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Economics

NH Senate Update by Jeb Bradley: Slots & Tax Hikes

slot machine

Time to Talk Taxes

Guest post by Senator Jeb Bradley

The Senate Finance Committee last week reported its version of the state operating budget.  It increases overall spending by about a billion dollars or approximately 10% after similar increases in the last budget enacted two years ago.  This budget depends upon $185 million of direct revenue from slot machines as well as hefty tax hikes on businesses in the middle of a deep recession.

Slot machines at race tracks in Salem, Seabrook, and Belmont is a proposal that has been around a long time. The Finance Committee approved up to 13,000 slot machines and two north-country facilities that are estimated to produce $185 million in revenue.  Gambling is not a partisan issue and has determined support because of the added revenue, and determined opposition because of social implications and the change in the fabric of our state it could create. I continue to have concerns about gambling.

While bettors may be laying long odds that gambling will ultimately pass, it is almost certain that taxes are going up.  These looming and precipitous tax hikes are due to the majority party in control of both the House and Senate which has shown no willingness to cut spending as families and businesses are doing to survive the harsh economy.

Here are the major tax proposals being bandied about in Concord:

 

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Coach, AKA Craig T. Nelson: A One Man Tea Party!

He played a great part on one of many people’s favorite TV shows, Coach. Now, Craig T. Nelson plays a great part in real life. Appearing on Glenn Beck and  discussing the economic situations in California and at the Federal level, he noted he may end up paying NINETY PERCENT of his income in taxes. He also … Read more

Tainted “stimulus.” Transparency? We don’t need no stinkin’ transparency!

JAG Grant

As reported in yesterday’s Daily Sun [PDF], Belknap County has once again decided to go the hard route with former Laconia Mayor Tom Tardif and yours truly, declaring that the two of us “don’t know what” we’re “talking about.” While that sentiment as expressed in the front page headline has no doubt excited certain people that love to degrade those who dare criticize local government, the fact remains that, if anything, the story actually vindicates us and the points we have raised.

First, let’s review a little history… When Tom and I questioned the legality of the appointment process used to replace Sheriff Collis, county “leaders” circled the wagons, going to the mat (and all the way to the NH Supreme Court) to prove us wrong. We all know how that ended—with the removal of the Sheriff, and compliance with law in the subsequent appointment of a new Registrar of Deeds. Yep–We won at the highest court in the state, against a lawyer paid for with our tax dollars, but we didn’t know what we were talking about…

Then there was the time that the County Convention (comprised of the delegation of 18 House members from Belknap County) forgot to have a public hearing on the budget. That little fiasco caused the county to adopt a “default” budget for the first time in memory. Funny, they did it the right way this year. Imagine that? Why would anyone do anything suggested by two clowns that don’t know what they’re talking about? It was around that time that the same pair enlightened county “leaders” as to the meaning and proper procedures needed to create and approve a supplemental budget.

And let’s not forget that occasion when Belknap County decided to borrow monies in anticipation of taxes to cover expenses. While Tom Tardif and I were studying the laws on such a matter, the county “leaders” were apparently otherwise occupied trying to do damage control after the head of finance and administration finally got caught with her fingers in the proverbial cookie jar.

Unfortunately for them, SOMEBODY should have been doing the same research as we were, because, as you might recall, they had to go back to the drawing board and do it, yes, you guessed it—OUR WAY. While claiming we weren’t really right, they followed the procedure as outlined by Tom and me in correspondence with the Convention, the bond counsel law firm, the NH Attorney General’s office, the NH Department of Revenue and the County Treasurer. In other words, this time, they would follow the law.

Fast forward to the present…When it comes to the federal dough (Recovery Act “stimulus” funds) flowing into local law enforcement agencies via the 2009 JAG grant program, it sure would be nice to know if the correct state and federal procedures to add these new monies for budgetary spending were used anywhere, be it here in the Granite State, or throughout the country. The NH Attorney General’s website has the methods by which a New Hampshire TOWN must do a supplemental appropriation when it comes to receiving grants, but is silent on sheriff’s departments and, more specifically, counties.

The letter that Mr. Tardif and I addressed to the County Convention last week outlined the basic problem as the process was conducted by the Belknap County Sheriff. Unlike the law for towns, (RSA 31:95-b) the county has no “go-around” clause for supplemental appropriations & MUST follow existing laws that call for approval by the County Convention as the governing body, not the Commissioners. In this, we are once again shown to be right, as yesterday’s Daily Sun story stated that the

“commissioners have also agreed to seek supplemental appropriation approval as required by state statute should the JAG grant request be funded."

