The debate concerning Texas’ economic success continues. With a Tejana as our new governor, many on the left believe New Mexico will become more economically similar to Texas. We at the Rio Grande Foundation have cheered that prospect.

Not surprisingly, left-wing economist Paul Krugman is not so sanguine about the prospect. But, as this blog posting at The Economist notes, Texas and slow-growing, high tax, heavy regulation states like New York really are economically different.

While New Mexico may not want to adopt every single policy Texas has in place — I’d settle for no personal income tax and a Right to Work laws. As this article points out, Texas is not perfect (spending growth has grown rapidly in recent years), but it is doing a lot right.

The film debate last night (the 11th) was a huge success and unfortunately many who showed up could not get into it. The good news is that full footage of the debate is now available online. Thanks to Kevin McDonald and the folks at KNME Channel 5 for the video!

New Mexico Sen. Tom Udall wants to expedite legislative action in the Senate by eliminating the filibuster. If Udall has his way, the Senate would not need 60 votes anymore to proceed to a vote. A simple majority would suffice. This is not a good idea.

None other than George Washington explained that the Senate was designed to act as a “saucer” to “cool the passions” of the House which is more directly responsible to the people and comes up for election every two years. The Senate is meant to be slow.

The basic issue is that Udall views Senate action as inherently good. Of course, he is a member of the body and part of the Democratic majority, but legislative action in Washington more often than not reduces our freedoms rather than enhancing them. Witness the ObamaCare abomination as just one recent example. The Founders were justifiably suspicious of pure democracy which is little more than mob rule. That is why we have the Electoral College, the First Amendment (a protection against unpopular speech by minority groups), and arcane Senate rules that slow the process down and thwart simple majorities from making radical changes (to name just a few rules and laws against rampant majority rule).

Udall’s rule changes would undermine the Founders intent when it came to the Senate. I believe that all Republicans and most Democrats will reject his changes.

This evening, at 4pm, the Rio Grande Foundation is co-hosting a debate on the film industry’s subsidies with the newly-formed New Mexico Motion Picture Association. While the debate will involve four legislators, I felt that it was important for us to put out our own statement explaining our concerns about the program. That statement follows:

New Mexico’s film industry is heavily-subsidized. Filmmakers are reimbursed for 25% of everything they spend in the state to make a movie (not including the interest free loans and job training considerations which are not discussed here in detail). This is a very generous program that has undoubtedly led to a large number of films having come to the state. Of course, this program is also direct expenditure of taxpayer dollars collected by the state. This money was taken from average citizens and other businessmen in the form of taxes and transferred to a chosen industry (the film industry).

Simply put, this violates the basic principle of tax fairness and this is grounds for our opposition.

But what about the program’s effectiveness? Advocates claim that millions of dollars in economic activity and thousands of high-paying jobs have been produced by the program. A variety of other studies including non-ideological ones from the Arrowhead Center at NMSU, the liberal Center on Budget and Policy Priorities, and the conservative Heartland Institute (to name just one conservative critique) have pointed out the flawed economic logic associated with New Mexico’s film subsidy program and similar programs nationwide.

Some 44 states nationwide offer film subsidy programs of one type or another. So, why does the Rio Grande Foundation believe that it is right and that policymakers in 44 states are wrong?

First and foremost, what we have here is a classic case of concentrated benefits and designed costs. The film industry and its employees derive significant benefits from the diversion of $60 to $90 million annually to their industry. They have a tremendous amount at stake when it comes to preserving and continuing the subsidies.

Other businesses and average taxpayers do not see how much is being taken from them to fund this program. All they hear about is the films that are made here, not what they could have done or businesses could have done with the money – including hiring New Mexico workers – if they’d had the opportunity to keep their money.

Currently, the state faces a $400 million budget deficit. Even if we wished to keep subsidizing the movie industry to the tune of $60-$80 million annually, can we afford it? If we are to continue the subsidy, what areas of program should be cut? Should K-12 education be reduced or Medicaid? How about higher education? These are problems that advocates for the film industry rarely address.

Another anti-subsidy perspective outlining corruption concerns over the internal workings of the program and analyses of the program were discussed recently in the Albuquerque Journal by Rep. Kintigh.

