Monday, May 12, 2008

How To Fix California's Red-Ink Budget

Sale of California’s Surplus Property Would Lower State’s Tax Liabilities

[Independent Institute, Oakland CA--Newsletter May 13, 2008]

California is in a quandary. Facing up to $20 billion in red ink, Gov. Arnold Schwarzenegger has proposed issuing $3.3 billion in new bonds, postponing $1.5 billion of debt payment, and cutting spending. According to Independent Institute Research Fellow William F. Shughart II, the governor should consider another option for helping to balance the state’s books: selling some of the state’s 22,727 buildings and more than 6.7 million acres of land.

Unfortunately, this option has been completely overlooked. “As of last October,” writes Shughart, “bids were actively being solicited on just three properties: a Highway Patrol station in the South Lake Tahoe area, 2.7 acres of a 20-acre parcel at the Los Angeles Reception Center, and 17.6 acres in Santa Clara County at the Bay Area Research and Extension Center.”

Yes, the state’s taxpayers would have been better off had the state’s surplus properties been sold when property values were higher, Shughart notes, but the state’s house is in such fiscal disarray that a property sale would still improve the prospects of the state’s taxpayers. “Disposing of surplus property is a partial, short-run solution,” concludes Shughart. “The longer term answer is budget reform and spending restraint.”

“Sell State Assets to Close Budget Gap,” by William F. Shughart II (Press-Enterprise, 5/8/08) Spanish Translation

Taxing Choice: The Predatory Politics of Fiscal Discrimination, edited by William F. Shughart II

“Explicit manipulation of the tax system to control personal choices violates the long-standing principle that taxes should be general. Discrimination through taxation is as destructive to democracy and liberty as discrimination in any other form. Taxing Choice exposes the fiscal rot that ‘targeted’ tax adjustments represent.”
—James M. Buchanan, Nobel Laureate in Economics, George Mason University

Hillary's Handlers Make a Good Case for Her Continued Fight--Believe It Or Not!

I heard one of Hillary's spin docs on a political show yesterday explaining why Hillary thinks she should keep running and deserves to have the superdelegates throw the nomination to her despite Obama's growing strength.

At first it was just ridiculous listening to him talking about changing the rules on Michigan (yes?) and Florida, and even talking about Puerto Rico's vote (they can't vote for president but can vote for the nominees, oddly enough). And he repeatedly ducked explaining Hillary's racist-sounding "candidate of the working white man" quote that is the current controversy. But as he talked, he started sounding entirely reasonable after all:

  • The total popular vote so far is 16.5 million for Hillary and 16.7 million for Obama. In an election he would win; but this is a nomination, not an election, and in some sense this is not far from a tie.
  • The job of the superdelegates isn't just to echo the popular vote. If it were, there'd be no point in having superdelegates (except as flattery, which it also is). The superdels, like all delegates if the convention were for example to be unable to come to a decision in the first vote, have as their first obligation to decide who the best candidate is for the Democratic Party--'best' in this case meaning only, and entirely, "the one most likely to get elected." In this near-tie vote situation leading up to the convention, there is nothing wrong with or even strange in suggesting they vote for Hillary if they decided she would be more likely to win the election. It wouldn't be a betrayal of party principle, or the voters; it would be what it is: Politics.
  • And, finally, another commentator said Hillary is Hanging On mostly because, though she seems like a long shot now in mid-May 2008, "anything can happen," including a major screwup by Obama, a remark or act or bit of past history of Barack's that can be *twisted* into seeming like a major screwup, some world event that changes perceptions of the candidates (e.g. her stupid and scary Bomb Iran remark last month would make her sound Presidential if, say, Iran threw a nuclear missile at Isreal before the convention), or, also God forbid, some fatal or crippling accident to one of the candidates. All these are unlikely, but the one certainty about electoral politics is that nothing is certain. And, in light of the above, what happens doesn't even have to actually cripple Barack in the election--it just has to convince a few superdelegates that Obama has been seriously compromised, and -- Bam! -- the nomination goes to Clinton.
Personally, I am not thrilled at the idea of having Hillary as president; her lack of respect for liberty and the citizenry, and her arrogance in the use of power, are things to dread. Of course, Obama is no libertarian; he's as much a leftist Democrat as she is, he just doesn't have much baggage yet. And McCain, of course, has zero interest in the liberties of the people -- or in the Constitution, as he has proven repeatedly.

