It boggles my mind sometimes. The ABQ Journal’s Winthrop Quigley asserted in this recent article that “the Obama administration has yet to increase taxes on anyone despite the president’s objections to the Bush tax cuts.” The article in general is blog-worthy because Quigley seems to be saying that “taxes don’t matter” as they relate to economic growth, but I will focus here on the tax issue. Did Quigley completely forget about Obama’s massive tobacco tax hikes? Most of the impact of these tax hikes, by the way, impact low income taxpayers.

But this isn’t a tax policy post, I’m talking trade war here. Of course, tariffs are simply a tax placed on imported goods. So Quigley is wrong again. The Obama Administration earlier this year levied a 35% tax on Chinese tires.

Now, the newspaper is reporting a third likely tax hike, this one on pipes used in the oil and gas industry and imported from China. Oil and gas being an industry of particular importance to New Mexico, I’m sure that our own New Mexico congressional delegation will stand up to the Democratic Party’s staunch allies, the United Steelworkers and support this vital home grown industry (yeah right!) against this tax hike.

Anyway, perhaps someone who hasn’t published a letter to the editor in the Business Journal in the past week can alert Quigley to these tax hikes? Hopefully fiscal conservatives will unite in opposing this dangerous trade war as well.

Happy New Year!

Airline security may seem to be more of a national security issue than a “free market issue,” but with aviation experts proposing even more onerous and costly security measures, presumably paid for through higher aviation taxes, the issue becomes economically important.

As Reason’s Jacob Sullum writes:

The reaction to Abdulmutallab’s fizzled bomb shows that the government continues to fetishistically focus on the details of the latest incident and impose conspicuous precautions without regard to whether the security payoff is worth the cost. Because Abdulmutallab used a blanket to conceal what he was doing, the TSA told airlines to ban the use of blankets during the last hour of flights to the United States. Also prohibited during the last hour: getting up from one’s seat, “passenger access to carry-on baggage,” and “personal belongings on the lap.”

Why the last hour? Because that’s when Abdulmutallab tried to set off his bomb. Therefore that is what all terrorists will do.

The TSA also instructed airlines to “disable aircraft-integrated passenger communications systems and services (phone, internet access services, live television programming, global positioning systems) prior to boarding and during all phases of flight.” And it forbade “any announcement to passengers concerning flight path or position over cities or landmarks.”

Those rules, combined with the focus on the last hour of flight, suggest the TSA believes Abdulmutallab wanted his bomb to go off as the plane was approaching Detroit, and it therefore is trying to prevent other bombers from knowing where they are. But these precautions are easily evaded by anyone who does a little preflight research and wears a watch (next on the list of banned items?). In any case, other terrorists may decide to strike at a higher altitude, where the damage caused by an explosion would be compounded by decompression.

With airline passengers already facing heavy tax burdens, it would be great if policymakers would focus on keeping bad people off of planes rather than making passenger flight more costly and difficult for all of us.

New Mexico taxpayers are finally off the hook for the latest boondoggle perpetrated upon them by their elected “leadership.” I’m referring to the flights between Albuquerque’s Sunport and the Mexican city of Chihuahua. The state has spent $175,000 of our money to subsidize the three-times-a-week service — which averaged a whopping nine passengers a flight on the 52-seat jets.

Politicians should learn their lesson. If the market won’t support something, wasting taxpayers’ money to support it isn’t going to do the trick…at least not for the long term. Unfortunately, as I blogged a few weeks ago, this “throw money at the problem” mentality is all too common among government officials.

If politicians want to make the Sunport a truly “international” airport, rather than bribing airlines, they should try reducing taxes and unnecessary regulations to make New Mexico a regional economic powerhouse as opposed to a being a ward of the federal government. Give businesses and people a reason to come here to do business and make money and we’ll have more international flights than you can shake a stick at.

