Sandra Fabry

Obama Recarbonates the Soda Tax Talks, Gives Yet Another Glimpse Into Political Psyche


Posted by Sandra Fabry on Wednesday, September 9th, 2009, 2:19 PM PERMALINK

Just when you thought the idea had (rightfully) fizzled, President Obama may have recarbonated the conversation about a tax on soda and sugar-sweetened drinks.  In an interview with Men's Health published on Monday, the President said that a tax on these types of drinks was "an idea that we should be exploring." 

President Obama's statement gives us yet another glimpse into his mind, and into his view of the role of government:

"Look, people's attitude is that they don't necessarily want Big Brother telling them what to eat or drink, and I understand that. It is true though, that if you wanted to make a big impact on people's health in this country, reducing things like soda consumption would be helpful."

So he understands that people don't like nanny-stateism, but he doesn't care, because he knows what is good for you.

There's a pattern here.  Our own John Kartch reminds us on the American Spectator blog that the president has a "habit of giving a verbal head-fake to Americans' limited-government sentiments while simultaneously pushing to expand the role of government."

But Obama's statement is not just another example of the above-referenced habit, it also stands direct contradiction to, and if enacted would be yet another direct violation of, his promise not to raise taxes on families making less than $250,000 a year - a campaign promise he renewed just last month. But maybe the President thinks only high-income earners drink soda...

If his signing of the cigarette tax hike earlier this year is any indication, then Obama's renewed vow not to raise taxes on families making less than $250,000 may have been just another "verbal head-fake."   He understands that people don't like higher taxes, but ...

There are plenty of good reasons reasons why the proposal to use a soda tax as a funding option for a health care overhaul hike fizzled a while ago (we listed them here).  However, the President has decided that a soda tax is good for you.  Hopefully Congress disagrees.

Photo credit: karen_d

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CA Legislature Passes Spending Transparency Bill


Posted by Sandra Fabry on Tuesday, August 18th, 2009, 3:03 PM PERMALINK

The following is cross-posted at www.fiscalaccountability.org:

Yesterday, the California legislature passed AB 400, its transparency legislation that requires state expenditures over $5,000 to be posted online with contextual information detailing the purpose of the expense, allowing taxpayers to see how their money is being spent by the state. 

While Gov. Schwarzenegger had signed an executive order that required all contracts over $5,000 to be posted on his website earlier this year, this (once the  governor signs the bill) would be the first time transparency has been codified into law in the Golden State – and it’s a long-overdue step for a state that has been plagued with budget problems for years.

The state legislature had long agreed on a comprehensive overhaul of the financial management system. The new system called FISCal is supposed to be serving as a single integrated system that encompasses the management of resources and dollars in the areas of budgeting, accounting, procurement, cash management, financial management, financial reporting, etc.  With the overhaul in the works, it should be very easy to slip the construction of a comprehensive searchable online database as part of the package (that’s how Kansas got theirs). And essentially, that’s what the bill does – it requires the FISCal system to integrate a transparency component.

The challenge is that the bill is not very clear as to how the data is to be presented. While basic categories for expenditures over the amount of $5,000 are included (amount, type of transaction, agency making expenditure, budget program source and brief description of purpose as well as description of any item purchased pursuant to the expenditure), there is no requirement that the information be searchable or downloadable. Another deficiency is the $5,000 threshold (although that’s already reduced from $10,000 initially).

One would think that a modern financial management system should be able to provide taxpayers with a fantastic comprehensive website.  California is notorious for leading the nation in many bad ways (some say, as California goes, so goes the nation, and that’s usually not a compliment).  Let’s hope the state uses this opportunity to shine, and will build a site that goes far beyond the basic requirements of the bill.

