Voice For Liberty

Tag: Wichita Eagle opinion watch

  • Balanced budget amendment is needed

    Despite claims made in a Wichita Eagle op-ed by its former editor Davis Merritt, we desperately need a balanced budget amendment to the United States Constitution. (Balanced-budget amendment is unworkable, August 2, 2001)

    Merritt calls the promise of a balanced budget amendment a “cruel deception” that “limits imagination and progress.” He gives three reasons as to why we should not adopt such an amendment:

    First: “It would need to define exactly and in detail what constitutes a balanced budget, and that’s unwieldy and impossible.” He cites the gimmickry that is often used to hide the reality of what’s in a budget. This, no doubt, would be a difficult problem to solve — but it’s not a reason to fail to try. Some things we could do would be to reduce the complexity of the budget so that we actually understand how much and on what we’re spending. Requiring a high hurdle for the treasury to borrow funds would also be a signal that spending is being hidden in the budget.

    Second: “It would destroy the constitutional tripartite balance of powers, the core of our system, and would strip citizens of their only leverage, their votes.” Here Davis raises problems with enforcement of such an amendment, noting the delay in bringing court cases and giving judges too much power to decide how to balance the budget. But cases can be fast-tracked to the Supreme Court, and a judicial remedy could be to simply refuse to let the government spend any money until Congress and the president produce a balanced budget.

    Third: “It would leave the most crucial fiscal decisions in the hands of congressional minorities, a profoundly undemocratic idea.” Davis mentions the need to spend for national emergencies like Hurricane Katrina. Also: “… less than 15 percent of the House of Representatives paralyzed that body while the nation hurtled toward default and collapse.” I would counter that our nation is hurtling towards collapse precisely because of spending and resultant debt that politicians of both parties have approved for decades. Without the opposition of this small group, it would have likely been business as usual, and that business has been harmful.

    (At least Davis didn’t mention war as justification for deficit spending. Forcing politicians to pay for wars now rather than later might help keep peace.)

    As for national emergencies, a few thoughts: First, people might decide to take care of themselves through advance planning and the purchase of insurance. Second, along with a balanced budget the government could establish “rainy day” or contingency funds for these types of disasters, should the federal government decide to still have a role in these matters. Or, the federal government might buy insurance to cover its costs for handling these disasters. Then, that expense becomes an annual budget item that is known in advance.

    Davis also mentioned a recession cutting into revenues. Again, a rainy day fund can help. While not Davis’ argument, many opponents of a balanced budget amendment cite the need for the federal government to engage in counter-cyclical spending to manage the economy. This, of course, is the Keynesian formula that has been proven many times to be a failure. A policy that prevents our government from engaging in Keynesianism is a plus, not a minus.

    Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively

    One of the best arguments for a balanced budget amendment is found in the book Common Sense Economics: What Everyone Should Know About Wealth and Prosperity by James D. Gwartney, Richard L. Stroup, Dwight R. Lee, and Tawni H. Ferrarini, in a section titled “Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively.” That title says it all, and it is exactly what has been happening. Despite the debt ceiling deal reached this week — a deal denounced by liberals as one that will ruin the country and its economy — huge deficits will still happen, and debt will increase.

    Before 1960, the authors tell us, there was “widespread implicit agreement” that the budget should be balanced, except in times of war. And, the deficits and surpluses that did occur were small relative to the economy. But enter Keynes:

    The Keynesian revolution changed all of this. Keynesians — those accepting the views of English economist John Maynard Keynes — believed that changes in government spending and budget deficits could help promote a more stable economy. They argued that, rather than balancing the budget, the government should run a budget deficit during periods of recession and shift toward a budget surplus when there was concern about inflation. In short, the Keynesian revolution released political decision makers from the discipline imposed by a balanced budget. Freed from this constraint, politicians consistently spent more than they were willing to tax.

    Imagine if Lord Keynes had called upon politicians to fix the economy by doing something other than what they like to do: He would be merely a curiosity of economic history. But Keynes calls for government deficit spending to fix the economy, and spending is what nearly all politicians and bureaucrats like to do. They just don’t like to pay for it, as Common Sense Economics explains:

    The political attractiveness of spending financed by borrowing rather than taxation is not surprising. It reflects what economists call the short-sightedness effect: the tendency of elected political officials to favor projects that generate immediate, highly visible benefits at the expense of costs that can be cast into the future and are difficult to identify. Legislators have a strong incentive to spend money on programs that benefit the voters in their district and special-interest groups that will help them win reelection. They do not like to tax, since taxes impose a visible cost on voters. Debt is an alternative to current taxes; it pushes the visible cost of government into the future. Budget deficits and borrowing allow politicians to supply voters with immediate benefits without having to impose a parallel visible cost in the form of higher taxes. Thus, deficits are a natural outgrowth of unrestrained democratic politics.

