Understanding Government

Nicholas Kristof had a thought-provoking piece over the weekend in the New York Times pointing out how reckless politicians are hurting America from within:

The biggest threat to America’s national security this summer doesn’t come from China, Iran or any other foreign power. It comes from budget machinations, and budget maniacs, at home.

Motivated by ideology rather than practicality, some members of Congress are blind to the way their position will actually make America weaker, and how their “budget-cutting” stance will actually end up forcing the government to spend more (to finance debt payment at higher interest rates, for one). (more…)

Pat Quinn

Illinois Gov. Pat Quinn will once again use state money to extend Put Illinois to Work, which started as a stimulus bill program — that created 26,000 temporary jobs –  before federal funds ran out at the end of September. Quinn spent $75 million then to keep the program going and he will spend $47 million more for a 2nd extension running six weeks, the Associated Press reports. In Put Illinois to Work, the federal, and now state, government subsidizes entry-level jobs in the private sector for residents 200 percent below the federal poverty level. The jobs typically pay $10 an hour.

Quinn has prioritized the state’s employment problems even at a time of record budget deficits. (more…)

The odds are 1-3 that California legislators won’t put up with some of Gov. Schwarzenegger’s proposed cuts to basic services. Christina Jewett of the Center for Investigative Reporting’s California Watch focuses in on plans to shave $1.2 billion from the state’s $19 billion deficit by eliminating California’s welfare-to-work program, CalWorks. The cut in state funding would trigger the elimination of $3.7 billion in federal funding. If those figures pan out, advocates won’t have a difficult job convincing the legislature to cut off this proposal at the knees. A three for one federal-state funding match is hard to argue against. (more…)

The New York Times editorial page takes a look at the loopy one-year repeal of the estate or “death” tax that will happen in 2010. The one-year repeal will result in smaller estates being taxed but estates that are worth millions not being taxed. Also, there is no — literally zero –  capital gains tax on inherited property, even if its value has increased by millions of dollars.  “The bottom line is this,” the Times opines. “there will be many more losers than winners under estate-tax repeal, and the losers will be among Americans who are farther down the wealth ladder.”

The one-year repeal of the estate tax is a legacy of the George W. Bush administration tax cuts that were completed during a budget surplus and Republican majorities in the House and Senate. I know tax reform is not quite the priority for Barack Obama that it was for Bush. But, according to the conventional wisdom, a top priority in 2010 for the Obama administration and the Democratically-controlled Congress is reducing the trillions dollar deficit. Undoing Bush’s tax cuts, especially for the rich, won’t come close to wiping out the deficit. But it would be a good start.