George W. Bush remains an enigma. Does he really believe in the free market? Does he completely misunderstand how markets work? Or, does he simply pay lip service to markets while continuing to undermine them? Regardless of his innermost feelings, there is no doubt that Bush abandoned free markets early and often in his presidency.
Unfortunately, as this recent story illustrates, Bush continues to imply that he was a free marketeer until he decided that a little (or a lot) of socialism was needed.
As Matt Welch points out over at Reason:

The real failure here is one of nerve, of imagination, of historical memory. You cannot save something by destroying it, or abandoning it, or even giving it a few stiff raps in the kneecaps. “Paternalism” is too mild a word for the mentality that produces such a sentiment, let alone the disastrous policies to back it up.

I would go even further and argue that the Medicare Prescription Drug Bill, No Child Left Behind, Sarbanes-Oxley, massive regulation, and massive spending increases under Bush should put lie to the President’s claims of adhering to free markets, but that is just a starter list. Unfortunately, he continues to besmirch and discredit free markets the more he opens his mouth.
Call me crazy, but how much worse can President Obama really be? At least he doesn’t paint himself as a free market believer.

“Tax Lightning” was first used to describe the shock a homeowner experiences upon receiving the initial property tax assessment from their respective county. It has since become more of an umbrella term to reference a larger problem: a severe property tax inequity among homeowners in New Mexico. When ownership of a property transfers, the property tax may be assessed by county assessors at current market value, pursuant to legislation passed in 2001 (HB 366). This has only become a hot topic in the past few years. People who purchased or developed properties at the height of the real estate bubble are paying inflated property taxes. Two property owners in the same district, perhaps even door-to-door, may be paying severely disproportionate property taxes. “Tax Lightning” remains an important issue; particularly with the 2009 state legislative session impending. This trend in property assessment at “current and correct” market value serves the budget concerns of county bureaucrats but chills our already weakened economy by penalizing home buyers.
While the weak housing market certainly makes it more difficult for potential home buyers to pull the trigger, the reality of “Tax Lightning” further hinders the market from returning to liquidity in New Mexico. A potential homeowner won’t enter the market because they face a significantly-increased property tax burden. While this is bad enough for those who are looking for bigger and better housing, the problem is even worse for current homeowner such as seniors, retirees, and those who simply need a lower house payment. Their incentive is not to downgrade to a smaller, more affordable house because they may wind up with a comparable monthly payment for a less valuable property, due to the new assessment and subsequent tax increase.
For some time now local newscasts, newspaper articles, and blogs have attempted to voice the concerns of those homeowners most directly affected by Tax Lightning. But the public outcry appears to have had little effect on this policy. Challenged assessments are continually shot down. The answer given to contesting parties has been the same, unaffected by public outcry: your property tax was assessed pursuant to the law. It follows then that new legislation is the only real means for change. Earlier this year, Senator Mark Boitano sponsored two bills addressing Tax Lightning which county assessors lobbied against. Bernalillo County Assessor Karen Montoya said that her office had considered the fiscal implications and determined that the State would lose too much revenue. The bills ultimately failed. In 2009, Senator Boitano and his colleagues will introduce new legislation that may be more amenable to the opposition. This new legislation may propose the following:
• Clarifying legal nuances regarding the formula to calculate property taxes and the definition of “current and
correct” and “valuation maintenance.” This may narrow the gap between those paying too much and those
paying too little.
• Applying yield control to debt service in addition to operating costs
• Maintaining a 3% cap regardless of a change in ownership
• Removing the 3% cap, reassessing all properties, and then imposing the cap again. Phase in the heavy
increase experience by some and the decrease experienced by others over a 4 year period.
It is clear that this issue is of great concern to those most directly affected. It should be of concern to everyone. It appears that legislation is the only way to interfere with the new trend in assessment. People are seeking shelter from the lightning storm. Concerns should be voiced to state legislators. The 2009 legislative session draws near, and with it a new opportunity to properly address this issue. The desperate state of our real estate market and the extreme dissatisfactions of property owners should be enough to influence legislation.

