Category: Spending

He who pays, decides. Even in government.

With all of the talk of Jack Abramoff and Congressional ethics lately, I’m amused at how some members of Congress have now found the religion of restraint. Consider:

House Republicans, seeking to recover their standing with voters in the wake of a lobbying scandal, are considering a total ban on privately funded congressional trips, the lawmaker leading the reform effort said Wednesday.

Rep. David Dreier, R-Calif., said GOP leaders were “seriously considering” the need to eliminate all privately financed travel. “That would be a very strong statement. We want to be bold,” said Dreier, chairman of the House Rules Committee.
…

Current congressional rules prohibit lobbyists from paying for travel for members of Congress and their staff.

But qualified private sponsors can pay for food, transportation and lodging when members of Congress travel to meetings, speaking engagements or fact-finding events in connection with official duties.
…

“There’s a difference between a fact-finding trip that you do with the Aspen Institute and these trips funded by lobbyists and corporations where you do an hour of work and then play golf at St. Andrews all day,” said Jennifer Crider, a spokeswoman for House Minority Leader Nancy Pelosi, D-Calif.

I’m amazed that such principled individuals needed a scandal to come up with such an obvious proposal, but I’m more stunned that this is somehow “bold”. If a trip is connected to official duties, the people for whom the representatives are acting should pay for the trip. If the people don’t like what their representatives consider official duties, they’ll let their representatives know. It’s not particularly complicated.

Spending money wisely is the kindest gesture possible

I’m a strong proponent of students learning a foreign language. Not learning another language before graduating is the biggest regret I have from my school years, by far. I took four years of Latin, which was a waste. It’s a dead language, you know. That doesn’t matter, of course, because I remember so little of it. I followed that with two years of French, but I hated it so I mostly ignored what I learned. I certainly didn’t use it outside the classroom, so I don’t remember the scant words and phrases I collected. I still wonder why I didn’t learn German, which is what I always wanted to learn of the four languages my school system offered then. (Spanish being the obvious fourth.) Regardless, the fault lies with me because opportunities existed two decades ago when I started learning Latin and only my county’s taxpayers paid for my education. So I’m amused by this story:

President Bush announced plans yesterday to boost foreign-language study in the United States, casting the initiative as a strategic move to better engage other nations in combating terrorism and promoting freedom and democracy.

“This program is a part of a strategic goal, and that is to protect this country,” Bush said.

The plans, which represent an expansion of some programs and the start of a few others, aim to involve children in foreign-language courses as early as kindergarten while increasing opportunities for college and graduate school instruction. …

Much of the instruction is intended to focus not on the traditional European and Latin American languages that Americans have tended to study most, but on what the U.S. government has identified as languages “critical” for national security. These include Arabic, Chinese, Russian, Hindi and Farsi, among others.

I appreciate that learning languages such as Arabic and Chinese is a strategic goal. Indeed, it’s even wise. But this plan makes no sense. The federal government has no business funding this, since education is a local task. The government can certainly set incentives for learning necessary languages, not to mention retaining linguists rather than booting them for their sexuality, but this incentive is wrong.

I’ll explain more fully in a moment, but allow me to include these quotes as further foundation:

“When Americans learn to speak a language, learn to speak Arabic, those in the Arabic region will say, ‘Gosh, America’s interested in us. They care enough to learn how we speak,’ ” Bush said.

And …

But in a State Department briefing, officials sought to emphasize general growth rather than individual targets.

“We’re not setting the goals in terms of X number of individuals by Y number of years,” said Barry F. Lowenkron, the assistant secretary of state for democracy, human rights and labor. “Our goal is to start building capacity.”

What we’ll get out of this is a warm, fuzzy feeling and a new permanent government expenditure. What we won’t get is capable linguists filling defined needs. The government is circumventing the employment market as an incentive, instead promoting some lofty, elusive notion of strategic preparedness and patriotism.

