Free Markets, Free People

Daily Archives: August 1, 2012


Ted Cruz, Tea Party and TSPLOST

There’s a lot of press being given the so-called “Tea Party win” of a candidate for the Texas Senate seat – Ted Cruz.

He, with the Tea Party’s help, overcame some pretty negative polling  numbers to eventually win a Republican run-off convincingly last night.

Says the Washington Post:

Cruz, an emerging conservative star whose father emigrated to the United States from Cuba, has drawn comparisons to Sen. Marco Rubio (R-Fla.) and has been lauded by national conservative political pundits and groups for over a year. His victory is a major blow to the Republican establishment in Texas, which lined up squarely behind Dewhurst. It’s also a victory for the tea party and national conservatives who lined up behind Cruz even when a surprise win appeared unlikely.

What the WaPo doesn’t say is the demise of the Tea Party seems to have been quite exaggerated.  And that’s irritating to both Democrats and, “the Republican establishment”.  Or as the Tea Party likes to refer to that establishment – RINOs.

Regardless of where you come down on the Tea Party, it seems to be in anything but in decline.

Another example that, which will get little if any publicity, occurred here in Georgia.  It was a referendum on TSPLOST.  The TSPLOST referendum was a state-wide vote on funding transportation infrastructure improvements in the state. Boring but expensive stuff, right? Approval would add a penny to sales tax for a period of 10 years.  It was touted as an absolute necessity by all of the state’s political leaders, from the Republican governor to the Democratic mayor of Atlanta.  Jobs were promised, improved economy was cited, etc.

But why was it necessary?  Well let Republican Senator Saxby Chambliss explain why, after decades upon decades of sending GA taxpayer money to Washington DC for redistribution, we now have to self-fund maintaining our roads:

We just passed a highway bill two weeks ago. The president signed it last week. In that highway bill, we did not change the funding mechanism on how roads and bridges and infrastructure in this country are built and maintained.

“We don’t have the money in the highway trust fund now to build new roads. We don’t have the money in the highway trust fund to build rail lines that will take some of the pressure off the transportation issues that we have in this country. We’ve got to develop a different way of funding those projects. And until we do that, the mechanism that we have in place is it. It’s the only mechanism.

“So when folks go to the polls to decide whether or not they want to vote for TSPLOST, if they don’t have a better idea of how we’re going to fund the infrastructure and the transportation needs for Georgia, then this is the best route to go right now. Now that’s the general picture. I am looking at it from a Georgian standpoint. This is not a federal issue, this is a Georgia issue.

The hell it’s not a federal issue – where’s the money?  Why don’t you have the funds necessary to improve infrastructure after the taxpayers of GA have been forking it over to the Federal government for years?

Simple answer?  They overspent or spent it on other things.  That’s why we have trillion dollar deficits.

Anyway, as you might imagine, the state’s campaign for passage was relentless and well funded.  But the citizens of GA weren’t about to buy into these pie-in-the-sky promises without some careful examination.  Enter the Tea Party in a true David and Goliath match up.  It didn’t have the funding, but apparently it did have the will (and tons of volunteers) to take on the power structure and give it a run for our money.

The TSPLOST referendum’s one penny 10 year sales tax bid went down in flaming defeat.  Only 3 of 12 state regions passed it.  The point hasn’t been lost locally:

The tea party and other T-SPLOST opponents didn’t need much money, though, to defeat the one-penny sales tax. According to the most recent campaign finance reports, they had raised only about $15,000. That was a pittance compared to the $8 million in the hands of the proponents, which included Deal, Atlanta Mayor Kasim Reed and the Metro Atlanta Chamber.

But the opponents made their punches count. As supporters hit the airwaves with TV commercials, opponents hit the roadways, relying on carloads of volunteers to plant yard signs, distribute fliers, make phone calls and, in the days leading up to the vote, stand on street corners hawking their message.

Grafstein said those local neighborhoods are where the tea party may see its greatest impact. Already, many members have been watchdogging city and county commissions and school boards.

"Officials on the local level are more likely to be more fearful of the threats the tea party can make," he said. "They have lower-turnout elections."

Tuesday night’s results, he said, "make [the tea party] look like people protecting the average citizen from the rapacious government."

Additionally, it should be noted that the Tea Party wasn’t tied to the traditional structure of politics (or, said another way,  those they’re accused of being tied too):

Tuesday’s outcome, Dooley said, also shot down many misconceptions about the group. Opposing Deal and the business establishment showed that the tea party is not just a wing of the Republican Party; forming alliances with the NAACP and Sierra Club showed a willingness to work across ideological lines; and winning showed that it’s not out on some fringe, she said.

And the Tea Party in GA scored a bonus victory as well:

In fact, the tea party scored a double victory Tuesday with the overwhelming popularity of a measure to restrict lobbyists’ gifts to state lawmakers. It was a cause the tea party championed during the last legislative session, and it positioned the group to push it with even greater vigor in the one to come.

