Increased Spending = Large Spending Cuts?
Those familiar with budget battles in Washington know that whenever budget plans are revised such that proposed spending increases aren't as great as previously planned, that's called a "cut." The same logic applies at the state level.

In an analysis of the recently Minnesota budget for the next fiscal year, the St. Paul Pioneer Press warns that "Gov. Tim Pawlenty's no-new-taxes pledge may become a liability later." At issue is a feature of the Minnesota budget, longstanding, that effectively subsidizes city governments in the rural areas of the state with moneys taxed away from the Twin Cities metro area. According to a report from the State Auditor "646 small cities get an average of 40 percent of their revenue from other taxpayers," and for one city, the number is over 90 percent. Local government aid has been trimmed, and so some raise-the-tax-rates advocates (at the state level) complain that property taxes will soar at the local level, lest fire, police and other local services be cut.

Overall, the "liability" article cited above suggests calls the budget decisions enacted "the largest downsizing of state and local governments in Minnesota in more than two decades. As mentioned in yesterday's entry, it is true that state spending will actually be reduced--by less than one percent. But by the end of the two year cycle under which budgets are made, spending will have increased from the current biannium. So an increase is ... "the largest downsizing ... in ... decades." And you thought that tax
forms were confusing.
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Minnesota General Assembly Adjourns. Wheh!
The General Assembly of Minnesota has adjourned--without a tax increase. Coming from the state that gave the nation Walter Mondale and Paul Wellstone, that's nothing short of remarkable.

According to a Start-Tribune wrap-up on the session, DFL legislators call the budget a "retreat from decades of generosity." Uhm, if I take money from Smith and give it to Jones (while keeping a bit for my expenses, of course), am I truly generous? Generosity is a virtue, but generosity with other people's money is virtue on the cheap. Likewise, the end of so-called "humanitarian care for our states most vulnerable citizens" confuses policy with virtue.

The DFL leadership calls the various reductions in spending "a ruthless dismantling of the safety net." Chicken little, call your office. For starters, it's simply untrue that (at least some of) the money at stake is the one thing that separates the most financially desperate people from third-world poverty. As one Republican leader notes, he "can't understand why a family of four making as much as $60,000 could get the state to pay for half of its child-care costs." Aren't people who create children supposed to be the ones who take care of them?

This budget being the result of the political process, there's no doubt that some things in the budget got messed up. DFL leaders charge that some cuts will mean the end of outpatient care for some people on the dole, which and they will in turn end up in emergency rooms instead, costing taxpayers even more than would otherwise be the case. That's a plausible claim. The answer, though, is not to keeping adding money to the status quo, but to try out innovative ways to turn the functional control of Medicaid spending from government officials to Medicaid families themselves. The Buckeye Institute and the National Center for Policy Analysis have teamed up to offer one such proposal worth considering.

As the Pioneer-Press reports, the two year budget--for all the cries of cuts and the death of all that is good about Minnesota--does increase over its two year span.

Under the bills, total state spending will decrease by about one-tenth of 1 percent over this year, and then increase by 2 percent in 2005, according to the Finance Department.

So much for the claim by the Senate DFL leader that the budget represents "the most radical turn to the right since the 1920s." Actually, he may be correct. Congratulations to Governor Pawlenty and his colleagues in the Republican-run House for standing firm against the DFL call for yet another tax increase. (Minnesota is, after all, the 3rd highest taxed state).

When individuals and families fear job loss in an era of dramatic economic change, retraint in government spending is necessary for good government, and economic growth. Too bad that this counts as "a radical turn," but the current budget is a start.
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I'm a Volunteer. Pay Me!
I do projects for a lot of non-profit organizations, and every one of them has a disclaimer to the effect that "we do not accept government funding." That would seem obvious--isn't a non-profit group one that gets its money from donations, either from foundations, corporations, or individuals?

Actually, no.

It turns out that many nonprofits rely on involuntary donations, or as we usually call them, taxes. A report from Jim Ragsdale in the St. Paul Pioneer-Planet tells the tale of three allegedly volunteer programs, all of which rely on taxpayer money to one degree or another.

