Category: Government

Aggressive Challenges to Property Tax Assessments Rising

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This is not surprising.

People are struggling, and their assessed property value often is well over market rate, so it is no surprise that a rapidly growing industry is evolving to help people challenge property tax assesments, particularly among people attempting to sell their homes.

The fact that one has successfully lowered the taxes makes the home more salable.

Of course, it’s going to devastate the tax revenues of municipalities just as an economic downturn increases demand for their services.

George F. Will Is an Idiot

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Will, writing on Obama’s proposal to lift the earnings cap on wages, talks about the middle class folk who will be hurt, and gives the following example:

You favor eliminating the cap on earnings subject to the 12.4 percent Social Security tax, which now covers only the first $102,000. A Chicago police officer married to a Chicago public-school teacher, each with 20 years on the job, have a household income of $147,501, so you would take another $5,642 from them. Are they undertaxed? Are they rich?

Dude, the $102K limit is per individual. Their tax load does not change, they are both taxed on their total earnings.

Truth be told, I don’t think that there is a problem with Social Security, but there is one with Medicare, so here is my suggestion about how to fix that:

  • End the cap on employers’ part of the Social Security tax, and devote the additional revenue to Medicare and Medicaid.
  • Broaden the definition of earnings to include things like the sweetheart deals that senior executives get.
  • Tax the employee’s part of income at levels above $1 million.
    • This would mean that there is a “notch” between $102K and $1M. You can call it the Paris Hilton tax.

It would go a long way toward fixing the problem, and it is a much easier political sell.

Because Dick Cheney Likes Death

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Dick Cheney is a busy, busy man.

In addition to outing a CIA agent, authoring torture policy, selling out the nation to oil companies, shooting people in the face, and taking payments from Halliburton, it’s nice to know that he can still taking time out to kill whales:

Another internal document shows that the officials working for the Vice President also raised spurious objections to the science. According to this document, the Vice President’s staff “contends that we have no evidence (i.e., hard data) that lowering the speeds of ‘large ships’ will actually make a difference. NOAA rejected these objections, writing that both a statistical analysis of ship strike records and the peer-reviewed literature justified the final rule. In its response to the objections from the Vice President’s staff, NOAA reported that there is “no basis to overturn our previous conclusion that imposing a speed limit on large vessels would be beneficial to whales.

Is there even the smallest bit of evil that is done by Bush and His Evil Minions&trade has to have Cheney’s finger prints all over this?

I feel like stunned like that cow that just stepped on it’s own udder.

More Signs (and Pictures) that Official Government Inflation Stats are BS

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We are starting to see more articles, like this at San Diego Union Tribune, noting that official government inflation statistics are a crock.

I will note that the changes in 1983 to a large degree took housing out of the picture, which is why Alan “Bubbles” Greenspan was so bullish on real estate*, and those in 1998 used hedonic mumbo-jumbo to create the illusion of low inflation.

If you assume that inflation is 2% more than official numbers over the past 35 years, prices have doubled relative to official inflation at 3¼% more, it’s triples, and at 4%, it quadruples.

We may be seeing a tremendous drop in the standard of living of the average American over that time that has been deliberately masked by our government.

*It allowed him to call inflation in a necessity, housing, an increase in wealth. If memory serves, Greenspan was at the center of both adjustments

City’s plan to relocate residents meets resistance – Apr. 24, 2008

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It appears that the 50 or so remaining residents in Youngstown’s abandoned neighborhoods are refusing to move, even with the offer of $50,000 payments.

I think that the obvious thing to do here is eminent domain. These green spaces are to be created for the benefit of the city, so as not to have to pay for utility service and police patrols to these areas.

Declare the green spaces a park, and take them to court. This is a legitimate public need.

Obviously, the use of eminent domain could be a political problem, so as an alternative, you could set up a special utility district in the neighborhoods intended for demolition.

When these folks get their bills to account for the real costs of their water, sewer, street lights, etc., they would likely leave.

Washington Post Misses the Point, Quelle Surprise

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This time, it’s about the aggressive policy to outsource civil service positions to private contractors, where they say that the zeal of Bush and His Evil Minions™ is because they ,”entered office with a deep skepticism of government. He saw competitive sourcing as a way to improve agencies’ performance.”