In a rational free market system, the need for hospitals in a particular area would be determined by a combination of market forces and the willingness of entrepreneurs to invest in that kind of business. But, as was discussed in a front page story on the cover of the Albuquerque Journal the influence of market forces in determining hospital need is somewhat minimal — and New Mexico is not (thankfully) — a certificate of need state (in other words, government permission is not necessary).

So, what determines where hospitals are located in New Mexico? According to the article:

The University of New Mexico (one of the 2 hospitals in question) is looking for financing from Housing and Urban Development;

Presbyterian (the other hospital, a non-profit) is asking its employees to help finance the project to the tune of $3 million;

Both hospitals are looking for property tax revenue from Sandoval County to finance operation costs.

So, how will the hospitals make money? Well, one of the most interesting quotes in the article is that “Hospitals often complain Medicare reimbursement aren’t high enough, but at least Medicare pays reliably, and Medicare patients utilize 2.5 times as many inpatient services than the average patient.” So, again, subsidies play a major role.

While Congress looks to rid the American health care system of the last vestiges of free market, the debate over two new New Mexico hospitals is yet another example of how non-market forces predominate.

Given the busy holiday season, I’m probably not the only one who hasn’t been able to keep up on their newspaper and current events reading. That said, if you haven’t already done so, I urge you to read the interesting article “State Can’t Waste This Budget Crisis” which appeared in the ABQ Journal on December 21.

In the article, New Mexico Senator Steve Fischmann emphasized the role of over-spending in causing the current budget situation and even pointed out the issue of political corruption as a cause. Then, Fischmann argued strongly in favor of reducing government spending by targeting the most wasteful and unnecessary government programs rather than copping out and cutting spending across the board. He also specifically mentioned criminal justice reform, a topic that RGF has promoted as a possible cost saver.

Lastly, Fischmann discusses “revenue enhancement.” And, while the devil is undoubtedly in the details, the concept of eliminating narrowly-targeted tax breaks and spending programs is certainly worth looking at. I recently discussed the ineffective ways in which New Mexico attempts to develop economically. Before going overboard on raising revenue, I’d urge Fischmann and his colleagues to eliminate special interest payouts like the film industry’s very generous subsidies first.

Regardless of this minor point of disagreement, I think Fischmann is someone that fiscal conservatives can work with on the budget issues facing the state. Hopefully he joins other common-sense Democrats like John Arthur Smith and Tim Jennings to stop tax hikes and cut spending during the 2010 legislative session.

Enjoy the Holiday which, for many of you, will be a White Christmas this year. Also, enjoy this brief capitalist history of Christmas. It turns out that far from being ruined by “commercialization,” Christmas, even in its original form, was a celebration of prosperity.

As Obama and the Democrats bribe senators in their slow march to 60 votes in the Senate, more and more details continue to come out. The picture isn’t pretty. First, there are the bribes:

— Nebraska’s Ben Nelson, in exchange for a “yes” vote on the 10-year, $871 billion package — received permanent and full federal aid for his state’s expanded Medicaid population;

— Louisiana got up to $300 million in Medicaid benefits;

— Vermont and Massachusetts got $1.2 billion in Medicaid money — a change that was described as a correction to the current system which exempts those two states because they have robust health care systems. Vermont Sen. Bernie Sanders also boasted Saturday that he requested and won an investment worth between $10 and $14 billion for community health centers.

— Western states secured higher federal reimbursement rates for doctors and hospitals that serve Medicare patients. The provision covers the low-population “frontier” states and applies to Montana, North Dakota, South Dakota, Utah and Wyoming — the latter two states are both represented by two Republicans, but ended up as beneficiaries anyway since they qualify. The legislative language defines frontier states as states where at least 50 percent of the counties have fewer than six people per square mile.

— Florida, New York and Pennsylvania — where five of six senators are Democrats — will have their seniors’ Medicare Advantage benefits protected, even as the program sees massive cuts elsewhere.

— Sen. Max Baucus, D-Mont., reportedly secured expanded Medicare coverage for victims of asbestos exposure in a mine in Libby, Mont.

