More Sequestration Pain for Virginia

pentagon_burning

Pentagon burning

by James A. Bacon

The pain of federal budget sequestration cuts in Virginia is not yet over. Look what The Washington Post reports today:

According to the Defense Department research, things are likely to worsen over the next four years. From 2010 to 2012, Virginia experienced $9.8 billion in defense cuts, with the vast majority of losses in Northern Virginia. Direct defense spending in the state is projected to drop from $64 billion this year to under $62 billion in 2019.

That’s only $2 billion in cuts compared to $9.8 billion previously. That sounds bad but not that bad. Actually, it is, says Sen. Mark Warner, D-Virginia: “If we have the return of sequestration, it’s going to be even worse than it was a couple of years ago, because every agency, particularly the Defense Department, has cleared out most of their coffers.”

I’m not sure exactly what “cleared out their coffers” means, but I’m guessing it means that defense agencies have burned through their budget gimmicks and are planning real cuts.

Adding to the woes, the impact of federal budget cuts will percolate through the rest of the economy. As government contractors consolidate, they’ll need less office space. That puts pressure on lease rates region-wide, there will be less construction work, and the necessary process of restructuring from inefficient and expensive land-use patterns to more cost-effective patterns will drag out. Meanwhile, transportation planning assumptions, predicated on wildly out-of-date assumptions about growth and development, will veer farther and farther from reality.

The rule is so simple: Things that can’t go on forever… won’t. The defense spending boom of the post 9/11 era could not continue forever… and it didn’t. The downturn and all the ugly consequences stemming from it were utterly foreseeable — I’ve been ranting about them for years.

I don’t lose a lot of sleep over real estate developers losing a fortune. They’re big boys and they know how to hedge their bets. (If they don’t, they shouldn’t be in the business.) I’m a lot more worried about the state and local government sinking billions of dollars on infrastructure designed for the go-go 2000s. It is astonishing to me that serious consideration is still being given to the Bi-County Parkway near Manassas, and I have serious questions about the assumptions underpinning the billions of dollars of improvements planned for Interstate 66 and the second leg of the Rail-to-Dulles project. Any project whose revenues are predicated on assumptions of increased traffic, which are based on the 2000s-era economic growth rates extended in a straight-line projection forever, will create nothing but headaches for taxpayers.

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38 responses to “More Sequestration Pain for Virginia

  1. There is a belief that the availability of transit, including bus transit, will magically create new jobs and draw large numbers of businesses to urban areas. Not satisfied with Tysons -Reston-Herndon, Fairfax County is now proposing to allow FARs up to 5.0 in places such as Baileys Crossroads and Seven Corners that will never be served by rail.

    Keep in mind that the average of what has been approved and sometimes built in Tysons within 1/4 mile of the four rail stations is a FAR of c. 4.8. Will there be tax or service districts in these locations to put the bulk of transportation improvement costs on builders receiving density?

    We all know Bill Clinton did not inhale. But Fairfax County’s decision makers didn’t follow Clinton’s example.

    Meanwhile most population growth in Fairfax County is from low-income service workers.

    • I struggle with the belief that the population growth in Fairfax County is mostly low income service workers. If the mid to high income service buyers are leaving why would the economy demand more low income service workers. My suspicion is that low income service workers always grow faster than high income wage earners. If Bill Gates moved his family to Annandale how many new jobs would be created? Well, Bill is still working so there’s one. His personal accountant would follow him so there’s two. Then, a bevy of chauffeurs, body guards, gardeners, caterers would also find work in Gates’ orbit. You could still say that most of the population growth occasioned by Bill Gates coming to Annandale was from low income service providers.

      The two questions that matter are whether the population is increasing or decreasing in Northern Virginia and whether real wages are rising or falling in Northern Virginia.

      • DR – I’m just repeating what Fairfax County executive Ed Long has been saying for the last couple years. John Foust has been doing the same. Of course, as higher-paying jobs disappear, replacement with the same number of new higher-paying jobs, obviously, nets to zero. If growth is flat, lost jobs are being offset with new ones. But there is very little gain.

