Errors of Enchantment

It is no secret that cities all over the country including our own Albuquerque are facing mounting budgetary problems. Chicago just received $2.5 billion in exchange for leasing the airport to a private company. Once debt is paid off, Chicago is expected to receive $1 billion from the privatization.

Albuquerque's Sunport is owned by the City of Albuquerque and receives taxpayer funding. There is no doubt, however, that a private, profit-making company could do a better job while also providing resources in the form of lease payments to the City. With impending belt-tightening including recent cuts of $15 million, Albuquerque's elected leadership should consider painless ways to access needed funding.

The win-win for taxpayers is that they get a better-run airport and save money at the same time.

Posted by Paul Gessing at 03:16 PM | Permalink | Comments (0) | TrackBacks (0)

Some of the figures below are truly shocking. According to the Institute for Truth in Accounting:

Since May 30, 2008, less than six months ago, the United States has added a stunning $1.2 trillion dollars to its already bloated public debt. Total debt now stands at $10.6 trillion while that portion held by the public and foreigners is up 20.6% in less than half a year.

"Since the time George Washington was president until Bill Clinton assumed the office, we had managed to accumulate $4.2 trillion in debt. President Clinton added $1.6 trillion and George Bush has increased the total by another $4.8 trillion" said Sheila Weinberg Founder of the independent Institute for Truth in Accounting.

"Beginning in the middle of the year, the federal government's existing annual deficit has been increased by bank bail outs, insurance company rescues and by coming to the aid to automobile manufacturers and their unions." Weinberg continued. "For the sixty million households that pay taxes, these government programs add more than $20,000 in future liabilities."

Weinberg reminds us that the public debt is only a small part of the fiscal challenges that face Americans. "The real problems are the promises we have made to ourselves without a way to pay for them. These unfunded obligations are a consequence of Social Security and Medicare entitlements, primarily and they are nearly five times larger that the "official" debt. The total combination of debt and promises is a whopping $57 trillion or more than $188,000 for every man, woman and child. For taxpaying households, this is an obligation of nearly $900,000!"

For more information about the Institute please visit: www.truthinaccounting.org and www.truthin2008.org

Posted by Paul Gessing at 07:44 PM | Permalink | Comments (0) | TrackBacks (0)

Over at Reason, there is a tally of the various federal bailouts -- total damage about $2 trillion. Interestingly, the Washington Post recently ran an article quoting several economic experts who believe that the AIG bailout was ineffective. This latest news is not surprising considering that another major government intervention in the markets, the ban on short-selling, has been called ineffective by a range of experts as well.

Posted by Paul Gessing at 03:04 PM | Permalink | Comments (0) | TrackBacks (0)

It is no secret that Tom Udall is fairly liberal and Steve Pearce is rather conservative. But, without having each of them take the quiz I discussed in this recent post, it may be hard to tell just how conservative or liberal they really are. Well, my former colleagues over at the National Taxpayers Union Foundation have produced an interesting report that contains some answers.

According to a new report that tallies up the taxing and spending agendas of the two candidates, Udall Would Boost the federal budget by $25.3 Billion while Pearce would increase it by $345 Million. Certainly, there is plenty of room to cut federal spending and both candidates should be ashamed for desiring an even bigger federal government, but Udall's desire to spend an additional $25.3 billion seems particularly astounding. With federal spending haven grown out of control in recent years (thanks to the efforts of both parties), the need for Congress to tighten its belt is long overdue.

Posted by Paul Gessing at 02:25 PM | Permalink | Comments (0) | TrackBacks (0)

In case you haven't already heard, the special session is over. The Governor's pared down rebate plan was pared down further so that if your family earns $70,000 or more, you get nothing. Medicaid has been expanded by $20 million which is likely to be recurring and will grow over time.

It would certainly have been better for the majority of New Mexicans -- even those who will receive these miniscule rebates (on their taxes in 2009) -- if the Legislature had never been called into the session in the first place, but we survived with only minor damage. It will be interesting to see if oil and gas prices rebound, thus generating a real windfall for the state or if they continue their recent slide, thus wiping out this supposed windfall that Richardson used as an excuse to call the session in the first place.

Posted by Paul Gessing at 10:34 AM | Permalink | Comments (0) | TrackBacks (0)

Democracy in New Mexico is hard to come by because most citizens don’t know what’s going on in the opaque shadows of government. Unless you’re actually attending the legislative sessions and committees in Santa Fe, odds are you won’t be able to see through the impenetrable iron curtain surrounding the Roundhouse.

New Mexico is one of only four states nationwide that don’t broadcast any part of the legislative process. Thanks to the efforts of Senator Mark Boitano, the state Senate will begin web casting its floor sessions starting January 20. Excellent; this is a big step for a government whose transparency is nearly non-existent.

