The Locker Room

May 26, 2009

Another bite at the Apple

Posted by Becki Gray at 8:17 PM

Senate Bill 575, Modify Corporate Apportionment Formula is heard on the House floor today.  This is the bill that changes the formula determining how much a corporation pays in taxes to benefit one company and lure them to start a new facility in NC - Apple. The company claims they get this benefit in other states and they will not come here unless we change our tax code to their specifications.  Legislators call this economic development, say we have to do this to be competitive with other states, claim the huge capital investment ($1 B, promised) by Apple makes it worth it, if Apple doesn't keep their end of the bargain, the law is void, and we have to do it because of high unemployment and some say they'll do anything to get jobs.
 

Rep Jonathan Rhyne (R-Lincoln) says, "well, at least we know what our price is - it's' $1 Billion".  We will pass tax policy on a case-by-case basis to the highest bidder or biggest roller, not on what is good for the state and what is good public policy for all.  He says it’s’ not fair to traditional industries, it says some play and pay by one set of rules but if you're big enough or promise to spend a large sum of money, we'll give you special treatment.  Lower rates for all not legislation on an ad hoc basis.  He suggests they turn the bill down and highlight the need for real, fair tax reform.  Every speaker says I don't like it BUT.... shows our system is broken and this bill just doesn't smell right. 


Rep Bill Owens (D-Pasquotank) and long time corporate welfare supporter, says until Congress passes a law outlawing incentives, North Carolina has to do this.
This company is not eligible for other incentive packages (Bill Lee, JDIG and One North Carolina) so we've had to come up with a new one.  Promises contractor and sub contractors and new jobs in building the Apple facility.


Rep Skip Stam (R-Wake) remembers the Dell and Google deals and how we were played.  Companies claim they won't come unless we give into their demands.  Would they come anyway?


Stam proposes an amendment that
reduces the investment requirement from $1 Billion to $500 Million.  It might benefit companies other than just Apple. 
Rep Pryor Gibson (D-Anson) says the bill specifically goes after the $1 B investment and is not intended for anything less.
Rep Curtis Blackwood (R-Union) asks who would turn down a $500 Million investment in their district?


Gibson says it’s been complicated to change the apportionment formula and it’s taken a lot of time and they have to hurry up and pass the bill before Apple changes their mind.  If you don't like incentives then you should be opposed to making more incentives available and oppose the amendment.


Amendment fails 35 - 77.


Stam asks where is the "but for" clause in the bill? Note: usually required in incentive bills: company is required to sign off on but for the incentive, they would not come or expand.   Gibson says it’s ‘not in there.  The incentive is so narrowly targeted that the "but for" clause is not needed.


Rep Bonner Stiller (R-Brunswick) asks who owns the land that this computer farm and $1 B investment will be on?  Shouldn't we be assured that there is no political pay off or leverage or benefit?  Gibson says he’s ‘sure the Commerce Dept will take care of the smell test.  In a previous deal, there was a land purchase exchange benefit that a legislator brokered with promises of getting a bill passed.  Stiller wants to know who owns the land where the facility be located.  No one seems to know but we're told to trust the Commerce Dept.


Nelson Dollar (R-Wake) asks how much transparency will there be in the contracts, etc.  Gibson says he'll get the info.


Rep David Lewis (R-Harnett) asks if local governments will be asked to sweeten the pot with local monies to Apple.  Gibson says it would not affect any way that local governments could do.  Local economic development units correspond pretty well and he feels like locals would not be competing against each other but doesn't answer the question if local governments will be giving additional money to Apple. Lewis asks if property tax reductions or credits may be used?  Gibson says maybe but that would be up to locals to make this decision.  In other words, local incentives may well be part of the Apple deal as well as the state incentive.


2nd Reading vote on the bill:  81 yes; 31 no


3rd Reading vote will be tomorrow and I’m sure the debate will continue.
 

Linkable Entry

If you don't like your competition, just get a law passed that would regulate them out of business.

