How would you balance the State’s short- and long-term budget problem?

Gov. Pawlenty announced his short-term budget cuts yesterday (MPR). Local impact? Nlfd News says: Northfield to lose $356,000

Figures released today by Gov. Tim Pawlenty show Northfield’s anticipated Dec. 26 aid payment will be $356,000 short of what city leaders expected… The governor’s decision reduces the amount Northfield will receive next week by a little more than 4 percent — from $1.56 million to $1.21 million. It’s unclear how the city will deal with the unallotment. The city is required by law to balance its annual budget.

Today’s editorial in the Nfld News: Gov. Pawlenty, give back our money

Taxpayers are not legally allowed to tell the state that they didn’t make enough money this year to pay their taxes, so why should the governor be allowed to use essentially the same argument? …  And while they’re at it, perhaps legislators should consider ending the governor’s authority to unilaterally take money away from our communities through unallotment.

Sen. Kevin Dahle blogged about the impending LGA cuts earlier this week:

dahleIf the Governor is set on using LGA to fill that gap, I hope he makes proportional cuts that will allow cities and counties to still receive badly needed checks this December instead of a blindsided approach that leaves our local governments reeling.

charlie kyte Seems to me that Pawlenty handled it reasonably well, especially in his sparing small towns and small counties from the short-term LGA axe… as well as military, veterans, K-12 education, and public safety (press release). I saw Northfield resident and Minnesota Association of School Administrators (MASA) Executive Director (and blogger) Charlie Kyte at GBM this morning and he agreed.

Besides, we’re not in such bad shape here in Northfield. City Finance Director Kathleen McBride commented here on Locally Grown back in early Dec when I asked her about City’s vulnerability to further cuts:

kathleenmacmcbride-thumb1We have already received notice of our 2009 state aid amounts. The dilemma is what the potential cuts could be and when they would be made. It is possible that the governor – and the legislature could “un-allot” 2009 aid in 2009. This would cause local governments to have to make mid-year budget reductions.

The City does have a $722,000 “revenue stabilization” reserve for this very purpose. This at least allows us some wiggle room should the cuts occur suddenly.

Rep. David Bly blogged about the State’s BIG budget problem earlier this month. He alerted me to it via email:

blyIn my most recent post I talked a bit about the budget crunch we are facing at the State level, I encourage constituents to weigh in on suggestions for the resolving the budget problem.  It occurred to me that Locally Grown might be a place to generate some discussion.  I do genuinely want to hear ideas from those who are interested in offering them.  The $5.2 billion short fall will not be made up by using one approach or by a simplistic solution and the more ideas we have to work with the better.

Sen. Dahle makes a similar plea in his Thursday blog post.

We’re planning to have both Rep. Bly and Sen. Dahle on our radio show/podcast in the next two weeks, so now’s a good time to start the discussion.

How would you balance the State’s short- and long term budget problem?


  1. Griff Wigley said:

    Ray Cox had a guest column in the Nfld News last week titled: Time for some creative plans to solve deficit.

    An excellent starting point would be for the legislature to roll back the $2.5 billion of new spending implemented in 2007. Or they could, as some have suggested, start using a zero budget baseline, making every state agency rationalize all budget requests. But there are also a couple of simple things the legislature can do that will help restore confidence in state government.

    First, the legislature should roll back their compensation to 2006 levels. One of the first things the House DFL leadership did in 2007 was greatly expand legislative compensation — by as much as 125 percent in some cases. At a time when our families, businesses and farmers are hurting it would be appropriate to rein in legislator compensation back to the very adequate 2006 levels.

    A second action would be to reduce the number of House committees back to 2006 levels. For many years the House operated with 24 standing committees and divisions.

    December 20, 2008
  2. Griff Wigley said:

    Former Sen. Mark Dayton had a commentary in the Strib last week titled: Fixing Minnesota (miracle not required) .

    For the past two decades, two Republican governors and one independent/libertarian have enacted those policies. What is the result? They have turned the Minnesota Miracle into the Minnesota Nightmare! This latest budget crisis should drive the final nail into the coffin of their fiscal and policy delusions.

    Their lowering taxes for the rich has created a regressive state and local tax structure in which the wealthiest 10 percent of Minnesotans pay a lower percentage of their high incomes in state and local taxes than do the next 60 percent of taxpayers. Many of those beneficiaries have been business decisionmakers. Yet their gains have not translated into better schools, better highways, better jobs or better lives for most other Minnesotans.

    December 20, 2008
  3. Griff Wigley said:

    Center for the American Experiment Executive Director Mitch Pearlstein had a commentary in the Strib last week titled A bit of context for the state budget crisis:

    President-elect Obama’s chief of staff, Rahm Emanuel, recently was quoted as saying, “You never want a serious crisis to go to waste,” by which he meant these are precisely the days when big improvements in government and the rest of society are possible. He was right, as was the late economist Milton Friedman, who said that only crises, actual or merely perceived, produce real change, and that when they occur, actions taken depend on “ideas that are lying around.”

    What good and germane ideas are lying around? State Sen. Geoff Michel, R-Edina, and State Rep. Laura Brod, R-New Prague, took advantage of one last week when they proposed leasing Minneapolis-St. Paul International Airport and the Minnesota State Lottery to private operators, a move that could increase state revenues by billions without compromising public safety in the least.

    December 20, 2008
  4. Griff Wigley said:

    Dane Smith is the president of Growth & Justice, had a commentary in the Strib in early Dec. titled: Three fundamental facts for Minnesota.

    During our decade-long experiment with disinvestment in the public square, Minnesotans have been asked to believe this: Government is the problem; it’s too big, and less of it is the answer. And we can tax-cut our way to broader prosperity and balance our budget crises without new state revenues.

    Brace yourself for more such bromides, spiced with fresh anecdotes and selective statistics, when we get a state government budget forecast today that projects billions less in revenue for the next two years.

    December 21, 2008
  5. kiffi summa said:

    I don’t know, Griff … it looks like since the only (4) comments on this thread are yours … there is either no interest or, probably, not a clue as to how the state budget can be balanced , especially with this governor.

    But I noticed that K.McBride says in the original post above that the city has a $722,ooo “revenue stabilization” reserve to be used for this sort of cut; but Saturday’s NFNews quotes Joel Walinski as saying there is about half the $350K in reserves set aside for such cuts.
    I would imagine McBride has the right figure since she is the city’s Finance Director. I hope she is correct.

    December 21, 2008
  6. Griff Wigley said:

    Sen. Kevin Dahle and Rep. David Bly are our podcast/radio show guests this week, talking about the state budget from hell. We’re recording it today (a day early) and I hope to have the audio/podcast posted by tonight. It’ll air on KYMN at the usual time, Wed. at 5:30pm.

    December 23, 2008
  7. Kathleen McBride said:

    One of the things that has always frosted me about the state / local government structure here is the wording on the property tax bills. The total tax bill for your property is shown and then followed by offsets / reductions by the state (i.e., aid provided to local governments). Well, where did the state get the money that reduced your property tax bill?! (Stand up and pull money out of your other pocket!)

    Our system is too complex, too difficult to explain to residents and business owners. I honestly wonder what the cost is for the bureaucracy that has to support it. I’ve worked in NC and MI – and while there were some state aid, the local levy authority was just that – local decisions made by the Council, School Board and County Commissioners. In NC there was a maximum property tax rate established by state law; in MI, the property tax couldn’t increase more than the rate of inflation (debt and other exceptions). The states’ financial status did not impact local governments as dramatically as in MN.

    This month’s aid cut will be a drop in the bucket to what we can expect next year. And the city will have to dramatically alter the 2009 budget (just so recently adopted).

    December 23, 2008
  8. kiffi summa said:

    But Mac, now I’m confused …. on another thread you said there was a $722,000 reserve fund for situations like this. ?So, won’t that fund be used for this last minute adjustment for this year?
    Another confusing comment was in the NFNews, crediting Joel Walinski with saying there was a ‘slush’ fund for about half of the LGA cut (356K), so only half would have to be adjusted before Dec 31…
    What’s the right answer?

    December 23, 2008
  9. William Siemers said:

    A couple ‘blue sky’ (and probably unworkable) ideas.

    Collect sales tax (or an equivilant fee) on all internet transactions for goods and services sold out of state but delivered to MN residents. Or on any internet transactions originating in Minnesota. (This may require a federal solution…in any case, emerchants have had this no sales tax advantage long enough.)

    Install toll bridges/toll roads on the nearest non-reservation land adjacent to casinos. Or allow open casino gambling (taxed) that would compete with the existing facilities.

    Legalize marijuana. Tax it and control it. Release anyone from prison who is incarcerated for a non-violent marijuana related conviction. Legalization will also allow for a reduction in law enforcement personell currently employed in this ridiculous aspect of ‘the war on drugs’. This will also require coordination with federal law…but hey…let’s not let this crisis ‘go to waste’.

    December 24, 2008
  10. David Henson said:

    Mark Dayton’s quote above could only be made by someone born with a Silver Spoon in his mouth. I think very few Minnesotans would hearken back to the Perpich administration days as a period when their “lives were better.” The thing is most of what is better about our lives (including blogging) were the result of private initiatives (investment funded from those saved tax dollars). Coerced choices via taxation simply cannot produce the dynamic economic results of private voluntary decisions. Dayton’s statement that schools, highways and government have not improved is not a strong argument for supplying more tax dollars.

    December 24, 2008
  11. David Ludescher said:

    The magnitude of the problem is difficult to grasp. $5.0 billion divided by 5 million residents is $1,000 per resident in MN. This means $20,000,000 just for the City of Northfield.

    December 24, 2008
  12. Kathleen McBride said:


    The City will amend the 2008 budget on Monday at a special meeting of the City Council to address this month’s aid cut of $355,263. The amendment reduces intergovernmental revenue by that amount and increases the use of fund balance (reserves). Within the City’s General Fund fund balance – there is a specific designation for revenue stabilization that totaled $722,000 at the close of 2007. Look for the staff report on the web on Friday – it goes into a bit more detail.


    December 24, 2008
  13. David Henson said:

    David L I have read the state is going to collect 32 billion in taxes (5 short I guess) but following your logic Northfield is then contributing $120,000,000 in taxes to the state. That is a staggering number when one thinks what could be accomplished in Northfield with those dollars were they kept local even for one year. If you draw a circle around Northfield then do the citizens of Northfield (understanding there is benefit of state expenditures) getting anywhere near $120,000,000 in value from the system ? I would think a constitutional convention or some means of restructuring government from the ground up would really benefit MN.

    December 24, 2008
  14. Ray Cox said:

    Kiffi, I hope few comments does not translate into apathy by residents. I will admit that the state budget is a huge animal to wrestle with, but it has to be done. Thankfully, our state constitution requires the state to have a balanced budget every two years. Without that requirement who knows where we would be.

    Griff is correct that I had a column in the News about this issue. I gave two suggestions for reducing spending: repeal lawmaker raises and reduce House committees back to 2006 levels. These are tiny, tiny cost savings in the big budget picture, but in my mind, they will send a huge signal to taxpayers. When the legislature is willing to reduce their own unncecessary spending, then one hopes that they will treat others fairly also. If they are not ready to do their own reductions, then they most likely will treat others harsher than necessary.

    William, good thoughts. That is what we need. The US Supreme Court ruled that states cannot collect sales taxes on internet sales outside of their states….unless the 50 states implement a uniform system of sales tax. If that is done, then all internet sales would be subject to a uniform sales tax. There have been many proposals to create Racino gambling at Canterbury Park….but all have been rejected. This is a tough sell because conservative Republicans generally don’t support expansion of gambling, and most Demorcrats don’t support it due to the huge financial contributions they receive from Tribal political committees.

    David Henson, I couldn’t agree more with your comments. Mark Dayton was born with a silver spoon in his mouth and he continues to promote the supposed tax inequities between the ‘rich’ and the ‘not rich’. However, the huge majority of the taxes paid differential between these two groups is related to personal choices of spending. And Mark seems to always forget that the top 5 percent of Minnesotans pay about 70 percent of our taxes. We need to do everything we can to keep them here, encourage them to operate their businesses, stay here when they sell their business, etc. My comments to Mark are that he is free to donate any portion of his inherited wealth to Minnesota at any time. The Revenue Department will be happy to accept checks.

    The big issue the state is dealing with centers on the fact that state government has been expanding at slightly more than 5 percent a year. That is unsustainable regardless of the level of taxes you think you can collect. If they raise taxes by $5 billion this year, that will go into the mix for the following biennium as the ‘base amount required’… expanded by another 10-11 percent for the biennium at a minimum. Minnesotas demographics do not support this level of growth. Maybe someone can come up with a brilliant plan to attract young, high earning professionals by the boat load and our population will start to grow again, but I would not hold my breath for that to happen. Absent this type of growth we are going to have to learn to deal with living within our taxing means. Can we do it?

    December 24, 2008
  15. Anne Bretts said:

    Ray, the top 5 percent of Minnesotans (by income) pay 70 percent of taxes. What percentage of income do they control?
    According to the Wall Street Journal in 2007, the richest one percent of Americans earned a postwar record of 21.2 percent of all income in 2005, up from 19 percent a year earlier, reflecting a widening income disparity among different classes in the nation.
    Using Internal Revenue Service data, the paper noted that the fortunes of the bottom 50 percent of Americans are worsening, with that group earning 12.8 percent of all income in 2005, down from 13.4 percent the year before.”
    The rich pay a disproportionate percentage of taxes because they control disproportionate amount of wealth. Sounds more like they’re just paying their fair share or less.

    December 24, 2008
  16. William Siemers said:

    a couple more ideas for raising revenue:

    Sales tax on food and clothing. While sales tax is regressive for the poor and working poor, it is not necessarily regressive for others. (No sales tax on lobster tails, filet mignon, Brooks Brothers suits, Mink coats, etc.???) Give protection akin to an earned income credit for sales tax paid on food and clothing to the most at risk, but charge the tax on every item sold.

    Personal Property Tax: Boats, cars, furniture, appliances, art, jewelry, cellars full of vintage wine, non interest bearing cash accounts, etc., constitute untaxed wealth and could be taxed yearly at a nominal amount.

    December 24, 2008
  17. david beimers said:

    I’m pretty much a lefty, but I see few add’l opportunities for revenue growth. I would not be opposed to legalized gaming (or marijuana), but I think the revenue options there are limited.

    As for cuts, I’ve worked in state govt (public safety), and I recognize there is waste that could be trimmed. Unfortunately, that means layoffs, which is not good for those workers and their families.

    It’s going to be difficult for MN to address the budget shortfall without addressing the major expenditure of health care. Even though MN has done better than some states in minimizing the growth in the cost of Medicaid over the past few years, it has still been growing at a much faster rate than inflation. As long as health care is treated as a state issue, we’ll continue to see states like MN, with progressive ideas about health care, struggle under the costs of providing coverage to low-income families and children. I expect we’ll see some of health care coverage rolled back in the upcoming session.

    December 24, 2008
  18. Peter Millin said:

    With a lot of people losing their jobs how could anyone justify any increase in taxes?
    I have been asked my my employer to do with less this year. He cut my bonus to zero and has eliminated any raises for 2009.
    How can we ask working people to live with less but don’t require the same “sacrifice” from our elected officials?

    I have listened to part of the Bly/Dahle broadcast. They have correctly analyzed the problem, but don’t offer any real solutions.
    They operate on the premise that only government can get the economy going by initiating infrastructure projects.
    In general I do believe we need infrastructure improvement and we should spend our money wisely to do so. But to conclude from this that this will stimulate our economy ignores certain facts.

    The way government finances these projects is by either raising tax revenue or by printing money we don’t have. In both cases government does not create new value. In taxation they just take money from one person and gives it to another, which in essence is a zero sum gain.
    Printing money just devalues our own money and makes it worth less.

    The perceived creation of jobs and wealth in both cases is really smoke and mirrors only and doesn’t address the fundamental problem.

    Ray Cox is correct with is assessment of the problem. The only way we can increase our wealth is to allow the production of it. We need to attract young entrepreneurs to come here create businesses which also creates jobs which in turn creates revenue and wealth.
    Minnesota, depending on who’s numbers you read, is in the top ten when it comes to tax burden in the USA.
    It also is 42nd when it comes to a favorable business climate.
    Raising the taxation burden on people will only worsen the picture and make it less likely for businesses to come here.
    I don’t see how we can sustain government growth at 5% per year without being taxed to oblivion.

    If we decide to tax the rich the effect will backfire on us. Money and wealth has become more portable then ever. If we don’t make it attractive for people with wealth to come here. They just move on and live somewhere else and we essentially lose even more revenue.

    The real solution is for us to ask ourselves the question on what we expect the government should do for us.
    Then properly fund it and hold them accountable for it.

    I think legalizing pot is a mistake. Pot in itself is no more dangerous then alcohol, but it usually leads to the desire for stronger drugs. Besides it tends to make one paranoid, lazy and unproductive.

    December 25, 2008
  19. Ray Cox said:

    Anne, I do not dispute the facts and figures you listed. However, I am not in favor of social engineering to limit earnings for some selecdt group of people. America is the great country that it is today because we have (generally) a working free market system. I am not advocating for reducing the taxes on our high earners. I’m fine with things the way they are. But I also think the state then has an obligation to live within that revenue stream. As I said earlier, ‘solving’ the budget shortfall by implementing some new big taxes on a single segment of the population is not wise and can be predicted to not ‘solve’ anything. I agree with you that “the rich” are paying their fair share.

    William brings up the wider sales tax base .That really isn’t such a bad proposition if enacted properly. One downside is that it hits lower income people hard. However, most of the really low income people do not pay any income tax at all, and in fact a huge portion of them receive a check from the government due to the Earned Income Tax Credit program. So a broad based sales tax really doesn’t hurt them as much as some people claim…..but there is a time lag in when they pay the increased sales tax and when they get their EITC check.

    Minnesota used to have a personal property tax. The Assessors came around every year and imposed taxes on your TV’s, belongings, etc. It was phased out about 40 years ago I believe as it was very, very hard to enforce.

    I continue to believe that Minnesota has to move from a ‘business as usual’ mindset to actually looking at demographics and charting a new course that matches where we are headed. They need major discussion on some issues that have not had good discussions for years. Example: Should individuals be required to use up evey last asset they have to fund their long term care? Or should they be able to shield some assests to pass on to their heirs, as we operate now?

    December 25, 2008
  20. David Bly said:

    Ray, it is difficult to understand your statement (in 14) that state government has grown by 5% per year in light of facts presented in a recent report by the Minnesota Budget Project “The Lost Decade,” which states ( ):

    Since Fiscal Year 2003, state funding has declined in the four key areas of investment (after adjusting for inflation).

    And Minnesota has lost ground compared to other states.

    State general fund spending on E-12 education rose by 10 percent from FY 2000 to FY 2009. A major tax reform meant that in FY 2003, about $1 billion in school funding was taken off of local property taxes and replaced by state funding. However, state E-12 funding has gradually declined since FY 2003.

    State general fund spending on higher education dropped 16 percent from FY 2000 to FY 2009. Significant cuts earlier in the decade were partially restored in recent years.

    State higher education funding per full-time student dropped by 28 percent from FY 2000 to FY 2007.

    The state cut funding for child care assistance by a cumulative total of $250 million from FY 2004 to FY 2007.

    State funding for affordable housing and homelessness prevention gradually declined in the 2000s, with the exception of two one-time boosts in funding. From FY 2001 to FY 2009, funding fell by 17 percent.

    Minnesota is now average in its education spending compared to other states. In Fiscal Year 1987, per pupil education spending in Minnesota was 11 percent above the national average. By Fiscal Year 2006, Minnesota’s per pupil spending was equal to the national average.

    So where does this increase in state government come from?

    Kevin Phillips in his recent book “Bad Money” states that real inflation when figured accurately would be closer to 6% not the usual 2% increase reported in most circles. Add to that the fact that the State of Minnesota does not figure inflation in its budget spending. 5% growth would actually be a net loss. But perhaps Ray can explain where his figure comes from.

    As to the 5% wealthy who, as you report, have to pay 70% of our taxes, the Minnesota Tax Incidence Report states that they will likely pay 10% of their total household income while most others pay 12%. If it’s true isn’t it really a statement of how much greater their income is than the rest of us? If they came here when Minnesota was investing in the things we need as a state and the State retreats from that investment as we have been doing isn’t it more likely they will leave if we can’t provide the things that once made our state great. We may see a mass exodus of the wealthy and turning away form our state because we can’t supply the educated workforce or infrastructure that fed our economic growth. Years ago the advocates of investment argued that not do so leaves us not much different than our cold neighbors, with the investment we became in economic force. My how times have changed.

    For further reading, people might check out these blogs on tax fairness:

    Or this one on decline in state revenue:

    December 25, 2008
  21. john george said:

    David- The problem with statistics is that they are just that- statistics. They must be interpreted and that interpretation applied to fiscal policies. You state in your post, “…We may see a mass exodus of the wealthy and turning away form (sic) our state because we can’t supply the educated workforce or infrastructure that fed our economic growth…” This is a common liberal litany I keep hearing. Do you have some actual research to support that theory? I assume you do, as you present it as a fact. I would just like to see some documentation.

    The problem I see with trying to increase the amount of tax money the top 5% pay is that they have much more flexibility in their movements. If they decide the tax structure is too great to handle, they can move somewhere else or exercise loopholes written into the laws to seek shelter. It is these inequities I see as something that should be addressed. I have heard some ideas about a flat tax, that everyone pays a set percentage of their gross income, no matter what it is. This would only be fair if the loopholes in reporting income were removed. I just haven’t heard anyone pushing that policy, yet. The attack seems to be on the top 5% rather than a uniform system.

    As far as getting out of this financial mess we are in, I don’t have any quick answers, and I don’t think there are any. Just as bankers and investors gambled on future returns on increasing property values, and lost, the government has gambled on the same theory in collecting taxes. It just isn’t wise to count your chickens before they hatch.

    My son lives in North Dakota, and with the discovery of economicly feasable processes to extract the oil in western N. Dakota, they are rolling in the money they have. They can’t figure out how to spend it fast enough. But, because the state has been controled by conservatives for the last couple decades, the government has not gone down the path of social spending and entitlements. With the advent of a new resource, the taxes are more than enough to cover the needs. Now, if there were another natural resource in Minnesota that could be developed, our deficit could disappear quite quickly. Unfortunately, I am not aware of anything like this.

    December 25, 2008
  22. Bruce Wiskus said:

    David in post 19 you state that the State Government has not increased, WHEN ADJUSTED FOR INFLATION. That is the real kicker.

    It is a typical response from the left that if the increase is not greater than than inflation index it is actually a cut. When in reality it is an increase.

    If I make $100 and get a raise to a $103 but inflation is 3.5% did I get a raise or not?

    The fact of the matter is that there are going to have to be real budget cuts at all levels of government. Economist on both sides of the aisle agree that we can not tax our way out of this current situation. Even President elect Obama is backing off on repealing the Bush tax cuts.

    Budgets are going to have to be trimmed and yes it is not going to be fun for any of us.

    December 25, 2008
  23. john george said:

    For those of you who would want to read it, here is a link that I feel gives a pretty good analysis of state governments’ actions affecting business climates:

    Since business is the source of taxable revenue, I think it important to consider how we attract and keep those businesses. Their profitability and success directly affects tax collection. This is where the fundamental differences between fiscal conservatives and fiscal liberals affects how these needs are interpreted and addressed.

    December 25, 2008
  24. Ray Cox said:

    David, I’m not sure what numbers you use when working on state budgets. When I served I was quite content to use the Department of Finance figures. For the last biennium, 08-09, the state budget grew by just over 10.1 percent when compared to the 06-07 budget. There is no dispute on that. I don’t have all the previous Dept. of Fiance figures in front of me, but I can assure readers that government spending did in fact increase by roughly 5 percent per year.

    As John points out so well in #20, statistics can be twisted and turned into any shape. That is why I believe it is far better to simply use the figures from the Dept. of Fiance. They don’t lie. They don’t twist things. They simply report the actual tallies of spending plans.

    And Bruce, thank you for making the point about how increases are often looked at. The media constantly reports on ‘cuts’ to various programs and budgets, but they most often are not really cuts. They are reporting that some agency or division wanted a 12 percent increase in something and received an 8 percent increase, so they ‘were cut 4 percent’. Only government spending gets reported in that manner and it is a rather bizarre way to look at the world.

    And David, K-12 spending received increases of just over 8% in the 06-07 biennium, then was granted another 8% increase in the last biennium. That works out to just about 17% increase in 4 years. With inflation at record low levels that is a very health increase, especially with a declining student enrollment. Carefull management of funds by local school boards is required, but no one can say that Minnesota is not funding k-12 well.

    I agree with John, that Minnesota risks driving businesses out of the state much faster with a hostile tax and business climate than we do by supposedly not producing well trained workers. For example, I suspect it won’t be too many more years and we will see 3M headquarters leave the state, and take just about all their remaining jobs. That won’t be because of poorly trained workers. It will be related to taxes and business climate, as well as a change in the location of the bulk of their customers to foreign lands.

    As I said earlier, Minnesota has to come to grips with changing demographics. We cannot continue using methods that we used 30-40 years ago. The times have changed and our state has and is changing. Today’s article in the St. Paul Pioneer Press reports that about 90 percent of our k-12 schools will be having reduced student levels. There is your lack of workers. If we cannot attract people to move to this state to live and work here, then we are going to have a shrinking work force, schools….and a shrinking tax base.

    We’ve recently seen a perfect example of what happens when old methods are not replaced by new methods suited to current conditions…..the UAW and the American auto industry. The UAW is so set in its ways that it refused to even talk about any contract concessions needed in an effort to keep the auto makers alive. And industry management agreed to various unstable contracts over the years that essentially guaranteed future insolvency, but they did it for current year labor harmony and current year earnings. The Congress’ rescue plan failed to advance. President Bush funded a smaller level of ‘rescue’ money—-but does anyone really think it will do anything to keep the auto makers alive and healthy?

    John is absolutely correct….”Since business is the source of taxable revenue, I think it important to consider how we attract and keep those businesses.” Minnesota can either properly address that issue, or we can ignore it, use outdated models and methods, and watch our business climate deteriorate and shrink—and our tax base with it.

    December 26, 2008
  25. Sean Fox said:

    >If I make $100 and get a raise to a $103 but inflation >is 3.5% did I get a raise or not?

    Bruce raised this question. Its a good basic quantitative literacy question. One way to illuminate the answer is to consider another question: If we paid Bruce $100 one year and then the next year paid him 300 pesos and inflation went up 3.5% did he get a meaningful raise? Clearly the number associated with his salary got larger (300 is larger than 100). But if he tries to go buy something with that money (assuming folks are just as willing to peso as dollars at current exchange rates) Bruce would find he can’t purchase as much stuff (gas, milk, etc…).

    I’m guessing he wouldn’t be happy if we labeled his new salary a ‘raise’. The point here is that the number of dollars (or pesos) isn’t actually the thing any of us cares about. What we care about is how much ‘stuff’ we can exchange it for. So talking about changes in ‘cost’ over time without taking inflation into account is pretty silly. Because if you don’t take inflation into account you’re not really talking about changes in costs–you’re talking about changes in cost mixed in with changes to the units you’re using to measure cost. This mixing together of the thing that actually matters (real ability to buy stuff) and the something that is just an arbitrary number makes it harder to make clear arguments. We could just figure the state budget in English Pounds (or even Euros) this year and get the budget to go down to a smaller number. Would that make anyone happy? I suspect not.

    So when I see folks making arguments about costs ‘changing’ and they aren’t taking inflation into account I’ve got to assume they either don’t actually understand how money works, or that they are trying to get me to believe something that isn’t true.

    December 26, 2008
  26. Peter Millin said:

    Thank you David and Ray for sharing your thoughts. I certainly don’t follow the numbers as closely as you do.

    All I can offer here is my family budget and I can attest that over the years the tax burden and inflation has reduced my take home pay steadily.

    Inflation is caused by an oversupply of money. This oversupply was created by irresponsible budget management and a consistent increase in debt.

    We can argue about who created the debt and when, but for working families this means very little. The end result is just the same regardless at what level the debt has been created.

    Unfortunately I don’t hear much on how we seriously going to fix this. All I see is finger pointing and academic discussions on how to raise more taxes.

    It is easy to criticize the Governor for taking some unpopular actions. It is much harder to offer tough solutions that will reduce the debt without raising taxes.

    We can raise taxes on the rich which is an easy and very popular target, because it only hurts a few initially.
    It does however neglect to explain the trickle down effect it has on society as a whole.

    Some years back we had a luxury tax on yachts, boats and other luxury items. As a result these items became more expensive and the demand for them went down. Which forced some of the makers of them to either close down or layoff people. In the end the tax hurt more the working class then the rich.

    Just as recent as last year MN has given themselves a higher per diem and now Washington is considering a raise for themselves????
    How about politicians lead by example and take a pay cut? Just a thought.

    December 26, 2008
  27. Sean Fox said:

    Ray, I’m not following your arguments. You say “Carefull management of funds by local school boards is required, but no one can say that Minnesota is not funding k-12 well. ”

    I’m pretty sure I’ve been reading in the papers about school districts across the state (and even here in Northfield) having to cut programs and having funding referendums on local ballots in order to keep from cutting programs. Is the implication that schools were funded ‘too well’ before and now they are simply funded ‘well’?

    You also make (a not adjusted for inflation) argument about funding for schools having risen over the last two budget cycles. But I think we all remember that in the years before that school funding from the state received cuts that were much larger than any recent
    increase. So if you’d choose to look over a slightly longer period of time you’d see that school funding has not made a dramatic jump, or even a jump at all.

    December 26, 2008
  28. David Bly said:

    John thanks for pointing out statistics are statistics and more often times than not depend on your political perspective for how you see and interpret them. Take for example the views of the Tax Foundation not everyone agrees, here are some critics:

    I have not heard that Obama is rethinking his repeal of the Bush tax cuts. The reason the Reagan, Bush and Minnesota tax cuts to the rich have not worked is that the very wealthy are not interested in creating the promised jobs their proponents keep promising. They are interested in investing in things that increase their wealth. And unlike tax cuts to the middle class they can’t spend enough in consumption to make a difference in the economy.

    Let’s not lump all businesses and all taxes together either. I can see there are some small businesses that are clearly more effected by taxes as clearly many Northfield businesses are adversely effected by sharp increases in property taxes. I am not proposing we raise property taxes, which have been the result of cuts to LGA at the State level.

    What I am hearing is that we are in very unusual times right now and just as Eisenhower spent money to develop the Interstate highway system to escape a recession Obama is proposing government spending on infrastructure to stimulate the economy. This is because right now the Government is the only entity right now in a position to create growth in the economy. There is so much uncertainty in the private sector that investments and borrowing are nearly impossible.

    Those who want to use such an opportunity to shrink government more are putting the economy at greater risk.

    Bruce I don’t believe I said that we have seen a cut in spending, however reports I have read say that the rate of overall state government spending is in decline. But at the ground level when the Northfield School District experiences 6 to 8 % inflation and receives 1% or 2% or God for bid 0% increase in funding from the state, the District must make cuts.

    When the State of Minnesota receives less in revenue than budgeted for (and currently we don’t budget for inflation in projecting spending) it must cut, to the tune $5.2 billion right now. We can’t deficit spend our way out of this as we have to balance the budget. I appreciate the suggestions reflected in the comments here and I am sure we will have to consider these ideas. I also think it is important to remember that most economists are saying that what we are experiencing is not just effecting state government spending. The economy as a whole is changing and the market appears to be in a free fall and we don’t know what will happen. More and more people will turn to government at the state and federal level for help. We are seeing more evidence that our economy is not a free market system as much as conservatives want to turn it in to that. We are a mixed economy based on interactions of private, public and non-profit activity. They all play an important role and right now the government (public sector) maybe what we need to rely on to keep the economy afloat.

    December 26, 2008
  29. Ray Cox said:

    Sean, Minnesota’s schools have never received an actual dollar cut. There were several years (I believe 3 out of my 15 years) when I was on the school board that I remember we got 0% increase, which is to say our funding from one year to the next year was left the same, as long as we had the same number of students.
    In 2003 schools again received a 0% increase. They did not get a cut. However, due to the way schools are funded, if a district saw student decline then under a 0% increase they would actually receive fewer dollars than the previous year.

    In my mind there is nothing wrong at all with local school districts making the decision to ask local voters for school support. That is what is meant by local control. Some districts do not do it, but most do. For example, until 2 years ago Belle Plaine had never asked voters for levy support. They elected to run their schools on what the state sent them. That’s a local decision. Local school boards make the decision about what programs and classes to offer and still fit their budget.

    I personally think we have a pretty good balance between state and local school support right now at about 82% state and the rest local, if a levy is in place. In 1972 when Minnesota was recognized for our “Minnesota Miracle” we lifted state school support to 72% with the rest on local taxpayers. As noted, Minnesota state support has gone far beyond that figure today….and I think it is appropriate.

    I do not think the state should ever be in the position of 100% school support as Gov. Ventura attempted to do. I want to have local taxpayers have ‘some skin in the game’ so they pay attention to what is going on in the schools. As long as we have local bargaining for employees, I think we must retain some local taxing effort. A system where 100% of school funding comes from the state will lead to a complete state run school system….something I would never, ever support.

    I do not care for the current method of schools being forced to ask for all their local support in the form of a voter approved levy. I’d rather see a system where the state pays a set portion of school costs, and local taxpayers are assessed the balance of the cost on their property tax statement. I’d keep the voter approved levy option, but would hope it would be rarely and carefully used.

    Finally, I have no real problem with budgets that do not include inflation. It is an easy calculation to make as an add in as budgets are being set. In many respects it is much easier to use raw accurate numbers. Inflation is a guess as we all know. I’d rather see inflation added in as a best guess at the time the budget is being adopted and formulated. I do have a problem with the way the state adds inflation to the revenue side and not the expense side.

    December 26, 2008
  30. David Ludescher said:

    One of the reasons that gov’t spending is confusing is based upon unfunded mandates.

    It’s my understanding that the Sibley school expansion request is not based upon student enrollments so much as the need to have adequate space for the special needs programs that are required by the state.

    December 26, 2008
  31. john george said:

    David- Thanks for the reply. The one issue you and I differ on is whether government can actually increase wealth. It can print money, but all that does in dilute the value of the money in circulation. As far as people looking to the government to bail them out, I think this has contributed to the economic downfall we are experiencing. The government cannot supply everyone’s needs. In my opinion, government has enabled poor management, both of personal finances and now corporate finances. There is no shame in trying something and failing and learning from that experience. When we insulate people and now corporations from the realities of life, then I think we stifle growth, but I know that my opinion is not popular right now. It would be nice to see some of JFK’s proposal being advocated today- it is not what your country can do for you; it is what you can do for your country.

    It is interesting that you cite Eisenhower as one who built infrastructure with the national freeway system. This has been a mixed blessing, in that it has facilitated the local distribution of goods and services more easily and expanded markets. It has also fostered American dependence on personal transportation rather than public transportation. It seems we can’t seem to find the balance between the two concepts. I appreciate what Obama seems to be doing so far in trying to use a centrist position in governing. We’ll see how successful we can be with that.

    December 26, 2008
  32. Sean Fox said:

    Ray, I certainly agree that putting fixed imaginary future inflation numbers into future budget calculations is misguided. Predicting the future requires a lot more nuanced judgment than that. Though imaging the future will be exactly like today (and so budgeting without any consideration of inflation) is just one possible guess about the future and not always the wisest one.

