In case you missed it — or you were not at our luncheon event with John Stossel yesterday — the Rio Grande Foundation’s Ken Brown appeared on the front page of yesterday’s USA Today discussing the propensity of the federal government to continue to hire and grow even as private employers cut back in a tough economy. While some “economists” view this as a good way to mitigate tough economic times, Brown more accurately points out that the problem is that governments are much slower to react to economic conditions than other actors in the economy.
John Stossel, who will be speaking tomorrow in Albuquerque at an RGF-sponsored event, questioned in a recent article the chicken little perspective being foisted on the American people by the media and their political leaders.
It is easy to see that the media benefits from hyperventilating about supposed crises we’re now facing — after all, a crisis is interesting and draws viewers. Who else benefits from a crisis? Politicians and big government, of course! Government is often looked to as the solution to supposed crisis (the Great Depression would be a great example) and bigger government means more power for government officials. Thank you Mr. Stossel, for giving us all a chill-pill.
Jim Scarantino wrote about the FairTax recently in The Alibi. While I did not really disagree with anything that Jim said, I think free market conservatives and libertarians are misplacing their energies by focusing on tax reform. The letter which was published in the most recent edition of The Alibi
Taxes in New Mexico
I read Jim Scarantino’s article on “The Fair Tax” [Re: The Real Side, April 17-23] with great interest. I spent nearly eight years in Washington working on tax reform and advocating for taxpayers. Like Jim, I believe America’s tax system is broken. Unfortunately, the political will to seriously reform or abolish our income tax system is sorely lacking in Washington.
The problem is that each loophole and tax shelter now written into the Tax Code was put there because a powerful interest group successfully lobbied to put it there. The home-owners tax deduction is just one popular provision that, rightly or wrongly, will be extremely tough to eliminate in the name of tax simplification.
As if entrenched special interests were not enough of a problem with any fundamental tax reform, the Fair Tax faces the additional obstacle of being untested. On the other hand, more than 20 nations, especially rapidly growing states of the former Soviet Union, have adopted flat taxes. It might work, but making the leap will be a serious challenge.
Rather than focusing on reforming how we collect taxes, we instead need a philosophical shift away from the belief that government is a tool by which one person can live at the expense of others. Indeed, government can insure our lives, liberty and property, but redistributive government policies inevitably destroy wealth rather than produce it.
Simplifying the Tax Code is a good idea, but until we change our view of government, such reforms will remain a distant dream.
Paul J. Gessing
President, Rio Grande Foundation
According to Zsombor Peter of the Albuquerque Journal ($1M Spent on Truancy, With Little To Show for It, Apr. 22, 2008), the state government has recently released a report documenting that 67% of APS high school students are classified as habitually truant from class. The state high school average is 33%.
In his 2003 “state of the state” address, Governor Richardson “propos[ed] a $1 million appropriation for truancy prevention.” Through the Governor’s Statewide Truancy Prevention Program, the APS district was awarded the most out of any district in 2005, $40,000. It now appears that almost 7 out of 10 high school students miss more than 10 days of instruction out of the school year.
The state’s truancy prevention money is not being invested wisely in the Albuquerque Public Schools. There are obviously circumstances that contribute to a student’s absenteeism that the district is either overlooking or not effectively addressing.
We were all 16 at one time or another and most of us have skipped a class or two at some point in our lives, but the fact is that our public schools are not producing a product — even when it is offered for free and officers of the law attempt to force attendance — that most “consumers” deem worthy of their time. This truancy problem persists despite the abundant documentation of the importance of a high school diploma.
There may not be a silver bullet solution to the truancy problem, but we could start by tailoring our educational system to the needs of students rather than attempting to force students into a regimented and very institutional public school setting. Charter schools are a step forward, but this is yet another sign pointing to the need for school choice.
It is Earth Day and over at Eye on Albuquerque, the author has an excellent posting on the mixed significance of the environmental movement today. While it is certainly good to limit our ecological footprint, environmentalists seem more concerned about taking away our freedoms and putting the state in control of society’s resources.
The irony here is that the environmental movement has actually succeeded since it began in earnest back in 1970. The earth, especially in the United States, is better off than ever before. Rather than giving the government more control of our lives, the key to improving the planet is to help other countries grow as wealthy as we are.
While most economists understand the economic benefit of reducing or eliminating income taxes, not many states have real-world data to show how income tax cuts would impact their own economies. New Mexico, however, is one state with recent experience with significant income tax cuts. Between 2003 and 2008, New Mexico reduced its top personal income tax rate from 8.2 percent to 4.9 percent. Not surprisingly, during that same time period, New Mexico’s average personal income level rose from 47th in the nation to 43rd after having been stuck at 47th in the nation for several years.
The Rio Grande Foundation’s new paper outlines a plan to eliminate the state’s personal income tax entirely within four years by simply holding spending growth to 4.5 percent annually. Since the 9 states lacking an income tax have personal incomes averaging $7,000 more per year than New Mexico, eliminating the personal income tax would conceivably push the state out of the tier of poor states and push it up to the middle of the pack.
In case you missed it, I had an opinion piece in the Albuquerque Journal on Friday in support of Albuquerque Mayor Marty Chavez’s fiscally-restrained 2009 budget. While we have been critical of some of the Mayor’s priorities in the past, his willingness to cut spending and move forward with modest tax relief is welcome.
Albuquerque’s fiscal restraint is particularly striking when compared with the rapid growth of spending at the state level. Check out Albuquerque’s proposed budget here.
The issue of “corporate welfare” has taken on greater importance over the years on both the left and right sides of the political spectrum. And, although it is hard to have corporate welfare in the absence of large corporations with giant lobbying budgets, a recent article by Barry Massey of the Associated Press illustrates an example right here in New Mexico.
In fact, an Albuquerque-based company called Blast-N-Clean received $162,500 to demonstrate its cleaning system to nearly a dozen cities and counties. Legislators earmarked money for the work although local governments didn’t ask for the pilot projects in some instances. As I point out in the article, this “Certainly sounds like this is something that should come out of the company’s own marketing budget, not the state budget.” I also argue (as I have done before) that we need to reform the capital outlay process. Better still, this money should be returned to taxpayers.
Nothing against Blast-N-Clean or any other company, but they should live or die based on the quality and innovative nature of their product, not their ability to suck money from taxpayers.
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.
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