— Connecticut is receiving $100 million for a “health care facility” affiliated with an academic health center at a university that contains the state’s only “public academic medical and dental school.”

Then there are the actual policies. For starters, it now appears that the Medicare savings in the bill which most everyone believe will never come to pass, have been double-counted to make the “savings” contained in the bill look bigger.

All of this adds up to Robert Samuelson’s calling the Senate health care bill “a bad bargain because….health benefits are overstated, long-term economic costs understated. The country would be the worse for this legislation’s passage. What it’s become is an exercise in political symbolism: Obama’s self-indulgent crusade to seize the liberal holy grail of ‘universal coverage.’ What it’s not is leadership.”

Hopefully a left-right coalition of liberal Democrats and Republicans, spurred on by the American people who are repulsed by the process and its result, will convince the House to kill this incredibly bad legislation.

Jonah Goldberg is one of the most thoughtful columnists in America. This Goldberg column which also appeared in the Albuquerque Journal makes a persuasive case that what environmentalists are pushing under the guise of “climate change” legislation is really wealth re-distribution and expanded government.

If environmentalists are really concerned with mitigating the potential impact of climate change on both humanity and planet, they should focus on economic development and free market capitalism.

Last week in the Albuquerque Journal’s business section, reporter Winthrop Quigley wrote in something of a convoluted fashion about the fight over global warming and the potential for the US Environmental Protection Agency to act to limit carbon emissions regardless of Congressional action.

Quigley justifiably expressed concerns about the potential for the Obama Administration to skirt Congress, saying:

If he cares to, Obama will be able to avoid a lot of the pointless, stupid, ugly and unproductive debate that has afflicted health care legislation in Congress.

That is like electing to avoid a food fight by stepping into a minefield.

He goes on to discuss the demerits of the Supreme Court’s Roe v. Wade decision which, as Quigley again rightly points out, has caused the abortion issue to fester for decades. Unfortunately, Quigley fails to point out that the US Constitution has a simple solution for all of this. I responded to all of this with a letter to the editor that appeared in paper today.

Letter appears below and can be found online here.

Stick with democracy

Winthrop Quigley made several good points about the frustrations (and benefits of working through the process) of “getting things done” in America’s political system (“Democracy’s Glacial Pace,” Dec. 14). His central point, that Obama should not use the EPA to push draconian restrictions on carbon dioxide emissions that he cannot achieve through the democratic process, is spot-on.

The good news for Quigley and our political leaders is that a road map exists for addressing issues as diverse as the environment and abortion: the U.S. Constitution. The Founding Fathers wrote this document with the idea that while the states should be constrained by the federal government in military and trade, the states are the “laboratories of democracy” where a majority of both social and environmental policies should be made.

Unlike the federal government, the 50 states are not a monopoly. They have to compete with each other to formulate the best policies to attract citizens and businesses. Washington policymakers simply don’t face these pressures.

As much as I may oppose climate change legislation now moving through Congress and think that any such policies should be handled by the states, a move by President Obama to use an unelected bureaucracy to achieve his favored policy ends will result in nationwide outrage and even blatant disobedience. For all our sakes, I hope Obama sticks with democracy, regardless of its flaws.

Paul J. Gessing
President
Rio Grande Foundation
Albuquerque

I love Whole Foods. They have good food there and as an added bonus, their CEO and founder, John Mackey, is a free market libertarian who stuck his neck out to oppose the terrible health care legislation now moving through Congress and propose his own market-oriented reform ideas.

That all said, my wife and I don’t shop at Whole Foods all that often. It is really expensive. But apparently, people on food stamps can shop there. This from a story by Leslie Linthicum in today’s paper (unfortunately the online version doesn’t have the pictures like the paper does). Anyway, Lisa Aragon, the recipient interviewed, is photographed shopping at Whole Foods at taxpayer expense. Interesting that I shop at Wal Mart while she gets to shop at the high-end grocery. One would think Aragon might have gone to a less upscale place to shop if nothing else but for the benefit of the paper…

Caveat: It is too early to tell at this point, but, according to this article from the Albuquerque Journal Governor Bill Richardson may be pushing a “fix” for the problem of tax lightning during the upcoming legislative session. For the uninitiated, “tax lightning” is a situation in New Mexico dealing with property taxes in which someone who buys a new home experiences a dramatic increase in property tax burdens because the property they are purchasing is no longer covered under the state’s 3 percent annual assessment increase limit.

