Raise Taxes, Businesses Suffer

So, here's the situation. California spends far more money than it takes in, even though it taxes at a high rate. So, what to do? Lower spending? Nope, raise taxes.

You know how regular websites can join an "affiliate program" with major retailers like Amazon.com? Ads for books are shown on the website, and if the customer uses that link to purchase the item, the website receives a small percentage. It's a good way for websites to make a little money and for retailers to increase sales.

California decided to tax that. They just passed a law, effective immediately, that would tax such sales whether or not the retailer has a business presence in the state. They are hoping to raise $200 million a year in new tax revenue. But is that what will happen?

Of course not.


Amazon.com has already sent out letters to 25,000 websites cancelling their affiliate status.
http://www.ocregister.com/articles/amazon-306409-affiliate-california.html

Amazon has already emailed its termination of its affiliate advertising program with 25,000 websites. The letter says, in part:

(The bill) specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by California-based marketing affiliates like you - even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

The new law won't affect customers, Amazon said, but added that the immediate termination of the affiliate program also applies to endless.com, myhabit.com and smallparts.com.

This may be an unintended consequence, but it was entirely foreseeable. Once again, the real world demonstrates that higher tax rates aren't good for businesses OR the economy.

Read the rest...

Special Session For JeffCo Tax Bill?

We all know what happened, the bill that would allow Jefferson County to levy new taxes, including a new occupational tax, was contested by Senator Beason and never came up for a final vote. Now we're hearing entirely predictable calls for a special session to reconsider the issue. In fact, an editorial in the Birmingham News made that very point.
http://blog.al.com/birmingham-news-commentary/2011/06/our_view_after_seeing_its_bill.html

Thursday's death of the taxing authority bill for Jefferson County should not be the end of the struggle to get the state Legislature to help the county out of a financial bind the lawmakers put the county in. County officials' next move should be to ask Gov. Robert Bentley to call a special session to take another try at passing the bill.

To me, this is a risky proposition at best. Absent some indication that Beason will stand aside instead of blocking the bills in the special session, it's all wasted effort and wasted money. Because if Beason stands firm, we could end up at the end of a month with nothing accomplished... having spent the money for the special session but getting nothing in return for all that money.

The Birmingham News then descends into exactly the thinking that makes politics the deep pit of raw sewage that it has become in Alabama.

As for Beason, his colleagues should remind him he's not the only senator in the delegation whose vote should count. And if he thinks he is, they should treat his local bills the same way he treated the county's.

Is this really how we want legislators conducting business? Passing judgement not on the quality of the bill in question but on how often the sponsoring Legislator has opposed your own bills? The Democrats used to do that all the time, but though the Republicans PROMISED a change in how things were done, the only change so far has been which party has the whip-hand.

But do we really want Legislators killing what could be perfectly good legislation because they have a beef with the guy who is sponsoring it? Shame on the Birmingham News editorial staff for advocating such tactics. That way lies chaos, not to mention bad law.

Read the rest...

Friday Afternoon News Roundup

Here are some stories I collected this week that I think you might be interested in.

Egypt Revolution Failing
Essentially, the revolution in Egypt is falling into chaos. Obama is very willing to force the leaders of other countries out of power, but the result can easily be far worse than the status quo. We're seeing that develop in Egypt.
http://www.msnbc.msn.com/id/43350732/ns=world_news-the_new_york_times&t=revolution-was-curse-economic-woes-test-egypt

Secret Law?
This is a developing story, but apparently the US government has an "official interpretation" of the Patriot Act that is classified... We're not allowed to know what it is. But a Congressman is working to change that. "Americans would be alarmed if they knew how this law is being carried out."
http://www.cato.org/pub_display.php?pub_id=13180

Rising Electricity Rates... Thanks, Obama
Before he was elected President, Obama declared he wanted to make electricity more expensive to all, for environmental reasons. He is doing precisely that, with new EPA regulations that are forcing existing coal-fired power plants to close down.
http://thehill.com/blogs/e2-wire/677-e2-wire/165651-aep-epa-regs-will-cost-billions-and-result-in-five-closed-plants

