The economy is on the front pages of newspapers and at the top of most newscasts nowadays (at least it has replaced Britney Spears’ misadventures). President Bush and Congress agree that a so-called “stimulus package” is necessary, but each have their own ideas on what the package should contain.
Unfortunately, election time is known in Washington as the silly season and from an economic standpoint (as opposed to a political one) a stimulus is at best economically unnecessary and at worst harmful. Robert Samuelson writing in the Washington Post and argues, quite correctly in my opinion, that much of what passes for economic commentary these days is simply hysteria.
Steve Stanek of the free market Heartland Institute also criticized the idea of a stimulus, writing “lawmakers should rein in federal spending and approve long-term tax reductions that apply to everyone, not just to people in certain income brackets.”
I agree 100% with Stanek. Temporary stimuli are not what the economy needs. Rather, making President Bush’s tax cuts which are set to expire in a few years permanent would be a good first step. Slowing government spending growth would also be better than what this stimulus amounts to which is the economic equivalent of simply dropping money from the skies.

Rio Grande Foundation President Paul Gessing recently appeared on Bob Clark’s radio show to discuss Governor Richardson’s health care reform plan and some free market alternatives. Listen to the show by clicking here. Fast forward almost one-third of the recording to get past the advertisements, etc.

Dan Mayfield, a columnist in the Albuquerque Journal, writes in today’s paper about New Mexico’s growing film industry and argues that policymakers should keep the spigot open by not limiting the amount of money the state dishes out.
You see, the current rebate program pays up to 25 percent on all direct production expenses that are subject to taxation by the state. So, if your film company spent $20 million here, you could get a $5 million rebate. This is a refund, not a credit, on the full amount of the expenditure, not just the tax portion. When you think about it, that is an amazing subsidy and it is coming out of taxpayers’ pockets whether the film makes any money or not.
Sure, the film office estimates that the industry has spent $496 million here since January 2003, but what industry would not grow and spend more money if taxpayers reimbursed it for 25 percent of their expenses? No one knows, but I can say with relative certainty that New Mexico would have been better off, instead of spending $70 million over the last five years and offering generous tax breaks to the film industry, if that money had been returned to the economy through a broad-based gross receipts or income tax cut.
Unfortunately, when taxes are cut across the board and equally for everyone, it is more difficult for politicians to take credit for the creation of a new industry out of whole cloth. Thus, while Richardson ran for President on his targeted tax credits, he left out the positive impact of his income and capital gains tax cuts (even though some hikes offset those cuts, they were still more economically beneficial than any tax credit).
Politically, it looks like generous film subsidies are here to stay. The industry has these policies in place and is going to be a powerful force. It will be interesting to see what the state’s cost-benefit analysis looks like.

According to a new report from a panel that included some of the nation’s leading transportation policy experts, we are not paying nearly enough in gas taxes and the tax should be increased by 40 cents a gallon.
Most New Mexicans will dismiss such findings out of hand and justifiably so. But the fact is that there are several major road projects around the state that should be top priorities including the Paseo and I-25 interchange in Albuquerque just to name one.
The problem is that governments are poor stewards of transportation resources. Congress wastes hundreds of millions on “bridges to nowhere” and diverts ever-growing amounts of gas tax revenue to wasteful transit projects. At the same time, New Mexico is wasting $400 million plus $20 million in annual operating costs on the Rail Runner and diverting millions of dollars in state gas tax revenue to the General Fund.
Instead of raising the gas tax, shouldn’t we re-allocate gas tax revenues to pay for roads and bridges? Let transit users pay for their favored mode of transportation and stop stealing from tax paying motorists!

It was inevitable. While campaigning for President, Richardson stated that tax hikes to pay for the Rail Runner were “off the table.” Now, that he is out of the race, he has put them back on the table. Given the fact that voters in the southern part of the state have been asked to pay for a portion of the Spaceport via higher taxes, it is probably “fair” that residents of the areas served by the Rail Runner pay the costs, but it makes no sense to vote on this now.
After all, the Rail Runner is a fait accompli. It isn’t going anywhere. The trains will run whether voters raise their taxes or not because Richardson wants it to be his legacy. Thus, if taxpayers go along with higher taxes to pay for the train, they’ll essentially be choosing to pay higher taxes for no good reason. Hopefully voters will decide to give Richardson and his boondoggle a firm rebuke at the polls, but I’m sure the Governor and his minions will try to convince the voters otherwise. Nonetheless, these votes are a good thing because they provide voters with their first real chance to express themselves on the train.

