11/17/2008
“And, as in uffish thought he stood,
The Jabberwock, with eyes of flame,
Came whiffling through the tugley wood,
And burbled as it came!”
I couldn’t help but think of those words from Lewis Carroll’s “Through the Looking-Glass” as I listened to Treasury Secretary Hank Paulson’s recent press conference. Paulson, the 700 billion-dollar man, was indicating yet another change in direction for the Bush administration’s financial bailout plan. The stock market didn’t seem overly impressed with Paulson’s change of course, as evidenced by a further 400 point plunge in the Dow Jones average.
A recent article in Forbes magazine estimates the total fiscal stimulus put forth so far by both the Federal Reserve Board and the Treasury Department to be approximately $5 trillion. Before this avalanche of “stimulus” began, the federal debt was $10 trillion. Our federal government is potentially putting us half as much again in debt (though Fed Chairman Bernanke and Secretary Paulson would argue that taxpayers will be getting some of the $5 trillion back—they just have no clue how much or when.)
The whiffling through the tugley wood isn’t confined to the Fed and the Bush administration. Congress and the Obama team will soon be burbling as well. They have their own list of bailout targets.
The automobile industry is in dire straits and is asking for help. The state of California has already requested billions in loans to put off the tough fiscal decisions needed to rein in its $15 billion deficit. New York, New Jersey, and Michigan—to name a few—are other states tottering on the edge of bankruptcy. Many major cities will likely join the bandwagon. The line of supplicants forming at the doors of the White House and the Capitol will be long, indeed.
Before we wade further into the swamp, we might want to remember that our mission was to drain it. The original bailout was designed to thaw the freeze in lending necessary for the economy to function. The concept was for the Treasury Department to buy the bad real estate loan portfolios which were creating uncertainty in the markets. Treasury has now decided that approach is too difficult to implement and is using the bailout money to purchase preferred stock in banks--with no requirement for increased lending or for private equity to match the federal dollars.
Lending billions of dollars to struggling state and local governments would be a slippery slope. The states in the worst shape are the ones with high tax rates and excessive spending habits. Their politics are often unduly influenced by their public employee unions. These special interest groups are quick to push through tax increases and are adept at stopping any attempts to cut spending. Sending huge amounts of federal tax dollars to states that refuse to live within their means will not be popular with taxpayers in states with sound fiscal practices. The fiscally challenged states are generally the ones that gave President-Elect Obama and the Democrats in Congress their margins of victory. That being the case, they won’t be bashful about asking for favors.
Taxpayers should pray that the bailout explosion does not cause more harm than good and gets refocused to practices that will shore up the economy, not grow government. At the outset, the goal of federal intervention was to address the collapse of the housing market and restore the availability of credit for businesses and consumers. It is time to drop the jabberwocky, focus on the original goals, and minimize the impact on deficits, inflation, and the future standard of living of our children and grandchildren.
Friday, November 14, 2008
Tuesday, November 4, 2008
Is The Gravy Train Ccming to an End?
By Dan Juneau
LABI
10/27/2008
For a number of years, higher government revenues have been flooding into the state’s coffers. Budget surpluses have set records and state spending has hit unprecedented levels. Now the “embarrassment of riches” may be coming to an end, and it will be interesting to see how the governor and a Legislature with many new faces handle the new economic reality.
Two factors drove the recent explosion of state revenues: hurricane recovery spending and record-setting oil and gas prices.
In the aftermath of Hurricanes Katrina and Rita, higher levels of recovery spending propelled state sales tax revenues to record levels. Road Home money, insurance settlements, and personal spending fueled these increases. Construction and retail activity led to higher levels of business revenue and resulted in higher business tax collections.
In addition to soaring revenues from hurricane reconstruction, record oil and gas prices have also led to huge increases in state tax collections. Our Revenue Estimating Conference has done a good job of using conservative estimates for oil and gas revenues at a time when the price of these commodities has skyrocketed. The end result has been budget surpluses in the billion dollar range and constant upward revisions of excess revenues available for spending by the Legislature--and the Legislature has not been bashful about spending those excess revenues.
A confluence of factors is now bringing Louisiana’s revenue party to an abrupt end. The U.S. is experiencing an economic meltdown that has undoubtedly ushered in a recession. Louisiana will certainly feel the effects of this downturn. Even more of a problem for our state finances is the huge decline in oil and gas prices.
For the current budget, the Revenue Estimating Conference budgeted oil at a market price of $84 per barrel. As this column was being written, the price had plunged below $70. The price had risen as high as $147 per barrel. For a long time, billions of dollars in oil and gas revenue went directly into the state’s general fund and was quickly spent. It is more fun being a legislator when you are spending surpluses and excess revenues instead of cutting the budget. The fun is now gone.