        Most higher-income people come to Fairfax County because we border the Nation’s Capital. McAuliffe and Warner have been reminding people defense and homeland security spending was down $9.8 billion from 2010 to 2012. And Warner says more is to come. What’s going to replace it?

        Tysons has been doing pretty well attracting new residents; Mall business is up (but so is crime); but most of the commercial real estate transactions have involved existing businesses consolidating offices. Only the attraction of Intelsat can be regarded as a big gain. My source is a friend who sits on the board of the Tysons Partnership.

        Big drawbacks to this region’s attractiveness is traffic. While many improvements have or are being completed, MWCOG’s study of a few years ago suggests traffic will get worse. The Tysons traffic studies show that traffic will get worse despite the Silver Line. Expanding rail-station-level density to non-rail locations will make traffic worse. That was one of the key premises behind the land use decisions made for Tysons. The BoS refused to extend higher density beyond one quarter mile of a rail station because beyond that point, people will drive not walk, bus or pedal.

        Another risk to the attractiveness of this area is the major change in Fairfax County Public Schools from a leading suburban school district to a low-income district, where at-risk student needs take away resources from middle and upper middle class schools. The high number of poorer kids and the many who don’t speak English as a first language and who often have other educational needs is already reducing resources to public schools in Great Falls, McLean, Vienna, Oakton, Clifton, etc. While elementary schools in low-income areas have class sizes below 20, in many of the more affluent areas, class sizes exceed 30. Just how attractive is FCPS to key workers when their fourth grader sits in a class of 32? The ability to watch the Nats or Wizards?

        • Everybody has an opinion. I see a lot of new home construction in high cost neighborhoods. Somebody must think that the number of well paid people is increasing.

          FCPS is an interesting story. The ESOL students who live in Great Falls and most of McLean have parents who work for employers like the World Bank. Their children tend to become proficient in English very quickly. As for poor neighborhoods … there have always been poor neighborhoods in Fairfax County. Some of those neighborhoods appear to be improving to me. I grew up near the intersection of Rt 1 and Huntington Ave. The massage parlors, fortune tellers and large swaths of trailers have given way to more reputable businesses (give or take the car title loan shops) and nicer housing. Bucknell Elementary is still something like 88% free and reduced price lunch but the area has definitely been on the up swing. I am not sure that the public schools are any better or any worse than when I went to school there.

          If you can understand the commercial real estate market in Northern Virginia you should get a Nobel Prize. There was a lot of vacant real estate in 2012 and they developers just keep on building. Seems like a fiasco just waiting to happen.

          As for the future of Northern Virginia … we’ll see. I am more pessimistic than optimistic. The simpletons in Richmond let the traffic problems build until traffic jams became the unofficial mascot of NoVa. When the money is good the people will put up with the traffic. But when an engineer gets laid off from a defense contractor and has a job offer in Austin – they might well take it.

          The Washington, DC area is often cited as one of the best educated cities in America – http://wallethub.com/edu/most-and-least-educated-cities/6656/. Everybody knew that federal spending couldn’t keep rising forever. All the half-wits in the Dillon state enclave of Richmond had to do was keep the quality of life reasonable in NoVa to preserve the educated workforce. But the Imperial Clown Show in Richmond just couldn’t do it.

    • @TMT – Uber will fix the transit problem as well as give jobs to low income.. Airnb will also boost the fortunes of low income who can now own a home by renting their bedrooms out and letting the kids sleep in mom and dads room.

      no worries TMT.

      Embrace the future!

  2. Jim Bacon’s philosophy in a nutshell = “Since we don’t know what the future will bring let’s just sit on our hands and do nothing lest we do something ill-advised”.

    Someday Jim might come to understand that government can take actions which will attract talent to a region, talent attracts business and business pays people wages that can be taxed as well as generating profits that can be taxed.