While education is not at the top of the legislative agenda this year, it is never far from the minds of politicians and those of us who are concerned about out-of-control budgets. That is why the Rio Grande Foundation is supporting the idea of education tax credits. Recently an opinion piece I wrote appeared in the Los Alamos Monitor making the case for the adoption of such a credit in New Mexico during the current legislative session. In building the case for these reforms, I cite Dr. Messenheimer’s recent policy paper published by the Rio Grande Foundation which showed that education results in New Mexico are stagnant despite ever-increasing resources dedicated to education.
My article drew a rather misinformed response from a reader to which I responded with the following:

As the author of a recent (January 3) article on the need for tax credits for education choice here in New Mexico, I feel the need to clear up some misconceptions contained in a recent letter written by John Lilley, dated January 17.
Mr. Lilley states that private schools already have the capacity to accept donations and that such a system is already in place. This is true, but that does not mitigate the need for New Mexico to adopt its own tax credit program for the benefit of needy children in failing K-12 schools.
The idea we are promoting and which is being carried forward by Sen. James Taylor (D- South Valley) this year is for individuals and businesses to take a credit against their New Mexico tax burden. Unlike the federal deduction which Lilley references, tax credits would allow individuals to take a credit against a very high percentage (up to 90 percent) of their New Mexico tax burden and allocate that money to eligible scholarship programs.
The current tax deduction is taken against a taxpayer’s federal tax burden. This provides a significantly lower rate of return and is available only to those who itemize their federal taxes (typically higher income taxpayers).
Two other misconceptions are that we want people to be able to donate directly to their own children’s education. This is simply not the case as donations would be made to a non-profit, scholarship organization to offer scholarships for low-income children.
Lastly, Lilley calls into question our status as a “charity.” While we are designated as a 501c3 non-profit, we are not a grant-making organization. Not all non-profits make grants.
Lilley has every right to criticize both the editor of this paper and the Rio Grande Foundation if he wishes, but his assertion that my writing is nothing more than factually incorrect “ramblings” is incorrect and out of order. If Lilley or any reader of this paper has questions about our work or education tax credits, I encourage them to check out our website: www.riograndefoundation.org.

You can tell Bill Richardson is no longer running for President (and that he is a lame-duck governor). After all, who in their right mind that is running for office would attack an entire interest group for no good reason. I’m referring to Richardson’s comments that doctors are “greedy.” Richardson said of doctors, “They’re greedy. They shouldn’t be so greedy. They should be part of the plan,” in reference to his “Health Solutions New Mexico” plan.
Doctors oppose Richardson’s plan in large part due to its reliance on price controls which would force doctors to take whatever payment is being offered by the government or insurance companies. This doesn’t seem “greedy” to me, rather given doctors’ experiences with Medicare and Medicaid, the prices of which are both determined by the federal government, doctors have a lot to worry about if they become even more beholden to the government for their daily bread.
Doctors spend a long time in medical school at great personal and financial cost to themselves. Most doctors I know are “greedy” only in the sense that they want to be fairly compensated for their work. In reality, Richardson is the greedy one because he wants to take credit for offering health care to more people with doctors, insurance companies, and businesses footing the bill. That’s greedy.

Rarely does an opinion piece get published in both the <a href="http://www.abqtrib.com“>Albuquerque Tribune and the <a href="http://www.abqJournal.com“>Journal, but recently an outfit called the Quivira Coalition which is holding their annual conference in Albuquerque, scored that success.
Unfortunately, the Coalition seems to be like so many other environmental groups in wishing to turn back the clock on modernity. We are supposedly living in an “Age of Consequences” according to Courtney White, the author, who goes on to compare the future to a hurricane coming ashore. The metaphor, unfortunately, fails to hold water, and arguments to “build resilience” are senseless or even meaningless.
The best White comes up with is the concept of “regional solutions.” That would seem to mean that trade, commuting, and travel are on their way out in the coming “hurricane.” Despite the occasional unsafe good from China, trade is good for all of us. Worse still for the Quivira folks is the fact that international trade is booming. In fact, international trade is growing at rates more than double the growth of the world economy, thus trade is becoming more, not less important.
Despite what leftists would like to believe, we are not headed to a crisis unless we cave to their wishes by regulating our economy whether that be in regulating energy usage or trade. Left to their own devices, Americans and indeed the rest of the world as a whole will continue to realize the very real benefits of trade, ignoring the tempests in the proverbial teapot expounded upon by Al Gore and others.