Once the holidays are over, Albuquerque’s City Council will again be discussing whether to pony up close to $400 million and raise taxes in order to finance an arena. We at the Rio Grande Foundation have long questioned the need for a taxpayer-financed arena or events center, particularly who would actually play there. Possibilities have included the WNBA and an arena football team.
Council better hurry up because the list of possible tenants has become even narrower with news that the Arena Football league has decided not to play the 2009 season. This comes on the heels of news that the Comets, the WNBA team in Houston, has folded. If the WNBA can’t survive in America’s 4th-largest season, how will it survive here?
The fact is that the case for the arena is built on nothing more than hope and taxpayer dollars. If they build it, who will come?

While the Founding Fathers would undoubtedly be rolling in their graves if they were aware of the federal government’s massive intervention in the American economy, we can still celebrate America’s Bill of Rights and its important legacy of limited government. It is also important to educate our fellow Americans that ours is a federal government with limited powers and that the Bill of Rights protect individual Americans and their state and local governments from federal overreach.
Happy Bill of Rights Day!

Sometimes I wonder if Albuquerque Mayor Martin Chavez is serious. Hopefully, Congress does not take him very seriously with regard to his latest scheme to expand government, this time at the expense of federal taxpayers rather than just local taxpayers. The key to this scheme is that he won’t have to build public support for his projects and no one will have to vote on the plan. I’m referring, of course, to his plan for Congress to “bail out” Albuquerque to the tune of $1.6 billion.
As outlined in the New Mexico Business Weekly, Chavez’s wish list includes:

A concentrating solar plant at Double Eagle airport for $532 million, a wind farm for $140 million, a small business energy audit and retrofit program for $5 million and a solar array on the Albuquerque International Sunport with a price tag of $34.5 million.

Of course, no list of Mayor Marty’s would be complete without money for his beloved streetcar down Central Avenue for which he’d like $90 million. Apparently, the voices of City Council and Albuquerque voters have no bearing on Mayor Marty’s dreams. He wants a streetcar and by golly he’s trying to get it even if taxpayers in Des Moines have to pay for it.
The fact is that Congress has at least temporarily rejected the bailout for the Big Three Automakers. Hopefully, this move will put a stop to the bailout bonanza once and for all and Mayor Marty will be unable to force his useless streetcar on us by begging for money from Washington.

Over at the left wing FBIHOP blog, we at the Rio Grande Foundation are accused of believing that voters are “dumb” for voting, albeit narrowly, to raise the gross receipts tax to fund the Rail Runner. Of course, I never said that voters in New Mexico or elsewhere are dumb, rather, I simply argued in a recent Albuquerque Journal column that government should not be able to use taxpayer money to fund campaigns in support of ballot measures. FBIHOP apparently interprets this as my saying that voters are dumb.
Nonetheless, lets not let the facts get in the way of a perfectly interesting discussion. Are voters really informed when it comes to voting on the issues? If anyone watched the JayWalking or other “man-on-the-street” segments about the presidential candidates it seems pretty obvious that voters are not always well informed.
While it is easy to criticize ignorance, as Reason Magazine writer Bryan Caplan wrote voters tend to make boneheaded decisions on basic economic issues when they go to the polls. This is not a sign that they are inherently “dumb,” rather it is a sign of rational ignorance in which people concern themselves with their jobs and succeeding in their daily lives rather than keeping track of politicians and policy issues.
While overcoming rational ignorance is difficult, it would seem that at the very least policymakers should stop government bureaucrats from using taxpayer money to sway voters to vote for bigger government.

If you caught KOB News last night, you saw a report on the release of our Piglet Book. Check out this article which includes some great footage of our pig frolicking in the Santa Fe plaza and handing out copies of our report. The report itself is available here.

In case you missed it on each of the major New Mexico news outlets, the Rio Grande Foundation released its 2008 Piglet Book along with the Washington, DC-based Citizens Against Government Waste. Detailed in the report is hundreds of millions of dollars of wasteful and unnecessary spending. Download the report here.
In case you did miss the stories, you can hear more about the Pig Book on Bob Clark’s show on 770 KKOB AM at 9am on Friday and on 1550 KJOY AM on Saturday from 9am til 10am.

