The past sometimes looks better than it really was. That seems to be the case with some conservatives and the administration of George W. Bush. As I note in response to a column defending the Bush track record by economist Micha Gisser, spending and government grew at rapid rates during the Bush years.
I respect Micha Gisser as an economist, but I think he allows politics to cloud his economic thinking in his recent column on the US and New Mexico economies.
In analyzing the national economy, Gisser, emphasizes the Bush tax cuts, but fails to acknowledge that the Administration’s overall economic track record was disastrous (from a free market perspective). To name just a few harmful policies, Bush (along with a Republican controlled Congress) increased spending and indebtedness to unprecedented levels, created a new health care entitlement, and dramatically expanded the scope and cost of federal regulations. Obama has raised taxes and further expanded government.
New Mexico’s recent economic history is also nuanced. Democrats have consistently controlled the Legislature for decades, but Bill Richardson managed to convince them to reduce income tax rates from 8.2 to 4.9 percent. These were the most significant pro-growth tax cuts enacted in any state in that time frame. Not surprisingly, New Mexico led the region in personal income growth during the decade from 2000 to 2009.
Unfortunately, Richardson also created the costly Rail Runner and Spaceport, both of which continue to burden our economy. Gov. Martinez has worked to reduce the corporate tax and gross receipts tax burdens while not burdening taxpayers with new, costly projects like the Rail Runner and Spaceport.
Both New Mexico and the US economies face serious problems with out-of-control spending, tax burdens on productive behavior, and costly regulations. We should analyze politicians’ records on their merits, absent partisan blinders.
Paul J. Gessing
Rio Grande Foundation
PO Box 40336
Albuquerque, NM 87196
Texas continues to outpace the nation in jobs and economic growth. New Mexico, on the other hand, lags dramatically behind the region and the nation.
Rather than focusing on New Mexico’s woes, this week on the “New Mexico Freedom Hour” presented by the Rio Grande Foundation which airs next on Saturday, August 30, 2014 from 12pm to 1pm on 770 KKOB AM, we’ll focus on understanding what Texas does so well when it comes to economic development and job growth. Of course, we’ll also plug our guest for ideas on what New Mexico could do to compete with the Lone Star State.
Host Paul Gessing will interview Chuck DeVore, Vice President of Policy with the Texas Public Policy Foundation. DeVore is author of “The Texas Model: Prosperity in the Lone Star State and Lessons for America.”
Listeners are encouraged not only to tune in and listen, but to call in with questions: 505-243-3333.
I don’t read the New York Times. I focus my time and attention on New Mexico, but occasionally they carry a really interesting article. One such article was entitled “Affordable Housing Draws Middle Class to Inland Cities.”
The idea is that large numbers of Americans are abandoning the costly coasts for more affordable digs in the Midwest, Plains, and, of course, Texas. This is definitely a story worth telling. In the absence of crazy federal housing policies, people are moving to places where they can get a decent-paying job and afford to buy a house. This is not a surprise.
The coasts are expensive in part because they tend to have somewhat limited land mass as compared to the central part of the nation, but, more importantly there are the government regulations (everything from environmental to land use to lack of right to work and many in between) that drive up the cost of living in those predominantly “blue,” coastal regions. Needless to say, this being the Times, the impact of regulations is downplayed (only regulations specifically on home-building are mentioned).
As a trend, this shift away from the coasts SHOULD be beneficial to New Mexico, but unless our policymakers free the private sector up for job growth, we’re going to miss out.
Featuring Julian Morris of the Reason Foundation
In the past two years, two of New Mexico’s largest cities, Santa Fe and Silver City, have passed bans on plastic shopping bags. They join hundreds of others nationwide that have adopted similar measures.
It is likely only a matter of time before governing bodies throughout New Mexico, particularly within the Rio Grande Corridor, consider such policies.
