How Florida (!) Solved Its Budget Crisis

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From Looking at California from Florida by Randall Holcolme, The Independent Institute, May 27, 2009

As a Floridian, I’m looking at California’s budget mess with some amazement. The state’s 2009-10 budget is $111 billion, up 6% from the prior year, and $25 billion more than the year’s projected revenues of $86 billion. The budget’s expenditures are 29% greater than projected revenues! Yes, times are tough, we’re in a recession and all that, but during tough times shouldn’t we tighten our belts? Instead, California’s expenditures are growing at a fairly good clip, and 29% larger than revenues. This strikes me as crazy, and I’m happy to be saying this from Florida rather than California.

Things are tough in Florida too. In 2006-07 the state’s budget was $73.9 billion, but with the collapse in the real estate market, the recession, and the associated decline in tourism, revenues have fallen just like in California. The difference is, our state legislature has cut expenditures to match the decline in revenues, and Florida’s 2009-10 budget is $66.5 billion, a cut of more than 10% from its high a few years ago. And, the budget is balanced.

Florida’s legislature balanced the budget pretty much without raising taxes. There were a few “revenue enhancers” here and there—most significantly, a $1 per pack increase in cigarette taxes—but by and large the state held the line on taxes. Florida’s 6% sales tax rate (lower than California’s 8.25% rate) remained unchanged, and Florida never has had a personal income tax. Pretty much the way things went were, revenues fell, and the legislature cut expenditures to match the reduction in revenues. That’s fiscal responsibility.

People complained, of course, but the loudest complaints were from people who worked for the government, or special interests who wanted some particular program funded. You didn’t hear ordinary Floridians saying they wanted their state government to spend more. I’m giving our state legislature a lot of credit for holding the line on taxes and spending within their means. I don’t see that kind of fiscal responsibility at the national level, or at the local level (in Florida, local governments are all scheming for ways to raise more revenue and increase their spending). And, looking all the way across the country, I don’t see it in California.

I watched with interest (actually, morbid curiosity would be more descriptive) last week as Californians voted down the state’s proposed solution to the budget crisis. I would have voted against the state’s plan too. Now I’ll be interested (I mean, morbidly curious) to see what California’s legislature has up their sleeve as Plan B. Fortunately, Florida’s political leadership shows more responsibility. Sacramento is 2,700 miles from Tallahassee, and I confess I don’t follow California news that closely. But I really don’t understand how California’s political leadership can put the state in that much fiscal peril and still remain in office.

Debunking "Mars Big as the Moon in the Sky!" Email Spam!

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The excellent Bad Astronomy blog in Discover magazine posts this week about the notorious email spam that asserts (from time to time) that Mars is coming so close to the Earth in its orbit that later this year it will "appear" to be as big as the Moon appears.

Yes; as big-seeming as the Moon seems in the sky. That would be something!

If it were true. But it's not even close to being true.

As astronomer Phil Plait explains in his blog, "I tire of debunking this every freaking year, so just read this post from last year, or from 2007, or 2006, or 2005, or 2003, when this evil viral thing got started by someone who I hope is now covered with a copious slathering of honey and ensconced in the ground near a fire ant mound, preferably surrounded by quicksand, a tar pit, and a bunch of TV sets all tuned to the Oprah show."

Geez, he's been countering this thing for five years. And it won't die.

Pity the rationalist.

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He also mentions the amusing series going on in the comic strip NonSequitur on the same subject....

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• Mars Hoax Circulates: 'Big as the Moon!' (space.com)

Killing General Motors Softly

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Reason Foundation's Shikha Dalmia, based in Detroit, writes:

"The president seems to think that there is nothing that G.M. has that a visit to bankruptcy court won't cure. Amputate its liabilities to bondholders, excise all its promises to unions (no, actually, scratch that one, that didn't quite happen) and, presto, it'll be ready, once again, to kick some foreign ass.

"If only!

"Chapter 11 is certainly a necessary - and a long overdue - condition for G.M.'s return. But it is not a sufficient condition. What G.M. also needs is a winning business model...

"Far from returning the $50 billion, G.M. is likely to become an unquenchable money-guzzler that taxpayers will have to feed for many, many, many years to come."



