Monday, January 31, 2011

What is so Hard About Cutting the Budget?

Why is it so hard for legislators to balance the budget without resorting to revenue farming bills and raising taxes?  The Nebraska Legislature is facing nearly a billion dollar budget shortfall over the next two years.  Governor Heineman did all the tough work for the legislature by proposing a balanced budget without raising taxes yet there are several tax hikes and creative revenue bills introduced this year.  The republican dominated legislature is either hard of hearing or they just hold special interests above the greater good.

On January 27th during a Douglas County republican central committee meeting three state legislature gave an update on happenings in Lincoln.  Senators Kirst, Lautenbaugh, and Pirsh discussed how hard it is for the legislature to agree to cut a $250,000 subsidy for motorcycle safety classes from the budget.  With a 34 to 15 majority it should be easy for a fiscally conservative republican party to downsize the deficit.  It is clear to me that the republican majorities rhetoric does not match their actions. 

Why does the state have a deficit in the first place?  A major part of the deficit was caused by lost tax revenue during the recession and the federal stimulus ending.  15% of the deficit is caused by pension shortfall and no senator has addressed that issue.  Sure there is several bills out there attempting to reform the CIR, the labor court, but none addressing defined benefit pension plans and the problems associated with them. 

The senators down in Lincoln need to understand that some people will be upset no matter what they choose to cut.  Its ok to piss people off and some people need to be fired.  Showing the courage to do the hard things may not be popular or get you re elected, but it will help put the state in better fiscal standing.  The republican majority needs to stop acting like liberal democrats and show us what fiscal conservative means. 

Wednesday, January 19, 2011

Regulators, Mount Up Red Tape

The United States is being pushed off course.  The creation of a myriad of regulating agencies has stifled innovation, competition and nearly usurped the power of we the people.  Some of  these agencies have the power to be legislator, enforcer and judge of the regulations they create.  They have tipped the balance of power to the executive branch. The potential for corruption is alarming.  It is much easier for a corporate lobby to influence or even get appointed to a regulatory agency and pass regulations to crush competitors out of business then it is to influence a majority of congressmen to do the same.

Since the first agencies creation in 1887, to regulate railroad fares, corporations have been attacked by this awesome power.  They would learn to use the iron fist of regulation to form cartels in nearly every industry.  In fact the early 1900's was ruled by large corporations headed by robber barons.  We are told that Teddy Roosevelt beat back the corporate takeover of America but he was really just an agent  of corporations.  His trust busting was more of a political attack on competitors than a true attempt at reigning in the power of corporations.  

For over 120 years America has been divided up by those with political clout.  Corporations have benefited from expanded power and given oversight over their industries.  This has lead to record profits, diminished quality and lack of competition.  Cartels such as the Federal Reserve, a group of private banks,  have gained the power to print money, a power constitutionally reserved to the Congress.  The USDA has practically regulated small farmers and butchers out of existence while ensuring a food recall almost every week.  The EPA, with good intentions in mind, just passed stringent lead cleanup regulations, which will most likely lead to joblessness and further deterioration of inner cities.

Some agencies pass regulation that the congress has voted down.  If this continues to happen then what is the point of having a congress?  We can just elect a dictator and he can appoint more czars.  There would be no need for courts either. That is anarchy.  

If the agencies were eliminated private businesses would form guilds and police themselves. The court system would regulate fraud and keep business honest. At least that's how its supposed to work. There are several ways to insert fraud and corruption but to legislate it into law is ridiculous. If the agencies are not eliminated their power should be stripped and returned to congress. If the congress is overwhelmed with creating new legislation the agencies could assist in an advisory way and enforce congressional law. If that's to big a reform then we should  make sure that all regulations expire after six months unless the congress passes them into law. 
The unelected bureaucracies power represents the biggest threat to American democracy and freedom today.  We need bold reform to reign in that awesome power.  The congress needs to reassert itself as the sole lawmaker of this nation.  A return to the constitutional balance of power can save the republic from crumbling under the weight of a bloated executive branch.

Saturday, January 15, 2011

Why can't the city tear up its contracts?

This is my response to Patrick Barret, the labor counsel for the City.  His Midlands Voices can be read here:

I am pleased that Patrick Barrett laid out the facts that have led the city and fire union to an impasse.  He notes that after 30 years of overall wage and benefit increases this is the first time that any major concessions have been reached.  The main concession was the ending of pension spiking.  Hailing these changes as substantial is partisan hyperbole at its best.  Noting that the city cannot void its contract, dictate terms, or do nothing has shown how one sided these negotiations have become.

The city is tied by law to have only one fire department and that fire department is union.  By law the union cannot strike leaving the city without fire responders, a law that was necessary because of the previous law.  By law the CIR is to bring wages up to be comparable to other cities.  The CIR may not give the union everything it wants but they get something.  The pension system is by law required to pay out defined benefits which has led to the shortfall.  The city by law is not allowed to raise its sales tax without state approval which led to the unfair restaurant tax and increases in property taxes.  Those taxes led to the recall.

Poorly written laws have led to this whole mess and no side is willing to take a look at the big picture.  The fire union has monopoly control of fire response in Omaha and ultimately gets its wages from the threatening side of a gun.  It is hard to negotiate with someone who knows you have no alternatives.  After 30 years of greasing the legal system the public unions, state legislature, and past city councils  have written into law a beniefit plan that is detrimental to Omaha's finical stability.  It takes a special person to let go of a deal like that, but this path is unsustainable.

We need a leader willing to make the sacrifices necessary to put the city on sound financial footing.  Defined benefits need to be reformed to defined contributions.  This may be costly in the short term but is the morally right choice.  The laws that are a barrier to this transition need to be eliminated.  Omaha, the state legislature, and indeed the whole United States, have made a mistake in thinking that defined benefit plans for monopolistic government services are sustainable.  The time for reform is now.  This recall is an investment in the future as much as it is a referendum on the past 30 years of bad deal making.

Thursday, January 13, 2011

A Different Look at the State Budget Plan

Today was another bitterly cold day in Nebraska.  Winter is digging in and people are getting frustrated.  Homeless people are voting early and the Governor delivered his state of the state address with little fan fare.  The budget shortfall for 2 years was just under $1 billion and the Governor, true to his word, proposed a balanced budget without raising taxes.  The budget also increases spending by  2.2% over the next two years.

This budget is not nearly as bold as the governor claims.  Dipping into the rainy day fund may be required but only because the Governor is unwilling to actually cut spending.  His moderate stance on spending increases is balanced only by his vocal opposition to any type of tax increase or tax credit elimination.  Let's hope the legislature gets the message.