…for $1:

[A bureaucrat] says if the state's food stamp recipients receive just $1 for energy bill assistance, that qualifies them for extra federal assistance. That means someone [on welfare] could receive about $30 more per month in food stamps.

Sending out $1 checks cost the state $250,000. DSHS says that could bring the state and additional $43 million in federal funding.

Call it red tape or a hoop to jump through. Either way, the state says it makes sense.

But as I noted back in January 2008, what can you expect, given that government is human beings?

(Via To the People.)

—

Lewis Black on tax rebates (contains naughty language):

Since it was created more than 10 years ago, the Children's Health Insurance Program has been a lifeline for millions of children whose parents work full time and don't qualify for Medicaid, but through no fault of their own don't have — and can't afford — private insurance. For millions of children who fall into that gap, CHIP has provided care when they're sick and preventive services to help them stay well. This legislation will allow us to continue and build on these successes.

Of course, even if one takes as a given that it is either proper or moral to do good works with funds you seize from others by force, the subsequent question still remains: If there is a "Medicaid gap," then why not just expand Medicaid? Why establish an entirely new entitlement and bureaucracy?

The answer of course is one of perception, and delusion. SCHIP is packaged and marketed as a middle-class entitlement. Lower middle class, perhaps, but middle class nonetheless.

Medicaid, on the other hand, is the dole. And the Prime Taboo of Politics is that no middle class entitlement must ever be allowed to hint of being the dole (cf., Social Security).

So instead of the simple and straightforward approach — expand Medicaid — the politicians craft an entire new middle class entitlement, that it can expand without any fear of stigma from those voters whose support the politicians are trying to buy.

I exposed this fraudulent packaging of SCHIP expansion back in September 2007:

—

No wonder class warriors such as John Edwards and Barack Obama are so incensed. Just look at the absolute squalor now spreading across America:

Lori and Steven Siravo earn $56,000 a year and say they can't afford health insurance.

They consider themselves lucky to live in New Jersey, where the family's income isn't too high to qualify their 16-year-old daughter, Carlie, for U.S. government-subsidized coverage under the State Children's Health Insurance Program.
…
Steven, 49, drives a Chevrolet Caprice Classic that's almost 20 years old, and she drives a 5-year-old Chevy Monte Carlo. The above-ground pool out back is 17 years old, bought when "we had money" before Carlie was born, Lori said.

The one luxury is a full-size pinball machine Steven bought for his wife on her 40th birthday.

The family's monthly bills consume most of their take-home income. Pulling out her checkbook, Lori said there's the mortgage ($1,500), utilities ($743), phones and Internet service ($200), car insurance and gasoline ($205), property taxes ($230), basic cable television ($48), food ($600) and credit-card payments ($325) on an outstanding $11,000 balance. That's $46,212 a year, not including clothes, school books and extra-curricular activities for Carlie.
…
There's also $352 a month on a home-equity loan the Siravos took out to send Carlie to a private Catholic high school.

Read that again: Apparently "poverty in America" now means having "only" two cars, "only" basic cable, "only" an above-ground pool and "only" a private education. Oh, and "only" one pinball machine.

If that's your (deprived) lifestyle, then you are, to SCHIP apologists, "poor" and in need of health insurance welfare underwritten by other people's taxes.

This is what Democrats decry as "poverty in America." These are the people to whom President Bush is being "cruel" by threatening a veto of SCHIP expansion. These are the miserable, contemptible, utterly hopeless forty-something whiner-brats who lay claim to other people's income, insisting that — their words — "life is stressful enough without worrying about your health."

Or, apparently, worrying about being middle-class leeches on other taxpayers.

Just to be clear, this family is not "uninsurable." They have access to typical, ordinary private health insurance. They choose, however, to opt — immorally if not irrationally — to enroll in SCHIP for less than one-third the cost of private, middle-class health insurance. Behold "enlightened" socialized medicine schemes — corrupting otherwise reasonable people into becoming welfare bums.

Madness. Sheer madness.

—

Back to the present, Tax Policy Blog explains how the SCHIP expansion: (1) entices families who do in fact have private health insurance to abandon it for "not the dole" government health insurance, and (2) reflects a unapologetically broken campaign promise by President Obama not to raise taxes on anyone making under $250,000 per year. "Change we can believe in"?

