Pork In The North Carolina Budget

Washington isn’t the only place where lawmakers love to spend money that isn’t theirs. The North Carolina legislature is currently working on its state budget for FY 2018-19. On Monday, Civitas posted an article about the current budget proposal.

The article reports:

The state budget for FY 2018-19 contains nearly 170 line items totaling $30 million that are highly inappropriate or outright pork.

Appropriations directing funding to local pet projects include items such as walking trails, playgrounds, county fairs and highway signs. Moreover, dozens of nonprofit organizations receive direct appropriations in the budget. Make no mistake, these nonprofits perform admirable work. However, it is highly inappropriate – and unfair favoritism – to single out nonprofits for specific appropriations of state tax dollars, instead of having them go through the appropriate grant process.

There is little doubt that a large percentage, if not all, of these earmarks represent legislators trying to “bring home the bacon” to their districts in an election year. State taxpayers should not be forced to finance explicitly local projects.

Note that the items identified in this article include only adjustments made to the second year of the biennial budget passed last year. There no doubt are many more such earmarks that will be doled out this year that were previously included in last year’s budget.

Legislative leaders have rightly been criticized for the closed-door, non-transparent process used in crafting the budget. It is plausible to believe that these 166 line items were the result of political horse-trading behind closed doors, which left virtually no time for objections from legislators before the House and Senate voted.

Such a significant number of earmarks, while not adding up to a major percentage of the budget in dollar terms, raises legitimate concerns about political patronage in which representatives direct state funds to local projects in exchange for political support.

Please follow the link above to read the entire article. It includes a specific list of the earmarks in question.

Who Benefited From The Tax Cuts?

On Friday, Investor’s Business Daily posted an article about the Trump Tax Cuts.

The article reports:

The numbers are now in. According to Congress’ nonpartisan Joint Committee on Taxation (JCT), the rich are now paying a higher share of federal taxes after enactment of the Republican tax reform plan than before.

For 2017, before tax reform, the JCT estimates those earning $1 million or more a year paid 19.5% of all federal taxes, counting income taxes, payroll taxes, and excise taxes. But for 2018, after tax reform, the committee estimates that these same millionaire taxpayers will pay 20.4% of all federal taxes.

The biggest relative tax cuts resulting from the tax reform are for those making less than $50,000 a year. Their share of federal taxes fell from 4.4% to 3.8%, a tax cut of 14%.

Indeed, the committee estimates that the federal tax burden went up for all taxpayers now making over $200,000 a year, from 49.8% before tax reform, to 51.3% this year after tax reform. You have to go down to those making between $100,000 and $200,000 a year to find taxpayers paying a lower share of federal taxes, from 29% of the federal tax burden last year to 28.8% this year.

But how could that be? The fundamental reason is the economic growth effects of tax reform.

Higher economic growth means increased wages, jobs, employment and income. As the economy grows, the share of taxes paid, especially by those earning higher incomes who still pay much higher tax rates under our so-called “progressive” tax code, goes up as well.

This is the Democrats’ biggest nightmare. That is the reason they opposed the tax cuts and tried to use the media to turn the American people against the idea of tax cuts. I believe that in the 2018 mid-term elections, we will see the Democrats attempt to campaign on the idea that the tax cuts were ‘tax cuts for the rich,’ but if American voters choose to be informed, they will recognize the lie in that statement.

The article reports more bad news for Democrats campaigning in 2018:

Those same economic effects of the tax reform amount to economic liberation for the poor, working people and the middle class. After 8 years of economic stagnation under the neo-socialist policies of Obamanomics, the rising wages, jobs, employment and income under the long overdue Trump Republican economic recovery are making America great again for those with low and moderate incomes.

Top economists estimate wages for average middle-class families are increasing by $4,000 a year due to tax reform. That’s in addition to direct tax cuts of $2,000 a year for middle class families.

These economic effects are why we now see the lowest unemployment rates among blacks in American history. And despite the lies of the Democrat fake news media, the lowest unemployment rates among Hispanics in history as well.

And these economic effects are why Trump/Republican economics is now resonating among blacks and Hispanics culturally as well, from young black Millennials like Candace Owens to hip-hop stars like Kanye West.

As John F. Kennedy stated, “A rising tide lifts all the boats.'” We have watched the tax cuts (and the ending of some over regulation) do just that. John Kennedy would probably not be welcome in today’s Democrat party. That is a shame. In spite of his questionable activities regarding women, I believe he would have been a reasonable President had he lived.

This Is Not A New Idea

On Friday, The Daily Signal posted an article about a proposal before Congress asking taxpayers to make loans to private, union-run pension plans. This is a really bad idea. We have seen what has happened to the college loan program since the government took it over. Just in case you think the idea of the government bailing out union pension plans is far-fetched, I posted an article about this idea in October of 2010.

The article reports:

The Butch Lewis Act—a proposal to bail out private-sector pensions through loans as well as direct cash assistance—acknowledges the high probability of default by stipulating that pension plans that have trouble repaying their loans after 30 years of interest-only payments will be eligible for forgiveness or alternative repayment plans.

A loan with a zero-consequence default option for the borrower is not a loan—it’s a bailout.

But it’s not just defaults that taxpayers need to be concerned about. There’s also the cost of providing highly subsidized, low- or no-interest loans for 15 to 30 years, as well as the risk that plans will increase—rather than decrease—their unfunded liabilities over the course of their loans.

These features could lead to loans to insolvent pension plans costing taxpayers more than direct cash bailouts.

But those costs won’t be apparent in the official government score because the Congressional Budget Office is required to score loans under the assumption that insolvent pension plans are essentially riskless borrowers.

In reality, loans to insolvent pension plans could cost taxpayers hundreds of billions of dollars. The most liberal proposals—which supplement loans with direct cash assistance—could cost more than the entirety of multiemployer pensions’ half-trillion-dollar shortfall.

Does anyone really believe that these loans will be paid back? Union membership is down, and various courts are hearing cases that will make the mandatory payment of union dues by non-union members who work in a union shop illegal. Both of these factors will make the union retirement plans (actually a true Ponzi scheme) unsustainable.

The article concludes:

Coping with roughly $500 billion in private union pensions’ unfunded promises will not be easy. There are ways to minimize losses to workers who have earned pension benefits and protect taxpayers from paying for private pensions’ broken promises.

Policymakers should look to improve the solvency of the Pension Benefit Guaranty Corp.’s multiemployer program through premium increases and other reforms; end union pensions’ preferential treatment; enact and enforce sound funding rules; hold pension trustees liable for financial decisions; act sooner rather than later to enact needed reforms, including benefit reductions; and explicitly prohibit federal pension bailouts.

None of these actions provide a costless cure-all, but they offer more fair and rational solutions that don’t treat taxpayers as guarantors of private-sector promises or set the stage for even more mismanagement and reckless behavior.

There is no reason every American should pay for the fact that the unions have not sufficiently funded their retirement plans!