Rick Green's Eye

Courant columnist Rick Green is a keen observer of very obscure, though important facts. In a recent blog posting he dusts off and shines a spotlight on an issue that must be resolved if Connecticut ever has a hope of containing runaway tax spending. He quotes DonKlepper-Smith, Governor Rell's economist:
There is a long-standing, red-herring argument that has been backed by symphony orchestra string sections about how poorly public sector employees are paid. In fact one is led to believe that to work in the government sector is to be doing the altruistic "public service" akin to feeding the poor in starving nations.

The bare and ugly truth is that the salaries, benefits, time-off, government perks, and pensions over time far exceed the economics of the private sector for the vast majority of Americans. Government itself, as a self-regulating and self-serving consumer of tax dollars has long been an economic pig wearing lipstick.

The size of government needs to be trimmed and the obscene excesses of compensation need to be brought under control.

Two decades ago, this problem was identified and swept under the rug. The prediction at that time was that government serving government spending would first collapse the free market economy and then finally implode it's own.

We are nearing the time of that implosion. The free market economy is bare and staggering.

Visualizing Tax Cuts

A site called ChartJunk is redesigning tax comparison graphics to more accurately depict population distributions.

This is an interesting math exercise because it is a real world example of how figures get distorted. Here's ChartJunk's improved graphic:



Contrast and compare it to MSM reporting of the tax plans.

Economic Schizophrenia

In yesterday's post we explored the market forces at work molding the habits and values of children to spend, spend, spend.

Today we explore the paradoxical reality of family economics in America. he International Herald Tribune reports in Hard times hitting American students and schools in double blow by Sam Dillon:

In interviews, educators in many states said they were seeing more needy families than at any time in memory. Two charities in suburban Detroit announced in August that they would hand out student backpacks, attracting hundreds of families.

"They went through all 300 backpacks in three hours, boom, and that was that," said Kathleen Kropf, an official in the Macomb Intermediate School District. "We're seeing a lot of desperate people."

There were no giveaways for Jacci Murray, 28, a single mother in West Palm Beach, Florida, who said she lost her job six months ago. Murray bought pencils and crayons for her son, Cameron, who is in the second grade, from a discount bin at Office Depot. Saying she felt "cheap and broke," she pored fretfully over her school supplies list, afraid to waste gas by making more than one shopping trip.

"It's been tough this year," Murray said. "I'm depressed about school."

And so are many educators.

West Virginia officials issued a memorandum recently to local districts titled "Tips to Deal With the Skyrocketing Cost of Fuel." Last week, David Pauley, the transportation supervisor for the Kanawha County school system, based in Charleston, met with drivers of the district's 196 buses to outline those policies. Pauley told them to stay 5 miles per hour below the limit, to check the tire pressure every day and to avoid jackrabbit starts.

The Caldwell Parish School District, in northern Louisiana, took a more sweeping approach to saving fuel by eliminating Monday classes. The district joined about 100 systems nationwide, most of them rural, that in recent years have adopted a four-day schedule.

The district's superintendent, John Sartin, said the move should save $145,000 in a $15 million budget. The decision, made in June, came after crude oil prices had risen for 29 consecutive days, Sartin said.

"People here worry that they won't have enough money to last through the month," he said.

-snip-

Nationally, 14.9 million students qualified for free lunches last year, according to data from the Agriculture Department; the Bush administration's budget estimates that an additional 283,000 students will be eligible this year.

A department spokeswoman, Jean Daniel, said that subsidized meals were an entitlement and that no students would be turned away if participation exceeded estimates.

The office here where parents fill out forms to qualify for subsidized meals has seen a stream of anxious parents this year, often in tears, pleading for the free meals for their children because they do not have 70 cents a day to pay for the reduced-price meals, Owens said.

"We've had a lot of daddies coming in to say their check doesn't cover like it used to," she said.