    My qualm is with folks citing past budget figures (where the inflation rate is well documented) as support for arguments without doing the inflation adjustment.

    I hope we all agree that the actual purchasing power of the money (not the number) is the thing we should really be caring about. And if that’s the case arguments that try to convince people we have spent “too much” or ” not enough” (which at their root appeal to our gut instinct as to what is a ‘big’ number) and which fail to cite the number for the ‘real’ value that we’re all concerned with can mislead.

    For example you cited an increase in the state education funding from 2004-2005 to 2006-2007 of just over 8%. That sounds (intuitively) like a big number. (which I think was your point) But you don’t say whether that’s inflation adjusted. If it (for example) is not then we could do a quick check of the consumer price index (comparing for example Jan 2004 to Jan 2006–not really the right calculation but just for the sake of example), see that inflation over that two year period amounted to about a 7% increase, and so the actual increase in real purchasing power was only 1%. That feels like a much smaller number and makes your argument much less compelling.

    Perhaps the 8% you cited is inflation-adjusted. Perhaps it isn’t. But I think this illustrates the danger of not using inflation-adjusted numbers in cases where they can give a more accurate picture of what’s really going on.

    December 26, 2008
  33. There will have to be some tough choices made and we cannot afford to squabble of who is right and who is wrong. One thing I know for sure Long-Term Care and the people who work in the industry must not bear the burden of budget cuts or less funding we have a moral obligation to the workers and to our parents and grandparents since maybe someday they will need the services of long term care. Maybe holding it at current funding levels would ok but Long-Term Care cannot bear the brunt much longer. Long -Term Care cannot go to the voters and ask for a referrendum like some other needs of the budget can. I would like people to think that every time you drive by Three Links Care Center and Northfield Care Center think of the dedicated workers who work every day and holiday and they do not do it for the money. They do it because they are dedicated and very hard working . Just a thought David Roberts

    December 26, 2008
  34. Ray Cox said:

    John, excellent points. I too fear that we are creating a dependency culture that has the potential to doom us all. Turning to the government to ‘save’ you from whatever ails you is not the answer in many instances. You are right in that there is generally much to learn from a failed venture. Many successful people took several tries to make an idea or business work for them.

    Sean, you said “I hope we all agree that the actual purchasing power of the money (not the number) is the thing we should really be caring about.” Agreed. I also hope we all can agree that government budgets should not simply be based on what the previous budget was. Hard looks must be taken at what is being done with the money…is the plan working, are there measurable results, etc. Without doing that we just create bigger more bloated government. That is why a budget shortfall is actually about the only time that true government reforms can take place as it is the only time that programs get a hard look. The easy way is to cry for more taxes from the taxpayers. The real work is in figuring out how to do what government should do with the revenue collected. Advocating to make the revenue pie larger and larger for the same number of people is being the engineer for a train wreck.

    December 26, 2008
  35. Sean Fox said:

    Ray — I definitely agree that what government does with revenue and what the right amount of revenue might be is something that should always be a top consideration on the table. I would disagree with your statement that “Advocating to make the revenue pie larger and larger for the same number of people is being the engineer for a train wreck.”

    One of the defining features humanity is that it has gotten dramatically more efficient at producing stuff over the course of its existence. We leverage our intelligence to find better, more efficient ways to meet our needs and desires. 100 people today (leveraging the hard won prizes of long healthy lives, steady food, shelter, educated minds, technology, stable social structures, predictable availability of capital, etc, etc…) can produce dramatically more stuff (real or virtual) than those same 100 people could 100 years ago.

    The result is that people today can afford to spend radically more on government than they did 100 years ago simply because they are radically more productive. There is simply more money, more value around. We can spend the same percentage on the things that government buys us (much of which the free market can not) and get more and more for that same percent as we are more and more productive.

    So to say that (with a fixed population) a growing investment in the social goods that government represents will lead to some sort of fiscal melt-down doesn’t jive with the notion of steadily increasing human productivity. Of course if government growth is faster than GDP growth over long periods of time then we will eventually have problems.

    But I don’t think that’s our current problem (speaking now about the last decade of budget battles–this year’s financial turmoil is just bringing to a head a reality that has been lurking for some time). Our current problem is that while our GDP has been climbing steadily in recent years the fruits of those labors, that value, has come to rest in an unprecedentedly uneven way across the population. A very few hold most of that new value and the great majority hold very little of it.

    As a result you have the great majority thinking “we are in hard times, we must tighten our belts” since they have seen little growth in wealth. They are indeed in hard times. They indeed cannot afford higher taxes without having to make real sacrifices. At the same time the nation as a whole is wealthier than it has ever been.

    December 26, 2008
  36. David Ludescher said:

    David Bly: First of all, thanks for weighing in. It is good to know what our legislators think at a time like this.

    December 26, 2008
  37. Ray Cox said:

    Sean, we agree on some things and disagree on some things. I don’t think I could ever find myself uttering the words “The result is that people today can afford to spend radically more on government than they did 100 years ago” because it assumes that what government is doing is all proper, and that government derserves to take more and larger amounts of money from some people—often just to give it to other people. I believe there are better ways to accomplish much of what government is doing today by using other methods.

    Less than 10 years ago with the same level of taxation we have today, the state of Minnesota had so much excess revenue that ‘Jesse checks’ were sent out to taxpayers. Now today we are facing a $5.8 billion shortfall. That is after a $2.5 billion excess in 2007. Minnesota has got to figure out stable revenue amounts that fund proper government functions, then save a certain amount of surplus to get us through some of the difficult times. When we spend every dime we have in one biennium then have to face massive shortfalls the next biennium it does not make for good government.

    And as I said earlier, much of this has to do with Minnesota demographics. Take a hard look at demographics…numbers of people, ages of people, education levels, etc…. and you can see what we are facing.

    December 26, 2008
  38. David Ludescher said:

    Ray and John: I agree with you guys that no real progress can be made until we abolish the idea of a “nanny” state. Especially damaging is the concept that every expenditure is an “investment”.

    The idea that the government, which already is trillions of dollars in debt, should spend money on infrastructure as an “investment”, is analogous to remodeling your house when you can’t make the mortgage payment.

    December 26, 2008
  39. Anne Bretts said:

    Ray and David L., can you give some specifics of services in the city, schools or the county that shouldn’t be funded, or which should be cut back significantly? I’m trying to see your definition of what constitutes a nanny state.

    December 26, 2008
  40. Paul Zorn said:


    In #14 you alluded to ideas you suggested recently in the Northfield News as possible ways to reduce spending: repeal lawmaker raises and reduce House committees back to 2006 levels. I’d defer to your direct experience on the substance of these ideas. But as you said yourself, these are tiny, tiny cost savings in the big budget picture. You suggest that such steps would send a “huge signal” to taxpayers. As a taxpayer myself I guess I do see a signal here, but the signal I’d get is less “now we’re really going to get serious about the budget” than “look how nicely we’ve rearranged the deck chairs.” I’m hoping for more substance and less symbolism. In times of serious economic pain I think there will need to be accommodation on both the spending and the revenue sides. If T-Paw just tacks hard right, it won’t be pretty.

    Concerning budget numbers, you describe yourself as “content” with Department of Finance figures, which indicate something like 10% biennial state revenue growth over recent biennia. But do you know whether those figures reflect inflation, population increase, or other such fac

    December 26, 2008
  41. Paul Zorn said:

    Oops … something jumped the gun on my posting a moment ago. Let’s try the last paragraph again:

    Concerning budget numbers, you (i.e., Ray) describe yourself as “content” with Department of Finance (now part of Minnesota Management and Budget, I think) the figures, which indicate something like 10% biennial state revenue growth over recent biennia. But do you know whether those figures reflect inflation, population increase, or other such factors?

    And are you also “content” with other information from the same source? For instance, the Price of Government report (go to

    and click on Price of Government) says that total state, local, and school district spending in Minnesota has remained almost constant, or fallen very slightly, over the last 10 years or so, as a percentage of personal income.

    I don’t know the best mix of spending cuts and “revenue enhancements” in these troubled times. But the idea that the price of Minnesota state and local governments are taking larger and larger cuts of personal income appears to be factually mistaken.

    December 26, 2008
  42. Ray Cox said:

    Paul, you are correct that the price of government has reduced slightly over the past decade. I have not checked lately but I assume it is around 16.5% down from 17% some years ago. I would hope that is a good thing in that government is delivering mostly the same basic services but at a reduced cost. I don’t think it will—-or probably can— go much lower. The price of government is simply the sum total of all the revenue governments take in, divided by the number of people in Minnesota. If we are not growing our population and we are not reducing government spending, then the price of government will go up slightly over the coming years. But if there are significant spending reductions made we may see the price of government remain stable.

    When I said I was content with the Finance Department figures, I meant that I had confidence that they were true and accurate. I don’t have the same confidence in most other reports as they are generated by those with ‘a dog in the fight’. The Finance Department is consistantly accurate.

    David L. your comments about remodeling your home when you can’t pay the mortgage are spot on. And that is what we are seeing with the federal government get involved in all these huge bailout programs. Managing a proper bankruptcy is not something the government should avoid. As someone said earlier, there is a lot to learn from a business closure. Where were all these government programs when PanAm folded up? When Braniff went bust? When Studebaker closed up? And when Northwest went into bankruptcy a couple of times—-and emerged healthy? They were not around and let the shut downs occur, as they should. The planes were purchased and kept flying. Studebaker was purchased and merged, just like Rambler and Hudson and Packard merged. Trying to prop up failing businesses is nuts.

    Anne, anything the state is doing for people that they can and should be doing on their own winds up in the nanny state column. In Northfield one might think the liquor store falls into a nanny state program. Lots of people consider state funded day care a nanny state program. Others think creating bike trails is a nanny state program. Then many think providing funds for college educations is a nanny state program. Others will gladly lump ethanol support payments into that nanny state category. One can go on and on with the list—-as long as you leave off the ones I like!

    December 26, 2008
  43. Paul Zorn said:

    Hi, Ray,

    I don’t mean to pick on your many postings … just want to rescue myself from any charge of apathy!

    Concerning the factoid you mentioned above to the effect that the top 5 percent of Minnesotans (by income) pay 70 percent of taxes …

    Like all factoids, this one is subject to interpretation and definition, but since you threw this one out, here are a couple of questions:

    1. What percentage of total income does this 5% control? Anne Brett asked this earlier and, unless I missed it, no answer emerged. Seems to me the answer is pretty important if the object is to assess what’s fair.

    2. You worry, perhaps justly, that tampering with tax rates can amount to “social engineering”. Fair enough, but isn’t *every* tax rate structure, including the status quo, to some extent socially engineered? If it’s true, as some have said here, that top earners actually pay lower total state and local tax rates than poorer folk, isn’t there some social engineering implicit in that situation? Weren’t the Bush tax cuts — which went principally to richer folk, even at a time of government deficits — another form of social engineering?

    My own view (in a spirit of full disclosure) is that *every* tax structure entails some social consequences and incentives. In some ways this is a Bad Thing, but taxation at some level is clearly necessary, so the object of good tax policy should be to raise the necessary revenue as fairly as possible, with as few perverse side effects as possible. Like other constrained engineering problems, this one is very difficult, but worth doing as well as we can.

    December 26, 2008
  44. Peter Millin said:

    It bears the question on how much real wealth we have created. It is true that our GDP has consistently increased, but it is also true that our national debt has increased at the same time.

    Couple this with a steady increase in inflation one could argue that our perceived increase in wealth isn’t that great after all.

    Their are always two sides to a balance sheet. How much is your worth really worth when offset against your obligations?

    David B. you’ve been trying to make the point that only government can create real growth in the economy.
    I respectfully disagree with you on this. Government run projects are nothing more then “make work” projects some of them with very questionable value.

    Surprisingly enough even Obama starts to understand that government is in no position to provide real growth.

    His hiring of Christina Romer as the head of the CEA speaks volumes on this matter.

    Christina Romer has clearly established that increase in taxation has a negative impact on growth.

    She has found that tax cuts are usually associated with increases in government spending, for example. But she has also found that tax increases cause the economy to contract. And her dissertation showed, to the great delight of free-marketers, that the federal government has not gotten much better at stabilizing the economy since the Great Depression.

    I hope Obama will be able to fight off those who believe that government is the solution for our economy….because it is not.

    December 26, 2008
  45. Griff Wigley said:

    In today’s Nfld News: City leaders say use reserves to replace LGA.

    The city has a little more than twice the $356,000 that Gov. Tim Pawlenty last week unallotted from the city, said Interim City Administrator Joel Walinski, who suggests using money in that fund instead of trimming the few expenditures that could be halted by year’s end. “That’s what this money was set aside for,” said Walinski. The city council is expected to amend the budget Monday at a 5 p.m. special meeting

    December 27, 2008
  46. Griff Wigley said:

    NY Governor Paterson, a Democrat, has proposed his budget and it includes cuts to K-12. NY Times: Paterson Proposes Austere Budget to Close Deficit

    Education would be particularly hard-hit, with an actual cut of $700 million in state aid in the next fiscal year, not just a reduction in projected spending growth.

    MN Growth and Justice on Dec. 11: For Minnesota, education on the chopping block.

    But during a panel discussion of legislative leaders in Bloomington on Tuesday, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said the sheer size of the projected $4.8 billion budget deficit for 2010-2011 puts education on the budget-cutting table. He noted that K-12 education is 40 percent of the $34 billion general fund budget. “Do the math,” Pogemiller said.

    December 27, 2008
  47. Griff Wigley said:

    I like the idea of zero-based budgeting, but is it politically feasible? And is there enough time to do it?

    Dec 9 MinnPost: Legislative leaders take pains to stress cooperation with Pawlenty in solving state’s budget shortfall.

    Pogemiller and Kelliher went over other themes they’ve talked about before, including “zero-based budgeting,” an evaluation of every aspect of government agencies and programs to see what kind of return on investment taxpayers are getting. The two say whatever isn’t working also will be on the chopping block.

    MN Growth and Justice on Dec. 11: For Minnesota, education on the chopping block.

    Since the forecast was announced Dec. 4 by the Minnesota Management and Budget department, Pawlenty and DFL leaders said they need to build the budget from the bottom, rather than making changes to the current budget. They have referred to this budgeting strategy as “zero-based budgeting.”

    Senjem said during the Bloomington panel discussion, however, that he was skeptical zero-based budgeting would yield a budget deal in an environment with 201 legislators and dozens of committees.“Try to make that one work for five months. I’m not sure they can,” Senjem said.

    Hmmm. Could we borrow from the strategies used to close military bases?

    The Commission submitted its revised list to the President on September 8, 2005. The President approved the list and signalled his approval to Congress on September 15. The House of Representatives took up a joint resolution to disapprove the recommendations on October 26, but the resolution failed to pass. The recommendations were thereby enacted. The Secretary of Defense must implement the recommendations not later than September 15, 2011.

    December 27, 2008
  48. Anne Bretts said:

    Thanks for your list, Ray. By your logic, would the Northfield Downtown Development Corp., the Convention and Visitors Bureau and EDA be creating dependence on the nanny state services to businesses who should be financing their own efforts? And given the liquor store philosophy, should the hospital be run by one of the many fine private health care organizations in the area? The ice arena also would be as discretionary as the bike trails, wouldn’t it?
    There’s a lot of money to be saved with your thinking, to be sure. I guess as long as everyone shares the burden, I’m willing to consider all the options.

    December 27, 2008
  49. David Henson said:

    The world power structure is decentralizing before our eyes. The traditional media is melting down because they can’t hold a large enough audience share (blame Griff). Financial markets are imploding – the biggest reason for this is probably that they are no longer a viable business model (they offer society no bang for the overhead buck). “The rich,” big corporations and the government functioned for societies as repositories of information – they were the Internet – but now we have the Internet which is far more efficient.

    MN government (all government) cannot remain the same any more than the music industry can remain the same. How does MN survive? The good news is its pretty easy to survive a huge pickup in economic efficiency provided entrenched interests are not reactionary to change. One major difficulty is how does local and state government navigate this change within a federal (or global) system – when said system is weaving around like a drunken giant?

    Business as usual would be to look to Washington or Wall Street or big corporate employers for answers … but these institutions are in crisis and unlikely to provide any solutions … in fact, they are already becoming the problem (tossing around billions).

    I would think one top priority for MN given our climate would be to become energy independent asap. Maybe Ray Cox or David Bly knows to what degree we can meet our energy needs with local or immediately regional natural resources (or reserves). If MN can’t meet its needs locally then I would think local energy sources be they windmills or whatever would be a top priority. Hopefully the world economic system will straighten itself out but having local energy independence would seem like a strategic imperative in a cold climate.

    December 27, 2008
  50. Sean Fox said:

    Peter points out that rising GDP has also been coupled with rising national debt and asks:

    “Couple this with a steady increase in inflation one could argue that our perceived increase in wealth isn’t that great after all.”

    This is the sort of question we can get the answer to if we’re willing to take the time to check out the numbers.

    The numbers I find (with a trivial google search, maybe you have better ones) indicate that national debt has varied from between 100% to 30% of the GDP over the last 60 years.

    This is equivalent to someone making $50,000 a year having a debt (mortgage, car loans, etc…) of between $15 and $50k.

    But at the same time the (inflation-adjusted, per capita) GDP has doubled.

    So, following our analogy we were making $25K with between $7k and $25 of debt.

    I don’t know about you but I’d certainly feel wealthier making 50k (even with 50k of debt) than making 25k (even with only $7k of debt).

    Of course, the irony is that average americans aren’t seeing this sort of increase in buying power because the fruits of most of that growth has come to rest in the hand of a very few, very rich people. And so you (and I) don’t perceive an increase in wealth.

    December 27, 2008
  51. David Bly said:

    Ray, I began this before your last post and read post 29 just before I posted this. So I will preface my comments by saying I am sure you would agree no method of funding schools is perfect. There are advantages and disadvantages to whether school funding comes more from the local level or the state level. One of the disadvantages of relying more heavily on local funding is the discrepancy of tax base. This has the effect of creating greater inequity in how schools are funded. I don’t think it is necessarily a given that state money takes away local control. I don’t think you meant to imply that Belle Plaine gave up local control when they did not have a local levy in place. All local school districts even those with a levy increase in place are worried about having to make cuts and don’t see asking for more local money as an option.

    The state has a wider tax base to draw upon because it can collect a variety of taxes. They can for example tax the income of the extremely wealthy to contribute to a larger pool of state funds which means there may be more funds available for schools than the schools could garner just from local property taxes.

    On the one hand you say you trust government numbers and on the other you say the way government spending is reported “is a rather bizarre way to look at the world.” As John points out numbers are numbers and cherry picking and throwing percentages around doesn’t really help us understand what is happening.

    The state economist, Tom Stinson, says in looking at the financial reports, “The State of Minnesota has a revenue problem not a spending problem.” Whether or not you agree with him depends on your perspective. Ray from your comments I would guess you think the Northfield schools either get more money than they need or at least are adequately funded. They should be able to educate our kids just fine with the money they have.

    If I were to say well, class sizes are too large, teacher salaries are not keeping up with inflation, or health care costs are increasing at doublet-digit rates, or fuel costs are on the rise. You might reply as you did with your comment about auto workers, concessions are in order. If you want more teachers, pay them less. Or put restrictions on doctor visits or employee illness to bring down health care costs. Or lay off some non-essential workers. The problem is, darn it, things just cost too much and we have to cut costs.

    Or I assume you would argue nursing homes are adequately reimbursed or maybe got more than adequate funds. If I said we hear from local directors they are unable to hold on to workers because they are restricted in offering them a competitive wage because of inadequate state funds. You might respond that they just have to cut back on spending elsewhere or we should reduce regulations so that they could deliver care more efficiently.

    Ultimately your argument seems to be government just does too much and should not try to do so much, people can take care of themselves. We all have to buy less stuff and learn to live within our means.

    Though it may be true Americans have been on a consumer-borrowing binge and they have to cut back, our economy depends on economic growth. Unless the benefits of that growth is spread around more fairly we have a concentration of wealth in one income group over another. That concentration makes it more difficult for money to circulate and promote overall growth. Less money means less economic activity, and more layoffs and business failures all spiraling downward and taking other businesses with them and less tax revenue for government and lower or lost wages means less tax revenue as well.

    Government has the potential to spend money on things we need and put people to work. If government reduces spending (and I know we will be forced to reduce spending) it only adds to a further downward spiral and cutting back on things people depend on from the government. So why is it people would argue that we need that age-old solution “shrink the government” and provide no new revenue? This attitude is a result of the very effective campaign to discredit government and effective political leadership and replace good government with inept government to prove the point.

    One constituent called me recently to complain that he was upset that when ever he has tried to reach some one in a state agency to get information he is never able to talk to a real person. “It should be might right as a taxpayer to talk to a real person when I call in to a state agency.”

    I do agree we need to look at whether or not government is spending money wisely and we need to be careful what we spend money on. But I also believe that what is new in government in the last 100 years is the role government plays in creating and maintaining a middle class. In the last thirty years we have seen government leaders trying to undue that commitment. The result is the shrinking middle class we see today. Shrinking good government means we return to the way things used to be when only the rich went to college, and workers were treated like chattel and home remedies were the only health care most would receive.

    Those were the charming good old days and I hope they are not the future we have in store for us.

    December 27, 2008
  52. David Bly said:

    I am not sure why but somehow my posts seem to disappear into cyber space. One problem I had, as Griff explained, was I had too many links. Perhaps lack of brevity is the other reason. I will try to be brief.

    First let me say how much I appreciate the discussion and although there is much philosophizing and ideology expressed and fewer concrete ideas it is all still helpful.

    I first wanted to answer Peter’s claim that I am saying government investment offers the only solution here. In normal circumstances, Peter, I would have to agree with you, that government does not offer the only solution. But what I have been reading tells me that what we are experiencing is not the norm. The fact that money for start up loans and expansions in the private sector is very tight makes private sector growth at best uncertain.

    Government investments in infrastructure and institutions that can put people to work and promote growth in the economy maybe the only way to go, under current circumstances. Learning from failure is one thing but if the economy fails, where are we? One economist said to me the government must keep the economy alive so that perhaps in ten years from now it will be able to recover. No I do not believe government is the driver of our economy but I believe that government can keep us going and it can attempt to spread the benefits of growth around so more benefit from it, which ultimately is good for the economy.

    My sense is that many comments in this discussion undervalue investment in public good, as if to argue if the private sector isn’t doing it, it must not be worth doing. I find this short sighted. Sean you mentioned that we now have greater capacity to invest in government to provide public goods. I agree and I also think over the past 100 years even in America, and especially in Minnesota (until recently) there developed a greater political will to invest in public good. A clean environment, a dependable transportation system, a public education system available to everyone, and the notion that living wages and access to health care should be considered public goods.

    I believe this political evolution is what had given us a strong middle class and our political departure from that in the 80s has put our middle class society and our democracy at risk. It is my hope that as we make our way through our current financial crisis we can see and restore that belief in investment in public goods. Not to do so I fear does us more harm as a nation and a state. This is why I do not believe we can only consider further cuts to our public infrastructure and must consider some forms of revenue to protect those investments in public goods.

    December 27, 2008
  53. Griff Wigley said:

    David, my apologies for the glitch. I’ve contacted the spam filter service, Askimet, to correct the problem. Neither the links nor the length should be a factor.

    December 27, 2008
  54. David Henson said:

    Government was discredited by the Nazis, the Communists, Saddam Hussein and endless other historical examples. And in this country, America, government is always going to be scrutinized like the devil by its masters – the citizens. David Bly you are obviously a very bright guy but the idea that some cabal has discredited the fine institution of government is a dog that doesn’t hunt.

    Let me ask a simple question, how many of those poor elderly people you site needing government nursing care are broke because of the lotto and Indian gambling? Why should Minnesotans respect a government that intentionally damages its citizens for short term funding gains?

    December 27, 2008
  55. john george said:

    Griff- This quote from the Strib-

    Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize.

    is, I think, a good example of the difference between net worth and buying/investing capability. Minnesota may have an enviable net worth, but the deficit is evidence to me that we are cash strapped. These assests are only a help if they are liquidable. Perhaps the airport and the sports facilities could be cl;aimed for this, but much of the real estate is tied up in parks and enviromentally sensitive areas. It is a little like my dad and his $3000 dog. He decided it was worth that because he traded it to a fellow for two $1500 cats. This reminds me of the PIK farm program of a few years ago. Farmers were “paid in kind” for their program acres. In other words, instead of getting a check, they were given a certificate for so many bushels of excess corn. This was only valuable if the farmer could find a market for it. It is the same situation we are in in much of business and government finances right now. There may be value there if we can just find a market.

    December 27, 2008
  56. Sean Fox said:

    David asks (perhaps rhetorically, but I’ll answer anyway)

    Let me ask a simple question, how many of those poor elderly people you site needing government nursing care are broke because of the lotto and Indian gambling?

    Likely not nearly as many as need government care because their pension vaporized when the company they’d worked for their entire life declared bankruptcy, while the CEO’s golden parachuted into repurchasing the same company now that the dead weight had been discarded. All hail the free market!

    And even if all those elderly and unemployed and sick getting government help did end up destitute solely as a result of their own poor judgment (since we all know that life is ultimately fair) they still deserve our support, despite their failures. Simply because they are human. At least in any country I’d be interested in living in.

    Why should Minnesotans respect a government that intentionally damages its citizens for short term funding gains?

    Minnesotans should respect the government because the government is them. There is no ‘other’ that is government. All the decision are made by those we elect. If we’ve made bad choices then we need to look in the mirror and decide how we can act better in the future. If you’re under 18 and have never voted you’re free to blame the man. Otherwise the blame falls squarely on your shoulders and the shoulders of all the other folks you see walking down the street.

    December 27, 2008
  57. David Ludescher said:

    David B.: If your statements (#51) are statements of religious belief – then I agree with you. In an ideal world, everyone would have access to health care, housing, food, education etc.

    But the reality is that the state is over $5.0 billion in debt. Government, like GM and most of us, has been irresponsible in balancing the budget. Spending more money when the government is deeply in debt is a sure formula for going even deeper in debt.

    December 27, 2008
  58. David Henson said:

    Sean – you misunderstand me I think those seniors suffering losses to STATE lotto and gaming have the STATE to blame. The STATE needs to act responsibly (as it once did when lotto and gaming in MN were banned) if it wants an expanded role in society. Lotto and gaming have done nothing to strengthen MN. The expanded Muni will do nothing to enhance Northfield. All the lawyers and politicians in this town know that to be true but they won’t stand up to the peer and money pressure ~ there is a whole lot of greed in government. Please get real, do you believe a government that promotes a get-rich-quick lotto franchise is going to act responsibly when it comes to regulating retirement funds? I agree people need to be cared for but the first rule has to be ‘do no harm.’

    December 27, 2008
  59. john george said:

    David L.- You bring up some very good, and I believe acurate, evaluations of your observations in your post #58. We do not live in an ideal world. In fact, the whole concept of preventive medical care is something that has become a general trend since WWII. That leaves a lot of US history that is without it. Also, the idea that the state government, being $5 billion short of predicted tax collections, is in any position to give out more money just strengthens the foolish practice of deficit spending. We may as well have everyone max out their credit cards to buy necessities, because either way we are spending money that does not exist, and has little hope of being made in the future. It is this mindset that I think we need to change. We do not DESERVE everything we DESIRE. Until we learn the difference between real needs and desires, we will continue down this same road we are on. The political differences come to play in the evaluation of these two concepts.

    December 28, 2008
  60. Ray Cox said:

    Paul Z. I don’t know how much wealth the top 5% of Minnesotan’s controls. I’m not sure why that is of any importance. We generally tax on income, so the top 5% is obviously earning a significant income….that is the number the state is interested in. Most of us, as parents, also hope our children go on to earn decent incomes and take care of themselves. As I’ve stated before, I have no problem with the tax rates or divisions in Minnesota right now. I will admit that I most likely would not design a system like it is, but I can live with it. And that includes with having the top 5% support a huge portion of state activities.

    I do have significant problems with the idea that the government is going to ‘create jobs and get us out of our economic slump’. I’ve often remarked at our dinner table, in jest, that I could solve our unemployment problems…..simply allow me to outlaw hydraulics. Now I fear that someone may have been listening in on my converstaions and is actually thinking about putting it to work. Totay in the St. Paul paper there is an article titled “If it’s more jobs we want, why not dig tranches with spoons?” That is following my outlaw hydraulics train of thought. The article points out:
    “The Obama administration’s goal of creating 3 million new jobs by January 2011 will run smack into ‘the natural demographis flow, which will add 3.2 million people to the workforce in the same time period, former Treasury Secretary Paul O’Neil said. In effect “we are going to spend $750 billion, the number of unemployed will rise and the unemployment rate will go down slightly.”
    Each job ‘will cost $250,000, which doesn’t suggest much labor intensity for the dollars spent” he said. “It makes me wonder if any of the planners or commentators are good at arithmetic.”

    We are going to have real trouble here folks if we think the government is going to ‘create’ jobs and work us out of our economic slump. Government doesn’t creat any wealth. Everyone of those $250,000 jobs is going to require taxes to fuel it. We need private employment to get things back in order. And if we take new taxes away from people, they have less capital to invest in job creation. It is a pretty simple equation.

    Anne, things such as the Chamber and NDDC are pretty much financed by private enterprise. I’m all for that. Business that band together to promote their businesses makes sense. You decide if you share their values and want to join and participate. That is far different than the state reaching into your pocket and taking your dollars to give to someone else. Most people don’t have as much trouble with our taxing situations when they know the state is doing only those things that we cannot do for ourselves….water, sewer, police, fire, libraries, etc. The trouble arrises when the state strays over into areas like subsidies for particular businesses, and things that families should do themselves.

    December 28, 2008
  61. Paul Zorn said:


    You wrote:

    I don’t know how much wealth the top 5% of Minnesotans controls. I’m not sure why that is of any importance ..

    It was you who cited, many postings above, the factoid that the top 5% of Minnesotans pay 70% of taxes, while also chastising Mark Dayton for forgetting this fact. So I concluded that you found these numbers important, as I do. In tough financial times it’s crucial to think hard about what “we” as a polity can afford and about who pays how much toward these things. What could be more important than that?

    In any event, is it conceivably “fair” that only 5% of people to pay 70% of taxes? Should they pay more? Less? How much?

    My point (and the reason I keep harping on this) is that such questions can’t be answered without more data, some of them numerical. One important number is the fraction of wealth that these lucky 5% control. Were wealth more equally distributed these top dogs might have, say, only 6% of the bones, and so it would seem outrageous to lean on them for 70% of the government’s take. But if the big dogs have a lot more, say 75% of the bones, then the moral and economic calculations become very different. Mathematics may not be sufficient to determine tax policy, but surely it’s necessary.

    December 28, 2008
  62. Peter Millin said:


    The attached link below will explain a lot better what I was talking about when I said “How much wealth did we really create”
    Admittedly the website tries to sell you a certain investment philosophy, but the numbers from these particular charts are based on BEA numbers.


    I believe that the current government intervention in to the open markets will only delay the inevitable.

    As large and as scary the current crisis is it is still a result of greed and market over valuation. These need to flush out naturally, by injecting ” Fiat Money” we delay the natural flush out of bad companies and bad investments.

    It will also create more inflation and devalue our current assets even further.
    The housing market is a prime example. Instead of letting the market find it’s natural bottom. Government intervention will keep bad assets longer on the market and house prices artificially higher then they should be.
    If we would let the prices drop to their natural bottom. Private investors would start keep buying assets once they reached real market value.

    The described principal would work in almost every aspect of our economy. i.e. Car industry….

    December 28, 2008
  63. Anne Bretts said:

    Ray, I think you missed my questions. The NDDC gets the bulk of its revenue from the city, and the Convention and Visitors money comes from taxes, as I understand it. I didn’t mention the chamber because I know it’s privately funded.
    As for the top 5 percent issue, you keep phrasing it as though they are paying a disproportionate share of taxes, without mentioning that they represent a disproportionate percentage of wealth. As I understand it, the top 5 percent are paying about their fair share, base on their percentage of income.
    If the minimum wage had grown at the rate of executive pay, the government wouldn’t have to help the poor, most of whom are working full-time and can’t make ends meet. It seems the market has had plenty of opportunities to resolve these issues and has been more than willing to let the poor get food stamps and other aid from government in order to keep the costs off their corporate bottom lines.

    December 28, 2008
  64. David Henson said:

    As an individual adds wealth they get beyond consumption to a stage of investing that wealth in income generating activities which create “sustainable” jobs. For example: person ‘A’ goes out and gets 6 business customers for widgets and $500,000 in prepaid widget orders and then purchases a ‘widget press’ for $450,000 and a hires person ‘B’ as a widget operator for $50,000 yearly. Business goes swimmingly the first year (rarely actually happens) and person A takes a salary of $100,000 and pays off the $450,000 widget press. Now in simple terms person ‘A’ has gotten $550,000 of the transaction and person ‘B’ has gotten $50,000. Person ‘B’ has only gotten 8% of the transaction but person ‘B’ has gotten 33% of the consumable portion of the transaction. The power dynamic appears to favor ‘A’ but the widget press is the widget press whether owned by person ‘A’ or ‘B’ or usurped by government bureaucrat ‘C.’ One cannot eat the ‘widget press’ or take it dancing or ponder its beauty over cigars (well ‘A’ might do the later and that’s why society should want him/her to own the press).

    The example would get complicated by inheritance and a million other nuances. In fact it is very possible for person ‘A’ to consume less and get taxed more than person ‘B.’ The point being ‘income’ numbers do not ever tell the whole story.

    December 28, 2008
  65. Ray Cox said:

    Paul and Anne….I am not upset that 5% of our wealthy pay roughly 70% of our taxes. I’ve said several times that I am not advocating changing our tax system—I’m fine with it the way it is. But that also means I am not in favor of increasing the taxes that our top 5% pay. As for Paul’s question about how much wealth the top 5% control, I continue to believe that I am much less interested in that figure than I am in the amount of income they earn.
    There are many, many wealthy people that own assests that are underperforming. They may not earn much income from those assets. An example of this is the thousands and thousands of acres that actor Robert Redford owns in Montana. He doesn’t do much with a lot of the acres…no logging, no grazing, no mining. But he controls a lot of wealth in Montana without generating much income. A lot of economists find fault with wealthy people that do not put their assets to the highest and best use. That discussion is for another day.
    It looks like Anne and I agree on this issue when she notes:
    “As I understand it, the top 5 percent are paying about their fair share, base on their percentage of income.”
    I agree. The reason that I am not in favor of increasing the level of taxes on our wealthy is that I want to encourage them to put their capital back into our economy. I want good jobs created. When our businesses need credit, they can’t get it all from banks. Individuals are a huge part of our credit system.

    Anne, I was not aware that the NDDC got the bulk of its funding from the city. I have financiall supported it for years and must say that I thought that they raised their operating funds privately. Thanks for the heads up—-looks like I need to talk to Ross about NDDC structure.

    Peter, I completely agree with your analysis of what happens with government funds being injected into private economies. We generally see privatized profits and socialized losses when this happens. With the secrecy about how the TARP funds have been allocated, the use of some TARP funds to purchase other financial institutions, etc. there seems to be a general problem with the process. I am very leery of seeing more taxpayer funds used in this manner.

    December 29, 2008
  66. David Ludescher said:

    Paul and Anne: As Ray says, fairness in taxing is not an easy question. In Northfield, the two colleges are far and away the wealthiest businesses. If we taxed on ability to pay, they “deserve” to be taxed a substantial amount.