    Last week I was in North Carolina. I went to a Durham Bulls minor league baseball game. It was food truck night so various food trucks were in the stadium selling their wares. A great evening at a beautiful minor league stadium. I can certainly see why it’s hard to convince the software developers working for me in RTP to transfer somewhere else. In 2013 the City of Durham agreed to finance $6m of $9m in stadium renovations. In return, the Bulls agreed to stay in Durham through 2033. No doubt that Jim would find this to be a horrific example of wasted public funds. However, if the governments in the RTP area create an environment that attracts talented people and those people cause businesses to locate and expand there … was it really money wasted?

    • I was in the RTP in May. Wow. You’re right, what a great job with the stadium/atmosphere/vibe in Durham nowadays.

      I’ve posted before that I think we’re headed for a 10/90 society. 10% of Americans are going to be super productive and reap super rewards in the new economy. 90% are going to be in a fairly stagnant position.

      I think the RTP is an example of where we’re going. We can blather about “wasting” money, but the truth is that local and state governments are going to have to create the most inviting environments to attract that 10%. Durham and Raleigh are really trying to do so.

      The shame of Virginia is Richmond. It’s got so many assets that really could work in its favor. But….its leadership looks less competent than Greece’s and while it’s had a nice “moment in the sun” from national publications over the past couple of years, I’ve seen very little done by the city or its economic development officials to capitalize on it. It’s a shame, because I really like the city, but Raleigh-Durham is blowing its doors off in terms of economic growth.

      I don’t live there, so I don’t know all of the particulars of the “baseball stadium” debate. But I will say this….the talented generation coming along (30s and 20s) expects a very vibrant downtown/mixed use/walkable area with plenty of things to do. It would seem that a cool state of the art stadium in Richmond’s downtown would be an asset. But it seems like the city’s abandoned that idea. Meanwhile, both Raleigh and Durham keep building on their “vibe” and attracting more and more talented workers.

      We’ve got to stop thinking that gov’t should be a passive player in creating these environments. The hot places in America right now (Boston, RTP, Austin, Boulder, Silicon Valley, Portland) all have very activist local governments that are obsessed with creating the right environments to lure the top 10% of American workers. That’s the challenge right now.

      • RTP, where my daughter works, has ready access to three major universities – North Carolina, North Carolina State and Duke. What does the MW Region have? Maryland. George Mason doesn’t get the funding that W&M, VT or UVA gets and is hard-pressed to become a major research /teaching university, at least according to one member of the board I know. D.C. has GWU, which has just gotten rid of SATs because too many of those nasty Asian-American students are getting in.

        But for Uncle Sam, why would people move here? Why would you want to bring/start a big business here unless you expected to need federal funding or regulatory approvals? We live in a government town. Not unlike Colorado Springs.

        • Georgetown? Hopkins is pretty close?

        • AES Energy
          Capital One
          Gannett
          Interstate H&R
          Marriott
          Sodexho
          Sprint Nextel
          Hilton Worldwide
          Discovery Communications
          Avalon Bay
          Verisign
          Choice Hotels International
          Microstrategy
          ComScore
          DuPont Fabros
          Broad Soft
          Omega World Travel
          Virtustream
          Carlyle Group
          FBR & Co

          There are a lot of good companies in the Washington Metropolitan Area that are not focused on the Federal Government.

      • CR – if you are correct in your 10/90 assumption (and you might well be), how are the 90%’s interests advanced by luring the 10%? If the 10% largely employ others of the 10%, most of the 90% aren’t going to be much better off than they are today. Second, if you tax the 10% to the point where the 90% receive major subsidies, aren’t you likely to wind up with tax rates that push the 10% elsewhere? For this to make some sense, IMO, the 10/90 must be dynamic and not static.

        • I wish I had answers…I agree that the 10/90 must be dynamic. My fear is that it won’t be. I think a related but bigger issue is the creation of a permanent elite. A few years ago, the Economist ran an article on “cognitive breeding”. The gist was that as feminism has risen and more women are attending elite colleges and working as colleagues in professions…we’re seeing a rising trend, worldwide, of elites marrying elites.

