Check out the video from Sunday’s episode of Eye on New Mexico in which I debate the merits of raising the Gross Receipts Tax in Bernalillo, Sandoval, and Valencia Counties to fund the Rail Runner and some other transit projects.
Speaking of the Rail Runner and other tax hikes on the ballot this fall, why is it that governments are clearly spending your taxpayer dollars to fund public campaigns to convince voters to raise their taxes.
Check out the Rail Runner’s campaign site. You’ve probably already seen their tv ads. It seems that all of the measures on the ballot this fall have their own government-financed campaigns behind them. It would seem that all voters should get behind some kind of effort to prohibit the spending of taxpayer money to ask for more taxpayer money…

Check out this excellent article (by a self-described liberal) which explains how Fannie and Freddie are at the heart of the current economic crisis and explains how the media is all too eager to blame “free markets” for government failure.
On a related note, the National Taxpayers Union and Competitive Enterprise Institute have set up a website called Beyond Bailouts. You can sign the petition in support of the following steps to make sure a similar government-caused financial crisis never happens again.
* Privatize Fannie and Freddie
* Prosecute Corrupt Officials
* Suspend Destructive Accounting Rules
* Repeal the Community Reinvestment Act
* Clean Up the Tax Code

The Washington, DC-based Cato Institute is a libertarian think tank. While not always in alignment with them on policy, we at the Rio Grande Foundation have a great deal of respect for Cato and work with them on a regular basis.
Recently, Cato published its ranking of governors. The study which is in pdf format can be found here. According to the study’s findings which analyzed tax and budget policies of America’s governors gave Florida’s Charlie Christ the highest marks and gave Maryland’s Martin O’Malley the worst rankings. Our own Governor Richardson fared relatively well in the rankings scoring a “B” on the A through F scale. Richardson was ranked 10th with high marks given for his tax cuts and poor marks for out-of-control spending.
Unfortunately, the study did not include VP candidate Sarah Palin because Alaska’s very unique budgetary practices and access to tremendous oil and gas revenues make direct comparisons with other states quite difficult.

If the current economic malaise makes you want to cry, check this Arlo Guthrie song on Fannie Mae and Freddie Mac out.

It is no secret that Tom Udall is fairly liberal and Steve Pearce is rather conservative. But, without having each of them take the quiz I discussed in this recent post, it may be hard to tell just how conservative or liberal they really are. Well, my former colleagues over at the National Taxpayers Union Foundation have produced an interesting report that contains some answers.
According to a new report that tallies up the taxing and spending agendas of the two candidates, Udall Would Boost the federal budget by $25.3 Billion while Pearce would increase it by $345 Million. Certainly, there is plenty of room to cut federal spending and both candidates should be ashamed for desiring an even bigger federal government, but Udall’s desire to spend an additional $25.3 billion seems particularly astounding. With federal spending haven grown out of control in recent years (thanks to the efforts of both parties), the need for Congress to tighten its belt is long overdue.

Albuquerque’s weekly periodical The Alibi had an interesting (and balanced) story on the Nolan Chart. The Nolan Chart is a popular political quiz that allows those who take it to get a better feel for where they stand as far as the popular terms “liberal,” conservative, libertarian, or even statist.
So, before you cast your vote, take this quick and fact-based political quiz. Figure out where you and your favorite candidate stand on the issues and whether or not you really agree.

Rio Grande Foundation economists Brown and Gisser recently wrote an op-ed arguing that McCain’s health care plan is superior to Obama’s. That drew a swift response from a supporter of Obama who argued that McCain couldn’t get health care under his own plan.
To sum up the author’s arguments:

The real problem with the American health-care system is that it has become an industry designed primarily to profit the corporations who provide the “health-care” product. Some aspects of life are more important than profit — family, community and education, for example. Other aspects of life are actually necessities, health care being among them, and when it comes to necessities, profit has no place in the picture at all. Health care should be treated as a public service, not a for-profit business.