    Then, the realities of public choice economics are cited: the well-known problem of concentrated benefits and dispersed costs:

    The unconstrained political process plays into the hands of well-organized interest groups and encourages government spending to gain rich patronage benefits for a few at the expense of many. Each representative has a strong incentive to fight hard for expenditures beneficial to his or her constituents and has little incentive to oppose spending by others. In contrast, there is little incentive for a legislator to be a spending “watchdog.” A legislative watchdog would incur the wrath of colleagues who find it more difficult to deliver special programs for their districts and retaliate by providing little support for spending in the watchdog’s district. More important, the benefits of spending cuts and deficit reductions that the watchdog is trying to attain (for example, lower taxes and lower interest rates) will be spread so thinly among all voters that the legislator’s constituents will reap only a small part of these benefits.

    This is another reason why earmark spending, while a small part of the total federal budget, is harmful. We need to watch to make sure the promised earmark reform is meaningful and lasts.

    A numerical example helps illustrate what happens when there’s a disconnect between receiving something and paying for it in a collective manner:

    Perhaps the following illustration will help explain why it is so difficult for the 415 representatives and 100 senators to bring federal spending and the budget deficit under control. Suppose these 535 individuals go out to dinner knowing that after the meal each will receive a bill for l/535th of the cost. No one feels compelled to order less because his or her restraint will exert little impact on the total bill. Why not order shrimp for an appetizer, entrees of steak and lobster, and a large piece of cheesecake for dessert? After all, the extra spending will add only a few pennies to each person’s share of the total bill. For example, if one member of the dinner party orders expensive items that push up the total bill by $10, his share of the cost will be less than 2 cents. What a bargain! Of course, he will have to pay extra for the extravagant orders of the other 534 diners. But that’s true no matter what he orders. The result is that everyone ends up ordering extravagantly and paying more for extras that provide little value relative to cost.

    The section goes on to explain how large debt leads to higher borrowing costs, which make it even more difficult to control spending. Eventually the result is a financial crisis.

    The authors conclude that spending must be controlled, and that rule changes are needed: “It is vitally important for the federal government to control its spending and borrowing in the years ahead. This is unlikely to happen without a change in the political rules. The rules need to be changed so it will be more difficult for politicians to spend more than they are willing to tax.”

    As for rule changes that would work, the authors mention a balanced budget amendment or requirement for supermajorities for spending proposals and increases in the debt ceiling.

    While I’m encouraged about some of the new members elected to Congress last year, there are still many members — and their constituents — who believe more spending and more debt is the way to go. Relying on people to do the right thing is different from relying on systems to be correct. This is why we must have a balanced budget amendment to the U.S. Consitution.

  • Despite subsidy program, Wichita flights are declining

    Supporters of the Kansas Affordable Airfares Program are proud of the program’s success. But looking at the statistics uncovers a troubling trend that is obscured by the facts used to promote the program.

    The program provides taxpayer-funded grants to airlines so that they will provide low-cost service to cities in Kansas. The thought is that by propping up a discount carrier, other airlines will be forced to reduce their fares. By far the largest consumer of these subsidies is Airtran Airways in Wichita. For this goal, the program has worked, probably. We have to say “probably” because we can never know what would have happened in the absence of this program. But it is quite likely that fares are at least somewhat lower than would they would be otherwise.

    But lower fares is not the only measure of success. The number of available flights is a measure, too, and a very important one for many people.

    The problem is that subsidy boosters state that the number of flights has increased. For example, on a page that is part of the Sedgwick County official website, the claim is made that the affordable airfares program “offers more flights to both east and west coasts.”

    In the agenda packet for the July meeting of the Regional Economic Area Partnership of South Central Kansas — that’s the body that administers the affordable airfares program — board members were presented this information: “In presenting its proposal Sedgwick County provided evidence documenting that low-fare air service to eastern and western U.S. destinations through Wichita Mid-Continent Airport had been successful in providing more air flight options, more competition for air travel, and affordable air fares for Kansas.”

    Later that document describes selection criteria for deciding which airlines will receive grants. The first goal listed is “more air flight options,” which is further described as the number of scheduled, daily nonstop and one-stop flights.