          While it’s debatable as to whether IQ is genetic, it’s not debatable that a 2 parent family of bright, high earning parents is much more likely to produce a successful child than other marital combinations.

          Obviously, as Mr. Bacon point out, trend lines don’t last forever. But this is a trend line I’ll be keeping an eye on…..

      • You are 100% right. A very small percentage of American wage earners pay a very large percentage of taxes. Localities that want to thrive need to attract more than their fair share of these high wage earners. Ditto for states that want to thrive. The best way to attract high wage earners is to attract well educated young adults in their 20s and 30s and get them to “put down roots”. You don’t have to attract businesses. The talent attracts the businesses, not the other way around.

        I question the competence of the Richmond area’s elites. Half of them are living in the antebellum past, the other half are chasing after schemes that nobody could believe in – like cutting a deal with Dan Snyder for the Redskins to hold summer camp in Richmond. Richmond has some positives (inexpensive for a city, Federal Reserve Bank, some scenic beauty, state capital) but it isn’t where I’d make my bet in Virginia.

        Charlottesville has tremendous potential in my opinion. Great university, very scenic, something of a blank palette for doing development the right way, very impressive medical center. The Rt 29 traffic shambles can be fixed with over-passes. The legacy of incompetence among the city’s elites seems to have been reversed as high density, multi-use development takes root. Charlottesville needs a new airport, it needs to attract some more private employers and it needs a development and transportation plan that will create the kind of environment found in go-go cities like Austin.

        Virginia Beach also has great potential. ODU needs the kind of STEM improvement program that the University of Maryland, College Park pulled off. The Norfolk Airport needs work. However, the scenic beauty of the shore along with a certain southern charm puts Va Beach in reach of economic development success.

        • Fully agree about a small number of taxpayers paying a large amount of the taxes. However, the cost of running government, including the military and social services/income transfers is too big for a small group of 10% to fund. Government is so big that one needs to tax the middle class significantly to fund big subsidies.

          The average cost per student in Fairfax County was $13,718 for the 2014-15 school year. A family with two kids in school at the same time must pay more than $27 K in real estate taxes to cover the costs (assuming they are funded largely through real estate taxes). Not many families pay that amount of taxes. Now let’s throw in a poor family with 4 kids in school (even assuming no extra costs for ESL or special education), we are talking $55 K. If Ed Long and John Foust are correct, Fairfax County is spiraling in the wrong direction.

          More FCPS stats from 2014-15. Students receiving free and reduced meals: 52,638 out of 188,545 total students. English for Speakers of Other languages (ESOL) students: 28,870. Students receiving special education services: 25,715. Poorer children spend more time in ESOL classes. County officials say that the children receiving special ed services are need more services each and more expensive services. Financially, the County is not headed in a good direction considering all factors.

        • I don’t think Charlottesville will ever turn into Austin. But it’s definitely growing….there are a number of entrepreneurs here. And a few have attracted some decent start-up funding. We’ll see what the future holds.

          I agree about Virginia Beach….it’s got the assets so that it could become a growth engine for the state.

    • I hate to tell you but the stadium is the work of “blue” city leaders not the hard-right GOP controlled legislature in Raleigh who are busy cutting K-12 and Higher Ed these days.

      If the GOP that controls the States like they do in NC and Va – could control the cities – they’d screw the pooch in a New York Minute – no question about it! They’d even kill the things near and dear to Jim Bacon’s “Conservative” Smart Growth heart!

      • Gee, Larry, it must be a hard pill to swallow: The “hard right” economic policies in North Carolina has generated a budget surplus and unemployment has plunged. See Stephen Moore’s column: http://www.wsj.com/articles/the-tax-cut-payoff-in-carolina-1433373095

        • Stephen Moore? are you KIDDING? the man is a ideologue and Heritage group propagandist who has been caught misrepresenting…

          want me to list out some of his articles?