Posted by Becki Gray at 5:40 PM

That appears to be what happened today to hair braiders In what would seem like a simple bill, the House considers HB 291, Hair Braider Licensure/Cosmetic Art Act today on the floor.  The bill, sponsored by Rep Earline Parmon (D-Forsyth)  would impose new regulations with a new $10  licensing fee for hair braiders in North Carolina.  In an obvious attempt to strangulate, oops, regulate the hair braider industry, there is also a requirement of 300 hours of training before they could be certified to practice in NC. 


Rep Paul Stam (R-Wake)  has an amendment to change the 300 hours education  requirement to 35 hours.  Most states either don't regulate or exempt hair braiders from any kind of regulation.  Texas requires 35 hours.  Current braiders are grandfathered in and don't have to have any training. Cosmetic arts regulators oppose any changes.

Vote on amendment 56 - 56.  Amendment fails.

Stam presents a second amendment that says if braiders operate out of their home, they are exempt from the regulations.  Parmon opposes this one too.  Vote is 52 to 59. Amendment fails.

Vote on the bill - 73 yes; 39 no.
 

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Charter schools approved by State Board of Education LFI committee

Posted by Dr. Terry Stoops at 3:47 PM

1. Lake Lure Classical Academy (Rutherford County)
2. Henderson Collegiate Charter School (Vance County)
3. Bear Grass Charter School (Martin County)

For more information on these charter schools, go here.

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Good news on the NC ozone report

Posted by Dr. Roy Cordato at 3:20 PM

We are now 8 weeks into the 2009 ozone season and North Carolina has yet to register a single high ozone day anywhere in the state. It should be pointed out that this is under the new, very stringent EPA standard of .076 parts per million of ambient air. If an area is above this level for an 8-hour period on a particular day it is said to have a code orange day. I just received the data below from North Carolina Department of Environment and Natural Resources (DENR). The first column lists the name of the site where an ozone monitor is located, column 2 shows the county where the site is located, and all the zeros represent the number of high ozone days, year-to-date, for the individual monitor. This is very good news, unless you are running a left wing environmental group whose revenue flows depend on there being lots of horror stories to tell.

Site Name                              County                         >.076YTD   

BushyFork                            Person                                0   
Barnett Knob                        Jackson                              0   
Butner                                   Granville*                          0   
Bryson City                           Swain                                 0   
Castle Hayne                         New Hanover                    0   
Cooleemee                            Davie                                 0   
Duke Armory                        Durham *                          0   
Golfview                                Cumberland                      0   
Joanna Bald                           Graham                             0   
Jamesville                              Martin                              0   
West Johnston                        Johnston *                        0   
Lenoir community College    Lenoir                              0   
Linville Falls                          Avery                              0   
Leggett                                   Edgecombe                     0   
Lenoir                                    Caldwell                          0   
Mendenhall                            Guilford                          0   
Mount Mitchell                      Yancey                            0   
Millbrook                               Wake                               0   
Monroe middle school           Union                              0   
Pitt County Ag. Cr.                Pitt                                   0   
Bethany                                 Rockingham*                   0   
Cherry Grove                        Caswell                             0   
Enochville                             Rowan*                            0   
Franklington                         Franklin*                          0   
Crouse                                  Lincoln                             0   
Pittsboro                               Chatham*                         0   
Fuquay                                 Wake*                               0      
Wade                                    Cumberland                      0   
Waggin Trail                        Alexander                         0   
Bent Creek                          WNC                                 0   
Frying Pan                           Haywood                           0   
Purchase knob                     Haywood                           0   
Rockwell CSS                     Rowan                               0   
Waynesville                        Haywood                            0   
Clemmons                          Forsyth Co                          0   
Hattie Ave. (U)                   Forsyth Co                          0   
Shiloh Church                    Forsyth Co                          0   
Union Cross                       Forsyth Co                          0   
Arrowood                          Meck. Co                             0   
County Line (U)                Meck. Co                             0   
Garinger                            Meck. Co.                            0   
  

Linkable Entry

Joe the Plumber, Mary Katharine Ham, and this guy

Posted by Mitch Kokai at 3:04 PM

Here's a story about a North Carolina businessman who plans to take part in the June 3 Tea Party outside North Carolina's legislative building.

