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Willisms

« December 2010 | WILLisms.com | February 2011 »

Trivia Tidbit of the Day: Part 921 -- Even Lean State Governments Can Cut.

Misinformation Running Amok-

Yes, it's true that Texas government spends less per person than any other state. Yes, Texas government is already relatively lean, when you look at left-of-center states.

But Texas is going to be able to trim and cut and slow the future growth of government. And it's not going to be the end of the world.

Take education, the biggest expenditure of Texas state government. Most education funding decisions are conducted at the local level, but the state picks up a giant portion of the tab through a relatively convoluted property tax system.

But-- the children. Won't they all be thrown out into the streets if there are school budget cuts?

No.

And, if you're talking about central Austin, there are several schools where there aren't all that many kids.

Statewide, there's plenty of room to cut:

enrollmentversusexpenditures.gif
In the last decade, total spending rose nearly five times as fast as enrollment (95.3 percent versus 19.7 percent).

Yes, Texas is a fast-growing state, but we're spending a lot more money per student than we did ten years ago, even when adjusting for inflation:

expendituresperpupilversusinflation.gif
Public education can be trimmed. It's not the end of the world. Higher education can, too. And the other big item in the Texas budget-- Medicaid/S-CHIP -- can also be trimmed, slowed, etcetera.

As for the newfound interest of Paul Krugman and other folks in the Texas budget situation, I just really wonder if they'll hang around to their their crow. In 130 days or so, Texas will have a balanced budget, and all the talk of "shortfall" or "deficit" will vaporize. And as for the "Texas covered its shortfall last time with stimulus dollars," Texas was and is a donor state, meaning we send more to Washington than we get back. If there are use-them-or-lose-them stimulus dollars going around, assuming there aren't strings attached (cough, UI) that will force the state to change our programs and/or eventually pay more than we would have otherwise, it would be asinine to not use those funds out of principle.

So when people say that Texas' budget shortfall was conveniently very similar in size to the federal stimulus in 2009, they are getting it exactly wrong. Texas simply balanced its budget with the funds it had on hand. Since Texas basically starts over every two years, and since we have a balanced budget requirement in our state Constitution, spending what what the state has in revenues is just standard operating procedure.

That's how this works. Texas looks at how much money it has to spend, regardless of the source of the money, and it spends no more than that amount. Recently, Texas' expenditures have actually been less than revenues, which is why the state has a $9,000,000,000 Rainy Day Fund "surplus."

As for the absurd notion that Texas relied most heavily on stimulus dollars of all the states, that is just total and complete bunk.

Indeed, Texas is one of just a few states to reject any stimulus dollars whatsoever, Texas accepted the second lowest level of stimulus funds in the nation, per capita, and Texas ranks in the bottom quintile of federal pork flowing into the state.

How is that so hard to understand, and so easy to mangle into some sort of weird argument about hypocrisy or failure?

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Previous Trivia Tidbit: Unions Lead To Slower Growth.

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Posted by Will Franklin · 25 January 2011 05:58 PM · Comments (2)

Trivia Tidbit of the Day: Part 920 -- Unions Shrank Again This Year.

Fewer Unions, More Rapid Growth-

Michael Barone puts some figures behind what we already know:

unionversusgrowth.gif
The Bureau of Labor Statistics is out with its annual report on union membership. It’s down, once again: 11.9% of employees in 2010 were union members, down from 12.3% in 2009. There were 14.7 million union members, significantly down from 1983, the first year for which comparable data is available, when there were 17.7 million. Note that the population of the United States in 1983 was 234 million as compared to 308 million in 2010.

In 2009, for the first time, a majority of employed union members were public employees. The trend continues: in 2010 there were 7.6 million public sector union members and 7.1 million private sector union members.

Unions are not so much factory folks these days. More and more, union members are government workers. Union-heavy states perform poorly (economically and demographically) relative to right-to-work states.

We can absolutely universalize this. Labor unions could hypothetically be useful, but in reality big labor is anti-trade and unfriendly to free markets.


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Previous Trivia Tidbit: Texas Versus California.

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Posted by Will Franklin · 24 January 2011 12:44 PM · Comments (0)

Trivia Tidbit of the Day: Part 919 -- Texas Versus California.

The Texas Model-

Look at Texas versus California (and the rest of the U.S.) over the past decade:

decadeofeconomicgrowthcomparisons.gif

Seriously, the strange giddiness on the left over the fact that Texas is going to cut government spending is one of the more puzzling things I have seen in a long time. Texas is exactly the model for how to do things. We have a balanced budget amendment, so when revenues fall or stagnate, government spending falls or halts. It's not rocket science. It's why Texas is the best big state in America, economically.


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Previous Trivia Tidbit: Texas' Budget.

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Posted by Will Franklin · 20 January 2011 04:28 PM · Comments (0)

Is Hillary Clinton Talking About The Middle East, Or The United States?

