Voice For Liberty

Tag: Government spending

  • Kansas spending should be cut, not frozen

    By Dave Trabert, Kansas Policy Institute.

    A recent Wichita Eagle editorial, “Freeze means big cuts,” said gubernatorial candidate Sam Brownback’s intention to freeze state spending would cause big cuts in services by not replacing federal stimulus money. The unspoken presumptions one must accept to make that leap are (1) every government program and service is essential and (2) every program and service is being provided as efficiently as possible.

    Most programs are never examined to determine whether they are effective, and independent efficiency studies are rarely conducted, yet we’re to believe that government could not possibly spend less money without wreaking havoc on taxpayers?

    Governments commonly present taxpayers with Soprano-like ultimatums — “either pay higher taxes or surrender necessary services” — as though there are no other options. But there are countless options. For example, eight consecutive studies conducted by Legislative Post Audit found ways schools could operate more efficiently and still meet outcome requirements. State employees pay far less for medical insurance coverage than private sector employees. The state spends millions of dollars on overtime, conference travel, organization dues, advertising campaigns, and in 2009, enough mileage reimbursement to fund twenty-five round trips to the moon!

    Government not only can spend a lot less money, it must for the sake of the state’s economic future. Admittedly, that sounds a bit alarmist, but consider the facts.

    Private sector jobs increased just 5.2 percent between 1998 and 2008, well below the national average of 7.9 percent and worse than all but one neighboring state. We’ve also lost population due to domestic migration (U.S. residents moving in and out of states), representing 2.5 percent of total population over the last decade and the worst performance in the region. At the same time, our state and local tax burden increased significantly. State and local taxes jumped 59 percent between 1999 and 2009 but income available to pay taxes only increased 38 percent.

    Underperforming in job creation and losing on domestic migration while the tax burden rises is not a coincidence; it’s part of a very clear national pattern.

    Between 1998 and 2008, the ten states with the lowest combined state and local tax burdens averaged 16.5 percent private job growth and gained 3.8 percent population from domestic migration; the ten states with the highest tax burdens grew jobs by just 6.1 percent and lost 3.3 percent population from domestic migration. Tax burden rankings are provided by the Tax Foundation using FY 2008 data. Kansas was ranked number 21 but is now likely well inside the top twenty, with nearly $500 million in increases just this year between sales, unemployment and property taxes.

    Freezing spending might slow the rate of decline but it won’t solve this problem, as our tax burden will continue to grow. Kansas’ overall population is increasing because the birth rate exceeds the death rate, but infants don’t pay taxes; coupled with domestic migration losses, each year sees fewer and fewer taxpayers. The burden on remaining taxpayers goes up, it becomes more expensive to create jobs and the downward spiral continues.

    By cutting spending and reducing the tax burden, Kansas can become a state that leads in job creation and attracts population, but only if we’re willing to make the necessary changes.

  • Kansas business climate: not good

    On this week’s episode of the KAKE Television public affairs program “This Week in Kansas,” Kansas Policy Institute Dave Trabert told host Tim Brown that Kansas tax policy is creating a poor environment for business. “Kansas is becoming increasingly a difficult place to do business,” Trabert said.

    Kansas needs to look at its economic development strategy, he added, to create a system where everyone — small and large business — has an equal opportunity to succeed.

    Brown noted that during this year’s session of the Kansas legislature, the consensus was that taxes — the sales tax in particular — had to be increased. Trabert said the tax increase didn’t have to happen: “Kansas is the only state in our region that took that route. Every other state around us found ways to balance their budget without raising taxes.”

    Trabert also noted that the legislature had two studies that showed a tax increase would cost jobs. Asked by Brown about about the claim that services would have to have been cut if taxes weren’t increased, Trabert said that wasn’t the case. The budget that was passed increased spending by over $200 million. This increase in spending adds to the tax burden in Kansas.

    Regarding the possibility of Hawker Beechcraft moving to Louisiana, Trabert said that state has a top corporate and personal marginal income tax rate that’s about half of that in Kansas. Low tax burden states perform much better than high-tax burden states in private-sector job growth, he said. Low-tax burden states have weathered the recession better, too.

    Trabert also mentioned the out-migration from Kansas, an “early warning signal” that he said has been largely ignored. High-tax burden states are losing population to low-tax burden states. Kansas has lost population due to domestic migration for 11 straight years, he said.

