News New Mexico: 07/08/10

A Culture of Entitlement & Borrowing Part II

Offering a more enlightened view of economic reality, Ronald Reagan and other pro-business, supply side-oriented politicians promised and delivered a competitive revival for the U.S. The remarkable rebound of the U.S. economy during the 1980’s after nearly two decades of utter stagnation came about as a direct result of the slashing of personal income tax and capital gains tax rates. Unfortunately, the long overdue need for government spending restraint was put off thirty years ago just as it is now. While Reagan was a pro-business supply side thinker, he was a politician first and an economic tactician second. Predictably, Reagan chose to fight hardest for the politically palatable elements of his pro-business policies. Accordingly, personal income and capital gains tax rate cuts were enacted immediately and these actions became economically effective almost immediately. Unfortunately, for the nation’s long term well-being the elimination and/or reform of woefully inefficient government programs that subsidize dependency on government were delayed indefinitely. This procrastination over the hard work of governing caused the malaise of the U.S. entitlement and borrowing mentality to continue unchecked even as the economy soared.

Predictably, the political realities of a cultural bias towards entitlement and borrowing continue to remain pretty simple as the dawn of the second decade of the 21st century arrives. Regardless of any purported philosophy held by any elected official, government rarely if ever says no to even the most ineffective program once it says yes to it. In 2010, signs that the majority of American citizens and their elected officials have fully embraced reliance on borrowing to fund the national sense of entitlement are unmistakable. Absent the one time flood of dot.com related capital gains tax revenue windfalls of the late 1990’s, U.S. government borrowing has escalated from a previously alarming hundreds of billions per year earlier in the first decade of the 21st century, to an astounding $1.75 trillion projection for 2010. And late in 2009 we saw indications that future attempts at reforming government borrowing will once again be left to yet another toothless “bi-partisan” commission that will be predictably ignored by the army of demagogues populating both sides of America’s so-called political spectrum.

When carefully considered, some seemingly obscure and unrelated symptoms offer compelling testimony to the pervasiveness of America’s naive acceptance of the entitlement mentality. Each day in America, manufacturers of motorized scooters, items that cost thousands of dollars to produce, are offered for “free.” While no precise details are provided in the marketing ads as to how these very expensive items can be given away, the implications are clear. A free scooter is readily available to any senior that is eligible for Medicare, even those seniors that clearly possess the means to pay for these products themselves. Accordingly, the rule of competing in the marketplace for discriminating customers is irrelevant. Instead, navigating through the nuances of the entitlement-driven diagnosis rules of the federal government has become a successful business formula. At the end of the day, the U.S. government borrows continuously to fund these types of means-ignoring entitlement policies in the Medicare and Medicaid systems.

The debt remediation business has also become a multi-billion dollar industry. Numerous organizations advertise their debt counseling services every day. And with debt-financed goods and/or services in hand, millions of consumers are encouraged to employ sophisticated legal tactics that will enable them to renege on otherwise binding contractual obligations. Ethical considerations are eschewed, the justification being that U.S. laws “entitle” consumers to employ these tactics. In Part III we will examine other examples of the entitlement and borrowing culture and put this scourge into global perspective.

Progressive - Netanyahu Red Carpet Treatment Wrong?

This column by Mathew Rothschild appeared on the Progressive magazine website earlier this week. It is critical of President Obama for treating visiting Israeli Prime Minister Benjamin Netanyahu (photo right) with too much respect. Read the thought processes here:

Martinez on Energy

     Susana Martinez integrates her views on energy into her broader plan for the state's economic recovery. Read her ideas here:
    The position page on energy is much more brief than the Denish position. Instead of spending the bulk of her space addressing the state's investment in "green" jobs, Martinez has a common theme running through all of her economic ideas. She offers a recurring theme of competitiveness."
      Martinez gets more specific with her ideas concerning what she wants to do regarding existing state energy policies. She suggests her idea to eliminate the state's "pit rule," a Richardson/Denish administration policy that places a $250,000 per well cost burden on our state's energy producers, will lead to the adding of revenue to the New Mexico Severance Tax Fund, simply by eliminating penalties on energy exploration and production.  Also Martinez claims her opposition to a regional version of a Cap and Trade agreement, a proposal which was supported by Governor Richardson (and presumably Diane Denish) is based on her opposition to the inherent competitive disadvantages this plan will create for New Mexico taxpayers.
    In the final analysis the Martinez message on energy is one of broad philosophy. News New Mexico will attempt to draw out Susana Martinez for clarity and try to determine her views on the all important question of nuclear power, since the state is already relying on Palo Verde Nuclear Generating Station in Arizona for current (no pun intended) electricty needs.  NNM will also explore her views on government using taxpayer funds to subsidize other not currently viable alternative energy sources.
     The Martinez approach to energy policy is pragmatic and competitive.  And the Martinez philosophy of competiveness is "comprehensive."

Green Jobs?

