With all of the economic turmoil going on in the world, the terms “austerity” and “stimulus” continue to be bandied about. It is time for some understanding of these words. Winthrop Quigley recently reported on comments by an analyst from Bank of the West who argued against the US adopting “European-style austerity measures” lest they harm our economy. OK, well, if “austerity” means massive tax hikes, I agree with him, but if it means spending cuts as happened in Canada, it seems hard to argue that such “austerity” is not needed. See the chart below on Canada’s massive spending reduction:

Besides, if “stimulus” means engaging in deficit spending to stimulate the economy, the US government has been “stimulating” the economy for decades now.

By way of illustrating the wasteful nature of government “stimulus” spending (which, after all is the “whole point”), I thought this cartoon was appropriate:

Rep. Brian Egolf is among the furthest left legislators in New Mexico. He is a strong supporter of subsidies for the film industry and one of the most outspoken opponents of the oil and gas industry. He wrote an opinion piece that appeared in the Albuquerque Journal over the weekend which cited some polling data that attempted to paper over some very real issues and controversies over “conservation” and environmental policies.

One of the RGF’s most active supporters, Jim Crawford, did a thorough analysis of Egolf’s piece and the questions asked in the poll. Rather than duplicating his work, I have posted it in its entirety below:

Representative Brian Egolf’s column  presented some questionable conclusions based on a poll (linked to here) by Colorado College.

Colorado College is a progressive liberal arts college which is enough to make the poll results questionable even before examining the poll itself.

Representative Egolf is correct. CONSERVATION is not a partisan divider.  Conservation is the wise use and/or management of our resources.  Conservation is a much different concept than the tree hugging anti-use EXTREME ENVIRONMENTALISM depicted in the illustration with the column.

Even the most conservative, pro-industry, cheap energy, drill baby drill advocates are conservationists.  None among us favor wanton or wasteful destruction of resources.  Hardly anyone opposes reasonable protections. The debate has never been about conservation versus jobs but about extreme environmentalism versus jobs.

As with most polls, the devil is in the details of how questions were asked.  In the Colorado College poll, the questions were nearly all phrased in a way than nearly all of us would answer the same way.  For example, who would not agree that “Our national parks, forests, monuments, and wildlife areas are an essential part of New Mexico’s quality of life” (Q20)?

Then there are the questions like Q2 where the choices are an option that nearly everyone would agree with or one that almost nobody would agree with.  The choices were: “We can protect land and water and have a strong economy with good jobs at the same time, without having to choose one over the other. OR sometimes protections for land and water and a strong economy are in conflict and we must choose one over the other.”  We presently have strong protection for land and water, a strong economy along with good jobs. It has never been about choosing one or the other.  No wonder 80% of New Mexicans agreed with option 1.

Even more slanted are a series of questions where there are three categories of “serious problem” i.e. extremely serious, very serious, and somewhat serious.  The only other choice is “not a problem”.  Let’s face it.  There is no human use or activity that has no impact.  So again “not a problem” is not a likely option.  However, if we view the somewhat serious category as one where there may be some minor within reasonable limits, then those percentages combined with the not a problem group exceeds the combined extremely and very serious group.  A good example would be Q7 “The impact of oil and gas drilling on our land, air and water.”  In NM only 31% put this statement in the extremely or very serious category while 65% put it in the somewhat serious and not a problem categories.  New Mexicans are actually a lot less worried about these things than portrayed in Representative Egolf’s column.

Finally, Representative Egolf makes a big point about (QN2) where 71% of New Mexicans favored keeping our existing resource portfolio standards to force a certain percentage of renewable energy on our utility companies. Unfortunately, New Mexicans were never asked if they were willing to pay the $2.3 billion in increased electricity rates to achieve the standard.  The answer may have been different in that case.  There were no questions to test how much New Mexicans are willing to pay for utopian green quality of life statements.

We have all read the old adage about how figures lie and liars figure.  This poll was designed to arrive at a predetermined answer and does not deserve a lot of credibility. The most surprising thing about it is that the results were not more skewed than they are.

I was interviewed on “This week in Chaves County” on the good, the bad, and the ugly of the 2012 legislative session. Take a few minutes to listen by clicking on the first button here.

Heath Haussamen says it in a more polite manner here (and it is indeed a shame that it had to be cancer to drive Lujan from the Legislature), but House Speaker Ben Lujan embodies much of what is wrong with New Mexico politics. As discussed by Haussamen, Lujan is arguably responsible for killing the Gov.’s legislation to make sure 3rd graders who can’t read aren’t passed along through the school system to add to New Mexico’s 43% dropout rate. Lujan also prevented school choice tax credits from coming to the floor for a vote, thus protecting many of his fellow Democrats from having to vote against policy changes that is supported by 78% of New Mexicans and would provide a life line for New Mexico children who are in dire need of better educational options.