Here’s an idea instead: make the reward for choosing a linguistics career comparable to the need. I’m sure there are plenty of creative ways to do that, but I suspect the uncreative salary is a good starter. Obviously that’s a little tweaked given the military versus private industry nature of government work, so my unimaginative method isn’t perfect. I concede the point. But the military has experience in solving recruiting shortages without resorting to presidential handouts for feel good public relations. Use them.

For a moment, humor me while I return to my opening paragraph. I didn’t retain either of the two languages I studied. Let me suggest why, now that I have fifteen years of hindsight into the experience. I didn’t care. I knew I wasn’t going to need either in college, thanks to exemptions. I knew I wouldn’t need either after college, thanks to my career expectations. So I took both to get a special stamp on my high school diploma. I doubt that’s really helped the United States since I graduated high school in 1991.

More importantly, I would’ve taken Russian in high school if offered, as the President now proposes, because that’s what I really wanted to take. I knew I wasn’t going to join the military, but I would’ve taken it to learn something interesting to me. Scarce taxpayer funding, with only a poorly-defined goal of “building capacity,” would’ve been wasted on someone only interested in learning. Maybe I would’ve used Russian one day while traveling through Eastern Europe, but the federal goverment never would’ve seen a return on that investment. Is that really the best method of allocating money to meet a strategic goal?

Unless President Bush wishes to imply that anyone who learns a language from these newly allocated funds will be subject to a service obligation to the United States government, this program is a worthless waste of tax dollars designed only to make the federal government larger and more influential in every area of life. That, or our leaders are just stupid. Whichever it is, I’m not reassured.

Take me out to the corrupt government

I don’t know what’s more egregious, Major League Baseball preventing bidders from offering to cover cost overruns or this political pissing contest within the D.C. City Council:

[D.C. Mayor Anthony] Williams continued to meet with council members yesterday to try to win support for the stadium lease agreement. He stepped up the pressure on the council in a statement criticizing council member Jim Graham (D-Ward 1) for supporting the use of public money to help build a parking garage for a future Target store in his ward while opposing public funding for the stadium.

“His actions are inconsistent and shortsighted,” Williams said. “It’s time for Mr. Graham and other council members to stop holding up our agreement with Major League Baseball.”

Graham said the Target project was different because the costs are much lower and the use of public funds far less. “I hope the mayor is not in meltdown mode,” he said.

How can two people be so far apart on an issue, and be so wrong in the same way? The size of the infraction doesn’t matter, since they both have their hands in the City’s fiscal cookie jar to offer private businesses a free gift. Qualitatively, both are stealing from the taxpayers for inexcusable bribes to businesses. Who cares if one does it to buy votes and the other to buy a legacy?

Congress is turning tricks again

Good news from Congress: we no longer need think that pressure from constituents or logic might influence them into some notion of sanity. Hooray! Just think of all the time we’ll save that would normally be spent bitching about how irresponsible they are. Again, hooray!

The House passed three separate tax cuts yesterday and plans to approve a fourth today, trimming the federal revenue by $94.5 billion over five years — nearly double the budget savings that Republicans muscled through the House last month.

GOP leaders portray the tax bills — for the hurricane-ravaged Gulf Coast, affluent investors, U.S. troops serving in Iraq and taxpayers who otherwise would be hit by the alternative minimum tax — as vital to keeping the economy rolling.

“Our economic policies have done the trick,” said Rep. Deborah Pryce (R-Ohio). “We are in the middle of one of the strongest economies this country has ever seen.”

In order: qualified yes, qualified yes, qualified yes, and absolutely. It might be surprising that I’d offer a qualified yes or absolutely to all proposals, yet still insist that it’s bad news. Allow me to explain.

Hurricane Katrina ravaged the Gulf Coast. A friend who visited New Orleans recently on business returned with a clear understanding that the devastation is far worse than it appears on television. Something must be done. But I don’t trust Congress to do it correctly, especially when its idiocy got us into the situation where only the Federal government could fix the problem. Destroy market forces (insurance, flood walls, etc.) that would make population and business decisions more in line with the inherent risk in the Gulf Coast and a federal response is all that’s left. My reservation stems from that. Congress doesn’t get to take credit for fixing a problem it created. Also, handing out gifts tax breaks to businesses, only to exclude less-favored, “sinful” businesses, is an awful form of central planning. Let the people of New Orleans decide. But I understand that goes against every belief Congress currently holds. In the end, a qualified yes because we have little choice.

