A Dubious Honor
Who was the most informed political reporter in Tennessee during the election campaign? I came in tied for seventh in an informal poll. Of course, I also tied for last - along with such luminaries as the AP's Karin Miller, the Tennessean's Larry Daughtrey, WKRN Channel 2's Chris Bundgaard, and "nobody."
Oh well. At least it's nice to be mentioned.
Steaming hot commentary on journalism, Tennessee, politics, economics, the war and more...
- Name: Bill Hobbs
- Location: Nashville, Tennessee, United States
A Dubious Honor
I Sleep Well At Night...
...knowing George W. Bush is president at a time like this.
Today's Funny Page.
This interactive page is lots of fun.
Taxpayers Bill of Rights Praised
A Cato Institute scholar says Massachussets tax reformers should pursue a Taxpayers Bill of Rights similar to Colorado's, rather than trying to abolish the state's income tax outright. On Nov. 5, 45 percent of Massachusetts voters voted for a measure to abolish the state's income tax. November 25, 2002, Michael J. New, an adjunct scholar at the Cato Institute and a post-doctoral fellow at the Harvard-MIT data center, says the TABOR approach has a better chance of winning a referendum - and actually would do more to reduce government spending.
An approach similar to TABOR would likely enjoy more political success in Massachusetts than a proposal to abolish the state income tax. Reasonable people can disagree about the extent to which state services would have to be reduced if the income tax were abolished. However, such grandiose proposals are very easy for unions and other opponents to demonize and caricature. Conversely, a tight expenditure limit would not require drastic short-term budget cuts. Additionally, this approach has actually enjoyed some success in Massachusetts. In 1986 Massachusetts voters enacted an expenditure limit though it was too high to meaningfully constrain budgetary growth.
New also details the success of TABOR in Colorado:
When the state collects revenues above the limit set by TABOR, Colorado taxpayers are entitled to a rebate. Overall, between 1997 and 2002, Colorado has reduced taxes more than any other state, issuing annual tax rebates that have totaled more than $3.2 billion. These tax reductions have been a boon to Colorado's local economy. Between 1995 and 2000, for instance, Colorado ranked first among all states in gross state product growth and second in personal income growth. Furthermore, according to the National Association of State Budget Officers (NASBO), Colorado was one of only five states that did not run a deficit during fiscal 2002.
TABOR has also forced Colorado residents to see the costs inherent in government programs. In other states, residents often support higher government spending because they can see the benefits of a particular program, but remain blissfully unaware of the costs that they and other taxpayers will be forced to bear. However, in Colorado the annual tax rebates brings these tradeoffs clearly into focus. In every year from 1993 to 1999 there was a proposal on the ballot to either raise taxes or increase spending in excess of the TABOR limit. Knowing these initiatives would markedly reduce the size of their annual tax rebate, voters soundly defeated each of these measures.
For more stories related to TABOR, including a variety of looks at how the Colorado plan is working, and efforts to create a TABOR in Tennessee, go here, and here, and here, and here, and here. And this link will take you to a post with links multiple TABOR resources.
Lots of reading. Perhaps you should get started now. :-)
Say That Again
The New York Times buries this quote at the tail end of a long story about the Republican Party's rising popularity:
Wayne Denson, 75, a Democrat and retired optician from Kansas City, Mo., said: "I voted for him to start with but now that Bush got elected, I'd rather vote for Bush than Gore. Bush has got more intelligence."
Amen to that.
The crux of the story is that the Democrats' ratings are dropping - and many people, even many Democrats, don't want Gore to be the party's nominee in 2004.
In a measure of additional concern for Democrats, Al Gore, who is the best-known Democrat who might run for president in 2004, is viewed unfavorably today by a ratio of almost two to one, despite a weeklong bath of favorable publicity that accompanied his national tour promoting two new books about the American family. Nearly two-thirds of all respondents, including just over 50 percent of Democrats, said that Mr. Gore should step aside and allow someone else to run against Mr. Bush.
The sound you hear is the sound of Al Gore sliding into irrelevancy.
Islam-Religion of Peace® Update
Rich Hailey has a couple items today on the war. This one remarks about al Qaeda with a smirk: "For a bunch of guys who praise martyrdom for Allah it seems strange that so many of the leaders are captured alive...."
Also, Hailey remarks on the Nigerian Muslims who went on a killing spree after a newspaper columnist suggested the Prophet Mohammed might have chosen a wife from among the Miss World pageant contestants.
Now, for those of you who equate Islamic fundamentalism with Christian fundamentalism, let me ask you a question. We've had images of the Virgin Mary painted in cow feces; we've had books published saying Jesus was gay; we've had singers ripping up pictures of the Pope on national TV; we've seen devout Christians pilloried in our media time and again as helpless morons at best or dangerous fanatics at worst; we've seen sacrilege of almost every kind imaginable put forth as art. Anyone been burned alive for it? Didn't think so.
The Tennessean praises Frank Buck in an editorial we can agree with. We like Frank Buck too.
The degree of control [House Speaker Jimmy Naifeh] exercises over the House has the tendency to choke off honest debate and consensus building.
Bills deemed unpopular by the leadership are shuffled off to committees where they disappear. Important decisions are made behind closed doors. Committee votes are taken by voice vote, denying the public the ability to track their local legislators. Public records are kept off the Internet where they would be available to all.
Buck's ill-received remarks on Saturday were not a case of a young upstart trying to grab his 15 minutes of fame. This is a highly principled lawmaker who is amazingly void of personal ambition. He's also a 30-year veteran of the legislature who has been known to mumble under his breath that he doesn't need the aggravation of continued service. Yet the state needs him, and whether they know it or not, so do his fellow House Democrats. For the sake of state government, we hope they were listening.
I doubt Naifeh was.
The paper says Naifeh's love for Tennessee can't be questioned. I don't question it. I just think Jimmy Naifeh loves power more.
Incidentally, you don't think all that back-room smoke-filled-room dealing that is the hallmark of Naifeh's leadership style has any effect on the public's level of mistrust in their government, do you?
We Dodged a Bullet
What if Tennessee had adopted an income tax back in 1999, when Gov. Don Sundquist first proposed it? Today, Tennessee wouldn't be facing a minor revenue shortfall but a major fiscal crisis, in all likelihood.
Governors and state budget officers said the fiscal condition of the states was more dire than the condition of the national economy. The recession has reduced state revenues, especially personal income and capital gains taxes, said Raymond C. Scheppach, executive director of the National Governors Association, but the states' fiscal problems are also linked to long-term trends, like the increase in health costs and the growing importance of services in the economy.
The NGA's press release announcing the new November 2002 edition of its biannual Fiscal Survey of States, says states saw a much larger decrease in revenue from income taxes than they did from sales taxes.
In fiscal 2002 sales tax collections were 3.2 percent lower than originally budgeted, personal income tax collections missed states' targets by 12.8 percent...
In other words, if Tennessee had followed the path Gov. Sundquist and others had urged, Tennessee today would be facing a much-larger revenue shortfall. But we were told an income tax would protect us against major shortfalls during a sluggish economy. What happened? Simple: During this sluggish economy, consumer spending is the one sector of the economy that has remained strong.
According to the New York Times, Scheppach also fingers a primary cause of the budget gap in most states: "unaffordable and unsustainable" increases in spending on Medicaid (which, in Tennessee, is called TennCare).
Medicaid and other health costs like employee health benefits account for 30 percent of state spending and grew last year by 13 percent, the largest increase in a decade, the report said. At a time when revenues are declining, Mr. Scheppach said, such growth is unaffordable and unsustainable.
You can see the NGA's November 2002 Fiscal Survey of States here.
It includes some other rather interesting facts:
During a supposed time of fiscal crisis in Tennessee, state government added the equivalent of 1,097 full-time employees to the state payroll, going from 41,703 in fiscal year 2001 to 42,800 now.
The number of full-time equivalent positions in Tennessee state government rose 1.34% from fiscal 2001 to fiscal 2002, and 1.27% from fiscal 2002 to the current fiscal year. Nationally, among all 50 states, the number of full-time equivalent positions on government payrolls rose 0.4% from fiscal 2001 to fiscal 2002, and was reduced by 0.7% from fiscal 2002 to the current fiscal year. Other states trimmed their payrolls to deal with budget gaps; Tennessee's government continue to fatten itself.
26 states used across-the-board budget cuts to eliminate budget gaps in fiscal 2002. Tennessee was not one of them. Tennessee also did not use layoffs, furloughs, early retirement, reorganization of programs, privatization, or fee increases to help close its budget gap that year - measures that other states used one or more of. Could it be that the Sundquist administration was intent on letting the budget crisis fester in hopes of generating support for the income tax?
Tennessee increased general fund spending by 7.6% in fiscal 2002, compared to the year before, the fourth largest percentage increase among all 50 states. Only New Hampshire, Idaho and Hawaii increased spending at a faster rate. 15 states actually reduced spending.
