You have more than likely heard reports about the Transportation Security Administration’s (TSA) controversial procedures at the Nation’s airports. The sad truth is that without Congressional action or internal decisions by TSA, the new “backscatter” machines and gropes at the security line will not go away anytime soon.

But that doesn’t mean that we can’t do anything to improve airline security and Councilor Lewis should be commended for his new legislation R-172 and Albuquerque voters and taxpayers should express their support to their City Councilors via email or at the upcoming Council meeting on December 20.

Why? Although procedures would not be changed immediately, if Lewis’s measure to opt the Sunport out of TSA and hire private screeners is adopted, the Sunport’s security would likely be improved. That’s because TSA, as transportation analyst Bob Poole writes:

TSA is both the provider of airport screening and the regulator of all aspects of aviation security. TSA regulates itself and has hidden its mistakes in the past. It suppressed a report in 2007 showing that private security companies were at least as effective as TSA screeners and that if more careful accounting were done, were probably less costly, too. TSA never released that report, but the Government Accountability Office blew the whistle on TSA’s attempted coverup.

TSA has a monopoly over regulation and a near-monopoly in terms of actual security provision, how effective and efficient (not to mean customer-friendly) are monopolies? Nonetheless, a dozen or so airports across the nation have opted out of TSA including Kansas City and San Francisco, so this is not uncharted territory. While immediate cost savings are unlikely because TSA dictates the wage scale even under the “private” model, costs will certainly not go up.

Lastly, opting out of TSA will send a message to TSA that the citizens of Albuquerque are not pleased with the “service” being provided and that Congress needs to reform TSA or abolish it entirely and allow the airlines and airports manage security themselves. Lewis’s effort is not radical and it won’t solve our problems right away, but it is a big step in the right direction. Drop your Councilor a line and let them know what you think.

Recently, the Rio Grande Foundation published this report detailing several specific, significant spending cuts that could help Governor-Elect Martinez and the Legislature close the budget deficit (currently estimated to be $400 million). Now we need your help!

Take this quick survey which will allow you to choose the cuts you’d prefer to see and preserve the programs you feel are worthwhile. We will make the final results of this survey available on our website when the results are in (after the New Year). We will also submit the results to the incoming Martinez Administration.

Take the survey and pass the survey link along to your friends and other contacts!

This useful chart illustrates how federal spending and taxing levels have varied over the last few decades.

Clearly, federal spending has risen dramatically in recent years, while the economy has hit tax revenues. The chart is taken from an article written by Veronique de Rugy at the Mercatus Center who puts a few big-picture ideas on the table for balancing the budget.

As de Rugy notes “Since Bill Clinton left the White House in 2001, total federal spending has increased by a massive 60 percent in inflation-adjusted 2010 dollars. In fiscal year 2010, which ended September 30, the federal government spent $3.6 trillion, or 25 percent of Gross Domestic Product. That’s the most spending, in terms of percentage of GDP, since 1946. Likewise, last year’s $1.5 trillion deficit, as a percentage of GDP, was the largest deficit since 1945.”

Most people didn’t think the federal government was “too small” when Clinton left office. It would seem that some tough decisions on spending should be all that we need to eliminate the deficit and that significant tax hikes as outlined in the federal debt commission would be unnecessary if Congress and the White House get serious about cutting the federal budget down to size.

It was known by those “in the know” at the time of purchase, but with a front page report in Sunday’s Albuquerque Journal, it became public knowledge that New Mexico taxpayers are on the hook for a lot more than they bargained for with the Rail Runner. With track being purchased that may never be used and annual maintenance costs in the millions of dollars annually, we are being RailRoaded. Read more on this sordid story from Rob Nikolewski at Capitol Report New Mexico.