The fix, as it is spelled out in The Journal would involve altering New Mexico’s Constitution to “allow for a class of people to be taxed differently. This would allow the state to continue protecting longtime homeowners with the 3 percent cap on rising home values.”

While we applaud efforts to protect homeowners with the 3 percent cap, the idea of allowing the politicians in Santa Fe to start taxing different groups of people differently would open a dangerous new way for them to discriminate against various groups of taxpayers. In fact, New Mexico’s “anti-donation clause” was meant, in part, to prevent this discrimination among various groups of taxpayers, but it has been weakened over the years to the point that various special interests are able to use the rest of us as a piggybank.

Rather than changing the Constitution, New Mexico’s elected leaders should consider a flat 3% cap for everyone. That would be the fairest solution to “tax lightning.”

To paraphrase Shakespeare “Something is rotten in the State of New Mexico.” What’s rotten? One thing is our governments’ misguided ways of generating (or stifling as is more often the case) economic development. In this blog, I’m going to concentrate on a few such efforts in the southern region of the state. First, I wrote about the Doña Ana County Commission’s denial of a meat packing plant’s desire to set up shop and create 55 new jobs (subsidy-free). Heaven forbid someone try to actually build a factory and create jobs WITHOUT suckling from the government teat!

So, that leads me to the Doña Ana County Commission’s decision to look for $500,000 in state incentives to help finance a factory that produces components for large windmills. Sure, $500,000 is not that much within the overall $5 billion-plus state budget, but if you haven’t noticed, we are considering both cuts and tax hikes right now. Hardly seems like the time to be spending taxpayer dollars to finance a private business. Couldn’t we just give this factory some tax breaks rather than actual taxpayer handouts or are these subsidies ON TOP OF these tax exemptions?

To tie the bow on on this sorry package, I submit the example of the Spaceport. While this project edges a bit closer to reality, less-publicized is the fact that New Mexico taxpayers are not done paying for the Spaceport. In fact, it recently came to light that taxpayers will need to pony up another $7.5 million to build a road for the express benefit of the Spaceport. The project is already costing taxpayers $225 million.

The point is that projects that require government subsidies are not economically viable without those subsidies. New Mexico has built much of its economy around attracting those industries that demand subsidies while killing off those (like oil and gas and other forms of mining) that require no subsidies. This is not a model that has worked and this philosophy is a significant reason for New Mexico’s lagging economy. Unfortunately, despite tough economic times, it seems that policymakers have no desire to focus on building an economic base for New Mexico that makes sense and doesn’t demand taxpayer handouts.

Okay, I am not 100% in agreement with him, but he is correct in asserting (as he does in this piece) that the health care bill on the verge of passing out of the US Senate “expands private insurers’ monopoly over health care and transfers millions of taxpayer dollars to private corporations.” In sum, it is not the way to reform health care.

Of course, where Dean and I disagree is in what direction to actually take health care. Dean’s objection to the Senate bill is that the federal government’s role is too small whereas I’d like to reduce government’s role in standing between market forces and the health care system. Here’s a good description of a free market direction that, with any luck, Congress will seriously consider after (hopefully) killing this horrible legislation.

For anyone who cares about limited government, the possibility that former New Mexico governor Gary Johnson will run for President of the United States is a tantalizing possibility. For anyone who doesn’t remember the 2008 campaign for the White House, Ron Paul had a staunchly limited government campaign that generated a great deal of media attention and put libertarian-oriented ideas front-and-center while generating tremendous support from younger Americans.

Gary Johnson has launched a group called the “Our America Initiative” and the plugged in folks over at The Politico have now dubbed Johnson “The next Ron Paul.”

Certainly, given the paucity of proponents of limited government among the leadership of both parties and the popularity of the Tea Party movement, the door is open for a true fiscal conservative like Gary Johnson to make a big splash in 2012. Only time will tell, but New Mexico could have another “dog in the hunt” during the next presidential election.

The Rio Grande Foundation has released a new study on New Mexico’s government employment from Scott Moody and Wendy Warcholik, Ph.D. and the news is not good. That’s because, even as the private sector cuts costs and embraces economic reality, the public (government) sector continues to grow unabated.

Among the study’s findings:

* In 2008, state and local government employed 25.3 people for every 100 people employed by the private sector, that’s a 0.8 percentage point increase from 2007 when state and local governments employed 24.5 people for every 100 private sector workers;

* Relative to the national average of 16.72, New Mexico’s state and local government employment ratio is 51 percent higher and is the 2nd highest ratio in the country (New Mexico was 3rd highest in 2007;

* Not only does New Mexico hire more government workers than almost any other state, but those employees are more highly compensated than average New Mexico workers. In 2008, state and local government compensation was $49,711 per job while private sector compensation was $44,601 per job. As a result, the average state and local government job paid 11.5 percent higher than the average private sector job;

* The budgetary savings to the state by aligning New Mexico’s state and local government employment and compensation ratios to the national average would be astounding. In 2008 alone, such an adjustment would have saved taxpayers up to $2,946,289,629.

Not only is New Mexico’s bloated bureaucracy among the ripest targets for policymakers, but the problem worsened significantly between just 2007 and 2008. Unfortunately, allowing the number of private sector workers who pay taxes to whither away while continuing to expand government is unsustainable.

I wish someone at APS or in the Public Education Department had gotten caught yanking someone by their hair. Then, perhaps, the daily crisis of New Mexico’s abysmal educational system would have received the attention it deserves.

Instead, we get another article from the Albuquerque Journal explaining that in much of the state, even if students muddle their way through the broken system and receive a diploma, they are often not qualified to get into college. Putting it as delicately as possible, the writer stated:

A Journal analysis of state education data suggests New Mexico may have a quality control problem when it comes to ensuring that students rec eiving high school diplomas have mastered the state curriculum.

The analysis of 23 randomly selected high schools in 13 of the state’s 89 school districts found that some of the schools with the lowest proficiency rates have among the highest graduation rates.

Shocked, I’m shocked I tell you!!! Unaccountable, socialized (government ownership of the means of production) schools are giving students diplomas even if they don’t have the basic skills that they are supposed to have in order to achieve this diploma. I simply cannot fathom why people are not marching in the streets demanding reform…and no, money is not the issue. We’ve increased public school funding dramatically in recent years.

Instead of more money which we simply don’t have, the discussion should start with the “Florida Model” which includes a variety of school choice mechanisms, greater teacher accountability, no social promotion, and incentives. The time for half measures has passed. We need dramatic reforms before even more children are lost in a failed system.

On Wednesday, December 9, the Rio Grande Foundation hosted a candidate forum to which each of the five currently-declared candidates was invited. Only two, Rep. Janice Arnold-Jones and Doug Turner participated while the Weh campaign was represented in the opening session by Whitney Cheshire. Video of the forum is below:

New Mexico Watchdog updates its August report. The red ink lubricating the wheels of the Red Runner is getting redder. This pic from inside the Rail Runner during service between Santa Fe and Albuquerque speaks volumes.

A few years ago, New Mexico eliminated its tax on groceries. While this was not technically a tax cut because other taxes were increased, groceries are now a target for the tax-hikers in Santa Fe. Some, particularly self-appointed advocates for the poor, wish to only raise taxes on “bad” food items like soda pop. But, as this column rightly points out, taxing soda will not improve overall health measures.

