Commercial aviation is one of the most heavily-regulated and taxed industries in the nation. Thus, some new developments that made news this week, could have an impact not only on the industry itself, but on the flying public as a whole.
First and foremost, in a major positive development, the United States and the European Union have finally approved an “open skies” agreement that should make trans-Atlantic air travel cheaper and more convenient. Under the agreement, starting next March, airlines based in any of the EU countries would be allowed to fly to any American city and U.S. carriers will be allowed to fly to any destination in the EU’s 27 countries.
Open skies will be a huge boon for the flying public, but of course there is one major opponent: labor unions. The funny thing is that since US workers are actually more productive and less expensive to hire and fire than their European counterparts, American aviation workers should benefit, but that never seems to stop labor unions from fighting economic liberalization.
Unfortunately, the news is not all good. Despite paying incredibly high taxes that subsidize wealthy passengers on private jets, commercial airline passengers will be paying even higher taxes if the airports have their way.
Needless to say, when there is as much government involvement in an industry as their is in aviation, incentives are going to be mixed up…nonetheless, we are in better shape now than we were 30 years ago thanks to of all people, President Jimmy Carter who deregulated the airlines.

A few weeks ago I blogged a Washington Post story on the supposed trend of voters in Western states moving from the Republican Party to the Democratic Party. In a recent column for the Albuquerque Journal, recently added columnist Ned Farquhar made the same point and cited Colorado’s Taxpayers’ Bill of Rights as an important reason for Colorado’s shift from red to blue.
Unfortunately, Farquhar ascribes too much credit to the Republican Party for its role in adopting TABOR in Colorado and he completely fails to account for the fact that Governor Owens led the charge on behalf of weakening the spending limit in 2005. As I point out in a letter to the editor responding to Farquhar’s column that appeared in today’s Albuquerque Journal, it was not Republicans’ “rigid ideology” that cost them votes. Perhaps it was the other way around?
Text of the letter appears below:
I ENJOYED reading Ned Farquhar’s commentary outlining why he believes the Republican Party is losing the West, but many of his facts are simply wrong and in other cases he ascribes trend status to mere political fluctuations.
His focus on Colorado is particularly telling. He argues that Republicans “painted themselves into an ideological corner” and cites that state’s spending limit known as the Taxpayers’ Bill of Rights. What he fails to mention is that voters, not Republicans or Democrats, adopted the law in 1992.
And, while voters did suspend part of the law for five years starting in 2005, Colorado voters— unlike New Mexicans— have the final say on any and all tax increases at both the state and local level.
Specifically regarding the politics of the situation, his subsequent mention of then-Gov. Bill Owens, a Republican, is interesting. Owens actually led the campaign on behalf of the referendum that ultimately suspended a portion of Colorado’s spending limit. The Republicans did indeed lose Colorado, but it was hardly the result of their supposedly rigid ideology.
Ultimately, elected officials should try to put political calculations aside to do what is best for their states. Cutting taxes and restraining government have been shown to work everywhere they’ve been tried. Western politicians have historically heeded this, and that is why our states are among the fastest-growing in the nation.
PAUL GESSING
President, Rio Grande Foundation, Albuquerque

“If you build it, they will come.” This line from the movie Field of Dreams has been used to justify taxpayer-financed construction of professional sports stadiums for years. Now, as the Washington Post discussed on its pages this Sunday, Governor Richardson and a number of leading New Mexicans and civic boosters in and around Las Cruces have been pushing a taxpayer-financed spaceport in order to allow billionaires like Richard Branson start commercial space flights.
While it is being sold as an economic development tool, the plan requires a significant and economically-harmful hike in the gross receipts tax. With more than three-dozen of these spaceports either complete or under construction, New Mexicans need to understand just how speculative this type of “economic development” really is.

Governor Richardson wants the Senate to come back to Santa Fe in part to pass his transportation plan known as GRIP II. While roads are certainly something that even advocates of the most limited of governments can get behind, the episode illustrates some particular flaws associated with politically-driven transportation planning.
Among the items contained in GRIP II is $25 million for the proposed Spaceport for which taxpayer subsidies are already being used. Thankfully, Albuquerque Senator Joe Carraro has said he will vote for the bill only if money is included for improvements to the clogged I-25/Paseo del Norte juncture (subscription required).
I’m not trying to be Albuqueque-centric here; I’m sure there are dozens of transportation projects in cities throughout the state that should be higher priorities than additional subsidies for the multi-millionaire’s who want to go launch their rockets, but I drive the I-25/Paseo corridor on a regular basis and can assure you that something should be done.
Unfortunately, we have a socialized transportation system (how else do you explain the RailRunner) that could use a good dose of market forces in order to better allocate resources. The folks at the Reason Foundation have been beating the drum for such reforms for years and have some really great research on how to bring the free market to transportation.