While it is certainly up for debate whether McCain has the plan we need to solve our health care problems, the idea that education and health care are “above profit” illustrates the basic ignorance of this argument. The fact is that in a world of scarce resources, the most efficient way to allocate them is through the profit motive. Under socialism, resources are simply allocated by the government, thus resulting in political allocation and greater scarcity (due to the lack of a profit motive).
Making a profit off of someone’s misfortune or illness may sound like a dishonorable way to make a living, but this is what doctors do. It is also the best way to make people well.

Otero County residents are voting on whether or not to increase the County gross receipts tax rate in order to build the spaceport hundreds of miles away near Truth or Consequences. I argued recently in the Alamogordo Daily News that voters should be wary about voting for higher taxes due to the unique nature of the gross receipts tax and the fact that this particular tax hike will be far more costly than 1/8th cent.

Paul Gessing, president of he Rio Grande will appear on Channel 4 in and around Albuquerque (or the local NBC affiliate in your area) at 6:30pm on Saturday October 18. Click here for schedule. He’ll be discussing various issues in climate change and the hysteria in some circles over “global warming” on a half-hour program called “The Climate Case An examination of the state of the environment.” Aside from Mr. Gessing, Weather Channel Founder and global warming skeptic John Coleman will appear. The opposing side will be represented by two UNM professors.
While my role on the show is to talk about the politics of global warming, not the science, there have been some interesting stories recently about climate. First and foremost, there is widespread belief that the coming winter could be extremely cold, in part because the sun has no sunspots (thus signaling a cold winter). Only time will tell, but the idea of a new phase of “global cooling” must make Al Gore very concerned that the global warming gravy train has left the station.
Then there is this interesting story about major climate change taking place on Jupiter. No word on whether humans have caused this to occur, but considering that we’ve never stepped foot on the planet, I doubt even Gore can pin the blame on automobiles. Just goes to show that our solar system is ever-changing and the climate on planets — including ours — is not exempt.

Marita Noon of the Coalition for Responsible Energy has an excellent article in today’s Albuquerque Journal. The fact is that, despite the ongoing economic crunch, we still need to be concerned with energy policy and ensuring that Americans have access to gasoline, electricity, and heat at reasonable prices.
Thankfully, as Noon points out in the article, New Mexicans have repeatedly expressed support for energy exploration, including offshore drilling and opposition for increasing taxes on energy companies. This economic crisis will pass and, when the economy strengthens, there is no doubt that energy will again be an issue. That is why it is so important that we continue to put the pressure on our elected officials in New Mexico and in Washington to make sure that we don’t harm our economy by cutting off access to energy, the foundation of our economy.

Another New Mexico-based think tank — usually considered to be moderate or slightly left-of-center — called Think New Mexico recently released a study calling for smaller schools. While the Rio Grande Foundation has focused on tax credits for education and, more broadly speaking “choice” and market-based reforms as the best means of improving educational results, we fully support Think New Mexico’s call for smaller schools.
According to research from Think New Mexico:

New Mexico’s graduation rate ranks second from the bottom of the 50 states and the District of Columbia. Only 54.1% of New Mexico’s children graduate from high school, compared with a national average of 70.6%. An average of 77 students drop out each school day across New Mexico – nearly 14,000 per year.
Decades of research have shown that smaller schools have higher graduation rates, higher student achievement, lower levels of student alienation and violence, and higher levels of satisfaction among students, parents, principals, and teachers. Small schools also dramatically improve the performance of low-income children, which helps to narrow the persistent achievement gap.
The most effective high school size, according to the research, is 600-900 students. Yet, in 2007, more than two-thirds of New Mexico ninth graders entered high schools with populations larger than 1,000 students, and nearly a third entered high schools with more than 2,000 students.
Small schools are not only better for students, they also cost less to build and operate. Researchers have found that the most efficient schools are those serving 300-900 students. Schools larger than this experience “diseconomies of scale”: inefficiencies and increased costs that result from increases in bureaucracy, security, and transportation. In addition, if the operational cost of a school is calculated “per graduate” rather than “per student,” small schools are substantially more efficient than large schools because their dropout rates are much lower.
The capital costs of small schools can also be far less per student than those of large schools if the small schools are designed to take advantage of community educational resources like gymnasiums, pools, libraries, and sports fields, rather than duplicating these facilities. Several New Mexico charter schools have successfully applied this community-based model, at a savings of millions of taxpayer dollars.
Think New Mexico recommends that the legislature and Governor Richardson enact legislation requiring that: 1) any school receiving state capital outlay funding for construction must have a capacity of no more than 225 students per high school grade level, 120 students per middle school grade level, or 60 students per elementary school grade level; and 2) schools receiving additional state funds to serve at-risk students must establish smaller learning communities if they exceed these size limits and if they have not already done so.