    David Allen Seaton, President of the Winfield Courier newspaper, was part of the panel. He mentioned the split between the Kansas Chamber of Commerce and local chambers of commerce. Local chambers were in favor of more taxes and spending, while the Kansas Chamber strongly opposed it. Seaton’s argument was that the services that government provides — education, Medicare, prisons — is as important to the economic climate as the tax burden. Trabert answered that the choice is presented as either/or: “Either we have to raise revenue, or we have to cut the services we want.” Trabert said we should look to provide services at lower cost.

    An example Trabert provided is the audits of a handful of Kansas school districts, which uncovered ways the districts could save money. He also said that the budget being worked on for next year spends $1 billion more than five or six years ago.

    Testimony presented to Kansas Legislative Committee

    In September Trabert presented testimony to a special committee of the Kansas Legislature. His testimony, which may be read here, provides more detail about the differences in the economies of high-tax burden states as compared to low-tax burden states. On why the low-tax burden states perform better, Trabert wrote: “Both performance comparisons (private sector job growth and domestic migration) make perfect sense. Given the means and opportunity, we all tend to gravitate toward what we perceive to be the best ‘deal.’ Human and financial capital is no different; it will go where it is treated the best. People want to retain more of their earnings and states with the lowest state and local tax burdens let them keep more of their hard?earned money to spend as they wish.”

    According to Trabert’s testimony, the Tax Foundation ranks Kansas as having the 21st highest state and local tax burden in the country. But this is likely to change, as Kansas increased taxes this year, and our neighboring states did not.

    Trabert notes a discrepancy in the definition of the term “income” that may lead some to conclude that the tax burden in Kansas is not rising: “The Kansas Legislative Research Division (KLRD) says [the tax burden is not rising], but they are using the federal government definition of personal income to calculate the tax burden. The problem is that that definition includes money in ‘income’ that is not available to pay taxes, such as employer contributions toward pension funds, health insurance, social security and Medicare. … Over the ten year period ending June 30, 2009, income available to pay taxes went up 38% but state and local taxes shot up 59%, resulting in a significant jump in the tax burden.”

    Trabert recommends that Kansas gradually eliminate both the personal and corporate income tax. Missouri is moving in this direction, and that provides a competitive threat to Kansas.

    For property taxes, limiting the rate of growth would provide relief from rapidly-rising tax burdens.

  • Kansas and Wichita quick takes: Tuesday October 12, 2010

    Wichita Visioneers in Louisville. The Wichita Business Journal’s Emily Behlmann reports on a trip by Wichitans to Louisville to get ideas on transforming Wichita’s downtown. Hopefully they won’t get this idea, as reported yesterday by the Louisville Courier-Journal: “The heavily subsidized 4th Street Live entertainment district has come under criticism from locally owned businesses for receiving millions of dollars in tax breaks and government subsidies — including a controversial, $950,000 city loan that won’t necessarily have to be repaid.” According to Wichita planner Goody Clancy, heavy subsidy isn’t supposed to be necessary in Wichita. And, I hope all the planners read Jack Cashill’s take on Louisville’s planning: Good intentions, and planners, can sap a city’s soul.

    Lynn Jenkins: Don’t try to make Koch Industries a scapegoat. From today’s Wichita Eagle: “Koch management is dedicated to keeping the company growing. It reinvests 90 percent of company profits back into the businesses, allowing them to expand product lines and hire more employees. That is good for consumers and for workers. However, the company has come under fire because its owners support free-market principles inconsistent with the current Democrat leadership.”

    Should candidates bother to debate? Rasmussen finds that nearly half of likely voters have watched at least one debate, and about half find them informative.

    Costly approach to Kansas economic development — or defense. “Insiders were still not talking Wednesday about the potential cost of saving 6,000 aircraft workers’ jobs in Wichita. Outsiders say that some circumstances at their employer, Hawker Beechcraft, are so different from other companies Kansas has fought to keep that it may be impossible to gauge what it might cost to help prevent the 80-year-old Wichita firm from moving lock, stock and avionics to Baton Rouge, La., and cashing in on Louisiana incentive packages rumored to be worth as much as $400 million.” From Kansas Reporter.

    FiveThirtyEight. More about the political site FiveThirtyEight, which I took a look at on Sunday, especially its coverage of Kansas races. Here, James Taranto discusses FiveThirtyEight, concluding: “The recent acquisition of Nate Silver’s FiveThirtyEight.com makes for a striking contrast with the paper’s uneven news reporting and dreadful op-ed columnists.”

    No Wichita city council today. It’s the League of Kansas Municipalities conference in Overland Park this week. LKM is a special interest group working in favor not of the citizens who live in Kansas towns and cities, but the politicians and bureaucrats that run them — and their cronies — who benefit from the LKM’s advocacy of things like TIF districts, STAR bonds, tax abatements, and eminent domain for economic development.

