March 05, 2015

A Thought on Democracy and the Future

“A democracy cannot exist as a permanent form of government. It can only exist until the people discover they can vote themselves largess out of the public treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the public treasury, with the result that democracy always collapses over a loose fiscal policy--to be followed by a dictatorship.”
~ Alexander Fraser Tytler

March 04, 2015

Arlington County Board Gets a "Thumbs Down"

On the editorial page in this week's Arlington Sun Gazette, "County Board members – all five of ’em – who voted to advertise a real estate tax rate 1.5 cents higher than its current rate" received an editorial "Thumbs Down" in the "Highs & Lows" section.

Here's how the Sun Gazette explains it:

"Board members wrapped themselves in the self-righteous mantle that this vote isn’t a final decision, but merely gives them flexibility as they move forward in the budget season.

"Pish-posh: It’s an outrage on two fronts:

"For homeowners, it adds insult on top of injury, offering the prospect of a double-whammy: a higher tax rate on top of higher assessments. For the owner of a typical single-family home, that could mean a tax-bill increase of more than 7 percent.

"It also encourages organizations that rely on funding from the county government to mobilize and advocate, so they don’t miss out on the larger prospective pot of cash that could be available, rather than accept the reality that we are still in constrained economic times.

"Advertising a higher tax rate – whether it ends up being adopted, or not – is a disservice to the community. We had hoped for better from the County Board."

Kudos also to the second "Thumbs Down," too, which was "(t)o the prospect that the Artisphere might rise, phoenix-like, from the dead this budget season."

March 03, 2015

A Thought on the So-called Gender 'Pay Gap'

"Innumerable studies, going back decades, show that women do not average as many hours of work per year as men, do not have as many consecutive years of full-time employment as men, do not work in the same mix of occupations as men and do not specialize in the same mix of subjects in college as men.

"Back in 1996, a study published in the New England Journal of Medicine showed young male physicians earned 41% higher incomes than young female physicians. But the same study showed young male physicians worked over 500 hours a year more than young female physicians.

"When the study took into account differences in hours of work, in the fields in which male and female doctors specialized and other differences in their job characteristics, "no earnings difference was evident."

"In other words, when you compare apples to apples, you don't get the "gender gap" in pay that you get when you compare apples to oranges."

~ Thomas Sowell

Source: His March 3, 2015 column, posted at Investor's Business Daily

March 02, 2015

Dynamic Scoring and the Congressional Budget Office

The Wall Street reported on Friday (but behind their paywall) that the Congressional Budget Office will have a new director, saying that that "Keith Hall, who served as commissioner of the Bureau of Labor Statistics, will replace Doug Elmendorf starting April 1. The story, reported by Nick Timiraos, pointed out:

"The decision over who would follow Mr. Elmendorf—the director doesn’t need to be voted on by Congress—attracted all the more interest because House Republicans passed a rule earlier this year requiring nonpartisan budget and tax offices to analyze the macroeconomic effects of certain bills in their influential estimates, known as “dynamic scoring.”

Since frequent Growls include CBO data, e.g., February 3, 2015, January 27, 2015, and November 27, 2014, we took special note a report by Scott Hodge for the Tax Foundation last month (Fiscal Fact No. 451). [Or you can search Growls for additional entries]. The Tax Foundation report had five key findings:

  • "Dynamic scoring is a tool to give members of Congress the information they need to evaluate the tradeoffs in tax policy changes.
  • "Dynamic scoring provides an estimate of the effect of tax changes on jobs, wages, investment, federal revenue, and the overall size of the economy.
  • "Using dynamic scoring, policymakers can differentiate between policies that look similar using conventional scoring methods, but have vastly different effects on economic growth under dynamic scoring.
  • "For example—using Tax Foundation’s Taxes and Growth model—we find that five tax change with the same static revenue cost can have vastly different effects on GDP, investment, jobs, and federal revenue—ranging from virtually no change in GDP to an increase of over 5 percent.
  • "The use of dynamic scoring is crucial to ensure that comprehensive tax reform grows the economy and meets revenue expectations."

In concluding Fiscal Facts No. 451, Hodge writes:

"Despite the recent criticism of dynamic scoring, Members of Congress are being ill-served by the current conventional, or “static,” scoring method, which provides lawmakers a very one-dimensional picture of the effects of tax changes.

"If Members of Congress are to make sound tax decisions that impact today’s complex, global economy, they need the three-dimensional perspective that is only possible with dynamic scoring.

"As we have seen, five different tax policies that conventional scoring would say have the same cost to the U.S. Treasury, can have very different effects on the economy and, ultimately, on federal revenues when those effects are accounted for.