ObamaCare Mandate Problems
I'm sure that you've heard by now of a survey showing 30% - 50% of businesses plan to terminate their insurance plans once the 2014 ObamaCare regulations go into effect. That means a huge number of American workers will lose their insurance and be forced to enter the government-run exchanges. This is bad. Very bad.
http://blog.heritage.org/2011/06/09/morning-bell-americans-will-suffer-under-new-obamacare-mandates/

War In Libya Costs More Than Estimated
The war in Libya is running way over budget. Is anybody surprised?
http://www.voanews.com/english/news/usa/Report--US-Costs-for-Libya-Soaring-123543159.html

Obama's Example Not So Hot
Last week, PresBo touted a restaurant as a success story, as having benefitted from the government "saving" the US auto industry. Essentially, the argument went, if they hadn't saved the auto industry, the restaurant would not be doing so well, which is proof that the government bailouts had far more effects than just the auto company's. THIS week, however, the restaurant announces it is closing its doors. Ooops.
http://www.huffingtonpost.com/2011/06/09/new-chets-ohio-restaurant_n_874619.html?icid=maing-grid7%7Cmain5%7Cdl5%7Csec3_lnk1%7C69747

How Bad Is Our Debt?
Far worse than you may think. Last year alone, PresBo and his Democrat allies increased our long-term financial obligations by $5.3 trillion!
http://blog.heritage.org/2011/06/07/governments-unfunded-obligations-now-total-534000-per-household/

Ridiculous Regulations
For those who think regulations are good, think about this. Federal regulations require a big "F" to be painted on a train so we can easily tell which end is the front. Moreover, the first wheel on the right has to be painted with "R1," because presumably regulators aren't smart enough to understand how it's possible to determine that information without the handy-dandy paint.
http://blog.heritage.org/2011/06/07/tales-of-the-red-tape-13-an-%E2%80%9Cf%E2%80%9D-for-train-regulation/

The Economy Is Worse Than You Think
This is a good article on the many indicators showing the direction of the economy... and unfortunately it's not good news.
http://online.wsj.com/article/SB10001424052702303657404576363984173620692.html


Here you go, I hope you find these informative and entertaining.


Read the rest...

Homebrew Bill Fails Again This Year

I run into a lot of myths concerning the Legislature. One of the biggest is that when a bill is debated, they debate the merits and drawbacks of the bill, and that the Legislators demonstrate at least average intelligent in their approach to this.

I hate to burst your bubble should you buy into this myth, but the amount of ignorance and obfuscation going on, not to mention outright stupidity, can sometimes reach staggering heights.

For instance, let's look at HB266 from the recently concluded regular session. That bill would have legalized home brew within the state.

Homebrew is making of wine, beer, and mead at home for your own personal consumption. This is legal under Federal law, allowing up to 200 gallons of wine or beer per household each year. (It's a LITTLE more detailed than that; see a good summary of Federal law here.)

Although homebrewing is legal under Federal law, states can still outlaw it. To the best of my knowledge, homebrewing is curently legal in 48 states... Alabama and Missisippi are the only remaining holdouts. Should tell you something, that.

Under Alabama law, it is only legal to make beer or wine if you go through a complex and expensive licensing process. Once you're licensed to produce and sell your beer or wine, you can make it. But if all you want to do is make a gallon of wine using Chilton County peaches, you are out of luck.

Listen to these excerpts from the Alabama Legislature as they debated this bill earlier in the session, and then you tell me whether or not these guys have the intelligence to be state lawmakers.



If the player doesn't work, try this link:
http://www.youtube.com/watch?v=BVqnUf8NH6g

Oh, and to answer Alvin Holmes' most ridiculous question, mead (spelled m-e-a-d) is basically honey wine. Maybe the fact that you don't know that, Mr. Holmes, should indicate that you need to educate yourself just a TEENY bit better on this issue.

The amount of prejudice, scare-tacits, over-the-top moralizing, and just plain misinformation coming out of the mouths of these Legislators is mind-boggling.

If you'd like to read a summary of reasons why Alabama should legalize homebrewing, here's a good link:
http://www.homebrewersassociation.org/pages/government-affairs/talking-points

Ain't Alabama loverly?


Read the rest...

