Profile in courage: Gov. Chris Christie takes on the teachers union
As you can see in the video, the New Jersey teachers union has spent $6 million since March attacking Gov. Christie.
And it's not just in New Jersey that teachers unions wield exorbitant influence to block reforms that would increase student achievement.
In fact, the biggest reason that Nevada's student achievement has remained stagnant over the past 50 years while inflation-adjusted, per-pupil spending has nearly tripled is that teachers unions have strongly opposed reforms that have improved student achievement around the country.
The question for Nevada' next governor is this: Will you stand up to the politically powerful teachers unions in order to increase student achievement, or will you be intimidated by their political power and condemn another generation of Nevada's students to a failing school system?
Let's hope the next governor -whoever it is - will follow Gov. Christie's lead.
Read moreAmerican liberals fear Robin Hood
He's not stealing from the rich to give to the poor, he is fighting against a corrupt government and high taxes. Robin Hood is a Hollywood movie that doesn't follow the liberal establishment's ideology, and it's ticking off liberal critics. Ironically, the new movie may be a little more historically accurate than the liberal fantasy of good government in the 12th and 13th centuries.
Governments of the 12th and 13th centuries (around the time of Robin Hood and certainly years before and after) were overwelmingly corrupt, elitist (what do you think a King is, after all?) tyrannical and oppressive. They didn't respect free speech or private property, people were guilty until proven innocent, and might languish in jail without ever getting a trial (why do you think all of this was in the U.S. Constitution?). Don't forget, taxes were very high relative to the people's income at the time. Oh, and guess who paid the most in taxes. Commoners - who represented well over 95 percent of the population (remember, this is pre-capitalism, when most peasants didn't own land, but rather land was held in commons or owned by feudal lords).
So these movie critics want to defend authoritarian, fuedal monarchies ... just because they like taxes? Really? Back to reality.
The Robin Hood legend itself is over 700 years old and it has changed over time. Liberal American commentators are visibly upset that the new Robin Hood looks like a Tea Party protestor ... but with a long bow. The idea that Robin Hood stole from the rich to give to the poor wasn't popularized until the Victorian era (betwen 100 and 200 years ago). Thus, Ridley Scott's new Robin Hood is closer to the original story than the Disney movie that is stuck playing in the critics' collective (and collectivist) heads.
Read the Cato Institute's blog on the subject. Cato highlights some of the criticisms among liberal commentators. It's quite amusing.
U.S. to pay Brazil $147 million a year
The U.S. government imposes tariffs and subsidies on cotton worth over $3 billion each year. This allows American cotton farmers to remain competitive (or at least avoid upgrading capital to remain competitive) by forcing American consumers to pay more for cotton and everything made from cotton.
America's unfair trade practices led to a suit by the country of Brazil, which won permission from the World Trade Organization to impose retalitory tariffs on U.S. goods. To avoid retaliation (and ticking off other entrenched special interests) President Obama agreed to pay Brazil $147 million every year after it won a suit against the United States in the World Trade Organization over our anti-free trade cotton policy.
So not only do American consumers have to pay $3 billion extra a year for cotton, we taxpayers also have to pay Brazil $147 million to do nothing for us at all. Our government's opposition to free trade isn't about helping poor Americans or social justice. It is about defending wealthy special interests at the expense of everyone else.
To quote the great 19th Century American poet Walt Whitman:
"The spirit of the tariff is malevolent. It flies in the face of all American ideals. I hate it root and branch. It helps a few rich men to get rich, it helps the great mass of poor men to get poorer. I am for free trade because I am for anything that will break down the barriers between peoples. I want to see the countries all wide open."
Vouchers and tax credits win again
Nevada spends $53 million per biennium on full-day kindergarten, $290 million on class-size reduction, over $100 million on teacher bonuses for extra degrees earned, $6.6 million on early-childhood education, and millions more for education schools producing teachers that are statistically no better than Teach for America employees. Nevada easily wastes over $400 million every biennium on education programs that provide little to no benefit for Nevada's students.