Unfortunately, the House of Representatives and the myriad of legislative committees remain largely undocumented. Every time a bill is introduced in either house, it’s assigned to at least one, usually three, committees for deliberation (One committee is perfectly normal. The speaker assigns bills he and/or the majority don’t like to multiple committees in order to bring about their deaths. In addition he’s been known more than once to change a bill’s committee assignments in mid-stream.) Minutes, if they’re kept, are not made public for any of these standing committee hearings. The only time anything is publicly documented is if they actually decide to take a vote on it.

In 2007 (the last 60-day legislative session), three groundbreaking bills aimed toward increasing government transparency were introduced, and only one actually made it through without getting lost in the usual veil of secrecy. Rep. Brian K. Moore introduced House Bill 235, which would’ve forced the state to disclose exactly who was getting special exemptions through the tax code and how much the state was foregoing. The bill passed through the House and Senate with flying colors. According to the Senate Chief Clerk’s Office, Senator Michael Sanchez of Valencia County was the only legislator in the entire state to vote against the bill… before Bill Richardson used a pocket veto to kill the legislation after the Legislature adjourned.

Reps. Larry Larranaga and Kathy McCoy teamed up with House Bills 554 and 993 (respectively) to create a searchable transparency website where all state revenues and expenditures would be made available to the public (including the recipients of all state contracts). Both bills were “postponed indefinitely” in the House Taxation and Revenue Committee.

Without some detailed, written record of the committee hearings, we’ll never be able to actually know what was discussed unless we attend. Democracy will not be able to succeed until the citizens of New Mexico are allowed to watch everything the politicians are doing in government. That’s a right to which we are entitled. Unfortunately, there are probably plenty of bad reasons why Governor Richardson doesn’t want us to know who’s getting special favors in the tax code and why Lujan and the House Taxation and Revenue Committee want to make it hard for us to know where our money’s going.

Posted by Corey Davis at 09:23 AM | Permalink | Comments (0) | TrackBacks (0)

When discussing the federal budget, the size of the numbers being dealt with and their different meanings and calculations becomes overwhelming and even irrelevant. The federal deficit is an example of this. While President Bush and federal bureaucrats like to cite our supposedly reduced deficit as a result of their successful policies, when future obligations are accounted for, the picture is much worse. In fact, according to a recent article in the USA Today, "the federal government's long-term financial obligations grew by $2.5 trillion last year, a reflection of the mushrooming cost of Medicare and Social Security benefits."

As the article goes on to explain:

Taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, a USA TODAY analysis found. That's nearly $500,000 per household.

When obligations of state and local governments are added, the total rises to $61.7 trillion, or $531,472 per household. That is more than four times what Americans owe in personal debt such as mortgages.

The $2.5 trillion in federal liabilities dwarfs the $162 billion the government officially announced as last year's deficit, down from $248 billion a year earlier.

Clearly, entitlement reform should be a top priority of politicians in both parties, but it doesn't look like any of the current crop are making it a top priority...instead, it seems that our children will be inheriting our debts.

Posted by Paul Gessing at 08:47 PM | Permalink | Comments (0) | TrackBacks (0)

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.

Posted by Paul Gessing at 11:21 AM | Permalink | Comments (0) | TrackBacks (0)

Pete Domenici may be popular here in New Mexico in part because he brings the pork home for New Mexico, but he's also a big reason why the Republican Party has lost its moorings on fiscal matters.

I received word of the following exchange from a staffer at the Heritage Foundation. This debate just occurred on the Senate floor between Senators Coburn and Domenici (link courtesy of Sen. DeMint’s office). It highlights the clash of cultures between true reformers (Coburn and DeMint) and business-as-usual career politicians (including Domenici, unfortunately) like nothing else since perhaps the Bridge to Nowhere debate. The final 45 seconds is especially noteworthy.

Earlier in the debate Sen. Domenici essentially asserted that the Junior Senator from Oklahoma shouldn’t attempt to supplant the collective wisdom of committee staff.

Transcript of Domenici remarks:

I DON'T THINK ONE SENATOR SHOULD SUPPLANT THAT. THOSE 23 MEMBERS OF THIS COMMITTEE MAKE THEIR JUDGMENTS ON INFORMATION COMPILED BY A PROFESSIONAL STAFF WITH A COMBINED SERVICE OF RELEVANT DEPARTMENTS IN CONGRESS OF OVER 70 YEARS JUST ON THE REPUBLICAN STAFF SIDE ALONE. THEY SPEND GREAT DEAL OF TIME ON THESE BILLS. THEY KNOW MORE THAN ANYONE ELSE. THEY -- THEY GIVE THAT KNOWLEDGE TO US, THE 23 MEMBERS, AND WE VOTE.

