The floundering job market
Yesterday, Lew Rockwell used his Mises Institute column to ask the question, "What's Wrong with the Job Market?"
His answer is remarkably similar to what I said a few weeks ago in an NPRI column: would-be entrepreneurs are hamstrung by the uncertainties created through a continuous deluge of policy changes that has subverted confidence in the rule of law.
Read moreInflating Nevada's budget deficit: The lie that's dying, though some keep trying; Updated
Last week I noted that the media overwhelmingly reported accurately on the size of Nevada's budget deficit.
Although the truth is now the accepted budget narrative, some in the media, including David Schwartz of the Sun, are still trying to inflate Nevada's budget deficit.
Instead of providing clarity, the Economic Forum's ruling on how much money the state can spend over the next two years set off an even more heated debate on the actual size of the budget deficit.Here's the simple math equation that liberals have consistently answered incorrectly and that David Schwartz avoids entirely in his article above.
On one side, there's Gov.-elect Brian Sandoval and conservatives who say the state has a deficit of $1.2 billion.
On the other side, Democrats and advocates for maintaining current government services say the deficit is $3 billion.
The real number is somewhere in between, about $2.2 billion, according to a Sun analysis. ...
Both sides have accused the other of using fuzzy math to further their ends.
Nevada is going to have about $5.4 billion for the next biennium when you include the Economic Forum's forecasted revenue and a little bit in surplus revenues.
In the last biennium, Nevada's General Fund spending was about $6.4 billion.
$5.4 billion - $6.4 billion = -$1 billion.
And the vast majority of journalists in Nevada have reported this correctly - Nevada faces a $1 billion deficit, or about a 17 percent budget gap, not including the $200 million in additional Medicaid funding that Sandoval has pledged to spend.
The problem with Schwartz's reporting on the $1.2 billion, $3 billion and $2.2 billion deficit figures is that he assumes a budget with a $2 billion spending increase and works from there.
Outside of government, no one budgets this way - it's the difference between real and government math.
Schwartz's conclusion, then, is based on his assumptions about the political mood of Nevada's leaders.
The $480 million savings from furloughs and pay freezes is virtually assured to be extended. So we can subtract that from the $3 billion.Do you see the danger in that kind of thinking? He's subjecting numbers (and what constitutes a deficit) to his thoughts, err ... a "Sun analysis," on what is going to happen politically.
The state has made new projections improving the budget outlook, further reducing the number. Still, the 10 percent ($820 million) cuts Sandoval is including seem a generous assumption - especially considering such a proposal will have to make it through the Legislature.
Same goes with the $175 million cut in higher ed. Students, faculty and school boosters won't let that happen without a fight.
So add back that combined $1 billion in proposed cuts to Sandoval's number. That leaves a $2.2 billion deficit - and tough decisions for legislators and the governor to make.
Therefore, using the same logic as Schwartz, I can make Nevada run a surplus.
Since Nevadan's are sick of wasteful government spending and with record high unemployment facing Nevadans, its citizens won't be satisfied until spending is brought down 22 percent (Nevada's "actual" unemployment rate) to $5 billion in the next biennium. This means that Nevada has a $400 million budget surplus.That type of logic would be just as intellectually disingenuous as what Schwartz did. (Note: This doesn't prevent either side from arguing that Nevada needs to spend $5 billion or $8.3 billion, but neither side should claim that the amount of money it wants to spend determines the budget deficit. And believers in limited government haven't been claiming this.)
A surplus or deficit, commonly defined, is what you have minus what you spent before.
And to their credit, the rest of the media - and add the Elko Daily Free Press editorial board to the growing list - is getting this right.
(An update, including a response from Schwartz after the jump.)
Update: David Schwartz has made his disagreements with this post known on Twitter. With apologies for switching between Twitter and a blog post (hard to accurately reply in 140 characters), let me respond.
Here are Schwartz's disagreements:
NPRI doesn't like my math on NV budget. But I use Gibbons/Sandoval #'s. They over-simplify for political reasons. http://bit.ly/g98qeZFirst, it's not Schwartz's math I disagree with, it's his premise - that the size of Nevada's budget deficit is dependent on his (or the Sun's or anyone's) interpretation of political reality.
"$5.4 billion - $6.4 billion = -$1 billion." Willful ignorance on budget. Ignores fed. stimulus, local school support.
Left doesn't like my number either. But saying deficit is "$1 billion to $3 billion" is meaningless to readers, even if I'd get less flak
Second, NPRI uses the general fund spending number, because that's what the debate is over - what will Nevada's general fund spending be? Also, general fund spending (exclusive of federal stimulus, etc.) is widely reported as Nevada's budget, including in an article Schwartz wrote.
Gibbons and the Legislature were at odds during most of the session. He vetoed more than 40 bills, which was a record. These included the state's $6.6 billion budget and higher taxes to pay for it. Lawmakers easily overrode the governor on most major vetoes. [Emphasis added]So according to Schwartz, in 2009 the state's budget was $6.6 billion (before the 2010 special session took the number to $6.4 billion), but now in 2010, when it's politically convenient (i.e. useful to the goal of increasing state spending), the budget now includes federal stimulus funds, etc.
