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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Cato Institute, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Sunday, February 28, 2010 ~ 8:25 p.m., Dan Mitchell Wrote: As stimulating as it might have sounded at the time, the city recently declined $2.5 million from the American Recovery and Reinvestment Act for its new water treatment plant because federal wage regulations
would have forced the city to pay more for the project. ...the low bidder — Penta Corporation — presented final cost of $21 million with the stimulus funds and $17.3 million without. So the city said thanks, but
no thanks, to the stimulus funds. "It just didn't make sense," said Deputy Public Works Director David Allen. "It was going to cost us more money to take the money." Stimulus funds mandate
workers are paid using Davis-Bacon Wage Determination, which sets the pay scale for workers on federal projects and added $2.5 million to the bottom line. The "Buy American" provision would've added
another $500,000 and Allen said there would have been significant administrative costs — upwards of $100,000 — for the city to track it the way the government requires over the course of the two-year project. Saturday, February 27, 2010 ~ 10:12 p.m., Andrew Quinlan Wrote:
Friday, February 26, 2010 ~ 7:23 p.m., Dan Mitchell Wrote: Three big companies quit an influential lobbying group that had focused on shaping climate-change legislation, in the latest sign that support for an
ambitious bill is melting away. Oil giants BP PLC and Conoco-Phillips and heavy-equipment maker Caterpillar Inc. said Tuesday they won't renew
their membership in the three-year-old U.S. Climate Action Partnership... "We think there's momentum to get [a climate bill] done," USCAP
spokesman Tad Segal said. "President [Barack] Obama's State of the Union address made it clear the administration is behind us." But experts
said the companies' decision to withdraw from USCAP is a sign the politics of climate change is shifting in Washington. When Mr. Obama took office,
Congress appeared to have momentum for a climate bill that would push the economy toward lower-carbon alternatives. But as the economy soured, support waned. Friday, February 26, 2010 ~ 5:51 p.m., Dan Mitchell Wrote: Richard Rahn has a nice comparison in the Washington Times of Poland's good policy and Greece's profligacy. Reuters has a story about some new reforms in Greece, including a very Orwellian proposal to track everyone's purchases by banning cash transactions above 1,500 euro. And the Associated Press has a story about gas shortages because bureaucrats at the Customs office went on strike to protest a proposal by the government to give them only
one (rather than two) extra month(s) of pay per year. Friday, February 26, 2010 ~ 3:38 p.m., Dan Mitchell Wrote:
Thursday, February 25, 2010 ~ 7:17 p.m., Dan Mitchell Wrote: Read his post for yourself, but I think a fair summary is that he is basically saying that a) there will be a crisis if we don't do something about future deficits, b) a crisis will result in very bad policy, and c) if we support a VAT now, we will at least be able to extract concessions from the other side. I have no idea whether there will be a future crisis, but I think the rest of Tyler's argument is wrong. But before explaining my position, let's start by stating what I assume to be our mutual objective, which is to control the size of government. We all agree that there is a problem because government is too big now, and it is projected to get even bigger because of the built-in growth of entitlement programs. One symptom of growing government is deficits, which are very large today and will be even bigger in the near future as more and more baby boomers retire and push up costs for Social Security, Medicare, and Medicaid. Our side (broadly speaking) wants to solve the budgetary situation by restraining the growth of government. One proposed solution is Congressman Paul Ryan's Roadmap plan, which would reform entitlements and curtail other programs so that the long-term burden of federal spending is reduced to less than 20 percent of GDP. Since long-term federal tax revenues under current law - even if the 2001 and 2003 tax cuts are made permanent - are expected to be about 19 percent of GDP, this solves the budget problem (the tax reform component of the Roadmap includes a VAT, which is a poison pill in an otherwise excellent plan, but let's set that aside for another day). The left, by contrast, generally wants to let federal spending consume ever-larger shares of economic output, and they believe that increasing the tax burden is the right way of keeping the deficit from getting too large. No statist has put forth a detailed plan to match Rep. Ryan, but several high-ranking Democrats have made no secret about their desire for a VAT (see here, here, and here). And everyone agrees that a VAT is capable of extracting a lot of money from the productive sector of the economy. These two visions are fundamentally incompatible, which helps to explain why there is a standoff. The bad guys do not want to control the size of government and the good guys do not want to raise taxes. But now we have to add one more piece to the puzzle. While gridlock normally is a good result, inaction to some degree favors the other side because entitlement programs automatically expand. The helps to explain why Tyler (with reluctance) thinks that it may be best to acquiesce to a VAT now rather than to wait for a fiscal crisis. Now let's explain why Tyler is wrong. First, it is far from clear that surrendering to a VAT now will result in better (less worse) policy than what will happen during a crisis. It certainly is true that some past crises have led to terrible policy, such as the failed policies of Hoover and Roosevelt in the 1930s or the more recent Bush-Paulson-Obama-Geithner TARP debacle. But at other points in time, a crisis atmosphere has paved the way for better policy, with Reagan's presidency being the most obvious example. The wait-for-a-crisis strategy clearly is a bit of a gamble, but even if we lose, we get a VAT in the future rather than a VAT today. So what's the downside? Tyler and others might say that the future legislation in the midst of a crisis could be a vehicle for other bad provisions, but he offers no evidence for this proposition. And it may be the case that the other side would be forced to add good provisions instead. Moreover, the lack of a VAT in the period between today and the future crisis might help lead to some much-needed spending restraint. What about Tyler's argument that the good guys could extract some concessions from the other side by putting a VAT on the table. This is horribly naive. Even though George Mason University is less than 20 miles from Washington, and even though Tyler is a renaissance man with many talents, he does not understand how Washington really works. Imagine there is a budget summit where politicians from both sides get together to work on this supposed deal. Here are the inevitable ground rules - and the consequences they will produce: 1. The deal will be 50 percent spending cuts and 50 percent tax increases, but the supposed spending "cuts" will be nothing more than reductions in already-legislated increases. The tax increases, by contrast, will be on top of all the additional revenue that is already expected under current law (not a trivial matter since receipts will be $1.5 trillion higher in 2015 than they are today according to OMB). For proponents of limited government, using the "current services baseline" as a benchmark in budget negotiations is like playing a five-minute basketball game after spotting the other team a 20-point lead. 2. All spending and revenue decisions will be examined through the prism of CBO income distribution tables, and the left will successfully insist that nothing is done to make the tax code less progressive. But since a VAT is a proportional tax, the only way of preserving overall progressivity is to raise tax rates on those wicked and evil rich people and/or to massively increase "refundable" tax credits (what normal people call income redistribution). Any proposal to lower income tax rates or eliminate the corporate income tax, as Tyler envisions, would be laughed out of the room (though Democrats will offer a fig leaf or two in order to seduce a sufficient number of gullible Republicans into supporting a terrible agreement, and that might include a cosmetic change to the corporate tax regime). 3. Many of the supposed spending cuts, for all intents and purposes, will be back-door tax increases on saving and investment. More specifically, a big chunk of the supposed spending cut portion of a budget deal will be from means-testing entitlement programs. This sounds good. After all, who wants to send a Social Security check to Bill Gates when he retires? But consider how such a system actually will work. The government will say that people with income (and/or assets) above a certain level are ineligible for some or all of the benefits available to less-fortunate retirees. From an economic perspective, this is very much akin to a higher tax rate on people who save and invest during their working years. And since means testing would only generate substantial budgetary savings if it applied to millions of regular people in addition to Bill Gates, we would wind up with a system that created big penalties on middle-class families that were dumb enough to save and invest. I've already pontificated enough for one blog post, so let me summarize by stating that Tyler's approach, while not unreasonable, is about how to lose gracefully. Even if his strategy works perfectly, the result is bigger government. I'd much rather fight. If you want some inspiration for the battle, watch this video. If you haven't had enough of me already, here's my video explaining why the VAT is a horrible idea.