Transcript of Coburn remarks:

THE HERITAGE THAT WE HAVE EMBRACED IN THIS COUNTRY IS ONE OF SACRIFICE. ONE GENERATION SACRIFICES SO THE NEXT HAS OPPORTUNITY. IF WE KEEP DOING THIS WITHOUT REGARD, WE DON'T KNOW HOW MUCH WE'RE SPENDING, WE DON'T KNOW HOW MUCH THE MONTHLY COSTS ARE, WE'RE NOT TAKING CARE OF THE PARKS THE WAY WE SHOULD BECAUSE WE HAVE A HODGEPODGE, A BARGE FLOATING DOWN A RIVER WITHOUT A TUG ON IT, WE'RE GOING TO MAKE THE PROBLEM WORSE. I WILL REMIND MY COLLEAGUES, THE TRUE ACCOUNTING OF THIS YEAR ESTIMATE IS $607 BILLION DEFICIT. THAT'S OVER $2,000 FOR EVERY MAN, WOMAN AND CHILD IN THIS COUNTRY. EVERY CHILD THAT'S BORN TODAY IN THIS COUNTRY INHERITS AN OBLIGATION THAT THEY WILL HAVE TO PAY THAT THEY GET NO BENEFIT FROM OF $400,000. AM I FRUSTRATING THE SENATORS FROM NEW MEXICO? YOU BET. ARE OUR CHILDREN WORTH IT? YOU BET. I'M NOT GOING TO STOP, I'M GOING TO STAND AND SAY WE'RE GOING TO THINK LONG TERM, WE ARE GOING TO START.PROTECTING PROPERTY RIGHTS, WE ARE NOT GOING IT GIVE UP BECAUSE WE GET LECTURED TO BECAUSE WE ARE NOT DOING IT THE WAY WE'VE ALWAYS DONE IT. THE WAY WE HAVE ALWAYS DONE IT HAS US BANKRUPT.

IT'S TIME FOR A CHANGE.

REPUBLICANS AND DEMOCRATS ALIKE: OUR CHILDREN ARE WORTH IT. WITH THAT, I YIELD THE FLOOR.

Description of Coburn amendments that are being voted on now.

Posted by Paul Gessing at 03:30 PM | Permalink | Comments (0) | TrackBacks (0)

An article linked to from Yahoo's main page caught my attention "9 Reasons Your Taxes Are Going Up." While you never know what you are going to get and what the ideology of the story's author, it is hard to argue with most of the author's points.

Particularly relevant are number four, Congress's lack of willingness to reform Social Security and Medicare and our deteriorating infrastructure. Both problems could easily be solved by free market reforms.

The only cause of future tax hikes that I fail to see is number six, "White House's Free Market Nonaction Policies." Not surprisingly, the author fails to describe exactly what he is referring to here. Bush and the Republicans have become a big spending, heavy regulation party. This certainly doesn't fit the "laissez faire" profile.

Unfortunately, it looks like Americans' tax burdens are going up unless dramatic change takes place in Washington.

Posted by Paul Gessing at 09:15 AM | Permalink | Comments (0) | TrackBacks (0)

We've certainly discussed the extremely flawed capital outlay process a few times before in this space. So, we read with interest the Albuquerque Journal's recent stories on the capital outlay money that was shifted from some projects to others (especially the Unser Museum) recently. Tthe articles are for subscribers only and can be found here and here, but essentially what happened is that the Governor redirected $1.5 million to the Museum.

I've been to the Unser Racing Museum and I can vouch for the fact that it is both a nice facility and that it is poorly attended. In fact, it averages only 30 customers per day. Oh, and of course the Unsers are big contributors to Richardson.

So, do I begrudge the Guv? To be honest, not really. The capital outlay process is a disaster in need of reform. And, while the Unser Museum may be a money pit, at least it is not spurring the creation of additional even bigger goverrnment. In other words, Richardson actually saved Albuquerque taxpayers money (and preserved property rights) by redirecting $174,000 away from Mayor Marty's hoped for arena and diverting $700,000 from a planned "extreme sports park" at the Big I which would have involved the City forcibly taking land from a private company currently located there.

Were the vetoes political? Probably. Is the capital outlay process a disaster? Definitely. Were the vetoes good for taxpayers and property owners regardless of their motivation? The answer to that is most likely "Yes." Particularly in these tough economic times, I think most New Mexicans would rather see that money remain in their own pockets.

Posted by Paul Gessing at 03:00 PM | Permalink | Comments (0) | TrackBacks (0)

According to Barry Massey of the Associated Press in the Albuquerque Journal (Gov. Vetoes $7M In Senate Pork, Mar. 6, 2008), the Governor vetoed $500,000 for “renovation of a law enforcement complex in Deming, $10,000 for a plasma television and related equipment, $10,000 for weight room equipment, and $30,000 for field maintenance equipment for the UNM Athletic Department.” A more extensive list of the vetoes is available in the article.

