Quantifying “Political Development”: The “Foregone Job Loss Index”

President Obama’s claim to have “saved or created” 150,000 jobs has been snarked by some on the right, but in Michigan such boasts are nothing new. Citizens here are treated to a steady stream of press releases from politicians and the Michigan Economic Development Corporation – dutifully and uncritically copy-and-pasted into newspapers and TV news scripts – all reporting in chirpy, expectant tones, “MEDC incentives created or retained X jobs last month!”

Given that the federal stimulus program and Michigan’s economic central planning empire are fundamentally political development programs – not economic development ones – the politicians need a new metric to quantify their accomplishments. Today I am introducing that metric:

The Foregone Job Loss Index

Calculating the current figure is easy: You simply take the number of jobs left in the economy at this moment, and that’s the number.

Michigan now has 3.900 million non-farm payroll employment jobs not-yet-destroyed. That makes our Foregone Job Loss figure 3.900 million.

Or to describe it another way, employers of 3.900 million Michigan workers have not yet been driven under or out of the state by Lansing’s ongoing success at making Michigan an even more undesirable place to do business.

At the federal level the Foregone Job Loss figure is 132.1 million – that’s how many jobs the current administation has succeeded in not destroying since January.

This metric adds an important new tool to the political development tool box of our state’s and nation’s political class. As long as their policies cause overall employment to decline, politicians will be able to quantify the number of jobs they have not destroyed yet.

One important caveat for politicians: Strongly discourage any discussion of changes in the Foregone Job Loss Index. For example, in January 2009 the national figure was 134.3 million jobs not-yet-destroyed. Focusing attention on the 2.182 million job decline in the index does not serve your political development goals.

Similarly, in Michigan the political class will want to squelch any discussion of the 552,900 decline in the Foregone Job Loss Index since January, 2002.

Public Employee Unions, Bond Vultures Circling Michigan Taxpayers

Today the Michigan Senate Appropriations Retirement Subcommittee took testimony from a bond brokers’ lawyer on House Bill 4075, which would allow local governments to borrow to establish funds from which would be paid post-retirement health care benefits they’ve said over the years they would provide to retired government workers.

Note the careful phrasing: “Benefits they’ve said over the years they would pay.” The first “they” is current and past politicians, and the second “they” is future taxpayers.

Note two words not contained in that opening sentence: “liability” and “obligation.” Courts have ruled that unlike pensions, employers have no obligation to pay these retiree health care benefits.

Of course the government employees and their unions want everyone to think that this is a real obligation. They implicitly reveal the truth with another bill discussed in committee today, House Bill 4073. This would explicitly convert those politicians’ promises into real contractual obligations. Doing so would have future Michigan taxpayers choosing between pavement and police vs. gold-plated health bennies for age 50-something public retirees.

These bills easily passed the House – the Democratic majority there makes no bones about being in the tank for public employees. The fact the bills are getting a hearing in the GOP-controlled Senate suggests that Repubs may be just as misguided about where their loyalty properly lies – with taxpayers or with politically powerful government employees and their unions.

Here’s my guess about the outcome: The Senate will pass the bills after adding some eye-wash in the form of marginally more stringent financial standards limiting which local governments may burden future taxpayers with this new debt. The Senate will not mandate that locals put all new employees in defined contribution pension and post-retirement health bennies before they can issue these bonds. The bills are bad enough, but leaving this out would be fiscal malpractice of the worst sort.

With or without that prerequisite, passing these bills would be just one more tragic example of the destructive priorities of this dysfunctional legislature. Especially for Republicans, who have pretended to the public that they are more fiscally responsible.

Note that if the state, school and local governments just pulled the plug on all these health benefits, retirees would still be eligible for Medicaid at age 65. We’re not talking about stepping over the bodies of ailing seniors here, but over the swim-suited bodies of age-50 something public retirees catching the Florida rays while enjoying health benefits courtesy of Michigan taxpayers.

Oh, and the bond vultures? If the bills pass they will make millions brokering all these new public debt (bond) sales. Senators shouldn’t give these people the time of day, much less a respectful hearing.

Hey GOP senators – which side are you on? Taxpayers, or public employees and bond lawyers each with their big campaign contributiuon warchests.

Political Class “In the Tank” for Public Employees, Part Deux.

Part trois, actually . . .