Wednesday, February 24, 2010 ~ 4:24 p.m., Dan Mitchell Wrote:
A new study from Boston College provides additional evidence about the consequences of hate-and-envy tax policy. The research reveals that high tax rates in New Jersey have helped cause wealthy people to leave the state, leading to a net wealth reduction of $70 billion between 2004 and 2008. Wealth and income are different, of course, so it is worth pointing out that another study from 2007 estimated that the state lost $8 billion of gross income in 2005. That's a huge amount of income that is now beyond the reach of the state's greedy politicians. Here's a report from the New Jersey Business News: More than $70 billion in wealth left New Jersey between 2004 and 2008 as affluent residents moved elsewhere, according to a report released Wednesday that marks a swift reversal of fortune for a state once considered the nation's wealthiest. Conducted by the Center on Wealth and Philanthropy at Boston College, the report found wealthy households in New Jersey were leaving for other states — mainly Florida, Pennsylvania and New York — at a faster rate than they were being replaced. ...The study – the first on interstate wealth migration in the country — noted the state actually saw an influx of $98 billion in the five years preceding 2004. The exodus of wealth, then, local experts and economists concluded, was a reaction to a series of changes in the state's tax structure — including increases in the income, sales, property and "millionaire" taxes. "This study makes it crystal clear that New Jersey's tax policies are resulting in a significant decline in the state's wealth," said Dennis Bone, chairman of the New Jersey Chamber of Commerce and president of Verizon New Jersey. ...In New Jersey, the top 1 percent of taxpayers pay more than 40 percent of the state's income tax, he said. "That's probably why we have these massive income shortfalls in the state budget, especially this year," he said. Until the tax structure is improved, he said, "we'll probably see a continuation of the trend, until there are no more high-wealth individuals left." He added the report reinforces findings from a similar study he conducted in 2007 with fellow Rutgers professor Joseph Seneca, which found a sharp acceleration in residents leaving the state. That report, which focused on income rather than wealth, found the state lost nearly $8 billion in gross income in 2005. ...Ken Hydock, a certified public accountant with Sobel and Company in Livingston, said in this 30-year-career he's never seen so many of his wealthy clients leave for "purely tax reasons" for states like Florida, where property taxes are lower and there is no personal income or estate tax. In New Jersey, residents pay an estate tax if their assets amount to more than $675,000. That's compared to a $3.5 million federal exemption for 2009. Several years ago, he recalled, one of his clients stood to make $60 million from stock options in a company that was being acquired by another. Before he cashed out, however, the client put his home up for sale, moved to Las Vegas, and "never stepped foot back in New Jersey again," Hydock said. "He avoided paying about $6 million in taxes," he said. "He passed away two years later and also saved a huge estate tax, so he probably saved $7 million." http://www.nj.com/business/index.ssf/2010/02/nj_loses_70b_in_wealth_over_fo. html Still not convinced that high tax rates are causing wealth and income to escape from New Jersey? The Wall Street Journal wrote a very powerful editorial about the Boston College study, noting that New Jersey "...was once a fast-growing state but has now joined California and New York as high-tax, high-debt states with budget crises." But the most powerful part of the editorial was this simple image. Prior to 1976, there was no state income tax in New Jersey. Now, by contrast, highly-productive people are getting fleeced by a 10.75 percent tax rate. No wonder so many of them are leaving.
Tuesday, February 23, 2010 ~ 3:11 p.m., Dan Mitchell Wrote: Killing this small program, which currently benefits 1,300 mostly poor and minority children, is odious and indicative. It is a small piece of something
large -- the Democrats' dependency agenda, which aims to multiply the ways Americans are dependent on government. Democrats, in their canine devotion to teachers unions, oppose empowering poor children to escape
dependency on even terrible government schools. ...For congressional Democrats, however, expanding dependency on government is an end in itself. They began the Obama administration by expanding the State
Children's Health Insurance Program. It was created for children of the working poor but the expansion made millions of middle-class children
eligible -- some in households earning $125,000. The aim was to swell the number of people who grow up assuming that dependency on government
health care is normal. ...Democrats' "reforms" of the financial sector may aim to reduce financial institutions to dependent appendages of the
government. By reducing banks to public utilities, credit, which is the lifeblood of capitalism, could be priced and allocated by government. ...Many Democrats, opposing the Supreme Court, advocate new campaign
finance "reforms" that will further empower government to regulate the quantity, timing and content of speech about government. Otherwise voters
will hear more such speech than government considers good for them. Tuesday, February 23, 2010 ~ 2:34 p.m., Dan Mitchell Wrote: A rise in VAT is looming whichever party wins the general election, as Labour and the Conservatives draw up plans to balance Britain's books.
Alistair Darling and George Osborne, the Shadow Chancellor, are both considering raising VAT to as high as 20 per cent — the European average
— from the current rate of 17.5 per cent, The Times has learnt. ...One City source close to the Tory tax team said: "There is a view across the
Conservative Party that VAT is going to have to go up." The Chancellor is also keenly aware that Britain needs to retain the confidence of the
credit-rating agencies. He has privately ruled out either raising income taxes or increasing the scope of VAT, but has deliberately left open the possibility of increasing the sales tax in the next Parliament.
Monday, February 22, 2010 ~ 5:57 p.m., Dan Mitchell Wrote ...the difference between America and Europe is that, when the global economy nosedived, everywhere from Iceland to Bulgaria mobs took to the
streets and besieged Parliament demanding to know why government didn't do more for them. This is the only country in the developed world where a
mass movement took to the streets to say we can do just fine if you control-freak statists would just stay the hell out of our lives, and our
pockets. You can shove your non-stimulating stimulus, your jobless jobs bill, and your multi-trillion-dollar porkathons. There are obviously millions of Europeans who want to be left alone and millions of Americans who like sticking their snouts in the public trough, but Mark's observation is generally true. The United States is the only major nation that still has a libertarian tradition of individual liberty and personal responsibility. This is why we need to stop government-run healthcare and roll back the nanny state. Yes, it is bad that bigger government undermines growth and prosperity, but the real danger is that collectivism will destroy the American soul. Monday, February 22, 2010 ~ 5:34 p.m., Dan Mitchell Wrote New mothers are being denied valuable money saving offers on infant milk formula because of 'politically correct' pressure to breast feed. Boots says it
cannot award loyalty points on milk for newborns because it is against EU law to 'promote' bottle feeding. ...Under European legislation, Boots and
other stores with loyalty schemes can be penalised by trading standards officers for 'incentives' to buy formula milk for babies up to six months.
...Health visitors sent to help new mothers have been told to ask them when they will go back to work. They have been instructed to find out about job
plans as part of routine checks on the health of the baby. The pressure on mothers to think about an early return to work has come as part of a
Government drive to widen the role of health visitors. But their union last night called the edict 'unethical', while mothers said the intrusive
questioning made them feel guilty for wanting to stay at home to look after their families. Sunday, February 21, 2010 ~ 10:05 a.m., Dan Mitchell Wrote
Sunday, February 21, 2010 ~ 9:32 a.m., Dan Mitchell Wrote This happened to Bob Thomas, a 53-year-old officer in Camden's emergency crime suppression team, who was flying to Orlando in March with his wife,
Leona, and their son, Ryan. Ryan was taking his first flight, to Walt Disney World, for his fourth birthday. The boy is developmentally delayed, one of
the effects of being born 16 weeks prematurely. His ankles are malformed and his legs have low muscle tone. In March he was just starting to walk.