Ragsdale crisply describes the contradiction, and the bipartisan political problem it creates:

Funding for volunteers? [Minnesota's governor, Tim] Pawlenty himself has questioned why state money is needed for voluntary service. The state contributes $2.1 million per year toward three national volunteer programs: Foster Grandparents, Senior Companions and the Retired and Senior Volunteer Program, known as RSVP. The governor, faced with a $4.2 billion budget deficit, recommended eliminating those grants.

But due to political pressure from the "volunteers" in the story, the proposed cuts are history.

When the state needs to cut corners everywhere it can to meet a looming budget deficit, this is a bad development on several levels. First, it means that another (potentially) good program somewhere else will be cut instead. Second, it means that the enterprise of volunteering has been corrupted by the political world.

Finally, it speaks to the politicization of our lives on a personal level. Said one man of the (alleged) volunteer organization he participates in, "It gives me a purpose .... I'm so grateful to have something to do, and something as fulfilling as this."

He has a purpose? Good for him. It's pathetic, however, that his vision for the funding of his activities is limited to picking the pockets (all legally, of course) of his fellow citizens.

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Conceal Carry Takes Effect in Another State
Recently, Minnesota became the 34th state to enact conceal-carry, or "shall issue" laws. Typically, these laws provide a statewide standard for who is and who is not allowed to carry a concealed handgun. Absent such laws, local authorities have greater discretion.
As the St. Paul Pioneer Press reports, the new law "calls on the state's 87 sheriffs to give permits to law-abiding, mentally competent residents who are at least 21 years old. Before, police chiefs and sheriffs were in charge of granting or denying permits under a law that gave them wide discretion and called on the applicant to prove an occupational or personal safety need." Interestingly enough, the law, which mandates a $100 permit fee and the completion of a safety class, which runs around $300, raises the bar for residents of some counties. Said the sheriff in one rural county, "It used to be if you said you had a DNR gun safety class when you were 12, that was good enough for us. That's not going to fly anymore."

Opponents of shall-issue permits display the same sense of unreality that pacifists do in foreign policy. C.S. Lewis wrote of the pacifists, during World War II,

Only liberal societies tolerate Pacifists. In the liberal society, the number of Pacifists will be either large enough to cripple the state as a belligerent, or not. If not, you have done nothing. If it is large enough, then you have handed over the state which does tolerate Pacifists to its totalitarian neighbor who does not. Pacifism of this kind is taking the straight road to a world in which there will be no Pacifists.

In a similar way, a prohibition against citizens protecting themselves against the inevitable rogue elements of society will make for a less safe society. (Unlike the international arena, police power is obvious and present in the states. But even the police can not be everywhere, nor can the prevent all crime.)

Even so, a loose group is gathering to oppose the new law, supposing that they can protect people by removing their ability to protect themselves. Rev. James Erlandson, co-chairman of the coalition, states, "We have a right to safe communities free from the threat of firearms.''

Pace Rev. Erlandson, what we ought to be free from is crime, and the record is clear: conceal carry laws probably do reduce crime. This has been the case in Texas, and in other states as well. Such laws may have reduced murders and severe assaults by 7 to 8 percent.

At a more philosophical level, the controversy comes down to a matter of trust. We need and have police and sheriff departments to do their important work. But is public policy going to work on the assumption that, given the right incentives and guidelines, people can be trusted, or not? Given the record on gun control and crime, I'll go with the people.
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Democracy + Government Spending = Threat to Freedom
In the modern world, democracy is the most effective form of government we have found for advancing personal freedom and human well-being. As Winston Churchill allegedly said, democracy is the worst form of government, except for all others. Look at the countries that are the wealthiest, healthiest, with the most output of creative talent, and are most likely to respect civil liberties, and you are looking (without exception, I believe) at democracies.

Democracy, at its best, means more than mere majority rule. A democracy in which a majority of voters approve of cannibilizing a minority is hardly an ideal society. As this example (admittedly, far-fetched) suggests, the rule of majority vote, absent other restrictions on public or private behavior, is a cruel one.