    Certainly enticing a new airline carrier to town by paying them a subsidy increases the number of flights that carrier will offer, as before the subsidy, they offered none. But the experience of Wichita shows that the affordable airfares program is causing an overall loss of flight options in Wichita.

    It’s true that when the airline subsidy started, funded at first only by the City of Wichita, the number of flights departing from Wichita increased. That’s not remarkable. That was the stated goal of the program, and if we paid AirTran a subsidy and they didn’t provide flights, that would have been a problem.

    But the history of flights before the subsidy program is not the only important measure, although supporters of the program like the Wichita Eagle’s Rhonda Holman make use of it when she recently wrote this about the program and an audit of it conducted by Kansas Legislative Division of Post Audit: “Even so, the audit put the return on the state’s investment at $2.32-to-$1, cited 38 percent growth in passenger counts between 2000 and 2009, and said ‘fares have decreased, while the number of passengers and the number of available flights have increased.’”

    Yes, the number of available flights increased upon the arrival of AirTran and the start of the subsidy payments. But the trend since 2005 — about the time the state got involved in the funding and the program matured — is not encouraging. As shown in the accompanying charts, that trend is continually on a downward trajectory. (The charts show two different sets of data for the number of departures from Wichita.)

    The decline in the number of available flights is important, because for some travelers, particularly business travelers, the availability of a seat on an airplane at any price is more important than being able to book a cheap flight a month in advance.

    People may disagree about the wisdom of the airline subsidy program. But we need to recognize that the availability of flights to and from Wichita is declining, and has been declining for a number of years.

    We often hear of the unintended consequences of government intervention. This is such an example. Compounding the problem is the refusal of the program’s supporters — both within and outside of government — to recognize it, at least publicly.

    Monthly departures from WichitaMonthly departures from the Wichita airport
    Number of daily departures from the Wichita airport by air carriers (excluding weekends)Number of daily departures from the Wichita airport by air carriers (excluding weekends)

  • Kansas job growth — or lack of it

    The lack of job growth in Kansas should be in the news, as the figures are quite startling and reveal a stagnant Kansas economy when compared to nearby states. It’s also the one-year anniversary of the increase in the state-wide sales tax of one cent per dollar.

    But some want to stick their heads in the sand when it comes to the harmful effect of tax increases and the dismal performance of the Kansas economy. An example is from yesterday, when Wichita Eagle opinion page chief Phillip Brownlee editorialized that “Apparently last year’s sales-tax increase didn’t wreck the Kansas economy, as some predicted.”

    Perhaps Brownlee hasn’t been listening to what others have said. The most startling fact, and one that should be a wake-up call to anyone who cares about the future of Kansas, is the uncovering by the Kansas Policy Institute that Kansas is the only state to have a loss in private sector jobs over the past year.

    All the spending on schools, highways, and other government programs that are supposed to spur our economy to greatness have lead to this: last place. The only state with private-sector job loss. We couldn’t have done worse.

    Here are some charts based on data from the Bureau of Labor Statistics that illustrate. First, here’s the trend in Kansas employment, using January 2009 as the base. Other months are indexed from that number. The chart separately shows the trends in government and private sector employment.

    The effect of the recession on private sector employment has been severe, while government employment has fared much better. But government employees don’t create the wealth necessary to create prosperity for Kansans. Instead, the government jobs are a burden to our economy as they drain resources from the productive private sector.

    Of particular interest is the relative flatness of the curve over the past year. Around that time we’re told the recovery was taking place — it was on June 17, 2010 that President Barack Obama announced the “Summer of Recovery.” But Kansas private sector employment has remained largely unchanged since then.

    Kansas employment trendsKansas employment trends, government and private sector

    Comparing Kansas private sector employment to other states near Kansas produces a grimmer picture. All these states suffered from the recession, but many of these states did not suffer job losses as large as Kansas (on a relative basis).

    Then about a year ago, the trend in most of these states started to improve. But not Kansas.

    Kansas private sector employment trendsKansas private sector employment trends, compared to other states

    Even if one believes that government jobs create prosperity, Kansas has lagged here, too. It should be noted that Kansas has a very large number of government employees compared to its population. Kansas has 717.4 public employees per 10,000 population, which is number 48 in the nation. Only two states have more government employees, compared to population, than Kansas.

    Starting from such a high level of government employment may explain the following chart, where Kansas, when compared to neighboring states, has lagged behind in the change in the number of government jobs.

