MyGovCost News & Blog

Pillage People Plot to Increase Asset Seizures

Monday July 24th, 2017   •   Posted by K. Lloyd Billingsley at 10:10am PDT   •  

U.S. Attorney General Jeff Sessions seeks a “new directive on asset forfeiture” and plans new policies to “increase forfeitures.” The target is supposedly big-time criminal organizations but all citizens have good cause to be wary. As U.S. Supreme Court Justice Clarence Thomas notes, the issue is “whether modern civil-forfeiture statutes can be squared with the Due Process Clause and our nation’s history.” Due process is not served when police can grab people’s assets without charging them with a crime, and according to Thomas, forfeiture operations “frequently target the poor and other groups least able to defend their interests in forfeiture proceedings.”

Previous Attorney General Loretta Lynch, called asset forfeiture “a wonderful tool,” prompting Casey Harper of the Daily Caller to cite some wonderful examples. Tan Nguyen won $50,000 at a casino but a Nevada cop confiscated the money and threatened to seize his car if he spoke up about it. Nguyen had to hire an attorney to get his own $50,000 back. On a trip to buy a car, George Reby had $22,000 in cash but a Tennessee cop suspected it was drug money and took it. In similar style, at a traffic stop Georgia police grabbed Alda Gentile’s $11,530 after searching her car for drugs and finding none. And so on. As Akil Alleyne, notes in The Hill, “perhaps the most worrisome aspect of asset forfeiture is the mercenary incentive that it gives authorities to ‘police for profit’: seizing as much property as possible—the more valuable, the better—in order to auction it off and pad their budgets with the proceeds.”

Asset forfeiture remains rampant in Illinois, not exactly a model of fiscal responsibility. As Ben Ruddell of the ACLU observes, between 2005 and 2015 Illinois law enforcement took in more than $319 million through forfeiture, with little of the haul from drug kingpins. A reform bill places the burden raises the standard of proof to preponderance of evidence at trial, and the burden of proof is on the government, not the property owner. The bill enjoys bipartisan support, and with the federal pillage people planning a surge, Congress should craft an even tougher bill to protect property rights and preserve due process. President Trump should sign it, and that would be a win for the people.

Illinois Kicks the Can Down the Road

Monday July 24th, 2017   •   Posted by Craig Eyermann at 6:17am PDT   •  

15800669 - kicking tin can down the road Illinois has kicked the can down the road for the state’s debts and liabilities.

Last week, Moody’s credit rating service announced that it would sustain its current rating for the state of Illinois at Baa3, one level above “junk” status, making Moody’s the third of three major credit rating agencies to not take the final step of downgrading the state’s debt to the level that would have made it the first state to have ever have its credit reach that rating.

But in having passed a budget that was largely designed by the state’s legislature to keep it from going over the fiscal brink, the state may have only managed to delay its fiscal reckoning. Bloomberg‘s Elizabeth Campbell reports on the accounting shell game that Illinois is now playing:

Illinois’s biggest financial challenge, the $130 billion debt to its workers’ pension funds, may only get bigger thanks to the budget that pulled the government back from the brink.

That spending plan, pushed through by lawmakers eager to keep Illinois’s bond rating from being cut to junk, allows the state to sink deeper into the hole by giving it five years to phase in hundreds of millions of dollars in increased contributions to four of its five retirement plans. Those extra payments stem from the funds’ decisions to roll back forecasts for what they expect to make on their investments, which means Illinois will need to set aside more money to ensure it can cover pension checks due in the decades ahead.

“The phase-in of the actuarial assumption is another exercise in kicking the can down the road, but we’re not sure how far the can travels,” said Dave Urbanek, spokesman for the Illinois Teachers’ Retirement System, the state’s largest pension, which has $73 billion of unfunded liabilities. “You pay less now, pay more later.”

By “roll back forecasts,” Campbell is referring to the predicted rates of return that the state’s pension funds are required to use to predict how much their investments will grow in the future, which after years of underperformance, had finally been reduced to more closely match the state pension funds’ actual returns in recent years.