    December 29, 2008
  67. Paul Zorn said:


    You’re right about the difference between wealth and income, and I agree that income should be the key figure in determining taxation. Of course wealth and income are not unrelated, but I used “wealthy” carelessly in #62 as a too-rough synonym for “high-earning”, and am properly reminded of the linguistic distinction.

    So how much of the total pie does the top 5% earn? Does MMB (nee Department of Finance) have those stats?

    As for wealth vs. income, I agree that the degree to which wealth rather than income should be taxed is a different (but interesting!) discussion, for another day. One aspect of it that might be relevant here is the fact (you mentioned Robert Redford) that a lot of fat cats use wealth in ways that don’t generate many, or any, jobs. This is true, but it implies that we need to take with several dollops of salt the conservative mantra that taxing the rich necessarily kills jobs. Sometimes taxing the rich just depresses their appetite for supporting environmental causes or piling up bling.

    December 29, 2008
  68. Paul Zorn said:

    David L,

    You wrote:

    As Ray says, fairness in taxing is not an easy question.

    I would never describe “fairness” as easy to define or to achieve, and I don’t think Anne would, either. But, IMO, conservatives (liberals, too, sometimes) too often react to this difficulty by branding *any* tinkering with tax rates as “social engineering” or “class warfare.” Yes, it’s a hard problem, but we should do the best we can with it.

    Then you wrote:

    In Northfield, the two colleges are far and away the wealthiest businesses. If we taxed on ability to pay, they “deserve” to be taxed a substantial amount.

    Whether non-profits should have tax-exempt status is a good question. (And while we’re discussing it we might include Northfield’s many churches, too.) I’m glad to have that discussion, but in the meantime let’s consider that, were Carleton and St Olaf taxable businesses this year, they could probably write off pretty substantial investment losses.

    December 29, 2008
  69. Anne Bretts said:

    Yes, taxing is complicated. And I don’t have anything in particular against the NDDC. I just wanted to point out that some people would view it as part of the nanny state and put bike trails into the category of basic services, along with roads, bridges buses and light rail.
    As for the liquor store, we’ve had enough threads derailed by that one, so I’ll leave that alone here.

    December 29, 2008
  70. David Bly said:

    I believe the super-wealthy are under-taxed. To say otherwise is to ignore the tremendous tax breaks they have gotten over the years. The discussion about the percent of the total tax the top 5% pay is a distraction from this topic. The problem is that the wealthy on the one hand can’t spend their assets in a way that stimulates the economy and on the other hand choose not to. They invest in things that increase their wealth not in public goods, which benefit everyone. Progressive taxation is the way that government can help to make sure all classes benefit from the tremendous productivity in our economy, especially when the super rich are not inclined to do so.

    When wages are held constant at a time when the wealthy are seeing their wealth double and the government acts in a way which increases this problem by providing tax cuts to the wealthy the problem gets worse not better. We can’t wish the wealthy into doing the right thing here. They are no different than any one else especially when they are encouraged to pursue their own interests.

    Finally, to compare the proposed government investment in infrastructure to the Bush bailouts does not make sense. The poorly conceived bailouts were meant to provide troubled banks the ability to continue to make loans to those entities that need to borrow money for such things as an ability to make payroll. Unfortunately, true to form many of the institutions are using the money to take care of their own.

    The investments in infrastructure provide value by creating a ‘public good’ and putting unemployed workers to work. This will create tax revenue and improve the general mind set of Americans as they see things happening, supplies being purchased and goods beginning to move.

    Paul Krugman has an interesting opinion piece this morning on this very subject, called “50 Herbert Hoovers.” He is concerned about what damage the cuts State governments seem forced to make, will cause to the economy.

    He says, “But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.

    “These state-level cutbacks range from small acts of cruelty to giant acts of panic — from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.”

    December 29, 2008
  71. Ross Currier said:

    Apparently I need to address an inaccurate statement made by an individual in the course of this discussion of the sources and uses of government finances.

    The NDDC gets less than 40% of its annual funding from the EDA, the majority of its funding comes through donations contributed by businesses and individuals. The money from the EDA is directed toward specific activities or initiatives that are part of both organizations’ missions.

    Contrary to what has been repeatedly suggested by two or three people in town, the EDA, the NDDC, the NEC, and the Chamber have a long history of working together for Northfield’s economic vitality. In the coming year, we believe that such collaboration will be even more crucial.

    I think everyone (and I refuse to use the ancient, simplistic, and inaccurate categories of “conservatives” and “liberals”) would agree that we need to maximize the financial leverage of public investment. Personally, I believe that there is substantial private economic leverage generated from the modest public investments in the NDDC, the NEC, bike racks, and trash receptacles and that this private economic activity generates revenues for the public sector.

    I would urge those interested in the NDDC’s priorities for 2009 to attend our January Forum next Tuesday, January 6th, 8 a.m., in the Riverview Conference Room of the historic Archer House, 212 Division Street. The public is always welcome at our Forums.

    December 29, 2008
  72. Anne Bretts said:

    Thanks, Ross, for the clarification. As I said, I wasn’t criticizing the work of the EDA or NDDC, just making an example that one person’s investment is another person’s nanny state tax subsidy. I’m not going to argue where state parks are more vital than food stamps, or the NDDC is more important than bike trails. I’m just pointing out that some people keep talking about programs for the poor as encouraging dependence on government, when programs for business can be said to do the same thing.

    December 29, 2008
  73. Ray Cox said:

    David B….it might work better if you simply promoted a confiscation of assets, as that is what you are advocating. You say the ‘super rich’ (just who is that anyway?) are not using their own wealth in a manner you see fit. Why stop with promoting the enactment of huge new taxes and instead simply take their assets?

    I agree with David H that many government ‘solutions’ only worsen events or circumstances. There are lots of wise people that have evaluated conditions in the 1930’s and contend that governments New Deal plans would have sunk this young country were it not for World War II. We need to be very careful about the engineering that government does.

    December 29, 2008
  74. Peter Millin said:

    I find it interesting that we are still discussing what constitute a fair share and what doesn’t.

    What does fair taxation mean anyway? Who decides on what is fair and what isn’t?
    I think our whole premise here is wrong. Rather then debating on who pays enough and who doesn’t, shouldn’t the question be how much tax money our government should have in the first place?
    When can we say that government has enough of our money? Is there a limit to how much government should collect and spend?
    It seems to me that the general population has been asked to sacrifice by spending less, losing their jobs and in general do with less.

    Shouldn’t we expect the same from OUR government?
    Where are the cuts in the budget? And I don’t mean a cut in the increase of spending, no I mean real cuts to the actual budget.
    How many government workers will lose their jobs?

    David Bly has rightfully asked for some concrete suggestion on how to address the problem. The above two are my first two.
    I would further suggests we seriously look at some subsidies to interest groups.
    How about we start cutting subsidies on Ethanol? When TARP was approved it came with a $150 Billion dollar attachment in pork spending, can we cut this?
    Unfortunately I don’t have enough information on the MN budget, but my gut feel tells me that their are some pork projects in there as well.
    How about cutting subsidies to our public transportation system?

    I believe politicians could really win some real favors by starting to cut pork, rather then discuss at length on how to raise more taxes.

    How about every senator and member of congress takes a 5% cut in pay?

    Let’s see if we can collectively can up with a list of “want to have programs” versus “must have programs”?
    It seems common sense that in a time of financial pains we focus on the things we need and not the things we want.

    December 29, 2008
  75. Ray Cox said:

    Peter, you raise important issues that do seem to get shoved aside time and time again. In my recent article in the Northfield News I mentioned zero based budgeting. Since that time I’ve had several people contact me and ask what that is. It is essentially starting at a true zero point for every state agency and have them come in and justify every dollar they request. Right now most budgets are built on the backs of the previous budget. That seems to instigate the ‘how much tax can we get’ mentality that we see being used. If you were granted $100 last budget, you want to see that you get $110 or $112 in this budget. Life goes on.
    It seems there is very little thought given to actually looking at every program and function of government. I know it is a huge amount of work to do that, but I agree that is is worthwhile doing. Especially when most of the people that are being asked to fund government are struggling every day.

    I also stand my my request that the legislature roll back their compensation to 2006 levels, and that they reduce House committee/subcommittees by 10, to match 2006 levels. Budget reductions need to start at home (House and Senate) if serious work is going to be done in reducing spending for others.

    In this week’s Twin Cities Business magazine there is an article about the “Boomer Exodus” that is taking place. I know I have harped and harped about this recently, and in St. Paul while serving as a Representative, but people really need to start understanding this issue. Currently Minnesota has 1,304,000 people age 25 to 44 and another 97,000 over age 65. In 2020—-just 12 years from now—we are projected to have 1,410,000 in the 25 to 44 age group and 217,000 in the over 65 age group. The over 65’s grow by 123 percent, while the 25-44’s grow by just 8 percent. And even more of an issue, the 16 to 24 year olds decline by 11 percent during the same time period. And just think about the health care and long term care issues that the older population will need.

    You can talk about taxing the super rich all you want, but it will just be a state run ponzi scheme unless something changes with our demographics.

    December 29, 2008
  76. john george said:

    Peter- In all fairness to the legislators, some of the “pork” that is in the budget is only local efforts to get some of the money flowing out of a community to flow back in. If the only way to do this is to get a bridge built to nowhere, then at least the legislator was successful in getting some dollars back into the community, albeit of very little value in the results. I think it is this type of foolishness that we need to take a look at. It is always easier to see the splinter in another’s eye and miss the log in our own eye.

    If the theory of collective bargaining actually works to affect additional benefits, how could this theory be practically appied in reverse to reduce the deficit on every side? Can we as citizens find enough agreement and cooperation to bring a positive pressure to reduce spending? I know of various government stipends that, if are not used, will not be there in the next budget allocation. This sometimes leads to spending on unwise things just so as not to lose the money in the next round. This is an area where I think local citizens can have an effect if we can only come to agreement on what our priorities are. I think someone asked the question in a previous post as to who makes this decision, and I think that is where the bottleneck occurs.

    December 29, 2008
  77. Ray Cox said:

    David H, your post in #65 comments on something that I wish more legislators understood well. When we get fewer and fewer business owners in the legislature it appears we end up with a lot of them having a very hard time understanding the examples you listed with widget production.

    In a ‘bring it home’ example, I look at my own construction company. If I believe I have enough work to justify the purchase of a new skid steer loader, it generates the sale of a $75,000 piece of equipment. I decide to purchase the loader using a portion of current earnings and financing the blance for 2 years. A lot of people would be involved in the manufacturing and distribution of the loader. And, when I get it at my shop, I need to have an operator, so I hire another employee. The employee and new loader go to work. Hopefully all goes well, the production unit stays busy and earns revenue.

    Now, lets look at what happens with a new tax on the wealthy as Mr. Obama keeps talking about. With a sub-chapter S corporation all taxable revenue flows through to personal tax statements. The new tax reaches in and plucks out, say $25,000 of additional taxes from the ‘wealthy’ individual. Now I don’t have the $25,000 down payment for the loader, and I don’t have the term payments for the next two years. I don’t purchase the loader and the new worker is not hired. Just who is served by this scenario? I’d much rather have manufacturing production remain firm and have new hiring taking place, than send an additional new tax to Washington for them to create ‘make work’ jobs. Our jobs need to be created by the private sector to be lasting, meaningful jobs.

    December 30, 2008
  78. Bruce W. Morlan said:

    Well, this is an interesting back-and-forth, though there are some entrenched positions that are amenable to neither facts nor principles. One thing that strikes the lurker, however, is the apparent inability to discuss the fairness of the tax system. In point of fact, a national tax code that is between 9,000 and 14,000 pages long cannot be fair. A tax code that requires highly trained acolytes to interpret (at great cost) cannot be fair. A tax code that gives special status to groups because they have better access to the government than the people cannot be fair. A tax code that is so byzantine that even the agency that enforces it cannot give correct answers when asked cannot be fait (at one time, we were told that 60% of the answers given out on the IRS help line were wrong).

    So do not pour coffee on my leg and tell me it’s raining.

    What is also clear is that there is a huge chasm reflected here between the collectivists and the individualists. The collectivists are all about robbing the rich to pay the poor and the individualists are all about letting people who are more productive keep the fruits of that productivity. Unfortunately, the collectivists can always enlist the voters in a sort of mob mentality, with lots of heart-rending stories of individual suffering, and then convince those voters to vote themselves largess from the public treasury. And down that road lies ruin (IMNSHO).

    Meanwhile the individualists have hard to follow arguments (intellectually challenging) about sharing larger pies because of the growth in the shared wealth of society that results from their better productivity (the Adam Smith algorithm for wealth generation).

    Robin Hood did not create wealth, but he did let people keep the fruits of their labor. Remember, he was not robbing the rich, he was robbing the tax collectors. Take notes people, there will be a test (for at least the next four years) to see if Obama (whom I suspect understands the intellectual arguments) can hold out against the mob.

    December 30, 2008
  79. Sean Fox said:

    Ray, I think your point about the availability of liquid capital as an key factor in allowing businesses to grow is important. However, I think it worth pointing out that we don’t ‘need’ to have large chunks of cash in the hands of individuals or businesses in order to have a liquid capital market. 75 people with $1,000 in hand could fund that new skid steer for you as long as there were mechanisms for that that money to be shared. And if there’s one thing we have in spades in this country are mechanisms for sharing that kind of money (banks, public corporations, etc…)

    And of course that new skid steer (and the employee to run it) only makes sense if there are construction projects available. If Obama ‘takes’ your $25k but helps fund local construction (safety center, Sibley expansion, god-forbid a new liquor store) and your company gets some of those contracts you could end up being much better off. With more jobs created (in your company) in the long run. Of course your $25k won’t fund all those projects. Some businesses will lose (e.g. if you made luxury yachts) and others will gain. But the money will result in salary and jobs for someone somewhere.

    Obviously, good growth requires a balance of liquid capital available to invest in skid steers and widget factories, and capital consumed: salary people use to buy new houses and widgets. I certainly don’t know what the perfect balance is and I strongly believe that anyone who claims to know for sure is delusional.

    How we tax people affects the balance. Raising taxes on the rich will definitely affect that balance. What is unclear is if the current balance is too far in one direction or the other. I suspect we both have opinions on this that aren’t the same.

    December 30, 2008
  80. Anne Bretts said:

    Wow, Bruce, the larger pie arguments aren’t hard to follow — or intellectually challenging — at all. They’re just hard to swallow. They’re always made by the guys who own the kitchen and control all the ingredients and are trying to sell more pies by proclaiming they will be larger — and low-fat and good for us.
    We’ve just come off the greatest free market ‘bigger pie’ period in history and where are we, in the worst recession since the 1930s — which came as the result of another free market fiasco. So after all those years it seems we were paying deposits for pies that not only didn’t get bigger, but never got made at all.
    A few of the pie makers are still doing just fine with a government bailout to keep them in sugar, while the workers and small investors are wiped out and going hungry — and being told that it’s because we should have shopped more carefully and shouldn’t have believed in pies at all.
    Sorry, Bruce, we’ve heard that story before, when the bigger pie theory was the trickle down theory. And we all remember what trickled down on us then.
    The only joy in this has been seeing Mr. Madoff, the poster boy for the individualists, leave a lot of rich folks with flour on their faces and empty stomachs.

    December 30, 2008
  81. kiffi summa said:

    In comment #75, Ray, you use the term “confiscation of assets”; you were referring to taxing the rich … but I think that term is 100% right on when Gov. Pawlenty UN-allots LGA payments.

    The UN-allotted LGA payments are the second of two in a year, due to be delivered at the end of December when a balanced budget is required, and yet the Gov has to be aware of the fact that this is money which is essentially already ‘spent’, and that the un-allotment will cause serious damage to the communities’ just completed budget process.

    My question is this: what are the un-allotments, other than the LGA cuts, that Gov Pawlenty delivered to the state budget? Categories and amounts?
    Anybody have a link to a clear listing?

    David Bly: Can you help me here?

    December 30, 2008
  82. Paul Zorn said:

    Hey, Bruce,

    Some comments on your posting #80.

    Re this:

    there are some entrenched positions that are amenable to neither facts nor principles.

    I’m not sure what you mean by “amenable” in this context, but you’re surely right about “entrenched.”

    Re this:

    One thing that strikes the lurker, however, is the apparent inability to discuss the fairness of the tax system.

    Come again? Hasn’t a whole lot of the discussion been, at least implicitly, about what’s fair and what’s not? Seems to me that’s what’s behind the buzzword-rich rhetoric about “confiscation”, “super-wealthy”, etc.

    Re this:

    In point of fact, a national tax code that is between 9,000 and 14,000 pages long cannot be fair [and much more on this theme] …

    Your point is … uh … fair enough; nobody wants a Byzantine tax code. (Look at what happened to the Byzantines.) But let’s remember that fairness and simplicity are not the same thing, though they’re often conflated in public discourse. We’re a big, complicated country, with lots of (properly) competing interests. Is it so surprising that our tax system should reflect some of that complexity?

    And then there’s this:

    … there is a huge chasm reflected here between the collectivists and the individualists. The collectivists are all about robbing the rich to pay the poor and the individualists are all about letting people who are more productive keep the fruits of that productivity.

    Just a hint of caricature here, perhaps? Dueling caricatures is fun (those individualists who enjoy pushing grandma individually into the snow to freeze …) but it makes discussion harder, and digs the “entrenched” deeper.

    December 30, 2008
  83. john george said:

    Bruce- I appreciate your observations of the tax code. I had the sense that it is unweildy, but those stats just confirm my suspicions. And I agree that government does not create wealth, it just redistributes it. The concept of fairness in this process seems to be a subjective one to me rather than an objective one. For the person who has amassed wealth, the idea of the government coming in and taking part of that and giving it to people who had nothing to do with the creation of it seems grossly unfair. To the person who has worked hard during their life and, because of their specific circumstances, doesn’t have much to show for it, getting some of that largess, I’m sure, seems justified to them.

    Sean- You touched on something that is a real effect of government construction projects. These are accomplished by the private sector, so some of these taxes are reinvested back into the economy in a real way. Your example of the 75 people with $1000 each to invest in Ray’s skid steer is just an example of how a bank works. What happens to these individuals if Ray’s business risk fails and he defaults on the loan? The bank, through the FDIC, provides a buffer between Ray’s loss and their investment. This is what has overlaoded the system this last fall. There were more defaults that available buffer to handle it.

    As far as the state “unallocating” funds, I think we need to realize these funds don’t exist. They were projections of estimated taxes that would be collected as long as the economy kept progressing as it was at the time the budget was set up. Unfortunately, that has not happened. When there is a downturn in the private business sector, this affects the government resources, also. The underlying reason we got into this mess is that some people, motivated by greed, among other things, began to put value on something that was not there. Now, the federal government has given out $700 billion that is not there to fill in these holes. I’m not an economist, but this doesn’t seem like rocket science. And that people in leadership actually believe this will work defies logic, to me. Deficit spending only works until it comes time to pay the bill and the funds are not there. That is where we find ourselves today.

    December 30, 2008
  84. Paul Zorn said:

    John G,

    In #85 you say

    … And I agree that government does not create wealth, it just redistributes it.

    You’re right, I suppose, in the technical sense that all government expenditures (e.g., paying a police officer) takes money from some to give to others. But to say that government has no role in wealth creation is wrong. Without that police officer, for example, those rugged individualist fat cats might see their loot pilfered, and hence have less motive to toil virtuously to acquire it.

    And government (as Adam Smith recommended, by the way) properly does all sorts of expensive infrastructural things, like roads and schools and armies, on which the just and the unjust depend alike. (We could, I guess, try mercenaries, private academies, and private turnpikes on a big scale … .)

    Then you said

    The concept of fairness in this process seems to be a subjective one to me rather than an objective one.

    I agree completely.

    But so what? Almost all political decisions involve objective and subjective elements. We have to decide anyway.

    For the person who has amassed wealth, the idea of the government coming in and taking part of that and giving it to people who had nothing to do with the creation of it seems grossly unfair.

    Really? Is all taxation “grossly unfair”? What do you suggest?

    December 30, 2008
  85. David Bly said:

    Let’s see the Bush tax cuts have been in place for a number of years and how many jobs are being created because of them? Where are those private sector jobs? An MSNBC reporter just stated that today a job is lost at a rate of 1 every 15 seconds in our current economy. Giving tax breaks to the wealthy in order to create jobs is no less government practicing social engineering than is taxing the rich to create jobs in the public sector or to educate the work force for future private sector jobs. It also appears it may be less successful to count on the rich to create jobs here when they may have a greater return creating jobs in China.

    I am not advocating an asset grab like the ones being proposed to take away autoworker pensions or benefits, or the livelihood of state workers. By protecting the rich from taxation we make tax increases for the middle class almost inevitable. After the budget tightening of 2003 did anyone’s property taxes go up? Bruce I appreciate your pointing out the obvious that what we are engaging in is trying to talk about reality from two opposing perspectives. But I do wish you could be a little more intellectually honest about the different point of view. I have heard you talk about the flowery virtues of the individualist point of view. Perhaps you feel one from the opposite perspective should really explain the virtues of the common good. But I submit that only contributes to the entrenched discussion you expose.

    It is not a surprise that an economist from the Hoover institute would question FDR’s policies, but I don’t know that it should be taken seriously. There have been a number of recent publications described as reinterpreting FDR’s legacy that propose to defend the Reagan/Bush economic policies.

    We are engaged in an age-old argument that emerged in the American consciousness out of the contradictions of our founding as a nation. Was it about tax freedom or freedom from oppression and equality? I believe we have elected a president who has a sense of history and most likely understands the different sides of the argument. I believe he understands we must find a way to live together. I hope he sees there are shadow sides to both points of view.

    Both sides believe in creating opportunity and economic growth as a public good. But they differ on who is best at creating that opportunity. The ‘Individualists’ to use your term Bruce, believe the private sector creates opportunity and further they seem to believe that they create opportunity all on their own. I think it is true that opportunity is created by individual initiative but it is not the only way to create it and private initiative requires certain conditions supported by social order to create it. ‘Communitarians’ believe opportunity is created by the establishment of public goods that allow individuals to function and exercise initiative in a community.

    These public goods are such things as legal contracts, laws that support individual ownership and the right to vote. They also include roads, schools and institutions of higher learning, hospitals, courts, landfills, libraries, etc. These all cost something. Individualists seem to believe that if they aren’t using these things directly they don’t see why they should have to pay for them. ‘Communitarians’ believe, whether we use them directly or not, supporting them creates a social order that must be sustained to continue to offer opportunities to every one.

    ‘Individualists’ seem to believe that privilege should be protected because this is what keeps society going and perpetuates individual wealth creating opportunity for those who have ‘earned’ it by birthright. Individualists see laws written to protect their interest as non-interventionist but laws written to protect the interests of the others as somehow stealing.

    The flaw of individualists is they assume their perspective is universal or that is to say protecting their interests protects everyone’s individual interests. But this is true only to a point because individual rights can often be in conflict and the law picks winners and losers depending on who writes the rules. Or who has the power and privilege to speak louder and with more force than any one else.

    Communitarians can err when they weigh the rights of the common good over the rights of individuals, which may not always be fair or right. But even Adam Smith argued that individual rights should not be protected at the impoverishment of the greater population.

    It is my belief that we have reached a point where the power of the ‘individualist’ point of view has over reached. It has put us as a nation and as a state in a position where opportunity exists for a few and not for the many; a position where more and more of the wealth is controlled by a smaller and smaller elite. Where we believe the rights of the individual paying the wage are more important than the individual selling the labor. It seems clear that the radicals of the Bush/Reagan philosophy have been very successful in their efforts to undo the FDR/Johnson efforts to create a great society that recognized economic and civil rights of the people. I realize I do reveal here my political perspective. I don’t think that is a surprise to any one, but I think the election of Obama as our next president does show that our electorate is ready for the pendulum that swings between the American Dream and the Gospel of Wealth to swing back to support for the ‘dream.’

    Because our Governor believes in the greater value of the rights of the rich who have had more than ample time to grow jobs and rebuild infrastructure and grow the economy where the economy wants to grow, we are reaping the results. His ideology is based on the economic theory that the economy is a self-governing system that government interference will only throw the system off kilter; so public investment and government planning is unnecessary. This is as good a rationale for protecting the moneyed interests as was the divine right of kings. It ignores what history teaches – advantage breeds more advantage and only when checked by some sense of fairness or justice can it be changed.

    I am not advocating that government just create make-work Ray, although putting people to work may be at some point important enough to use that as a strategy, what I am advocating is that government invest in needed projects that create public goods that will be of value to the public in the future and increase the potential for opportunity, as well as creating revenue.

    The choices we face will be difficult and will have impact on the future. We will choose winners and losers, we will cause harm to some and may assist others. I hope we are able to be as fair as we can be to our citizens and at the same time keep our economy from further collapse. I believe in democracy and I believe that citizens can contribute to how we resolve our budget difficulty, which is why I welcome all suggestions. I believe at the same time citizens have a right to know my perspective and I welcome hearing from others their perspective whether I agree with them or not. I accept none of has all the answers, and I benefit from a sharing of views.

    December 30, 2008
  86. Peter Millin said:


    I am disappointed that you view my request for sacrifice as a money grab on public officials and auto workers.
    In my company all of us had to forgo our bonuses this year and all of our wages have been frozen for 2009. We further had to layoff about 10% of our workforce with probably more to come.
    I am asking that before our elected officials raise our taxes again that we look at other options.

    David how can you justify even thinking about raising taxes, when the people that voted for you are on hard times?

    I am not a big fan of Bush, but to blame him for the current mess is the easy way out. The collective wisdom of state and federal government has gotten us to where we are today.

    I am also a bit frustrated of the constant good cop bad cop routine between the federal and state government.
    The check and balance put in place by our funding father has created a give and take tension between the two. This is now being exploited to avoid fiscal responsibility.
    I can promise you that for me it’s still the same dollar I am paying regardless who it goes to.

    Both parties have a great opportunity to distinguish themselves by taking steps away from business as usual and offer a true alternative. This would go a long way towards drawing a sharp contrast to the other partie.

    Unfortunately all I hear is much more of the same. It is either borrow and spend (R) or tax and spend (D). Neither one of those approaches do anything for me, because I am “too rich” to qualify for state help and “too poor” to afford not to care about taxation.

    Minnesota is already in the top ten nationwide when it comes to taxation and at the bottom when it comes to attract businesses.
    Looking at those realities I can’t see how increased taxation would help us as a state at all.

    If you look at the extremes of collectivism you will find that they have not delivered on the promise of equal wealth for all.
    Most countries that have tried socialism or communism have failed or failing miserable.

    I am neither a collectivist or an individualist like most people I am between those two. I do believe that we need government to police the rules of a free market. However I don’t believe that they should affect the dynamics of a free market.

    I do believe that we a a society have the obligation to help those that have fallen on hard times. But I don’t think it should be a lifestyle to live on our goodwill and hard earned money.

    We do need government to provide services that are a public BENEFIT and not a RIGHT or GOOD. The latter two will lead to division and class warfare.
    I.e. since 40% of the taxpayers don’t pay federal taxes at all how can there be a public good for ALL. It can’t because one half has to work harder so the other half can enjoy the goods.
    Of course it doesn’t affect 40% of the population when those taxes get raised so they will vote in their own interest.
    The problem with socialism is exactly that. Sooner or later there will be more people wanting public goods and fewer that see the value to work for it. This is happening today all over Europe and has ultimately led to fall of the UDSSR.

    I hope we don’t borrow or tax away the American dream and continue to gamble with our kids future.

    December 30, 2008
  87. john george said:

    Paul Z.- I don’t think you and I differ on the importance of government in our society. It is necessary for order and regulation of commerce for our private industries to succeed. I think the recent financial meltdown is evidence that men, if given the temptations for mega-wealth that some were exposed to, do not have inate in their own moral fiber the strength to resist without some kind of outside accountability to a higher authority.

    My comments on fairness in taxation are just my observations, and I do not consider that any of them are directive. You need to consider the paragraph as a whole. I am just trying to illustrate an age old battle between the rich and poor, and, in my opinion, it won’t be resolved until the establishment of the Kingdom. But that is another whole discussion that I don’t want to enter into here.

    David B.- To blame the current economic situation and employment rates on the Bush tax cuts is, IMHO, sidestepping the responsibilty that the federal government as a whole has had in this debacle. I have heard much prose from your side of the aisle that would suggest that all the problems facing our country right now are Bush’s responsibility. I just don’t buy that argument, and I have not been given any statistics of any type that would support that evaluation. That being the case, I look at these types of statements as more partisan finger pointing that really gets us nowhere. And to suggest that the change in the White House is somehow going to miraculously turn the nation around is at best naive and, I think, puts unrealistic expectations on our next president. If Bush or Obama had that type of power, we would not be considered a democracy. We would be a monarchy.

    I have heard references made to how well the country did during Clinton’s presidency. I think it is notable that the congress was Republican controled 6 of the 8 years during that period. Bush has had a Republican controled congress only an average of 3 years of his term (2&4 for House & Senate). You can make of that what you like, but back to tax cuts, the reason Reagan’s worked is because there was a reduction in the size of the government. With Bush, his tax cuts have been met with an increase in the size of the government. This can’t be done successfully unless there is an approval of deficit spending. That has led to the accusation of borrow and spend rather than tax and spend. Neither method is advantageous to economic growth, IMHO. Herein lies the philosophical differences between us- I favor a small central government, you favor a large central government. I believe the correct size is the one that can perform its duties within the the budgetary restraints is has, whatever that may be.

    December 30, 2008
  88. Ray Cox said:

    Kiffi, you asked about the unallotment that took place. I don’t have a website, but here are the major items I am aware of (remember, I’m not in the legisalture any more so may not have the inside info on this all) First of all, he unalloted $271.4 million….
    1. 110M in aids to cities and counties
    2. 73 M in human services. That includes 28M from education for medical students, 10M from hospitals, 17M from chemical dependency and 8M from mental illness.
    3. 40M split between Uof M and MnSCU allocations.
    4. 42M in unspent funds from state agencies…exempted military, veterans, public safety and K-12
    5. 4M from MnHousing Finance Agency
    6. 2M from unspent legislative funds
    7. 2M from minerals fund and biomass program

    The rest of the 426M shortfall —155M—-I believe came from the last of Minnesota’s reserve fund.

    I think it is good to remember that if Minnesota had created more of a reserve fund in 2007 we could weather more of a shortfall like this. The legisature spent over $2Billion of surplus funds in 2007. As I noted in my Northfield News article, what would our state budget look like today if the additional spending would not have been added into the 2007 state budget?

    December 30, 2008
  89. David Bly said:

    Peter and John, I don’t think I was blaming the Bush administration for current situation, but trying to speak to the premise that tax cuts to the wealthy create jobs and government cannot. I don’t think I was saying that there should not be shared sacrifice as much as I was trying to point out that there is a similarity between taking someone’s livelihood or asking for concessions and asking the rich through increased taxes to contribute to our the solution to our problem. It seemed I was hearing that everyone must sacrifice except the rich.

    Peter, I don’t think your comments about Minnesota’s tax ranking are any longer accurate. In fiscal year 2006 according to the Minnesota Budget Project we were 19th in total state and local taxes, 32nd in spending. We are 8th in income tax, but Minnesota has a long tradition of income tax and some states have no income tax. We are 42nd in Federal revenue.

    Minnesota’s business friendly status has a lot to do with whether or not you think it is influenced by taxation or public investments. There are arguments for both.

    If it is possible to avoid taxing people who have endured losses I am for that, but to pretend that by cutting government jobs or aid to other institutions that will likely result in loss of jobs is a good solution to our problem. In most cases those people who lose jobs or lose income are likely to come to the state for help further challenging state funds. To pretend that cutting state spending as deeply as we would have to will shield the middle class from increased local taxes just isn’t realistic. To shield the very rich from taxes when a number of them have done quite well in the current economy seems not only unfair but as I have tried to point out, bad for the economy.

    I believe we will have to consider all tools available to solve this problem. I have my political perspective but I do not pretend to argue that I have all the answers and I welcome your comments and point of view.

    I have not described myself as a socialist or communist but rather continue to describe our economy as a mixed economy that recognizes the importance of private enterprise and government planning and regulation that attempts to see that prosperity is shared. I think finding the right balance is a challenge but that is what I believe makes our economy work.

    December 30, 2008
  90. David Bly said:

    Ray, I don’t believe your statement about the $2 billion surplus is accurate. Most of the surplus disappeared when we allowed for inflation in spending, which you acknowledged is not counted on the expenditure side. Now you could argue that we didn’t have to allocate funds to cover inflation. But that means as we have been over already schools, nursing homes, agencies and communities that rely on state funds would have to exclude inflation increases in their budgeting or cut back in other spending to balance their budgets.

    December 30, 2008
  91. Mike Zenner said:

    John G,

    The Reagan myth you are touting needs to be put to rest. No small government here!

    Reagan talked the talk, but never walked the walk!

    Reagan is the guy who launched the Federal deficit spending kick that is going to this day. The federal government spending was NEVER smaller than the previous years. Looking at the Wiki link below it can be seen how the deficit changed slope considerably after 1981.

    We had a choice in 1980 to address the same issues we are dealing with today, energy shortages and a decline of the real US economy. We choose the easy way out with Reagan ” don’t worry be happy” and charged it all on the federal, and personal credit card!

    December 30, 2008
  92. David Bly said:

    Peter, the Minnesota Department of Employment and Economic Development published the following pdf. To promote Minnesota’s business climate, “Why Minnesota the top ten reasons” they offer some impressive reasons to argue a very positive business climate in Minnesota. This is the Pawlenty administration.

    December 30, 2008
  93. Ray Cox said:

    David, the 2007 budget expanded by 10.1 percent….end of story. You can talk about the $2 billion as part of inflation if you want, but the vast majority of the spending went into various programs. Many programs were significantly expanded, such as HHS. If you think Minnesota can support that type of growth during a low inflation time, then good luck dealing with future budgets.

    We can talk all we want about ‘investments’ in this public program or that public program, but if we don’t have the revenue to fund them it is just talk. I know you are asking people how the budget problem should be resolved. I’d like to hear some ideas from you about how you think the $5+ billion shortfall should be handled.

    December 30, 2008
  94. David Henson said:

    David – it’s great that you are hear listening and blogging with the electorate. I would just be cautious to consider reality within the broader philosophy constructs. Large sums of money and human resources cannot effectively be pushed en mass into specific “free markets” or “government activity.” In either case this will create tremendous graft and waste (and will immediately be encouraged by those who thrive on graft and waste). Think Johnny Appleseed, his activities worked because he sprinkled seeds all over the countryside verses dumping all the seeds in a couple of huge piles.

    December 30, 2008
  95. john george said:

    Nick- Take a look at this link:
    According to this article, the civilian federal workforce decreased 5% during the Reagan years. And, though Reagan borrowed 20% of his government funding, the deficit decreased from 6% of GDP in 1985 to 3% of GDP in 1989. Also, it was predicted to drop to 1% of GDP by 1993 with no addotional manipulation by congress. The Reagan years are touted to be ones with the greatest amount of economic growth since the Civil War. I guess this is a case of how a person interprets the same statistics, as I have mentioned before. Sorry, I just don’t buy your conclusions in post #94.

    December 30, 2008
  96. john george said:

    Sorry, my last post was to be addressed to Mike Zenner, not Nick. Too bad I didn’t catch that in the “nick of time” before I posted it.

    December 30, 2008
  97. Holly Cairns said:

    This post has Charlie Kyte agreeing that Tim Pawlenty handled budget cuts reasonably well. I find that interesting.