Will the heir-apparent, Ken Martinez be any better? I doubt it, but there is nothing set in stone saying he HAS to be the next house speaker.

For the next few weeks, Gov. Martinez and her staff will be going through the bills that passed both houses this legislative session (find a list of those bills here). Here are a few “off the cuff” thoughts on the end of the session:

1) The failure to pass any significant education reforms is a travesty. The Gov.’s 3rd grade reading bills failed as did the tax credit scholarship bills. The especially galling  fact about the scholarship bills (HB 166 and HB 65) both passed out of their respective House Committees, but Speaker Lujan refused to bring the Democrat-sponsored bills to the House floor for votes. Apparently, a majority in the Legislature is perfectly happy with 49th.

2) The tax cuts on the gross receipts tax that passed will help lower costs for some businesses. This is probably a good thing, but the piecemeal approach to tax reform is not ideal and will lead to increased tax complexity.

3)  Some important reforms to the PRC passed and are great news. Kudos to our friends at Think New Mexico! The series of bills will increase the qualifications for PRC commissioners, transfer the PRC’s authority over the reporting and registration of corporations to a one-stop shop for business registrations and filings at the Secretary of State’s office; and remove the PRC’s authority over insurance and reforms how Superintendents of Insurance are selected.

4) No action was taken to resolve New Mexico’s massive $10 billion unfunded pension liability. This is a real problem. Failure to act now only makes the problem worse.

I often write about the need for free market forces in our education system. The problem is that in a heavily-socialized, unionized system like K-12 education, market forces are a foreign concept.

Given this reality, it is hard to understand how good education COULD be. But, as Mark Perry points out on Jay Greene’s blog, we have myriad products available in the marketplace that have grown better and cheaper over time. Don’t believe me? Check the post.

You are invited to the following free event:
THE LIBRE INITITATIVE PRESENTS: FORUM ON ECONOMIC FREEDOM
Thursday, March 1, 2012 at 8:00 AM-1:30pm (MT)

Hotel Albuquerque at Old Town
800 Rio Grande Boulevard Northwest
Albuquerque, NM 87104

The LIBRE Initiative along with its partners seek to inform the community about how Economic Freedom is critical to our community’s Economic prosperity. Confirmed panelists and speakers include:

Jon Barela, Secretary of Economic Development
Paul Gessing, President, Rio Grande Foundation
Dennis Kintigh, New Mexico State Representative, District 57
Carla Sonntag, Presdient, New Mexico Business Coalition
Gerges Scott, Vice President, Energy Unit, DW Turner

Read more and register for free here.

We hope you can make it!

Want to know why America is in trouble? Take a look at this interactive website provided by the New York Times. It maps which counties throughout the US rely disproportionately on federal largess as a percentage of personal income.

Of course, New Mexico has more than its share of government-dependent counties, but we knew that already. The really scary thing is to click by the year (this map is from 2009) in the top right corner. Go back to 1969 and Americans are less than half as dependent on the federal government (7.8%) as they are today (17.6%).

In case you haven’t heard already, the US Supreme Court will be hearing briefs in a matter of weeks on the federal health care law colloquially known as “ObamaCare.” The Rio Grande Foundation (along with the Cato Institute, several other state and national think tanks, and a number of legislators) has signed onto an “amicus brief” relating to the “individual mandate” contained in the law.

According to the brief, the issue discussed in the brief is:

Can a limited government to whom a free people have delegated only certain enumerated powers commandeer that people into purchasing a product from a private business pursuant to its power to pass laws “necessary and proper for carrying into execution” the authority to “regulate Commerce . . . among the several States”?

For the lawyers out there and interested citizens, the full brief is available here.

Read my letter to the editor from the Business Outlook section of today’s Albuquerque Journal.

In his column on the various tax bills introduced in the 2012 legislative session Winthrop Quigley focuses on taxes, one reason that New Mexico is not economically-competitve.

However, economic policy is about more than just taxes. In terms of overall economic freedom, according to the Fraser Institute’s “Economic Freedom of North America,” New Mexico ranks 49th. Factors like work force freedom and regulations come into play in broader measures of economic freedom that are not reflected in studies of taxation. Yet their impact is very real.

