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
68HouseYoungblood, Monica C.R25.00%3658.10%1041.50%
66HouseWooley, Bob R.R23.60%3462.90%1643.30%
7SenateWoods, John PatrickR-2.80%-345.90%-321.60%
25SenateWirth, Peter F.D-33.90%-3759.50%712.80%
19HouseWilliams-Stapleton, Sheryl M.D-38.90%-5633.90%-20-2.50%
20HouseWhite, James P.R8.30%1251.60%230.00%
45HouseTrujillo, Jim R.D-33.30%-4833.90%-200.30%
46HouseTrujillo, Carl P.D-36.10%-5229.00%-26-3.50%
24HouseThomson, Elizabeth L.D-27.10%-3936.30%-174.60%
1HouseTaylor, Thomas C.R34.70%5062.90%1648.80%
2HouseStrickler, James R.J.R28.50%4171.00%2649.70%
37SenateSoules, William P.D-32.10%-3529.70%-15-1.20%
35SenateSmith, John ArthurD-38.50%-4248.60%-15.10%
22HouseSmith, James E.R24.30%3565.30%1944.80%
1SenateSharer, William E.R23.90%2673.00%1748.40%
17HouseSandoval, Edward C.D-40.30%-5833.90%-20-3.20%
29SenateSanchez, Michael S.D-32.10%-3537.80%-92.90%
70HouseSalazar, Tomas E.D-40.30%-5830.60%-24-4.80%
40HouseSalazar, Nick L.D-36.10%-5230.60%-24-2.70%
10HouseSaavedra, Henry K.D-20.80%-3031.50%-235.30%
10SenateRyan, John ChristopherR0.90%144.60%-422.70%
13HouseRoybal-Caballero, Patricia A.D-29.20%-4232.30%-221.50%
24SenateRodriguez, Nancy E.D-33.90%-3723.00%-20-5.50%
41HouseRodella, Debbie A.D-22.20%-3233.90%-205.80%
31HouseRehm, William R.R18.10%2648.40%-233.20%
44HousePowdrell-Culbert, Jane E.R17.40%2560.50%1338.90%
20SenatePayne, William H.R-4.60%-545.90%-320.70%
38SenatePapen, Mary K.D-27.50%-3024.30%-19-1.60%
23HousePacheco, Paul A.R12.50%1851.60%232.10%
12SenateOrtiz y Pino, Gerald P.D-34.90%-3829.70%-15-2.60%
13SenateO'Neill, Bill B.D-35.80%-3924.30%-19-5.70%
2SenateNeville, Steven P.R-13.80%-1563.50%1024.90%
11HouseMiera, Rick B.D-31.90%-4632.30%-220.20%
69HouseMartinez, W. KenD-36.10%-5329.00%-26-3.50%
5SenateMartinez, Richard C.D-23.90%-2624.30%-190.20%
65HouseMadalena, James RogerD-26.40%-3827.40%-280.50%
9HouseLundstrom, Patricia A.D-25.00%-3634.70%-194.80%
11SenateLopez, Linda M.D-33.00%-3647.30%-27.10%
60HouseLewis, Timothy DwightR14.60%2158.10%1036.30%
41SenateLeavell, Carroll H.R-0.90%-144.60%-421.80%
27HouseLarranaga, Lorenzo A.R14.60%2158.10%1036.30%
42SenateKernan, Gay G.R3.70%444.60%-424.10%
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15SenateIvey-Soto, Daniel A.D-24.80%-2745.90%-310.60%
32HouseIrwin, Dona GaleD-2.10%-348.40%-223.10%
57HouseHarper, Jason CarlR9.00%1367.70%2238.40%
28HouseHall, Jimmie C.R22.20%3250.00%036.10%
39SenateGriego, Phil A.D-23.90%-2624.30%-190.20%
54HouseGray, William J.R20.80%3077.40%3449.10%
42HouseGonzales, Roberto J.D-28.50%-4129.00%-260.30%
30HouseGentry, Nathaniel QuentinR33.30%4858.10%1045.70%
14HouseGarcia, Miguel P.D-27.10%-3941.10%-117.00%
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52HouseGallegos, Doreen YvonneD-46.50%-6729.00%-26-8.70%
61HouseGallegos, David M.R22.20%3251.60%236.90%
7HouseFajardo, Kelly K.R15.30%2244.40%-729.80%
59HouseEspinoza, Nora LeeR28.50%4170.20%2549.30%
50HouseEasley, Stephen P.D-36.10%-52-18.10%
64HouseCrook, Anna M.R26.40%3866.10%2046.30%
56HouseCook, Zachary J.R21.50%3149.20%-135.30%
6SenateCisneros, Carlos R.D-37.60%-4123.00%-20-7.30%
12HouseChavez, Ernesto H.D-44.40%-6450.00%02.80%
62HouseBratton, Donald E.R31.90%4663.70%1747.80%
40SenateBrandt, Craig W.R2.80%363.50%1033.20%
3HouseBandy, Paul C.R22.90%3362.10%1542.50%
36HouseArchuleta, Phillip M.D-34.00%-4950.00%08.00%
29HouseAnderson, Thomas A.R32.60%4768.50%2350.60%
6HouseAlcon, Eliseo LeeD-24.30%-3530.60%-243.20%
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.
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.