by Robert Poole, Reason Institute

Recently, Thomas Frank of the Wall Street Journal manages to get just about everything wrong in his column attacking public-private partnership toll roads.

First, he writes as if this phenomenon is solely about leasing existing tollways, such as the Indiana Toll Road, the Kansas Turnpike Authority, and the Chicago Skyway (all great political as well as economic successes, by the way), when by far the larger potential is in providing much-needed new capacity such as the $1.3 billion SH 130 toll road in Texas and the $1.4 billion HOT lanes being added to the gridlocked Capital Beltway outside Washington, DC.

Second, he assumes that today's credit market crunch means such projects will be "melting away," when $180 billion of equity capital has been assembled in infrastructure investment funds, and good projects continue to be financed, both here and overseas.

Third, he ignores the degree to which pork is "baked in" to the current federal highway and transit funding formulas, in contrast with the stringent return-on-investment filter through which public-private partnership toll projects must pass in order to get financed.

Fourth, he seems unaware that everyone involved appreciates that unlimited toll rates might divert too much traffic to non-tolled roads, which is why nearly all long-term lease agreements control either the toll rates or the allowable return on investment.

In short, Frank's piece is an ideological attack on what has become a mainstream, bipartisan practice not only in late-adopter America, but in most of Europe, Australia, Canada, Chile, Brazil, and more recently China and India.  Now, public-private partnerships are being turned over to government only and we all know how efficient and economical that is!

by Governor Mitt Romney

These are extraordinary times, and like a lot of Republicans I believe that a well-crafted stimulus plan is needed to put people back to work.  But the Obama spending bill would stimulate the government, not the economy.

We're on an economic tightrope. The package that passed the House is a huge increase in the amount of government borrowing. And we've borrowed so much already that if we add too much more debt, or spend foolishly, we could invite an even bigger crisis.

We could precipitate a worldwide crisis of confidence in America, leading to a run on the dollar or hyperinflation that wipes out family savings and devastates the middle class.

It's still early in the administration of President Obama. Like everyone who loves this country, I want him to adopt the correct course and then to succeed. He still has a chance to step in and insist on spending discipline among the members of his own party.

It's his job to set priorities. I hope for America's sake that he knows that a chief executive can't vote "present." He has to say yes to some things and no to a lot of others.

As someone who spent a career in the private sector, I'd like to see a stimulus package that respects the productivity and genius of the American people. And experience shows us what it should look like.

First, there are two ways you can put money into the economy, by spending more or by taxing less. But if it's stimulus you want, taxing less works best. That's why permanent tax cuts should be the centerpiece of the economic stimulus.

Second, any new spending must be strictly limited to projects that are essential. How do we define essential? Well, a good rule is that the projects we fund in a stimulus should be legitimate government priorities that would have been carried out in the future anyway, and are simply being moved up to create those jobs now.

As we take out nonessential projects, we should focus on funding the real needs of government that will have immediate impact. And what better place to begin than repairing and replacing military equipment that was damaged or destroyed in Kuwait, Iraq and Afghanistan?

Third, sending out rebate checks to citizens and businesses is not a tax cut. The media bought this line so far, but they've got it wrong. Checks in the mail are refunds, not tax cuts. We tried rebate checks in 2008 and they did virtually nothing to jump-start the economy. Disposable income went up, but consumption hardly moved.

Businesses aren't stupid. They're not going to invest in equipment and new hires for a one-time, short-term blip. What's needed are permanent rate cuts on individuals and businesses.

Fourth, if we're going to tax less and spend more to get the economy moving, then we have to make another commitment as well. As soon as this economy recovers, we have to regain control over the federal budget, and above all, over entitlement spending for programs such as Social Security and Medicare. This is more important than most people are willing to admit.

There is a real danger that with trillions of additional borrowing -- from the budget deficit and from the stimulus -- world investors will begin to fear that our dollars won't be worth much in the future. It is essential that we demonstrate our commitment to maintaining the value of the dollar. That means showing the world that we will put a stop to runaway spending and borrowing.

Fifth, we must begin to recover from the enormous losses in the capital investment pool. And the surest, most obvious way to get that done is to send a clear signal that there will be no tax increases on investment and capital gains. The 2001 and 2003 tax cuts should be extended permanently, or at least temporarily.

And finally, let's exercise restraint in the size of the stimulus package. Last year, with the economy already faltering, I proposed a stimulus of $233 billion. The Washington Post said: "Romney's plan is way too big." So what critique will the media have for the size of the Obama package?

In the final analysis, we know that only the private sector -- entrepreneurs and businesses large and small -- can create the millions of jobs our country needs.  The invisible hand of the market always moves faster and better than the heavy hand of government.