The Senate's proposed tax reform package would have a direct impact on his business. 

Click here, here, and here for Carolina Journal TV Tea Party coverage.

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It Depends on What Your Definition of Empathy Is

Posted by Jay Schalin at 2:25 PM

I think I'm getting a feel for what President Obama's idea of "empathy" is. It appears that the the new Supreme Court nominee was involved in "Ricci v. DiStefano," which is about white firefighters being denied promotions despite having top test scores. (She voted to deny them.)

This New York Times article gives a pretty good idea of what to expect from Sonia Sotomayor:

"I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn't lived that life," said Judge Sotomayor.

A video surfaced of Judge Sotomayor asserting in 2005 that a “court of appeals is where policy is made.” 

Still, Judge Sotomayor questioned whether achieving impartiality “is possible in all, or even, in most, cases.” She added, “And I wonder whether by ignoring our differences as women or men of color we do a disservice both to the law and society.”

So, legislating from the bench--good! Impartiality--bad! White males--not smart!

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Taxes Should Not Pay for Personal Political Campaigns

Posted by Daren Bakst at 2:20 PM

Tomorrow, the state Senate could vote to allow cities to use your tax dollars for the personal use of politicians.  Below is my latest Carolina Beat on the issue:

Scandal is running rampant in Raleigh. North Carolinians are struggling to pay their bills. Now the state Senate is expected to vote on a bill, House Bill 120, which would allow city council members to take your tax dollars and use them for their own personal purposes. Specifically, the money would be used to fund political campaigns.

The primary sponsor and champion of this political welfare bill is Rep. Rick Glazier, D-Cumberland. Amazingly, Glazier and like-minded politicians allege that these taxpayer-financed campaign programs would improve the public’s confidence in government.

Your hard-earned property tax dollars and other local taxes would be used to help politicians. Instead of paying off debts, you would be forced to pay for city politicians’ advertisements.

One of the biggest problems of taxpayer-financed campaigns is compelled speech. Taxpayers are forced to support candidates and speech they oppose. If a candidate wanted to raise city taxes, you would be forced to support that candidate financially even if you opposed higher taxes.

These taxpayer-financed systems also are incumbency protection schemes. For example, assume Candidate A decides against taking taxpayer dollars for her campaign. (I will refer to her as a traditional candidate.) Candidate B decides to take taxpayer dollars. (I will refer to her as a political welfare candidate.)

If Candidate A spends $5,000 beyond a threshold amount of money, $5,000 in “matching funds” would be provided to Candidate B. The whole point is to ensure that traditional candidates can’t spend more than the political welfare candidates.

When funding is equalized, it benefits incumbent candidates. There are many advantages to incumbency, such as name recognition, so it often requires additional money for a challenger to overcome these built-in advantages. When challengers can’t spend more than incumbents, they are far less likely to win.

For centuries, politicians have raised money to help them run for office. This allows citizens to decide voluntarily whether they want to support candidates. Now some politicians want to get rid of our voluntarily system and instead force everyone to support political welfare candidates.

Proponents argue that taxpayer-financed systems protect against the influence of wealthy special interests. However, they don’t mention that existing laws already cap how much money individual donors can contribute to campaigns.

Proponents don’t mention that taxpayer-financed systems clearly are unconstitutional after the June 2008 U.S. Supreme Court decision in Davis v. Federal Election Commission.

In very simple terms, the Supreme Court in Davis held that the government couldn’t penalize a candidate for spending beyond a threshold amount of money because it unconstitutionally burdened his free speech rights.

This is exactly what North Carolina’s taxpayer-financed systems do. When a candidate spends beyond a threshold level, matching funds are provided to the opposition. In fact, the penalties in North Carolina are far worse than those considered in Davis.

Since Davis, legal experts such as former FEC chairman Bradley Smith have explained that these systems would very likely be unconstitutional. The New Jersey legislature decided against these taxpayer-financed systems after its legislative counsel warned that matching funds would most likely be found unconstitutional.

Proponents simply don’t care whether taxpayer financing is constitutional — they will ignore their oaths to the state and federal constitutions and wait for the courts to force them to get rid of their taxpayer-financed systems.

