Finding Anecdotes and Solving Problems

by: Matt Singer

Mon Aug 30, 2010 at 11:50:48 AM MST

Interesting story today, forwarded to me by Eric Feaver, that focuses on a fairly small number of public employees with large pensions while downplaying the more typical numbers. The headline focuses on one retiree who gets over $100,000 from the system, but here's the real nut:

However, for all retirees the mean was $16,484 in the PERS and $22,631 in the TRS and $12,238 for the median in the PERS and $22,546 in the TRS, according to the report.

MEA-MFT is promoting a plan to require longer terms of work in the system to qualify for full retirement benefits and some other reforms to make the system work better. I'm not deeply familiar with them, but the state would be wise to work with these stakeholders, not beat up on them.

Separately, the larger question of socking away money (either through large public accounts or private individual accounts) in the stock market as a plan for retirement has its shortfalls. Check out this chart of the Dow Jones Industrial Average for the past decade to get a sense of just what might be problematic with relying on the stock market for perpetual growth.

Putting more money into a place that seems to be short on actual investment opportunities of late won't lead to growth. It will lead to more bubbles and more pain as people watch their portfolios collapse. I'm skeptical in general of the value of pushing more people in to 401Ks. Part of Social Security's good sense is to operate as a ponzi scheme that captures long-term productivity gains. We can't run all of our retirement operations like that, but we may need to run more of them.

Why Rehberg Can't Balance the Budget

by: Matt Singer

Mon Jun 28, 2010 at 12:52:41 PM MST

But there's something very frustrating about engaging in politics with people who pay lip service to big challenges and even lie about history. Here's an AP writeup on Congressman Rehberg's budget solutions:

Rehberg, a Republican seeking his sixth term as Montana's lone representative, said slashing taxes on corporations, capital gains and payrolls while balancing the budget is the solution. He said those types of measures were used in 1961, 1981 and 2001.

Now, it is true that tax rates were cut in 1961, 1981, and 2001. JFK pushed to cut the top marginal rate, for example, to something like 33% higher than the current rate. JFK did this while continuing to run surpluses and pay down the debt.

But let's look at what happened in 1981 and 2001:

We cut taxes and...didn't balance the budget.

Look -- in the near term in particular, I have absolutely no problem running deficits. Hell, I think we should run deficits. But planning for the long-term by advocating for specific tax cuts and only vaguely referencing spending cuts is not a plan to balance the budget. It is really just a very limited plan to expedite a great transfer of wealth from poor to rich in this country.

But the question of how to balance the budget is one we can have a serious discussion about. I had one of those on Saturday. Sadly, it looks like our Congressman had the opposite kind of conversation - absolutely nothing but empty rhetoric and misleading information.

Saturday's Budget Forum -- The Good News

by: Matt Singer

Mon Jun 28, 2010 at 09:26:02 AM MST

Let me note that I was at a pretty ideologically diverse table. Our group included a few Missoula non-profit types like myself, a successful businessman who lives in the Bitterroot, a retired teacher, and several people who I think can be fairly called "tea party" activists, including one fairly prominent leader in Western Montana.

Despite those divergent viewpoints, the process, the facts, and our discussion led our table to what I think was a pretty forward-thinking approach to the long-term budget difficulties our nation faces. Namely, we supported a carbon tax, significant comprehensive tax reform (end deductions, lower rates, simplify the process, and pay down the deficit), a financial transactions tax, cuts to defense spending, the removal of the income cap on social security payroll taxes, and a few other measures.

Showing my trademark optimism, I predicted that the new health care bill would work better than CBO predicts to rein in federal health care expenditures on its own (meshing with a long history of CBO scoring items in a conservative way, as they should).

But long story short, a bunch of people showed up to a 6 hour budget discussion, evaluated a whole bunch of options, and nationally voted overwhelmingly for really positive solutions.

I left pretty convinced of a few things. First, that we should be organizing more events to educate people about the state of the budget and challenging them to find solutions -- at both the state and the federal level. Second, that it really is still possible to have meaningful political dialogue with people with pretty divergent views -- especially when there is a common task to be achieved, not simply a debate to be had.