Previously:
–Should We Worry About SCHIP Mission Creep?
–Is SCHIP Analogous to Public Schools?

In 1980, Airborne Express turned Wilmington's abandoned Air Force base into a hub for overnight shipping. Eight thousand people found work at what they call "the air park." Then, in 2003 a German company, DHL, bought Airborne in an effort to win a big piece of the U.S. market. It didn't work. The merger was rocky, there were service disruptions were delayed, and customers left in droves. With last fall's economic crash, DHL was losing $6 million a day in the U.S.; layoffs started coming by the hundreds.
…
This week DHL will stop all domestic shipping, except international service. Altogether, about 10,000 people are losing their jobs.

The only reason DHL came to Wilmington in the first place was because there was an abandoned Air Force base there. So in that sense the city's woes started — surprise — with the government.

But as long as somebody — even if just one private employer — was keeping people employed and the tax revenue flowing, then there was no real need for the local government to worry. So they didn't — until it was too late.

As I commented over at MR:

If the mayor of Wilmington had invested all his money in (hypothetical) DHL stock and lost it all, people would say, "That was foolish and his own fault."

But when the mayor of Wilmington (as proxy) invests his entire city's economy in DHL operations and loses it all, it becomes a "moving" story?

I'm not advocating central planning. I'm merely noting that situations like this are not strictly exogenous or unpredictable, and that politicians are not blameless.

If you need another anecdote, compare two cities: Phoenix and Las Vegas. (I've been comparing them ad nauseum recently in connection with Career 2.0.) Phoenix has an extremely diversified economy, and is hurting. Las Vegas has an extremely undiversified economy, and is dying.

Again, this is not a call for central-planning intervention to coerce a local economy into diversification. It's merely a call to highlight how little politicians are able to do about it one way or the other — and how unmotivated they are to even try when times are good.

Now that Washington is scrambling like a headless chicken to "do something" (with taxpayer money and trillion-dollar deficits) after the fact, it's a fair question to ask why, if government is so wise, they couldn't see it coming before it happened.

In Monday's meeting between President-elect Barack Obama and congressional leaders, Senate Republican leader Mitch McConnell suggested that instead of providing aid to the states to help them meet their Medicaid and education obligations, the federal government offer them loans. The idea is ridiculous on its face: With revenue drying up, states are already slashing services and reducing their workforces, which only deepens the downturn. The last thing they'd be inclined to do would be to take on more debt at the very moment they're struggling to balance their budgets.

So government giving itself other people's money is an enlightened path to universal prosperity. But government loaning itself other people's money is — his term — "ridiculous on its face." Are you getting all this down?

Would the following proposition make any sense? "If I give myself money (that I don't have), then I'll be better off. But if I loan myself money (that I don't have) — well, that's just ridiculous on its face!"

Myerson seems to forget the pesky fact that the federal government and state governments are — ahem — "government." The suggestion that any intragovernmental transfer will possibly (let alone inevitably) have any meaningful stimulus effect is what's "ridiculous on its face." Whether one-way grants or two-way loans, the government (singular) cannot inject a single dollar into the economy without first extracting it via higher taxes or deficits. Making the path less or more layered and less or more circuitous does not change that.

Any suggestion to contrary is just rearranging deck chairs (but not loaning them — that would be "ridiculous on its face").

UPDATE: Great Cato podcast on the subject (5:39).

Previously:
–On the Calls for an Infrastructure Stimulus

Maybe I was hallucinating, but didn't we all spend the past two years or so bitching and moaning about taxpayer money being used to build bridges?

But now using taxpayer money to build bridges is a good thing?

I'm confused.

—

So is Bob Herbert (again):

Right now infrastructure projects go forward willy-nilly. They are often financed haphazardly and are subjected to the worst kinds of political influence.

Senator Chris Dodd of Connecticut is sponsoring a bill that would create an infrastructure bank with a bipartisan board of directors and a chief executive to be appointed by the president and confirmed by the Senate.

The board would streamline the process of reviewing and signing off on major infrastructure proposals. It would determine the value to the public of each project — and its environmental impact. It would provide federal investment capital for approved projects and use that money to leverage private investment.

