Free Markets, Free People

Education

Nanny to nix bake sales?

In the seemingly never ending cavalcade of laws at the federal level that more and more deeply intrude on our private lives, it now may become illegal to hold school fundraising bakes sales, according to an AP article, depending on their frequency.

A child nutrition bill on its way to President Barack Obama — and championed by the first lady — gives the government power to limit school bake sales and other fundraisers that health advocates say sometimes replace wholesome meals in the lunchroom.

At the moment, the key seems to be the “frequency” with which the bake sales are held and the ostensible “reason” for this limiting of their frequency is … childhood obesity.  Yes, friends, we’re at war once again, and, as usual when the government commits to one of its social wars, the first casualty is your liberty:

The legislation, part of first lady Michelle Obama’s campaign to stem childhood obesity, provides more meals at school for needy kids, including dinner, and directs the Agriculture Department to write guidelines to make those meals healthier. The legislation would apply to all foods sold in schools during regular class hours, including in the cafeteria line, vending machines and at fundraisers.

It wouldn’t apply to after-hours events or concession stands at sports events.

Well it won’t apply to “after-hours events or concession stands at sports events” yet.  And yes, I mean that.  Implicit in this law is the belief that you cannot manage your family’s nutritional health.  And it is up to the government to manage it for you.  To do so they must treat you and your family like a 4 year old and tell you when enough of something is enough.  If you don’t believe me, read this:

Margo Wootan of the Center for Science in the Public Interest says the bill is aimed at curbing daily or weekly bake sales or pizza fundraisers that become a regular part of kids’ lunchtime routines. She says selling junk food can easily be substituted with nonfood fundraisers.

"These fundraisers are happening all the time," Wootan said. "It’s a pizza sale one day, doughnuts the next… It’s endless. This is really about supporting parental choice. Most parents don’t want their kids to use their lunch money to buy junk food. They expect they’ll use their lunch money to buy a balanced school meal."

“Most parents don’t”? Really? Says who, Ms. Wootan?  Stats?  Polls?  Any conceivable “scientific” way of supporting that assertion?  If kids eat pizza twice a week for fundraising purposes, what business is it of yours?  If parents have a problem with that, they need to solve it, not you or that pseudo scientific busy body organization of yours.

And, of course, since Wootan and the busy bodies can’t make what they deem necessary happen, they lobby government to do it.  And government naturally complies.  

Of course government claims their intent is not to outright ban bake sales – a promise I simply don’t believe:

Public health groups pushed for the language on fundraisers, which encourages the secretary of Agriculture to allow them only if they are infrequent. The language is broad enough that a president’s administration could even ban bake sales, but Secretary Tom Vilsack signaled in a letter to House Education and Labor Committee Chairman George Miller, D-Calif., this week that he does not intend to do that. The USDA has a year to write rules that decide how frequent is infrequent.

So there you go – the road to totalitarianism is paved with banal or seemingly trivial paving stones such as this.  They don’t intend to “ban” bake sales – but the law gives them the authority to do so.  They will decide, at least in the interim, how many bake sales a year they’ll allow you to have.  How benevolent.

"This could be a real train wreck for school districts," Lucy Gettman of the National School Boards Association said Friday, a day after the House cleared the bill. "The federal government should not be in the business of regulating this kind of activity at the local level."

Precisely.  But … when you decided it was a good idea to give the federal government control of our schools, you ceded local authority whether you like it or not.  If the USDA decides to ban bake sales and the Department of Education directs the schools to comply, you’re SOL, lady.’

How does that feel?  And isn’t this one of the things that was supposedly part of the message sent on Nov. 2nd – get government out of our lives and off our backs?

Finally, it’s not at all difficult to apply this very same template of creeping totalitarianism to health care anymore, is it?  They’ve taken control of it on a federal level like never before.  Is there anyone who doesn’t believe rules regulating how we take care of ourselves (or else) aren’t in the offing?  If not, then review the emphasis that the government wants to supposedly put on “preventive care” vs. reactive care.  If you don’t understand, it’s time to wake up and smell the coffee.   ObamaCare is the prelude to intrusion at a level you’ve never imagined.  It too will empower the federal government to reach down into your life as never before.  It will make banning bake sales seem trivial by comparison.