The full national results are here. I don't think they read like a lefty wet dream of how to address our common challenges. But I do think they represent a pretty reasonable set of principles we can move forward with. I can quibble with some of the specifics -- I'm not inclined to raise the retirement age on social security, at least not across the board. But the broad sweep isn't bad. And for a set of compromises reached across the nation by 3,500 people, I'm actually fairly impressed.

Finally, Congress should take heed -- when this group was asked whether the federal government should take more immediate action to reduce unemployment, even if it increased the near-term deficit, the answer was a strong "Yes!" Give the Senate's recent inaction, folks in DC should pay a bit more attention.

Eye on 2011: $400 Million Gap

by: Matt Singer

Tue Jun 15, 2010 at 11:12:42 AM MST

But Washington, DC, seems cowed by short-term deficits and is willing to accept lots and lots of pain in order to avoid offending hypocrites like Congressman Rehberg, who supported deficit spending during good times only to oppose it when we need it (actually, this isn't so much hypocritical as it is stupid or opportunistic).

Regardless, we've got some painful options in Montana. One proposal I saw would make up less than 1/3 of the gap by cutting state support for education by roughly 1/3. That lost money would presumably be made up by either massively jacking local property taxes, consolidating classrooms, or simply killing children perhaps. I'm not sure how we ask schools to take 15% cuts to their budgets without significantly decimating their mission. Perhaps an "expert" on the right can inform me.

There are another set of options that need to be on the table -- eliminating the oil tax holiday; cracking down on high-income folks, especially non-residents, who got great tax breaks out of the Martz Administration; and maybe even a real estate transfer tax on high-end property sales.

The reality is that we can make some cuts, but we already run this state in a pretty lean fashion. I had a 1.5 hour wait at the DMV recently. I'd hate to turn that into half a day over budget cuts.

There will be a lot of meaningless rhetoric thrown around about waste in government. Here's my advice for anyone who honestly is aware of waste in government -- share your information with the Governor's office, with your legislator, and with MPEA and MEA-MFT. These folks will be looking more than anyone to eliminate true waste this year in order to move resources into valuable programs.

But vague sentences about waste don't actually help anyone find it. And if we just pull out a chainsaw and start cutting in the hopes of eliminating waste, my sense is that we'll cut a lot of damn important stuff out as well.

Update -- And here's Paul Krugman explaining why more stimulus is a good idea since many folks seem to think that we need to piss our pants over deficits these days.

Congressman Deficit Redink Freaking Out About Projected 2013 Shortfall

by: Matt Singer

Fri Apr 23, 2010 at 16:02:08 PM MST

The health reform bill that I voted against included $5 billion for a temporary high risk pool for people with preexisting conditions.  That money was supposed to last through the 2014.  But this money is expected to run out by 2012.

Meanwhile, an attempt to verify Congressman Rehberg's claims results in one story...in the Clark Fork Chronicle...with a byline from...Jed Link, Rehberg's communications staffer.

Hmmmmmmm.....

Regardless, I don't think any of us are eager about there being a shortfall in those funds, but it does seem like it would be hard to know if the shortfall will happen before it is clear how many states are going to use them. And I'm not sure that we'd be better off eliminating high risk pools.

But forget about that. I'm just curious what Rehberg has done in the past ten years about the deficit other than basically create it by voting for tax cuts for rich people (or, as Rehberg calls them, his peers), two wars, or an unfunded prescription drug benefit.

Did Brian Schweitzer Just Jump the Kingfisher?

by: Matt Singer

Thu Apr 01, 2010 at 08:37:37 AM MST

But prioritizing public infrastructure projects in terms of local governments' support for political agendas is just beyond the pale.

This whole thing has left a really terrible taste in my mouth. I know I'm not alone on that front.

George Ochenski's editor has termed it "blackmail." I think the term they were looking for is "extortion."