First, note Herbert's use of "bipartisan" rather than "non-partisan." That itself belies the delusion that federal taxpayer money can ever be allocated by anything other than inefficient, wasteful formulas crafted via political rather than economic priorities. (See also this link from this morning's Questions post, or the post-9/11 scandal concerning absurd homeland security budget allocations.)

Herbert is living in a naive fantasy land: The infrastructure decisions will be political, period. They will also therefore be inefficient at best and downright ludicrous at worst.

To the extent that infrastructure projects are legitimate public goods, they should be pursued locally and financed by the people who use them. There is no basis, either in economics or the Constitution, to make taxpayers in Iowa pay for a bridge in Vermont or a train station in Oregon.

If politicians and pundits want to pretend that a massive "New WPA" will somehow rescue the economy, then that is their prerogative. What is not their prerogative is to pretend that politicians can ever stop being politicians.

—

Still on the subject of a "New WPA," here's a comment I left at Marginal Revolution this morning:

Stimulating the economy by building infrastructure projects may have made sense in the 1930s when the work force consisted almost exclusively of healthy adult males (white, of course, but that's another blogpost).

How, I wonder, will an all-Democratic government deal with lawsuits claiming that a "new WPA" violates Title VII, the Americans With Disabilities Act, the Rehabilitation Act, the Age Discrimination in Employment Act of 1967, the Age Discrimination Act of 1975, etc., etc., etc.

Another commenter at MR rightly notes that we are still living with remnants of the "old WPA" mentality — the Tennessee Valley Authority, the Rural Utilities Service, etc. Are those obsolete relics still around because they are vital to the economy, or because they are vital to politicians?

(More on those discrimination statutes, in another context, later this week. Stay tuned.)

Previously:
–Rohatyn's Big Ditch

Science bloggers have been quick to react indignantly. One example:

McCain repeatedly called the requested equipment an "overhead projector" which brings to mind the simple light projector your junior-high geometry teacher used to display transparencies. But the Zeiss planetarium projector Adler [Planetarium] has its eye on is no simple teaching aid.
…
Once at the cutting edge of planetarium technology, Adler has fallen behind the Griffith Observatory in Los Angeles and the Hayden Planetarium in New York City, which already have the latest Zeiss projector.

The science bloggers (who, recall, often have a rather unscientific contempt for libertarianism) may well be right that the cost of the earmark is entirely commensurate with what is being funded (i.e., that $3 million is not too much to pay for a Zeiss projector). But that's not the point at all.

The point is instead that a Zeiss projector is simply not a public good (its use is perfectly excludable) and therefore should not be in any way funded by taxpayer dollars. Moreover, if a Zeiss projector in Chicago is not a public good in Chicago, then it surely is not a federal public good worthy of federal taxpayer dollars. As bad as it is to demand that all Chicago taxpayers fund something from which not all of them will benefit, it is downright obscene to demand that all New York taxpayers fund something from which none of them will benefit.

The fact that the executives of the Adler Planetarium — or Barack Obama or some politically illiterate science bloggers — think that a new Zeiss projector would be a neat-o thing to have is not a legitimate claim on — well, on anyone. Charge an appropriate admission fee to fund the projector, or rely on private donations. There is nothing "enlightened" (no pun intended) about making people pay for something they don't use.

Previously:
–Trick Question: Is McCain "Anti-Science"?
–From the Archives: Space — The Final Appropriation
–The "Tang-Teflon-Velcro" Fraud, 2008 Edition
–On the Absurdity of "Legislating Discovery"
–Gasbag Politician Fuels Pork-Powered "Prizes"

The lines of authority between states and the federal government are, to a significant extent, defined by the United States Constitution and relevant case law. In recent years, however, the Supreme Court has decided a number of cases that would seem to reevaluate this historical relationship. This report discusses state and federal legislative power generally, focusing on a number of these "federalism" cases.

The report (PDF – 29 pages) covers the Commerce Clause, Section 5 of the Fourteenth Amendment, the Tenth Amendment, the Eleventh Amendment and the Spending Clause. These areas of constitutional law, especially the first and last, are among the most contentious in federal-state relations (and, one might note, in judicial confirmation hearings). The report summarizes the major cases in each area; the Commerce Clause section is particularly well-written.