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Newsflash for Northeast Liberals: Taxpayers Vote With Their Feet


Posted by Sandra Fabry on Tuesday, August 18th, 2009, 10:51 AM PERMALINK

Due to the declining population numbers, the Boston Globe reports, Massachusetts will likely have to give up at least one U.S. House seat after the 2010 Census.  However, liberal Rep. Michael Capuano apparently seems to think migration happens in a vacuum:

"I haven’t got any control over it, so why worry about it?’’ said Representative Michael E. Capuano, Democrat of Somerville. “I don’t think there’s anyone around who has figured out how to stop the population flow to the Southwest."

Well, maybe he should read our Cost of Government Day 2009 Report.

In our report, we not only highlighted the spending and regulatory burdens imposed by all levels of government, we also included a section on inter-state migration, which clearly shows that taxpayers vote with their feet.  Liberal politicians, however don't seem to get it, which explains why Cost of Government Day comes notoriously late for states in the tax-and-spend-happy Northeastern states.

Taxpayers are leaving higher-tax states and take billions of dollars in income with them.  Between 1998-2007, the ten states with the highest tax burden (many of which are in the Northeast of the country) lost more than 3 million residents taking $82 billion of net-adjusted income with them to other states.  During the same period, the states with no income tax saw an influx of 2.6 million migrants bringing in $98.5 billion in income.

So are Northeastern liberals just clueless, do they simply not care, or maybe even both?

H/T Andy Roth


Cost of Government Day Arrives Five Days Later than the National Date for Massachusetts


Posted by Sandra Fabry on Monday, August 17th, 2009, 4:46 PM PERMALINK

The following is cross-posted at www.fiscalaccountability.org:

Happy Cost of Government Day, Massachusetts!? If you think “wasn’t Cost of Government Day last week?” you’re right, but that was the national date.  For Massachusetts taxpayers, that day has finally arrived today, on August 17 – five days later than the national average.  (Click here for the full report)

As a reminder, Cost of Government Day is the day of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of the spending and regulatory burdens imposed by government.
 
However, the late Cost of Government Day does not really come as a surprise for a state that is notorious for its tax-and-spend policies.  In fact, it is no coincidence that Massachusetts has the nickname “Taxachusetts.

Massachusetts has repeatedly raised taxes on its residents – by almost $10 billion, or $ 1,533.42 per capita, between FY 2003 and FY 2009.

While the state legislature refrained from tax hikes for FY 2009, things are different for FY 2010.  In June this year, Gov. Deval Patrick signed a $27 billion state budget that contains about $1 billion in new taxes.

Among them are:

  • a sales tax increase from 5% to 6.25%;
  • the removal of the sales tax exemption on off-premise sales of spirits, beer and wine;
  • a  5% tax on satellite TV service;
  • an increase in the meals tax to 6.25%;
  • a hotel tax hike.

So while tough fiscal times could be seen as an opportunity to tighten the fiscal belt by cutting spending so that Massachusetts would finally be seeing Cost of Government Day fall before the national date, these tax increases are only going to perpetuate the problem.

Photo credit: Taylor Tai


New Video Outlines Government Spending's Negative Impact on Economic Growth


Posted by Sandra Fabry on Monday, August 17th, 2009, 10:19 AM PERMALINK

The Center for Freedom and Prosperity Foundation has released a new video which examines how government spending hurts economic growth. The video cites eight primary costs associated with government spending:

  1. Extraction Cost
  2. Displacement Cost
  3. Negative Multiplier Cost
  4. Behavioral Subsidy Cost
  5. Behavioral Penalty Cost
  6. Market Distortion Cost
  7. Inefficiency Cost
  8. Stagnation Cost

For more information on broader issue of the cost of government, check out the Cost of Government Day 2009 Report here.


Speaking of Posting Things Online ... Another Case Study in Selective Transparency


Posted by Sandra Fabry on Tuesday, August 4th, 2009, 3:58 PM PERMALINK

Where is the data on "Cash for Clunkers?"

Earlier today, we took exception to the House Energy and Commerce Committee's claim that it will take a few weeks for them to post the health care bill online after the Examiner mocked its exchange with the committee over the issue:

When we called back for an official comment, spokeswoman Lindsey Vidal gave us the slightly less jarring news that it would take at least two to three weeks, even though we live in an age of computer cut-and-paste.