Nick Gillespie over at the Reason blog points out that with the automakers’ bailout practically a done-deal, the states and cities are using infrastructure investment to get their own “bailout.”
Among the infrastructure items funding is hoped for:

* a proposed “O’Malley Road Reconstruction” in Anchorage, Alaska, that will cost $30 million but provide 300 (count ’em!) jobs;
* a Gadsen, Alabama “Hoke Street Sidewalk Construction to serve new Department of Human Resources facility” that’s a real steal at $150,000 but will take almost surviving members of the Allman Brothers Band off the public dole (at last!);
* Police Facility Solar Panels for Lake Havasu City, Arizona, for only $400,000 and 75 jobs;
* Stormwater Settlement Ponds for Beloit, Wisconsin for $1,428 million and five whole jobs, which will feed a family of four in the Badger State, especially if they only eat government cheese;

Bastiat disproved the idea that government can improve our economic situation by wasting money on worthless projects. Unfortunately, if Congress and the White House cave to the governors and mayors we’ll be pushing off any economic recovery and making us all poorer.

Advocates of limited government have been distressed to see one bailout after the other pass through Congress only to have little positive impact on our economy. While it looks likely that the automakers will get their bailout, taxpayer advocates led by the National Taxpayers Union are calling for federal policymakers including the Treasury Department and Congress to make the bailouts transparent at least. Read the recent coalition letter to which the Rio Grande Foundation is a signatory here. A total of 72 grassroots organizations, including many that are not considered to be fiscally-conservative, signed the letter.

On Sunday there was an interesting article in the Albuquerque Journal explaining that legislators have found $173 million worth of unspent funds that could be re-allocated for other uses. While the opportunity to re-allocate unspent funds that would have otherwise been wasted on a $22.3 million equestrian center would seem like a good thing, Ed Sandoval is skeptical. He is quoted in the article as saying “Capital outlay in essence drives the economy…we’ve got to be careful how we do this.”
Certainly, care is important whenever legislators are dealing with millions of taxpayer dollars, but the idea that the capital outlay process “drives” the economy is truly a joke. The private sector drives the economy and people like Sandoval (politicians) suck off of our productive activity and re-distribute it to others, often with highly unproductive results. Does anyone really believe that they couldn’t spent $22.3 million more effectively than the state has plans to do for this equestrian center?
In the best of times Sandoval’s economic ignorance should be of concern. In today’s economic situation, Sandoval’s ideas are truly dangerous.

Having been out of state for much of this week, it has been tougher to follow the action locally, here in New Mexico, but I did see this great article from the Wall Street Journal from Wednesday. The authors’ essential argument is that while we expect Congress and corporations to behave badly, we have seen an unfortunate abandonment of principle from many economists relating to the spate of bailouts and the role of government in having created the current economic malaise.
As the authors conclude:

Our desire for a principled approach to this crisis does not arise from an academic need for intellectual coherence. Without principles, policy makers inevitably make mistakes and succumb to lobbying pressure. This is what happened with the Bush administration. The Obama administration can do better.

Principle, especially relating to limited government, is more important than ever these days. Usually economists are among the most principled members of society, but supporters of bailouts and arbitrary, massive government spending have debased the field.

Governor Richardson has officially been named by Barack Obama to head the Department of Commerce. While I’m sure he would have preferred the State Department (and the Commerce Department has no constitutional function and should be eliminated) this country faces too many economic problems not to give Richardson our best wishes for helping the Obama Administration solve the current economic situation.
As I said in a recent article in the Santa Fe New Mexican, Richardson’s record on the New Mexico economy is mixed:

On one hand, he cut income and capital gains taxes to very positive effect.” “In that sense, he will undoubtedly be a voice of reason in the Obama administration. On the other hand, he has relied heavily on targeted tax breaks designed to benefit specific companies. His prized achievements are arguably the film industry and Eclipse Aviation.
The Governor’s Office has said that since he was elected, more than 100 major film and television projects have been shot in the state, adding more than $2 billion to the state’s economy.
But Eclipse, in which the state has a $19 million equity investment, has been hit with some major financial problems in the past months, including not being able to make payroll at one point last week.

Hopefully, Richardson will be an advocate for responsible tax policies in the Obama Administration. Only time will tell, but at this point we can only wish the Governor the best in Washington.

Now that Eclipse Aviation has filed for Chapter 11 bankruptcy protection, New Mexico taxpayers have officially lost their $20 million investment in the company. As Rio Grande Foundation investigative journalist Jim Scarantino points out in his newest piece, New Mexico taxpayers face mounting losses and well-below-market returns through the State Investment Council.