    County commissioner forum tonight. Tonight at 7:00 pm at Gloria dei Lutheran Church, 1101 N. River Blvd. Oletha Faust-Goudeau and Richard Ranzau will appear.

    Parkinson is moderate — he says again. Kansas Governor Mark Parkinson — yet again — engages in self-congratulation over “how Kansas has weathered the economic recession by setting politics aside and working together to find moderate, common-sense solutions.” He’s done this several times since the legislative session was over — so many times that I’ve lost count. Evidence of a guilty conscience, perhaps? Parkinson’s abandonment of the Kansas Democratic Party by not choosing to run for reelection has put that party at a tremendous disadvantage in this year’s elections.

    Bureaucracy vs. Bureaucracy? “Andrew Gray, Libertarian Candidate for Kansas Governor, says that simplifying or repealing unnecessary statutes and regulations is a key part of his administration’s plan to empower the private sector to create jobs and prosperity in Kansas. He also says he’s pleased that Senator Brownback is at least talking about similar actions. However, Gray finds it ridiculous that Senator Brownback is actually planning to create more bureaucracy in order to cut bureaucracy.” I think he’s got a point. But anything that is necessary to reduce the size of government is what we need to do.

    The impossibility of an informed electorate. D.W. MacKenzie writing for Mises Daily, reacting to a John Stossel suggestion that uninformed people have a duty not to vote: “The problem with voting in modern America is that we have a politicized society, and modern society is extraordinarily complex. Stossel suggests that only people who follow politics should vote. However, even those who follow politics very closely do not understand the implications of changes in public policy. The lesson here is that efforts to incrementally reform government policies and programs through the democratic process are futile. To the extent that we vote at all, rational people should vote to depoliticize the economy. … What this means is that we need to reintroduce the price system as the primary method of economic communication, and the profit-and-loss sorting mechanism as the primary method of social reform.”

    Gallup: Americans negative towards federal government. “More than 7 in 10 Americans use a word or phrase that is clearly negative when providing a top-of-mind reaction to the federal government.” Details here: Americans’ Image of “Federal Government” Mostly Negative.

    A minority opinion, or a delusion? Paul Krugman in the New York Times: “Here’s the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending can’t create jobs. Here’s what you need to know: The whole story is a myth. There never was a big expansion of government spending. In fact, that has been the key problem with economic policy in the Obama years: we never had the kind of fiscal expansion that might have created the millions of jobs we need.”

  • Political attacks by Obama camp endanger opportunity

    By Ronald Gidwitz

    As a recovering politician (I ran for governor of Illinois in 2006), I know it’s seldom a good idea to hint that voters are dupes. Sometimes, though, in an attempt to “divide and conquer,” politicians do just that.

    Lately we’ve seen President Barack Obama and his team, who ran for office on the claim they would bridge political differences, playing this foolish and ultimately self-defeating dividing game.

    “Right now all around this country there are groups with harmless-sounding names like Americans for Prosperity, who are running millions of dollars of ads against Democratic candidates all across the country,” the president told Democratic donors in Texas last month.

    His advisers have followed his lead. “Americans for Prosperity is funded by billionaire oil men, David and Charles Koch, to promote Republican candidates who support their right-wing agenda and corporate interests,” Obama’s senior adviser David Axelrod wrote in The Washington Post last month. He further claimed that these “billionaire oilmen secretly (are) underwriting what the public has been told is a grass-roots movement for change in Washington.”

    Well, it’s no secret what AFP is, who we are or what we want to do. Nationwide, Americans for Prosperity and the Americans for Prosperity Foundation have more than 1.5 million activists and 31 state chapters and affiliates. I’m state director for Illinois. More than 80,000 Americans in all 50 states have given money to AFP or the foundation.

    • We want lower taxes and less government spending, ideas that appeal to a solid majority of Americans.
    • We support removing unnecessary barriers to entrepreneurship to spark citizen involvement in the regulatory process.
    • We aim to restore fairness to our judicial system.

    Americans aren’t fools. Our call for change is being echoed by millions of citizens. That experienced businesspeople and successful job-creators are among those putting resources behind it is not an insult to the effort, it’s an affirmation of it.

    Unfortunately, President Obama has ignored the people’s cries for fiscal responsibility. On issues including the stimulus, health care reform and tax policy, he’s hammered through decidedly liberal and unpopular approaches to America’s problems. Not surprisingly, his popularity rating is sinking, and polls indicate his party seems headed for a thrashing in November’s midterm elections.