From the perspective of left-wing adherents to the religion of global warming, Al Gore’s energy usage is apparently beyond question. Drew Johnson of the Tennessee Center for Policy Research recently exposed Gore’s energy usage and felt the wrath of those for whom questioning the global warming orthodoxy or the merits of its adherents is beyond the pale.

After months of discussion and delay Albuquerque’s City Council finally repealed the November tax hike/extension for Mayor Chavez’s trolley. Theoretically-speaking, the quarter-cent hike in the gross receipts tax will now expire in 2009 as voters originally gave approval for in 1999. As Dr. Messenheimer and I have pointed out, because of its unique nature, even small hikes in the gross receipts tax can create large amounts of revenue and significant economic harm.
Council unfortunately did not approve an amendment that would have given voters final say on any proposed streetcar, so the victory is not complete. Worse, a rigged “study” of the project will now be funded that — due to its makeup — will undoubtedly produce recommendations attempting to justify the project.
Council will most certainly not let this tax expire without a fight, but at least round one goes to taxpayers.

The Club for Growth is one of the groups that not only advocates for real fiscal responsibility, but has the resources to hold Members of Congress accountable for their actions at election time. New Mexico’s delegation did not fare particularly well in their most recent congressional ratings.

Although it is not something the Foundation has worked on, it has been interesting to watch the debate over medical marijuana from the sidelines. Having failed in the first effort to pass a bill through the House, Governor Richardson did some arm-twisting behind the scenes and urged legislators to pass a bill…thus New Mexico becomes the 11th state in the nation to allow sick people the use of marijuana with a doctors’ recommendation.
Although New Mexico is a poster child for ways in which the debate over drug policy can split otherwise amicable limited government types, it is hard to argue from a limited government perspective that allowing medical patients the freedom to use the treatments that work for them is a bad thing. Perhaps more importantly, as more and more states pass their own medical marijuana laws, pressure will increase on the federal government to give states more freedom to experiment with their own policies as opposed to running everything from Washington.

At least ethanol is not the answer to our energy problems. It may indeed be the answer to the question, “What biofuel is used by politicians as a political ploy to satisfy environmentalists while they escape making politically difficult decisions?”
Ethanol actually makes gasoline costlier and dirtier. But, conveniently, the benefits of ethanol subsidies flow to politically-connected corporations and farmers, thus making it a potent source of votes even if its usefulness as a source of fuel is suspect.

There is seemingly no area of our existence that can now escape the tentacles of government. Soon to be added to that list in New Mexico is mandatory vaccinations for HPV virus for all girls entering sixth grade unless their parents sign a waiver.
Governor Richardson has already said he’ll sign the bill mandating the vaccine, but who will pick up the $400 tab for the shots? Presumably this will fall to taxpayers one way or the other.
We’re all for preventing diseases — that’s one of the reasons we support Health Savings Accounts after all — but governments that mandate you get a vaccine for the sole purpose of protecting yourself — as opposed to vaccinating people in order to stop a disease to spread through the entire population — seems a bit over the top.

The New Mexico House of Representatives will vote tomorrow on a resolution that declares Pluto be a planet, and tomorrow, March 13, 2007, as “Pluto Planet Day”. The bill’s sponsor, Doña Ana County Democrat and landscape architect Joni Marie Gutierrez, must have a vastly over-inflated sense of government power. The State of New Mexico has no jurisdiction over the heavens, and might as well attach an amendment declaring the moon be made of blue cheese.
The text of the resolution recognizes that “the state of New Mexico is a global center for astronomy, astrophysics and planetary science” and that we host “world class astronomical observing facilities.” The state government interfering in this regard, denying the scientific definition of ‘planet’ and controverting the International Astronomical Union, is an insult to this scientific tradition. Let’s hope that representatives who do respect science and astronomy vote against this stunning piece of anti-intellectualism.

While we at the Rio Grande Foundation focus a vast majority of our time and attention on public policy and how it impacts average New Mexicans, personal finance and money management are important as well. This is an excellent blog on personal finance with a New Mexico-specific focus. There is also an excellent book called “Common Sense Economics” that was written by James Gwartney, Richard Stroup, and Dwight Lee that connects the worlds of personal finance and economics.
The fact is that too many Americans don’t understand economics at any level — as it impacts them directly or in the broader policy context — that’s why Americans are paying an average of 18.9 percent interest on credit card debt of $60 billion.
With the average American mired in debt, it is no coincidence that the federal government, which is run by people who get to spend money that belongs to others and largely free of personal repurcussions, is in debt to the tune of more than $8 trillion.

