Don't be fooled! Most federal money coming to Mississippi belongs to its citizens as a matter of right

    In my last post I objected to the claims made by liberals that Mississippi is a giant welfare case, unable to survive without massive federal aid.
    Among the claims made by the Thad Cochran tax-and-spend crowd is that Mississippi gets three dollars from the federal government for every one dollar paid by Mississippians in federal taxes, and that therefore we mustn't cut spending. This three dollar figure overstates the case; indeed for 2012 Mississippi or Mississippians did receive about three dollars in federal money for every dollar paid. But the average over several years is about two dollars.
    Liberal Republicans are trying to convince people that any effort to rein in out-of-control federal spending will cut of the flow of these funds. Well, it's simply not the case.
    My last post addressed this issue in general terms. Let's look now at the specific federal spending based on a 2010 report from the U.S. Census.
    In 2010 the federal government sent approximately $31.5 billion to Mississippi. The chart above, from the Bigger Pie Forum, shows how that money was spent.
    In 2010 Mississippians received $9.8 billion in various retirement and disability payments. As a state we have two to three times the average number of military pensioners, and many people work in other states and then return to low-cost Mississippi to retire. These pensions are a  matter of right, not a gift to Mississippi by magnanimous blue states.
    Next up, at $9.7 billion, is "Other Direct Payments," which include Medicare benefits; excess earned income tax credits; unemployment compensation; Supplemental Nutrition Assistance Program; housing assistance; agricultural assistance; federal employees life and health insurance; student financial assistance. None of these programs are targeted to Mississippi. People get this money if they are entitled to it, regardless of what state they live in.
    So $20 billion of the $31.5 billion is pensions and welfare. People are going to get this money wherever they live.
    In 2010 $2.6 billion was spent on "procurement." In other words, the federal government bought things. This isn't a handout; it's a value for value exchange. Three billion was spent on various federal salaries.
    And then there were $8 billion in grants, everything from the Small Business Administration to the Department of Education. The Census lists 32 different agencies or categories of spending. If any cuts are to be made it will come from "grants." But such cuts will affect every state, not just Mississippi.
    When Republicans start championing runaway government spending on the grounds that our state is getting more than our share, our nation is in trouble. I suppose those who think like this would find it a terrible thing if every person on welfare or unemployment in Mississippi were to suddenly get a job. After all, that would mean fewer federal dollars flowing in.
    The fact is that most of what we as Mississippians receive from the federal government is ours as a matter of right. Cutting back on waste isn't going to affect the pensions and benefits received by our citizens. It will make us a stronger state and a stronger nation.
   

   

The beauty of federalism: Blue States free to raise taxes while Red States make cuts

    The Wall Street Journal has an interesting story about how Blue states are raising taxes and spending pretty dramatically while Red States are holding the line.
    My personal opinion is that these Blue States are making a mistake. There has been a slow seepage of high-income people and businesses from Blue States due to high taxes. Raising them even more is likely to drive off more.
    But, on the other side of the coin, many people are glad to pay more in taxes when accompanied by better government services. Unfortunately, many of the Blue States, such as California, have a history of squandering tax money.
    What's the right choice? I have an opinion but I don't know for sure. But the beauty of federalism is that different states can do different things and hopefully learn from each other's mistakes. If higher taxes and spending -- presumably accompanied by better infrastructure and education -- end up attracting new businesses we'll know that the Blue State strategy is best. If the Blue States continue to hemorrhage jobs and taxpayers we'll know they have made a mistake. If Red States continue to slowly attract business and taxpayers we'll know they've done it right.
    I think it worthy of note that many Blue State residents simply would never more to a Red State no matter how high their taxes were. Most people from Southern California or Massachusetts simply are not going to be happy living in Mississippi or Alabama. They might like Naples, Fla., though. People aren't going to pack up and move overnight. This is a decade-by-decade process.
    What we have is federalism at its finest. Different states adopting dramatically different policies. Not only does it give American citizens more choices, but as a state we can look around at what works and doesn't work elsewhere and act accordingly.