Tennessee budgeted an increase in general fund spending by 4% in the current fiscal year, the 14th largest percentage increase among all 50 states. 17 states actually budgeted less spending.
The national average among all 50 states was 1.3 percent growth in spending in both fiscal years.
The evidence is clear: while revenues falling short of optimistic projections have contributed to the current budget gap, Tennessee spent itself into this position.
At least we didn't make it worse three years ago by adopting an income tax.
Here's Some Happy News...
The world is a safer place today, because of this.
The Return of Reaganomics
History proves that so-called "Reaganomics," more properly known as supply-side economics, has worked to foster economic growth every time it is tried. Actually, it should be called "JFKnomics," because it was President John F. Kennedy who, in the 1960s, used a combination of personal and corporate tax cuts to rejuvenate the sputtering economy.
The good news: The Bush administration appears to be embracing supply-side economics, and will push for more and faster tax cuts even at the expense of short-term increases to the national deficit. So says this story, though it is laden with anti-tax cut bias.
Earlier this month, [Bush] espoused one of the central premises of Reagan's supply-side economics: that tax cuts actually increase government revenue, by stimulating the economy. Asked about this year's deficit of $159 billion after a Cabinet meeting, Bush insisted that his big tax cut of last year was not responsible for the red ink. "The deficit would have been bigger without the tax-relief package," he said.
Indeed it would have. Even Alan Greenspan has said the tax rebates of last year helped prop up the economy, which leads to smaller deficits.
The administration is pushing to make permanent those aspects of its tax package which are set to expire. Its solution to the stumbling economy is in part a new package of tax cuts, perhaps to include a reduction in the corporate income tax rate. Treasury Secretary Paul O'Neill has even put together an internal group to mull major tax-code revisions. Contrast this behavior with that of former GOP presidential nominee Bob Dole. As a Senator Dole was once denounced by a member of his own party, Rep. Newt Gingrich, as a "tax collector for the welfare state" for suggesting increased revenue enhancements.
Congressional Democrats, for their part, are quick to blame tax cuts as a major reason for the current run of red ink. But few are willing to call directly for tax-cut repeal. And in the meantime, many in the party are busy promoting more spending on prescription drugs for the elderly and other social programs.
Bad news for Democrats: tax cuts not only work economically, they also work politically. Democrats oppose them at their political peril.
NYC to Taxpayers: Cough Up More
New York City's billionaire mayor wants taxpayers in NYC - and across the river in New Jersey - to pay more taxes. Others say he should cut the city's budget instead.
A billionaire media mogul and a political novice, the mayor has surprised many with the artfulness of his politics. But his budget moves have begun to draw catcalls. The Citizens Budget Commission, a business-backed watchdog, gave Bloomberg's first budget a grade of D. It noted that the city was "spending far beyond its means."
Many budget analysts also shook their heads when the mayor declared that the city workforce and budget were streamlined. "It was a very amateurish statement," said Steve Savas, a Baruch College professor, whose Privatization Research Institute analyzes state and city governments around the world. "Raising taxes and slashing services before you've even attempted to refashion the workforce is the wrong starting point."
The size of Bloomberg's proposed income tax levy on suburban commuters also has proven problematic. New Jersey Gov. James E. McGreevey (D) threatened to declare a cross-river tax war, and suggested the commuter tax could be DOA in Albany, where the state Legislature must give its approval.
Bloomberg allegedly is a Republican.
War Update: An Opportunity in Iran
A Second Iranian Revolution is brewing, and this time the revolutionaries are pro-American. Win that one, and we take a big step toward winning the War on Terror.
Frank Cagle says an opportunity has been lost and legislators who favor a state income tax remain in control of the Tennessee House of Representatives. With Naifeh wounded by the failure of the income tax and with many of his allies leaving the legislature to retirement or defeat, he appeared vulnerable. But never underestimate the ability of House members to disintegrate into disorganized rabble at the first sign of trouble. Sadly, he's right.
I'm not the only one who thinks Dr. Bill Fox's economic forecasts are wrong. The U.S. Government Accounting Office agrees with me.
"There's a dramatic and growing revenue concern for the states from e-commerce," said William F. Fox, a tax specialist and business professor at the University of Tennessee. His research puts the annual sales tax revenue lost through e-commerce at $10 billion, although a Government Accounting Office study in 2000 put it at only about one-third that amount.
Always remember: Dr. Fox's "study" claiming a huge current and future loss in tax revenue due to e-commerce was sponsored (i.e. bought and paid for) by the Institute for State Studies. The ISS is an arm of the National Governors Association. The NGA favors Congress allowing states to extend their sales tax to online purchases by customers in other states. Fox's "study" allowed the ISS and NGA to claim there was a "crisis," always a prerequisite before any group of politicians is able to ram a tax increase down taxpayers' throats in the guise of "tax reform" and "fairness."
For more on Internet commerce and sales taxes - and demonstrations of Fox's incompetence - go here and here and here and here and here.
But mostly, go here to read Colorado Gov. Bill Owens' excellent explanation of why taxing online purchases by remote customers is inherently unfair. It's in the latter part of the post.
Whom Do You Trust?
It's got a pro-income tax spin, but the rest of this column by David Kushma, editor of the editorial page of the Memphis Commercial Appeal, is pretty good.
Kushma reports on a recent report from the "Better Government Association," which he describes as "an independent watchdog group formed in 1923 to combat public corruption in Al Capone's Chicago long before Eliot Ness arrived." The report is a ranking of the 50 state governments on an "integrity index" based on honesty and accountability in state government. Tennessee ranks 44th. Arkansas ranked 31st and Mississippi 33rd, while ranking below Tennessee were Louisiana, Alabama, New Mexico, Vermont and South Dakota. But
Quoting from Kusmha's column:
"It begins to look like the state's for sale," said Terrance Norton, BGA's executive director and a former federal prosecutor. "Our form of government is sustained by public trust. If you don't believe your public officials are people of integrity, you've got problems."
The index ranks the states according to the effectiveness of their laws that fight corruption and promote government integrity. Those laws deal with such things as freedom of public information, protection of "whistleblowers" who expose government waste and corruption, campaign finance, conflict of interest, and rules covering gifts, trips and speaking fees for politicians.
Norton said the strength (or weakness) of such laws reflects a state's commitment to transparency of government processes, accountability for public officials, and strong, clear limits on what "public servants" can do in accepting campaign money and other favors. The BGA assigned each state a numerical grade on how close it came to meeting the best prevailing practices among state governments.
Kushma notes that the BGA's findings are "neither new nor startling"
After all, he says : Two years ago, another good-government group, the Washington-based Center for Public Integrity, surveyed conflicts of interest in state legislatures. In Tennessee, it found, a third of lawmakers sat on legislative committees that regulated their own professions or businesses.
A third received income from a government agency other than the legislature, even though the General Assembly often subsidizes those institutions. And 15 percent of lawmakers had financial ties to businesses or groups that lobby state government.
Such findings can - and do - cause voters and taxpayers to believe that the officials they elect are more concerned with promoting their own interests, or peddling their influence to the special-interest lobbyists who bankroll their campaigns, than with pursuing the common good. That's especially true when lawmakers of both parties conspire to limit electoral competition, and perpetuate their own tenure, through the gerrymandering of legislative districts.
As a result, citizens are going to look upon government as something they need to be protected from, rather than something that can improve their lives. That's hardly a recipe for progress.
Kushma asserts that some people oppose the income tax (which Kushma favors) even though it would benefit their own checkbook if the state adopted an income tax (a debatable assertion, but we'll do that another time), "based on the notion that, given their past performance, the politicians in Nashville can't be trusted to spend more tax dollars efficiently or even honestly."
On that point, Kushma is correct.
There is a way to solve that problem, if legislators want to.
They could pass a Taxpayers Bill of Rights amendment to the state constitution, similar to Colorado's, and put it on the ballot in the 2006 governor's race.
A smart Taxpayers Bill of Rights (TABOR) would have three essential components:
1. It would limit the rate of growth of state government spending from state tax revenues to the combined rate of inflation and population growth.
2. It would require surplus revenue above that growth cap be returned to the taxpayers via across-the-board tax rate reductions, unless the people approved in a referendum spending the surplus on a specific set of projects or programs proposed by the Legislature.
3. It would require tax rate increases and new taxes be voted on by the people.
Colorado's TABOR amendment - which ushered in a decade-long economic boom in that state - is considered the benchmark model of such a constitutional amendment.
Consider the words of Martin McBride, an Oak Ridge resident who is leading an effort to enact a local version of the Taxpayers Bill of Rights there. McBride emailed me just the other day.
Today’s citizen has typically seen many more political promises and experienced more tax increases than typical citizens have in the past. In my lifetime, I have been in three states where governors have broken solemn tax-related promises to their constituents. I have experienced a variety of tax increases---and heard all the assurances that “this would be the last major tax increase.”