While not explicitly “market” or “choice”-based, the call for smaller schools will certainly make New Mexico schools more manageable. Broad-based choice should still be the ultimate goal of education reform (and it will continue to be the centerpiece of our reform efforts), but forcing schools to downsize should result in improved results.

In case you missed it, a few weeks ago I appeared on Bob Clark’s show on KKOB 770 to discuss the Rail Runner tax hike. A link to the show can be found here.

Recently, two Rio Grande Foundation economists, Ken Brown and Micha Gisser, had a column in the Albuquerque Journal discussing the health care plans of Obama and McCain. While Obama claims his plan will not lead to “socialized medicine,” Gisser and Brown believe that his reliance on government will inevitably lead to a breakdown of the current system.
As far as McCain’s plan is concerned, they say that it would:

McCain’s plan is radical yet simple: It would offer every individual $2,500 and every family a $5,000 refundable tax credit to purchase health insurance. He would abolish the current tax code where employers purchase health insurance for their employees with pre-tax dollars. We can safely assume that his plan, while subsuming Medicaid, would leave Medicare intact.
For the poor, McCain’s tax credit would be offered in the form of a negative income tax. Thus, McCain’s plan is in fact a voucher extended to every citizen, from Bill Gates to the poorest person sleeping under a bridge. Allowing people to purchase health insurance across state lines, and overriding the hundreds of state-coverage mandates, will open up a huge national market for the tens of millions of voucher holders. At long last the spiraling cost of health care will level out.

McCain’s plan likely is better, but I wonder, even if he gets elected, will Congressional Democrats go along? I don’t think we’ll get to find out.

While it will take quite some time to discern the success or failure of the massive government intervention we have seen throughout the US economy in recent weeks, one policy — the ban on short-selling — has already been proven a failure. As the article points out, “The short selling ban hasn’t stopped the decline in bank stocks. An index of the 34 U.K. financial stocks on the banned list has fallen 22 percent since Sept. 19, compared with an 18 percent drop for the FTSE 100 Index of the largest U.K. companies and 10 percent for the FTSE All-Share Index.”
This is no surprise since government intervention in the economy caused this mess at the outset. As this article points out, it was government policy that created the Great Depression as well. Hopefully policymakers stop these interventions and let the economy run its course, but at this point there is no guessing what will happen next.

The Cato Institute recently released its annual “Economic Freedom of the World” Index. The full study can be found here. Unfortunately, the news for the United States is not good. Since 2000, our score has dropped from 8.55 which was good for second in the world, to 7.86 which was good for only 10th in the world (check page 177 of the index for US rankings and scores). I can only imagine how the current financial crisis and massive government intervention in the economy will affect our relative level of economic freedom.
According to the authors, “Lower ratings in the legal structure area and for the
administrative costs of clearing customs were primarily responsible for the rating reduction of the United States.” Sound money, size of government and regulation have all suffered in recent years as well. It would be simple to lay blame for this slide at the feet of President Bush as he has presided over this decline in freedom, but our nation’s entire political leadership has been working to destroy economic freedom in recent years and I see no lights at the end of the proverbial tunnel.

