Doonesbury. Much more on earmarks, including local activity, here.
Category: Taxes
Earmarks’ Declining Political Utility?
Until this year, Richard W. Pombo, the seven-term Republican congressman from the Central Valley, had never caused much fanfare about bringing home earmarks, the special local projects that circumvent the normal budgeting process. He was far better known for his work fighting environmental regulations.
All that changed in the closing months of this year’s surprisingly tight re-election campaign, when Mr. Pombo began trumpeting the money he had directed to his car-bound district — particularly $75 million for highway expansion, a gift for one of the most congested areas of California.
But it was not enough to persuade voters like Alex Aldenhuysen, a self-described independent, just out of the Navy and voting for the first time in two years. He said he was turned off by Mr. Pombo’s earmark talk. And in the end, Mr. Pombo lost his seat to a Democrat in one of the year’s most significant upsets.
Much more on earmarks, including local politicians use and views of them, here.
Sales Taxes & Online Shopping
But even Christmas stories, from Dickens to Seuss, need a villain. We’d like to nominate your friendly neighborhood state governments, which for years now have been predicting dire declines in state finances because untaxed online shopping would erode the revenue-raising ability of sales taxes.
As usual, the political gloom proved to be overwrought. State tax revenues took a header in 2002 along with the rest of the economy, but they’ve been growing smartly ever since. The third quarter of this year saw state tax revenues up 4.6% over last year, and that was a deceleration from growth that has bumped along at close to 10% at times in recent years. State sales-tax receipts grew at 4% in the third quarter–and that was the slowest growth in three years. The biggest news about the sales-tax apocalypse is that it isn’t happening.
But the strong trend lines for overall tax receipts and sales-tax revenue in particular haven’t slowed the move among states to grab a piece of the online-sales pie. In the 14 years since the Supreme Court ruled that the myriad state and local taxes were too complex for mail-order retailers to be expected to master, there’s been a movement to obviate that argument by “streamlining” the country’s many sales-tax regimes.
Federal Subsidies Turn Farms into Big Business
Gilbert Gaul, Sarah Cohen & Dan Morgan:
The cornerstone of the multibillion-dollar system of federal farm subsidies is an iconic image of the struggling family farmer: small, powerless against Mother Nature, tied to the land by blood.
Without generous government help, farm-state politicians say, thousands of these hardworking families would fail, threatening the nation’s abundant food supply.
“In today’s fast-paced, interconnected world, there are few industries where sons and daughters can work side-by-side with moms and dads, grandmas and grandpas,” Rep. Jerry Moran (R-Kan.) said last year. “But we still find that today in agriculture. . . . It is a celebration of what too many in our country have forgotten, an endangered way of life that we must work each and every day to preserve.”
This imagery secures billions annually in what one grower called “empathy payments” for farmers. But it is misleading.
Dairy Industry Crushes Innovator Who Bested Price-Control System
Fascinating, by Dan Morgan, Sarah Cohen and Gilbert Gaul:
In the summer of 2003, shopers in Southern California began getting a break on the price of milk.
A maverick dairyman named Hein Hettinga started bottling his own milk and selling it for as much as 20 cents a gallon less than the competition, exercising his right to work outside the rigid system that has controlled U.S. milk production for almost 70 years. Soon the effects were rippling through the state, helping to hold down retail prices at supermarkets and warehouse stores.
That was when a coalition of giant milk companies and dairies, along with their congressional allies, decided to crush Hettinga’s initiative. For three years, the milk lobby spent millions of dollars on lobbying and campaign contributions and made deals with lawmakers, including incoming Senate Majority Leader Harry M. Reid (D-Nev.).
Last March, Congress passed a law reshaping the Western milk market and essentially ending Hettinga’s experiment — all without a single congressional hearing.
“They wanted to make sure there would be no more Heins,” said Mary Keough Ledman, a dairy economist who observed the battle.
At the end, participants said, Reid was plainly exasperated. “I’m not listening to any more of this,” he said. “I’m out of here.”
Reid made his move on Dec. 16, with the Senate chamber nearly empty. He brought up the milk bill, which passed a few minutes later by “unanimous consent,” a procedure that requires no debate or roll call vote if both political parties agree. Reid and Kyl said in recent statements that their goal was to level the playing field for milk producers.
Our elected officials at work.
Revenge of the Garlic Farmers, or More Feeding at the Public Till
For decades, the fiercely independent fruit and vegetable growers of California, Florida and other states have been the only farmers in America who shunned federal subsidies, delivering produce to the tables of millions of Americans on their own.
But now, in the face of tough new competition primarily from China, even these proud groups are buckling. Produce farmers, their hands newly outstretched, have joined forces for the first time, forming a lobby group intended to pressure politicians over the farm bill to be debated in Congress in January.
Nobody disputes that competitive pressures from abroad are squeezing fruit and vegetable growers, whose garlic, broccoli, lettuce, strawberries and other products are a mainstay of world kitchens. But the issue of whether the United States ought to broaden farm subsidies beyond the commodity crops like corn and cotton, which have historically been protected, is a big flashpoint.