I am an optimist in general, yet I find I have very little trust left to give my government in the tax arena. Many other citizens of my generation appear to feel the same. I see the advancing experience-level of American citizens is the single greatest reason why so many tax increases are being currently turned back across the country - good, old-fashioned lack of citizen trust in government.
Faced with declining citizen interest and trust, what options do our political systems really have in future tax decision-making? More promises probably will not work. About all that’s left are options that give folks a little bigger piece of the tax decision-making process, (a bigger piece of the action!) This line of thinking brings you to the conclusion that approaches like the TABOR - options which gives citizens a more-direct say-so in tax policy - are the coming thing in this country and are, in a sense, inevitable..
I think McBride is right.
I personally believe an income tax is more damaging to the economy than a sales tax, though a low, flat and constitutionally capped and TABOR-ized income tax would not do significant harm. I also believe Tennessee's constitution does not allow an income tax without the constitution being amended.
That said, I also believe this: if voters were given a chance to vote on a package that eliminates the state sales tax, the Hall income tax, the state's "death tax" on inheritances and estates, and the state's economically destructive franchise & excise taxes on business, replace it with a flat 4% income tax that applied on the first dollar of income for complete fairness, and include a TABOR amendment to cap the whole thing (and every other state tax to boot) - and guarantee future surpluses came back to the taxpayers - it might well pass.
I ran the numbers on such a package, incidentally, using data from the year 2000.
That year, the sales tax, franchise & excise taxes, Hall tax and inheritance/estate taxes brought the state $6.09 billion in revenue.
That same year, total personal income in Tennessee was $148.4 billion.
A flat 4% tax that year would have brought in essentially the same amount of revenue, $5.93 billion, a difference of just $160 million.
Under such a plan, the state would immediately switch from being an exporter of retail sales to retailers just across the border in lower-tax states, to being a retail magnet. And by wiping out the largest business tax, Tennessee would immediately become a business haven and an economic growth powerhouse. Increased economic growth would benefit workers with higher wages and more available jobs, while providing state government a surge in revenue. Meanwhile, the state's costs for various welfare services would drop as unemployment fell.
And in future years, the stronger economy would no doubt generate revenue surpluses, which TABOR would force the government to give back via tax rate reductions. Those reductions would begin to ratchet down Tennessee's income tax rate. Unless the people voted otherwise, the tax rate would never go up.
Such a system would force the Legislature to economize and prioritize, to cut the bureaucracy down to size and root out waste and duplication, to confront the entrenched special interests and tell them the party is over and their feeding trough is closed. It would force the Legislature to deal honestly and opening with the public as well, making them justify every dollar spent and every request to spend a surplus dollar.
And a TABOR-ized tax system would also clean up government, by lessening the power of lobbyists and special interests. Legislators would not be able to make promises to lobbyists and special-interest groups of lavish new spending in exchange for generous campaign donations, because TABOR would put surplus revenue off limits without approval by voters. Instead of courting the financial support of a few well-heeled lobbyists and PACs, legislators would have to convince a majority of voters that their proposals for new spending or new taxes or spending of surplus revenue made sense. Fewer and fewer legislative proposals would be tailored to curry favor with this well-funded special interest or that powerful lobbyist because the taxpayers would be the most powerful special interest, and ordinary citizens would be the most powerful lobbyists, which is as it should be.
Think that's pie in the sky? It's not. In fact, it's what has happened in Colorado.
The Rocky Mountain News once urged voters in that state to reject the TABOR amendment, when it was on the ballot in 1992, but on Nov. 7, 1999, the paper urged voters in Washington state to pass a similar measure there, saying that TABOR “actually strengthens the political process rather than destroys it."
"That's clearly what has happened in Colorado since the passage of TABOR," the paper continued. "Here, shifting responsibility for taxes from politicians to the public hasn't resulted in automatic rejection of every spending plan.
"But while Tabor hasn't straitjacketed government, it has accomplished a number of good things. It has heightened interest in elections and government policy; it has given public officials mandates they otherwise would have lacked; it has shrunk voters' sense of helplessness over the use of their hard-earned taxes; and last, but hardly least, it has strengthened the fiscal responsibility of state and local government."
A TABOR-ized tax system - whether it includes an income tax or not - would bring about what Mr. Kushma says he wants: a government the people can trust. A TABOR-ized tax system puts the ultimate political power in the hands of the people. TABOR trusts the people. You, on the other hand, want to get the people to trust their government again by having the very government they can't trust pass some more rules to toughen the rules that very government, ranked a dismal 44th in integrity, currently flouts.
Sorry, Mr. Kushma. Your goal is noble, but your approach is pure naiveté.
This Will Make You...
...feel good. Especially the ending.
An excerpt: The jihadists of militant Islam are reported to believe that as they toppled the Soviet colossus, so, in time, they can topple the American one. What they do not understand is that the Soviet state made war on civil society for most of its 70-year rule. Americans, meanwhile, have nurtured their churches, charities, and clubs. The Soviet Union fell because it was brittle as well as brutal. America, with its countless nodes of activity and authority, is somewhat more vulnerable than the USSR, but it is infinitely more robust. More robust than Al Qaeda realizes. More robust, even, than many Americans realize.
Larry Daughtrey is Usually Wrong
But this time he is so very right.
There are all sorts of little quirks in the machinery of the place. There are only half the welfare recipients that there were eight years ago, but the department's budget has doubled. The prison population is up 50%, and we spend $17,000 per inmate each year, more than the cost of four years at the University of Tennessee.
There's another nasty little secret: There's been a lot of rejoicing about how the new lottery will help more kids go to college, which is great. Their tuition, even with help from lottery scholarships, will pay only 40% of the true cost of their education. You've got to figure out how to pay the other 60% from tax money.
What Would Jesus Drive?
Have you heard of the group of silly preachers trying to convince you its a sin to drive an SUV by asking, rhetorically, "What Would Jesus Drive?"
Here is a brilliant answer from, as it turns out, a Nashville blogger who also happens to pastor a Nashville church.
It is impossible for me to live's Christ's life, nor can I meaningfully imagine Jesus leading my life . At best, I can hope to live a Christly life. But that makes the question not, WWJD, but "WWJHMD" - what would Jesus have me do? There is a particularity to my circumstances that Jesus never encountered, and to think that I can possibly say what he would do in my day, my place and my situation is arrogant, unless I use purely superficial situations.
Example: Last Monday night my wife and I went to Vanderbilt hospital be with a family whose five-month-old baby girl was literally her next breath away from death. The Gospels show that Jesus was responsive to that kind of tragedy, so far so good. But the breakdown occurs right there. Would Jesus have merely sat with the relatives (less mom and dad, who were with the baby in a medically restricted area) and simply prayed with them and offered purely moral support? Or would he have taken the girl by the hand and said to her, "Little girl, I say to you, get up!" (Mark 5:41).
I did the former, but I think Jesus would have done the latter.
IMO, for some clergy seriously to ask what Jesus would drive is to miss the entire point of Jesus' very life. Jesus wouldn't buy a car! He didn't even own a donkey; he had to borrow one to ride into Jerusalem. Jesus mostly walked from place to place. When necessary, he relied on transportation furnished by others - boats, for example. I have no problem imagining that Jesus would take a plane, train or automobile today. But if you offered to pick him up in a Ford Excursion, would he refuse? I think not!
Sensing is on the money with this one. I had planned to write an essay on the issue focusing on a logical argument regarding Jesus and SUVs. My point was going to be that environmental concerns are just one part of deciding what vehicle to drive, and that Jesus would also consider the safety of his passengers, and whether the SUV was the right vehicle for the task. But of course those are all tangential to the real issue, and I won't bother writing it now. Just read Sensing's piece.
It makes a ton more sense than this one-sided drivel.
UPDATE: Brock Yates has a good take on the Jesus/SUV debate:
Their contention is that if Jesus were touring Galilee today, he would have shucked his walking staff for a small, efficient, pollution-free automobile, as opposed to a giant sport utility vehicle (that might, on second thought, accommodate his 12 Disciples and be capable of navigating the more challenging sections of the Wilderness.)
Good point - one made equally well by the cartoonist for the Orlando Sentinel.
Memo to Bredesen: To Spend More, Tax Less
As Tennessee's state legislators prepare to return to Nashville for another season of taxing and spending (that is, after all, what government does), they would do well to read the report, Crisis in State Spending: A Guide for State Legislators, published in the past year by the American Legislative Exchange Council, the nation’s largest bipartisan, individual membership organization of state legislators.
In that report, two highly-accomplished economists explain why higher taxes ultimately harm a state's economic growth, and why reducing taxes (and reducing state spending) leads to higher economic growth.
Here's an excerpt from the report's introduction:
High taxes mean lower economic growth. High tax states grow slower than the low tax states.