Apropos of nothing...

by: Jay Stevens

Thu Feb 25, 2010 at 10:34:42 AM MST

Turns out "convervative" to "very conservative" Americans actually like big government:

Very few conservatives said they favored reducing (or cutting out altogether) spending on any program. The least popular program proved to be childcare -- with a grand total of 20 percent of conservatives saying they'd slash it. The most popular is highways; only 6 percent want to cut spending there. Even bugaboos like welfare and foreign aid fare well, attracting the ire of only 15 percent of conservatives. Amazingly, the survey found that, on average, 54 percent of them actually wanted to increase spending.

Not a surprise, actually. It's fun to trash "big government," call for "reduced wasted spending," but it's another to actually go ahead and do something about it.

Of course, the mainstream conservative movement is hopelessly befuddled when it comes to policy.

Rehberg Decries Stimulus as "Failed" While Touring Jobs Project Funded with Stimulus Dollars

by: Matt Singer

Thu Feb 18, 2010 at 10:48:49 AM MST

Number one suggestion..stop spending money on failed stimulus. Tax relief!!

Beyond that, the spending in the stimulus didn't fail, unless our Congressman is advocating for cutting short COBRA subsidies or unemployment insurance. Hilariously, Congressman Rehberg tweeted this yesterday, around the same time he was touring the stimulus-funded Northern Hotel renovations:

When the two reached Nelson's basement office, Rehberg's work began. The congressman inquired about what the government could do for the Northern, promising to have a staffer look for grant options and Department of Energy assistance.

A year ago, by cooperating with the city of Billings, the Northern was able to sell $20 million in tax-free "stimulus bonds" to pay for the hotel's remodeling. Investors like the government-backed, tax-free bonds, which were made possible through the American Recovery and Reinvestment Act of 2009.

Even worse, our Congressman is apparently aware that he's full of it:

In an interview with The Billings Gazette editorial board Tuesday, Rehberg, who opposed the ARRA and is advocating a shift toward tax cuts, said the construction projects funded by the ARRA had merit....

And keep in mind when Rehberg rails about government spending that his office repeatedly calls for higher spending on numerous programs. This guy is absolutely all over the map.

Congressman Rehberg Calls for Reducing Deficit by Increasing the Deficit

by: Matt Singer

Sun Feb 14, 2010 at 12:40:06 PM MST

Congressman Denny Rehberg
HAS A SOLUTION TO OUR DEBT PROBLEM:
STOP SPENDING AND BALANCE THE BUDGET!

Congress can decrease the deficit and decrease the debt by:

   * Freezing non-defense discretionary spending
   * Reforming "entitlement" spending
   * Increasing tax incentives for small businesses
   * Lowering taxes for hard-working Americans

Obviously, some practitioners of voodoo economics will argue that resulting improvements in economic growth will make up for any loss of revenue, but the math here is quite fuzzy and, at the tax rates currently levied in the United States, almost certainly inaccurate. There are policy arguments for cutting taxes and accepting the deficits, but we're almost certainly on the wrong stretch of the Laffer curve to have tax cuts actually increase revenue.

But let's look at the other two proposals, starting with the discretionary non-defense spending freeze. First, this is an Obama proposal. Second, in terms of the budget, it's virtually meaningless. Check out this interactive budget graphic from The New York Times. Look at the overall budget, then click on the "Hide Mandatory Spending" button. Now, pretend that the National Security and Veterans Benefits (I'm presuming Rehberg isn't advocating freezing spending on Veterans). Look at what a small share of the budget is left. Now remember that we're not slashing this, we're freezing its growth.

So, not really a big deal.

What's the last proposal? Entitlement reform.

Where to begin with this one? Entitlement reform is GOPese for "cutting Medicare and Social Security," often through privatization. Depending on the particular privatization scheme with Social Security, there's a good chance that Rehberg's proposal would actually increase costs.

But let's just keep in mind that any savings on the Social Security front are likely to be minimal. The real driver of costs within the long-term budget is Medicare (which is one of the big reasons I favor health care reform). Rep. Paul Ryan, the House Republicans' point person on the budget, solves this problem by voucherizing Medicare and freezing its spending, a proposal that has the virtue of balancing the budget solely through spending cuts. Of course, Rehberg has also played politics by pretending to oppose any reduction in Medicare services. Instead, he'll just destroy the program in wholesale fashion.