That matters because the higher those rates are set, the less money that the state government needs to budget in order to pay out the state’s generous pension benefits for state and local government employees. By artificially inflating its predicted return assumptions back to the levels that allowed the state to significantly underfund its pension funds in the first place, the state can reduce the amount of money it puts into them.

That unrealistic accounting achieves two things. First, it makes money that may have gone to shoring up the state’s pension funds available to pay off its other debts, which is how the legislature managed to keep the state’s credit rating from collapsing into junk status at this time. Second, it digs the fiscal hole that its pension funds are in, deeper toward insolvency, ensuring that the state’s biggest liabilities will only get worse.

It’s not a question of if Illinois’ credit will be downgraded, but when. When that will happen will be now most likely be determined by the available cash balances of the state’s various government-employee pension funds, which will have less taxpayer cash to make guaranteed pension benefit payments if its investments continue to badly underperform its now legislatively set rate-of-return assumptions. As soon as they run out of cash to cover the lavish, state-guaranteed pension benefits payments to retired state government workers, the slow-motion chain reaction that will lead to junk status for the state’s credit rating will get underway.

Inside the Budget: More Law Enforcement Spending

Friday July 21st, 2017   •   Posted by Craig Eyermann at 7:19am PDT   •  

11542653 - riot police preparing for trouble at an edl demonstration While running for office, Donald Trump pledged to reduce the regulatory burden for Americans while also increasing the amount of spending to support federal law enforcement agencies in their work, much of which involves enforcing federal laws and regulations.

Budgets are about priorities, so perhaps it isn’t much of a surprise that President Trump’s first budget proposal appears set to achieve both seemingly contradictory tasks.

That’s the finding of analysis by Susan E. Dudley & Melinda Warren of the Regulatory Studies Center at George Washington University. Here’s a short summary of what they found:

Although President Trump has made reducing regulatory burdens a priority, he proposes to increase the regulators’ budget in FY 2018.

• The proposed 2018 regulators’ budget reflects a 3.4% real increase in expenditures.
• The proposed increase is twice the 1.7% increase estimated in 2017.
• Proposed outlays are $69.4B for 2018 compared to $65.9B in 2017 and $63.7B in 2016.
• Proposed staffing levels would decline by 0.5%—from 281,300 full-time personnel in 2017 to 279,992 in 2018. In 2017, regulatory agency staffing increased 1.5%.

Some agencies are budgeted for significant increases in both expenditures and staff, while others face dramatic cuts.

• Agencies within the Department of Homeland Security (DHS) focused on immigration are the big budgetary winners including:

   • Coast Guard,
   • Immigration and Customs Enforcement,
   • Customs and Border Control, and
   • Transportation Security Administration.

• Overall, DHS regulatory agencies would increase expenditures by 13.7% (an additional $4.1B) in 2018, after a 5.9% increase ($1.7B) in 2017.
• DHS staffing is also budgeted to grow by 2.3% (3,294 additional people) in 2018 following a 1.3% increase (1,896 people) in 2017.
• The Environmental Protection Agency (EPA) is targeted for sharp reductions in both expenditures and staffing. The Budget proposes a 26.2% reduction in EPA’s outlays, to $4.1B in 2018, down from $5.5B in FY 2017.
• If implemented, this would be EPA’s smallest budget since 1987.
• EPA’s staff under the proposed 2018 budget would decline by 3,811 employees—from 15,500 to 11,689—a reduction of 24.6%.
• The last time EPA employed fewer than 12,000 employees was 1984.

Writing about the study at Reason, Eric Boehm reveals that because of its emphasis on increasing funding and staff for federal law enforcement agencies, President Trump’s budget is actually increasing the U.S. government’s total spending on regulation.

Despite promising to roll back the federal regulatory state, President Donald Trump’s first budget proposal would increase regulatory spending by more than 3 percent—double the increase approved by Congress during Barack Obama’s final year as president.

If Congress were to enact Trump’s budget as written, the federal government’s regulatory staff would fall by half of 1 percent, but the total amount of taxpayer money spent by regulatory agencies would climb to $69.4 billion. That’s up from $65.9 billion in 2017 and $63.7 billion in 2016...