Paul Gessing of the Rio Grande Foundation discussed Governor Bill Richardson’s plans for socialized medicine in New Mexico on “Eye on New Mexico” this Sunday morning. Dennis Domrzalski hosted the program while Gessing’s opponent was Charlotte Roybal of Health Care for All New Mexico. The video is now available online.

The Albuquerque Tribune editorialized in favor of Albuquerque Mayor Marty Chavez challenging the City’s term limits law by running for a third term, saying it “did no harm.” This may be true, but how about Albuquerque voters, more than 70 percent of whom supported term limits back in 1994?
When the Constitution doesn’t address an issue, as is the case with term limits for city officials, shouldn’t the default be to obey what the citizens say unless there is an issue of direct harm or a minority is being unjustly attacked? Sure, Mayor Marty can run for another term and he may get elected, but that doesn’t mean it is best for the City or that it’s the right thing to do.

Bill Richardson has dropped his bid for President. While we certainly are not shy about criticizing Richardson’s policies here in New Mexico, the reasons for Richardson’s failure to gain traction are only partially his fault. A big part of Richardson’s difficulties stems from the process itself.
First and foremost, Richardson did not run a great campaign. He made too many gaffes and tried to have it both ways on policy issues that required an obvious stance. This recent discussion between Richardson and Barack Obama on the issue of carbon caps and whether or not it would increase prices for consumers is a perfect example.
As for the reasons that were not necessarily his fault, except for the Iraq War, Richardson was a “centrist” relative to his fellow Democrats. On taxes, guns, and trade, Richardson was to the right of his fellow Democrats.
Unfortunately for Richardson, Democratic primaries tend to reward those on the left and penalize centrists. Only in the general election do centrists have the advantage. Even though we at the Rio Grande Foundation weren’t overly enthusiastic about Richardson as a President, his run did bring great attention to New Mexico. From that perspective, we are sad to see him drop out.

Today’s Albuquerque Journal included a column from Kathy Chavez, President of an organization called Albuquerque the Educational Assistants Association. The organization even has a website here.
Essentially, Chavez argues that while teachers and principals have received salary increases of 20 percent to 40 percent over the last three year, “classified employees,” that is, those who handle non-classroom related functions, have seen stagnant salaries. Chavez wants a raise for those people and takes Sen. John Arthur Smith to task for proposing a 2 percent increase next year.
Who’s right? It is hard to say because there is no such thing as a free market in education. Public education is a government monopoly with almost no competition in the system. Therefore, it is hard to tell what pay structure is “fair” and schools and districts have no need to compete for staff. If Chavez and her ilk are serious about increasing pay, they must seriously consider educational choice as a means of increasing salaries. Given the AFT’s statement on both vouchers and privatization, the AFT seems unlikely to embrace any market-based education reforms in the near future.
Lastly, while I’m not saying Chavez doesn’t have some point, New Mexico spends more on administration and other outside-the-classroom costs than any other state in the nation…that is, less of each education dollar in New Mexico goes to the classroom than any other state. Go here and click on NM on the map of the USA. Clearly, we are spending large sums on administration, where it is going is anyone’s guess.

Those who understand economics understand that capitalism and free markets are the most efficient and fairest means of allocating resources in any society. Unfortunately, most people (including our elected officials) don’t necessarily understand that. Thus, we fall prey to those who would lead us to believe that some central planning agency will allocate resources more effectively than individuals and companies interacting in a free market. This was the thinking among economic planners in the old Soviet Union and it is the thinking behind New Mexico Governor Bill Richardson’s health care proposal.
In response to the Governor’s government planning model, the Rio Grande Foundation recently released an issue brief, “Cutting Costs and Improving Health Care in New Mexico,” that outlines several ways in which New Mexico could cut health care costs, improve quality, and improve upon its ranking as the state with the third-highest rate of uninsured in the nation.

The Rio Grande Foundation has long decried New Mexico’s economically-destructive Gross Receipts Tax and urged other states to avoid our mistakes.
Unfortunately, at least in Maryland, that message seems to be falling on deaf ears. That state recently decided to levy a 6 percent tax on companies that provide computer support services, computer programming, consulting services for computer systems design and disaster recovery.
Critics say the tax will be a “small-business tax,” as many smaller companies outsource their computer network maintenance work. Of course, those who like bigger government call the $200 million tax hike a “fiscal necessity.”
One would think that Maryland, a state with the 5th-highest personal incomes in the country would not be taking economic policy cues from New Mexico, a state with the 45th highest personal income level in the nation, but revenue-hungry governments are not known for their discretion. If Maryland is wise, they will refrain from adopting the rest of New Mexico’s GRT “model” which includes rates as high as 8 percent and includes nearly all services, not just those related to computers.

