Setting the Stage for 2012

Say what you want for 2010, but it seems as if the battle lines for the 2012 presidential election were drawn in the sand this December. What are these issues? The forefront of the election will center on the economy. It’s not quite surprising is it? After all, since 2008, “we” – Congress that is – bailed out banks, car manufacturers and it was even proposed that the pornography industry could benefit from this economic “stimulus.” As if.

Even while economists claim a glimmer of hope exists for the coming year, this reassurance is hardly comforting given that 2010 has been so dismal. Housing prices have stagnated, and no one seems quite sure if they have bottomed out. It’s just as difficult to read the tea leaves of applications for unemployment benefits. Still we try. Even the television stations try to spin the news to make it palatable to the American public. The problem, of course, is the reality of the situation. The mirage of future economic prosperity being right around the corner does little to placate the family whose house is underwater and the homeowner who has become recently laid off.

One of our greatest problems is our fundamental failure to understand that we are far more than a stone’s throw away from our economic solution. For the past two years, we’ve tried putting on band-aids to plug the aortic rupture of our financial problems. In doing so, our congressional leaders have used neither a scalpel nor a hatchet to operate on the economy. Rather, we’ve treated the symptoms but failed to address the cause. How have we treated the symptoms? Predominately though stimulus and bailouts.

If we use a band-aid when stitches are required, we jeopardize exacerbating the condition. Unfortunately, this is the case. The federal deficit is larger now than at any time in American history – the last two years have added more to it than any other administration, Washington through Regan, combined.

Taxes, too, form part and parcel of the economy. Too high, taxes retard growth and depress the economy. Too low, the government cannot provide for the safety and welfare of its citizens. The Bush-era tax breaks, of course, were only extended for two more years and will lapse shortly after the next presidential election absent congressional intervention. For many Americans, this issue will remain dormant for the next twelve months until 2010 when the gears of political machinery will place this in contention.

So what of 2011? If past is prelude, 2011 won’t be greatly different from 2010. Certain those on Capitol Hill will continue to suggest that recovery is nigh, but I suppose that isn’t any different from the past twelve months. It’s not that I’m pessimistic, but I’m not quite even guardedly optimistic. Until our leaders decide to take more aggressive steps to address federal spending and the deficit, I expect the band-aid to stay on another year.

Prop 100 Passed – Now What?

In a 2-1 vote that was largely expected, Arizona passed Proposition 100.  It wasn’t a huge surprise at all considering proponents spent over two million dollars lobbying for its passage.  In comparison, whether for apathy or lack of disagreement with the sales tax (likely the former), opponents raised a nominal thousand dollars.  Planned to begin on June 1, 2010, Proposition 100 will raise the Arizona state sales tax by 18%.  Though it sounds like hefty increase (and it is), supporters posit that it is “merely” a one-cent increase over the existing sales tax.  That is also true; the sales tax is increasing from 5.6% to 6.6%.

For the time being, state employees can breathe a sign of relief; they are able to keep their jobs.  Teachers and other employees that had been laid off may be rehired.  For those dependent on a state salary or on state services, this is a welcomed relief. 

At the very least, Arizona will hopefully be able to right its financial ship.  I am leery of raising taxes, and it is certainly not the norm that the biggest proponent to raising taxes be a Republican governor.  At the same time, I understand that governor Brewer did inherit much of this debt from Janet Napolitano (who was appointed head of Homeland Security).  This does not mean I have experienced a change of heart regarding Proposition 100; I haven’t.  And like I mentioned in the post yesterday, throwing money at our financial woes is not a viable solution to a systemic spending problem.

The decision to Prop 100 did not relieve the state of its obligation to make hard budget decisions, but it did help mitigate the consequences of its financial irresponsibility.  It’s like touching a hot stove, it’ll burn your hand.  That’s what happens when you touch hot stoves.  Likewise, over spending leads to drastic cuts.  Passing Prop 100 is akin to putting on an oven mit and then touching the hot stove.  You feel it, but it’s no where near the effect of touching the skin to the burner.   We can debate the pros and cons of each method, but it’s clear where I stand.  If I touched the hot burner once with my hand, I learn my lesson.  Touching it with a mit, maybe not.

Regardless, this tax is (supposedly) temporary and it will be automatically repealed in three years.  Again, lots can happen between now and then.  So, the goal now is it still to cut programs and reduce spending such that three years later, Arizona can still function without the additional 300 million in revenue.  I’ve heard talk that to drop off in revenue, Governor Brewer will not renew tax incentives given to businesses (but that isn’t this post).

Though the specifics will still be worked out, the “wish-list” projects will be scratched from the drawing board – and rightfully so.   Do we need more parks or playgrounds?  Do we even need the latest and greatest technology labs in schools?  Jobs will survive, but there certainly will be fat trimmed from the general budget.  I’m still of the opinion that we need more than a “trimming.”

