It is getting to be crunch time for state legislators looking to establish the budgets for their state governments across the U.S. With most states following a fiscal year that starts on July 1 and runs through June 30 of the following year, the clock is ticking down for determining how each will spend the tax money and other revenue that they will collect over the next year.
Unfortunately, each U.S. state government’s budget is coming to be dominated by two line items over which state legislators have very little influence. The Wall Street Journal‘s Cezary Podkul and Heather Gillers report:
As state and local officials prepare their next budgets, many are finding that spending decisions have already been made for them by two must-fund line items that barely mattered when baby boomers such as Mr. Leavitt were growing up: Medicaid, the state-federal health insurance program for the poor and disabled, and public-employee health and retirement costs.
These days, they consume about one out of every five tax dollars collected by state and local governments. That is the highest share since Medicaid was created in 1965. Postretirement health benefits, which are harder to quantify, add to that burden and have cumulatively cost states more than $100 billion since 2008, according to government financial disclosures compiled by Merritt Research Services.
Those costs are outpacing growth in tax revenue year after year. In 2016, state and local governments collected about $136 billion more in taxes than they did in 2008, adjusting for inflation. Two-thirds of those additional dollars went to fund pensions and Medicaid, according to a Wall Street Journal analysis of Commerce Department spending data.
“The more we stare at the data, the more we realize all roads lead back to Medicaid and pensions,” says Dan White, a director at Moody’s Analytics who has studied the issue.
The resulting revenue squeeze is making it harder for governments to pay for core services such as education, infrastructure, police and fire protection.
Until Medicaid is reformed and state and local government employee pensions are reined in to fiscally sustainable levels, an increasing number of states can expect to experience a budget crisis that will cause core services to be cut in 2018 and beyond.
As we noted, during the last three years the state of California has paid out more than $25 million to settle sexual harassment claims against state agencies and public universities. The payouts ranged from $500 to $1.7 million, and the state did not volunteer the information or make it easy to find. As usual, the problem is much worse than the state portrays.
As the Los Angeles Times reports, “California’s court system paid more than $500,000 over seven years to resolve sexual harassment complaints against judges and staff.” The court system paid $296,000 to resolve three complaints against judges and $225,000 to settle two lawsuits against court staff. Outside attorneys and investigators burned up a full $79,750 and the more than $500,000 in reported spending “is likely less than the actual cost to taxpayers of resolving sexual harassment complaints against judges and staff.” This is because “county courts can resolve such cases themselves without reporting to the statewide council,” which reveals no names. It has emerged, however, that one settlement involved Tulare judge Valeriano Saucedo, booted from the bench for inappropriate behavior with his clerk Priscilla Tovar. She’s not disclosing the amount of the settlement, but the deal has something in common with the more than $25 million state agencies and universities have paid out in the last three years.
Embattled California taxpayers picked up the tab for all of it. Until the state makes abusers take responsibility for their own actions, and comes clean with the public, nothing is going to change.
Shortly after 1:00 PM on Friday, March 23, 2018, President Trump signed the U.S. Congress’ omnibus discretionary spending bill, which authorizes the various departments and agencies that make up the U.S. government to spend $1.309 trillion through the end of its current 2018 fiscal year on September 30, 2018. The chart below shows where most of that money is going, as appropriated under each of the individual 12 spending bills that were collected into the omnibus spending bill, as compared to how much each category was allowed to spend in the 2017 fiscal year.
Every spending category recorded an increase that was faster than the 1.8% core rate of inflation from 2017 to 2018.
This chart only shows the discretionary spending portion of the U.S. government’s total spending, which is the part of the U.S. government’s budget that isn’t on autopilot. In addition to this $1.3 trillion, the U.S. Congress has previously mandated the U.S. government to spend an additional:
Altogether, the U.S. government will spend somewhere around $4.2 trillion during its 2018 fiscal year.
After signing the FY 2018 Omnibus spending bill, President Trump vowed that he would “never sign another bill like this again”. Alas, this kind of thing is business as usual in Washington D.C., where President Trump has yet to clarify how he intends to live up to that new vow.
March 22 is World Water Day but that may have escaped notice, particularly in flooded areas of the central United States. So what is this day about? According to the official site, it is about “exploring nature-based solutions to the water challenges we face in the 21st century.” As some readers may have noted, World Water Day is a proclamation of the United Nations, so it might be about a bureaucratic solution to water challenges. True to form, another UN Water Day site explains, “water is an essential building block of life. It is more than just essential to quench thirst or protect health; water is vital for creating jobs and supporting economic, social, and human development.” I mean, there had been a lot of confusion about all that until the UN cleared it up.
