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Re: Pigs at the trough - yvonne - 11-09-2010

UC and CSU are raising tuition again. I don\'t think she dares utter a word.

Re: Pigs at the trough - washingtonismoney - 11-09-2010

To be fair--and this is unrelated to whether you believe athletic departments should be maintained at their current subsidy levels--state funding to universities has been going down as a proportion of GDP for a while now (in California, it\'s been going down in favor of prisons and Medicare; in most states, it\'s just Medicare that\'s so voracious). So while I don\'t believe college athletics need to be funded by the state any more lavishly than today, it\'s not unfair to blame  the current parlous state of state university finances on insufficient governmental support.

Re: Pigs at the trough - gbiddulph - 11-09-2010

Interestingly, Oregon taxpayers voted to give themselves a tax increase last year.  This year, Washington taxpayers refused to institute a state income tax.

The amount of money thrown at higher education (mostly public but some private) simply cannot continue.  California is bankrupt, and many other states are not far behind.  As a nation we need to look at other models of educating our children -- the big, lavish public education factories are the dinosaurs of our age.

As a football fan, it makes me sad to write that, but as a taxpayer it makes me hopeful.

Re: Pigs at the trough - jayasena - 11-09-2010

Quote:The amount of money thrown at higher education (mostly public but some private) simply cannot continue.  California is bankrupt, and many other states are not far behind.  As a nation we need to look at other models of educating our children -- the big, lavish public education factories are the dinosaurs of our age.

Of all the things state money is spent on, higher education (and education in general) is the easiest to justify and the closest thing to an investment. Note that I\'m not referring to athletics here.

Re: Pigs at the trough - Pastor - 11-09-2010

FIC wrote
Quote:Interestingly, Oregon taxpayers voted to give themselves a tax increase last year

Not quite, they voted to give the top 3-4% in income and most small businesses a tax increase.

Don\'t tax you, don\'t tax me...tax the man behind the tree.

Also note that since the tax passed (and became effective), state tax revenue has fallen and charitable giving has declined.

Re: Pigs at the trough - yvonne - 11-09-2010

Quote:
Quote:The amount of money thrown at higher education (mostly public but some private) simply cannot continue.  California is bankrupt, and many other states are not far behind.  As a nation we need to look at other models of educating our children -- the big, lavish public education factories are the dinosaurs of our age.


Of all the things state money is spent on, higher education (and education in general) is the easiest to justify and the closest thing to an investment. Note that I\'m not referring to athletics here.


I\'m shocked that anyone on this board would think otherwise.


Re: Pigs at the trough - gbiddulph - 11-10-2010

Pastor, thanks for that information on the Oregon tax.  Isn\'t it interesting how the rich find a way not to pay higher taxes?  That has been the way of the world for millennia.

I would agree that higher education is a better investment than many other things.  But I don\'t think the extent of the coming state budget crises, caused by excessive government, has really sunk into the consciousness of most people.  Perhaps in 2011 as Jerry Brown attempts to balance the California budget and fails and talks about scary cuts -- and then raises taxes on "the rich" until another million or so upper middle class people leave California -- will start the process of reality sinking in.

The current model of large public institutions paid for by taxpayer sudsidies cannot be maintained indefinitely in most states unless at least 1 of 2 things take place (and probably both):  1)state benefits to government workers and K-12 teachers are massively cut or 2)state Medicaid payments are massively cut.  Go look at the state budget of your average Pac-10 state, the growth rate of Medicaid payouts and education payouts and then ask yourself how long the current model can last.  Something has to give.

Until now, the solution has been to raise taxes on "the rich," which really means the upper middle class because the truly rich find ways not to pay higher taxes by, for example, moving their primary addresses to Jackson Hole or Sun Valley when California raises taxes.  As Pastor points out, Oregon raised taxes on the rich but revenues didn\'t increase.  That solution will not work long-term because the taxpayers then move out.  I believe California has lost 1.5 million people (most of them in the middle class to upper middle class range) in the last decade.

Re: Pigs at the trough - raja - 11-10-2010

I was curious to see how various expenditures have changed over time.  One thing that popped out was the change in spending on prisons vs. higher education over time.

(from http://www.lao.ca.gov/reports/2010/edu/educ_prisons/educ_prisons_012610.aspx)

Over 25 years (from the 84-85 budget to the 09-10 budget):
- spending on higher education (the UC and CSU systems combined) decreased by about half: from 11% of the state budget to 5.7% - a total of $4.9 billion in 09-10
- spending on prisons more than doubled: from 4% to 9.5% of the state budget - a total of $8.1 billion in 09-10

I don\'t argue about the concept of excess government per se... but it is interesting to note where the \'excess\' really has grown.

