"Capitol Report New Mexico" Latest Blog Postings

Gary Johnson: ‘Abolish the IRS’

Capital Report New Mexico Blog Postings - Mon, 2014-07-14 08:01

BUH-BYE, IRS: Former Libertarian presidential candidate and former New Mexico Gov. Gary Johnson calls for replacing income and corporate taxes with a single consumption tax.

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE — For 2012 Libertarian Party presidential candidate and former New Mexico Gov. Gary Johnson, the ongoing controversy at the Internal Revenue Service is further proof the agency should be eliminated.

“Imagine life without having to deal with the IRS,” Johnson told New Mexico Watchdog in an interview just two days after a new development in the IRS story, in which former IRS official Lois Lerner warned colleagues to be careful about what they write in emails amid congressional inquiries.

“None of it surprises me,” Johnson said. “To a higher degree or a lesser degree this is what happens when you have bureaucrats in charge that can manipulate the system any way they so choose.”

A federal judge last Thursday ordered IRS officials to explain under oath how Lerner’s emails disappeared and how they might be recovered.

“Come on, loss of emails? Give me a break,” Johnson said. “If that doesn’t outrage anybody who looks at this, then you’re out to lunch.”

Johnson’s call to abolish the agency dates back to 2009, after he met with a number of economists, including Jeffrey Miron, director of Undergraduate Studies in the Department of Economics at Harvard, who became an adviser in Johnson’s 2012 campaign.

“Let’s abolish the IRS, let’s eliminate income tax, let’s eliminate corporate tax, let’s balance the federal budget and if we need a tax, it can be one federal consumption tax,” Johnson said.

But how would that work?

Instead of collecting taxes from various sources, a consumption tax works from a single point of purchase. It taxes people when they spend money on any given item or service. By eliminating income tax, sales tax and others, the idea is that overall price would not go up and may, according to its advocates, actually decrease the overall tax burden on citizens.

“I think a great starting point for a debate and discussion over a national consumption tax is, let’s start with the Fair Tax, legislation that has been written up and I think signed up on by 80 congressmen and women,” said Johnson.

Critics say that a consumption tax benefits people with higher amounts of savings and, therefore, could hit low-income households harder.

UNDER FIRE: Some officials at the Internal Service have been accused of targeting conservative political groups.

“Under a consumption tax system all savings would be tax-free, it would all be taxed like a 401(k),” said Len Burman, a senior fellow at the left-of-center Urban Institute, in a 2005 interview with PBS. “But the question is, if people don’t get the special tax break will they still be putting money into retirement savings and if they don’t, if they just put it in their regular bank account, are they as likely to keep it until retirement, and a lot of people are concerned that in fact without the special tax breaks you could actually end up with less retirement savings and possibly even less savings overall.”

But Johnson said the advantages outweigh the disadvantages.

“Why would any company, anywhere in the world, locate anywhere but the United States, given zero corporate tax?” Johnson said. “The entire world will change their tax structure to emulate no income tax, no corporate tax, no more filing.”

Would it ever happen? After all, the current tax system is laden with incentives and tax breaks, such as deductions for charities.

“I believe it will take place because at some point all these smart people will actually get with it,” said Johnson, who has a page devoted to tax reform at the website for the Our America Initiative, a political advocacy committee he founded.

Johnson made headlines last week for becoming the president and chief executive officer of Cannabis Sativa Inc., a small company based out of Nevada that sells products that come from extracted oil derived from marijuana plants. But they’re not smoked; instead, they’re packaged as lozenges.

“We sell a product that’s sublingual, so it’s a sucked-on product, very pleasant, and I believe, much safer than alcohol,” Johnson said, adding the lozenges can be used for medical treatment as well as recreational use.

In 1999, Johnson became the first governor in any state to call for the legalization of marijuana.

“I remain the only governor that has ever espoused legalizing marijuana, to this day,” Johnson said.

Since being named CEO, Johnson said the company’s stock jumped two points.

“Tens of millions of Americans use marijuana … those people make up half of everyone we know,” Johnson said. “These are our friends, these are our families, these are our co-workers, and you can label their choice to use marijuana as a bad choice, but I’m going to say it’s not criminal. Our kids are not criminal, our parents are not criminal, our co-workers are not criminal, our friends are not criminal.”