It seems like only yesterday that Congress and all manner of people who are ignorant of basic economics were bashing oil and gas companies for their supposed efforts to manipulate prices and keep them high. Now, with the global economy on the skids, crude prices are plummeting right along with the stock market and are likely to keep dropping.
So, the question must be asked: where are the speculators and manipulators? If Exxon has an iron lock grip on the prices it charges for its product, why aren’t they keeping them high or at least stabilizing them? The simple fact in is that they don’t control prices; they are “price takers.”
While the information above is simple economics, the more interesting issue is how the collapse in oil and gas prices will impact New Mexico’s budget and economy. Months ago I wrote about the impact lower oil and gas revenues could have on New Mexico. It would appear that the chickens are coming home to roost.

Jonah Goldberg spoke at a breakfast in Albuquerque on September 19th. The event was sponsored by the Rio Grande Foundation and New Mexico Prosperity Project. The event was outstanding and several people told me afterwards that it changed their entire outlook on politics (for the better). While the video is not perfect, the sound quality is very high, so turn up your speakers and listen to the talk.
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A few weeks ago I posted information on some of the ballot measures that will appear on New Mexicans’ ballots this fall. Not all of the information was available at the time, but at last, the Secretary of State’s office has put sample ballots online. Ballots statewide are available here and are listed by county. They are long and have a lot of important races and ballot measures on them, so I recommend you look at them early and figure out your votes ahead of time.

At last, complete text of the Rail Runner tax hike is available. The Bernalillo County language is as follows: Shall Bernalillo County impose a one-eighth of one-percent gross receipts tax which shall be dedicated to the Rio Metro Regional Transit District in equal portions for the purpose of management, operations, capital planning, construction or maintenance of the New Mexico Rail Runner Express, and for the management, operations, capital, planning construction or maintenance of the Rio Metro Regional Transit District System, pursuant to the Regional Transit District Act?

According to this recent report from the Albuquerque Journal’s Business section (subscription required although a shorter free article is available here), New Mexico’s State Coverage Insurance program has stopped enrolling new members at 40,000. This has occurred two years earlier than the government originally expected.
SCI is a funded through the federal SCHIP Program. The state pays $100 million per year on the program, approximately 1/4th of the total cost. New Mexico uses SCHIP, a program intended for children, to fund insurance for adults under a waiver that expires in 2010. Because New Mexico already has such generous Medicaid standards, the state couldn’t find enough people to spend SCHIP money on, so, in their infinite wisdom, the program was expanded.
The result is that between an employer and employee, costs for insurance under SCI come to $110 per insured person, per month. The cost of the program to federal and state taxpayers is $400 million annually and $40,000 people are covered for a total cost of $10,000 per insured person. This leaves a total cost per insured person of $11,320 annually. Considering that my Health Savings account costs my employer a total of $3,600 annually, we the people are getting ripped off big-time. Don’t you just love government programs? Couldn’t we just give everyone who doesn’t have insurance in New Mexico a fully-funded HSA and be done with it?

In his posting below, Jim rightfully bashes Congress. I want to trash our beloved Albuquerque City Council too. During last night’s meeting, Council approved $147 million in TIDD subsidies in order to redevelop Winrock Shopping Center. Abundant literature shows that TIDD and TIF are economic losers.
At the very same meeting, in a move that could have helped revitalize downtown — yes, remember downtown, the area that is at the center of so many government planning experiments — Council denied the Church of Scientology a permit that would have allowed them to get to work right away on moving into new digs.
The problem with putting government bureaucrats and politicians in charge of development is that they will subsidize their friends and contributors and they will obstruct those, like the Church of Scientology, that may be outsiders or hold unpopular views. Unfortunately, this is currently the way of the world.

I have written previously in this space about our new legislative tracking website, NewMexicoVotes.org. Recently, we released our “missed votes study” which simply tallies up which legislators are showing up to vote when they are supposed to.
Certainly, there are often legitimate excuses (illness being one example) for legislators to miss votes, but nonetheless, we feel that voters should have some idea if their elected officials are doing their jobs or not. One story from the Santa Fe New Mexican is available here. The Associated Press also picked up the story which can be found here.
The missed votes study itself can be found here.