Rather than cutting the regulatory state, then, Trump’s first budget plan is better understood as a shifting of regulatory priorities—a shift in which the increases overwhelm the cuts.

Overall, the changes that President Trump has proposed in the regulatory portions of the U.S. government’s budget are in keeping with their long term growth trend. We will need to wait until next year to find out if President Trump is serious about restraining that growth in the future after his initial shifting the government’s priorities this year.

Stop Erosion of Property Rights

Monday July 17th, 2017   •   Posted by K. Lloyd Billingsley at 9:19am PDT   •  

California’s Coastal Commission has shut down the last beach-sand mine in the United States, operated by the Mexico-based Cemex company. Coastal Commission boss Jack Ainsworth told reporters, “This settlement is an incredible victory for the public.” Taxpayers might not think so.

The Commission blamed Cemex for erosion along Monterey Bay. Company official Walker Robinson told the Monterey Herald the causes of erosion “are numerous and complex” and claims that attribute the erosion to the sand mine “oversimplify the issue.” The mine has been operating for more than a century, predating the Commission, but rather than face a court fight Cemex agreed to end operations by the end of 2020. A better outcome would be to let the mine continue and shut down the Coastal Commission, which has been eroding Californians’ property rights since the first Brown administration in the 1970s.

The Commission was supposed to be temporary, but legislators made it a permanent unelected body that overrides scores of elected city and county governments on land-use issues. In practice, the Commission became the private domain of Peter Douglas, a regulatory zealot with little if any regard for property rights. On his watch the Commission was also known for Mafia-style corruption. During the 1990s, Coastal Commissioner Mark Nathanson attempted to shake down celebrities for bribes, and wound up serving a prison term.

As we noted, the Commission has been expanding its power into new areas such as animal management and surfing tournaments. The CCC keeps busy adding new commissioners and deploying its new power to bypass the courts and levy fines directly. Now the Commission claims it is too shorthanded to clean up its own books and seeks regular loans to keep itself afloat.

Taxpayers provide the Commission’s annual $23 million budget, but for that spending they get nothing of value. California’s elected city and county governments are entirely capable of handling land-use issues. Shutting down the Coastal Commission would trim waste, restore accountability, and above all stop the steady erosion of Californians’ property rights.

How Fiscally Healthy Is Your State?

Monday July 17th, 2017   •   Posted by Craig Eyermann at 6:38am PDT   •  

The Mercatus Center has released its fiscal rankings of each state in the nation. Find your state in the map below to see how highly (or lowly) it may have ranked:

Here’s what the report’s authors, Eileen Norcross and Olivia Gonzalez, had to say about the five states occupying the fiscal basement in 2015, Illinois, Kentucky, Massachusetts, New Jersey and Connecticut:

In FY 2015, Illinois, Kentucky, Massachusetts, and New Jersey remain in the bottom five performing states. Connecticut leaves the bottom five due to a very strong increase in revenues and a reduction in expenses in FY 2015 that boosted the state’s budget solvency ranking from 50th to 3rd. But this factor by itself does not mean Connecticut is fiscally robust. Connecticut continues to have weak metrics in other areas, including very low levels of cash, high liabilities, and high levels of debt relative to assets. Maryland joins the bottom five at number 46. The state’s cash position is weak, with cash covering between 55 percent and 148 percent of short-term obligations. Maryland’s revenues exceeded expenses by 1 percent. On a long-run basis, Maryland’s fiscal metrics point to the state’s reliance on debt to finance its operations. Longterm liabilities are 94 percent of total assets. Noncurrent liabilities amount to $39 billion and assets totaled $41 billion in FY 2015. The largest noncurrent liabilities include $16.5 billion in bonds and notes and $24.0 billion in unfunded pension obligations....

The comments about Connecticut’s lack of fiscal robustness, despite its large tax increase, are especially compelling in that we know, two years later than the data analyzed in the report, that the state’s large tax hike two years earlier has failed to generate sufficient revenue to keep it out of the fiscal doghouse. That’s a significant result in that it provides confidence that Mercatus report’s overall methodology for assessing each state’s fiscal health is sound. Two years from now, we can reasonably expect that Connecticut will rejoin the fiscal basement dwellers.

