Liberals and conservatives rarely agree on anything, but the fact that Koch Brothers-funded Americans for Prosperity is leaving New Mexico is bad news for conservatives and good news for left-wing liberals like George Soros.

While this is unfortunate news for advocates of the free market and limited government throughout New Mexico, we at the Rio Grande Foundation aren’t going anywhere. We’ll continue to advocate for the free market and against the far-left agenda that has led New Mexico to the bottom in economic freedom and the top of so many bad lists when it comes to poverty, overall economic performance, and education.

Join Us For a Special Event During
National School Choice Week

You are invited to a special screening of "The Ticket: Stories of School Choice and Quality Education" by filmmaker and school choice advocate Bob Bowdon. Following the 30 minute film, you'll be invited to participate in a Discussion of Educational Choice in the Land of Enchantment which will be led by Paul Gessing of the Rio Grande Foundation and will include former New Mexico Senator and school choice leader Mark Boitano and Daniel Ulibarri, head of Educate New Mexico.

The event is being held as part of nationwide National School Choice Week celebrations from January 26th to February 1st of this year.

We are hoping to have an interactive discussion of the wide variety of school choice options and where New Mexico stands with respect to each option. These might include great public schools, public charter schools, magnet schools, private schools, digital/online learning and homeschooling. So, bring your questions!

Co-sponsors of this year's event are the Rio Grande Foundation and Educate New Mexico.

National School Choice Week's Albuquerque Event
Wednesday, January 29th – 6:00 to 7:30pm
St. Pius X High School
5301 St Joseph's Dr. NW
Albuquerque, NM  87120

There is no cost to attend this event. Snacks and sodas will be provided. An RSVP would be appreciate via the online registration form available here.

We look forward to celebrating with you!

Location Details: The event will be held in the St. Cecelia building. It is the second one on the right as you enter the St. Pius campus.

The old Bob Hope quote never gets old. It is why Americans continue to move to Washington, DC. More importantly, it is an indication of serious economic issues: if you want to move to America’s wealthiest places, move to where the government is.

Check out this article which goes through the data. Los Alamos is the 3rd-wealthiest county in America (thanks to the government!). 4 of the 5 wealthiest counties are in the DC suburbs (only Los Alamos is not). 6 of the top 10 wealthiest are in the DC area.

Anyway, fascinating data and a sad commentary on the central role Washington now plays in the US economy.

A local filmmaker is taking on the federal budget. Actually, he’s made a reality film about eight people who use real-world budget information to balance the seemingly un-balanceable federal budget. The film, called “Big Bad Budget,” will be shown at UNM on Saturday, January 18. For more details, click here. Admission is free, but an RSVP is requested.

For a preview of some online games that you can use to balance the federal budget, check out this site and this one.

(Albuquerque) The Legislature will consider reforming the system during the upcoming 2014 legislative session. Several proposals have been made in the hopes of reforming New Mexico’s Lottery Scholarship program which plays such a large role in financing higher education in the Land of Enchantment.

In its newest paper, “Let’s Really Reform New Mexico’s Lottery Scholarships,” Paul Gessing, president of the Rio Grande Foundation, takes a broader look at the impacts, both positive and negative, of the Lottery Scholarship program and outlines some principles that legislators should adhere to in considering the program’s future. He also offers some approaches that might increase the positive impact of the program both on educational outcomes and New Mexico’s economy as a whole.

The paper includes:

• A reminder of the tradeoffs and negative impacts of government-sponsored gambling;
• Analysis of how New Mexico’s Scholarship program results in students “slacking off” in high school;
• The scholarship discourages students from pursuing scholarships and other funding opportunities for their higher educations;
• An explanation of why it might not be good public policy to encourage New Mexico’s best high school students to stay in New Mexico; and
• How the Lottery Scholarship spurs price inflation among New Mexico’s institutes of higher education.

Gessing strongly discourages the Legislature from using General Fund revenues to prop up the Lottery Scholarship Program and cautions against over-emphasizing the use of grades in determining who keeps and who loses their scholarships.