U.S. examples abound. From 1964 to 1999, Tennessee grew approximately 20 percent faster than its northern neighbor Kentucky. Tennessee maintained low taxes, and indeed was one of nine states that had a falling tax burden over time. Kentucky’s tax burden, on the other hand, rose sharply.
You cannot find two states more similar than North and South Dakota. The tax burden fell in South Dakota, but rose considerably in its northern neighbor. The result? Economic growth was one fourth higher in South Dakota.
The two poorest states in the Union currently are Mississippi and West Virginia. In Mississippi, the tax burden fell slightly over time, while it rose sharply in West Virginia. Mississippi grew over 50 percent faster than the Mountaineer State, which probably will fall below Mississippi sometime in the next decade if it follows the suicidal fiscal policies of the past.
Colorado, with a falling tax burden, outdistanced neighboring Nebraska, Wyoming and New Mexico with rising taxes. New York’s tax burden increased more than that in neighboring Pennsylvania, New Jersey and Massachusetts, and it grew slower than any of them.
The reports also explores the effectiveness of various tax-and-expenditure limitation laws and constitutional provisions on the books in many states, from Tennessee's very weak spending cap to the very strong Taxpayers Bill of Rights amendment to the Colorado constitution, considered the benchmark.
During the recent Tennessee governor's race, the eventual winner, Democrat Phil Bredesen, criticized the Colorado plan, which losing Republican candidate Van Hilleary had held out as a model for Tennessee to emulate. The Bredesen campaign said such a Taxpayers Bill of Rights would lock Tennessee into staying at or near the bottom in education, etc..., as it would prevent much-needed state spending.
But the ALEC report reveals an interesting statistic - one that the Hilleary campaign should have publicized. (Indeed, the Hilleary campaign in my estimation blew the campaign in part because it was too timid on the Taxpayers Bill of Rights and didn't make it a major campaign issue.)
Colorado's TABOR amendment was passed in 1992. While it has resulted in big tax cuts for the people of Colorado, it has also ushered in an economic boom in that state. Economic booms can produce more revenue for state government, even at lower tax rates.
That appears to have happened in Colorado, which restrained spending via its spending cap but still increased per-capita state spending by 139 percent from 1990 to 2000, the third-largest increase among all 50 states.
Tennessee, which pursued a strategy of increasing taxes and increasing government spending in the 1990s, and routinely exceeded its spending cap, but because higher taxes reduce economic growth, the state actually brought in less revenue than it might have under a lower-tax/higher growth strategy.
Tennessee increased per-capita spending by 76 percent from 1990-2000.
In 1990, Colorado's government spent $2,504 per capita and Tennessee spent $3,753 - 50 percent more per capita than Colorado. By the end of the decade, Tennessee was spending $6,593, and Colorado had increased per-capita spending to $5,992. Tennessee state government now spends just 10 percent more per capita than does the government of Colorado.
Even though Tennessee raised taxes repeatedly during the 1990s in order to spend more, Colorado was able to raise spending faster by taxing less.
If Tennessee's next governor doesn't change direction on tax policy and reduce taxes, Tennessee will always be stuck near the bottom. Mr. Bredesen, the evidence of the past decade could not be clearer: If you want to spend more money, first cut taxes.
(It's also a pretty good way to get re-elected in a landslide.)
Owens in 2008
It's a few months old, but I think you should read Colorado Gov. Bill Owens' speech to the Ronald Reagan Banquet at the 2002 Conservative Political Action Conference, held in Arlington, Va., last February. Owens laid out the roadmap for a small state to become an economic powerhouse with a highly educated workforce and high-paying technology jobs.
It's a path Tennessee should follow.
Here's a long excerpt. After you read it, you should read the whole speech. If I had to pick the best GOP candidate for President in 2008 right now, I'd pick Bill Owens.
In 1992, we passed the Taxpayers' Bill of Rights, a citizen initiative that constitutionally limits the growth of all Colorado governments. State, counties, cities, school districts, special districts, all of our governments are limited by the Taxpayers' Bill of Rights. And under this Bill of Rights, government spending cannot grow faster than the sum of inflation and population growth. Government at any level can only grow the combination of those two, and that is the maximum. If revenues exceed that maximum, we have to refund those revenues to the taxpayers.
And the only way that taxes can be increased in Colorado is through a direct statewide vote of the people.
With all due respect to Howard Jarvis, this is far better than Proposition 13 in California, because the Taxpayers' Bill of Rights means that, in Colorado, since 1992, our governments have not grown faster than the nongovernmental sector except by a direct vote and approval by the people.
I added two provisions to the Taxpayers' Bill of Rights.
First, that no government funds can be expended to support or oppose any initiated or referred measure. Many of you live in school districts where when the school district goes to the ballot, the school district funds that ballot campaign. You ought to try to put a stop to that, because it’s unfair. It is not right. It is not fair to put government dollars in these elections.
Second, I added a provision to the Taxpayers' Bill of Rights that says that we can raise taxes on only one election day a year, and that’s the general election day. This way, everybody knows about the election, not just those few who might benefit from that tax increase.
As you can imagine, the debate over the Taxpayers' Bill of Rights in 1992 was fierce. My predecessor, the Democratic governor, said that, if we pass the Taxpayers Bill of Rights, it would be akin to throwing a hand grenade into a schoolyard of children.
A Republican county sheriff put on his county sheriff uniform for the first time in many, many years, appeared in TV ads and said, if we pass the Taxpayers Bill of Rights, he would be forced to chain his prisoners to the railing of the State Capitol, in a tent.
Well, the voters ignored those visions. They passed the Bill of Rights in Colorado, and here is the result:
Today, according to the Corporation for Enterprise Development, a national group that ranks all 50 states in terms of our friendliness to the private sector, Colorado has the best business climate in the entire country.
We have the most technological workers per 1,000 of any state in the country, according to the American Electronics Association.
We have the best educated work force in the country, measured by college degrees per 1,000.
Both the Milken Institute and the Progressive Policy Institute say that Colorado has the third best ranking in the country in terms of being ready for the new economy.
We are first in per-capita income growth in the 1990s; fifth lowest poverty rate of all 50 States; third fastest growing in population.
Of most importance, the Tax Foundation says that we have the fourth lowest taxes per capita in the country.
All of this, I believe, is made possible because we have had the common sense in Colorado to limit the growth of government. That has allowed us to have the nongovernmental sector able to grow and prosper. And we are working hard to keep that economic engine growing.
We have been able to cut taxes by a billion dollars in the three years that I have been governor, which isn’t bad out of a $6 billion general fund state budget. And we have cut the income tax twice. We have cut the sales tax once. We have ended the marriage penalty in Colorado, something that we have also worked on nationally.
Owens also discussed the issue of taxing online purchases, and why such taxes would not be fair.
One more issue, and that is the taxation of the Internet. Some of you are very, very involved, as I am, in terms of opposing this. Let me just suggest that Ed Feulner at the Heritage Foundation was right when he said that perhaps the greatest business development since the creation of money is the Internet. And yet today, all across this country, there are mayors, there are legislators, there are some in Congress, and yes, there are some governors, who want to tax the Internet. Some will say it is a matter of fairness. If we pay a sales tax on Main Street, they will tell us, why shouldn’t we have to pay a sales tax when we buy items over the Internet?
Well, here is the difference. And as conservatives, it is important we understand this fundamental distinction, because this issue will be debated for the next few years in the United States. When I go on Main Street to buy something at Wal-Mart in Aurora, Colo., I am using the city street, I am protected by the city police force. If there is a fire and I need the help of the fire department, they are there. As I am going to that Wal-Mart or while I am in that Wal-Mart, if I drink water from the water faucet, I am using municipal water. I am in fact receiving city services when I go to that Wal-Mart and make that purchase.
When I buy something over the Internet from Lands End in Wisconsin, the only impact on any government in Colorado is the UPS truck that arrives at my door, bringing me that package. And UPS, I can assure you, more than pays its fair share in gas taxes for the use of that local or state road. There is no nexus between a service rendered and a service delivered for that Internet tax that some would want me to have to pay to Aurora and to Colorado.
Twenty states are now meeting regularly, setting up the system, so that if Congress ever overrules [California Rep.] Chris Cox and allows us to tax the Internet, there are states already ready to go forward with the compact to make this happen. Well, let me just tell you—and I bet Colorado is not the only state that will do this—but it is my goal, if that day ever happens, to have Colorado be the Switzerland of Internet taxation. I want us to be a tax haven so that these companies move to Colorado.
There's more to Owen's speech. Read it.
Louisiana May Tap Surplus to Cover Shortfall
Like many states, Louisiana faces a projected budget gap as projected spending is larger than projected revenue. The state's governor wants to tap the state's "rainy day" fund to fill the gap.
The good news is, Gov. Mike Foster is trying to avoid increasing taxes to fill the shortfall, and the Foster administration has already reduced planned spending this fiscal year by $75 million.