All of this puts children whose expectations for consumption are non-stop suddenly in situations that most surely will trigger bouts of depression and resentment toward their parents.

This will not end well.

Re: Educrats

An op-ed piece by D. Dowd Muska appeared in The Chronicle on Saturday called Educrat. Muska speaks for a growing number of taxpayers in questioning the enormous costs of public education.

The numbers on spending are stunning. Several years ago, a legislative investigation found that between 1981 and 2001, Connecticut’s government-school expenditures, adjusted for inflation, more than doubled. Enrollment growth was less than 10 percent.

The teacher-student ratio in Nutmeg State government schools is lower than the national average. The share of non-instructional staff in the system is high -- 13 percentage points above average. And with educrat earnings and benefits in the exosphere, spending per student ranks near the top. (Only New Jersey and New York spend more.)

It’s likely that many “do it for the children” activists aren’t aware of these figures. A recent opinion survey discovered that Americans have little understanding of how much revenue funds government-run schools. The average answer to pollsters’ query about per-pupil spending in respondents’ local districts was $4,231 -- less than half the accurate sum. In addition, respondents underestimated average teacher salaries in their states by over $14,000.

Researchers William Howell and Martin R. West concluded: “Americans think that far less is being spent on the nation’s public schools than is actually the case. The vast majority of the public thinks we spend amounts that can only be described as minuscule, and almost 96 percent of the public underestimate either per-pupil spending in their districts or teacher salaries in their states.”

On the rare occasions when Connecticut’s educrat lobby concedes that taxpayer support of its empire is vast, we’re told such spending is the cause of the state’s high-performing students.

But the outcomes of Connecticut’s government schools aren’t as stellar as defenders of the status quo would have us believe. Skeptics cite Nutmeg State students’ performance on the National Assessment of Educational Progress (NAEP). The test, first given in 1969, is a rigorous examination of elementary students’ competency in core subjects.

Connecticut’s NAEP scores are unimpressive. In 2007, 53 percent of the state’s eighth graders were “proficient” in writing. A mere 37 percent were proficient in reading. And only 35 percent were proficient in math.

Those figures don’t quite jibe with the far-less-demanding Connecticut Mastery Test (CMT), which unlike the NAEP, is not overseen by a bipartisan panel of experts from across the nation, but by the state’s Department of Education. CMT scores show that those same eighth graders are doing terrific: 83 percent proficiency in writing, 76 percent in reading, and 81 percent in math.

A 2006 analysis by the Thomas B. Fordham Foundation found that the quality of Connecticut’s academic standards was pathetic -- only seven states did a worse job setting criteria for command of basic subjects. (Connecticut’s math and English standards both received grades of “F.”)

I had not realized the disconnect between public perception of the economics and the reality.

Muska gets the economic arguments right though I would argue that the metrics of student success are wrong-headed and indicative of a degenerative pedagogy driven by the madness of the federal Department of Education.

Be that as it may, Muska's economic arguments should be be taken seriously at face value. Education salaries increases are a runaway windfall for the public school employees. The argument that teachers would be much more comfortable in the private sector is a fraudulent argument in an age where the average American worker gets a 0 - 2% raise, faces continuous threats of layoff and outsourcing, and so on.

Teachers and government employees need to recognize that their salary increases are not entitlements but paid for by taxpayers who have not fared well for the past ten years or so.

The $$$ Education Gap

We just got through a very difficult budget season in Region 19 and a clarity about today's economy occurred to me along the way.

Economists like to talk about the nation's economics as monolithic as though everyone experiences the same economic effects.

What has become increasingly apparent is that government employees, teachers, and certain other education professions have surged ahead in security and earnings during the Bush years. Their uninterrupted incomes, benefits, and automatic raises have turned the old arguments that public service jobs don't pay around. They not only pay but they are self-inflationary.

On another hand, the middle-class, working in the free-market have experienced severe deflationary economics. Layoffs, downward re-employment, displacement, and depletion of savings are typical. Missed paychecks are common. Benefits, security, and thoughts of retirement are non-existent.