I love it when our friends on the left feel threatened (now is one of those times). In flush economic times, our friends on the left support massive spending for the Rail Runner, Spaceport, and unlimited expansion and zero accountability for wasteful and incompetent programs like K-12 education, film subsidies, and Medicaid. When the economy turns south and fiscal conservatives like the Rio Grande Foundation (and elected officials) start looking for cuts, suddenly it would appear that all government does is provide roads and fire departments.

For a little detail on this, check out our recent opinion piece and the response from Gerry Bradley of Voices for Children. Bradley and his allies on the left seem to think that we at the Rio Grande Foundation simply hate government and want to abolish roads and fire departments. This is simply not the case and, if government limited itself to “the basics,” we’d be the happiest people around.

Unfortunately, government does way too much and diverts resources away from the basics. As you can see from this document, roads and highways form a small fraction of the state’s budget.

Bradley also fails to see that in the absence of a government role, the private sector would probably provide infrastructure that is far more focused and well-maintained than what the government provides. In Europe, for example, where gas taxes and gas prices are much higher than they are here — and are not dedicated to roads — toll roads are the norm.

The fact is that our society (both New Mexico and nationally) is simply not able to pay the bills for government at the size it is now. Cuts are needed. Ideally, politicians will cut the fat and leave the bones and core functions of government intact.

How do I know someone is either lying or doesn’t understand basic economics? There are a lot of ways to do it, but use of the term “multiplier effect,” particularly when associated with government spending, is one of the best ways to root out economic ignoramuses and liars. For more details on why the “multipler” doesn’t work, check out this excellent article on the Obama “stimulus.”

So, it was no surprise that half-way through an opinion piece in this morning’s Albuquerque Journal, the author (who defended the film industry and its subsidies), cited a mysterious three to one multiplier.

Then there is the issue of extending federal unemployment benefits — an issue that Congressional Republicans seem willing to capitulate on in order to continue the Bush-era tax cuts. Some seemingly credible economists claim that extending such benefits has a “multiplier effect.” Of course, the only “multipler” I’ve seen from expanding unemployment benefits is that we have multiplied the number of folks who have been unemployed for more than a year. It also multiplies the deficits of state unemployment funds.

How do we know that the multiplier effect is bogus? Economics is about creating wealth with limited resources. The use of government force to take resources from one person or group to another person or group does not confer upon that money any greater power than it had before. In fact, as humans, we have a proven track record of caring less about things that we don’t deserve and receive through inappropriate means than we do about what we have worked hard to gain ourselves.

In the meantime, keep your eyes out for the mythical “multiplier.”

I was on vacation and out of town over the Thanksgiving, so I was unable to get to some of the op-eds and other information on this blog. The most interesting and worthy of response was this piece on the Rail Runner. Simply put, the author makes several completely unsubstantiated claims regarding the Rail Runner. I’ll respond to each point in bold:

First, and most importantly, there are efficiency benefits that result when the Rail Runner reduces costs due to traffic congestion, road construction and maintenance, parking facilities, accidents and pollution. Simply not true. Portland, Oregon, the most transit-intensive city in the nation is also one of the most congested. In fact, most transit advocates want to INCREASE congestion

Second, there are the benefits to the people who were already using commuter buses in the Belen/Santa Fe corridor before Rail Runner and who now enjoy more comfortable and more frequent service. Is taking a bus to the Rail Runner and then taking another bus once you get off the Rail Runner really better than a shuttle bus? Also, which is quicker? The author makes an assertion but has no facts.

Third, there are the benefits to people who are physically, economically or socially disadvantaged who couldn’t travel before the Rail Runner, but now can. He just mentioned buses. Has anyone asked the handicapped? I’ve seen no polling on this, so again, an assertion with no backup.

The simple fact is that the Rail Runner is heavily-subsidized with little benefit in terms of the environment or congestion. It is time to shut it down.

Tom Molitor has a nice column over at NMPolitics outlining some of the personal leadership characteristics that Margaret Thatcher — one of my favorite political leaders of all time — used to turn England’s economy around during the 1980s. Thankfully, Martinez doesn’t face quite as dire a situation here in New Mexico as Tom points out, but tough decisions are going to anger those who believe they will be hurt by them.