I’ve started something of a drumbeat on this blog regarding Michigan legislators who act as if their fiduciary duty is to state employees rather than to taxpayers.

Attention legislators: You owe your loyalty to citizens and taxpayers, not to government employees (and their unions).

The latest example of confusion on this point is Senate Bill 552 introduced by Cameron Brown, R-Fawn River, which would benefit employees at the Adrian Training School reformatory,  slated for closing under a budget-cutting executive order issued last December. Employees would get a full pension if their age and years of employment equals 70 (such as a 50 year old with just 20 years on the job).  Those whose age and years on the job equals 75 would get a 16.7 percent increase the cash portion of their post-retirement benefits.

This  is recurring theme. I wrote in March about a scheme to give a similar pension bennie to prison guards who might get laid off if several prisons are closed as proposed (without specifics) by Gov. Granholm.  At the time the Senate was also holding hearings on a massive school employee pension expansion sponsored by Sen. Wayne Kuipers, R-Holland, that would have loaded billions of dollars worth of new unfunded liabilities onto taxpayers.

Thankfully that last dog would not hunt, but the fact that such measures are even contemplated shows how skewed the priorities are for many members of this state’s political class.

I also wrote just last week about how state police also get a pension “double dip” opportunity that would be considered absolutely nuts by any private sector employer. They’re all symptoms of the same dysfunction, which is bringing about the gradual Detroitification of the entire state (hollowing out the private sector to prop up an unsustainable government establishment).

As I said in March, it would give me no pleasure to see former state employees on unemployment rolls, any more than it does to see tens-of-thousands of auto industry workers and others among the jobless ranks. But private sector employees impacted by the economic downturn don’t get these kinds of golden parachutes, and the people who citizens elect to represent their interests need to remember who their real bosses are.

Tea Party Activists Have ATTITUDE!

Since the Tea Parties, the questions that everyone has been asking are “what next?” and “what else can we do?”

The Mackinac Center has posted three important tools with some answers. All three are now live on Mackinac.org.

The first is “Tea Party Activists have Attitude,” and it describes the ‘tude they should have to change the incentives on members of the political class.  (First item: “Tea Party activists aren’t impressed that their politician is a ‘nice guy.’ They’re all ‘nice guys’ – get over it, and hold them accountable for their deeds rather than their smile.”)

The second installment is called “Ten Minute Tea Party Activist” and it lists 10 specific actions activists can do. These are more sophisticated than the usual “civic creed” nostrums – I think you will like. This list is now live on Mackinac.org (and will be the featured Current Comment on Monday).

Finally, a “Candidate Quesionnaire for Tea Party Activists” provides “hard-to-dodge questions that suggest whether a candidate for the Michigan Legislature actually supports limited government principles.”  Emphasis on “hard to dodge” – these go way beyond the ”Do you support tax and spending cuts?” that they all say “yes” to, and which tell you nothing.

Please don’t hesitate to spread these tools far and wide.

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Tea Party Activists have Attitude

Samuel Adams, widely believed to be the instigator of the Boston Tea Party, once said that it didn’t take an activist majority to prevail, “but rather an irate, tireless minority keen to set brush fires in people’s minds.”

Setting brushfires requires attitude, especially during a time described by Adams, “when vain and aspiring men shall possess the highest seats in Government, (and) our country will stand in need of its experienced patriots to prevent its ruin.”

The following describes an attitude that, if widespread, would vastly improve the incentives of lawmakers to honor the principles of limited government.

1. Tea Party activists aren’t impressed that their politician is a “nice guy.”

Being likeable isn’t needed for a person to succeed in America. An insufferable jerk can build a billion-dollar corporation from scratch, employ thousands, save the whales and cure cancer.

What he can’t do is win an election. To gain votes in a democracy a candidate must be likeable. The reason political campaigns feature photos of the candidate’s family and pets is not because they want voters to assume that he or she has a responsible record on taxes and spending.

Therefore, the last thing that should ever impress a Tea Party activist is a politician who’s a “nice guy.” Simply put: They’re all nice guys, so get over it and ignore it. Hold them accountable for their deeds rather than their smile. The Tea Parties were a reaction against a lot of very nice guys doing very bad things.

2. Tea Party activists don’t presume virtue in party labels.

Political parties are extensions of the politicians that they elect. They are mere instruments to gain power, not virtuous machines that exercise that power in noble ways.