You can find out more about how your state fared in this year’s rankings in the report.

More Change Taxpayers Can’t Believe In

Friday July 14th, 2017   •   Posted by K. Lloyd Billingsley at 3:20pm PDT   •  

As we noted, California taxpayers were the first to pay for the sexual-reassignment surgery of a violent criminal, Shiloh Heavenly Quine, who as Rodney Quine gunned down Shahid Ali Baig, a father of three, then stole his car. Taxpayers nationwide have also been footing the bill for sex-change surgery, and Congress just decided that they will continue to do so.

The Obama administration required the Pentagon to pay for soldiers’ gender-transition surgeries and ensuing hormone therapy. According to Rep. Vicky Hartzler, Missouri Republican, such surgery could cost the military $1.3 billion over the next decade. The surgery involves months of recovery time, during which the patients are undeployable and unable to do their jobs. Hartzler offered an amendment to the annual defense-authorization act that would forbid the military from spending money for medical treatment related to gender transition. On July 13, a full 24 Republicans joined Democrats to shoot down the amendment, which Democrats called a bigoted attack on diversity, and so forth. Taxpayers might take a few other factors into account.

The U.S. military has one job, to defend the nation and win wars. There is no right to join the U.S. military, which has age requirements and other standards. Once in the military, nobody has a right to sex-change surgery, a costly construct and an elective procedure. In reality, nothing can be a right that puts mandates and costs on other people. Putting taxpayers on the hook for sex-change operations does nothing to enhance the military’s capability to fight, win, and protect the nation. It is therefore military waste, and Congress just ensured that such waste will continue. That is a bad deal for taxpayers, just like those M-1 tanks the generals don’t find useful but that Congress wants to keep buying.

Meanwhile, Shiloh Heavenly Quine has been transferred from Mule Creek, a tough men’s prison, to the women’s prison at Chowchilla, where life will be much easier. And thanks to judge Jon Tigar, a one-man robed politburo, taxpayers will now be springing for Shiloh Heavenly Quine’s jewelry and sartorial needs, right down to the bracelets, earrings, and “compression tops.” California leads the nation in the kind of change taxpayers can’t believe in.

The CBO Scores President Trump’s Proposed Budget

Friday July 14th, 2017   •   Posted by Craig Eyermann at 6:29am PDT   •  

The Congressional Budget Office has scored President Trump’s first budget proposal. In its report, the CBO finds significant reductions in the U.S. government’s annual budget deficits compared to their baseline estimates, which reflect their projections of how those deficits would have grown if the spending policies of the Obama administration had continued on autopilot.

Here’s how the CBO’s analysts summarized the effects of President Trump’s proposals on the budget:

Compared with CBO’s baseline projections, the deficit under the President’s proposals would be slightly larger in 2018, about the same in 2019, and smaller in each year between 2020 and 2027, according to CBO and JCT’s estimates (see Figure 1). The cumulative deficit from 2018 through 2027 would be reduced by $3.3 trillion from the $10.1 trillion in CBO’s baseline. . . .

As a result of those smaller deficits, debt held by the public would also be lower under the President’s proposals than under current law. Federal debt held by the public would equal 77 percent of GDP this year and would hover around 80 percent for most of the 10-year period. That ratio would be lower—about 11 percentage points of GDP lower by 2027—than the amounts projected in the baseline (see Figure 2).

The following chart shows the CBO’s newest projections for the publicly held portion of the U.S. national debt.

These two charts represent the most positive assessment of the U.S. government’s fiscal outlook that the CBO has provided regarding both deficits and the national debt in over eight years.

There is a downside in the CBO’s analysis in that its projection of the future for the publicly held portion of the nation’s total public debt outstanding will require faster economic growth to achieve. Since economic growth is not something that can ever be dictated from Washington, D.C., that portion of the new projections is not guaranteed.

However, Washington, D.C., can dictate exactly how much the federal government will spend, where the president’s plan to slow the growth rate of that spending can most certainly achieve the CBO’s projections for the government’s reduced budget deficits.