"The primary goal of comprehensive tax reform is economic growth. Conventional scoring treats this process as an exercise in arithmetic, whereas dynamic scoring makes the process an exercise in economics. The well-being of the American people is at stake. It is critically important that lawmakers make the right choices that lift everyone’s standards of living. Only dynamic scoring can help them do that."

For more about the appointment of Keith Hall as CBO director, see this release from George Mason University's Mercatus center as well as this Washington Post story, this story from Politico, and this Fiscal Times story.

At on February 12, 2015, columnist Dan Mitchell, a senior fellow at the Cato Institute, has a detailed explanation, with numerous links, explaining both the Laffer Curve and "why 'dynamic scoring' is far more accurate measuring the impact of fiscal policy changes."

At the New York Times on January 7, 2015, Jonathan Weisman reported the House of Representatives adopted the dynamic scoring rules. And here is a Google Search for other stories about 'dynamic scoring.'" At the Washington Examiner on December 16, 2014, the CBO director says it's up to Congress to decide on 'dynamic scoring." In the Wall Street Journal on February 3, 2015 (behind the WSJ paywall), Michael Solon, former adviser to a U.S. Senator, points out:

"The recent rule change by House Republicans to incorporate the macroeconomic impact of major legislation into official budget estimates—“dynamic scoring”—has triggered heated criticisms. But three decades of hard accounting data, in addition to supporting the rule change, should prompt Washington to reconsider the way it thinks about what drives federal revenues.

"Since 1984 the Congressional Budget Office has tracked all revisions to its triennial projections of federal revenues, outlays and deficits to account for economic, technical and legislative changes. Its data—from the “Changes in CBO’s Baseline Projections” tables that are published annually in the CBO Budget Outlook, the Budget Update and the Analysis of the President’s Budget—indicate which federal policies grew or shrank the economy significantly enough to generate measurable revenue gains or losses. The data also reveal the failures of core Democratic economic policies and flaws within the CBO’s current economic model.

"One fact above all others emerges from the data: Economic growth is the single most powerful determinant of federal revenues."

And finally, in Investor's Business Daily on February 1o, 2015, Ernest Christian and Gary Robbins, for Treasury Department officials, write (Mitchell references this article, too):

"The 114th Congress can make history by using computer-aided dynamic analysis to quantify and disclose to voters in stark dollars-and-cents terms the heretofore hidden, but nevertheless real, harm that government is doing to them. Voters can then for the first time weigh the true costs of government against its benefits."

In concluding their IBD op-ed, Christian and Robbins write:

"Like truth in general, dynamic analysis can help bring about beneficial changes in taxes, regulations, spending and almost everything else Washington does.

"Putting the facts out on the table may also beneficially affect how election campaigns are conducted and who wins.

"No matter how the truth is arrived at, the overriding goal is accurate scoring of the costs and benefits of government."

Without economic growth, it is hard to see how the nation can emerge from all the debt that our politicians have created. Of course, we probably should not have elected them, but that is a story for another day.

February 28, 2015

Leftists and Progressive Taxation

 In his column today at, Dan Mitchell, senior fellow at the Cato Institute, asks "what’s the higher priority for Leftists, raising revenue or punishing success?"

Mitchell begins the column by writing:

"On the issue of so-called progressive taxation, our left-wing friends have conflicting goals. Some of them want to maximize tax revenue in order to finance ever-bigger government.

"But others are much more motivated by a desire to punish success. They want high tax rates on the “rich” even if the government collects less revenue.

"Some of them simply pretend there isn’t a conflict, as you might imagine. They childishly assert that the Laffer Curve doesn’t exist and that upper-income taxpayers are fiscal pinatas, capable of generating never-ending amounts of tax revenue.

"But more rational leftists admit that the Laffer Curve is real. They may argue that the revenue-maximizing rate is up around 70 percent, which is grossly inconsistent with the evidence from the 1980s, but at least they understand that successful taxpayers can and do respond when tax rates increase.

"So the question for grown-up leftists is simple: What’s the answer if they have to choose between collecting more revenue and punishing the rich with class-warfare taxation?"

He then delves into several research efforts that look at the tradeoffs involved. He also includes several helpful charts and tables, and concludes by writing:

"We like a flat tax because it treats people equally and it raises revenue in a relatively non-destructive manner.

"But because it is an “efficient” form of taxation, it’s also an “efficient” way to generate revenues to finance bigger government.

"Indeed, this was one of the findings in a 1998 study by Professors Gary Becker and Casey Mulligan.