One last point, despite Paul Ryan's ability to balance the budget solely with spending cuts, it is worth knowing that he had to instruct the CBO to assume no revenue reductions, which means no tax cuts.

In short, Montana's Congressman is pushing fiscal snakeoil. No surprise there. As Tyler Gernant put it a few weeks ago:

While Rehberg claims that fiscal responsibility is at the core of his being, Gernant said he voted for "a massive tax cut for the wealthy that completely eliminates our budget surplus and returns us to deficits."

Gernant said Rehberg voted to put two wars on the country's credit cards and voted for a pharmaceutical drug plan that lets the big drug companies charge the U.S. government whatever they want.

Sadly, politicians rarely explain the federal budget to constituents. Neither, really, does anyone else. That means we're left with misleading crap like this being peddled instead.

Happy Valentine's Day!

Oregon Voters Say Hell Yes to Taxing the Rich

by: Matt Singer

Wed Jan 27, 2010 at 09:58:40 AM MST

Oregon voters bucked decades of anti-tax and anti-Salem sentiment Tuesday, raising taxes on corporations and the wealthy to prevent further erosion of public schools and other state services.

The tax measures passed easily, with late returns showing a 54 percent to 46 percent ratio. Measure 66 raises taxes on households with taxable income above $250,000, and Measure 67 sets higher minimum taxes on corporations and increases the tax rate on upper-level profits.

Oregonian Jonathan Singer offers his take at MyDD:

The message out of Oregon, like the message out of Massachusetts, is resonating: Voters are in a populist mood right now -- not an anti-government one, necessarily, but a populist one nevertheless. The progressive brand of populism that resonated with Oregonians this month is slightly different than the one that rang true in Massachusetts. Yet the message is just as clear.

The real question now is whether DC will listen, or if instead it will continue to cling to its common wisdom.

You want to win? Hone your messaging, mobilize your base, and even in a recession, we can hike taxes on the rich to pay for necessary services.

Thanks, Oregon, for the good news.

Schweitzer on Republican Fundraising Letter:They want someone who can actually balance a budget

by: Matt Singer

Tue Jan 26, 2010 at 10:35:15 AM MST

Efficiency in Government Competition

by: Matt Singer

Mon Jan 25, 2010 at 10:29:26 AM MST

Mike Jopek is proposing moving a lot of state money into local banks in order to free up capital for Montana small businesses. This is less of a savings idea and more of a combination of economic development/fuck you to Wall Street.

What else can the state do? What should they consider?

Special Session Crystal Ball

by: Yellowstone Kelly

Mon Jan 25, 2010 at 07:13:47 AM MST

He's ready to cut the budget to make sure the state's checkbook is balanced.

He says he is looking high and low for ways to save money. (And, yes, a news release pronounces each one he finds.)

He'll continue to give it his best, but in the end, it won't be enough.

And, guess what?

Special session time.

My bet is that it will occur in mid-April.

That will be after the end of the first quarter of the calendar years. Revenue will continue to stagnate and decline. Couple that with larger than estimated tax refunds for 2009 and you have the makings of a first rate fiscal disaster.

The Governor is allowed only to make funding reductions on about 65 percent of the general fund. That total does not include monies distributed by the state to local school districts, all 438 of them. This total amounts to hundreds of millions of dollars annually. After the first week in May, it would nearly be impossible to change the total number of dollars each district would otherwise receive.

Without dipping into the basic state aid for school districts, the Executive cannot fix the state's checking account problem without practically shutting down the state's human services and corrections programs.

As the fiscal picture continues to deteriorate, there will be more and more pressure to spread the pain.

The Governor will be forced to bring is his pals with the temperament and knives to forge a fix during weeklong session.

The question remains: Can he work with another 150 fellow Montanans fix it? And, how?