    Kansas government sector employment trends, compared to other statesKansas government sector employment trends, compared to other states

    Last year supporters of the increase in the sales tax made the case that more government revenue was necessary to avoid decreases in government employment. Judging by the record since then, the cost of the sales tax has been a stagnant Kansas private sector economy at the same time our neighbors are starting to grow employment. This is a policy that must be reversed. We know how to do this — the Rich States, Poor States: The ALEC-Laffer Economic Competitiveness Index report has evidence of polices that work to produce economic growth and those that don’t work. We simply need the will to implement them.

  • Arts won’t go away in Kansas

    Supporters of government-funded art in Kansas are lashing out at Kansas Governor Sam Brownback for his decision to cancel funding for the Kansas Arts Commission. An example is the Wichita Eagle’s Rhonda Holman in her editorial A state for the arts?

    In her editorial Holman makes the claim that eliminating the Kansas Arts Commission exposes Kansas to the risk of losing federal and other funds. Many government art supporters state that the loss of funds in a certainty. But as I wrote earlier this year when I covered a hearing before a Kansas Senate committee, Kansas Legislative Research Department made inquiries to the Arts Alliance and the NEA. The answers from both agencies indicate that it is unclear as to whether the new Kansas Arts Foundation would be eligible to receive grants. In particular, the NEA answered, according to Legislative Research, “the potential exists for Kansas to forfeit its ability to receive National Endowment for the Arts funding depending on how the new entity in structured …”

    A related — and more important to public policy — question is why do we send tax money to Washington, only to have to jump through federally-designed hoops to get it back? We shouldn’t argue for the perpetuation of such a system just so we can receive matching grants.

    Holman and others make the case that the arts funding that Brownback canceled is small — “minuscule in the context of the state’s $13.8 billion budget,” she wrote. It’s not only a financial matter, although this factor alone is reason enough to cancel this funding. The arguments of supporters of this funding, small amount that it is, illustrate some of the worse aspects of government and public policy.

    Government funded arts supporters promote the government funding as an investment that pays off for Kansas taxpayers. They have studies that say it does. But these studies have little credibility, as shown in Arts funding in Kansas. These studies purportedly show that spending on the arts has a magic power that is not present when people spend their own money on the things they value most highly. But these studies, like most, rely on several economic fallacies. Henry Hazlitt, writing in Economics in One Lesson, explains.

    Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine — the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for then plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

    The proposed funding for the arts commission is a clear illustration of the problem with many pleas for public funding. A small group of people will benefit powerfully from this spending. What about the rest of us? Government-funded arts supporters make the case that the cost of the funding is just 29 cents per person in Kansas. Who of us will get worked up over such a small cost?

    The Public Choice school of economics calls this the problem of concentrated benefits and dispersed costs. It’s a huge problem.

    Besides the financial aspects of government funding of arts, there’s the artistic issue itself. There are very important reasons to keep government away from art. Lawrence W. Reed wrote in What’s Wrong with Government Funding of the Arts? of the harm of turning over responsibility to the government for things we value and find worthwhile:

    I can think of an endless list of desirable, enriching things in life, of which very few carry an automatic tag that says, “Must be provided by taxes and politicians.” Such things include good books, nice lawns, nutritious food, and smiling faces. A rich culture consists, as you know, of so many good things that have nothing to do with government, and thank God they don’t. We should seek to nurture those things privately and voluntarily because “private” and “voluntary” are key indicators that people are awake to them and believe in them. The surest way I know to sap the vitality of almost any worthwhile endeavor is to send a message that says, “You can slack off of that; the government will now do it.” That sort of “flight from responsibility,” frankly, is at the source of many societal ills today: many people don’t take care of their parents in their old age because a federal program will do it; others have abandoned their children because until recent welfare reforms, they’d get a bigger check if they did.

    The boosters of government arts funding in Kansas make the case that arts are important. Therefore, they say, government must be involved.

    But actually, the opposite is true. The more important to our culture we believe the arts to be, the stronger the case for getting government out of its funding. Here’s why. In a statement opposing the elimination of the Kansas Arts Commission, former executive director Llewellyn Crain explained that “The Kansas Arts Commission provides valuable seed money that leverages private funds …”

    This “seed money” effect is precisely why government should not be funding arts. David Boaz explains:

    Defenders of arts funding seem blithely unaware of this danger when they praise the role of the national endowments as an imprimatur or seal of approval on artists and arts groups. Jane Alexander says, “The Federal role is small but very vital. We are a stimulus for leveraging state, local and private money. We are a linchpin for the puzzle of arts funding, a remarkably efficient way of stimulating private money.” Drama critic Robert Brustein asks, “How could the [National Endowment for the Arts] be ‘privatized’ and still retain its purpose as a funding agency functioning as a stamp of approval for deserving art?” … I suggest that that is just the kind of power no government in a free society should have.