While seven million dollars is a relatively small amount compared to the $341 million worth of expenditures he approved, fiscal conservatives might take heart that the Governor is looking out for their interests.

While this may be the case and much of what the Governor vetoed should be funded locally and not by the State, the pattern of vetoes seems more related to politics than principle. In fact, among the “capital investments” approved by the Governor are “$4.5 million for an automobile assembly facility… $7.5 million to assist with a solar energy equipment manufacturing plant…[and] $7.5 million for infrastructure for a planned building for a financial services company.” Clearly, some of these funds are also unnecessary.

Gilbert Gallegos, Richardson’s spokesman, basically admitted that Senate inaction on Richardson’s health care bill was the real reason for the vetoes, saying: “Sen. Rawson” (one of the Senators targeted with the most vetoes) “has been purely partisan and defiant as a state senator. He is not willing to work with the governor in the best interest of New Mexico.”

Ironically, while it is clear that the funding process in New Mexico needs to change (or better yet have the money returned to taxpayers), taxpayers may be the short-term winners in this game of chicken. That is, as long as the Governor fails in his bid for government-controlled health care.

Posted by Paul Gessing at 05:06 PM | Permalink | Comments (0) | TrackBacks (0)

With the news that the US Senate voted yesterday to preserve its ability to earmark legislation (both Domenici and Bingaman voted to keep the pork coming), thus providing for often wasteful spending back home, often called "pork," I thought my recent article from the Las Cruces Sun-News on how those running to represent New Mexico in Congress should approach the issue.

The underlying point of the piece is: "New Mexico should stand on its own two feet and not rely so much on the federal government." Fortunately, because our representatives will have such limited pull due to their lack of seniority, our political leaders have no other choice at this point.

Making the Senate vote even more illustrative is the fact that on the very same day, the House passed a budget that -- if its outlines are followed -- would allow the vast majority of President Bush's tax cuts to expire. Clearly, the collective voice of Congress is saying "Keep the pork flowing. We'll raise your taxes to do it." It is truly unfortunate that Senator Domenici decided to favor "bridges to nowhere" over New Mexico taxpayers.

Posted by Paul Gessing at 01:52 PM | Permalink | Comments (0) | TrackBacks (0)

Today's Albuquerque Journal contains a very insightful editorial (subscription needed) about the way government operates.

The article discusses the US Conference of Mayors' request for more federal spending on local police which the Journal points out is a core function of government. The editorial contrasted police, something cities should fund, with projects like Mayor Marty's proposed streetcar, Tricentennial Towers, the car wash Bernalillo County wanted to buy for $500,000, or the Hiland Theater commissioners voted to purchase and spend $1.3 million on renovating.

Justifiably, the piece argued that this was a case of "municipal leaders ordering dessert first while expecting someone else to pay for the meat and potatoes later."

The problems is not only a local one. Rather, it is exactly how governments at all levels tend to function. Politicians and bureaucrats like power, not necessarily because they are malicious although that is sometimes the case, but because they think they are the most competent stewards of resources (see the El Vado case). Unfortunately, this is not the case and instead, governments accrue power while the "boring" core areas of government like policing and road and bridge construction are left to rot while trolleys and Rail Runners flourish.

The only solution is a vigilant, well-informed population that constantly pushes back against empire-building government officials.

Posted by Paul Gessing at 09:19 AM | Permalink | Comments (0) | TrackBacks (0)

The federal government has announced the early launch of USASpending.org, an online portal to help you find out how your federal tax dollars are being spent. The website ensures that information about all federal grant and contract spending above $25,000 is published online for ordinary citizens to review.

This is a monumental achievement for transparency in government. You now have the ability to go online and look at nitty-gritty details about where more than $700 billion of our tax money is going. You can search by recipient name, by agency, even by location down to the city level.

I did a few searches by Congressional District and noticed that in New Mexico, districts one and three are among the top 25 districts in terms of receiving money over the past nine years. District two on the other hand, doesn't appear until 155th place....still above average though.

Getting this database was a huge accomplishment for taxpayer advocates and supporters of transparent government. Getting a similar effort up and running in New Mexico would be a good thing as well.

Posted by Paul Gessing at 10:03 AM | Permalink | Comments (0) | TrackBacks (0)

The Office of Management and Budget has published its "Mid-Session Budget Review." To sum the situation up:

- Federal tax revenues continue to be very strong, having risen by 7 percent. This comes on the heels of increases of 15 percent and 12 percent the past two years (clearly tax cuts are helping the economy);

- At 1.5 percent of GDP, the budget deficit is now lower than it was in 24 of the past 30 years;

- Total 2007 federal spending is estimated to be 20.2 percent of GDP, up from 18.5 percent when President Bush took office. Had spending remained at 18.5 percent of GDP, this year's budget would show a $35 billion surplus.