To help ensure that decisions on this matter are made on the basis of the best available evidence, we have invited one of the foremost experts to discuss the issues involved at free public events in Albuquerque and Las Cruces.
Albuquerque event details are as follows:
Las Cruces event details are as follows:
Please let us know you’re coming by E-mailing us at email@example.com and identify which event (Albuquerque or Las Cruces) you’ll be attending.About the Speaker
Julian Morris is Vice President of Research at Reason Foundation and author of the new report: “How Green Is that Grocery Bag Ban? An Assessment of the Environmental and Economic Effects of Grocery Bag Bans and Taxes“.
He wrote a column on the issue that recently appeared in Time.
Beverlee McClure was interviewed recently by Dan Mayfield of Albuquerque Business First. The article is worth a read as it gives a realistic perspective of how a right to work bill might fare during the upcoming legislative session.
As an added bonus, check out some of the back-and-forth between myself and former Lt. Gov. Diane Denish in the comments section (and feel free to weigh in yourself). I take issue with her unsupported assertion that of the top 7 states in economic growth, four do not have right to work laws. As this article from June of this year shows, 8 of the top 10 states in economic growth are right to work (North Dakota, Wyoming, Oklahoma, Idaho, Utah, Texas, South Dakota, and Nebraska are while West Virginia and Colorado are not). There may be something contradicting that if you search hard enough and define “economic growth” in some unusual way, but right to work states pretty consistently outperform non-right to work states (as seen below), so Denish resorts to the classic tactic of third-graders and those without sound arguments (name-calling) instead.
I recently sat down with Wally Drangmeister of the New Mexico Oil and Gas Association to discuss New Mexico’s economy and how it depends on the oil and gas industry as well as potential ways to use the industry as a bridge to a more prosperous economy. The show originally aired on the Energy New Mexico Hour which airs on Sunday mornings from 10 to 11am.
Check out the chart below (pdf here):
It illustrates changes in private sector GDP growth over three different time periods (the last 17, 4, and 2 years). As seen in the chart, New Mexico’s private sector growth has been consistently weak over the various time periods hovering from 45th to 35th place among US states.
Certainly, there are various ways to interpret this. One is that while New Mexico’s overall economy remains stuck in the rudder in recent years, the private sector is performing reasonably-well given recent history. The current economic malaise in New Mexico seems to be as a result of changes in federal spending.
Also, it is worth noting that by and large, New Mexico’s neighbors outperform the Land of Enchantment over each of the time frames discussed. This is not a surprise given New Mexico’s poor rankings on all manner of economic freedom indices.
For example, none of New Mexico’s adjacent neighbors under-perform New Mexico in any given time period although nearby Nevada and Arizona perform somewhat poorly when the after-effects of the housing crisis are included (as in the last four years).
HT: Matt Mayer
The liberals on Albuquerque’s City Council may flex their muscles at tonight’s Albuquerque City Council meeting.
Two bills (P-14-5 and O-14-14) would increase the gross receipts tax by 1/8 of one percent to fund “essential services.”
The intent is to fund (a) mental health services and (b) capital improvements. No specifics are offered.
As I wrote several months ago when the mental health tax hike was first proposed, New Mexico’s per person spending on mental health is middle-of-the-pack among states. There is very little evidence as to the need for this tax hike or that enacting it will result in improved services.
Regarding the capital spending proposal, Albuquerque has robbed the Capital fund to spend more on operations and pay. The way to correct that problem is to balance the books. Use Capital money only for capital improvements. Taxpayers should NOT pay now for “something” and find out what the real needs are without leaping to the “increase tax” solution. Furthermore, Albuquerque should reconsider management of its golf courses and the zoo (to name just two things) which could result in cost savings.
It’s official. Tesla has broken ground at its new “gigafactory” near Reno, Nevada. While New Mexico appears to have missed out on Tesla and its expected 6,500 jobs, some legislators, when asked, seem willing to spend as much as 500 million tax dollars to lure the company to the state.