    What we have here is discussion which outlines basic differences between Democrats and Republicans. Should we cut government to curb spending, reducing the size of government so it has less effect? Or, should we believe government is helpful, needed, and worthy of our support.. and ultimately we’ll all be better if we invest?

    Maybe we should start with what want from our government (which is made up of us, by the way. Government of the people, by the people, for the people) and then we should make sure it has enough revenue to do its job.

    That said, I believe the Democratic-Farmer-Labor party has always championed programs which work to meet the needs of our hardworking families.

    This all reminds me of the sixties classic “Soylent Green”. In the movie people opt for early death and then (surprise) are converted to food for the rest of the people. Food scarcity at its worst, I guess.

    I bet both Democrats and Republicans view the movie and think they have it right. You can argue for or against affirmative action, you can argue for or against M16s being used to protect individual houses, you can argue for or against regulation to protect the people. You can argue for unfettered capitalism, or smart restraint.

    But what probably can be agreed upon is that the US government failed. Maybe it was because of a lack of revenue…

    December 31, 2008
  98. Ray Cox said:

    Holly, you make a statement that I believe all thinking people will agree with…
    “Or, should we believe government is helpful, needed, and worthy of our support.. and ultimately we’ll all be better if we invest?

    In my service in St. Paul it was very rare to find anyone that didn’t believe that government serves a distinct and needed purpose. What we most often agree on is how big that government should grow and how intrusive into individual liberties is should be. Do I think our government needs to be as heavily involved in agriculture subsidies as we presently are? No, I’d like to see modifications. Do I think our government should manage IRRRB funds better…yes. But do I think government should be eliminated?…of course not. We absolutely need a properly functioning government to be a key part of a civil society.

    In most instances there are fewer and smaller differences between lots of Republicans and Democrats. It is interesting to see how Mr. Obama is putting together his plans, and his Cabinet, and in many instances appearing to be different in several areas than what many people originally thought.

    December 31, 2008
  99. Kathleen McBride said:

    I remember the early 90’s when the State’s budget had a deficit – local government aid was cut mid-year and cities had “to deal” with it. Part of the resolution was to increase the sale tax from 6 to 6.5% and make local governments subject to sales tax – to help create a “local government trust fund” that would be dedicated to funding local government aid. As I recall – the trust fund lasted one year.

    To this day – local governments are still subject to sales tax and the sales tax rate hasn’t decreased.

    Is it impossible to consider making local governments exempt from sales tax – as an offset to cuts in aid? If there are further cuts – to the point of wiping out the market value homestead credit aid – is it possible to consider the elimination of the program? At least this way, local governments would be able to collect all of their levy.

    There needs to be some examination of what the State’s basic programs should be and how they are to be funded (and what the levels of taxes, fees and charges should be). Why must the immediate reaction be to look for other revenue sources? It hasn’t worked in the past and given the outlook – the economic forecast will likely be worse come February (next State budget forecast).

    December 31, 2008
  100. Peter Millin said:


    Collectivism is just another word for socialism. I hope I didn’t give you the impression that I think you are a socialist, because you are not.

    Thirty years ago in Germany we had a very similar discussion, minus the crisis. Like me, a lot of people supported the proposed government programs proposed by the SPD (Social Democratic Party).

    Fast forward thirty years later. Each German worker has health care, 25 working days of vacation, unemployment benefits for 1 year (which includes health care), an extra monthly paycheck every year, the opportunity to take a three week paid LOA for health reasons, government funded retirement and many more. My numbers could be slightly off and I might missed some benefits, but you get the point.

    My mom who worked in a blue collar job (she is retired now) had a total of 51% of her taxes taken by the government. This 51% included a 7% solidarity tax to rebuild East Germany. This might be gone now, but it would still leave her with a 44% tax burden. Add to that a 21% VAT for every purchase and you get the picture.
    The current German unemployment stands at 8%. Growth in GDP is pretty much non existent.
    To make matters worse my mom is barely surviving on her pension, because inflation has driven up prices even more.

    Before Americans start to venture in to a collectivist nirvana I wish we would take some lessons from those who went before us.
    I am getting a bit uneasy listening to some of the current “Zeitgeist” because I have been there and I have seen the results.

    December 31, 2008
  101. john george said:

    Peter- I think your observations support the idea that the grass always seems greener on the other side of the fence. I don’t think there is any economic system which can be successful and grow in every type of market situation that comes along. Your example of Germany is fair warning that this system did not grow when times were good, let alone now when times are tough. That link I gave above for Mike has some good stats about the economy in the early ’80’s when Reagan was elected. Coming off Carter’s administration, we had double digit inflation and double digit interest rates. Hopefully, we have learned from our recent history, but judging from some of the things posted here, I really wonder.

    January 1, 2009
  102. Holly Cairns said:

    For once I agree with Peter. (OMG) The latest Bush business and bank takeovers were too socialistic. I value regulated capitalism. Bush’s Republican de-regulation has led us in the wrong direction. We need to carefully regulate so we allow for middle class prosperity.

    Peter, maybe your mom should have climbed the employment ladder to get a higher paying job…? At least she had a job, maybe, now that I think about it.

    That said, I believe single payer health care (state level) will cost less in the long run (5 years) and help us avoid the clogging of our current system that we already see because of job loss. If everyone hurts and it’s because of health care, it’s time to fix the 1970’s HMO idea. Stop digging the hole.

    Ray Cox, what makes you a Republican?

    January 1, 2009
  103. Anne Bretts said:

    Europe, the U.S. and other older economies are in the same boat as Catholic nuns. The systems work as long as there are 10 young, healthy working people paying into the system for every old one needing a pension or long-term healthcare. When the young nuns didn’t enter the convent, the old ones were left in the lurch. The same thing happened with the newspapers and automakers and steelmakers and other industries that became victims of their own success. At a certain point the cost structure becomes too high.
    To balance the state budget we need to change the structure. We don’t need as many townships and cities and counties doing government. Make the county the lead, consolidate law enforcement and fire services and roads and utilities. We don’t need multiple police departments or fire departments or road crews. The libraries have done a pretty good job of this, but we have a long way to go.
    We shouldn’t have needed to annex Bridgewater land because it all should be under the county with the same zoning laws and availability of services.
    Yeah, yeah, yeah, tell me about local control and I’ll tell you that worked when you needed to ride a horse to Faribault to get a decision or ask a question, not when you can do everything online and in real time.
    MnDOT also has a hard-headed planning process. Everyone knows how much each project will be and when it is slated to get done. When money is short, those projects that are 10 years out won’t get done for 15 years.
    Closer to home, I have a field behind my house that is city land. There’s no reason it has to be mowed. We need a real discussion about what we need to do as a city versus what we’d like to have. Maybe we can live with fewer parks and maybe we need to wait longer for streets to be paved.
    Simply finding new ways to stretch people to cover the current system doesn’t work. We need to give up some services and change the structure.

    January 1, 2009
  104. David Henson said:

    Peter – I think it’s interesting to look through the Declaration of Independence and US Constitution and recognize that “JOBS” are never mentioned in either document. America was really intended to be a place where individuals were free to carry on their own lives unimpeded by false moral authority. I think both major parties really believe in what David L calls the “nanny state.” This is why Obama’s choice of Rick Warren is interesting. To me this selection is recognition that Republicans and Democratic parties should be merged with the outcast constituents joining together with freedom oriented Americans to elect nonaligned pro decentralization and pro individualist candidates. ‘Socialism’ is really about ‘materialism’ but America was never really about either one. The country lost its way following WWII and adopted an industrial state model that is now collapsing. American citizens don’t say they are happy to see the socialist-industrial ship sinking. But if you speak with people on the street or watch their economic behavior no one is grabbing a pail and starting to bail water. I disagree with posters here who claim Americans believe in ‘good governance,’ I think most Americans believe the government gets in the way of social progress more often than not and that society would function just fine with a total national/state/local tax base of 10% or less.

    January 1, 2009
  105. Peter Millin said:


    To blame the recent socialistic bailouts on Bush disregards the fact that the plan was put forth by the Democrats.
    At first the Republicans rejected it. Once enough pork was put in to the bill everybody finally signed on.
    I still can remember the scare tactics used at the time ” If we don’t do anything this week, the economy will collapse” was the mantra of the day.

    Looking at it three month later we are still here. I would argue that TARP has done nothing more then delayed the inevitable. A much needed market adjustment.
    Instead we have chosen to defy the natural cycle of the market and intervened.

    From where I sit we don’t have a lack of oversight, we have too much oversight and intrusion.

    Anytime a government has tried to run a centralized market economy it has failed miserable.

    About 35 years ago when I visited my grandma in Hungary the average waiting period for a car was 5 years and 2 years for a dishwasher.
    All major manufacturing was government run Not only did the government guarantee every employee their job, but also provided very generous benefits.
    The result was a unproductive and lazy workforce.

    I am sure the Hungarian government had the best of intentions but it couldn’t predict human nature.
    Giving people no incentives to perform will lead to apathy, and not all incentives need to be positive.

    Government should regulate as little as needed and let the free market do it’s job.
    Freedom and Democracy are much more messy and difficult in the short term, but collectivism while comfy in the short term will lead to long term decay.

    January 1, 2009
  106. Holly Cairns said:

    Hi Peter,

    How many laws caused this current financial crisis? Just one, you think? That is a bit short-sighted. Please tell me which laws led to the crisis.

    The CRA loans were the least likely to be sold, and so they are the least likely to have caused this crisis. Or answer me this, do you think the selling mortgages had any contribution to our current economic crisis?

    You didn’t answer why your mother didn’t try to move up the ladder. If she had worked harder, she might have been richer.

    Peter said:

    About 35 years ago when I visited my grandma in Hungary the average waiting period for a car was 5 years and 2 years for a dishwasher.

    It was the same around here after WWII. Scarcity. Demand not meeting supply. But no one in this thread or anyone else at LoGroNo has been asking for what you say happened in Hungary. No one wants the gov to a run manufacturing or decide supply. So what was your point? Just to show how bad it was in Hungary? I do feel badly for them. Hard work results in a good feeling.

    To say we have too much oversight means you’ve missed the fact that there has been corruption running amuck these last eight years, and that the Executive branch sets the budget… the President is in the Executive branch.

    Anne, we need local police departments and local fire departments. If you need a response in a few minutes and have to wait 11 minutes, you might be dead!

    January 2, 2009
  107. Peter Millin said:

    It is without a doubt that relaxed mortgage lending standards have contributed to the meltdown. These relaxed standards where caused by laws passed by the government. One of the laws was the CRA.
    This law led to loans being made to people who couldn’t afford it…this is an established fact.

    I wasn’t going to go in to more details about my mom, but here it is.
    My mom and dad decided to escape Hungary in 1956, when the Russians moved in. They saw the hand writing on the wall and knew exactly what it meant to live under a socialist/communist regime.

    Unfortunately neither of my parents knew any of the German language so good paying jobs where hard to get. If you want to succeed in the German society you better know how to speak the language.

    Although my mom had a college degree she was pretty much not employable due to her lack of language skills.
    Add to this three children and a divorce you can pretty much figure out how the story went.
    She never was afraid of work so she did what she could.

    My example of Hungary was an illustration on what happens when a centralized bureaucracy tries to take over an economy.
    Just today our government has decided to by 5 MM shares in GMAC which means we have decided to get indirectly involved in to manufacturing.

    You wrote ” no one wants government to decide supply”, but this is exactly what we are doing right now.
    Government has decided on who the winners and who the losers will be in this downturn, by randomly supporting or buying stakes in companies.

    Why did AIG, Fannie Mae and Freddie Mac deserve a bailout but not Bears and Stearns? Besides the fact that those chosen for a bailout have political connections and some of our elected officials have personal reasons do not let them fail. There is really not much else that makes sense here.

    January 2, 2009
  108. Peter Millin said:


    As much as O support your idea I don’t think it ill ever happen.
    The bureaucracy needs to feed itself to survive. Too many people make a good living of our tax dollars. Politicians unfortunately don’t have an interest either because it would be political suicide.

    Don’t forget it is not the politicians that run our country it’s the bureaucrats. Most politicians come and go and are rarely around to see thru some of their laws and consequences to them.
    However most bureaucrats are there for life and do pretty much as they please.

    There is a certain self interest on both sides to keep the status quo.
    Most voters have a short attention span, that’s why most of the difficult laws are past early in a tenure. Two, four or five years later nobody will remember what happened.
    The few that remember are the hard core politically interested. You can measure them on the % showing up for primaries.

    January 2, 2009
  109. Holly Cairns said:

    Hi Peter,

    Interesting information about your family. One of my ancestors fought for the Russians (he was a General), and then his brother was executed by the Russians (he was a priest). Those Russians sure made a difference wherever they went. Sorry your family had to move, sounds familiar (mine is Polish, Bolshevik problems).

    Okay, but it sounds like you really want a system where people can fail. That seems to be important to you, because otherwise they don’t work hard. Yes?

    Democrats who voted to deregulate have let me down, if you want the truth. But most are not tax and spend. Please see this graph, and I’d like to hear your response about this specific graph. Under Democrats, more people do better. Under Republicans, only certain people get richer. Under Democrats, our budget deficit has been reduced. Under Republicans, our budget deficit has been increased.

    Dualism! Good grief.

    Here’s the url for the graph if my link doesn’t work:

    January 3, 2009
  110. Ray Cox said:

    Holly, I’m not following your statement “under Republicans only certain people get rich.” The people that ‘get rich’ are generallly the ones that get decent educations, work hard, spend wisely, etc. etc. If that is what you mean by certain people, then I can agree with your statement. If you mean that only Republicans get rich under Republicans you need to get out more.
    It also is interesting to note that minorities have prospered and done much better under Republican adminstrations than under Demorcratic adminstrations. In fact, a huge percentage of minorities have increased wealth in the past decade. I’m sure you have heard the saying ‘a rising tide lifts all boats.’ And a system that doesn’t have–or won’t allow– failures is a very problematic system.
    As Peter notes, I’m not at all sure why our government now is suddenly so interested in the health of various companies. They’ve handed out support like candy in a candy store. I’m old enough to remember Montgomery Wards, PanAm, Braniff, TWA, Hudson, Packard, and many, many more fine old companies. All were allowed to disappear….why was that OK but our current companies need to be ‘rescued’?

    January 4, 2009
  111. Holly Cairns said:

    Ray said:

    It also is interesting to note that minorities have prospered and done much better under Republican adminstrations than under Demorcratic adminstrations. In fact, a huge percentage of minorities have increased wealth in the past decade. I’m sure you have heard the saying ‘a rising tide lifts all boats.’

    LBJ was a Dem, regarding the civil rights argument and the working towards equality of all citizens.

    Hmm, yes, and because of deregulation the tide rose so fast many of those boats you refer to will now be thrust onto dry land, no matter if you’re majority or minority.

    Perhaps instead of arguing “Dem” vs “Rep” we should be talking “programs” vs. cuts. For a long time Democrats have championed programs which help hard working families. For a long time Republicans have wanted less regulation and less or no social programs. What would you cut out re: social programs (Programs that have been at the heart of the Democratic agenda since the Great Depression).

    As (both Ray and) Peter note, I’m not at all sure why our government now is suddenly so interested in the health of various companies.

    Well, me neither, and it is Bush’s group that has been making the decisions. Except could it be that Henry Paulson is saving some money for Obama to use?

    January 4, 2009
  112. Holly Cairns said:

    Oh, and I agree there should be a freedom to fail… and under regulated capitalism, there is that freedom. We just don’t want to see massive failure.

    January 4, 2009
  113. Peter Millin said:

    It will be interesting to see how our leaders will attack the budget crisis. I know this is early in the game, but what I heard so far is not very encouraging. I hope that some of the comments made are nothing more then just posturing.

    I found it interesting that some of our leaders can’t even do with less postage stamps!! To be sure the saving off $ 50k + won’t solve the billions of debt, but I think the vote against it speaks a lot to the mindset that some are in.

    January 8, 2009
  114. David Henson said:

    Holly, the farmers market is a good example of a “free market.” Rules exist but the sellers are free to 1) show up 2) offer what they want to sell (produce) and 3) set their prices. Buyers are free to purchase what they want or nothing at all. If the city of Northfield stepped in and said we feel homemade cookies are a social good in Northfield and therefore consumers of farmer’s market cookie purchases may deduct half the cookie purchase price from their property tax. Cookie sales will jump and some sellers will begin switching from selling carrots to selling cookies. Everyone seems happy flour sales jump so the city goes a step father and says not only can cookie consumers have the deduction but will guarantee their satisfaction with cookie purchases. Cookie sales soar and everyone is raving about Northfield cookies until the obesity and diabetes epidemic strikes. The cry from the left, “this cookie free market is terrible and should have been regulated we need to get everyone buying tomatoes now.”

    Holly, as soon as interest deductions on loans were offered for a specific class of business activity (housing) we were no longer dealing with a free market. Add to that the Feds “implied” guarantee of paper purchased from Freddie and Fannie and the free market fades into the distance. Then Clinton loosened the credit standards (probably to postpone the market collapse).

    Housing was a super inflated socialist program that blew up – not a free market failure. This got wild and wooly because housing asset values were being artificially jacked up by POLICY and as the UNFREE market got more and more wildly out of control no one wanted to ruin the cookie party.

    January 9, 2009
  115. Holly Cairns said:

    Hi David, we used to sell at the farmer’s market and boy were there a lot of problems over rules, etc. It’s funny to use it as a our example because it doesn’t equate to a democratic, capitalistic society.

    David said:

    Holly, as soon as interest deductions on loans were offered for a specific class of business activity (housing) we were no longer dealing with a free market.

    There’s a difference between providing incentives and tax breaks, and communism/ socialism. If Northfield had said “Cookies for 1.00 only, must be chocolate, and Holly will sell them. Judy will sell carrots” we’d “no longer be dealing with a free market”.

    I don’t know what your point is supposed to be or what you’d like to discuss. I feel the “takeovers” were too socialistic.

    January 11, 2009
  116. David Henson said:

    Holly, you asked “what laws lead to the meltdown” and I think it’s very important for people to understand the history of housing and to understand that the idea of encouraging home ownership (with ‘incentives’ as you say but what were actually ‘massive incentives’ in real dollars) has proven a very bad idea.

    Many of the “poor” that were to take a greater interest in their communities are now trapped in up-side-down mortgages and cannot move to improve their income, etc. I agree that the bailout is just further socialism. I guess the discussion that would seem appropriate is how much did America turn its back on freedom after WWII? And how much are we paying the price for that now? And how can these two parties through massive moves towards more centralization be effective in undoing current economic damage (that I think was caused by centralization to begin with)?

    What are the ramifications if the “system collapses” as Obama warns? Could the US in fact be much better off following this collapse? How much economic pain should citizens endure to support “the current system” (which at this point I think one could argue is no system at all). I mean this system did not work in Germany which is why the Nazis became wildly defensive and started dealing with opposition by shooting them in the heads. Is the US going to be that committed to “the system?” The current debt structure cannot be maintained and enforced without becoming a police state. America is at risk of becoming an incredibly ugly place and I would think people should at least consider gutting the governmental-financial structure and recapitalizing the system through a massive decentralized capital injection to individual citizens – central planning has not served us well so why continue down this path?

    January 11, 2009
  117. Holly Cairns said:

    David Henson, what governmental system do you support?

    January 11, 2009
  118. David Henson said:

    A true democracy (no special interest lobbies and no parties) where freedom is held as the highest value. The government that governs least governs best seems kind of obvious now.

    What is about the current state of affairs that you do support ?

    January 11, 2009
  119. Holly Cairns said:


    There have been times where there has been a one party system. That isn’t good, as the Nazis helped us learn. You are suggesting no party? The problem lies in finding a candidate who you can support. If there are 50 candidates, who is likely to win?

    BTW, Direct democracy has huge limitations, starting with incorrect tally for one.

    We probably could come together on things if we decided what we want for ourselves (in our society). Do we want equal rights? A fair court system? Majority rule (but respect for minority?) A system where most can prosper? A plan to protect our country from attack? Help if we fail and need food to keep our family and help to keep elders alive, etc? (oops, that’s a bit Democrat Party of me), fair and transparent government? Etc.

    What do you think is important, and how do we get it…?

    I’ve mentioned this before, but when I taught the “gifted” social studies class, we spent time on “create your country”. If the last country blew up the world, I ate the cookies. If the last country allowed for a working system and the panel agreed, the class ate the cookies. Sad to say, I mostly ate the cookies. And I did when they all watched.

    But what do you want, and how do you suggest we get there? Application of theory: Poor people owning houses should be supported by society. Poor people owning huge houses no one can afford is a mistake… something went wrong. Is that what happened?

    Sigh. I probably want the same things you want: Secure job, happy market, care for the vulnerable (which will be a huge part of our society when the boomers get old), safety, health care if I need it, and freedom to reach for the stars and win or lose depending on how hard I work.

    Perhaps you and I don’t see the world through the same glasses at all and we cannot come together in any form of agreement. So, we might need to agtree to disagree. I value our system, sorry.

    January 11, 2009
  120. David Henson said:

    I think you are right Holly we just do not see the world through the same glasses. To my eyes when Obama takes $120,000 from Freddie and Fannie lobbists he is to oversee and McCain takes $19,000 from Freddie and Fannie lobbists he is supposed to oversee then it starts to look a lot like a single party. This happens over and over again in our system with every special interest group.

    I value what are country was and could be but not what it is becoming. Reagan pushed for a constitutional convention and its too bad that didn’t happen.

    January 12, 2009
  121. Holly Cairns said:

    Sounds like you are an all or nothing kind of guy, David.

    January 12, 2009
  122. David Henson said:

    Holly – I believe many Dems “believe” in emotional goals even in the face of failed policy. Worse yet they believe their goals should be everyone’s goals. Do you agree that housing values inflate as soon a tax deduction is offered ? Do you agree that housing values inflate when the Fed guarantees mortgage paper ?

    I personally would say logic would, even before the meltdown would suggest “the poor” not borrow money for housing as renting would leave more options open to improve economic status (but I would not begin to be arrogant enough to assume I know how these individuals should lead their lives). Not to mention many many people involved in construction are now in enormous financial trouble because they committed themselves to an artificial economic construct which blew up.

    You teach history, whats the saying, those who do not review history are bound to repeat it.

    January 12, 2009
  123. Ray Cox said:

    David and Holly….good dialog and comments. I’m not sure you will convince each other of your points and positions, but it is interesting for ther rest of us to read.

    I tend to line up with those that feel government has gotten too large and is intruding into too many areas of our lives. It seems to me that type of government is not sustainable. And we may be experiencing that right now—the melt down of government as we know it. The big question is: “will those governing us recognize it, or will they simply revert to old ways that no longer apply?” I think the bailouts we are seeing is the later as they are bailing out companies that are clearly not positioned to remain solvent. They seem much more interested in creating short term protection for a class of workers (auto workers) than they do in really addressing long term systemic problems. But we all know the short term ‘solutions’ are what keep getting folks elected, and also are what creates the mess we are in.

    I’m really interested to see what solutions are elected state officials are ready to bring forward to address our $5+ billion budget shortfall. I’ve heard David Bly’s answer, which seems to be to create a new 4th tier of taxes for the really rich. That is most likely a non-starter and will not address the true problems in Minnesota’s economic system. From what I can learn most R’s in St. Paul, and a whole bunch of D’s as well feel raising income taxes on this class of folks…who create most jobs in Minnnesota, is not the way to go. I’d like to hear some other ideas.

    And Holly, you asked why I’m a Republican. It is because I believe in the free market system of this country. I believe people need to develop personal responsibility and take charge of their own life and the direction they head it. I believe government should focus on doing those things that an individual cannot do for him/herself, such as schools, public safety, transportation, etc.

    January 12, 2009
  124. Holly Cairns said:

    David and Ray,

    I believe in regulated capitalism (not just in a free market). This latest financial crisis was due to not enough regulation. We must protect the middle class and it’s ability to prosper, and that is in jeaopardy right now. Democrats want to support Minnesota’s hardworking families.

    Ray, you’ll get old some day (old enough to ail, perhaps). I hope you’ve stashed that wad in your mattress and are prepared to take care of yourself. You’d like to go back to the 1920’s way of doing things? Back to poor farms? I suppose vulnerable people die faster that way and is that a goal of the Republican party or what? I think we’re in this together, and it’s good to be responsible for

    Plus, you’re not interested in universal health care? Business owners who wouldn’t have to pay health care or disability tax would be free to make more product and hire more people…

    Anyway, David, I’m thinking our system isn’t that broken yet. You say Dems are idealistic, but looking at history, there have been a lot of good things done by Dems.

    David and Ray, what do you think of this graph?

    January 12, 2009
  125. Paul Fried said:

    There have been some opinion pieces recently observing that some elements on the conservative right have been trying to rewrite history and claim that the New Deal didn’t help the recovery from the Great Depression, but instead, delayed it. Some of the guilty include the usual suspects, the talking heads at FOX.

    This is simply false; government spending not only on the New Deal, but also on war spending, created jobs and stimulated the economy at the time.

    The rich could complain about the New Deal, and some tried to organize a coup, with retired Marine General Smedley Butler to lead it. They wanted a government more favorable to business interests, like the Fascist government in Italy at the time. The interests favoring the coup included J.P. Morgan, the Singer sewing machine family, and the DuPont family. Some speculate that they were also behind a failed assasination attempt in 1933 when FDR was still president-elect.

    But while the rich could complain about the New Deal, they could not complain about war spending (and they profitted even more from war spending than from the New Deal).

    The fact is that the economy does better when there’s a strong middle class and consumer class. Using federal and state money to invest in infrastructure and education helps strengthen a consumer class, and in the end, the rich benefit.

    No one likes taxes. The rich, if given the choice, will tend not to offer up capital to create jobs in a sour economy. They become more conservative to protect their capital. When the government taxes them and spends the money on infrastructure and education, the rich don’t like it, but it’s in their own best interests, and historically, they (and the middle class) beneift.

    Mark Dayton is right, though he’s one of the least charismatic people to hear it from. Recent decades of Repbulican tax cuts have seen the largest UPWARD redistribution of wealth since the early 1900’s. The rich have seen their taxes go down, and the middle class have seen their social security taxes (still a slush fund) increase. At the state level, the middle class has higher tax incidence (about 11%) than the richest (about 8%).

    Republicans preach about personal responsibility. And if you had a campfire in the woods and started a forest fire, you could be jailed or fined for damages. We should be talking about the people who were really responsible for the financial mess, and holding them responsible, and taxing those who benefitted most.

    The conservative revisionism (sometimes seen here) wants to blame the poor and the sub-prime mortgage holders. But unregulated derivatives and credit default swaps were an even larger problem. In the casino economy, not only could John Smith buy a package of mortgages, and credit default swaps to insure his investment in case of defaults; multiple others could also buy credit default swaps on the mortgage package John Smith bought. This was insanity, and for a while, many people got rich from the casino economy. Then Wall Street wanted the bail-out to cover their losses.

    For free-market conservatives who preach personal responsibility and letting the “invisible hand” of the market do its work, this is incredible hypocrisy.

    The only way they can pull it off is to quickly practice historical revisionism and try to convince us that the ending of red-lining, and people with bad credit and/or no equity in their homes, were all responsible for the whole mess.

    George Orwell showed (in “1984”) that those who control the past control the future; those who control the way we understand history control the way we think we should learn history’s lessons. That’s why the conservative historical revisionists are so hard at work lately.

    January 13, 2009
  126. Paul Fried said:

    I’m surprised that Ray and the Republicans are recycling many of the same old arguments here about the increase in the state budget. There was a similar debate in the newspaper (NNews) in September of 2003. Ray and others complained about how the state budget had grown. Tom Neuville claimed David Bly’s tax suggestions were socialist forced redistribution of wealth. It was false then, and it’s false now; in 2003 I asked whether it was simply bad math or intentional misrepresentation.

    In fact, as Republican Colin Powell noted after endorsing Barak Obama, all taxation is redistribution of wealth. When Dwight Eisenhower was president, the rate for the richest at the federal level was something like 88%, but with tax shelters, I’ve read that they paid an average of 40-50%. At that time, Republican Eisenhower spoke of the virtues of taxes as a patriotic duty. The rich then paid a much higher rate than they do now. Democrats should all be quoting Eisenhower around now.

    On the one hand, the basic tax rates are oriented wisely to tax at a higher rate those who make more money and have more disposable income; on the other hand, special interests often work to create tax shelters and loopholes, and if you’re rich enough and can afford a good accountant, you can lower that rate significantly, so the ultra-rich in Minnesota pay about 8% in all MN taxes according to tax incidence studies, whereas the middle class pays 11%.

    Ray says that the rich pay 70% of all taxes, and like other conservatives, he’d like to give us sticker shock (or percentage shock) leave it at that.

    But the richest 1% of the population in the US hold a little more than 34% of the wealth, the next richest 9% hold about 37%, the next 10% of the richest hold between 10 and 15%, and the poorest 80% hold little more than 15% of the wealth. So in other words, the richest 20% of the population holds about 85% of the wealth. We argue about minimum wage, but it’s not even a living wage; people can’t afford to pay rent, buy food, and have medical care on minimum wage.

    These percentages have seen a huge upward shift of wealth in recent decades. The rich have gotten richer at a rate not seen since the days of the robber barrons. To lower taxes for the rich is immoral, and to claim that deregulation and lower taxes stimulate the economy is simply a myth at best, and a Machiavellian lie at worst.

    Not only is it generally true in recent years that people do better (and the economy does better) under Republicans, but more specifically, the economy has done better (under Republicans and Demoncrats, both) when they have not been afraid of government spending. According to some recent analysis, it did better under George H.W. Bush when he raised taxes, although he paid a political price for it because of his “no new taxes” stand. It did slightly better under Hoover when he raised taxes. It did better under FDR when he raised taxes and spending, and suffered under FDR only when he gave in to pressure to try to balance the budget.

    Conservatives here are mistaken and misleading on issues of government spending in general as a way to stimulate the economy, and more specifically, on their characterization of state spending.

    In September of 2003, I called St. Paul and was referred to the (non-partisan) State Department of Finance, and spoke with Charles Bieleck there. Among the causes for increased state spending, besides inflation, he listed “… historically growing health care costs, increased criminal justice spending, and state court takeover — as well as the recent state assumption of basic K-12 formula costs.”

    It’s true that inflation hits everyone, individuals, families, businesses and state, but it’s a false argument to leave it at that. If you never adjusted for inflation since MN statehood, the state would not function, so Ray is not seeing this flaw in his own argument. Furthermore, “no new taxes” Pawlenty, for many years, starved state spending down by way of no inflationary increases. For example, state spending on women’s shelters had not increased for about 10 years a while back. Parents of children at public schools can form an active interest group and rally for funding increases to restore some of what was lost to inflation, but battered women can hardly form an effective lobbying group. If there was a 10% increase to compensate for uncompensated inflation after Pawlenty’s starvation diet, it is simply disingenuous for Republicans to jump on this as an opportunity to demonize Democrats and call them tax-and-spenders. At some point, the only response is to call Republicans liars, masters of misdirection, experts in smoke and mirrors.

    It’s also true that rising health care costs hit us all; if we have any co-pay, we know this as individuals as well as we do as a state. If the state has obligations to provide health care to state employees and to other vulnerable parties, and if these costs have skyrocketted, we cannot as a state say we’ll simply fire a bunch of state employees to compensate. Health care profits are still solid, so this only strengthens the argument for universal single-payer.

    In 2003, our population was growing as a state (might still be growing; I have not checked). Unlike some other states, between people moving here and moving out, and between the death rate and birth rate, population was growing. When population grows, other things grow (such as roads, etc.). Computers and efforts at efficiency can sometimes help, but in the end, you cannot provide the same services, with the same sized staff, to a growing population.

    Menards knows this. Other businesses know this. Ray knows this. If you have a growing number of customers and a growing number of services you need to provide, you have to hire more staff to get all the work done.

    When state budgets grow in a good economy with a growing population, the tax base is also growing, so you can collect income taxes and business taxes from a growing number of businesses and individuals.

    It is simply disengenuous for Republicans NOT to admit such things, and instead, to throw out all these logical fallacies, all this misdirection, and to take any opportunity to characterize any spending increase as a sign of wasteful Democratic spending. It is simply Rovian/Machiavellian partisan politics for Republicans to do this and not to deal with some of the historical forces at work:

    1. Historically growing health care costs
    2. Increased criminal justice spending
    3. State assumption of some basic K-12 formula costs
    4. Simple inflation
    5. Compensation for Pawlenty’s past inflation-starving of state budgets
    6. Increased costs for infrastructure and services that accompany growing population.

    Ray, were you simply committing some of the same errors you’ve committed in the past, or are you playing Machiavellian partisan politics with claims you know to be false?

    January 13, 2009
  127. Griff Wigley said:

    Paul F., you’re forgetting our rule about addressing people by name in the first person when you disagree with them.

    Can I edit your comment above that’s directed at Ray?

    January 13, 2009
  128. Paul Fried said:

    It’s your blog, Griff, so you can hold or delete posts or edit any way you like.

    My comments early on (first paragraph of my second set of Jan 13 comments on this thread) refer directly to Ray and Tom, and at the very end refer directly to Ray because of comments by Ray on this thread. I thought this would be sufficient.

    Some of my comments about Republicans/conservatives relate in general to comments by others on this thread, or comments made in 2003 (by Ray, Tom, and Paul Gates at the time) when similar arguments were made.

    I’m not sure if you’re referring to my first or second set of comments above.

    From my first set of Jan 13 comments on this thread, 5th paragraph from the bottom:
    “Republicans (edit: like Ray Cox) preach about personal responsibility…..”

    From my first set of Jan 13 comments on this thread, 4th paragraph from the bottom:
    “The conservative revisionism (sometimes seen here /edit: at LoGroNo, represented, for example, on the Financial Crisis thread by Peter M) wants to blame the poor and the sub-prime mortgage holders….”

    Does that help?

    If you feel I’m being too general or vague in my complaints about conservative misrepresentation of budget or economic issues, you can delete whole sections of my comments as you see fit. Some of the discussion regarding red-lining and the cause of the financial crisis relates to posts by Peter M. on the old finanical crisis thread.

    Sorry if I’ve trangressed the rules. I was not intentionally avoiding Ray’s name, as my second set of comments shows.

    Some of my comments are about Republican historical revisionism by others (not locals) in the media (I could look up the names of the talking heads at FOX if you like; I did not name FOX talking heads specifically, and I know there have been counter-claims of historical revisionism leveled against Rachel Maddow of MSNBC this last December regarding Herbert Hoover).

    January 13, 2009
  129. David Henson said:

    Holly, don’t you look back fondly at the days when people could work their way through college and not owe anything upon graduation ? Or when you could save a few years of wages and buy a house for cash ? What about if you have an ear ache and want to see a doctor, what should that cost ($50, $100, $500, $1000 – the fact is there was a day you could go to the doctor and know you would be charged fairly – now unless you are in ‘the system’ you just do not go since they could not even tell you in advance what the costs would be)? What is the overhead in our society that has changed the dynamic so much over the past 50 years that we are all now slaves to the system ? The rich or the size and cost of government ? Hint : there have always been super rich in America. Take another look at some more charts, except for a brief blip in the 50s and 60s as taxes go up the middle class income goes down (especially if you factor the amounts cycled into debt service for student loans etc.)

    January 13, 2009
  130. Paul Fried said:

    Griff, in spite of my last paragraph (in my second set of comments above) that addresses a question to Ray specifically, the previous paragraph before the numbered list near the end begins this way:

    “It is simply disengenuous for Republicans NOT to admit such things….” (Oops–SP–disingenuous.)