Why I voted “NO” on Arizona Prop 100

Today the polls open for Arizonians to vote whether to approve a one-cent sales hike for three years to benefit public schools and public safety.  I voted early and I voted no.

Over the past few months, there has been an incredible amount of spin associated with Prop. 100 – almost all exclusively by those in support of the sales tax.  I’ve heard the refrain on the news and in the office: our public schools need support, and we need to support public safety too.  But the thought that failing to support higher taxes means that I am somehow anti-government is absurd.

I am for fiscal responsibility.   Arizona, for the past number of years, has continually dug itself into a financial hole.  Salaries of state and local government employees have swelled as great as the economic boom of the mid-2000s.   It wasnt’ bad at first because year-over-year revenue suggested that future years would be more profitable than the current ones.  But this house of cards quickly collapsed after the economic downturn and as a result, Arizona still has a billion dollars of money to raise or programs to cut. 

Arizona just has not managed its money well over the past decade and am I opposed to raising taxes on the population to cover its financial mismanagement.   The government needs to manage the money entrusted to it, not raise more to pay for its mistakes.  Look, I think funding public safety is important – especially here in Arizona where the state is plagued with unique problems with border enforcement and illegal immigration.   But there is a problem when there are more police sergeants than necessary, and police officers aren’t properly utilized.  Public safety is top-heavy right now and police officers are sometimes being charged with (and paid for) completing tasks that can be best left to lower level (and lower paid) government employees.

Let’s talk about education too.  Supporters of Prop 100 cry wolf if this does not pass: more teachers will be cut, classroom sizes continue to swell and the level of education will drop precipitously.   Arizona, however, has been consistently at the bottom of the barrel in public education.  It can’t drop much further even if class sizes triple.  And look, this issue is dear to my heart too: for the most part, I am a product of public education.  Education is important, but even here, changes are necessary.

The public school system is in desperate need of a paradigm shift.  Reading, writing and arithmetic are certain baseline principles, but so are real-life, practical classes too.  Instead of reading “See Jane Run” teachers need to put more emphasis on the principles of basic budgeting.  I’m not laying the problems on the teachers, the issues are far deeper and systemic than any one group of employees or individuals.  After all, teachers are mandated a particular curriculum with goals, tests, objectives and sub-objectives.  Meeting these goals are supposedly a benchmark to a well-performing school and a well-performing, adapted student.  Even these are flawed.   And as a result, we are sending waves of under-performing students into the workforce or into college without a solid education foundation.

Just throwing money at a program won’t solve a problem.  This is what Governor Brewer, the media, and the general public seem not to understand.  And those that stand to benefit the most are raising their voices, extending their hands, and casting incredulous stares by those challenging the State to make changes to how it has done business over the decade.  Arizona needs to conduct a hard look at how it operates its budgets and it needs to make hard decisions.  But equally, it needs to develop innovative, new solutions.   Just adding a tax is like sticking a finger into a drain.  It’ll plug the problem temporarily, eventually you’ll want to remove the finger.   Until Arizona fundamentally changes how it manages its budget, its schools, public safety programs and other publically funded endeavours, Arizona will continue to encounter one problem after another.

At some point, we need to say “enough is enough.”  I am drawing the line in the sand with Prop 100.  It’s time for Arizona to own up to its mistakes and quit avoiding the hard decisions.  Governor Brewer needs to make a holistic, top to bottom review about how the state already spends its hundreds of millions of dollars.

Do you support a soda tax?

With the debate surrounding health care reform (Question: How do we pay for it?), another possibility to bettering the health of this nation is warranting a second look. (Answer: the soda tax). Certainly this possibility comes as bitter news to the sugary soda industry but lawmakers suggest that a nominal tax would help offset the trillion dollar price tag attached to universal health care.

I am favorably disposed to a soda tax because harmful actions should be discouraged; e.g. over-consumption of sugar.

As Derek Thompson from The Atlantic explains,

The added benefit of a sin tax is that by taxing something you consider harmful, you can win in two ways. If you don’t discourage consumption of the taxed good, revenues go up. If you do discourage consumption of the taxed good, then congratulations, you’ve reduced the sin you considered harmful in the first place. Considering the enormous impact of obesity on soaring health care costs, that would be a very good thing indeed.

Now, I do not believe it is the government’s role to dictate what we eat, how much we eat, and when we eat. I’m a firm believer in personal responsibility for my eating habits. However, I do believe the government has an interest in protecting the health of its citizens by passing regulations or taxes consistent with such goals.

And considering the enormous impact obesity impacts health care costs, it seems reasonable to tax those responsible for incurring such expenses.

I’m certainly curious to hear what others think. Why do you (or do not) support a soda tax?