Personhood Bill Fails

I am glad to report that, as far as I can tell, the "personhood" bill (SB301) was NOT approved by the House and will NOT go to the Governor for his signature. This is a good thing, but it should never have even gotten this close. Is this really what we want from our Legislators, passing laws that satisfy their own religious conviction? Not I... You decide for yourself.

In other news, the anti-illegal-immigration bill was signed by Governor Bentley yesterday.
http://www.reuters.com/article/2011/06/09/us-immigration-alabama-idUSTRE7584C920110609

Republican Governor Robert Bentley on Thursday signed into law a crackdown on illegal immigration in Alabama that both supporters and critics consider the toughest in the nation.

The measure will require public schools to determine the citizenship status of students -- a provision not included in an Arizona law that has been at the forefront of actions by several states to curb illegal immigration.

Senator Scott Beason maintained his "contest" on the House bill to grant "limited home-rule" powers (in other words, enhanced taxing authority) to Jefferson County. That means the bill failed, and JeffCo doesn't get its new taxes at this time.
http://blog.al.com/spotnews/2011/06/alabama_sen_beason_kills_jeffe.html

A plan to give the Jefferson County Commission power to raise sales taxes or other levies of its choosing to a suggested target of as much as $50 million a year was defeated in the Legislature Thursday night.

Sen. Scott Beason, R-Gardendale, said shortly after 7 p.m. Thursday that he would not let the full 35-member Senate vote on the bill.

Personally, I think this is a good thing, regardless of the eventual consequences. I mean, look at it. The county has been incredibly irresponsible and have gotten themselves into a bad financial position, and then their occupational tax was thrown out by courts (TWICE!) as unconstitutional. A note to supporters: After having two illegal taxes tossed, maybe the best thing to do is NOT to let them levy more taxes. Maybe?

The Alabama Healthcare Freedom Act was passed by the Senate yesterday, which means on Presidential election day in 2012 we get to vote on the Constitutional amendment which opts us out of ObamaCare. Not bad, but I think the vote should come sooner, during the already scheduled 2012 primary election. Let's use a regularly scheduled election, yes, but balance turnout with time considerations.
http://blog.al.com/spotnews/2011/06/alabama_lawmakers_ok_public_vo.html

State lawmakers today approved a plan that will let voters decide whether to rewrite the state constitution to say that people and employers in Alabama could opt out of the federal health care overhaul passed by Congress last year.

Under the plan, voters will decide in November 2012 whether to rewrite Alabama's constitution to say "a law or rule shall not compel, directly or indirectly, any person, employer or health care provider to participate in any health care system."

So that's it, the 2012 Legislative session is a wrap. Unless, of course, Bentley decides to call a special session... which shouldn't happen but may well. We'll see, though, in time.

Read the rest...

The Danger Of Repealing Obamacare

I have been thinking about this lately, and our experience here in Alabama should serve as a stark warning of the dangers that come with the ability to repeal Obamacare.

Let's look at this. In order to repeal Obamacare, the Republicans will have to take majorities in both Houses of Congress. They'll have to keep the House and win, not just 51 seats in the Senate, but a 60 seat supermajority to get the repeal past Democrats. In other words, they'll have to hold the same huge majority that the Democrats held after the 2008 elections.

But remember what happened when the Democrats took that majority... They interpreted that as carte blanche to enact their entire ultra-liberal agenda, including items that had been on their wish list for decades. They didn't let massive resistance from the non-Democrat public deter them, because it didn't matter what we thought. THEY had the power to do as they wished.

As the President famously said, to put Republicans in their place and dismiss their objections to his proposals, "I won!"

In Alabama, the Tea Party movement made possible Republican majorities in the Legislature for the first time in history. What we are seeing is a reflection of what Democrats did in 2009. They are using the majorities to enact "wish-list" legislation that is more ideologically oriented than practical or constructive. For example, the "personhood" bill that redefines the word "person" for every state law to include a just-conceived child... the focus is abortion, but the scope of the change affects murder, manslaughter, fraud, you name it.

Republicans are so willing to outlaw abortion in this state that they are willing to change how hundreds of other laws work in order to accomplish it. You can't get much more extreme than that.


