What a County Government Does When It Has Too Much Money

The Fairfax County Taxpayers Alliance, here in the Washington suburbs, complains that property taxes have soared over the past seven years. The typical Fairfax homeowner is paying $4830 a year in property taxes. The FCTA points out that “if during the past seven years the Supervisors had held real estate tax increases to the rate of inflation, which averaged three percent per year, the typical homeowner would be paying $3,079.” Home values have been rising fast in the Washington area (at least until the past year), so taxes have also increased sharply.

Taxpayers urge the supervisors to cut taxes. The supervisors–in Fairfax County and everywhere else–respond, “Would you have us close fire stations or fire teachers or throw widows out in the snow?” Somehow they never discuss, as another item in the FCTA newsletter does, the fact that salaries and benefits have increased far more than population growth or any other measure over the past seven years. Just hold county employees’ salary increases to the rate of inflation, and you could save the taxpayers a lot of money.

Or maybe, just maybe, Fairfax County’s $3.3 billion annual budget contains some low-priority items, like this one that was the subject of a charming article in the Washington Post:

This group of 12 kids, ages 6 to 10, are in the otherwise empty cafeteria of Anthony T. Lane Elementary School in Alexandria for the last of their eight Saturday morning classes on manners, offered through the Fairfax County Park Authority.

The End for McCain?

John McCain’s share price at the Iowa Electronic Market lost 40 percent of its value yesterday. It opened at 17 cents and closed at 11:59pm at 10 cents.

Since May 17th, McCain’s share price has lost almost two-thirds of its value.

If no one is buying futures on McCain’s nomination, we might suspect that relatively few people will be giving him campaign contributions. Without funding, of course, the McCain effort is doomed.

So go to the Iowa Market and invest a dime. You might get a dollar in a year’s time. You’ll find plenty of people there willing to sell you a futures share on McCain.

Return of Public Diplomacy

The Heritage Foundation has released a report by Lisa Curtis titled “America’s Image Abroad: Room for Improvement.” While the title represents a triumph in terms of overcoming denial of the condition, the evasion of the central problem with “America’s image” in the article is truly remarkable.

Curtis cites the 2004 Defense Science Board report on strategic communication. Here’s what it says, in part:

American direct intervention in the Muslim World has paradoxically elevated the stature of and support for radical Islamists, while diminishing support for the United States to single-digits in some Arab societies…Muslims do not “hate our freedom,” but rather, they hate our policies.

That’s the Defense Science Board, not Noam Chomsky. Curtis then cites a 2006 GAO report. It says, in part:

All of our panelists agreed that U.S. foreign policy is the major root cause behind anti-American sentiments among Muslim populations and that this point needs to be better researched, absorbed, and acted upon by government officials.

Somehow those concepts don’t make their way into the Heritage paper. The fundamental problem here is that you can have the best salesman in the world plugging your product, but if the product itself stinks, nobody’s going to buy. Until we get past the governing assumption that somehow we just aren’t presenting American foreign policy in the right way, we’re bound to continue hurting ourselves.

But of course if you’d been reading Cato at Liberty, say, more than one year ago, you would have seen this all already.

The GOP Debates Health Care

The Democratic candidates for president have been all too anxious to debate health care reform so far, but Republicans have generally avoided the issue. Still, last night’s debate in New Hampshire gave us an idea about where at least a few of the candidates stand.

Rudy Giuliani attacked the Democrats for supporting “socialized medicine.” He’s right, and it’s good to hear someone call them out on it, rather than meekly promise that they too support “universal coverage.” More importantly, showed that he actually understands free market health care reform, calling for expansion of Health savings Accounts and replacing the current tax exclusion for employer-provided health care with a standard deduction for health insurance.

Mitt Romney defended his health care plan without actually telling anyone what it is. That’s probably smart because no matter how many times he repeats the words “private insurance” and “personal responsibility,” the plan is still little more than warmed-over HillaryCare.

Duncan Hunter gets points for attacking Mitt Romney’s plan as the “first steps to socialized medicine.” He gets even bigger points for endorsing Rep. Shadegg’s proposal to allow people to purchase health insurance across state lines. In fact, he not only endorsed the proposal he showed he understands it, even pointing out how regulations push up the cost of insurance in states like New Jersey. The public probably had no idea what he was talking about, but all over America, health policy wonks stood and cheered.

