With the election behind us and a tough legislative session looming, policymakers need to get a firm grip on our bloated government sector and shrunken private sector. As our latest research clearly shows, New Mexico pays a steep economic price in lower personal income for its inefficient government workforce.

Fundamentally, personal income - as defined by the bean counters at the U.S. Department of Commerce's Bureau of Economic Analysis (BEA) - comes from two sources: the private sector and the public sector. More specifically, the BEA defines public sector spending as personal current transfer receipts (Medicare, Medicaid, Social Security, etc.) and government employee compensation (federal, state and local). All else is considered to be in the private sector.

The distinction between the two sectors is important because only the private sector creates new income. The public sector, in contrast, can only redistribute income through taxes and spending. The end result is that the public sector crowds out the private sector.

Of course, this is not a new phenomena, the crowding out of the private sector has been going on for a very long time. Based on the BEA data, in 1929 (the first year of available data), New Mexico's private sector accounted for 87.2 percent of all personal income earned in the state. Eighty years later in 2009, the private sector share had fallen by nearly one-third to an all-time low of 58.9 percent of personal income - the fifth-smallest private sector in the country.

There is a lot of discussion these days about the effectiveness of tax cuts and whether to keep them or instead to increase taxes. The most prominent tax cut conversation has taken place in Washington over President Bush's tax cuts and whether to extend them for all taxpayers, rescind those for high-earners (earning above $250,000 annually), or rescind them for all taxpayers.

New Mexico has its own tax cut discussion as well. The topic here is Gov. Bill Richardson's tax cuts which took New Mexico's top income tax rate from 8.2 to 4.9 percent and slashed the capital gains rate in half. While gubernatorial candidate Susana Martinez has pledged not to raise taxes during her four-year term, Diane Denish was somewhat less committal saying she would not raise taxes for "the foreseeable future."

The Rio Grande Foundation and Citizens in Charge Foundation, a national voter rights group focused on the ballot initiative and referendum process, have released a new poll of New Mexico voters on the issue of giving voters in the state greater ability to directly vote on issues in state elections. Read the full story here.

Timothy Sandefur, one of the leading pro-freedom lawyers in the nation, recently spoke at a Rio Grande Foundation event in Albuquerque. The subject of Sandefur's talk was his new book "The Right to Earn a Living" which studies the myriad legal cases throughout American history that impact Americans abilities to work, unmolested by government bureaucrats. Apologies in advance for the video quality, but the sound quality is excellent.

Things have been quite busy here at RGF. This includes several recent radio appearances. I was on Bob Clark's show for an hour discussing tax cuts and a variety of other subjects relating to listener calls;

Also, KUNM had a series of interviews with myself and other politicos and policy watchers relating to Governor Richardson's legacy. 

I discussed Richardson's lack of action on education reform here;

His scandals here;

and, his record on tax cuts and spending here;

I had a place at the table for last week's "In Focus" program on Channel 5 KNME. Topics included Obama's visit to Albuquerque, the race for governor, the closing of the GE plant in the South Valley, and more. Check it out:

Watch the full episode. See more New Mexico In Focus.

We at the Rio Grande Foundation have been among Governor Richardson's harshest over the years. With the Governor caught up in corruption scandals and spending gobs of taxpayer dollars on dubious "investments" in the Rail Runner, Spaceport, Eclipse Aviation, film industry giveaways, and "Solar Alley," to name just a few, there has been much to criticize.

That said, as Richardson serves out his last few months in office, we feel that it is time to take a more holistic look at the Richardson legacy. And, while we will continue to criticize the wasteful spending and corruption, we would be remiss if we overlooked the powerful, positive, economic impact that the personal income and capital gains tax cuts of 2003 had on New Mexico's economy.

Congressional Republicans are now running for office on a platform of repealing the recent federal takeover of the US health care system. Unfortunately, while repeal would undo a great deal of harm, positive reforms are needed in the health care sector. Rio Grande Foundation board member and physician Deane Waldman wonders what will happen and outlines some positive reforms in a new article "If Obamacare Is Repealed, What Then?"