The Rio Grande Foundation is co-sponsoring a free legislative debate over the film subsidies currently offered by the state. The debate is Tuesday and more information can be found here.

Please let us know you’re coming by reserving a seat at info@riograndefoundation.org We’ve been advocating for at least a $30 million cap on the program which would save taxpayers at least $30 million annually (perhaps even more as the program is not capped). This would put a significant dent in the $400 million budget deficit the state is now facing.

Come, learn about the program and decide (or weigh in) for yourself.

With a $400 million deficit (revised upwards from $286 million during the campaign), Tom Molitor explains that Medicaid in New Mexico should be on the table for some reforms. Leaders of other states, facing far worse deficits, are making more dramatic cuts. Governor Martinez can and should take on Medicaid.

Of course, as Molitor writes, Congressional action to give states more responsibility for, and control over, Medicaid spending, is absolutely essential to the long-term viability of both federal and state budgets.

Great news for New Mexicans and the state economy: Governor Susana Martinez has halted the implementation of the state’s carbon cap that was passed through the Environmental Improvement Board.

This is a clear, early sign that Martinez is serious about turning New Mexico’s economy around. If environmentalists want to pass a carbon cap in New Mexico, I highly recommend they pursue it through the democratically-elected Legislature and Governor. We’ll fight them, but at least it is a fair fight when legislators have to stand for election once in a while (unlike the unelected EIB).

Left-wing columnist E.J. Dionne’s columns run regularly in the Albuquerque Journal. He is a dyed in the wool statist and I rarely bother to respond to his nonsense, but he wrote a few things about the incoming Republican Congress, the Tea Party, and the Constitution that I take issue with.

First, he claims that the Tea Party has “treated the Constitution not as a collection of shrewd political compromises, but as sacred scripture.” This is simply not true and it misunderstands the meaning of the Constitution which is meant to serve as the law of the land. The Constitution DID indeed contain numerous compromises, most notably over slavery. The document has been altered (amended) numerous times over the years to fully acknowledge the equality of blacks and other minorities. The Bible on the other hand is unaltered and unalterable.

This is Dionne’s fundamental misunderstanding of the Constitution. He believes that it should be “living.” That is, it should be interpreted broadly in such a way as to accommodate his big-government agenda. The Tea Party and other conservatives may disagree with the 16th Amendment which legalized the income tax, but we at least recognize that it was the right way to change the original intent of the Constitution.

As for his statement that “tax cuts add to the deficit,” Dionne is simply assuming, as do many on the far left, that all wealth belongs to the government and that it allows us, the peons, to keep the scraps. This is not the way our government was intended to operate and it is simply immoral. Sorry E.J., only spending increases the deficit!

I previously blogged about New Mexico’s tax credits and deductions. The posting included this spreadsheet from the Tax and Revenue Department which compiled the listing and explanations.

It is important to note that simply eliminating any of the tax credits or deductions (aside from the film rebate subsidy) would result in a net tax increase. This doesn’t mean it is ALWAYS bad policy, but as I explain in this article from the Las Cruces Sun-News raising revenue by eliminating tax credits and deductions is not a good path to solving New Mexico’s budget problems.

In today’s Albuquerque Business Journal I discuss ObamaCare and the need for the threat of coercive government force to enforce the law. As Winthrop Quigley wrote last week, the law falls apart without the individual mandate.

I note that this is accurate and show the proverbial “gun in the room” that is federal control over Americans’ health care:

Winthrop Quigley is absolutely correct that the individual mandate, i.e. using the coercive power of the state to force people to purchase health insurance, is integral to President Obama’s health care law. Reliance on government force is at the very heart of the law and is at the very core of what is wrong with the law in the first place.

Unfortunately, due to past government interventions in the health care sector, there is no “free market” in American health care. Governments pick up 50% of the tab and, due to various incentives; patients pay less than $1 out of every $8 out of pocket as it relates to health care. The result is the mish-mash of a system we have had for the past several decades.