While details are by no means firm, it appears that Tesla is looking for an infusion of $500 million, not tax breaks of $500 million. The difference between the two is that tax breaks don’t actually “cost” the state/taxpayers anything because Tesla would have to locate in New Mexico for any tax revenue to result from its activities. When it comes to outright spending of New Mexicans’ tax dollars, those are dollars that come directly out of the pockets of average New Mexicans and the businesses already located here.
This important nuance explains why we at Rio Grande Foundation oppose payments made to the film industry which, according to a new legislative report, paid out $251 million in incentives to the film industry with $103.6 million in state and local tax dollars generated over the same basic time period. In simple mathematical terms, the state spent $147 million more than it generated from the film industry in recent years. That’s called a “loss” in any other industry. Jobs were created, but the net loss really illustrates the inherent problems with the program.
The same reasoning explains why fiscal conservatives should not support outright spending of $500 million to bring in Tesla. Tax breaks are one thing, but if the company goes under, there are no “clawbacks” that will get $500 million in outright spending back.
Long-term, generous subsidies and tax exemptions are not the answer for New Mexico’s economy. In fact, it is no surprise that the company broke ground in Nevada, which, aside from proximity to the company’s factory, is a state with a right to work law and zero income tax.
Recently, site selection expert John Boyd was interviewed about New Mexico’s chances of attracting Tesla. His comments were enlightening. He said, manufacturing companies look for reasons to scratch off states when considering where to build major facilities — and no right to work law is at the top of the list. Boyd again reiterated the need for right to work stating, “I can’t underscore how critical right to work status is.”
“Right to work” is not “anti-union.” It simply states that union membership must be optional and not a condition of employment. “Right to work” must be at the core of efforts to turn New Mexico around. Taxes are a second area in dire need of reform. As economist Steven Moore has illustrated in study after study, having a zero income tax means both stronger economic growth and faster population growth than the national average and the states with the highest rates on personal income. It all goes back to the adage that if you want more of something, tax it less; if you want less of something, tax it more.
Liberals clearly understand this when taxes were raised in a successful effort to reduce tobacco consumption, but they seem not to believe that workers will choose to go where they can keep more of their hard-earned money.
Despite the state’s challenging economy, New Mexico has made some progress in recent years in gradually reducing taxes on productive activity (Bill Richardson reduced the top income tax rate from 8.2 to 4.9 percent and Susana Martinez has made New Mexico a “single sales factor” state, reduced taxes on manufacturing inputs, and is phasing down New Mexico’s corporate income tax).
Unfortunately, decades of reliance on the federal government and a business-unfriendly gross receipts tax, underperforming educational system, and poor regulatory environment mean that the transition away from government reliance and toward prosperity will require greater cooperation and even bigger reforms.
The Catholic Church in New Mexico seems to be more consistent in its advocacy for bigger government than it is in truthfully explaining public policies enacted or proposed by the State’s political leadership. Check out this statement on the Martinez Administration’s proposed changes to SNAP/food stamps from the New Mexico Conference of Catholic Bishops. To summarize the Bishops’ statement: they’re opposed in part because New Mexico’s terrible economy isn’t generating enough jobs for people who The Governor’s proposed changes would restore some kind of work requirement or require job training or community service for certain recipients of food stamps. As detailed by Capitol Report New Mexico, these requirements hardly require all food stamp recipients to get a job:
The rule won’t be forcing young mothers to abandon their toddlers. It won’t apply to disabled people who use food stamps, or the elderly.
The only people affected will be able-bodied adults between the ages of 18 and 59. Teenagers 16 and 17 who get SNAP benefits have to prove they’re in school or in a jobs training program.
According to HSD spokesman Matt Kennicott, if you’re a single parent with a child younger than 6, you’re exempt.
If you are receiving unemployment benefits, you’re exempt.
If you’re a college student — even if you’re only in school part-time — you’re exempt. Pregnant women are exempt.