          ” In a 2014 Kansas City Star opinion piece entitled “What’s the matter with Paul Krugman?” Moore responded to Krugman’s opinion piece entitled “Charlatans, Cranks and Kansas.”[11][12] In his piece, Moore claimed that job creation had been superior in low-taxation states during the five years following the recession ending June 2009. After substantial factual errors were uncovered in Moore’s opinion piece, the Kansas City Star indicated that it would no longer print Moore’s work.[13][14]”

          Moore has a bad habit of cherry picking and misrepresentation in my view. He’s exemplifies the disingenuous nature of of Heritage and Cato “studies”

          • I figured that would be your response. Step #1: Demonize the source. Step #2: Ignore any facts or logic used by the source. Step 3#: Pretend you’ve won the argument.

            Instead of knocking Moore, why not address his claims that North Carolina (a) has a budget surplus and (b) has seen unemployment plummet.

        • ” On the August 7 edition of Fox News’ Your World, host Neil Cavuto invited conservative economist Stephen Moore to discuss the purportedly high cost of allowing roughly 50,000 unaccompanied minors access to public schools around the country. Citing his own calculations, Moore claimed that the cost of educating these immigrant children could reach $1 billion annually, adding that “it’s unfair to put these costs on the backs of local residents ”

          ” According to research from the Heritage Foundation, Moore’s current employer, the cost of educating a single undocumented immigrant child is roughly $12,300 per year. Therefore, the cost of educating the roughly 50,000 recent undocumented minors in the U.S. would actually be roughly $615 million per year, according to Heritage’s estimates.”

          there are many others.

          I don’t consider Moore to be an honest broker of information.

          he consistently is caught fudging.. and misrepresenting.

          Why do you rely of folks like Moore for your info ?

          Unemployment in NC is good – NOT because of the ignorant NC GA which is little better than the Va GA when it comes to these things.

          NC is prospering BECAUSE of the Blue-governed cities not the neanderthals in the State legislature …

          the NC legislators are killing the golden goose of education that has helped to power their state’s economy.

          they’re headed back to how the Southern States do education…

          • TooManyTaxes

            Sorry to bust your bubble, but FCPS administrators have told the public that one of the causes of their ongoing budget problems is the approximately 1000 unaccompanied minors who came to Fairfax County while the President closed his eyes. Many of these young people are older (say high school age) and are illiterate in their own language, thus, requiring FCPS to provide many expensive services. Or maybe, these administrators were lying to the people at the meeting. This is one of the reasons why some grade schools in Fairfax County have average class sizes above 30. Someday Atlas might shrug even in here in NoVA.

      • LarrytheG:

        There can be no doubt of that. There aren’t many Republicans in the City of Durham. The mayor is a guy who grew up in the DC area and then went on to become an IBM Systems Engineer so it’s no wonder to me that the city is making strides!

  3. Here’s a concept.

    you replace those billions of dollars and it gets directed to the parts of Virginia that are in desperate need of jobs and economic development and not in need of additional transportation investment and will reduce sucking on NoVa for education subsidies.

    It will also be a boost for anyone working in the gig economy and make small businesses more competitive against bigger competitors.

    even better – Virginians are already paying the taxes to fund it and it adds not one penny to the deficit like DOD spending would.

  4. re: ” activist local governments that are obsessed with creating the right environments to lure the top 10% of American workers.”

    I worry about this if the State is not also investing in basic K-12 education for the rest of the state – and ends up with a lot of unemployed and others who need entitlements – that would be funded by that 10%.

    Virginia is hollowing out – both rural and inner city.

    I tend to agree with Don . For every well-off guy -how many lower level workers are there? And who is going to be paying for entitlements for those without jobs and without sufficient education to do more than commodity labor work?

    I just think the idea of focusing on the high end only – is not ultimately a good strategy.

    • I agree that I’d like a little more equitable sharing of economic growth. But I just don’t see the political or economic environment for change.

      The “critiques” of Piketty have been wanting in my opinion. I see almost no evidence to the contrary that almost all economic gains are going to the owners in society rather than labor except for highly skilled labor. None.