World Water Day is coordinated by UN-Water “the UN’s inter-agency collaboration mechanism for all freshwater related issues – in collaboration with governments and partners.” But wait, “there is no single UN entity dedicated exclusively to water issues. Over 30 UN organizations carry out water and sanitation programmes, reflecting the fact that water issues run through all of the UN’s main focus areas.” And water issues are at the heart of “recent milestone agreements” such as the UN Convention Framework on Climate Change.
Despite the 30 UN organizations, water is not evenly distributed between continents, countries, states, counties or even municipalities. Australia, a particularly arid nation, has achieved great success with a system of tradable water rights. Such water markets holds more promise for arid regions such as California than the vapors of a wasteful and unaccountable bureaucracy with an annual budget of $5.4 billion.
It was only a matter of time after the Bipartisan Budget Act of 2017 became law, but now, lawmakers on Capitol Hill are set to fully commit to a bipartisan budget for the U.S. government that, if anything, adds to what MyGovCost has previously described as President Trump’s “really ugly” budget proposal.
The Associated Press’ Andrew Taylor and Lisa Mascaro have the story of how something that was already going to be really ugly became even worse as legislators turned the spending knob up past 11:
Congressional leaders finalized a sweeping $1.3 trillion budget bill Wednesday that substantially boosts military and domestic spending but leaves behind young immigrant “Dreamers,” deprives President Donald Trump some of his border wall money and takes only incremental steps to address gun violence.
As negotiators stumbled toward an end-of-the-week deadline to fund the government or face a federal shutdown, House Speaker Paul Ryan dashed to the White House amid concerns Trump’s support was wavering. The White House later said the president backed the legislation, even as some conservative Republicans balked at the size of the spending increases and the rush to pass the bill.
Talks continued into Wednesday evening before the 2,232-page text was finally released.
“No bill of this size is perfect,” Ryan said. “But this legislation addresses important priorities and makes us stronger at home and abroad.”
Well, that’s an understatement, isn’t it?
If you’re inclined to attempt to read all 2,232-page text of the omnibus budget deal, here it is in all its glory, provided that you define glory as meaning an absence of fiscal discipline.
Mike DeBonis, Ed O’Keefe and Erica Werner of the Washington Post take on the challenge of describing “what Congress is stuffing into its $1.3 trillion spending bill”:
The “omnibus” appropriations bill doles out funding for the remainder of fiscal 2018 — that is, until Sept. 30 — to virtually every federal department and agency pursuant to the two-year budget agreement Congress reached in February. Under that agreement, defense spending generally favored by Republicans is set to jump $80 billion over previously authorized spending levels, while domestic spending favored by Democrats rises by $63 billion. The defense funding includes a 2.4 percent pay raise for military personnel and $144 billion for Pentagon hardware. The domestic spending is scattered across the rest of the federal government, but lawmakers are highlighting increases in funding for infrastructure, medical research, veterans programs and efforts to combat the opioid epidemic. Civilian federal employees get a 1.9 percent pay raise, breaking parity with the military for the first time in several years.
Oh, but it’s worse than that. Many of the agencies that were specifically targeted for spending cuts by the Trump administration will instead either see their funding hold level or rise. That outcome means that a bipartisan coalition of U.S. politicians are unwilling to meaningfully restrain some of the most wasteful aspects of federal spending that provide very little value to U.S. taxpayers, that in many cases, count as little more than corporate welfare or bureaucrat employment programs.
The U.S. Congress will be voting over the next two days to pass the bill before sending it to the Oval Office for President Trump’s signature.
As we noted the estimated cost to build California’s bullet train from San Francisco to Los Angeles has doubled to $77.3 billion and could almost triple to $98.1 billion. Governor Jerry Brown is now on record what he thinks of it. “This is bullshit,” he told reporters in Sacramento on March 19. “I’m so tired of all the nonsense that I read in the paper and you hear from other politicians.” The governor did not explain which figures were “nonsense” or whether he believed the train’s cost were too high. On the other hand, he did seem to know where the money was. “I’ll tell you how we’re going to fund the railroad,” the governor said. “We’re going to take back the Congress and then a Democratic Congress is going to put the high-speed rail in the infrastructure bill and then we’ll get that trillion dollars and we’ll put America back to work.”
Few if any California taxpayers are panting for a train that will be slower and more expensive than air travel. Brown also wants some $16 billion to dig a massive tunnel under the San Joaquin-Sacramento River delta. Yet, the governor opposes a $1.3 billion project to expand Shasta Dam, citing environmental impacts and flood risk. The water tunnel and bullet train would wield far greater environmental impact, but that is of no concern to a tax-and-spend hereditary governor in search of a legacy. If the state’s embattled taxpayers were to say they are “tired of all the nonsense” from this guy it would be hard to blame them. As for his quest to “put America back to work,” taxpayers might recall that Jerry Brown ran for President of the United States in 1976, 1980 and 1992 and failed all three times.
The U.S. government’s total public debt outstanding now exceeds $21 trillion, having crossed that milestone just one week after MyGovCost marked the occasion of $1 trillion having been added to the national debt under President Trump.