NPRI has mentioned many times that the Silver State should spend money effectively - not simply spend more money. The good news is there are effective policies out there. Most recently, Florida's Step Up for Students program - a privately funded (donors are given tax credits in return) scholarship program for low-income kids to attend any public or private school of their parents' choice - has proven to have a modest yet statistically significant impact on improving the quality of public schools. And yes, individual students using the scholarships are performing better, too.
Of course, the modest benefits of the program might be due to the modest funding. The program began its life with a $50 million limitation on donations - peanuts compared to the $23 billion statewide operating budget of Florida's K-12 school system. Imagine the impact if even more scholarships were issued.
Greg Forster of the Foundation for Educational Choice notes that there are now 18 empirical studies that demonstrate a statistically significant positive impact for public schools when faced with competition from vouchers (meaning public schools improve). Only one study finds no gains (incidentally, that program protected public schools from competition because they didn't lose funding when students left for a private school). Zero studies show public schools are harmed by vouchers.
Oh, and how well did Florida's dramatic class-size reduction program fair? Not well, according to Dr. Paul Peterson of Harvard University. According to a study cited by Dr. Peterson, "The study strongly suggests that monies restricted for the purpose of funding class-size reduction mandates are not a productive use of limited educational resources."
Read NPRI policy fellow Dr. Mathew Ladner's opinion on these findings, as well as the St. Petersburg Times article.
Politics is a game of inches
Geoff's recent tax study, "One Sound State, Once Again," does an excellent job highlighting the true volatility of Nevada's taxes and provides great recommendations on how to move forward. Geoff's revenue-neutral tax plan calls for the expansion of the sales tax to all goods and services but drops the rate from 6.85 percent to 3.5 percent. The punitive Modified Business Tax and the Insurance Premium Tax are also repealed. Geoff also calls for tax rebates to help defray the cost of the sales tax on necessities. Finally, the plan calls for an overhaul of the budgeting process so it is more realistic, focuses on priorities, and uses competitive bidding to get the best prices in order to provide essential state services.
The plan has garnered praise from the right and left - from Chuck Muth and Elizabeth Crum to Jon Ralston. The plan also has its critics from the right and left - from armchair pundits on the internet and blogosphere to Launce Rake of the Progressive Leadership Alliance of Nevada. Each group (including former government workers) has its own concerns, which can be laid to rest with a deeper understanding of Geoff's ideas. Read Geoff's personal response here.
RIGHT WING
Some complaints from the right:
1) Revenue-neutral plans aren't good enough; we need tax cuts.
2) The government will just raise the sales tax later, and we will be worse off.
3) This plan does nothing to address out-of-control government spending.
True, tax cuts and smaller government would be good things, but we are in a political climate where the government just implemented one of the largest tax hikes in state history during the state's worst recession. Going from record-shattering tax hikes to slashing taxes and cutting budgets overnight? Unless the legislature is turned upside down, don't count on it.
As for raising the statewide sales tax in the future, what's to stop legislators from raising other taxes again? They've already passed two record-breaking tax hikes in this decade alone. Changing the tax code to a more efficient and less volatile system still requires vigilance against big, greedy government. That will never change.
The final complaint, regarding controlling excessive government spending, shows that critics either missed the fact that Geoff recommends spending limits tied to population growth plus inflation, or they don't believe such a policy would pass (and it might not). Geoff also proposes changing Nevada's budgeting methodology. Current budgeting plans always assume we need more spending and make no differentiation on needs or priorities. Changing the budgeting process to be more realistic and efficient, and to focus on priorities and use competitive bidding will go a long way toward reducing government expenditures over time.
Opposing a revenue-neutral tax policy that would avoid the extremely volatile corporate income tax hike (which will just encourage the government to call for more taxes later) just because spending limits and budgeting plans might not pass is about as smart as shooting yourself in the foot. Without some kind of reform, you are guaranteed a tax hike!