Readers will find this article from the Alamogordo Daily News fascinating. It tells the story of some of the very disturbing things that Congressman Harry Teague learned about some efforts to promote solar energy during a recent trip to Alamogordo. Read more here:

Larry Elder - Donor Revolt

Columnist Larry Elder discusses the drop off in donations coming from Wall Street investment firms that go to the Democratic Party. He cites a Washington Post article on the subject. Read his views here:

Denish on Energy

Given the catastrophic difficulties presented by thousands of barrels of oil leaking into the gulf and the enormous importance of the State Severance Tax Fund to New Mexico voters, News New Mexico conducted a thorough review of the Diane Denish (left) positions on the topic of energy.

Upon reflection of the Denish approach to energy several thoughts come to mind. In the first paragraph of her energy paper on her website (click here) she says she supports a “comprehensive” approach to energy production. We applaud this concept. Comprehensive approaches are almost always best practices.

    A "comprehensive" approach to New Mexico’s position in the energy question should recognize first and foremost that New Mexico electrical power suppliers are already using Palo Verde Nuclear Generating Station (photo right) which is located just outside of Phoenix, Arizona, to supply a large percentage of the electrical power consumption in our state.
    Of the 604 words used in the Denish energy position paper to describe her “comprehensive” approach, neither the word “nuclear” nor “battery” is used.
    For the foreseeable future, land-based production of traditional energy will be required, even if a transition to nuclear energy started today. And if encouraged by state government, this production can continue to supply the State Severance Tax Fund with sorely needed dollars. It seems that Denish gives merely the obligatory lip service to the importance of severance tax revenue by leaving New Mexico's existing oil and gas industries unmentioned until the final three lines of her lengthy position paper.

What is mentioned in the body of the piece is all the ways that New Mexico state government should be involved as trusted steward of more and more taxpayer dollars. The idea seems to be to steer ever more precious state resources towards energy industries that are sure to require an endless stream of taxpayer subsidies due to gross inefficiencies and limited capabilities.

LCPS Forced to Waste $1 Million by City Council Vote

Updated post: in an earlier post we referred to the new Las Cruces Public Schools elementary school incorrectly. It is Monte Vista Elementary.
City Council's vote back in April against a special assessment district that would have provided private financing for the improvement of Sonoma Ranch Blvd. is going to cost the Las Cruces Public Schools $1 million dollars. LCPS will now have to build a "temporary road" north from the location pictured at right to provide secondary access to Monte Vista Elementary School which opens next month. Sadly, this costly temporary road will be ripped out when the final four lane version of Sonoma Ranch Boulevard is constructed at this same location.
In the midst of budget cuts, classroom teacher layoffs, and other austerity measures, could LCPS use the $1 million it will spend on the temporary road for something that makes more sense? Apparently city councilors, except for the mayor, did not consider this unintended consequence back in April when they cast their job-killing votes.

Paved Road Has Existed For Months

Updated post: in an earlier post we referred to the new Las Cruces Public Schools elementary school incorrectly. It is Monte Vista Elementary.

The Las Cruces Sun News contained some serious inaccuracies in an article it published yesterday on the Las Cruces City Council's evaluation of road issues associated with the new golf course. In the Wednesday edition of the Sun News on page 6A (paragraph 4) the article said: "Much of the new golf course has been ready for some time now. But without a paved road to it, the semi-private course has been closed to the public. The lack of a paved road created a double whammy of sorts: without a road, a construction permit to build the clubhouse could not be obtained."

Clearly the second sentence is untrue. The picture (above right) depicts the paved road (Sierra de Luna) that leads to the golf course. So that local citizens can understand the issues, it is critical to include a critical fact in this story. THIS PAVED ROAD TO THE GOLF COURSE HAS BEEN IN PLACE FOR MANY MONTHS.

It is particularly noteworthy that Councilor Nathan Small (photo left) presented a false premise in voicing his objections to allowing the private road to be used for its intended purpose when he said, "We, as a council, have continuously required developers to follow city design standards as we've outlined them. I'm uncomfortable going against those requirements under any circumstances." The false premise lies in the fact that the area around the golf course has not gone through any sort of formal development process. And there is no doubt that when plans for the land around the golf course are formally submitted for "development," the city design standards Councilor Small speaks of will have to be followed. It would seem that both councilors Small and Olga Pedroza (above right photo), who both voted to continue to render the paved road and golf course useless, are somehow curiously determined to head off job-creating projects like this one at every turn. Why, after millions of dollars have been invested in the golf course and before the actual development process even begins would these two councilors attempt to keep throwing up barriers? These are thought processes that will require much further explanation by both councilors. We extend an open invitation to both to appear on News New Mexico.

In the meantime, the distinctions between local elected officials wanting to encourage job creation in this area and those who are ambivalent to the plight of the unemployed became clearer Tuesday afternoon. City Councilor Nathan Small's objections defined his priorities. Councilor Olga Pedroza also defined her priorities.

In the end, as is the case with most city council meetings, for most in attendance Tuesday the experience was like a trip to the dentist.. Eventually the other four City Council members led on this issue by Mayor Ken Miyagishima, ignored the objections of Small and Pedroza and voted to put a stop to the stranding of this road so it can finally be used for its intended purpose.

