Posts archived in Economics and Debt

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Today’s fun fact.

Under Paul Ryan’s budget plan, Romney’s tax rate would be less than 1%

But think of all the jobs he could create with that extra money…. At, uh, Swiss banking branches and Cayman Island hedge funds….

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The East-West Highway.

The East-West Highway.

This concept is a longtime Maine conservative Shangri-La, a Randian dream of hardworking Maine investors, collared shirt sleeves permanently rolled up to their elbows, striking a blow against the mammoth bureaucracy of the Maine Department of Transportation by building a privately financed highway across the state from Quebec to Calais.

Of course, unlike the mammoth DOT bureaucracy, the scrappy, sleeve-uprolled, private investor consortium has never actually built a road, but hey… They keep talking about it?

Take that, government bureaucracy.

Yes, the East-West highway is the bright conservative transportation beacon of economic freedom and hope. By building a road across the middle of the state, Canadian truckers will be able to shave hours, hours I tell you, off of their trips between Toronto and New Brunswick. The economic ramifications are enormous. With a highway nearby, previously sleepy towns like Corinna could achieve the towering economic heights previously reserved for the giants of Maine highway exit stops like Burnham, or Medway. Why should prosperity be reserved for the likes of Island Falls?

The AMG thread about this route is here.

From this thread, I have learned several things. First, this heroic piece of private triumph required about $300,000 in government investment to “study.” Because government is always bad, except when it is used to fund some particular rich person’s private profits with no risk of loss to themselves.

Second, this miracle-upon-Medway will come into existence without any use of eminent domain but only through the force of good old-fashioned American elbow grease, or so says Legislator Doug Thomas. Despite the law appearing to allow for some government taking your land shenanigans, Mr. Thomas assures everyone that the East-West Highway is a big fricking deal and would require a new vote, one in which he would definitely NOT allow the eminent domain takings that some unlearned backwoods bumpkins (it’s not their fault- they are only backwoods because there is no highway there yet!) seem to see in the already-passed law pushed for at the behest of the investors proposing the East-West Highway. Because, of course, that is just some general law. Doug Thomas promises to vote the right way on the specific law, which will come. He promises.

And besides, even if they could, technically, use emininent domain, they wouldn’t need to! There is just so much space, surely they can survey, plan, permit, and build a route that goes around every last farmer or wood lot owner who doesn’t want to sell. And if something pops up, they can just re-survey, re-permit, and re-engineer a different route. Yeah, that would be cost effective. The men enacting this libertarian wet dream would never imagine to cut through that mess and ask for eminent domain. Sure, they would make more profit doing it the quick way, but freedom must be more important. I’m insulted you would even ask.

Third, I see in this thread the truth that only liberals whine about development. Conservatives clearly love having giant noisy things built in their backyard that, despite make their life worse, help the whole of society. You can see that truth because there is no NIMBY-esque complaining happening. Oh, except for this:

The opponents know that it is much more about the “corridor” and any and all other uses for such a “corridor” across Maine, other than a road. It is quite compellling to see the promoters deny that they are thinking of any other uses for this corridor…..than a road!

100+ tank car trains, carrying Bakken crude oil from North Dakota, are traversing Maine already, en route to Irving’s refinery in ST John. Approx 6 of these trains have crossed Maine, either by PanAm RR or the former CP line north of the projected road. My railroad sources just told me this morning that Irving is contracting for 15 of these trains weekly by september.

And this:

What bothers me about this plan, among other things, is that Vigue for years described the project as a “transportation and utility corridor,” then suddenly shifted the emphasis to it being an “east-west highway” last year and started dodging the issue of other uses. That worries me — a lot. I share woodcanoe’s doubts on that question. Also, what about wildlife movement between north and south Maine? Will this be a 220-mile wall across the center of Maine?

And this:

I’m all for business.
I think it’s more.
Even if it were just that, how’d you like me to build a highway just beyond you’re furthest stake?

As a Mainer below the “Volvo line,” even though I think the Volvo line died years ago and has been replaced by the “Not an old crappy pickup with a Bush-Cheney ’04 sticker” line, I want to give some quick advice to the AMGers on the fence about this project.

First, if you want a goddamn highway then just have the government build it. Can’t we even agree that the government can build roads? For crying out loud. Your party controls the whole government. You can dick around with this fantasy or you could, you know, actually build a road!

My second piece of advice is as follows. The highway is a bad idea, 30 years too late. In the ever increasing American service economy, powered by the Internet, building more roads through the woods so that widgets can get from Trois-Rivieres to Halifax more quickly is a losing proposition. Would it help some businesses? Sure. And if you built a train from my bedroom to my bathroom then I might take more shits. But in the end, this isn’t going to make a noticeable difference.

In modern America towns need to compete. I know, I sound like a free market capitalist instead of the evil Socialist I must truly be, but hear me out. Towns need to compete, and they have to compete over what is the future rather than the past.

