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CURMUDGEON'S CORNER: Tax breaks for special interests not the answer (OPINION)

October 23, 2012

In a letter to the editor to this paper on October 4th Ellen Waxman who owns an art gallery in Wickford, argues that the legislature should “declare a state-wide sales tax exemption on art”. This, she asserts, would “spark Rhode Island’s economy”. Just how this would happen is unstated.
In this effort, state Senator James Sheehan “has agreed to sponsor legislation along this idea if he is reelected”. Great. Just what we need is more legislation that would favor a special interest, in this case owners of art galleries.
Mrs. Waxman advocates reducing sales tax revenues but is silent about whether state grants to the arts could be cut or eliminated to make her proposal revenue neutral.
Recently my wife and I went on a long-delayed vacation. We boarded our dogs and found out that as of October 1st the kennel has to collect a seven-percent sales tax. I suggest that Rhode Island be declared a “pet friendly state” and the sales tax on grooming services, kennels and pet food be eliminated.
Perhaps if Sen. Sheehan is reelected, he will agree to sponsor legislation to that effect.
Just think of how our economy would be improved if dog groomers, kennel operators and feed store owners got more business from pet lovers.

n Three candidates were interviewed for the position of chief statistician of the Bureau of Labor Statistics. The Secretary of the Department of Labor who is in charge of the BLS conducted the final interviews.
The interviewer asked the first candidate, “How much is two plus two.” The man quickly responded, “Three.” “All right, we’ll contact you if there’s anything else,” said the secretary.
The second candidate was asked the same question. She thought for a few seconds and answered, “Why, four, of course.” “Very good”, said the secretary as he dismissed her.
When asked the question, the third candidate, a young man who had attended Harvard and the University of Chicago, looked slyly at the Secretary of Labor and answered, “How much do you want it to be?” He got the job.
When I first heard the little anecdote above, it was about three people interviewing for a position as a corporate controller. It came to mind when the Obama Administration recently launched its “October surprise” precisely one month before the presidential election.
News media trumpeted the announcement by the BLS that the addition of 114,000 jobs, the lowest since last June and most of them part-time gigs, had miraculously reduced the unemployment rate to 7.8%. Some observers such as former CEO Jack Welch tweeted, “Unbelievable jobs numbers…these Chicago guys will do anything…” Nationally syndicated radio yakker Rush Limbaugh alleged that the two top statisticians in the BLS were major Obama campaign contributors.
Obamanistas proclaimed the success of the President’s programs and policies in getting the economy headed in the right direction. The page one Associated Press story in the state’s largest daily newspaper on October 6th read, “Jobless rate falls below 8 percent” calling it “a surprising lift for the economy and [Obama’s] reelection hopes”.
According to the AP, “The government calculates the unemployment rates by calling 60,000 households and asking whether the adults have jobs, and whether those who don’t are looking for work. Those who do not have jobs are counted as unemployed.” Next comes an important caveat, “Those who aren’t looking are not considered part of the work force and aren’t counted as unemployed.” Back on page A7 of that paper, Keith Hall, head of the BLS until last January, told the McClatchy Newspapers that “manipulating the data would be very tough”.
The answers from the 60,000 households are plugged into statistical formulae and crunched by a supercomputer to arrive at the unemployment rate. In other words, it’s only an estimate and that it why it is adjusted every month.
Now for two other economic stories are buried in Section B of the same newspaper. First, “Gas prices soar overnight”, exceeding $5 a gallon in parts of California. Back when despised George W. Bush was president, local newspersons were shoving microphones and cameras into the faces of Californians filling their vehicles with $4 a gallon gas.
When Obama took the oath of office, gas was at a national average of $1.84 per gallon. Apparently, the new tipping point is five bucks because until now there has been little media attention to the motorists’ plight.
Second, the headline back on page B2 should give every thinking American pause. “2012
deficit estimated at $1.1 trillion”. The AP’s Andrew Taylor writes it’s “the fourth straight year of trillion dollar deficits on President Obama’s watch.” and “government borrowed 31 cents for every dollar spent.”
The estimate is based on projections by the Congressional Budget Office that income and payroll taxes will increase by three perecent. Corporate income taxes – you know, all those companies who get all the loopholes and tax credits – are projected to increase by 34 percent.
Another way of looking at the deficit would be that federal spending would have to be cut by 31 percent across the board for expenses to equal revenues.
According to the AP, spending on Medicaid that Democrats like Sheldon Whitehouse, Jim Langevin and David Ciccilline swear they will protect “dropped because the federal government stopped paying a higher share of the program’s costs.”
Let me pose the following question to you, gentle reader, that I asked Senators Reed and Whitehouse and Congressman Langevin during the debate on the Affordable Care Act to which I received no reply. If there is general agreement that over $700 billion in fraud and inefficiencies exist in Medicare, why did it take the passage of Obamacare to root it out? And why, after three years, does it still exist in order to pay part of the costs of Obamacare?
(Note to readers who regard me as a right-wing nut: the President says he likes the term “Obamacare”.)
In his latest book “The Real Crash”, investment manager Peter D. Schiff observes that Social Security, Medicare and Medicaid presently account for 41 percent of the federal budget and in less than 10 years, these three items will cost $3 trillion per year and take up over half the budget.
When combined with interest payments on the national debt and defense spending, the “big three” will consume every dollar collected by the federal government and we are not even talking about social entitlement programs such as food stamps and student loans.
Politicians seeking reelection can stick their heads in the sand and hope that voters have theirs stuck somewhere else and pretend that this nation isn’t facing a fiscal dilemma far worse than the Great Depression.

Richard August is a North Kingstown resident and a regular contributor to the Standard Times. He served for six years on North Kingstown’s Audit Committee and was its chairman for the last two. His opinions are his own.

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