This vote Tuesday by city council merely clears one of the hurdles in the way of getting the course open. Hopefully for job seekers it will prompt the owners of the golf course to create employment opportunities as they provide the resources needed to get the new course ready for play.

The course (pictured in photo right) is located northwest of the new elementary school built by LCPS. Monte Vista Elementary is slated to open next month when the 2010 - 2011 school year begins.

The Progressive - Put Away the Flags

The Progressive magazine ran a commentary piece by the late Howard Zinn just before Independence Day that is worthy of consideration. Zinn calls on Americans to "out away their flags." Though News New Mexico resists the use of political labels we are always interested in seeing how people from various philosophical viewpoints define themselves through the ideas they find useful. Read here:

Mario Diaz - Tea Time at Kagan's Home

Columnist Mario Diaz poses ten questions for Supreme Court nominee Elena Kagan. Diaz has the sense that Kagan recognizes very few rights that cannot be transferred from citizens to government including the judiciary. Read his questions for Kagan here:

Star Parker - The Atmosphere or Earth?

Columnist Star Parker questions the source of our problems. Is the high unemployment rate in the African American community the result of the fuels we use? She calls attention to the way the government uses the climate issue to grab more control of our lives. Read her thoughts on these topics right here:

Fat Cats I

Recently President Obama railed against so-called “Fat Cats.” We think all Americans should support his disdain for Fat Cats. However, a more comprehensive definition of the term “Fat Cat,” would also be helpful. Let’s examine how we got to the point where Fat Cats regularly manipulate and exploit our financial system on such a grand scale. How can Fats Cats successfully prompt government to step where it does not belong and micro-manage various segments of our economy. Perhaps a little background is in order.

Ending Glass-Steagall - With bi-partisan support on November 12, 1999, President Clinton signed into law a bill that essentially tore down banking system safeguards contained in the Glass-Steagall Act. Naturally, like most government folly, this ill-advised reversal of a policy that dated back to the Great Depression, was completed only after an army of clever lawyers successfully sold shell game-like arguments to elected officials. Our domestic depository banking institutions, these advocates argued… deserved more “fair” treatment so they could be able to operate more freely in already deregulated financial markets. Their general rationale was that distinctions between loans, securities, and deposits were already blurred. And they further asserted that our once mighty commercial banks were gradually losing market share to securities firms that were not so strictly regulated, as well as to foreign financial institutions operating without much restriction from the Act.

Congressional leaders in both parties and President Clinton swallowed this special interest advocacy bait like hungry fish. It was naively suggested that the dangerous conflicts of interests created by the end of Glass-Steagall could be controlled by…… our government. By simply enforcing existing legislation that separated the lending and credit functions through the forming of “distinctly separate subsidiaries,” we were told our financial system could continue to function properly with commercial banks both underwriting and trading securities for their own accounts.

Lower Risks, Diversification, and Fairness - President Clinton and the majority of members of Congress reassured skeptical industry experts that the underwriting and securities trading activities that these depository banking institutions were seeking to engage in as part of the end of Glass-Steagall, were “low-risk.” It was further asserted that the end of Glass-Steagall would lead to the reduction of the total risk to federally-insured deposits thanks to the broad benefits of diversification. In the end, the clever lawyers resorted to an all-too-familiar version of law school 101…..a bamboozle strategy. Cloaking their arguments in the timeless virtue of “fairness,” they argued that Glass-Steagall had become a needless impediment that was keeping our banks from doing what nearly everyone else was doing.

Elected Officials and Mortgage Lending - Not long after the protections of Glass-Steagall were torn down, our campaign contribution driven system of government continued to bring the worst it has to offer to the foundations of sound lending practices. Caught on film in hearing after hearing were members of congress who, in the sorriest traditions of American-style politics, cloaked themselves in a heightened sense of “fairness.” Simply put, elected officials relentlessly pressured regulators of government sponsored entities (Fannie Mae and Freddie Mac) into allowing a dramatic loosening of mortgage underwriting standards. As a result, loan approvals became an entitlement for most mortgage applicants, regardless of their personal creditworthiness. Tomorrow we will go farther in defining the Fat Cat.

Walter Williams - Talks Founder's Vision

Columnist Walter Williams has some ideas on the nation's founding fathers and their vision. He contrasts and compare's them to our views today. He warns us it is not only thugs that require us to have 2nd Amendment rights. We must protect ourselves from Congress too. Read Williams ideas here:

Aggie Women Make All-American Scholar Team

CORAL SPRINGS, Florida - Three New Mexico State women's golfers were named to the All-American Scholar team selected by the National Golf Coaches Association (NGCA), Monday, July 5.

It is the third consecutive All-American Scholar selection for Maggie Murphy, who graduated with a bachelor's degree in Community Health this past May. Murphy, who played 17 rounds for the Aggies in the 2009-10 season, carded an average score of 80.33. With a 3.71 grade point average, Murphy was able to find balance between academics and athletics. Read more here:

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