While all these bailouts are economically dubious from a policy standpoint, Charles Krauthammer points out that their real danger is in shifting the emphasis of business from economic success and innovation and to political lobbying. What he doesn’t state explicitly is that President Bush is largely responsible for the shift. He does point out that it will be up to Obama and the Democrats to further these changes or return to the market.

Despite tough economic times and plummeting oil and gas prices, Texas maintains an $11 billion surplus (without forcing its citizens to pay an income tax). As this article points out, despite the surplus, politicians in the Lone Star State are not calling a special session to spend the money, unlike the Governor of a neighbor of Texas. According to the article, in Texas “new spending by lawmakers will be capped at about 9.1 percent over the current two-year budget.” New Mexico grew spending by this much in one year during the recent oil and gas boom.
Perhaps that is why the average Texan makes more than $5,000 more than the average New Mexican annually???

There is a lot of talk at UNM about making the school more environmentally responsible. A new degree is even being offered in sustainability studies. In keeping with this trend, the University and the state government should also consider making UNM more fiscally responsible.
With President David Schmidly implementing a freeze on hiring and faculty raises, University students are becoming increasingly critical of fiscal policy on campus. They have reason to be concerned. After all, major facility renovations and upgrades, including a $60 million renovation of The Pit, are moving forward despite the freeze on faculty spending. Some students have suggested Schmidly take cuts out of his own salary – which is $387,000, according to UNM’s public records – and administerial operations to ensure that the educational function of the University isn’t jeopardized.
Although the state has allocated less money to the University this year, UNM’s operating budget has increased by 10.4 percent. State allocations to the school are likely to continue their decline due to tax revenues taking a hit from dropping oil prices. If the school’s budget keeps increasing and state allocations continue to dwindle, the University will find itself having to compromise the quality of education just to keep itself afloat.
Unfortunately, the University’s incentives aren’t necessarily aligned with its purported educational goals. That’s because a relatively minor percentage of the school’s operating budget is collected from tuition – only 6.4 percent. Far more, 38.6 percent, comes from local, state and federal taxpayers.
New Mexico policymakers should consider realigning those incentives by routing a greater percentage of government money through students in the form of a voucher rather than directing it to the bureaucracy. Colorado is one state that has enacted this reform to positive effect. If New Mexico’s universities are forced to compete for students, and therefore money, student needs will begin taking precedence over basketball and administration. A voucher program will give students the ability to allocate government funds to whichever school they choose. In a free-market system like this, schools will naturally focus more on the quality of their product – education – rather than sports facilities or outrageous administrator salaries.
(The above letter was published in UNM’s student newspaper, The Daily Lobo.)
UNM’s President David Schmidly is also worried about the likely cuts in government allocations to the school. Hopefully this recession can give the university an opportunity to learn to operate more efficiently.

If you left your house, watched tv, listened to the radio, or read the newspaper in the months prior to the last election, you probably saw a political ad that you paid for. No, I’m not just referring to donors to the Obama or McCain campaigns, but involuntary campaign “donations” that were taken in the form of taxes. How can this happen?
As I explained recently in the pages of the Albuquerque Journal, taxpayers funded the “yes” campaigns on behalf of the RailRunner and other statewide bond measures that increased property taxes statewide in an extremely tough economic time. This represents an extremely unfair advantage over grassroots and community groups like the Rio Grande Foundation that are concerned with out-of-control taxes and spending.
While government agencies looking for more money will always have the advantage of having many employees that get their paychecks from said agency, cutting off advertising money would at least create a fair election in which taxpayers’ own money are not used against them.

Most economists worth their salt oppose government wage mandates for the simple fact that politicians have much less knowledge about what a “fair” wage is than do employers and workers making decisions in a free economy. Santa Fe’s “chickens” of government-mandated wage inflation are now coming home to roost. In fact, business owners in the City Different are organizing to make a last stand against the 30-cent increase in the wage which is set to take effect at the end of January.
Business owners say that raising the wage in a strong economy is one thing, but with economic growth slowing dramatically generating increased unemployment and mainstream economists concerned about deflation, a free market would see wages shrink, thus naturally sucking marginal workers into the employment market albeit at marginally lower wages. Unfortunately, mandated wage rates disproportionately harms teens and low-skilled workers.
Santa Fe made a mistake in mandating wage rates that are far above market levels. Unfortunately, business owners and marginal workers will be the ones feeling the pain.