...The boy's father broke down the stroller and put it on the conveyor belt as Leona Thomas walked Ryan through the metal detector. The alarm went
off. The screener told them to take off the boy's braces. The Thomases were dumbfounded. "I told them he can't walk without them on his own," Bob
Thomas said. "He said, 'He'll need to take them off.' " Ryan's mother offered to walk him through the detector after they removed the braces, which are
custom-made of metal and hardened plastic. No, the screener replied. The boy had to walk on his own. ...Bob Thomas was furious. He demanded to see
a supervisor. The supervisor asked what was wrong. "I told him, 'This is overkill. He's 4 years old. I don't think he's a terrorist.' " The supervisor
replied, "You know why we're doing this," Thomas said. Thomas said he told the supervisor he was going to file a report, and at that point the man turned and walked away. Saturday, February 20, 2010 ~ 4:32 p.m., Dan Mitchell Wrote Under threat of losing their jobs if they didn't go along with extra work for not a lot of extra pay, the Central Falls Teachers' Union refused Friday
morning to accept a reform plan for one of the worst-performing high schools in the state. The superintendent didn't blink either. After learning of
the union's position, School Supt. Frances Gallo notified the state that she was switching to an alternative she was hoping to avoid: firing the entire
staff at Central Falls High School. In total, about 100 teachers, administrators and assistants will lose their jobs. Gallo blamed the union's
"callous disregard" for the situation, saying union leaders "knew full well what would happen" if they rejected the six conditions Gallo said were
crucial to improving the school. ...In an interview, Jane M. Sessums, union president, said the union intends to fight the terminations, although she was not ready to say how. Saturday, February 20, 2010 ~ 3:23 p.m., Dan Mitchell Wrote Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, reports that under his analysis national health spending will rise
under the bills by $222 billion over the next 10 years. In other words, ObamaCare really does "bend the cost curve"—up. Even that estimate
exists only on paper, as Mr. Foster has the honesty to admit. Because "most of the coverage provisions would be in effect for only six of the 10 years of
the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the proposed legislation," he writes. The
report is punctuated by phrases like "unrealistic" and "doubtful," and Mr. Foster adds that "the scope and magnitude of these changes are such that
few precedents exist for use in estimation." ...ObamaCare is "paid for" only in the sense that Medicare's payments to doctors are assumed in the bill to
be cut by more than 20% this spring and even deeper after that, which will never happen in practice. ...As for the White House's promise that it will
reduce health spending painlessly by cutting "waste," Mr. Foster isn't buying it. He writes that "we find the language as it now reads is not
sufficiently specific to provide estimates." The report also calls out the new entitlement program for long-term care, which is included only because it
will start collecting premiums five years before it starts paying benefits. In return for this accounting gimmick, the fisc will be saddled with a program that Mr. Foster estimates will be bankrupt by 2025.
Friday, February 19, 2010 ~ 7:36 p.m., Dan Mitchell Wrote Did you see that Super Bowl ad for the U.S. Census? If not, too bad, because you paid $2.5 million for it. Maybe you can catch it on YouTube. If
you think that's outrageous, it gets worse. The $2.5 million is just 1.9 percent of the government's $130 million "census awareness budget." Oh,
yes. Just in case you didn't know that Census Bureau workers will be coming to your home this year to do what they have done every 10 years for more
than two centuries, Washington is spending $130 million of your money to tell you. ...It's also par for the course in a Washington so awash in money
that $130 million isn't considered serious spending, and yet the government still manages to outspend revenues by $1.6 trillion. Friday, February 19, 2010 ~ 2:45 p.m., Dan Mitchell Wrote The president of the Michigan Education Association stated on the radio recently that school employees have "given and given and given and given."
Comparing teacher salaries to personal income demonstrates that the taxpayers who pay for teacher salaries have "given" a lot more. The
National Education Association just released its annual report that compares average teacher salaries throughout the country. For 2009-2010, Michigan ranks 8th. ...Public school teachers are government employees
and are paid with tax dollars, and therefore their wages are inextricably linked to the economic well-being of the state and the wealth of its citizens.
...Michigan has many difficult decisions ahead, especially if Lansing continues its failed economic policies. Based on the numbers above, one issue that must be addressed is whether Michigan can continue to pay
teachers "rich state" wages while the taxpayers footing the bill have "poor state" incomes. Friday, February 19, 2010 ~ 2:22 p.m., Dan Mitchell Wrote The European Union's new president, Herman Van Rompuy, is calling for an "economic government" for the bloc, with closer policy coordination and
financial incentives for good performers. ..."Whether it is called coordination of policies or economic government," only the European
nations working are "capable of delivering and sustaining a common European strategy for more growth and more jobs," he underlined. ...The
evocation of a European "economic government" will please France which has lobbied in this direction for years without success. ...Thursday's summit
will also will also prepare the ground for a new EU economic strategy, focussing on investing in research, innovation and the green economy. This
will replace the bloc's Lisbon Strategy launched in 2000. The ambitious Lisbon Strategy was supposed to make Europe's economy the most competitive and dynamic in the world. It failed to do so and Van Rompuy
was happy to bury it. ...For Van Rompuy it the matter is urgent and strikes at the very heart of the European project. ..."Our structural growth rate is
not high enough to create jobs and sustain our social model," he warned. Thursday, February 18, 2010 ~ 9:58 p.m., Dan Mitchell Wrote This Act is the great unsung hero of the past year. It has provided a tax cut to 95 percent of America's working families and thousands of small
businesses. It has meant the difference between hanging on and destitution for millions of unemployed workers who had exhausted their conventional
unemployment insurance benefits. It has kept hundreds of thousands of teachers, police, and firefighters employed by helping to fill the yawning
hole in state and local budgets. And, it has made crucial long-run investments in our country's infrastructure and jump-started the transition
to the clean energy economy. All told, the Recovery Act has saved or created some 1½ to 2 million jobs so far, and is on track to have raised
employment relative to what it otherwise would have been by 3.5 million by the end of this year. Let's set aside some of the disingenuous components of her post, such as categorizing income redistribution as tax relief, and focus on her claim that the legislation created at least 1.5 million new jobs when total employment has dropped by 3 million. Romer is not bad at math. Instead, she is saying that the economy would have lost 4.5 without the $787 billion increase in government spending. This what-might-have-been analysis is completely legitimate, assuming that there is good theory and evidence to back the assertion. Unfortunately, Ms. Romer and another colleague last year prepared a supposedly rigorous what-might-have-been report, where they estimated that the so-called stimulus would keep the unemployment rate at 8 percent and that failure to increase the burden of government spending would drive the unemployment rate to 9 percent. Yet as this chart from their paper indicates, when we add in the data for what actually has happened, in turns out that bigger government is not only theoretically misguided, but it also doesn't work in the real world.. Thursday, February 18, 2010 ~ 9:12 p.m., Dan Mitchell Wrote Phoenix City Councilman Sal DiCiccio has pointed out that the average cost for a Phoenix city employee is $100,000. In just the past six years, the
City of Phoenix budget grew by 59.6 percent, more than double the sum of inflation and population growth. ...Clearly, there is a failure by the City of
Phoenix to address fundamental reform in the face of shrinking tax revenues. Public safety should be the city's first priority for funding, not an
afterthought that depends on the promise of additional taxes. Many of the funds in the city's total budget are dedicated for various purposes such as public art. Wednesday, February 17, 2010 ~ 10:30 a.m., Dan Mitchell Wrote In Switzerland, this tradition of treating a client's financial affairs in confidence became law in 1934 when it was codified in Article 47 of the
country's first-ever federal banking act as a contemporary reaction to the economic crisis, various domestic political considerations and well-publicized cases of espionage involving France and Germany.