Next, concerning affluent investors. I’ve already addressed this, so I won’t go much further with the issue. Congress needs to stop thinking in terms of poor vs. rich and start thinking in terms of smart economic policy and stupid economic policy. We’re nowhere close to smart policy, but this is a small step. I don’t pretend that this is being done for the right reasons, though, so it gets a qualified yes.

Next, U.S. troops serving in Iraq. I don’t have much information on this tax break, but it “would extend a provision allowing members of the military to use their combat pay to claim the earned income credit.” Fine. At a cost of $153 million, it’s a blip in our fiscal health. It’s qualified because it’s probably more to promote a warm fuzzy feeling of helping our troops. If I gave it a no, I’d probably be unpatriotic. I wouldn’t want that. Merry Christmas!

Finally, the Alternative Minimum Tax is a travesty. Anything that reduces its impact is a bonus. Congress should abolish it immediately. No member has the brains to that, so I’ll settle for this. It doesn’t change the reality that an indiscriminate tax on taxpayers who have no intention of evading taxes (illegally), without any sense behind it, is wrong. And the rich paying their fair share is obscene. Just one more soak the rich policy, which is not soaking the not-really-rich. Get rid of it. This is a small positive step.

None of that changes my original idea that this is bad news from Congress. Cutting taxes by almost $100 billion is wonderful, but without an equal or greater reduction in spending, the deficit will grow. It’s insanity and this doesn’t make me think differently:

“By cutting taxes, you grow the economy, and you generate an enhanced flow of revenues to the Treasury,” said Rep. David Dreier (R-Calif.), chairman of the House Rules Committee.

I like that argument as much as anyone, but it’s not generating an enhanced flow of revenues to the Treasury I’m interested in. I want more money left with the people who earn it. The government should get what it needs, not what it wants. Does anyone believe that Rep. Dreier intends to use that enhanced revenue only on necessary, appropriate expenditures? Our tax policies should be adjusted to meet that criteria, while spending according to the revenue we’re generating, not what we hope to generate through more targeted central planning. Congress doesn’t understand that, even though it’s simple. Cut taxes. Cut spending. Reduce the government’s size and reach.

If only we had a Constitution

A few months ago, I wrote about Congress deciding that no one should be left without television when digital broadcasting becomes required. It’s still on track and still stupid. Nothing new is out about this fiscal misadventure, but George Will has an excellent take on the story in today’s Washington Post. Read the whole thing, but I want to point out my favorite line when I read the article this morning on the train. Enjoy:

… the timeless truth that no matter how deeply you distrust the government’s judgment, you are too trusting.

I’d be very proud of myself if I’d written that.

For anyone who thinks I only hate Republicans

I’ve written about our need for tax reform, but I realize I haven’t catered to everyone who might be interested in the subject. I’ve argued from a pro-individual, pro-business, pro-responsibility foundation. If you don’t like that, and prefer your tax reform to include tax increases, anti-investment incentives, and heightened class warfare, advocating poverty for all, I’ve found the plan for you, courtesy of Oregon Sen. Ron Wyden. Behold:

Wyden’s plan, the Fair Flat Tax Act of 2005, would replace the six current personal income tax rates with three – 15 percent, 25 percent and 35 percent. Corporate income would be taxed at a single flat rate of 35 percent. The proposal would eliminate many of the personal and corporate tax breaks that encrust the existing tax code, and would allow all taxpayers, not just those who itemize, to deduct state and local taxes from their federal income tax forms.

Most significantly, Wyden calls for taxing all income equally, regardless of its source. Interest and dividends would be taxed at the same rate as wages and salaries, eliminating the preferential treatment for investors over workers.