Even on the issue of taxes, Bill Jordan of Voices for Children – an organization that has never met a tax hike it didn’t support – is simply wrong when he says that New Mexico usually is in the “middle of the pack.” Far more often, our tax code and tax burden places us in the bottom 10 among states.

While not a panacea, Gov. Richardson’s tax cuts did have a serious, positive, economic impact. New Mexico, a state that had been among the bottom 3-4 states in personal income saw income rise to 43rd in the nation. Yes, the broader national economy wiped out jobs everywhere, but New Mexico is better off than it was before.

Regardless who is right on the issue of whether taxes should be cut and how, passage of a “Right to Work” law as was just done in Indiana would be a no-cost way to make New Mexico more economically-competitive. I eagerly wait the day when Quigley and Voices for Children support such proven job creation measures.

Paul J. Gessing
President
Rio Grande Foundation
PO Box 40336
Albuquerque, NM 87196
505-264-6090

There has been a much needed discussion of government pension plans in the Albuquerque Journal and in the Legislature. Brad Day, a member of the Education Retirement Board, had a column here. Someone who disagreed with Day wrote his thoughts up here. Rob Nikolewski at Capitol Report has an even more thorough discussion with Day available here. The New Mexico Senate has passed SB 150 which would make several modest changes to the ERB’s pensions. Unfortunately, it seems unlikely that this bill will pass out of the House in the short time still left this session.

Rather than re-hashing Day’s comments, I want to rebut the rebuttal to his remarks point by point. That’s because it is a fact that New Mexico’s pensions are unsustainable. Day gets it while his rhetorical opponent does not.

First point: “Social Security is not a Ponzi scheme. Instead, Social Security the world’s longest-lived Ponzi scheme: self-funded and faithfully paying benefits as promised since the 1930s!” Yes, it is. In fact, Social Security is worse than a Ponzi Scheme as no one is forced to pay into a Ponzi Scheme whereas they are forced to pay into Social Security. Really big Ponzi Schemes like Social Security take a long time to run out of money. It has a $9.2 trillion unfunded liability.

Secondly, he writes that “the ERB has $9 billion in assets that are invested.” That may be true and $9 billion is a lot of money for you or me, but if liabilities are even bigger (which they are), the system can still be insolvent.

Lastly, the author states “The 9.4 percent ERB employee contribution is actually higher than the typical 7 percent that private-sector employees contribute to their 401(k) plans.” So what? Government pensions are far more generous than the retirement plans offered in the private sector (not to mention their guaranteed nature which puts all the risk on taxpayers).

The fact is that even SB 150, if it passed, would not be adequate to make New Mexico’s pensions truly solvent. Further changes, as outlined here are needed.

Before the legislative session got started, I sat down with Fred Martino with Las Cruces Public Television to discuss education policy in the 2012 legislative session. While it appears that many of our (and the Gov’s) education proposals are not going to pass this session, we are going to continue to push for reform because 49th is not good enough. The interview is about 30 minutes in length.

Should I be able to waive my rights to sue somebody if I engage in an obviously-risky behavior? It would seem obvious that one should be able to do so (particularly if they are paying $200,000 for the privilege) , but I’m not a trial lawyer (thank God!). Also, in case you missed it, we at the Rio Grande Foundation aren’t huge fans of the Spaceport.

Nonetheless, we do hope the Spaceport succeeds (as best it can) as taxpayers have spent upwards of $200 million on it already. So, it is shocking, but perhaps not surprising, that the trial lawyers have convinced so many legislators to oppose efforts to protect those who will be providing space flights out of the New Mexico Spaceport from legal action. After all, there is already talk of a “Spaceport Glut.” Do opponents of liability protection really think Richard Branson and his buddies are stupid enough to come to New Mexico if they can go elsewhere and not be exposed to these lawsuits?

In case you missed it, New Mexico was the only of 11 states to have been denied a waiver by Obama’s Department of Education under No Child Left Behind. Winston Brooks is “embarrassed” by this.

And, if you’ve been to the Roundhouse or follow education policy in this state, you’d know that APS is just one of many school districts in this state that has lobbied hard against serious education reform. Of course, many of these reforms are the very things that the Obama Administration has been looking for in order to decide if a state is serious enough about reform in order to receive the waiver in the first place.

So, you fight reform and then you cast blame on others when Obama’s Administration doesn’t see enough reform. Pretty embarrassing, I’d say. The solution? Ban publicly-funded agencies like APS from hiring lobbyists or cut their budget until they fire them all.