Would this have happened had Tom and I not raised the issue? But we don’t know what we’re talking about, otherwise…

Beyond that, the other big piece to this is the TRANSPARENCY angle. “Oh, Doug, Obama’s gonna make it right– You know, the “new transparency movement” blah-blah and all that!” And indeed, the JAG really does call for transparency. The big question is what happens when it is ignored, as is the case here in Belknap?

 

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STEWARD: “If You’re Not Getting a Bailout…Chances Are, You’re Getting the Bill.”

Steward of Prosperity

 

Over the past week or so, I have been receiving emails from various friends and acquaintances making sure I got whatever the latest news happened to be from the new grassroots group STEWARD (Save The Economy Without Accumulationg Record Debt) , and reminding me about the May 21st Stimulus Debate the group will be hosting– led by Nashua businessman Fred Tausch. "Interesting," I thought. "The news of this fairly new group sure has gotten out quickly." And then I recalled the glossy mailer I got a short while back. I’ll bet my friends went to the website advertised and signed up. 

And then, this week, another one showed up in the mailbox. I’ll bet this one caught peoples’ eyes, because it sure caught mine, taking full advantage of the infamous Air Force One "photo op" during which the presidential plane buzzed New York City, unnanounced, at what would have been "treetop level" were there any. But, even worse for the Obama Administration than reminding folks of THAT, STEWARD points out that it is symbolic of the true problem at hand:

 

Air Force One over NYC

 

When Fred Tausch decided to create a movement to "fight reckless spending and massive deficits" and to "raise awareness of the problems with President Obama’s stimulus package" which has since become law, he wasn’t kidding. In addition to newpaper, radio, and a very respectable Internet presence, STEWARD is getting to the folks via the US Mail with these eye-catching, informative pieces.

What makes this story even more interesting is the fact that Fred Tausch– a citizen and concerned taxpayer from Nashua, NH– supported Barack Obama for President in 2008!

 

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Guest Post– An Open Letter to newly elected US Senator Jeanne Shaheen:

Senator Shaheen, As one of the coordinators of the recent tea party gathering in Manchester, I heard many comments about the price of gas and whether proposals in the president’s budget plan would cause fuel costs to increase.  I believe there is a good deal of concern among residents and small business owners in this … Read more

The only way the economy will rebound

Inflation dangers ahead?

Washington keeps looking for quick and easy ways to get the economy back on its feet and return us back to the good old days. Some Americans think we can shop our way back to happiness. At least that’s what Washington would have us believe. As such, our national government is now spending like never before, forgetting that we are running up our collective credit cards to the limit and that the tab will ultimately have to be paid. But never mind they say, it feels good for now – and some would have us believe we need all this “stuff” are buying.

Between the U.S. Treasury and the Federal Reserve, Washington has committed well over $12.8 Trillion in new spending. The Europeans warned President Obama during this last round of G20 meetings that this is a dangerous course to take. The head of the European Union, which is always worried about inflation, w arned that the spending of the U.S. Government is taking us down “the road to hell.”  The French and the Germans have made similar warnings and have pressed for a repair to the regulatory system. Unfortunately, the Democratic Administration has brushed past these requests. While acknowledging that their arguments have merit, the Democrats called for even more stimulus spending.

One of the dangers of all this historically unprecedented spending is that it will spark a very dangerous new round of inflation. Never mind the spenders argue, before inflation can get started, we will pull the money out of the system. This of course sounds very much like the drug user who says that he is not hooked and can quit anytime. Washington does not work that way and never has; real spending cuts have rarely been seen. A brief history of the size of government as a percent of GDP shows that government never shrinks. At best, it plateaus from time to time.

Were this a run of the mill recession, where there was a mere imbalance in asset supply and demand, government spending might do the trick. But this is a deeper financial sector crisis that will require major structural changes.  No amount of spending will fix the structural problems in the economy. We may very well pump up the economy into a short term sugar high. But there is an underlying illness that very much needs tending, lest we set ourselves up for a repeat of 2008. In some w ays, the experience of the crash of Long Term Capital Management (LTCM) in 1998 was, in effect, a dress rehearsal for this crisis – from which we learned nothing.

First and foremost,…

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A commentary on “No government, no markets”

  "I can’t resist: without government, there would be no f*****g MARKET. What is it about contracts you don’t understand?"   -Michael Kitch   Skip asked me to comment on this ("Is Government NECESSARY for a marketplace to exist?"), as he knows that I am an economist. This is a very good but very complex question. … Read more

Sarah Palin blows opportunity to shine on national stage

Et tu, Sarah Barracuda? The Juneau Empire.com headline bore the news that pretty much capped an already sad political day for this Granite Stater: Palin to accept most stimulus funds, aide says Oh, great. The one bright spot for conservative Republicans joins the rest of the lemmings diving off the cliff of fiscal reality. Has … Read more

Republican Budget for NH: No new taxes. No raised taxes.