      So, in such a scenario, I think local and state governments have to fight for that top 10%.

      • Cville -they will.. but what’s the plan for the unemployment and related entitlement burden and the ever increasing pool of under-educated and unemployed?

        It’s about way more than “inequity”. It increases taxes on those who can pay and eventually runs them out …

        this is what happened to Detroit and is happening to Richmond.

        People leave and go to adjacent jurisdictions like Dearborn and Henrico/Chesterfield … and the urbanized area ends up in financial distress and ruin.

        I just don’t think that works.

  5. NoVA sounding more like New Jersey all the time: big taxes, no Univs or manufacturing. Not exactly same. Maybe if I invoke New Jersey analogy that helps avoid it.

  6. Something I’d point out about New Jersey that I don’t think many folks know.

    Education Rankings By State

    1. Massachusetts
    2. New Jersey
    3. Vermont

    from our friends at ALEC

    http://www.alec.org/publications/report-card-on-american-education/

  7. I am confused. For 30 or so years Republicans/Conservatives have been incessantly stating (shouting actually) that:

    1. Government IS the problem;
    2. Government jobs are not real jobs;
    3. Government spending is waste.

    So what precisely is Virginia’s problem with reduced defense spending?

    • EXACTLY!

      it’s hilarious listening to the “no-tax”, govt does not create jobs folks
      talk about the sequester!

    • Despite the fact that my home will go down in value when people leave Norther Virginia due to reduced opportunities from sequestration I am glad that we cut defense spending.

      I am less pleased by the tax increases passed at the federal, state and county level. But, at least, we will see federal debt reduced … right? No. This is from the CBO:

      “CBO expects that federal debt held by the public will amount to 74 percent of GDP at the end of this fiscal year — more than twice what it was at the end of 2007 and higher than in any year since 1950. … By 2025, in CBO’s baseline projections, federal debt rises to nearly 79 percent of GDP.”

      So, we tax more and spend less on defense but the federal debt will continue to rise as a percentage of GDP (the only meaningful way to think of the federal debt)?

      Yes, government IS the problem.

      Government jobs are certainly real jobs. The only question is whether the government taking (say) another billion in taxes to fund 10,000 jobs at $100,000 per year (fully loaded) reduces the jobs that the taxpayers would have created if they kept their $1B by more than 10,000. I doubt that’s true but that is the question.

      The government declared war on drugs and the drug trade flourishes more than ever. The government declared war on poverty and poverty remains. The government declared war on Vietnam (sort of) to keep South Vietnam democratic and it is communist today. The government declared war on Iraq and Afghanistan to bring stability to the region and the region has never been less stable. Here in Virginia the government took the proceeds of the tobacco suit to create economic development in distressed areas and the economic development never came.

      Yes, government spending is largely a waste.

      Meanwhile, one of the heroes of the Democratic – liberal cause, a scourge of the one percenters, left the White House in 2001 “dead broke”. In the 14 years since then Bill Clinton has been paid $104.9M for giving speeches. Over one seven day jaunt through Europe he was paid $1.4M. The financial industry has been Clinton’s most frequent sponsor. The Post review showed that Wall Street banks and other financial services firms have hired Clinton for at least 102 appearances and paid him a total of $19.6 million. Hillary is no slouch either earning over $200,000 per speech. She is said to be in higher demand than her husband.

      In 15 years there are about 3,600 workdays. Bill Clinton made $104.9M by making 542 speeches. Even if it took him two days to write each speech and he never used the same speech twice he’s working less than half time.

      Tell me about crony capitalism and overpaid CEOs again.

      Mind you, the same liberals who crawl over each other to throw money at Bill Clinton like he’s a high end male stripper want to shun accused serial sexual assaulter Bill Cosby. Never mind that quite a number of women accused Clinton of inappropriate sexual advances, never mind that two of the women claimed that he physically assaulted them. The whole time these accusations were coming out the Dems were calling the Republicans misogynists while the Clinton campaign was calling the accusers “bimbos”.

      Wow, just wow.

