It looks like we have a deal on the debt ceiling. While avoiding the possibility of a government default is a good thing, the actual spending cuts are not actual “cuts,” but only relative to estimates of the growth of federal spending over the next decade.

Needless to say, I’m not sold on the proposal, but it is probably the best that could be achieved given the political limitations (I like this plan much better). However, it is depressing to see the same Keynsian claptrap being spewed by those who the media cites as mainstream economists.

According to the article:

“Unemployment will be higher than it would otherwise have been,” Mohamed El-Erian, the CEO of Pimco, the world’s largest bond investment firm, said yesterday on ABC News. “Growth will be lower than it would be otherwise. And inequality will be worse than it would be otherwise.”

The article goes on to say:

And the consensus is that job losses are likely to outweigh the positive impact of increased business confidence. “When you look at the history of these things, the finding is that we shouldn’t be kidding ourselves,” Paolo Mauro of the International Monetary Fund and an expert on the impact of spending cuts, told the New York Times. “When you do fiscal adjustment in the near term, it does have an adverse impact on economic growth.”

Weren’t these the same people who sold us the “stimulus” as a sure-fire way to turn the US economy around?

Me, I think that cutting back federal spending and providing some indication that Washington is serious about cutting spending are the keys to spurring economic growth.

The following videos are from Friday’s luncheon on virtual schools with Lance Izumi. The first video is of an introductory video celebrating what would have been Milton Friedman’s 99th birthday as well as the world premier of the movie “Short Circuited.”

This video is of my introduction of Education Secretary Hanna Skandera and Skandera’s introduction of Lance Izumi:

The study is available here, but an opinion piece appeared in the Albuquerque Journal today.

All of this brinkmanship over the debt ceiling has me a bit depressed. After all, Boehner’s plan is hardly a serious attempt to put America on a path to budgetary sustainability.

That’s why I loved John Stossel’s recent proposal to take a chainsaw to the federal budget. Stossel’s proposal, without even accounting for the rapid economic growth that would be unleashed by the reduction in the federal bureaucracy would result in a surplus in one year. Rather than punting our budgetary problems to future generations, we need our leaders to come up with real, specific cuts, RIGHT NOW.

Oh, and in a small glimmer of optimism, Democratic Rep. Jared Polis of Colorado has a proposal that would increase federal revenues by doing things like having a tax amnesty and legalizing internet gambling — without raising taxes.

I wish I could get excited about the ongoing debt ceiling debate. Unfortunately, while they talk a good game, the Republicans’ supposedly draconian plans (according to Harry Reid and Barack Obama) is weak tea indeed.

The reality is that Speaker Boehner’s newest plan only purports to cut $1 trillion over the next 10 years. None of that is specific or immediate. Considering that recent deficits have been over $1 trillion annually, even this plan, which is sure to be vetoed by Obama, is supposedly too radical. The reality is that it will continue the current deficit spending unabated and, since one Congress cannot force a future Congress to adhere to its will, there is no reason to believe that the $1 trillion will ever materialize.

The recent past hardly inspires confidence. Remember the deal that kept the federal government from being shut down? The good news is that Republicans have control over spending. All they need to do is refuse to pass any legislation that spends more than we have revenue to cover….

Imagine owning a business and not being able to advertise. This is the world Albuquerque City Councilor Isaac Benton wants to impose upon our city. He states that he wants to ban on electronic billboards (including those on sites owned by businesses) because “they’re a traffic nuisance and they don’t look good.” The issue will be heard at Monday’s City Council meeting (August 1).

Now, whether they are dangerous to traffic or not would seem to be a scientific question that can be studied, but it would seem that those in favor of a ban bear the burden of proving this point in advance of a ban, not the other way around. As to whether they look good or not, that is clearly subjective and it would seem that using the force of law to impose one person’s aesthetic preferences on the rest of us would be unfair and even immoral. Of course, as an architect, Benton is used to handling aesthetics and controlling how people live certain aspects of their lives. The difference is that builders can hire or not hire him to design a building. As City Councilor, he has the power to force the rest of us to bend to his will.