For years, North Carolina has listened to “reformers” who have created excessive campaign finance regulations, restricted free speech through contribution limits, crafted incoherent lobbying laws that discourage political participation, and advanced other policies that blame citizens while protecting the “innocent” politicians. Now they want to force citizens, from the poor to the wealthy, to pay local politicians money for their personal use.

How have their reforms worked for North Carolina? The state government’s corruption is at an all-time high. The state government has become a joke to the rest of the country — even Illinois is laughing. It’s time to ignore these “reformers” who think it’s for the “greater good” when government unethically restricts speech and forces taxpayers to subsidize politicians. A good place to start ignoring them is by shooting down House Bill 120.

Linkable Entry

Without Cooper, Dems have trouble beating Burr

Posted by David N. Bass at 2:12 PM

The Fayetteville Observer's political blog highlights a recent poll showing that Republican U.S. Sen. Richard Burr fares well against other potential Democratic challengers in 2010.

Previous polls showed Attorney General Roy Cooper beating Burr, before Cooper announced he wouldn't run.

According to the new poll (PDF download), Burr has:

  • An 11 point lead over lead over Elizabeth Edwards, wife of disgraced former U.S. Sen. John Edwards
  • A 13 point lead over former state treasurer Richard Moore
  • A 16 point lead over Congressmen Bob Etheridge and Heath Shuler

One caveat is that Burr fails to break the 50 percent threshold in any of the head-to-head match ups -- not a good number for an incumbent.

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Potential school lunch cheating in Wake remains the same

Posted by David N. Bass at 1:59 PM

Readers of this blog who hail from the Triangle area will be interested to learn that Wake County's rate of potential fraud in the free and reduced-lunch program stayed pretty much the same this year compared with last.

As reported previously by Carolina Journal, 64 percent of a sample pool of F&R lunch applicants in Wake County Public Schools had their benefits reduced or revoked during the 2007-2008 school year. Failure or refusal to comply with a verification of income from the school district led to the reduction or elimination of benefits.

The F&R lunch program is meant for low-income families, but some school board members have questioned whether wealthier, ineligible families are receiving the benefit.

Wake's 2008-2009 school year verification shows a drop from 64 percent to 62 percent. Out of 421 applicants surveyed:

  • 152 responded and had no change in eligibility status
  • 6 responded and had their benefits increased
  • 67 responded and had their benefits decreased from free to reduced-price
  • 48 responded and had their benefits eliminated altogether
  • 148 did not respond

The sample was taken from a pool of applicants considered "error prone," meaning their self-reported income came within $1,200 annually of the income eligibility limitation.

The USDA says that school districts risk losing their federal school lunch funding if they conduct a more thorough verification of the program. See CJ's exclusive series on school lunch cheating for more.

Linkable Entry

Re: Remember Estrada

Posted by Daren Bakst at 1:33 PM

David,

Excellent point about Estrada. Regardless of him being Hispanic, the Democrats took the political process to a new low by filibustering his appointment.  The Estrada filibuster was the first time that a Circuit Court appointee had ever been filibustered.  The Democrats by not allowing a vote on Estrada, blocked a chance to have the first Hispanic serve on the DC Circuit.

There are some things that just aren't supposed to be done, and filibustering an appellate court judge is one of them. The Senate's role is to provide advice and consent--it isn't to go so overboard that it undermines the President's appointment powers.  There also is the unwritten rule that the Senate should respect the fact that whomever is the President has won the right (by being elected) to shape the federal courts.

I hope the Republicans take the high road (which they probably won't) and do what is right.  That means no litmus tests for Sotomayor.  It also means no filibustering.  The Republicans by taking this action can help improve the political environment, and also not be a bunch of hypocrities.   This doesn't mean they should support her appointment, but they shouldn't stoop to the level the Democrats have when it comes to judicial appointments.

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Remember Estrada?

Posted by David N. Bass at 12:39 AM

This morning, President Obama nominated Sonia Sotomayor, a federal appeals court judge, to replace David Souter on the U.S. Supreme Court. If confirmed, she would be the first Hispanic to serve on the high court.