I haven't seen the Republican majorities do anything that would help the voters and not their own political party. We've seen no laws passed to loosen our strictest-in-the-nation ballot access laws, no laws passed to give Alabama citzens more say so in our state government, and no laws passed to address the desire for recall and referendum (I still don't totally support the referendum effort, but we definitely need a recall provision). They are hard at work passing agenda-related items, and the rest of us can just go jump in a lake.

This demonstrated prediliction by both political parties to use newly gained majorities to elevate ideology over sound governing should give us pause. Because this is the Catch 22.

Yes, electing Republicans en masse in 2012 is our only hope of repealing Obamacare. But with that comes the virtual certainty that the Republicans will legislate their own ideological agenda, echoing the Democrats and Alabama Republicans in ignoring sound governance and even the will of the people in order to get their own agenda items codified into law while they have the chance.

That's the danger with electing the Republican majorities needed to repeal Obamacare... they won't exist in a vacuum, and they WILL vote on far more than Obamacare. They will sieze the opportunity to enact agenda items that have nothing to do with good governing, and everything to do with an ever-more extreme ideology that they dearly want enacted. In that, they are no different from the Democrats who have spent the last few years doing precisely that.

So go into the upcoming election season with your eyes open, people. Electing Republicans to Congress in order to repeal Obamacare will have other consequences as well... and you won't like all of them. What you'll have to decide is whether the gain (hopefully repealing Obamacare) will be worth the price (extreme conservative agenda items promoted against even the will of the people).

That's a question I can't answer for anybody except me... and I know my answer. Do you know yours?

Read the rest...

Anti-Abortion Bill

Okay, people, let's try and recover some sanity, shall we? There is one bill with "a chance" to make it through the Legislature today that should fail. It is a "personhood" bill, i.e. it defines a "person" with respect to all state laws to begin at conception.

It's being billed as an anti-abortion law, but its implications go FAR beyond that.

Let's look at it. By defining a "person" as a fetus just having been formed, at conception, all state laws referring to a "person" (such as fraud, assault, poisoning, and murder, to name a few) are affected. If a pregnant woman does drugs and damages her fetus, is she guilty of a crime against a person? Prosecutors could make a strong argument to that effect.


Similarly, if a man kills a pregnant woman, is he guilty of two counts of murder? Let's not even look at late-trimester pregnancies... if a woman doesn't even know she is two weeks pregnant, is her murderer still guilty of two counts of murder?

EVERY law that references a "person" is affected if we change the definition of a "person." This should be clear to everyone, but supporters of the bill claim that the effect will be narrow. Personally, I think they know this argument is bunk and are lying to us in order to pass their bill. I suppose it's possible I'm wrong about that, but I don't think so.

The fact remains that you can't change an underlying definition without potentially affecting EVERY law based upon that definition. This is a bill that will have many "unintended consequences," no matter what the supporters say.

The Legislature should refuse to pass this bill... it is far too sweeping a change. I don't like it when Democrats make huge sweeping changes to our laws, and I don't like it when Republicans do the same thing.

Knock it off, children! Govern effectively and responsibly. Don't make laws to advance your own ideological agenda!!!

Read the rest...

Obamacare Hearing In 11th Circuit Court Of Appeals

I don't know if you were aware or not, but a three-judge panel from the 11th Circuit Court of Appeals held hearings today on the government's appeal of Florida Judge Vinson's ruling that overturned Obamacare. Here is what happened today.
http://www.cato-at-liberty.org/the-obamacare-lawsuit-from-the-courtroom-in-atlanta/

In the most important appeal of the Obamacare constitutional saga, today was the best day yet for individual freedom. The government’s lawyer, Neal Katyal, spent most of the hearing on the ropes, with the judicial panel extremely cautious not to extend federal power beyond its present outer limits of regulating economic activity that has a substantial aggregate effect on interstate commerce.

This legal process is not an academic exercise to map the precise contours of the Commerce Clause or Necessary and Proper Clause — or even to vindicate our commitment to federalism or judicial review. No, all of these worthy endeavors are just means to achieve the goal of maximizing human freedom and flourishing. Indeed, that is the very reason the government exists in the first place.