What might surprise you however is that this has happened even as the U.S. government has collected more in taxes than it ever has before. The following chart shows the federal government’s cumulative monthly revenue totals for each of its fiscal years from 2015 through 2018, as calculated from data provided by the U.S. Treasury’s monthly statements, where the data for its current 2018 fiscal year is only available through February 2018 at this time.
Meanwhile, the next chart shows where the real problem of the rising national debt originates: the U.S. government’s excessive spending.
In 2018, the U.S. government is on track to have one of its most fiscally unbalanced years ever.
“Our country is infuriated by the lack of action taken by Congress to combat the gun violence epidemic in America,” says Sen. Martin Heinrich, New Mexico Democrat, who is calling for “repeal of the Dickey Amendment,” a 1996 measure that restricted the federal Centers for Disease Control from spending public funds to research what Heinrich calls “gun violence and its effect on public health.” And “lifting this ban will finally allow scientists to research solutions and give lawmakers the tools to make fact-based decisions on how to prevent the next tragedy.” Taxpayers have good reason to be wary.
One champion of more government spending is Garen Wintemute, director of the UC Davis Violence Prevention Research Program, which gets $5 million in state funding. As Wintemute explained, the first project would be “a survey that looks at who owns guns, why they own them and how they use firearms.” In Gun Control in the Third Reich: Disarming the Jews and “Enemies of the State” author Stephen P. Halbrook compiled data on the way Adolph Hitler’s Germany restricted firearms. The Nazis also wanted to know “who owns guns” and they ruthlessly suppressed firearm ownership by disfavored groups. Californians have good cause to wonder if California’s new gun laws, with their heavy-handed restrictions and database of ammunition owners, resemble in any way the gun laws of National Socialist Germany.
Wintemute and Heinrich might try this experiment. See if they can get the police to their house faster than a pizza. The basic issue here is not public health but criminality, and spending more on the already bloated $5.6 billion CDC will have little if any effect on violent criminals, who do not obey gun laws. Taxpayers might also recall Major Nidal Hasan, the Army psychiatrist who in 2009 at Fort Hood used privately purchased handguns to murder 13 unarmed soldiers and wound more than 30 others. The Obama administration called this “workplace violence.” The politically correct “gun violence” is every bit as absurd.
As we noted in January, costs for Jerry Brown’s vaunted high-speed rail project jumped by $2.8 billion to $10.6 billion, just for the stretch from Madera to Bakersfield. “It’s horrifying when you look at the amount of money we’re going to have to reinvest to make this program work,” exclaimed bullet-train board member Ernest Camacho. For their part, taxpayers now have more reason to be horrified.
As Breitbart News reports, “the ‘Base Case’ estimated cost to build California’s bullet train from San Francisco to Los Angeles has doubled to $77.3 billion, and could almost triple to $98.1 billion.” These figures come from official estimates, with per-mile estimates ranging from $155 million to $196 million. As the piece recalls, politicians sold the project as the 2008 Proposition 1A, promising “a bullet train for $37 billion that would whisk 120,000 riders per day in 2 hours and 40 minutes from L.A.’s Union Station to San Francisco’s Transbay Terminal for a fare of just $55.” In reality, the project would be slower and more expensive than air travel. As we have noted in many posts, right from the start this train was all about spending.
California High-Speed Rail has established a Sacramento headquarters and three regional offices. So the Authority works well as a comfy sinecure for ruling-class retreads like board member Lynn Schenk, a former congresswoman and chief of staff for governor Gray Davis. High-Speed rail has also been handing out no-bid contracts, one for $3 million, part of a similar noncompetitive pattern in state government. The day of the $2.8 billion hike, High-Speed Rail announced the hiring of new CEO Brian Kelley, secretary of the California State Transportation Agency, at a salary of “nearly $385,000.” So with total costs now nearly $100 billion, and completion of the project increasingly unlikely, bureaucrats and politicians are still all aboard.
It’s official. In the time since he was sworn into office on January 20, 2017 through Thursday, March 8, 2018, the U.S. government has managed to rack up another trillion in national debt under President Trump.
If there’s a silver lining to be found in this state of affairs, it is perhaps that President Trump hasn’t yet accumulated debt as fast as his predecessor did while he was in office. It took President Trump 412 days after being sworn in to pass the trillion dollar milestone for the national debt, whereas it took President Barack Obama just 192 days after he was sworn in, which was largely made possible by the massive, and largely ineffective, economic stimulus bill he signed into law in February 2009.
It’s also slower than President Obama’s last year in office, when it took a full year to add another $1 trillion (President Obama’s ninth) to the U.S. total public debt outstanding.
Thanks to the Bipartisan Budget Act of 2018, which President Trump signed into law in February 2018, we can look forward to many more trillion dollar milestones over the next several years.
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