August 4th, 2011
by John Hood
RALEIGH – If you want to understand why the fiscal politics of Raleigh and Washington got so heated this summer, you have two choices.
One is to delve deeply into the details of each Democratic and Republican proposal to balance government budgets. I’m certainly not going to dissuade you from doing so. For North Carolina’s budget, the John Locke Foundation offers you some handy spades and shovels.
Another way to examine the issue, however, is to stay general and conceptual. At its core, what the debate is really about is whether our fiscal problems are driven by too much spending or too little revenue.
As I have previously observed, there is some evidence for both propositions. At the federal level, for example, expenditures as a share of gross domestic product have been way above the historical norm for several years. Score one for the GOP. But it’s also true that federal revenues as a share of GDP have been significantly below the historical norm. Score one for the Dems.
The reason the conservatives ultimately have the better argument here is that if you turn your attention away from the 2008-11 period, looking at historical trends back in time and at fiscal projections forward in time, you will see that budgetary balance is impossible without spending restraint. It is possible without tax hikes.
Recessions make deficits bigger in two ways. First, they lead to spending increases on programs such as unemployment compensation. Second, they lead to lower-than-expected revenues because some taxpayers lose their jobs and others lose enough income to fall into lower tax brackets.
When the economy recovers, these effects on state and federal budgets will dissipate. Higher employment will bring somewhat-lower expenditures and somewhat-higher revenues.
In Washington, the longtime trend has been a persistent gap between historical rates of revenue collection (between 18 percent and 19 percent of GDP) and historical rates of spending (between 20 percent and 21 percent of GDP). There was a brief period of operating-budget balance in the late 1990s, driven primarily by Pentagon cuts and dot.com-era tax collections. The economic and national-security events of 2000 to 2003 ended both phenomena.
At the current, Bush-era tax rates, federal revenues were at the historical norm as recently as 2007. Economic recovery will, in other words, bring us back to that level without having to jack up federal tax rates.
But on the spending side, most of the deficits projected for the next two decades reflect growth in Medicare, Medicaid, and other entitlements that are not closely tied to the economic cycle. Economic recovery won’t change the forecasts much.
To broaden the picture a bit, remember that a significant share of federal borrowing over the past two decades has really been to finance state and local spending – thus evading balanced-budget requirements at those levels of government. That means that we really ought to be thinking about the total burden of government taxes and spending.
According to data from the Tax Foundation, Americans will pay about 28 percent of their personal income in total taxes in 2011. That’s the average. Poorer households will pay less (around 16 percent to 20 percent is a reasonable estimate) and wealthier households will pay more (about 29 percent to 31 percent), with middle-income households paying somewhere between 20 percent and 25 percent.
Keep in mind that these statistics are for taxes alone. Government imposes other costs on households, such as regulatory compliance and fees. But for now, let’s focus on the tax measure.
If you compare the overall 2011 tax burden, 28 percent, to past levels, you can certainly see it as a recessionary drop. In 2006 and 2007, for example, taxes totaled about 31 percent of personal income. That’s similar to the total tax burden Americans paid in most of the 1970s, 1980s, and 1990s. So once the economy recovers, we can expect to see total tax collections rise back towards that 31 percent figure.
Unfortunately, federal, state, and local politicians have promised to spend far more than 31 percent of income on government programs. It is highly unlikely that trying to push the tax burden to 35 percent or beyond will generate greater benefits (in valuable services) than costs (in lower economic output).
So, yes, the real problem is on the spending side.
More From The JLF Locker Room
August 4th, 2011
JERUSALEM (JTA) -- The wave of protests sweeping Israel is about much more than the lack of affordable housing: It’s a grass-roots demand for the major redistribution of the nation's wealth.
In social terms, protesters are calling for a more caring government attuned to the needs of young, middle-class citizens who serve in the army, pay heavy taxes and provide the engine driving the country's burgeoning economy.
In economic terms, it is a call for the reversal of nearly three decades of fiscal conservativism at the expense of social services such as education, health and welfare, as well as an appeal against eroding salaries and rising prices.
In other words, the protesters are demanding that today's thriving free-market Israel use its wealth to create conditions for a restoration of at least some elements of the long-defunct Israeli welfare state.
As an estimated 150,000 people demonstrated Saturday night in 12 locations across the country, the central theme was a demand for “social justice.” To some, it was reminiscent of the students' revolt in Paris in the late 1960s: an alliance of students, workers and, in the Israeli case, a large, financially strapped middle class of people mostly in their 20s and 30s demanding a new economic order.
But there were key differences: In the Israeli case, there was no violence. Instead, there was a veiled, largely unspoken threat: that if the government fails to act and middle-class people continue to struggle to make ends meet, many more of the best and brightest would leave for countries where there is no defense burden and it’s easier to make a living.