And the 11th Circuit judges saw that. Countless times, Judges Dubina and Marcus demanded that the government articulate constitutional limiting principles to the power it asserted. And countless times they pointed out that never in history has Congress tried to compel people to engage in commerce as a means of regulating commerce. Even Judge Hull, reputed to be the most liberal member of the panel, conducted a withering cross-examination to establish that the individual mandate didn’t help that many people get affordable care, that the majority of people currently without coverage would be exempt from the requirement (presumably due to their income level).

In short, while we should never read too much into an oral argument, I’m more optimistic about this case now than any other.

You can seldom predict with certainty what the ultimate ruling will be based upon the tone of the questions in the hearings, but this is a bit encouraging. The onus is on the government to justify their actions and prove those actions are constitutional, and it seems that's where these judges placed the onus.

It'll take a few months, but we'll get their ruling eventually. Remember that they not only have to decide if Vinson was correct in his ruling that the individual mandate violates the Constitution, but they also have to decide if he was correct in throwing out the entire law.

Should be interesting.

UPDATE: Here's another early article on the hearing.
http://www.politico.com/news/stories/0611/56544.html

The judge’s questions were mixed enough to give encouragement to both sides in the oral arguments in the multistate lawsuit, the most significant of the legal challenges against Obama’s health care overhaul.

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Breaking: Why Send A SWAT Team?

When folks think of SWAT teams, most people think of well-intentioned officers who are risking their lives by apprehending vicious murderers, drug dealers, and other such dastardly criminals. The no-knock approach is justified because of the danger posed by the assumed criminals in the dwelling being searched.

That's what most people think. How to explain, then, what happened yesterday morning in Stockton, California?

Around 6:00 AM, the homeowner noticed 15 officers on his lawn. They broke down his door, threw him into a squad car for hours (in his underwear), and traumatized his three children while they searched the house. No, they weren't looking for drugs or a murderer.

The SWAT team had been ordered by the Department of EDUCATION, in order to apprehend the homeowner's estranged wife for the violent and horrible crime of... defaulting on her student loans.
http://www.news10.net/news/article/141072/2/Dept-of-Education-breaks-down-Stockton-mans-door

According to the Department of Education's Office of the Inspector General, the case can't be discussed publicly until it is closed, but a spokesperson did confirm that the department did issue the search warrant at Wright's home.

The Office of the Inspector General has a law enforcement branch of federal agents that carry out search warrants and investigations.

Did you catch that? I'll repeat it, because it sounds vaguely important. Our Federal Government is sending out SWAT teams to get people who owe them money. If this catches on and isn't stopped, the IRS is going to LOVE this method of... increasing tax collection successes.

Note that there was no indication (that we're aware of) that the woman was violent or anything, no danger to the arresting cops, she merely owed the government money. So danger to the arresting officers isn't needed anymore to justify a military-style invasion of your home, complete with knees in the back and guns in the face. If you owe them money, apparently you're a target. Suspected terrorists have to be read miranda rights, but if you default on a student loan, you and everyone around you get a gun in the face.

Libertarians argue that all government power is essentially forcing our behavior at gun point, and we are often ridiculed because it sounds paranoid to many people. But this case seems to make our point. If you owe the government money, especially the Department of Education, they can AND WILL send armed officers to smash down your door, invade your home, and shove guns in your face.

It's not paranoid to see a pattern of abuse and comment on it, and this trend of no-knock abuses is long and growing longer. This isn't a new or unique occurrence, it's the latest in a long string of abuses.

The government wants you to pay back your student loan. The penalties for defaulting have been, until now, confined to civil court and bad news for your credit score. HOWEVER, if you'll recall, Obama nationalized all student loans not too long ago, to the almost unamious approval of the majority of American citizens. This is the direct result of that nationalization. The government can and will send SWAT teams to your door if you cannot repay those loans.

Yet ANOTHER example of why government shouldn't have as much power as it currently has. Remember that a government big enough to give you anything you need is big enough to take away everything you have. In this case, if they have the power to invade your privacy and perform military operations to catch really bad guys, they have the power to do exactly the same to innocent citizens... as they did yesterday morning. This is a really good reason to shrink the size and scope of the Federal Government.