The Baton Rouge Advocate reports: A constitutional amendment passed by voters in 1998 created the Budget Stabilization Fund, commonly called the rainy-day fund, to be covered by budget surpluses in good years. The amendment set rules requiring that extra state money be put into the fund in good years and details how money could be spent during a budget crisis. The administration can spend up to one-third of the fund in a year - about $88 million of the $263 million currently in the fund. Foster needs two-thirds approval from the Legislature to tap the fund.
The governor blames the budget gap on several factors, including $50 million in costs imposed on the state by Hurricane Lili and Tropical Storm Isidore cost the government $50 million, and $3.4 million in costs from the outbreak of the West Nile Virus. Notably, he didn't do as Tennessee Gov. Don Sundquist did: blame the state's budget problems on taxpayers not paying enough taxes.
Foster is a lifelong Democrat who switched his party affiliation to Republican just before running for governor. He appears to be acting here as a conservative Republican.
But looks can deceive. The truth is, the Louisiana budget has grown by over $6 billion during Foster's two terms in office and Foster has steadfastly champion tax increases, and has called legislators who voted against his tax increase proposals "tooth fairies."
So while Foster looks to use the "rainy day" fund for this this budget gap, overall he's one alleged Republican who likes to put the bite on taxpayers.
Kentucky Gov. Proposes Tax Hikes
A Democratic chief executives admits to having an affair - and admits to lying about it. And he proposes tax increases. No, it's not Bill Clinton. It's Kentucky Gov. Paul Patton, who in September, Patton admitted an affair with businesswoman Tina Conner. Now he's back, and is proposing tax hikes to offset slowing revenue growth because of the sluggish economy in the Bluegrass State. Patton's a Democrat, so he's just being true to his party's tax-and-spend nature.
According to the Louisville Courier-Journal, Patton said Wednesday that the state must raise taxes, make substantial spending cuts - or both - to handle a revenue shortfall of a projected $144 million in the current fiscal year and a projected revenue shortfall of $365 million the next fiscal year.
In Kentucky, Democrats control the state House, Republicans control the state Senate. Patton "said he's already cut expenses enough, and in a written report hinted at raising taxes on businesses," reports the CJ. His report said the state must "substantially raise revenues or make draconian cuts."
Senate Majority Floor Leader Dan Kelly, a Republican, said Patton was implicitly asking for higher taxes, but the state can cut more spending without substantially affecting services.
"We really feel like there is a lot more work to be done to get spending under control before you turn around and ask the people of Kentucky to pay more revenue," Kelly told the CJ.
Kentucky is one state where the Republican leader appears to be standing up against higher taxes and looking to spending cuts to balance the budget.
On the Right Fiscal Track in North Carolina
Good news from North Carolina, where the projected budget gap is approaching $1 billion. Remember: a projected budget gap is merely the difference between projected future spending and projected revenue. Since no money has been collected or appropriated, it is merely a difference of opinion between what the bureacracy desires to spend and what the taxpayers have provided.
According to News 14, a television station in the Research Triangle area of North Carolina, "some lawmakers are trying to find new ways to save money," and a special legislative committee on government efficiency spent two hours looking at cost-cutting measures Thursday. "With a state budget shortfall projected at $1 billion or more, leaders of the House committee say they're going to need to find ways to help the state tighten its belt," the news program reported. Republicans took control of the state House in the November election. According to one legislator, the leadership in both parties have "said absolutely, we need to find more efficient ways to operate." State Rep. Wilma Sherrill, a Republican, says: "A lot of us have been talking about duplication of service and consolidation of services for years, and I'm excited that someone is finally talking about it. It is time that we get rid of the fat." The news report says some members of the House Government Efficiency Committee "want to take a closer look at the state personnel system, state grant programs, and zero-based budgeting."
All good things.
Incidentally, the story doesn't mention tax increases. They're on the right track in North Carolina.
It's The Same War
Despite what Al Gore says, there ARE links between Iraq and al Qaeda. Here is a story documenting how an al Qaeda subsidiary is attacking Kurds, who are American allies in Northern Iraq.
A former member of the al Qaeda-connected Islamist group Ansar al-Islam ("Soldiers of God") who, in the story, uses the pseudonym "Rebwar Kadr Said" to conceal his identity, says links between Kurdish Islamist groups to Afghanistan go back to the 1980s, when Abdullah Azzam, one of the founders of the Al Qaeda terrorist organization, held Mullah Krekar and a Palestinian man by the hand, and told his followers: "Take care of these two," meaning the groups each leader represented, Kurds and Palestinians.
"They dreamed of having a Taliban government in Afghanistan, a Taliban government in Kurdistan, and to join them through Iran," says Said.
Ansar al-Islam is the same terrorist organization that U.S. Intelligence determined was testing chemical weapons in Northern Iraq earlier this year, apparently with the blessing of Saddam.
War against Iraq is not a diversion from the war on Islamist terror. It is the same war.
Poindexter's Prying Project
Here's more on that creepy "Total Information Awareness" project underway inside the Defense Advanced Research Projects Agency (DARPA), the creator of the forerunner of the Internet.
From the WaPo: Pete Aldridge, the Defense Department undersecretary for acquisition, technology and logistics, held a news conference yesterday to officially outline the program. He used the opportunity to try to quell all the Orwellian comparisons. Aldridge said the system is just in an experimental stage right now, mostly using made-up data. Poindexter has said that private information about innocent people would be protected.
"You're looking for trends in transactions that are associated with some potential terrorist act," Aldridge said, as quoted by Newsday. "And you're trying to put those pieces together." The Associated Press quoted Aldridge as saying: "This is an important research project to determine the feasibility of using certain transactions and events to discover and respond to terrorists before they act." The system would scour passports, visas, driver's licenses, credit cards, rental cars, airline tickets, gun purchases, arrest records and other records. Aldridge also tried to soothe concerns over Poindexter's role, saying if the system is put to use by law enforcement and the government, Poindexter won't be involved anymore.
This is one part of the Homeland Security program that needs to be axed. Now. Poindexter shouldn't be involved, because the project itself should not exist.
Amen to This
I've got nothing to add to this excellent suggestion from James Robbins except this: Call your senators and congressman and tell them to make it so.
I have always admired the fact the Victoria Cross was originally manufactured from metal taken from Russian artillery pieces captured during the Crimean War, from which the decoration originated. In that spirit I would like to propose something similar - that all campaign medallions awarded for service during the War on Terror be cast from metal from the World Trade Center towers. Currently the salvaged beams are being cut up and sold for scrap in Asia. One long beam would supply enough metal for thousands of medals. And I think it would make the decorations that much more meaningful to the men and women who earn them, as well as let the survivors know that a small piece of the buildings in which their loved ones perished has been put to a noble use.
As the last steel beams are broken down and shipped to Asia for purposes mundane, would it be too much to ask that one or two be set aside for this purpose before the opportunity eludes us? And who can take the action necessary to encourage the Defense Department to authorize creation of the medals? Are any members of Congress at all concerned, apart from Senator Inouye? Could the commander in chief motivate this effort by Executive Order, and bring a sense of reverence to what could otherwise be a stuffy bureaucratic process? Surely too much is at stake to let this matter escape us. What veteran of this conflict, years hence, would not look with special thoughtfulness at such an award, knowing its hallowed provenance? And who would not bring it forth to show to generations now unborn, to let them feel its weight in their young hands, to tell the story of the fateful day, to renew the pride in service well performed, and to remember?
Today's Funny Page
I know, I know, the election is over. But this TV ad from the Club for Growth is still funny.
A Democrat Fiddles as South Carolina Burns
A newspaper editorial urges South Carolina Gov. Jim Hodges to either call the Legislature into session to deal with budget cuts, or order the state Budget and Control Board to make the cuts needed to close a $331 million budget gap in the current fiscal year.
"Thus far, Hodges has opted for the irresponsible choice: doing nothing," says the Greenville News in the scathing editorial.
By law, Hodges must do one or the other - either summon the Legislature into session or have the Budget and Control Board make the necessary 5-percent cut to the state budget, the paper notes. "Of the two options, calling the Legislature back to Columbia is preferable because state lawmakers can prioritize spending and safeguard vital services such as education, health care and law enforcement. The budget board, for its part, only can enact across-the-board cuts, which indiscriminately impact both crucial services and less important expenses. The budget board already has cut the state budget three times in the past two years, allowing the Legislature to escape the responsibility and accountability expected of lawmakers."
Hodges, a Democrat, appears ready to just dump the budget problem into the lap of Republican Gov.-elect Mark Sanford, who beat Hodges 53% to 47% in the November election. Sanford campaigned on a pledge to cut taxes and phase out the state's income tax, and received key endorsements based on his willingness to lead and tackle tough problems. During the campaign, Hodges refused to deal with the growing budget gap in order to avoid negative headlines that might hurt his re-election bid. He lost anyway, and deservedly so.
Now, he continues to play petulant politics rather than do his job.
GOP Does it Right in Arizona
Arizona Gov. Jane Hull is proposing spending cuts to close a budget gap in that state. "With revenue slipping below projections and some program costs rising, the state will see a projected shortfall of up to $500 million in the $6.2 billion budget for the 2002-2003 fiscal year that ends June 30," the Associated Press says. Part of Hull's $409 million answer to the budget gap included a small tax increase on Medicaid premiums, but the Republican-dominated Legislature didn't accept that proposal.
Knoxville News-Sentinel columnist George Korda assesses the legacy of Tennessee Gov. Don Sundquist, who spent the state into a huge budget crisis and leaves office with two thirds of Tennesseans giving him an unfavorable job approval rating.
Gov. Don Sundquist thinks Van Hilleary’s campaign ads criticizing Sundquist hurt Hilleary’s chances of being elected governor. Apparently Sundquist had the TV off when Phil Bredesen’s commercials aired calling for a change from "the last eight years." Sundquist also said he’d rather retire having done the best he could than just having been a caretaker.
The last four years was the best he could do?
There's other good stuff in Korda's column as well.
Blogging: Important to Me, You and Democracy
So says Rocky Mountain News columnist and editorial writer Linda Seebach.
Weblogs are "going to be as important a political force as talk radio," Seebach writes. Blogs are "the Reader's Digest on Internet time, instant, interactive, uncensored access to a dazzle of events and ideas." She cites several examples of how blogs have been used to ferret out the real truth of an evolving story - from the role several sites played in debunking a history of gun ownership in America to one site's gleeful take-down of political documentary filmmaker Michael Moore. Blogs "enforce a certain level of honesty," she says.
That, incidentally, is why this weblog exists. If you want it to continue to exist, please make a donation in the Amazon tip jar.
Income Tax No Guarantee of Revenue Growth
Check out what's happening what's happening in Missouri, a state the depends heavily on an income tax to finance state government. It puts the lie to those in Tennessee who said an income tax would prevent the state from facing revenue shortfalls.
From the Kansas City Star: "Missouri's budget deficit could grow to $300 million by next June, leaving Gov. Bob Holden with few ways to avoid painful reductions in government programs. The budget director, Linda Luebbering, said Tuesday that the state took in $102 million less than projected through Oct. 31. Individual income taxes, which had been projected to rise by 4 percent this year, continue to muddle along at last year's level."
Hmmm. They have an income tax, yet they still have a budget gap.
Notice the pro-Big-Goverment-spending bias in the first sentence of the Kansas City Star story. Painful cuts. Apparently, the KC Star doesn't leave its opinons on the editorial page anymore.
So, which will it be, Missouri? Spending restraint or higher taxes? Oh, sorry. It looks like higher taxes. Missouri Gov. Bob Holden "will pitch his plan to raise new money at a public hearing Thursday in Independence. The meeting, at 3 p.m. at the Truman Museum, is the first of four public hearings throughout the state that will emphasize the critical condition of Missouri's finances," says the Star.
Holden is a Democrat.
If a Democrat Can Do It...
Maryland has a budget gap. Maryland's outgoing Democrat governor is responding by cutting spending. Even better news: the income Republican governor wants to reduce spending even more.
From the Washington Times:
Gov. Parris N. Glendening introduced a plan yesterday to eliminate the state's estimated $498 million budget deficit by imposing spending cuts for most agencies but avoiding layoffs for state workers. Mr. Glendening said the plan, which spared K-12 education from cuts, would leave Gov.-elect Robert L. Ehrlich Jr. a balanced budged and $646.7 million in cash reserves when he takes office in January. The plan called for cutting $172 million in spending and taking $189 million from the state's $500 million revenue-stabilization fund — informally known as "the rainy-day fund."
"It's a start and it's just a start," said Paul Schurick, spokesman for the Ehrlich transition team. Mr. Schurick also said the plan needs to be examined closely because it appeared to rely mostly on one-time savings and does little to reduce next year's anticipated $1.5 billion budget shortfall. "The cost of state government has got to shrink," he said.
Why is it that some Democrats - like Maryland Gov. Paris Glendenning and Mississippi Gov. Ronnie Musgrove can hold the line on spending or even cut spending to handle revenue shortfalls, while Republican governors like Kenny Guinn in Nevada and Mike Huckabee in Arkansas feel that they must raise taxes first, rather than reduce spending? Did our guys learn by watching Tennessee Gov. Don Sundquist in action?
Perish the thought.
The good news for Maryland taxpayers is, Ehrlich isn't following the Sundquist model.
Kansas shortfall means... spending cuts!
Here's another update on how various states are dealing with budget gaps.
Kansas Gov. Bill Graves, a Republican, said Wednesday he will make spending cuts to address an expected $310 million shortfall in the current year's state budget. Kansas faces a projected budget gap - the difference between projected spending and projected revenue - of $1.1 billion in fiscal year 2004, which starts July 1, 2003, unless lawmakers reduce spending or raise taxes.
Graves is nearing the end of his term, but has decided to make the cuts instead of dumping the budget problems onto Kansas' next governor, Kathleen Sebelius. She's a Democrat, which means she talks out of both sides of her mouth when it comes to taxes.
From the Wichita Eagle: A spokeswoman for Sebelius said the governor-elect likely will not reverse Graves' cuts in the 2002-03 budget even if they include schools. Sebelius promised throughout her campaign that she would not cut school funding. "She will respect the decisions he makes in '03 and will not second-guess him," spokeswoman Nicole Corcoran-Basso said.
Translation: "We made promises to spend a lot of money we don't have, so thank God Bill Graves has the sense to be responsible and reduce spending to match revenues, because we Democrats hate having to do that sort of thing."
Tax Revenue Goes Up In Smoke
Last summer, lawmakers in Indiana raised the state's cigarette tax from 15 cents a pack to 50 cents, to help balance the state budget. Four months into the fiscal year, revenue from the cigarette tax is up - but not by as much as the state had hoped.
"The state is collecting more money in cigarette taxes compared to last year, but collections are down from where state budget makers thought they'd be when the legislature increased the tax," reports WISH-TV in Indianapolis.
"In the first four months we've been down about $17.8 million below what we expected, " said Budget Director Marilyn Schultz.
What's happening? The little guy is getting hurt by the tax increase, as usual. Indiana stores that sell cigarettes have lost business, while the state has raked in more money from some customers and driven others to avoid the higher tax by going out-of-state or online to buy their cigarettes.
"The state budget director says more people have stopped buying cigarettes in Indiana," reports WISH-TV in Indianapolis.
Why do state revenue forecasters tend to forget that when taxes are raised, taxpayers alter their behavior? The decline in cigarette purchases in Indiana after the cigarette tax was more than tripled was entirely predictable, except to Indiana revenue officials apparently.
Never Thought I'd Say This:
Sen. Dianne Feinstein is right.
As more is becoming known about the Total Information Awareness System, a Pentagon research project headed by former Iran-Contra figure John Poindexter, more people are becoming alarmed about the implications.
The Pentagon tried to allay those concerns Wednesday, stressing that it is only ``an experimental prototype'' and that Poindexter's involvement is limited to the research. But Sen. Dianne Feinstein, D-Calif., said she plans to introduce legislation to ensure that the project does not infringe on the privacy rights of Americans.
Read this from today's San Jose Mercury News for the whole story.
Oregonians Oppose Tax Hike
The new Democratic governor of Oregon wants voters to approve a $724 million temporary income tax hike in a referendum in January. Gov.-elect Ted Kulongoski, who only defeated Republican Kevin Mannix 49-47 because a Libertarian candidate sucked votes away from the Republican, says the tax increase is better than cutting more than $300 million from education, health care and other programs to deal with a budget shortfall.
Voters in Oregon in November overwhelmingly rejected a plan to create a statewide government-run healthcare program - a plan that would have doubled and tripled taxes on most Oregonians. Voters also defeated 18 out of 25 proposed tax increases for local schools on ballots across the state. “It’s very clear that people are not in the mood to depart with additional dollars,” said Oregon independent pollster Tim Hibbits.
A Hibbits poll for the Portland Oregonian and KATU television found only 37 percent of Oregon voters said they were likely to vote for the proposed tax increase. Hibbits said he doubted Kulongoski could change many voters' minds.
Opponents of the tax increase say voters don't want taxes raised during a troubled economy. "Taxpayers are really getting tired of being punished because the state can’t balance its budget,’’’ said Jason Williams, executive director of the Taxpayers Association of Oregon.
As you might expect, unions such as the AFL-CIO and education groups back tax increase.
The fact that nearly two-thirds of Oregonians are opposed to it is remarkable, given Oregon has long been one of the nation's most liberal states, and a bastion of tax-and-spend Democrats. If Oregon is in the midst of a tax revolt, anti-tax sentiment is a full-blown national trend.
Fries With That?
An excellent editorial in the East Valley Tribune, a paper in the Phoenix suburb of Mesa, alerted me to the incredible stupidity of a group called "Commercial Alert."
It seems the group wants UNICEF to cancel a fund-raiser involving the McDonalds hamburger chain, a fund-raiser designed to raise $5 million to help UNICEF fight global child malnutrition.
Commercial Alert's executive direct, Gary Ruskin, "and a bevy of physicians, professors and sundry activists" signed a letter to UNICEF asking them to cancel the project, reports the Tribune.
According to the organization's web site: “Commercial Alert's mission is to keep the commercial culture within its proper sphere, and to prevent it from exploiting children and subverting the higher values of family, community, environmental integrity and democracy.”
The paper comments, To Rushkin and his ilk, there is no such thing as "corporate citizenship." Just greed, which must be segregated from society's "higher values." Presumably if, in the process of keeping corporate America in its seamy corner, a few thousand children starve — well, so be it. At least we've protected our "higher values."
We see this “let them eat dirt” attitude all too often these days. We see it in the riot-torn streets outside World Trade Organization meetings and on Web sites demonizing genetic engineering of food crops.
And our response is this: We hope you, dear reader, will stop at McDonald's today in observance of World Children's Day. And whether you buy a Big Mac or a Happy Meal, we urge you to toss in an extra buck or two for UNICEF. And spare a scornful thought for those whose narrow, politically correct agenda moves them to disparage such a worthy partnership to save children's lives.
I'll eat to that.
Here's some fine counsel regarding what the Republicans and the Bush administration should push for now.
In a 2001 study on tax simplification, Congress' Joint Committee on Taxation found the tax code consisted of 1,395,000 words in 693 sections applicable to individuals, 1,501 sections applicable to businesses and 445 sections applicable to tax exempt organizations. A taxpayer filing a 1040 form could face a return of 79 lines with 144 pages of instructions, 11 schedules totaling 443 lines and 19 separate worksheets of embedded instructions.
The corporate tax code was even worse. And the cost to the economy, only for administering and complying with the rules - not including loses in efficiency from the distortions in the code - ranged from a low estimate of about $75 billion a year to a high of $300 billion.
The Tax Foundation, taking a mid-level assessment, noted early last year that compliance with federal tax laws requires the equivalent of 2.7 million full-time workers. That's more than the federal civilian payload, about double the military force and three times the number of police on the street.
As Aldona Robbins of the Institute of Policy Innovation noted, only by first tackling the structural problems with a tax system that continues to punish savings and investment can Republicans advance another primary agenda item - reform of Social Security.
The GOP has long held itself up as the party of ideas, especially on taxes. A failure by a GOP now in control of Congress and the White House to deal with the numerous deficiencies of the tax code would indicate it has no confidence in its tax ideas, so why should voters have confidence in what Republicans say about taxes?
Well, This is Lovely...
Most of this Seattle Times story about suspected terrorist James Ujaama's vision of the perfect Islamic state will make you either barf at his vision of a great society, or just shake your head in wonder that such people exist - or drop to your knees and pray a prayer of thanks to God that Ujaama and his friends aren't going to win.
Ujaama and Abu Hamza, seated at a small table next to each other, paint a picture of an ideal, worldwide Islamic state, beginning in Afghanistan, and urge Muslims to move there, build villages, attend military training camps and support the Taliban government.
And then there's this little snippet of info about Ujaama's pal Hamza, whom U.S. federal prosecutors have targeted for indictment on terrorism charges:
At one point in the video, Ujaama turns to Abu Hamza and adjusts the microphone for the cleric, who lost his hands while making a bomb in Bosnia...
No word on where, exactly, he lost his mind.
Lovely people. Brought to you by the Religion of Peace©.
Uber-liberal columnist (and, inexplicably, Vanderbilt University business management professor) Bruce Barry has lots of kind things to say about President George W. Bush in his Nashville Scene piece ... until the very end of his piece, where Barry offers the obligatory "Yes, But..."
Yes, Barry says, Bush has emerged as a good leader. But... he hasn't signed on to the liberal agenda. So he's not a good leader.
The late 2002 edition of George W. Bush is evidently more focused and polished than the early 2001 inauguration model. But authentic leadership transcends persistence and strategic gloss; it transforms the body politic through substantive social progress. Bush falls short here: We have a president who is eager to wage war, but unimpressed with civil liberties, indifferent to corporate corruption, unconcerned with millions who lack basic health insurance, unmoved by environmental degradation and unwilling to view education through anything more sophisticated than a lens of standardized testing. Honest liberals will grant that Bush has overachieved, yes, but such is the inevitable dividend of low expectations.
Liberals always have "low expectations" for an elected official of the opposite party who doesn't share their agenda.
At Least Some Republicans Are Opposing Tax Hikes
Several posts below detail how some Republicans are caving in and supporting higher taxes in states facing a gap between projected revenue and projected spending.
There's good news, too. The Milwaukee Business Journal is reporting that, despite the election of Democrat Jim Doyle as the next governor of Wisconsin, some are optimistic he will not resort to tax hikes to fill the gap. Doyle vowed during the campaign he would not raise taxes, but the state's business community is skeptical and fear the state's first Democrat governor in 16 years will try to raise taxes to cover a projected budget deficit approaching $3 billion.
"I don't think any of us understands the enormity of the budget deficit and the strong impetus to increase taxes," said Steve Sobiek, executive director of the 500-member Independent Business Association of Wisconsin. "We need something big and bold to improve the business community without a tax increase."
Sobiek suggests repealing Wisconsin's estate tax and allowing businesses to establish medical savings accounts for employees.
Jim Haney, president of Wisconsin Manufacturers & Commerce in Madison, says his membership is optimistic that taxes will not be raised because both Doyle and the Republican candidate ran on "no new taxes" platforms. "There seems to be a will not to look to taxes first to fix the deficit," Haney said.
The business community is hoping the Republicans, who took control of the state Senate and added to their majority in the state House in the Nov. 5 election, helps Doyle keep his pledge.
Meanwhile, in Minnesota, the election of a Republican governor has business leaders hoping Gov.-elect Tim Pawlenty "will reduce regulation, build coalitions to address tough issues and radically overhaul state government in an effort to uphold his promise to stave off tax increases," reports the Minneapolis-St. Paul Business Journal.
Pawlenty's no-tax-hike stance "means he will have to cut government and find new ways to fund projects to balance a projected $3 billion budget deficit rather than saddling businesses with added costs," the paper says.
But, so far, people believe he will do his best to keep his pledge. "This is about the most-friendly-to-business administration that we've seen in recent memory," said Lawrence Jacobs, a professor of political science with the University of Minnesota. Jacobs predicts Pawlenty will pursue an overhaul of state government that will shift many responsibilities to the private sector, a "thorough raking out."
In Minnesota, "state tax revenue is expected to grow 11 percent during the next two and a half years, while spending is expected to grow 11.6 percent," the paper reports.
Duane Benson, executive director of the Minneapolis-based Minnesota Business Partnership, says the new governor recognizes that the poor economy makes this a bad time to raise taxes. "What the governor-elect is doing is saying we don't have to raise taxes, and it's doable," he said. Benson says most business people could make up the difference in the state's projected revenue and projected spending through spending cuts.
Lucky Minnesotans. Not only did they get Norm Coleman in the U.S. Senate, they've got a governor who thinks the solution to a budget gap is to reduce the spending, not raise the taxes.
Election Day: A Fine Look Back
Politics has become the Democrats' religion, says columnist Mark Steyn in a gotta-read-it piece published in the Spectator.
Here's an excerpt: The do-what-you-gotta-do philosophy of the McAuliffe crowd is making the party look just plain ugly: at Republican concession speeches, the bromides about congratulating the Democratic victor and urging everyone to get behind him in the best interests of our state were listened to respectfully; at Kathleen Kennedy Townsend’s concession speech in Maryland and Gray Davis’s victory speech in California, the pro forma acknowledgments of their Republican opponents were greeted by boos. From the crowd. This was in keeping with what I think posterity will record as the ‘defining moment’ of the campaign — the grisly televised ‘memorial service’ for the late Senator Wellstone held in the solemn cloisters of the basketball arena at the University of Minnesota at which fist-pumping mourners hissed Republican senators, and deranged activists publicly demanded that these alleged GOP friends of Paul demonstrate their loyalty by renouncing their parties and campaigning for his posthumous victory. To those watching at home, it looked like hidden-camera footage from inside a particularly insane cult. It’s a commonplace, especially in Britain, to hear the ‘religious Right’ referred to as a bunch of weirdos who are an embarrassment to the Republican party. Well, the Minnesota memorial gave us the religious Left: they don’t believe in God, they believe in politics; the Democratic party is their church, Wellstone their latest martyr, and the campaign a crusade. They couldn’t have been any freakier if they’d been speaking in tongues.
Read the whole thing.