Yesterday, the state Senate passed a bill that would force the split up of Albuquerque Public Schools into smaller districts. Remarkably, only two Senators opposed the bill, which would work by prohibiting school districts larger than 35,000 students. Currently, APS has more than 90,000 students in captivity, so simple division implies a partitioning into at least three independent districts.
Yet APS Superintendent Elizabeth Everitt, as quoted by the Albuquerque Journal and in her Call to Action posted on the APS website, has responded as if APS would be split in two along the river, posing a false dichotomy between “a wealthy district east of the Rio Grande” and a “less affluent district” across the river.
If the state Senate’s move is carried into law and Dr. Everitt ‘s fiefdom is reduced in size, at least some Albuquerque schools might be overseen by a superintendent capable of elementary school math.

It looks like there is some good news coming from Congress for a change. No, Nancy Pelosi has not embraced the flat tax…the news is not that good, but for the first time in recent memory, the number of earmarks passed by Congress actually fell according to the newly-released “Pig Book” from Citizens Against Government Waste.
As it turns out, Democrats deserve credit for paying heed to their campaign promises to put a stop to Washington’s culture of corruption (for now at least), but conservative stalwarts like Tom Coburn (R-OK) and Jim DeMint (R-SC) also played a major role in limiting the pork in this year’s budget.
These are small victories, but it shows what can happen when the American public expresses its outrage over wasteful and fraudulent practices in Washington.

If you’ve read the opinion pages of the Albuquerque Journal recently, you’ve probably noticed that health care has been discussed on an almost daily basis. Representative Dan Foley, for his part, had an article today that started off strong by explaining why government is not the best provider of health care. Foley is absolutely correct when he writes that “with a finite number of dollars available, the government will have to decide who gets how much health care and how much health care that should be.”
Unfortunately, Foley then goes on to outline a plan to provide “universal coverage” that sounds suspiciously like the plan adopted by Massachusetts. Unfortunately, the plan adopted by Massachusetts is quickly turning out to be a costly failure.
Interestingly enough, in the Journal’s business outlook section, another article called “Why Health Savings Accounts Save Money,” appeared (subscriptinon required). This excellent article outlines the simplicity and relative ease with which consumer-driven health care can cure what ails our health care system. Rather than embarking on universal coverage boondoggles, Richardson and the Legislature should focus on ways to expand consumer-driven solutions like HSA’s.

Got a hold of a recent copy of US News & World Reports last night and they had an interesting article on the 10 Worst Presidents in US History. I have always felt that rankings like these, whether they have a “liberal” bias or not, tend to give undue weight to those who accrue power to the executive branch and expand the power of the federal government.
This survey is no different as presidents were ranked (positively) according to their doing the most “progressive” things during their time in office. My list looks quite a bit different: in no particular order Woodrow Wilson, FDR, LBJ, and Nixon are among my candidates for worst president for their roles in massive expansion of government.

Some New Mexicans, especially those directly involved in promoting economic development are feeling rather proud of themselves. The new Tesla motors plant will be built in Albuquerque and Intel is keeping its plant in Rio Rancho. A new study from the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation (ITIF) may throw some cold water on that.
Apparently, New Mexico is losing ground in the battle to “create an environment that fosters innovation and high skills in order to help fast growing entrepreneurial firms and innovative existing firms expand.” With an oppressive gross receipts tax and a reliance on government favors and largesse, this is nothing new to the Rio Grande Foundation. It is true that studies and rankings are plentiful and can make economically-healthy states look worse than they are, but think about it. Does New Mexico really “create an environment that fosters innovation and high skills in order to help fast growing entrepreneurial firms and innovative existing firms expand?” Not by a long shot. Hopefully Governor Richardson and the Legislature will avoid the 11% spending hike they’re expected to approve. We’ll see.

Stuff happens. It is part of life. But when you are a member of Congress, what happens to your family often colors your worldview to the point that rightly or wrongly you act in ways that are inconsistent with your beliefs. This is especially true for New Mexico Senator Pete Domenici and Senator Michael Enzi of Wyoming who are teaming up with Sen. Ted Kennedy in an effort to add mental health to the long list of mandates on your health insurance.
While the big-government mindset of Sen. Kennedy is widely known, Senators Domenici and Enzi are usually level-headed conservatives. Unfortunately, personal tragedy has led Domenici to support bad policy, but I’m not sure what happened to Enzi.
At a time when Congress and the states are fixated on reducing the costs of health care, it simply makes no sense for our elected representatives to force consumers to bear the costs of even more coverage they may not need.