Example: During the term of President Bill Clinton the budget actually had a brief surplus, while spending soared under President George W. Bush. Likewise, while Michigan Republican lawmakers boasted of their collective resistance to the $1.4 billion income and business tax hikes passed in 2007, most of them voted for most of the increased spending it funded.

There are countless other examples. An experienced patriot treats the promises of politicians and political parties with equal (and substantial) skepticism. Use political parties only as tools toward your ends, not theirs. Your loyalty is too valuable to sell so cheaply.

3. Tea Party activists really know their own lawmakers’ voting records.

If the “nice guys” aren’t a reliable source for a full and accurate picture of their records, and the party label doesn’t do it either, then experienced patriots need to find this information on their own.

At the state level, two free tools make this much easier in Michigan. The first is MichiganVotes.org, which provides a plain-English description for every vote cast by every member of the Michigan Legislature since 2001. The second is Michigan Capitol Confidential, a periodical that gives more details on votes involving concerns regarding limited government.

An experienced patriot should use both of these tools, and compare how his or her lawmaker measures up by asking these critical questions:

• Does the lawmaker always vote with their party, no matter what?
• If there are a handful of dissenting votes for or against the limited government side of an issue, which side does he or she tend to fall on?
• Do most of the bills he or she introduces expand the size of government, or reduce it?

4. Tea Party activists follow the money.

Is your lawmaker getting financial support from those whose values do not match up with your own? It’s not hard to find out. For most past and current Michigan legislators, go to the “Search Voting Record” tab on the MichiganVotes.org homepage, choose a representative or senator and click “search.” A link to a list of the legislator’s campaign contributors appears below his or her photo. For members of Congress find this information at OpenSecrets.org. (Go to “Politicians and Elections,” “Donor Lookup.”)

5. Tea Party activists know they don’t have to get elected to change the world.

They understand that electing a handful of virtuous lawmakers won’t solve the problem either, because what needs to change are the incentives operating on the entire political establishment. Here’s how Milton Friedman described it:

“I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or if they try, they will shortly be out of office.”

More often than not the most important effect of an election is who gets defeated, not who gets elected. When a politician loses for “doing the wrong thing” the incentives change for all of them.

6. Tea party activists don’t “repress their feelings” regarding fiscal malpractice.

Having discovered the real records of elected officials in their own area and elsewhere (see Items No. 3 and 4), Tea Party activists share this knowledge widely with friends, family, colleagues, internet contacts, etc., letting all and sundry know how their lawmakers are behaving, and sharing their feelings regarding the ones who are misbehaving.

7. Tea Party activists focus on what unites them, not things that may divide. Those uniting things are:

• Grievance: Chronic fiscal irresponsibility, now become acute fiscal extremism.
• Target: A self-serving, self-perpetuating political class that no longer represents the will of the people.
• Goal: Restore genuine representative, limited government by changing the incentives on elected officials.

See also: “Ten-Minute Tea Party Activist” and “Candidate Questionnaire for Tea Party Activists.”

“Draconian” $304 million budget cut is 1.05 percent of state revenue

(Cross-posed from Students for a Free Economy blog.)

Yesterday, responding to a $1.3 billion gap between how much state politicians like to spend vs. the amount of revenue they actually expect to collect (a.k.a. “the deficit”), the governor proposed and the legislative appropriations committees approved $304 million in state spending reductions. The balance of the spending gap will be filled in with federal “stimulus” money (called “Obamabucks” by Capitol wags).

The $304 million amounts to 1.05 percent of state revenue from state sources, which is around $28.9 billion. Federal money (not counting the “stimulus”) adds another $14.9 billion to make up the $43.8 billion “adjusted gross spending” budget.

Here’s how they spend the biggest chunks of the $28.9 billion raised in the state:

• K-12 schools swallow $11.8 billion
• Medicaid and related health-care welfare consume $4.9 billion
• Universities and colleges get $2 billion
• Prisons spend $2.0 billion
• Gas tax and vehicle registration fee dollars set aside for roads are $2.1 billion
• Regular welfare is $1.3 billion
• Revenue sharing to local governments is $1.1 billion

The politicians and their friends in the media like to measure spending reductions as percentages of the “General Fund,” but that’s a game they play to fool the public. Much of so-called “restricted fund” money really isn’t very restricted. For example, $11.7 billion “school aid fund” money all goes to K-12 schools, but it could also be spent on colleges and universities (especially since the number of kids in public schools is falling).