The Tunisian revolution has been intriguing to watch. President Zine El Abidine Ben Ali is one of the few dictators to fall since the Democrats took power in 2006 and took our country in a new direction. Since Obama has been in office, you've seen almost zero action on the global liberty movement front. Indeed, Obama has been uninterested (to the point of negligence) in human rights, especially in the Middle East. Obama's administration seems to favor the old "he's a bastard, but he's our bastard" approach to foreign policy, ranking stability as the ultimate goal and rejecting President Bush's vision for a freer world.

Lee Smith at The Weekly Standard wonders whether Hillary Clinton is more of a Bushie than an Obama-ite:

Thursday afternoon in Doha Secretary Clinton fired a shot across the bow of the Arab political order.

In the Middle East, Clinton said:

one in five young people is unemployed. And in some places, the percentage is far more. While some countries have made great strides in governance, in many others people have grown tired of corrupt institutions and a stagnant political order. They are demanding reform to make their governments more effective, more responsive, and more open. And all this is taking place against a backdrop of depleting resources: water tables are dropping, oil reserves are running out, and too few countries have adopted long-term plans for addressing these problems.

In taking the side of Arab individuals against their ruling regimes, Clinton was reminiscent of the most optimistic days of the Bush administration’s freedom agenda, circa 2005. It is worth wondering what Clinton’s words might have indicated to both the regime and its opponents.

Indeed. And the story of Tunisia is an interesting one. But this post is not about Tunisia. It's about Hillary Clinton's assessment of the Middle East at large.

Hillary Clinton said, "young people have a hard time finding work. In many places, there are simply not enough jobs. Across the region, one in five young people is unemployed. And in some places, the percentage is far more."

One in five young people is unemployed, eh?

Is she really talking about the Middle East, there?

Unemployment at large in the United States is nearly 10%, while nearly 20% of those under the age of 25 are unemployed, and more than a quarter of teens are unemployed:

The unemployment rate for African American youth is even higher at 50.4% percent. Half of African American youths that are actively seeking employment are unable to get hired.

America really needs to fix this, if this is something we're going to lecture other countries about.

Posted by Will Franklin · 17 January 2011 04:22 PM · Comments (0)

Trivia Tidbit of the Day: Part 918 -- Texas' Budget.

The Texas Model-

Texas Comptroller Susan Combs estimated today that the state's general revenue would be about 72 billion dollars over the next two years. Liberals-- ironically-- are practically giddy right now, because they believe Texas needs to spend a hundred billion over the next two years, and they think the gap proves that Texas is a failure and all of that. Paul Krugman, in particular, has been rubbing his moustache, Snidely Whiplash-style, over the notion that Texas is proving that conservative fiscal policy is a failure. The ultra-liberal CCCP or CPPP or whatever they are called says we need $99 billion over the next two years, therefore there's a 26 point something billion dollar shortfall.

Hold your horses, folks.

As Kevin D. Williamson notes, Texas is not at all broke, and the "shortfall" is just part of what keeps Texas from having actual deficits and debt:

Texas doesn’t do shortfalls. Texas starts from scratch: Every year is basically Year Zero when it comes to the state budget — there is no assumption that next year’s funding will match or exceed this year’s, and the state’s constitution explicitly forbids any legislature to tie the hands of a subsequent legislature, financially or otherwise. When necessary, Texas implements zero-baseline budgets, in order to keep the state living within its means, even if Paul Krugman thinks it beastly.

As I posited earlier today on Twitter:

A good shortfall every now & again is cleansing. Government needs significant downsizing every few years, especially after years of economic boom.

and

The brilliance of Texas: we actually stop growing our government when revenues stall. And CPPP can't dictate perpetually higher spending.

Texas will have "shortfalls" every now and then, based on official revenue estimates and liberal spending wish list estimates, but we're never going to have actual deficits. Eight years ago, Texas faced a 10+ billion dollar "shortfall," but ended up with a huge surplus and a booming economy thereafter in reality.

Here are a few figures to explain what's going on here:

texasspendingtotals.gif

If you look at just government spending without recognizing that Texas has added millions of people and otherwise boomed over the past decade, it has exploded. If you adjust for population growth plus inflation, it's still grown, but at a much more reasonable pace. This graphic above counts state revenues plus federal revenues. Yes, Texas receives gobs of money from the federal government, but we're still-- ultimately-- a donor state, especially in highway funding. Many of these federal dollars are simply paying for federal mandates and state-administered federal programs, like Medicaid.

Texas government has grown over the years, albeit at a reasonable pace, even when adjusted for economic and human growth in our state.

Shouldn't the goal be, though, to hold government's growth to at or below population plus inflation growth? It's an easy thing to talk about, hypothetically, but even conservative legislatures rarely do it.

In Texas, though, a "shortfall" combined with our Constitutional requirement to balance the budget, means that we can actually make cuts. Real cuts. Because we have to. And that's a good thing. That's how it's designed to work.