Lots of towns have a highway. They don’t help if you’re not within a few hours of a major city. You need to compete for what young people actually want, because they are your town’s future.

When young people, most of whose can in fact still find decent jobs in Southern Maine, think about where they want to live and work we take a few things into account. One, we want to live near where we work. Walking around Portland is absolutely a lovely convenience. Moving away from here becomes more and more unthinkable the more I do it. I grew up in a Maine town where I had to drive everywhere. I always assumed I would move back to one like it someday. But not anymore. Cars are annoying, expensive, and unnecessary for most day to day errands. Most Maine towns, of course, cannot compete with a city like Portland in this regard, but too many give up altogether and assume no one will want to walk anywhere. That is wrong.

So build sidewalks. Make downtown areas that are pleasant to be in. With, you know, parks and stuff. Build bike paths and give out maps of same. Slow down traffic in the center of town, even if it means building annoyances like narrower lanes, and center islands. If I can’t imagine myself ever possibly walking or biking from my driveway to the grocery store, I promise you I will never become a taxpayer in your little paradise.

Also, build good schools. Take pride in how your school looks. I know, it is slightly more expensive to build anything not a plain white vinyl box to educate your children in, but if I’m looking at a house in your town then I’m going to look at the school. Seriously. Everyone I know who is moving, or planning to move in the next year, is doing it for schools. Schools drive Maine real estate values. People will literally downsize their home to get in a better school district, and that builds on itself because bringing in smart young families makes more smart young families want to be there. So don’t be a Naran. People want a school that they could picture being the launch pad for their child’s future. I don’t buy the cheapest roll of toilet paper, so why would I want the cheapest school?

Finally, admit you are what you are. I’m looking at you, Millinocket. Paper will never be that big again. Until they find a way to make touch screens out of trees, your best asset is the pristine wilderness around you. They don’t do much fishing in Bar Harbor anymore, either. If you are near Baxter, or some other large public wilderness area, leverage it and sell it. Being green is profitable. It really is.

So that’s my advice. If you want a highway, build one, but don’t play these stupid games. And don’t think anyone is going to move to the sticks just because there’s a road to nowhere.

Although, I might move to your town if I can see these petty, time wasting arguments in person. Maybe arrange an “AMG-Live and uncensored” night at the local cafe? I’d have to seriously consider.

LD 849 is a genius piece of political posturing.

The news reports on this bill, which passed the Senate yesterday, simply say that Republicans voted to “reduce the income tax rate to 4%.” Looks great! They got the headline they wanted. No further explanation given or required.

But what the bill actually does is only slightly better than nothing. It does nothing in terms of taxes people actually pay, but creates a nice baseline for future Republicans to compare all budgets to.

The bill, technically, creates a new “fund,” into which goes any extra, leftover money the state has after all it’s general commitments are paid. Some of that is then doled out into the budget to reduce tax rates until the top rate is 4%.

The original bill only lowered the top rate to 6.5%, but that lacked the panache necessary to really excite the unsophisticated Republican voters whose buttons are meant to be pressed by this headline, so they lowered it to 4%. That is apparently the poll tested number that LePage voters find most exciting but still believable.

How does this help future Republicans? Consider that state revenues are unusually low, given the recession. Understand that these revenues will go up substantially in the next few years, even if the actual tax rates do not. Also understand that there are a lot of costs the state is deferring at the moment, costs that are being pushed ahead into future budget years in order to stop an immediate tax rate increase to make up for the current, temporary revenue decrease.

So if 2013 rolls around and Democrats are in charge of writing the budget again, the Republicans know the new legislature will do what Democratic-controlled bodies always seem to do in the current millennium: craft a moderate budget that keeps the lights on and even fixes a few potholes, literally and metaphorically.

And Republicans will jump out from behind a tree screaming, “Democrats are increasing taxes 200%! They want to double your taxes!”

How? Because the current tax rate is 8.5%, heading down to just under 8% in a year or two. And Republicans will look at the next budget and calculate the relative tax rates compared to their mythical 4% they passed but never implemented. And eight is twice as high as four!

The 4% rate is mythical because the tax rate would only reach that low if spending did not increase at all from these historical lows, and revenues skyrocket in a good economy. But of course spending will increase because the government has been putting off lots of general housekeeping and upkeep- the sort of stuff that can be let go for a few years unnoticed before people start complaining.

Oh, and spending will go up modestly even without paying all those deferred costs, as always, because of inflation.

Yet Republicans will calculate a tax increase as what Democrats propose in their responsible budget versus their hypothetical baseline that could never, ever, actually happen. They will determine that we would all have been paying 4% by 2020 if we had just held the line on spending, and therefore that Democrats want to double your taxes.