Politics is like trench warfare, or football - it is a game of inches. Battles of ideas are fought and won over long periods of time as the evidence continues to mount and the public begins to understand.
The Nevada Legislature and many Nevadans still stubbornly believe we need a corporate income tax to decrease the volatility of the tax structure. As Geoff's quantitative analysis demonstrates, the corporate income tax would actually increase tax volatility. We would be worse off if we had a tax structure like that of California or Arizona. It will take time for some to understand these facts (and others never will because their end-goal is always more taxes).
If you truly want limited and more efficient government, attacking a plan that provides the facts and alternatives necessary to dismantle Big Government's latest tax fantasy isn't very bright. Finally, conservatives and libertarians have to be realistic and remember not to make the perfect the enemy of the good.
Left-wing complaints:
1) A broader sales tax would hurt the working poor.
2) Corporations don't pay their fair share.
Left-of-center pundits like Launce Rake of the Progressive Leadership Alliance of Nevada believe Geoff's plan will hit low-income people the hardest. While it is true that sales taxes are regressive because low-income people spend a disproportionate amount of their income, Geoff accounts for this by offering a tax rebate to defray the cost of the sales tax.
Geoff also takes into account the need for a simple tax code that doesn't treat goods and services differently. Tax codes with different rates for different products are complex and often distort consumer preferences. Government has no business trying to influence people as to what goods and services they should and should not buy. Furthermore, over time, government tends to exempt more and more things for highly connected and privileged citizens - this is why the federal income tax has exemptions for people who bought certain stocks between one year and the next.
Next, the oft-repeated claim that corporations don't pay their fair share (what is a fair share, anyway?) stems from ignorance about how corporate taxes actually work.
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With corporate taxes, corporations merely serve as middle men, collecting revenue from consumers and giving a portion of the revenues to their workers, shareholders and the government. When the government raises corporate taxes, the corporation can pay the tax in one of four ways (or a combination). It can a) raise prices, b) decrease wages, c) decrease employment or d) decrease dividends for shareholders.
Corporations are most likely to raise prices, decrease wages and reduce the amount of employees when faced with higher income taxes. Thus corporate taxes are merely a hidden and regressive tax on the people. The left seems eager to ignore this fact, perhaps due to an overriding distrust of the private sector - thus faith in government replaces facts and reality.
Geoff also notes that a value-added tax (or VAT - a disgustingly complicated and regressive tax that the Left loves because it is hidden in the price of goods) or gross-receipts tax (a tax instrument created in the mind of some sinister politician) would exacerbate Nevada's unemployment problems. Both are favored by the political Left.
Additionally, as Geoff's study points out, the corporate income tax would result in more tax volatility. The only reason you would advocate a corporate income tax is because you just want the government to have more money. Any other excuse is pure hogwash.
The political left needs to remember that the end goal of politics is not simply more government and higher taxes. If you are the "party of government," at the very least you should advocate government that functions properly. Introducing the best elements of the private sector - to replace some inefficient and unaccountable elements of government - is a smart way to ensure that quality services continue at a reasonable price taxpayers can afford.
Genius column headline from CNN
We got the President we elected.
In other news, I wore the clothes I picked out today, Mayor Goodman got the showgirls he requested and the Dallas Cowboys got the draft pick they selected.
Now, to be fair, I don't know if CNN Senior Political Analyst Gloria Borger's column contains any insights as brilliant as the headline above it, but that level of wisdom is pretty hard to top.
(/snark)
NPRI releases comprehensive tax study
You know how the Interim Finance Committee, Moody's and the Nevada Vision Stakeholder Group have been working on a tax study? Well, so has NPRI.