Finally, Gessing encourages the Legislature to consider an innovative voucher-style proposal that, if adopted, would solve several of the problems inherent in the current, flawed model.

A Gessing argues, “The Lottery Scholarship Program has the potential to improve New Mexico’s work force. We believe that a healthy dose of market-based incentives could make limited lottery funds go further without tapping taxpayers for even more spending on higher education.”

It’s time to get innovative in how America deals with unemployment. Washington Republicans who just supported a budget deal that broadly expanded government, but allowed extended unemployment benefits to expire, are now looking for ways to capitulate to demands from Democrats that unemployment benefits be expanded beyond 26 week (up to as many as 99 weeks) for 1.3 million Americans.

If the government keeps giving people money for being unemployed, you are going to get more unemployment. How about instead helping the unemployed Americans stuck in high-tax, low economic freedom states, get out of those states and find jobs in places where the unemployment rate is hovering around 5 percent or less? Areas like Midland, TX, the fastest growing city in America could also provide much-needed jobs for struggling workers in high-tax states like New York from which large number of Americans are fleeing (might be why Chuck Schumer is so angry at Rand Paul and others who oppose unemployment benefits w/o end).

Over the long-term, being on unemployment DOES hurt the very workers it is intended to help. And unemployment benefits can keep people in places that will take a long time to recover from this economic downturn. It’s time to incentivize people to move where the jobs are. This idea was actually written about in the Washington Post, so I’m not the only one thinking along these lines.

Update: North Carolina which reduced the length of unemployment insurance availability saw dramatic declines in its unemployment rate. Notably, North Carolina is one of the states to which people are moving according to the United Van Lines report cited above.

United Van Lines isn’t a think tank, nor is it dedicated to demography, but as a moving company, they do have a pretty good idea where Americans are moving to and coming from. As the map below shows, New Mexico again finds itself on the list of top 10 states that Americans are moving out of (last year’s report can be found here):

Some points worth noting on the top states to which people are moving:

Three (SD, TX, and NV) have no personal income tax;
One, OR, has no sales tax;
Five are right to work states (SD, TX, NV, SC, NC);
One, CO, has a constitutional amendment (called TABOR) that both limits spending growth and mandates a vote on ALL tax hikes.
One, DC, is the capital of our bloated, federal government which forcibly takes money from productive citizens in the rest of the nation.

Among the states from which people are moving:

UT is a right to work state while the rest are forced-unionism states that possess both income and sales taxes.

A few recent letter writers to the Albuquerque Journal’s Business Outlook section attacked the Rio Grande Foundation’s views and its funding. One of these letter writers happened to be from the Sierra Club. I responded with the following which was published in the Business Outlook section on Monday, January 6, 2014:

Some letter writers have attacked the Rio Grande Foundation on these pages and I feel compelled to set the record straight. A representative of the Sierra Club attacked us for allegedly being funded by those who would “burn the dirtiest, cheapest energy they can.”

The reality is that Rio Grande Foundation is funded primarily by New Mexicans who believe that free markets, not government mandates, are the best means of creating economic prosperity. While we do accept corporate donations when those businesses also support free market principles (by no means a common occurrence), those donations pale in comparison to the $25 million the Sierra Club accepted between 2007 and 2010 from the natural gas industry.

Now that fracking has made natural gas a competitor for “renewables,” the Club has changed direction and, misguidedly in my opinion, calls the natural gas industry, “dirty, dangerous, and run amok” on its “Beyond Natural Gas website.”

A second letter writer makes a series of claims out of left field relating to what is subsidized by government and what is not. Law enforcement should be subsidized by government. Roads have historically been and will likely continue to be subsidized by the taxpayer, but they also generate significant user-fees in the form of gas taxes and are a basic requirement for a variety of public services.

Nonetheless, European nations have relied on privately-operated toll roads for decades and as gas taxes decline as a source of revenue due to increased fuel efficiency, we hope that private-sector providers will play a larger role in America’s transportation system.