Concord—In response to a state budget proposal from House Democrats that would cost the taxpayers of New Hampshire $133 million in additional property taxes, House Republicans today offered their alternative budget at a press conference held in Concord. “Two years ago we warned that the Democrats were overspending and relying on over- inflated revenue estimates … Read more

Judd Gregg: The budget of the President spends too much, taxes too much, and borrows too much.”

Judd Gregg

US Senator Judd Gregg (R-NH)

Regular readers know that from time to time, we have been quite critical of Senator Judd Gregg’s performance both as a Republican and as a supposed conservative. We’re happy to note that in the short time since his flirtation with the Magic Obama, the Senator has regained his footing and has been as strong in his criticism of the proposed taxpayer-busting budget as anyone. This week, our senior Senator provided the Republican weekly radio address and provided some much-needed detail and words of caution regarding the Magic Obama’s budget. I appreciate this, and would further add that, given Gregg’s attempts at bipartisan cooperation with the Democrat-led Executive Branch, he has a degree of credibility on these fiscal issues that cannot be tagged simply as partisan rhetoric…

GREGG: Hello, I’m Judd Gregg , Senator from New Hampshire. We all know these are difficult times. People are worried about keeping their jobs, paying their bills, the value of their homes and the cost of sending their kids to college. It’s hard.

Thus I appreciate, as do all Americans, the efforts being made by our President and his seriousness about addressing these issues.

But what concerns many of us are his proposals in the budget he recently sent to the Congress that dramatically grow the size and cost of government and move it to the left.

It is our opinion that this plan spends too much, taxes too much and borrows too much.

You may have heard this before that the budget of the President spends too much, taxes too much and borrows too much.

What do we mean? Well, let me give you a few examples.

 

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“Excessive government spending will not bolster the economy”

March 11th, 2009, Fairfax, VA—Americans For Limited Government (ALG) today released an exclusive video interview with Republican Congressman Michael Burgess, M.D. (TX-CD26). Topics ranged from healthcare reform and the economic crisis to the commuter rail lines in Texas. Congressman Burgess also proposed tax cuts as a remedy for the nation’s economic woes. “[W]e’ve seen this … Read more

Watch the Magic Obama as he pulls an economic “fix” out of his hat…

Magic Obama

The FreeDictionary.com defines the word “bailout” as “a rescue from financial difficulties.” That was the term used to describe the initial government action and spending that occurred while Bush was still in office. We were told at the time that the $750 billion raised and appropriated by Congress at the behest of the President and his folks at the Treasury was to prime the pump so that cash-strapped banks and other institutions could begin lending again—entities deemed by the government “too big to fail.” And of course, it seemed plausible—and I only use that word with reservation—that because many of the lending institutions were in a jam due to failed mortgages and other similar loans (otherwise known as “toxic assets”) mostly due to government rules and regulations as dictated through Fannie Mae and Freddie Mac, they (the government) help clean up the mess. Of course, when the government gives out money, it comes from you and me.

And once the financial industry got their hands on this “bailout” money, other industries—most noticeably the automobile industry—decided to follow suit and came calling with outstretched hand looking for some, too. A business model based upon endless credit to keep production going to pay for expenses incurred previously and no cushion to fall back on, coupled with labor unions unwilling to give the slightest concession, is nothing more than the proverbial “sword of Damocles,” ready to drop at the first wrinkle. In this case, when the credit markets dried up, so did auto sales, as many people suddenly lost the ability to borrow because there was no money left to lend. At this point, we know that a “small” amount “bailout” funds have been funneled to the automakers, but we still hear that several are on the brink and in need of much more. The question is whether more money will really help fix the problem, or simply perpetuate systemic problems for another day? The same question applies to the financial institutions noted above.

As we moved down the road from the Bush Administration to the Obama Administration, it appeared that the word and notion of a “bailout” lost its luster. Time for a new word… The FreeDictionary.com defines “stimulus” as “something that acts as an incentive to (someone).” As you all know, following the bailout came the “stimulus” with a promise to “jump start” the economy. I guess it only seemed right—if “priming the pump” didn’t work, a “jump start” would come next. Of course, what came next was the stock market continued to tank and peoples’ money continued to evaporate—along with even more jobs. It seemed that the only good thing about “stimulus” was that it made for good fodder for jokes.