If you have a low-paying job, you don’t have to apply for a better-paying job to keep your benefits.
If you’re a single parent with a kid older than 6, you have to prove you’re looking for a job but you can skip the jobs training and community service requirements.
Set aside the public policy value of having New Mexicans take proactive steps to find work or improve themselves in order to receive government benefits…you know, “Give a man a fish, he’ll eat for a day. Teach a man to fish and he’ll eat for life.”
The Bishops’ statement appears to directly contradict statements from Saint (Pope) John Paul II and a recent statement from Pope Francis (Without Work, Human Dignity is Wounded):
It is necessary to reaffirm that employment is necessary for society, for families and for individuals”, said the Pope. “Its primary value is the good of the human person, as it allows the individual to be fully realised as such, with his or her attitudes and intellectual, creative and manual capacities. Therefore, it follows that work has not only the economic objective of profit, but above all a purpose that regards man and his dignity. And if there is no work, this dignity is wounded! Indeed, the unemployed and underemployed risk being relegated to the margins of society, becoming victims of social exclusion.
Discussion and Fellowship at Liberty on the Rocks!
“Liberty on the Rocks” is a no-host happy hour discussion and information-sharing session.
Liberty on the Rocks will be held at Scalo Northern Italian Grill which is located in Nob Hill at 3500 Central Avenue SE in Albuquerque. A private room has been reserved for this event. In August, Liberty on the Rocks will take place on Thursday, August 21st from 6:00 to 7:30PM.
There is no cost for this public event, but attendees are encouraged to have dinner or drinks. Registration is not required but is much appreciated. Click here to register online … it’s fast and it’s free!Come celebrate liberty with us!
The National Taxpayers Union Foundation has a unique tool that compares the spending agendas of members of Congress. Rather than analyzing votes taken, the “Bill Tally” report examines the cost or savings of each member’s “wish list” as expressed by the net cost/savings of that individual’s bills as introduced, whether they come to a vote or not.
Check out the following chart, specifically the net spending agenda of each member as expressed in millions. Simply put, Udall and Heinrich would like to increase spending by about $10 billion whereas Lujan-Grisham and Lujan have much more ambitious spending goals. Rep. Pearce, on the other hand, is sufficiently ambitious as a spending cutter that his cuts are larger than the spending agendas of his New Mexico colleagues combined.
According to the latest report ranking state economies, New Mexico is the 37th “most likely to succeed.” The report which was put together by ALEC (the organization the left loves to hate) analyzes economic policies on a state-by-state basis so readers can better understand identifies “which states are poised to achieve greater economic prosperity and those that are stuck on the path to a lackluster economy.”
There are myriad problems with the Obama Administration’s proposed power plant rule, not the least of which is that Congress is not involved in enactment of such a dramatic policy shift in the first place. A close second is that it will increase electricity prices and cost good-paying (union!) jobs at existing power plants in New Mexico and elsewhere as seen in the following chart:
The best we can ask for is for large numbers of Americans to weigh in against the proposed regulations in the hopes of killing, weakening, or delaying the regulations. That can be done by personalizing and submitting a letter at the following link.
(Albuquerque, NM) — New Mexico’s only free market think tank, the Rio Grande Foundation, is hosting an hour-long radio show on 770 KKOB starting this Saturday, August 16, from noon to 1pm. The show will air every two weeks through at least the end of 2014.
The show, entitled “New Mexico Freedom Hour” will focus on economic and education issues here in New Mexico with an eye towards real solutions that have been tried in other states. The format will involve interviews of guests from across the political spectrum and phone calls from the public. The call-in number is: 505-243-3333.
Said Rio Grande Foundation president and primary host, Paul Gessing, “This show offers the listeners a unique forum in which to learn about and discuss the ways in which free markets and limited government can help everyday New Mexicans lead better lives. Show topics will include labor freedom, taxation, education reform, and an economic history of New Mexico to name just a few.”