    We give up a lot when we turn over this power to government bureaucrats and arts commission cronies. Again I turn to David Boaz, who in his book The Politics of Freedom: Taking on The Left, The Right and Threats to Our Liberties wrote this in a chapter titled “The Separation of Art and State”:

    It is precisely because art has power, because it deals with basic human truths, that it must be kept separate from government. Government, as I noted earlier, involves the organization of coercion. In a free society coercion should be reserved only for such essential functions of government as protecting rights and punishing criminals. People should not be forced to contribute money to artistic endeavors that they may not approve, nor should artists be forced to trim their sails to meet government standards.

    Government funding of anything involves government control. That insight, of course, is part of our folk wisdom: “He who pays the piper calls the tune.” “Who takes the king’s shilling sings the king’s song.”

    Around the country Kansas is being portrayed by government arts supporters as having taken a giant step backwards. For those who value the tenets of classical liberalism — liberty, individualism, skepticism about power, spontaneous order, free markets, limited government, and peace, to name a few — Kansas has moved forward, although I don’t imagine for a moment that all these attributes were motivators for Brownback’s decision. It’s sad and telling that arts supporters, who often claim to express the human soul and condition through their art — a viewpoint that ought to be sympathetic to classical liberalism — are not able to grasp the importance of this decision.

  • KPERS editorial a disservice to Kansans

    A recent Wichita Eagle editorial written by Phillip Brownlee urges caution in proceeding with changes to KPERS, the Kansas Public Employees Retirement System. The editorial has two areas that we should be concerned about, as the facts Brownlee provides leave time for proceeding cautiously. The actual facts leave no such margin for maneuvering.

    Brownlee cites $7.7 billion as the shortfall or unfunded liability in KPERS. This is highly misleading. It’s true on a certain technical level, but on an economic level — meaning what really counts — it is dangerously misleading. Neither Brownlee or the KPERS Fiscal Impact Report he refers to mention $1.7 billion in asset value losses that don’t have to be included in reports. (It’s possible with recent rises in financial markets that some of theses loses have been recouped, but we don’t know that at this time.)

    Additionally, the $7.7 billion figure is based on an unrealistic assumption: that KPERS investments can earn an annual return of 8.0 percent. Since most calculations involving retirement plans involve long periods of time, even a small change in the rate of return can produce some large changes in values. KPERS actuaries say that if the rate of return was 7.5 percent instead of 8.0 percent, that small change would cause an additional unfunded liability of $1.3 billion.

    Adding these factors together — the reported unfunded liability, the unrecognized losses, and a more realistic rate of return — and we come up with an unfunded liability of $10.7 billion. And some would say a 7.5 percent assumed rate of return is too high, which adds even more unfunded liability. For example, the Employees Retirement Income Security Act (ERISA) recommends that private employers assume a 6.1 percent return on assets in private pension plans. And with a note of irony, in illustrations of what benefits from a defined contribution plan would look like, the KPERS report uses 7.0 percent return prior to retirement and 5.0 percent return following retirement.

    Growth over time of contributions at different rates of returnIllustration of how the rate of return impacts the growth of a stream of contributions over time: Small changes in rates produce large differences in ending balances. KPERS uses 8.0 percent in its assumptions, while some authorities recommend 6.1 percent.

    What we’re not facing is the fact that the KPERS unfunded liability is much larger than reported by Brownlee and by most of the other news media in Kansas.

    A second problem is the largely successful attempt by state employee unions to convince Kansans that the KPERS unfunded liability can be paid off only if the present defined-benefit system is maintained. Supporters of the present system say that if a defined-contribution plan is established for new employees, it will be too expensive to pay off the unfunded liability.

    But the fact is that unless the state wishes to renege on its promises, the unfunded liability must be paid off. It doesn’t matter whether it’s paid off as part of a reformed defined-benefit or new defined-contribution plan, or even if the state were to appropriate funds apart from payroll contributions. The bill must be paid.

    And since the Kansas Legislature has shown itself incapable or unwilling to funding the promises it has made, its vital that we stop enrolling new employees in the present defined-benefit plan.