If you watched the Super Bowl, you probably saw this ad with Clint Eastwood which has caused some controversy. The folks at Reason have come up with a more realistic parody ad:

It’s tough these days for politicians to be against government transparency. With technology widely available, large majorities of Americans have decided that governments — which theoretically work for them, the taxpayer — should be as open and accessible as possible. And, with the Internet, that can be quite open as Albuquerque Mayor R.J. Berry has shown.

Unfortunately, when one is running for Congress, they have a need for grandstanding and appearing to be “for the people” when they are not. Enter Eric Griego and SB 30. SB 30, introduced by Sen. Sander Rue would simply enshrine in law that information currently available at New Mexico’s Sunshine Portal, will continue to be made available under future administrations.

Sounds like a slam-dunk, right? Not for Griego the opportunist. He submitted and convinced his fellow Democrats to support a floor amendment to create “a directory of all employee positions of every person, corporation or entity with which the state contracts, identified by position title, salary and the name of the individual that holds the position.”

For starters, this amendment would represent an administrative nightmare for New Mexico government and businesses alike. Imagine the state buying or leasing police cars from Ford. Do we really need to know everyone that works for those companies? What if General Electric provides some “renewable energy” for the state? Issues abound (like, how often does this list need to be updated?) and, more importantly, the employees of these businesses (and the hundreds of smaller ones that contract with New Mexico) are not government workers and therefore are not subject to the same level of transparency.

So, Griego may claim that he wants transparency and open government, but the reality is much different.

I read Sen. Tim Keller’s article on rebuilding our economic base this morning in the Albuquerque Journal. Another article not requiring a login can be found here. It really didn’t do much for me in terms of outlining a plan for developing New Mexico’s economy.

Two specific proposals were outlined. One would provide tax incentives for companies to hire graduates of New Mexico institutes of higher ed. The other would make “new investments in a state entrepreneurial fund.” Aside from those proposals, he rightly criticizes “tax giveaway’s to single companies or long-established industries.”

By way of serious economic reforms, these are weak proposals indeed. Incentives to hire New Mexico college grads? First and foremost, why do we need more incentives for businesses to hire the MOST educated and qualified members of our work force? These graduates are on average wealthier and whiter than the New Mexico population at large. Of course, these incentives, while spread out over New Mexico’s economy, won’t really do much to spur significant economic growth anyway. Are companies really going to set up shop here (and create new jobs) in NM because of a $5,000 credit?

In terms of the state’s entrepreneurial fund, New Mexico already has the State Investment Council. Keller led the charge in reforming this, so he should be more aware than most of the serious problems with government-driven investment of taxpayer dollars. This is a bad idea.

Lastly, it is hard to argue with Keller’s view that government should not favor one business or industry. One wonders where the Democrats were when Bill Richardson set up the Rail Runner, the Spaceport (two government-created businesses) and the film subsidies. Rep. Dennis Kintigh has introduced legislation to phase down the tax credit over the next several years. It would seem to fall directly within the paradigm that Keller is touting. Unfortunately, his colleagues don’t seem to have gotten the memo.

I’m not a big fan of Mitt Romney’s politics. His health care law was a bad enough affront to liberty. Now, only one day after I wrote this blog posting, I see this news story.

So, the presumed Republican standard-bearer for the White House is (still) pushing a proposal that I called the worst bill of 2012 in the New Mexico Legislature….yikes. The good news…Gary Johnson is still running.

Gov. Martinez won another victory for New Mexico’s utility rate payers and the economy with the unanimous repeal by the Environmental Improvement Board of the carbon caps originally advocated by Richardson’s Environmental Department.

This is step one of two as the Board still needs to consider repeal of the carbon cap advocated by the environmental group New Energy Economy. This will apparently happen in March.

Certainly, repealing a New Mexico-specific carbon cap is good news for our economy and — when complete — it will lift a burden of uncertainty that has surely made businesses less willing to invest in and do business in the state. However, the most amusing thing about the article on the repeal (the first link in this blog) is the bellyaching over the repeal vote on the part of the environmental groups. A staff attorney with the New Mexico Environmental Law Center is quoted as saying, “It’s obvious that anything that industry wants, they’re going to get from this board, whether it’s good for public health or the environment or not.” Well, pardon me, but wouldn’t the opposite have been true for Richardson’s board? Anything the environmental groups wanted, they could get.

That is the problem with an un-elected board with members appointed by one governor. It is why major decisions like capping carbon emissions should be made by elected legislators, not an un-elected, politically-appointed boards. But you won’t hear that from the enviros because they haven’t convinced the public of their point of view.