It will be a weird few months. I have to say, it is at times like this that I am glad I am a libertarian, and all this hubbub in both mainstream parties is just so much political eye candy for me - it's like watching a football game in which I have no team playing.

I just thank goodness there *is* a Libertarian Party on which I can waste my vote. It beats having to choose between (to exaggerate enormously) Stalin and Mao....

Bob Barr Gets Radio Airtime for LP Nomination! Weird!

Weird scenes inside the gold mine!

Former Republican Bob Barr announced today (May 12, 2008) that he will seek the nomination of the Libertarian Party at its upcoming convention - which is only interesting in that it made the KCBS news at least three times today.

Apparently the McCain people fret that Barr is well enough known that he could grab 3 or 5 percent (vs the Libs usual 1/2 percent) and in a close race throw the whole thing to Obama! (Also interestingly, they specify Obama, not Hillary...heh heh.)

This has to be the first time the LP has been mentioned in this way on a main news show ever. Strange political times we are in.


Friday, May 9, 2008

Does Hillary Clinton Hate Our Freedoms?

In the Cato-@-Liberty blog post "Hillary Hates Freedom," David Boaz, Cato executive vice president and author of The Politics of Freedom, writes: "Sen. Hillary Rodham Clinton operates with reckless disregard for individual freedom and the limited government that protects and sustains it. ... At her core, Hillary Clinton rejects the fundamental values of liberalism, values like individual autonomy, individual rights, pluralism, choice, and yes, life, liberty, and the pursuit of happiness. She seems to see no area of life that should be free from the heavy hand of government. And to her the world of free people seems a vast nothingness. ... The really scary prospect of another Clinton presidency is not what she would do to our medical care but what she would do to the 'life, liberty, and the pursuit of happiness' that is the foundation of our free society."

[Mac's comment: Unfortunately, Barack Obama isn't much better; nor is McCain on the Republican side...]

BAD CONGRESS Agrees on BAD Farm Bill

Congress Agrees on Farm Bill
(from Cato Institute)
"Congressional negotiators announced a final agreement on a $300 billion farm bill on Thursday, as the White House and key conservatives continued to signal opposition to the legislation," the Associated Press reports. "One of the biggest sticking points has been how much money would be paid to wealthy farmers. Under the legislation, married farmers with joint incomes of up to $1.5 million a year and individuals who make more than $750,000 could still qualify for some crop subsidies."

Sallie James, policy analyst at Cato's Center for Trade Policy Studies, comments: "The agreement reached by the farm bill conference committee contains very little in the way of serious reform. It makes minimal cuts to farm subsidies and in fact adds a new 'permanent disaster' program on top of the existing hand-outs to farmers. The conferees did make some small cuts to subsidies by introducing a slightly tighter means test, but only for the type of support least offensive to our trade partners and least market-distorting.
"In an effort to garner support for the insupportable, the committee has larded the farm bill up with extra nutrition and conservation spending, even as they encourage the development of biofuels that act against the interests of poor and hungry people and the environment. At a time when commodity prices are at record highs and farmers are doing so well, this policy proposal is woeful."

Mac's comment: Will we EVER get agriculture policy reform in this country? (Or any other country, for that matter -- see France, see Japan, see et al.)

Wednesday, May 7, 2008

Higher Taxes, More Government: Dangerous Delusions

by Richard W. Rahn

[Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth. This essay is from Cato Institute's site May 5, 2008; This article appeared in the Washington Times on May 1, 2008.]

