Necessary Stimulus?
The economy is on the front pages of newspapers and at the top of most newscasts nowadays (at least it has replaced Britney Spears’ misadventures). President Bush and Congress agree that a so-called “stimulus package” is necessary, but each have their own ideas on what the package should contain.
Unfortunately, election time is known in Washington as the silly season and from an economic standpoint (as opposed to a political one) a stimulus is at best economically unnecessary and at worst harmful. Robert Samuelson writing in the Washington Post and argues, quite correctly in my opinion, that much of what passes for economic commentary these days is simply hysteria.
Steve Stanek of the free market Heartland Institute also criticized the idea of a stimulus, writing “lawmakers should rein in federal spending and approve long-term tax reductions that apply to everyone, not just to people in certain income brackets.”
I agree 100% with Stanek. Temporary stimuli are not what the economy needs. Rather, making President Bush’s tax cuts which are set to expire in a few years permanent would be a good first step. Slowing government spending growth would also be better than what this stimulus amounts to which is the economic equivalent of simply dropping money from the skies.
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Paul Gessing Discusses Health Care on KKOB with Bob Clark
Rio Grande Foundation President Paul Gessing recently appeared on Bob Clark’s radio show to discuss Governor Richardson’s health care reform plan and some free market alternatives. Listen to the show by clicking here. Fast forward almost one-third of the recording to get past the advertisements, etc.
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Why Cap Growing Film Industry?
Dan Mayfield, a columnist in the Albuquerque Journal, writes in today’s paper about New Mexico’s growing film industry and argues that policymakers should keep the spigot open by not limiting the amount of money the state dishes out.
You see, the current rebate program pays up to 25 percent on all direct production expenses that are subject to taxation by the state. So, if your film company spent $20 million here, you could get a $5 million rebate. This is a refund, not a credit, on the full amount of the expenditure, not just the tax portion. When you think about it, that is an amazing subsidy and it is coming out of taxpayers’ pockets whether the film makes any money or not.
Sure, the film office estimates that the industry has spent $496 million here since January 2003, but what industry would not grow and spend more money if taxpayers reimbursed it for 25 percent of their expenses? No one knows, but I can say with relative certainty that New Mexico would have been better off, instead of spending $70 million over the last five years and offering generous tax breaks to the film industry, if that money had been returned to the economy through a broad-based gross receipts or income tax cut.
Unfortunately, when taxes are cut across the board and equally for everyone, it is more difficult for politicians to take credit for the creation of a new industry out of whole cloth. Thus, while Richardson ran for President on his targeted tax credits, he left out the positive impact of his income and capital gains tax cuts (even though some hikes offset those cuts, they were still more economically beneficial than any tax credit).
Politically, it looks like generous film subsidies are here to stay. The industry has these policies in place and is going to be a powerful force. It will be interesting to see what the state’s cost-benefit analysis looks like.
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Raise Gas Tax by 40 cents a Gallon?
According to a new report from a panel that included some of the nation’s leading transportation policy experts, we are not paying nearly enough in gas taxes and the tax should be increased by 40 cents a gallon.
Most New Mexicans will dismiss such findings out of hand and justifiably so. But the fact is that there are several major road projects around the state that should be top priorities including the Paseo and I-25 interchange in Albuquerque just to name one.
The problem is that governments are poor stewards of transportation resources. Congress wastes hundreds of millions on “bridges to nowhere” and diverts ever-growing amounts of gas tax revenue to wasteful transit projects. At the same time, New Mexico is wasting $400 million plus $20 million in annual operating costs on the Rail Runner and diverting millions of dollars in state gas tax revenue to the General Fund.
Instead of raising the gas tax, shouldn’t we re-allocate gas tax revenues to pay for roads and bridges? Let transit users pay for their favored mode of transportation and stop stealing from tax paying motorists!
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Richardson Flip-Flops on Rail Runner Taxes
It was inevitable. While campaigning for President, Richardson stated that tax hikes to pay for the Rail Runner were “off the table.” Now, that he is out of the race, he has put them back on the table. Given the fact that voters in the southern part of the state have been asked to pay for a portion of the Spaceport via higher taxes, it is probably “fair” that residents of the areas served by the Rail Runner pay the costs, but it makes no sense to vote on this now.
After all, the Rail Runner is a fait accompli. It isn’t going anywhere. The trains will run whether voters raise their taxes or not because Richardson wants it to be his legacy. Thus, if taxpayers go along with higher taxes to pay for the train, they’ll essentially be choosing to pay higher taxes for no good reason. Hopefully voters will decide to give Richardson and his boondoggle a firm rebuke at the polls, but I’m sure the Governor and his minions will try to convince the voters otherwise. Nonetheless, these votes are a good thing because they provide voters with their first real chance to express themselves on the train.
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The Importance of Education Tax Credits
While education is not at the top of the legislative agenda this year, it is never far from the minds of politicians and those of us who are concerned about out-of-control budgets. That is why the Rio Grande Foundation is supporting the idea of education tax credits. Recently an opinion piece I wrote appeared in the Los Alamos Monitor making the case for the adoption of such a credit in New Mexico during the current legislative session. In building the case for these reforms, I cite Dr. Messenheimer’s recent policy paper published by the Rio Grande Foundation which showed that education results in New Mexico are stagnant despite ever-increasing resources dedicated to education.