    Without a positive agenda to run on, the president and his allies have launched the coordinated attacks in an attempt to discredit conservatives.

    After Obama’s Texas speech came a 10,000 word attack piece in the New Yorker magazine that went after the Kochs for supposedly “waging a war against Obama.” That article quoted a series of “experts” from groups that are supported by left-wing billionaire currency speculator George Soros, including the Center for Public Integrity and Media Matters for America.

    More chilling, Mark Holden, a lawyer for Koch Industries, has fingered Austan Goolsbee, one of Obama’s top economic advisers, as saying during a press briefing that Koch Industries did not pay corporate income taxes.

    Enough!

    The federal government has almost infinite power to investigate and intimidate people. It can, whether it intends to or not, easily destroy businesses and reputations. That’s why Americans recoiled against Richard Nixon in the 1970s when they learned he was using federal investigators to track his political “enemies.”

    Americans of all political persuasions can agree that we face serious national problems, including sluggish job growth and soaring federal spending. The way to solve these problems is by coming together, not by attacking each other. President Obama should call off the attack dogs, before they end up biting him too.

    Ronald Gidwitz is a partner in GCG Partners, a strategic consulting and equity capital firm he co-founded in 1998. He chairs the Illinois chapter of Americans for Prosperity.

  • We can balance the budget without new taxes

    Politicians and interest groups claim higher taxes are necessary because it would be impossible to cut spending by enough to get rid of red ink. This Center for Freedom and Prosperity video shows that these assertions are nonsense. The budget can be balanced very quickly by simply limiting the annual growth of federal spending.

  • Bankrupting America says ‘spending just got personal’

    The new website Bankrupting America features a video presentation of poll results that reveal that a strong majority of Americans — seven out of ten — feel that government spending is too high, and nearly as many say this spending affects them personally.

    A link to the video’s page is Spending just got personal, the video.

    Results of the poll tell us that only eight percent of likely voters say government spending is too low. The issue of government spending is very important to Republicans and Independents, but even 42 percent of Democrats say it is important, according to the survey.

    Bankrupting America is a relatively new site that seems to contain much useful information about government and the economy. Information from the site says “Bankrupting America is an educational project that explores the policies hindering economic opportunity and growth in America. The project focuses on the causes of the country’s current economic downturn and the future implications of careless policy-making.”

  • Federal government spending: With all due respect Mr. President, we’re still waiting

    “We will go through our federal budget — page by page, line by line — eliminating those programs we don’t need.” — President-Elect Barack Obama, November 2008.

    How has that promise worked out? A newspaper advertisement placed by the Cato Institute reminds us of President Obama’s pledge — and its lack of fulfillment:

    It’s been nearly two years since you made that pledge, Mr. President. Since then, you’ve signed into law an $800 billion “stimulus” package and a massive new health care entitlement — adding trillions of dollars in unfunded liabilities to our grandchildren’s tab.

    Our looming debt crisis threatens to destroy the American dream for future generations. Yet your administration continues piling up deficits of over a trillion dollars a year. By 2012 our national debt will be larger than the entire U.S. economy. Isn’t it past time you identified the programs you’d cut?

    This is at the same time the president criticizes small-government advocates for their lack of ideas. Countering that criticism, the Cato advertisement list many ways that federal spending could be cut. A companion website, Downsizing the Federal Government, contains more. From the site:

    The federal government is running massive budget deficits, spending too much, and heading toward a financial crisis. Without a change of direction in Washington, average working families will be faced with huge tax increases and a lower standard of living.

    This website is designed to help policymakers and the public understand where federal funds are being spent and how to reform each government department. It describes the failings of federal agencies and identifies specific programs to cut. It also discusses the systematic reasons why government programs are often obsolete, mismanaged, or otherwise dysfunctional.

    Some people have lofty visions about how government spending can help society. But the essays on this website put aside such “bedtime stories” about how government programs are supposed to work, and instead focuses on how they actually work in the real world.

    Downsizing the Federal Government is a project of the Cato Institute. Scholars at Cato believe that cutting the federal budget would enlarge personal freedom, increase growth and prosperity, and leave a positive fiscal legacy to the next generation.

    Yes, Mr. President, we have lots of ideas. But we’re not prescriptive — so most of our ideas center around the government doing less, leaving more freedom and liberty in the hands of the people, not government.