Everyone wants a bailout these days. Once Congress and the Bush Administration made the misguided decision of bailout out AIG and the banking industry, every other industry — not to mention governments and individuals — decided that they deserved some money from the federal government.
In yesterday’s Albuquerque Journal, Christine Trujillo
President, American Federation of Teachers-N.M, made the case for a government “bailout” of education. While I couldn’t disagree more with her overall point, the truth is that she makes no factual argument for the “bailout.” Rather, she makes some pointless statements about societal changes that she argues make educating children next to impossible.
The biggest red-herring is that education suffers from inadequate spending. This is the argument some are making for a major gross receipts tax hike for additional education spending, even in these tough economic times. As Dr. Harry Messenheimer has pointed out, education spending per-capita has increased dramatically in recent years. Check page 6 of this study.
There is no need to bail out education with a tax hike of any kind. Instead, like the Big 3 automakers, education will be forced to improve and become more efficient with competition and by giving consumers greater freedom of choice.

At least that is what the folks over at the blog Urban ABQ believe. Apparently, we’re also intellectually lazy. But is it true?
Yes, we at the Rio Grande Foundation oppose the taxpayer-financed Albuquerque streetcar, the taxpayer-financed Rail Runner, and the taxpayer-financed Albuquerque arena. But does that mean we oppose “everything?” I believe the evidence points elsewhere.
For example, we support the Heritage Marketplace development which has been killed by the City of Albuquerque. Also, we’d support the parishioners at St. Francis Xavier Catholic Church who were outlined on the front page of today’s Albuquerque Journal. It turns out that the churchgoers would like to cook home-made food (tamales, menudo and homemade goodies like bread pudding and bizcochitosfor), but the City health regulators are forcing them to buy food instead.
The fact is that we at the Rio Grande Foundation support private sector efforts and realize that those who use and abuse government power by forcibly taking other people’s hard-earned money via taxation are pushing ideas that would otherwise not garner financial (as opposed to political) support from enough people to be viable.

Lobo football fans awoke this morning to find that their head football coach of the past 11 seasons, Rocky Long, had resigned. While the losing 2008 season was definitely tough on the coach, he made a point of stating that New Mexico football will never flourish until the fans decide to turn out in greater numbers to support the program. What does this have to do with public policy in New Mexico?
Well, Albuquerque’s political establishment is considering the construction of a brand new taxpayer-financed arena in downtown Albuquerque. Possible anchor tenants include an arena football team and a WNBA franchise. While studies are done with an eye towards justifying the expenditure, despite difficult economic times, the real question is “If you build it, will they come?” After all, Lobo Football is a Division I, “major league” product. If fans won’t support them, will they support women’s professional basketball?
The record is mixed. Fans turn out for the Isotopes and Lobo basketball, but not for the Thunderbirds minor league basketball, not for Lobo Football (at least not enough to make the team as successful as its <a href="<a href="http://themwc.cstv.com/"/”>Mountain West peers, and not for the Scorpions hockey team.
It is hard to say what makes the teams that succeed do so and why other teams lack fan support, but I don’t trust our City Council and Mayor to spend a bunch of our money to figure it out, do you?

Recently, I appeared on a special on Channel 4 called “The Climate Case” to discuss global warming and what, if anything, should be done about it. The show lasts 30 minutes and can be found below:
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Also, if the current fiscal crisis has any silver lining it is that Congress, according to New Mexico Sen. Jeff Bingaman, Chairman of the Energy Committee, says that Congress will not act until 2010 on global warming legislation. At least Congress recognizes that the American people view purported climate change as far less of a problem than the economy. Of course, whether government at any level has the right solutions is an even better question.

Regardless of how you feel about the results of the recent election, it would seem that taxpayers of all stripes should be concerned that government officials are able to tilt the balance of ballot elections by using tax money to advertise on behalf of those ballot measures. Opponents of higher taxes, like the Rio Grande Foundation, must rely on donated funds and are given no free resources or media platform to argue against these tax hikes and bond measures.
I wrote about this problem in this week’s edition of The Taos News.