No man’s life, liberty, or property are safe while the Legislature is in session.”

No matter who said it first, the quote is accurate. Perhaps the worst bill of 2012 has been introduced by Rep. Miguel Garcia (yes, THAT Miguel Garcia) and it would amend New Mexico’s Constitution to increase the minimum wage annually based on the rate of inflation. Why is this a terrible idea? Following are just a few of the many reasons:

1) minimum wages by their nature increase unemployment among minorities and the young (those who are at the lowest rungs of the work force);

2) indexing the rate to inflation means that New Mexico (like the City of Santa Fe) will be increasing the minimum wage even in a recession;

3) if raising the minimum wage year-by-year is such a good idea, why not just make the wage $20 or $30 an hour? The fact is that even advocates won’t support such a move because it will cause a sudden, well-publicized wave of layoffs. The piecemeal approach is used to mask the real effects of the mandatory wage increase;

4) it is morally wrong for government to stand between a voluntary agreement made by a worker and their employer. If I want to work for free or sub-minimum wage rates, that should be my right.

5) raising the minimum wage is bad policy, but it is just that: policy. The advocates of this proposal know that Gov. Martinez will veto this business-killing measure and are attempting to do an “end-run.”

(Albuquerque) The Rio Grande Foundation and the Citizens’ Alliance for Responsible Energy (CARE) will host S. Fred Singer for a lecture and discussion of climate change and climate change policies. Singer is one of the most articulate and best-known “skeptics” regarding the supposed “consensus” on climate change.

The discussion will be held on Wednesday, February 15, from 6pm to 8pm in Room 2401 at the UNM Law School. Admission is $10, payable at the door, and includes light beverages and snacks. The Law School is located at: 1117 Stanford Drive Northeast, Albuquerque, NM 87106-3700.

Singer is Professor Emeritus of Environmental Sciences at the University of Virginia, President of the Science and Environmental Policy Project, a Fellow of the American Association for the Advancement of Science, and a Member of the International Academy of Astronautics. He received his Ph.D. in physics from Princeton University.

Dr. Singer is the author or editor of fourteen books on climate science, energy, and environmental issues as well as the author of over 400 articles in scientific and public policy journals plus over 200 articles in popular publications, Dr. Singer has been featured in articles in Time, Life, and U. S. News & World Report, and he has been interviewed on Nightline, Today Show, News Hour, Nightwatch, and other national and international television programs.

More recently, he co-authored the New York Times bestseller, Unstoppable Global Warming: Every 1500 Years (Rowman and Littlefield, 2007), and he was also the organizer of NIPCC (Non-governmental International Panel on Climate Change) and lead author in 2008 of its summary report, Nature, Not Human Activity, Rules the Climate.

The event is sure to be a lively and engaging one.

For an understanding of the legal issues involved in ObamaCare and some of the legal precedents that made such blatant federal overreach possible, check out this great video from Reason. By the way, the two presidents that had the most to do with providing legal precedents that will be used to support ObamaCare at the Supreme Court? FDR and George W. Bush.

Last year, we at the Rio Grande Foundation proposed capping annual outlays for New Mexico’s film industry subsidies (25% on the dollar is given to the industry) at $30 million annually. The ultimate agreement was to cap the subsidy at $50 million annually. This is a reasonable compromise, but the fact is that the film industry subsidies represent net spending (they are not a credit, thus representing foregone taxes) and are bad economic policy. Long-term, the subsidies should be phased out towards total elimination.

Unfortunately, liberals in the Legislature are hoping to eliminate the cap on TV shows, thus giving unlimited subsidies to the filming of television shows in New Mexico. SB 168 is terrible legislation. Rep. Kintigh’s HB 117 would move our state in the right direction by phasing out the subsidy at a rate of one percentage point annually.

Legislators are a bit more than halfway through the 2012 legislative session. While they meet, they (and their constituents) need to keep in mind that policies now in place — enacted over the years in Santa Fe — have led to New Mexico being among the most impoverished states in the nation. This poverty has been driven by an abject lack of economic freedom.

According to the Fraser Institute’s (the are the Canadian national equivalent of the Rio Grande Foundation) 2011 report “Economic Freedom of North America,” New Mexico is the 49th-freest state in the nation (check page 2 of the report). Or, put another way, we’re less economically free than any state besides West Virginia.

What makes a state free? Small government, limited or no arbitrary takings and discriminatory taxation, and labor freedom, are the main factors.

States performing well on the economic freedom report include Delaware, Texas, Colorado, and Nevada. A quick video explaining the importance of economic freedom can be found below: