Governor Richardson seems adamant in asserting that whatever tax hikes he pushes through during the 2010 legislative session will be “temporary.” Of course, this promise is ridiculous on its face because this is his final legislative session in office and he won’t be around to determine whether the hikes he enacts will be temporary or not. Pretty silly of him to make this promise or for anyone to believe him if he has a 0% chance of backing this up.

Of course, this is not where the silliness stops. According to the morning papers, Richardson is considering “sin” taxes on soda pop, cigarettes, and junk food. So, you are the next governor of New Mexico and, while the economy has improved a bit over the 2-3 years since these “temporary” tax hikes were enacted, you now have to stand up and “cut” taxes. How exactly are you going to sell these supposed tax breaks for tobacco, soda, and junk food?

The reality is that these will be permanent taxes because it will be politically impossible in the future to reduce taxes on products even though they disproportionately consumed by the poor cigarettes and soda. Rather than balancing New Mexico’s budget on the backs of the poor, Richardson (and the Albuquerque Chamber) should focus on cutting New Mexico’s bloated government bureaucracy and spurring economic growth.

If you read the Albuquerque Journal, then you know that their cartoonist, John Trever, is normally spot-on with his cartoons. One recent cartoon from Sunday’s paper in particular caught my eye. That’s because Trever’s cartoon showed the bloat in higher education. See cartoon below:

Of course, our own analyst, Scott Moody, has written extensively on New Mexico’s bloated government bureaucuracy and even pointed out in this study that higher education in particular is a bloated sector of government. See table one of this study.

Notably, Scott Moody who normally resides in New Hampshire is in town right now and will be speaking at a public forum on the issue of government employment, pay, and pensions Tuesday night. More information on that event can be found here. This issue is too important to overlook. I hope you’ll try to come out to learn how we can tackle this problem.

In case you did not pick up a copy of today’s Albuquerque Journal, I wrote in support of smaller schools as one means of improving New Mexico’s K-12 educational system. The proposal was originally put forth by Think New Mexico, another think tank here in New Mexico.

While we certainly don’t always agree with Fred Nathan and his organization all the time, the idea behind smaller schools is sound if policymakers commit to doing it without spending more money (a reasonable possibility). Now, to be fair, smaller schools are not my first choice when it comes to education reform. I’d rather have a total free market with only minimal government involvement in terms of helping the poor obtain educational opportunities. I’d also like to see tax credits or even vouchers.

Smaller schools by their very nature would allow for greater educational options for parents and students. Is it the ultimate solution to education reform? No, but we can’t continue to tolerate 50% graduation rates in New Mexico and smaller schools, if adopted, would likely improve our results.

The editorial page of the Washington Post is not normally my preferred place to go for free market analysis of health care and other major issues of the day, but Charles Lane, a member of the editorial board, seems to have a reasonable grasp on the realities of health care reform. His recent article, which appeared in the Albuquerque Journal starts out with a discussion of the supposed problem of “diagnostic creep.” In the words of Lane, diagnostic creep happens when society medicalizes imperfections that formerly were either not defined as disease or thought to be too minor and/or too intractable for treatment.

Sometimes, this is a real problem and it unnecessarily drives up costs. But, as Lane points out “diagnostic creep sounds bad, but it obviously can be very good” because it has helped people with a whole host of real medical issues.

Ultimately, as Lane points out, government boards that might be set up to determine whether certain procedures are necessary will result in a political firestorm or, if they are too lax, will not result in savings. Unfortunately, Lane does not make the next step and call for an end to the whole charade of government-directed health care, but he is certainly on the right track.

Rio Rancho has done some very silly things when it comes to development recently. Take the money hemorrhaging Santa Ana Star Center…please!

Now, the City is seriously considering using tax incentives known as TIDD’s to spur construction of a 12-14 screen cinema. While the need for a theater is debatable and the use of TIDD’s for this project is questionable, the real kicker for taxpayers is that, as the Journal story points out,

The resolution is contingent upon final approval from city staff and Southern Sandoval County Arroyo Flood Control Authority of a plan to realign an arroyo that bisects the property. Jimenez hopes the arroyo plan will be approved by mid-January. Work to realign and build a diversion channel for the arroyo is expected to cost about $11 million.

So, let me get this straight, taxpayers will have to subsidize this project to the tune of $11 million, not to mention the TIDDs, in order to build a movie theater and potentially (there is no guarantee here) some office space and hotels. This certainly seems like the kind of project that is destined to cause additional financial problems for Rio Rancho. Hopefully, Rio Rancho City Council decides that this $11 million realignment channel is “a bridge too far.”

Here is page two of the thousands of pages of paper documents that the Roswell Public Schools saw fit to provide the Rio Grande Foundation by way of information on their use of taxpayer money.

Transparency is a new watch-word when it comes to giving citizens the ability to find out more about what their employees in government are up to. We’ve made some progress in recent years. For starters, legislative floor sessions are now available for your listening pleasure and you can watch the Senate proceedings from a statonary camera. Also, Rep. Janice Arnold-Jones has opened committee meetings to cameras.

Recently, the New Mexico Contracts Database went live with all state contracts over $20,000 online. This includes a listing of Active Statewide Price Agreements. So, we are making some progress, but before we mistakenly believe that government officials are happy to share what is happening with taxpayers, let me share the Roswell Public Schools “page of the day” with you.

Today’s page, which can be found below, is one of literally thousands that the Rio Grande Foundation received from the Roswell School District in a series of statewide requests for information on how they are spending your money. We were mailed a stack of these papers with sub 6 point font. Government bodies have this information in electronic format, but they were not willing to share this with us. Look for more “pages of the day” from the Roswell Public Schools in the days ahead. Click here for page 1.