I didn’t come up with the title for this piece which appeared in today’s Albuquerque Journal so the point is not that renewable energy should be considered at the same level as fossil fuels.
My real point is that Marks unfairly targets the very energy industry that does so much for New Mexico’s economy in a recent opinion piece. If New Mexico produced little in the way of oil and gas, bashing the industry that fuels America’s economy would be reprehensible enough. Since we do rely disproportionately on oil and gas severance taxes, it is just ignorant and foolhardy.

No wonder the health care debate here in New Mexico has gotten so off track. The policymakers and advocates seem to have little or no understanding not just of markets, but of how bureaucracies actually operate. Two opinion pieces that somehow managed to get published in today’s Albuquerque Journal are perfect examples.
The first article, “Start Health Care Reform in ’08,” by Charlotte Roybal of the Health Care for All campaign first discusses New Mexico’s failure, despite reports to the otherwise, to reduce uninsured numbers. Fine, without reform, little change is to be expected.
Roybal then goes on to discuss the Governor’s proposed Health Care Authority and how it would slash administrative costs and should generally be accountable. Of course, no specifics are offered, but plenty of buzzwords like “transparency”, “meeting health care policy needs”, and “clear balance of power.” None of this actually gets to the heart of what the Authority will actually do and how it is supposed to control health care costs (in reality that will be rationing), but we’ll just figure it all out after it passes I suppose.
The second article, Health Care Fixes Require Thought, by Dr. J. Deane Waldman at the University of New Mexico, starts out like the author is making a case for Evidence Based Medicine, a concept that would bring the scientific method to health care. The practice, while it sounds good, if imposed in a bureaucratic and governmentally-controlled system, would result in utter stagnation in innovation as doctors would be unable to offer new and patient-unique treatments.
Strangely, the author does not dwell on the topic and instead launches into the doctor and nurse shortage in New Mexico, all without mentioning that we are one of the only states nationwide that taxes health care services under the gross receipts/sales tax. There are many reasons that fewer Americans are studying to be doctors and nurses, but the most important one is socialism. We have a quasi-socialized system already and we are on the verge of going all the way. The only way to improve health care is by restoring the individual to the equation, not by adding more government on top of what we already have.

An editorial in today’s Albuquerque Journal discusses ways in which the state can do a better job of attracting dentists. New Mexico has no dental school and I’m sure that is a hindrance on some level, thus measures have been taken to attract dentists to the state, but the Journal is not optimistic about one reform that would do more than others to attract dentists: stop charging them the state’s gross receipts tax!
As the Foundation has pointed out on a number of occasions here, and here as well, New Mexico’s gross receipts tax is economically-devastating with rates upwards of 8 percent in some areas. This would be bad enough if the tax were only applied to retail purchases, but the tax is also levied on services provided by dentists, doctors’ co-pays, and deductibles, and all fee-for-service procedures.
Clearly, before we embark on a “universal coverage” scheme of indeterminate cost, we should enact simple reforms like eliminating unnecessary taxation, right?

Newspaper readers throughout New Mexico are aware of the financial problems and the very real potential for closure at Albuquerque’s afternoon newspaper, the Tribune. While I am certainly sympathetic with the plight of the Trib and hope that new ownership can be found, I take issue with a recent article in the paper which cited the Trib’s potential demise as an example of “concentrated media ownership” and argued that “A huge majority of columnists in most daily newspapers are right-wing.”
First and foremost, while the Tribune is indeed in trouble, that has little to do with media consolidation. Instead, it is the result of increased competition from other news sources (including blogs) and declining readership among newspapers — especially afternoon papers — nationwide.
The author cites a recent report from a group called Media Matters which found that a majority of newspaper columnists carried in major newspapers nationwide are “right-of-center,” writers, this may be a response to reader demands. After all, liberal newspapers like the New York Times are losing readers faster than their more conservative counterparts.
Hopefully the Trib pulls through, but if it doesn’t, it is market trends, not “conservative, corporate media ownership” that will have caused the loss of the paper.

New Mexico Governor Bill Richardson has failed to gain the vaunted status of “front-runner” in either New Hampshire or Iowa that would generate the scrutiny that we’ve seen of say Mitt Romney’s religious beliefs or Barack Obama’s past drug use.
Nonetheless, in attempting to educate voters nationwide on Bill Richardson’s record — especially as it relates to the state’s all-important energy industry — I wrote this article for nationwide distribution.