Nanny will take care of you – whether you need it or not, whether you want it or not and whether you like it or not.

~McQ

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Charts of the day – do we really need more teachers?

Apparently the president’s job initiative centers around hiring 10,000 more union teachers.

The reason given is we need to beef up our math and science achievement.  And, as usual, the way to do that is to throw either more money or more teachers at the job.

What everyone ignores, however, is we’ve been doing both for years with no change.  What’s the definition of insanity again?

 

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So for an approximate 10% rise in enrollment, we’ve added 10 more public school employees for every student.  And we’ve also seen the spending go through the proverbial roof as a result.  The normal, everyday, tax paying citizen would most likely expect spectacular results if he or she invested the amount they were taxed in something of their choice.  Instead, they end up screwed again:

 

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Looking at those two charts, does anyone think the problem is related only to the money spent or the number of teachers?

Japan spends about 5% of its GDP on education, pays its teachers the equivalent of $25,000 US, has average class sizes of 33 and graduates 93% of its students from their equivalent of high school.  South Korea actually spends more of its GDP than does the US (7.35%), pays its teachers a little over $27,000 US, has huge average class sizes (almost 36) and has a graduation rate of 91.23%.  The US’s stats are 7.38% GDP, average teacher’s salary of almost $36,000, average class size of 19 and a graduation rate at a dismal 77.53%.

To most that would signal that something is wrong other than the number of teachers or what we’re spending.  Somehow, however, that message seems never to get through to our political leaders who continually work under the premise that more money and more bodies is bound, at some point, to make it all better.

That thinking, In this case, given the word pictures the two charts paint, it is obviously wrong.  When and how we can get that message across to both sides of the political spectrum remains to be seen.  But if the left wants to invoke the “for the children” canard in an attempt to shame the right into capitulating for the usual remedies, maybe they can put these two charts in their pockets and make one up of the comparative spending and graduation rates and change not only the discussion, but the solution.  My guess the new solution would take less people and less money.  Wouldn’t the taxpayers love that?

~McQ

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Speaking truth to power – NJ version

If anyone doubts that teacher’s unions are the power within the education establishment, they simply haven’t been paying attention. And if that same person is satisfied with the results of that education establishment over the years, they’re simply asleep at the switch.

In at least one state, a governor – Chris Christie of NJ – is attempting open warfare with his state’s teacher’s union in an effort to actually improve education, and you can imagine the result. That hasn’t stopped him from doing something the liberals always like to claim as their prevue – speaking truth to power:

“Parents and children who are being failed by a public school system whose costs are exorbitant and whose results are insulting deserve a choice. We don’t have to look far around the country to know that vouchers and experiments in school choice are working, that they’re producing results.

In D.C., those in that program are now reading 19 months ahead of their peers outside of the program. This isn’t a coincidence, we know it’s not a coincidence. We know that there’s over five-million children trapped in over ten-thousand failing public schools around America.

And I use the word ‘trapped’ and I use it directly. They are trapped by an educational bureaucracy, they are trapped by a selfish, self-interested, greedy school union that cares more about putting money in their own pocket, and the pockets of members, than they care about educating our most vulnerable and needy children.”

The rhetoric is interesting to me. Using the style of most union attacks Christie cites “greedy”, “selfish” and “self-interested” school unions as the problem. He’s using “for the children” against the liberal establishment to move his agenda – one which will actually provide children in NJ with a choice. Imagine that. And since it advances liberty, it puts me squarely in his camp applauding his effort.

What he is doing is what government should be doing – freeing the citizenry to decide for themselves and forcing marginal or poor schools to heed their customer base or “go out of business”. The message is “the free ride is over” as it is certainly not a free ride for taxpayers.