That’s brilliant. Instead of ending extra punishment for wage income, Sen. Wyden wants to punish investing. Not a moment too soon, of course, because we know only the wealthiest, greediest individuals invest their money in financial instruments generating interest and dividends. The bastards deserve to be punished for their capitalism hatred of poor people.

Simplicity is a virtue of any tax system; fairness is another. Wyden’s idea of equalizing the tax treatment of all income – whether it comes in the form of a paycheck or a stock dividend – has powerful appeal. The preferential tax treatment of investment income clearly favors the richest taxpayers. In Oregon, according to the state Department of Revenue, the richest 5 percent of taxpayers received 40 percent of all income from interest and dividends, and 79 percent of all income from capital gains.

Here’s an angle these editorial writers might like to pursue: what percentage of Oregon’s tax payments come from the richest 5 percent? Might that reveal a useful understanding, as well? But it’s about helping the poor, not punishing the rich. The use of “clearly favors the richest taxpayers” is all the analysis I need, so never mind.

Tax rates on interest, dividends and capital gains were cut during the Clinton administration, and again under President Bush, as a means of encouraging investment and savings. The resulting disparity in tax rates is manifestly unfair to those who rely on income from salaries and wages. A middle-class taxpayer who gets a $1,000 raise will forfeit 25 percent of it in federal income taxes, plus Social Security taxes. The same amount paid in dividends, interest or capital gains is taxed at a rate of no more than 15 percent, with no Social Security bite.

Once again, this plan just looks out for the poor(er) taxpayers. We wouldn’t want to bring that 25% tax hit on the $1,000 raise down as much as we want to hit the rich with an extra $100 tax for having the nerve to derive sources of income apart from direct labor. We shouldn’t care if they spent years building the wealth to invest. Hell, they should’ve donated the extra to the poor. Since they didn’t, we should take it from them.

If this is the best Democrats can do, they should just shut up and let Congressional Republicans continue to botch our nation’s economic well-being.

UPDATE: With a little research, I found this statistic from 1999. (I’ll look for a newer statistic, but I don’t think the result will change.)

For example, 38.1 percent of 1999 full-year taxpayers had an income of $20,000 or less but paid only 4.2 percent of all taxes. Conversely, those 1999 full-year taxpayers with income of at least $100,000 comprised only 6.8 percent of all taxpayers, yet they paid 42.8 percent of all taxes.

Spin that.

Can we return the favor next November?

Because flood insurance and pension guarantee failure aren’t enough, Congress wants to extend the Terrorism Risk Insurance Act (TRIA).

The version approved by the House Financial Services Committee contains several provisions that the Treasury Department opposes, such as the addition of group life insurance and the kinds of coverage eligible for the backstop. The bill also calls for different triggers for different types of coverage — a provision dubbed siloing — that critics say would lower the damage level at which the federal program could be invoked.
…

The Treasury Department has not favored extension of TRIA, but agreed last summer to accept it if it were more restrictive than the original program and designed to be temporary, leaving coverage eventually to private insurers.

Treasury Secretary John W. Snow endorsed the version approved by the Senate Banking Committee. [ed. note: The Senate version is less expansive.] The panel’s actions “recognize the temporary nature of the program and place terrorism insurance on the right path to full private market participation,” he said.
…

The Treasury Department and other critics say the private market is now able to resume insuring against terrorism but will not do so as long as the federal government provides the coverage at little or no cost.

I’ve left out the details because they don’t matter in the discussion of principle. They’re in the article if you want them. What’s important here is that the government is once again circumventing the private market and the Treasury Department tried to explain this. It’s nice to have the assurance that someone will pay for the damage should another attack occur, but it’s not at little or no cost.

An attack could occur anywhere, but no one expects it to be in Peoria. Those people shouldn’t pay for the risk inherent in building a new skyscraper in New York City. We should’ve learned this lesson with every hurricane that comes along. The private market would’ve compensated for the extra risk to lives and property along the Gulf Coast by making it (prohibitively?) expensive to live and work there, but our helpful friends in Congress crushed that. Taxpayers get the $200 billion bill, yet the undesirable fallacy of socialized risk management denial marches on.