I found this tidbit from the AP's coverage of the story noteworthy:

Senate Republicans pledged to give her a fair hearing, and some questioned whether she would base decisions on her personal feelings, rather than constitutional principles. Given her background, any effort to filibuster her nomination could carry political risks, since Hispanics are the fastest-growing segment of the population and an increasingly important one politically. (Emphasis mine).

Wonder why that standard didn't apply to Miguel Estrada, a Latino appointee put forth by Bush for the D.C. Circuit Court of Appeals. He withdrew his nomination in 2003 after being blocked by Senate Democrats for two years:

Estrada, 42, a Honduran immigrant, would have been the first Hispanic to sit on that court, which sometimes serves as a steppingstone to the U.S. Supreme Court.

He was nominated by Bush in May 2001, but Senate Democrats used a filibuster to block his approval.

I guess breaking down racial barriers is only a good thing if the nominee toes the liberal line.

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Re: Education Budget update

Posted by Dr. Terry Stoops at 11:15 AM

Rep. Bruce Goforth (D-Buncombe) may claim that our state constitution mandates that there be 1,000 hours or 180 days of instruction, but the constitution says otherwise.

From Article IX, Section 2:

The General Assembly shall provide by taxation and otherwise for a general and uniform system of free public schools, which shall be maintained at least nine months in every year, and wherein equal opportunities shall be provided for all students.
Instead, the NC General Statutes establish the 180 day, 1,000 hours of instruction rule.

From G.S. §115C‑84.2.(a)(1):
A minimum of 180 days and 1,000 hours of instruction covering at least nine calendar months. The local board shall designate when the 180 instructional days shall occur. The number of instructional hours in an instructional day may vary according to local board policy and does not have to be uniform among the schools in the administrative unit. Local boards may approve school improvement plans that include days with varying amounts of instructional time. If school is closed early due to inclement weather, the day and the scheduled amount of instructional hours may count towards the required minimum to the extent allowed by State Board policy. The school calendar shall include a plan for making up days and instructional hours missed when schools are not opened due to inclement weather.

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GOP leaders pan bullying, sex ed bills

Posted by Mitch Kokai at 10:34 AM

Republican legislative leaders used their regular weekly news conference to raise concerns about Senate Bill 526, the "bullying bill," and House Bill 88, the "comprehensive" sex education bill.

Both pieces of legislation are up for discussion again this week. Click play below to view the 23:58 news briefing.

Linkable Entry

Education Budget update

Posted by Becki Gray at 09:50 AM

The House Appropriations Committee meets this morning to consider additional changes that were made to their proposed budget.

Apparently late last week it was brought to their attention that a significant cut to the budget which would have reduced the school day by 5 days and 10 days was unconstitutional.  According to committee chair, Rep. Bruce Goforth (D-Buncombe), our state constitution mandates that there be 1,000 hours or 180 days of instruction in K through 12.  So they have eliminated that provision and the new budget makes up for those cuts elsewhere in the education budget.

Additional cuts are made to many programs and some are now eliminated. Some of those include:

-Drop out grants were reduced $1 M to $13 M
-University tuition will be increased $200 per student or 8 percent, whichever is lower.
-In state scholarships to out of state athletes (also known as the Rams Club schloarships) are eliminated.
-Every university center will be cut 20 percent unless their funding is tied to a grant or federal matching money. 

NCGA staffer, Richard Bostic says every center received a thorough review, something that to his knowledge has never been done. This affects 275 Centers whose total budget is over $600 M. The reduction in their funding frees up about $124 M.

The committee discussion is about specific programs and several members suggest further cuts to the drop out grants to move the money to other areas - classroom supply funds and national board fees. The grants started out with $7 funding, last year $15. The gov proposed $6.7M, the Senate $1 M and the House started at $14 and reduced to $13 today. This is Speaker Joe Hackney's pet project. See Terry's work on the grants here.

Rep. Cullie Tarleton ( D-Wautaga) asks about reducing teacher salaries and was told that would be a decision for the "big chairs".  In other words, many of the budget decisions will be made behind closed doors by a few select legislators.