This is the beauty of the Republican party- moderation and reality mean nothing. They will make this claim of a potential doubling of taxes even though the top rate in effect is, will be, and always was somewhere over 7.9 percent at all relevant times. And they can’t actually propose a budget with a 4% tax rate, because that would lead to all kinds of nasty news stories about what they cut to make the numbers work. That is the beautiful thing about this bill: you don’t have to cut any spending if your tax cuts are imaginary!

So when the Democrats propose a budget generally like the last one, but with a modest spending increase over historic lows, Tea Party types will jump and scream because they won’t realize that the 4% rate was impossible all along.

The tax cut in this bill is completely useless as a piece of responsible, honest governing. It is fiction.

This bill’s only use is as a talking point in 2014. And it is only a useful talking point if Republicans aren’t actually in charge of the budget- because otherwise they would be the ones raising taxes when they continue to fund everything at or about historical levels, with inflation added in, thus continuing the endless cycle of small, continuous budget increases. Their decision to pass this bill shows that they are already hedging against losing the legislature.

They know they probably won’t be in charge, so they can put these little talking-point bombs into the system.

And if they somehow maintain control of the legislature, we will not hear of this 4% number ever again. They will lower the 7.9% rate to 7.6%, or something like that, and talk about how historic that is. The 4% baseline is only meant for attacking others. No Republican will ever be held to it.

Cynical? Yep. Politically smart? Sure, if you plan on losing the legislature sometime soon.

I wouldn’t be surprised if this tactic is happening in other states controlled by radical Republican majorities in usually un-radical states. It makes a lot of sense, tactically.

Today, Naran started a thread that unites 90% of AMGers behind the proposition that Portland’s city hall is right to implement an expensive, job-killing regulation on Maine small businessmen.

Finally, they come around to the dark side! As you friendly neighborhood communist pinko, let me welcome you to the People’s Republic of Portland.

Why would AMGers turn 180 degrees so quickly? Easy answer: In this case the businessmen in question are SOMALI.

The job-killing regulation in question requires taxi drivers, most of whom are African immigrants, to get their taxi license and pay a fee in person rather than through a representative. The city had been letting people use a representative but then decided that their rules didn’t allow it.

The AMG “pro-business” crowd somehow sees nothing wrong with having people stop working to go get a piece of paper in person just because the guv’mint has a rule saying so. If the Somalis don’t like it, why, they are asking for special rights. Got to be that. They are Somalis, after all. It couldn’t possibly be that they are trying to make a living and don’t like a stupid rule, right? That would be something regular Mainers do, not Somalis!

If you call AMGers on this contradiction, as a few posters have, the answer is some variation of “we have all got to play by the rules.”

Melvin Udall says:

The Somali taxi drivers have learned from the same day voting debate. Claim oppression, suppression, and depression. And throw in repression too.

No Melvin. They learned from AMG, where electricians and carpenters complain about housing regulations, where accountants complain about accounting regulations, and where small business owners complain about health care regulations. Complaining about regulations is sort of AsMaineGoes’ reason to exist.

Rarely is it ever said to the regular complaining Maine business people that they need to suck it up and “play by the rules.” What I usually hear is, “Hey, let’s CHANGE the rules, because Ayn Rand wouldn’t have liked them.”

Except when they are Somali.

Weird, huh.

Who would have thought AsMaineGoes would side with Portland City Hall in a story that basically reads, “Small businessmen sue city over useless regulation?”

No one, until you find out exactly who is doing the suing.

AMGers are split on a proposal by a Republican legislator to stick it to those damn hippies and tax bicycles.

They aren’t split on the underlying motivation- they’d LOVE to stick it to those dirty hippies with their healthy, non-fossil fuel burning mode of transportation – but some people just dislike taxes more than they dislike hippies.

This has come up on AMG before. In general, building trails or paths or bike lanes is just a waste of time and money. You know, touchy-feely stuff. They’ve been waiting to get their guy into the Blaine House so we can see some real economic development.

I was reminded of this AMG pick-on-the-bikes thread when I read some news today from Cincinnati. The city of Cincinnati had planned to renovate and restart their streetcar system. This kind of system is very popular in Portland, Oregon and several other cities around the country. Portland, for instance, claims that every one dollar they invest in the streetcar system has resulted in thirteen dollars of private investment along the route.

But the naysayers in Ohio know it is touchy-feely bullshit. If Starbucks sipping elitists like the idea too much, it must be a bad thing. The new government in Ohio withdrew funding for the project.

Where am I going with this? Well, streetcars and bike paths are sort of similar. People in cities like quiet, clean, frequently available transportation options. And they like bike paths. They’re both “quality of life” improvements that don’t make a dollar for dollar direct profit- but they are the sort of thing that attract families to your city. Young families especially. Professional families too.

But Ohio is going to keep doing what they’ve been doing, because that has worked so well. Same for Maine’s rural conservatives. They just need to lower taxes a little bit more and all the young families are going to do the math and move there in droves.