It's interesting to read a discussion of Commerce Clause jurisprudence followed by a discussion of Spending Clause jurisprudence. In both, an obscene expansion of federal power is rationalized by giving ordinary words, laypersons' words, their exact opposite meaning: interstate means intrastate, commerce means non-commerce, general means specific, welfare means deprivation. All because activist legislators, motivated at best by hubris and at worst by power-lust, enabled by jurisprudential eunuchs who insist that refusing to do one's job can somehow be a noble pursuit, had what they thought at the time was too good an idea to be blocked by pesky constitutional considerations.

Previous CRS Recommendations:
Political Activity by Tax-Exempt Institutions
The Law of Church and State
Constitutional Limits on Hate Crime Legislation
Same-Sex Marriage — Legal Issues
Saudi Arabia
The National Debt
Restricting Video Game Sales to Minors
Warrantless Wiretapping
Foreign Holdings of Public Debt
China's Internet Censorship
Summary of Rumsfeld v. FAIR

—

First, some background:

–Alaska has been the top recipient of federal taxpayer dollars per capita every year since 1999, and one of the three most lopsided states in terms of "receipts versus taxes" every year since 2003. For example, for every $1.00 Alaskans sent to the IRS in 2005, Alaska received $1.89 in federal expenditures. These federal subsidies from lower-48 taxpayers have helped Alaska maintain the lowest tax burden in the nation every year since 1999 and the first or second lowest every year since 1981.

–Besides its nearly 2:1 federal tax subsidy, the Alaska government is primarily funded by taxes on oil and natural gas production (i.e., through higher gasoline and other energy prices paid by the rest of the country).

–As a result, Alaska is the only the state in the Union to have neither a state income tax nor a state sales tax. Indeed, Juneau gets so much money from so many sources that it pays residents an annual subsidy out of the state coffers — currently about $1,600 per person.

–Only 25 of Alaska's 161 municipalities levied a property tax as of 2004.

In other words, Alaska is pretty much a leech on the rest of America — and, tax-wise, Alaskans have it pretty good.

But apparently not "pretty good" enough, as they are now proposing even more bloodsucking:

A citizen's initiative to tax the cruise ship industry and enforce stricter environmental standards has been approved by Lt. Gov. Loren Leman for the August 2006 primary. The initiative would institute a $50 head tax and a 33 percent tax on onboard gambling revenue, and would subject the industry to Alaska's corporate income tax.
…
Taxing the industry could lead to a decline in cruise ship travelers visiting the state, according to John Hansen, president of the North West CruiseShip Association. "We're very concerned about the elements of the initiative," Hansen said. "We believe it has significant implications for all of Alaska." [UPDATE: See this post for a debunking of the "tax the tourist" fallacy.]
…
The cruise industry sends about $800 million to the state annually through taxes, sales, shore excursions and visitors staying in hotels, Hansen said. The industry also is a good marketing tool for the state, he said. "A lot of people first visit by cruise and then they come back," Hansen said.

Just one small problem: onboard gaming occurs exclusively in international waters. Alaska can't tax it.

[See the original post for the constitutional analysis, which is not the point of this reprint.]

But take a step a back from the Constitution for a moment. By what logic or moral theory does Alaska or any state dare try to tax anything that occurs, not only outside the state, but outside the country? Try to imagine New York City deciding that, as the price of being able to visit our fair metropolis, tourists had to pay a special "visitors income tax." Try to imagine Florida demanding 33% of an airline's systemwide revenues just for the privilege of landing planes in West Palm Beach. Try to imagine if California tried to confiscate 33% of Las Vegas' casino revenues "just because." [UPDATE: But see this post.]

(And keep in mind, we are talking about 33% of the the cruise ships' gaming revenues, not their profits.)

It's been almost fifty years since Alaska was admitted to the Union. Isn't it time for Alaskans to start carrying their own weight, paying for their own government and stop trying to squeeze money from everyone but themselves?

—

I realize that no one, myself included, cares what became of that cruise tax initiative (it passed). But we do care about whether Sarah Palin is a moral defective "different kind of politician."

Palin, then running for governor, initially supported the extortionist tax:

She said she supports last summer's cruise initiative "literally," believing that voters knew what they were doing, especially in wanting ocean rangers on the ships. She said she has encouraged legislators "not to tweak it." … As for the economics of the initiative, she said most Alaskans wanted a value for their resource, through the tax on multi-national corporations that bring the tourists here.