My article drew a rather misinformed response from a reader to which I responded with the following:
As the author of a recent (January 3) article on the need for tax credits for education choice here in New Mexico, I feel the need to clear up some misconceptions contained in a recent letter written by John Lilley, dated January 17.
Mr. Lilley states that private schools already have the capacity to accept donations and that such a system is already in place. This is true, but that does not mitigate the need for New Mexico to adopt its own tax credit program for the benefit of needy children in failing K-12 schools.
The idea we are promoting and which is being carried forward by Sen. James Taylor (D- South Valley) this year is for individuals and businesses to take a credit against their New Mexico tax burden. Unlike the federal deduction which Lilley references, tax credits would allow individuals to take a credit against a very high percentage (up to 90 percent) of their New Mexico tax burden and allocate that money to eligible scholarship programs.
The current tax deduction is taken against a taxpayer’s federal tax burden. This provides a significantly lower rate of return and is available only to those who itemize their federal taxes (typically higher income taxpayers).
Two other misconceptions are that we want people to be able to donate directly to their own children’s education. This is simply not the case as donations would be made to a non-profit, scholarship organization to offer scholarships for low-income children.
Lastly, Lilley calls into question our status as a “charity.” While we are designated as a 501c3 non-profit, we are not a grant-making organization. Not all non-profits make grants.
Lilley has every right to criticize both the editor of this paper and the Rio Grande Foundation if he wishes, but his assertion that my writing is nothing more than factually incorrect “ramblings” is incorrect and out of order. If Lilley or any reader of this paper has questions about our work or education tax credits, I encourage them to check out our website: www.riograndefoundation.org.
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“Greedy Doctors”
You can tell Bill Richardson is no longer running for President (and that he is a lame-duck governor). After all, who in their right mind that is running for office would attack an entire interest group for no good reason. I’m referring to Richardson’s comments that doctors are “greedy.” Richardson said of doctors, “They’re greedy. They shouldn’t be so greedy. They should be part of the plan,” in reference to his “Health Solutions New Mexico” plan.
Doctors oppose Richardson’s plan in large part due to its reliance on price controls which would force doctors to take whatever payment is being offered by the government or insurance companies. This doesn’t seem “greedy” to me, rather given doctors’ experiences with Medicare and Medicaid, the prices of which are both determined by the federal government, doctors have a lot to worry about if they become even more beholden to the government for their daily bread.
Doctors spend a long time in medical school at great personal and financial cost to themselves. Most doctors I know are “greedy” only in the sense that they want to be fairly compensated for their work. In reality, Richardson is the greedy one because he wants to take credit for offering health care to more people with doctors, insurance companies, and businesses footing the bill. That’s greedy.
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Wingnut op-ed hits Journal/Tribune
Rarely does an opinion piece get published in both the http://www.abqtrib.com“>Albuquerque Tribune and the http://www.abqJournal.com“>Journal, but recently an outfit called the Quivira Coalition which is holding their annual conference in Albuquerque, scored that success.
Unfortunately, the Coalition seems to be like so many other environmental groups in wishing to turn back the clock on modernity. We are supposedly living in an “Age of Consequences” according to Courtney White, the author, who goes on to compare the future to a hurricane coming ashore. The metaphor, unfortunately, fails to hold water, and arguments to “build resilience” are senseless or even meaningless.
The best White comes up with is the concept of “regional solutions.” That would seem to mean that trade, commuting, and travel are on their way out in the coming “hurricane.” Despite the occasional unsafe good from China, trade is good for all of us. Worse still for the Quivira folks is the fact that international trade is booming. In fact, international trade is growing at rates more than double the growth of the world economy, thus trade is becoming more, not less important.
Despite what leftists would like to believe, we are not headed to a crisis unless we cave to their wishes by regulating our economy whether that be in regulating energy usage or trade. Left to their own devices, Americans and indeed the rest of the world as a whole will continue to realize the very real benefits of trade, ignoring the tempests in the proverbial teapot expounded upon by Al Gore and others.
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Talking Health Care
Paul Gessing of the Rio Grande Foundation discussed Governor Bill Richardson’s plans for socialized medicine in New Mexico on “Eye on New Mexico” this Sunday morning. Dennis Domrzalski hosted the program while Gessing’s opponent was Charlotte Roybal of Health Care for All New Mexico. The video is now available online.
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The “Harm” of letting Mayor Marty Run Again
The Albuquerque Tribune editorialized in favor of Albuquerque Mayor Marty Chavez challenging the City’s term limits law by running for a third term, saying it “did no harm.” This may be true, but how about Albuquerque voters, more than 70 percent of whom supported term limits back in 1994?
When the Constitution doesn’t address an issue, as is the case with term limits for city officials, shouldn’t the default be to obey what the citizens say unless there is an issue of direct harm or a minority is being unjustly attacked? Sure, Mayor Marty can run for another term and he may get elected, but that doesn’t mean it is best for the City or that it’s the right thing to do.
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