My organization has opposed and continues to oppose the RailRunner because its high cost outweighs any benefit it provides relative to our transportation network. We also believe that the same transportation role could be performed better and far more cheaply by buses.

Paul J. Gessing
President
Rio Grande Foundation

The Tax Foundation is broadly free market tax policy research organization based in Washington, DC. They have created a new award for national leaders from around America who have contributed to the fight for pro-market tax reforms. New Mexico Gov. Susana Martinez was just honored by the organization for her corporate tax reform efforts that were enacted at the end of the 2013 legislative session.

According to the Tax Foundation, “New Mexico Governor Susana Martinez proposed a far-reaching business tax reform and, by skillfully working with the Legislature, signed into law in 2013 a final bill that included much of what she had sought. Provisions include a reduction in the corporate tax rate from 7.6 percent to 5.9 percent over several years, tightening of some tax credits, and improvements to tax administration.”

Kudos to Gov. Martinez. Her efforts are one of many reforms needed to make New Mexico a more economically-competitive state.

John Stossel is one of the guiding lights of the free market movement. His platform as a national television host gives him regular opportunities to weigh in on the pressing issues of the day. Unlike many politicians and media personalities, Stossel is a consistent opponent of government overreach and a proponent of individual liberty. He’s done a great deal of work on education issues.

So, it was only a matter of time before Stossel took on the education policy known as “Common Core.” While some conservatives and advocates of limited government have endorsed Common Core, Stossel outlines his concerns here.

According to Stossel, the fundamental flaw with Common Core is that:

As American education has become more centralized, the rest of our lives have become increasingly diverse and tailored to individual needs. Every minute, thousands of entrepreneurs struggle to improve their products. Quality increases, and costs often drop.

But centrally planned K-12 education doesn’t improve. Per-student spending has tripled (governments now routinely spend $300,000 per classroom!), but test results are stagnant.

While Common Core may have some good aspects, I believe that we must fundamentally re-form our entire K-12 education system in ways that emphasize choices and individuality. These concepts, as Stossel notes, govern the rest of our lives. It is hard to imagine that another centrally-imposed curriculum or set of standards, no matter how well-intentioned, is the cure for America’s education woes.

The hits keep on coming for ObamaCare. First, Obama told us that if we liked our coverage we could keep it, now it looks like his claim that the law would reduce costly visits to hospital emergency rooms is being undermined by a new study out of Oregon. As a bit of background, ER visits are notoriously expensive and tend to be an inefficient way to deliver health care services, especially when people really don’t need emergency care.

Astute readers will recall that I have written in the past about Oregon having engaged in a massive experiment by holding a lottery to either give or not give poor people Medicaid. ObamaCare achieves most of its coverage increase by simply expanding Medicaid coverage (although the Supreme Court ultimately gave the states the final call on this).

Well, according to the new report, contrary to Obama’s assertions to the contrary, people on Medicaid are MORE likely to visit the ER than those who did not receive the expanded coverage. Oops! Just another ObamaCare lie and just another way this law will further harm American health care.

Recently, I penned a column that ran in several papers around New Mexico. Democratic candidate Alan Webber penned a response to that column.

While I appreciate Webber’s willingness to engage in a much-needed discussion over New Mexico’s flailing economy, his article wasn’t exactly reassuring insofar as Webber’s understanding of economic policy in the Land of Enchantment is concerned. In fact, Webber fails to even note that it is the Legislature that sets economic policy in New Mexico. The PRC and Courts also have a great deal to do with policies that help or harm New Mexico’s economy.

Speaking directly to Webber’s points, he either makes inaccurate statements or fails to specify what he’d do to improve our economy. For starters, Webber claims that our state is offering “hundreds of millions of dollars in tax cuts trying to lure big-box stores to New Mexico.” He offers no details as to the specifics of the policy or its harms, nor does he offer viable alternatives for developing our economy.

Webber also writes about education reform, citing the need to “leave politics at the door.” He offers no other specific education reforms while failing to explain how politics can be eliminated from an education system that is funded by taxes and operated by a combination of elected officials and government bureaucrats.