    Perhaps this is what caught your eye–the reference to Republicans instead of Ray. This was a reference, in part, to the 2003 NNews debate, which included Tom Neuville and Paul Gates. I could have named Ray, Tom and Paul there, but other Republicans across the state do the same kind of thing: Look for budget increases, and blame Democrats.

    They don’t divide the growing budget by the growing population before blaming Democrats;
    they don’t adjust the growing budget for inflation before blaming budget increases on Democrats;
    in the longer view, they don’t account for expenses shifted from property tax and related to education and courts;
    and they don’t adjust for rising state health care costs, even simply for employees, for example.

    So in part, my complaint in that paragraph is not only about Ray, Tom and Paul Gates and their 2003 comments, but about other Republicans as well who play the same blame games with distorted use of numbers.

    So you can edit that paragraph to refer only to Ray, but it would change my intended meaning.

    If that makes me a rule-breaker, then you may have to delete a paragraph or two, or my whole set or sets of comments.

    But then the secret would be out, and everyone would know that LoGroNo is a conservative blog that tolerates many liberal comments merely because that’s the way the local political winds happen to be blowing…. (O;

    If my question to Ray at the end seems to you to be too harsh or uncivil (Is it merely the same errors as in 2003, or is it Machiavellian?), you could delete the whole thing (or both sets of my comments) and I could tone it down and resubmit.

    I know Ray is your client, and you supported him with lawn signs (as well as votes, we might think), and as it’s your blog, its your right not only to uphold civility, but also to defend your clients.

    I also respect your thoughtful efforts at being fair in your enforcement of the rules. And I don’t want to take up too much of your time pondering an application of the rules and possible edit. If its easiest to take down one or both of my sets of comments and be more specific about which part seemed to be the violation of the rule, I’d be glad to edit, tone down, whatever, and resubmit.

    January 13, 2009
  131. Paul Fried said:

    I like William Siemer’s idea about more sales tax, but to avoid having folks go to Wisconsin, or online, to do their shopping, it would be better to do it at a national level. that way, you could start a tax on internet transactions.

    Have a consumption tax for everything, as Bruce Morlan has also suggested, but to avoid a regressive tax that hurts the poor, give a tax rebate to people under a certain income that decreases as income increases. Then return the monies collected to the states (they are talking about federal assistance for the states anyway, and this could help pay for it).

    I disagree with what David L. and Ray C. said many days (a few weeks) long ago, comparing infrastructure investment to remodeling a house when you can’t make the mortgage payments. Here’s David L.:

    “The idea that the government, which already is trillions of dollars in debt, should spend money on infrastructure as an “investment”, is analogous to remodeling your house when you can’t make the mortgage payment.”

    It’s not analogous for a number of reasons. Many people who own homes remodel them, and it’s a good investment. The analogy carries too many assumptions that David L. and Ray push on readers uncritically.

    Government spending does stimulate the economy, and there’s nothing wrong with taxing the rich. As I’ve said before, we should be quoting Republicans like Colon Powell
    (all taxation is redistribution of wealth, but it’s to the benefit of the rich)
    and Dwight Eisenhower
    (taxes are a patriotic duty)
    to support higher taxes for the rich–at rates similar to those during the Eisenhower administration

    Tax cuts and costly wars are part of the reason we are not paying down our debt. There are ways to do it.

    – There should be no cap on social security withholding, as there currently is.

    – Capital gains taxes should compete with rates in other countries to avoid capital flight, but income should be taxed at a higher rate, and CEO’s and hedge fund managers should not be able to avoid income tax by taking more income as capital gains or other lower-tax forms; tax code should not be written so that the richest avoid paying taxes; loopholes should be closed.

    – Just as the government requires domestic ownership for newspapers and TV, the government should stop having any contracts with corporations that are not based in the US, and don’t have a significant majority of revenue and assets in the US. When Haliburton relocates to Dubai for tax purposes, our contracts with them should end.

    – A recent recommendation by a Pentagon advisory board warned that US military spending was at dangerously unsustainable rates. We should heed their warning, cut military spending, and invest in more infrastructure projects in those states hardest hit by the military spending cuts to compensate for lost jobs.

    Etc. We should be agressive about reversing the disatrous fiscal policies of the last eight years, and any unprofitable practices from previous administrations.

    It’s not that we can’t pay the mortgage. It’s that we’re not enacting the policies that will make it happen.

    Here’s a better analogy: We can afford a mortgage, and a home equity loan for remodeling, but we’ve allowed ourselves to be suckered into
    expensive payments for cable TV,
    a cell phone for every member of the family,
    big-screen digital TV in multiple rooms,
    multiple SUV’s with low MPG & high insurance premiums….

    …and in order to afford all that, a friendly financial institution offered us a no-equity loan that will keep us paying high interest rates, and no principal, forever, because they want to maximize their profits. It’s not welfare queens we have to worry about so much as economic leeches who care more for their profits than for people’s financial well-being. The drain on the system of such leeches dwarfs spending related to welfare fraud or medicare fraud.

    January 13, 2009
  132. Holly Cairns said:

    David Henson said:

    Holly, don’t you look back fondly at the days when people could work their way through college and not owe anything upon graduation ? Or when you could save a few years of wages and buy a house for cash

    I’m sure that was nice. My parents paid their last college financial aid bill when I was 11, and houses were already a lot of money by the time I was born (1967). I agree there is are housing cost problems– not enough quality, low income housing and ridiculous prices for housing and college. Seems to have really started to get out of hand in the George HW years.

    Anyway, it is market driven. What is the public willing to pay… the problem is our misuse of credit, IMHO. Or, did you want to have regulations that limit the price of houses, college, or use of credit? Is that what you’re getting at?

    David Henson said:

    What about if you have an ear ache and want to see a doctor, what should that cost ($50, $100, $500, $1000 – the fact is there was a day you could go to the doctor and know you would be charged fairly – now unless you are in ‘the system’ you just do not go since they could not even tell you in advance what the costs would be)?

    This is due to the Nixon era HMO idea. The rest of the world went universal health care (after WWII?) and are now finding ways to improve that system, and we went with “fair market.” I see it better, financially, to go universal at the state level. In 5 years it would be cheaper and health care would not be such a huge burden on those that are employed. Plus, people would get care and not lose the house due to illness (as it is now, they can be covered by health care insurance and still lose the house… go figure that one out.)

    David Henson said:

    …we are all now slaves to the system…

    What system is that? I hope you don’t need anyone else besides yourself, David. Perhaps you’d rather get out of the system. Get your gun and find that nice cabin. Shoot dinner, bury your own, catch rain water, and learn to wear fur. Oh, and one trek a year for ammo and news.

    And why won’t you comment on the specifics provided in the graph I linked to?

    January 13, 2009
  133. Peter Millin said:

    The z-fact graph doesn’t account for a very important event that happened during Clinton’s tenure. Very early he raised taxes.
    This of course gives the government more income and reduces the debt needed.
    Bush reversed those increases thus the increase in debt.

    The problem is not taxation the problem is spending. Unless somebody in Washington get’s back to common sense we are all doomed in one way or another.
    You simply can’t spend yourself out of debt without longterm consequences.

    Between the bailouts and the newly proposed “stimulus (pork) package” the amount we allow ourselves to go in debt is staggering.

    Below are some comparisons:
    Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
    Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
    Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
    S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
    Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
    The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
    Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
    Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
    NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

    TOTAL: $3,920,000,000,000
    2008 BAILOUT TOTAL AS OF NOV 2008: $4,616,000,000,000
    Strange how debt was a bad thing about three month ago and now is being touted as the way to salvation.

    It’s a matter of time before the Chinese will stop buying our debt, because our debt will exceed our GDP and the dollar will become worthless.

    January 13, 2009
  134. David Henson said:

    Holly, I did not mean that you were alive in those days. Neither was I but I know many people who were and parents could quite affordably pay cash for a semester. But in fact as the government has gotten involved in finance for housing and education the cost has risen vastly faster than all other costs … to where it is actually a much worse deal for consumers. Health care costs also bear the inflationary mark of government finance. These are facts that are hard to dispute … you can argue despite the inflationary effect the programs are still worthy … I’m just suggesting that is very dubious.

    I can’t really understand how any rational person cannot agree that in our lifetimes products and services that were decentralized got cheaper and better (phones, software) and products and services that were centralized (housing, health) have gotten more expensive and worse.

    I think it is a huge mistake to micromanage people’s lives and say you should have health insurance but not new tires on your car. That said, society can always empower people by giving them a debit card each year for $8000.00 and say spend this on your health as a smart consumer wherever and however you see fit. This way instead of going to a clinic for a strep test costing $100, they could go to WalMart for one costing $10.00.

    What’s wrong with letting people manage their own affairs?

    January 13, 2009
  135. Paul Fried said:

    David H, you wrote, “products and services that were centralized (housing, health) have gotten more expensive and worse.”

    Hmmm. I didn’t buy my house from the government. Our mortgage is through a bank, but I suppose we could have bought a home via contract for deed. Is it centralized because there are building codes, and do building codes make homes worse?

    Your comments suggest that perhaps the housing bubble was caused by centralization through — what? A monopoly of too few banks, or construction companies? Too much intervention by government? The analysis nationally has been going the other way, claiming Greenspan should have done more intervention to prevent the bubble.

    Or are you talking about the rising cost of public housing? Isn’t that tied more to other general housing and construction costs, and the bubble (or lack thereof)?

    It seems you are forcing your ideology upon unrelated sectors because of your observations about — phones? Software? I thought the complaint in the industry has been that cell phones in Asia are better because they’ve agreed on one standard instead of two, so actually more centralization has helped them, whereas we’ve been hurt.

    Regarding health care, do you mean that employers should not require health coverage? My employer doesn’t, but we have health coverage through my wife’s plan, which offered many options. I also know people who have no health insurance. It’s not required.

    Are you saying that in Canada, where everyone is covered (centralized?), quality of care is lower? It might be higher in some respects, certainly if you could not afford it otherwise.

    How do you relate these observations to solving the state’s financial crisis?

    January 14, 2009
  136. Paul Fried said:

    Peter, during the Clinton years (1993) there was a tax hike, especially on the wealthiest, but the economy grew anyway. Then there was a tax cut in 1997, and the dot-com bubble was still inflating. But we were better off financially than we were under Bush.

    Spending in itself, and taxation in itself, are not the problem: The problem is, how to spend on what really matters, and who to tax in order to pay for it.

    January 14, 2009
  137. David Henson said:

    Paul : the government has guaranteed for some trillion odd dollars of mortgage backed securities (probably including yours) which flooded finance capital into this area of the economy at the expense of other areas of the economy. Most of the money the government is printing is to make good on these guarantees for investors. So investors had to decide should I put money into a rational business activity or the business activity where the government will bail me out.

    Cell phones only exist because a really really smart decision was made to end the US government backed monopoly on telecommunications (over the objections of many free market haters).

    January 14, 2009
  138. Peter Millin said:

    My reason for pointing out the tax hike was not to put it in context with growth. The economy grew anyway, although it ended up bursting on the end of Clinton’s tenure.

    I was pointing out that the z-fact graphs points out a dip in the national debt during Clinton. This dip can be explained by the increased government revenue via taxes. This allowed the Clinton administration to borrow less to keep things afloat.
    Does this mean that government can only reduce the debt by raising taxes? I sure hope not.

    I agree with you that we need to spend money on the right things. Where you and I disagree is on what those “right” things are.

    January 14, 2009
  139. Paul Zorn said:


    You quote some interesting numbers in your January 13 post, such as the $4.616 trillion for 2008 bailout.

    When you cite such numbers it would be helpful (as others have requested) if you give a source, too. I don’t say your numbers are wrong (though I’m dubious of the 4.6 trillion), but they’d mean more, and be more persuasive in argument, if they were sourced.

    You wrote, too, that

    … during Clinton’s tenure … he raised taxes.
    This of course gives the government more income and reduces the debt needed. …

    The point that raising taxes can give the government more income is well taken, and hard to dispute. But it also runs counter to one of the standard dogmas of the anti-tax crowd, to the effect that *lowering* taxes stimulates growth so much that the government ends up richer for it. (Whether this dogma will survive GWB remains to be seen.)

    January 14, 2009
  140. Peter Millin said:–famous-government-projects-combined

    Here is the link for my info.

    If you compare the GDP numbers of the Clinton years versus the Bush years they are pretty much on par. This despite 9/11 and Katrina.
    Anyway I don’t think this is an issue of Democrats versus Republicans. The fact that Washington has become irresponsible will affect us all and our children.
    If we for once just could put aside our ideologies and identify and attack the source of the problem, we actually could have an impact.
    I don’t care which side you are on the current DC spending spree is not sustainable and will hurt ALL of us in the long run.
    Government debt and spending has gone up consistently and there doesn’t seem to be any hurry to curb it anytime soon.

    If DC sees fit to spend over a 100 Million dollars on an inauguration or Minnesota lawmakers still can give themselves a raise. Then either things are not as bad as they seem or our elected officials are living in a bubble.

    Three month ago everybody was complaining about the “Bush debt” now suddenly we believe that more debt will save us????

    January 15, 2009
  141. Ray Cox said:

    Thank you Peter…you have clearly identified what the real problem of government is today—spending. You note: “If we for once just could put aside our ideologies and identify and attack the source of the problem, we actually could have an impact.” I agree that all might be able to civily agree that spending is truly the problem, no matter if you are looking at Minnesota’s deep shortfall, or what is going on in Washington.

    As so many people point out in many media sources, we do generate a huge amount of revenue in our state and nation. But when people are behaving like children in a candy store, there never is enough money and there never will be. We need to elect people that have sound sensibilities in understanding the differences between wants and needs, and with some comfort in reading and understanding P&L and balance sheets, and with the ability to understand future trends. In Minnesota, as I pointed out earlier, we are a graying population (I know for one that I am!) and we are still relying on a bit of a ponzi scheme to pay for things. The same can be said for Washington. It will not continue to work. Even if David Bly is successful in implementing his 4th tier income tax plan on the really, really wealthy—it will not last and will not sustain the growth of government that we have been experiencing in the past years.

    We need serious discussion about wants, desires and needs. It looks to me like we might see some of that discussion this year in the legisalture as they wrestle with a $5.2 billion hole. But who knows what the end result of those discussions will be at this time. You can say you heard it here first folks, but I’m guessing we will see a government shutdown on July 1st.

    January 15, 2009
  142. Ray Cox said:

    I hope everyone interested in this thread will read the latest economic report by the commission on Minnesota budgets. This is a well respected group of people that took a hard look at Minnesota finances and budgets. The report isn’t long…34 pages and is at

    It is worth a read.Some of the highlighted issues:
    * our economy is underperforming
    * expect lower growth rates
    * our budget is structurally unbalanced and our long term growth outpaces revenue.
    * we shoud replace our reliance on volitle revenue (sales tax, income tax, etc.) with a more reliable revenue source (property taxes)

    I think the report is very good and hope that legislators take a good look at it.

    January 15, 2009
  143. Peter Millin said:

    The report posted by Ray Cox is very interesting.

    Most of the current budget issues we are facing today have been predicted since 1995.
    The question is why have we ignored them? Is it because some of the remedies require tough political choices? Or is it a case where we just whistle in the dark and hope it goes away?
    In either case it is a case study on what is wrong with politics today and why a lot of people (including me) have become cynical of the process.

    I am still holding out hope that one of parties will muster the political courage and leadership to face this head on, and start to apply common sense to a complex problem.

    January 18, 2009
  144. Ray Cox said:

    Good comments Peter. You are absolutely correct that people have been ignoring what is taking place. If you really, really want to get frightened about what is going on in America, read I. O. U. S. A….or visit their website and watch the short 30 minute version.

    All across America today it appears we are working harder at creating a dependency culture than we are at creating hard-working individuals that take on personal responsibility. As this book and movie point out so well, we are headed for a ‘train wreck’ in the very near future.

    January 19, 2009
  145. Peter Millin said:


    This is scary stuff.
    Bush wanted to address the issue but got no support not even from within his party.

    From a politicians point of view it is much easier to maintain the status quo. That way we can have our cake and it it too.
    It is much easier to promise tax cuts and increase spending, then to cut spending and keep taxes affordable.

    On a state level we have to face this issue much sooner then on the federal level.
    The past federal administration was fiscally irresponsible and I don’t have much hope for the new administration.

    The issue of federal debt is the real inconvenient truth. If not addressed it will bring the American dream to a standstill.

    January 19, 2009
  146. Ray Cox said:

    You are absolutely correct Peter….we must address this issue on a state level before a national level. Our nation is allowed to deficit spend…our state is theoretically not allowed to do so. It does take a real spine to shrink government to its core functions, getting rid of the fluff, at a time like this. It will be interesting to see how our legislators will act on our current biennial budget. I’m hearing that the shortfall has grown to almost $7 billion.

    And I agree that Bush did try to address the legaacy debt we are building up, and that there was no support for doing so. Bush couldn’t stand for election again….everyone else can. There is your answer to that issue. That said, Republicans and Democracts have been on a reckless spending spree for years in Washington.

    I wish everyone would read I.O.U.S.A…..or if they can’t make time to read it, at least watch the 30 minute movie summary.

    January 20, 2009
  147. Paul Zorn said:

    Thanks, Ray, for the link to the Minnesota budget commission report. I found it interesting, useful, and balanced, and I agree that the report points to several serious structural, not just short-term, problems in funding state budgets. Peter’s right, too, that governors and legislators have not faced up honestly to these problems, which weren’t discovered yesterday.

    Where we may differ concerns how we should address these real problems. One view (yours and Peter’s, if I understand correctly) is that “the problem is spending” (Peter’s words, I think) and so the fix is obvious: reduce spending. Governor Pawlenty takes it a step farther than I think you would: Never, ever raise a tax, in good or bad economic times. (Whether the Gov really believes this or is posturing for national office isn’t completely clear.)

    It’s not that simple — and note that the report you cite doesn’t oversimplify the problem. For example, the report recommends a lot of rebalancing of different types of taxes in the budget, and it’s not clear that anything of the sort could occur on Pawlenty’s watch, because re-balancing would mean raising some taxes (while perhaps lowering others). The report also points to the need to preserve and improve productivity of the workforce, and this may require more, not less, investment in education and perhaps other infrastructural elements.

    Peter says (about federal spending) that we can’t spend our way out of an economic fix. This is true in the sense that more spending doesn’t automatically make us richer, and government debt has to be paid eventually. But, for better or worse, Keynesian economics is now widely accepted, at least in outline, and one tenet involves extra government spending on infrastructure during down cycles. In my opinion it’s a bad thing that most (all?) states have balanced budget requirements, because such policies prevent or restrict Keynesian responses to downturns. True, there’s some prospect of the feds helping out the states with revenue sharing, but why bother with the middleman?

    In any event, if we can’t simply spend our way to prosperity, neither can we get there just by cutting, any more than you can expect to save money on your car in the long run by skimping on oil changes. On the contrary, we’ll probably need more, not less, public investment in education, infrastructure, and possibly social services if the economy stays in the toilet for long. If this means higher taxes for a while, even a long while, I’d rather have that than pass the bill on to my kids.

    January 20, 2009
  148. David Henson said:

    Ray –
    If I understand this correctly the federal government spends about $3000.00 per US person and Minnesota spends about $1200.00 on health care per person (pp).

    So let’s do a little math for fun:

    Northfield folks (population) 15000.
    Health Care Govt Expense pp $4200.00
    Total $63000000
    Doc Salary $125,000
    Docs we could employ fulltime 504
    That would be doctor days (x246) 123,984
    Patient Visits x30 day 3719520
    Northfield Population again 15000
    Annual office visits per NF Person 248

    Maybe we should spend the money this way and each have an office visit every single work day with the doctor for 15 minutes – we’d be the healthiest city in the world.

    January 20, 2009
  149. Peter Millin said:

    If raising taxes and government involvement is the medicine to cure our current ailments how come Europe is not doing any better then we are?
    Europe in comparisson to us has a much higher tax rate and a much higher level of government involvement in the economy, but yet they are struggling too.
    The difference is that our standard of living is still much higher then Europe’s is.

    We can’t afford to simply just raise taxes to support our political leaders irresponsibilities. This is like providing heroin to an addict.

    What we need is an honest discussion about the role we want government to play in our lives.

    Do we really want a nanny state? Are we willing to give up our personal freedoms and let government take care of us?

    My answer is no. Given the track record of our current government your answer should be no as well.

    How can we believe that a government that is not capable to work within it’s means, with the programs currently entrusted to them, would be able to do more efficently.
    In this case, past indicators are a meassure for future performance.

    Our current leaders are not capable of doing something as simple as exchange a digital box for your TV….and we collectively believe they can run healthcare efficently? Be responsible with our money? Run social security? Enforce current immigration laws?

    The evidence speaks against it.

    January 21, 2009
  150. Ray Cox said:

    Glad you like the report Paul Z….I too thought it was well researched and prepared. Some responses to your comments.

    I cannot imagine what it would be like if states did not require a balanced budget. Speaking from serving in St. Paul I can assure everyone reading this that their 5 year old has more spending restraint than most legislators. A good example of this is the 2007 session. There was a $2.5 billion excess. Go ahead and assign $600 million to inflation, and you still have $1.9 billion left over. What was done? Every dime was spent. So we now have a state budget that included the new $1.9 billion in spending, but did not include any new taxes. So, the result is what we are looking at today—-a $6-7 billion shortfall. Much of this could have been avoided if the legislature did not add in the new $1.9 billion of spending, and in fact put it aside for the ‘rainy day’. It’s raining folks, and we have a total of zero in our reserve accounts. If the $1.9 of new spending was not put into the budget, you can argue that we would at least have that amount to tide us over.

    The question Paul raised focues on taxes…do we have enough? The reason Peter and I are saying we mainly have a spending problem is that the rate of government spending is far outstripping all other sectors. And when our government spending grows at a pace far in excess of our business growth, we have a problem. Minnesota is now discovering that problem. You could increase taxes, but unless the spending rate is kept in check, you will again run out of funds. Peter is correct, granting massive new taxes to the government is like feeding heroin to an addict.

    David, I like your little health care math. Somehow the clinic and hosptial costs don’t seem to show up, but the raw math makes one take a hard look. I’m more in line with Peter on this one….who thinks a government that can’t deliver coupons for converter boxes can run a health care system? But a bigger question for me is “why would you want to get your health care from the government?”

    Paul, your Keynesian econimics picture may help some sectors of business by providing government purchases. I agree that most people recognize that. But the way to do on a state level is to create a surplus balance that can be held back in reserve and used when needed for such spending. We already create bonding bills that are set at 3% debt service. That $1+ billion spending all by itself addresses many state needs and creates lots of employment. I suppose someone could argue that we should raise it to 4% or 5% in tough economic times. That would expand the bonding bill by a signifcant amount. But I would never want to see authority for an unbalanced state budget.

    January 21, 2009
  151. David Henson said:

    I agree that socialized medicine is mistaking the antidote to medical inflation for the cause. Health care is very important but the economics are way out of whack. I think this happens when tax dollars or centralized planning take over a process. The government cannot just wholesale pull out of health care because the results would be too chaotic. But I think the hybrid would be to give consumers health debit cards and let them decide where and how to spend – that would begin a dramatic reorganization of health care. This would also get employers out of the process which is another must for an efficient economy. Further centralizing a bloated and inefficient system would be the worst choice.

    January 22, 2009
  152. David Henson said:

    Paul, infrastructure spending sounds great but if the borrowed money ends up building great pyramids or shoddy bridges with a short shelf life then the funds were wasted. I think infrastructure spending to stimulate the economy is a bit like having a nice high volume restaurant and all of a sudden customers quit coming in so instead of laying off employees the management starts having them repaint the walls and install new freezers. Of course these upgrades probably are not addressing the root problems and are only useful if customers start coming back.

    January 22, 2009
  153. Paul Zorn said:


    Of course there’s such a thing as wasteful infrastructural spending, just as it’s possible for non-governmental entities (like me and you) to waste money. That’s why I’m in favor of useful infrastructural projects, not wasteful ones. There is no lack of the former.

    Do you doubt that our infrastructure needs attention? Or do you just expect government to attend to it incompetently? If so, whom would you suggest? And what do you mean by “shelf life” of a bridge?

    January 22, 2009
  154. Paul Zorn said:


    I’m shocked — shocked — at your cynicism about the spendthrift ways of 5-year-old-like state legislators. If “most” legislators are so childish, is this true of Republicans, too? Or did the “most” part come in with the D’s? And if legislators are so childish, what hope is there for wise squirreling away of occasional surpluses?

    You also allow that “.. Keynesian economics … may help some sectors of business by providing government purchases.” True, that could be a good thing at least for the (relatively few) direct beneficiaries of governmental largesse. But I’m more interested in government working (and yes, this costs money) to help everybody, including but not limited to businesses, through infrastructural investments in stuff like roads, schools, environmental improvements, etc. I’m willing to help pay for such things not just out of some do-gooding instinct but because they are investments in future productivity.

    Those spendthrift legislators you rail against may not be blameless, but Pawlenty and that crowd are not exactly acting like grownups when they pass the costs of maintenance (in several senses of that word) on to our kids and grandkids.

    January 22, 2009
  155. Paul Zorn said:

    David H,

    I agree with some of what you say about health care, especially the bit about separating health care from jobs. And it’s fair to ask whether “socialized medicine” (whatever you mean by that … there are very different versions out there) works better or saves money relative to other possibilities, such as involving private insurance.

    But I don’t at all follow your reasoning about socialized medicine being the cause of high medical costs. If this were true, why does the US (with probably the *least* socialized health system among rich countries) have substantially *higher* medical costs than in rich countries with highly socialized medical systems, like Denmark or Switzerland? Socialized medicine may have its own problems, but blaming it for high US costs seems far-fetched.

    January 22, 2009
  156. Ray Cox said:

    Paul Z….yes, I include Republicans and Democrats alike in my faulting spending. If you look at what has been going on in government for the past 30-40 years you see it easily has been crossing party lines. There just is no restraint in spending. We watch government growing and expanding at rates far faster than it should, and, I believe, far faster than it can be sustained by America.

    Our leaders simply are not looking hard at our demographics. The baby boomers are going to be retiring, we will greatly reduce our taxes paid, while the demand for services from this group will increase hugely. As I noted earlier, the book I.O.U.S.A. does a very, very good job of outlining just what the problem is. As you say Paul, Washington has been passing on their spending to our grandchildren for years and years.

    I do not claim to be an expert on health care issues, but one of the big reason America has higher costs for health care is that we do far more of it, and that which we do often includes very, very expensive procedures. MPR this week replayed a discussion on health care they hosted a while ago….lots of people pushing for socialized plans, and lots of Doctors in the audience asking questions. Without exception the folks pushing for the socialized (government run) plans noted that there have to be decisions about who gets what type of care under those plans. We all know that is what goes on in Europe, Canada and most places that have that type of care. (I think Germany has a blended type of plan where government pays half your insurance premiums or somthing like that) Is America ready to have government tell them they cannot have a procedure? I don’t think we are. I continue to assert that we have the best medical care in the world. When world leaders and others need the best care, they come here, not to Canada. We have a system that does some sorting of health care access by funding.

    I think it is possible to make huge reductions in health care delivery by streamlining administrative matters. We can and should do that. But I am very fearful of the government taking over our total health care system. This is a government that pays $400 for a hammer and $750 for a toilet seat.

    January 23, 2009
  157. Paul Fried said:

    Ray, earlier, you said that tax cuts should go to businesses because they create most of the jobs.

    In a sour economy, businesses cut more jobs than they create. Giving tax cuts to businesses in a sour economy does not create jobs. It’s a net loss on jobs from existing businesses. Start-ups and out-of-the-home businesses create the most jobs in a sour economy. It’s a fact.

    This doesn’t mean that, if there’s going to be tax relief during hard times, that businesses shouldn’t come begging with their hand out, asking for some fair share of the welfare instead of pulling themselves up by their bootstraps.

    I’m fine with being fair, and helping out businesses, which are also hurt. But let’s be honest about what helps stimulate the economy most and what doesn’t.

    People who own businesses (like yourself) might prefer to advocate for business tax cuts, which is fine, just as teachers should advocate for hiring more teachers and improving the student-teacher ratio. Hiring more teachers would actually do more to stimulate the economy than business tax breaks, but your bias is clear, and there will probably be some tax break for businesses.

    I saw a chart created by a recent Moody’s economics study, and it found that the biggest bang for the buck in terms of stimulus is food stamps, because people living in poverty tend to spend it right away on necessities, and this keeps people in the economy working, even if they’re not on welfare. The food-stamp recipient helps keep local Malt-O-Meal workers employed, and this helps the local economy.

    January 23, 2009
  158. Paul Fried said:

    Ray, you also wrote, “The reason Peter and I are saying we mainly have a spending problem is that the rate of government spending is far outstripping all other sectors. And when our government spending grows at a pace far in excess of our business growth, we have a problem.”

    This is not really true. Government spending on the New Deal and on the war effort during WWII grew at a tremendous pace, and soon enough the economy was roaring. War profiteers made a buck, and it also helped create a confident consumer class. This created a feedback loop by which businesses then grew. The economy gets more action, like a see-saw, if government–a huge customer–spends money on needed improvements when the money is not moving.

    During WWII, the income tax was raised on millionaires to a rate of about 94%. There was strong public support, and it kept us paying our bills. It also kept the economy moving.

    The problem now is that the disparity in wealth has been increasing too rapidly in this country. 20% of the population owns 85% of the wealth. CEO’s in this country make hundreds of times more than the lowest paid employee, and the disparity is far larger in this country than in any other developed country. Tax cuts have allowed the rich to get far richer while 80% of the population owns only 15% of the wealth, and real wages are either staying flat or falling.

    Government intervention/stimulus in the way of infrastructure investments (human and physical) could help us take the long view that the markets have not, and will not take unless the government, like a consumer (and on behalf of many consumers), does its job.

    You worked on and blogged about a home that was “off the grid.” Some groups have been talking, not only about wind generation in the Rockies, and solar in the desert southwest, but also decentralizing the grid with rooftop solar and perhaps, when feasible, small back-yard wind turbines, as well as many new conservation methods like geothermal.

    The market alone will never create a decentralized grid if the government/consumer doesn’t step up to the plate and create a demand for it. Rooftop solar, backyard wind-turbines, geothermal, and other green technologies won’t rise significantly in demand unless government steps forward and requires it as part of new building codes. Instead of building McMansions, we could build smarter, and create many new jobs.

    Government cannot, and should not, wait for business income to grow. Government should spend now, and help create demand.

    And if government would spend on transforming our energy economy to a renewable energy economy, we’d also solve some of the woes related to our trade deficit and foreign policy. 55% of our oil comes from other countries, and of that, most comes from the Middle East. Over the summer, when gas prices were still high in June and July, during one of those months, the portion of our trade deficit related to purchases of foreign oil was equal to our entire November trade deficit.

    If you leave this to the darn free market, Exxon lobbiests will keep us depending on oil, and we’ll go nowhere. We would keep sending Northfield dollars to the Middle East, and to South America, and to Coal states, and to the far east for natural gas, and our trade deficit would continue to grow.

    This is not a free market. It’s a stacked deck. Adam Smith never envisioned Exxon, or corporate boards where CEO’s of other corporations sit and vote in favor of obscene pay for their fellow CEO’s. Not free market at all. Simply a stacked deck.

    Time is running out. We can’t dither around with the status quo. Our debt is too high, and the polar ice caps are melting. We need to transform the econmy, the energy infrastructure, and health care as we know it. The tables are turned, and it’s now reverse shock-doctrine time.

    Francis Bacon said that wealth is like manure: it’s only good if you spread it around. Right now, it’s not moving. We gave banks all that bail-out money, and they’re still not moving the economy. It’ takes a different sort of kick in the pants than a bail-out.

    We’re the richest country in the world; 20% hold 85% of the wealth, and the gap has been widening since Reagan. It helps nobody to let 80% of the population sit around and lose their jobs while the banks and the wealthy are nervous, or licking their wounds.

    It’s time to get to work and spread the manure. I don’t advocate a 94% tax rate for the wealthiest as we once had. Let’s start with a mere 92%. Your idea about property taxes (if it’s on the wealthiest 20% of the population) would be fine with me. The rich, eventually, as always, will be the greatest beneficiaries from what results.

    That’s the way manure works in a garden: You may have to wait a while, but eventually you get a big harvest.

    January 23, 2009
  159. David Henson said:

    Paul, "a kick in the pants" is not the solution to economic woes. If you think people should have wind turbines then spend your Saturdays out selling people on the wind turbine value proposition and taking orders one customer at a time. This is how value is created in society through hard work and persuasion – government decrees/incentives inhibit freedom and end up distorting people's behavior in undesirable ways. Do you not see any causal relationship between the growth of government and the consolidation of wealth amongst a smaller class ? Do you really think 'the poor' are going to control funds from this massive "taking" that you endorse ? You seem to have a utopian vision that ignores all the pitfalls of history and human behavior. If you want to take us to Nirvana then at least give us a glimpse of the roadmap.

    January 24, 2009
  160. Paul Zorn said:

    Ray: Concerning health care, you wrote:

    I continue to assert that we have the best medical care in the world. When world leaders and others need the best care, they come here, not to Canada. We have a system that does some sorting of health care access by funding.

    By the "metric" you propose, we do indeed have a great system. I have a very wealthy acquaintance with 4 or 5 homes around the world, for instance, and he checks in at Mayo every year or two for a physical.

    But do you also say that we have the best health-care *system* in the world? That certainly doesn't follow from the WWWLD (what would world leaders do?) principle. Your last sentence above — a masterpiece of understatement! — points to what I think is the biggest problem. Governments aren't there to cater to "world leaders'" health needs, but they do have some responsibility for bigger systems, and for people who haven't yet achieved "world leader" status. Governments can approach this problem in various ways, some more free market-oriented than others. There's a lot of space between our present system and having a federal bureaucrat in every exam room.

    As for rationing health care, you seem to worry that any government involvement would lead to rationing. That's an interesting question, but doesn't the present system of "sorting … access by funding" accomplish its own sort of health care rationing? If we Americans won't accept any rationing, as you suggest, shouldn't we care about access?

    January 24, 2009
  161. john george said:

    Paul F.- Regarding your idea of putting a small wind turbine in everyone’s back yard, this is not new. Nor is it something that was never done. My father had his original wind generator out in the shed that he used up until the late ’40’s when the REA came through. It was hooked up to a series of lead/acid glass jar batteries that stored the energy for use on windless days. It also allowed the system some consistency in voltage supply. Of course, this was only a 60 volt system. I think it is interesting that the energy efficient bulbs out now are low-voltage. I got this following quote from the National Rural Electrification site, just to give a little historic perspective.

    ‘The first official action of the federal government pointing the way to the present rural electrification program came with the passage of the Tennessee Valley Act (TVA) in May 1933. This act authorized the TVA Board to construct transmission lines to serve “farms and small villages that are not otherwise supplied with electricity at reasonable rates.”’

    Seems that the whole grid system grew out of a government act, not some decisions by a bunch of greedy energy CEOs. The whole idea of consolidating the production and distribution of electrical energy, for supposedly greater efficiency, has brought us to the level of energy dependence we are now experiencing. It is this type of government meddling from our past that gives me pause for concern about trusting these agencies with the future. Unless there is a change in the way every household functions, to which David H. aludes, then any government plans are going to be ineffective. Perhaps there is a crisis looming that will initiate this change, like the attack on Pearl Harbor did for manufacturing in the ’40’s.