Christie points out that in Newark, NJ, taxpayers pay $24,000 per pupil per year. So in a class of 20 you have almost a half a million dollars spent. I’d like to say “invested” but its hard to do with a system Christie characterized as an “absolutely disgraceful public education system.”

So cheers to Christie. I continue to follow his battles in NJ with interest and, yes, hope. If he can be successful in triming back government and making it more effective while saving taxpayers money and breaking the power of government unions, he’ll be someone many politicans should, and I hope would, emulate. He is indeed one of the few governors using his state as a “laboratory of freedom”. I wish him good luck.

~McQ

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Scotland’s effort at top down healthy meals

Apparently the Scots, much like our government, have decided that Scottish children just don’t eat healthy enough meals.  So they’ve decided they’ll take the matter in hand via government and introduce their version of healthy eating in school.  After all it is “for the children” and who wouldn’t be for that?  Apparently the children:

NEW rules introduced to make school meals healthier have resulted in tens of thousands of Scottish pupils consuming a worse diet, it has been claimed.

The company which provides school meals in Glasgow revealed yesterday that 30,000 fewer children are eating school lunches since healthier meals were introduced.

Uptake of school meals in Glasgow has fallen from 61% to 2006 to 38%, with some schools as low as 24 per cent. Across Scotland, the number of secondary school pupils taking school meals fell to 39.2 per cent in 2009 – the lowest level for a decade.

Fergus Chambers, managing director of Cordia, which provides school meals in Glasgow, urged the Scottish Government to carry out a “root and branch” review of the regulations which limit salt, fat and sugar content.

He said: “The original objective of the legislation was to improve uptake and improve health.

“But I believe the most recent rules, which allow no flexibility to those providing school meals, have fallen victim to the law of unintended consequences.

The unintended consequence isn’t just that they don’t eat the school meal.  It is that they leave school during the lunch period and go to the nearest fast food franchise.

The answer to that?  Well certainly not improving the food.  Instead some schools have “experimented” with banning kids from leaving the grounds at lunchtime.  But consider changing the draconian rules that have them fleeing?  Of course not:

“Fat, salt and sugar levels are now set so low as to be almost non-existent. We can no longer sell diet drinks, flavoured water or even fruit juice of any reasonable portion size. Confectionery, including most home baking, is banned – yet pupils can walk out and buy anything they want.

Damn those students.  How dare they attempt to exercise their freedom to eat what they want.  Oh wait, here’s a solution – John Dickie, head of the Child Poverty Action Group in Scotland, said:

“It is clear that if local authorities and ministers are serious about boosting the take-up of healthy school lunches, then providing them free to all pupils is by far the most effective action they can take.”

Well there you go – just give it to them “free” and they’ll eat what they’ve already demonstrated they won’t eat .  What would we do without the advocates and experts.

Growing kids need a certain level of fat, salt and even sugar.  They’re not going to eat what they don’t like, no matter how “healthy” it is purported to be.  That’s something any parent can tell you.  When the state takes over those responsibilities and attempts to impose it’s ideas about healthy eating, these are the sorts of results you can expect.  The law of unintended consequences, as Fergus Chambers notes, couldn’t be more evident than in this case.

Coming to a “war on childhood obesity” near you soon.

~McQ

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Dope of the day – politically correct edition

I sometimes wonder what the thought process some people use, if any, when they make decisions like this:

On any other day at Live Oak High School in Morgan Hill, Daniel Galli and his four friends would not even be noticed for wearing T-shirts with the American flag. But Cinco de Mayo is not any typical day especially on a campus with a large Mexican American student population.

Galli says he and his friends were sitting at a table during brunch break when the vice principal asked two of the boys to remove American flag bandannas that they wearing on their heads and for the others to turn their American flag T-shirts inside out. When they refused, the boys were ordered to go to the principal’s office.

“They said we could wear it on any other day,” Daniel Galli said, “but today is sensitive to Mexican-Americans because it’s supposed to be their holiday so we were not allowed to wear it today.”