Post Script: Thankfully we have someone in Congress to put it all in perspective.

“I do not regard TRIA as a favor to the insurance industry,” said Rep. Barney Frank (D-Mass.). “It’s a favor to the insureds.”

I think that (D-Mass.) should read (S-Mass.) “favor to the insureds” shows me that Rep. Frank prefers his capitalism with a large dose of socialist stupidity.

Who didn’t see this coming?

In what will likely be sold as fiscal sanity, but is in reality only a calculated political conclusion that eliminating tax cuts raising taxes is more acceptable than eliminating wasteful spending, the Senate Finance Committee decided not to extend dividend and capital gains tax cuts.

Facing a stalemate over one of President Bush’s top economic policy goals, the Senate Finance Committee yesterday gave up efforts to extend deep cuts to the tax rate on dividends and capital gains and approved a $60 billion tax measure largely devoted to hurricane relief and tax cuts with bipartisan appeal.

The measure, which could pass the Senate today, marks the latest in a string of legislative setbacks for Bush, who has repeatedly called on Congress to make his first-term tax cuts permanent and has taken particular pride in the 2003 dividends and capital gains tax cuts, which are set to expire in 2008.
…

“The fact is, these are a confluence of challenges that require a confluence of choices,” said Sen. Olympia J. Snowe (R-Maine), who forced Republican leaders to back down on the dividends and capital gains extensions when she argued such cuts would primarily benefit the wealthy as Congress was moving to cut programs for the poor.

A confluence of challenges indeed. Perhaps she and her fellow Senators should look in the mirror to find the biggest source. But benefiting the wealthy? Sure, but they’re hardly alone. I’m not wealthy, yet those tax cuts affect me by helping me become wealthy. It’s might be helpful for the Senate to remember that I’m doing the work to make myself wealthy, not the multitude of spending nonsense they offer. Might it be better to start with spending than with taxes?

When Republicans start co-opting the economic language of Democrats, little hope remains.

The potholes will lead to the sinkhole

Major League Baseball’s return to D.C. in 2005 made me happy. I saw the Phillies live seven times at RFK Stadium this year and couldn’t have been happier. (I could’ve been if we’d won one of the two we lost when I saw them, because then we could’ve played the Astros for the Wild Card, but such is life for a Phillies phan.) Area residents rallied behind the Nationals, showing an exuberance for the team many suspected would develop more slowly over the next few seasons. Major League Baseball made the correct decision, but it was the inevitable decision. D.C. could not be logically excluded over Las Vegas or Portland, and everyone but the D.C. City Council knew it. They were the group that Major League Baseball held hostage negotiated with, though, which is why the District now faces this mess:

The District government filed court papers yesterday to seize $84 million worth of property from 16 owners in Southeast, giving them 90 days to leave and make way for a baseball stadium.

By invoking eminent domain, city officials said last week, they hope to keep construction of the Washington Nationals’ ballpark on schedule to open in March 2008. The city exercised its “quick take” authority, in which it takes immediate control of the titles to the properties.

Under law, the property owners and their tenants must vacate the land within three months unless a judge declares the seizure unconstitutional.

In papers filed in D.C. Superior Court, city attorneys said: “The Properties subject of this action . . . are taken for an authorized municipal use, namely the construction and operation of a publicly owned baseball stadium complex.”

This is crap, of course, because authorized doesn’t mean legitimate, but when was the last time that stopped a government from invoking eminent domain? I hope the property owners have good negotiators to achieve a reasonable price. And attorneys when this ends up in court because the city won’t pay a reasonable price. That’s just me thinking government should serve the public. I could be wrong.

I’m not, naturally, so I’ll move on to this:

Some activists have argued that the stadium is a private project for Major League Baseball, but District leaders say the $535 million project will create significant tax revenue [sic]. Developers have snatched up land just outside the stadium plot in anticipation of a waterfront revival, and the city is planning to create a “ballpark district” featuring restaurants and retail.