California school district financing proof that the worst is yet to come

    If you want proof the worst is yet to come in the municipal and state funding ponzi scheme that we've been running, just look at the graphic above from the Voice of San Diego.
    This graphic represents a recent bond deal that was agreed to last year by the Poway Unified School District in California. Under this agreement, the school district agrees to pay a high interest rate, but doesn't actually have to pay anything for 20 years, at which point it starts paying on the debt.
    It's called a capital appreciation bond, and presupposes that the value of both the buildings and the tax base will increase in value. But the fact is that California real estate remains overvalued and the economy is in a shambles. Deals like this one ensure that it won't recover in the future.
    Poway isn't alone in using these ridiculous bonds. San Diego Schools recently agreed to pay $1.1 billion in interest on a $164 million loan. Other school districts are joining in with the borrow now, pay 20 years later plan. Of course, if the taxpayers don't have the money now, what makes them think the citizenry will have five times more money in 20 years?
    If you want to know where the economic growth is going to be in the next 50 years, find states with the lowest unfunded pension obligations and the least amount of down-the-road debt that some many states are willing to accept. States which have huge unfunded liabilities are going to have to raise taxes to such high levels that industry will have to leave. California is one of these states. Unfortunately, as we've seen California's fiscal woes have a way of spilling over into the nation at large.
    The Voice of San Diego has led the way in educating the public about the dangers of these bonds. They've even put together a guide, including a spreadsheet, showing how to find which districts have issued these bonds. Currently there are more than $18 billion of these bonds outstanding in California. Be afraid. Be very afraid.
    We've known about the problem on unfunded pensions for some time now but have done nothing due to the power of public-employee unions. Now you can add to that problem these balloon bonds, or capital appreciation bonds, high-interest bonds on which payments don't start until long after the idiots who approved them are out of office and retired. Oh, and to add insult to injury many of these bonds are not callable. They can't be paid off early.
    Sort of gives a whole new meaning to the phrase, "Let's do it for the children," doesn't it?

Fight obesity by taxing high fructose corn syrup

    A new study says by the year 2030 42 percent of Americans will be obese. Needless to say, the experts are calling for more regulations, so of which will be highly intrusive into people's private lives.
    Yet nobody is calling for the one regulation that might actually help: a ban on high fructose corn syrup. Perhaps it was coincidence, but America's obesity epidemic began with the mass introduction of high fructose corn syrup into our diets and this product has been linked to obesity by numerous studies. Other studies don't find the link, but I am firmly convinced HFCS is the cause of much of our nation's obesity and other health problems.
    Despite its name, high fructose corn syrup is a highly artificial product which has to be manufactured. Food processors like it for one reason: it's cheaper than sugar. They care not one whit about our health.
    Why hasn't this dangerous product been banned? It's sort of like the case with cigarettes. It's virtually impossible to do double-blind experiments on humans, so even though there are correlations that can be seen there is not the type of absolute scientific proof that is needed to prove the product is dangerous.
    Because the product is so dangerous manufactures have gotten permission to relabel it as "corn syrup" or "corn sugar" when it is included in a product in order to fool consumers. The government has been willing to go along with this because it promotes corn production. Of course it also promotes obesity, diabetes and a host of other diseases, but nobody cares about that.
    We can work at the state level to solve this problem by asking our state legislators to tax products containing high fructose corn syrup in order to generate revenue. For example, don't tax all soda, just those with HFCS. If it discourages the use of this deadly product, all the better!

