July, 2017, Part 4, Political Class Insanity: Fiscal Mismanagement Around The World

As we do every month, we review the latest idiocy, lunacy, ineptness, and general insanity from the American political class. The members of the political never cease to amaze us with their greed, idiocy, gumption, and criminal activities. And just when we think there is no new way to disappoint us and tick us off, they manage to find a way to do it, wasting our tax dollars and destroying our freedoms in the process.

The political class has been very busy this month so let’s get right to it:

1) We are going to talk a lot today about how politicians both in this country and around the world are lousy economists and horrible money managers. We have talked recently about how screwed up the state of Illinois is when it comes to fiscal insolvency of its state government’s finances. It has not had a workable budget in three years, it has untold billions and billions of dollars in unfunded future liabilities, it currently has unpaid bills totalling about $15 billion, and its bond rating is about to sink to junk bond level.

But Illinois is not alone. Many liberals and Democrats in this country want us to assume the economic model of Denmark where the fallacy is everyone is healthy and happy and the government efficiently and effectively takes care of everyone’s needs. 

A recent article from the American Journal Review talked about the reality of life in Denmark, based on the experience of a Danish school teacher:

• The school teacher claims to be a school teacher in Denmark who earns about $61,000 a year.
• She does admit that there is free education for anyone who wants it and they do not have to pay for medical costs.
• But this “free stuff” is not really free since the minimum income tax in Denmark is a whopping 40%.
• Anyone earning over $80,000 a year pays an income tax rate of 68%.
• The national sales tax is 25%, somehow buying a car is taxed at 180%, and gas is taxed so high that it costs $10 a gallon, with the last two taxes precluding just about anyone in Denmark from owning their own car.
• All of these taxes add up so that about 80% of every Danish citizen’s earnings is paid out in taxes.
• The Danes average the highest amount of individual debt in the world.
• The suicide rate in Denmark is 20.8 per 100,000 residents, one of the highest in the world and almost double the suicide rate in the U.S.
• 11% of Danish adults are using anti-depressants, hardly a good sign for a happy population.

As liberals and Democrats never understand, there is no free ride, no free lunch nor free anything in life. There is always a cost and in Denmark the cost is lost freedom, lost incentive, and lost hope, with just about your whole life controlled by what is usually inept and greedy politicians. 

Overtaxing people has NEVER been a way to improve society or the lives of those that live in that society, just ask the Danes and those that live in Illinois, the home of some of the highest taxes, that are about to go even higher, in the country.



2) Let’s stay with high taxes and intrusive government and review a recent report from the fact checking organization, Politifact. It has been my experience that while Politifact claims to be non-partisan, in my opinion it definitely leans left and liberal. Thus, when it comes out and is critical of anything liberal you know it is really bad.

No one would argue that California has been dominated by the Democrats for decades so anything that goes right or wrong in that state is the result of Democrats having overwhelming control of the state government. California also has some of the highest tax rates in the country so that under taxation is not an excuse for anything that goes wrong in the state.

But finally a California politician has stated what is probably taboo among the state’s politicians, that California has the highest poverty rate in the country despite some of the highest taxes in the country: State Assembly Republican Leader Chad Mayes recently called poverty California’s No. 1 priority during a recent meeting of legislative types: "If you look at the official poverty measure in California, we’re about average with the rest of the country. But if you use the supplemental poverty measure, we are in the lead. We have the highest poverty rate in the nation -- higher than New Mexico, higher than any of the southern states, Louisiana, Alabama, higher than Idaho."

Politifact decided to fact check this assertion and their verdict: Mayes is right and he used the most accurate measure of poverty, the Supplemental Poverty Measure, a measure that not only looks at income levels and such but also considers the cost of living in the state.

But this should not surprise us. We recently reported on how 40% of Los Angeles residents are on Medicaid, indicating at least 40% of LA citizens have extremely low income levels, low enough to qualify for Medicaid under their low income thresholds.

Thus, a state government and state political class that has taxed its citizens at some of the highest rates in the country for decades and have racked up over $100 billion in unfunded liabilities, still has not been able to not be the most poverty stricken state in the union. 

Okay, two stories and two stories that show how higher and higher taxation results in worsening impacts on the citizens that have to pay those higher and higher taxes.

3) Okay, still not done on how badly politicians handle our financial matters and economies: Illinois almost at junk bond status, Denmark crushing incentive and stealing 80% of everyone’s income, and California driving its citizens into poverty.