Ironically, as many of the coal miners in England figured out, economic prosperity would ultimately create a stronger economy and better living standards for them and their families outside of the dirty and dangerous mines. New Mexicans who have grown reliant on government, could have the same epiphany as Martinez is forced to make needed cuts to turn New Mexico around.

It is a scary, exciting time in New Mexico (and the US as a whole). There is no doubt that tough action is required. Thatcher was one of the toughest, best leaders this world has seen.

I’m a pretty cynical guy when it comes to special interests and their desire to obtain a “free lunch” for themselves at taxpayers’ expense. So, rarely do things I read in the newspapers shock me. But, something said by film union flack John Hendry nearly made me fall out of my chair. He said, in reference to the latest report showing that the state’s massive subsidies for the film industry are an economic dead-end, that curtailing the industry’s subsidies “would amount to a tax hike.”

Clearly, what we have here is a failure to communicate. A tax hike is NOT a reduction in the amount of subsidy you receive from taxpayers (25 cents on the dollar in the case of the film industry). A tax hike is governments’ taking more of someone’s money than they previously did. See this recent post on combined reporting which is a genuine tax hike.

The film industry did not own or produce the 25 cents they are getting from taxpayers. Those who earned it did. Eliminating that giveaway would NOT raise taxes. Hendry is just plain wrong and either doesn’t understand the term or is making things up.

There is the grey area of traditional tax credits and other incentives that are also being debated (legitimately as we face a massive deficit). Good tax policy is flat, fair, and simple. Tax incentives tend to be focused narrowly at politically-powerful groups. Eliminating some of them may be a net tax increase, but reducing such special interest breaks can contribute to good, long-term tax policy.

Ultimately, what we own belongs to us. When government takes more of it than it did before, that is a tax increase. If we don’t set the terms of the debate at the outset, we’ll never get anywhere (and maybe that is their point).

The Internet is great. I couldn’t do what I do at the Rio Grande Foundation without it. Nonetheless, as Thomas Friedman rightly pointed out in his book “The World is Flat,” technology levels the playing field for EVERYONE regardless of the merits of their work or their arguments.

And, while I am used to being attacked by those who disagree with me and the Rio Grande Foundation for believing in smaller government, my personal integrity has never been attacked…until some guy named Christopher Dudley came along.

Dudley posted a bunch of accusations that mostly centered around two alleged points:

1) I lied about my background and resume;
2) RGF is a membership organization that has little support except from corporate sponsors.

The second argument is just silly. As this article points out, 501c3 non-profits are not really “membership” organizations. So, we don’t have “members” at all. His corporate sponsorship number is also completely fictional as that information is simply not available for 501c3s. The best financial information on non-profits is contained in a group’s 990 form and is available online at www.guidestar.com.

Now, to his claim that I am a liar. Here is my bio. It mentions that I have published in the Washington Post, Wall Street Journal, and US News and World Reports.

In some cases, there are more than one, but here is more than ample evidence to illustrate that I have not misrepresented myself.

Here is one from US News.

Here is one from the Washington Post (by no means the only one, for more, go to the Post’s advanced archival search page and type in “Paul Gessing”).

And here are a few from the Wall Street Journal, here, and here.

Anyway, I’d never have responded to this jackball because I have more important things to do, but mainstream news outlets inquired and I felt the need to respond. So, be careful out there and don’t believe everything you read online.

Over the Thanksgiving Holiday, Steve Terrell over at the Santa Fe New Mexican did a short piece discussing efforts by an organization calling itself We Are New Mexico which outlined its own budget fix ideas at about the same time as we released ours.

Their ideas included:

Bonding of Deficit Items.
Closing Foreign Corporate tax loopholes.