The Examiner concluded that there could only be one reason for the committee not to post the bill swiftly:

House Democrats are afraid of what people will say when they read the bill.

Now we have to wonder if the Administration (which was supposed to be the most open and transparent in history, remember?) might have similar ulterior motives as President Obama wants an expansion of the ill-conceived "Cash for Clunkers" program for his birthday. Writes the AP:

The Obama administration is refusing to quickly release government records on its "cash-for-clunkers" rebate program that would substantiate — or undercut — White House claims of the program's success, even as the president presses the Senate for a quick vote for $2 billion to boost car sales.

The Transportation Department said it will provide the data as soon as possible but did not specify a time frame or promise release of the data before the Senate votes whether to spend $2 billion more on the program.

In other words, just trust us and pass the darn thing now, we'll worry about answering your questions later!?

This attitude is very disconcerting, but at the same time hardly surprising, as the "stimulus" package was pushed through by the Administration in a similar fashion.

Apparently, the House suffers from short-term memory loss given that they fell for quickly passing an expansion of "Cash for Clunkers" last week without demanding to see the data.

Senator DeMint hits the nail on the head:

And for us to rush through $1 billion and then say, 'Well, we don't know exactly what happened, but it's out of money after one week, so let's have $2 billion more!' this is just an out-of-control government at the federal level now, and we need to stop and see what we've done.

It just doesn't make any sense to keep rushing through bills, borrowing money from our children, and then saying, 'Shazam, we've sold some cars!'

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Scrap the Expansion of the Scrappage Program


Posted by Sandra Fabry on Monday, August 3rd, 2009, 5:12 PM PERMALINK

After the U.S. House of Representatives hastily passed a $2 billion expansion of the "Cash for Clunkers" program last week, the Senate is poised to take up the bill this week.  Luckily for taxpayers, several Senators, including Sens. McCain, McCaskill and DeMint have already voiced their opposition and may look to derail this costly and unwarranted expansion.  ATR and our Center for Fiscal Accountability sent a letter urging Members to refrain from passing the House bill. From our letter

This ill-conceived program is costly, and has turned out to be a bureaucratic nightmare.  And make no mistake, even if the first infusion of money came from the “stimulus” package and the replenished funds would come from the TARP program, it is not free money. But even beyond that, a similar program enacted in Germany has seen its cost balloon from an estimated €1.5 billion to €4 billion, and failed to achieve the desired effect of “stimulating” the economy while reducing emissions.
 
In addition, even the underlying logic of increasing fuel efficiency is flawed, as increased fuel efficiency often leads to more driving, which could ultimately lead to more pollution. Further, several studies point to the fact that replacing old cars with new ones in fact increases carbon emissions, as the manufacturing stage is responsible for a large percentage of all toxics released over the life-cycle of a car. Even environmentalist activists like Paul Monbiot from Great Britain oppose “Cash for Clunkers” programs, because in their eyes, “scrappage schemes are nothing but hand-outs for the car firms, resprayed green to fool the incautious buyer.”

The Wall Street Journal also raised a few excellent points earlier today, calling the underlying assumptions of the program "crackpot economics."

On the other hand, this is crackpot economics. The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.

Hopefully  the Senate will reject such "crackpot economics" - but some of the things they have passed recently leave me worried.

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House Bill Furthers Encroachment of Government into Private Sector


Posted by Sandra Fabry on Friday, July 31st, 2009, 3:56 PM PERMALINK

The U.S. House of Representatives just voted to pass H.R. 3269, the "Corporate and Financial Institution Compensation Fairness Act.  ATR, Americanshareholders.org and CFA opposed the bill and alerted Members that our respective organizations "may rate" a vote against the bill in our annual Congressional ratings.

From our alert:

We are currently witnessing “the abridgment of the freedom of the people by gradual and silent encroachments of those in power” James Madison warned against in 1788. After the recent series of government interventions into the private sector, it is time to draw the line.

