A Jaded Question

I started a new thread because I simply don’t subscribe to the premise that the question raised by the Jaded-JD is a “tough question for anti-taxers.”

Simply put, the premise of the original post is a jaded question. It’s not a matter of cutting–it’s a matter of how much should we allow government to grow. Under no circumstances should government be allowed to grow faster than the rate of population growth plus inflation.

Unfortunately, since our greedy politicians can’t control their spending habits, it’s up to us to make sure that we set some concrete spending limits for them. That’s why we must enact a Taxpayer Bill of Rights (TABOR) that sets specific limits on government growth and mandates refunds of budget surpluses (see; “Taxpayer Bill of Rights.”) Had we enacted such a law years ago, billions of dollars would have been refunded to the taxpayers as has been the case in Colorado, which enacted TABOR in the mid-1990s.

From an economic perspective we’re simply painting ourselves into a corner. Tax increases (both at the state and local levels) have been growing much faster than the growth of personal incomes. This cannot be allowed to continue; if you carry this argument to its ultimate conclusion, taxes will eventually consume 100% of personal incomes. What will our greedy tax-and-spend commissars do at that point? I doubt that the Jaded-JD would want to tackle this question.


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  1. Will Vehrs Avatar
    Will Vehrs

    Ok, Phil, it’s not a tough question when you answer that way. We give the legislature a finite pot of money and they have to prioritize it.

    Do we as conservatives just walk away at that point?

    It sure would be nice if there was a philosophical or operational basis to the real tough question–which pieces of the pie get sliced?

  2. Phil Rodokanakis Avatar
    Phil Rodokanakis

    Will: You simply can’t go back and cut the pie into smaller pieces. There are too many vested special interests to do it that way and that’s why it never gets done. Look at the Wilder Commission recommendations. They have sat around for more than two years and all the pols (except the newcomers that are running for office for the first time) go out of their way to ignore them.

    That’s why the TABOR in Colorado has worked so nicely. It has automatically refunded billions of dollars to the taxpayers. And since tax increases have to be approved by the voters in a referendum, several attempts to increase taxes went down the drain.

    Yes, it’s pretty much of a foolproof method. You’re right! If we implemented TABOR in Virginia we as conservatives may have to walk away at that point and take up golfing or some other hobby… 🙂

  3. The Jaded JD Avatar
    The Jaded JD

    I never propounded a tough question. I propounded a simple question. Mr. Kenney the Elder has done an admirable job engaging that question, much to his credit.

    As I’ve raises in my discussion with him, I don’t have a problem with capping state spending according to some objective metric. I do have a problem with the TABOR metric of population + inflation, because I distrust the inflation measure. Is it core inflation? Non-core? Price? Wage? How does it account for the obligation that arise independent from or grow faster than the rate of inflation or population?

    For example, the “War on Terror” gives rise to costs independent from both metrics. The federal government has the luxury of deficit spending that Virginia lacks. Health care costs grow at a pace far exceeding the rate of core inflation, and that’s relevant because the state has obligations to those on Medicaid.

    I’m not opposed to an objective cap, but it has to be a cap somewhat more comprehensive in its scope than population + inflation.

  4. Steven Avatar

    I’m a Blue Dog Democrat, which means that I have an abiding faith in the ability of our government to do the right thing — which are fiscally sound and socially responsible policies. I also believe that anyone can run for office, and that everyone should. What I do NOT believe in is government growing too large, or spending tax dollars so irresponsibly as to become poor stewards of that sacred trust.

    Like all things in life, it is a question of priorities. In the public budgeting process, you need to make tough decisions about who gets what. Public Agencies and Departments that have a history of poor money management or low performance levels routinely lobby hard and receive the same, if not more money than they did the year before. This is a big reason why the state always seems to have no money for VDOT and Transportation Road projects, but is currently under funding education by 1 billion dollars this biennium.

    TABOR and other Preformance Based Budgeting methods would begin to change our budget system in Richmond for the better. These concepts, in legislative form, would allow the General Assembly to use a system of criteria to judge whether or not a state agency qualified for more money. It basically works the same way an employer would evaluate you if you asked for a raise. What have you accomplished? What goals did you have for the year, how many of these were met? Etc.

    Problem is, our current crop of VA politicians have been elected only with their pork barrel promises and their spending merits in the election districts, which ultimately drives higher taxes and the spending of more and more money.

    ~ the blue dog

  5. Steven Avatar

    That should have read:

    “…but in addition, is currently under funding education by 1 billion dollars this biennium.”

    Btw, I’m gone for the day — reporting on two semi-political events in the City of Staunton.

    First, a cookout with EV ExDirector Dyana Mason & the Valley Equality, VA organization and then, a cookout at ‘Casa de Saxman’ with Delegate Chris Saxman and the local Teen Age Republicans. Both are within walking distance of the my parent residency in Staunton.

    Later tonight is my youngest daughter’s birthday.

    Oh, Alison, keep your aim true…

    Happy B-Day Alison!

    ~ the blue dog daddy

  6. republitarian Avatar
    republitarian

    right on, Steve..but you need to drop the Democrat part everyone knows better.

    Phil,

    could you please explain the population+inflation scenario in a little more detail.

  7. Phil Rodokanakis Avatar
    Phil Rodokanakis

    Steve: Happy Birthday to Alison!

    And I must agree with Republitarian, that you need to drop the Democrat label—you, my friend, have very little in common with the majority of the Democrat Party that has been hijacked by socialists, social liberal extremists, special interests, etc.