Over at Town Hall, citizen activist Paul Jacob has compiled a list of the top 10 ballot measures on the ballot nationwide this November. Sure, we are voting on the Rail Runner (ex post facto) of course, but wouldn’t it be great if citizens could put issues they want on the ballot?
Here in New Mexico we really don’t have this capability as we lack the initiative and referendum process (in most cases at the state level). I realize that in a liberal state like New Mexico, this could be dangerous, but I’m willing to take my chances that allowing the people to have a greater say in the rules they live under will be a good thing. What do you think?

Micha Gisser is a former UNM professor and currently serves as a Senior Fellow with the Rio Grande Foundation. He had a very interesting article (subscription required) on taxes in the Business Journal section of the newspaper recently. Gisser essentially went through the tax cutting successes and failures of the last three Presidents to have cut taxes significantly — JFK, Reagan, and George W. Bush and discussed their impact on the overall economy. I have previously compared the size and scope of these tax cuts here.
To sum up his arguments, Kennedy’s tax cuts were Keynesian in nature with the top income tax rate dropped from 91 percent to 70 percent and they succeeded in reducing unemployment from 5.7 percent to 3.8 percent while the deficit was actually reduced at the same time.
Gisser goes on to discuss Reagan’s tax cuts which included reducing the top income tax rate from 70 percent to 28 percent. He calls the record of these cuts “mixed” because budget deficit increased dramatically under Reagan. Where I disagree with Gisser is that the deficit and tax cuts are separate matters. The deficits under Reagan were at least partly spending induced as this chart shows.
Lastly, there is Bush whose capital gains tax cuts in particular Gisser calls a success. Although Gisser gives Bush an undeserved pass on his spending (see previous chart), it is important to recognize at a time when Bush’s economic policies are increasingly unpopular that his tax cutting policies are not to blame. Rather than raising taxes as Obama proposes, we should make the Bush tax cuts permanent and look for ways to reduce our corporate tax burden which is among the heaviest in the world.
Overall, Gisser makes a compelling case, but rather than saying that a particular tax cut has a “mixed record,” we should look at cutting taxes as a way to shrink government. Ultimately, that should be the goal.

Councilor Isaac Benton created a task force and stacked it with his friends and supporters of the streetcar. Recently, the task force released its recommendations. Not surprisingly, they recommend continuing the 1/4 cent gross receipts tax that is up for renewal at the end of 2009. Also, given Benton’s bent towards control of development and personal mobility, he urges more financial support for transit. Lastly, while his task force supports the idea of the streetcar, they naturally view additional funding (more tax hikes and subsidies) as essential in order to move the project forward. Specific recommendations are below:

By a unanimous vote, the Task Force recommended continuation of the gross receipts tax for transportation, set to expire at the end of 2009. This tax will provide continued funding to maintain, improve, and repair city roads and to help maintain and operate the ABQ Ride transit system. The recommendation to continue the tax, which generates approximately $38 million annually, is tied to new comprehensive policy recommendations for each of the tax’s five programs: road maintenance, road rehabilitation, road deficiencies, trails & bikeways, and transit. A central focus of the Task Force’s recommendations is increasing capacity of the city’s existing street
system by improving efficiency and flexibility for private vehicles, transit, pedestrians, and bicyclists.

The report also contains a recommendation about how the tax should be allocated in the future. “One of the most important recommendations from the Task Force is to increase Transit’s share of the tax from 20% to 36%,”
said Councilor Benton. “More and more people are using ABQ Ride every day. We must respond to the citywide demand for transit that has resulted from $3- and $4-dollar-a-gallon gas.”

On the question of the modern streetcar, a two-thirds majority of the Task Force supported the concept, further analysis, and development of the streetcar. However, it would limit such use of the tax to a maximum of 14%
of the total proceeds, and only if leveraged on a 3:1 basis with other sources. These could include State and/or Federal support, private sponsorships, and a Tax Increment Development District.

The report, once introduced at Monday’s Council meeting, will be referred to the Finance and Government Operations Committee, which could hear the report as early as their October 15th meeting.