Two Senators Stop Late 2006 Earmark Stuffed Spending Bills
Sens. Tom Coburn of Oklahoma and Jim DeMint of South Carolina have decided to take a stand against overspending by objecting to the nearly 10,000 earmarks, or member-sponsored pork projects, larded throughout the spending bills Congress is currently considering.
Their obstinacy has convinced the leadership of the departing Republican Congress that they probably won’t be able to pass spending bills in next month’s short lame-duck session. Instead, they are likely to pass a stopgap “continuing resolution,” which will continue funding all programs at last year’s level until the new Democratic Congress passes its own versions of the funding bills.
ass earmark-stuffed catchall spending bills could save taxpayers a cool $17 billion. All 10,000 earmarks in the pending bills will expire if they aren’t passed by the end of the year.
Overall federal spending has gone up by 49% since 2001, but you wouldn’t know it from the anguished cries of those who regard ever-higher spending as some sort of birthright.
Useful timing, given the upcoming Treasury/Fed trip to China to talk about exchange rates and China’s extensive dollar reserves (movement away from dollar reserves could be a real problem for the United States). Much more on earmarks, including local commentary.
“As Power Shifts in New Congress, Pork May Linger”
Mr. Stevens, an 83-year-old Republican, and Mr. Inouye, an 82-year-old Democrat, routinely deliver to their states more money per capita in earmarks — the pet projects lawmakers insert into major spending bills — than any other state gets. This year, Alaska received $1.05 billion in earmarks, or $1,677.27 per resident, while Hawaii got $903.9 million, or $746.05 per resident, according to Taxpayers for Common Sense, a nonpartisan group that tracks such figures.
Representative Nancy Pelosi, the Democratic leader, and many Democratic candidates have railed for months against wasteful “special interest earmarks” inserted into bills “in the dark of night.” Now their party’s electoral victories mean that Mr. Stevens will hand Mr. Inouye the gavel of the Senate defense appropriations subcommittee, which presides over the largest pool of discretionary spending and earmarks. But if the Democratic leaders are talking about “earmark reform,” that may be news to Mr. Inouye.
“I don’t see any monumental changes,” Mr. Inouye said in a recent interview. He plans to continue his subcommittee’s approach to earmarks, he said. “If something is wrong we should clean house,” he said, “but if they can explain it and justify it, I will look at it.”
business as usual.
Much more on earmarks, including significant Wisconsin activity here.
Wisconsin Senator Herb Kohl and Congressman David Obey (among others) continue to bring home the bacon – cha ching on our kid’s charge cards – :
- 4.7M for military battery technology, mostly for Madison’s Rayovac (Kohl).
- 2.4M for improvements to the Rice Lake Airport (Obey)
- $260K for UW-Madison agricultural grazing research (Obey).
Wisconsin per capita “pork” spending is $47 (Massachusetts is 45) while Robert Byrd’s ongoing efforts to pave over West Virginia requires $327/resident.
Tammy Baldwin’s comments regarding earmarks.
Government Spending Via a Credit Card Due from our Future Generations
Italian Minister of Economy & Finance Tommaso Padoa-Schioppa [120K PDF]:
I now come to the last and conclusive theme of my argument. Controlling expenditure always has to balance technical arguments and constraints, with the legitimate and competing claims (often drawing on very different ideological Weltanschauungen) on the resources managed, directly and indirectly, through the political processes. Balancing the two elements is a difficult exercise, as I experience on a daily basis.
Political economists have blamed the difficulty on the fact that the time-horizon of a typical political cycle is shorter than the one relevant on average for the society as a whole, in turn leading the legislature to attribute a smaller weight to the long-run implications of public expenditure policies than it would be socially desirable. Empirical evidence shows that discretionary public expenditure tends to rise before the elections irrespective of the political orientation of the incumbent government, and also in spite of the weak evidence of a relation between the size of pre-election spending and the election outcomes. The politicians’ short horizons and the long lag between reforms and their beneficial effects gives rise to a pervasive tension in expenditure control.
For Faust, the lure of Mephistopheles’ services is greatly enhanced by the fact that the price – albeit a terrible one – is to be paid later. For politicians, the lure of the support obtained through public expenditure is similarly enhanced by the fact that public debt will be paid (o reneged) by next generations, often well after the end of one’s political career. As to myself, having inherited a public debt larger than GDP, and having committed myself and my government to comply with sound fiscal principles, I scarcely can afford even to contemplate the possibility of accepting Mephistopheles’ services.
Fascinating and powerful!
Ingredients of a 2007 Grand Bargain on Social Security?
So Washington is full of rumours that 2007 will bring a Grand Bargain on social security reform (see Mark Thoma’s take here and Vox Baby here). The Bush team’s plan is to sound sufficiently conciliatory and open-minded that it becomes impossible for the Democrats not to sit down and talk. That strategy just might succeed. Stonewalling is a plausible political tactic when you are in opposition (though still shamefully shortsighted). It doesn’t work so well if you are actually in charge on Capitol Hill, particularly when you announce that retirement security is one of your top legislative priorities.