A Green Ride for Government Motors

Jacob Sullum: How Not to Run GM

California's Fiscal Doom and the Federal Deficit (Reason)

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Reason magazine's Brian Doherty examines California's cash crisis, the massive federal deficit and what all of this red ink means:

"Federal revenues for 2007 ($2.6 trillion) are sufficient to have spent twice as much as federal outlays in 1975, adjusted for inflation, with no deficit at all. While life in these here United States was hellish on many levels in 1975, not least the fashions and food, even those with a much bigger appetite for government than I might agree that a government twice as big as what we enjoyed/suffered that year should be able to manage its necessary functions. (And no, there is no convincing reason that in a growing economy the government’s cash grab as a percentage of GDP should remain stable.)

"When contemplating California’s fiscal present and the U.S.’s fiscal future, it’s not quite right to say that where California is now, the U.S. as a whole will follow. The U.S. is already in a deep hole, much deeper than California's, and has been for some time. Even President Barack Obama knows it. He told C-SPAN recently, with wonderfully disarming frankness, 'we are out of money now.'

"The U.S., unlike the state of California, when faced with a dearth of cash, can just make more, which is in essence Obama’s plan—for a while, at least. As in his most famous movie role as the Terminator, Schwarzenegger is metaphorically a visitor from a dangerous and unpleasant future that awaits the rest of the United States.

"The Golden State is absolutely a political bellwether now in the sense that the crisis-induced fiscal seriousness Schwarzenegger is at least pretending to attempt will be essential to the U.S. in the near future—and should be seen as essential this very second.

"But while California can hold out hope that the federal government might bail it out of its troubles, the U.S. government, alas, has no higher power to which it can direct its own appeals. The buck stops there.

"The only problem, as Obama himself claims to understand, is they are all out of bucks."

Matt Welch: Blame the Voters, Pass the Buck
Watch Welch on Fox News Discussing California's Deficit

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• California's Fight over What to Cut (time.com)

What to Ask Supreme Court Nominee Sonia Sotomayor

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All discussions in the media boil down to this: Will she rule in favor of what I want to happen, or against it?

Zero about how she views the underlying principles of the COnstitution.

If I were on the Senate committee, I would ask her one question only:

Is ours a Constitution of enumerated powers, or one of enumerated rights?

Her answer -- which would likely be enumerated rights because that's what all the lawyers believe these days--would tell me all I need to know.

Most people just want to know if she will be a right-wing Justice or a left-wing Justice.

By the way, the answer most legal people today would give is: Ours is a government of enumerated rights.

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The Founders would spin in their graves at that.

By the way, if you're puzzling over this distinction, simply put it is this:

The Founders decided that a government with unlimited powers is an unlimited danger to the liberties of the People. Their clever solution to this age-old problem was to create a government whose powers would be listed specifically in the Constitution -- and (in principle) the government would only be authorized to exercise power in those specific areas. Like, say, national defense. Anything not specifically listed as an area where the government can act, the government cannot act--because it doesn't have the power. Its powers are strictly limited.

When the Bill of Rights was being debated, one common objection was that this listing of specific rights might give the government an opening to declare that people only have the specific rights listed there -- the government can do anything it wants, limited only by the Bill of Rights.

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This is known as the Enumerated Rights interpretation. It is the popular interpretation today, just as our Founders feared. Interestingly, in the Federalist Papers, the authors argued that this interpretation was idiotic, because it would require ignoring the whole thrust of the Constitution; the Constitution would make no sense under this interpretation.

But to soothe this attack of nerves, the Founders added the 9th and 10th Amendments, which specifically say that this Bill of Rights is not a list of all the rights people have; they have all rights outside of the limited powers of the government.

This "protective clause" took 150 years to break down, but now it is considered a dead letter. Robert Bork's nomination hearing included the shocking news that he didn't think the 9th or 10th Amendments had any real meaning.

Of course, if you think ours is a Constitution of Enumerated Rights, then the 9th and 10th Amendments wouldn't make any sense to you. The Founders mistakenly thought the logic of this would force one to abandon the enumerated rights idea. How little faith they had in our ability to ignore what is inconvenient in our Constitution!

So What Happens to California?

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Forbes Magazine editor's blog this week:

Here is another fine piece by Atlantic blogger Megan McArdle; it is rollicking good.

So what about California? A reader asks. Ummm, that's a tough one. No, wait, it's not: California is completely, totally, irreparably hosed. And not a little garden hose. More like this. Their outflow is bigger than their inflow. You can blame Republicans who won't pass a budget, or Democrats who spend every single cent of tax money that comes in during the booms, borrow some more and then act all surprised when revenues, in a totally unprecedented, inexplicable and unforeseeable chain of events, fall during a recession. You can blame the initiative process and the uneducated voters who try to vote themselves rich by picking their own pockets. Whoever is to blame, the state was bound to go broke one day, and hey, today's that day!

