agency’s network of medical facilities. A recent investigation by Open the Books and COX Media revealed that the VA spent $20 million on artwork over the last decade, outraging members of Congress."

As we noted last Friday, the motto of the Department of Veterans Affairs is “To care for him who shall have borne the battle and for his widow, and his orphan.” Unfortunately, and like the Grand Poobahs of Arlington County, the focus is on vanity projects.

Additional reporting on problems at the VA, and especially at its medical facilities, can by found by using the Washington Free Beacon's search facility, and using Veterans Affairs in your search.

Take a few minutes to review Morgan Chalfant's entire report, and then write a Congressional representative to tell her or him your thoughts on veterans care. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 08, 2016

Happy 50th Birthday for the Beatles' 'Taxman'

At the Tax Foundation's Policy Blog today, Joseph Henchman, Vice President of Operation, reminds us:

"Today is August 8, the date in 1966 when the Beatles album Revolver was released in the United States (it came out in Britain three days earlier). This one is tax-related because the opening track of Revolver is Taxman, which George Harrison wrote after their new fame pushed them into the UK’s 95 percent tax bracket (“There's one for you, nineteen for me”). Happy birthday, Taxman!"

The lyrics to Taxman are avaiiable here at azlyrics.com  Note especially these:

Should five per cent appear too small
Be thankful I don't take it all
Cos I'm the taxman, yeah I'm the taxman

If you drive a car, I'll tax the street
If you try to sit, I'll tax your seat
If you get too cold I'll tax the heat
If you take a walk, I'll tax your feet

You Tube features several versions of Taxman. This one features George Harrison and Eric Clapton live in Tokyo, Japan.

Here's a bit of history about Taxman from the song's Wikipedia entry:

"Harrison said, "'Taxman' was when I first realised that even though we had started earning money, we were actually giving most of it away in taxes. It was and still is typical."[6] As their earnings placed them in the top tax bracket in the United Kingdom, the Beatles were liable to a 95% supertax introduced by Harold Wilson's Labour government (hence the lyrics "There's one for you, nineteen for me").[7] In a 1984 interview with Playboy magazine, Paul McCartney explained: "George wrote that and I played guitar on it. He wrote it in anger at finding out what the taxman did. He had never known before then what he'll do with your money."

Finally, there's even a Virginia connection, thanks to former Virginia Attorney General, Ken Cuccinelli. According to Wikipedia:

"In 2006, Virginia State Senator and future Republican gubernatorial candidate Ken Cuccinelli introduced an amendment to make "Taxman" the state song of Virginia, stating that taxes were an important part of Virginia history. He gave the example of Patrick Henry's strong opposition to British taxation during the American Revolution. The measure did not pass."

Think a 95% tax rate is outrageous? In a story posted December 7, 2011, the 70th anniversary of Pearl Harbor, CBS News asked, "How would you feel about a 94% tax rate," writing in part:

"If you think a 35% tax rate is high, try 94%.

"The consequences of the attack on Pearl Harbor still reverberate today, in dozens of unseen ways -- including how Americans pay the taxes that support the national security apparatus that works to prevent such an attack from happening again.

"The Roosevelt administration had been gearing up to support the war effort long before the actual attack. When bombers struck on December 7, 1941, taxes were already high by historical standards. There were a dizzying 32 different tax brackets, starting at 10% and topping out at 79% on incomes over $1 million, 80% on incomes over $2 million, and 81% on income over $5 million.

"In April 1942, just a few short months after the attack, President Roosevelt proposed a 100% top rate. At a time of "grave national danger," he argued, "no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year." (That's roughly $300,000 in today's dollars). (emphasis added)

"Roosevelt never got his 100% rate. However, the Revenue Act of 1942 raised top rates to 88% on incomes over $200,000. By 1944, the bottom rate had more than doubled to 23%, and the top rate reached an all-time high of 94%.

"World War II also marked the introduction of payroll withholding, which has become the secret to making today's tax system work . . . ."

For what it's worth, while Henchman says the release date was today, the Wikipedia entry says the album was released on August 5, 1966. 50 years old this weekend. Timeless!

August 07, 2016

A Thought about History

“Those who don’t know history are destined to repeat it."

~ Edmund Burke

Source: BrainyQuote.com.

August 06, 2016

Medicare Benefits vs. Medicare Taxes Paid

Less than two months ago -- on June 22, 2016 to be exact -- we growled that Social Security and Medicare were "in dangerous fiscal positions."

Consequently, a Heritage Foundation infographic showing "today's retirees receive far more in Medicare benefits than they paid in taxes" caught our attention, and appears below:

 

The above infographic appears in"Medicare's Next 50 Years: Preserving the Program for Future Retires" (Special Report #185 Health Care, July 29, 2016), and was written by Robert E. Moffit, a senior fellow in the Heritage Foundation's Center for Health Policy Studies. The .pdf version of the report is 38 pages. It includes many helpful graphics that portray the major issues that risk Medicare's long-term health.

Take a few minutes to review the entire report, and then write your member of Congress to tell her or him your thoughts on whether, and how, Medicare should be made sustainable. Contact information is available at the Library of Congress' Congress.gov website. 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.

And kudos to the Heritage Foundation for its continuing efforts to formulate and promote conservative public policies based on free enterprise, limited government and traditional American values.

August 05, 2016

Problems at Veterans Affairs Medical Centers

In the Department of Veterans Affairs' (VA) publication on the origin of the VA motto, President Abraham Lincoln ended his Second Inaugural Address with the following paragraph:

“With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation’s wounds, to care for him who shall have borne the battle and for his widow, and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.”

