QUOTE OF THE DAY
Chicago Tribune: Quinn throws Hail Mary on pension reform
Gov. Pat Quinn this afternoon floated a desperation plan on pension reform, throwing his support behind a bill that would set up a commission to decide how to fix Illinois' financially failing government worker retirement systems.
Conventional efforts to craft a compromise on pension changes have gone nowhere during the lame-duck session. The new measure filed today would set up an eight-member commission appointed by the four legislative leaders. The panel would issue a report on pension system changes that would become law unless the General Assembly voted to overturn it.
Testifying before a House panel, Quinn said the measure represents "extraordinary action" to break the gridlock. It is modeled after federal military base closing commission reports to Congress. "We must have some sort of movement," Quinn said.
It's unclear whether lawmakers will support the idea, which would give much power to a committee controlled by legislative leaders. The report would be due April 30, and lawmakers would have a month to vote on it if they decided to overturn it.
AEI: The coming middle-class tax hit
With a European-sized Welfare State comes European levels of taxation. Actually, even-higher levels of taxation since current European tax levels are not enough, apparently, to finance their welfare states. According to the OECD, total government tax revenue, all levels, for the US was 25% of GDP vs. 36% for the UK, 44% for France, 37% for Germany. So we are certainly talking at least a 50% rise in the tax burden.
To achieve anything like the European-style entitlement state liberals advocate, we need to tax everyone a lot more, not just the 1%. Indeed, Asness has noticed that the big spenders have begun to talk about the 2% instead of the 1%.
Bloomberg: Keynesianism Has Been Tried, And It's Failed
After five years of financial crisis, the European record is in: Northern Europe is sound, thanks to austerity, while southern Europe is hurting because of half- hearted austerity or, worse, fiscal stimulus. The predominant Keynesian thinking has been tested, and it has failed spectacularly.
The starkest contrasts are Latvia and Greece, two small countries hit the worst by the crisis. They have pursued different policies, Latvia strict austerity, and Greece late and limited austerity. Latvia saw a sharp gross domestic product decline of 24 percent for two years, which was caused by an almost complete liquidity freeze in 2008. This necessitated the austerity that followed.
Bloomberg: Texas Starts Budget Debate Flush With Energy Boom Cash
Legislators in Texas, the biggest energy producer among U.S. states, will begin deliberating its next two-year budget with a surplus forecast today to match an $8.8 billion record set in 2007.
The Texas economy has topped budget projections over the past 15 months, as booming energy output fueled job growth and an 11 percent fiscal first-quarter gain in sales-tax receipts, the biggest source of general-fund revenue. Even after paying off $7 billion in health and school bills, Comptroller Susan Combs said today that the state will be flush heading into 2014.
Lawmakers, who convene tomorrow for a five-month session, in 2011 put off about $4.7 billion in future Medicaid costs and $2 billion for public schools under the current budget, and now must pay those bills. With Combs projecting an $8.8 billion surplus by Aug. 31 and a 12 percent jump in general-purpose receipts for the next two years, Democrats sense an opening.
“Given that we’re seeing an increase in revenue, let’s use this opportunity to fix those things that those in control of the budget have broken,” said state Senator Kirk Watson, an Austin Democrat. “Some people clearly want to starve the necessities of our people, things like schools, health care and transportation.”
WSJ: Will robots solve our entitlement crisis?
Robots are coming because robots are needed. In 2013, we can already see the appetite in the transportation sector. Aviation analyst Kit Darby figures the industry will need 65,000 new pilots in the next eight years to cover expected retirements. One reason for the millions Google GOOG -0.20% has been spending to develop a driverless car is to meet anticipated market demand from America's growing elderly population.
Or take another example, arising in Baltimore, where a local entrepreneur, following the logic of need, invested seven years and $30 million developing a robotic system for packaging prescription drugs for long-term patients in nursing homes and hospitals.
WGNT: VA governor looks to eliminate gas tax, increase sales tax
During a press conference today, Governor Bob McDonnell laid out a new plan that would eliminate the gas tax but increase the sales tax.
He wants to raise the state sales tax from 5% to 5.8% percent and wants to put the money into transportation.
He said he’d do away with the 17.5 cent gas tax.
Real Clear Markets: States Cut Taxes Even As Washington Raises Them
Although federal taxes are rising for three-quarters of Americans this year, many states have spent the last two fiscal years cutting levies and simplifying their tax codes. Even as high profile battles to raise taxes in places like California have garnered the press's attention, from Kansas to Michigan to Oregon and New Jersey, states have actually been net tax cutters recently after trying for several years to tax their way out of budget woes.
In total, state legislatures over the last two fiscal years have cut taxes more than they increased them by a net of $4.3 billion, according to the National Conference of State Legislatures. Kansas Governor Sam Brownback has led the way with a budget that reduced the state's income tax rate to 4.9 percent from 6.45 percent, a cut of some $250 million, which will grow to $850 million in fiscal 2014.
CNBC: $47,000 Presidential Inauguration Package Includes 'Twitter Butler'
If you're heading to D.C. for the presidential inauguration, make sure to bring your social-media butler.
Don't have one? No problem. The Madison Hotel will provide one for you, as part of its "Inaugural Town and Country" package.
The cost: $47,000. (And you don't even get a ticket to the inauguration or any of the swanky inaugural balls.)
CARTOON OF THE DAY