    Besides, just because the government owns the official printing presses for our currency, it does not automatically make these pieces of paper worth anything. We got into this financial mess by spending and investing money that wasn’t there. I just don’t understand how the government can rectify anything by giving out money that isn’t there.

    January 24, 2009
  162. Paul Zorn said:

    John G: Just to be clear, do you see the TVA and REA efforts as just blameworthy “government meddling”? If so, any thoughts on how the Southeast and rural areas should power their homes and schools and factories?

    January 25, 2009
  163. David Henson said:

    Paul, I am quite certain that if one were to chart federal and state expeditures on health care against inflation in health care the parallel would be striking. Health care has a lot of innovation and complexity which account for some increases but even the most basic tried and true services are inflating (when they should be deflating) and gov’t funding and monopolisitic practices are a cause.

    The parallel is very striking in education. In 1960 fulltime annual tutition at the U of MN was $213.00 and for 2008-2009 it is $9621.00. This is a 45 times (4500%) increase. Wages in the same period have risen around 4 or 5 times (400-500%), the minimum wage around 10 times. Certainly government funding of education has been a major factor supporting this inflation.

    January 25, 2009
  164. Paul Zorn said:

    David H.,

    Re tuition cost at the U … there’s no doubt that it’s risen a lot above inflation. Like you, I’d like it to be lower.

    But a well-informed discussion of the causes and effects would require some additional numbers, and perhaps some corrections to those you cite. For instance, family incomes in the US have risen about 10-fold, not 4-fold, since 1960, according to the census bureau. And the minimum wage has risen about 6-fold, not 10-fold, since 1960. (Where did your numbers on this come from, by the way?) And the CPI, which measures cost of living, has increased around 7-fold since 1960.

    Here are some other numbers we’d want:

    • the total cost (not just the tuition cost levied to students) of educating students at the U, which is of course higher than tuition charged to students, which is to some (considerable) extent subsidized by taxpayers.
    • some estimate of the additional earnings students who pay tuition at the U can expect — in effect, what students get for their (and our!) tuition money
    • some estimate of how much “better” education is now than in 1960, in the sense that knowledge itself has grown in the last 50 years, and so perhaps it should cost more to “cover” a larger body of knowledge. The U probably didn’t have much of a computer science department in 1960, for instance.

    I don’t necessarily disagree with your view that tuition should be lower at the U, or that government may have something to do with its being too high. (Maybe the government should subsidize tuition more, not less, for instance, so students would pay less.) But we’d need more and better numbers to draw confident conclusions.

    January 25, 2009
  165. David Henson said:

    Paul Z, you might right on incomes but I think we can agree that incomes did not rise 4500%. The prices of computers and software have fallen radically while the cost of an IT degree has soared. I assume you agree that when money is poured into one area of the economy it creates inflation? More cynically society create a pile of money from taxes, even for the best purposes, and skilled parties come in and snag the lions share while telling everyone what a great social good they are doing.

    Reducing the government footprint in society will benefit people at the bottom more than people at the top. Go sit in the court room in Rice County and watch what happens there. A poor immigrant comes in stopped with no auto insurance (which is a poor economic choice for him at his wage but demanded by policy ~ and special interests!) so the court fines him $500.00 – now you can be damn sure he can’t afford insurance. Then he goes to the insurance agent and they say well we now have to charge you a little extra because you a bit more of a risk (read poorer). Then the $500.00 makes him late on rent and the banks and credit card companies want to charge a bit more interest because he is more of a risk (read poorer). The education establishment is doing the same thing it’s just more skilled at hiding the money grab. This is how government policy really works – it rips people off. We need to stop voting for fantasies and start voting for realities.

    Obama keeps mentioning Lincoln – the total income tax burden (all in) was 6% under Lincoln and somehow society seemed to function.

    January 25, 2009
  166. Peter Millin said:

    Canadian health care is not nearly as good as health care in the USA.
    The Canadian health care system works like an HMO in the US. Problem is that they don’t have enough primary care physicians. The reason why they don’t have enough of them is due to an indirect limit on earnings. By regulating the amount of money the government pays for patients, doctors limit the number of patients they see.
    Those who don’t have a primary care physician are limited to walk-in clinics.
    Most doctors in walk-in clinics are young inexperienced doctors with last names most of us can’t pronounce.

    For general health issues primary care physicians are very good. It becomes more of an issue if you need to see a specialist. Waiting periods of three to six month are common.
    The province of Ontario (not sure about the others) does reimburse people that have to seek treatment in the US if they are not available.
    Private options are very limited and not widely available. A lot of politicians and people with money use private clinics or go to the US for treatment.
    Unfortunately there is no way of really telling how much tax money is spend on government health care. Since it is not broken out separately in your paycheck.
    Most of the time you still have to take out a separate insurance to cover expenses not covered under the government plan.
    My tax rate in Canada was 42%. No deduction for homeowner ship and a VAT of 14% on everything you buy.

    Given that we are on the edge of a depression with an unprecedented national debt. Melting ice caps and green energy will be the least of our problems.

    I hope the financial crisis will bring us all back down to earth and we start to discuss issues that really matter and use common sense to solve them.

    January 25, 2009
  167. Peter Millin said:

    David H

    You are absolutely correct when you say that government intervention will only hurt the poor.The rich will always find a way to buck the system.

    It always makes me smile when a politician uses “the rich” as a tool to create division and class warfare. Especially since most of them using it are rich themselves.

    There be a longtime before any of the politicians in DC will send their kids to public schools or will be depended on national health care or social security.

    I also predict that non of them will drive a hybrid, use public transportation or have a windmill in their backyard.

    Al Gore’s and his cohorts carbon footprint is probably a hundred times larger then mine ever will be.

    Old German proverb:

    If you sit in a glasshouse don’t throw
    any rocks.

    January 25, 2009
  168. Paul Zorn said:

    Peter: You wrote

    … The rich will always find a way to buck the system.

    and then

    … it always makes me smile when a politician uses “the rich” as a tool to create division and class warfare. Especially since most of them using it are rich themselves.

    First you “create division” by dissing the rich. Then you diss rich politicians who create division by dissing the rich.

    That made me smile.

    January 25, 2009
  169. Peter Millin said:

    I wasn’t dissing the rich I was pointing out that “the rich” always will be better off regardless of the political situation.
    Some of the current policies that are being proposed will hurt the poor more then the rich, because the rich can afford them..sorry if I wasn’t clear enough.

    Here is an extreme:

    Even in the deepest of communist times and countries there were people that are better off then the rest.

    January 25, 2009
  170. Paul Zorn said:

    Peter M and David H:

    Peter wrote:

    You [David] are absolutely correct when you say that government intervention will only hurt the poor.

    Come again … the government only hurts the poor? One usually expects libertarians and conservatives to oppose excessive coddling of the poor. But (do I have this right?) y’all see job training, unemployment benefits, educational loans, Head Start, and other forms of “government intervention” as sneaky ways of harming the poor? If this be harm, what be kindness?

    January 25, 2009
  171. David Henson said:

    Paul Z – we just walked through the educational loans and I am still uncertain in light of a 4500% inflation since 1960 how you think the poor are being helped ? Esp now, they walk away with $20,000 plus in interest bearing debt and have no jobs because the life blood of the economy has been zapped by directing money in an economic closed loop (taxes)towards “so much kindness.”

    If you really dig into the economy, in an honest way, you will see that you can tax a teacher to hire a policeman and tax the policeman to hire a social worker and tax the social worker to hire a teacher for a very brief time by selling off your technology and manufacturing base to the Chinese – but there is a point where it all comes tumbling down.

    January 26, 2009
  172. Peter Millin said:


    Let me explain with a few examples.

    1) When we increase taxes on businesses or goods the increase usually shows up in a higher cost of goods.

    2) Green energy will be more expensive. People with a lot of money won’t feel the pinch nearly as those who are struggle. How many really can afford a hybrid?

    3) An increase in governmental fees will hurt the little people. Most people with money can afford fees or have a good accountant to help them.

    I include in the poor the working poor and the lower end of the middle class.

    January 26, 2009
  173. Paul Zorn said:

    To Peter M:

    Yes indeed, the poor find it harder than the rich to pay for things — food, clothing, taxes, whatever. That’s kinda the definition of “poor”. And I understand that some governmental activity, even if well-intentioned, has perverse effects. (Governmental inactivity can also have bad effects, of course.)

    But my question referred to Peter’s blanket observation —

    You [David] are absolutely correct when you say that government intervention will only hurt the poor.

    which suggests (note the “only”) that government action, across the board, harms the poor. Surely there’s some balancing to be done between costs and benefits. No?

    To David H: Indeed, education is terribly expensive, and paying for anything is hardest for the poor. But the facts you cite strike me as arguments for more, not less, public subsidy of education.



    January 26, 2009
  174. David Henson said:

    Paul – the inflation in education is because of government involvement … how does that argue for more ? Don’t you think if the government pulled out of higher education the price structure would deflate ?

    January 26, 2009
  175. Peter Millin said:


    You are correct and the same logic applies to health care.

    January 26, 2009
  176. Ray Cox said:

    Paul Z and David, I contend that the steep increase in college costs has more to do with the entry of a ‘third party payer’….ie, the government/states….than it does with the inflation of costs. Once you have a third parrty payer in the mix, the game has changed and don’t think the providers don’t know that. If there were no grants from taxpayers to support students at colleges, we would not see college costs anywhere near where they are today.

    January 26, 2009
  177. Ray Cox said:

    Paul F, I don’t think you can find me advocating for a reduction of taxes. In fact, I have stated many times on LoGro that I am fine with leaving them right where they are. We did not reduce taxes anytime when I was in the legislature. We did increase fees that are generally directly related to personal benefit.
    However, I also believe that Minnesota must then live within its tax revenue. We don’t seem to be able to do that very well. State government has grown at a pace that outstrips the taxpayers ability to feed it. The solution for some is to raise taxes—that is unsustainable in my opinion. The solution for all can be to live within the revenue….don’t raise taxes and don’t lower them….just use them properly.

    I know there are some that are calling for reductions in corporate taxes. Contrary to what you imply, reductions of corporate taxes does not have any impact on me…other than to note that a reduction should reduce the cost of goods for all Minnesotans, of which I am one. There is good discussion going on now in St. Paul about lowering the corporate tax rate, since, as everyone knows, corporations don’t pay taxes, the purchasers or users of their products pay the taxes. I’m not totally up to speed on the proposal, but if it can help bring Minnesota’s total corporate tax burden from #2 or #3 to something much lower, and attract jobs and businesses, then it should be considered.

    One thing I do know is that we cannot continue using the 1960’s tax system to try and generate consistent revenue in 2020, when out tryly changing demographis start kicking in. We either get out ahead of the issue, or we do a bunch of tired old rehashing of tired old plans and continue to flounder.

    January 26, 2009
  178. Paul Zorn said:


    You wrote:

    the steep increase in college costs has more to do with the entry of a ‘third party payer’….ie, the government/states….than it does with the inflation of costs. Once you have a third party payer in the mix, the game has changed and don’t think the providers don’t know that. If there were no grants from taxpayers to support students at colleges, we would not see college costs anywhere near where they are today.

    Just to be clear … would you support “no grants from taxpayers to support students at colleges”? (Up to now this hasn’t been your view, and I’m grateful for that!)

    Whether having government involved in education raises prices more than other factors (like general inflation, the growth of knowledge, development of new academic and scientific fields, etc.) is unknowable, and unlikely IMO to be tested by experiment anytime soon. So much said, I agree with the general observation that having more payers in the game tends to raise prices. But that’s a general rule of economics, nothing special to do with education.

    And indeed I “don’t think the providers don’t know that” any more than, say, home builders “don’t know” that (back when we had an economy) the mortgage deduction tended to encourage over-investment in homes. But are you suggesting that “the [educational] providers” are playing some sort of dark con game here? I don’t see it, any more than I blame builders for working with the market as they find it. Maybe the ed folks just believe that what they do is important, and so they advocate for it forthrightly.

    January 26, 2009
  179. Paul Zorn said:

    David H:

    You assert that

    the inflation in education is because of government involvement … [snip] Don’t you think if the government pulled out of higher education the price structure would deflate ?


    True, government and government policy plays some role in the market for anything, but IMO it’s simplistic to attribute large changes in complicated systems (like higher ed) to single causes (like government). And if the government “pulled out” of higher education the immediate effect would be catastrophic for students, who probably pay something under half the marginal cost of their education at the U. In the much longer term the cost structure to students might indeed change, perhaps substantially, but I really doubt such changes would be good for the poor.

    As for the present cost of college. Yes, it’s high, and perhaps savings can be achieved with tighter financial discipline. But there’s another side to the ledger, too. According to the US census bureau ( … or Google on “value of college education” )

    Adults age 18 and older with a bachelor’s degree earned an average of $51,554 in 2004, while those with a high school diploma earned $28,645, … . Those without a high school diploma earned an average of $19,169.

    That’s a pretty good premium. And higher-earning citizens is a pretty good investment for a state.

    January 26, 2009
  180. Paul Fried said:

    Ray and Peter M: I never advocated raising taxes on businesses. But a few years back, the leader (then) of the organization Growth & Justice gave a presentation in Northfield, attended by David Bly and, Ray, I think you were there too. He advocated lowering corporate tax to create an attractive business climate in MN, but raising income tax on the highest earners.

    Then you could not claim that MN’s tax climate is not business-friendly enough, the refrain Pawlenty is now singing again.

    Another idea:
    A few years back, MN’s US Rep. Martin Sabo proposed another helpful idea: In corporations where the CEO’s income/compensation exceeds 40 times that of the lowest paid employee, raise the tax rate very steeply.

    Sabo’s idea could be enacted at the federal level — such a ratio for CEO pay would be more similar to CEO pay in Europe and Japan. Sabo’s plan could be enacted, and personal income tax rates be raised for the wealthiest.

    My point is not about raising taxes on businesses. But if the demand for products and services is not there, tax cuts to businesses will not stimulate the economy or hiring. The federal records show that mid- and large-businesses have a net loss in jobs during sour economic times, while startups and out-of-the-home businesses create the most jobs in bad economic times.

    January 26, 2009
  181. Paul Fried said:

    Peter, you write,
    “2) Green energy will be more expensive. People with a lot of money won’t feel the pinch nearly as those who are struggle. How many really can afford a hybrid?”

    This is a false way to approach the situation, based on false assumptions.

    1. Even if it costs more initially to put up a bunch of wind turbines, solar panels, geothermal units, waste-heat-recovery systems, etc., MN still gains because we’re not sending a bunch of money out of state for coal, for example. Just as GDP-Consumer spending, plus business spending, plus govt spending, plus trade (which is a deficit on the US level), states have a similar formula for economy, and even if green energy is more expensive in the short term, it decreases the “leak” of dollars going out of state for coal.

    2. Just because our economy is now based on a system in which hybrid cars involve new car purchases for the vast majority, it doesn’t have to be this way. If reducing greenhouse gas emissions were that much of a priority, we would not have to build new cars for everyone. During WWII, there was rationing so that needed supplies could be used in the war effort. Similarly, the same car companies that have all the specs for the space under the hood for thousands of cars that are now on the road could use their engineers to design hybrid engines that could be retrofitted into used cars that are now on the road. If it’s a national priority, you put the auto laborers to work building hybrid engines, and for people under a certain income, you give rebates to be used for the purchase of the hybrid retrofit engines.

    This would not require poor folks buying a new Toyota Prius.

    January 26, 2009
  182. David Henson said:

    Paul Z you are simply avoiding the 4500% increase at the U of MN that outstrips inflation by a staggering pace. Your answer “no” that the cost of higher education would not deflate cannot be serious … of course it would deflate.

    Higher education has a marketing/lobbying machine behind it just like the housing industry (remember houses only increase) so I would be wary of those numbers. Education is, of course, important but that does not mean taxpayers should pour money into the industry just so those tax dollars can be gobbled in higher prices. And pushing young people into borrowing big money at interest with extra harsh collection teeth is both mean and ludicrous.

    January 26, 2009
  183. john george said:

    Paul Z.-Re your question to me on 01/25/09, I am just looking at how history seems to have come full circle. The idea behind the TVA and REA was to respond to need (?) of the rural areas for electrical power with the only thing at hand- large generating plants. This was based on the theory that central (government) control of the production and distribution could most efficiently provide for the need. This precipitated the vast integrated electrical grid we now have. The waste of energy through resistance in transmitting this energy over long distances to equalize the supply was not a real problem when we had relatively cheap energy sources. Now, with the rise of fossil fuel prices, this resistance is beginning to be a greater liability. I don’t have statistics on this, but I ask if privatizing the energy sector was more detrimental than helpful and lead to the hybrid system we now have? I’m only musing, here, but did this delay the onset of research for better local energy sources?
    I don’t have an answer, but, with the current push to keep energy production local, it would appear that we invested a huge amount of dollars in infrastructure that is now adding significantly to the overall cost. Who knew at the time? Of course, hind sight is always 20/20. That is why I think we need to evaluate decisions about plans being made for major changes in this distribution concept with a close eye on the history behind it.

    Just a comment on infrastructure, because of the developments in wireless techonology, China has conveniently sidestepped the need for a huge communication infrastructure. A bunch of strategically place cell towers has eliminated the need to install land lines. To me, it is little wonder they could afford to buy our debt.

    January 26, 2009
  184. Griff Wigley said:

    I’ve heard that Pawlenty’s budget plan (released tomorrow) includes an increase in K-12 dollars but it’s tied to Q-Comp, with teacher incentives based on the gains made in student academic performance.

    The Dept of Educ. QComp page appears dead. No updates beyond the 07-08 school year.

    Northfield teachers turned down a Q-comp plan in Dec. of 2005. See my blog post and my school levy blog post a year later for details.

    It’ll be interesting to see if the sagging economy changes any minds this time.

    January 26, 2009
  185. Paul Zorn said:

    David H:

    I’m not “avoiding the 4500% increase at the U of MN” … I’ve lamented it in several postings, while also suggesting some numbers to help put it in context.

    You said, too, in reference to whether the cost of higher education would “deflate” if government pulled out:

    Your answer “no” … cannot be serious … of course it would deflate.

    I’m fully serious. As I said, I think your analysis overstates the role of “government” in determining costs of higher education. Some costs might come down without government investment in higher ed, but others — especially direct costs to students — would rise.

    In reference (I think) to numbers I cited about the economic value to students of higher ed, you wrote

    Higher education has a marketing/lobbying machine behind it … so I would be wary of those numbers.

    The US census bureau (source of the numbers I cited) falsifies data to please the higher ed “marketing lobbying machine”? I don’t think so.

    And pushing young people into borrowing big money at interest with extra harsh collection teeth is … mean …

    Agreed. Let’s not do it.

    January 27, 2009
  186. Peter Millin said:

    This thread is not on the stimulus or federal budget, but since both of them affect the state budget I thought it was worthwhile to post this.

    It gives a detailed overview of the planned stimulus plan as currently discussed in DC.

    Happy Reading.

    January 27, 2009
  187. Griff Wigley said:

    Now that the Governor Tim Pawlenty has revealed his budget and Speaker of the Minnesota House Margaret Anderson Kelliher is going to take it on the road for citizen feedback, I’m going to launch a new blog post on this topic since we’re at nearly 200 comments.

    January 27, 2009
  188. Peter Millin said:

    Paul Fried,

    Our tax dollars are already heavily subsidizing green energy which in itself doesn’t make any sense. Because government decides which alternatives are viable and which aren’t. This distorts the true solutions in favor of political payoff.

    After we have spend billions on subsidies we are now have to subsidize those who can’t afford it. So in essence it will be more expensive to those that pay taxes.

    We are now in the process of subsidizing the car industry so they can build “greener cars” which is done with our tax dollars again.

    If I add up all the numbers it seems like a raw deal to those paying taxes.

    January 27, 2009
  189. Bruce Anderson said:

    We’ve been down this path (i.e. what you consider excessive subsidies of renewables compared to fossil fuels and nuclear) before, just two months ago, in fact. I presented factual information which I felt clearly refuted the proposition that renewables receive excessive subsidies and should be expected to compete in the “free market” on a “level playing field.” I will simply link to those extensive comments here again:

    I think that the huge subsidies that the fossil fuel and nuclear industries have received for many decades, which they continue to receive, and which have greatly exceeded the subsidies for renewable technologies, are even more of a raw deal for taxpayers. They’re also a raw deal for the atmosphere (385 parts per million carbon dioxide and rising) and humans and other living things that rely upon a relatively stable climate. They’re also a raw deal for those of us who breath air, as the air pollution resulting from fossil fuel combustion causes literally hundreds of billions of dollars in health problems and mortality annually.

    It’s not exactly clear how this relates to balancing the State’s short- and long-term budget problems, but I just had to get that off my chest.

    January 28, 2009
  190. Peter Millin said:


    1) Subsidies are wrong, no matter who receives them. The only exception I would discuss, would be subsidies that keep our economy viable against countries that heavily subsidize their industries i.e. Europe, China and Russia.

    False practices of the past don’t excuse current proactices. Further the outcome of gas, nulear and oil subisdies have clearly beneftited the public as a whole.Green energy subisidies are suspect at best.
    The ethanol disaster is a good example of that.

    Our country is burdening a debt of almost $ 5 trillion dollars. We need to look at every cent we spend.

    If we don’t the reult will be hyper inflation and the collapse of our system. The issue of green energy will than be mute at best.

    January 29, 2009
  191. Paul Zorn said:


    You wrote:

    Subsidies are wrong, no matter who receives them. The only exception I would discuss, would be subsidies that keep our economy viable against countries that heavily subsidize their industries i.e. Europe, China and Russia.

    Uff da! That’s a loophole the size of the great outdoors. Can you give some examples of these “good” subsidies?

    And then you say

    Further the outcome of gas, nuclear and oil subsidies have clearly benefited the public as a whole.

    Interesting theory … I suppose it could be debated, but I’m surprised to hear it advanced by a deficit hawk. With all that “clear benefit”, shouldn’t we be subsidizing more, not less?

    Could you explain again why “subsidies are wrong, no matter how received them”?

    And most economists nowadays seem more worried about deflation, not inflation.

    January 29, 2009
  192. Paul Fried said:

    Bruce and Paul, thanks for jumping in regarding subsidies. It’s clear that the market alone will not do some of the things society needs; yet when government invests in infrastructure (highways, freeways, the FAA and air traffic control, building codes), the market usually benefits greatly.

    From countries where government investment, regulation and oversight are not present or strong enough, we hear stories of apartment buildings collapsing, and many deaths, because the code and inspection process wasn’t working, but instead, some market players assumed they could do just fine policing themselves.

    It doesn’t work, and this is a perversion of what Adam Smith observed and intended about the “invisible hand.” The economic conditions are different and greatly expanded. Free market fans are holding to economic ideology like religious fanatics to doctrine, when there are better understandings to account for the realities we observe in large-scale economies. Time to get real.

    January 29, 2009
  193. Peter Millin said:

    Uff da! That’s a loophole the size of
    the great outdoors. Can you give some
    examples of these “good” subsidies?

    In order to compete with the European Government run Airbus. Boeing needs direct or indirect subsidies.

    Interesting theory … I suppose it
    could be debated, but I’m surprised to
    hear it advanced by a deficit hawk.
    With all that “clear benefit”,
    shouldn’t we be subsidizing more, not

    Gas, Oil and Nuclear can stand on their own and don’t need subsidies. After all our economy and our country have been build on those.
    Green Energy has a spotty record at best despite being in play for over 10 years. None of the current “green energy” options are or will be in the position to replace oil, gas and nuclear.They could be used as a add on at best.
    Besides that how many more foolish government directed fuel sources like Ethanol are we willing to put up with.
    If Ethanol is so great and so valuable why don’t we removes tariffs on them? Or cut the subsidies?
    My point is, none of our current politicians really have a plan for energy indepency. It’s all about catering to lobbyist. Which in case of Ethanol is the farmers lobby.

    Subsidies, pork and stimulus are the same disguised in a different word. They are aimed to satisfy lobby and interest groups and are a way for politicians to get re-elected.
    I challenge you to explain to me how 350 billion dollars, for the prevention of STD, has anything to do with a stimulus??
    Or how subsidizng Ethanol, while raising food prices, will make us energy independent?

    On a side note:
    there is a brewing contorversy between Ted Kennedy and the Obama administration about building windmills on Cape Cod. Despite as having Cape Cod identityfied as a prime spot for windmills Kennedy opposes it. Geez could it be becuase he doesn’t want those ugly windmills in his backyard???

    Can you say hypocrit?

    January 29, 2009
  194. Bruce Anderson said:


    Gas, Oil and Nuclear can stand on
    their own and don’t need subsidies.

    Huzzah! Something we can agree on. They have been subsidized for decades, and it’s time to stop! Furthermore, it’s time that we, as consumers, pay, in the marketplace, the full cost of these traditional energy sources so we can make more rational choices, rather than the ARTIFICIALLY LOW PRICE we’ve been paying for decades. I’d be happy to let the market work if we got the prices right. Renewables would then need no subsidies to be cost-competitive, and we’d see much more dramatic energy efficiency/conservation efforts in all sectors of our economy. We’ve been on a cheap, dirty-energy binge for the past century, subsidized by federal energy policy, which has sickened our people, led to the certainty of undesirable global climate change, and made us less secure as a nation. It simply can’t continue.

    By getting the prices right I mean that we would need to internalize externalities (so that we would actually see these costs in the prices we pay for energy), including

    • the health and mortality costs related to air pollution resulting from fossil fuel combustion, and all black lung-related health costs incurred by coal miners and their families/survivors
    • the cost of insuring nuclear power plants and waste storage facilities in the private insurance market (i.e. quit subsidizing the nuclear industry through the Price-Anderson Act, via which US taxpayers have been on the hook for any nuclear accident-related claims for the past 52 years)
    • the cost of sequestering carbon from all fossil fuel combustion
    • the cost of adapting to and mitigating changing climate
    • the cost of utilizing the military to protect the free flow of oil from the Middle East and other oil-exporting areas of the world.

    Unfortunately, these things are not going to happen any time soon. With the election of Obama and a strongly Democratic Congress, we should at least get action on a carbon cap-and-trade system (or, much less likely, a carbon tax).

    You say:

    none of our current politicians really
    have a plan for energy indepency. It’s
    all about catering to lobbyist.

    I disagree. Obama actually has a pretty good plan to move us toward a more secure energy future (although not for true energy independence, which is probably an unrealistic goal in the foreseeable future).

    As for your side note on Ted Kennedy and opposition to offshore wind development in the Cape Cod area, I can indeed say it: hypocrite! This issue has been kicked around for years already, and I think it’s a travesty. While there are certainly places where major wind development should not be allowed, 5+ miles off Cape Cod isn’t one of them, in my opinion. And before you ask, yes, I would be happy to have one in “my backyard,” literally or figuratively. I’m hopeful that Carleton’s second wind turbine will be up and running on the east edge of town by the end of this year, generating clean, affordable, zero-pollution electricity for the campus.

    January 29, 2009
  195. Ray Cox said:

    I think a far better approach than subsidies is policy. Policy gets vetted much more thoroughly than subsidies do. And subsidies always seem to have such a ‘gut level’ support built into them. When you represent a corn farming district, do you vote against corn ethanol subsidies?

    But policy can work wonders. If nuclear energy needs policy to dictate how the waste will be stored/disposed of, lets do that to ‘even the playing field’. If coal needs policy to remove mercury, as was done in 2006 in Minnesota, then create the policy, don’t give a subsidy to offset the cost and keep things artificially low. Set clear policy in the direction you want to go, with clear standards, then go there.

    Example: I thought the smoking ban in bars was all wrong. It should have focued on performance standards and let bars decide if they want to buy and operate the mechanical equipment necessary to meet the standards. The state uses solid science to set solid standards, and lets businessed decide what they want to do.

    January 29, 2009
  196. Paul Zorn said:


    I agree that subsidies are often subject to political influence and that they can distort or muffle good market signals. And I’m inclined to agree with you on the smoking ban issue, assuming (as I’m sure you do) that the standards would be set with due attention paid to the science and to recovering costs.

    But here are some caveats:

    1. True, subsidies are often politically influenced, but policies can be, too. Tax policy, for instance, is famously political.

    2. It’s obviously subsidy if the government gives me some of your money to support my golf habit. But isn’t there an implicit subsidy to (say) smoke-free bars if we zap smoker bars with high costs?

    3. The line between subsidy and policy isn’t always bright. Is it policy for instance, to mandate CAFE standards for cars? Or is it effectively a subsidy to small cars? Would it be policy or (negative) subsidy to support gasoline prices from below (say $4/gallon)?

    January 29, 2009
  197. David Henson said:

    Modern civilization is basically built on the value equation provided by oil as an inexpensive source of energy so I do not think it is accurate to describe its development as subsidized. I do agree that better cost accounting should be applied to funding the military and an oil & gas tax would make way more sense than an income tax. When prices were jacked to $4.00, I think the oil industry was stunned by how much demand fell off. And then when prices dropped and demand never recovered I think their minds were blown. Information became a direct substitute for energy.

    Nuclear would seem the worst possible choice for energy because it is highly centralized and creates a huge waste problem for future generations.

    I understand that the technology exists, or could exist, that would radically decentralize the power grid thus burying one tool of heavy handed centralized government.

    January 30, 2009
  198. Ray Cox said:

    Paul, I agree with you that the line between policy and subsidy can be blured many times. However, I still like policy in that it generally uses a free market approach to solve the issue that is being worked on.

    In your example on CAFE standards, if government raises them—what I consider a good policy action—-it does not dictate how to meet the policy standard. Auto manufacturers are free to use our wonderful free-market system and come up with vehicles that meet the goal and that consumers will purchase. Some may do it by using more expensive materials and making the vehicle lighter. Some may create more fuel efficient engines. Others may create completely different engines. But meeting the solid, identified goal is required, and up to them as to how they address it.

    The main issue for policy is to make sure it uses sound science when applicable. If there is good reasoning behind policy issues the policy is accepted much more easily by taxpayers.

    January 30, 2009
  199. Peter Millin said:

    The last two of my posts didn’t make it. griff, any idea on what’s going on?

    January 30, 2009
  200. Peter Millin said:


    I am curious as to how we can manipulate the cost of a barrel oil here from the USA?

    Current alternative energy subsidies have negative effects on our economy i.e. ethanol. This is even more reason not to let government dictate on who deserves a subsidy and who doesn’t.
    In a time where we faced with a potential financial disaster I don’t believe we have the luxury of spending any money unless it is a necessity.
    Global warming is the fad du jour. More and more people start to realize this, especially in a time when people are worried about the basics in life.

    Bruce I respect your opinion on this but I don’t buy the reasoning behind global warming. Especially if it is used as an excuse to raise taxes.
    We have to agree to disagree on this….cheers

    January 31, 2009
  201. Bruce Anderson said:

    I don’t think you’re understanding my argument. I don’t think that we here in the US can (easily) manipulate the cost of a barrel of oil. I think the tremendous run-up in oil prices from 2005 through July of 2008 was primarily a market response to strong international demand coupled with extremely tight supply, largely because virtually every oil producer internationally was producing pretty much everything they could, at least at a rate that wouldn’t cause premature collapse of otherwise productive oil fields. (I’d recommend Matthew Simmons’ Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy for a fascinating, sobering discussion of this subject.) The subsequent collapse in oil prices (from a high around $147 a barrel in July to today’s $41 or so) is largely a result of the global collapse in oil demand related to the global recession.

    I agree with Ray that policy is preferable to subsidies. I would love to see the federal government do away with the great majority of energy subsidies (which, again, have been HEAVILY tilted toward the fossil fuel and nuclear industries, NOT renewables, for many decades), perhaps even all of them, if we could get energy prices right and let the market operate. Again, getting the prices right would entail consumers paying the TRUE cost of fossil fuels and nuclear, not the artificially low prices we have been paying. I’m not saying that the federal government has been manipulating the market; I’m saying that the market price is artificially low for the following primary reasons:

    1. the Price-Anderson Act, from 1957 to this day, has allowed the nuclear industry to avoid paying surely high, market-rate insurance premiums for potentially catastrophic damages from (admittedly low-likelihood) nuclear incidents
    2. the price of coal-generated electricity does not include the cost to society of premature deaths related to respiratory problems severely aggravated by air pollution resulting from coal combustion, and the many billions of dollars in other respiratory health problems caused by same. The American Lung Association cites recent research that “attributed 24,000 premature deaths each year to power plant pollution. In addition, the research estimates over 550,000 asthma attacks, 38,000 heart attacks and 12,000 hospital admissions are caused annually by power plant pollution.”
    3. the price of petroleum products does not include the cost to society of maintaining a vast military apparatus in the Persian Gulf to ensure the free flow of oil, not to mention GW Bush’s $3 trillion Iraq War
    4. the price of all fossil fuels does not include the likely huge future costs of mitigating and responding to global climate change.
    5. etc., etc.

    Policy steps to do away with hidden and direct subsidies to the nuclear industry, to eliminate the huge direct subsidies to the fossil fuel industries, and build the “external costs” I have enumerated, and others, into the cost of fossil fuels, would go a LONG way toward creating a level playing field on which clean renewables could duke it out with the traditional 20th century energy technologies. It would also greatly increase economic incentive to make our whole economy more energy-efficient.

    Several sensible policy steps, in addition to doing away with direct subsidies, would be to:

    1. eliminate the Price-Anderson Act
    2. enact a carbon tax to address all of the externalities associated with fossil fuels
    3. decrease other taxes on things society wants (e.g. income taxes) so the carbon tax on things society doesn’t want is revenue neutral

    As for global climate change, the news gets more ominous all the time. You can disagree with the best available science if you want, but I am glad that our newly-elected President, the strong Democratic majority in Congress, and even many Republicans, don’t. Concern about global climate change is not some treehuggers’ marginal issue; it is about, as you put it, the basics in life. Will our children, and their children, and mid- and late-21st century children in Bangladesh, Maldives, China, and everywhere else in the world, have a livable planet? Seems pretty basic to me.

    February 1, 2009
  202. Peter Millin said:


    I understand now where you coming from when you are speaking about subsidies. I would argue that we already pay the true cost of a barrel of oil.Part of the reason why we see a spike in prices is the uncertainty in the ME.

    I just want add that there will be other unforeseen costs regardless of what our primary source of energy will be.
    Maybe I haven’t made myself clear I am not opposing the exploration of new energy sources, but why should government decide on who should find them? and which of the current alternatives will have some future value?

    If we ever find a viable solution the marketplace will create it’s own demand, despite government interference.

    Besides my opposition against government interference, there is a real issue of money here.
    The last thing we need is higher taxes and don’t believe that an increase in carbon taxes will lower others, no way…remember government can NEVER do with less.

    There is a growing opposition against the notion that humans are responsible for global warming. I can cite a large number of renowned scientists that have doubts about it.
    Which brings me to another question. Since when is science build on consensus? Shouldn’t it be based on proven facts?

    February 2, 2009
  203. Peter Millin said:

    Here is a partial list and I have provided a link as well.

    • William Gray, Colorado State
      University, leading researcher into
      tropical weather patterns.

      • Richard Lindzen, Massachusetts Institute of Technology, one of the
        world’s leading experts in dynamic
        meteorology, especially planetary

      • Stephen McIntyre, primary author of Climate Audit, a blog devoted to
        the analysis and discussion of climate
        data. He is a devastating critic of
        the temperature record of the past
        1,000 years, particularly the work of
        Michael E. Mann, creator of the
        infamous “hockey stick” graph. That
        graph–thoroughly discredited in
        scientific circles–supposedly proved
        that mankind is responsible for a
        sharp increase in greenhouse gases.