The boys said the administrators called their T-shirts “incendiary” that would lead to fights on campus.

I wonder – would Mexican-Americans wearing a Mexican flag to school on the 4th of July be considered “incendiary?” Oh, wait, we’ll never know. The 4th of July is a national holiday and school is out in the United States.

Cinco de Mayo – a “holiday” developed by bar owners as an excuse to sell more Mexican beer. It’s historic significance? It is the date the Mexican army beat the French army at the battle of Puebla in 1862. In Mexico it’s pretty much only celebrated in Puebla.  It’s kind of like us celebrating the battle of New Orleans when we thumped the Brits.  The only thing that might conceivably be considered “bad taste” would be wearing a French flag – and they lost.

I have no idea if this Vice Principal knows this, but he completely blew this out of proportion regardless. Had he simply ignored it, the day probably would have passed without incident. More infuriating, at least to me, is he (or she) decided the celebration of a bogus foreign “holiday” in the United States took precedence over displaying or showing the flag of the United States  – which he considered “incendiary”. I wonder if the school had decided not to fly it on the school’s US flag that day for the same reason?

The good news? The district left the Vice Principle out on that limb all by himself, exactly where he belongs. In their press release they said:

The district does not concur with the Live Oak High School administration’s interpretation of either board or district policy related to these actions.

Good on ya, “district”.

~McQ

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Immigration and the welfare state

Immigration seems to be the topic du jour at QandO today, and I take a slightly different tack than Dale and Bruce.

Let’s run through the main problems associated with illegal immigrants: state welfare costs, crime (or is it?), lack of assimilation (particularly if they’re allowed to vote), and suppressing wages for poor natives.

I think we can mitigate a lot of these problems with solutions far more realistic (in the short-to-medium term) than mass deportation, amnesty or ridding ourselves of the welfare state.

First, let’s recognize that the security threat becomes more complicated when you place wishful restrictions on immigration.  When there’s a flood of mostly non-threatening people crossing the border outside of any official process, it’s a lot harder to pick out the few really malicious ones.  And it’s really hard/expensive to stop that flood along such a long border.

We should be striving to funnel as many of them through official processes as possible, so we know who’s here, we know their backgrounds and we can separate the villains from those who just want to observe a basic civic peace and take advantage of opportunities in a freer country.  That means offering carrots and sticks to both prospective immigrants as well as those who are already here, and I’ll get to those incentives below.

Second, minimize how much the welfare state serves and controls non-citizens.

  • Uncompensated care makes up only 2.2% of medical costs in this country, and a good chunk of that doesn’t come from illegals, so the fact that many illegals wait until they need to use the emergency room, while irritating to some, isn’t a political hill to die on.  As long as it’s mostly limited to taking care of communicable diseases and real emergencies, which can be enacted into law, it’s tolerable.
  • Education is a much bigger problem.  I recall reading that there are 1.6 million illegal immigrants under age 18 in the States, and being from Southern California, where the largest budget item by far is education, I know that they (and natural born citizens born to noncitizens) represent a big cost.  Here we can do a bit of political jiu-jitsu: target guest worker families with a school voucher program.
    • They’re already in public schools, so it’s a win if they instead form the basis for a larger private school market.  The larger the market, the more the market can work its magic.
    • It can come with strings attached, like a requirement that any school accepting vouchers be able to show an improvement in English language skills at least as good as nearby public schools.
    • It’s not like Democrats have a good argument against it: it’s nearly the opposite of cream-skimming.  And when guests get this, naturally other groups are going to want it too.
  • Transfer payments (Social Security, unemployment, welfare, etc.), obviously, should be off the table for non-citizens.  I have no problem with people who want to take risks in a freer market; a host country owes them nothing more than securing their rights.

The idea here is to weed out those who aren’t seeking opportunity so much as handouts.  Those seeking opportunity are naturally more eager to assimilate.