As the protests entered their third week, the great Israeli paradox loomed large: Never has the country been economically stronger, yet never have so many of its young people felt so frustrated at their own personal financial status.
The current situation is partly a result of a constitutional lacuna.
In the mid-1990s, a number of basic laws were passed -- together they are eventually meant to form the basis of a constitution for Israel. One of the laws, on the dignity and freedom of man, enshrined property rights, but a balancing companion act on social rights continues to be held up. It would deal with issues like the right to housing, education, health and welfare, and set parameters of state responsibility for their provision.
The bill again is on the agenda, promoted by Meretz Knesset member Zahava Gal-On.
But the country's current socioeconomic predicament goes much deeper than any law. It is the result of more than two decades of a virtually consistent small government economic policy.
The turning point came in 1985, with inflation running at over 450 percent per annum. It became clear that Israel could no longer afford to maintain the old-style, government-subsidized welfare state.
The economic stability plan introduced by then-Prime Minister Shimon Peres and then Finance Minister Yitzhak Modai entailed stringent cuts in government spending. With its dramatic success in saving the economy, the small government approach quickly became economic orthodoxy.
The economic buzzword in the 1990s was privatization, started by the Likud, taken on board by Labor and then accelerated by Benjamin Netanyahu. When he first became prime minister in 1996, Netanyahu spoke of a thin man, the private sector, tottering under the weight of a fat man, the public sector, and vowed to turn things around. Netanyahu had a strong ideological commitment to free market forces, privatizing government companies and outsourcing social services.
This meant the accelerated handover of services to the private sector that once were the sole preserve of government. It was accompanied by a weakening of trade unions and an overall erosion of working conditions and salaries.
The result? Owners and a select few mega-salaried executives became richer and the middle class relatively poorer. It also led to the rise of the Israeli tycoons, who controlled a great deal of the country's wealth and power. Banks, energy companies, supermarket chains and media properties all were concentrated in the hands of a dozen or so billionaire families.
Netanyahu's economic philosophy also entailed a reduction of corporate taxes. Big companies paid 5 percent to 20 percent income tax, while the middle class saw the prices of everything from food to cars to apartments rise considerably. The system produced impressive economic growth but left wealth in the hands of the few. The trickle-down effect, middle-class Israelis said, had failed to materialize.
The upshot was that by May 2010, Israel’s economy was robust enough for Israel to be admitted to the Organization for Economic Cooperation and Development -- the exclusive club of the world's strongest economies known as the OECD. But Israel also was the OECD member with the biggest gaps between rich and poor.
Some blame preferential spending on settlements in the West Bank for the lack of funds for social services in Israel. Others focus on welfare for the growing haredi Orthodox population in Israel. Still others point to the limited taxation of the tycoons -- tax concessions nationwide are estimated at approximately $11 billion per year, about 11 percent of the national budget.
For years, middle-class discontent simmered under the surface, always eclipsed by security concerns or peacemaking moves. For embattled Israel, peace and security inevitably took top priority.
Until now. With terrorism virtually nonexistent and the peace process deadlocked, young Israelis have turned their attention toward generating a mass movement against the socioeconomic system.
Their anti-establishment energy took the form of street protests because there is a strong sense that none of the traditional parties represents their interests, and Israel has a long history of street protests, encompassing everything from Ethiopian immigration to the campaign to release captive Israeli soldier Gilad Shalit.
For the most part, the protests have not been focused. But now the leaders of the protest movement are formulating a list of concrete demands and general principles for change. These are expected to include demands for public housing on a large scale; major tax reforms that would increase taxation of the super-rich and lower indirect taxes on the general public; a shift in budgetary priorities, transferring part of the defense budget and the increased tax money from the rich to fund social services; and demands for Israel to comply with OECD averages when it comes to the numbers of doctors, policemen and firemen per thousand citizens, and the number of children in classrooms.
Netanyahu has set up committees to examine all the relevant economic issues and to negotiate with the protesters, who are likely to be backed by trade union boss Ofer Eini. The prime minister almost certainly will produce a new economic plan, but it may not be enough. What the people are demanding is a new social contract.
The political question is whether this could have an impact on the next election, scheduled for 2013, and the agenda over which it will be fought. That depends on how pressing security issues are around that time and whether these protesters can sustain enough momentum to translate their street movement into real political power.
More From JTA
August 4th, 2011
Breath mints are usually refreshing, but a Knoxville legislator believes a University of Tennessee bookstore's selling of novelty candies mocking President Barack Obama stinks.