    While the present legislature seems intent on solving the problem, it’s hard to place much faith and trust in their seriousness. Consider the motives and incentives of legislators: If legislators were to give state employees raises, that would require them to raise taxes or cut services. But granting generous retirement benefits is another matter. The bill for these benefits doesn’t come due until many years later — as we are now painfully aware. Except, of course, that the legislature should be paying, on an annual basis, the amount necessary to provide the promised benefits. The Kansas Legislature hasn’t done this for a long time, and that’s part of the reason why KPERS is in a mess.

    Promises by lawmakers to behave well in the future must be discounted. The present defined-benefit retirement plan allows them to make promises they don’t have to pay for. With the discipline of a defined-contribution plan — the 401(k)-type plans that almost all private sector workers have — we don’t have to worry about present legislators heaping debt on yet another future generation.

    Note: Today’s editorial by Brownlee holds this conclusion: “The state may also need to make additional reforms to limit future liabilities for new employees, such as reducing plan benefits or possibly switching to a 401(k)-like plan. Climbing out of this hole will be a struggle. But the sooner the state starts, the better. At the very least, it needs to stop digging the hole even deeper.” Canceling the defined-benefit plan for new employees is the best way to “stop digging.”

  • Kansas and Wichita quick takes: Friday April 8, 2011

    Kansas Meadowlark blog recast. Earl Glynn of Overland Park has reformed his Kansas Meadowlark site from a blog to a news site along the lines of the Drudge Report. Glynn’s full-time job is working for Kansas Watchdog.

    Economics in one lesson next week. On Monday, four videos based on Henry Hazlitt’s class work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Lesson, The Broken Window, Public Works Means Taxes, and Credit Diverts Production. The event is Monday (April 11) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

    Government shutdown guide. Americans for Limited Government reports on What happens if the government shuts down? :Well, nothing really, and the consequences of a shutdown are really rather mundane. The worst part of it all, Congress would still be working, oh, and all government museums and tourist sites will close.” Tourist sites closing: that’s the “Washington Monument Strategy,” where any threatened cuts to the National Park Service will first cause a closing of the Washington Monument. Instead of looking for the ways to save money with the least impact, agencies propose cuts with the most impact first. … The Washington Post has more, noting that only essential government employees would work during the shutdown. Which causes me to ask: Why do we have non-essential government employees?

    Halve the deficit by doing nothing. Writes Ezra Klein: “Just let the Bush tax cuts expire in 2012, as they’re currently scheduled to do.” But this is not “doing nothing.” It’s government taxation at a higher level than present, which is far from nothing. It’s redirecting resources from the productive private sector to government, which almost always means less effective application of these resources. The Wichita Eagle editorial board approved enough of this that they mentioned it — favorably, I think — on their blog.

    State debt worse than federal. While many are aware that the U.S. federal government is awash in debt and that any plan to forcefully deal with this problem is denounced by liberals, the states, collectively, are in worse shape. Washington Examiner explains: “House Budget Committee Chairman Paul Ryan of Wisconsin talked Tuesday about cutting federal spending by a staggering $6 trillion in the next decade and in the process eliminating the $14.3 trillion national debt. As incredible as these numbers are, all 50 states face perilous fiscal times as well, but they are less able to cope than the federal government. States can’t print money, as the federal government can, and they are far more limited in whom and how much they can tax. There is one common factor here, though: Washington and the state capitals are drowning in red ink largely because professional politicians promised excessive entitlement benefits without making provisions to pay for them. … These liabilities are coming due as the baby boomers begin to retire, which means entitlement reform — at the federal and state levels — is likely to be the defining political issue for the next decade.”

    This Week in Kansas. On “This Week in Kansas” Chapman Rackaway, Kenneth N. Ciboski, and myself discuss local elections in Kansas, and then the Kansas Legislature. Tim Brown is the host. “This Week in Kansas” airs on KAKE TV 10 Sundays at 9:00 am in Wichita, and 11:30 am Saturdays on WIBW in Topeka.

  • Kansas and Wichita quick takes: Monday March 28, 2011

    Wichita Eagle endorsements. Yesterday the Wichita Eagle released its endorsements for Mayor, Wichita City Council, and Wichita school board. It is no surprise that in each case the newspaper editorial board recommended that voters select the candidate most likely to support the board’s big-government interventionist policies, thereby (unwittingly?) providing a guide as to who not to vote for, if you value limited government and economic freedom.

