An Enron Surplus

Bismarck Tribune - February 11th, 2007

In all the talk of how to spend the state surplus, one area has been mysteriously missing from the discussion — debt.

According to the State Office of Management and Budget’s management’s discussion and analysis for fiscal year ending June 30, 2006: “The state’s total debt (bonds and notes payable) increased during the fiscal year to $1.64 billion, an increase of $100 million, or 6.4 percent, which represents the net difference between new issuances and payments and refundings of outstanding debt. During the year the state issued $404 million in bonds and $637 million in notes.”

Now, you may say to yourself, “But I thought the state was running a surplus in excess of $500 million.” It doesn’t take a former accountant from Enron to figure out what is going on here. In fact, any recent college graduate with an average of $18,000 in debt can tell you exactly what is going on here — credit flipping.

Far too many Americans make the ends meet by paying off one credit card with another, so it is not a surprise that governments that are strapped for cash would do the same thing. Certainly our government — federal, state and local — should not get into the same practice.

Back to the surplus: If the state issued $100 million in new bonds and $304 million in bonds that renew old debt, how can anyone with a shred of intellectual honesty claim that there is really a surplus?

The only reason there is a surplus is because a large chunk of debt was rolled over and new debt was created. This is akin to someone taking a cash advance on one credit card, making the minimum payment on another card, and keeping the rest of the cash and claiming a surplus.

There is no surplus. It is all a numbers game played by accountants and politicians wanting to spin some political advantage.

It was wrong for Enron to play these number games. It left many employees jobless, and many investors broke. Our own state must not play these games with the future financial security of the state.

Wars and Rumors of Wars

Target Iran: US able to strike in the spring

US preparations for an air strike against Iran are at an advanced stage, in spite of repeated public denials by the Bush administration, according to informed sources in Washington.

The present military build-up in the Gulf would allow the US to mount an attack by the spring. But the sources said that if there was an attack, it was more likely next year, just before Mr Bush leaves office.

Neo-conservatives, particularly at the Washington-based American Enterprise Institute, are urging Mr Bush to open a new front against Iran. So too is the vice-president, Dick Cheney. The state department and the Pentagon are opposed, as are Democratic congressmen and the overwhelming majority of Republicans. The sources said Mr Bush had not yet made a decision. The Bush administration insists the military build-up is not offensive but aimed at containing Iran and forcing it to make diplomatic concessions. The aim is to persuade Tehran to curb its suspect nuclear weapons programme and abandon ambitions for regional expansion.

Sometimes it seems that the neo-conservatives are on some messianic quest to fulfill prophecy; in this cas Matthew 24:6 “And ye shall hear of wars and rumours of wars: see that ye be not troubled: for all these things must come to pass, but the end is not yet.”

Bush to be Impeached - By Republicans?

Via Cybercast

GOP Lawmaker Warns of Impeachment in Border Agent Case

Weeks after accusing President Bush of “shameful” behavior over the imprisonment of two Border Patrol agents who shot an unarmed suspected drug smuggler along the U.S.-Mexico border, a federal lawmaker turned up the heat further Wednesday, suggesting the president should be impeached if the two men are killed in prison.

Speaking after the Federal Bureau of Prisons confirmed that agent Ignacio Ramos was assaulted by inmates in his Mississippi prison at the weekend, California Republican Rep. Dana Rohrabacher had a warning for the White House.

“I tell you, Mr. President, if these men — especially after this assault — are murdered in prison, or if one of them lose their lives, there’s going to be some sort of impeachment talk in Capitol Hill,” he said during a press conference in Washington, D.C. (Listen to Audio)

“The president of the United States talks a lot about his Christian charity, and his religious beliefs,” Rohrabacher said.

“He now is showing a mean-spirited side to him, an arrogance, in which he will turn his back, even after one of these officers in prison has been brutally assaulted.”

Isn’t that interesting?

Recruiting Poster

Free Trade vs. Free Trade Agreements

I came across an older article from November after learning of the University of North Dakota College Libertarian Blog about how Free Trade and Free Trade Agreements are very different.

A recent editorial rightly takes Sen. Byron Dorgan, D-N.D., to task for failing to embrace trade.

Surprisingly however, after having read the critique, I was left feeling that the senator actually deserved a qualified defense.