  • Wasteful government spending must stop

    As part of its campaign against wasteful government spending, Americans for Prosperity Foundation has started a television advertising campaign and companion website to help Americans learn more about the harmful effects of the stimulus plan promoted by President Barack Obama, Speaker of the House Nancy Pelosi, and Senate Majority Leader Harry Reid.

    In just a handful of years, AFPF has grown to become “America’s leading conservative grassroots organization,” according to a recent article penned by Richard Viguerie. The recent attacks on AFPF by President Obama are evidence of this.

    According to AFPF President Tim Phillips, “This first ad called ‘Hollywood’ details how the failed $862 billion Obama/Pelosi/Reid ‘Stimulus’ bill was wasted on pet political projects, how it cost every American family an average of $10,000 and how it in reality killed genuine private sector jobs.”

    The companion website at SpendingCrisis.org has useful information that citizens can tap to learn more about the stimulus spending, as well as government spending in general. The site carries the headline “Washington, we’ve got a problem.”

    In particular, an issues page gives some reasons as to why high government spending is bad for America.

    As an example, under the heading “Government Spending is Inherently Wasteful,” we find “It’s regarded as a virtual truism that no one spends someone else’s money as well as they spend their own. The only people who seem to disagree are politicians.”

    Other facts highlighted include:

    • This year, the federal government will borrow about $12,500 per household to pay for its spending.
    • Despite claiming that the $862 billion stimulus package would keep unemployment below 8 percent, it is hovering around 9.5 percent with few signs of improving.
    • Public employees earned more than $120,000 per year in salary and benefits on average, compared to about $60,000 in the private sector.
    • From anti-poverty spending programs to defense and education, the federal government now spends a record $30,543 per household.

  • How does Kansas rank in economic freedom?

    In measures of economic and personal freedom, Kansas ranks relatively well among the states, but lags behind some neighboring states. Recent actions by the Kansas legislature might drive its ranking down.

    Last year the Mercatus Center at George Mason University published a paper that ranks the states in several areas regarding freedom. According to the authors, “This paper presents the first-ever comprehensive ranking of the American states on their public policies affecting individual freedoms in the economic, social, and personal spheres.”

    What is the philosophical basis for measuring or determining freedom? Here’s an explanation from the introduction:

    We explicitly ground our conception of freedom on an individual rights framework. In our view, individuals should be allowed to dispose of their lives, liberties, and property as they see fit, so long as they do not infringe on the rights of others. This understanding of freedom follows from the natural-rights liberal thought of John Locke, Immanuel Kant, and Robert Nozick, but it is also consistent with the rights-generating rule-utilitarianism of Herbert Spencer and others.

    According to the authors, “No current studies exist that measure both economic and personal freedom in the fifty states.” So this is a ground-breaking work.

    How does Kansas do? Surprisingly, not too badly. Not outstanding, but not as bad as I might have thought.

    For the four areas measured, here’s how we did: In fiscal policy, Kansas is 28. In regulatory policy, 4. In economic freedom, 18. In personal freedom, 15. (In all cases, a ranking of 1 means the most freedom.)

    Our overall ranking is 12.

    Some of the remarks the authors made about Kansas include noting our large public employee payroll, even though state employees are not paid as well as private sector workers. Also: “The area of spending that could most stand to be cut is education, while the taxes that should have priority for cutting are individual income and property taxes.”

    Some of our neighbors do pretty well in the overall ranking. Colorado is 2, Texas is 5, Missouri is 6, and Oklahoma is 18. Nebraska is not as good at 28.

    Colorado undoubtedly benefited from its taxpayer bill of rights (TABOR) law, which places limits on the rate of growth of government spending, although it had been suspended for several years. Those in Kansas who favor government spending over private sector spending use Colorado as an example of a state that TABOR has destroyed, but in terms of economic freedom, it does very well.

    In case you’re wondering, for overall ranking, New Hampshire is best. The worst? It’s no surprise that it’s New York by a wide margin, with New Jersey, Rhode Island, California, and Maryland rounding out the bottom five.

    If this index were to be recomputed this year, Kansas might fall in rankings due to outgoing Governor Mark Parkinson‘s two landmark achievements — the increase in the statewide sales tax and the statewide smoking ban. Some of the other enacted laws detailed in the article In Kansas Legislature, a bad year for freedom and liberty would push Kansas’ ranking down, too.

    But since rankings are relative and consider what happened in other states, Kansas might not have changed much, as many states have passed tax increases and other freedom-killing legislation and regulations.

    The full study contains discussion of the politics surrounding these rankings, and a narrative discussion of the factors present in each state.

    You may read the entire study by clicking on Freedom in the 50 States: An Index of Personal and Economic Freedom.