Here’s New Mexico Watchdog video of Johnson talking about taxes:

And here he is talking about his support of marijuana legalization:

Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski

Editorial: The $3.7 billion Band-Aid for the border

Capital Report New Mexico Blog Postings - Sun, 2014-07-13 13:38

Rob Nikolewski. Photo courtesy of the Santa Fe New Mexican//Clyde Mueller

When you study economics, one of the first things you learn is that people respond to incentives.

And that maxim goes a long way toward explaining the current crisis on the border that has led to the impromptu establishment of facilities across the country to house the flood of migrants from Central America coming into the United States – including the Federal Law Enforcement Training Center (FLETC) in Artesia.

The situation has been called a humanitarian crisis but it’s also an economic crisis. After all, it’s not rich El Salvadorans or Hondurans but impoverished Central Americans who are making the dangerous trip through Mexico and into the U.S.

Some are escaping the drug and gang violence in their countries, some are looking for a better standard of living and many are looking for both.

So the incentive to leave their countries is strong and, given the fact that over the years millions who entered the U.S. illegally have been able to stay, the incentive to make the United States their final destination is powerful.

And, ironically, if the political leaders in Washington ever pass an immigration bill that includes tighter border security measures, that only heightens the incentive to make the journey now before getting into the U.S. gets more difficult.

President Obama has called for $3.7 billion to help handle the crisis in the short term. According to reports, more than half of that is going to handling resettling chores.

Conservatives who want to buckle up the border complain about that – and they’ve got a point about the cost to taxpayers – but it’s a law passed in 2008 under George W. Bush that prevents the government from immediately returning young migrants to their respective countries.

Only children entering illegally from countries contiguous to the U.S – Canada and Mexico – can be sent back immediately.

When it was passed, the law was intended to address human trafficking instead of the current crisis, but that’s the law on the books now.

Furthermore, the 2008 law requires the government to make the best effort possible to reunite unaccompanied minors with a parent or guardian and give them a hearing date.

But the courts are backlogged and – speaking about incentives again – why show up for a court date when you risk getting sent back?

A similar situation may play out at the FLETC facility in Artesia, as New Mexico Department of Public Safety Secretary Greg Fouratt recently pointed out.

“I worry about people who have taken this remarkable step in their life that has to be borne out of desperation, to come to the United States, and then they learn that they’re going back to the place that they left, they might not have the motivation to stick around,” Fouratt told me.

Some say that the U.S. should take in this wave of immigrants but it begs the question, how many more can the country absorb? And, despite the desperate circumstances that inspired many of them, don’t laws need to be respected?

Even House Democratic Minority Whip Steny Hoyer said this week, “The United States cannot be expected to give sanctuary to every child in the world that is exposed to danger in their country because of the failure of the country’s government, or the local municipality’s government, to assist in keeping their own children safe.”

But in order to do that, it takes border enforcement first and foremost. Without it, expect more $3.7 billion payments to come.

“When a parent or relative in those countries just paid … up to $7,000 to smugglers to take that child into the country,” said Republican Sen. Jeff Flake, who supported the Senate immigration bill that stalled in the House, “when they see those planeloads of kids coming back, then it will stop.”

It’s a hard truth, but he’s right.

This editorial originally ran in the July 13, 2014 edition of the Santa Fe New Mexican. You can contact Rob Nikolewski at the website he edits, www.newmexiocwatchdog.org   

An opening for Republicans in NM? Or are independents flexing their muscle?

Capital Report New Mexico Blog Postings - Wed, 2014-07-09 14:40

PICK A PARTY: Voter registration numbers in New Mexico give some Republicans hope but may simply indicate the growth in independents.

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE, N.M.— Democrats have outnumbered Republicans in New Mexico for generations, but do recent voter registration numbers give the GOP some hope in winning over young voters?

Or is it just a blip?

Or do the numbers simply show that voters in the state are becoming more independent?

A recent study by Research & Polling, a political polling company based in Albuquerque, looked at the party breakdown across the state. The numbers are open to varying degrees of interpretation.