Third, take the prospect of adding tons of dependent immigrants to the voter rolls off the table.  Instead, we can get most of what we want by creating a liberal guest worker program that virtually all prospective immigrants and current illegal residents can join simply by identifying themselves to authorities, as long as it’s clear that they’re going to generally be paying their own way, so that people with a dependent mindset are weeded out by attrition.

So what are the carrots and sticks here?  Without doing anything that would turn stomachs (and thus make reform politically impossible), we can get rid of the bad apples while not incurring the large costs associated with trying to throw 12 million people out of the country.

  1. A program allowing people to easily enter the country without being harassed should increase suspicion of anyone who’s still trying to immigrate the hard way — and that would increase public support for border security.
  2. Deport illegals who fail to register under the guest program and then commit serious crimes — violent crimes or big property crimes like auto theft.  Those who commit petty crimes and can’t prove their status can either apply for guest status and take their punishment here or accept deportation.
    • No sweeps or “asking for papers” for those who are just here peacefully.  Only those charged with another crime can be asked to prove their status within a reasonable time frame.
    • Come to an agreement to build cheaper-run prisons in Mexico to hold illegals during their sentences — no sense in keeping them in expensive American prisons if we’re planning on deporting them anyway.
  3. Illegals can’t access the school voucher program, but guest worker families can.
    • Perhaps also allow vouchers for English-language and Civics education for adults.

I’m open to any other ideas, but that seems like a good foundation, accepting (in the neolibertarian fashion) that the welfare state won’t disappear tomorrow, but offering a positive agenda that tends to increase liberty.

A tale of two states

I’ve been mentioning what’s going on in the state of New Jersey as a positive example of what is necessary to reign in government and government spending.  Hard decisions have been made there and, in an epic battle with public service unions (specifically the teacher’s union) Governor Chris Christie seems to be prevailing.

Not so in Illinois where, amazingly, the public service unions held a big rally yesterday and chanted “raise my taxes”.

Any guess why?

Thousands of protesters bused down by labor unions and social service advocates rallied at the Capitol today in an attempt to pressure state lawmakers into raising the income tax to avoid more budget cuts.  A spokesman for Illinois Secretary of State Jesse White estimated the rally crowd at 15,000, with more than 12,000 marching around the building. That would appear to make it the largest Capitol protest since the Equal Rights Amendment crowds a quarter-century ago. Bus after bus pulled up on streets surrounding the Capitol complex and dumped sign-waving protesters clad in purple, green, red and blue shirts that represented a show of strength from a variety of public employee unions and dozens of groups that formed what they named the “Responsible Budget Coalition.”

“Responsible Budget Coalition” my foot.  “I want my job, benefits and perks unchanged coalition” is more like it.

Their goal, of course, is to pressure Illinois lawmakers into raising income taxes to continue spending at the level that is leading Illinois into bankruptcy.

Illinois has a $13 billion dollar budget deficit.  $2 billion in cuts to education have been proposed.   But Democratic Governor Pat Quinn would rather raise income taxes thantake on his base (public service unions such as the teacher’s union) by make those hard and tough choices necessary to reign in the deficit.  And, one assumes, because Illinois educators have done such a great job in the past (ranking 32nd out of 50 in 2005-06 and dropping 3 more to 35th isn 2006-2007).

So Quinn has come up with a budget plan that rests on “5 pillars” : 

Creating Jobs, Cutting Costs, Strategic Borrowing, Continued Federal Assistance and Increased State Revenues.

Quinn claims he can create 439,000 jobs in the next 6 years by using $6 billion.  The same “shovel ready” game plan that’s worked so well on a national level is now the panacea for Illinois unemployment.  He also is going to give small businesses a $2,500 tax credit for employees they hire.  Yeah, that’ll cover the cost of new hire, won’t it?  In fact, his entire jobs creation plan is a recreation of the Obama plan which has done zip to spur job creation.

But now we get to the fun part – Cutting costs (well, not really).