Any objective evaluation of Republicans, and government, including Bush, shows that they have no interest at all in improving agencies performance. One need only read their own declarations. They find government programs, with the exception of the state security apparatus, to be evil, and to the degree that it is less efficient, they see this lack of effectiveness as an independent good.

Contracting out government work is not about efficiency, it’s about patronage and rewarding contributors. It frees up money to shovel to one’s supporters.

Youngstown Gets It

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In response to a collapsing population, Youngstown, Ohio has made the obvious, though politically audacious, decision to downsize the city.

They are demolishing abandoned homes, and in nearly deserted blocks, giving grants to move the last residents out, and then tearing up the streets and power lines, and converting them to green spaces.

It saves money on maintenance, street lights, etc.

It certainly makes a lot more sense than some of the schemes which have taxpayers paying well upwards of $100K/job to subsidize employers.

California Eschews Bond Insurers

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It’s interesting how often financial reporters miss the forest for the trees.

Case in point, we have California Treasurer Lockyer telling Warren Buffet’s new bond insurance business to go pound sand.

The core of the dispute is that bond ratings agencies have low rated municipal debt as compared to commercial debt for years.

This has meant that entities like the state of California have had to buy bond insurance to get AAA rates, despite the fact that the risk of default is negligible:

“We’re selling water in a desert; we should be rated to reflect that,” said Cary Casey, who oversees bonds at the Southern Nevada Water Authority in Las Vegas that have a AA+ rating from Standard & Poor’s. Casey said he’s not interested in Buffett’s insurance. “He’s no savior.”

The first municipal bond insurance policy was sold in 1971 by Ambac. The near bankruptcy of New York City in 1975 bolstered demand for the industry, said Richard Larkin, research director at brokerage Herbert J. Sims & Co. in Iselin, New Jersey, and a former chief municipal rating officer at S&P.

New York City creditors were paid in full. When Orange County, California, filed the largest municipal bankruptcy in 1994, only one issue defaulted and no principal or interest payments were missed, according to Moody’s.

“The legalized extortion has been going on since before I became mayor of Somerville in 1990,” said U.S. Representative Michael Capuano, a Massachusetts Democrat on the House Financial Services Committee. Capuano said he was forced to buy bond insurance, even though his town of 80,000 had never defaulted and the state provided backup guarantees.

Emphasis mine.

Bond insurance to municipalities have been a protection racket for years, and not it turns out that the insurers, not the municipalities, are the ones with the problem.

I think that as we tease out the credit collapse, we will find many more examples of systemic corruption and extortion by Wall Street firms.

The FSM may be wrong, these guys are pirates, and global warming proceeds unabated.

Kenyan Dispute Still Not Resolved

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President Mwai Kibaki and PM Raila Odingaappear to be having significant problems resolving the composition of the cabinet.

I haven’t followed this closely, quite honestly Africa is pretty much off of my radar, but to the degree that I have, it’s painfully clear that Kibaki stole the election, and that he is being given a bit of a pass by outside powers, because he is seen as being “good for business.”

The impetus here should be for an arrangement that respects the will of the people as it was actually expressed at the ballot box, and to the degree that Kibaki is backing away from these agreements, it should be made clear that this is not acceptable.

Local and State Governments Call for Changes in Bond Rating System

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One of the peculiarities of bond rating is that state and local bonds are typically rated much lower for a given level of risk than those of private entities, which requires that they purchase bond insurance.

This is the still lucrative core of the now almost insolvent monoline insurers business.

A number of public officials have expressed their concerns to the rating agencies:

On March 4, Bill Lockyer, the treasurer of California, sent a five-page letter to Moody’s Investors Service, Standard & Poor’s Corp. and Fitch Ratings asking for justice.

`”State and local governments almost never default on the bonds they issue,” the letter says. “The safety of municipal bonds is grounded in a fundamental fact: a city or state simply is not going to go out of business during the life of its bond issue.”

The letter was signed by 14 other state and local officials, including Michael Murphy of Washington, Michael Fitzgerald of Iowa and Patrick Born, the chief financial officer of Minneapolis. I mention these three in particular because they are public finance veterans who really understand the business.

Maybe every one shouldn’t be rated AAA, the letter asserts. Just most of them.