A third group is a growing retirement community living on fixed incomes.

The ever-increasing tax burden that funds the inflationary group is killing the rest.

This can't go on forever.

Rell's Dystopic -cough- "Vision"

The Courant reported today the shocking news that Gov. Rell wants to raise taxes to aid, among other things, education.

I whole-heartedly support increased aid to towns for education but not at the expense of higher State taxes. And these new taxes will violate the spending limits with malice. IMO, this is not a vision nor is it a true relief. This is a stealthy way to raise State taxes without guaranteeing a corresponding reduction in local taxes. Quite frankly we can't afford this bait and switch game.

What this state needs is lower taxes and the elimination of the Department of Education as well as a rollback of numerous inane and regressive education "laws".

Here's where Rell is wrong.

First, considering the negative environmental impact autos have on Connecticut she should not be attempting to eliminate car property taxes. This is regressive for urban dwellers who reap no benefit by using public transportation. Secondly, it's yet another tax break for the rich. We should be creating incentives for public transportation systems not reinforcing big car purchases.

Instead eliminate all taxes on businesses who upgrade high-tech capital equipment and assemble and operate that equipment in Connecticut and who hire local residents of Connecticut first. This creates jobs and growth that lower taxes by introducing prosperity and a larger labor and tax pool. Connecticut needs quality jobs not taxes.

Second, sunset any tax increase the minute that the state education funding is reduced to local entities. Years ago, lottos were legalized because their receipts were ear-marked for education. Soon after, lottery buyers had a better chance of seeing money than schools. Taxpayers are sick of these sneaky deals.

Third, schools cannot afford any more sugar-coated accountability riders to funding. If the governor is interested in accountability then she must address her own campaign activities long before accusing schools of needing more accountability or high-stress tests. This nonsense is killing education nationwide and she needs to get real about improving education by advocating the complete repeal of the NCLB blight.

No more high school graduation requirements. This blovial nonsense is dropping out more students than it saves. The job of schools is to create learners not student widgets. Let's start holding the veracity of employer and CBIA education claims to higher standards of accountability for a change. I recently heard a story about an engineering firm who preached to educators that that couldn't hire engineers fast enough - educational output was failing them. That was when their stock was selling for hundreds per share. Two years later, at four dollars a share they weren't hiring.

The CBIA incessant whining about American education bears examination because it distorts the true quality of the schools and students - defamation using stock market speculative propaganda.

Can You Spare A Dime?

An opinion piece [more fact than opinion] in today's New York Times is a wake-up call to everyone working in the Private sector and needs to be a wake-up call to everyone working on tax dollars. Income is dropping for the under-65 years of age working population.

To me there's no mystery involved. The tax myth that giving tax breaks to corporations and the rich will somehow enrich us all is empirically false. Taxes continue to rise, government has ballooned, and parents and children are taking the hardest hits.

Downward Mobility from the New York Times Opinion section.

If you’re still harboring the notion that the economy is “good,” prepare to be disabused.

Even the best number from yesterday’s Census Bureau report for 2005 is bad news for most Americans. It shows that median income rose 1.1 percent last year, to $46,326, the first increase since it peaked in 1999. But the entire increase is attributable to the 23 million households headed by someone over age 65. So the gain is likely from investment income and Social Security, not wages and salaries.

For the other 91 million households, the median dropped, by half a percent, or $275. Incomes for the under-65 crowd were hurt by a decline in wages and salaries among full-time working men for the second year in a row, and among full-time working women for the third straight year. In all, median income for the under-65 group was $2,000 lower in 2005 than in 2001, when the last recession bottomed out.