This is a Federal issue, so I want to ask this... What do our Alabama Congressmen think about this egregious abuse of power by our Department of Education, and what do they plan to do about it?

UPDATE: The Department of Education has issued a semi-formal response to allegations that this SWAT raid was in response to defaulted student loans:
http://reason.com/blog/2011/06/08/dept-of-education-swat-team-up

While it was reported in local media that the search was related to a defaulted student loan, that is incorrect. This is related to a criminal investigation. The Inspector General's Office does not execute search warrants for late loan payments.

Because this is an ongoing criminal investigation, we can't comment on the specifics of the case. We can say that the OIG's office conducts about 30-35 search warrants a year on issues such as bribery, fraud, and embezzlement of federal student aid funds.

Even if they're correct, what about "bribery, fraud, and embezzlement of federal student aid funds" justifies a military assault force to serve an arrest warrant? Surely the local police are more than capable of handling an embezzler, right?

UPDATE: It is my considered opinion that every agent on that SWAT team should be charged with aggravated assault on that innocent family. And every person who enabled them, including the DoE official(s) who authorized the assault and the judge who approved it, should be charged as accessories to aggravated assault. Somebody, somewhere along the way, should have stood up and said "Wait, this is not an appropriate use of a military assault force." Absent any elevated potential for harm to the arresting officers, SWAT assault teams should NOT be used. And in this case, there doesn't seem to be any justification. So arrest them, charge them, and indict them all. Let's go, guys... Either the laws apply to everyone, or we're living in a police state.


Read the rest...

The Story On Beason And Birmingham Taxes

There is one legislative day left in the current session, and this fact is contributing to a rather heated and overly-hyped confrontation in our State Legislature.

Here's what has happened so far. Jefferson County behaved stupidly and got their county mired in a massive amount of debt that they couldn't pay off. Then they lost quite a bit of revenue when their occupational tax was tossed out by a judge as being unconstitutional, i.e. illegal. They convinced the Legislature to pass a new occupational tax... and at the time I warned that it would ALSO be unconstitutional. Lo and behold, it too was tossed out.

So here we are, with the County crying poor mouth and pinning their hopes on a "limited home rule" bill that would allow them to levy huge new taxes on those who work and/or reside in the County.

Which brings us to Scott Beason. The bill in question, that would allow Jefferson County political figures who largely caused these problems in the first place to penalize the citizens of Jefferson County by taxing them heavily, was delayed again and again and is on a tight schedule. If it isn't passed on Thursday, the last day of the session, it dies and Jefferson County has to start laying off employees.

Which, if you ask me, is only right. The County screws up massively and continues business as usual while the unwitting taxpayers have to foot the bill? Whatever happened to consequences for actions?


Anyway, Senator Beason has "contested" the bill, which basically puts it on hold. Any Senator can contest a local bill for their area, which means no action can be taken on it. The bill probably has the votes to pass if Beason backs down, and this has led to a little hysteria.

What do I mean by hysteria? How about an editorial in the Birmingham News calling Beason's actions treasonous?
http://blog.al.com/birmingham-news-commentary/2011/06/our_view_sen_scott_beasons_tre.html

They call Beason's actions treasonous. They claim he is "abusing" the Senatorial power to contest bills. They claim the sky will fall without this new money.

How can it be treasonous to oppose a bill? As to abusing the "contest maneuver," as they put it, this is precisely what the power is there for, to allow a single Senator to slow down or stop a bill he or she thinks is bad or wrong. Flipping this argument around, local bills require unanimous consent of the local delegation to sail through, and all Beason is doing is removing that unanimous consent. And as to the sky falling without new tax revenue... We hear that every time some politician wants to raise taxes, but when the tax increases are defeated the world continues on pretty much as usual. Who got a bump on the noggin when Riley's massive Amendment One was defeated? Despite all the scare tactics and predictions of doom and disaster, nothing happened.

If the people responsible for getting the County into this mess don't feel the pain they earned with their own irresponsible actions, how will they learn better? With no consequences, what incentive do ellected officials have to govern responsibly?

I'm sorry, but Beason's actions do not bother me at all. If he decides NOT to lift his contest of the bill, that would be fine with me.