Now, if Benton were to get his way, there are First Amendment issues that might arise from such a ban. Our friends at the Institute for Justice have challenged a sign ban in Dallas. Perhaps similar legal challenges could be brought to bear in Albuquerque?

Sometimes you just have to scratch your head. Recently, I wrote about the New Mexico Spaceport within the context of America’s ongoing efforts in space. The article received this scatterbrained response from a liberal blogger.

They explain their position, such as it is, best in the following line: The Pink Flamingo does not like libertarians. I think they are lying fools who have no earthly idea about the realities of life. Neither do their dimwitted little tea party supporters.

That is hardly a thorough critique to say the least. Even more humorous is this anti-libertarian’s belief that we at the Rio Grande Foundation support the Spaceport. Nothing could be further from the truth.

I’m not sure what would happen in terms of space exploration were it not for the US federal government. It is a thought experiment that is truly impossible to fully comprehend. The fact is that — even if Obama or the next president changes directions — given the current budget situation, the private sector can and should play a greater role in space. Sorry Pink Flamingo, but name calling is not an argument.

Jon Barela and the Economic Development Department are currently hosting a “Job Creation Tour” statewide. More information on the schedule of events is available here. I’ll be speaking at around 9am at the Albuquerque meeting this Thursday. I’ll discuss our Roadmap for a more Economically-Competitive New Mexico.

So, if you are concerned about New Mexico’s economy and wish to participate in efforts to turn it around, I urge you to attend.

The Pew Foundation, a generally elite, left-of-center foundation, recently analyzed the national network of Watchdog sites like our own New Mexico Watchdog. And, while they predictably found that the sites “leaned conservative,” I’m proud to say that our own Watchdog site was “at the lower end of the ideology scale.” That’s pretty good, especially considering that up until this year, New Mexico’s political structure was almost totally controlled by Democrats.

So, while the only axes our reporters have to grind are in defense of taxpayers and honesty in government, we are pleased by Pew’s findings. Jason Stverak of the Franklin Center which coordinates and assists with the national network of Watchdog sites has his own take here.

Whether August 2nd is the day of reckoning or it is pushed off into the future, America’s financial situation is dire and unsustainable. Check out the sorry truth at “USA Incorporated.”

Despite pressure from many legislators in both parties (here are the House and Senate votes) and the various Chambers of Commerce, Gov. Martinez made the tough call of vetoing a $128 million tax hike that would have beefed up New Mexico’s unemployment insurance fund. Wisely, the Gov. did allow the benefit reductions in the bill to go into effect.

Martinez could have been excused for going ahead with the increase because if she didn’t, and revenues into the fund did not increase, the unemployment tax would have been forced even higher by the federal government.

Now Martinez’s decision appears to be vindicated (at least at this point) with new data saying that the fund is solvent at least through March of 2013.

Thanks to Gov. Martinez for making a tough decision that undoubtedly has helped to restore New Mexico’s economy to health.

The free market advocacy organization Club for Growth is rating all of the presidential candidates. They just published their white paper for Gary Johnson and it is quite favorable (as expected). Check it out here.

It certainly isn’t true that all teachers are left-wing liberals, but it certainly seems that the most vocal ones are. So, we are treated to the latest, thinly-veiled political diatribe by a teacher on the supposed need to raise taxes to spend more on education.

I have already written extensively on the topic of K-12 funding here. To see how much spending has increased over and above inflation on a per-pupil basis since the early 1990s, click here (the number is about 33%). Nationally (and I’m sure NM isn’t much different), the ratio of teacher to pupil is about half what the author cites:

Most importantly, I believe, while the writer cites the supposed need for reform, he gives absolutely no specifics. Nor does he give any justification for his view that vouchers have “failed.” The fact is that vouchers have not failed. They may not be a panacea, but they have had success when they have been tried (over the stern objections of teachers unions).

Another reform option is virtual schools. To learn more about that, I hope you’ll attend our upcoming luncheon on July 29.

Today marked the end of the last flight of the Space Shuttle. Many are questioning what the legacy of the Space Shuttle is in American history and in the history of space travel. Some (mostly “national greatness and neoconservatives” are decrying the lack of a US vehicle to deliver astronauts to space.