Despite the Bush-era expansion, the number of Americans living in poverty in 2005 — 37 million — was the same as in 2004. This is the first time the number has not risen since 2000. But the share of the population now in poverty — 12.6 percent — is still higher than at the trough of the last recession, when it was 11.7 percent. And among the poor, 43 percent were living below half the poverty line in 2005 — $7,800 for a family of three. That’s the highest percentage of people in “deep poverty” since the government started keeping track of those numbers in 1975.

As for the uninsured, their ranks grew in 2005 by 1.3 million people, to a record 46.6 million, or 15.9 percent. That’s also worse than the recession year 2001, reflecting the rising costs of health coverage and a dearth of initiatives to help families and companies cope with the burden. For the first time since 1998, the percentage of uninsured children increased in 2005.

The Velvet Military Draft

The Bush administration refuses to reinstate the military draft. Why bother?

The alternative plan is not only to force teenagers to enlist but to make as much money as possible doing so. As you know, college loans are no longer guaranteed reasonable rates of interest. Those borrowing will be paying that debt until they're in their late middle ages.

Now, comes news that this administration has found a way to punish families that save as well. From the Courant;

The kiddie tax was created nearly 20 years ago. It affects a child's unearned income - typically interest, dividends and capital gains. It does not apply to money that a child earns on a job.

As it now stands, the tax applies to those under 14. The first $850 of a child's unearned income isn't taxed. The next $850 is taxed at the child's rate. Anything above that is taxed at the parents' rate.

After children turn 14, investment income is taxed only at their rate, not the parents'.

Under the new tax bill, the kiddie tax would apply to those under 18. The change would be retroactive to the start of this year.

Here's how the change would affect a child's tax bill:

Assume that a 15-year-old's tax rate is 10 percent and that her parents are taxed at 35 percent.

If the teen has taxable interest income of $10,000, under current law her tax bill would be $1,123, said Bob D. Scharin, a senior tax analyst with RIA, a provider of tax information in New York. Once the kiddie tax age limit is raised, her tax bill would go up to $3,283, he said.

Soon the only teenagers who will be able to afford college will be those receiving GI benefits. Maybe that's the new draft, strangle higher education.

Legalizing High School Robbery

Thanks to Republicans like Rob Simmons, most high school students who will depend on financial aid of one kind or another will be lucky to keep a shirt on their backs. The latest tax legislation is carefully crafted to offer a few crumbs to the middle class while punishing parents and students.

As Connecticut Blue observes, "Simmons is one of the few Second District residents that will benefit from this bill. The rest of us will be saddled with paying the principal and the interest on the debt we will rack up in order to transfer our money to rich people like Rob". The Center on Budget and Policy Priorities lists the criminally negligent consequences of Bill: H R 4297.

$20 for the middle class, $43,000 for millionaires. Middle-income households would get an average tax cut of just $20 from the agreement, according to preliminary estimates by the Urban Institute-Brookings Institution Tax Policy Center, while the 0.2 percent of households with incomes over $1 million would get average tax cuts of $43,000, and the top 0.1 percent of households (whose incomes exceed $1.6 million) would get average tax cuts of $84,000.

But to complain about this -cough- "transfer" of wealth from the not-rich to the ultra-rich would be nothing more than petty jealousy on the part of the not-rich so we can't talk about how it will affect local budgets.

You see, when the not-rich have less money to spend the not-rich are less likely to vote for school and local government budgets. Bad for schools, fire departments, police, and other not-rich constuencies.

But let's peel the onion one more skin.

Today, The Student Business by Ralph Nader, is an article that talks about your child's chances of ever paying off a student loan.

In February Congress did act on student loans in another way - backward. It cut $12 billion out of the student loan programs, mostly from students and parents. In a report just out, the California Public Interest Research Group (CALPIRG) found that in California, 17.9% of public college students and 28.8% of private college graduates have unmanageable student loan debt were they to take jobs as teachers or social workers. Yet these critical careers desperately need college graduates to replenish their ranks. (To download the full report, go to http://www.calpirg.org. See also http://www.studentloanjustice.org.)