Also, lots of state revenue never touches the general fund, but has been earmarked for other purposes (and can just as easily “un-earmarked”). That includes around $300 million in tobacco lawsuit settlement money, and $304 million from a 75-cents per pack cigarette tax hike passed in 2004. Most of the money from both of those goes to Medicaid and related health welfare.

If the road tax revenue is subtracted from the $28.9 billion the state takes from Michigan taxpayers, yesterday’s $304 million cut comes to 1.2 percent of the remainder. If school aid money is also subtracted it’s 2.0 percent

If they didn’t use ”Obamabucks” and covered the entire $1.3 billion “deficit” with cuts, the reduction would be 4.5 percent.

Question: If you had to cut 1.05 percent or 4.5 percent from your family budget would it really be a life-altering hardship? 

It is said by some that this oversimplifies, and that it really is hard to cut the budget. It’s not hard. You just have to be willing to think outside the box and reject, “But that’s not the way we’ve done it in the past!”  If you are willing, then here’s how to cut $1.9 billion.

If you’re not willing then not only is it hard to cut spending – it’s impossible. And if it’s impossible, that leaves only one alternative – tax hikes. Which they are already whispering about around the Capitol.

That tax talk should cease. These cuts represent a penny to a nickel on a dollar of state spending. Isn’t protecting what few jobs Michigan has left from another economy-crushing tax hike worth more consideration than that?

The ultimate anti-school choice hypocrisy?

Defenders of the public school monopoly – mostly school employees, their unions, and the system’s other direct beneficiaries – argue that government-run schools are an important institution for their role in knitting together our multicultural society. They evoke an earlier era of high immigration, when the socializing effects of public schools converted the children of huddled masses recently arrived from southern and eastern Europe into Good Americans.

Agree or not, it’s a legitimate argument, up to a point. That point arrives when a school district becomes so dysfunctional, corrupt and immune to reform that it turns poor children into victims, destroying any chance they may have to achieve the American dream by obtaining a good education.

In most of the nation’s big cities – including Washington, including Detroit – that point was passed decades ago. Ever since then, opposition to school choice has been nothing more than self-serving, reactionary protectionism, led by politically powerful school employee unions. It’s frankly and unambiguously a moral outrage, and a breeding ground for rank hypocrisy.

This is saying a mouthful, but I can’t recall a more blatant example of this hypocrisy than one cited in today’s Wall Street Journal, a quote given to another publication by U.S. Education Secretary Arne Duncan. Since taking office Duncan has been serving his school union masters by doing all he can to kill a school choice program that gives 1,700 Washington, D.C. kids a $7,500 voucher.

Here’s from the Journal piece:

“Science magazine recently asked Mr. Duncan where his daughter attends school and ‘how important was the school district in your decision about where to live?’ He responded:

“ ‘She goes to Arlington [Virginia] public schools. That was why we chose where we live, it was the determining factor . . . I didn’t want to try to save the country’s children and our educational system and jeopardize my own children’s education’.”

Good call, Arne – I wouldn’t sacrifice my own child for some abstract principle either. But I can’t imagine anything more despicable and contemptible than your willingness to sacrifice thousands of other parents’ children, especially when your own words and actions reveal that have no illusions that you are doing anything but that.

Why another budget “crisis?” Excessive State Police bennies (among other reasons)

A disturbing sidelight to the successive budget “crises” is the things you learn about where some of the money goes in that $44 billion monstrosity called the State of Michigan budget.

For example, the political class and its mainstream media adjunct are about to get all breathless about State Police layoffs that are reportedly under discussion. The MIRS newsletter says that 81 spanking-new state troopers fresh out of police academy will be eliminated, although the jobs might be “saved” if some 70 older cops are bribed with a pension boost to retire early, and presumably forego entering a “DROP” program.

What is a DROP program, you ask? It amounts to pension double dipping scheme:

Troopers start getting a portion of their pension while still working and simultaneously collecting their regular salary. The amount of pension they can collect is 30 percent the first year, 50 percent the second, and then increases 10 percent each year until eventually they are getting full pension and full pay before they have retired. The money is not paid out to them immediately but is deposited into an interest-bearing retirement account they get when they really retire.