Third, no one at NPRI is ignoring federal stimulus funds or local school support. I've personally linked to the agency requests budget, which contains both, several times, including in the post above.
Nothing is stopping anyone from arguing that Nevada needs to spend $8.3 billion (or $100 billion!) in the next biennium, but don't pretend that the budget you or anyone else believes Nevada "needs" determines what the budget deficit is or that an $8.3 billion budget isn't a $2 billion increase in general fund spending over the previous biennium. Just have the intellectual honesty and integrity to defend increasing spending by $2 billion.
Note that NPRI has never argued that Nevada doesn't have a budget deficit, because we "project" that Nevada "needs" to spend less than it's going to take in. We have plainly acknowledged many times that Nevada is facing a $1 billion budget deficit (see above) and we aren't afraid to defend the need to shrink government by eliminating waste and ineffective government programs.
The other side needs to be that intellectually honest as well - then the productive discussions and disagreements can begin about what is and isn't important in Nevada's budget.
Mythbusters takes on President Obama
Enjoy. From ReasonTV
Sen. Coburn on the dangers of debt and uncontrolled government spending
Preach it. I hope America is listening.
(h/t Hotair)
NPRI launches new litigation center
In case you missed the news this week, the Nevada Policy Research Institute announced that it has launched a new litigation center, formally called the Center for Justice and Constitutional Litigation.
I encourage you to learn more about the Center by visiting its website, reading NPRI's press release on it or reading the Review-Journal's story on it.
NPRI has also hired Joe Becker as director of the Center.
In a nutshell, the Center for Justice and Constitutional Litigation will litigate as a means to uphold the nation's bedrock principles, including limited and ethical government, property rights, Second Amendment rights and the separation of powers.
With the success a similar center has had in Arizona, this is a bright week for the rights of Nevadans.
Blog note: I apologize for the relatively few posts this week. With the Center launching, I was quite busy. I should be able to blog more regularly next week. And with the budget debate really starting to take shape, there's certainly a lot to talk about.
Until then, here's my shameless plug to "like" the Nevada Policy Research Institute on Facebook - over 500 fans and counting. Join the fun!
Media gets it right: Budget narrative now has accurate information
Just a quick follow-up to yesterday's post on the Economic Forum, in which I asked if the media would report accurately on the size of Nevada's budget deficit.
For those who don't remember, Nevada's general fund spending was around $6.4 billion in the last biennium and the Economic Forum projected Nevada's revenue for the next biennium will be $5.33 billion.
Now, this leads to a fairly simple math equation: $5.33 billion - $6.42 billion = a $1.09 billion deficit. That's about a 17 percent shortfall.
Overwhelmingly, members of the media reported this accurately.
Even David Schwartz and Anjeanette Damon of the Sun, although they didn't mention last biennium's total spending, provided some context for the forum's projections.
The forum concluded that for fiscal years 2012-13, the state will have $5.3 billion in general fund revenue to spend - about $1.1 billion less than the current biennium.The only print reporter I found who didn't provide context for the state's budget discussion is Geoff Dornan of the Nevada Appeal, who avoided mentioning how much Nevada's general fund spending was in the last biennium.
Disagreements over what to cut and whether to raise taxes are expected. But everyone will have to deal with the forum's number.
The projection assumed a few things: Taxes raised in 2009 will expire as scheduled; the federal government won't shower Nevada with stimulus money as it did two years ago; and Sandoval and the Legislature won't (even though they probably will) take money from local cities and counties.
To maintain current levels of services, state agencies have requested $8.3 billion, according to the state budget office.
The Economic Forum on Wednesday set total general fund revenues for fiscal 2012 and 2013 at $5.3 billion. That is nearly $700 million less than the $6 billion the 2009 Legislature had in projected revenue and some $400 million less than the revised projections prepared for the 26th special legislative session last January.With the narrative correctly reported, the focus can now turn to reducing spending.
That total is also $3 billion less than the $8.3 billion that state agencies have requested for the coming biennium.
Here are some ideas to get started with. NPRI will be putting forward many more ideas in the next few months as well.
Bonus: Andrew Clinger and KRNV do a good job explaining why Nevada's budget deficit is about $1.2 billion.
Economic Forum: Nevada will collect $5.33 billion in taxes
Let the budget games begin:
Nevada's Economic Forum today projected that the state will have $5.33 billion dollars to spend in the 2012-2013 biennium.This isn't a surprise. Revenue had been projected to be set at around $5.4 billion.
It is roughly that which Governor-elect Brian Sandoval was discussing all along, but would be more than $1 billion less than the current two-year budget.
The forum did not include tax hikes, approved by the 2009 legislature, because they are supposed to sunset next year. If the legislature decides not to sunset those taxes, it could cut the deficit by more than $500 million.