For example, Democrats continue their stranglehold on registration numbers.

They hold a double-digit advantage over Republicans in every age category, topping out with an 18-point edge — 53 percent to 35 percent — among voters 65 and older.

But the narrowest margin is found among the youngest voters, with Democrats’ lead on the GOP among those between 18-24 dipping to 11 percent. Here are the pie charts published in the Albuquerque Journal:

On Tuesday, the New York Times published a column headlined, “Why Teenagers Today May Grow Up Conservative.” While young people tend to vote for Democrats, columnist David Leonhardt points out that 18-year-olds eligible to vote in the 2016 presidential election will have been born in 1998.

“They are too young to remember much about the (George W.) Bush years or the excitement surrounding the first Obama presidential campaign,” Leonhardt said. “They instead are coming of age with a Democratic president who often seems unable to fix the world’s problems.”

“We’re in a period in which the federal government is simply not performing,” added Paul Taylor of the Pew Research Center, who just published a book on generational politics, “and that can’t be good for the Democrats.”

Does that add up to an opportunity for the New Mexico GOP? Maybe, maybe not.

Brian Sanderoff, president of Research and Polling, said, “One can look at these numbers in different ways.”

After all, if you’re a Democrat, the numbers confirm the party’s advantage over Republicans, and with the Hispanic population — which tends to vote for Democrats — growing, Republicans may be in for a tough demographic challenge.

But Sanderoff points out another way to interpret the numbers: Namely, the rapid growth of voters in New Mexico who don’t identify with either of the major parties.

Sanderoff shared with New Mexico Watchdog a chart showing how the number of voters registering as “decline to state” — or with parties besides Democrats and Republicans — has tripled since 1982:

Even here there’s news Democrat or Republican loyalists can latch onto.

“As the numbers of independents grow, they take more from the Ds than the Rs,” Sanderoff said, pointing out that 63 percent of New Mexico voters were registered Democrats in 1982; that number dropped to 46.9 percent this year.

Yet at the same time Research & Polling has also produced data showing that among voters age 37 and younger, there are actually more DTS (decline to state)/other voters registered in New Mexico than total Republicans:

So maybe the news isn’t very good for either party.

“Ultimately, the hope for either party is to have leadership that will resonate and turn on young folks,” Sanderoff said. “You saw that for a couple of years where Obama turned them on in 2008 and 2009. You can actually see a blip in the data where Democrats actually stopped declining, but you see where in the midterm election it just dropped off again … I think it’s going to take a sea change before either the Democrats or the Republicans cut into the declines that have actually been occurring.”

Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski

Ride-sharing compromise may be near in New Mexico

Capital Report New Mexico Blog Postings - Wed, 2014-07-09 14:38

THERE’S AN APP FOR THAT: Ride-sharing companies use apps from smartphones to attract customers looking to catch a ride.

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE, N.M. — Ride-sharing companies and New Mexico regulators have been locked in a standoff for months, but a potential compromise could come in the space of a couple of weeks.

On Wednesday, the Public Regulation Commission directed its staff to work out a proposal to make rules that would allow companies such as Lyft and Uber to operate in the state as “specialized passenger services.”

“I do believe the commission would have to be careful to craft a rule, but can do it and have authority,” PRC transportation division director Ryan Jerman told the five commissioners, who then directed the staff to come up with language by July 23.

The ride-sharing companies, operating out of Albuquerque and Rio Rancho, have been at odds with the PRC over whether or not they should be licensed and considered like taxi cab services and, therefore, be regulated under the state’s Motor Carrier Act.

Ride-sharing works by allowing customers to download a free smartphone app, which they use to request a ride. The app connects them to the nearest available driver and tracks the length of the trip in distance and time, calculates the cost and automatically transfers the fee from the user’s credit card (already entered into the app at the beginning of the process) to the driver’s account. No cash changes hands.

PRC chairwoman Theresa Becenti-Aguilar indicated during Wednesday’s hearing she would support creating a new rule for ride-sharing.

“I don’t think we can just shut the door on a new kind of business in New Mexico,” she said.