  8. Phil Rodokanakis Avatar
    Phil Rodokanakis

    Jaded-JD: What metric one uses for inflation is something that can be debated—that’s really not a big deal in my view. Sen. Cuccinelli’s TABOR bill (SJ408) provides for the emergencies you speak of. It states that if excess revenues are less than or equal to one-half of one percent of the limitation, the total excess shall be deposited into the Revenue Stabilization Fund and the general fund. If excess revenues are greater than one-half of one percent of the limitation, a portion of the excess revenues shall be returned to individual income taxpayers.

    It also calls for a super-majority vote of equal or greater to 60% of the General Assembly members voting to increase taxes. This allows for emergencies, such as the ones you mentioned. Frankly, I would prefer that this be done by referendum. I say this, because in Montgomery County, MD (yes I know, I’m now talking about bona fide socialists), the voters passed a law a few years ago requiring a super-majority vote before they can raise their property taxes and a super-majority of the Board members vote for higher property taxes each year.

  9. Phil Rodokanakis Avatar
    Phil Rodokanakis

    Republitarian: It’s a simple formula where you calculate a compound factor consisting of population growth (by taking the population growth percentage from the previous year) and adding to it the increases in the cost of living for the same period. So if the population grew by 0.5% and inflation by 2%, the budget for the following year shouldn’t be allowed to grow by more than 2.5%.

    Contrast this to the double digit budget increases we’ve experienced over the last few years. The Fairfax County Taxpayer Alliance (FCTA) has documented the state’s spending growth. It calculates that through FY 2003, the annual growth in VA State spending over and above population growth plus inflation has averaged more than 2.4% since 1979.

    As a result, in FY 2003 taxpayers had to finance a budget that was about $9 billion (billion with a B) larger than what it would have been had spending growth been kept in check following the population growth plus inflation formula. That means that had we kept our spending in check, our state budget could be almost 2/3 of its current size (about $20 billion instead of about $30 billion).

    For those of you who have an easier time following financial figures looking at a graph, the FCTA has a graph on this at:
    http://fcta.org/GIFSVA04/Va03aTrend.html

  10. republitarian Avatar
    republitarian

    Thanks Phil,
    Very helpful.

  11. Waldo Jaquith Avatar
    Waldo Jaquith

    JD’s question is very simple. Anybody running for office on a “cut taxes” platform should be able to answer it. Anybody who believes that government spending is too big should be able to present a detailed budget outlining where government spending should be smaller, and be prepared to justify those cuts.

    Unfortunately, I had to leave early for VT graduation, but the bulk of Saturday’s Sorensen Institute session was spent on this very matter — the group was broken up into a House and a Senate, faced with demands for tax cuts and funding increases, and made to come to a solution through hours of negotiation. From e-mailing with my fellow fellows afterwards, it was clear that the mind of many were strongly changed by what they learned in their efforts to create a balanced budget. It ain’t as easy as saying “spend less.” Anybody seeking office saying “we must cut taxes” must also say “we must cut expenses,” and lay out a proposed budget.

    If this requirement is too demanding, then we’d best rethink representative democracy.

  12. James Atticus Bowden Avatar
    James Atticus Bowden

    I wanted to respond the earlier post – after a great Hooah for Shaun Kenney’s answer – but been busy with life and will answer here. Phil begins with a comment about slicing the pie. When I went to first grad school in 79 I made a list of questions I wanted to figure out. How to slice the economic pie and share better was one of them. I learned – at one of the most liberal schools in the US – that growing the pie as well as slicing and dicing differently was the answer. So, I have three answers on the classic public policy question ‘how much is enough’ (also title of great book about McNamara trying to ‘rationalize’ defense spending)

    1. Bottom up. Jimmy Carter’s claim to fame in GA was to put the state agencies through painful exercises in zero-based budgeting. Defend what you do from the bottom up. Then the political executives and legislature can decide to do more or less. The state agencies got the hang after the first go around and nothing much got fixed.

    2. Ceteris Paribus. Assuming the government is doing okay now, then growth should be limited to inflation (choose an index)and population increase so you can provide the same level, all other things being equal, of services. Actually, a very good rule of thumb to know when you are increasing spending too fast too much.

    3. Something New. Like the bride’s ensemble what if there must be something new? How much does it cost and how can it be paid (consider more than one way)

    Those three lenses are ways to examine growth in the budget as opposed to government and government clients screaming “I wanna!”

    The last point is about economics. Forgive me, but again from the beast of the Liberal belly, where I studied micro and macro econ, public finance, govt and business in mixed economics, quantitative analysis blah blah in grad school I learned that productivity is the best way to improve economies. There are limits on growth (and capital growth) without inflation. Gov’t spending produces about (brain cramp) 23 cents on the dollar for gross domestic product and every dollar produced (capital growth) creates about 5 more dollars. So, cutting government to the bone produces wealth. The opportunity is create new means of sharing that wealth with government commanding it. I have some ideas on that – later.

  13. James Atticus Bowden Avatar
    James Atticus Bowden

    One more comment about public finances. Have you tried to read the budget on line? It is not a wealth of information, neatly presented, good graphics, with english prose explanations. It’d help to have the budget as easy to understand as some of the better financial statements that are put out to us consumers quarterly for 401k etc.

  14. Ray Hyde Avatar
    Ray Hyde

    “We give the legislature a finite pot of money and they have to prioritize it.”

    It’s our money and our government, why don’t we prioritize it. Put a form on the back of your tax return in which you can allocate how you think it should be spent.

    The totals on the forms would be added up and published. Legislators would not be bound by the results, but they would be hard to ignore.

    I imagine that averaged over all the priorities of everyone in the state, the result would not be too different from the budget. If it is, then the pols are out of touch.

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