...Banking secrecy, therefore, is not some gimmick the Swiss devised to attract foreign clients to their banks. It reflects the very high degree of trust
that exists between the Swiss state and its citizens and it has strong democratic foundations. ...The Swiss are proud of their system and they
reward it with a high level of taxpayer honesty. It works because the Swiss vote their own taxes, they have a high degree of control over the way tax
revenues are spent and over all they believe their tax system to be reasonable, comprehensible, transparent and fair. The principle of self-declaration backed up with withholding taxes and, if necessary, stiff
fines supports this "honesty box" system. ...Doesn't Switzerland hear the snapping jaws and cracking whips of foreign finance ministers, tax
collectors, O.E.C.D. bureaucrats, cash-dispensing government agents and other denizens of the encroaching real world as they circle round Mother
Helvetia intent on biting huge chunks out of her banking secrecy, if not swallowing it whole? ...In March last year the Swiss announced they would
give up the evasion-fraud distinction for foreign bank clients and adopt the O.E.C.D. standards on information exchange in tax matters. ...However,
requests for assistance must be made with regard to a specific individual, and "fishing expeditions" — any indiscriminate trawling through bank
accounts in the hope of finding something interesting — remain ruled out. ...Switzerland demonstrates to the world that it is possible for a state to
collect taxes with a high degree of taxpayer honesty and without the authorities being corroded with suspicion about the financial activities of
their citizens. Citizens in a democracy would never allow their police force to have an automatic right of forced entry into their homes just on the
off-chance of finding some stolen goods, so why on earth should the state have an automatic right of forced entry into citizens' banks accounts just on
the off-chance of discovering some tax evasion? There must be a limit to the extent to which respect for an individual's privacy is sacrificed on the altar of international cooperation in tax matters. Sadly, the United States is part of the effort to create a global tax cartel. An "OPEC for politicians" would be terrible news for taxpayers, though, much as a cartel of gas stations would be bad for drivers. So-called tax havens play a valuable role in curtailing the greed of the political class. Ask yourself a simple question: Would politicians be more likely or less likely to raise tax rates if they knew taxpayers had no escape options? Wednesday, February 17, 2010 ~ 10:00 a.m., Dan Mitchell Wrote For five years it has been subject to a ruthless European Union-inspired campaign of extermination. But now the ruddy duck could be about to have
the last laugh. ...The cull was supposed to have been completed this year, but despite the killing of 6,200 ruddy ducks, the population is starting to
increase again. ...And while the British government has been trying to kill off its population, ruddy ducks in Holland and France have grown in
number, undermining the British effort. ...Lee Evans, from the British Birding Association, said: "It is a pointless farce. They will never be able to
kill every last bird. ..."The cull has been a complete and utter waste of money because the government would have to kill every one and there is no
possibility of that." ...The five year project to kill off the ruddy duck, co-ordinated by the Department for Environment, Food and Rural Affairs
(Defra), is due to finish this summer. But 687 birds are still alive in the UK, up from an estimated 400 to 500 two years ago. ...Andrew Tyler, director of
Animal Aid, said: "This has been a completely hopeless slaughter. The whole premise is nonsense, as well as the logistics, and it has also been
extraordinarily expensive. "The birds from Britain don't seem to be going to Spain anyway, but even if ruddies are breeding with white headed ducks,
that is a natural hybridisation that occurs in many birds." ...At one shoot earlier this month, an estimated 12 Defra officials, in eight boats, killed a
total of 14 ducks on Ibsley Water, near the New Forest. ...Half the cost of the UK's £3.3 million ruddy duck cull has been met by the EU, with the
other half provided by Defra. It follows earlier research by the department into eradicating ruddy ducks, said to have cost a further £1.3 million. Tuesday, February 16, 2010 ~ 5:17 p.m., Dan Mitchell Wrote Felony snowball throwing charges have been leveled against two Virginia college students for allegedly pelting a city plow and an undercover police
car during Saturday's blizzard. Charles Gill and Ryan Knight, both 21, were nabbed by cops in Harrisonburg, where they attend James Madison
University. According to police, the pair first targeted a city plow last Saturday afternoon. ...If convicted of the felonious snowball tossing, the
men each face between one and five years in prison, and a maximum $2,500 fine. Tuesday, February 16, 2010 ~ 4:44 p.m., Dan Mitchell Wrote 1. Bailing out Greece will reward over-spending politicians and make future fiscal crises more likely. In a four-year period between 2005 and 2009, Greek politicians expanded
the burden of government spending from an already excessive level of 43.8 percent of GDP to an even more excessive level of 51.3 percent of GDP. Subsidies are rampant,
the public sector is bloated, civil service pay is way too high, and entitlements are wildly unsustainable. A fiscal crisis - with no escape options - is probably the only hope of
reversing these disastrous policies. So why, then, would it make sense for Germany and other nations to provide an escape option? Despite heavy rain, there have been rallies across Greece throughout the day, with thousands of striking workers and pensioners gathering in the
capital, Athens. Several thousand people were also reported to have protested in Greece's second city, Thessaloniki. The rallies have been mainly
peaceful, but in one incident police fired tear gas at rubbish collectors who tried to drive through a police cordon. ...The unions regard the austerity
programme as a declaration of war against the working and middle classes, the BBC's Malcolm Brabant reports from the capital. He says their resolve is
strengthened by their belief that this crisis has been engineered by external forces, such as international speculators and European central bankers.
"It's a war against workers and we will answer with war, with constant struggles until this policy is overturned," said Christos Katsiotis, a union
member affiliated to the Communist Party, at the Athens rally. ...On Tuesday, Prime Minister George Papandreou's socialist government announced that it intends to raise the average retirement age from 61 to 63
by 2015 in a bid to save the cash-strapped pensions system. ...Mr Papandreou has already faced down a three-week protest by farmers demanding higher government subsidies. ...The markets remain sceptical
that Greece will be able to pay its debts and many investors believe the country will have to be bailed out. The uncertainty has recently buffeted the
euro and the problems have extended to Spain and Portugal, which are also struggling with their deficits. The possibility of Greece or one of the other
stricken countries being unable to pay its debts - and either needing an EU bailout or having to abandon the euro - has been called the biggest threat
yet to the single currency. Ahead of the talks between EU leaders in Brussels on Thursday, some business media reported that Germany is preparing to
lead a possible bail-out, supported by France and other eurozone members. Tuesday, February 16, 2010 ~ 3:12 p.m., Dan Mitchell Wrote A decade ago, New York City officials were so reluctant to give out food stamps, they made people register one day and return the next just to get an
application. The welfare commissioner said the program caused dependency and the poor were "better off" without it. Now the city urges the needy to
seek aid (in languages from Albanian to Yiddish). Neighborhood groups recruit clients at churches and grocery stores, with materials that all but
proclaim a civic duty to apply — to "help New York farmers, grocers, and businesses." There is even a program on Rikers Island to enroll inmates
leaving the jail. "Applying for food stamps is easier than ever," city posters say. ...These changes, combined with soaring unemployment, have pushed
enrollment to record highs, with one in eight Americans now getting aid. "I've seen a remarkable shift," said Senator Richard G. Lugar, an Indiana
Republican and prominent food stamp supporter. "People now see that it's necessary to have a strong food stamp program." ...The program has
commercial allies, in farmers and grocery stores, and it got an unexpected boost from President George W. Bush, whose food stamp administrator,
Eric Bost, proved an ardent supporter. "I assure you, food stamps is not welfare," Mr. Bost said in a recent interview. Still, some critics see it as
welfare in disguise and advocate more restraints. ...The federal government now gives bonuses to states that enroll the most eligible people. ...In 2008,
the program got an upbeat new name: the Supplemental Nutrition Assistance Program — SNAP. ...Since Mayor Michael R. Bloomberg took office eight years ago, the rolls have doubled, to 1.6 million people... Albany
made a parallel push to enroll the working poor, setting an explicit goal for caseload growth. "This is all federal money — it drives dollars to local
economies," said Russell Sykes, a senior program official. But Mr. Turner, now a consultant in Milwaukee, warns that the aid encourages the poor to
work less and therefore remain in need. "It's going to be very difficult with large swaths of the lower middle class tasting the fruits of dependency to be weaned from this," he said. Monday, February 15, 2010 ~ 4:35 p.m., Dan Mitchell Wrote Chile's education system was decentralized in 1980, and a voucher-type subsidy was introduced to encourage private providers to enter the market.