Agency requests for the 2012-2013 biennium would put the budget at $8.3 billion, which is roughly $2.9 billion more than the economic forum projects. The projected $8.3 budget would include the end of furloughs for state workers and general rollups of current state programs.
The pressing question is this: How will the budget debate be framed?
In the last biennium, Nevada's general fund spending was around $6.4 billion.
Now this math equation is fairly simple: $5.33 billion - $6.42 billion = a $1.09 billion deficit.
That's about a 17 percent shortfall.
If this was six months ago, you'd likely here many claims in the media that Nevada is facing a $3 billion shortfall, based on assuming that Nevada's agencies need to increase spending by 30 percent to $8.35 billion.
But to the credit of most members of the media, Andrew Clinger and governor-elect Brian Sandoval, accurate information about Nevada's budget situation is now reported widely.
From Sandra Chereb of the Associated Press, to Ed Vogel of the Review-Journal, to Ray Hagar of the Reno-Gazette Journal, to the Lahontan Valley News, Nevada's budget situation - that our state is facing a $1 billion, 17 percent drop in revenue - is now the accepted (and truthful) narrative.
Even the Las Vegas Sun's David Schwartz, who's joking on Twitter about NPRI's insistence that the budget situation be accurately reported, has had the integrity to change how he's reporting on the budget.
It was his article, $2.5 billion state budget deficit: 'Best-case scenario', that contributed to the $3 billion deficit myth in the first place, but note how he described the budget situation yesterday.
Sandoval has remained firm in the face of protests that cuts to balance the state's $3 billion deficit in funding needed to maintain existing services will harm education, health and human services and the long-term well-being of the state. [Emphasis added]Not quite as accurate and informative as Hagar's description above (or the description of other reporters), but it's an improvement.
Accurate reporting doesn't mean that believers in limited government have won the debate, however. It just puts us in a position to have an intellectually honest discussion.
Fiscal conservatives now need to make the case that it's better to decrease spending by about 17 percent and live within our means than to increase spending by 30 percent and continue Nevada's pattern of unsustainable spending increases.
The budget battle is just beginning. But the good news is that we'll be doing it with facts, not misleading rhetoric.
Meet the man who's suing the feds over Obamacare
He's also been called the "most powerful lawyer in Arizona."
Who is he and why is NPRI hosting him at its December Policy Luncheon?
NPRI is excited to be hosting him on Friday, Dec. 3 for a presentation on "Taking Tyranny to Court," which will include details on how a state-based litigation center can protect citizens from government overreach and abuse.
Please join us there. The lunch starts at 11:30 a.m. at the Las Vegas Country Club. The cost is $30. More details are here and you can register here.
Come join fellow believers in limited, constitutional government. We hope to see you there.
Until then, enjoy this interview with Clint Bolick detailing how he and the Goldwater Institute are protecting the rights of citizens through the courts.
What the Pilgrims were thankful for: Property rights
A great new video from ReasonTV on a little told story about Thanksgiving - how embracing property rights helped pilgrims survive and thrive. Enjoy and have a Happy Thanksgiving.
NPRI is going to be closed on Thanksgiving as well as this Friday, so blogging will be light over the next few days. Thank you for reading Write on Nevada, and we hope that you and your family and friends have a wonderful Thanksgiving.
We'll see you Monday.
Why it's not easy being green
A green job that is. While green job training is costing the government plenty of money, the jobs are few and far between.
After losing his way in the old economy, Laurance Anton tried to assure his place in the new one by signing up for green jobs training earlier this year at his local community college.This is important to remember, especially since Nevada's politicians keep talking about how "green jobs" are the future for Nevada's economy.
Anton has been out of work since 2008, when his job as a surveyor vanished with Florida's once-sizzling housing market. After a futile search, at age 56 he reluctantly returned to school to learn the kind of job skills the Obama administration is wagering will soon fuel an employment boom: solar installation, sustainable landscape design, recycling and green demolition.
Anton said the classes, funded with a $2.9 million federal grant to Ocala's workforce development organization, have taught him a lot. He's learned how to apply Ohm's law, how to solder tiny components on circuit boards and how to disassemble rather than demolish a building.
The only problem is that his new skills have not resulted in a single job offer. Officials who run Ocala's green jobs training program say the same is true for three-quarters of their first 100 graduates.
...The Obama administration channeled more than $90 billion from the $814 billion economic stimulus bill into clean energy technology, confident that the investment would grow into the economy's next big thing.
The infusion of money is going to projects such as weatherizing public buildings and constructing advanced battery plants in the industrial Midwest, financing solar electric plants in the Mojave desert and training green energy workers.
But the huge federal investment has run headlong into the stubborn reality that the market for renewable energy products - and workers - remains in its infancy. The administration says that its stimulus investment has saved or created 225,000 jobs in the green energy industry, a pittance in an economy that has shed 7.5 million jobs since the recession took hold in December 2007.
(h/t Michelle Malkin)