Cutting Costs

State Employees and Operations – The Governor’s plan includes more than $203 million in savings through employee furlough days, renegotiated employee contracts, employee health insurance savings and additional travel restrictions. The state will also change the way it does business, including reviewing, reducing or re-bidding all contracts over $1 million; historic procurement reform; and consolidating state office spaces.

Pension Stabilization – The state’s current public pension system costs are growing significantly, adding to the mounting deficit. Without bold reform, the system will fall apart, forever disrupting thousands of lives. Stabilizing the system so that existing employees and retirees will keep their current benefits, while new hires become part of a streamlined pension system will save approximately $300 million in the first year.

Health and Human Services – Services such as home care for older adults, child care and community mental health services will be reduced by $276 million. Scaling back prescription drug assistance and group health coverage for state retirees, combined with a managed care pilot program for seniors and adults with disabilities who are enrolled in Medicaid will save the state $325 million.

Performance Metrics – The state will implement rigorous performance metrics that will improve accountability and performance, and will make sure programs run more efficiently. A new Web-based system will be designed for collecting and reporting performance updates.

Education – Education will see approximately $1.3 billion cut from general state aid, special education, student transportation, grants and universities.

Now – this is a state with a $13 billion dollar deficit – correct? Count up the “savings” and cuts proposed here. Approximately $2.2 billion dollars. $2.2 billion in “savings”.  [As an aside – note the cuts in health care.]

So what about the rest of the deficit number? Well, of course, the answer is “strategic borrowing”. Oh, and an increase in the state’s income tax by 33%.

The excuse?

Well the state “owes” vendors, providers, colleges and universities $5 billion dollars, and it is high time the taxpayers paid these bills. Additionally, the Governor, knowing very well that Democrats have now become the party of public service employees (and that necessarily means preserving their jobs, salaries, benefits and perks) contends it is the duty of the Illinois tax payer to cough it up for education:

Governor Quinn challenged lawmakers to pass a 1 percent income tax surcharge to support education. The surcharge will help restore educational funding, while also enabling the state to get caught up on the millions of dollars owed to public schools, community colleges and universities.   “We can’t afford to deny reality or delay action any longer. We don’t have time for any more partisan battles, parliamentary maneuvers or political expediency,” said Governor Quinn. “As we tackle this budget, let’s remember: We are fighting for our children, our communities, and the future of our state.”

What he’s actually fighting for is the continued support of the public service unions.

And thus the well timed astro-turf “populist” uprising among the beneficiaries of misspent Illinois tax dollars.

A tale of two states.  One facing up to the fiscal reality of the day, and the other in the middle of trying to deny reality and maintain the status quo.  Certainly everyone understands that at some point, some tax increases may have to be considered.  But is it too much to ask the state to show some good faith and cut the bloated and costly state apparatus that is unable at this point to run in anything but a deficit?  A $13 billion deficit is no small potatoes for a state budget.  Proposing $2.2 billion in cuts and then wanting to put off $1.3 billion of those with a tax increase doesn’t demonstrate any seriousness at all about cutting the size and cost of state government.

While the bussed in protesters may have been many, according to the report, the Illinois taxpayers are many more.  Time to lay down the law to your lawmakers.  Cut spending.  Take a tip from New Jersey.  Make the hard choices and do the tough job of cutting the size and cost of government.  Otherwise, if the public tantrum the public service unions throw is allowed to work,, you can expect to be on the hook from now on ensuring those jobs, salaries, benefits and perks are forever maintained, while you watch the cost of government continue to spiral out of control.

~McQ

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The New Jersey model

An interesting article in the Wall Street Journal about newly elected NJ governor Chis Christie.  The Republican, elected in a traditionally blue state, ran as if he’d be a one-termer and laid out the distasteful medicine necessary to put the state’s fiscal house in order.  To the surprise of many, he won.  He’s now engaged in doing what he said he’d do.

His assessment and conclusion are solid:

“We are, I think, the failed experiment in America—the best example of a failed experiment in America—on taxes and bigger government. Over the last eight years, New Jersey increased taxes and fees 115 times.”