...Following the reform..., the subsidized private sector rapidly expanded...with 56 percent of enrollments in the municipal sector and 34 percent in subsidized private schools. The fee-paying private sector has
expanded...to account for 10 percent of total enrollment. ...test results have tended to improve over time, especially at 4th grade, but there are
significant differences...fee-paying private schools on average score 19 more points than municipal schools in the SIMCE test, whereas subsidized private schools score 4.5 more. Sunday, February 14, 2010 ~ 9:43 a.m., Dan Mitchell Wrote A politically divided Securities and Exchange Commission voted on Wednesday to make clear when companies must provide information to investors about the business risks associated with climate change. The
commission, in a 3 to 2 vote, decided to require that companies disclose in their public filings the impact of climate change on their businesses -- from
new regulations or legislation they may face domestically or abroad to potential changes in economic trends or physical risks to a company. Chairman Mary L. Schapiro and the two Democrats on the commission
supported the new requirements, while the two Republicans vehemently opposed them. "I can only conclude that the purpose of this release is to
place the imprimatur of the commission on the agenda of the social and environmental policy lobby, an agenda that falls outside of our expertise
and beyond our fundamental mission of investor protection," Republican commissioner Kathleen L. Casey said. Sunday, February 14, 2010 ~ 9:21 a.m., Dan Mitchell Wrote One of the key features of the Dutch education system is freedom of education—freedom to establish schools and organize teaching. Almost 70
percent of schools in the Netherlands are administered by private school boards... it is shown that the Dutch system promotes academic performance.
The instrumental variables results show that private school attendance is associated with higher test scores. ...a significant part of the high
achievement of Dutch students in international achievement tests is due to the institutional features associated with school choice. ...Money follows
students and each school receives for each student enrolled a sum equivalent to the per capita cost of public schooling. ...achievement levels
are high, while relative costs are low. ...Private school size effects in math, reading and science achievement are 0.17, 0.28 and 0.18, all significant.
Given PISA's scaling, this is close to 0.2 of a standard deviation in the case of math and science, and almost 0.3 of a standard deviation in reading. In
other words, these are large effect size effects, indicating that school choice contributes to achievement in Netherlands. Saturday, February 13, 2010 ~ 8:23 p.m., Dan Mitchell Wrote Patrick Timoney, a fourth-grader at PS 52, South Beach, was nearly suspended after playing with LEGOs during his lunch period because one of
the action figures was carrying at toy machine gun. He and his friends had planned a playdate with their respective toys, and were sitting around the
cafeteria table when the principal walked in and saw the action figure carrying the fake gun. While the action figure was a standard LEGO
policeman figure, the brand of the gun could not be determined. "She took him into her office in the middle of the lunch period and he was crying,"
said the boy's mother, Laura Timoney. "He was afraid." The principal called Ms. Timoney and said she considered the toy suspension-worthy, and that
she was going to double-check with a security administrator from the city Department of Education. According to Ms. Timoney, the administrator said
the toy should be confiscated and returned to the parents at the end of the day, and that no other action was necessary. ...She pointed out that another
child had an action figure that was holding an ax, but that only Patrick was reprimanded. Saturday, February 13, 2010 ~ 7:45 p.m., Dan Mitchell Wrote Costs incurred in sex-change operations and procedures are tax-deductible, the U.S. Tax Court ruled. The Washington-based court decided yesterday
that hormone therapies and sex reassignment surgeries are necessary to treat gender identity disorder, a disease, in the case of a Boston- area man who became a woman named Rhiannon O'Donnabhain. "The Court is
persuaded that petitioner's sex reassignment surgery was medically necessary," Judge Joseph Gale wrote in a 69-page decision for the majority.
The decision is the first to rule that sex-change operations qualify as medical care and overturns a 2005 Internal Revenue Service policy denying
medical expense deductions in such operations on the grounds they are 'cosmetic.'' The case involves a $5,679 tax bill assessed by the IRS, which
denied medical deductions claimed by O'Donnabhain after she underwent sex reassignment-surgery in 2000. O'Donnabhain, a civil engineer who joined the U.S. Coast Guard during the Vietnam War, was diagnosed with
gender identity disorder in 1997. O'Donnabhain sued the IRS after it denied her deduction of $25,000 in out-of-pocket medical costs associated with the
surgeries and other care such as hormone treatments and counseling, according to Boston-based Gay & Lesbian Advocates & Defenders, which represented her in court. Friday, February 12, 2010 ~ 4:35 p.m., Dan Mitchell Wrote:
Friday, February 12, 2010 ~ 2:56 p.m., Dan Mitchell Wrote:
Thursday, February 11, 2010 ~ 5:40 p.m., Dan Mitchell Wrote: While D.C. residents take out their snow shovels for untold hours of back-breaking labor, the Office of Personnel Management estimates that
the shuttering of the federal government is breaking the bank as well -- costing taxpayers about $100 million every day in lost productivity, or work
that's not getting done. With Friday's half day, and three full days of government shut-down this week, that adds up to $350 million -- and it could top $500 million if the government, with its 230,000 D.C.-area
employees, remains closed through the end of the week. Thursday, February 11, 2010 ~ 5:28 p.m., Dan Mitchell Wrote: High earners will cost the public purse hundreds of millions of pounds through tax dodges as they avoid the new 50p rate of income tax, a minister
indicated yesterday. Lord Myners, the City Minister, said that the Treasury had "significantly reduced" its estimate of the revenue to be earned from
the historic change. ...Lord Myners told peers that "behavioural consequences of the new higher rate of taxation" — shorthand for tax avoidance — had forced the Treasury to lower its expectations. ...Mike
Warburton, senior tax adviser at Grant Thornton, one of Britain's biggest accounting firms, said..."People are taking obvious avoidance measures
because they are not prepared to pay 50 per cent tax"... "People were prepared to pay 40 per cent but the Treasury don't seem to understand what
drives people. The minister has at last admitted that the 50 per cent tax rate was a blatantly political measure and not designed to raise new revenues.