Governor Jindal recently stated that he expected a billion dollar shortfall in revenues available to fashion the 2009/10 state budget. He also stated that he had no plans to raise taxes in order to address that shortfall. Hopefully, he will stick with that approach.
For openers, the billion dollar shortfall the governor was referencing undoubtedly was in the context of a “continuation” budget. In state government, new budgets are not submitted using the base of the old budget. An automatic “inflation adjusted” increase is added in before any other changes are made. By simply not submitting a “continuation” budget to the Legislature, the governor could reduce the potential red numbers by $600 million or more. That would leave a shortfall of approximately 3 percent to be made up in the $12 billion state fund budget.
Taxpayers will soon find out if our current Legislature is going to take a fiscally conservative approach to address the new economic reality or if it will attempt to continue record levels of spending that no longer can be sustained with current revenue streams. Governor Jindal’s initial comments are encouraging. Some in the Legislature will not share his view. He will need to provide strong leadership to insure that our state government lives within its means and adds no additional financial burdens to taxpayers who have their own fiscal problems to address.
LABI
10/27/2008
For a number of years, higher government revenues have been flooding into the state’s coffers. Budget surpluses have set records and state spending has hit unprecedented levels. Now the “embarrassment of riches” may be coming to an end, and it will be interesting to see how the governor and a Legislature with many new faces handle the new economic reality.
Two factors drove the recent explosion of state revenues: hurricane recovery spending and record-setting oil and gas prices.
In the aftermath of Hurricanes Katrina and Rita, higher levels of recovery spending propelled state sales tax revenues to record levels. Road Home money, insurance settlements, and personal spending fueled these increases. Construction and retail activity led to higher levels of business revenue and resulted in higher business tax collections.
In addition to soaring revenues from hurricane reconstruction, record oil and gas prices have also led to huge increases in state tax collections. Our Revenue Estimating Conference has done a good job of using conservative estimates for oil and gas revenues at a time when the price of these commodities has skyrocketed. The end result has been budget surpluses in the billion dollar range and constant upward revisions of excess revenues available for spending by the Legislature--and the Legislature has not been bashful about spending those excess revenues.
A confluence of factors is now bringing Louisiana’s revenue party to an abrupt end. The U.S. is experiencing an economic meltdown that has undoubtedly ushered in a recession. Louisiana will certainly feel the effects of this downturn. Even more of a problem for our state finances is the huge decline in oil and gas prices.
For the current budget, the Revenue Estimating Conference budgeted oil at a market price of $84 per barrel. As this column was being written, the price had plunged below $70. The price had risen as high as $147 per barrel. For a long time, billions of dollars in oil and gas revenue went directly into the state’s general fund and was quickly spent. It is more fun being a legislator when you are spending surpluses and excess revenues instead of cutting the budget. The fun is now gone.
Governor Jindal recently stated that he expected a billion dollar shortfall in revenues available to fashion the 2009/10 state budget. He also stated that he had no plans to raise taxes in order to address that shortfall. Hopefully, he will stick with that approach.
For openers, the billion dollar shortfall the governor was referencing undoubtedly was in the context of a “continuation” budget. In state government, new budgets are not submitted using the base of the old budget. An automatic “inflation adjusted” increase is added in before any other changes are made. By simply not submitting a “continuation” budget to the Legislature, the governor could reduce the potential red numbers by $600 million or more. That would leave a shortfall of approximately 3 percent to be made up in the $12 billion state fund budget.
Taxpayers will soon find out if our current Legislature is going to take a fiscally conservative approach to address the new economic reality or if it will attempt to continue record levels of spending that no longer can be sustained with current revenue streams. Governor Jindal’s initial comments are encouraging. Some in the Legislature will not share his view. He will need to provide strong leadership to insure that our state government lives within its means and adds no additional financial burdens to taxpayers who have their own fiscal problems to address.
Congress Should Protect Workers’ Freedom to Choose
By Dan Juneau
LABI
Imagine an election in which you cast your ballot in public instead of in the privacy of a voting booth. Imagine that you have to mark your selection on a card in full view of others, including a representative for one of the candidates and your friends who support that candidate. What if you don’t really want to vote for this candidate? Should election laws place you in this situation? Of course not, and they don’t. But the federal laws governing labor union certification elections might do so after next year.
Over the last few decades, private sector union membership has steadily declined. Many workers are realizing that unions can be a bureaucratic obstacle to workplace efficiency and employee freedom. They see how some unions have crippled companies’ ability to maneuver and compete in the demanding world market, and they want no part of that.
Union membership has certainly diminished as workers at unionized companies lost their jobs because their employers were no longer competitive. However, membership has also fallen as employees -- disenchanted with their union leaders -- have sought to have the National Labor Relations Board (NLRB) remove (decertify) a union from their workplace. During the one-year period ending July 2008, the NLRB conducted 330 decertification elections and the unions lost 201 of these, or 61 percent.