Have you ever wondered why so many people see higher taxes and more government as the solution to every problem, despite the empirical evidence that more government reduces economic efficiency and growth and diminishes our liberties?

As will be shown, the arguments from the big government advocates are usually based on a combination of economic and historical ignorance, including an inability to think beyond Stage 1, envy, and just plain delusional thinking.

The New York Times editorial page has long been a bastion of this delusional thinking. On April 24, the paper produced one of its classic inane editorials in favor of higher taxes on labor and capital, which contained this gem of a sentence: "Memo to McCain: 401(k) savers get no benefit from a low capital-gains [tax] rate."

Everyone who has ever taken basic economics should know a lower tax rate on an investment (i.e., the capital-gains tax) will lead a higher rate of return, and hence the investment will be worth more. Other things being equal, lower capital gains tax rates will lead to higher stock prices, and all who hold stocks will benefit, whether or not they pay a particular tax on that stock. Though this concept is not difficult for most people to understand, it seems beyond the knowledge and reasoning ability of those who write editorials for the New York Times.

Unfortunately, the Times has plenty of global company when it comes to economic ignorance, envy and delusional thinking. We find it among many politicians in almost every government. International organizations, such as the United Nations, and even the Organization for Economic Cooperation and Development and their dependent allies, are filled with those who advocate higher taxes on capital and labor, all in the name of "tax harmonization."

The following are only some examples of what those who advocate higher taxes on capital and labor either do not understand or willfully choose to ignore:

  • Many studies by leading economists, including those from even the International Monetary Fund and World Bank, have shown most countries tax and spend at a level higher than that which would maximize their economic growth and social welfare.
  • Financial capital (productive savings and investment) is the "seed corn" of modern economies, and when it is taxed there are fewer funds available for businesspeople to create new jobs and invest in new productivity, including life enhancing and lifesaving innovations.
  • When labor is taxed at high rates, it discourages people from working (at least in the legal economy) and increases the cost of hiring by employers, which reduces their demand for workers.
  • Most government programs do not live up to their billing in that they cost far more than projected and produce less than promised. Recent U.S. government studies have shown that about 50 percent of all taxpayer dollars do not achieve the promised results. There is little reason to believe most other governments perform any better. There is no evidence that governments spending more money use it any more efficiently than those spending less, and the contrary is more often the case.
  • There are few examples of governments balancing their budgets or improving their fiscal situations by increasing tax rates, but there are many examples of governments balancing their budgets through spending restraints and, at times, reducing tax rates. The federal surpluses during the last Clinton administration in the late 1990s only occurred after the newly elected Republican Congress imposed strict spending limitations and the capital gains tax rate was cut by Congress and signed into law by President Clinton.
  • Most people can make better decisions about how to spend their money to aid their families than can politicians and government bureaucrats. When taxes rise, people's ability to take care of themselves is reduced and they more become dependent on government.
  • Higher tax rates reduce individual liberty by denying people the fruits of their own labor.
  • Some of those who claim tax rates must be increased use the argument that the cost of government pension (Social Security) and medical aid programs are growing faster than the economy. Yet these same people ignore (or arrogantly dismiss) many of the cost-saving and privatization proposals from reputable public policy organizations and scholars, which would not only lower costs but improve results. The fact is, unless the rate of cost increases is brought down, no tax rate increase can possibly solve the problem.
  • Finally, there are some tax increase advocates who still have the long discredited socialist mentality that even when a tax increase hurts everyone, it is justified in the name of "fairness." When Sen. Barack Obama was informed that his proposal to nearly double the capital-gains tax rate would most likely result in less revenue for government, he said it was still justified in the name of "fairness."

The logical consequence of this notion of "fairness" would be a much lower standard of living for everyone, which I doubt is what the good senator desires.

Despite their delusional rhetoric, I even doubt the editors of the New York Times really want to see their own incomes fall to that of the average person, let alone to the level that would result from their economic policy proposals.