This legislation delegates broad authority to unelected federal legislators and constitutes an unquantifiable yet undoubtedly expensive mandate on private sector companies which will further hamper our nation’s potential for economic growth.

Unfortunately, the House decided to further the "gradual and silent encroachments" Madison warned against.

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Soda Taxes - Another Fallacy of Nanny-State-ism


Posted by Sandra Fabry on Wednesday, July 29th, 2009, 2:31 PM PERMALINK

A little while ago, Senate Finance Committee Chair Max Baucus (D-MT) floated a set of "lifestyle-related" taxes in his "Description of Policy Options." Among these policy options was the proposal to raise taxes on sweetened non-alcoholic beverages, a proposal that soon seemed to fizzle in light of overwhelming public opposition.

However, this week, the chief of the Centers for Disease Control (CDC) and Prevention argued at a conference that increasing the price of food perceived as unhealthy "would be effective" at combating the obesity problem.   Interestingly enough, only three years ago, researchers from the CDC reported that:

Evidence for the association between sugar-sweetened drink consumption and obesity is inconclusive...[N]ational data showed no association between sugar-sweetened beverage consumption and Body Mass Index."

Several other studies (see for example here and here) draw similar conclusions, and state that the impact of sweetened beverage consumption on a person's weight is statistically insignificant.

Beyond that, obesity may be an issue in this country. But even if you accepted the premise that it is a public health issue and not a personal health issue, the tax code is not the place to address this issue.  Tax increase proposals on products perceived as "sinful" or "unhealthy" amount to social engineering through the tax code, and the tax code should not be used as a consumer control device.

But let's face it, this tax increase proposal is not about obesity, it is about revenue, and "sin taxes" in general provide an opportunity for government to pursue divide-and-conquer and nickel-and-dime tactics to generate more revenue to fund the expansion of government programs.

What's more, this tax increase is highly regressive and would disproportionately affect lower- and middle-income taxpayers who are already hit hard by the economic crisis and are struggling to make ends meet.  And we all remember President Obama's promise not to raise taxes on anyone making $250,000 or less.  However that promise was already out the window with the passage of the federal excise tax hike on tobacco early this year, so taxpayers shouldn't hold their breath that Obama's promise will shield them from a tax hike.

 

And let’s not forget that the “tax bite” the government already takes out of a can of pop is 37.6 percent or $.28 for a 75 cent can.

The economic damage this tax increase brings with it should also not be forgotten, especially as our economy continues to shed job.  The beverage industry and affected industries employ hundreds of thousands of workers, and jobs would most certainly be at risk.

A broader issue that comes into play with these types of life-style taxes is the fact that excise taxes aimed at reducing consumption of a product of often turn into "placeholders" for future tax increases. While on the one hand trying to discourage certain behaviors through these tax increases, government would find itself in the contradictory position of at the same time relying on the continuance of such behaviors as a revenue source for the programs funded. Ultimately, these excise tax hikes serves a placeholder for the next tax increase that will likely be required to sustain funding levels once revenues dwindle when consumption does drop.

There are a lot of things that some say are "bad" for you. Tobacco, soda, snacks and fast food, salt - where do you draw the line? What's next on the list? They say high heels aren't healthy for your feet and back. Ladies, your Jimmy Choos might be next.

This soda tax hike proposal fizzled for good reasons - let's hope they don't refresh it.

Photo credit: Vox Efx

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Congressman Conyers Shows Contempt for Taxpayers


Posted by Sandra Fabry on Monday, July 27th, 2009, 5:40 PM PERMALINK

 Our friends at the Heritage Foundation caught this video clip of Congressman John Conyers (D-MI) ridiculing the calls for Members of Congress to actually read the health care bill:

 
So what is Congressman Conyers trying to tell us?  They don't know what's in the bill - but they also don't care? Can you show any more contempt for taxpayers?
 

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