The deficit reduction under the President’s proposals would stem from lower spending. The 10-year decrease of $4.2 trillion (or 8 percent) from amounts in CBO’s baseline would result from the following changes:

  • A decrease of $2.0 trillion in mandatory spending (which is spending for programs generally governed by provisions of permanent law), including a $1.9 trillion reduction in spending for health care, as well as cuts to income security programs and student loans;
  • A decrease of $1.9 trillion in discretionary outlays (which result from funding provided or controlled by annual appropriation acts) stemming from substantial reductions in nondefense discretionary spending and from sharply lower outlays for military operations and related activities in Afghanistan and elsewhere (known as overseas contingency operations, or OCO); and
  • A decrease of $0.3 trillion in net interest costs because of lower deficits.

Outlays would average 20.7 percent of GDP from 2018 to 2027 under the President’s proposals. In CBO’s baseline, by contrast, outlays average 22.4 percent of GDP during that period. (Over the past 50 years, they have averaged 20.3 percent of GDP.)

The Trump budget could do more to ensure better outcomes for the U.S. government’s deficit and national debt by focusing on further restraining the growth rate of its spending to be lower than the growth rate of the nation’s economy.

After the past eight years, however, it’s nice to finally see CBO budget projections that don’t involve an exponential worsening of the U.S. government’s fiscal outlook.

Contract on Private Contracts

Wednesday July 12th, 2017   •   Posted by K. Lloyd Billingsley at 10:26am PDT   •  

California Assembly Bill 1250, authored by Los Angeles Democrat Reginald Jones-Sawyer, would restrict counties from contracting out for key services. The bill is sponsored by two of the most powerful government employee unions, the Service Employees International Union (SEIU) and the American Federation of State, County, and Municipal Employees (AFSCME). As the San Jose Mercury News editorialized, “the intent is clear: Increasing the number of public employees, who would be members of unions, rather than looking at outside services that could be more cost-effective.” The government unions “want to force all services to be provided directly by counties so that they will increase full-time staff.” Taxpayers should be aware of the back story here.

The measure comes billed as backed by “labor,” but this is not so. According to the Bureau of Labor Statistics, 84.1 percent of California workers, the vast majority, are not union members. Only 15.9 percent of workers, a small minority, are union members. So “labor” is not the same as government-employee unions, who nevertheless wield enormous clout with legislators. As we noted, the SEIU demonstrates outside the California capitol proclaiming, “This is our house!” Government employee union bosses such as Bruce Blanning of Professional Engineers in California Government proclaim that contracting out for services wastes taxpayer dollars. As the Mercury News contends, the reverse is true.

Many California cities and counties, “weighed down by mounting retirement and benefit costs, are barely keeping their heads above water.” The “onerous” AB 1250 “could push some of them under.”

Therefore, “Local government leaders should be free to find the best services for the best price. They shouldn’t have to hire government workers for projects that are temporary or services best provided by the private sector.”

Quotas Crash the Lobby

Tuesday July 11th, 2017   •   Posted by K. Lloyd Billingsley at 4:58am PDT   •  

Lobbyists seldom get much sympathy from taxpayers, but that could soon change. According to a report by Taryn Luna of the Sacramento Bee, the Asian Pacific Islander, Black, Jewish, Latino, LGBT and Women’s caucuses in the California legislature “are asking lobbying firms to provide them with demographic data – including race, ethnicity, gender and openly gay or lesbian orientation – on their employees.” Supporters bill it as part of the “worthy cause” of making California’s workforce representative of its residents and a “courageous” effort to expand the conversation about “cultural diversity.” It’s actually an example of ignorance and intrusion.

In 1996 California voters approved Proposition 209—also known as the California Civil Rights Initiative—by a margin of 54 to 46 percent. This measure ended racial, ethnic, and gender preferences in state-college admissions, state employment, and state contracting. The six caucuses are apparently unaware of this state law, which bureaucrats and politicians have fought from the beginning. California has always been culturally diverse, but “diversity” is now code for the politically correct orthodoxy that all institutions must reflect the ethnic breakdown of the populace. Diversity dogma empowers politicians and bureaucrats to claim that there are “too many” members of certain ethnic groups at UC Berkeley, for example. This ignores personal differences, effort and choice, and because of those variables, politically correct proportional is nowhere evident.