Review of top-heavy administrative positions vs. service positions.

Establishment of a ‘Blue Ribbon’ commission headed by the Governor and the Legislative leadership, and consisting of (but not limited to) business, organized labor and non-profit members to review state government and recommend long-term adjustments to make state government more effective in delivering the services that New Mexico’s citizens desire.

Provisions for an honest review and assessment of all tax incentives, to determine which actually create jobs and an improved New Mexican Economy.

A demand that proposed cuts are accompanied by an assessment of the impact on other aspects of New Mexico’s economy, fiscal status and especially on the most vulnerable people of our state.

The head of We Are New Mexico indeed has reached out to us at the RGF and we do plan to meet to discuss potential ideas that we share. And how about that verse of Kumbaya?

We’re definitely in favor of seriously looking at tax credits and incentives as most of them (the film industry’s in particular) are not effective. Also, reducing administrative expenses throughout government would be a wise move. The difference, of course, is that We Are New Mexico’s recommendations seem to be mostly general while ours are specific. We’ll see how things go at our meeting.

Albuquerque Journal business columnist Winthrop Quigley recently wrote about New Mexico’s flawed economic structure in the paper’s business section.

While I often disagree with Quigley, he makes some good points in the article. Nonetheless, as I wrote in my published letter below, policymakers have the power to make needed changes that will turn New Mexico around by attracting private sector businesses to the state.

Winthrop Quigley is spot-on in stating that New Mexico’s Economic Structure is Flawed in his recent article. There is no doubt that the state is too reliant on federal, state, and local government, nor can it be argued that – important as they are to the economy – it would be great to diversify beyond our mineral riches as a means of bringing money into the state.

History, as Quigley writes, plays a major role, but so do our poor educational system and government tax and regulatory policies. The onerous and misunderstood gross receipts tax which includes a wide variety of services and business inputs that are not taxed in other states is one obvious factor.

Governor Richardson seems to have been of two minds on economic development. On one hand his initiative led to dramatic income and capital gains tax cuts, but he also wasted money on the heavily-subsidize Rail Runner, film industry, and Spaceport, all while seemingly doing everything in his power to chase the oil and gas industries out of state.

History and geography indeed loom large, but other lightly-populated states have overcome these problems – like New Hampshire and Wyoming, to name just two. Governor-elect Martinez cannot change the equation overnight, but by balancing the budget with no tax hikes, creating a system of reasonable regulations, and dramatically re-vamping New Mexico’s K-12 system, she’ll be moving us a long way toward the balance that Quigley (and the rest of us) desire.

No matter which side of the political spectrum you analyze them from (here is a list I put together of analyses from the left, right, and center), economists keep coming back with the same answer: “Film subsidies are bad policy and don’t generate economic prosperity.”

The latest such study was undertaken by the Center for Budget and Policy Priorities, a national, liberal group that finds such subsidy programs to be “Too Little Bang for Too Many Bucks.”

On this day we take stock of all that we have to be thankful for. And, while the nation is in debt and the state faces a massive budget deficit, living standards in the US continue to rise. So, from our family to yours, Happy Thanksgiving!

Oh, and if you are not familiar with the REAL story of Thanksgiving and how property rights and free markets saved the day, be sure to read this.

We’ve all heard the horror stories about the grope-a-thons at the airports. I wrote about them here. Now, we find out, that according to this article some government officials will not be subject to the screenings at all.

Of course, most government officials worth their salt will fly on the government’s own jet fleet, but even if they are subjected to flying commercial, they’ll be exempt. In other words, TSA security hassles are just fine for the rest of us, but for the government’s elite, they are unacceptable.

While calling Obama a Stalinist or a true “socialist” may still be over the top, is there any question that American society is starting to look like the Soviet Union where a small ruling class controls society and the rest of us just do what we’re told?