It is the 10th anniversary of Santa Fe’s so-called “living wage.” The Albuquerque Journal covered the anniversary today and concluded that “results are mixed.”
Fair enough. It is hard to say that raising the minimum wage is a “disaster,” but when such a small portion of workers earn the minimum wage and those happen to be the most marginal, least-productive workers in the economy, it would take a truly outlandish minimum wage hike to be a “disaster.”
But that doesn’t mean that higher minimum wages are harmless or somehow beneficial as we have pointed out regarding younger workers in Santa Fe.
Ironically, while mom-and-pop businesses in Santa Fe are forced to pay $10.66 an hour, their elected officials in Washington with unlimited claims on the United States Treasury pay some of their workers nothing.
It is also sad, per the anecdote at the conclusion of the Journal article, that a young person would pick up and move all the way from North Carolina to work in fast food. Rather than relying on government mandates to increase one’s pay, wouldn’t she be better off studying part time to gain an associates degree in some kind of skilled trade (plumbing, welding, electrician, hair-stylist) where there is a real future rather than using those scarce resources to pick up an move her entire family for another unskilled, low-wage job?
Regardless of minimum wage policies, there are modest disparities in pay levels for even unskilled work, but the long-term impact of a few $$ an hour raise as opposed to a long-term increase in skills and marketability is minimal.
Overall, conservatives shouldn’t blow the impact of increased minimum wages out of proportion in terms of overall economic impact, but that doesn’t make it good policy either.
(Albuquerque, NM) – The Rio Grande Foundation is one of 77 organizations in 44 states celebrating “National Employee Freedom Week” which lasts from August 10-16. The week marks an occasion to educate workers on their freedom to join or not join a labor union.
There is no more basic freedom enshrined in the United States Constitution than that of free association. That includes the choice not to be forced to join or pay dues to a union as a precondition of employment. This right is protected under “Right to Work” legislation which has been adopted by 24 states, not including New Mexico.
According to a poll of 500-502 respondents conducted by Google Consumer Surveys, approximately 84.7 percent of New Mexicans answered “Yes” to the question: “Should employees have the right to decide, without force or penalty, whether to join or leave a labor union?”
Said Rio Grande Foundation president Paul Gessing, “These poll results illustrate strong support for the basic tenets of a “Right to Work law in New Mexico. No matter how the legislative races pan out in November, there can be no doubt that an overwhelming majority of New Mexicans support the basic principles of “Right to Work.”
Concluded Gessing, “Where implemented, “Right to Work” laws not only protect basic fairness, but they have a proven track record of spurring economic growth and increased employment when adopted. With New Mexico’s economy struggling profoundly, both parties in Santa Fe must consider ‘Right to Work’ as a core component of plans to reform the economy.”
According to a recent article published by National Review Online, a federal audit has found information-technology security weaknesses at New Mexico’s health-insurance exchange.
According to the report:
The final audit report was completed by June 17, 2014, but because it contains such specific information about vulnerabilities, it is not public, according to a letter sent from the Department of Health and Human Services’ Office of Inspector General (DHHS OIG) to the health exchange.
Needless to say, there are still some very significant issues with ObamaCare in New Mexico and around the nation.
In response to the NRO story, Dr. Deane Waldman who holds positions both on the Health Exchange Board and the Rio Grande Foundation, said:
The NM Health Exchange, in conjunction with federal oversight, was beta-testing, de-bugging if you will, our preliminary system for the individual market.
WE found the security problem and fixed it, before implementing our individual market, unlike healthcare.gov. Further, since we could not finish all the beta-testing in time for the federal deadline, WE chose to put off opening our Individual Market for a year until we completely de-bugged the system and proved (with evidence not promises or magical thinking) that it works, again unlike healthcare.gov.
You might find it interesting that WE take the federal deadline seriously, while they keep deferring them, “moving the goalposts” as it were.