New Mexico has followed left-liberal economic policies for most of its existence. Our economy has also underperformed the economies of our neighbors, most especially Texas which has followed a more free market approach. New Mexico’s elected and aspiring to be elected officials should carefully study what Texas has done and figure out what New Mexico can do to compete with them.

Paul Gessing sat down for a few interviews over the Holidays with Mike Jaxson at KSVP Radio in Artesia. One discussion centered on a tax reform proposal that Rio Grande Foundation has supported.

The second discussion focused on new support from the State’s Land Commissioner for federal land devolution back to New Mexico, recent reports detailing our State’s reliance on Washington, and a brief review of 2013 and look forward to 2014.

Both interviews are about 10 minutes in length.

It’s been another tough year for New Mexico’s economy and a lot of people are less-than-optimistic about the future of our state, but I firmly believe that the right reforms and some genuine leadership can turn our economy and educational systems around.

For one positive example of that we need to look no further than today’s Albuquerque Journal editorial lauding Secretary of State Diana Duran for her management of New Mexico’s Corporations Bureau. Her efforts have resulted in significant efficiency improvements and cost reductions which, over time, should make our economy better as well.

Some in this state love to throw around the old Lew Wallace quote that “All calculations based on experience elsewhere, fail in New Mexico.” While there is some truth to the quote, the problem is that too often, policies that have been tried successfully in other states are never attempted here. Secretary Duran showed that leadership, demanding results, and a call to treat citizens as customers can lead to positive results.

Here’s hoping the rest of New Mexico’s government, especially the Legislature, resolves to learn from the Secretary’s example.

Our intellectual opponents over at Voices for Children have concerns about legislation, which the Rio Grande Foundation has expressed support for, that would enact a “hard reboot” of New Mexico’s tax code. That “reboot” would essentially restore New Mexico’s gross receipts tax to what it was originally intended to be: a low, flat tax upon all items and their inputs with a statewide rate of 2% and local options up to 3%. New Mexico’s corporate and personal income taxes would be eliminated.

“Voices” hates the plan because it might make New Mexico’s tax system more “regressive.” Regressive is a term that means the poor will pay a higher percentage of their incomes in taxes than will the wealthy. Notably, New Mexico’s tax system is already rather regressive. Advocates of “progressive” taxation (meaning that the wealthy pay a higher percentage (not just more taxes) love income taxes because higher rates can be levied at higher income levels. While the US tax code is considered to be the most progressive in the world, I couldn’t find a US state that had a truly progressive code. California with its steeply-progressive personal income tax (topping out at 13.3%) comes close.

Which leads me to the most fundamental point of this discussion. An overly-regressive tax structure can be problematic, but taxes that dampen economic growth are at least as big if not a bigger problem. After all, you can’t redistribute poverty, just wealth. As we’ve already pointed out, taxing income (business formation and work) is damaging to economic growth in ways that taxing sales is not.

New Mexico’s economic woes are well-known. It is worth taking a hard look at how taxes are levied in this state to see if something can be done to spur private-sector economic growth. The gross receipts tax isn’t going away anytime soon because it allows New Mexico to generate revenue from federal activities in our state in ways that a sales tax cannot. Getting rid of the income tax and eliminating loopholes and the problem of high rates from our gross receipts tax seems to be the best available option.

And, on the issue of regressive taxation, perhaps some kind of basic credit could be written into the law to mitigate the effects of regressivity? I’m thinking of something along the lines of the “pre-bate” idea from the FairTax which has been proposed at the Federal level.

A link to the article can be found here, but it may not be available to non-subscribers. A relevant chart from the article can be found below:

While I spent a great deal of time talking to the reporter who is new to the NM beat, I was not quoted. James Jimenez of the left-liberal Voices for Children did have a choice quote “We can’t tax cut our way to prosperity.” I’m not sure where they get this stuff, but our research shows otherwise. In fact, between 2001 and 2010, states with no personal income tax grew their economies by a combined 56% while the 9 states with the highest personal income taxes grew by only 41%. Truly, there is no overnight solution (aside from fracking, perhaps), but over time, reducing taxes on productive activity (work, entrepreneurship) are proven to work.