I’ve written in this space on several occasions about New Mexico’s fractured and all-too-reliant on the government business community. Nonetheless, the Martinez Administration provides an opportunity and the budget situation provides a necessity for the business community to step up and make New Mexico government more effective and efficient.

The opinion paper in Sunday’s paper was a good start. But, with $452 million in savings needed, it is time to move beyond platitudes and generalities and into specifics. We at the Rio Grande Foundation outlined some tough budget cuts. These are by no means the only opportunities for savings, but I’d love to know what specific savings the business community has been looking at and work with them. After all, it’ll take the united efforts of the business community, the Martinez Administration, and fiscal conservatives throughout the state to close the budget gap and change New Mexico government for the better.

Personally, I think that if they are going to name the I-40/Coors Interchange near my house after Bill Richardson, they should buy “Fathead”-style pictures of Richardson, so that I can drive over the top of him and make him eat my global-warming-inducing exhaust whenever I like (after all, I want to remember the guy, right)? Nonetheless, I stuck to a narrower script about the role of politicians in society and whether having this interchange named after Richardson is appropriate or not for an interview with Channel 4.

Watch the interview below:

The naming of buildings and other projects after one’s-self is nothing new, nor is it a partisan problem. House Speaker Ben Lujan, US Sen. Pete Domenici, and Rep. Sheryl Williams Stapleton have all named government buildings after themselves even though they are still/were in office.

Gov. Richardson has long been known for padding the state work force with so-called “exempt” employees. Now, like rats fleeing a sinking ship, those government workers are trying to find the safety of being “classified.”

Allowing this to go unchallenged would pile millions of dollars onto the payroll at a time of massive deficits. It would also preclude more qualified workers from pursuing their jobs. View the Channel 4 report on the incoming governor’s efforts to do the right thing here:

An article in the business section of today’s Albuquerque Journal caught my eye. “Los Cuates May Fill Space at Sunport.” Well, that’s nice, it looks like the spot vacated by Gardunos will be filled.

Then I read further into the article…subject to approval from City Council…! Seriously, regardless of what actually happens with this vote — I hope it is approved — is managing the restaurants that do business in the Albuquerque Sunport really the job of City Council? Me, I’d like to see management of the terminal done by a private company which would likely do a better job at a far lower price…and they wouldn’t have to get City Council’s approval to add a new restaurant.

In case you missed it, on last night’s 10pm news, I sat down with the folks at Channel 13 news to discuss our budget cutting ideas. The full report is available below:

Certainly, the ideas are not popular with those who we are trying to place on the chopping block, but the only other set of proposals I’ve seen from a left-wing group called “We are New Mexico,” is not very specific and doesn’t seem to cut very much. That group’s cuts are available below:

Selling severance-tax bonds to avoid cutting state jobs. Senate Democratic Leader Michael Sanchez introduced a bill in this year’s Legislature to issue $76 million in bonds to avoid job cuts. However, the measure never made it to the Senate floor.

Closing out-of-state corporate tax loopholes. (Martinez, during the campaign, said she was opposed to legislation to plug this loophole, equating it to increasing taxes.)
Reviewing “top-heavy administrative positions” as opposed to positions necessary to provide needed services.

Reviewing all tax incentives to see which are beneficial to the state and which are not.

Check out this news story (disregard slightly annoying ad) from New York on an effort by a few local teens to do something productive by holding a bake sale. A busybody council man “caught” the two engaging in such nefarious activity and shut the effort down because “the two were selling for their own benefit rather than a charity.” More details on the situation in this article.

There are two really interesting things about this situation:

1) Teen unemployment is a real problem in this nation and this kind of government meddling is a major reason (26% percent according to this article). Minimum wages are another. But, what better ways to kill the natural entrepreneurial spirit of a couple of teenagers than for city bureaucrats to make life difficult on them;

2) The somewhat less jerk-like Robert Snyder (another city bureaucrat interviewed in the story) says that “he’d be happy to sell them a permit for $1 or something — if they are going to use the money for college — just to show them that there’s a cost of doing business.” This guy makes me almost as sick as the other councilor who stopped the teens in the first place.