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Re: Speaking of a poor understanding of economics …

Posted by Jeff A. Taylor at 08:22 AM

Mitch, you left out the part about Justin Fox being an idiot.

Only a complete moron could write, "Our society failed spectacularly this decade at solving the problem of how to price houses and mortgage bonds."

No, we concocted precisely the housing and mortgage markets policymakers and consumers wanted -- free or nearly free money such that just about anyone, anywhere could buy $300K worth of house. From the tax code, to bank regulators, to Fannie and Freddie, we opted to build a giant banking Ponzi scheme.

All it took was an oil shock and a couple of Wild West wheeler-dealers in Countrywide and Golden West to send the whole thing woozy, finished off with a subtle nudge from fraudulent credit default swaps. More specifically, the problem was not the price of housing or mortgage-backed securities or CDS, it was their value.

We convinced ourselves that intrinsic value did not matter, that all we had to do was "solve" the "problem" of prices to make the numbers "work."

Fox does not even know that he is part of the problem is attempting to describe.

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An antidote for New Deal mania

Posted by Mitch Kokai at 06:42 AM

Regular readers of this forum already know the New Deal did not rescue the American economy from the Great Depression.

If you're looking for a brief, well-articulated restatement of this theme — along with a comparison between the economic conditions of 1933 and those of 2009 — try Robert Murphy's Politically Incorrect Guide to the Great Depression and the New Deal.

In fewer than 180 pages, the economist Murphy debunks myths about Hoover, FDR, the Fed, and the role of World War II in reigniting the sluggish American economy. Among Murphy's observations:

Left to itw own devices, the economy would have gradually recovered from the distortions of the late 1920s boom, as unsustainable lines were shut down and resources transferred to the solvent firms; moreover worker productivity would naturally increase thanks to advances in technology and managerial efficiency. Roosevelt should have let wages find their natural market level. If he had, then unemployment rates would have fallen rapidly in the first few years of his administration. Over time, rising prices, worker productivity and increasing profits would have led to the creation of more jobs and market-related increases in wages.

Unfortunately, FDR did not follow this strategy. Like Hoover before him, FDR thought that the Depression was ultimately due to underconsumption.

Murphy explains that Roosevelt's errors led to government programs such as the National Industrial Recovery Act and National Labor Relations Act.

Overall, the NIRA and NLRA reduced economic efficiency, because labor and other resources were directed only in part by market price signals, but also in significant part by the vagaries of the political process. The New Deal turned American industries into de factor cartels — becoming, in essence, domestic versions of OPEC — and wile that might have had short-term benefits for unionized workers and bosses of big firms in the cartelized industries, it came at the cost of the country as a whole because it resulted in artificially high prices, artificially high unemployment, and politically allocated — rather than market allocated — capital and labor. So not only did the New Deal keep workers on the sidelines, but it also ensured that many of those who did have a job worked in the wrong sectors. By preventing wage cuts and impeding the market's attempts to reshuffle resources after the bust, FDR's polices worked to freeze the economy in its 1933 condition.

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Why would we ‘combat climate change’?

Posted by Mitch Kokai at 06:40 AM

The primary in-house global warming alarmist at TIME, Bryan Walsh, dutifully reports this week:
Despite the positive early signs from the White House, some greens still fret about the future and wonder whether Obama's preference for cooperation over confrontation means he will back away from the truly radical action needed to combat climate change.

This is a case in which the changing language of this debate raises an interesting point. When Walsh’s “greens” talked about “global warming,” it was easier to understand the goal — at least the stated goal. To “combat global warming,” we would take steps to reduce or end global warming.

Unfortunately for the alarmists, none of the policies they’ve pursued to reach that stated goal would have any noticeable impact on global warming. That’s an assessment based on their own projections.

Now that they’ve substituted “climate change” for “global warming” (perhaps because there’s been no global warming in recent years), it’s harder to pin down the stated goal.

Isn’t the climate always changing? Won’t it change no matter what we do? Why would we combat that change? With what end in mind?

Don’t count on Bryan Walsh to ask those questions.