First, there is the issue of free trade versus “free trade” agreements. The last time I checked, there was no good reason for mercantilist policies (unless you represent a producer who wants government protection at the expense of fellow citizens). Free trade agreements, of course, amount to government-managed trade and, thus, it’s not surprising that they contain hundreds of pages of special-interest legislation, complete with newly created international commissions and bureaucracies.

In contrast, genuine free trade exists between North Dakotans and the citizens of the other 49 states in the union and between the citizens of Grand Forks and the citizens of Fargo. Notice also that Fargo officially could boycott Grand Forks businesses, yet it still would not be in the best interests of Grand Forks’ citizens for the Grand Forks government to legally ban them from shopping in Fargo.

The Herald is hardly a consistent voice for genuine free trade.

Second, the editorial fails to address Dorgan’s argument about spending in the economy. The senator’s argument essentially is this: Spending on consumer goods drives the economy, but with more “cheap labor” employed “overseas” (at the alleged expense of employment opportunities here in the United States), there will be less spending here, and the U.S. economy will implode.

But Dorgan fails to appreciate that the demand for goods really is what drives the economy. This demand drives people to produce (work) and trade with each other in the first place; and only after a consumer good has been produced by someone can it be consumed by anyone.

The problem of wealth creation is, therefore, not a problem of maximum “spending,” but of maximum production. As a result, any reduction in the costs of production furthers the goal of increasing production - so “shipping jobs” to where they can be done for less makes it possible for increased consumption (increased wealth).

A final point: Dorgan absolutely is correct about the yearly deficits and the total debt (though, ironically, his consistent votes for more spending obviously contribute to their existence).

The Herald, citing an economics textbook no less, forwards a basic fallacy that government deficits don’t matter. I beg to differ. It’s hardly comforting to know that governments have the ability to print (legally counterfeit) money in order to pay for their activities, but that is the “proof” the Herald offers as to why we shouldn’t care about hundred-billion-dollar deficits.

Well, I have news for the Herald: Many governments already have used the printing press to get themselves out of financial trouble, and they went bankrupt anyway (think about Germany after World War I).

In contrast with the Herald, I conclude that any “Econ 101″ student should know that as the supply of money goes up, the “price” or purchasing power of money generally goes down. Destroying the value of the dollar is an entirely dangerous and outrageous cost to impose upon the American citizenry and, as such, it should not be looked upon as any kind of real solution to the government’s financial woes.

An Enron Surplus

In all the talk of how to spend the state surplus, one area has been mysteriously missing from the discussion – debt.

According to the State Office of Management and Budget’s Management’s Discussion and Analysis for fiscal year ending June 30^th, 2006: “The State’s total debt (bonds and notes payable) increased during the fiscal year to $1.64 billion, an increase of $100 million, or 6.4%, which represents the net difference between new issuances and payments and refundings of outstanding debt. During the year the State issued $404 million in bonds and $637 million in notes.”

Now you may ask yourself “but I thought the state was running a surplus in excess of $500 million?” It does not take a former accountant from Enron to figure out what is going on here. In fact, any recent college graduate with an average of $18,000 in debt can tell you exactly what is going on here – credit flipping.

Far too many Americans make the ends meet by paying off one credit card with another, so it is not a surprise that governments that are strapped for cash would do the same thing. Certainly our government, federal, state and local, should not get into the same practice.

Back to the surplus – if the state issued $100 million in new bonds and $304 million in bonds that renew old debt, how can anyone with a shred of intellectual honesty claim that there is really a surplus?

The only reason there is a surplus is because a large chunk of debt was rolled over and new debt was created. This is akin to someone taking a cash advance on one credit card, making the minimum payment on another card, and keeping the rest of the cash and claiming a surplus.

There is no surplus. The state has a total debt of over $1.7 billion, with $400 million of that being renewed or incurred in 2006. It is all a numbers game played by accountants and politicians wanting to spin some political advantage.

It was wrong for Enron to play these number games – it left many employees jobless, and many investors broke – our own state must not play these games with the future financial security of the state.

No Taxpayer Left Behind

Americans for Prosperity-North Dakota announced on their blog yesterday a campaign to convince lawmakers in the state that No Taxpayer should be Left Behind.

As most North Dakotans know, the state is sitting on a $550 million surplus that just keeps getting bigger. Governor Hoeven has a foolish plan to spend the surplus and create the impression of tax relief without actually providing tax relief.

