The Pacific Research Institute
(PRI promotes individual freedom and personal responsibility as the cornerstones of a civil society, best achieved through a free-market economy, limited government and private initiative. PRI researches and analyzes critical issues facing California and the nation, and crafts strategies for policy reform.)
SACRAMENTO, Calif. -- Capital Ideas: What Colorado can TEL California about taxes
There are more than 100 bills before the California legislature that will raise taxes and fees about $29 billion. Instead of increasing an already heavy tax burden, legislators should learn from Colorado, which in 1992 passed a state constitutional amendment called the Taxpayer Bill of Rights, or TABOR.
This voter-approved measure limits increases in per capita state expenditures to the inflation rate and mandates that excess tax revenues be refunded to taxpayers. As a result, between 1997 and 2002, Colorado reduced taxes more than any state, issuing six consecutive annual tax rebates totaling more than $3.2 billion.
When Californians were struggling with a $24 billion deficit in 2002, Coloradoans were enjoying a balanced budget and receiving $927 million in tax refunds. Colorado's economy surged in this fiscally responsible, business-friendly climate.
Between 1995 and 2000, Colorado's personal income grew 51 percent, ranking it second in the nation. Its gross state product grew 54 percent, first in the nation. California grew only 42 percent and 45 percent, respectively.
Colorado's TABOR has granted tax relief, fostered economic growth and reduced the size of its state and local government -- about $114 per person annually according to Michael New of the Harvard-MIT Data Center.
What Colorado, like 25 other states, has done is enact a TEL, a tax and expenditure limitation. To be effective, TELs must limit spending across the board, without politically correct exceptions. The growth limit must be stringent and straightforward. Colorado's TABOR, for example, limits annual increases in state spending and tax revenues to the inflation rate plus state population growth rate.
The spending limit must be automatically lowered when the state government transfers responsibility for a program to local governments. The state government can't escape the limit by simply transferring functions to lower levels of government.
Debt increases and tax-rate hikes must be approved by voters, and tax revenue in excess of the limit must be immediately refunded to taxpayers in full, without earmarks for privileged interest groups.
Tax rates should be set each year to generate as little excess revenue as possible to minimize job losses and to prevent the government from becoming a giant tax-revenue-recycling center with the attendant bureaucracy. Finally, the TEL and the balanced-budget requirement must be embedded in the state constitution, not just in state statutes. Constitutional TELs have teeth because legislators must obey them. Statutory TELs are easily sidestepped -- repealed or modified in a pinch by a simple majority of the legislature.
If California had a Colorado-style TEL in place since the start of Governor Davis's first term, current state spending would still be a healthy 21 percent larger than four years ago. Instead of a $35 billion deficit, however, we would enjoy a $5 billion surplus this year -- a $571 tax refund for a family of four -- and $30 billion cumulatively over the past four years.
If refunded through tax-rate reductions, this money would have created 851,000 California jobs. This TEL would have prevented the deep cuts Davis is proposing by keeping spending on an even keel.
Davis views the budget crisis as an opportunity to design a "new foundation." An amendment to the California Constitution limiting the growth of taxes and spending is a great place to start. Two recent statewide polls show bipartisan support for this solution. The time to begin is now.
(Lawrence J. McQuillan is the director of business and economic studies at the Pacific Research Institute.)
The Reason Foundation
LOS ANGELES -- Crying Wolf? Secrets and the search for weapons of mass destruction
By Ronald Bailey
Twenty-five thousand liters of anthrax, 38,000 liters of botulinum toxin, the materials to produce as much as 500 tons of sarin, mustard and VX nerve agent, and upwards of 30,000 munitions capable of delivering chemical agents were supposed to be part of Saddam Hussein's arsenal of terror. So said President George W. Bush in his 2003 State of the Union message.
Bush also cited secret intelligence suggesting that Saddam's regime had constructed mobile biological weapons labs and was still trying to develop nuclear weapons. Bush persuaded many, including me, that war must be waged against Iraq because Saddam could some day provide these weapons to terrorists for an attack on the United States.
U.S. Central Command declared at the beginning of the war that the discovery of weapons of mass destruction, or WMDs, was, after the overthrow of Saddam, the second highest priority of the campaign. A month later, Centcom has all but declared victory in Iraq, but no solid evidence for stockpiles of WMDs has yet been uncovered.
Of course, there remains intriguing evidence that Iraq did maintain some type of biological and chemical weapons programs. Consider the evasive radio exchanges between Iraqi military commanders cited by Secretary of State Colin Powell at the United Nations. Or the discovery of thousands of chemical weapons suits left behind by fleeing Iraqi soldiers.