The quota surge disturbed lobbyists such as Jim Cassie, who looks for good communicators, regardless of ethnic considerations. Loyola Law School professor Jessica Levinson wonders: “Is the government forcing companies to hire people they otherwise wouldn’t want to, to make sure they are seen with favor from lawmakers?” In her view, the caucuses gambit is “absolutely designed to exert pressure on hiring practices. I don’t think that this is the Legislature’s role.” Levinson is right about that. This is government intrusion based on ignorance and politically correct dogma. That’s why, as lobbyist Jim Cassie told the Bee, “This is something that goes straight to the trash can along with the Reader’s Digest sweepstakes.”

Illinois Now Has a Budget, and a Huge Backlog of Bills to Pay

Monday July 10th, 2017   •   Posted by Craig Eyermann at 6:15am PDT   •  

39119067 - extreme close-up of past due bill envelope After going over two years without any kind of fiscal plan, Illinois’ state government now has a budget after the state’s legislature overrode a veto by the state’s governor to impose large tax increases on the incomes of the state’s residents and corporations. Unfortunately, Illinois’ legislature made no effort to address the state’s biggest liabilities.

The Quad-City Times has the story:

Illinois finally has a budget plan after two years. Now, to start paying bills.

The Democratic-controlled Legislature’s vote last week to create a $36 billion framework over Republican Gov. Bruce Rauner’s vetoes ended the nation’s longest fiscal stalemate since at least the Great Depression. At the core of the budget was a $5 billion income tax increase.

The tax hike is retroactive to July 1, and the state could start seeing some additional money within weeks. But after unchecked “autopilot” spending that outstripped incoming revenue by $600 million a month, Illinois has a $14.7 billion jumble of overdue bills.

The tax increase also does nothing to directly address the haunting, $130 billion shortfall in pension obligations to retired and current state workers.

Illinois’ legislature pushed through the tax increase specifically to avoid the fate of becoming the first U.S. state to have its credit rating cut to “speculative” or “junk” status. However, even after it budget passed its first hurdles toward becoming law, at least one major credit rating service notified the state that it was reviewing the state’s credit for a potential downgrade. Bloomberg‘s Elizabeth Campbell reports on the continuing risk that Illinois faces because the state legislature failed to enact reforms to fix its deteriorating long term fiscal situation:

Illinois is at risk of becoming the first junk-rated U.S. state on record even if lawmakers overturn Governor Bruce Rauner’s veto and enact a budget, Moody’s Investors Service said.

The state’s rating, one step above speculative grade, is “under review for possible downgrade” after Illinois’s leaders failed to enact a “timely budget” and come to a political consensus over how to solve the state’s financial challenges, Moody’s said in an emailed statement on Wednesday. The Senate overrode Republican Rauner’s veto of budget bills, including a $36 billion spending plan and tax hike, on Tuesday, and the House is scheduled to vote on override measures on Thursday.

The budget “appears to lack broad bipartisan support, which may signal shortcomings in its effectiveness once implemented,” Moody’s said. “So far, the plan appears to lack concrete measures that will materially improve Illinois’ long-term capacity to address its unfunded pension liabilities.”

In the short term however, the passage of a budget in Illinois has reduced the cost of borrowing to the state over what it had risen to in recent weeks. Compared to other, more fiscally solvent states however, it still costs Illinois over twice what they pay in interest rates for their general obligation debts.

A large portion of the state’s $36 billion budget will go toward paying its $15 billion backlog of unpaid bills.

Under the state government’s new budget, it will only pay down one-third of its balance of unpaid bills during the next year. At the same time, nearly $8 billion (over one-fifth) of the state’s budget will go toward paying the generous retirement benefits of current and former state government employees, while it is unclear if the state will have enough money to open its public schools on time for the 2017-2018 school year that is scheduled to begin next month.

Budgets are about priorities. Illinois’ new state government budget reflects the priorities of the state’s legislators, regardless of whether or not they are the same or are very different from those of the state’s residents.

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