    Wichita City Council this week. As it is the fifth Tuesday of the month, the Wichita City Council will not meet. While some might say the mayor and council members need to get to work and do their jobs, I’m more aligned with Will Rogers when he quipped: “Be thankful we’re not getting all the government we’re paying for.”

    Sedgwick County commission this week. At Wednesday’s meeting, the Sedgwick County Commission has two economic development incentives to consider. These are forgivable loans, essentially grants of money, to be made to MoJack Distributors, LLC and Apex Engineering International LLC. Each has already received a forgivable loan from the City of Wichita, as well as other subsidy of various forms from governments state and local. More discussion is at Wichita again to bet on corporate welfare as economic development. The commission’s agenda is available at Board of Sedgwick County Commissioners, March 30, 2011.

    Kansas judicial selection. A legislative maneuver could force the Kansas Senate to debate and possibly vote on the method of selecting judges for the Kansas Court of Appeals. This is despite the efforts of Senator Tim Owens, an attorney and Republican from Overland Park, to block the bill in his committee. See Method of choosing judges could see debate.

    Kansas Department of Labor computer system. From Kansas Reporter: “A $50 million, six year project to upgrade unemployment claims technology within the Kansas Department of Labor was grossly mismanaged, resulting in massive system flaws according to Labor Secretary Karin Brownlee.” Brownlee took office earlier this year after being appointed by Kansas Governor Sam Brownback. More at Massive waste, inefficiency in Labor Department technology upgrade, secretary says .

    General Electric: no taxes for me. Competitive Enterprise Institute explains how General Electric, one of the largest companies in the world, earns large profits and manages to pay no income tax.

    Freeloaders come in all types. This weekend John Stossel had an hour-long special show that focused on freeloaders. Not just panhandlers, although Stossel did work in disguise as a panhandler and discovered he could make over $90 a day. Tax free, he added. One segment of the show uncovered farmers who received $50,000 because they were discriminated against by lenders. But — some of these farmers merely grew potted plants or fertilized their lawn to qualify as a farmer. Another reported on homeowners who stopped paying their mortgages on advice of a website. The homeowners and the website operator said there is no moral obligation to pay their mortgage loans. Corporate freeloaders didn’t escape, as General Electric was mentioned as a large recipient of government handouts. And, they won’t pay taxes: “Despite billions in profit, they’ll pay no taxes this year,” reported Stossel. … The severe poverty of American Indian tribes that live on government-managed reservations and living on government handouts is contrasted with a tribe that accepts no handouts and has no casinos. … Stossel covered his own beach house, which was covered by low-cost subsidized federal fund insurance. It suffered losses twice. … Standing in front of the U.S. Capitol, Stossel said “We rich people freeload off you taxpayers all the time, because the over-promisers in there keep churning out special deals for politically-favored groups. And they tend to be rich people, because the rich can afford lobbyists. … Think about how much money we could save if these guys just didn’t pass so many laws that encourage freeloading. But they do, year after year. They micromanage life with subsidies. And the winners are not so much the needy, but people like Bon Jovi, Ted Turner, Maurice Wilder, and — me. So let’s hope for an end to all this freeloading.”

    New York City may seek waiver from ObamaCare. One of the strongest advocates for ObamaCare may seek an exemption for the city he represents. Politico reports in Anthony Weiner: Waiver might work for New York. … So far over 1,000 waviers have been issued, exempting businesses, labor groups and a handful of states from at least some of the requirements of the Affordable Health Care Act.

    Economic freedom and a better life. Economics professor Josh Hall explains that economic freedom leads to greater human well-being. If we look at average income, life expectancy, income of the poorest 10%, and other factors, we see that when governments let citizens make economic decisions for themselves, this leads to greater human flourishing. This video refers to the Economic Freedom of the World index, which was the subject of a lecture delivered last year in Wichita by Robert Lawson. In that lecture, Lawson warned of the path of the United States in terms of economic freedom, as I reported: “Speaking about the United States, Lawson said that the numbers are likely to go down in the future. While the U.S. ranks above the world average, its measurement of freedom has been declining since 2000. At the same time, the rest of the world is on an upward trend. ‘It’s no longer accurate to say the United States is among the very top tier in the economic freedom index,’ Lawson said, adding that he blames George Bush for this. The decline is partly due to the increasing size of government, but the largest cause of the decline is in the area of property rights. This area is measured largely by surveys asking people how they feel about property rights in America. The perception, Lawson, said, is that the security of property rights are on the decline.”