Cant' wait to find out.

Montana Budget & Policy Center: State Only Needs $15 Million in Budget Cuts

by: Matt Singer

Fri Jan 22, 2010 at 09:49:41 AM MST

MBPC has some other suggestions, including warnings that excessive cuts may cause negative ripple effects as well as some guidance as to where to target initial cuts.

Game, Set and Match

by: Montana Cowgirl

Thu Jan 14, 2010 at 16:46:27 PM MST

Then, a new chapter in Tennisgate.  You'll recall Republican Bozeman Mayor Jeff Krauss got into trouble recently when he chose to spend stimulus money on a new rubber-tiled tennis court.  Schweitzer publicly chided this expenditure, and the Mayor ended up having to defend himself on Fox 'News'.  This past Monday the volume was amplified when Schweitzer decided to attend, as a citizen, the weekly City Commission meeting in Bozeman.

According to several observers, Schweitzer was first accosted outside of the meeting room by Commissioner Chris Mehl, who cursed at him, saying:

"what you are doing is bullsh**, Governor."

(Mehl obviously takes his tennis very seriously).  

When the meeting came to order, Schweitzer waited in the back of the room as six or seven proponents of the tennis court project gave their testimony.   Then it was Schweitzer's turn to speak.  The only opponent present, Schweitzer said that he, as a property owner in Bozeman and a tennis player, supported fixing the courts, but believed such a project was inappropriate use of federal stimulus funds. The house was packed mostly with Krauss partisans, and there was some hooting and hollering as Krauss and Mehl tried to razz the Governor, questioning him from their perches.   Whatever you think of Schweitzer, this much can be said:  not many gunfighters would walk into a saloon like this one.  

Krauss and Mehl, in what a number of people saw as disrespectful behavior toward a Governor, started interrupting Schweitzer and attempting to pepper him him with spicy one-liners.  But Schweitzer, who did not interrupt the commissioners, hushed the crowd when he said:

"Just because somebody puts a chocolate cake in front of you, doesn't mean you have to eat the whole thing,"

Personally I think Krauss has picked a stupid fight.  The Governor's position on this issue is very popular, even in Bozeman where the Chronicle online poll of over 900 respondents shows a 74-26% vote against the tennis project.  Plus, it turns out that the tennis court contract was awarded to a Minnesota firm, meaning no Montana jobs would be created.  

Finally, if Krauss has aspirations beyond city council, he is going to have a tough time. As of now, the notable items on his resume are 1) spending stimulus money on tennis,  and 2) a city policy that required all job applicants to hand over their passwords to their e-mail and facebook accounts.  

That resume won't get you very far in a Republican primary.  

Fixing the Federal Budget

by: Matt Singer

Wed Jan 13, 2010 at 14:09:09 PM MST

CBPP is run by smart economists, so they open the report with a giant disclaimer that near-term deficits really aren't a big problem:

Reducing deficits in the short term, however, would undercut the fragile economic recovery. Policymakers should tolerate large deficits over the next several years in order to maintain strong aggregate demand until the economy is back on its feet. Moreover, they can take comfort in the fact that temporary measures intended to aid recovery add very little to the long-term deficit problem. The increase in deficits for several years pales in comparison to the size of the economy over the long run.

The "fiscal gap" - defined here as the average amount of program reductions or revenue increases that would be needed every year over the next four decades to stabilize the debt at its 2010 level as a share of the economy - equals 4.9 percent of projected GDP. That is a very large amount. To eliminate that gap would require a 28 percent increase in tax revenues or a 22 percent reduction in program (non-interest) expenditures over the entire 40-year period from now to 2050 (or, more realistically, a combination of tax increases and spending cuts).

The big problem here is not current spending areas. It is specific inflations and population growth among certain populations.

Basically, the problem is health care inflation:

Rising health care costs are the single largest cause of rapidly rising expenditures, and ongoing reform of the health care system is absolutely fundamental to any solution. The two main sources of rising federal expenditures over the long run are rising per-person costs throughout the U.S. health care system (both public and private) and the aging of the population. Together, these factors will drive up spending for the "big three" domestic programs: Medicare, Medicaid, and Social Security. Growth in those programs accounts for all of the increase in federal spending as a share of GDP over the next 40 years (and beyond).