They are absolutely right.

As the system stands now, most state and local governments have to buy insurance in order to get an AAA rating, but the risk of default is minuscule compared to commercial AAA bonds.

When the Financial Times of London Sounds Like the Workers Daily World, The Times are a Changing

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London has long had a policy of allowing rich foreigners to live there tax free.

FT columnist Martin Wolf looks at proposals to eliminate this immoral give away to the rich, and finds that too many people in the UK subscribe to the Leona Helmsley way of doing thing.

We live in strange times, as evidenced by his concluding paragraph:

Yet the experience also shows that the case for a simple, neutral and stable fiscal system, which taxes the worldwide incomes of all long-stay residents on the basis of ability to pay, is overwhelming. As soon as one departs from that principle one enters in a maze of special pleading or invidious distinctions, in which failed ideas of industrial policy – subsidising winners through the tax system – return to the fore. If the application of that great principle means some rich people leave the country, so be it.

(Emphasis mine)

Whiskey Tango Foxtrot??? Elliot Spitzer Linked to Prostitution Ring?

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OK, this is not the sort of thing that I was expecting from Elliot Spitzer. He has, “been caught on a federal wiretap arranging to meet with a high-priced prostitute at a Washington hotel last month.”

I’ve noticed that he has some problems with overreach and arrogance, but this is a shock to me.

I’m not sure where it goes from here, though I am sure that any sympathy one feels should be reserved for his wife, Silda and his three children.

Yes, any Republicans reading this, Schadenfreude is normal, and probably justified at this point, though obviously I’m not feeling this at this point.

And yes, the phrase, “Shanda before the Goyim” does dome to mind here.

Smaller Bond Insurers Cleaining Up on Muni Business

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With a MBIA and Ambac in death spirals over their involvement in mortgage backed securities and other similar instruments, former bit players like Financial Security Assurance and Assured Guaranty Ltd, which never drank that Koolaid, have seen their market position in the municipal bond insurance market soar.

The consequences I’ve predicted with the ability of municipalities to raise money may be milder than I had anticipated.

A Rebuttal to An Earlier Post

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I made a post on Barack Obama’s policies regarding the stimulus package, and Barack Obama’s and specifically his advisor, Austan Goolsbee’s position on the low income heating assistance program.

Dr. Goolsbee took exception to my post in the comments, and has granted me permission to reproduce it as a post, which follows:

This is totally bogus. I have never opposed LIHEAP as a program and neither has Senator Obama (who has voted many times to fund the program). The only objection to the program–in the CNBC clip and in all previous discussions–is trying to use LIHEAP as a stimulus program. Because there is an application process, it won’t get out the door quickly. Obama’s stimulus plan would cut checks for low income people that are BIGGER than the LIHEAP checks and would send them the money right away.

Proof that I support LIHEAP just not as a stimulus, see the debate over stimulus is the NY Observer of January 24

“For the most part, Goolsbee had little to take issue with. He had a much bigger problem with the Clinton plan’s call for $25 billion in emergency energy assistance for families facing skyrocketing heating bills. Goolsbee’s criticism of this component was consistent with his major beef with Clinton’s entire stimulus plan, which is that it would take way too long to enact, and therefore wouldn’t provide for any real stimulus at all.

Here’s Goolsbee’s critique: “It is a very detailed program. It is a very good program that people are familiar with but it just isn’t a stimulus. It is for winter heat and by the time this thing gets through we’d be talking about next winter. Two, it’s a five to 10-page application process which is significantly onerous.

He added, “After convincing the people to apply and getting them to fill out the application process, you then have an evaluation process, so this will take many months if not a year to get out the door.”

Note: there were some apostrophes that were munged by haloscan that I corrected. Otherwise it is as posted.

Very, Very, Wise

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Lance Mannion gets to the core of Republican governance practice“

If the Goverment is a car setting out to give every one a ride to work, then for 40 years the Republicans have been puncturing the tires, pouring sand in the gas tank, stealing the distributer cap, and, whenever they can get their hands on the wheel, driving it straight into the nearest ditch and then, pointing to the wreckage as the tow truck backs up to it, saying, See, this proves that people were meant to walk.

And they do this so that they don’t have to chip in on gas.