“Yo, Doug, feelin’ ‘stimulated’ today?” Of course the answer is, “Not really. But I AM getting bleeped…”

Uh-oh– Time for ANOTHER new word… and fast! Enter the term “recovery.” Ah yes, a much more positive word. Maybe this will be the one that gets the job done for Team Obama as they seek to “fix” the economy. Again, let us turn to the FreeDictionary.com, which defines “recovery” as “the regaining of something lost.” How perfect. As the government continues to dole out our children’s grandchildren’s great grandchildren’s money hand over fist, it can now claim to do so all in the name of going back to the way things were. Or something like that…

 

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“Poverty is good for the soul…”

Guest Post by Bill Asbell The Baby Boomers Strike Again to Inflict perhaps the Death blow on U.S. Capitalism Once and for All. No doubt, William Ayers, Abbie Hoffman, Noam Chomsky and Saul Alinsky are all most definitely proud "Americans"…wherever they currenty reside, above or below.   All we endangered rational types ask is to do what … Read more

A view on the economy from an ordinary guy in central NH…

 

Please note that while I don’t claim to be an economist, I have enough of an understanding of basic economic theory to know that we face some clear dangers if we are not careful.

It is easy to see on the one hand that things in certain sectors seem pretty much unchanged. Some businesses appear to be functioning at or near normal levels, while others, less so. Many folks believe that after a period of time, things will bounce back the way they usually do. This leads to, for most I’d bet, token belt-tightening. “Sure, things are tough,” they say, “but not for me. I’ll cut back a little and wait and see what happens.” Believe me, I hope that this is indeed the case—that we’re simply in a wrinkle that will soon iron itself out.

But on the other hand, what happens if, despite the relative health of those businesses with plenty of work and people that still have money, other forces come together to destroy even that? Then what?

I maintain that a good chunk of the current economic drawdown and cutbacks is nothing more than the natural cycle of the marketplace, with ups and downs being the so-called correcting factors that ultimately keep things in balance. What seems to have made things different in this latest go-around, however, is that it was greatly exacerbated by too much credit issued that in another time would have been denied. People were buying stuff—lots of it, including cars and houses—on credit that they should have never been given, because they could never realistically pay it back. And now, banks and other lending institutions are left holding the proverbial bag.

While nobody decried the good times as they lasted, the market was producing an excess of goods and houses that created a “bubble” that expanded far and above the norm. The natural result was that the economy of nearly the whole world ended up growing to fill it, and, when the end came, well, we’ve seen the results with the further cutting of manufacturing jobs, joined in full force by the former denizens of the overheated construction industry. There is much truth to the old adage, “what goes up, must come down.” I have always believed that—perhaps it’s the cynic in me, but I’ve yet to really see it otherwise. Sadly for those very real people whose lives are affected, this is the normal cycle of life. Thankfully, history further tells us that things must also go up. The big question, then, is how long?

 

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Every dollar’s sacred. Every cent is good…

Well, it took a few years, but Governor Lynch has finally acknowledged that if something isn’t done about spending at the state level, we will finally reach a true crisis point. Since he is still somewhat surprisingly committed in his opposition to new broad-based taxes here in the Granite State, what other choice does he have? Because of the revenue streams as they are presently structured, there is a limit to how much government can grow—which is exactly the point. With people writing actual checks to the government, whether to pay taxation on real property, business profits, interest dividends, or the meals and rooms tax, they are more keenly aware of how much monies they turn over than if they paid 52 weekly installments via their paychecks. In this atmosphere, it is much more difficult to ratchet up spending, as it is experienced in a more direct fashion. When politicians do so, therefore, it leaves them more vulnerable to angry public reactions. This is the essence of our smaller, slightly more limited government here in New Hampshire.

At least that’s the way it is at the state level. And with the economy in the tank as it is at present, causing the rosy revenue projections upon which the existing state budget is based —as crafted by the Democratic majority—to be way off the mark, spending MUST be reduced. And certainly, like in the “real world” of the private sector, this means reducing the number one driver of costs: payroll. As reported last Friday by the AP,

“Gov. John Lynch says layoffs will be unavoidable in the budget he is preparing for the next two years. Lynch said Thursday he is looking at every dollar the state spends to determine what spending is necessary and what services can be cut or delayed. He said some state programs will be eliminated which means there will be layoffs.”

What other choice does the Governor have? With unionized state employees unwilling to forego this year’s raises of over five percent, he has few other options. Oh sure, there have been other cuts passed, such as yesterday’s $16 million round of reductions passed by the NH House, but that still leaves the budget with a huge deficit hole to be filled –by some estimates, $65 million by the year’s fiscal end on June 30. With personnel being among the largest cost drivers in any budget, there is no other alternative.