 

TOPEKA – The free-market grassroots group Americans for Prosperity-Kansas today announced its priorities for the 2009 legislative session.

 "Our legislative agenda this year focuses on ways to make our state government more accountable to its people," said AFP-Kansas state director Derrick Sontag. "We support real and meaningful reforms of how our state manages its finances, how we select our judges, and how we track taxpayer-funded lobbyists."

 Sontag said years of over spending at the state level have now come to a head, with a mounting budget deficit looming.  "The state of our budget cannot be blamed solely on the current economy," said Sontag. "It's quite simple: we have an over spending problem in our state government."

Sontag said that had our state budget grown at a more moderate rate, the state's financial situation would be vastly different today.

"Had the Legislature approved budgets with five percent growth since 2004, rather than eight or nine percent growth, the state would have more than $2 billion in the bank," he said.

AFP plans to help legislators fight the temptation to raise taxes in order to balance the budget, encouraging them to make responsible cuts and to implement budget reform.

"Our state is one of the few nationwide with no budget stabilization fund," Sontag said. "We must do what we can to build up reserves so our state can weather tough financial times without asking taxpayers to shoulder the burden." AFP's full legislative agenda is available at www.americansforprosperity.org/kansas.

 

---

Americans for Prosperity (AFP) is the nation's premier grassroots organization committed to advancing every individual's right to economic freedom and opportunity. AFP believes reducing the size and scope of government is the best safeguard to ensuring individual productivity and prosperity for all Americans. AFP educates and engages citizens in support of restraining state and federal government growth, and returning government to its constitutional limits. For more information, visit www.americansforprosperity.org.

 

By William Luckey, PhD

But, you say, that explains only the big Federal spending spree that has been going on since 1913. It doesn’t explain the debt.

 

 

  

By Kurt Van Keppel

In a recent editorial from WSJ [Wall Street Journal] it explains this phenomenon succinctly: raising taxes doesn’t increase tax revenues.  For those who studied macroeconomics of developing nations, this is no surprise.  In the 1970’s, 1980’s, 1990’s and even now, Latin American countries learned that raising taxes only leads to tax evasion and money flight. In fact, I recently read that the maximum revenue tax rate, is 23%.In addition to tax evasion, another result, far worse for the USA, is the suppression of investment.  By this I don’t mean investment in market funds. Rather, I mean that type of investment that drives the vast majority of employment growth and productivity in this country: small business investment. After a certain tax rate (23% would be delightful), my investment in business growth becomes less and less interesting. Better to put the money elsewhere (elsewhere is in traditional fund type “investments” that are taxed at a lower rate, and don’t create jobs or add to productivity).

What is surprising, however is that American politicians and economists (those that do the press-reporting anyway), don’t seem to realize it. And furthermore, they don’t realize that when they raise taxes on the “rich”, they don’t touch the rich. For tax purposes, consider corporations like people. The USA already has the highest corporate tax rate among industrialized nations (can you believe it?! Check the WSJ). At the same time, we suffer the lowest tax revenue as a % of GDP. Why is this? Because large corporations enjoy incredible tax breaks that you and I can’t touch (or, with incredible perfidy, they relocate to tax havens – like Dubai. Ask Dick Cheney about Halliburton.)

So, when we increase taxes on the rich, who gets taxed? 40% of our population pays little to no tax. 2% pay 35% or more of all taxes. Who pays the other 65%? You do. I do. So do all our other “rich” friends, who are rich enough to pay the higher taxes on income, capital gains, dividends and interest income, but not rich enough to avoid them.

What do we do instead? Here’s my prescription

1. Taxation reform: close the loopholes, and lower the tax rate. This can easily be done at a rate that would come close to 23%, but also increase revenues as a % of GDP. It will the lower barriers to growth and attract reinvestment in the USA. Maybe Halliburton will move back.

2. Election and legislation reform: take the money out of politics, particularly the election process. Make all campaigns funded by government-only, to get honest people in Congress and to keep them honest while there. Remove earmarks as a hidden part of legislation and give the President an earmark line-item veto (Presidents, democrat and republican have asked for this for years).

3. Gov’t efficiency and budgeting reform: Balance the budget! How can you manage your house with annual deficits on top of a huge debt burden? How can our government? Reduce wasteful spending (earmarks) and entitlements. Reduce the size of government – the free market is more efficient than the government, and we are a capitalist, not socialist country.