Later, Palin decided that "tweaking" was a good idea after all:

She recently told tourism industry officials that if elected, she would work with them to "mitigate some of the impacts" of the law.

File that under "reformer" politics, I suppose.

—

Recall the fiscal situation in Alaska. Through a combination of oil revenue and federal subsidies from the rest of the nation — you and me — Alaska's elected leaders have at least one thing not to worry about: fiscal problems.

Alaska had 626,932 residents as of the 2000 Census; Obama's state senate district had 653,647. Alaska has no declining industry, no blighted inner cities (or the racial tensions that often accompany them), no aging infrastructure. No baby boomer entitlement crisis, no illegal immigrant crisis, no subprime mortgage crisis. And, contrary to the delusions of some, neither Alaska nor its governor are fending off Vladimir Putin at the Bering Straits or negotiating treaties with Ottawa. What exactly would you expect a governor of Alaska to do all day besides hunt, fish and flip-flop on the Bridge to Nowhere?

The only thing that occasionally makes Alaska difficult to govern is — Alaska Republicans. Go figure.

Palin's apologists have a simple choice: either concede that experience isn't particularly important, or continue to be rightfully mocked for the utterly asinine suggestion that serving four years as (part-time) mayor of Wasilla (population 5,470) and 20 months as governor of a nearly worry-free state that a college senior with a 3.3 GPA and a fully charged Roomba could keep neat and tidy, somehow compares to seven years in the Illinois State Senate and 32 months as a United States senator.

The authority collects far more revenue from subway, bus and commuter rail fares, dedicated taxes, and bridge and tunnel tolls than it draws from direct government aid.

In a libertarian paradise (or near-paradise, in the case of privatization fetishists), that statement would of course read:

"The authority collects all revenue from subway, bus and commuter rail fares."

With emphasis on the ".".

But the notion that the authority's Rube Goldberg financing scheme is so complex and multi-tentacled that journalists actually have go back and check whether the money comes mostly from:

(a) those who actually use the subways and buses, or
(b) taxpayers

speaks volumes about how disconnected the current system is from the hardly controversial notion that people who use something should be the ones who pay for it.

And even the original "far more revenue" description still contains some mixture of fiscal wheat and chaff. The bridge and tunnel tolls are not funding the bridges and tunnels, but the subways and buses. They're two entirely different bureaucracies. "Use a bridge, pay for a bridge" makes perfect sense. "Use a bridge, pay for a subway" would be a comical absurdity almost anywhere except New York (or a legislative chamber).

Previously:
–Who Should Pay for Mass Transit? (Part One)

(Click to enlarge.)

Some hasty stitches regarding these numbers:

–The idea that "the rich don't pay their fair share" is ludicrous. People who want to raise taxes on higher-income households should be pinned down: Exactly how much more progressive should taxes be? Give specific percentages — what exactly should this table look like in your "fair share" paradise?

–On the other hand, the upper tiers of this table (but not the lower 50% who pay no income tax) will shift quite a bit in the coming years as the Alternative Minimum Tax freefalls into the middle class. For details see my previous post. Those who are comfortable with such high progressivity should be the most vocal champions of abolishing the AMT, which will greatly reduce progressivity while raising overall tax burdens.

–For the most part, state and local income and property taxes only make this chart even more progressive on a government-at-all-levels, taxes-at-all-levels basis.

–Those who blame our federal budget deficit woes on the phantom "Bush tax cuts" are misguided. The problem is not that people are taxed too little, but rather than government spends too much.

–Of course, most of those filers in the "tax-free" lower half of returns are only free of income tax. They are not exempt from Social Security taxes. The rich are oppressed by income taxes; the working poor are oppressed by Social Security taxes. Therefore, those who champion the working poor ought to be less interested in income tax reform and more interested in Social Security reform. Indeed, they ought to be the most ardent advocates of Social Security reform, including voluntary partial privatization. Go figure.

Hat tip to Government Bytes; prior year data here. Other thoughts at DefCon:Blog.

UPDATE: A far better presentation of the data available here, including a debunking of the assertion by Tom in the comments that the distribution of federal income tax burdens merely replicates the distribution of income (see Table 5) — higher-income filers pay a higher percentage of tax receipts than they receive in income. That's progressivity, folks.