Me, I think this is an opportunity for both the nation and New Mexico. Certainly, it would be great to rely on private enterprise — or at least contractors — to be more engaged in space exploration as President Obama (of all people) has discussed. Also, New Mexico MAY benefit from this shift. We’ll see.

Needless to say, we’re not big fans of the Spaceport. There is no guarantee that, even if Obama’s vision for space holds and private companies play a greater role in space exploration and transportation, New Mexico’s Spaceport will be used in those activities. After all, there are dozens of spaceports in the US already.

So, I actually think Obama is going to right direction here. We need to shift away from the “big-program” style of governance — whether that be in space or in health care. As to whether New Mexico will ultimately benefit or not from this shift, that is another question. The Spaceport is so speculative at this point that any positive result would seem to be a bonus.

This is a great, short, ad that pretty much sums up what has happened in Washington over the last several decades. The ongoing crisis over raising the debt ceiling is just the first battle in a much-needed effort to restore government to sustainable, Constitutional principles:

With all the debate these days over the debt ceiling and the need to cut spending, I’ve been pondering new, innovative, and relatively politically-palatable ideas for cutting federal spending. I can’t help but to keep coming back to the Base Realignment and Closure Commissions (BRAC) that have saved hundreds of billions of dollars for taxpayers by shutting down unneeded military bases.

I’d be interested in readers’ thoughts, but I’d be hard-pressed to come up with a more effective tool for cutting spending than BRAC. So, why not use similar commissions to build political support for (and overcome regional and special-interest objections to) spending reductions.

Specifically, I’m thinking that something along these lines could easily be used to sell off and dispose of federal lands and buildings and to close unnecessary military bases overseas. I also wonder if something similar could be used by the US Post Office which — although theoretically private — is still very much burdened by federal rules and regulations that cause it to lose billions of dollars annually.

I’d be very interested in reader input on this issue. I think it could be a real winner, but I’d like to hear thoughtful suggestions from all sides. What other areas of the federal (and state) budget could this procedure be used for? I’m thinking higher ed and closing branch campuses, but am open to other ideas.

This article which included Albuquerque Chamber President Terri Cole had me scratching my head. Not that we haven’t had our differences with Cole and the Chamber, but their ongoing defense of the Rail Runner is getting ridiculous.

Simply put, the Rail Runner is an unaffordable luxury and it always was. Remember I-25 before the Rail Runner? If anyone can clearly show that traffic has improved on that road, I’d like to see their data. Also, if businesses in Santa Fe do such great business from the train, why don’t they put their money where their mouths are?

Ultimately, the issue boils down to whether, as they say in the article, “a comprehensive multimodal transportation system which efficiently moves people and product because it is an economic development necessity and is essential to creating a vibrant and competitive city and state.” How so? We have a socialized transportation system, what signals are we using to determine the best mix of the various transportation modes? Is there really solid evidence that cities which massively invest in heavy rail transit are in better economic shape than those that don’t?

The train did not markedly improve transportation issues — such as traffic congestion — in the I-25 corridor and is clearly unaffordable without tax hikes of some sort. Of course, we agree with the Chamber that tax hikes are a bad idea, but doesn’t this mean that we have to cut spending somewhere?

Recently, the folks at the Center for the American Experiment (a sister think tank based in Minnesota) put together a symposium of free market leaders (including yours truly) on what they personally would be willing to give up in terms of government services to cure the budget problems facing the federal government.

As I write here, I’d be willing to give up quite a lot. Read what other free market luminaries including Grover Norquist, Former Congressman Tim Penny, and David Theroux have to say.

A recent columnist in the Albuquerque Journal said something that I’ve been saying for a while (here and here): to spur economic growth, business leaders need to see some certainty and consistency out of Washington.

The trick is that many of Obama’s keynote policy accomplishments (namely health care) are driving the very uncertainty that is holding the economy back. I’m sure the current gridlock over raising the debt ceiling isn’t helping the situation, but SOMETHING must be done to stop Washington’s over-spending even if the debt ceiling is a blunt instrument to use.