UT officials pulled the mints poking fun at Obama from store shelves after state Rep. Joe Armstrong, a Democrat, visited the bookstore and told the director he found the satirical mints offensive.
"When you operate on state and federal dollars, you ought to be sensitive to those type of politically specific products," Armstrong said. "If it was a private entity or corporation or store, (that's different), but this is a state university. We certainly don't want in any way to put the university in a bad light by having those political (products), particularly aimed at defaming the president."
The tin can of mints has a blue and red image of the president with the words: "This is change? Disappointmints."
Armstrong said he got a call from a student who was bothered by the depiction of the president, and the legislator followed up Tuesday with a visit to the bookstore in the basement of the University Center. There, he purchased a box of the $2.99 mints and had a conversation with director David Kent, who ultimately removed product from the shelves. About 30 tins were removed.
Kent, who has run the bookstore since 2009, said the university and the store had no intention of offending anyone with the mints. The store previously carried satirical mints aimed at former President George W. Bush when he was in office.
"We've never had any complaints before and we've carried them for years," Kent said. "But someone saw it and they were offended by it, brought it to the attention of a state representative, and I said 'no problem, we'll remove them.'"
Armstrong insisted he would take the same stance if he had seen mints making fun of Bush or Gov. Bill Haslam, both Republicans.
Armstrong also said that since the mints were not educational material, there was no breech of the First Amendment.
"With a book or something of that nature, then fine, but that (the mints) is sort of a discretionary product they have," Armstrong said. "It wasn't viewpoint neutral. Very specifically insulting to the president."
Margie Nichols, vice chancellor for communication at UT, agreed that there was no violation of free speech and said the bookstore is run as business with discretion over what products to sell.
Others disagree, however, pointing to Armstrong's involvement as a form of censorship.
"Let me make very clear, there is no candy exception to the First Amendment," said Glenn Reynolds, who teaches constitutional law at UT. "Free speech is free speech. If you make fun of the president in a mint, it is just as much free speech as it is if you make fun of the president in a political cartoon."
While citizens have the right to express disapproval of a message on a tin can of breath mints, that opinion has more heft when it's coming from a government official, Reynolds said, calling it "a species of censorship."
"The other thing I have to say is, I just think it's really quite odd to hear of a state legislator to take it upon himself to have something removed from a bookstore. It's the kind of thing people make fun of Mississippi for," Reynolds added.
The company that sells the mints, Unemployed Philosopher's Guild, sells more than 25 different varieties of mints on their website, including ones that poke fun of Sarah Palin and Bush.
Top Stories At KnoxNews.com
August 4th, 2011
by Mike Adams, the Health Ranger
(NaturalNews) This is a NaturalNews exclusive breaking new report. Please credit NaturalNews.com. A multi-agency SWAT-style armed raid was conducted this morning by helmet-wearing, gun-carrying enforcement agents from the LA County Sheriff's Office, the FDA, the Dept. of Agriculture and the CDC (Centers for Disease Control).
This story is now being followed and widely reported on InfoWars (www.InfoWars.com</a>) and the Drudge Report (www.DrudgeReport.com</a>). See updates below...
Rawesome Foods, a private buying club offering wholesome, natural raw milk and raw cheese products (among other wholesome foods) is founded by James Stewart, a pioneer in bringing wholesome raw foods directly to consumers through a buying club. James was followed from his private residence by law enforcement, and when he entered his store, the raid was launched.
Law enforcement demanded that all customers (members) of the store vacate the premises, then they demanded to know how much cash James had at the store. When James explained the amount of cash he had at the store -- which is used to purchase product for selling there -- agents demanded to know why he had such an amount of cash and where it came from.
James was handcuffed, was never read his rights and was stuffed into an unmarked car. While agents said they would leave behind a warrant, no one has yet had any opportunity to even see if such a warrant exists or if it is a complete warrant.
Law enforcement then proceeded to destroy the inventory of the story by pouring the milk down the drain and / or confiscating raw cheese and fresh produce for destruction. Video now posted at NaturalNews.TV: http://www.naturalnews.tv/v.asp?v=A...
Note to NaturalNews readers: We believe this was an ILLEGAL raid being conducted mob-style by government thugs who respect no law and no rights. This is an all-out war by the government against people who try to promote healthy raw and living foods.
James is now being held at the Pacific division police department at Centinela and Culver in Los Angeles. He is being held at $123,000 bail with no possibility of using bail bonds. Law enforcement has demanded that if he comes up with the money to cover bail, he must disclose to them all the sources of that money. (This is an illegal demand!)
Massive public protests are needed to teach these criminal law enforcement agencies that they cannot illegally arrest and persecute individuals merely for buying and selling raw milk and cheese. We are organizing a public protest day in cooperation with James. Please watch NaturalNews for an announcement of that. Story is developing...