NPRI's study, titled "One Sound State, Once Again: Comprehensive fiscal reforms to again make Nevada strong, prosperous and free," was authored by Geoffrey Lawrence and provides a revenue-neutral alternative that broadens and stabilizes the tax base. "Revenue-neutral" is a fancy way of saying the government won't get more money at the end of the day, although it will get its tax dollars from different sources.
Compare this to the IFC's forthcoming report, which is likely going to call for a new corporate income tax and is likely to use the words "broaden and stabilize" as cover for raising taxes.
The full NPRI report is here. The executive summary is after the jump.Executive Summary
In the middle of the Great Depression, while other states suffered shortfalls and communities used scrip rather than actual currency, the State of Nevada ran a budget surplus. It lasted into the mid-1940s.
Proud of the Silver State's unique fiscal situation, state and business leaders launched a nationwide promotional campaign intended to attract wealthy investors to the state. The "One Sound State" project advertised Nevada as a state with "no income tax, no inheritance tax, no sales tax, no tax on intangibles, but with a balanced budget and a surplus."
By 1939, the state surplus was so large that the property tax rate - raised by the 1937 legislature - was cut by 20 percent. The San Francisco Chronicle editorialized, "Unbelievable, but it is true. These people just do not belong in the United States."
Today the State of California is again issuing scrip - called "registered warrants" now - and Nevada clearly needs a new model for fiscal rectitude.
The state's current legislative leadership, however - operating as the Interim Finance Committee - has already signaled its intent to ignore the state's need for comprehensive fiscal reform and instead simply pursue a quantum increase in the state tax burden, while billing it as a comprehensive review of the state revenue structure. Like each of its predecessors over the last 20 years, however, this legislature's tax study was structured to ignore genuine fiscal reform issues and instead merely provide cover for lawmakers out to transfer private-sector resources to the powerful, organized, tax-consuming groups that get them elected.
Nevertheless, Nevada seriously needs genuine, revenue-neutral fiscal reforms, and this report seeks to fill that vacuum. It analyzes the actual volatility of Nevada's current taxes - and the taxes lawmakers keep signaling they want. It covers important tax-related issues, such as achieving economic efficiency and tax equity, while reducing compliance costs as well as tax-induced distortions in economic behavior. And it reveals why comprehensive fiscal reforms for Nevada should include:
• Eliminating the modified business tax;
• Eliminating the insurance premium tax;
• Broadening the sales tax base and reducing the statewide sales tax to 3.5 percent;
• Implementing priority-based budgeting; and
• Implementing spending controls that limit state spending growth to the rate of inflation plus population increase.
Are government employees getting paid too much?
Competing viewpoints from Sunday's RJ.
Steve Hill, chairman of the State Policy Task Force of the Las Vegas Chamber of Commerce, says yes.
Recent Las Vegas Chamber of Commerce studies have shown that Nevada's public employees are the sixth highest paid public employees in the country. Those studies also point out that there is a significant difference in the pay of local government employees and those employed by the state of Nevada and the private sector. Local government employees make nearly 30 percent more than those employed in the same job in the private sector and state government.Don King, president of the Las Vegas City Employees Association, says no.
Additionally, retirement benefits, through our Public Employees Retirement System (PERS), are the most generous of any state in the country -- a benefit for which local government employees contribute nothing from their paychecks, and for which state employees typically contribute one-half the cost.
As a result, we spend approximately $1 billion every year to fund the difference in compensation for local government employees versus what the same employee would make if he or she did the same job for the state.
As members of the city's largest employee union, we have repeatedly tried to negotiate concessions that are fair to both the residents and employees of the city of Las Vegas. We understand that the economy has changed. We know that times are difficult and that, the public sector, like the private sector, must be willing to share the pain. We understand that and now, more than ever, we know that mature judgment, honesty and respect are called for...So who's right?