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Speaking of a poor understanding of economics …

Posted by Mitch Kokai at 06:39 AM

TIME’s “Curious Capitalist,” Justin Fox, offers us this gem in his latest column about libertarian Peter Schiff:

He believes that the crisis-fighting measures coming out of Washington are merely delaying the inevitable, debasing the dollar and loading future taxpayers with huge debts.

There is still demand for this kind of market-trashing talk.

Well, no, Schiff is not “trashing” the market. He’s trashing harmful government intervention that prevents the market from working.

But Fox’s error should not surprise us, since he reveals later in the same column that he believes some elite group — Government bureaucrats? Academics? Washington cocktail-party enthusiasts? — must have the answer for the nation’s economic woes:

I happen to disagree with most of Schiff's economic views. But there's a thriving line of academic research showing that including divergent opinions and models of how the world works makes groups better at solving problems. Our society failed spectacularly this decade at solving the problem of how to price houses and mortgage bonds.

In Fox’s defense, his column asserts that people ought to give Schiff an opportunity to make his case. Still, the thrust of Fox’s argument suggests he’s more of a central planner than a capitalist.

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A poor understanding of supply-side economics

Posted by Mitch Kokai at 06:37 AM

The latest print version of U.S. News includes an article from Justin Ewers recounting Ronald Reagan’s economic policies.

Ewers highlights some valid achievements and criticisms (I’d link to the article, but it doesn’t appear to be posted yet), but he also includes the following assessment:

After taxes were cut, he predicted, economic activity would increase so much that tax revenues would go up, allowing the government to pay down the deficit — a radical new theory known as supply-side economics.

Except that’s not the theory. What Ewers describes is actually a possible outcome of supply-side economics. That outcome depends on other factors, including a government that reins in spending.

The Concise Encyclopedia of Economics actually offers us a better definition, which reminds us of one of the social benefits of reducing marginal tax rates:

Since 1986, the top marginal personal income tax rate has been less than 40 percent, compared with 70 percent prior to 1981. Nonetheless, those with high incomes are now paying more. For example, more than 25 percent of the personal income tax has been collected from the top 0.5 percent of earners in recent years, up from less than 15 percent in the late 1970s. These findings confirm what the supply siders predicted: the lower rates, by increasing the tax base substantially in the upper tax brackets, would increase the share of taxes collected from these taxpayers.

That’s a fact the Obama administration ought to keep in mind as it considers changes designed to “tax the rich.”

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The Fed’s role

Posted by Mitch Kokai at 06:36 AM

James Cooper explains in the latest Business Week that it’s hard to predict when the Federal Reserve will turn off the money spigots.

If that doesn’t worry you, you might want to read Thomas Woods’ book, Meltdown.

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Don’t think the new administration wants to run the economy?

Posted by Mitch Kokai at 06:35 AM

You might change your mind after reading this Business Week article about Ken Lewis’ chances of keeping his job at Bank of America.

Writer Dean Foust explains why some in D.C. might want Lewis to leave the Charlotte-based bank:

Earlier this year, Lewis criticized the government, claiming in a now-public deposition that in late 2008 then-Treasury Secretary Henry Paulson bullied BofA into its ill-fated purchase of Merrill Lynch. "What it comes down to is the exercise of power," says Bert Ely, a banking industry consultant in Alexandria, Va. "This may be payback."

It’s just the latest example of the Obama administration’s love of power.

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In case you missed them …

Posted by Mitch Kokai at 06:33 AM

Two John Locke Foundation researchers made the television rounds this weekend.

Michael Sanera discussed environmental issues with Tim Boyum on the latest edition of News 14 Carolina’s “Political Connections.” Click play below to see a portion of the discussion dealing with global warming alarmism.

Meanwhile, Terry Stoops offered his thoughts to NBC-17’s Julie Henry about the N.C. House education proposals. Click play below for Terry’s comments.

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Today's Carolina Journal Online features

Posted by Mitch Kokai at 06:30 AM

The week's first Carolina Journal Online exclusive features Joe Coletti's reaction to North Carolina's latest unemployment figures.

John Hood's Daily Journal examines faulty data that are skewing the debate about global warming.

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