4. Increase productivity. This starts with small business, continues with small business and ends with small business, which is the engine for employment, innovation and wealth distribution in this country (and all others). Small business is the bedrock of the middle class, which is in turn the bedrock of a democracy. How do this?

a. Lower regulations: regulatory burdens are burdens only for small business, not big ones. Big business benefits by regulations because they can afford it, and it increases their market share by driving away small business competitors / innovators.

b. Lower taxes: in addition to the above, how about allowing Sub-S Corporations (most small businesses) to submit taxes on a cash-accounting basis? This will reward high-growth by reducing taxes on “profits” that we don’t see. Here’s what I mean: in a high growth situation, by December 31 I will have invested most of my “profit” in inventory for next year. Then I have to pay more than 40% taxes on that figure – using cash that I either don’t have, or have to hold back from investment in new inventory, plant or equipment. This reduces my growth. If I paid taxes on a cash basis, then I would pay on the actual cash profit (anything not re-invested). When my business growth slows, that reinvestment does not occur, and I then pay taxes on a cash figure that balances out those years that I paid less.

Our economy is in trouble. We have an enormous debt, annual deficits and a tax system that burdens those of us who can save it. Thus, we are in for a painful time. My vote goes to the politicians who are willing to accept their share of the painful decisions up front, and make ours a little less so.

By David Pierson,  (Los Angeles Times Staff Writer)

Business A-Z: Union Pacific Railroad

 U.S. District Judge Frank C. Damrell Jr. said Union Pacific was not only responsible for the cost of firefighting and lost timber, but also damage to young growth, soil, wildlife, habitat, recreational uses and views. Damrell also ruled that the forest was more valuable because it was protected against logging by Congress.

Federal prosecutors said the settlement should send a message that the government is serious about prosecuting those who spark wildfires -- even by accident.

"We want those individuals or corporations operating lawfully in our national forests to be on notice," said U.S. Atty. McGregor W. Scott. "We're paying attention and very focused about regaining, not just [fire] suppression costs, but lost resources to the country."

Five Union Pacific workers were accused of neglecting safety precautions when using power tools to repair track on Aug. 17, 2000, in Plumas National Forest. By failing to use spark shields and clear the area of flammable material, smoldering bits of metal were able to ignite a blaze that consumed 52,000 acres within the Plumas and Lassen national forests over three weeks, federal officials said.

A Union Pacific spokeswoman Tuesday said the settlement was reached to put the so-called Storrie fire behind them and it was agreed upon without any admission of liability on the part of its crew. She said the crew had extinguished the flames when the fire started, but a passing train reignited it.

"We feel our employees did all the right things," Zoe Richmond said. "These were extraordinary circumstances. . . . This happened in 2000. It was a long time ago and it's time for us to move on."

Legal experts said the settlement has broad implications because of the judge's view of the forest's value and Union Pacific's high level of liability in setting the blaze.

"It's an important development in the law to have courts saying decisions aren't limited to the value of timber," said Sean Hecht, executive director of the UCLA Environmental Law Center. "A calculation is now allowed to look at the value of wildlife and the ecosystem. It seems to me that's the correct view, otherwise it's like saying there's no consequence to someone burning land that didn't have salable timber."

More than 2,500 firefighters battled the flames without any loss of life or structure damage at a cost of $22 million. But U.S. attorneys argued that the actual cost of the blaze far exceeded just the firefighting resources and loss of valuable trees.

After recovering the costs of fighting the fire, $80 million will go to restoring landscapes and repairing ecological damage. Trees will be replanted, trails and roads improved and dangerous woody fuels cleared, officials said.

"The money received will go directly to remedy and heal the harm to these forests," said John Heil, a Forest Service spokesman.

Heil said a first payment of $35 million was received July 2, and a second is scheduled for Aug. 15. A final payment of $32 million is set for Oct. 15. Union Pacific's operating revenue in 2007 was $16.3 billion.

Authorities have heightened their efforts to recover costs associated with wildfires and punish those responsible. The Department of Justice established Fire Recovery Teams in California and Utah this year to bolster their ability to seek damages.

The $102-million figure marks a sizable increase from the previous record settlement targeting the origins of a wildfire -- $14 million in 2006 paid by Southern California Edison for its role in the 1994 Big Creek fire in the Sierra National Forest, officials said.

Over a five-year period, about two-thirds of state wildfires were started accidentally by humans, natural causes or unsafe use of equipment, according to a study by the California Department of Forestry and Fire Protection.

One-third were triggered by power tools and equipment. Arsonists were responsible for 7%.

Scott said the settlement sends a clear message that the government will aggressively argue its case.

"It will provide solid ground to pursue earlier resolutions to these cases," Scott said. "The law is on our side now and it provides motivation for our worthy opponents to settle as early as possible."

Hecht said the big question is how prosecutors can deal with fire starters who don't have the deep pockets of a railroad.

"It's exciting pursuing cases like this," Hecht said. "At the same time, it's important to remember things that inherently don't have monetary values like water quality violations."