Of course there are those who deny the Tea Party had any impact and in fact are claiming victory for something they had little impact upon.  But the results are the results aren’t they?

Here’s the point in all of this – the Tea Party movement is concentrating in areas and races that don’t get much national press or coverage, but as they amass victories, will have a profound effect later in national politics.  They’re winning at the state and local level.   Where do you suppose the next challenge to the likes of a Saxby Chambliss in GA will come from?  Certainly not a Democrat, not in red, red GA. 

Instead, look for a Ted Cruz like candidate to eventually emerge.

This is what keeps the Republican establishment up at night, and rightfully so.

It is also a reason to be somewhat optimistic about the future of politics, if we can survive our current crop of pols long enough to turn this all around.

Citizens are, in effect, revolting.   One of the things we’ve said on our podcasts that might happen is states will say ‘no’ to impositions and mandates by the federal government, and that may start a new revolution of sorts.  Well that’s something that’s possible but I can’t think of anything more likely to spark that than outcomes like this.  The citizenry of GA is saying “no”.  They’ve lost trust in their government to use their tax dollars wisely.  They’ve put their state (or are in the process of putting their state) in the position to say “no” to the Fed.

We live in interesting times.

~McQ

Twitter: @McQandO


Economic Statistics for 1 Aug 12 (Updated)

The following statistics were released today on the state of the US economy:

US motor vehicle sales: Chrysler reports a 12% sales increase, with 126,089 vehicles sold. GM sales were down -6% at 201,237, while Ford dropped -4% to 173,966. Volkswagen sales for June rose 27.3% to 37,014. Toyota sales rose 26% to 164,898. Nissan was up 16.2% to 53,744. Overall, auto sales so far this year remain on track for 14.4 million units sold, which would be more than a 12% increase over 2011.

The Federal Open Markets Committee meeting has announced that monetary policy will remain unchanged for now. Their assessment of the economy is that growth has slowed since the last meeting.

The ISM Manufacturing Index remains little changed this month, at a slightly contractionary 49.8. New orders are also weak, at 48.0.

Construction spending rose 0.4% in June, and was up 7.0% over June 2011, another indication of a modest uptrend in construction and housing.

The ADP Employment Report predicts that non-farm payrolls will rise 163,000 in July, indicating continued weakness can be expected in Friday’s Employment Situation report.

Markit Economics’ final PMI Manufacturing Index for July dropped to 51.4 from the preliminary estimate of 52.5.

An interesting bit in today’s Treasury Refunding announcement is that the Treasury is studying the possibility of negative rates at bond auctions. This would allow you to pay the Treasury for the privilege of lending it money.

For the third straight week, MBA Purchase Applications declined, falling -2.0%. The overall index rose 0.2%, though, as re-fi apps rose 0.8%. The drop in purchase apps raises questions about how solid the recent moderate rise in the housing sector really is.

~
Dale Franks
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US Olympic medal winners face a taxing experience

Are you watching the Olympics?  Did you enjoy the gold medal performances of the US women’s gymnastics team?

It was nice to see them bask in the glory of the fruition of all those years of hard work and sacrifice.  They reached the peak of accomplishment.  They took the gold.  The stories of the athletes were as interesting as the victory.  Years of monetary sacrifice, hard work, dedication and practice.  Families, who moved to avail their daughter of coaching,  who lived from paycheck to paycheck to ensure money was available for their daughter’s training, the hundreds of meets and competitions, etc.

But hey, we all know they “didn’t build that” themselves.  They traveled on roads to their practice sites and meets, used other common infrastructure improvements and now they get to pay the piper.

It’s time for them to pay up for winning those gold medals, and the IRS will ensure they do.

At today’s commodity prices, the value of a gold medal is about $675 according to Americans for Tax Reform.  And the gold medal brings with it $25,000 in prize money.  The IRS will tax them at 35%. 

So for all those years of hard work, sacrifice and performance, our gold medalists will pay the IRS $8,986 for each gold medal they win.  The silver will cost them $5,385 ($15,000 prize money, and $385 for the medal) and bronze $3,502 ($10,000 prize money, $5 for the medal).

Of course they’ll be about the only athletes in the world so treated because you see, the US is one of the few countries in the world that takes it upon itself to tax the world wide earnings of its citizens.

Because, you know, that infrastructure is everywhere and it’s expensive. </sarc>

But I’m sure we’ll hear from our usual apologists for intrusive government trying to spin these taxes as something both necessary and proper.

Just a note to them – most Americans don’t at all agree with the sentiment that they didn’t build what they now have.   But you have to hope the Democrats keep trying to sell that.    Our Olympians and their tax experience make as good a case against that as any I can imagine.

~McQ

Twitter: @McQandO