So let's look at that 72 billion in context. It's somewhere between what we spent in the 2006-2007 biennium and the 2008-2009 biennium:

texasgeneralrevenuespending.gif

It should also be noted that Texas still has a Rainy Day Fund of around $9 billion, but as Williamson notes, we can probably leave it untouched as we trim government:

Texas’s low-B.S. approach has had some salubrious effects, as I’ve documented here and here. It also left Texas with surpluses that allowed the state to put about $10 billion in its rainy-day fund, which could come in handy now that the economy seems to be clouding up a little. Could, but probably won’t: Republicans plan to introduce a budget that comes in within current revenue without touching the rainy-day fund. Get your head around that: There’s a multibillion-dollar pot of cash sitting there in front of politicians who must be just slavering inside at the thought of it, and they aren’t going to touch it — even though they have a pretty good excuse. Imagine a Congress that could do that.

In 141 days, Texas will have made cuts, and I am sure there will be innumerable editorials written about how this is the apocalypse and Texas will fall into the Gulf of Mexico due to these cuts. The children will suffer and the poor will all die of starvation out in the cold. The budget is already to the bone, they will say. Businesses will leave our state and go to California and Michigan. All of that.

But what will happen in reality is that the budget will be trimmed, Texas will have a balanced budget, and the trend line will show that government is still far larger than it was a decade ago, and maybe even a significantly larger than it was a decade ago after adjusting for inflation and population growth.

And the sky will still be in place, unfallen. Texas won't have a deficit. Texas won't borrow its way out of this. Texas will continue attracting businesses and jobs and people faster than any other state. And we'll all live happily ever after.

So take a deep breath. Reach zen, even, if that's your thing. Yes, there is work to be done. Yes, liberals will try to exploit the "deficit" for political gain. You can tune them out without guilt, knowing what you're seeing is not a bug, it's a feature, of the fiscally-responsible, highly successful Texas budget process.

UPDATE: Talmadge Heflin at the Texas Public Policy Foundation says it is simply "false" to say there's a 27 billion dollar shortfall.

ANOTHER UPDATE: More from TPPF on how absurd this "deficit" hysteria really is.



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Previous Trivia Tidbit: Low Tax States More Successful, Even In Recession.

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Posted by Will Franklin · 10 January 2011 01:50 PM · Comments (0)

Trivia Tidbit of the Day: Part 917 -- Low Taxes Attract People, Jobs.

The Texas Model-

It's encouraging to read about new Florida Governor Rick Scott or new Ohio Governor John Kasich declaring-- in public, of all places-- that they want to lead their states like Texas Governor Rick Perry has led Texas. Tort reform. Low taxes. Etc.

It makes sense, given that the data are pretty overwhelming and unequivocal about where people are moving:

statetaxburdens-vs-growth.gif
The Gallup Organization found that all of the 10 states which lost seats are dominated by Democrats, at least in terms of party registration. Democrats, as we all know, generally tend to be in favor of higher taxes compared to Republicans.

Americans for Tax Reform has some interesting numbers showing that states losing seats in the House of Representatives have higher marginal income tax rates, higher average tax burdens, more spending per capita, and are much more likely to force employees to work for a union even if they don’t want to.

Last Tuesday, my Examiner colleague Michael Barone did a good general breakdown of income tax rates versus population growth and found that 7 of the 9 states which have no income tax all grew higher than the national average while the 2 that didn’t grew fastest in their regions.

....

Three of the ten least-taxed states—Nevada, Florida, and Texas—were among the ten-fastest growing states. None of them were among the 10 slowest growing states.

Of the 10 states with the highest tax burden, 3 of them—New York, Rhode Island, and Ohio—were among the 10 states that had the lowest population growth. Not one of them is among the fastest-growing states.

Of the 20 states with the lowest tax burden, 12 of them were among the 20 states that gained population the fastest. In contrast, of the 20 states with the highest tax burden, 8 of them were among the 20 slowest-growing states.

Indeed, Allied Van Lines just announced its annual "Magnet States" winners and losers, and the trends the Census picked up from 2000 to 2010 continued through 2010:

Everything's bigger in Texas – including its appeal as a destination for residents in 2010, according to Allied Van Lines' 43rd Annual Magnet States Report released today.

For the sixth year in a row, Texas eclipsed every other state and took the lead as the No. 1 magnet state in 2010 based on Allied's report, which tracks U.S. migration patterns.

Texas realized the highest net relocation gain (inbound moves minus outbound moves performed by Allied Van Lines, one of the world's largest moving companies) of 1,640, which is lower than the nearly 2,000 families it attracted in 2009, but it far outpaced all other states. Colorado came in second place, with net relocation gains of just over 400 and Florida, South Carolina and Arizona rounded out the top five states with the largest net relocation gains.

"Today there are more Fortune 500 companies located in Texas than any other state in the union," said Bill Dircks, president of Berger Transfer & Storage, Inc. "With our branch locations in Austin, Dallas, Houston and San Antonio, we've serviced a large number of relocations into the state this past year. A healthy business climate, coupled with family-friendly cities, makes Texas a very attractive place to work and live."

Indeed.

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Previous Trivia Tidbit: Icing The Kicker Actually Works.

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Posted by Will Franklin · 4 January 2011 02:14 PM · Comments (1)