      • Arthur Robinson, curator of a global warming petition signed by more
        than 32,000 American scientists,
        including more than 10,000 with
        doctorate degrees, rejecting the
        alarmist assertion that global warming
        has put the Earth in crisis and is
        caused primarily by mankind.

      • Willie Soon, Harvard-Smithsonian Center for Astrophysics.

      • Roy Spencer, University of Alabama at Huntsville, principal
        research scientist and team leader on
        NASA’s Aqua satellite.

    February 2, 2009
  204. Peter Millin said:

    Back to taxes:

    I found this article in the Star Tribune today and remembered, that part of the federal stimulus money was slated for more public transportation.
    I didn’t know that our current public transportation system is being that much subsidized. One would expect that based on ridership a system like this would be able to support itself.
    Looking at the article above it wouldn’t make much sense to expand the system any further. Especially in light of us facing a huge budget shortfall.

    Why do we want to expand a public transportation system that is already broke? What am I missing here?

    February 2, 2009
  205. Ray Cox said:

    Peter makes very good and valid points. I don’t think the government should be in the business of picking losers and winners. A better approach, as I tried to indicate in an earlier post, is to point people/industry in the direction you would like to see things move. I gave an example of the CAFE standards. That can work because everything to meet the clearly identified goals is on the table.

    Regarding energy, when the government slects wind energy as the choice to subsidize, we will never know what does not get developed due to the huge focus on wind. I think Bruce will agree that there are inherent problems with wind energy, namely that it doesn’t provide steady, consistent power loads and we typically have to have a secondary source of backup power. If we don’t do that, we need to convince energy users that they will get a brownout. There are a lot of things that could be done to harness wind energy in some form of stored energy—-but they won’t be fully developed if we allow energy providers to create the secondary systems and be reimbursed for doing so.

    Instead of creating subsidies for wind, might it not be wiser to direct an incentive to energy providers that create a portofilo of renewable energy? Clearly state what constitutes renewable energy and let the free market system have at it. This is the ‘carrot’ approach. The ‘stick’ approach has been tried in many instances, but the results are never as good as using the ‘carrot’.

    February 2, 2009
  206. Bruce Anderson said:

    We’ve gone around and around on the global climate change issue before on other discussion threads, so I’m sure we’re unlikely to change anyone’s opinion on the scientific validity of, or lack thereof, the argument that human-caused global climate change poses a clear and present danger to the human enterprise.

    I’m well aware that there are scientists (some of them no doubt sincere) who are not convinced that human-caused global climate change poses this clear and present danger. They are far outweighed by those who do think that global climate change is a legitimate, significant problem.

    However, I don’t think it’s very enlightening to engage in a game of “my list of experts is longer and more impressive than your experts.”

    I’ll just make the following observation: Global climate change is taken very seriously by the National Academies. See, for example, Understanding and Responding to Climate Change: Highlights of National Academy Reports.

    The National Academies, comprised of the National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and the National Research Council, “perform an unparalleled public service by bringing together committees of experts in all areas of scientific and technological endeavor. These experts serve pro bono to address critical national issues and give advice to the federal government and the public.”

    From the National Academy of Sciences website:

    These bodies were created by act of
    President Lincoln in 1963. Since 1863,
    the nation’s leaders have often turned
    to the National Academies for advice
    on the scientific and technological
    issues that frequently pervade policy
    decisions. Most of the institution’s
    science policy and technical work is
    conducted by its operating arm, the
    National Research Council, created
    expressly for this purpose. These
    non-profit organizations provide a
    public service by working outside the
    framework of government to ensure
    independent advice on matters of
    science, technology, and medicine.
    They enlist committees of the nation’s
    top scientists, engineers, and other
    experts, all of whom volunteer their
    time to study specific concerns. The
    results of their deliberations have
    inspired some of America’s most
    significant and lasting efforts to
    improve the health, education, and
    welfare of the population.

    The Heartland Institute, which is sponsoring the global climate change skeptics conference you link to above, is funded by unidentified corporate, individual, and foundation donors. However, SourceWatch notes that major funders have included ExxonMobil ($791,500 between 1998 and 2006) and the tobacco industry, including $240,000 from Philip Morris between 1993 and 1998. (Heartland also opposes tobacco control measures and denies the health effects of second-hand smoke.)

    For objective scientific analysis and policy recommendations, I’ll take the National Academies over a right-wing think tank funded at least in part by the tobacco and oil industries. If you choose otherwise, that’s your bidness.

    February 2, 2009
  207. David Henson said:

    Bruce, Steven Chu raised $500,000,000.00 from BP so there could be a financial incentive for “end-of-the-world” preaching also.

    February 2, 2009
  208. David Henson said:

    Peter, I think the automobile is far more subsidized by society than recognized. 50,000 annual fatalities and some 100,000s of critically wounded from automobile accidents. These accident figures cost society a staggering sum (much of it coming in the form of other public services). Light rail is not my ideal solution but a fair comparison has to take into account the real costs to society of the automobile.

    If Obama could create a free market in transportation allowing new ideas to truly compete then this arena would attract gobs of capital, employ millions and be the starting point for a new economy. Detroit has paid enormous amounts of hush money to Washington to lock in a terrible system at great expense to innovation and the health of the transportation industry.

    February 2, 2009
  209. Paul Fried said:

    Ray, you write, “Instead of creating subsidies for wind, might it not be wiser to direct an incentive to energy providers that create a portofilo of renewable energy? Clearly state what constitutes renewable energy and let the free market system have at it.”

    You contradict yourself. If you want government to create incentives, to define renewable portfolios, and to offer carrots instead of sticks, it’s not a free market.

    Free market is when, without regulation, they bundle mortgages into mortgage-backed securities, and sell so-called “insurance” on them as credit default swaps, and sell the credit default swaps not only to those who hold the mortgages, but to any player who has the bucks and wants to bet on the casino economy. That’s free market for you.

    You want government to provide definitions and carrots, and maybe this is why some (not me, but perhaps some conservative commenters at MnDemSexPosed?) called you a RINO.

    In a free market system, the market brings its own carrots. So don’t talk of free markets if taxpayers have to jump start it and pay for the carrots. It’s just not free.

    In a mixed system, the governments use carrots, sticks, infrastructure investments, regulations, whatever, to break the horse so folks can ride it instead of merely watching while it busts down the barn, piece by piece.

    February 3, 2009
  210. Ray Cox said:

    Paul, you are missing my point. When utilities are allowed to develop their own mix of renewable energy, they will do just that, using the free markety system of what works for them and what they believe will work for their customers. I used the comment about the incentive, or carrot, because the thread was talking about wind incentives. No incentive is needed at all. If policy is directed to utilities to have a certain percentage of their energy portfolio from renewable energy, they need to comply. My point was that we don’t need to pick the renwable energy source—-they are perfectly able to do that on their own.

    The same thing holds true for CAFE standards. I actually think the federal government did a pretty good job with CAFE in that they did not direct how to comply. Auto manufacturers did what they deemed was the best way to comply.

    You seem to be using the term free market to suggest a system where there are no controls on the market. If that is the definition of free market system we have not had that in America for decades. That is not the environment we are working in. We have a bucket full of controls on everything we do today, from tax regulations, to environmental regulations, to labor regulations and on and on. We are not going to see those controls disappear so in that respect maybe you are right in calling it a mixed system. I call the market system we are working with now a free market system with the understanding that government has sets of permanent controls in place that will remain.

    February 3, 2009
  211. David Henson said:

    Paul, subsidies in energy basically means that the production and maintanance of the energy takes more energy than is produced. This is not true for oil and gas. When Bruce talks about subsidies for oil what that really means is they get a tax break (from the taxes they actually pay!) to explore for more reserves. The argument for renewables would be they are new technologies and if taxpayers sink billions then they become effective in the future. This type of investment rarely pans out and few would put their own money into the technology. Putting other people’s money in via taxation has ,based on history, almost zero chance of creating working alternatives to oil and gas (especially since oil and gas will just get cheaper as each alternative comes online).

    As I have mentioned before our transportation system is very inefficient in expending human life and energy. Fixing this system could actually be measured (which is undoubtedly why politicians avoid the subject) and not dying, sitting in traffic for hours or polluting the atmosphere would have broad public support. Liberals love government and transportation requires some governance so this would seem a match made in heaven for a monster governmental makeover – and the energy savings will be way bigger than wind mills.

    February 3, 2009
  212. Bruce Anderson said:

    You say

    subsidies in energy basically means that the production and maintanance of the energy takes more energy than is produced.

    This is incorrect. That may be your interpretation of what “subsidies” mean, but it is not what I mean. I mean both

    • indirect subsidies (as in probably several trillion dollars in military expenditures since WWII to protect the free flow of oil from the Persian Gulf; untold hundreds of billions? trillions? in insurance premiums NOT PAID by the nuclear industry, because, WE, THE TAXPAYERS, have been on the hook in the case of catastrophic nuclear accidents since 1957; the huge health cost associated with air pollution resulting from fossil fuel combustion) and
    • direct subsidies (such as the federal R&D and electricity production tax credit expenditures detailed in the Government Accountability Office report FEDERAL ELECTRICITY SUBSIDIES: Information on Research Funding, Tax Expenditures, and Other Activities That Support Electricity Production. That report details direct subsidies, from 2002 to 2007, totaling $16.8 billion for fossil fuels, $6.2 billion for nuclear, and $4.2 billion for renewables.

    In other words, the mature fossil fuel and nuclear industries received FAR MORE in direct subsidies than did the emerging clean renewable energy industries. Period.

    Concerning your definition of subsidies (i.e. that renewables need them because they don’t produce more energy than is needed to create and maintain them): numerous studies have shown that wind turbines produce as much energy as went into manufacturing and installing them within the first few months to year, depending on the type of turbine, its productivity, etc. Thereafter, they require minimal energy input in the form of maintenance.

    For the record:

    I am NOT a fan of subsidies. As I said in a lengthy comment above, I think a far more effective mechanism would be to GET THE PRICES RIGHT, and then let the (regulated) market work.

    In the absence of ACCURATE PRICE SIGNALS, I do think it is reasonable to expect to pay somewhat more for clean, renewable energy than the artificially low market prices we pay for fossil fuels and nuclear. There are numerous social benefits that are worth paying for.

    David, Peter, and Ray: do you feel these direct and indirect subsidies of the mature fossil fuel and nuclear industries are justifiable? Do you feel that it is fair to expect renewables to compete in the marketplace without accounting for these subsidies?

    February 3, 2009
  213. David Henson said:

    Bruce, I have nothing against Windmills. I don’t need much expertise to know the backback for a windmill is not months or they would be going up faster than cell towers. I also know that when its 95 degrees in July and the air is still that wind is not going to run the AC.

    I agree with you that Nuclear is bad.

    Don’t you think fixing the transportation system has by far and away the greatest potential to reduce pollution and save energy?

    February 3, 2009
  214. Bruce Anderson said:

    I didn’t say that the payback for a wind turbine is months. I said that they produce more energy than it takes to produce and install them within months, a very different thing. The economic payback is a far more complicated question, and takes a whole lot longer.

    I agree that our transportation system needs a 21st-century overhaul. You’re probably right that it offers the greatest potential to reduce pollution and save energy (through more-efficient vehicles–primarily electric and plug-in hybrid; modern, highly efficient transit options; smarter development patterns, etc.). We’ve subsidized the bejeezus out of the American Dream Machine since Day One.

    February 3, 2009
  215. Peter Millin said:

    Back to taxes.

    If the public transportation system can’t sustain itself even in a time with increased ridership. Why would we want to spend even more money on this?

    Looks to me like an opportunity to save money and taxes.

    Metro Transit long on riders, short on money

    As economy tightens, maintaining
    existing bus and rail service will be
    tough. Another fare increase is

    February 3, 2009
  216. Peter Millin said:


    If we make the “who is payed by who” an issue then I would have to elude to the fact, that most of the guys on “your side” are receiving government funding for their studies.
    Having said that, what would motivate these scientist to look at an opposing view, if it has the potential to cut off their funding?

    Like I have mentioned earlier. Science should be based on facts not consensus.

    February 3, 2009
  217. Bruce Anderson said:

    I agree that science should be based on facts (and peer-reviewed research), not consensus. It is my considered opinion that the preponderance of the facts and peer-reviewed research support the position that human-caused global climate change is a clear and present danger to the human enterprise.

    February 3, 2009
  218. David Henson said:

    With current tax collection levels the road transportation system (which is also public) will not be able to sustain itself either.

    February 3, 2009
  219. Bruce Anderson said:

    Getting back more directly to the question posed by Griff for this thread (“How would you balance the State’s short- and long-term budget problem?”), how about the following as one element of a budget-balancing package:

    Legalize marijuana and tax it like alcohol and tobacco.

    I realize this is a hot-button issue, especially given the very real and serious problem in this community with abuse of opiates (a different class of drugs altogether), and the general seriousness of drug/alcohol abuse problems society-wide. I do not suggest possible marijuana legalization because I am a marijuana advocate. I am not. In fact, I know from the experience of people close to me how destructive marijuana abuse can be. That being said, I don’t know why someone who wants to relax with a joint (or a bong…) after dinner rather than the glass of wine, bottle of beer, or hot toddy that I prefer, should be treated like a criminal. There is a difference between use and abuse.

    Most fundamentally, marijuana prohibition has been a huge, and hugely expensive, failure. It has not led to a reduction in use or abuse, and it has introduced many young people to the corrosive effects of the criminal justice system. Many people feel that it has been as destructive a failure as prohibition of alcohol was in the 1920s, when it contributed hugely to gangster-era activity not unlike many of the urban gang/drug wars we’ve seen for the past generation.

    As a practical matter, I don’t know how much law-enforcement expenditure this might save, or how much tax revenue it might generate, in Minnesota. A couple of minutes of internet research did lead me to this very interesting study:

    The Budgetary Implications of
    Marijuana Prohibition

    June 2005

    Jeffrey A. Miron
    Visiting Professor of Economics
    Harvard University

    Dr. Miron finds potential national law enforcement savings of $7.7 billion/year (2005), and tax revenues on the order of $6.2 billion/year. Doing the back-of-the-envelope math, this might mean about $280 million in net revenue annually for Minnesota. Food for thought in this era when every option should be on the table. I would think that those of you who are libertarian-leaning might like this kind of approach.

    Please note: I AM NOT SUGGESTING LEGALIZING ALL DRUGS. I’m just talking about marijuana. I’m sure many of you will vehemently oppose this idea. Fire away.

    February 3, 2009
  220. Tracy Davis said:

    Bruce, no tar and feathers from me. I support it.

    February 3, 2009
  221. john george said:

    Bruce- I’m not sure you have a realistic perspective of how maraijuana and opiates are intertwined. Those people pushing marijuana are also the same ones pushing crack and heroine. Marijuana is the soft core bait. Easing back on this will not, in my opinion, stem the sale and abuse of the harder drugs. It seems a little like boiling a frog. Are you suggesting that legal availaibility of this drug will actually cut down on its use and cut down on the demand for “harder” drugs? I’d like to see some research on this if there is any.

    February 3, 2009
  222. David Henson said:

    Bruce – you are going to discredit your arguments for windmills proposing hallucinogenic ideas.

    February 3, 2009
  223. Paul Zorn said:


    You say (in reference to global warming):

    Science should be based on facts not consensus.

    True. But how does this principle support global-warming denial?

    Indeed, there’s no consensus — in the sense of unanimity — on the degree and causes of global warming. But there’s a strong preponderance of opinion among climatologists that our climate is warming, and that human effects play an important role. That a small fraction of serious scientists disagree is interesting, and not to be discounted. But as a non-expert myself I’m inclined to go with the substantial majority.

    You suggest, too, that government-funded climate scientists have an ulterior motive to go along with prevailing opinion on global warming questions.

    This is false, for at least two reasons:

    • Any scientist who could
      convincingly overturn any conventional
      scientific dogma would do so in an instant. Science is all about skepticism, not about going along.
    • For most of the last 8 years the “government” view of global warming was skeptical of global warming theories. So by your analysis scientists who were just going along would have wanted to debunk, not support, global warming.
    February 3, 2009
  224. Peter Millin said:


    See this article from NPR this morning. This is the first guy that talks sensible about the climate change issue.

    Using energy “is really the metabolism
    of modern industrial society,” he
    says. “And changing that system is not
    about replacing a few technologies or
    advancing our level of efficiency
    along certain fronts.”

    It means creating a whole new basis
    for the global economy. Sarewitz is
    skeptical that politicians can
    deliberately manage a transformation
    of that scale, either through
    legislation or through climate
    treaties. He says, for starters,
    measures that will ultimately force
    everyone to pay more for energy are
    doomed both economically and

    “Politically, what you’re asking
    people to do is to pay a huge upfront
    cost for benefits many decades down
    the road that they can’t even
    anticipate or predict. And that is
    politically an extremely difficult
    sort of situation to manage,” Sarewitz

    It’s harder still, considering that
    Americans rank global warming at the
    bottom of their worry list, according
    to a January poll by the Pew Research
    Center for People and the Press.

    And even if the public became
    passionate about climate change,
    Sarewitz says, it’s hard to imagine
    how they would warm to the idea of
    making carbon-emitting fuels
    prohibitively expensive. Just try to
    imagine how much that would cost.

    “The economic dislocation that would
    be created by getting to that sort of
    level would absolutely be immense,” he
    says. “And it’s easy to be casual
    about that or it’s easy to pin that
    kind of argument on conservative
    Republicans or on the executives of
    oil corporations, but nevertheless it
    is absolutely true you would be
    talking about something that would be
    destabilizing to global economies.”

    February 4, 2009
  225. Peter Millin said:


    I never disputed the fact that our climate was changing. It has changed since the beginning of time.
    I am balking at the notion, of it being created by humans.

    February 4, 2009
  226. Anthony Pierre said:

    john said:

    Bruce- I’m not sure you have a
    realistic perspective of how
    maraijuana and opiates are
    intertwined. Those people pushing
    marijuana are also the same ones
    pushing crack and heroine. Marijuana
    is the soft core bait. Easing back on
    this will not, in my opinion, stem the
    sale and abuse of the harder drugs. It
    seems a little like boiling a frog.
    Are you suggesting that legal
    availaibility of this drug will
    actually cut down on its use and cut
    down on the demand for “harder” drugs?
    I’d like to see some research on this
    if there is any.

    look at europe, they are not so uptight about alcohol or drugs, and guess what? people don’t abuse those as much.

    February 4, 2009
  227. Peter Millin said:

    look at europe, they are not so
    uptight about alcohol or drugs, and
    guess what? people don’t abuse those
    as much.

    You couldn’t be anymore wrong…….one of the first thing people notice when visiting Europe is the amount of people that smoke and drink.
    I suggest you visit England where public intoxication and the consequences of it are a real problem.

    February 4, 2009
  228. Anthony Pierre said:

    drug use is not always abuse.

    February 4, 2009
  229. Bruce Anderson said:

    Peter (and John),
    Regarding the issue of drug use in Europe (and specifically in Amsterdam, which you, Peter, mention in the drug-sniffing-dog thread), and the issues of marijuana as gateway drug, etc., which you cite, John:

    Dutch drug policies do not increase
    marijuana use, first rigorous
    comparative study finds

    (Excerpts): In the first rigorous
    study comparing marijuana use in the
    Netherlands and the United States,
    researchers have found no evidence
    that decriminalization of marijuana
    leads to increased drug use. The
    results suggest that drug policies may
    have less impact on marijuana use than
    is currently thought…

    “We compared representative samples of
    experienced marijuana users to see
    whether the lawful availability of
    marijuana did, in fact, lead to the
    problems critics of the Dutch system
    have claimed,” said Reinarman. “We
    found no evidence that it does. In
    fact, we found consistently strong
    similarities in patterns of marijuana
    use, despite vastly different national
    drug policies.”

    Highlights of the study include:

    • The mean age at onset of use was
    16.95 years in Amsterdam and 16.43 years in San Francisco.

    • The mean age at which respondents
    began using marijuana more than once
    per month was 19.11 years in Amsterdam
    and 18.81 years in San Francisco.

    • In both cities, users began their
    periods of maximum use about two years
    after they began regular use: 21.46
    years in Amsterdam and 21.98 years in
    San Francisco.

    • About 75 percent in both cities had
    used cannabis less than once per week
    or not at all in the year before the

    • Majorities of experienced users in
    both cities never used marijuana daily
    or in large amounts even during their
    periods of peak use, and use declined
    after those peak periods.

    The Netherlands effectively
    decriminalized marijuana use in 1976,
    and it is available for purchase in
    small quantities by adults in licensed
    coffee shops; in the United States,
    marijuana use carries stiff criminal
    penalties, and more than 720,000
    people were arrested for marijuana
    offenses in 2001.

    The study was funded by the U.S.
    National Institute on Drug Abuse
    (NIDA) and the Dutch Ministry of

    The study found no evidence that
    lawfully regulated cannabis provides a
    “gateway” to other illicit drug use.
    In fact, marijuana users in San
    Francisco were far more likely to have
    used other illicit drugs–cocaine,
    crack, amphetamines, ecstasy, and
    opiates–than users in Amsterdam, said

    “The results of this study shift the
    burden of proof now to those who would
    arrest hundreds of thousands of
    Americans each year on the grounds
    that it deters use,” said Reinarman.

    February 4, 2009
  230. Peter Millin said:

    I know that Mr. Bly and Mr. Dahle sometimes read these blogs.
    It would be very nice if they could explain to me (and us I hope) the logic behind the 2009 property tax bill increase.

    How can the county justify an increase in home value in Rice county, despite evidence to the contrary.
    What is the logic behind a 12% increase in property taxes in connection with this?

    This illustrates exactly what is wrong with government.
    While those who work and pay taxes have to do with less, while we restrict CEO pay, our elected officials just to the exact opposite.
    It seems that local, state and federal government live in a bubble and completely ignores current realities.

    This is an outrage.

    Thomas Jefferson said: “Every
    generation needs a new revolution.”
    I Like this quote I dislike this quote“The spirit of resistance to
    government is so valuable on certain
    occasions that I wish it to be always
    kept alive.”

    February 4, 2009
  231. Peter Millin said:


    There is a major flaw in this study. Most Dutch people stay away from pot, because they can see what it does to people I would venture to say that 90% of the drugies in Amsterdam are foreigners.

    Amsterdam is a zest pool of drugs and crime not the imagined nirvana at all.

    I know because I lived and worked there.

    February 4, 2009
  232. Bruce Anderson said:

    So your subjective experience gained in two years living and working in Amsterdam trumps the “science based on facts” you hammered away on earlier (the study I referenced was published in the peer-reviewed American Journal of Public Health)? I’m having a hard time keeping up with your logic.

    February 4, 2009
  233. Peter Millin said:

    I wasn’t saying that at all. I was just sharing my personal experience. I thought that it was clear, if it wasn’t I apologize.

    I can’t see anything positive coming out of drug use, sorry but that’s my opinion.

    February 4, 2009
  234. David Henson said:

    Bruce – science is not just throwing out numbers to support a position, true science must have a predictive quality. All the global warming models are failing right now because this winter is way outside their predictive models. Calling those pot smoking statistics science is just silly.

    February 5, 2009
  235. Bruce Anderson said:

    You demonstrate either a complete misunderstanding or deliberate misrepresentation of the science of climatology (–noun
    the science that deals with the phenomena of climates or climatic conditions) and global climate (–noun
    1. the composite or generally prevailing weather conditions of a region, as temperature, air pressure, humidity, precipitation, sunshine, cloudiness, and winds, throughout the year, averaged over a series of years), both of which have NOTHING to say about one winter in one small region. Our conditions this winter have no bearing on the validity of global climate change theory.

    Weather (what we have been experiencing in Minnesota in the past few months) and global climate (what has been happening worldwide over the past century or so) are two COMPLETELY different issues. While I am not a climatologist, I am confident that any climatologist worth his or her salt could confirm this for you. We have had this identical exchange before on another thread. Do you dispute this, or do you just choose to ignore science?

    My response to your statement that “Calling those pot smoking statistics science is just silly”: do you have more valid scientific credentials than the scientist(s) who authored the study and had it published in a peer-reviewed scientific journal (the American Journal of Public Health, first published in 1911, is the official Journal of the American Public Health Association, 800 I St., NW, Washington, DC 20001-3710; (202) 777-APHA(2742). APHA is a professional society founded in 1872 to represent all disciplines and specialties in public health.)

    February 5, 2009
  236. David Henson said:

    So Bruce, how many years of dropping temperatures and record snow fall will be required before you cease to believe in global warming? Or are these facts in North America actually proof of global warming?

    February 5, 2009
  237. Peter Millin said:


    Correction! The correct political term is not “global warming” it is “climate change”. That way you are covered both ways…LOL

    February 5, 2009
  238. Jerry Friedman said:

    Peter: “Climate change” happens every day. It’s a meaningless term in the preent context. “Global warming” covers scope (globe) and value (warming).

    Glaciers are receding. Ice sheets are breaking. Average world temperature is increasing. What happens in any one spot, i.e., Northfield, is insignificant when looking at global climate change, that is, global warming.

    But believe what you will. The overwhelming majority of scientists don’t mind.

    February 5, 2009
  239. Peter Millin said:

    Temperatures have been falling or stayed par since 1998.
    There is actually now discussions about cooling due to a decrease in sunspot activity.

    February 5, 2009
  240. Peter Millin said:

    The Maunder Minimum Early records of
    sunspots indicate that the Sun went
    through a period of inactivity in the
    late 17th century. Very few sunspots
    were seen on the Sun from about 1645
    to 1715 (38 kb JPEG image). Although
    the observations were not as extensive
    as in later years, the Sun was in fact
    well observed during this time and
    this lack of sunspots is well
    documented. This period of solar
    inactivity also corresponds to a
    climatic period called the “Little Ice
    Age” when rivers that are normally
    ice-free froze and snow fields
    remained year-round at lower
    There is evidence that the
    Sun has had similar periods of
    inactivity in the more distant past.
    The connection between solar activity
    and terrestrial climate is an area of
    on-going research.

    February 5, 2009
  241. Jerry Friedman said:

    Peter: Please cite your claim that global temperatures have been falling or staying on par since 1998.

    You imply that correlation equals causation, but that is far from truth. Most people who get in car accidents ate carrots in the previous month. Correlation does not equal causation. So “corresponding” events do not equal event A causing event B. Whether lacking sunspots, observed 300+ years ago with their telescopic technology, caused cooling on the Earth is unknown and perhaps unknowable.

    February 5, 2009
  242. David Henson said:

    The current cold weather in North America and Europe are contrary to what global warming models predicted (see current issue of Economist). Jerry and Bruce you put too much stock in historical models which by their creators own admissions have enormous error ratios and whose predictive extrapolations are proving inaccurate. I am not a climatologist, and neither are you. But I do know many false sensational ideas have been posited in the past:
    1) The sky is falling
    2) the ozone layer is disappearing
    3) that the Mississippi had low water and would take 10 years to recover (it spilled its banks 1 year later)
    4) That Santa Barbara CA finished building a desalination plant 2 months before its drying reservoir swelled to a dangerous level (again was to take 10 years to fill – in fact took 2 months)

    February 5, 2009
  243. Jerry Friedman said:

    David: You cannot look at an average temperature by looking at any one year in particular, and the best indicator would be to look at trends over several years, several decades, several centuries.

    Further, “the current cold weather in North America and Europe” could use more data. I know people in Bulgaria who went through spring-time weather last December. A shoe store owner who had inventory of winter boots made no sales because it was so warm.

    Scientists have made mistakes before and they will again. Basing your conclusion that scientists have been wrong is not predictive whether the vast majority of scientists are wrong now. Your logic is illogical.

    Local predictions of rivers overflowing and reservoirs filling up have no correlation to global measurements over a span of decades. The last map I saw (on Wiki) shows a few small areas of cooling and vast areas of heating. If you point to a cooling area and over look the heating areas, you are misrepresenting the facts.

    February 5, 2009
  244. David Henson said:

    Jerry, the point is Climatologists can’t predict much with accuracy – so if the definition of science is to be predictive (which some areas are 100% of the time) then Climatogy is more artful presentation (or history) than science. Anyone with exerience would expect the field to think climate is important and suggest that it is changing one way or another (staying the same would reduce funding). My understanding is that North America has stayed constant on average and that many questionable third world measurements are required to suggest “a possibility” of global warming. Even the hard core “scientists” are only stating there is “a possibility” of non-cyclical global warming based on models – models of huge complexity with big error ratios.

    February 5, 2009
  245. Ray Cox said:

    Won’t the result of actual global warming actually be cooling in North America? It would seem to me that if global warming is causing polar ice to melt, the resulting flood of cold water into the ocean will eventually spill down and slow or stop the gulf stream. Without the warm gulf stream I assume much of North America will start to cool, which will in turn start restoring artic ice and also ice in a lot of places that have not seen ice for centuries. Am I missing something in this?

    February 5, 2009
  246. Jerry Friedman said:

    David: Generally, I disagree with your definition of science. Part of science is collecting data about the universe and its smaller pieces, which is then organized and analyzed, and then conclusions are made. Any portion of this is science even if there is not enough data for predictions (or if predictions are wrong). Scientific theories and laws need a predictive quality, but science itself does not.

    Nonetheless, global warming predicted the recession of glaciers around the world and the melting of arctic, antarctic, and Greenland’s ice caps. Coral reefs are dying because the ocean is warming. Tropical disease infections (like yellow fever) are increasing. Weather is more extreme (in the last 18,000 years, the average climate has increased 10°F; half of that increase took place in the last 150 years). There is more carbon dioxide and methane in the air. These “global warming” predictions have come true.

    February 5, 2009
  247. David Henson said:

    Jerry – its junk science, believe what you want – time will prove it is junk science. In 25 years we can all come back to Locally Grown and laugh about the idea. Until then you believe in ‘science’ and I’ll buy a warmer coat.

    But just remember men loaded men into ovens based on scientific theory because too few stood up and said this is the stupidest idea ever.

    February 5, 2009
  248. Jerry Friedman said:

    David: It’s a remarkable claim to say that eugenics relates to global warming mutually as “junk science”. I’ll keep this comparison of yours for a long time.

    The best you can claim is that the conclusions are uncertain. You could say that I select some data and you select some data, and that either of us could be correct. Instead you claim certainty — that’s not scientific of you.

    You admit that it will take quite some time, perhaps 25 years, for everyone to know. Somehow, based on the data you choose to analyze, you know it with certainty.

    Yet the overwhelming majority of scientists and lay observations come to the opposite conclusion. Is it that you disagree that the ice caps are melting, the glaciers are receding, the coral reefs are dying, the tropical diseases are spreading, or do you claim that these all come from a non-global-warming cause? I’d really like to know if these easy-to-verify facts are trumped up from fascist scientists, or if these facts are caused by a change in sunspots.

    February 5, 2009
  249. Bruce Anderson said:

    Thanks for pitching in here on the global climate change debate front line. David H., I agree with Jerry that your equation of eugenics (and the resulting Holocaust) with the predominant scientific view of the human causes of global climate change as “junk science” is breathtakingly novel. Time will indeed tell who is right here…

    Unfortunately, if we continue on a business-as-usual course and just adopt a “wait-and-see” stance for the next 25 years, the best available science (David’s junk science, that is) indicates that it will be way too late to prevent truly catastrophic consequences (e.g. the complete melting of the Greenland ice cap, which would raise global sea level by about 24 feet, inundating most of the world’s coastal cities and completely immersing several island countries).

    Ray, it is apparently true that this complete melting of the Greenland ice cap/sheet could have the effect of shutting down the Gulf Stream and launching a new Ice Age within as little as a few years or decades (more likely in Europe than in northern North America). This is referred to by David H’s junk scientists as “abrupt climate change.” It appears that this actually happened about 8200 years ago (see the data behind this from the purveyors of junk science at the National Climatic Data Center
    We are playing Russian Roulette with the possibility that we might trigger this again if we follow our current course of action. This is one of the many reasons why climatologists (junk scientists, I should say) now prefer to talk about global climate change rather than global warming. We’re dicking around with the atmosphere so much that pretty much anything could happen as we destabilize the global climate system beyond its natural condition, which is dramatically unstable to begin with. The world could become a much less hospitable place for the human enterprise in the coming decades.

    I know, David H. and Peter, that I’m not going to change your minds about this. You’re certainly not going to change mine, either. I’ve been engaged in this discussion because I think it’s important that people who might be convinced of either side of this argument get some sort of balance to the arguments you have been making, which I do not think are at all well supported. I think this is an important issue because the consequences of not addressing human-caused global climate change NOW are potentially so dire.

    February 5, 2009
  250. David Henson said:

    The switch from ‘warming’ to ‘change’ Bruce is so people can get their hands on the tax dollars either way. Eugenics had wide academic support – much consensus leads to ignorance.

    Bruce you are absolutely wrong: I, and I assume Peter, could change our minds – this is not an eco-religious quest for either us. But looking at how this is unfolding, the source of the data, the over simplification of the findings – my best current assessment is the manmade climate change catastrophe theory is BS. I’m sorry I would not throw two nickels at the problem.

    Jerry I don’t think its a problem now. I assume in 25 years you might agree although when biblical end times folks are disappointed by their final date coming and going they often walk away even more firmly believers.

    February 5, 2009
  251. john george said:

    Back to balancing the budget, perhaps the State should get into ice production. With all the increase in temperatures, I’m sure the demand for this product is going to increase. Also, if we could figure out a way to harness hot air, we would be able reverse the global temperature increase and provide inexpensive heat in the winter time.

    February 5, 2009
  252. Jerry Friedman said:

    David: Do you proffer that every scientist who publishes a conclusion, or who offers a professional opinion, supporting the subject of global warming, is doing so for a profit, or that they’re faking it to be popular? Do you not consider that every scientist who disagrees with global warming might be doing so for their own profit? While profit and popularity are powerful influences, both sides of the debate are subject to corruption, yet you think that only one side is corrupt.

    When might you step beyond insinuation and conjecture, and deal with evidence? I have supplied several pieces of evidence that all support global warming and you have dealt with none of them. You and Peter have, in turn, offered evidence of mistaken scientists but not mistaken related to global warming, and Peter offered evidence of correlation but not causation.

    You go on to equate amoral global warming to the immoral ideology of racial purity, i.e., eugenics. Then you compare me to theistic zealots who find a hidden code in an ancient book to figure out the date of an irrational event. Does this mean that you can’t form a rational argument, so you resort to any fallacy you can find? You have pumped this topic so full of red herrings, I don’t feel like I’m vegan any more.

    I miss the days of centuries past when great orators would speak of facts, analyses, and conclusions. Your style of pontificating and avoiding your opponents’ facts, analyses, and conclusions does not resemble the scientific method, and does not represent an honest interest in discovering the truth.

    February 5, 2009
  253. Peter Millin said:

    Here you go Jerry.

    It is very interesting how you claim that you provided evidence and we provide opinion.

    Based on your unwillingness to consider counter argument from other scientists it is pretty fruitless to continue a discussion over this.

    Let’s just agree that we have to continue to disagree.

    Unfortunately politics rather then evidence has overtaken this issue.

    February 6, 2009
  254. David Henson said:

    Jerry – read State of Fear, the evidence and scientists against global warming are well footnoted. I posted about 20 of them to Locally Grown some time back.

    The subject only interests me because it has wild eyed fanatics who want to take control of the government and people’s lives (just like fascists) and cannot cotton any objectors to their vision. The science is not even interesting enough to merit debate.