From the city's rejection letter dated May 18, it is apparent that the city is still demanding the 8 percent wage cuts and holding everything else. The city asked for several concessions from employees with no guarantee that any of the employees would keep their jobs. The proposal included flattening all wage increases: no cost-of-living adjustments, no step increase and a freeze on longevity pay; furloughs; a four-day workweek; splitting the PERS rate increase with employees; no guarantee on employee restorations from layoff lists; and an allocation method for placing people at lower jobs classifications on a lower pay grade -- if they are hired back. This has been pretty much a one-sided negotiation process with the Las Vegas City Employees' Association being the only party willing to negotiate.
Well here's the Las Vegas Chamber of Commerce study that found that Nevada's public employee pay is sixth-highest in the U.S. NPRI's research has shown that the average firefighter in Clark County receives over $170,000 in compensation. And if you want more details, head over to TransparentNevada.com, NPRI's clearinghouse of public records and public employee salaries.
Also check out Cato's new video, titled "There Are too Many Bureaucrats and They Are Paid too Much," which details how there are too many bureaucrats and they are paid too much. He's not talking specifically about Nevada, but the information is still pertinent.
Government salaries and benefits are out of line with private-sector compensation and need to be restrained accordingly. And let's hope this happens before PERS (the public employees' retirement system) consumes the state budget.
Graduation time, for some
High school graduation is upon us as the school year comes to a close. Students graduating from high school should feel proud. Unfortunately, the National Center for Education Statistics' recent press release on state-by-state graduation rates gives a somber reminder of the occasion.
According to NCES figures, Nevada's average freshman graduation rate is just 51.3 percent - last in the nation. It is true that this number can be skewed downward because of migrating students, but the school districts haven't exactly opened up their student records for the media and researchers to see how many there actually are.
Additionally, Nevada's dropout rate stands at 5.1 percent - 24 percent higher than the national average.
Nevada can improve graduation rates and lower dropout rates by creating a better school system, attracting and retaining better teachers, and by ensuring kids can read by the end of the fourth grade.
Busy work for adults
Nine more states - Idaho, Indiana, Kansas, Minnesota, Oregon, South Dakota, Virginia, West Virginia and Wyoming - have dropped out of the Race to the Top competition.
None of these states made the top 16 during Round 1. Several states are finding it difficult to get union support to pass meaningful reform, and some simply feel like they are giving up too much local control to the federal government.
This hasn't discouraged Nevada, though, as the Silver State mailed in its 211-page application - which rises to 1,567 pages when you include introductions, letters of support, addendums, appendices, graphs, charts and a table of contents.
Nevada knows bureaucracy and paperwork and certainly loves giving adults busy work - but we sure stink at educating our children.
Though I haven't completely read the application (I did read an earlier draft) I won't be surprised if very few reforms are actually proposed (and you still have to get the legislature to pass them in 2011). In the earlier draft, the application consisted of mostly fluff. For example, the application draft presented No Child Left Behind requirements as bold reforms that would help turn around Nevada's failing schools. Of course, every state is required implement those policies and (not surprisingly) they haven't actually worked.
Truth be told, Nevada isn't the most reform-minded state in the union when it comes to improving education. With no parental school-choice program, statewide bureaucratic hostility to charter schools and an unenforced empowerment-school law that is completely ignored by the Washoe County School District and partially ignored by the Clark County School District, plus teacher tenure that can be earned in just one year, continued obstinance on alternative teacher certification, useless pay scales that reward teachers in ways that provide no benefit to students and a distinct inability to fire bad teachers (only three states fire fewer teachers), Nevada isn't likely to score many points.
Fortunately, NPRI has proposed dozens of solutions, including one very simple idea - COPY FLORIDA! That said, without serious changes, the Silver State can only hope that the potential biases of the reviewing process result in a political decision to pick the winners of the Race to the Top, rather than a merit-based outcome.
Nevada's student achievement and hostility to reform suggest the state really doesn't deserve to win right now. I know lots of dedicated people worked hard on this application, and I'll leave open the possibility that this judgment may be premature and harsh, but as I dig deeper into the application, I doubt I will change my mind.
