Politico.com reports that key “White House allies are dramatically shifting their attempts to defend health care legislation, abandoning claims that it will reduce costs and the deficit and instead stressing a promise to ‘improve it.’”  It’s no surprise that Obamacare is not turning out to be what was promised. It seems the more the public gets to know about it, the less they like it.

And while some members of Congress and the President promised us that reform would cut costs, it is becoming increasingly clear that they were wrong. And now, facing the fact that Obamacare is becoming less popular with the public, many are doing what politicians do best, offering to “improve” the bad bill they passed in the first place. This is what happens when 2,500 page bills are passed without being read.

In other fiscal news, the Congressional Budget Office reports that over the last 31 months Congress has added more than $4.4 trillion to the federal budget baseline.  In comparison, in 2005 total federal spending was only $2.47 trillion. Healthcare is a part of that equation, and I’d hate to see what the numbers will look like if we send the same elected officials back to “improve” on the $1 trillion piece of legislation they already passed. In order for the situation to really be improved, we need to send a new crop of legislators to Congress.

More than 20 years ago I traveled with a delegation from the American Farm Bureau to assess China’s agricultural production.  China was about to enter the world market but little was known about rural China and even if the nation would be a net importer or exporter of agricultural products.

We had been encouraged to refrain from discussions about socialism, capitalism, personal freedom and similar topics with our hosts.  But while in Beijing we asked why most citizens on the street were riding bicycles and a few were in chauffer-driven limousines.  We finally got our hosts to agree that some people are more equal than others.

Which brings me to New York Representative Jerrold Nadler who happens to support higher taxes but wants to protect the citizens of his high income state.  His solution is to have the IRS adjust tax brackets in areas where the average cost of living is higher than the national average.

Nadler’s bill, called the Tax Equity Act would codify the concept that some people are more equal than others.  For example a family with the same earnings in Manhattan would pay less federal income tax than the same family in, say, Spokane or Yakima or Olympia.

One of the reasons taxes run higher in New York has to do a lot with the local and state tax burden, union work rules, and heavy business regulation that make it more expensive to produce, sell and buy things.

A more accurate title for his proposal is the Blue State Tax Preference Act.

 

The blog below was submitted by an active Farm Bureau leader in Snohomish County. If you would like to contribute to this blog, please contact Mollie Hammar with your submission so we can help make your voice heard.

 

More Bad News on the Employment Front

By Bob Clark

Unemployment continues to be a major headache in Washington state and the nation. The latest numbers, released today, were grim to say the least.

On the national level the advance number of actual initial jobless claims under state programs, unadjusted, totaled 513,347 in the week ending July 10 -- an increase of 44,855 from the previous week. There were 671,242 initial claims in the comparable week in 2009.

Here in Washington state there was some improvement in the unemployment situation in Pierce and Spokane Counties, but King and Snohomish Counties posted an increase of some 5,000 new jobless claims in the month of June. That, coupled with a major decline in retail sales for June in Washington, may have an impact on local produce and ag sales this summer.

For those of you not familiar with these labor statistics, there are basically two numbers that matter. They are the U3 number (the percentage of the work force collecting unemployment benefits) and the U6 number (the total number of unemployed people). Statewide the U3 number stands at 308,180 as of the end of June. The U6 number, now at 17.1 percent, came in at 605,733 in the Evergreen State.

Media types typically have these statistics wrong and mistakenly refer to the U3 number as the “unemployment rate”. The other numbers that are routinely touted are the “seasonally adjusted” numbers, which are simply statistics manipulated in an attempt to show trends.

The July stats that will be out in August will tell us if Washington state is slipping into a “double dip” recession. Follow these links to see the actual numbers from the U.S. Department of Labor and the Washington State Employment Security Department.
 

About the author

 Bob Clark and his wife Kay operate Circle KB Ranch in Monroe, WA, where they have bred rare, purebred Irish Dexter cattle for the last five years. Bob serves on the Snohomish County Farm Bureau Board as membership chair. He is also commander of Post 58 American Legion and President of the Snohomish Chapter of the Citizens’ Alliance for Property Rights. Bob has been following, researching, and writing about economic conditions in Washington state for many years.

Facing a likely budget deficit of nearly $3 billion dollars next biennium, not to mention the possibility of a shortfall this year, Governor Gregoire has announced that she would like to reevaluate our state’s budgeting process.

Part of this process includes holding hearings around the state during the next two weeks to hear from the public on this initiative. This is a unique opportunity to have your voice heard on the important issue of our state’s budgeting process.

The hearings will be held July 19-29 around the state:

Monday, July 19, 2010
7:00 – 9:00 pm
University of Washington-Tacoma
William W. Phillip Hall
1900 Commerce Street
Tacoma, Washington
 
Wednesday, July 21, 2010
7:00 – 9:00 pm
Everett Community College
Parks Building, Multi Purpose Room
2000 Tower Street
Everett, Washington

Tuesday, July 27, 2010
7:00 – 9:00 pm
Administration Building Room 110
Washington State University- Vancouver Campus
14204 NE Salmon Creek Avenue
Vancouver, Washington 

Thursday, July 29, 2010
Time TBA (evening)
Spokane City Hall  City Council Chambers
808 W. Spokane Falls Boulevard
Spokane, Washington

...In percentage and per capita debts among the 50 states.

THAT’S NOT GOOD!