Basically, what the OMB is telling us is that spending is rising fast, but the economy (and tax revenues) continue to outpace even Congress's ability to spend. If Congress and the President could agree to limit federal spending to inflation and population growth, the deficit would be gone and economic growth would continue long into the future.

Of course, it wouldn't hurt New Mexico to enact similar limits.

Posted by Paul Gessing at 04:01 PM | Permalink | Comments (0) | TrackBacks (0)

Congressional Democrats are hoping to pass a tax hike on cigarettes in order to pay for still bigger government. While billions in tax hikes were removed from the Energy Bill by Senate Republicans, the latest tax hike to increase funding by $50 billion for the State Children's Health Insurance Program , also called SCHIP.

Of course, SCHIP expansion is just another means of expanding government health care at the expense of private health care. Not surprisingly, Governor Richardson has made SCHIP expansion a point of emphasis. The not-so-subtle point here is that the Democrats are using SCHIP expansion as a means of incremental steps to "universal, socialized medicine."

Perhaps President Bush will veto this massive tax hike and expansion of government as he has pledged in the past?

Posted by Paul Gessing at 10:52 AM | Permalink | Comments (0) | TrackBacks (0)

Despite having won electoral victory in part by campaigning against the abusive use of earmarks, Democrats on Capitol Hill seem to lack the will to take substantive action to reform the earmarking process.

Of course, as Novak reports in the article I linked to above, the Republican leadership doesn't really want earmark reform either. Alas, yet another issue with widespread support among the American people that Congress allows special interests to block.

Posted by Paul Gessing at 04:43 PM | Permalink | Comments (0) | TrackBacks (0)

It looks like there is some good news coming from Congress for a change. No, Nancy Pelosi has not embraced the flat tax...the news is not that good, but for the first time in recent memory, the number of earmarks passed by Congress actually fell according to the newly-released "Pig Book" from Citizens Against Government Waste.

As it turns out, Democrats deserve credit for paying heed to their campaign promises to put a stop to Washington's culture of corruption (for now at least), but conservative stalwarts like Tom Coburn (R-OK) and Jim DeMint (R-SC) also played a major role in limiting the pork in this year's budget.

These are small victories, but it shows what can happen when the American public expresses its outrage over wasteful and fraudulent practices in Washington.

Posted by Paul Gessing at 09:37 AM | Permalink | Comments (0) | TrackBacks (0)

The Journal's Outlook section contained an interesting article about the fact that New Mexico has lost some earmarks that were supposed to be coming from Washington. The author quoted several recipients of federal largesse who worried about the impact such relative restraint in Washington giving the impression that somehow New Mexico is "losing out." Of course, while this year's numbers are not available, it is important to note that New Mexico gets more money from Washington relative to what it sends than any other state in the nation.

The author ended the article by saying "the cry is out for stronger private-sector support to emerge." This certainly makes sense and the business-friendly income and capital gains tax cuts of recent years have been helpful even though other taxes have been raised. Ultimately, however, it is not up to businesses to "pick up the slack" because entreprenuers will always try to make money when the incentives are right.

Instead of jacking up spending by 11 percent, Richardson and the Legislature should keep cutting income taxes, thus laying the groundwork for a stronger private sector to emerge.

Posted by Paul Gessing at 01:39 PM | Permalink | Comments (0) | TrackBacks (0)

In my humble opinion, one of the few bright spots of President Bush's Presidency has been the tax cuts that have reduced the burdened the federal government places on hard-working Americans. That is why it is very unnerving to hear that the Administration is now talking with Democrats about forcing more taxpayers and small businesses to pay a greater portion of their incomes to the federal government in the form of payroll taxes.

Such a policy would result in the largest tax hike in U.S. history and would do nothing to solve the severe problems assoociated with Social Security. Rather than passing a massive tax hike in the hopes of propping up a system that robs younger workers of their money, President Bush should focus on solutions that give individuals greater control over their financial futures.

Posted by Paul Gessing at 10:09 AM | Permalink | Comments (0) | TrackBacks (0)

Suddenly the councilors and mayor are sounding fiscally responsible:

Mayor Martin Chávez and City Council President Martin Heinrich said Saturday they will seek to repeal tax changes that would have financed a streetcar project. In separate interviews with the Journal, Chávez and Heinrich said they are backing away from the streetcar project for the time being. Each called for a comprehensive study of local transportation needs before the city decides whether to develop a streetcar system. Chávez said it "makes no sense" to keep the tax changes in place when there is no consensus on the City Council about proceeding with streetcars.

Why couldn't we have trusted them in the first place?