Britain raises taxes, revenue drops

    The London Daily Telegraph has a story about how Great Britain raised its top tax rate to 50 percent. Instead of raising more revenue as expected, less money was collected by the treasury.
    The cutline under a photo illustration of a 50-pence piece says it all: "A Treasury source said the relatively poor revenues from self-assessment returns was partly down to highly-paid individuals arranging their affairs to avoid paying the 50p rate." Who'd a thunk it?
    Folks like me have been saying it all along: Soak-the-rich tax policies might make some people feel better, but they will harm the economy. The rich can and will stop earning taxable income, by working less, investing less, refusing to sell assets, or investing in non-income-producing assets. People can and will avoid taxable events, and when that happens, all of society suffers.
    Currently the top one percent of earners pay more than a third of all income tax collected. The top 10 percent pay 70 percent of all income taxes. The bottom 50 percent of earners pay about two percent of income taxes.
    Anyone who studies the figures will see that the percentage of tax revenue raised from top earners actually increased after the Bush tax cuts. In 1999, for example, the top 10 percent paid only 66.5 percent of taxes instead of the 70 percent paid in 2009. And the percentage raised from the bottom half has been cut in half, from four percent to just over two percent. With lowered taxes the rich worry less about paying taxes and just go out and make money.
    There's nothing wrong with making the rich pay more. Society spends a great deal of resources in protecting the assets of the rich, and it isn't unjust that they should pay for the service. But we need to recognize that high income taxes are counter-productive.
    A rational tax policy makes sure every citizen pays some type of tax. Everyone needs to be invested in government. Income tax rates should be kept low, so that they don't overly distort behavior. We can combine the low income tax with a wealth tax on the uber-wealthy; not the ruinous tax Huey Long proposed, but a lower wealth tax designed to raise revenue by taxing the mega-million and billion-dollar estates a nibble at a time. Add to the mix reasonable consumption taxes on those things we need to consume less of, whether its energy or cigarettes, and we are well on our way to a better and fairer tax code.
    You'll never hear these types of proposals from the left. They just want to raise income tax rates. If they succeed, revenues will drop and the economy will suffer. But the liberals can satisfy themselves with the knowledge that they have successfully punished industry and thrift.

Simple tax better than outright ban on incandescent bulbs

    Folks are squabbling over light bulbs, particularly the ban on 100-watt incandescent light bulbs that goes into effect on Jan. 1, 2012. Eventually the ban will include standard 60- and then 40-watt bulbs as well. Small-base and oven lights are not included in the ban, and thank goodness, because just look at the small-base bulb in the photo. That is not acceptable!
    Republicans in Congress are talking about repealing the ban. The state of Texas is considering going into the light bulb business, much as Mississippi did with the manufacture of mirex back in the 1970s. I suspect Texas would have better luck than Mississippi.
    I'm a big fan of CFL bulbs, as I've said before. The recessed 65-watt floods cost little more than incandescent floods, and the twirly bulbs have come down greatly in price. While the first CFL bulbs were pretty dreadful, throwing off a eery blue light, they have improved greatly.
    In our home we have approximately 80 recessed and other 60- or 65-watt lights. It's not uncommon for a few hours each night for most of these to be on. I don't go around flipping off light switches and freely admit it (the CFL bulbs take a couple of minutes to warm up, which is a disincentive to flip them on and off). Let's just assume 30 bulbs in use for 15 hours per day. CFL bulbs use 14 or 15 watts to produce the light of a 65-watt bulb, so our total lighting usage is just under seven kilowatt hours per day. With standard bulbs, our lighting usage would be 28 kilowatt hours per day. Nationally electricity costs about 12 cents per kw/hour, so we're talking about a cost of 84 cents per day to light one's home versus $3.36. Monthly that comes to $25.20 versus $100.80. Multiply that by a hundred million households and you can see what a difference the use of CFL bulbs can make for our country.
    Electricity isn't gasoline, of course, and saving electricity won't necessarily solve the oil shortage. But energy is energy, and the more we save as a nation the more we will have. It's a national security issue.
    Nevertheless, I'm opposed to an absolute ban on incandescent bulbs. CFL bulbs, despite their improvements, do have an inferior lighting spectrum. Artists, museums, fashion designers and many others need lighting that will be free of any distortion, however small. Incandescent bulbs provide this.
    So what should our government do? Simple. Levy a tax on incandescent bulbs of a quarter or so per bulb. It's the government's way of telling people to switch to more energy-efficient lighting while still leaving the traditional bulbs for those who truly need them.
    Raise taxes on investments and people will invest less. Levy a tax on incandescent light bulbs and people will buy fewer of them. It's always better to discourage an activity through a tax than to ban it outright, and that's what our government should do with incandescent bulbs.
    As for me, I'm happy with my CFL bulbs, thank you.