Tommy Thompson showed why he’s no Fred. This Thompson wants the government to somehow make us eat better and exercise more. It’s also going to become involved in “managing” chronic illnesses like diabetes. And he jumped on the electronic medical record bandwagon. As I’ve noted before, electronic medical records would undoubtedly be a good thing and would reduce both costs and medical errors. The private sector is already moving rapidly in that direction. But the federal government has not yet figured out how to get the FBI’s computers to talk to each other. What makes anyone think that a single federally-imposed medical IT system will be more efficient?

Perhaps during the coming debates we could take time out from pressing issues like the candidates’ views on evolution to hear a bit more about this.

Robert Reich, Wrong Again

President Clinton’s secretary of labor, Robert Reich, complains on Marketplace Radio that the new immigration bill may encourage immigration by high-skilled people. He argued:

A century ago, America’s immigration policy was best summarized in Emma Goldman’s famous lines on the Statue of Liberty: “Give me your tired, your poor, your huddled masses yearning to breathe free.”

It’s a lovely poem, and it’s true that America was the land of opportunity for millions of people. But as Julian Simon pointed out, on the whole immigrants in the 19th century were not tired, poor, huddled masses. He cites findings from economist P. J. Hill:

[I]mmigrants, instead of being an underpaid, exploited group, generally held an economic position that compared very favorably to that of the native born members of the society.

Reich is wrong again. But then, he’s notoriously loose with the facts.

Update: An alert reader points out that I was still half-asleep when I heard this commentary and cut-and-pasted Reich’s words. Of course it wasn’t the anarchist Emma Goldman who wrote the words on the Statue of Liberty, it was the New York City poet Emma Lazarus.

European Treasury Chiefs Try to Discourage French Tax Cuts

Nicolas Sarkozy, the new President of France, has been flirting with tax cuts. Some of his ideas, such as lowering the corporate rate and reducing death taxes and/or wealth taxes, would be very beneficial for the French economy. Others, such as special tax breaks for overtime work, are gimmicky. But in all cases, as the EU Observer reports, European Finance Ministers are pouring cold water on the notion of less money for government. Cynics suspect that the Finance Ministers do not like tax competition and that they use any excuse to discourage tax cuts in other nations. But even if their concerns –that deficit reduction is the most important goal of fiscal policy – are genuine, it is ironic that they are rather vocal when discouraging tax cuts and remarkably silent when it is time to comment about proposed increases in the burden of government spending. This is hardly a European phenomenon. Many American politicians cry crocodile tears about deficits when tax policy is being debated, but routinely vote for bigger government:

EU finance ministers meeting in Luxembourg on Tuesday (5 June) urged France to stick to its EU deficit reduction targets amid concerns about the implications of president Nicolas Sarkozy’s tax-cutting plans. … Mr Juncker’s warning is in response to plans announced by Mr Sarkozy last month to give the country a “fiscal shock” by undertaking a series of tax-cutting measures likely to cost up to €20 billion. The proposed measures include almost entirely scrapping inheritance tax and cutting tax on overtime.

The Mouse that Roared

Luxembourg is a tiny nation with less than 500,000 residents, but its tax-haven policies have made it one of the world’s wealthiest countries. Other European states resent Luxembourg’s success, not surprisingly, because their own citizens often prefer to work, save, shop, and invest where taxes are lower. But rather than lower their own taxes to be more competitive, they try to bully Luxembourg into changing its laws. The latest skirmish deals with whether Luxembourg companies should be forced to act as deputy tax collectors for foreign governments when they make online sales to residents of other EU nations. The International Herald Tribune reports that tiny Luxembourg is resisting the 26 other EU nations and defending its fiscal sovereignty:

Luxembourg, which has become a center for e-commerce in Europe because of its low sales tax, held off an assault on that lucrative business Tuesday by the rest of the European Union. At a meeting of EU finance ministers in the small but prosperous duchy, Luxembourg refused to agree to a lifting of the tax advantages that have prompted iTunes, Skype, eBay and other big Internet companies to set up shop there. That effectively blocked the package, because adoption of tax measures requires unanimous agreement by all 27 EU members. Telecommunications companies, satellite broadcasters and other companies providing online services apply a value added, or sales, tax based on where the company is established, not where the customer is. That makes Luxembourg, where VAT on Internet-related sales is 15 percent, an attractive place to operate. … EU ministers had hoped for a deal that would force companies to charge sales tax on services delivered online at the rate set in the country where they are bought. Such a move could prove a boon to tax collectors in countries like Germany and France. … This is not the first time that the Grand Duchy has been at the center of controversy over tax rates. For years French and German savers have invested their cash in Luxembourg and avoided tax on interest income.