Last Sunday, May 7th, I turned on CBS' 60 Minutes which unloaded on Sallie Mae in a devastating segment about its power, greed and profits.

Originally a government-sponsored enterprise like Fannie Mae, Sallie Mae was privatized in 1997 and is now the largest private lender to students. But not entirely private. The federal government is its guarantor. Michael Dannenberg of the New America Foundation told Leslie Stahl: "It may be called 'private'.but it's not private at all. Frankly it's a socialist-like system. It's not as if this private entity is assuming any risks. No, no, no. The law makes sure that this so-called private entity has virtually no risk."

It gets worse. Let's say a graduated student defaults. The government pays Sallie Mae both the principal and the interest compounded. But the loan is still subject to collection. Guess who owns some of the largest collection agencies - you guessed it, Sallie Mae. When its collection agency collects, it gets 25% of the recovery. The profits go to Sallie Mae.

The corporate lawyers who conceived this self-enriching system ought to get the nation's top prize for shameless perversity.

Shameless perversity! The holy rollers who have taken complete control of this government say they talk to God, that the non-rich "don't share their values", and tell us underfunded schools need to be held accountable. And just a minor footnote on their "values" - for the first time in my life - torture, eavesdropping, sado-masochism, prostitution, money-laundering, national fraud in a multiplicity of critical areas, cover-ups, political paybacks, kickbacks, and back-stabbing, the destruction of a major American city including neighboring suburbs in three states... I am likely to exhaust myself naming the sins, high crimes, perversions, and witless incompetence that so naturally and casually has become business as ususal in the Bush theocracy.

And gutter bureaucrats like Rob Simmons have no problem with any of it except that it has an outside chance of hurting their election chances.

Voters reinforce the idea that schools are turning out idiots. Just look at the national election results. Stupid is as stupid does. The kids don't deserve this.

Parents lose tax break - thank Congress

Not only is education largely unfunded, now parents will be getting taxed without the benefit of long-standing tax breaks. The NY Times gives you the heads up...

With Tax Break Expired, Middle Class Faces a Greater Burden for 2006
By DAVID CAY JOHNSTON
Published: April 16, 2006

The tax break that expired at the end of 2005 limited the alternative minimum tax to 3.6 million taxpayers, of which 2.1 million were families with children.

This year 18.9 million taxpayers are facing the alternative levy, with 11.8 million representing families with children. Without Congressional action, those affected will pay $26.6 billion more in federal income taxes for this year. Almost the same amount, $24.1 billion, will be saved by all investors, the Tax Policy Center estimated. Actual savings for investors are likely to be higher if recent stock market growth continues.

The alternative tax was originally adopted in 1969 to ensure that people who earned the equivalent of more than $1 million in today's dollars did not live tax free. It has not been fully adjusted for inflation and was not integrated into the Bush tax cuts. In addition, Congress in 1986 made basic changes in what kind of deductions are counted in determining whether one has to pay the alternative levy, causing it to become a tax on the middle class.

In the beginning it took away exotic breaks to high-income taxpayers who paid little or no tax. Now it denies people exemptions for themselves and their children and deductions for state income taxes and local property taxes.

Just one-tenth of 1 percent of the increased alternative tax is being paid this year by those making $1 million or more, the Tax Policy Center estimates, even though this is the only group affected by the original version of the levy.

And you all thought your kids would be the first generation to not do as well as their parent's generation.

Wooooooooooooo Hoooooooooooooo!

A rumor circulating through Ashford at this evening's Board of Finance meeting was that two CT State Senators will be introducing a Bill on Monday that legislates that the State of CT will reimburse school districts 100% of the cost of special education expenses!

Every man, woman, and child needs to show up in Hartford on Monday to support these brave souls. There is no single piece of legislation that would more relieve taxpayers than this.

I'll update this post as soon as more information becomes available.