This is all to do with the politics of envy." Lord Myners said that there were "very small numbers of people" who appeared to have moved abroad as a result of the tax change. Thursday, February 11, 2010 ~ 2:14 p.m., Dan Mitchell Wrote: ...government unionized workers often have gold-plated health benefits packages that are among the most expensive in America. Several years ago,
for instance, the Employee Benefit Research Institute noted in a report the growing gap in both salaries and benefits between the private and public
sector, estimating that state and local governments paid on average about 120 percent more on an hourly basis for employee health premiums than
private employers. ...n places where government unions have the most influence, like California, New York and New Jersey, the cost of public
health plans is well beyond what's typical in the private sector because public workers in these places make little or no contribution toward
premiums, often don't have co-pays for doctor visits, and have a rich array of supplemental benefits that are rare in the private sector... Many of these
benefits, by the way, don't merely apply to current government workers but also to retirees because many states and cities now offer public workers
attractive retirement packages that start at 50 for public safety workers and 55 for everyone else and which include full-health benefits until retirees
reach the age that Medicare kicks in. ...The health care deal, moreover, represents only the latest victory in what has been a very good period for
public workers. In most places these workers have largely been insulated from the impact of the devastating recession. Hundreds of billions of dollars
of the so-called federal stimulus bill actually went to insuring that state and local workers did not lose their jobs, one reason why the unemployment rate
for government workers remains under four percent. ...we can't blame all of this on the Obama administration. Indeed, the Bush years were quite good
for public sector workers too. In fact, the last 50 years, ever since governments began allowing widespread organizing by public workers, have
been one upward arc for government workers, so that today they surpass their private counterparts in pay, benefits and working conditions. And now they've gotten their hands into the tax code, too. Wednesday, February 10, 2010 ~ 8:48 p.m., Dan Mitchell Wrote: The systemic failures that led to the attempted bombing of Northwest Flight 253 are, sadly, all too familiar. Substitute the words "Christmas Day plot"
for tainted meat, poisoned peppers, aircraft groundings, the Columbia shuttle accident, Hurricane Katrina, counterfeit Heparin, toxic toys, the
banking collapse, Bernie Madoff or even Sept. 11, and the failure to put Umar Farouk Abdulmutallab on the "no-fly" list becomes yet another
indication that the federal government can no longer guarantee the faithful execution of our laws. ...Fifteen years later, a second national commission...looked at the widening federal agenda after the Sept. 11
attacks as well as underlying causes of poor performance and frequent breakdowns. The final report minced no words: "There are too many
decision-makers, too much central clearance, too many bases to touch, and too many overseers with conflicting agendas . . . accountability is hard to
discern and harder still to enforce." ...four bureaucratic problems that plague the federal government. First, the federal government currently has
the most confusing hierarchy in its history. Barack Obama entered office overseeing at least 64 discrete titles just at the top of the government. Even
one vacancy in the reporting chain can wreak havoc on performance. With more layers of management and more managers per layer, information must
travel a great distance before reaching the president, if it ever does. ...Third, front-line government employees have expressed serious concerns about
their jobs. Interviewed in mid-2008 by the U.S. Office of Personnel Management, less than half of a random sample of federal employees said
their agencies were able to recruit employees with the right skills, just over a third said promotions were based on merit, and even fewer said their
agencies took steps to deal with poor performers. ...Fourth, the federal government is increasingly dependent on a huge workforce of employees who operate in the shadows. According to estimates from Eagle Eye
Publishers, prepared on my behalf, the number of federal contractors grew from an estimated 4.4 million in 1999 to more than 7.5 million by the end of
the 2005 fiscal year. Given the continued rise in federal procurement spending, the number of contractors is almost certainly higher today. As the
number of large contracts has increased and competition has declined, it has become nearly impossible to hold anyone accountable for what goes right or wrong. Wednesday, February 10, 2010 ~ 6:21 p.m., Dan Mitchell Wrote: [California] is in a precarious position, with a 12.3% unemployment rate (more than two points higher than the national average) and a budget $20
billion in the red (only months after the last budget fix closed a large deficit). Productive Californians are leaving for states with less-punishing
regulatory and tax regimes. Yet so far there isn't a broad consensus to do much about those who have prodded the state into its current position:
public employee unions that drive costs up and fight to block spending cuts. ...California needs to take on its public employee unions. Approximately
85% of the state's 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion
budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period.
A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, "This year alone, $3 billion was diverted to pension costs
from other programs." There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility. Many of
these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year's pay.
...A 2008 state commission pegged California's unfunded pension liability at $63.5 billion, which will be amortized over several decades. That liability,
released before the precipitous drop in stock-market and real-estate values, certainly will soar. ...State Treasurer Bill Lockyer, another prominent liberal
Democrat, told a legislative hearing in October that public employee pensions would "bankrupt" the state. And the chief actuary for the
California Public Employees Retirement System has called the current pension situation "unsustainable." Tuesday, February 9, 2010 ~ 11:15 p.m., Dan Mitchell Wrote: This bit of legerdemain is made possible, thanks to the convolutions of the personal income tax, by adopting or expanding refundable tax credits. But in this case, "refundable" does not mean the government is returning money to taxpayers. Instead, it means that money is being redistributed to people who do not earn enough to be subject to the income tax. This is hardly a trivial issue. According to the Congressional Budget Office, the amount of income redistribution being laundered through the tax code is now so large that the bottom 40 percent of the population has a negative "effective" income tax rate. In simple terms (though perhaps with profound political implications), the income tax is a revenue generator for a big share of the population. And the problem is going to get worse if the President's budget is approved. Buried in the fine print, on pages 188-189 of the Analytical Perspective of the Budget, you will see that the President is proposing to increase this hidden form of spending by more than $152 billion over the next ten year. It is worth noting that proponents argue that it is okay to classify this new spending as tax cuts because it somehow offsets other tax payments, especially the payroll tax. I'm sympathetic to lower taxes on everybody, including the poor, but surely it is better to be honest and simply cut the taxes that people pay. The current methodology, by contrast, is open to abuse. Heck, I'm surprised politicians don't classify other forms of spending as tax cuts. Maybe corporate welfare can be reclassified as a corporate tax cut (I better stop lest I give the political class any ideas). Defenders also assert that some so-called refundable tax credits, particularly the earned income tax credit, are designed to encourage work. That is partly true, but credits like the EITC are withdrawn as income climbs, and this means poor people face punitive marginal tax rates, so the overall effect on hours worked may be negligible. The right approach, of course, is to get the federal government out of the racket of redistributing income. Tuesday, February 9, 2010 ~ 9:27 p.m., Dan Mitchell Wrote: Mounting evidence of scientific fraud might make little difference in terms of the response to manmade global warming hysteria. Why? Vested
economic and political interests have emerged where trillions of dollars and social control are at stake. Therefore, many people who recognize the
scientific fraud underlying global warming claims are likely to defend it anyway. Automobile companies have invested billions in research and
investment in producing "green cars." General Electric and Phillips have spent millions lobbying Congress to outlaw incandescent bulbs so that they
can force us to buy costly compact fluorescent light bulbs (CFL). Farmers and ethanol manufacturers have gotten Congress to enact laws mandating
greater use of their product, not to mention massive subsidies. ...Then there's Chicago Climate Futures Exchange that plans to trade in billions of
dollars of greenhouse gas emission allowances. Corporate America and labor unions, as well as their international counterparts have a huge multi-trillion dollar financial stake in the perpetuation of the global
warming fraud. Federal, state and local agencies have spent billions of dollars and created millions of jobs to deal with one aspect or another of global warming. Monday, February 8, 2010 ~ 3:23 p.m., Andrew Quinlan Wrote: …But conservative critics are missing the conflict at the heart of the movie. It's quite possible that Cameron missed it too. Monday, February 8, 2010 ~ 11:44 a.m., Dan Mitchell Wrote: A Queens teacher who collects a $100,000 salary for doing nothing spends time in a Department of Education "rubber room" working on his law
practice and managing 12 real-estate properties worth an estimated $7.8 million, The Post found. Alan Rosenfeld hasn't set foot in a classroom for
nearly a decade since he was accused in 2001 of making lewd comments to junior-high girls and "staring at their butts," yet the department still pays
him handsomely for sitting on his own butt seven hours a day. ...The DOE can't fire him. "We have to abide by the union contract," spokeswoman Ann
Forte said. So Rosenfeld simply collects his $100,049 salary -- top scale for teachers -- plus full health benefits and the promise of a fat pension, about
$82,000 a year if he were to retire today. His pension will grow by $1,700 each year he remains. He could have retired at age 62, but he stays. He has
also accumulated about 435 unused sick days -- and will get paid for half of them when he retires. Sunday, February 7, 2010 ~ 5:49 p.m., Dan Mitchell Wrote: Newfoundland and Labrador Premier Danny Williams is set to undergo heart surgery this week in the United States. CBC News confirmed Monday
that Williams, 59, left the province earlier in the day and will have surgery later in the week. The premier's office provided few details, beyond
confirming that he would have heart surgery and saying that it was not necessarily a routine procedure. Sunday, February 7, 2010 ~ 3:11 p.m., Dan Mitchell Wrote: The Obama Administration claimed that spending more money would keep the unemployment rate below 8% in the United States, yet it climbed to 10%. The United Kingdom and Canada also suffered continued stagnation
after adopting so-called stimulus packages. Ironically, statist nations such as France and Germany that resisted the siren song of Keynesianism better
weathered the global economic storm. ...While many factors influence economic performance, the negative impact of government spending is one reason why small-government jurisdictions such as Hong Kong (where the
burden of the public sector is below 20% of GDP) have higher growth rates than nations that have medium-sized government, such as Canada and the
United States. The same principle explains in part why big-government countries such as France often suffer from economic stagnation. ...Most studies using current economic data show that economic performance is
maximized when the public sector is less than 20% of GDP. And if historical data is used, the evidence suggests that government should be even smaller.