    Government investment specialty. Gene Callahan, in his book Economics for Real People: An Introduction to the Austrian School, explains some of the problems inherent in government acting as investor. Writing about a plan to build a sports stadium in Hartford: “The Public Choice School has pointed out another force weakening that incentive, indeed, in most cases, completely negating it. Strong incentives exist for politicians to favor special-interest groups at the expense of the general public. Those upon whom benefits are concentrated are motivated to campaign hard for those benefits. As the costs of most political actions are spread across the public as a whole, the average person has little motivation to become involved. In the context of the stadium project, we can see that, even at a total cost of $374 million, the cost to each Connecticut resident is only about $100. It is simply not worth much of any individual citizen’s time to become devoted to the cause of stopping the stadium. However, for the construction companies who hope to get work on the stadium and the owners of businesses and land nearby, the potential benefits are enormous. They have a strong incentive to lobby hard for the project, to donate to the campaigns of politicians who support it, and to sponsor studies that will make the project look good. In fact, if there were a profit to be made in some particular investment, private investors would be likely to act quickly to take advantage of the opportunity with their own funds. … Private investors will turn to the risky business of lobbying the government to support a project only when it is not clear to them that it is profitable without taxpayer subsidies. Thus, the government is likely to specialize in money-losing projects.”

  • Wichita Eagle editorial page: arm of Democratic Party?

    Today’s letters section of the Wichita Eagle carries a letter from the executive director of the Sedgwick County Democratic Party promoting an event that will poke fun at Kansas Secretary of State Kris Kobach.

    A letter to the editor of any newspaper that discusses public policy, including Kobach’s agenda, is relevant. But this letter is a promotion — an advertisement — for a partisan political party event. It’s not billed as a fundraiser, but it has all the characteristics of one, including tickets selling for as much as $100.

    Printing letters like this harms the image of Eagle, if it wishes to retain credibility as a neutral arbitrator of public opinion and policy.

  • Wichita Eagle endorsements out of step with Wichita

    Yesterday’s primary election for Wichita city and school board races revealed a Wichita Eagle editorial board increasingly out of step with voters, who followed several of the board’s recommendations but also voted strongly against several Eagle-endorsed candidates. It’s not the first time this has happened.

    The endorsements are not the Eagle’s prediction of who will win, but instead are “recommendations as information to consider as you make up your own minds about the candidates.”

    For the race for Wichita mayor, voters strongly followed the Eagle’s endorsement of incumbent Carl Brewer. That contest attracted several challengers, but none with the stature to raise the money necessary to seriously challenge an incumbent in a city-wide election.

    For city council district 2, the Eagle editorial board strongly endorsed Steve Harris, calling him “best choice by far.” Pete Meitzner was mentioned as a credible candidate. But the winner of the election was Charlie Stevens, who the Eagle dismissed as an also-ran. The Eagle’s recommended candidate Harris finished in third place behind Meitzner, although the margin is small at 1,302 votes to 1,292 votes.

    For city council district 3, the editorial board recommended James Clendenin, and he won. Its second choice of Hoyt Hillman finished in third place behind Mark Geitzen, who will advance to the general election with Clendenin. Geitzen, too, was characterized by the Eagle as an also-ran.

    In city council district 4, the Eagle named June Bailey the “standout candidate.” She finished in third place behind Joshua Blick and Michael O’Donnell, the latter placed by the Eagle in the also-ran category.

    For the at-large seat for USD 259, the Wichita public school district, the Eagle recommend Sheril Logan, and she won.

    A distinguishing feature of the candidates the Eagle endorsed for city offices is their support for government intervention in the local economy through the use of economic development incentives and outright subsidy. (But always to be used prudently, of course, with scrutiny and discretion.) In particular, district 2 council candidate Harris embraced government intervention and was endorsed by several of Wichita’s most prominent crony capitalists. Other candidates like Clendenin and Bailey look favorably on big government, too.

    While Clendenin won in his district, voters preferred other candidates to Harris and Bailey. In particular, Stevens in district 2, Gietzen in district 3, and O’Donnell in district 4 have an explicit free-market perspective in their messages. The Wichita Eagle editorial board believes in all things opposite — crony capitalism, large-scale interventionism in the name of social engineering, and reliance on government rather than free people to solve problems and create prosperity — so it’s no surprise the names of these three candidates and their positions were buried. The Eagle’s political and economic preferences, however, are increasingly out of step with what Wichita voters want.