      The elites from both sides of the aisle profit massively from their corruption and crony capitalism. They are why government IS the problem. Perhaps we should stop rooting for one team of disgusting ghouls over another and just throw all the bums out.

      • Brilliant analysis and commentary.

        The nation is rotting from the top down.

        Meanwhile, most of us, swimming in all of this corruption like fish in water, cannot see what is all around us.

        So, instead of calling this corruption what it is and rejecting it vigorously, we throw our money, adoration, and votes at those corrupt ones and thus enable them to carry us thought the Gates of Hell and into the depths of Hell.

        We are living in the times akin to Nero. And do not know it.

      • A LONG diatribe, but you did not answer the question: So what precisely is Virginia’s problem with reduced defense spending?

        Personally I think that is because the conservative types do like to dump on everything, but are actually devoid of solutions. Not a sermon … just an observation

  8. re: ” I figured that would be your response. Step #1: Demonize the source. Step #2: Ignore any facts or logic used by the source. Step 3#: Pretend you’ve won the argument.

    Instead of knocking Moore, why not address his claims that North Carolina (a) has a budget surplus and (b) has seen unemployment plummet.”

    I’ve read many of Moore’s columns and I’ve watched him on FOX, on the WSJ show and Cavuto

    and the man is not honest.

    he misrepresents data to support his beliefs…

    he’s not objective. I’ve never seen him admit when he did get it wrong.

    so I routinely don’t believe anything he says..

    that’s not demonizing.. I’ve given him a fair hearing and he’s not trustworthy.

    He plays the typical Heritage and FOX game of mixing real data with fudged data.. to produce an assertion – that more often than not is demonstrably false.

    the problem with NC and with your citing of Moore is that the unemployment did not happen as soon as the NC legislature acted.

    and the problem with surplus is was it genuine and not done with tricks and did it come as a result to K-12 education?

    if you have another source – a credible source that backs this up – I’ll reassess but I’m not buying Stephen Moore’s, more often that not, fudged tripe.

  9. Jim – have you been following the tax-cut idea in Kansas?

    ” Acknowledging that Kansas’ massive tax cuts, which took effect over two years ago, haven’t done much to boost its economy, conservative commentator James Pethokoukis asks: “What should Republicans learn from the Kansas experiment, especially the GOP’s crop of White House wannabes who have plans to deeply cut top tax rates?” He makes some thoughtful points that tax-cut proponents would do well to heed:

    “First, don’t expect tax cuts to pay for themselves or even come close.” As we and others have observed, states that cut taxes must offset the cost, by raising revenue elsewhere or cutting spending, to meet their balanced-budget requirements. Tax cuts aren’t a free lunch.

    “Second, don’t expect an immediate economic boom.” That’s solid advice, given the poor history of state income tax cuts in producing economic growth. But it contradicts the claim by economists Art Laffer and Stephen Moore, who helped design Kansas’ tax cuts, that cutting income tax rates provides “the most effective immediate and lasting boost” to state economies. And it contradicts Governor Sam Brownback’s prediction that the tax cuts would provide “a shot of adrenaline into the heart of the Kansas economy.”

    and I have a question for you

    do you think when you cut taxes that you are cutting employees?

    do you think when you cut taxes that you cut spending?

    when you cut spending – are you cutting the economy?

    like you would with the sequester?

    so if you cut taxes and free them up to be spent in the economy – but it came at the cost of a job funded by taxes – what have you gained?

    are you not just trading one cut govt job for another added non-govt job?

    how does that fundamentally improve the economy especially in the short run?

    you’re just trading jobs. a teacher for a carpenter… or some other non-govt economy job.

    so taxpayers will be buying one less teacher and with the savings buying a carpenter. The teacher becomes unemployed and the guy who was unemployed becomes a carpenter.

    how does that change the economy? you subtract one and add one.

  10. I think you should rename this to the “LarrytheG” blog.

  11. Pingback: Peter’s Take: Sequestration Will Hurt Arlington » Peepstalks!

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