Voluntary interaction is at the core of the free market. Not only is it more efficient; it is also morally superior. But rather than peeling back the thicket of government rules and regulations to restore the free market (equalizing the tax treatment of health care purchased by employers and individuals would be a good place to start), Obama and Congress chose to simply force all Americans to purchase a government-approved health care plan. This may conceal the fundamental flaws of the new health care law for some time, but time and reality have ways of exposing government rules and regulations.

Recently, the Rio Grande Foundation published a policy paper outlining more than $280 million in specific spending cuts designed to help Governor Martinez and legislators close New Mexico’s budget deficit.

Then, throughout December, we gave average New Mexicans a chance to weigh in on which cuts they supported and how strongly they wanted to see the cuts made. Survey respondents were asked to rank their preferred cuts on a scale of 1-10 (with 10 being the strongest desire to see an item cut). More than 2,000 people took the opportunity to weigh in and the results are as follows:

• Saving $20 million annually by cutting the state work force by 2,000 was the most strongly supported with a rating average of 8.08;
• Saving $60 million annually by repealing SB 33 which increased the costs of public works projects around New Mexico followed close behind with an average rating of 7.91;
• Saving $6.4 million by diverting probationers and parolees who are revoked for technical violations of their supervision, not new offenses, from prison, scored 7.79;
• Diverting drug possession offenders from prison at a savings of $13 million garnered a score of 7.73;
• Saving $30 million by capping the cost of New Mexico’s 25% reimbursement for films made in the state scored 7.34;
• Shutting down the Rail Runner at a savings of $20 million annually scored 6.44; and
• The only budget cut items that scored below 5 were shutting down half of New Mexico’s branch campuses with a score of 4.81 and raising tuition to the national average which scored 4.71.

Said Rio Grande Foundation President Paul Gessing of the results, “While the results of this survey are not scientific in the polling sense, 2,000 New Mexicans inherently represents a reasonable cross-section of the public in terms of their beliefs on these important issues. The survey generated interest far beyond the conservative community with a public campaign by people at UNM Taos to name just one organized effort to sway results.”

Concluded Gessing, “Even if 100% of our spending cut proposals were enacted, Governor Martinez would still have to come up with more cuts to close the $400 million budget hole. Nonetheless, we hope that she will carefully analyze these results as she begins the difficult task of placing the state budget on a sustainable path.

I couldn’t have said it better than this myself. By all accounts, it seems that Gov. Martinez has two main priorities: solving the budget deficit and reforming education. As Daniel Ulibarri tells us, a healthy dose of school choice — along with a series of reforms based on the Florida model — is New Mexico’s best chance to improve education outcomes.

My biggest problems with many of my fellow conservatives are a lack of optimism and a lack of openness and inclusiveness. These traits are too-often associated with the left even though it is simply not reality to claim that those on the left are optimistic or any more inclusive than those on the right.

A perfect example of the liberal viewpoint on these issues appeared on New Year’s Eve in the Albuquerque Journal. The article, written by Kathleene Parker, displayed an obvious lack of understanding of economics and simply rehashed the old Malthusian arguments that humans will die off due to overpopulation.

Among the factors Parker cites in making the case for overpopulation are: gridlock on the roads, our overwhelmed health care system, poor educational system, and water shortages. What she doesn’t mention is that our roads are socialized (government ownership and operation), so is our educational system. Our health care system is not socialized yet but is well on its way and our limited water supply has never resembled anything close to a free market.

While nations can and should have some control over who comes in, the idea that we need to stop immigration and restrict birth rates is silly. Rather than trying to control others’ lives, Parker and her ilk should read their Julian Simon who years ago debunked Malthus’s (and Paul Ehrlich’s) “chicken little” predictions.

So, have a Happy and Optimistic New Year! If government gets out of the way, there is no problem too big for humans to solve.

New Mexico offers more than 100 tax credits, deductions, and other exemptions. You can view the full spreadsheet which lists them all here. One of the so-called tax credits is the 25% rebate for the film industry which is not a “credit” at all. But, policymakers are looking for ways to close the $400 million deficit and are going to be considering closing some of these “loopholes” during the 2011 legislative session.

I have looked at the list and it doesn’t seem to me that many of these deductions and rebates are purely wasteful and should be cut in their entirety, but I’ll have more analysis on this coming soon. What do you think?

