Oops!: Consumers Unfairly Taken to Task
You may have read my blog posting yesterday which discussed Governor Richardson’s campaign debt and drew a connection between the fiscal irresponsibility of our politicians and the citizenry as a whole. It turns out that I was being a bit hard on the spending and borrowing habits of my fellow Americans. As Harry Messenheimer pointed out in a few emails, the fact is that American consumers are not in nearly as bad of shape as the mainstream media would like us to believe.
Debt as an aggregate figure is irrelevant. What really matters is real net wealth — and it is way up and continues to climb. Indebtedness is simply a number and it can simply mean that more people are buying houses. So, there you have it. Government debt is relevant and rising dramatically. Debt as a simple number is not a good measure of the average Americans’ real economic picture.
Personal Budgets and Government Budgets
I’ve long believed that personal financial management and government fiscal policy are closely related. In other words, it is no coincidence that American families owe $14 trillion in debt and that the US government is $9.4 trillion (not to mention $40 trillion in un-funded government liabilities).
This overlap is also apparent among specific politicians. Take Bill Richardson for example. His Presidential campaign was unsuccessful, but because he spent more money than his campaign actually raised, he is now sending out desperate fundraising messages to his supporters asking him to pay off his $380,000 debt. At the same time, he’s only contributed $2,300 to his own bid for the White House. I didn’t give Bill any of my money, but even if I had done so, I’d be taken aback at his plea for more when he’s already dropped out. Does this tendency to stick others with the bill sound familiar, like perhaps New Mexico’s economy after Richardson leaves office and the Rail Runner starts sucking up tax dollars?
Winding up in debt and desperate for help does not bode well for Richardson’s political future or New Mexico’s economic outlook.
-Hat tip, Harry Messenheimer
Bringing Back NM Expats
According to the New Mexico Business Weekly, there is a new initiative afoot among some business groups to attract educated New Mexicans who have moved out of state, back to the state. Mark Lautman, director of economic development for the master-planned, mixed-use community of Mesa del Sol, is just one local leader who believes that the demand for labor will outstrip the supply in the next 25 years and get more out of our native population.
Initiatives being promoted by the business coalition include creating an online database where companies can post work force needs and job opportunities. A $400,000 grant from the US Department of Labor will pay for much of the program.
While this is by no means a massive expenditure of public money, it would seem that the program is going to do very little to alleviate the perceived “shortage” of highly skilled workers in the state. While there are no quick fixes when it comes to attracting talent, it would seem that two things could be done by policymakers:
1) Let workers keep more of their money by cutting taxes. States that lack an income tax — Washington, Florida, Texas, Nevada, and New Hampshire to name just a few of the nine — grow faster economically and have higher income levels than their peers. Further cutting New Mexico’s income tax rate (or eliminating the tax entirely) would attract high-end jobs and workers.
2) Produce more highly-educated workers. The fact that New Mexico needs to improve its education system is no secret. New Mexico’s drop-out rate hovers near 50 percent and by almost any measure, New Mexico’s educational system is among the worst in the nation. If we want to fill skilled jobs we need an education system that produces more of them.
In: Uncategorized
Deregulate Energy Market to Solve PNM Situation
As many New Mexicans know, the state’s main utility is currently fighting the state’s regulatory agency, the Public Regulation Commission, for a major rate increase. In today’s Alamogordo Daily News, I discuss the potential benefits of deregulating utilities in order to allow customers to determine for themselves where to buy their energy and what price they are willing to pay. Such competition driven by the ability and the need to set reasonable prices would also increase efficiency.
In: Uncategorized
Business Groups: “Raise Taxes for Existing Health Care Programs”
I have a great deal of respect for people who own and operate businesses in New Mexico. This a big-government state and the culture is not friendly to entrepreneurs. That said, a recent story (subscription required) from the Albuquerque Journal’s Business Outlook section outlining a new health care plan being developed by business groups including the New Mexico Restaurant Association and the Association of Commerce and Industry.
Unfortunately, rather than supporting market-based reforms such as those proposed earlier this year by the Rio Grande Foundation, this supposedly “pro-business” coalition instead is arguing that the gross receipts tax (as opposed to taxes levied on employers) should fund the expansion of government health care plans. While the business coalition does at least stress the fact that, as Beverly McClure of ACI notes “about half of the state’s uninsured already qualify for some kind of coverage or public program, and they still don’t sign up.” Nonetheless, if this coalition wanders down the path of higher taxation and bigger government, they are heading down the same path towards government-managed health care that Governor Richardson’s failed plan did.
Rather than bigger government, New Mexico businesses must rally behind ideas like eliminating the gross receipts tax on health care, allowing individuals to purchase coverage across state lines, and reforming Medicaid (to name just a few ideas). These reforms — unlike government programs — will cut costs and increase coverage.