Bernalillo County will be lobbying the Legislature during the 2008 session for the ability to raise property taxes on County residents. Leaving aside whether it is proper for our elected representatives to use our tax money to further increase our taxes, this request, if fulfilled, will inevitably result in higher taxes, no matter what the County Commission might say.
Ostensibly, the increase is “necessary” to fund the jail and there are major problems with who places people in the jail and whether or not they are financially responsible for them. But, those problems should be addressed before the County simply sticks its hands further into taxpayers’ pockets.
Perhaps the most troubling aspect of the article in today’s Tribune is the expressed willingness of some of our political leaders to increase the gross receipts tax in lieu of the property tax. The gross receipts tax is simply the worst, most economically-destructive form of taxation here in New Mexico and further increasing it would hurt the Bernalillo County economy.

The Club for Growth is a free market political action group based in Washington, DC that attempts to elect or defeat candidates based strictly on their free market credentials — taxes, spending, trade, regulation, school choice, and tort reform to name a few. The group has done write-ups for most of the presidential candidates at this point and recently released their white paper on the Democratic candidates including Bill Richardson.
Clearly, while the Club views Richardson in a clear-eyed manner with all of his very real flaws, when conservatives look at Richardson in the context of a Democratic primary with Clinton, Obama, and Edwards, he doesn’t look quite as bad.

Lawrence Rael, Executive Director of the Mid Region Council of Governments, argued today in the Albuquerque Journal that New Mexico’s Rail Runner is a great deal compared to the Utah Transit Authority’s Commuter Rail project because we are getting more train for less money.
Rael looks at the cost increases that have happened in Utah and argues that the Rail Runner’s costs are “on-target,” despite the fact that Phase II which requires the laying of new track is only in its early stages. The fact that New Mexico could see the very same cost increases seems like an impossibility to Rael.
Of course, regardless of whether or not the Rail Runner is ultimately a better deal than Utah’s commuter train, that does not mean that we are getting a good deal. In fact, roads like Paseo del Norte are a far more efficient use of limited transportation money than projects like the Rail Runner or commuter rail in Utah.

When one person says something it is can often be dismissed as a simple statement of their opinion. When two people make the exact same statement and they happen to both be state legislators who are intimately involved in setting transportation policies in New Mexico, it becomes a talking point.
This became apparent recently as I have listened to both Rep. Patricia Lundstrom, Vice Chair of the House Transportation Committee, and Sen. Diane Snyder of the Senate’s Transportation Committee, argue that on a national basis, gas taxes and gas prices are not correlated. The argument would then presumably follow that if raising the gas tax doesn’t increase prices at the pump, then New Mexico should increase its gas tax to resolve the its Railrunner-induced transportation crisis.
Of course, as anyone who understands basic economics would know, the legislators’ argument does not hold water. First and foremost, with 20 different gasoline formulations imposed by the federal government, clearly we are not dealing with one national market, but many separate markets for gasoline. Also, geography is important.
Not surprisingly, relatively isolated states like Hawaii and Alaska (despite low tax rates and the presence of oil), increase the price of gas. In fact, Hawaii is the most expensive and Alaska is second-highest right now.
In reality, despite the formulary issue, once you factor in geography, gas taxes do indeed seem to correlate with higher prices at the pump. An updated list of gas prices is maintained by AAA and a list of states and their gas taxes can be found here.
Not surprisingly, gas in Washington, with its 34 cent gas tax is about a dime more costly than gas in Oregon with its 24 cent per gallon tax. While prices at the pump in New Mexico trend somewhat higher than nearby states with the same tax rate, this is more likely a factor of having a relatively sparse population (see Montana as an example) than other factors.
Undoubtedly, pricing gas across state lines is not a perfect science, but I can assure you that if New Mexico increases its gas tax, prices at the pump will increase by a corresponding amount.

Just a few days ago, I wrote about a few of the worst provisions contained in the Energy Bill. Now, come to find out that tucked away in this waste of paper was a measure that will force the traditional incandescent light bulb off the market by 2012.
So, by 2012, Americans will be forced to buy expensive light bulbs which contain mercury, a toxic element the environmentalists have criticized President Bush for not regulating aggressively enough.
Let me get the logic here: Power plants are bad because they put mercury into the atmosphere, but mercury in our light bulbs is okay even though it vaporizes at room temperature and literally destroys our body in high concentrations!
Of course, mercury is a side issue here. The real issue is the supposed warming of our planet. Too bad for the alarmists that 2007 saw global cooling, some are arguing that another ice age may be imminent, and some 400 climate scientists are disputing man-made warming.