People who think that the environment is one thing that simply cannot be managed by the free market don’t know what they are talking about. Check out this story about US ranchers’ efforts to supply enough bison meat to a marketplace that is hungry for lean bison meat.

And, who was behind the original slaughter of the bison in the US? Why, none other than the US government. As this story from PBS points out:

Some U.S. government officials even promoted the destruction of the bison herds as a way to defeat their Native American enemies, who were resisting the takeover of their lands by white settlers. One Congressman, James Throckmorton of Texas, believed that “it would be a great step forward in the civilization of the Indians and the preservation of peace on the border if there was not a buffalo in existence.” Soon, military commanders were ordering their troops to kill buffalo — not for food, but to deny Native Americans their own source of food. One general believed that buffalo hunters “did more to defeat the Indian nations in a few years than soldiers did in 50.” By 1880, the slaughter was almost over.

Am I saying that the Indians and the buffalo would have lived in perfect harmony absent the US Federal Government? No, it’s hard to say how things would have turned out. But, the market is restoring the buffalo and as John Stossel points out, it could help save endangered African animals as well.

We at the Rio Grande Foundation have made a lot of New Mexico’s pitiful performance on the National Assessment of Educational Progress in terms of reading scores (and Florida’s success in turning itself around).

But what about math scores? The Atlantic magazine recently had an article on that particular issue. And, while the thrust of the article is that the US is under-performing relative to other nations, the fact is that New Mexico is doing quite poorly relative to other states. In fact, we only beat Mississippi while the nations of Uruguay and Bulgaria outscored us.

There is an interactive chart available here so you can compare New Mexico’s math performance relative to other states and nations. The fact is that America’s educational system has major issues and yet New Mexico is a failure even relative to other states.

Hat tip to Michael Daly

Obama and others have repeatedly told Americans how much they will benefit from the new health care law. To say the least, my family’s experience isn’t going to be so hot.

Why? Well, I, my wife, and our 11 month old daughter use something called a Health Savings Account (HSA). Unlike ObamaCare which places the government in charge of our care, HSA’s are an attempt to restore the direct relationship between health care consumers and their doctors. This includes financial responsibility. Needless to say, ObamaCare must counter efforts to restore individual control over care in order to work.

So, come January 1, rather than being able to use the money I’ve built up in my Health Savings Account (this also applies to Flexible Spending Accounts) over the last several years (pre-tax) to pay for aspirin, cold medicine, and other over-the-counter remedies, I’ll now be required to either get a doctor’s prescription or pay with after tax dollars. The situation is described in further detail here and here. The IRS says any money removed from HSA accounts to pay for medical expenses bought without a prescription will be included as taxable income and subject to an additional tax of 20 percent. The idea is to raise $14 billion to help pay for ObamaCare.

So, thanks to the infinite wisdom of Obama and Congress, 10 million consumers who use HSAs (and the many more who use FSAs) will now have to waste time and or money in order to comply with needless regulations. Unless this law is repealed, the situation will only worsen.

Sad to say it, but if I see a poorly written opinion piece in the Albuquerque Journal, I can almost assume it is written by a teacher. It makes me wonder who is becoming a teacher in this state and whether they are being taught basic writing skills. Check out this article from a 36 year veteran from Las Cruces. For the record, I don’t disagree with the author’s point (I think) that you can’t operate socialized government schools via an artificially-imposed “business” model.

For example, what exactly does this sentence mean? “There is such a plethora of teaching programs and ideas out there as a great and beckoning alternative!” Or this one: “You cannot clone teachers whose creativity, ingenuity and freedom to experiment should reign and abound in the ambience of school and classroom.”

He finishes with a flourish:

“With our state’s particular and mostly similar demographics teachers could share their own creative programs and new ideas that work.
If the people of New Mexico and Susana Martinez are happy with this current situation, so be it. Sadly, then, we all are going to be stakeholders for the tent of educational despair and failure for a long, long time!”