Ironically, John Maynard Keynes might not be a Keynesian if he was alive today. He certainly would not be a proponent of big government. In
correspondence with another British economist, he agreed with the premise of "25% [of GDP] as the maximum tolerable proportion of taxation." Saturday, February 6, 2010 ~ 7:21 p.m., Dan Mitchell Wrote: Ronald Reagan was born 99 years ago on this date.
The tribute is moving, but this video underscores what made Reagan special. Unlike most Republicans today, he actually believed in freedom.
Friday, February 5, 2010 ~ 5:55 p.m., Dan Mitchell Wrote: The phrase "too big to fail" has entered into our everyday vocabulary. It carries the implication that really large, complex and highly interconnected
financial institutions can count on public support at critical times. The sense of public outrage over seemingly unfair treatment is palpable. Beyond the
emotion, the result is to provide those institutions with a competitive advantage in their financing, in their size and in their ability to take and
absorb risks. ...To meet the possibility that failure of such institutions may nonetheless threaten the system, the reform proposals of the Obama administration and other governments point to the need for a new
"resolution authority." Specifically, the appropriately designated agency should be authorized to intervene in the event that a systemically critical
capital market institution is on the brink of failure. The agency would assume control for the sole purpose of arranging an orderly liquidation or
merger. Limited funds would be made available to maintain continuity of operations while preparing for the demise of the organization. To help
facilitate that process, the concept of a "living will" has been set forth by a number of governments. Stockholders and management would not be
protected. Creditors would be at risk, and would suffer to the extent that the ultimate liquidation value of the firm would fall short of its debts. To put
it simply, in no sense would these capital market institutions be deemed "too big to fail." What they would be free to do is to innovate, to trade, to
speculate, to manage private pools of capital — and as ordinary businesses in a capitalist economy, to fail. Friday, February 5, 2010 ~ 2:46 p.m., Dan Mitchell Wrote: Since December 2007, when the current downturn began, the ranks of federal employees earning $100,000 and up has skyrocketed. According to a
recent analysis by USA Today, federal workers making six-figure salaries - not including overtime and bonuses - "jumped from 14 percent to 19
percent of civil servants during the recession's first 18 months.'' The surge has been especially pronounced among the highest-paid employees. At the
Defense Department, for example, the number of civilian workers making $150,000 or more quintupled from 1,868 to 10,100. At the recession's start,
the Transportation Department was paying only one person a salary of $170,000. Eighteen months later, 1,690 employees were drawing paychecks
that size. All the while, the federal government has been adding jobs at a 10,000-a-month clip. Between December 2007 and June 2009, federal
payrolls exploded by nearly 10 percent. "Federal workers are enjoying an extraordinary boom time in pay and hiring,'' USA Today observes, "during
a recession that has cost 7.3 million jobs in the private sector.'' And to add public-sector insult to private-sector injury, data from the Office of
Personnel Management show the average federal salary is now roughly $71,000 - about 76 percent higher than the average private salary. Thursday, February 4, 2010 ~ 10:19 a.m, Dan Mitchell Wrote: After the administration floated a plan to cap non-defense, non-security discretionary spending for the next three years, the opposition party erupted
in jeers. The complaints were many: It affected only one-eighth of the budget, it came on top of big increases, and the savings would be trivial
next to the deficits that are in the pipeline. ...All the criticisms, as it happens, are true. Obama's claim of stern fiscal discipline -- "we are prepared to
freeze government spending for three years" -- collapsed into comical irrelevance as soon as he listed all the programs that won't be included:
national security, Medicare, Medicaid and Social Security, which happen to be the Four Horsemen of the Fiscal Apocalypse. There's more: Unspent
stimulus funds amounting to $165 billion. Other "mandatory" programs like unemployment and food stamps. Interest on the debt, which will triple in
the next three years. Obama is going on a hunger strike, except during mealtimes. ...Still, it's odd to hear complaints about excessive spending from
the people who brought us the bloated budgets of the Bush years. During his tenure, federal spending did not retreat under the relentless assault of
tight-fisted conservatives. In fact, during the Bush administration, total federal spending, adjusted for inflation, climbed by 72 percent. What was
originally a fiscal surplus became a deficit, reaching $1.8 trillion in 2009, Bush's final budget year (to which Obama contributed only a minor
amount). Not until he had been in office for more than six years did he veto a bill because it cost too much. Bill Clinton may feel your pain, but next to
his successor, he looked like Ebenezer Scrooge. ...If the GOP really wants to highlight the administration's budgetary excesses, the right response is not
to merely ridicule how little he offers in the way of savings, but to offer bigger and better savings of their own. Otherwise, they may find that the
public disgust with runaway spending can scorch incumbent Republicans as well as incumbent Democrats. Thursday, February 4, 2010 ~ 9:23 a.m, Dan Mitchell Wrote: Any expectation that state and local governments would use the worst fiscal crisis since the Great Depression to reduce their biggest expenditures is
proving to be wishful thinking. Companies have cut 7.3 million jobs, 6.29 percent, since business employment peaked at 115.8 million in December
2007. State and local governments kept adding jobs through August 2008 to 19.8 million and have since cut 132,000 positions -- 0.66 percent, according
to the U.S. Labor Department. ...Reducing headcount would help narrow budget deficits. It would also reduce public-pension liabilities, which
analysts say threaten state and local credit ratings and even, at the local level, solvency. State and local government pensions nationwide are
underfunded by about $1 trillion, Orin S. Kramer, chairman of the New Jersey Investment Council, which oversees the state's pension fund,
estimated in November. That doesn't include other retirement benefits, such as health care, which Standard & Poor's earlier this year pegged at about $500 billion for the states alone. Wednesday, February 3, 2010 ~ 6:14 p.m, Dan Mitchell Wrote: The Obama administration is considering several steps that would review the legality of the controversial Bowl Championship Series, the Justice
Department said in a letter Friday to a senator who had asked for an antitrust review. In the letter to Sen. Orrin Hatch, obtained by The Associated Press, Assistant Attorney General Ronald Weich wrote that the
Justice Department is reviewing Hatch's request and other materials to determine whether to open an investigation into whether the BCS violates
antitrust laws. "Importantly, and in addition, the administration also is exploring other options that might be available to address concerns with the
college football postseason," Weich wrote, including asking the Federal Trade Commission to review the legality of the BCS under consumer
protection laws. ..."The administration shares your belief that the current lack of a college football national championship playoff with respect to the
highest division of college football ... raises important questions affecting millions of fans, colleges and universities, players and other interested parties," Weich wrote. Wednesday, February 3, 2010 ~ 2:45 p.m, Dan Mitchell Wrote: …government employees of all stripes have manipulated the system to spike their pensions. The old deal seemed fair: public employees would earn lower
salaries than Americans working in the private sector, but would receive a somewhat better retirement and more days off. Now, public employees get
higher average pay, far higher benefits, and many more days off and other fringe benefits. They have also obtained greatly reduced work schedules,
thus limiting public services even as pay and benefits shoot ever higher. The new deal is starting to raise eyebrows, thanks to efforts by groups such as
the California Foundation for Fiscal Responsibility, which publishes the $100,000 Club, a list of thousands of California government retirees with
six-figure, taxpayer-guaranteed incomes. The story doesn't end with the imbalance in pay and benefits. Government workers also enjoy absurd
protections. The Los Angeles Times published a recent series about the city's public school district, which doesn't even try to fire incompetent teachers
and is seldom able to get rid of those credibly accused of misconduct or abuse. The real scandal is a two-tier society where government workers
enjoy benefits far in excess of those for whom they supposedly work. It's past time to start cleaning up the mess by reforming retirement systems and limiting the public unions' power. Tuesday, February 2, 2010 ~ 7:27 p.m, Dan Mitchell Wrote: But the most important numbers in the budget documents are the estimates of what is happening to government spending. The good news is that burden of government spending is projected to decline over the next few years from about 25 percent of GDP to less than 23 percent of GDP. That's the good news. The bad news is that federal government outlays only consumed 18.2 percent of economic output when Bush took office. In other words, notwithstanding the good news cited above, the size and scope of government has increased dramatically since 2001. The worse news is that the long-run spending forecasts show a cataclysmic expansion in the burden of government. The "optimistic" estimate is that the federal government will consume more than 30 percent of GDP by 2050 and 40 percent of GDP by 2080. Tuesday, February 2, 2010 ~ 7:12 p.m., Dan Mitchell Wrote: There's a recession going on, but you wouldn't necessarily know it by looking at public employee earnings. If you work for the government, you're
far less likely than your private-sector counterparts to have been laid off in the recession, and you probably also saw relatively fast wage growth.