Posted by Harry Messenheimer at 09:02 AM | Permalink | Comments (1) | TrackBacks (0)

Thanks to Silvio Dell'Angela for rallying the public in opposition to the streetcar nonsense.

Posted by Harry Messenheimer at 08:45 AM | Permalink | Comments (0) | TrackBacks (0)

Update 11/21/06: Thanks to a couple of observant readers who noticed that "500 adult residents" of ABQ should read "500k adult residents." I have changed "500" to "half-million" for clarity. Thanks for the help.

My remarks at yesterday's streetcar rally:

Last Wednesday the mayor’s spokesman wrote an opinion piece arguing for the streetcar initiative. The piece was an exercise in extreme sophistry (I thought perhaps it was satire when I first read it). That being so, I want to make three main points in rebuttal:

Robbing Peter to Pay Paul: Streetcar Arithmetic in Wealth Transfer Terms

There is a blatant and unfair wealth transfer being disguised by the feel-good rhetoric of the mayor and streetcar proponents. The fiscal facts are being hidden from us. My conservative guesstimate of the total cost of this boondoggle will be around $500 million (including operation and maintenance over the years). Albuquerque has roughly a half-million adult residents. Divide $500 million by a half-million adult residents and you get an average up front cost of at least $1,000 per adult. That is the essence of the fiscal fraud. Who will benefit from this largess? Answer: the few businesses and government entities along Central Ave.

Why doesn’t the mayor make this wealth transfer clear to all? Suppose the mayor said “enough of this nonsense; we’ll just take $1,000 from each adult in ABQ, transfer half a billion dollars in hard cash to downtown and Nob Hill entities and let them choose how to spend it.” Do you really think the recipients would choose to give it to Greg Payne for a streetcar boondoggle? Absolutely not! So, here we are facing an absurd transfer of at least half a billion dollars to special interests who will not benefit by nearly that much. Similar comments apply to the mayor’s comparison of the streetcar to the “wildly successful roadrunner.” The Railrunner is a taxpayer rip-off. How long has it been since the mayor observed ridership on the Railrunner? Does he know what it is costing us? Wake up, Mr. Mayor, the people won’t be fooled this time.

Campaign Promise
The Mayor makes much of his campaign promise to give us a streetcar. But did he also not promise to be fiscally responsible? For example, I don’t recall him promising to raise our taxes by a lot to transfer wealth to a few. BTW, the mayor says he has “given us lots of roads.” He fails to mention, however, that it is actually you who have provided our new roads via your hard earned tax dollars. We could only hope that our generous-sounding mayor would personally give us lots of new roads, thereby saving us the expense.

Public Comment
In an effort to deflect criticism the mayor says we (the public) have had plenty of opportunity to comment. But did the mayor go to various neighborhood associations and explain the fiscal realities of the streetcar? Most citizens of our city just want to go about our daily business in the hope that our representatives are actually representing us. But they are not representing us; they are representing the special interests in downtown and Nob Hill while being quite vague about the fiscal impact on the rest of us. Unfortunately, this is not unusual in political process. A characteristic of representative democracy is the relative ease of giving concentrated benefits to a few when the costs are spread among many and thereby often unnoticed.

There is a certain big-government arrogance at play here, too: the mayor thinks he can make decisions about your life better than you can. The mayor seems to think that he knows what is best for us – just trust him. I don’t think that is what the Founding Fathers had in mind when they established our “representative democracy.”

BTW, thanks to RGF president Paul Gessing for tracking down some fiscal realities of this boondoggle; and thanks to Jim Ludwick of the ABQ Journal for keeping us informed of the political maneuvering and statements as this proposal makes its way to the Council.

Posted by Harry Messenheimer at 10:30 AM | Permalink | Comments (0) | TrackBacks (0)

Although it would be easy to interpret the Democratic Party's victory as a call by voters for bigger government, a new opinion poll clearly shows that while the American people have been frustated by the foibles of Republicans, their votes for change should not be confused with favoring higher taxes or more government spending. Among the nuggets contained in the recent survey is the finding that 62% of voters would like the 2003 capital gains and dividend cuts extended and 57% of voters would rather have a member of congress that cut spending rather than bringing home pork.

While it is hard to attribute national election results to any one factor -- was it the Iraq War or was it spending and corruption that hurt the Republicans? -- I believe that many voters simply voted for divided government.

Posted by Paul Gessing at 07:21 PM | Permalink | Comments (0) | TrackBacks (0)

As Democrats ascend to power and Republicans begin picking up the pieces of electoral defeat, there is a lot of spin going on as to what the big issues were that caused the Republicans to lose Congress. One particularly confusing bit of "analysis" was recently performed by the folks over at the Republican Main Street Partnership, which blamed the Republican Party's defeat on its "pursuit of a far right agenda."