If you have a way to cheaply and accurately transcribe this information into an electronic format, please contact us at: info@riograndefoundation.org. In the meantime, perhaps you can help us get the Roswell schools to get us the data in a useful format.

Jonah Goldberg is normally spot-in with his writing, but I particularly enjoyed this piece which also appeared in the ABQ Journal.

As Goldberg eloquently points out, capitalism is blamed for ever wrong, every human foible, and seemingly every problem humanity faces, but never gets credit for all the things that provides us and for bringing billions of Indians and Chinese out of poverty. More importantly, when capitalism is blamed, the problem is not usually “the system,” but human frailties like greed and theft that would persist regardless of what economic system we lived under.

In case you missed it, Jim Scarantino has been making waves recently…especially over the airwaves. For starters, right before the Holidays, Jim appeared on Bob Clark’s show on 770KKOB AM. Listen to that here.

Also, Jim’s new story on the “phantom zip codes.” Channel 4’s Stuart Dyson had Jim on the newscast to discuss his findings.

Lastly, Paul Gessing and our budget analyst Scott Moody who will be in town next week (including an event on Tuesday evening) will be on Bob Clark’s show on Tuesday morning from 9am to 10am. Tune in!

The folks over at the New Mexico Independent have created a new forum over at their website for policy leaders and the general public to discuss the issues of the day. According to the folks at the Independent, “Every week we’ll ask a different question and solicit responses from a diverse group of New Mexico thinkers, pundits and other observers of the state’s political landscape. We’ll add more responses as they come in, so keep checking back to see how the conversation progresses.”

I am pleased to have been asked to participate in this as a panelist in the very first edition of the forum. You can read my comments and the comments of others here. As it says, this is an evolving, interactive project, so check back regularly.

During his failed presidential bid, John Edwards (remember him?), frequently spoke of “two Americas.” This was supposedly a metaphor for the “haves” and the “have-nots” for whom he was fighting. While his populist rhetoric did not resonate with enough Democratic voters to get him the nomination, Edwards does have a point. The problem is that the “two Americas” are not rich and poor, but government workers vs. private sector workers. One group is doing quite well in the current economic downturn while the other has seen drops in salaries, job losses, and overall living standards.

The Rio Grande Foundation has done a great deal of work on the issue. See opinion pieces here, here and here. Unfortunately, as commentator Paul Jacob points out, the gap between public and private sectors continues to grow. As Jacob writes:

A recent Rasmussen poll shows a stark difference. Government workers see the economy getting better, while those in the private sector see it getting worse.

Different perspective or different reality?

Well, during this economic downturn, 6 percent of those in the private sector have lost their jobs, while public sector employment has dipped only 1 percent.

Stuart Varney with Fox Business News says, “If you’re a government worker, you don’t lose your job. You have a very rich and generous pension. You have a very generous health care plan. . . . You’re protected from the real economy.”

He also points out that, “[T]he three wealthiest counties in America . . . are all suburbs of Washington, DC . . . full of very well paid government employees and lobbyists. They are the beneficiaries of a great deal of taxpayer largesse.”

In a column for the Washington Examiner, Michael Barone notes that unions overwhelmingly support Democrats, contributing $400 million in the last cycle. Union members account for only 7.6 percent of the private sector, but a whopping 40 percent of public employees.

This leads Barone to conclude that there is a partisan interest in protecting public sector jobs. He writes, “In effect, some significant proportion of the stimulus package can be regarded as taxpayer funding of the Democratic Party.”

Whatever happened to “we’re all in this together”?

If you are interested in arming yourself with information on this problem, Scott Moody will be discussing the issue of New Mexico’s bloated government workforce at an RGF-sponsored event on Tuesday, January 12. More information is available here.

If you haven’t been shopping since January 1 (or even if you have, but didn’t look at your receipt), you may not have noticed that Albuquerque gross receipts taxes were recently reduced to 6.625% from 6.875%. This is a New Year’s present of .25% off your purchases.

At first, I didn’t know where the tax cut was coming from, but then I realized that it took until November for voters to approve extension of the .25% transportation tax. While we disagreed with extension of the tax, the fact that City Council took so long to extend the tax has allowed it to lapse (I believe this will be until July 1, 2010). Anyway, enjoy the tax cut while it lasts because if Governor Richardson gets his way, we’ll all be paying higher taxes soon.

When will those bumblers at the Obama Administration and recovery.gov get it right? First, the Rio Grande Foundation’s investigative journalist Jim Scarantino found that the Administration had listed several mythical New Mexico congressional districts that had supposedly received stimulus funds. While the Administration dutifully pledged to resolve the situation, they appear to have failed miserably.

Scarantino has now uncovered another problem, this one being “phantom” zip codes that are supposed to have received stimulus money and jobs created in them.

As Scarantino writes:

Closer examination of the latest recovery.gov report for New Mexico shows hundreds of thousands of dollars sent to and credited with creating jobs in zip codes that do not exist in New Mexico or anywhere else. Moreover, funds reported as being spent in New Mexico were given zip codes corresponding to areas in Washington and Oregon.

The recovery.gov site reports that $373,874 was spent in zip code 97052. Unfortunately, this expenditure created zip jobs. But $36,218 was credited with creating 5 jobs in zip code 87258. A cool hundred grand went into zip code 86705, but didn’t result in even one person finding work.

None of these zip codes exist in New Mexico, or anywhere else, for that matter.

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…