- MC

P.S. More food for thought:
The skyrocketing cost of healthcare has reached the prison system as well: California spends approximately $2 billion/year on health care costs just for its prisoners (about 40% of the entire expenditure from the state for the UC and CSU systems combined).  This works out to ~$11,600 per prisoner.  New York, for point of reference, spends $5,757.  Texas $2,920.  And no - it is not clear that they are getting better care; a lawsuit in 2006 that found medical conditions so deplorable that the entire system was put under court receivership.

Re: Pigs at the trough - fullmetal - 11-10-2010

One might wonder about the relationship between prison industry lobbyists and the state government.  That relationship has come under fire recently in Arizona when it was implied that the legislative bill regarding immigrants and papers might have been sponsored specifically to boost jail populations.

Re: Pigs at the trough - Pastor - 11-10-2010

FIC

There\'s a study by Boston College when NJ instituted their \'millionaire\'s taxes\' that shows that $40 billion in assets moved out in 4-5 years.

The folly of what Oregon did is that the state of Washington, just next door, has no income tax.  Oregon has a pretty stiff income tax but no sales tax (WA has a sales tax).

In any event, under Christy in NJ, we have a great natural experiment between NJ and ORE.  NJ has lowered taxes and ORE has raised them...now we\'ll be able to see what it does in each situation.  Though the comparisons are not perfect, they\'re close.

We\'ll also be able to see about employment, charitable giving and investment.  In a couple of years, we\'ll have our empirical answers.  It should be interesting.

Re: Pigs at the trough - gbiddulph - 11-10-2010

Pastor, I agree with you.  There is another test taking place right before our eyes:  California and Texas.  California is trying the "European welfare state" model, which is high taxes and high benefits.  The results:  12 percent unemployment and govt unions sucking the state dry.  The middle class is fleeing California by the millions.  I hope Jerry Brown has the guts to change that unworkable dynamic, but I think I have great reason to believe he will change nothing except to increase the volume of California\'s cry for bailouts.

Texas meanwhile has followed the "low taxation, low benefit" model.  There is no state income tax in Texas.  Texas\' unemployment is near 7 percent, and the state is growing and booming.  Hundreds of businesses and hundreds of thousands of people are moving there from other states.  It seems to me the results are already in.

When it comes to higher education at public institutions (which affects 10 of the 12 universities in the Pac 12), I cannot see any future in which the current model is sustainable.  We are already seeing that at Kal and elsewhere with the cancellation of various sports programs and the increase in tuition.  This is only the beginning, imho.



Re: Pigs at the trough - Pastor - 11-10-2010

FIC:

You\'re right...as a native Californian (born in Sacramento), I have watched with growing sadness as California has become hostile to business and a morass for those living there.  I don\'t see any recovery for a long, long time.  I still do a lot of consulting down there but my clients (all business people) are pretty fed up with the atmosphere and self-righteousness of the governments (i.e. San Francisco for banning toys in Happy Meals arguing that parents don\'t know what\'s best for their children).

Reward systems work and so do punishment schemes.  No way I would start a business in California...no incentives but plenty of disincentives.

Re: Pigs at the trough - jayasena - 11-10-2010

Quote:I would agree that higher education is a better investment than many other things.
Then the answer is simple. Yes, government spending is out of proportion to incomes but the cuts should come elsewhere first. As MassillonCardinal pointed out with a specific example, there are other areas of state spending that have grown far more unmanageable (and IMO, unjustifiable).

Sacrificing the one aspect of the American education system that\'s still competitive with the rest of the world doesn\'t seem like the smartest move to me.

Re: Pigs at the trough - gbiddulph - 11-10-2010

Sonambule, I don\'t necessarily disagree with you.  But when you\'re talking about cutting either a)k-12 education b)taking on state employees\' unions c)cutting prisons and d)cutting Medicaid, or e)cutting higher education, and you probably need to cut at least three of the five to make budgets balance, the choice is complicated.

Re: Pigs at the trough - jayasena - 11-10-2010

Quote:Sonambule, I don\'t necessarily disagree with you.  But when you\'re talking about cutting either a)k-12 education b)taking on state employees\' unions c)cutting prisons and d)cutting Medicaid, or e)cutting higher education, and you probably need to cut at least three of the five to make budgets balance, the choice is complicated.

K-12 education is pretty dismal as it is. That needs major reform which should include how it\'s financed. Look no further than GM to see the end result of unsustainable unions (state or otherwise). Prison system in CA and the US in general is a disaster for people in and out of it. Medicaid cuts are only necessary because the cost of healthcare is ridiculously high -- and that needs to be addressed for various reasons (including business competitiveness).

This is only complex because of entrenched interests. Not from a logical point of view.

Re: Pigs at the trough - Pastor - 11-10-2010

GG:

It is good, I think, that you will cut higher ed before cutting cops and prisons...because if you cut higher ed, you\'ll need more cops and prisons.


To me it is not the budget but the way the budget is spent that\'s critical.