The inputs in terms of flour and sugar cost money; so does the time to make the baked goods and sell them; the only thing government does is stand in the way (this is a microcosm of almost all government interaction with business). Lastly, I find it morally offensive that Snyder feels the need to lecture these two youngsters on what they can do with their earnings. It is THEIR money after all and they should be able to engage in economic activity in any legitimate way they wish and do with their money what they want, regardless of the wishes of government.

I don’t know how often similar things happen here in New Mexico, but I do know that Doug Turner (an RGF board member) had to pull some political strings when he was a kid trying to run his own lemonade stand.

Just in time for the Holiday travel time, the TSA’s searches have become ever more intrusive and absurd, not to mention expensive with the newest scanners costing between $130,000-$170,000 per unit. . As a government bureaucracy, however, we have very few options for opting out of their system or going elsewhere for the “service” of airline security. There is also, realistically, zero competition with TSA.

The problem has created situations like this one where it would seem like a young woman was targeted for her looks. Byron York argues, justifiably, that more airports should opt out of using TSA to provide security. That’s nice, but I prefer the idea of abolishing the TSA entirely as this guy writes at Forbes.

Just in time for the Holiday travel time, the TSA’s searches have become ever more intrusive and absurd, not to mention expensive with the newest scanners costing between $130,000-$170,000 per unit. . As a government bureaucracy, however, we have very few options for opting out of their system or going elsewhere for the “service” of airline security. There is also, realistically, zero competition with TSA.

The problem has created situations like this one where it would seem like a young woman was targeted for her looks. Byron York argues, justifiably, that more airports should opt out of using TSA to provide security. That’s nice, but I prefer the idea of abolishing the TSA entirely as this guy writes at Forbes.

I for one plan to opt out of the scanner when I travel out of Albuquerque this Friday.

Tom Molitor writing over at New Mexico Politics describes just a few ways in which New Mexico’s budget either doesn’t make sense. Also, today, the Rio Grande Foundation released more than $450 million specific savings that would adhere to Governor-Elect Martinez’s campaign pledge to not cut Medicaid or K-12 education.

Read the short report here.

There is a lot for fiscal conservatives to like in President Obama’s Fiscal Commission. A full explanation of the first draft can be found here. A shorter summary can be found here. Specifically, the discretionary and defense spending cuts need to be considered and, while politically difficult, should attract some support from both sides of the aisle.

The most questionable aspects of the plan focus on Social Security with reform ideas such as:

Index the retirement age to longevity — i.e., increase the retirement age to qualify for Social Security — to age 69 by 2075.

Index Social Security yearly increases to inflation rather than wages, which will generally mean lower cost of living increases and less money per average recipient.
“Increase progressivity of benefit formula” — i.e., means test part of Social Security benefits by 2050.

Increase the Social Security contribution ceiling: while people only pay Social Security taxes on the first $106,800 of their wages today, that’s only about 86% of the total potentially taxable wages. The co-chairs suggest raising the ceiling to capture 90% of wages.

This is a massive tax hike and is designed to make the program another welfare program (redistribution of wealth) rather than the original vision of a “social safety net” for all Americans. Liberals have typically opposed efforts to make Social Security more “progressive” as the system will lose needed support from the wealthy, but that strategy appears to have been abandoned.

Personally, I think it is obvious that Social Security needs to allow young people to opt into a system where they own their own accounts. All the tax hikes and raising retirement ages is like rearranging the deck chairs on the Titanic.

Of course, the recommendations are nowhere near as fiscally-conservative as I’d like. The folks at Americans for Tax Reform explain the many issues fiscal conservatives might (and indeed should) have with the plan. Nonetheless. it would seem that the spending reductions are a good place to start. Hopefully they provide a foundation for a needed national discussion.