"California will go bankrupt, muni and state debt will spike, the federal government will backstop humanitarian programs and very possibly all state and local debt, and eventually, California will figure out whether it wants higher taxes or lower spending. But we will not actually make the world a better place by enabling the lunatics in Sacramento to pretend they can have both.


But all the discussions in the media for the coming months will be about raising more money, somehow, someway -- there is no way in hell we can cut anything, not single nickle can be spared. That will be the story.

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And to prove it, the politicians from Arnold on down will cut their budgets by slicing off nothing but important or sentimental programs -- they'll cut police and fire, which are the real reason most people think we have government in the first place -- and they'll cut programs for children and poor women and cripples, ones that make you think they're out of their minds because they raise a storm of criticism.

But they *want* a storm of criticism. They want to be able to say, "See? We *try* and we *try*, but anything we cut, people get really upset! So we have no choice but to raise taxes (or borrow money or whatever)."

They won't stop going on junkets, they won't shut down the hundreds of commissions that do nothing but provide make-work jobs for their out-of-office pol friends, they won't cut back on programs that haven't shown they work, and they won't cut into programs that really are questionable as to whether the government ought to be doing them. And they won't sell anything, not even San Quentin, because it's "for the people!"

Prepare yourself for a truly disgusting spectacle. And then your wallet will get lifted.

The Challenge for Libertarian Activists

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In "Libertarian Democraphobia," an article by Will Wilkinson on his site (May 4, 2009), I found these especially cogent thoughts about the problems facing libertarian activists.

"...[L]ibertarians have done a terrible job countering the widespread suspicion that it's a uselessly abstract ahistorical ideology for socially retarded adolescent white guys... If libertarians are going to shift the politics of the countries we live in, we've got to get it through our thick skulls that many people have considered libertarian ideas and have rejected them for all sorts of decent reasons. We've got to take those reasons, and those people, fully seriously and adequately address them. Otherwise, we should probably just accept that libertarianism is a niche creed for weird people and reconcile ourselves to impotent, self-righteous grousing.... For my part, I'm going to continue to try to convince people that free markets and limited government are better than they might have thought."

Well said. The libertarian challenge is, and has been, and will be for a very long time, to persuade people to take it seriously as (at some level) an attempt to address practically and pragmatically the problem of governance. At the level the Founders operated--and that certainly wasn't minarchism, though it probably seemed that way to some at the time--it was a practical alternative offered after long hard thought about the very real problems and risks of governance, and it still is.

That's one reason I like the Reason Foundation/Magazine so much -- they spend almost all their effort thinking and talking about how, as a practical matter, one can move closer (even if incrementally) to a more peaceful, prosperous, and free society, in specific situations such as garbage collection, police protection, air traffic control, highway congestion and maintenance, career licensing, and on and on -- just the kinds of things most people would think libertarians have no ideas about, and just the kinds of things most libertarians aren't interested in. In this, they follow Milton Friedman, whose entirely practical and sensible book, Free To Choose, created many a libertarian.

But since libertarianism tries to limit government power, its political arm has never figured out how to attract workers willing to invest time and money and energy in running for offices they will attempt to limit in scope and power -- the opposite of why people typically get into politics. So libertarianism attracts too many people who simply enjoy the arguments and ignore the question of how to move forward, which is why so many libertarians spend so much energy arguing among one another about who's more libertarian than the other. I remember one libertarian-minded pol whose reaction to someone who said "I like some of your positions, but I have problems with these other positions," was to focus on where they agreed, and build on that -- most libertarians will instantly jump on the area of disagreement and start an argument, which is dumb.

Sigh. Thank goodness there are a few free-market thinktanks pushing to convince voters and bureaucrats of the value of their ideas.

One thing I'd like to see pursued is the ideas of a 19th-century French politician who, in arguing against some socialist proposals, pointed out that a government that allows itself to be tasked with fixing every single problem put before it is a government setting itself up for failure. As hard as it is to keep peace and security among the citizens, it's got to be even harder to make them love one another, be happy, and have their many contradictory ways must surely be a formula for disaster. The US military, oddly enough, following Vietnam learned the lesson of failure, and until Iraq had dragged its feet about being sent off to pursue war -- they knew how easy it was to screw it up and then catch the blame. If only politicians could be so wise. If only we could encourage them to think so.

mac