While most free marketers did not support President Bush’s massive expansion of Medicare, the introduction of Health Savings Accounts (I love my HSA!) was a positive outcome of the costly legislation. Curiously enough, as Investor’s Business Daily points out, the percent of increase in health care costs has actually slowed down in recent years.
While this is something of a minor victory, it is a promising sign that increased reliance on consumer driven health care (HSA’s are the best example) will slow the rapid increase in medical spending. This is something that Governor Richardson and Democrats in Congress may want to consider before they again expand government’s role in health care.

According to a new study by fellow State Policy Network think tank, Tennesse Center for Policy Research, “Al Gore’s mansion, located in the posh Belle Meade area of Nashville, consumes more electricity every month than the average American household uses in an entire year.”
“Last August alone, Gore burned through 22,619 kWh—guzzling more than twice the electricity in one month than an average American family uses in an entire year. As a result of his energy consumption, Gore’s average monthly electric bill topped $1,359.”
“Since the release of An Inconvenient Truth, Gore’s energy consumption has increased from an average of 16,200 kWh per month in 2005, to 18,400 kWh per month in 2006.”
“Gore’s extravagant energy use does not stop at his electric bill. Natural gas bills for Gore’s mansion and guest house averaged $1,080 per month last year.” This story made the front page of the Drudge Report.
“As the spokesman of choice for the global warming movement, Al Gore has to be willing to walk the walk, not just talk the talk, when it comes to home energy use,” said Tennessee Center for Policy Research President Drew Johnson.
In total, Gore paid nearly $30,000 in combined electricity and natural gas bills for his Nashville estate in 2006. Great work Drew and the TCPR team for exposing the ringleader of the global warming crowd for being an energy hog.

On Friday, I recommended readers of this blog check out the movie Amazing Grace which is playing in theatres now. I enjoyed the movie, but as someone who has been involved in the political process for much of my adult life, I found the movie to be something more akin to a history/civics lesson than a movie for entertainment as many of the film’s reviewers have pointed out.
I still recommend the movie and believe that anyone who struggles daily against the establishment will gain from watching it, but I think that it is an even better choice for the average movie-goer who is less interested in politics than in the story itself. These are the people who may realize that the world around them is not a “given” and that they can change it for the better.

The Journal’s Outlook section contained an interesting article about the fact that New Mexico has lost some earmarks that were supposed to be coming from Washington. The author quoted several recipients of federal largesse who worried about the impact such relative restraint in Washington giving the impression that somehow New Mexico is “losing out.” Of course, while this year’s numbers are not available, it is important to note that New Mexico gets more money from Washington relative to what it sends than any other state in the nation.
The author ended the article by saying “the cry is out for stronger private-sector support to emerge.” This certainly makes sense and the business-friendly income and capital gains tax cuts of recent years have been helpful even though other taxes have been raised. Ultimately, however, it is not up to businesses to “pick up the slack” because entreprenuers will always try to make money when the incentives are right.
Instead of jacking up spending by 11 percent, Richardson and the Legislature should keep cutting income taxes, thus laying the groundwork for a stronger private sector to emerge.

If your weekend plans are not already booked, may I suggest you check out a new movie coming out this weekend in most areas of the country called “Amazing Grace.” The story is of William Wilberforce’s efforts as a member of Parliament in 18th-century England to end slavery and the slave trade in the British empire.
I first heard the story of Wilberforce and his compatriot Thomas Clarkson from Larry Reed, President of our sister think tank in Michigan. Reed visited New Mexico in November of last year and those who attended the events also heard the story of Clarkson and Wilberforce.
Essentially, Clarkson started the world’s first think tank with the “libertarian” goal of ending the slave trade. He and Wilberforce acted as a team and over nearly 50 years accomplished their goals. The lessons are that ideas matter and you should never give up.
I can’t do the story justice here so see the movie. I’ll have my review posted over the weekend.

Very interesting article in the Journal today regarding the fact that the San Juan/Chama project may not be the panacea our friends at the Albuquerque-Bernalillo County Water Authority may think due to the Colorado River’s propensity for drought conditions.
The report by the National Resources Council does bring up one interesting point about that I have been considering with regard to water in the West and that is the inherent conflict between agriculture and population growth. The report points out that 75 percent of water in the state of New Mexico is used for agriculture (I have heard as much as 90 percent). It seems to me that this situation could be resolved by creating an actual marketplace for water in which prices are set by the market as opposed to government fiat. Only when the economic benefits of agricultural usage are weighed against urban usage will water be allocated effectively.