So, in nearly 800 words, we’ve learned that New Mexico is attempting to operate the schools on some kind of “business model,” that this is supposedly unpopular with teachers and stifles their creativity, and that this guy who taught for 36 years can’t write his way out of a paper bag. Read the whole thing yourself and tell me if I’m wrong! I guess the good news is that he’s retired now and won’t be able to inflict his fuzzy thinking and poor writing on anymore students, but that is cold comfort when New Mexico is barely graduating 50% of its students from high school.

To you and yours, enjoy the tidings of the season. And, enjoy this from the Mises Institute about Christmas movies and bad economics.

Tom Molitor writes over at NMPolitics.net about the urgent need to end earmarks in Congress.

My family is planning to head up to Santa Fe (from Albuquerque) to witness the Inauguration ceremony of Governor Martinez which is scheduled for the Plaza in Santa Fe at 10am on January 1. We might stick around for lunch and check out one of the museums in town.

Figuring that parking and traffic would be a zoo, I decided to check out the Rail Runner schedule to see if it would get us there by 10am. This would be impossible on a typical weekend and even on a weekday we’d have to board a 7:23 am train to get to Santa Fe in time for the event, but I figured that traffic and parking might make it worthwhile. But then I looked at the Holiday Schedule and saw “NO SERVICE.” on January 1.

Needless to say, I am stunned. I realize it is different, but when President Obama was inaugurated in January, 2009, Washington’s Metro Rail system had its heaviest traffic ever. Obviously, even on a heavy traffic day, taxpayers are still subsidizing each and every trip on the RailRunner, so I guess in a way I’m pleased with their fiscal restraint, but if you can’t use the train on what is bound to be a busy day of travel between Albuquerque and Santa Fe, then what’s the point of having the train in the first place?

(Albuquerque) Governor-Elect Martinez faces a multitude of problems when she takes over from Bill Richardson, not the least of which is New Mexico’s struggling educational system.

Said Rio Grande Foundation President Paul Gessing, “Martinez’s pick of Hanna Skandera, who served as the deputy commissioner of education under Governor Jeb Bush, to head the PED, is a strong indicator that the successful reforms Florida enacted under Bush over the past 10 years will be emphasized under the Martinez Administration.”

“The fact that Martinez has named a strong reformer with ties to Jeb Bush is a good sign for New Mexico children and parents who are stuck in failing schools, yet face an ever-more competitive global economy,” continued Gessing.

The Rio Grande Foundation has been a leading proponent of education reform in New Mexico and brought the “Florida Model” to New Mexico during a series of events during the summer of 2010 and a policy paper entitled “Florida’s K-12 Lesson for New Mexico.”

As Gessing noted, “Florida’s students have seen dramatic improvements on tests like the National Assessment of Educational Progress (NAEP). Back in 1998, before Bush’s reforms, New Mexico 4th graders performed at about the same level as Florida’s 4th graders on the reading portion of the test. As of the most recent NAEP test, Florida’s 4th graders outperform New Mexico’s by approximately two grade levels.”

“Florida’s Hispanics,” noted Gessing, “have seen particularly dramatic improvement with poor Hispanic 4th graders seeing the equivalent of three grade levels of improvement on the NAEP from 1998 to 2009. In fact, poor Hispanics in Florida now outperform New Mexico’s general student population.”

“New Mexico faces a long way to go just to bring student performance up to even the national average, but Martinez’s pick of Hanna Skandera to head up PED shows that she is serious about making needed reforms to our K-12 system. This is an early Christmas present to New Mexico parents and students.” concluded Gessing.

The US health care system certainly has its problems. It is expensive, fragmented, and contains within it a multiplicity of perverse incentives and misguided policies. It is NOT capitalistic at all with more than 50% of health care expenses paid directly by governments and only 1 of every 8 health care dollars paid directly out of pocket (there is usually a middle-man).

Nonetheless, as a recent report from the respected RAND Corporation points out, Older Americans are not as healthy as their English counterparts (due to lifestyle), yet they live as long or longer. While RAND doesn’t come out and say it, the difference seems obvious: the US health care system still has capitalist, free market impulses while the English system is totally socialized.

While ObamaCare does not move us completely to the English model, it does move us dramatically towards greater government control. Hopefully ObamaCare is either repealed or overturned and we don’t have to find out if American seniors’ life-spans are shortened under the new, more socialist ObamaCare model.