Let’s turn our attention to my original home state, New Jersey. In a recent blog post we showed how New Jersey’s bond rating is the second worst in the country, with only Illinois having a worst bond rating. New Jersey also has some of the highest property tax, income tax, and sales tax rates in the country.

Consider my history of property tax. Back in 2005, just before I sold my middle class home in New Jersey, I was paying about about $4.00 in property tax per square foot of house (Lord knows what that tax rate is 12 years later). I moved to Florida into a middle class house and have yet to pay over $2.00 in property tax per square foot of house. In Florida I also pay no sales tax vs. the 7% in New Jersey.

And yet, New Jersey has the second worst bond rating in the country, has billions in unfunded pension liabilities, and still has some of the highest taxes in the country.

Consider that what the next governor will be faced with according to an article from the NJ 101.5 website by Michael Symons on July 9, 2017:

• A non-profit group has analyzed the state’s financial situation and has come up with some recommendations for the next NJ governor.
• Just to get close to being fiscally sane the state government may have to both reduce health benefits for retired public workers by $1.4 billion a year and raise taxes by $5 billion in taxes.
• The group was honest in their analysis and correctly predicted that given how badly the state politicians had screwed up the state’s financial situation, everyone in the state was going to feel the pain of the cuts in spending and increased taxes.
• But not taking these painful steps now would make the future realities even harder for the state citizens to swallow.
• The group’s tax change recommendations include increasing income taxes to boost revenues by 10 percent, undoing a law exempting more retirement income from taxes, raising the sales tax to 8 percent and expanding it to more services, reinstating the estate tax, taxing legalized marijuana and more.
• As an example of how bad the retirees benefit financial situation is that while the state will put $2.5 billion in the fund for the benefits this year, in reality experts say that $5 billion should be put away, a shortfall that will make the current dire situation even worse and still short fund education, Medicaid, and other state government costs.

So the story is the same, the more politicians and governments spend the worse their government becomes from a fiscal and quality perspective, be it in Denmark, California, Illinois, and New Jersey. And these states and governments end up in a vicious cycle, taxing more and more and more to fulfill the ever increasing size of government. The higher taxes drive away citizens and businesses who value their wealth and freedom which further reduces the tax base which reduces tax revenue which causes politicians to raise tax rates, and the death spiral continues.

More insanity to follow.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

www.loathemygovernment.com

It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:


http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w

July, 2016, Part 2, By The Numbers: Less Taxes Makes For Better Government Which Makes For More Freedom

On a periodic basis we do some posts that fall under the theme of “by the numbers.” Rather than trust what the American political tells us about reality, we like to examine the real numbers and the real reality in the world to understand what is actually going on. Relying on politicians, and their cohorts in the media, to tell us what is reality is always a sucker bet. They have their own agendas and goals, usually centering around their needs and self-enrichment. So we need to look at the reality of the numbers to determine what is really going on.

Previous analyses of “by the numbers” can be accessed by entering the phrase in the search box above. This is the third and final post this month where we look at the numbers to truly find out how good, not likely, or bad, most likely, the American political class is doing in managing our tax dollars, protecting our freedoms, and resolving major issues that affect all of us. 

Yesterday and today we focusing on how economic freedom is tightly linked with political freedom. I say this because the less money the government and the American political class allow you to keep from your work endeavors, the less overall freedom you have. You have less freedom, options and choices to send your kids to better schools, to start a business, to donate to charities, to retire in better financial shape, or to just enjoy life to the degree that you should be able to based on how hard you work. 

During these two days we will prove our constant libertarian point in this blog that the less government governs the better off everyone is on average. That the most heavily taxed states are usually the states in the worst financial shape which will eventually require residents of those states to pay more and more in taxes which will result in less and less freedom. As a result, as the numbers will show, that is why more and more people are leaving the highly taxed, financially distressed states for states that afford them the maximal return on their hard work and wealth. As always under this theme, you will see that the numbers do not lie. This is the cold reality of overreaching, freedom reducing politicians in this country today.

Our preliminary analysis of the numbers from yesterday led us to conclude that: low taxes = fiscally sound states and state governments. And low taxes also means more freedom and liberty for the residents of those fiscally sound states. Simple logic, solid numbers to support it. 

Today, we will continue this number analysis by looking at another measure of state by state financial shape and state by state migration to see if fiscally sound states with low taxes, as we proved yesterday, also increases the wealth of state residents.