Las Cruces Sun-News opinion columnist Jim Harbison has penned an excellent column on the proposed Organ Mountains Monument designation made by Sens. Udall and Heinrich. As Harbison notes, “Their bill will put more than 498,000 acres of public land under the more stringent control of the federal government.” Harbison notes many of the economically-productive activities currently on those lands that will be outlawed and the fact that those activities vastly outweigh the supposed benefits which have been debunked elsewhere.

As the great left-liberal economist John Kenneth Galbraith said, “Where socialized ownership of land is concerned, only the USSR and China can claim company with the United States.” New Mexico’s economy is already negatively-impacted by an out sized federal presence in terms of land ownership. We need to demand a shift away from centralized, socialized land ownership not allow well-heeled “environmental groups” put even more of our lands off-limits.

The federal government is again proving itself to be a capricious keeper of New Mexico’s federally-controlled lands. Earlier this year, allegedly due to the sequester, the Obama Administration took $26 million in royalty payments from New Mexico. Now, under the new budget agreement which increased taxes and spending, New Mexico will lose $100 million in royalty payments over the next decade. Rep. Pearce is the only Congressional representative from New Mexico to have voted against the deal.

The unfortunate thing is not simply that New Mexico will receive less money from the oil and gas (and other resources) used on our federal lands. The problem is that it seems to be “open-season” on royalties. Because they, at least to Washington, represent “spending” once the funds are collected in DC, royalty payments are just another option for covering for Washington’s out-of-control spending habits. In other words, after two attacks on our royalty payments in a single year, expect this trend to continue.

As far as I know, there is only one way to stop Washington from stealing our royalties and that is for New Mexico to re-take control of its federally-owned lands. The good news is that we have bi-partisan support among New Mexico public officials for such a process. The important thing is for both houses of the Legislature and for Gov. Martinez to follow Utah’s lead and translate that nascent support into legal demands for that land to be turned over.

I don’t know former PRC Commissioner Douglas Howe, but I have to admit that his column on New Mexico’s Renewable Portfolio Standard (RPS) from the Albuquerque Journal Saturday left me scratching my head. Howe (who was appointed by Gov. Martinez) opposes and voted against a recent proposal (passed and subsequently amended) to reduce the onerous nature of New Mexico’s standard. For the record, we at the Rio Grande Foundation support allowing New Mexicans to pay more to purchase renewable energy if they want to, but we oppose coercing utility consumers from doing so.

Back to Howe’s head-scratcher. In defending the RPS he discussed Texas which, like New Mexico has moderately-priced electricity,(see this chart for comparisons) and California, which has expensive electricity relative to most, but not all, other states. Fair enough, but then Howe gets crazy. He notes that both Texas and California have created more jobs than New Mexico despite equal and higher respective electricity costs. So what? There are literally thousands of factors at play. For starters, California went deeply into recession and is coming out of that recession. California is also not as reliant on Washington as we are and has a healthy tech sector despite what I believe are horrendous economic policies overall.

Texas, on the other hand, has no personal income tax, no corporate income tax, and is a right to work state. Perhaps these might also be factors in that state’s tremendous economic growth? Howe also fails to explain exactly how increasing the price of electricity (a significant cost for many businesses) will be good for job creation or economic growth in already-struggling New Mexico. (it hasn’t helped the Caribbean which suffers from much higher electricity costs despite rampant sun and an abject lack of fossil fuels)

He allude to “green jobs,” but perhaps he is unaware that study after study including those done by the liberal Brookings Institute and Reuters (not Heritage, Cato, or RGF) have found the so-called “green-economy” to be a failure.

We at the Rio Grande Foundation are on record as opposing the RPS (see link above). We think customers should be able to choose the source of electricity that suits them. If they want to set up their own utility or use wind/solar that is their choice, but other taxpayers shouldn’t subsidize them. And, while there are certainly externalities inherent in fossil fuels, they also exist for so-called “green” energy (a California solar project is in trouble due to expected wildlife deaths). It is nigh impossible to accurately measure and put an economic value on all of these externalities.