But commissioner Valerie Espinoza, who has said she believes Uber and Lyft are essentially no different from cab companies, said after the meeting she’s skeptical about creating new rules.

“The word ‘specialized’ is not defined,” Espinoza told New Mexico Watchdog. “That’s a legislative fix. You’re going to have everybody come up” and want to be classified as specialized “and it’s going to be a free for all. Our job is to protect the safety of all consumers in the state.”

The PRC filed a cease and desist order on Lyft on May 23, but the company has still been operating while not charging customers. On Wednesday, commissioners refused to withdraw the cease and desist order. Uber is also still operating despite not being licensed by the PRC.

Commissioner Ben Hall brought up the idea of having the state’s Department of Public Safety pull over and issue fines to the drivers of ride-sharing companies. “If you don’t want to be legal, go somewhere else,” Hall said.

A PRC attorney said a meeting with the general counsel at DPS is in the works.

Despite his criticism of Uber and Lyft, Hall told New Mexico Watchdog he’ll keep an open mind when it comes to crafting a possible new rule for ride-sharing.

“If it walks like a duck and quacks like a duck, it may be a duck,” Hall said.

Commissioner Pat Lyons, who has said he wants to spur business in the state, hopes the meeting July 23 can resolve the issue. “I’m always trying to get government to move faster,” he said.

“We need to act quickly on this,” said commissioner Karen Montoya.

Update 2:34 p.m.: Lyft spokeswoman Chelsea Wilson released a statement after Wednesday’s PRC meeting that said in part, “today’s decision by the PRC recognizes that with creative thinking, regulations can be revisited to allow new industries to thrive and still maintain the highest level of public safety.”

Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski

Six bucks a gallon? Where gas prices might be without the U.S. energy boom

Capital Report New Mexico Blog Postings - Tue, 2014-07-08 11:39

ENERGY EXPLOSION: Boom times in places such as the Bakken Formation in North Dakota has helped the U.S. leapfrog Russia and Saudi Arabia in oil production.

 

By Rob Nikolewski │ New Mexico Watchdog

If you think the price of gas is high, imagine paying up to $6 a gallon.

That’s what energy expert Dan Steffens thinks the price could be if not for the domestic oil boom.

“With what’s going on the Middle East, I think it would five or six bucks (a gallon),” said Steffens, president of the Energy Prospectus Group out of Houston. “If it wasn’t for the shale revolution, you’d be in big trouble.”

Technological breakthroughs in recent years have led to an explosion in the energy industry in the United States.

Extraction from shale rock formations in places such as the Bakken Formation in North Dakota, the Eagle Ford Formation in south Texas and the Permian Basin in west Texas and eastern New Mexico has been so dramatic that, last month, the International Energy Agency announced the U.S. surpassed Russia and even Saudi Arabia in oil production.

A report from the commodities division of Bank of America says daily output in the U.S. exceeded 11 million barrels in the first quarter of this year.

“If we didn’t have the oil industry and oil and drill activity, the economy would be much, much slower,” Joseph Dancy, investment partner at LSGI Advisors, Inc., based in Dallas, told New Mexico Watchdog.

Drivers have been grumbling about the increase in the price at the pump. Here’s a look at the average price per gallon for the Fourth of July in the U.S. since 2008:

But the message from energy experts? It could have been much worse.

Violence in Mideast nations such as Syria, Iraq and Libya, as well as political unrest in the oil-rich nations of Nigeria and Venezuela, might have sent the price of gasoline through the roof. But benchmark U.S. crude was at $104 a barrel Monday and Brent crude, a benchmark for the international market, was down 33 cents last week to $110.91 a barrel in London.

“There’s no question that this his new-found abundance of oil from shale plays is having a significant impact on the global market,” said Bernard Weinstein, associate director at the Maguire Energy Institute at Southern Methodist University.

“We’d probably be at $150 oil with this thing in Iraq going on,” Steffens said.

“While the situation in Iraq seems to be getting worse, oil prices have actually fallen (in some sectors) because the markets now understand that Iraq could go totally off the market and there’s still plenty of oil going around, not just here in the United States,” Weinstein said. “The world is swimming in oil right now.”