Right now, James needs help raising money with his legal defense needs. Our non-profit Consumer Wellness Center is currently serving as the collection point for donations. You may donate right now at www.ConsumerWellness.org</a> (100% of the donations go directly to James' legal defense needs, the Consumer Wellness Center keeps nothing).
See this video of James Stewart talking about his farm:
Story on InfoWars.com:
Here's background on Healthy Family Farms which was also targeted in the raid:
Healthy Family Farms in Santa Paula, California:
"Healthy Family Farms is a sustainable, pasture-based farming operation. We raise all our livestock on pasture. We raise all of our animals from birth. We do not feed any of our animals soy, choosing instead to feed animals as they are designed to be fed. This results in healthy, sturdy animals needing no hormones, antibiotics, or other artificial "enhancements." We harvest our animals humanely by hand before they are delivered to the farmers markets. We never freeze our products. In addition to farmer's markets sales, we have an active CSA, which offers discounts to our valued members."
Watch NaturalNews.com for more breaking news on this story. We are fed up with these illegal mob-style raids against the raw foods community! It is time to protest and fight back against tyranny!
Articles Related to This Article:• The Honest Food Guide empowers consumers with independent information about foods and health
• How to Stay Healthy in the Computer Era (Part 2)
• 100 things to be thankful for this Thanksgiving holiday
August 3rd, 2011
The Weather Channel
Tropical Storm Emily will begin to make a turn more to the northwest over the next day in the direction of Hispaniola. To access our full collection of maps to track Emily and its impacts, use the links below or scroll down.
Click to access: Threat Level | Status | Satellite | Forecast Models | Watches/Warnings
Emily will head for Hispaniola Wednesday through early Thursday. The heavy rains could trigger flashing flooding and mudslides. As of late April, there were 1.5 million Haitians still living in tents, following the deadly Jan. 12, 2010 earthquake. The National Hurricane Center is forecasting between 6 and 12 inches of rain to fall over portions of Puerto Rico, Haiti and the Dominican Republic. The image below shows the current threats to the Caribbean Islands (click to enlarge).
It is still too soon to determine if there will be direct impact on the U.S. Late this week into weekend will be the critical period.Will this tropical cyclone turn north, then northeastward safely out to sea away from the coast, or will it continue west-northwestward? It's also possible that land interaction could disrupt Emily enough to prevent it from restrengthening once emerging near the Bahamas. Assuming Emily survives, slow strengthening is expected as the system heads northward. Keep checking back with us at The Weather Channel and weather.com through the week as we update the threat level graphic below for the Southeast U.S. and the Bahamas.
The expected impacts from Emily.
> See Emily's Current Threat Level
So, where exactly is the center located now? If you're plotting the storm along with us, click on the "Current Information" map below to get the latitude/longitude coordinates, distance away from the nearest land location, maximum sustained winds and central pressure (measured in millibars).
Latest status including wind speed, location, movement and pressure.
> See Current Storm Information
How does the system look on satellite imagery. Click on "infrared" satellite imagery, to see how "cold" the cloud tops are. Brighter oranges and reds shadings concentrated near the center of circulation signify a healthy tropical cyclone.
The second link below is a link to a clickable, zoomable "interactive satellite" loop. Finally, we have a visible satellite loop, available only during daylight hours.
Latest infrared and visible satellite imagery.
> See Infrared Satellite Image
> See Interactive Satellite (clickable/zoomable map)
> See Visible Satellite Loop (during daylight hours)
With Emily advancing near Puerto Rico, radar will be able to point out the tropical squalls moving across the island along with the nearby islands of St. Thomas and St. Croix.
Meteorologists have a variety of numerical models to use as guidance in forecasting the track of tropical cyclones. Get an "inside look" at what these various models are saying regarding the track of this current system. (Important note: These model tracks should not be considered an official forecast. For the official forecast, see our current forecast swath.)
See where the various models forecast the center of this system to track.
> Enlarge Model Forecast Tracks
The National Hurricane Center, in consultation with government officials, will issue tropical storm or hurricane watches when a tropical cyclone threatens any land area.
Watches are posted when tropical storm-force (sustained 39-73 mph) or hurricane-force (sustained 74 mph or higher) winds are expected within 48 hours.
Warnings are hoisted when those same winds are expected within 36 hours.
You can see the latest watches and warnings in the map below.
Latest watches and warnings.
> See Tropical Storm Advisories
You can get a full briefing on the tropics in our "Tropical Update" video, the "Tropics Watch" graphic briefing, or our "Tropical Update" article.
Watch The Weather Channel for the latest on this system, and other areas we're watching in the tropics.