That’s nuts, of course. No sane private sector employer would give away such a benefit.

 

So why are Michigan taxpayers expected to foot the bill for one? See previous posts in this blog including “The people vs. the political class” and others, which describe the how our state and nation are being ruled by an inbred, self-serving, self-perpetuating and bipartisan political class that plays handmaiden to public employees and their unions, which use their bulging, tax-nourished political muscles to call the tunes that legislators dance to.

 

Of course the Michigan State Police are part of that tune-calling government class – don’t let the fancy uniforms fool you.

In short, we are burdened with a “DROP” program because legislators abandoned their fiduciary duty to be responsible stewards of the public fisc and gave away a huge pile of loot to a powerful public employee union.

The rationale under which that caper was foisted on taxpayers was that Michigan State Police are eligible to retire and collect their pensions after just 25 years of service with no minimum age. As a result it’s not uncommon to have age 40-something men and women in the prime of life eligible to call it a career and head for the beaches, spending the last 35-40 years of their lives lounging at taxpayer expense.

Needless to say this causes potential staffing problems at the MSP. Rather than fix the problem in a rational and fiscally prudent way – establish a minimum age of say 55 or 65 before an individual can start collecting a pension – the political class gave away some boodle in the form of a goofy DROP program as an incentive to keep troopers working.

Pretty sweet deal, huh? Sweet for the troopers, but not for the taxpayers. And just one more example of why you should never believe a politician who says, “Our budget has been cut to the bone.”   

55 Taxes On You; 116 Licensure Mandates

This list of taxes floated in on an email chain. It was accompanied by a stunning observation: None of these taxes existed 100 years ago.

 

This is the kind of thing that happens when the people lose control of their government. One tax is not on the list: the “future generations tax,” which we call the “deficit.”

 

Accounts Receivable Tax
Business income tax

Business Gross Receipts Tax

Business Tool and Equipment Property Tax,

(aka “personal property tax”)

Building Permit Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Excise Taxes
Federal Income Tax

Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax (currently 44.75 cents per gallon)
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Transfer Tax
Service Charge Tax
Social Security Tax
Road Usage Tax
Sales Tax
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Use Tax

Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax

  – HT- Jerry O’Neil, Chip, Trish

 

To this list I’ve added an incomplete list of occupations that a person is prohibited from entering in Michigan without paying an annual license tax, and jumping through hoops established by the incumbent professionals the new applicant would compete with. It’s in the jump-page.

 

Tea Party movement: Focus on defeating pols, not electing them

Perhaps the most powerful image from the Tea Parties is the video of South Carolina GOP Congressman Gresham Barrett being relentlessly booed at the Greenville event.

Some are suggesting that the way to give the Tea Party movement long term impact is by using it to encourage people to run for local office. Gresham Barrett’s smackdown suggests that defeating candidates may be more effective for getting at the real root of the problem, which is incentives within the system that push whoever’s in office to do the wrong things.

Electing a few sterling characters won’t change that. But if one or a bunch of political establishment hacks get “taken out and shot” - figuratively speaking, of course - that does change incentives, and behavior.

Milton Friedman said it well:

“I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or if they try, they will shortly be out of office.”

Turn that around and the point becomes clear: It needs to become politically unprofitable to do the wrong things. At this moment the most important thing about an election is not who gets elected, but who gets defeated. So rather than electing candidates, the movement should make defeating them its goal.

This applies to incumbents and also to open-seat races, where the front-runner is almost always a member-in-good-standing of the political class. Make that identity the issue, and defeat those people. Make political-class membership a political death sentence for candidates.

Back to that SC congressman being booed at the Tea Party: Talk about “changing the climate of public opinion” – that kind of thing is an incentive changer, especially if it marks the beginning of the end of this establishment pol’s career.

After the Tea Party – General Strike?

Atlas shrugs for a day, or half a day?

At the Lansing, MI tea party I saw thousands of solid middle class citizens, mostly in their 40s, 50s, 60s.

People who have worked all their lives, followed the rules, tried to build a nest egg. These truly are the Atlases who carry America’s economy.

What if they all took a powder for a day?

What if every small business closed for a day?

Maybe even just an hour. “Shrug-Out” on July 14?