...During the recession, public employees have done better than private ones on two measures: total employment and hourly compensation. Over the last
two years, private payrolls shed 7.3 million jobs, but public sector civilian employment actually grew very slightly, adding 98,000 jobs. ...public sector
compensation (as measured by the Department of Labor) rose 42% faster than private sector compensation over the last three years. Since the end of
2006, hourly total compensation (wages plus benefits) has risen 6.5% for private sector workers, essentially keeping pace with inflation. But state and
local government workers saw their hourly compensation rise 9.2%. Federal civilian workers (about 10% of the public sector civilian workforce) are
excluded from the above measure, but they did even better, receiving Congressionally-approved wage rises totaling 9.9% over the same period.
...If states and localities had kept pace with private sector wage growth over the last three years, state budget gaps would be approximately $36 billion less than they are today. Tuesday, February 2, 2010 ~ 3:45 p.m, Dan Mitchell Wrote: When it comes to hiring staff, there are plenty of legal pitfalls employers need to watch out for these days. So recruitment agency boss Nicole Mamo
was especially careful to ensure her advert for hospital workers did not offend on grounds of race, age or sexual orientation. However, she hadn't
reckoned on discriminating against a wholly different section of the community - the completely useless. When she ran the ad past a job centre,
she was told she couldn't ask for 'reliable' and 'hard-working' applicants because it could be offensive to unreliable people. 'In my 15 years in
recruitment I haven't heard anything so ridiculous,' Mrs Mamo said yesterday. 'If the matter wasn't so serious I would be laughing out loud.
'Unfortunately it's extremely alarming. I need people who are hardworking and reliable - and I am pleased to discriminate in that way. If they're not
then I really can't use them. The reputation of my business is on the line. 'Even the woman at the jobcentre agreed it was ridiculous but explained it
was policy because they could get sued for being discriminatory against unreliable people. ...She filed the advert for a £5.80-an-hour domestic
cleaner at a hospital in Bury St Edmunds, Suffolk, through the Jobcentre Plus online service last Thursday. However, when she rang the nearest
branch in Thetford, Norfolk, to make sure details would be available to jobseekers who turned up in person, she was transferred to a woman who said the wording was unacceptable. Monday, February 1, 2010 ~ 7:51 p.m, Dan Mitchell Wrote: ...former Treasury Secretary Henry Paulson on Wednesday defended his decision to complete a $182 billion bailout of American International Group
Inc., arguing that the unemployment rate would have risen easily to 25% without the bailout. "If the system had collapsed millions more in savings
would have been lost," said Paulson, who was Treasury Secretary at the time of the bailout, at a hearing. "Industrial companies of all size would not
have been able to raise funding and they would not have been able to pay employees, this would have rippled through the economy." For the sake of argument, let's assume he is right and that the economy would have collapsed without huge amounts of money being pumped into the financial system. Does
that justify Paulson giving money to his friends on Wall Street? Not at all. The crowd in Washington could have used what's known as the FDIC-resolution approach, which
would have resulted in the government paying healthy financial institution to take over the insolvent ones. In effect, this is what happened during the savings & loan crisis twenty
years ago. It's not an ideal libertarian solution since tax dollars are pumped into the financial system and there is some degree of increased moral hazard since
consumers/customers have less reason to monitor the safety and soundness of the banks they patronize. But the FDIC-resolution approach has one enormously good feature, at
least compared to the Bush-Paulson-Obama-Geithner bailout: Bad banks are shut down, meaning that shareholders lose all their money and senior managers lose their jobs. Monday, February 1, 2010 ~ 5:00 p.m, Dan Mitchell Wrote: For the first time in American history, a majority of union members are government workers rather than private-sector employees, the Bureau of
Labor Statistics announced on Friday. In its annual report on union membership, the bureau undercut the longstanding notion that union members are overwhelmingly blue-collar factory workers. It found that
membership fell so fast in the private sector in 2009 that the 7.9 million unionized public-sector workers easily outnumbered those in the private
sector, where labor's ranks shrank to 7.4 million, from 8.2 million in 2008. …According to the labor bureau, 7.2 percent of private-sector workers were
union members last year, down from 7.6 percent the previous year. That, labor historians said, was the lowest percentage of private-sector workers in
unions since 1900. Among government workers, union membership grew to 37.4 percent last year, from 36.8 percent in 2008. …government employment grew last year, inching up 16,000, to 22,516,000, according to
the bureau. …Fred Siegel, a visiting professor of history at St. Francis College in Brooklyn and a senior fellow at the Manhattan Institute, a
conservative research organization, said, "There were enormous political ramifications" to the fact that public-sector workers are now the majority
in organized labor. "At the same time the country is being squeezed, public-sector unions are a rising political force in the Democratic Party," he
said. "They depend on extra money for the public sector, and that puts the Democrats in a difficult position. In four big states — New York, New
Jersey, Illinois and California — the public-sector unions have largely been untouched by the economic downturn. In those states, you have an impeding
clash between the public-sector unions and the public at large." Monday, February 1, 2010 ~ 2:36 p.m, Dan Mitchell Wrote: It looks like Oregon corporations and high-income earners will pay higher state taxes as voters weighed in Tuesday on two hotly debated measures.
...Measure 66 raises the income tax paid by households earning at or above $250,000 a year or individual filers who make $125,000 or more. Measure
67 raises the state's $10 minimum corporate income tax. ...The tax measures were strongly supported by the state's teachers and other public
employee unions. ...Pat McCormick, spokesman for the opposing campaign, "Oregonians Against Job-Killing Taxes" described the results as "disappointing and discouraging."
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