That idea is just false. People dont dive into the local tax records when they buy a home. They want a nice home in a nice area with nice recreational options.

My point: Maine conservatives who usually pray at the alter of “business-friendly” never seem to want to look at the city in Maine that prospers the most: Portland.

Do tax rates REALLY matter? Hmm. Idaho has really low taxes. Do you know any big companies from Idaho? Do you own anything sold by an Idaho business?

Now think about San Francisco. Can you think of any big companies that have found success out there?

Why the difference? Why isn’t Idaho doing better than San Fran? More locally, why is Portland doing better than everywhere else? Why hasn’t Apple and Google left California for the low tax paradise of Idaho? Or Mississippi?

When conservative Republicans are in charge nothing is done to attract people other than lower taxes. This leads to a place like Mississippi. Yeah, it’s cheap, but the schools suck. The health and lifestyle sucks. Therefore, the economy sucks.

Meanwhile, places like Portland, Oregon try new things. They build things people want. Portland, Maine does this too. We’ve got an extensive bike and trail system, pretty good schools, and a bunch of other stuff that costs a bit more money but, well, all those kids from your town who moved here seem to think it’s worth it.

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Dan Demeritt

The PPH has picked up on LePage public-relations guru Dan Demeritt being slightly less effective at business than, say, anyone with fewer than five foreclosures pending.

Mr. Demeritt earns over $80,000 in state salary for his public relations smarts.

But have you noticed something? He isn’t doing a whole lot of public relations! Adrienne Bennett has supplanted Demeritt as the person always quoted in news articles on LePage’s behalf.

What is her pay? I hope it’s at least half of Demeritt’s.

And if she has a significant other, I hope he landed a plum “executive assistant” job, too, like Demeritt’s wife enjoys, which brings the Demeritt family income above $130,000.

Because I haven’t seen Demeritt do anything worthy of his salary, but Ms. Bennett seems to not suck so bad.

This is absurd theatre. Demeritt has $130,000 in household income and he can’t run a pizza shop. LePage was on vacation because he has “nothing to do.” LePage can’t find department heads because the taxpayer-funded $117,000 salaries are “not a lot.”

Out. Of. Touch.

Maine: Open for business? Or Maine: Open for surreal, live-action political theatre of the absurd? I vote for the second.

 

Economike just lays it all out there, telling us historical dunces that the labor mural’s message is simply false:

The mythology is the mural’s implicit narrative – the counterfactual that “better conditions” systematically were withheld by employers and that union organizing somehow created a general improvement in working conditions.

I know most conservatives see no use for today’s labor unions, but I thought most still granted yesterday’s unions some credit for how we don’t all work 15 hour days locked in a building with no bathroom breaks and lots of flammable material stacked against the walls. But, I guess even that is just too much for Economike’s libertarian wet dreams.

Things only got better because the rich people got nicer.

We should rename Labor day to, “Thank the Nice Rich Man You Only Worked 40 Hours And Didn’t Even Lose Any Limbs Day,” in honor of the true heroes of America’s middle class history.

 

AMG user “Watcher,” already known for making the discredited-everywhere-but-AMG assertion that the Affordable Care Act taxes regular people on the sale of their homes, now decides to opine about America’s budget challenges using terribly wrong numbers he found somewhere in the bowels of the conservative echo-net:

In this thread he writes:

(CNSNews.com) – Imagine that you had an average monthly income of about $170 balanced against average monthly expenses of about $940–and that you were more than $14,000 in debt. Then imagine that as of today, you had only $58.60 in cash left in your bank account and $130.50 left on your line of credit. Now multiply these numbers by 1 billion and you will have the up-to-date financial situation of the U.S. government.

You don’t have to go past the first two numbers, which imply an income to expense ratio for the Federal government of about 1:5, to see that this little bit of folksy math just doesn’t make sense.

In reality our federal government income to expense ratio for 2010 was more like 2:3. That number isn’t a secret or anything.

Why must AMGers lie about this? A two to three ratio is still going to piss everyone off more than enough. Why exaggerate the problem 10x (50% expenses over income versus 500%) unless you are just a compulsive liar?

And does Watcher, or anyone else, fact check anything? No one has corrected this obvious error. Does no one on AMG even have a tiny bit of actual knowledge about how our government funds itself? They all like to pretend they are experts.

Liberals are banned pretty much on a weekly basis, but someone like Watcher starts all sorts of threads grounded in easily disproven factual premises and doesn’t even get a little editor’s note asking him to kindly refrain from broadcasting bullshit. I have a feeling if someone posted numbers about LePage’s budget that were off by 10x it would be deleted before Naran could even write a snappy comeback pulled off a shelf labelled “1958.”

These are all rhetorical questions, by the way, because most of us already know the answers to all of them.