We all agree that education, safety, health care, employment are all basic human rights.  We just have to grow the revenue to provide for all and get rid of the sacred cows that bedevil the budget.  This is why the NJ/OR experiment is key.  Does cutting tax on the wealthy and business (a la Laffer) or increasing taxes provide the most revenue over the long term?

One might also argue that businesses pay no taxes, they just collect them from their customers.  But either way a definitive, emplirical answer would be good to have.

Re: Pigs at the trough - 97fan - 11-10-2010

I don\'t know the specifics of the state of Oregon\'s budget, but I\'d be willing to bet that if there has been a decline in revenues following an upper-income tax increase, it\'s the result of the nation\'s worst recession in decades, rather than the result of the tax increase. It is obviously true that as tax rates increase, they will eventually result in less government revenue, but tax rates would have to be very high for this to happen, probably somewhere over 80 percent. Tax rates in the U.S. are nowhere near the level necessary, despite GOP talking points to the contrary.

I would add that Pastor and Fan In Colorado seem to overestimate the impact that tax rates have on where people choose to live. Lots of people live in high-tax states such as California and New York because they have economic opportunities in those states that they wouldn\'t have elsewhere, and the additional taxes they pay do not cancel out the additional income they\'re making. Taxes are lower in Texas than they are in California, but so are salaries. Per capita income in Texas was $36,484 in 2009; in California it was $42,325.

I am not denying that California has enormous problems. The initiative process has gradually strangled the ability of the state government to deal with the state\'s problems. Eventually something has to give. But even on a per capita basis, California is still a much stronger economic engine than Texas. Fan In Colorado talks about the middle class fleeing California by the millions, but California is a highly mobile state. People come and go. Overall the state\'s population has continued to increase. And over the last 20 years, California has remained in somewhere in the range of 10th in the nation in per capita income -- it\'s been as high as 7th and as low as 13, but there\'s no clear trend in either direction.

Lastly, Fan In Colorado notes that Texas\' unemployment rate is near 7 percent -- it\'s actually 7.9 percent -- while California\'s is 12.2 percent. Much of this difference likely has to do with the fact that Texas largely avoided the housing bubble that ended in 2006, while California was one of the bubble\'s epicenters. Ironically, a key reason that Texas avoided the housing bubble is that it has some of the strictest mortgage rules in the nation; for example, there are restrictions on cash-out re-financings, which were a key driver of the housing boom in other Sun Belt states. The mortgage rules in Texas are a relic of the 19th century, and a rare instance where Texas embraces the idea that the government plays an important role in regulating the economy.


Re: Pigs at the trough - washingtonismoney - 11-10-2010

One addition to our budget problem situation: it\'s mostly health care-driven. The U.S. spends far more than its developed-world peers on health care, and spending has been accelerating faster than its peers also. The product of all this spending is worse health care.

If you\'d like to solve budget deficits, the place to start is health care, not higher ed. (Also, if you\'d like to solve stagnant wages and poor public health, health care is an excellent place to start too.)

Re: Pigs at the trough - Pastor - 11-10-2010

97 Fan:

It is not I that overestimates the result of taxes on the wealthy...I refer you to the empirical evidence in the Boston College study that showed after an increase in the higher brackets, $40,000,000,000 left NJ in 4 years to go to no tax states.  Monte Carlo and other tax havens are built on this premise.

Rather than opinion, I would always rather have data.  That is also why the NJ/OR natural experiment is so important...surely you wouldn\'t argue that one location was influenced by the recession and the other was not?

Yes the recession hurt revenues but the onset of the recession and the tax increases were at different times.  And as long as the effects of the recession can be controlled for (a relatively easy statistical correction), the influence of the tax on the wealthy can be seen.

Again, data is more important to me.

Re: Pigs at the trough - washingtonismoney - 11-10-2010

Pastor:

The data may be important to you, but it\'s important to note that natural experiments may be few and far between and hence the same datum might be heavily influenced by context and mean several different things. You cite the examples of Monte Carlo and other such small countries, but whatever the state of tax law, New York City and surrounding environs have been packed full of rich people for a long while now. Why? Because for many rich people, the only and best place to do business and play is New York. For all of California\'s problems with regulations, et. al., startup funding to Silicon Valley increases more than apace. Why? Because the best place to do a startup is in Silicon Valley (and the reason the best place to do startups is in Silicon Valley has to do with it being a medium-tax, high-services jurisdiction; similar things can be said about New York).  

Is there a point in which rich people or any people will flee for lower-tax jurisdictions? Of course. But top marginal taxes have been has high as 90%, during the Eisenhower years, and the economy was doing swimmingly back then, so the anti-tax story has to get a lot more nuance than lower-is-better.

It would probably be a benefit to the country if the tax debate could get more nuance than that, as the current tax regime, with its implicit subsidies and loopholes, is very bad and could and should be fixed with significant benefits to the economy.