According to www.usdebtclock.org, Washington has the 9th highest debt in terms of state and local government debt as a percentage of state gross domestic product. Washington’s state and local debt is 25.5 percent of GDP, placing us just behind California at 25.4 percent. Remember, this is a race we DO NOT want to win. Finishing strong in the top ten is a remarkably bad accomplishment!

On a per capita basis, Washington’s state and local government debt is $12,822 – ranking #6 among the 50 states. California ranks #7 at $12,752.

So, with all of the news reports about how bad it is in California, we now know that it is actually worse on a per capita basis in Washington state.

If voters approve the proposal to sell bonds for changing light fixtures in schools, we might have a chance to beat out a few other states and move into the top five.

That is, if we want to keep going the wrong direction….

Another observation from the Debt Clock is that our gross national debt is more than 91.3 percent of our GDP. If the current rate of debt compared to GDP remains constant, we will be at 100 percent by the end of 2012.

It’s time we realize it’s time for change…before it’s too late for change.

We all know through personal financial experience that overspending left unchecked will lead to financial ruin. Unfortunately, the present sentiment expressed by the President and Congress (and to a lesser extent by our state officials) seems to be that we can spend our way out of any difficulties without consequences from the subsequent astronomical deficits.

Until now. In an address to the National Governors Association, Erskine Bowles, member of President Obama's debt and deficit commission, hit the nail on the head when he called the national debt “a cancer that will destroy the country from within unless checked by tough action in Washington.”

It is high time that this message be delivered. What remains to be seen is if the Administration and Congress get their own message and take tough actions. Two options for such actions exist:  (1) raise taxes or (2) cut spending.

From vast personal experience we know that only cutting expenses will tame an out-of-balance budget.

In these tough financial times, the federal government is already increasing taxes (just wait for ObamaCare taxes to hit). To tax our way out of a budget/deficit situation now would cripple a struggling economy.

Yes, Erskine is correct -- we need tough action now.

Erik Smith (Washington State Wire) reported yesterday that the state pension systems will need BILLIONS of dollars of more money from the state to meet obligations.
 
Here’s part of the story:

“The state’s two oldest retirement funds are in such desperate shape that lawmakers are going to have to spend billions of dollars over the next 10 years to keep them from going broke. State pension spending is going to have to double next year and triple by 2013, to nearly $2 billion every two years. Half the money will have to go to the two troubled funds. To pay for it, state and local governments will have to cut programs, lay off workers, raise taxes – or all of the above.

Sounds like sort of a disconnect, doesn’t it?
 
How can a major chunk of the state pension system be on the verge of collapse – and yet the system as a whole can get a clean bill of health from the state treasurer?

Turns out it’s all how you look at things."

Mike Ennis at the Washington Policy Center reports that revenues from the state gas tax are continuing to fall – to the tune of 13 percent less than expected for this biennium.

Legislators and analysts have known for quite some time that the gas tax is a declining source of revenue, so they commissioned a study, finished in January of this year, to look at alternate funding sources. The recommendations include more tolling, taxes, and fees.

Washington farmers need a good farm-to-market transportation system, and they understand the costs of maintaining that system. But those costs need to be kept as low as possible so that our ag industry can remain viable and help lead the state out of this slow economy.

Bottom line: The state will want more money for transportation projects, and old methods of taxation aren’t enough. Hold on to your wallets. 

For the past two sessions, we’ve heard majority lawmakers complain about state spending cuts. “We’ve cut to the bone” and “People will die” were common refrains to try to garner public sympathy.

But the public seems to know something that state budget writers skipped over – There’s still room to cut. Former Okanogan County Farm Bureau President and current state Rep. Joel Kretz hit that nail on the head in a recent op-ed in the Seattle Times.

Kretz highlighted the need for fiscal reform and scrutiny, and cited specific examples of state environmental agency overlap and duplication. “This has created a web of money funneling that cannot be tracked effectively,” Kretz said.

In fact, total state government spending for this year is actually higher than it was last year.

“Taxpayers deserve a government that is transparent, accountable and run by people who understand every dollar spent is first earned by a hardworking citizen,” Kretz concluded.

Bottom line: This election cycle, we need to elect people who will stop this excessive spending and restore accountability to our government.

While the state budget outlook continues to look grim for the foreseeable future, key contracts are being negotiated with state employee unions this summer. While state employee contracts are not the only budget fix we need, the continued costs of salaries, pensions, and benefits are a major burden on our state’s long term financial health.

The fact that the state is expecting to collect $200 million dollars less than they had hoped from the new taxes including those on candy, bottled water, and beer, is just the beginning of their budget woes. Budgeting on “hope” may backfire as well as $480 million of expected federal money looks less like a reality every day.

 
All of this means that the state government needs to take every opportunity to cut costs. To her credit, the governor has recently announced a plan to “transform Washington’s budget” but she should not miss the opportunity to address a major budget issue while she has the opportunity. The unions lobbied hard to keep her from reopening their contracts, but they are in the process of negotiating for the 2011-2013 contracts, and now is the time to get it right.
It will not be an easy task, the unions reminded us of this when they filed a lawsuit last week to challenge the furloughs approved by the legislature earlier this year. The irony is that the furloughs were used as a way to save the state a small amount of money without having to completely lay-off some of these same workers. The cozy relationship between the governor and the unions she negotiates with has long been a contentious issue, but it is becoming increasingly clear that unless she is willing to take a tough stance in these negotiations, our state budget will continue to be unsustainable.