And so today, John Derbyshire argues that government employees should not vote, nor should they be allowed to unionize, lest they drive public finances to the abyss, and limited government from the land. The dangers of a large public sector workforce, enabled with the franchise and equipped with a union, are seen in New York State. Excessive government spending there--egged on by public sector unions--has lead to a public deficit of $11.5 billion out of a total budget of $40 billion.

Just how has this ballooning of public obligations occured? Listen as Derbyshire paraphrases Fareed Zakaria:

If a group of 100 farmers got together to petition the government to give them $10 million, the benefit to each farmer is $100,000. The cost to the rest of the country is about 4 cents per person. Who is more likely to form a lobby, them or us? Multiply this example by thousands and you understand the central problem of American democracy today.

In other words, each proposed increase in spending brings an intensely motivated collection of voters--and in politics, intensity is key. Each successive demand on the taxpayer is mild enough (though the cumulative effect is large) that it is irrational for most people to push back against the "more" crowed. That's why taxpayer advocacy groups are so small in comparison with organized groups of people whose livelihood depends on the tax-collect-redistribute system of government.

Public sector unions, such as the NEA (the union for government-operated schools) and AFSCME (the union for everyone else) are never satisfied with their pay--nor the size of government programs. Again, to quote Derbyshire:

Can you vote yourself a pay raise? No, and neither can I. Bill Bureaucrat and Pam Paperpusher can, though, and they do. Bill and Pam have no problem at all with ever-swelling public budgets, with ever-expanding public services, with the creeping socialism that is slowly throttling our liberties out of existence.

Lest you think that Derbyshire, or I, am being too hard on government employees, I know from experience (having worked for the Defense Department) that many, even most government employees are well-intentioned folk who work hard. But given the choice between a candidate who hopes to cut government programs and budgets, and one who wants to expand them, which is the logical choice for the public sector employee?

(A dirty little secret, by the way, is that many nonprofits depend heavily on government funding. So they, too, lobby for ever-higher taxes, and ever-increasing government budgets.)

Derbyshire recommends revoking the franchise of public sector employees. He admits that it is a fantasy, a dramatic idea that will never be enacted. And given the fact that, like the nonprofits, statutory employees of government are not the only ones who prosper from the machinations of bloated government, it's an impractical suggestion as well. At least, though, this private sector worker has done a good public service by pointing out the problem.

Not surprisingly, the single largest employer in many states is not an icon of American business--GE, Sears, or even the ubiquitous McDonalds--but government.
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Is a Tighter Seat Belt Law Coming to Your State?
In yet another trend towards federalizing crime and regulations, the National Highway Traffic Safety Administration (NHTSA) is trying to get more states to pass "primary" seatbelt laws. In a majority of states, police officials can write a ticket for not wearing a seat belt only if they stop a motorist for some other infraction. In the "primary" states, however, simply going beltless is reason enough to bring on a visit from the long arm of the law.

NHTSA, of course, sites the well-known fact that seat belt use is a good thing, and that seat belt usage is higher in states with "primary" enforcement. But federalism--a crucial tool that the Founding Fathers relied on to protect and guarantee freedom--is undermined if laws beyond the beltway are made under fiscal pressure from unelected officials in the national capitol. The golden rule is the reason that NHSTA has any power in statutes regulating the operation of motor vehicles--a function for states. NHSTA has the gold, and so it makes the rules. Actually, it doesn't make the rules, formally, but states ignore the agency at their own peril.

Only New Hampshire has no seat belt law governing drivers and adult passengers, but, the article notes, "59 percent buckle up anyway." Says the coordinator of the New Hampshire Highway Safety Agency, “The legislature has chosen not to pass a law, feeling that once you are an adult, you should be smart enough to know it makes good sense to wear a seat belt."
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Trust Your College Savings to ... the States?
From the people whose unrestrained appetite has brought billion-dollar deficits .... college plans for your children?