It’s too bad, however, that when it comes to lesser level government down the food chain, the attendant “leaders” and their usual water carriers and cheerleaders can’t follow Lynch’s example.

 

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Et tu, Judd? Oh well. At least I’ve got a good supply of those spiffy little notepads with his picture on it to remind me of him after he’s gone…

Judd Gregg

Famous Judd Gregg notepad– Gracing many a political banquet place-setting since 1993.

When I got my Union Leader out of the tube early this morning and saw the blurb on the left hand side of the front page touting a story about Senator Judd Gregg and the ongoing bailout-mania, I nearly choked on my coffee when I read the words:

Adding to the federal deficit with an economic stimulus package should lead to greater long-term fiscal stability for the federal government, as well as greater productivity and economic competitiveness, U.S. Sen. Judd Gregg said yesterday.

Huh? Spending more money that we DON’T have will HELP our long-term fiscal stability? I can’t think of any big-spending, government loving liberals that could have articulated their beliefs more clearly than has Judd with the above sentiment. Has he completely lost his mind? Having announced his intention to run for yet another term in the Senate in 2010, is his plan to throw all of his supposed long-standing conservatism (and the conservatives that rely on him) out the window? The last thing we need in the next two years– one dominated by a Democratic ruling majority– is another key Republican "leader" dishing out "Democrat-lite." 

Conventional wisdom held by many Republicans and Independents alike is that part of the reason the GOP finds itself on the outside looking in is because they blew it when it came to any pretense of fiscal restraint. Now, when taking on the Democrats– the REAL pros when it comes to taxing hard-working, productive Americans and giving it away to the many takers– they have no credibility… and we all suffer (and our children’s children’s children).

Perhaps someone should remind Senator Gregg of the words of another Republican that shows the extent to which he has strayed. From Ronald Reagan’s First Inaugural Address:

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2 “Bailout” Proposals we could support: A 30% marginal rate cut, or a “tax holiday”

I cannot help but feel uneasy about the federal government doling out tax dollars like there’s no tomorrow to people who have already demonstrated a failure to adapt and change within their chosen marketplace. It is said that the definition of lunacy is doing the same thing over and over and expecting a different result.  The same goes for giving people money in the face of future high risk of failure. If the private sector– either through loans or outright purchase offers– fails to demonstrate interest in a business entity, why should the government, in the name of its shareholder/taxpayers, be any different?

I have come to the belief that the only true way to “stimulate” the economy without building more credit debt (adding more levels to the “house of cards” that has been the economy to a certain extent) is by doing it with “real” money. And the only “real” money, when you stop and think about it, is what one has in hand. Instead of printing money–setting the stage for inflation– or taking even more from working and investing Americans and giving it to who Congress and its influence peddlers see fit, how about if they instead simply let working people keep more of what they make each and every week for a period of time?

Take a look at your pay stub. Compare the “gross” pay versus the “net”– your take-home portion. Do the simple subtraction and just imagine what you could do if you were allowed to keep a substantial portion of the difference.

Instead of Senator Windbag taking your money, or mortgaging your great-grandchildren’s futures, and giving it to his favorite banker buddies so they may continue their lavish “hot-tubs and champagne” lifestyles, wouldn’t it be nice to instead use it to purchase something you’ve long wanted? Rather than send that sizeable chunk of your paycheck to states, cities, and counties that refuse to eliminate waste, your money, spent as YOU see fit might be just the “stimulating” boost the manufacturer and retailer of your desired product needs.

Why, given the right incentive, some people might decide to save a little for a down payment on a house or that shiny new Chevy truck that catches their eye in the lot of the neighborhood dealer. Who knows? But one thing’s for certain– more money, if people were allowed to keep more of their “gross” weekly earnings– would be instantly and immediately moving around. Some people might pay off debt, thus infusing badly needed dollars to cash-strapped lending institutions. And yes, some others might simply SAVE the money for future needs- nothing wrong with that, either—and would that not help banks, too? 

The bottom line is that the more the free wheels of the economy spin while satisfying the needs and desires of people with cash, the more it should rise. And you don’t have to take my word for it, all you have to do is take a look back to some fairly recent history, and let it be your guide. I’m talking, of course, about the Reagan era—that brief moment in time when we truly were a “shining city on a hill.” Rather than “redistributing the wealth,” prosperity happened for many people who, following years of high taxation, got to keep more of the fruits of their labor. And, like wildfire, the newly kept dollars made their way across the economy. Oh, and we managed to win the Cold War during that time as well.

To that end, I have discovered two possibilities that could go a long way towards reinvigorating the Reagan economy’s successes.

 

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