So State Director of Americans for Prosperity-North Dakota, Duane Sand, held a press conference yesterday to announce this campaign. (Video Clip from KXMB)

The current property tax rebate plans that both the Governor and the Democrats are pushing do nothing to solve the long term problem, and give the State Government control in local issues that it just should not have. Plus, they give no relief to people who rent and do not own property.

There was a good bill from Senator Tracy Potter of Bismarck (a Democrat by the way) that would allow renters to claim part of their yearly rent as a credit against income tax liability.

All of these plans have the same problem - diverting state funds generated by the income tax (100% of income earners) to those who own property (70% of income earners). This is unfair and leaves upwards of 85,000 North Dakotan without any tax relief. (The 85,000 is the number the Democrats themselves use.)

The fairest way to give long term, sustainable, tax relief to the people that produced the surplus is with income tax rate decreases (not a rebate).

I hope the Democrats change their mind on this as well and support relief for everyone, not just the 70% of North Dakotans that own property.

This Is What America Gets For Saving Europe Twice

France Tells U.S. to Sign Climate Pacts or Face Tax

President Jacques Chirac has demanded that the United States sign both the Kyoto climate protocol and a future agreement that will take effect when the Kyoto accord runs out in 2012.

He said that he welcomed last week’s State of the Union address in which President Bush described climate change as a “serious challenge” and acknowledged that a growing number of American politicians now favor emissions cuts.

But he warned that if the United States did not sign the agreements, a carbon tax across Europe on imports from nations that have not signed the Kyoto treaty could be imposed to try to force compliance. The European Union is the largest export market for American goods.

“A carbon tax is inevitable,” Mr. Chirac said. “If it is European, and I believe it will be European, then it will all the same have a certain influence because it means that all the countries that do not accept the minimum obligations will be obliged to pay.”

Trade lawyers have been divided over the legality of a carbon tax, with some saying it would run counter to international trade rules. But Mr. Chirac said other European countries would back it. “I believe we will have all of the European Union,” he said.

Mr. Chirac spoke as scientists from around the world gathered in Paris to discuss an authoritative international report on climate change, portions of which will be released on Friday.

Mr. Chirac’s critics say that despite his comments in support of environmental measures, his record as president is far from green. He angered environmentalists across the globe when he conducted nuclear tests in a Pacific atoll within months of coming into office in 1995. He has been a loyal ally of French farmers and their pollution-causing practices, blocking some proposed Europe-wide reforms.

Most recently, France’s national plan for allocating carbon emission credits to businesses had to be revised after the European Union rejected it as too generous.

So after saving France in two world wars from Germany, they want to dictate what we do?   We will see if it maks it passed the corrupt and unconstitutional WTO first.  But it sounds like France is trying to do what Hitler almost did - control Trans-Atlantic commerce.

Official Recognition of Out-Migration as a Problem

If passed, House Concurrent Resolution 3025 in the North Dakota Legislature would officially recognize Out-Migration as a problem and seek to find a solution.

The bill is sponsored by:

Representatives Mary Ekstrom (D-Fargo), Matt Klein (R-Minot), Frank Wald (R-Dickinson) and
Senators JoNell Bakke (D-Grand Forks), Tony Grindberg (R-Fargo), Robert Horne (D-Minot)

The bill reads as follows:

WHEREAS, during the decade before the last decennial census, the population of the
state grew by one-half of one percent, which was the smallest relative growth rate of all 50 states; and
WHEREAS, during the early part of this decade, the estimates of the United States
Census Bureau indicated that the population of the state declined, and the estimated population of the state remains below the actual population in 2000; and
WHEREAS, three population trends affecting the state–rural depopulation, outmigration of young adults and young families, and an increasing proportion of the elderly–contribute toward a difficulty in businesses meeting workforce needs;
NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF NORTH DAKOTA, THE SENATE CONCURRING THEREIN:
That the Legislative Council study possible methods of growing North Dakota’s
population and increasing the available workforce in the state; and
BE IT FURTHER RESOLVED, that the Legislative Council report its findings and
recommendations, together with any legislation required to implement the recommendations, to the Sixty-first Legislative Assembly.

All the Rage - White Papers Against Candidates

First came the Mitt Romney Deception Report.

Now, from our friends at the Club for Growth - Is Arkansas Governor Mike Huckabee a Pro-Growth, Economic Conservative? 

Both are worth a read.