While I applaud the many Republicans who are standing firm against a blank-slate raising of the debt ceiling, the fact is that many of them (both Republicans AND Democrats) are totally spineless when it comes to proposing and voting for actual spending reductions. Even if entitlements are a tough thing to reform, there are spending programs in dire need of reform that only a few politicians in Washington are willing to actually cut.

I hear the constant refrain from the left about jobs and why they aren’t being created. Now, Wal Mart is looking to open a supercenter on the West Side (right down Coors from my house, I might add). It is going to be a controversial battle as 500 people have already signed up to comment at a public meeting on the proposed store. Ironically, the average Wal Mart supercenter creates 500 jobs.

Mayor Berry and Gov. Martinez are trying to create the conditions to make economic growth and jobs possible. Will the NIMBY crowd and the Wal Mart haters stop jobs from being created? Will Sam Bregman be out in front defending Wal Mart’s right to build a store in Albuquerque?

According to this article (written by a representative of the liberal think tank “Third Way,”) Even some so-called “progressives” are waking up to the fact that Social Security is in dire need of reform.

This is great news. After all, as bad as the economy has been recently, if you’d invested in the S&P 500 at the beginning of 2006 (back when George W. Bush was talking about “privatizing” Social Security and before the stock market bust), you’d have still made some money in the stock market. That’s pretty good compared to the paltry rate of return provided by Social Security which doesn’t invest your money, rather robs tomorrow’s Peter to pay today’s Paul (as it has from the very beginning).

Of course, long-term and diversified investing is the way to go, so most investors would have made a great return for themselves for decades and would not have all their retirement money in stocks as they near retirement. But, as long as the government operates Social Security as a Ponzi Scheme, the system will continue to go further in debt and young people will continue to lose out on a reasonable return on their retirement dollars.

Those who want to create a new, convoluted scheme to ensure that governments grab more revenues from sales made over the Internet are at it again. First, the Albuquerque Journal had this editorial and more recently it ran this opinion piece.

The problem is that sales made over the Internet ARE already taxed! It’s just that the Supreme Court has ruled in Quill v. North Dakota that state governments cannot force retailers located in another state to act as revenue collection agents for them. If you purchase something at Amazon.com, you owe taxes on that item and, at least in theory, the state can come after you if you don’t pay it.

What advocates of Internet taxation really want is far more complex than simply closing a loophole.

Where are the taxes charged and who collects them, the seller or the buyer? At what rate is the tax collected?

Even with computing technology, there are over 100 different GRT rates charged in New Mexico alone. Multiply that among the other 49 states — mostly far more populous than New Mexico — and keeping up with this and charging the right tax rate will be an accounting nightmare for businesses.

Governments have been the ones getting a free ride for too long. They’ve been able to bully local businesses into doing the dirty work of tax collection for them (at tremendous cost to those businesses). The Internet changes all that. This is hardly a “loophole.”

Lastly, while state government officials would have us believe that taxing Internet sales is a panacea for balanced budgets, the reality is that only 4.4% of total sales are made on the Internet, many of which are taxed. Slight revenue growth might occur if ALL sales were taxed, but at what cost to businesses and economic growth?

I took Jerry Ortiz y Pino’s article on our recent appearance on 770 KKOB as an opportunity to respond to his compliment/hostility. My response in The Alibi can be found here.

First, Larry Abraham blew the proverbial whistle on the debacle that is the Rail Runner. His was the first real public accounting for the train’s shaky finances. Today, the Journal ran another article noting that the State will need to pony up another $16 million for track and system maintenance.

The legislator who we can thank for bringing this additional information to the public is GOP freshman legislator Alonzo Baldonado. The Legislative Finance Committee is due to report on the Rail Runner and its finances this November and I’m sure that report will contain further bad news and bombshells. Specifically, as Mark Mathis wrote in his excellent — albeit unposted on the web — article this morning, the $16 million is just the beginning of the train’s maintenance costs. Taxpayers will have another massive bill foisted upon them in a few decades (again) to keep the crazy train moving down the tracks.

Thanks to Mathis for helping to lead the (at this point small) chorus calling to stop the RailRunner in its tracks and before it bankrupts us.