UPDATE: Here's the skinny:

HB No. 5842, entitled "AN ACT LOWERING PROPERTY TAXES THROUGH STATE
ASSUMPTION OF MUNICIPAL LIABILITIES," was recently introduced by the
Finance, Revenue, and Bonding Committee. In essence, it requires the state
to cover 100 percent of the special education costs in the state as well as
cover most health insurance costs for municipal employees. A hearing on the
bill is scheduled for Monday. To access information on the bill, go to
http://www.cga.ct.gov/ and enter 5842 in the "Quick Search" option at the
top of the page.

Thanks to Dave Polsky

If it's community property, it must be mine

Many years ago, I used to pick up my wife for dinner after work. She worked at a Handicapped Workshop in Rockville.

One day we pulled up after hours so she could pick up her car and a woman was emptying a van full of garbage in the Workshop's dumpster. "Hey, lady, what are you doing? I said, "That dumpster is for the Workshop only."

She turned and said, "I PAY TAXES FOR THIS! It's COMMUNITY PROPERTY!" She finished dumping her garbage and left. She had no right in the world to add expense to the Workshop's garbage removal bills but she, like far too many people, think that paying taxes is a license to pillage community trusts.

At school budget time the schools are trying to make nickels scream by hanging on to every one they can allocate, schools have to balance the books and beg taxpayers to pass enough money FOR KID EXPENSES. One way to help the schools is to let them manage their resources responsibly and leave NON-KID EXPENSES off the table.

Off hours use of school facilities is an extraordinary expense and needs to be properly accounted and responsibly supervised. Adding non-educational expenses to the school budget makes taxpayers scream thinking the schools are out of control.

The town of Ashford should no more let the middle school resources and facilities be offered to the community for free than let the Ashford Fire Engines be used to water private lawns for free in off peak hours. Both notions are absurd at face value.

The school can be made available off-hours, inexpensively and responsibly by observing good accounting procedures. That way nobody gets taken advantage of. And that means everybody pays something to use the school resources. For community use, funds can be cleanly allocated elsewhere.

Otherwise, let's just merge the budgets back together.

The IRS and your Political Privacy

This is slightly off-topic but there's always so much noise about how taxes are spent - as if education were a criminal enterprise.

Just Friday, this extremely disturbing article appeared in Tacoma Washington's paper. It talks about the IRS' indirect collection of party preference information from taxpayers. It also talks about a mysterious third-party database housing this data (is this secure and local or maybe outsourced and available for dubious purposes).

You'll notice that Connecticut taxpayers were targeted. Ah, the joys of a Bush presidency.

Read it and weep (I'm out of tears),

IRS tracked taxpayers’ political affiliation

The News Tribune
Published: January 6th, 2006 02:30 AM

WASHINGTON – As it hunted down tax scofflaws, the Internal Revenue Service collected information on the political party affiliations of taxpayers in 20 states.

Sen. Patty Murray, D-Wash., a member of an appropriations subcommittee with jurisdiction over the IRS, said the practice was an “outrageous violation of the public trust” that could undermine the agency’s credibility.

...and...

Kelly said Thursday that several IRS employees had complained to the union about the practice. She said IRS officials weren’t even aware of it until she wrote them in late December.

In a letter to Kelly, Deputy IRS Commissioner John Dalrymple said the party identification information was automatically collected through a “database platform” supplied by an outside contractor that targeted voter registration rolls among other things as it searched for people who aren’t paying their taxes.

“This information is appropriately used to locate information on taxpayers whose accounts are delinquent,” he said.

Murray and Kelly, however, remained skeptical. Kelly said the collection of such data was even more troubling because the IRS intends to start using private collection agencies later this year to go after back taxes.

“We think Congress should suspend IRS plans to use private collections agencies until these questions have been resolved,” she said.

According to Murray’s office, the 20 states in which the IRS collected party affiliation information were Alaska, Arkansas, Colorado, Connecticut, Delaware, Florida, Louisiana, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, Utah and Wisconsin.