Today's Funny Page
Molly Ivins gets what she deserves in a fine piece of work by one ticked-off Texan.
Of Ivins, she writes: Oh. Good. Lord. You crazy bat. Our arrogance doesn't create terrorists. If that were true, I'd be killing people right now because Susan Sarandon's arrogance is frankly more than I can bear. Terrorists terrorize because they're psychopathic freaks who would rather kill successful people than help make their own countries successful.
Read the whole thing.
The Only Thing Certain is Uncertainty
Economist James K. Glassman examines the role uncertainty plays in the economy.
The argument is that investing is fraught with uncertainty, with real risks. The world of business is complicated and unpredictable, and, as Mitchell writes, "the attempt to develop accurate forecasts of earnings or market prices is a fool's errand." Successful investors figure out strategies, not to overcome risk, but to live with it.
Still, Wall Street and Main Street abound with people who think the key to picking winners is to scrutinize income statements more carefully or to build better financial models. But, "no matter how strenuous and ingenious, efforts to slay the uncertainty dragon have always resulted in disappointment, anger, sub-par returns and occasionally criminal behavior."
This is the essential nature of stock investing: It's a dark and risky place. But, as Mitchell puts it, "if investors are to earn a return above the risk-free rate, they have no choice but to invest in securities whose returns are not guaranteed." In fact, stocks have, for the past 76 years, earned a return that, in the average year, is 5 or 6 percentage points higher than the risk-free rate. You don't get returns like that without taking risk.
Stock investors, especially since the early 1990s, have seen high returns as an entitlement. And politicians - as well as some journalists - play into these false expectations, promoting the notion that the only reason people lose out in the market is that someone is cheating them, or not telling them enough about the inner workings of companies. But such concerns are really a distraction. The nature of business is deep uncertainty.
Mitchell is not merely saying that stocks lack a money-back guarantee. He is saying that, when it comes to specifics on how a company will perform, hardly anyone knows anything.
You certainly should read the whole thing.
Economy Update: Greenspan Says Its Growing
Federal Reserve Chairman Alan Greenspan says the economy is growing.
Greenspan said Tuesday that financial innovations have helped the United States and the world absorb various shocks from the loss of $8 trillion of wealth in the U.S. stock market to the terrorist attacks and a number of high-profile corporate bankruptcies. Greenspan cautioned governments to resist the temptation to over-regulate financial markets, saying new types of financial instruments have been a major reason the United States and the global economy have withstood the shocks of the past 2.5-years. "Despite the draining impact of a loss of $8 trillion of stock market wealth, a sharp contraction in capital investment and, of course, the tragic events of Sept. 11, 2001, our economy is still growing," Greenspan said in a speech to the Council on Foreign Relations.
Take That, Ted Rall
According to my traffic tracker, somebody clicked onto my site after running a Yahoo search on the phrase "theories about Wellstone's death" - and my parody of Ted Rall's ridiculous column, in which he speculated that President Bush had the senator killed, came up fourth. It also comes up sixth if you Google the four words ted rall paul wellstone.
War Update: Barbarians at the Gates
History holds important lessons for Western civilization in the War against Terror, says Brink Lindsey, a senior fellow at the Cato Institute.
That morning, complacency and triumphalism gave way to grief and rage — and fear. The solid ground of security and comfort vanished beneath us, and we stared down into an abysmal vulnerability. We saw, with sickening clarity, that it was flatly impossible to defend every possible target, to anticipate every possible act of random destruction. We were not unnerved, far from it: The trial of September 11 has instead stirred American resolve and fortitude. But a shadow had fallen over our lives, and most of us knew that it would not recede for a long, long time.
We face, now and for the foreseeable future, the threat of a new barbarism. The new barbarians, like those of old, consist of groups in which every member is a potential warrior. Like their predecessors, the new barbarians rely on their ability to outmaneuver their civilized adversaries, to concentrate deadly force at vulnerable spots. But unlike the old steppe nomads, the new barbarians seek neither booty nor conquest. Our new barbarian adversaries pursue a strategy of pure and perfect nihilism: They seek destruction for destruction's sake.
Glenn Reynolds' comments on Lindsey's essay are also worth reading.
If a Democrat Can Do It, Republicans Can Too
Here's an interesting story out of Mississippi exploring how tight budgets forced that state's Democrat governor to hold the line on spending. Are you listening, Republicans?
In fact, Musgrove, a Democrat, has behaved far more conservatively in many respects than Fordice did. Mississippi was spending $2 billion a year (the general fund budget) when Fordice arrived, $2.7 billion when he ran for re-election and $3.5 billion when he left office. Fordice signed off on nearly every penny of it. Three years into his term, Musgrove is still offering up a $3.5 billion budget.
Nevada May Gamble on Higher Taxes
Nevada's Republican Gov. Kenny Guinn asked a task force for recommendations on changing the state's tax stucture, and now he's got them.
No surprise: it recommends higher taxes. Government task forces dominated by government officials and special interests always do.
Reports the Las Vegas Sun:
The study, prepared by the Governor's Task Force on Tax Policy in Nevada and forwarded to Guinn on Friday, includes recommendations for new or increased business, property, entertainment and "sin" taxes to help eliminate projected state budget deficits. The general fund that supports public services such as eduction, prisons and welfare is projected to have a cumulative deficit of $4.56 billion by fiscal 2010.
Comment: the "projected" deficit is based on "projected" spending and a lack of "projected" government downsizing.
The report also looked at how much federal money Nevada gets, and finds it is below average. Other states get, on average, 20 percent of their funding from Uncle Sam. Nevada gets 14.5%.
This is a problem, according to one Task Force consultant, Las Vegas economic analyst Jeremy Aguero, who told the Sun that Nevada gets less in part because it has been undercounted by the U.S. Census, and some federal funding is tied to a state's population. But the real problem, he said, is that Nevada also has higher-than-average income levels and lower-than-average poverty levels, which also translate to less federal funding, he said.
"We get less federal funds than other states that have a higher percentage of people who need those services," Aguero said.
Yeah. Okay. Higher incomes and less poverty. That's a good thing, right? Not, apparently, to Aquero and the Nevada Governor's Task Force on Tax Policy.
Gov. Guinn is a Republican. He ought to toss the task force's recommendations in the trash can, declare there will be no tax increases, and point to Nevada's high incomes and low poverty as proof the state's traditional low-tax strategy is working. Sadly, he's going to gamble on higher taxes instead.
Florida's Low-Tax/Spend-More Conundrum
"Florida Republicans swept to historic majorities in this month's elections by attacking Democrats as big taxers, but the post-campaign reality of a dour economy is splitting the state's GOP leadership on taxes," reports the Miami Herald today.
The story continues on, saying that incoming House Speaker Johnnie Byrd is "warning fellow Republicans to stick to their anti-tax principles," while new Senate President Jim King, also allegedly a Republican, is "refusing to rule out a tax increase."
The GOP holds a 2-1 majority in the Florida legislature and Republican Gov. Jeb Bush just won a landslide reelection. But voters approved a constitutional limit on public school class sizes, and meeting that mandate "could cost up to $3 billion next year," says the Herald.
In a speech to fellow Republican lawmakers, Byrd (he's the anti-ax increase Republican) ridiculed the notion that a tight state budget or the class-size amendment justify raising taxes, and that pro-tax forces are out of step with the bedrock Republican principles that gave the GOP its majority, the Herald reports. Said Byrd: "If the principles that got us here are good enough to get us here, they're good enough to take us through the challenges that lay ahead. Now is no time to take our rudder out of the water, to stick our finger in the wind. This is the time to stay the course and lead this state based on Republican principles." The Herald says he got a standing ovation.
It seems to me if the people of Florida voted for both the class-size limit and for the legislature to be held by anti-tax Republicans, the voters' will is clear: reduce class sizes, but don't raise taxes to do it. In other words, prioritize, economize and cut the rest of government down in size. It's only hard to do if you lack the will to do it.
UPDATE: The Florida Times-Union of Jacksonville is reporting that King - the allegedly Republican state Senate leader who wants government to have more money even if it means a tax increase - is supporting expanding gambling in the state to enrich government coffers.
King, a Jacksonville Republican, said senators will take up a bill during the spring legislative session that would allow video lottery games - similar to slot machines - at greyhound tracks, horse tracks and jai alai frontons.
It's unclear whether the Senate will pass the bill or whether the House and Gov. Jeb Bush would go along. But King said it could help solve budget problems that worsened this month when voters approved a constitutional amendment requiring smaller school class sizes.
Those budget problems have led state leaders, including King and Bush, to say Florida might be forced to raise taxes or slash services.
"My feeling is if we could get up to $1 billion from allowing video lottery in pari-mutuel [racetrack and jai alai] facilities, I think there are a lot of us who would rather do that than come up with $1 billion in new taxes," said King.
The good news: King is at least looking for a way to avoid a general tax increase. The bad news: he isn't talking about reducing spending or streamlining government.