Even Saddam's military leaders would know that the United States would not use chemical or biological weapons, so the likely reason for Iraqi troops to have such suits is to protect themselves against their own weapons.
Finally, unless one thinks it is an elaborate hoax, the U.S. military forced its troops to carry chembio protective suits and is still putting considerable effort into searching for hidden WMDs.
Opponents of U.S. policy have already suggested that the U.S. government lied about Iraqi WMDs. Meanwhile assorted conspiracy theorists think that the United States will, post facto, fabricate evidence of WMDs in order to justify the war.
If no WMDs are found, the international embarrassment will be great, though mitigated by mobs of liberated Iraqis dancing in the streets of Baghdad. Setting aside accusations of lying and fabricating evidence, the failure to find WMDs would lend itself to two hardly more benign possible explanations.
First, that our intelligence apparatus -- the Central Intelligence Agency, the National Security Agency and the Defense Intelligence Agency -- is providing our leaders with the information that our spies believe the leaders want to hear. Second, that our spies are incompetent.
Either is a menace to our free system of government. Intelligence estimates need to be independent of political pressures. Spymasters who slant ambiguous information to fit what they think our political leaders want to hear serve neither our leaders nor our nation.
Spymasters also need, at least most of the time, to ferret out the truth. It might be that despite an annual expenditure estimated to exceed $30 billion, our spy agencies are merely incompetent. In both cases, the only remedy is a major housecleaning of the "intelligence community" that should include a substantial streamlining and downsizing.
No doubt, protecting the American people does occasionally require secrecy, but expanding the scope of secret activities makes it difficult for the public, the press, or even Congress to know whether or not the agencies are performing effectively and within the confines of our constitutional rights. The Bush administration has made this oversight task even more difficult by allowing agencies to classify more and more information as top secret and by restricting Freedom of Information Act inquiries.
For example, the Bush administration issued Executive Order 13292 on March 25, which greatly enhanced the ability of officials to classify information and to prevent or delay declassification.
One telling line struck out from the previous Clinton administration executive order on classification notes that positive changes in the world "provide a greater opportunity to emphasize our commitment to open Government."
The earlier order, in a phrase that was also struck out in the new executive order, had declared: "If there is significant doubt about the need to classify information, it shall not be classified." The new rule is, when in doubt, stamp SECRET on it.
Perhaps significant caches of WMDs will turn up as coalition forces gain more control over Iraq, but that will not vindicate our government's growing secretiveness.
Six years ago, the late former Sen. Daniel Patrick Moynihan, D-N.Y., headed the Commission on Protecting and Reducing Government Secrecy, which warned that: "Excessive secrecy has significant consequences for the national interest when, as a result, policymakers are not fully informed, government is not held accountable for its actions, and the public cannot engage in informed debate."
That was true before the atrocities of Sept. 11 and it's just as true today. If we cannot remain an open society, we cannot remain a free society.
(Ronald Bailey, is Reason magazine's science correspondent.)
LOS ANGELES --The Fox News effect: Can 3.3 million viewers be wrong?
By Ronald Bailey
Besides the Bush Administration, the big winner of Operation Iraqi Freedom is the Fox News Network. Fox News' ratings jumped to 3.3 million average daily viewers, while CNN had 2.65 million and MSNBC trailed in third place with 1.4 million daily viewers.
Fox News' success is causing considerable handwringing among the would-be gatekeepers in the "mainstream media." Even the New York Times worries about the baleful "Fox News Effect" on journalism.
"I certainly think that all news people are watching the success of Fox," groused Andrew Heyward, president of CBS News in the Times. "There is a longstanding tradition in the mainstream press of middle-of-the-road journalism that is objective and fair."
Setting aside the ongoing argument of whether the "mainstream press" is objective and fair, perhaps the United States is returning to a time when media were frankly partisan. After all, how do you think the Tallahassee Democrat, the Waterbury Republican-American, the Arkansas Democrat-Gazette, the Preston Republican-Leader, the Albany Democrat-Herald, and the Garrett County Republican got their names in the first place?
Another model of a partisan, but nevertheless free and vibrant press, is Britain, where readers know the political leanings of all the major papers and make their purchases accordingly. Leftists peruse the Guardian while right-of-center people scan the Daily Telegraph. Both groups go home happy.
I suspect that as news sources continue to proliferate, those that provide their readers, viewers and listeners with the best information and superior analysis will tend to win out over those who offer chiefly partisan screeds. CBS News and other mainstream media have nothing to fear from the "Fox effect" if they keep that simple standard in mind.
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