So here's my advice to you, Senator Beason. If you honestly and truly believe the bill is a bad one, if you honestly feel that the bill should not pass, then feel free to maintain your contest.

The people of this state need some protections from politicians who are proving far too willing to raise taxes instead of living with the reality of the situation. Whether it's Jefferson County trying to lay their own mistakes off on the backs of taxpayers or any of a dozen cities raising taxes rather than cut their budgets because of (how would our President like us to think of this? Hmmm...) this little economic hiccup we're currently experiencing... Alabama politicians are ignoring the well-being of their constituents in favor of their own well-being.

In a time of high unemployment and economic uncertainty, at a time when families across this state are tightening their belts and spending less, Alabama politicians are taxing us more so they can keep up their normal spending habits. This makes no sense, and Alabama citizens need SOME protection against this kind of economically destructive behavior by our elected officials.

Politicians should be required to make the case for tax increases to the voting public each and every time they want to raise taxes. Lacking that, we shouldn't punish one of the few politicians with the guts to stand up for his constituents and get in the way of massive tax increases.

We'll see if Beason holds the line or if he caves. But this is a fight that should be fought.

Read the rest...

Unemployment Rate 9.1%, Jobs Figures Bad

As you've no doubt heard today, the jobs report for May was... disappointing. Many were expecting 200,000 or more jobs created in May, but instead there were only 54,000. In addition, the number of jobs created for April and March were revised downwards from 221k to 194k and from 244k to 232k, respectively.

The unemployment rate is 9.1%, and the number of long-term unemployed (those jobless for 27 weeks and over) increased by 361,000 to 6.2 million. Additionally, the average length of unemployment rose again this month to 39.7 weeks.

If you'd like to read the jobs report yourself, you may do so here:
http://www.bls.gov/news.release/empsit.nr0.htm

This isn't good news, people... but if you ask me it's not that unexpected. Each spring, the BLS attempts to "normalize" the employment figures by estimating (read: guessing) how many jobs were created that they didn't count. That's what happened the past few months, and I believe the jobs numbers were rather heavily inflated. The facts bear me out... the previous two months were "adjusted" to show 20k fewer jobs than had beeen previously guessed... I mean, estimated.


No matter what rhetoric you hear spewing from the mouths of elected Democrats in Washington, our economy isn't flourishing, and we haven't turned any "corner" of economic growth.

Unfortunately.

Our economy is in trouble, and it will remain in trouble as long as businesses and individuals suffer the uncertainty of not knowing what things will be like tomorrow. The Democrats in charge are entirely too willing to change the rules under which we operate on a daily, even hourly basis. And since we don't know what the legal, regulatory, and even taxation world will look like in the near future, how can we justify taking any risky actions?

Until that changes, our economy will continue to suffer.

Come on, Democrats, isn't our country's well-being more important than your desire to force your political agenda down our throats? If not, isn't that just about the best reason in the world for the voters to fire you next year?

UPDATE: This is rich. The unemployment rate jumped and we created far fewer jobs than can remotely be considered healthy, but Obama is running a victory lap today.
http://blog.heritage.org/2011/06/03/morning-bell-unemployment-goes-up-obama-declares-victory/

Read the rest...

Are Low Interest Rates Good Or Bad?

The Obama Administration really wants low interest rates, and so does the Bernanke-run Fed. We've had many years of low interest rates, and for the past couple of years they've been about as close to zero as it is possible to get. But are low interest rates really good for us?

The answer to that, as with most things in economics, is a bit complicated. But let's look at the pros and cons of low (and high) interest rates.

Low interest rates are basically good for one class of people: borrowers. Those who are in debt like low interest rates because that means they have to pay less interest on their debt. Individuals and corporations with credit card debt, car loans, and the like are pretty happy with low interest rates... as is the Federal Government. Our government is deeply in debt, and these low interest rates mean they can manage to rack up more debt without immediately paying the piper.

Low interest rates, though good for borrowers, aren't so good for lenders. Think about it... if you were a lender with a pile of money available for loans, would you want to lend it out at ruinously low rates? Add into the equation the fact that interest rates are almost certainly poised to rise in the near-term: would you lend your money now, at low rates, or would you prefer to hold off lending until the rates rise? The answer should be obvious.