The political irony is that President Obama is a beneficiary of relatively stable gas prices, even though the energy explosion is happening in red states such as North Dakota and Texas, where Obama lost to Republican presidential nominee Mitt Romney in 2012 by nearly 20 points and more than 15 points, respectively.

“It’s a wild boom and it’s all generating economic activity for a president who really does not favor the oil and gas sector at all,” Dancy said. “It is really ironic.”

But environmental organizations lament, rather than celebrate, the shale boom because energy producers use hydraulic fracturing — fracking — to get to the oil and natural gas under the earth’s surface.

“We can’t afford to support the extractive industries,” said Eleanor Bravo, senior organizer for Southwest Food and Water Watch. “The earth and the environment cannot afford to be burning any more fuel. Plus, the fracking process, when you count in the amount of methane that escapes during the extraction process, it’s as dirty or dirtier than burning coal.”

But there’s little indication the boom will stop anytime soon.

According to Weinstein’s statistics, there’s been a 60 percent increase in domestic oil production in the past six years, and Dancy cites figures showing global demand increasing 1 percent per year.

“If you look at the amount of refining exports that are going out of the United States, they’re hitting 20- and 30-year highs,” Dancy said.

Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski

Transfer federal land to states? NM’s governor open to looking at it

Capital Report New Mexico Blog Postings - Tue, 2014-07-08 11:35

LAND FIGHT: There’s a movement to transfer public land from the federal government to individual states. Nearly 42 percent of New Mexico is controlled by the federal government.

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE, N.M. — Proponents of transferring multiple-use land in the West from the federal government to individual states say it could generate millions of dollars a year for New Mexico.

Opponents question the numbers and the practicality of such a move.

But Gov. Susana Martinez says it’s at least worth considering and thinks forming a statewide task force is a good idea.

“It’s always better to have more information as to the costs,” Martinez told New Mexico Watchdog last week. “It’s always better to know what it would take. How many jobs would it create?”

Martinez made the remarks just one day after joining Utah Gov. Gary Herbert — a fellow Republican who is a leading advocate for the land transfer proposal — at an economic summit in Albuquerque.

In particular, Martinez said the threat of wildfires in New Mexico brings up questions as to whether the state might do a better job than the feds.

“When you have federal land, especially that’s in the forest and it’s not getting taken care of, and we end up with severe fires because of all of the fuel that’s within the forest, you end up losing homes and you end up losing life and they don’t seem to be interested in maintaining those forests,” Martinez said.

In marked contrast to states in the East, the federal government owns vast amounts of land in the West. In nine states — Alaska, California, Oregon, Idaho, Nevada, Utah, Arizona, New Mexico and Wyoming — the feds own more than 40 percent of the land:

Supporters say they won’t touch national parks, wilderness areas, military installations or tribal land, but they want to see land the federal government has already listed as open for multiple uses.

They point to a study from an economist in Wyoming who estimated transferring multi-purpose land from the feds to New Mexico would lead to the creation of between $600 million and $1 billion in additional tax money simply through additional jobs and production in the oil and natural gas industries.

But critics — led by environmental organizations — dismiss such claims.

The Southern Utah Wilderness Alliance said advocates of public land transfers are “prepared to waste millions of taxpayer dollars in their quixotic quest to send the federal government ‘a message.’ ”

John Horning, executive director at WildEarth Guardians New Mexico, has called the idea “laughable.”

“Public lands are a birthright for all Americans,” Horning said when the subject came up last fall. “I think the state is probably in over its head, acquiring federal land and managing it.”

But state Rep. Yvette Herrell, R-Alamogordo, has been trying to create a task force in the New Mexico Legislature to look into the issue.

“Let’s have that dialogue,” Herrell said last September. “Do the risks outweigh the rewards for the state of New Mexico? Clearly, there’s a revenue benefit, but at the end of the day, can we do it? I think, yes. I think it’s worth looking into.”

A bill to set up a task force introduced by Herrell stalled in committee during the most recent legislative session, but Herrell says she plans on introducing it again in the 2015 session.

Here’s New Mexico Watchdog video of Martinez talking about the land transfer issue:

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Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski

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