"So does this mean that instead of supporting a flat tax, we should a loophole-riddled system based on high tax rates solely because that system will be so inefficient that it won’t generate revenue?

"Of course not. At the risk of stating the obvious, this is why my work onfundamental tax reform is intertwined with my work on constitutional and legal mechanisms to limit the size and scope of government.

"And it’s also why Obama’s class-warfare approach is so perversely destructive. If you think I’m exaggerating, watch this video – especially beginning about the 4:30 mark.

Here is the link to the Dan Mitchell's entire article, which itself includes links to various documents.

For more on progressive taxes, see this Econlib article by Joel Slemrod.

February 27, 2015

Science Groups Get $1 Billion in Grants; Can't Show How Spent

In a story posted two weeks ago at Washington Examiner, Luke Rosiak writes, "Science groups that got more than $1b in federal grants can't show how they spent the money."

Rosiak writes:

"Problems with the National Science Foundation allowing grantees to spend tax dollars for unallowable purposes may extend well beyond a recent case of a $25,000 Christmas party, $11,000 for “premium coffee services,” and $112,000 in federal funds that were spent to hire lobbyists to ask for more funding.

"We found that NSF approved proposed budgets for four major projects, totaling more than $1.4 billion, although it lacked sufficient information to ensure that the budgets represented the basis for a fair and reasonable price," the National Science Foundation’s Inspector General wrote in a new report.

"After 17 months of back-and-forth with auditors, the Ocean Observatories Initiative could still not provide “adequate documentation” showing how it had spent $88 million.

"The $344 million Advanced Technology Solar Telescope proposal was “twice found unacceptable for audit in 2010 due to: Unsupported estimates and outdated vendor; Lack of support for labor costs; Lack of support for indirect costs; Unallowable contingencies.”

"The science foundation gave $500 million to the Large Synoptic Survey Telescope in August 2014 even after the foundation’s own review found problems with their budget estimate. Out of 136 transactions the foundation sampled, it could not find supporting documentation for a single one.

"The latter two projects are administered by the Association of Universities for Research in Astronomy."

Rosiak concluded, writing:

"But most troubling to congressional overseers was that documents showed that the science foundation had known about what the National Ecological Observatory Network was doing since at least 2008, and did not stop it. It has also accepted other budgets despite problems raised by auditors.

"On Feb. 11, Sen. John Thune, R-S.D., and Sen. Bill Nelson, D-Fla., chairman and ranking minority member of the Senate Committee on Commerce, Science and Transportation wrote to the science foundation that the inspector general had identified "accountability over large facility cooperative agreements" as a "challenge."

"The committee asked for "a full accounting of funds" for the projects "to assure Congress and the American public that NSF is prioritizing ... financial management."

Read Rosiak's entire report here.

This story caught my attention because global warming activists frequently claim that scientists who are skeptical about the causes of global warming do so because their science projects are funded by producers of fossil fuels -- Exxon and the Koch Brothers being frequent targets. However, those same activists fail to be consistent whenever scientists who believe in anthropogenic global warming receive government funding. Marc Morano comments on this at Climate Depot in a post headlined, "Analysis of ‘tiny’ skeptic funding vs. warmists funding: ‘Total budgets for all of these [skeptical] efforts would probably not add up to a month’s spending by just the Sierra Club.'"

Not to mention that government employees at NSF are allowing grantees to live large on the taxpayers' tab, what with $25,000 Christmas parties and premium coffee service. Sheesh!

February 26, 2015

Why Arlington County May Not Want an Internal Auditor

In a story posted today at, Kenric Ward,'s Virginia Bureau Chief, reports, "The Virginia Department of Health may be the most wasteful and inefficient agency in state government, a new audit suggests." (HT

Ward went on to report:

"The department was cited for “material weaknesses” in five areas by the state’s Auditor of Public Accounts. No other state agency was found to have more than one material weakness — the most serious financial category in the fiscal 2014 report.

"Auditors dinged VDH for not submitting $5.1 million in infant formula rebates and Medicaid claims, even though the department has rebate contracts through the Women Infants and Children feeding program.

"The income from these contracts is used to offset food expenditures incurred by the program,” the auditors said. “By not submitting the invoices for rebates and Medicaid claims, the WIC program required more federal funds for operation than necessary.”

"Health Department officials agreed with the findings and reported the issue “is now corrected.”

You can read Ward's entire story here. And the audit report issued by the Virginia Auditor of Public Accounts report, dated June 30, 2014, is here.

We look forward to the day that Arlington County has an independent and fully-staffed, fully functioning internal audit department so that our trust in the efficiency, effectiveness, and economy of county operations is significantly raised.

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