Their goal as a Major League Baseball franchise is to win baseball games, but that’s only one goal. The Nationals are a business. Their most important goal is to make a profit. (The owners of the Phillies ran the team for years to not lose money. Big difference. But I digress.)

One way they do earn a profit is by enticing fans to pay money to come to the ballpark. As a business the team controls its expenses for wages, overhead, maintenance, and whatever other expenses a baseball team encounters. How is acquiring use of a ballpark not inherent in their business? What makes the local government better at managing the ballpark than the team that plays there (or a separate private entity)?

It’s inappropriate for the city government to build a stadium solely to generate tax receipts. That isn’t the government’s purpose. It’s not why citizens entrust the government to issue debt, which is what D.C. will do to finance the stadium. Government’s purpose in this case is to provide functioning infrastructure, law enforcement, and tax policies. The team should take care of the rest. Until the city gets the revenue from the stadium, it shouldn’t pay the costs.

This should be obvious to the city, but its eyes are too glued to the golden calf of tax receipts. But how golden is it? Tax receipts generated by the Nationals arrival in D.C. fell short of expectations this year.

The District government appears likely to fall short of its goal of earning $10.5 million in tax revenue [sic] from sales at Robert F. Kennedy Memorial Stadium for Washington Nationals games, even as the team is on pace to earn larger profits than estimated just four months ago.

The city’s potential tax shortfall from revenue generated by sales of tickets, parking, concessions and merchandise could be more than $500,000, according to financial officials, who expect to have final numbers at the end of the month.

Meanwhile, the Nationals, still owned by Major League Baseball, exceeded expectations by selling 2.7 million tickets in their inaugural season and will earn a $25 million profit, about $5 million more than the team projected at midseason, team officials said.

Why should anyone who pays taxes to the D.C. government believe the District’s projected tax receipts for the new ballpark district?

What time is lights out, Senator?

Sometime between December 2008 and April 2009, the federal government will require traditional broadcaster to use digital signals rather than broadcasting over the current analog spectrum. After recapturing the spectrum, the government will then auction the spectrum. Who will buy, I have no idea, but the government expects the auction to generate $10 billion, which the government can then use to pay down debt waste somewhere else. Senator Ted Stevens has an opinion on where part of that $10 billion should go. Consider:

What’s it worth to make sure nothing gets between Americans and their TV sets?

Senate Commerce Committee Chairman Ted Stevens (R-Alaska) thinks $3 billion is about right. That’s what he proposed yesterday to spend to make sure TVs don’t go blank when broadcasters switch to digital signals in about four years.

The money would subsidize the cost of set-top boxes to convert digital signals to play on the old analog sets that millions of people without cable or satellite TV rely on. Under Stevens’s proposal, people would make a $10 co-payment for the boxes and the government would absorb the rest of the cost. The cash would come from an estimated $10 billion to be raised from auctioning the spectrum when analog broadcasts end.

Why exactly is the government playing this shell game? I have a television capable of receiving digital signals, so I won’t need a converter. Someone who can’t afford a new television will pay his $10 co-payment and still be able to watch his favorite programs. This doesn’t require a tax on me, of course, but it is still redistributionist nonsense. If the government wants to argue that the airwaves belong to the public, I own a portion of the airwaves. When the government takes my portion of the eventual auction and offers it to someone else, rather than using the money for a legitimate government need, I incur a tax burden I shouldn’t have to incur. This program is laughable. Senator Stevens is a hack. And the United States is replacing capitalism with a nanny state. Ridiculous.

The only bright spot in this is that I can’t decide who gets the quote of the day award, Rep. Lee Terry for this:

“It is not a constitutional right to own and watch a TV. . . . I can’t envision that we’d go for a number that’s triple what was our upper end.”

or Rep. Jeff Flake for this:

“What’s next, $40 to upgrade people’s iPod Mini to the Nano?” Flake said.