Sen. Domenici: Part of the Problem in Washington
Pete Domenici may be popular here in New Mexico in part because he brings the pork home for New Mexico, but he’s also a big reason why the Republican Party has lost its moorings on fiscal matters.
I received word of the following exchange from a staffer at the Heritage Foundation. This debate just occurred on the Senate floor between Senators Coburn and Domenici (link courtesy of Sen. DeMint’s office). It highlights the clash of cultures between true reformers (Coburn and DeMint) and business-as-usual career politicians (including Domenici, unfortunately) like nothing else since perhaps the Bridge to Nowhere debate. The final 45 seconds is especially noteworthy.
Earlier in the debate Sen. Domenici essentially asserted that the Junior Senator from Oklahoma shouldn’t attempt to supplant the collective wisdom of committee staff.
Transcript of Domenici remarks:
I DON’T THINK ONE SENATOR SHOULD SUPPLANT THAT. THOSE 23 MEMBERS OF THIS COMMITTEE MAKE THEIR JUDGMENTS ON INFORMATION COMPILED BY A PROFESSIONAL STAFF WITH A COMBINED SERVICE OF RELEVANT DEPARTMENTS IN CONGRESS OF OVER 70 YEARS JUST ON THE REPUBLICAN STAFF SIDE ALONE. THEY SPEND GREAT DEAL OF TIME ON THESE BILLS. THEY KNOW MORE THAN ANYONE ELSE. THEY — THEY GIVE THAT KNOWLEDGE TO US, THE 23 MEMBERS, AND WE VOTE.
Transcript of Coburn remarks:
THE HERITAGE THAT WE HAVE EMBRACED IN THIS COUNTRY IS ONE OF SACRIFICE. ONE GENERATION SACRIFICES SO THE NEXT HAS OPPORTUNITY. IF WE KEEP DOING THIS WITHOUT REGARD, WE DON’T KNOW HOW MUCH WE’RE SPENDING, WE DON’T KNOW HOW MUCH THE MONTHLY COSTS ARE, WE’RE NOT TAKING CARE OF THE PARKS THE WAY WE SHOULD BECAUSE WE HAVE A HODGEPODGE, A BARGE FLOATING DOWN A RIVER WITHOUT A TUG ON IT, WE’RE GOING TO MAKE THE PROBLEM WORSE. I WILL REMIND MY COLLEAGUES, THE TRUE ACCOUNTING OF THIS YEAR ESTIMATE IS $607 BILLION DEFICIT. THAT’S OVER $2,000 FOR EVERY MAN, WOMAN AND CHILD IN THIS COUNTRY. EVERY CHILD THAT’S BORN TODAY IN THIS COUNTRY INHERITS AN OBLIGATION THAT THEY WILL HAVE TO PAY THAT THEY GET NO BENEFIT FROM OF $400,000. AM I FRUSTRATING THE SENATORS FROM NEW MEXICO? YOU BET. ARE OUR CHILDREN WORTH IT? YOU BET. I’M NOT GOING TO STOP, I’M GOING TO STAND AND SAY WE’RE GOING TO THINK LONG TERM, WE ARE GOING TO START.PROTECTING PROPERTY RIGHTS, WE ARE NOT GOING IT GIVE UP BECAUSE WE GET LECTURED TO BECAUSE WE ARE NOT DOING IT THE WAY WE’VE ALWAYS DONE IT. THE WAY WE HAVE ALWAYS DONE IT HAS US BANKRUPT.
IT’S TIME FOR A CHANGE.
REPUBLICANS AND DEMOCRATS ALIKE: OUR CHILDREN ARE WORTH IT. WITH THAT, I YIELD THE FLOOR.
Description of Coburn amendments that are being voted on now.
Nation’s Largest Taxpayer Group Rates New Mexico’s Congressional Delegation
America’s largest taxpayer group, the National Taxpayers Union, publishes an annual rating of Congress. As a former employee of NTU, I am intimately familiar with the ratings process and am pleased to say that their ratings are the best of any tax and fiscal policy organization in Washington.
The difference between NTU’s ratings and others is that NTU doesn’t pick and choose votes based on a political agenda. Instead, all votes are included and weighted based on their importance to taxpayers. The full report is available here.
When it comes to New Mexico’s delegation, Sen. Domenici received a mediocre “C,” while Bingaman received an “F,” coming in among the worst-rated Democrats in the entire Congress (on par with Barack Obama). In the House delegation, Pearce received a respectable “B+” while Wilson received a sub-par “C-” and Udall picked up a low “F.”
While these numbers are quite revealing on their own terms, trends are also notable and can be studied with the use of the ratings database. Since entering Congress in 2003, Pearce has begun voting with the taxpayer more often, improving from lows of 53% to his current high point of 79%. Wilson, Domenici, and Udall’s ratings have remained fairly consistent over the years but Bingaman has become less taxpayer-friendly over time.
This is certainly useful information in light of the myriad races voters will be faced with this fall.
Would Mesa del Sol Charter School Harm Poor Students?
The Rio Grande Foundation and Moises Venegas have worked together on education choice issues in the past. Most recently, we were part of a loose coalition on behalf of education tax credits. While we consistently approach the education issue from a pro-freedom perspective, Venegas, particularly in an article “Poorer Students Lost in Rush to Create Mesa del Sol Charter,” that appeared on the opinion pages of the Albuquerque Journal on Sunday, April 6, approaches the issue from a very different perspective and comes to some conclusions contrary to the promotion of choice.
First and foremost, Mesa del Sol is a taxpayer-subsidized development now taking shape south of Albuquerque’s Sunport. Recently, the developers behind the project requested to build a charter school as part of the development.
Venegas’s argument is a bit bizarre in that he claims that wealthy people “already have school choice if they are willing to spend $10,000 to $16,000″ to send their kid to an expensive private school or they can move to an area with better schools. While this is technically a choice, these are not good choices especially when one considers that these people are already paying thousands of dollars annually in taxes for the failing government schools.
Venegas furthers the class/wealth issue by arguing that Mesa del Sol’s application for a charter is another means of the wealthy segregating themselves at the expense of poorer students. This argument boggles the mind. Sure, wealthy people (like their poorer counterparts) want what is best for their children, particularly when it comes to education. While Mesa del Sol may indeed be targeted at high-end residents, even relatively wealthy people will struggle mightily to pay $10-$15k annually per child in private school tuition. It would seem that building a charter school for the community is eminently sensible.
The fact is that true school choice will benefit all New Mexicans whether they are wealthy, poor, or in between. After all, competition drives improvement and cost reductions in all products whether they be cars, televisions, or education. Charter schools (and tax credits or even vouchers) are not the be-all, end-all when it comes to improving educational quality through choice, but they would be a big help. Rather than tearing down certain attempts to build alternatives to the failed government schools, Venegas and others should let 1,000 flowers bloom and bring choice to all children.
Movin’ on Up
When discussing New Mexico’s economic position relative to other states, we at the Rio Grande Foundation often cite per capita personal income as a measuring stick. That’s because this statistic is the single best way to rank the economic strength among the states.
With that said, there is some good news relative to New Mexico’s economic standing in recent years. According to new federal data, since 2003 (not coincidentally the year New Mexico’s personal income and capital gains tax rate cuts began), New Mexico’s national ranking has improved to 43rd from 47th with New Mexico leaping over Kentucky, South Carolina, Utah, and Idaho.
Sure, strong growth in oil and gas prices played a big part in this improvement, but note that Alaska’s ranking, another state with a major oil and gas industry, changed very little over the same time period and has certainly not seen New Mexico’s consistent improvement in recent years.
Can the Government tell us what to do with our property?
More than two years ago, Juan Dominguez of Rio Arriba County entered into a leasing agreement with T-Mobile, allowing them to place a cell tower on his property. The tower gives reception to many cell users in the Chimayo area.
Some citizens in the area have banded together to form the Chimayo Council on Wireless Technology. The Council feels that the appearance of the cell tower desecrates sacred sites within eyeshot, such as the Plaza del Cerro (an original colonial Spanish plaza) and a commonly used pilgrimage route to the Santuario de Chimayo. They also say that the tower defiles the hills around Chimayo, which are venerated by the Tewa people. In fact, the town is named after one of these hills, Tsi-Mayoh.
Unfortunately for the Council, Mr. Dominguez owns the property on which the tower is located, not the citizens of Chimayo, nor any body of religious people or historic preservationists. He has given his consent for placement of the tower. Nonetheless, the Council has correctly asserted, according to the State Historic Preservation Office, that T-Mobile had some errors in its application to the county government, including incorrect coordinates for its location.
SHPO is requiring T-Mobile to resubmit a corrected application, after which state officers will evaluate the tower’s level of historical malevolence. If they deem that the tower is violating the visual pleasance of historical sites, the state office will escalate the case to the Federal Advisory Council on Historic Preservation, which, under authority granted to it by the National Historic Preservation Act of 1966, may “make recommendations regarding historic preservation to the… heads of… federal agencies.” The federal agency involved in this case would be the Federal Communications Commission, which will make the final determination should the matter remain unresolved.
Sound like a bureaucratic nightmare? And all poor Mr. Dominguez wanted was to make some extra cash. T-Mobile has said that they cannot relocate the tower and keep their service effective. Not only are multiple levels of government involvement encroaching on Mr. Dominguez’ property rights, but they may also be hindering T-Mobile’s ability to run its company successfully in the area.
If the folks at the Chimayo Council on Wireless Technology have as much support from the community as they claim, they should consider buying Mr. Dominguez’s property or at least they could purchase the right not to have a tower built on the property.