If the Main Street Partnership were a libertarian group critical of Republicans' social or Iraq War policies, this critique would make sense, but the Partnership is really a left-wing faction within the Party dedicated to fighting any efforts to restrain the growth of the federal government and specifically created in opposition to the Club for Growth.

With President Bush and the Republican-dominated Congress having grown government at rates comparable to Lyndon Baines Johnson and that left Bill Clinton in the dust, it is hard to argue that Republicans adhered to a "far-right" philosophy on spending and that cost them the election. But, when your policies have been followed and have failed so miserably, I suppose recriminations are to be expected.

The National Taxpayers Union has some excellent analysis of the Main Street Partnership's agenda here.

Posted by Paul Gessing at 10:10 AM | Permalink | Comments (0) | TrackBacks (0)

We at the Rio Grande Foundation have had our share of problems with some of Governor Richardson's economic policies, but we wholeheartedly agree with his recent assertion that tax cuts are in order here in New Mexico. That said, however, if the purpose of cutting taxes is economic growth, his narrowly-targeted proposal will have a negligible impact.

Instead, we suggest, as we have in the past, that Governor Richardson continue reducing the state income tax to the point of complete elimination. Blanket rate reductions are always better than narrowly-targeted tax cuts and reducing the top rate further would have a significant, positive economic impact.

Posted by Paul Gessing at 04:58 PM | Permalink | Comments (0) | TrackBacks (0)

We are quickly going broke according to economist Larry Kotlikoff. Kotlikoff

concludes that countries can go broke, that the United States is going broke, that remaining open to foreign investment can help stave off bankruptcy, but that radical reform of U.S. fiscal institutions is essential to secure the nation’s economic future. The paper offers three policies to eliminate the nation’s enormous fiscal gap and avert bankruptcy: a retail sales tax, personalized Social Security, and a globally budgeted universal healthcare system.

Neither major party has shown much interest in the radical reform of fiscal institutions that Kotlikoff recommends. Closer to home, Governor Richardson is counterproductively trying to exacerbate our long-term Medicaid budget problems.

I do wonder about Kotlikoff's proposed retail sales tax rate of 33 percent. Combined with state sales tax rates the large (40 percent or more) tax wedge between buyer and seller would encourage tax avoidance. Maybe the proposal should be somewhat less vast. That is my feeling about Charles Murray's recent welfare reform proposal too. But at least these reform ideas are on the right track.

BTW, I find our bankruptcy problem to be orders of magnitude more important than global warming. Yet global warming seems to be getting orders of magnitude more attention.

HT: NCPA

Posted by Harry Messenheimer at 09:32 AM | Permalink | Comments (0) | TrackBacks (0)

New Mexico has been on a spending spree over the last four fiscal years. The Richardson record is now clear: The general fund budget has increased by 31.2 percent. When adjusted for inflation and population growth, the budget has grown by 13 percent. That means New Mexico is spending 13 percent more in current dollars (FY2007) per person than it did four years ago.

The general fund budget in FY2003 was $3,873,944,000; and this year (FY2007) it is $5,084,063,000. If we could have held government growth to inflation plus population growth, then $659,771,000 would be available for the hard working taxpayers. That is enough money to have eliminated our personal income tax altogether. Or we could have lowered the statewide gross receipts tax rate from five percent to three percent.

Of particular concern is the growth of welfare. We seem to be very good at rewarding unproductive behavior while punishing work and saving. The budget for Medicaid has increased by over 40 percent in current, per capita dollars! The remainder of Health and Human Serivces has increased by over 22 percent. As a percentage of the general fund budget these welfare programs now consume 23.9 percent compared to 20.9 percent four years ago. Now we are being told to expect another major expansion of Medicaid while no one notices why what we have doesn't work very well as they engage in more wishful thinking.

More detailed explanations of the budget data appear below the fold. Contact me if you have any questions.

Continue reading "Spending -- the Richardson Record" »

Posted by Harry Messenheimer at 08:27 PM | Permalink | Comments (0) | TrackBacks (0)

Sadly, and typical of New Mexico politics, our Cong are at or near the bottom of the rankings in the fight against pork barrel spending. See the nationwide Club for Growth's rankings here (a score of 19 is perfect, meaning that that particular Cong voted for 19 out of 19 anti-pork meaures). New Mexico's scores from best to worst:

Tom Udall - 5
Steve Pearce - 1
Heather Wilson - a big fat ZERO

Update: Over half of the Cong nationwide had a score of ZERO. That is bad news for the prospect of budget discipline. Only 21 protectors of taxpayers had a perfect score of 19.

Posted by Harry Messenheimer at 11:28 AM | Permalink | Comments (0) | TrackBacks (0)

The latest round of Congressional ratings on fiscal issues have been published and New Mexico's representatives in Washington again receive low marks. In the 2005 ratings published by the Club for Growth, Representative Stevan Pearce scored the highest in the House with a ranking of 172 out of 435, while Senator Domenici was our highest-ranking Senator at 41st.