And what has NJ gotten for that?

New Jersey’s residents now suffer under the nation’s highest tax burden. Yet the tax hikes haven’t come close to matching increases in spending. Mr. Christie recently introduced a $29.3 billion state budget to eliminate a projected $11 billion deficit for fiscal year 2011.

Obviously, as must be done in a state which has the nation’s highest tax burden, Christie has laid out a very aggressive plan that cuts spending to eliminate that deficit. And, as you might imagine, the entrenched interests which will see their budget’s cut are almost unanimous in their opposition. Most the opposition comes from government unions, and especially from New Jersey Education Association, the state’s teacher’s union.

And Christie is using a little of the left’s favorite tactics against them:

“I’m a product of public schools in New Jersey,” Mr. Christie explains, “and I have great admiration for people who commit their lives to teaching, but this isn’t about them. This is about a union president who makes $265,000 a year, and her executive director who makes $550,000 a year. This is about a union that has been used to getting its way every time. And they have intimidated governors for the last 30 years.”

Christie is obviously not going to be intimidated. And he’s got the numbers and, apparently, the public behind his effort to pare the educational establishment down to a manageable and affordable size:

While the state lost 121,000 jobs last year, education jobs in local school districts soared by more than 11,000. Over the past eight years, according to Mr. Christie, K-12 student enrollment has increased 3% while education jobs have risen by more than 16%. The governor believes cuts in aid to local schools in his budget could be entirely offset if existing teachers would forgo scheduled raises and agree to pay 1.5% of their medical insurance bill for one year, just as new state employees will be required to do every year. A new Rasmussen poll found that 65% of New Jersey voters agree with him about a one-year pay freeze for teachers.

The union, of course, has it’s own favored solution and I assume you can guess what it involves:

But the teachers union wants to close the budget gap by raising the income tax rate on individuals and small businesses making over $400,000 per year to 10.75% from its current 8.97%.

Obviously he has a lot of other fights within the state on his hands, such as cutting the onerous regulation regime the state has built, but he has a primary goal and desire to return the state to fiscal sanity. And he also knows that to do that he has to lower overall taxes – if he wants to again attract business and those who earn enough to provide a solid tax base.

The governor aims to move tax rates back to the glory days before 2004, when politicians lifted the top income tax rate to its current level of almost 9% from roughly 6%. Piled on top of the country’s highest property taxes, as well as sales and business income taxes, the increase brought the state to a tipping point where the affluent started to flee in droves. A Boston College study recently noted the outflow of wealthy people from the state in the period 2004-2008. The state has lately been in a vicious spiral of new taxes and fees to make up for the lost revenue, which in turn causes more high-income residents to leave, further reducing tax revenues.

So here’s a governor who understands that what has been heaped on the back of the taxpayers that are left is too much and is looking at other real ways of reducing the cost of government – i.e. actually seeking out where it has become bloated, putting some of the costs of the benefits government workers receive back on them, cutting unnecessary spending all with a goal of eliminating the deficit the state faces. And, by the way, planning on reducing the tax rate with an eye toward luring back the affluent and businesses with an eventual goal of actually increasing tax-revenues, and jobs, and all the other benefits such an influx would bring.

“What I hope it will do in the end is first and foremost fix New Jersey, and end this myth that you can’t take these people on,” he says. “I just hope it shows people who have similar ideas to mine that they can do it. You just have to stand up and grit your teeth and know your poll numbers are going to go down—and mine have—but you gotta grit it out because the alternative is unacceptable.” He also strongly believes that voters elected him specifically to fight this fight. “They’re fed up. They’ve had enough. In normal circumstances I wouldn’t win,” he says.