As a PRC commissioner Howe certainly had the right to use the coercive power of government to force us to use whatever source of energy he wants. I would just hope he’d be more upfront on the economics.

NOTE: This article was corrected to reflect that Howe is a former PRC commissioner and is no longer on the Commission.

The Fraser Institute, a free market think tank based in Canada, has released its annual “Economic Freedom of North America” report for 2013.

Unfortunately for New Mexico, the results are not good. Just like the 2012 report, New Mexico’s economic freedom ranking is dead-last.

See the cover of the report in which red states are the least economically-free and blue ones are the most economically-free (unlike American political elections)

According to the authors, “Economic Freedom of North America employs 10 components for the United States and Canada in three areas: 1. Size of Government; 2. Takings and Discriminatory Taxation; and 3. Labor Market Freedom.

Unsurprisingly, states that have little economic freedom also tend to be among the most economically-impoverished.

With the Christmas Holiday right around the corner, a lot of folks will focus on the family, spending time with them, and the enjoyment one derives (or does not derive) from being with the family. But what really makes one happy?

Arthur Brooks, head of the American Enterprise Institute has a great talk here about one of the greatest things that we as humans can control in terms of creating our own happiness. As Brooks explains, using relevant data, earned achievement is key to being happy. Of course, the economic system that best allows humans to achieve earned happiness is free market capitalism:

Despite the continued economic and educational difficulties faced by New Mexico’s economy, rhere are many hard-working elected officials who are striving to make things better. One of those people, a favorite of the Rio Grande Foundation, is Rep. Yvette Herrell. She was lauded this week by the national group Federalism in Action for her work on restoring states and the people to their role as the primary governing bodies in the various states.

Primary among Herrell’s initiatives is the Transfer of Public Lands Act which would restore certain federal lands in the West to state control, but Herrell works tirelessly to restore a proper balance between Washington and New Mexico. Kudos and thanks to Rep. Herrell!

Oh, and we’ll be on Scott Stiegler’s on 770KKOB show from 6 to 7pm on Thursday, December 19, to discuss the Transfer of Public Lands Act!

I recently wrote a column on the need for both leadership from policymakers when it comes to the economy and how the economy should be a top issue for elected officials regardless of party. Interestingly, Albuquerque Business First did an online survey of their readers to find out what we can expect in terms of our State’s economic performance during 2014. The results are not pretty and further lead me to believe that the economy must take center stage.

According to the non-scientific survey (however, I’d expect readers to be better-informed than average), approximately 50% believe the New Mexico economy will be “POOR,” 32% say “FAIR,” 13% say “GOOD,” and a mere 4% say “EXCELLENT.”

Of political interest is the comments section in which prominent Democrat and Martinez’s 2010 opponent, Diane Denish, slams the Gov. for the economic situation. Other readers are not so quick to blame Martinez, but the comment seems to indicate a primary line of attack during the next election.

Nothing pisses off the far-left greenies more than the reality that America is discovering and will use untold quantities of new, inexpensive, reliable energy from fossil fuels over the coming decades.

While humanity is clearly winning in the form of inexpensive, abundant energy, the latest battle on this front has been the Keystone XL pipeline. Rio Grande Foundation is co-sponsoring a rally in support of the pipeline.

Our reasons are simple: thousands of jobs will be created by the pipeline and the federal government should not stand in the way if a pipeline is desired. However, the evidence is that this fuel source will be used no matter what. Product will be shipped by train or will be shipped within Canada to the West Coast for transport to Asia. According to this article which links to and summarizes a report on the Pipeline from the US State Department, “Approval or denial of the proposed project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area.”

That hasn’t stopped radical environmentalists from making stopping the pipeline a major issue. They have even organized a counter-protest against our rally (so be prepared!). Rational arguments are unlikely to persuade those who make decisions based on emotion and ignore data and research from Obama’s State Department. The treatment of birds killed in the production of environmentally-favored vs. hated energy is one obvious case of hypocrisy.