The VA then explains, "With the words, “To care for him who shall have borne the battle and for his widow, and his orphan,” President Lincoln affirmed the government’s obligation to care for those injured during the war and to provide for the families of those who perished on the battlefield."

In a commentary for Investor's Business Daily on Tuesday of this past week, John Merline began by writing:

"President Obama, in an amazing display of self-adulation, gave a lengthy speech to the Disabled American Veterans in Atlanta, Ga., this week, in which he boasted about all the progress he's made in delivering better health care to veterans.

"Obama focused on how much his administration is supposedly delivering for vets. "Historic increases in veterans funding." "More clinicians." "More counselors." "More peer support." "More research." "More doctors, nurses, staff." "More mental health care." "More appointments." "More benefits."

"Left unmentioned is the fact that Obama failed to do what he promised two years ago when the VA's wait-time scandal broke -- in which the VA was caught imposing incredibly long (and sometimes deadly) wait times on veterans while trying to cover it up.

"Two years ago, Obama solemnly swore that he was "moving ahead with urgent reforms, including stronger management and leadership and oversight, and we're instituting a critical culture of accountability."

"He's not delivered on any of those promises.

"As IBD has pointed out many times, wait times for veterans seeking care are as bad as ever, if not worse. When National Public Radio looked into the so-called "Choice" program -- which was supposed to let veterans access private doctors if a VA doctor wasn't available -- it found that it had become another bureaucratic boondoggle.

"An audit by the VA's inspector general found that veterans at the VA Medical Center in Houston often experienced extremely long wait times, and that even after the scandal broke, the clinic had been cooking the books to make them seem shorter."

Take a moment to read the remainder of Merline's commentary, and then take a few minutes to write your member of Congress to tell her or him your thoughts about the medical care that America's veterans are receiving at VA healthcare facilities. Contact information is available at the Library of Congress' Congress.gov website. 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.

August 04, 2016

Arlington County's Future Aquatics Center Again on Page 1

The Arlington Sun Gzaette's Scott McCaffrey reports on the front-page of this week's paper (August 4-10. 2016) that cost estimates for the Aquatics Center are "still sketchy' and annual subsidies will still be required. According to McCaffrey:

"Even a reduced-in-scale Long Bridge Park aquatics center will require taxpayer subsidies to support operations, according to the latest estimates. How much the public will need to kick in, however, remains up in the air.

"Current staff projections call for an operating deficit of $540,000 to $1.05 million per year when the Crystal City facility opens, not counting the cost of servicing construction debt.

"That’s a major drop from the $1.9 million to $3.8 million operating subsidy estimated two-and-a-half years ago, when the project was far more grandiose in scale. It was the ballooning projected cost of both construction and operation that led then-County Manager Barbara Donnellan to put the facility on hold in January 2014.

"The revamped proposal by County Manager Mark Schwartz calls for a facility  about 35 percent smaller in scale than the original, with the construction costs of $40 million to $44 million being covered with funds available from park bonds approved by voters in 2004 and 2012.

"Under the downsized scenario, the estimated operating cost of the facility would total just under $4 million per year, based on 2019 dollars, with revenue estimated at $2.9 million to $3.4 million.

"Whether County Board members will be comfortable with those figures is an open question."

McCaffrey then writes about the Arlington County Board's primary budget hawk on the Aquatics Center, saying:

"The primary budget hawk on the project continues to be board member John Vihstadt, pressing county officials to squeeze any subsidy to the bare minimum.

“We want to be able to hold costs down,” he said. “Hopefully, we can do even more.”

He also quotes Arlington's quintessential fiscal watchdog Wayne Kubicki about the latest cost estimates, writing:

"Wayne Kubicki, a fiscal watchdog who helped lead opposition to the higher-cost aquatics center, seems pleased that the project is being scaled back, but still worries that it could be a budget-buster.

“The county’s track record at projecting revenue/operating costs on its facilities has not been very good,” Kubicki said. “These new numbers – which hopefully are better – still show operating deficits of $500,000 to $1 million per year.  Debt service is on top of that. So we’d be approaching a $5 million-per-year hit on the county operating budget, for a facility in a difficult-to-get-to location, that how many residents will be using?”

"Arlington voters by a 76-percent majority in 2004 approved a park bond that, they were told at the time, would cover the entire cost of the Long Bridge Park project. But in 2012, county officials had to come back and seek additional funding through another park bond, at a time when public discontent over what critics derided as gold-plated “vanity” projects in Arlington was beginning to gather steam."

If you didn't read the paper edition of the Sun Gazette delivered to your home, or the entire online article, take a few minutes to read the entire article since it contains a great deal more information about the Aquatics Center, especially the bond issues and cost information.

And talk about hair-brained, backwards planning, McCaffrey writes that "a cost structure for users won’t come until the facility is approaching completion." While a cost structure might not be step 1 in the entrepreneur's manual, it would certainly get done long before project completion.

Ever since the Acquatics Center became the vanity project du jure, we've growled about it.  Most recently we growled on May 20, 2016, saying the new CIP 'seeks no additional funds for the aquatics center.' On April 13, 2016, we growled that a 'pared down' Acquatics Center could be in Arlington's future. And on August 14, 2015, we growled that the latest proposal drew 'mixed reaction." Use the Growls search facility, located in the lower right corner, for additional posts.

Growls readers are urged to write to the Arlington County Board to express your views on the Aquatics Center. Just click-on the link below:

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

And tell them ACTA sent you.