The current health care bill is the single biggest deficit reduction act in the history of the nation. A whole bunch of conservatives paying lip service to deficit concerns are about to vote against its final passage.

Soooooooo frustrating.

Latest from the Genius who Tried To Require Job Applicants to Turn Over Facebook, Email Passwords

by: Montana Cowgirl

Wed Jan 06, 2010 at 21:57:49 PM MST

The Bozeman mayor is now touting an appearance on Fox and Friends in defense of a fancier tennis court in Bozeman.   I guess this guy would rather see the state cut Meals-on-Wheels? Bozeman Republicans are too much!

He attempts a "defense" of his actions on 4 & 20 Blackbirds.  However, his defence fails to explain how an out-of-state contractor building a tennis court in Bozeman will stimulate Montana's economy.

Krauss writes:

Bozeman's general fund budget dedicates an average of about 9% each year to parks and recreation. We have two swimming pools, many parks, baseball and soccer fields, tennis courts, ice skating and hockey rinks and miles of trails and bike lanes.

***UPDATE: Wulfgar pointed out that Krauss is now the mayor of Bozeman and that he did appear of Fox News.  Wulfgar also says this guy was vehement about correcting the fiasco after it happened, and if so that's good at least, though it would have been better to prevent it from happening in the first place.  You can see his apology here from the article I linked to above:

"I'm sorry that we couldn't get in front of this quicker. When Thursday came around and we tried to answer the questions from the national press, before we started defending it on Thursday night, I'm sorry we missed that opportunity to apologize and by Friday much of the damage had been done. What really is needed now from us to the community and the state is that we apologize for wandering down a road that violated basic rights of our citizens and we will do all we can to restore that public trust," Deputy Mayor Jeff Krauss said.

Basic Good Financial Management

by: Matt Singer

Sat Jan 02, 2010 at 10:46:09 AM MST

Sound financial management isn't everything, but accomplishing other outcomes without it is really, really hard. Different management in this state in recent years would have put us in a place where we'd either be raising taxes right now or cutting truly core education, corrections, or health care functions (what's the old saw, state government educates, incarcerates, and medicates?). We're not being forced to do that right now. Good news for all of us.

And something worth keeping in mind as people battle it out for the state house. Ask them about how they want to manage the state's finances. If tax cuts is the whole answer, ask for more detail.

Unemployment Dropping (?), Tax Revenues Too (!)

by: Matt Singer

Fri Dec 04, 2009 at 10:22:16 AM MST

The news is far more mixed in Montana, where tax revenues are down and are likely not to recover fully until 2015. Some of this is economic in nature -- when people are making less money, the same tax rates will collect fewer dollars. But some of it is policy -- we've cut taxes in this state a lot over the past 15 years, although not very often for most Montanans.

Some Budgetary Perspective

by: Matt Singer

Fri Oct 23, 2009 at 12:55:25 PM MST

The Senate on Thursday sent the massive 2010 Pentagon policy bill to the president's desk for signing. The Senate approved the bill authorizing $680 billion in defense spending by a vote of 68-29.

Cato's Chris Preble writes:

All told, every man, woman and child in the United States will spend more than $2,700 on these programs and agencies next year. By way of comparison, the average Japanese spends less than $330; the average German about $520; China's per capita spending is less than $100.

Some of that is reasonable. Unlike Chris Preble, I'm not an avowed opponent of U.S. military domination. I think the U.S. is a relatively enlightened hegemon and I think unipolar worlds offer some useful stability.

But the Defense budget in the U.S. is wildly out of control in ways that do nothing to advance American interests. That means that we're spending a lot of money we don't have to.

Fighting to focus the defense budget on...defense instead of on it being a massive jobs program for private military contractors is one of the most underrated social justice issues of our time. Tackled properly, it could be a real game changer in positive ways for the nation.