Let’s do another more set of numbers. The American Legislative Exchange Council (ALEC) recently released their ninth annual “Rich States, Poor States” report. The report is based on the following approach: “The Economic Outlook Ranking is a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less—especially on income transfer programs, and states that tax less—particularly on productive activities such as working or investing—experience higher growth rates than states that tax and spend more.

The Economic Performance Ranking is a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration and Non-Farm Payroll Employment—all of which are highly influenced by state policy. This ranking details states’ individual performances over the past 10 years based on this economic data.”

So, let's take this measurement and numbers approach, which states are in the best economic shape ("rich states"), and the lists we started with yesterday that had the top ten states governments that were most fiscally sound and the bottom ten states that were least fiscally sound and compare them to the health and robustness of their state economies as measured by the ALEC:

1 - Alaska - ALEC rank - 25
2 - Nebraska - 32
3- Wyoming - 4
4 - North Dakota - 3
5 - South Dakota - 11
6 - Florida - 8
7 - Utah - 1
8 - Oklahoma - 10
9 - Tennessee - 7
10 - Montana - 40

Average rank for the ALEC economically ranked states of the most fiscally sound states we identified yesterday = 14.1

41 - Maryland - ALEC rank - 31
42 - New York - 50
43 - Maine - 38
44 - California - 46
45 - Hawaii - 42
46 - Kentucky - 33
47 - Illinois - 43
48 - New Jersey - 48
49 - Massachusetts - 45
50 - Connecticut - 47

Average rank for the ALEC economically ranked states of the most fiscally unsound states we identified yesterday = 42.3

Thus, the economic condition average rank, as measured by the ALEC approach, of the states in the worst financial shape is about three times higher than the economic condition average rank of the states in the best financial shape. Another measure that shows lower taxes actually may lead to better economic conditions. And as we have discussed above, the states in the best economic condition also tend to be operated and led by Republican politicians:



And the two states with the worst economic conditions that are led by Republicans, New Jersey and Illinois, are really the exception because historically they have almost always been operated by Democrats. 

Note: Just to answer any assumptions that this analysis is tainted because I am a Republican or conservative, understand that I have NEVER voted for a Republican for President in my life (I have been voting since the 1970s) and until 2010, I have never voted for Republican for national office since 2010. As always, these posts are number based and I do not care where the numbers lead to, as long as the numbers are used correctly and thoroughly.

One last set of numbers. Over the past two days we have shown that the states that are in the best fiscal condition from a state government financial perspective also have the more robust economies and the lowest local and state taxes. What do those conditions mean for population growth? Let’s look at the top ten and bottom ten states that we developed yesterday and see if people are moving in or out of them:

1 - Alaska - population growth rate in 2014 - 2015 - -6.9%
2 - Nebraska - 1.2%
3- Wyoming - .3%
4 - North Dakota - 10.6%
5 - South Dakota - 4.0%
6 - Florida - 11.4%
7 - Utah - 1.4%
8 - Oklahoma - 3.0%
9 - Tennessee - 3.7%
10 - Montana - 4.1%

Average population growth of the ten most fiscally sound states = 3.28%

Now, let’s look at the ranking of the ten worst financially sound states and their ranking as far as their population growth:

41 - Maryland - population growth rate in 2014 - 2015 - 4.6%
42 - New York - 1.4%
43 - Maine - .9%
44 - California - 2.8%
45 - Hawaii - 4.2%
46 - Kentucky - 1.7%
47 - Illinois - -3.0%
48 - New Jersey - .5%
49 - Massachusetts - 4.6%
50 - Connecticut - .8%

Average population growth of the ten most fiscally unsound states = 1.85%

Thus, the population growth rate for the most fiscally sound states is about 77% higher than the population growth rate for the most fiscally unsound states. Obviously, state by state population growth is likely affected by a lot of factors but it is an interesting correlation that states with the best run state governments that operate at high efficiency with lower taxes results in more robust state economies and more state residents. And of course, less taxes, smaller government means more freedom and liberty for those state residents.

Of course, people like Obama and Pelosi and Reid get it backwards. They think that more taxation is needed for bigger government to make people’s lives better. Obviously, they have never looked at the numbers to see the exact opposite is true: less taxation means smaller government and better managed government which means more robust economic opportunities. The numbers do not lie.