Low interest rates also punish those who save money instead of going into debt. There is little reward for putting money into a bank account to earn interest, because interest rates are so low. If you have $250,000 in the bank, you'll be doing good to earn $7,500 in interest each year. As a comparison, I remember 10% interest on savings accounts... that same $250k would have earned $25,000 in yearly interest. As someone who has savings, which would you rather see?

So, our current low interest rates encourage consumers to go into debt, discourages savings, and reduces the ability of lenders to remain economically viable. Savers who want to earn a decent return on their money are forced into higher-risk scenarios, and that's not a good thing.

So, what are the pros and cons of HIGHER interest rates?

As interest rates rise, those who are in debt pay more and more in interest. If the interest rates double, for example, the Federal government is in for some REALLY tough budget problems. Anybody incurring new debt or having existing debt with variable rates will experience this pain.

On the flip side, interest earned by those who save, such as retirees, will do them a lot of good. Higher interest rates encourage saving and discourage debt. Also, lenders will be more willing to lend money, and will earn more money from their lending practices.

Higher interest rates could also help the housing industry.

There is nothing inherently good about low interest rates, though when they get TOO high they tend to stifle a lot of economic activity. There is a healthy range for interest rates, but by artificially holding rates at zero, the Federal Reserve is not letting a healthy balance be struck. Many financial analysts believe that the Fed policy is actually laying the groundwork for a future crash that could be just as big as the 2008 crash.

If there's one lesson we should have learned from the now-defunct Soviet Union, it's that central economic planning doesn't work. Sure, we CAN hold interest rates at artifically low levels, but that doesn't exist in a vacuum, and there WILL be real-world repercussions.

Instead of holding interest rates at zero, we need to let the market find a reasonable and healthy balance between the needs of borrowers and the needs of lenders and savers. The rates need to rise in a natural reaction to our current situation, and it won't be long before the Fed is forced to raise them.

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The Myth Of The $7.5 Billion State Budget

I have run into this for years, and it never fails to irritate the heck out of me. Are people so willing to believe falsehoods and misrepresentations of reality?

Allow me to explain. (I'll use 2009 budget figures here, as they're the latest I have readily available.)

A recent article in the Anniston Star made the claim that the state's General Fund budget was approximately $1.6 billion dollars a year. I've heard similar claims about our Education Trust Fund being less than $6 billion... for a total state budget of around $7.5 billion.

Don't believe it. The claims are total hogwash, and anchored in a firm grounding of willing self-deception.


You see, in each budget there are two basic types of funds allocated: earmarked and non-earmarked. Earmarked funds must be spent on specific items, while non-earmarked funds can be spent on whatever the Legislature wants to spend it.

If you look at the 2009 budget document, you'll find that the unearmarked funds in the General Budget totaled $1.8 billion... a number suspiciously close to the Star's $1.6 billion figure. The ACTUAL amount of money spent in the 2009 General Fund budget was $11.8 billion... but hey, money that is statutorily earmarked just doesn't count, now does it?

It's not just the Anniston Star that willingy makes this mistake. I've heard LEGISLATORS talk about their GF budget coming in under $2 billion, as well. It's malarky, but it sure makes them sound like they don't have a lot of money, doesn't it?

In 2009, the state of Alabama spent more than $24.4 billion, $11.8 billion in the General Fund and $12.6 billion in the Education Trust Fund. And if you'd like to see summaries of how much money the state has spent over the past decade or so, complete with links to the budget documents, you can find that data here.

The argument goes that, since the smaller amount is all that anybody really has control over (the rest being earmarked ahead of time), then it's reasonable to treat that smaller amount as the total amount. Personally, I think that's garbage. If the state spends the money, earmarked or non-earmarked, then we need to count that money when we refer to the budget.

So, the next time you hear somebody claim the General Fund is less than $2 billion, you know enough to call the speaker (writer?) a liar and tell them the TRUE figure is far closer to $12 billion than $2 billion.

Responsible government STARTS with honestly dealing with the budget numbers, no matter what they are.

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