Today's Wall Street Journal [paid registration required] carries a page one article on the way that states are changing the rules on 529 plans that parents use to save for their children's college education. While it is an interesting story of feuding states, there's a more serious philosophical problem that the article never mentions.

A little background, first. The 529 plan, like various forms of the IRA, is a tax-sheltered savings account. It's meant to encourage people to save for college (usually for dependents). If money is withdrawn from the account for education-related expenses, there is no federal income tax liability. Many states offer similar benefits. The plans are administered by the states, which typically contract out the responsibility to a mutual fund company such as T. Rowe Price. They are attractive to families not only for the tax savings, but because they have high contribution limits--much higher than other tax-favored programs. Wealthy families, who are often not allowed to participate in other plans, can participate in 529s.

The Journal article, by Tom Lauricella, concerns the legal barriers that states are enacting to discourage parents from shifting their money from one state's plan to another. New York, for example, now imposes taxes if the money is taken from New York and sent to another state's plan. Some parents quoted in the article complain that states are not changing the rules in the middle of the game, and they are right. How can an investment be properly planned and executed if the rules surrounding the taxation of that investment be changing throughout its lifetime? (The federal income tax code--including the revisions that will be incorporated by the second Bush tax cut--is the supreme example of this chaos).

Are the states not playing nice, by changing the rules? Is Illinois, for example, being unfair imposing taxes on withdraws that it makes from 529 plans offered by other states? Yes. But even more troubling is the fact that Illinois, and each other other states, has 529 plans at all. There are plenty of financial firms willing and able to help parents save for their children's expenses--usually the same firms that are running the state's plans. Why should the states even be involved in this activity in the first place? If there is a legitimate policy need to expand the options for tax-sheltered savings, it should be pursued through reforming existing laws, such as lifting the income limits on Education IRAs.

The incentives are all wrong. The state of Virginia, for example, gets $2 million a year in overhead. The Treasurer of Illinois, under a contract with Citibank, gets to direct a significant marketing program for that state's 529 plan. Her name must, by contract, appear in all advertising for the program, and she often appears in broadcast ads. Nothing to enhance one's political career than to frequently appear in advertisements, paid for by someone else, that pitch a solution to a highly desired product (the ability to fund a child's college education).
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The Memories We Keep on Memorial Day
Laments over the lost meaning of shared ceremonies and symbols, such as national holidays are nothing new. Paul Beston offers up one of the latest critiques of the cultural meaning of our holidays in his take the "lower case holidays," those holidays, once celebrated on a specific day, but since shifted to become the backstop to the great American institution, the three-day weekend:

holiday seems to have taken on its own commercial identity. Memorial Day means summer wear and getaways; Labor Day is for back to school supplies and fall clothing; Presidents Day is about car sales, with makeshift Washingtons and Lincolns hawking zero percent financing on TVs and at dealerships.

According to Beston, "With the exception of religious days, there are no American holidays anymore that do not involve the concept of celebration." When he overstates the case--July 4 is still a solid, widely-observed holiday with events all of its own--it confirms the overall point that holidays that get shifted also get shafted. July 4 is still largely observed on a specific date, not "the nearest Monday."

What does this matter, though? Here's why it matters: despite all its troubles, the US of A is one of the best political, social, economic, and cultural systems known to human history. It didn't get there by accident, but through the hard work of people living and dead--including those who have served in our military.And it got that way through the genius of the founding fathers, who understood that though men are no angels, government can be so constructed as to give them the best possible shot at living freely.

From the National Review archives, David Koppel reminds us that building and maintaining a free society requires right thinking:

Memorial Day — like Passover, Independence Day, and other celebrations of freedom — is a day for reminding ourselves, and teaching our children, that our present happy circumstances are not the mere result of good luck, but instead the result of right thinking.

Now, I'm not trying to be a scold here--I like three day weekends as much as anyone, and while I paid a trip to a field of green this morning, it was not to a veterans' cemetary, but to a golf course. So take today's entry as my small effort of acknowledging the honorable tradition of those who have gone before us, and serve our country even today.
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