He’s probably right about that. He probably wouldn’t have won 3 or so years ago.  And he’s right that the voters, as his election demonstrates, are “fed up”.  But, once the cuts start to hit, nothing says Christie will be given the continued support necessary to accomplish his goals.  But he seems to be a man who is going to do all he can to accomplish them. I call it the New Jersey model because if successful, Gov. Christie will provide both the blueprint and the success story which small government/fiscally conservative types can point to when discussing what must -and can – be done at both a state and national level. I’ll be watching the NJ saga develop with great interest over the years, and wishing Gov. Christie the best of luck in attaining his goals.

~McQ

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The teacher’s rotten apple

Another in a long line of reasons I don’t want government running anything that has to do with pensions, health care, railroads, post offices, etc. When it comes to running something properly and to fulfill the purpose for which it is formed, any examples which exist can most likely be counted on one hand. Public teacher’s pensions aren’t one of them:

The crux of the problem is the gap between assets and liabilities affecting the fifty-nine pension funds that cover most public school teachers in America. Some of these are general state-employee pension funds, while others cover only teachers. Among the findings of our study of these funds:
* All fifty-nine pension funds studied face shortfalls.
* California, the most populous state, has the largest unfunded teacher pension liability: almost $100 billion.
* The worst-funded plan in our sample is West Virginia’s, which we estimate to be only 31 percent funded.
* Five plans are 75 percent funded or better: teacher-dedicated plans in the District of Columbia, New York State and Washington State and state employee retirement systems in North Carolina and Tennessee that include teachers.

The general picture is not a good one. According to the fifty-nine funds’ own financial statements:

– Total unfunded liabilities to teachers—i.e., the gap between existing plan assets and the present value of benefits accrued by plan participants—are $332 billion.
According to our more conservative calculations:
* These plans’ unfunded liabilities total about $933 billion.

And for those who would like to blame this all on the beating the stock market took, huh uh:

* Only $116 billion, or less than one quarter, of this $600 billion discrepancy is attributable to the stock market drop precipitated by the 2007 financial crisis.
* The Dow Jones Industrial Average would have to nearly double overnight to make up for the present underfunding of these plans.

Instead it is another example of “what is law for me is not for me” governance:

Under current guidances, which are prepared by separate bodies, state pension funds are able to set aside fewer assets than their counterparts in private companies to cover equal liabilities. Private pension plans may invest in stocks and other higher-risk assets, but those plans may not reduce their pension funding on the basis of the superior performance expected of these types of assets. This is because those higher returns are accompanied by greater risk that returns will fall short of expectations. Yet pension funds’ obligation to retirees present and future does not diminish accordingly.
By contrast, public pension plans are permitted to base the amount of money they need today to meet their future obligations on the higher expected performance of stocks, allowing sponsors to cut their contribution rates and hope the markets perform as anticipated.

And when the markets don’t “perform as anticipated”, you, dear taxpayer, are left holding the empty bag while government, which feels bound to keep its promises, reaches for your wallet. Either that, or teachers don’t get the pensions promised.

So we have Social Security in a deep, deep hole, state pension funds in a deep hole and teacher’s pension funds right there beside them. Add to that the unfunded liabilities of Medicare and Medicaid.

Something’s got to give.

~McQ

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Interview with Tom Campbell, CA Gubernatorial candidate

I spoke with Tom Campbell for over 45 minutes on a range of topics, and I’ve split my posts on that discussion into two posts, one here and one over at The Next Right. Here at QandO, I’m going to cover the more policy-oriented topics, and over at The Next Right the topics have to do with new media, elections, and the politics of fiscal conservative governance.

It pains me to see my native California in such dire straits. The state is broke, farms are collapsing, and unemployment is over 12 percent. The public colleges that might help retrain a lot of those workers are slashing classes.

The tax and regulatory burden has finally overcome the state’s many natural advantages, leading its citizens to abandon the Golden State. And these are people who can’t be having an easy time selling their homes: California, one of the first to suffer in the real estate collapse, is still near the top of the heap in foreclosures.

California, as we say, has issues. I talked with Tom Campbell about some of the most important ones: the budget deficit, jobs, health care, education, water and infrastructure.

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