Posted by Paul Gessing at 05:16 PM | Permalink | Comments (0) | TrackBacks (0)

According to USA Today taxpayers nationwide "will soon get a surprise bill that could exceed $1 trillion for the cost of paying future medical benefits for state and local workers who retire." I wonder what NM's bill will be??? This will be fun to watch taxpayer reaction.

HT: Asymmetrical Information

Posted by Harry Messenheimer at 08:05 AM | Permalink | Comments (0) | TrackBacks (0)

Can you believe what Alaskan Republican Congressman Don Young said when someone suggested that he return the money he got for a bridge to nowhere in Alaska to pay for Hurricane Katrina relief?

Posted by Matthew D. Mitchell at 02:33 PM | Permalink | Comments (0) | TrackBacks (0)

Matt's recent posts on pork barrel spending and lack of fiscal discipline made me curious about voting records on the "transportation" and "energy" bills. I decided to create an honor roll of representatives and senators who voted against both bills. Here are the few, the proud, the defiant.

No to Corporate Welfare Honor Roll:
House
Flake, Jones (NC), Royce

Senate
Gregg (R-NH), Kyl (R-AZ), McCain (R-AZ)

BTW, if you would like to see how members voted during the last session of congress look here for the senate and here for the house.

Posted by Harry Messenheimer at 12:15 PM | Permalink | Comments (0) | TrackBacks (0)

The Albuquerque Journal reported yesterday (subscription required) that some of the spending is coming our way.

Here is how I described the incentives of pork-barrel spending in the public choice class I taught earlier this summer (those familiar with public choice may recognize this as a modified version of �Tullock�s roads example�):

Imagine you and two friends are out to dinner at Sadies (a fantastic Albuquerque restaurant for you non-New Mexicans). After a delicious meal, the waiter asks if anyone would be interested in dessert. You look at the menu and think, �I like mousse. I might be willing to spend $5 on one. They cost $6, though, so I think I�ll pass.� Let us assume that your two companions think the same thing. No one orders mousse because no one feels that it is worth it.

But, now something happens to change the incentives. The waiter informs you that he is sorry, but he forgot to split the check and it is impossible for them to itemize the bill. Did I mention that your two friends happen to be from the Democracy for New Mexico group? Well they are. Being a �social progressive,� one of your friends suggests that you just split the tab into equal thirds�everyone paying the same amount, even if some eat more than others. And being enamored with democracy, the other suggests that you take another look at the dessert menu and take a vote on whether or not you will have any dessert. The decision to have dessert has just been collectivized.

One of your friends has enjoyed many margaritas and when he gets up to go to the bathroom, you and your other friend make a deal. You will form a coalition: each voting for mousse for the other guy. When you do this, there will be two mousses (misse?) ordered at a cost of $6 a piece. Total cost will be $12, split three ways. The two of you in the majority coalition will each pay $4 for mousse which you value at $5. Pretty good deal for the majority. The (minority) third dinner-companion will also pay $4, but he gets no mousse! Pretty bad deal for the minority.

But notice what happened. The table collectively ordered $12 worth of mousse which it valued at only $10! That is insane!

Now, imagine if you made all of your dining choices this way. We could imagine shifting coalitions among the three parties: a carne adovada coalition, a tamale coalition, a chile relleno coalition. When you add up all the costs, you can expect to lose in the long-run. The table will order way more food than it really wants.

Where you went wrong was in collectivizing the decision in the first place. By doing so, you were able to concentrate benefits on the few, but diffuse the costs over the many. You should have kept dessert a private, individual decision.

Hopefully by now you see the purpose of our little parable. Every time legislators get together to vote pork for their district they are doing the same thing as our dinner companions. They are concentrating benefits on their constituents and diffusing the costs over the rest of us. For a particular project, the constituents may be better off, but in the long-run, we all lose!

We don�t even have to assume greedy, avaricious or immoral legislators. Even good people trying to help out their constituents face an incentive to spend on pork. The problem is not with the people, but with the democratic system.

The founders, of course, knew this. Franklin argued that, �Democracy is two wolves and a lamb voting on what to have for lunch.� Washington warned that �Government is not reason; it is not eloquent; it is force.� Armed with this knowledge, the founders did not create a democracy, but a constitutionally-limited republic. Under such a system, a Constitution limits government to only those powers which are specifically enumerated. In the words of Madison, �The powers delegated�to the Federal Government are few and defined.�

Unfortunately, too few people respect the Constitution these days and too many have fallen in love with unchecked democracy.

Posted by Matthew D. Mitchell at 04:05 PM | Permalink | Comments (0) | TrackBacks (0)