For starters, “It’s pretty hard to single out soft drinks as a unique contributor to obesity when regular soft drink sales have declined 9.6 percent since 2000, but CDC data shows that adult and childhood obesity rates have risen during that period.” When lawmakers in Santa Fe are talking tax hikes (a misguided proposition), they need to be careful about taxing soda and cigarettes to name just a two because these items are disproportionately consumed by lower income workers. Ah, the dilemma of the do-gooders!

While the idea of a government bureaucracy placing limits on when women can receive mammograms is a big potential problem of nationalized health care, as Sheldon Richman of the Future of Freedom Foundation points out, these mammograms are not free and (successful) Congressional efforts to: “guarantee women access to preventive health care screenings and care at no cost … [by requiring] all health plans to cover comprehensive women’s preventive care … with no copayments.” (Emphasis added)” are also a symbol of what is wrong with the health care legislation now in Congress.

After all, someone has to pay for the mammograms and Congress gets to grandstand and take credit, but ultimately the costs are borne by employers and others who will actually pay the bills. Under a rational system, women would have the “right” to have a mammogram as early as they like if they are willing and have the means to pay for it (or pay for an insurance policy that does), but Congress would not be in the business of micromanaging when this or any other medical procedure is provided.

Apparently, this is “praise Democrat week” here at the Rio Grande Foundation (that or hell has frozen over according to Steve Terrell). Maybe it’s just that Holiday spirit. Who knows? Anyway, I was very pleased to read in the Albuquerque Journal this morning, this story in which Sen. Smith, chairman of the Senate Finance Committee, contradicted Governor Richardson’s calls for tax hikes to fill the budget gaps facing New Mexico for the current and future fiscal year.

Said Smith on the issue of tax hikes, “Most of the support for tax increases has come from Albuquerque and Santa Fe and legislators who represent those larger New Mexico cities.

If you go to the Farmington people or the people in my part of the country, where they’re closing mines, people say no (to tax increases). Depending on what part of the state you come from, you get different answers.”

Interestingly enough, this stance puts Democratic Sen. John Arthur Smith firmly to the right of the Albuquerque Chamber which has endorsed tax hikes to solve the budget issue. Kudos to Sen. Smith. Hopefully his leadership and firm stance moves the debate away from higher taxes and towards spending cuts.

For other recent samples of RGF praising Democrats, check out postings here and here.

So says the Doña Ana County Commission. A Texas-based company undoubtedly received a rude awakening despite the challenging economy when they attempted to open a meat processing plant that would have created 55 jobs near Berino and Anthony. And we wonder why New Mexico’s economic situation — not very good in the first place — continues to deteriorate?

County Commissioner Dolores Salda a-Caviness (as quoted in this story), who voted against the proposal, said she supports “sound, clean economic development and the spirit of entrepreneurship.

“However, I don’t think my threshold has been met,” she said. “I don’t think this is the time or place for the Berino area.” My question for Salda a-Caviness is, “what resources do you have at stake here? What gives you the right to tell your neighbors what jobs are or are not good enough for them?”

Opening yesterday’s Albuquerque Journal, I was heartened to see this opinion piece from New Mexico State Senator David Ulibarri. In his article, Ulibarri cites the possibility that “if uranium mining resumes in New Mexico, we would be looking at the creation of about 20,000 jobs with a projected economic impact of $26 billion dollars over a 30-year period.”

For starters, it is good to see a Democrat out there promoting economic development in New Mexico. It would be great if Governor Richardson and political leaders of both parties embrace uranium mining as a way to generate jobs and economic prosperity in New Mexico.

And yes, environmentalists should support this as well. For starters, nuclear energy is carbon neutral and unlike wind and solar is a consistent, proven source of energy. Also, while many of the problems that have given uranium mining a bad reputation occurred when the federal government and military controlled mining operations. There was also an issue of ignorance of the pollution problem. Today, as Ulibarri points out, the private entities engaged in uranium mining are very safe.

Some of this requires national buy-in to nuclear power, but if that happens, New Mexico, if the right decisions are made, could be in a position to prosper.