Meanwhile, the number of elections to certify unions has dropped significantly. The NLRB conducted 2,726 such elections over the one-year period ending July 2001, and yet during the year ending July 2008, the NLRB conducted just 1,604 elections, a 41 percent drop.
Recognizing that they are on the mat and down for the count, union leaders are struggling to get back on their feet. So, for the past two years, they lobbied Congress to pass legislation eliminating secret ballot elections for certifying unions, replacing this procedure with one that would require the NLRB to accept signed authorization cards from a majority of workers. This process is referred to as “card check.” Thus far, this legislation has failed to pass, but it will be before a new Congress next year -- one that will likely be more willing to approve it.
Card check legislation is a desperate attempt by union leaders to stack the deck to reverse their dismal experience in union elections. It would permit the use of peer pressure and even intimidation to expand union ranks. It is a power play that should never be sanctioned by Congress.
The role of government in labor/management relations is to ensure balance. Governments -- local, state, and federal -- must never tip the scale in favor of one side. The fact that neither the employer nor the union knows how workers vote in a secret ballot election effectively stops coercion by either party. Workers are free to choose and need not tell anyone how they voted.
Contrary to assertions by card check advocates, current law in no way limits the ability of unions to organize workers. What it does do is protect workers who don’t want a union in their workplace from being forced to have one. That is balance, and it is what the majority of voters in Louisiana believes should happen.
Seventy-four percent of Louisiana’s voters say that having an NLRB-supervised secret ballot election is the best way to protect workers’ rights during a union organizing effort. And this sentiment is even stronger within union households (91 percent).
As a right-to-work state, Louisiana law protects workers’ freedom to choose. It would be wrong for Congress to erode this freedom by favoring union leaders over workers.
Jim Patterson, Vice President and Council Director for LABI’s Employee Relations Council, contributed to this column.
LABI
Imagine an election in which you cast your ballot in public instead of in the privacy of a voting booth. Imagine that you have to mark your selection on a card in full view of others, including a representative for one of the candidates and your friends who support that candidate. What if you don’t really want to vote for this candidate? Should election laws place you in this situation? Of course not, and they don’t. But the federal laws governing labor union certification elections might do so after next year.
Over the last few decades, private sector union membership has steadily declined. Many workers are realizing that unions can be a bureaucratic obstacle to workplace efficiency and employee freedom. They see how some unions have crippled companies’ ability to maneuver and compete in the demanding world market, and they want no part of that.
Union membership has certainly diminished as workers at unionized companies lost their jobs because their employers were no longer competitive. However, membership has also fallen as employees -- disenchanted with their union leaders -- have sought to have the National Labor Relations Board (NLRB) remove (decertify) a union from their workplace. During the one-year period ending July 2008, the NLRB conducted 330 decertification elections and the unions lost 201 of these, or 61 percent.
Meanwhile, the number of elections to certify unions has dropped significantly. The NLRB conducted 2,726 such elections over the one-year period ending July 2001, and yet during the year ending July 2008, the NLRB conducted just 1,604 elections, a 41 percent drop.
Recognizing that they are on the mat and down for the count, union leaders are struggling to get back on their feet. So, for the past two years, they lobbied Congress to pass legislation eliminating secret ballot elections for certifying unions, replacing this procedure with one that would require the NLRB to accept signed authorization cards from a majority of workers. This process is referred to as “card check.” Thus far, this legislation has failed to pass, but it will be before a new Congress next year -- one that will likely be more willing to approve it.
Card check legislation is a desperate attempt by union leaders to stack the deck to reverse their dismal experience in union elections. It would permit the use of peer pressure and even intimidation to expand union ranks. It is a power play that should never be sanctioned by Congress.
The role of government in labor/management relations is to ensure balance. Governments -- local, state, and federal -- must never tip the scale in favor of one side. The fact that neither the employer nor the union knows how workers vote in a secret ballot election effectively stops coercion by either party. Workers are free to choose and need not tell anyone how they voted.
Contrary to assertions by card check advocates, current law in no way limits the ability of unions to organize workers. What it does do is protect workers who don’t want a union in their workplace from being forced to have one. That is balance, and it is what the majority of voters in Louisiana believes should happen.
Seventy-four percent of Louisiana’s voters say that having an NLRB-supervised secret ballot election is the best way to protect workers’ rights during a union organizing effort. And this sentiment is even stronger within union households (91 percent).
As a right-to-work state, Louisiana law protects workers’ freedom to choose. It would be wrong for Congress to erode this freedom by favoring union leaders over workers.
Jim Patterson, Vice President and Council Director for LABI’s Employee Relations Council, contributed to this column.
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