    I don’t recall Voltaire debating Chicken Little.

    February 6, 2009
  255. Bruce Anderson said:

    You are of course free to pick and choose your science as you wish. If you wish to cite a work of science fiction (State of Fear, Michael Crichton), which received strong criticism from the scientific community for what many felt was distortion of the science (and, yes, support from the minority position scientific critics of global climate change theory), as the strongest support you can offer for your views, that’s fine.

    The scientific community will continue researching these issues, and with luck, sound policy decisions will be science-based. Fortunately for the rest of us, reason appears to be prevailing at the local, state, national (and international) level politically, and your point of view is in the distinct minority, where I feel it belongs.

    Over and out.

    February 6, 2009
  256. Jerry Friedman said:

    David: I stand corrected. I didn’t realize that a fiction writer, with a profit motive to write incredible stories and sell mass quantities of books, would faithfully represent real scientific studies. I am eagerly waiting for dinosaurs since now I believe Crichton’s scientific credentials are top notch. I wonder if “Battlestar Galactica” has footnotes, as I’ve always wanted to fly in a Viper.

    From Wiki: Myles Allen, Head of the Climate Dynamics Group, Department of Physics, University of Oxford, wrote in “Nature” in 2005:

    Michael Crichton’s latest blockbuster, “State of Fear,” is also on the theme of global warming and is likely to mislead the unwary… Although this is a work of fiction, Crichton’s use of footnotes and appendices is clearly intended to give an impression of scientific authority.”

    I am tickled that the best you can come up with is Crichton!

    I don’t recall Voltaire debating Crichton. That would be brief.

    February 6, 2009
  257. David Henson said:

    Address the citations if you like facts. But yes, I would take a fiction writer over a world congress of eco-theorists (which are also fiction writers) any day. Al Gore is a propagandist, this is evident to anyone watching his presentation with a critical mind. Michael Crichton had nothing to gain from his position and he had a team of researches to review the data in a way that neither of you or I could. And yes those wanting tax dollars for global warming initatives were very upset with his citations. The papers from the main sources supporting global warming read like marketing brochures not scientific journals. They site warm weather (like you two) when it fits their theory and then skim over cold weather as not relevant. They are out for money (our tax money) – facts will not get in the way.

    February 6, 2009
  258. Patrick Enders said:

    You wrote,

    I would take a fiction writer over a world congress of eco-theorists (which are also fiction writers) any day

    Why in the world would you do that? Why are you so distrustful of science and scientists? (I’m recalling here your previous dismissal of biology and the Theory of Evolution.)

    And most simply, why should the rest of us believe your opinion (or that of a fiction writer) over the results produced through the scientific method, rigorously applied and tested through the peer review process? Do you have some special expertise in genetics and climatology that you have not revealed to us? Do you have a secret body of data that you have gathered on world climate patterns?

    Scientists will occasionally draw incorrect conclusions from the best evidence available, but repeat/future scientific testing has consistently been the best way to discover their occasional errors.

    February 6, 2009
  259. David Henson said:

    Patrick – you provided a definition of ‘natural selection’ when I said people misunderstand evolution – which was exactly what I meant.

    Michael Crichton footnotes a great deal of contrary “facts” that are simply ignored by those favoring the idea global warming.

    Address those facts rather than my likes and dislikes. I take his researches analysis as more objective that what I have read supporting global warming. I have already posted a list of 20 or so, I can repost if you would like. His basic point is that environmentalists gloss over the facts that do not fit their vision and this cuncurs with what I have read and heard. We can go round and round but in the end I am not convinced. And I think the weather (over time) will prove the idea flawed.

    February 6, 2009
  260. Patrick Enders said:

    I must’ve missed it. What facts did you post?

    February 6, 2009
  261. David Henson said:

    most of the warming in the past century occurred before 1940, before CO2 emissions could have been a major factor (p. 84)

    temperatures fell between 1940 and 1970 even as CO2 levels increased (p. 86)

    temperature readings from reporting stations outside the U.S. are poorly maintained and staffed and probably inaccurate

    those in the U.S., which are probably more accurate, show little or no warming trend (pp. 88-89);

    “full professors from MIT, Harvard, Columbia, Duke, Virginia, Colorado, UC Berkeley, and other prestigious schools … the former president of the National Academy of Sciences … will argue that global warming is at best unproven, and at worst pure fantasy” (p. 90);

    temperature sensors on satellites report much less warming in the upper atmosphere (which the theory of global warming predicts should warm first) than is reported by temperature sensors on the ground (p. 99);

    data from weather balloons agree with the satellites (p. 100);

    “No one can say for sure if global warming will result in more clouds, or fewer clouds,” yet cloud cover plays a major role in global temperatures (p. 187);

    Antarctica “as a whole is getting colder, and the ice is getting thicker” (p. 193, sources listed on p. 194);

    The Ross Ice Shelf in Antarctica has been melting for the past 6,000 years (p. 195, p. 200-201);

    “Greenland might lose its ice pack in the next thousand years” (p. 363);

    The Intergovernmental Panel on Climate Change (IPCC) is “a huge group of bureaucrats and scientists under the thumb of bureaucrats,” and its 1995 report was revised “after the scientists themselves had gone home” (p. 245-246);

    James Hansen’s predictions of global warming during a Congressional committee hearing in 1988, which launched the global warming scare, were wrong by 200 percent (.35 degrees Celsius over the next 10 years versus the actual increase of .11 degrees);

    in 1998, Hansen said long-term predictions of climate are impossible (pp. 246-247);
    there has been no increase in extreme weather events (.e.g., floods, tornadoes, drought) over the past century or in the past 15 years;

    computer models used to forecast climate change do not predict more extreme weather (p. 362, 425-426);

    temperature readings taken by terrestrial reporting stations are rising because they are increasingly surrounded by roads and buildings which hold heat, the “urban heat island” effect (p. 368-369);

    methods used to control for this effect fail to reduce temperatures enough to offset it (p. 369-376);

    changes in land use and urbanization may contribute more to changes in the average ground temperature than “global warming” caused by human emissions (p. 383, 388);

    temperature data are suspect because they have been adjusted and manipulated by scientists who expect to find a warming trend (p. 385-386);

    carbon dioxide has increased a mere 60 parts per million since 1957, a tiny change in the composition of the atmosphere (p. 387);

    increased levels of CO2 act a fertilizer, promoting plant growth and contributing to the shrinking of the Sahara desert (p. 421);

    the spread of malaria is unaffected by global warming (pp. 421-422, footnotes on 422);

    sufficient data exist to measure changes in mass for only 79 of the 160,000 glaciers in the world (p. 423);

    the icecap on Kilimanjaro has been melting since the 1800s, long before human emissions could have influenced the global climate, and satellites do not detect a warming trend in the region (p. 423);

    deforestation at the foot of the mountain is the likely explanation for the melting trend (p. 424);

    sea levels have been rising at the rate of 10 to 20 centimeters (four to eight inches) per hundred years for the past 6,000 years (p. 424);

    El Niños are global weather patterns unrelated to global warming and on balance tend to be beneficial by extending growing seasons and reducing the use of heating fuels (p. 426);

    the Kyoto Protocol would reduce temperatures by only 0.04 degrees Celsius in the year 2100 (p. 478);

    a report by scientists published in Science concludes “there is no known technology capable of reducing [global] carbon emissions … totally new and undiscovered technology is required” (p. 479);
    change, not stability, is the defining characteristic of the global climate, with naturally occurring events (e.g., volcanic eruptions, earthquakes, tsunamis) much more likely to affect climate than anything humans do (p. 563); and
    computer simulations are not real-world data and cannot be relied on to produce reliable forecasts (p. 566).

    February 6, 2009
  262. Patrick Enders said:



    I’ve now had a chance to read back through this thread, and I can see that Jerry and Bruce have already offered excellent discussions of the flaws in your thinking.

    February 6, 2009
  263. Peter Millin said:

    This really should go under Faux News or should it?

    February 6, 2009
  264. Jerry Friedman said:

    Peter (and David): Thank you for the link to the “American Thinker” web site. For full disclosure, the “American Thinker” is a conservative haven. That does not necessarily mean that they are wrong.

    I read the article you cited by Gregory Young. I have also read criticisms of his article, for example:

    Do you have any opinion(s) on the criticisms of Young’s article? Predictably, I find the criticisms compelling. Without having examined the original data, I can only rely on what I read, but at least I admit that what I read might be wrong. David doesn’t admit that. Do you?

    February 6, 2009
  265. David Henson said:

    Patrick – Lots of facts, I totally understand your desire to ignore them. All have a list of publications to back them up and I can publish that also if you would like to educate yourself further.

    But hey if you would rather see a trillion dollars in debt, to be repaid via taxes, be spent to fix a nonexistant problem then that is what it is.

    February 6, 2009
  266. Patrick Enders said:

    The linked-to article specifically addresses the “facts” of your fictional source. Do you disagree with their critique of your citations? If so, why do you disagree with their critique?

    February 6, 2009
  267. Peter Millin said:


    Since I don’t have a science background my opinion on this issue is based on my own common sense (or the lack of it).

    I am not so much concerned as to the exact cause of global warming. My bigger concern is the irrationality and hype this issue has turned in to.
    You won’t hear much argument from me on the issue of oil being a finite resource, because it is.
    Why has the answer to this be more taxes? Why do we let a small group of politically motivated people dictate our energy policy?

    Over reaction is as harmful as no reaction at all.

    I have posted this link earlier, but in case you missed it, here it is again.

    This guy pretty much sums up on how we should approach this.

    February 6, 2009
  268. David Henson said:

    Jerry, if I go to the candy store and the owner tells me about the health benefits of candy I have to question his motives (could be true but the source is not disinterested). However if the candy store owner tells me to check my blood sugar before buying candy then I have to credit that this information as it actually runs against his interests (still may be false).

    All research that is beyond ones subjective senses needs to be considered this way. Al Gore, for instance, provides no contrary evidence in his presentation. He also presents data in a way that purposefully distorts the information. He also wants billions in tax dollars spent under the direction of his party on a ‘problem’ which is dubious.

    I just call it as I see it. Of course, I could be wrong – but that is not a reason to run contrary to what seems most plausible.

    Anyway, I will leave this battle in Peters hands for a while.

    February 6, 2009
  269. Patrick Enders said:

    Would you trust an endocrinologist’s, or a nutritionist’s, opinion regarding the health benefits (or lack thereof) of the candy in that candy store?

    February 6, 2009
  270. David Henson said:

    Patrick are the Endocrinologist or nutritionist in the store ? Do they have a financial interest in the store or candy company ? Am I paying for the advice or is it free ?

    February 6, 2009
  271. Paul Zorn said:


    Concerning the link (below), which you cited about global warming, and which you praised (“This guy pretty much sums up on how we should approach this”)

    Did you notice that this story is there any trace of global warming denial, or any suggestion that the problem is trumped up or hyped by cynical pseudo-scientists? The piece is about different possible approaches to solving a problem that everyone discussed seems to agree is real and serious.

    February 6, 2009
  272. Peter Millin said:


    I don’t know if global warming is true or not. I don’t know if it is caused by humans or not..and if we are honest about it neither do the scientists for sure yet.

    I have cited numerous sites and scientists that disagree with the global warming hype. Others here have cited those scientists who support the hype. In the end its a hypothesis at best.

    Between wanting to tax energy and make it unaffordable due to some miss guided hype and an honest and real discussion on how to shape common sense discussions about our energy future, there is a big difference.
    Without a doubt there is a need for us to think about energy and move towards the goal of energy independence. Recent events in Europe have made it all to clear, that some countries won’t think twice in using energy as a weapon.

    It would be disastrous for our economy to switch overnight from oil, gas and coal to “alternative energies”.
    Most of them are inefficient, expensive and without an infrastructure to support it.
    If the alternative energy crowd, just would turn down the volume of their hysteria, they would get a much broader support.
    Their constant attacks and hysteria has most people just tune them out.

    That’s why I posted that link.It was the first time I ever read an article on alternative energy, that included my concerns as well, and not just utopian dreams at any cost.

    February 6, 2009
  273. Jerry Friedman said:

    Peter and David: Credibility is always an issue. When a candy store owner or nutritionist advise one way or another on eating candy, either may be truthful or not. Credibility comes in when there are opinions that could go either way and there’s no independent way to weigh the facts. What I find remarkable, frightening even, is David’s apparent eagerness to give a small group of scientists immense credibility and a large group of scientists none, pretending that the large group is corrupt and the small group is not. There may be corrupt scientists in either camp, one making money by diverted tax dollars, the other making money by the status quo. David has not given any reason to believe his chosen scientists are any more or less corrupt that the scientists with whom he disagrees. This dogmatism wrecks David’s credibility in my opinion.

    Peter, I appreciate your humility in this. Neither of us are scientists and we both are doing the best we can with the information we have. Ultimately we choose whom to believe, and I believe (1) the overwhelming majority of scientists, (2) scientists with whom I’ve personally discussed global warming, and (3) my attention to news events that are predicted by global warming.

    If it matters, what kind of conspiracy would it take for the overwhelming majority of scientists to defraud the public on global warming? If it’s a lie in one form or another, wouldn’t the overwhelming majority of scientists want to expose it? That would bring many of them fame and money. It doesn’t make sense that the numbers are reversed, that scant few scientists disagree with global warming, and generally from the conservative side (rather than the “moderate” middle).

    February 6, 2009
  274. Paul Zorn said:


    You say:

    I don’t know if global warming is true or not. I don’t know if it is caused by humans or not..and if we are honest about it neither do the scientists for sure yet.

    Your personal modesty is becoming, but it plays oddly with your repeated uses of “hype”, “hysteria”, etc. — language one usually doesn’t associate with an open mind.

    Then you say:

    I have cited numerous sites and scientists that disagree with the global warming hype. Others here have cited those scientists who support the hype. In the end its a hypothesis at best.

    Note the “hype”s again. As for the schtick about being a hypothesis “at best”: Hypotheses in science are not just wild guesses — they’re assertions which, although based on evidence and interpretation, are explicitly “falsifiable”, i.e., subject to revision or even abandonment in the face of further evidence or experience. This is sometimes seen as a weakness, but it’s really a strength, and fundamental to how science advances. To ask that scientists know things “for sure” is asking too much, if “for sure” means something like mathematical proof. On global warming as on everything else, we have to act, or decide not to, on partial information.

    It’s not unthinkable that the large majority of scientists could be wrong about global warming, as about anything else. But the idea that the large majority of climate scientists have banded together to promulgate “hype”, just in order to protect research grants, is far-fetched. As Jerry and others have pointed out, the way to fame and fortune in science is to stand out (successfully, not as a crank), not to go along. So while those few expert climatological skeptics could conceivably be correct, they’re no less vulnerable to the charge of self-promotion or conflict of interest than anyone else.

    February 6, 2009
  275. David Henson said:

    So how do you gentlemen account for Nazi scientists? They had peer review. They even had ‘some’ exceptional science. Yet almost none stood up to the drum beat.

    Go back and reread Patricks own links Even this author is concerned about too much “drumming” up support. What is scary is that laypersons take the belief much farther than do the actual scientists.

    February 6, 2009
  276. Anthony Pierre said:

    godwin’s law

    February 7, 2009
  277. David Henson said:

    Anthony, that’s cute – I had never heard the expression. However since most of the ideaology leading up to WWII was based on junk science (which to me is just science with too many variables, little known predictive capability and sky high error ratios) that lead good people to tragic outcomes; Fascism seems a valid comparison for this and many discussions. Especially so in response to an argument that “all scientists” or “the vast majority of scientists” support something – there is clearly historical evidence that broad support (which is being overstated) does not mean good outcomes.

    February 7, 2009
  278. Peter Millin said:

    Both Paul and Jerry make valid points to support their believes and I respect your opinion although I don’t agree.

    Neither of you however has addressed the financial component of this issue. Which, based on current information, is much more important then the issue itself.

    The suggestions made, by the proponents of global warming, that we can just simply spend our way out of this, is just not very realistic.
    The notion that we can just simply flip the switch from gas and oil to solar, wind or others is very blue eyed.

    Does this mean we shouldn’t do it? NO, but it has to be done in a rational and logical way.
    It was nice to hear and see that even Mr. Chu has acknowledged that we can’t have a comprehensive energy policy without nuclear and coal.

    If the environmental extremists would tone down their rhetoric and stop attacking those who prefer a more measured approach, maybe people would start to listen.
    This has become more important than ever given our current financial situation.

    The current crisis will last a lot longer then most of us think. With money being tight and people losing their jobs the last thing we need is more taxes. Be it in form of a carbon tax or in form of a cap and trade.
    Those, who want to further their agenda and ignore the financial implications on the population, will be voted out of office quickly.

    Like most of you I have seen an increase in energy costs already, just look at your last gas/electric bill.
    Are we willing to push those higher to finance some alternatives and hurt those who have a hard time to afford it even more?
    I am all for energy independence…the real question is ….at what cost?

    February 7, 2009
  279. Jerry Friedman said:

    David: The Nazi scientists began with an immoral ideology and made a false assumption, eugenics or racial purity, to further the ideology. Either they were unaware or denied that all humans are of the same “race”, and that genetic strength comes through genetic diversity. Their ideology continued the long-held prejudices of European or “white” superiority of other humans.

    I don’t see any comparison to global warming. Every accusation that you can make against the overwhelming majority of scientists, i.e., corruption, can also be laid against the scant few scientists. There is no perpetuation of prejudice or immoral ideology. And your claims of “junk” science do not hold up after reviewing the data. You could allege “misleading data” but you overextend yourself to say “junk” science, which in my opinion reveals your zeal. Why should I begin to think you’re impartial in the issue when your first defense of your position is to call those with a different position corrupt?

    February 7, 2009
  280. Jerry Friedman said:

    Peter: The pickle we’re in is that if the science proves accurate, we will reach a point of no return. Rising global temperatures will extract carbon out of ground compounds to cause more heating. Either we stop (and reverse) global warming now or, at the tipping point, it will be too late.

    Whether we should turn to nuclear and coal is, to me, another topic. The topic before us is whether global temperature is rising (it is), whether that’s dangerous (it is), and whether we can reverse it (we can).

    I understand your skepticism. If we detected a meteorite coming to Earth, and the governments said we had to pay more to develop a rocket equipped to divert the meteorite’s path, of course we should all be skeptics about their wanting our tax dollars. At some point, you have to decide whether the science supports the peril. I believe it does with global warming. If you don’t, I hope you’re right but I won’t do nothing by waiting until I know.

    I have done what I can and will continue to do so. Presently, I drive a Honda Insight (gas-electric hybrid) and I don’t eat animals. While my lifestyle still produces more greenhouse gas than most people in non-industrialized nations, among the industrial nations, I am in the lowest category of gas producers. As I discover new ways to maintain a happy lifestyle and reduce gas emissions, I do so. For example, I favor “green” packaging, which means minimal or fully recyclable. I seldom put my produce in plastic bags and I reuse my grocery bags rather than take more from the market. I hope that you can remain a skeptic and still take steps to reduce gas emissions.

    February 7, 2009
  281. john george said:

    Jerry- Just a question, and I don’t mean to be fatalistic, but since the whole sum of mans’ contribution of CO2 to the atmosphere amounts to about 4% of the total contribution, have we perhaps passed the point of no return? If we can halve out contribution to 2%, will this amount reverse the global warming? I’m just curious, here, as I have so far not found any scientific articles documenting this premise. Perhaps I have looked in the wrong place. If you have any links, please post them here. I would like to know how the mechanics of this would work. Thanks in advance.

    February 7, 2009
  282. Jerry Friedman said:

    John: In advance, you’re welcome.

    Prof. Steven Morris, who teaches natural sciences in California, and I had a lengthy conversation about global warming last year. He alerted me to the issue of carbon being “baked” out of ground carbon compounds as the most perilous issue. If this process begins, the newly released carbon will make the air hotter and then bake more carbon out of the ground. This process is called a feedback loop.

    Here is an article covering the same subject: “Feedback Loops in Global Climate Change Point to a Very Hot 21st Century” May 2006, Research News, Berkeley Lab:

    The Skeptics Society recently published two articles on global warming, including an analysis of carbon dioxide content in the air, in their May 2008 issue. You can read it online:

    (I accessed this site yesterday. At this moment, it seems to be offline.)

    My understanding is that the raw percentages don’t matter. One percent, or two or four may seem slight, but a slight change can cause drastic changes over time because of feedback loop (or loop-like) processes. For example, if the Earth’s distance from the sun was one-half percent less, the effect on the first year might be slight but on successive years we’d feel the change. Increase the amount of cyanide in your diet by one percent per year and at a very small amount, you’d find your body wouldn’t work the same. Some systems may have a tolerance of 10% or 50% before changing. Other systems may have no tolerance. Carbon content in the air is apparently very sensitive.

    Using rough numbers, I have found it compelling that the global temperature has risen 10°C in the last 18,000 years, 5 of which in the last 200 years. If in fact humans contributed 4% of the carbon content in the air, and it caused that temperature change, then doing nothing about it puts us and future generations in a very hot place.

    If the temperature increased 5 degrees in 200 years, then every generation won’t experience much change. People like me and David H. may not witness compelling evidence like forests turning to deserts. But there is still subtler evidence, like ancient glaciers receding, coral reefs dying, stronger hurricanes, etc. I understand why some people claim that these are natural cycles. As I said to Peter, I am not willing to assume they’re natural. There is enough evidence to compel me to act.

    February 7, 2009
  283. john george said:

    Jerry- I knew you would come up with some good links. I couldn’t get the second one to work, either, but I am going to try again tomorrow. If I understand the mechanics correctly, it appears that the CO2 change has an exponential effect upon the environment as opposed to an incremental effect. Am I understanding this correctly? If this is so, then I can understand the alarm in the scientific community about the apparent short term changes. I found this url:

    that I think you might find interesting. I like it simply because it provides some graphs. With my background, I can relate to graphs easier than a written article. If the fossil evidence is correct, then it appears that the earth has gone through some much more major changes than what is being predicted. With our advancements in technology, do you see hope in our ability to address what is coming? Just wondering.

    I found another study on this url that I think you might enjoy:

    Please don’t let the header scare you off. I think this is good evidence that not all Christian based scientific studies are done by a bunch of blathering idiots as, I concede, some are. This article appears pretty balanced and lines up with your other links.

    I think it prudent that we take some actions. The question is what is going to give us the best return for our dollar investment and our limited amount of time. Any way we can conserve consumption of energy has got to help. I think it would also be good to investigate further what steps we need to begin as far as distribution of resources and people as these changes begin to affect various regions. I think we should have learned a good lesson with the response, or lack thereof, after huricane Katrina. That was small change to the magnitude of what we are going to be facing. I think we do ourselves and our future generations a great disservice if we do not begin to make some plans. What little research I did turned up articles about predictions of adverse socio-economic effects of global warming, but I didn’t see anything that looked like research addressing answers to it. Hopefully, it is being done.

    February 7, 2009
  284. john george said:

    Jerry- Well, I posted a response to you, but it disappeared into cyberspace somwhere. If it doesn’t show up tomorrow, I’ll try to recreate it.

    February 7, 2009
  285. Paul Zorn said:


    You say:

    Neither of you however has addressed the financial component of this issue. Which, based on current information, is much more important then the issue itself.

    Indeed, this discussion hasn’t so far been about financial implications of global warming, but about whether global warming is a problem at all, and if so how severe a problem. Your repeated references to “hype” and “hysteria” suggest to me that you don’t take the problem itself very seriously. Am I mistaken?

    So much said, I agree that costs are among the most important ramifications of global warming, and deserve serious discussion. You’ve emphasized the costs of addressing global warming, and I agree they could be substantial. But not addressing the problem has costs, too, stemming from changing temperature and precipitation patterns, more severe droughts and floods, stronger storms, etc. Like most ledgers, this one has two sides.

    Then you wrote:

    The suggestions made, by the proponents of global warming, that we can just simply spend our way out of this, is just not very realistic.

    I haven’t heard this suggestion made by “proponents”. Closest thing I’ve heard to the Pollyanna-ish attitude you describe is from global warming deniers [who don’t see a problem at all, so there’s nothing to fix] or from GW minimizers [some of whom expect simple technical fixes]. It would be nice if either were right, but I’m not banking on it.

    The notion that we can just simply flip the switch from gas and oil to solar, wind or others is very blue eyed.

    Here I agree completely (if by “blue eyed” you mean naive). Changing patterns of energy use will be difficult and expensive, not painless. And I expect that, for better or worse, we’ll be using fossil fuels for some time to come. I’d just add that, IMO, wishful thinking has at least as much to do with GW denial as it does with GW doomsaying.

    February 7, 2009
  286. David Henson said:

    “Scientists who want to attract attention to themselves, who want to attract great funding to themselves, have to (find a) way to scare the public…and this you can achieve only by making things bigger and more dangerous than they really are.”
    – Petr Chylek, Professor of Physics and Atmospheric Science, Dalhousie University, Halifax, Nova Scotia

    February 8, 2009
  287. Jerry Friedman said:

    John: After re-reading my answer to you, I don’t think I read your question carefully. I don’t know if reversing half of humans’ CO2 contribution would put us in a safe place (from 4% to 2% as you posed). I assume so, because today’s climate seems tolerable in most places and cutting the CO2 in half — I’d guess — would make the climate tolerable in all places.

    From my readings, the primary cause of greenhouse gasses are the digestive gasses from both ends of ruminant animals (especially cows). The second greatest cause is the combustion engine. It’s inconceivable to me that enough people will stop producing and consuming cows, and that enough people will stop producing and consuming combustion cars, to neutralize or reverse the rate of CO2 production. One reason why I think of Northfield as a jewel is because of the generally “green” attitudes here. Erecting windmills is a great step, but it’s a small step in the big picture.

    February 8, 2009
  288. Jerry Friedman said:

    David: Please supply context. What exactly was Prof. Chylek talking about? The asteroid that might hit the Earth in 2029? Was he talking about general principles of corruption among academics? Was he talking about global warming? Please cite, cite, cite.

    February 8, 2009
  289. David Henson said:

    The prof was speaking about Global Warming hysteria

    February 8, 2009
  290. Jerry Friedman said:

    David: “The prof was speaking about Global Warming hysteria” is not a suitable citation.

    I read an abstract of one of his papers which said his findings were on the low-end of the IPCC’s findings, not that the IPCC was “hysterical”. So I don’t know who Chylek was referring to. Was he referring only to the most extreme “global warming” findings? All of them? His academic rivals? This is why a citation — and context — are important.

    Shall we line up the “pro” quotes against the “anti” quotes and use simple math to determine who is telling the truth? If you’d rather have a qualitative measurement, why do you believe this scientist is right and others are wrong.

    You have rested on the coat tails of history to say that the science of Nazis past were junk. You can’t rest on the same coat tails, nor can you say that this scientist is correct because he happens to agree with you. You have not answered why. Why should we believe the minority of scientists? Why are the minority of scientists not subject to the corruption that you allege against the majority?

    February 8, 2009
  291. Mike Zenner said:


    If ruminant animals are the largest contributor to CO2 in the atmosphere why is the focus of reduction on fossil fuels and not the reduction of these animals?

    February 8, 2009
  292. Peter Millin said:


    The state of Minnesota has put a law in place last years requiring utility companies to get a certain % of their energy from “green sources”.

    As a direct result most people have seen or will see an increase in their utility bill.

    My last bill went up by 30% despite of me using less energy then last year.

    So, yes the environmentalist extremists have a direct impact on my family budget. Unlike the government my income sources are finite, which means I have to cut cost somewhere else.

    Add to this an increase of property taxes by 12% you can easily see how darn little our elected officials care about the middle class squeeze. Despite all their rhetoric.

    I have yet to see budget cuts both on the state or federal level.

    The GW issue is being used as an excuse to get deeper in to our pocketbooks.

    Most people don’t understand that corporations don’t pay taxes…it’s all of us who pay them.

    February 8, 2009
  293. Paul Zorn said:


    You wrote (about your utility bill):

    My last bill went up by 30% despite of me using less energy then last year.

    Interesting. I just looked at my Xcel bill, and found that my cost per therm of natural gas soared over the last year from $1.03 to $1.04. My electric bill increased from 10.34 cents per kWh to 10.89 cents per kWh.

    How can I reconcile this with your figure of 30% increase despite lower use?

    February 8, 2009
  294. john george said:

    Jerry- That lost post never showed up, so I’ll try again. You really didn’t answer me directly in your first post, but the first link you gave did, if I understand it correctly. It appears that the correlation of the increase in CO2 has an exponential effect on the temperature rather than an incremental. If this is the case, then I can understand the urgency in the scientific community. I haven’t gotten the second link to work yet, either, but I will try again later.

    I found this interesting link that I think you will agree with, also:

    If the fossil record is being interpreted correctly, it would appear that the earth has been through drastic changes in climate. I remember climbing over the strip mine mounds on my uncle’s farm in southeast Iowa looking for sea shell fossils in the shale that was being scraped off the coal veins under his farm. This is evidence that the area was a sea bed at some time in history. It also supports some of the assertions made by Dr. Baez that there have been major changes over the history earth. It is interesting that species have changed and adapted to these changes as they came along. I’m wondering, given our technological advances over the last century, if we will be able to adapt to the changes coming as well as the prehistoric creatures did?

    Here is another link I would like you to look at:

    Don’t be scared off by the header. The article is put more in layman’s terms rather than scientific jargon so more people can read it and understand it. It would appear that not all Christian scientists are necessarily against the evidence being presented.

    The other question I raised in the lost post was what is being done beyond conservation and alternative energy sources to address the socio-economic effects of global warming? In the little research I did, I did not find any significant proposals for the redistribution of available resources and populations as we enter into greater and greater change. If we do not get prepared for some of these things, I think we will see a debacle like the post Katrina event, except on a global scale.

    February 8, 2009
  295. john george said:

    Jerry- I give up! Twice, now, I’ve tried to post back to you, and I keep getting thwarted. I only had two urls in mine, and so did you. Just give me a call sometime, and maybe I can just e-mail you the links I found. I thought they would be intersting to you.

    I’ll see if I can get this one question to go- do you know what is being done beyond research for alternative energy sources and conservation that will address the socio-economic effects of global warming? My concern is that if we do not have a plan in place for the redistribution of resources and people as the changes come, we will experience a debacle similar to the post Katrina fiasco, except on a global scale.

    February 8, 2009
  296. Jerry Friedman said:

    David: I read the web site you referenced, which did not answer my questions of context for Prof. Chylek, nor did they explain why the minority scientists are immune to corruption and the majority scientists are subject to it, as you have repeatedly alleged.

    Further down the page that you referenced, the author cautions against the data he’s using as representing any trend. Here, you capitalize on the data, but the author says not to.

    Further down the page are many comments from scientists and non-scientists that again moderate anyone’s hasty conclusions about the data.

    I have no problem admitting that a 0.5°C drop in one year is noteworthy, but if you look at the graphs, you will see that there are peaks and valleys in the data. The trend is warming. Does this mean that with every ascent you’ll cry “global warming” and with every descent you’ll cry “global cooling”, or will you take a step back and look at trends? As some people here have offered, the melting ice caps will add a lot of cool water to the oceans and atmosphere. There are reasons for ups and downs. Trends are key.

    The site that you referenced also made reference to another scientist’s blog, who concludes:

    Humans are significantly altering the global climate, but in a variety of diverse ways beyond the radiative effect of carbon dioxide. The IPCC assessments have been too conservative in recognizing the importance of these human climate forcings as they alter regional and global climate. These assessments have also not communicated the inability of the models to accurately forecast the spread of possibilities of future climate. The forecasts, therefore, do not provide any skill in quantifying the impact of different mitigation strategies on the actual climate response that would occur.

    Again, why are your scientists immune from corruption? Why are your scientists immune from error? Why do you select one scientist over another?

    February 8, 2009
  297. john george said:

    David H.- The graphs you cite are for faily short periods of time relative to the overall changes over the last century or so. Take a look at this url:

    Don’t let the header scare you. When we put these changes in perspective to the cyclical climate changes over the last several thousand years, unfortunately, the general trend we are in is up. Also, toward the bottom of the article are some links that explain many false claims that have been made concerning global warming.

    February 8, 2009
  298. john george said:

    Jerry & David H- I found the problem link I was trying to connect. Just Google this subject line:

    Global Warming: will human induced climate change destroy the world?

    Don’t be scared off by the header. This fellow takes a lot of scientific jargon and tries to put it in layman’s terms that even I can understand. I think you’ll be surprised at what he has to say, Jerry.

    David- I mean no offense in this link, but I think it puts Jerry’s comments in perspective.

    February 8, 2009
  299. Jerry Friedman said:

    Mike: You asked,

    If ruminant animals are the largest contributor to CO2 in the atmosphere why is the focus of reduction on fossil fuels and not the reduction of these animals?

    First, for those who doubt the numbers, I urge they search for such simple terms as “cows global warming”, like this report I found from the U.N.: “Rearing cattle produces more greenhouse gases than driving cars, UN report warns” – It starts, “Cattle-rearing generates more global warming greenhouse gases, as measured in CO2 equivalent, than transportation, and smarter production methods, including improved animal diets to reduce enteric fermentation and consequent methane emissions, are urgently needed, according to a new United Nations report released today.”

    Second, you ask “why”.

    Human civilization was built around “domesticating” nonhuman animals. Prof. Jared Diamond goes into great detail about how domestication, of which the cow plays a major role, provided Middle Eastern and European humans with labor, meat, and disease (disease gave Europeans a major advantage, for example, when they were immune to small pox and the Incas were not). Suffice to say, cattle have been part of human civilization about as long as there has been civilization. Some humans today come from many generations of farmers. Rearing cattle is pervasive in human culture.

    Compared to combustion engines, automobiles showed up in the last 120 years. While our culture relies on cars, truck, and planes, I believe the emotional connection to the oil-based industries are not as deep as the meat-based industries.

    There also remains a myth that eating meat is a necessary part of the human diet. A recently fired stock trader filed a lawsuit against his employer, claiming harassment because he was a vegetarian.

    On average, I think people would sooner buy an electric car than stop eating cows. Because of this belief, news sources are more likely to report bad news on the combustion engine.

    These two aspects, the lengthy relationship between humans and cattle, and the myth that eating cattle is important, give an emotional reason for many humans not to want to stop producing and consuming cattle.

    I think that’s why.

    There are more greenhouse factors than the methane that cows produce. On average, for every 100 pounds of grain, we can feed 10 pounds of cow and then 1 pound of human. Alternatively 10 pounds of grain can feed 1 pound of human. The difference to feed one human is 10:1 if the human eats animals. This means that it will take, on average, ten times more tractor gasoline, ten times more pesticides, ten times more water, etc., when we choose to eat cows rather than grains.

    February 8, 2009
  300. David Henson said:

    Jerry, Honestly, I don’t think much policy will be made over global warming as the logic is still much too out of focus – even knowing there are die hard believers. The economic drop is also going to lower the carbon footprint and if no correlating blips can be show (not made up) this and cold weather will end that ecoparty. I think there will be some moves towards alternatives based on security but even this barring a new event is probably not going to be subsidized. I still say if you are a global warming believer focus on transportation because solving real tangible problems, like traffic jams and deaths will ultimately reduce the carbon footprint. An infrastructure change over is needed as tar is currently required for roads and this is a byproduct of gas production. So just a new fuel will up the price of fuel and roads surfaces (a hard sell with no tangible gains). What’s needed is to have an “auto-internet” of some type where at least urban traffic has information technology driving decisions.

    “if they get you asking the wrong questions then they do not have to worry about the answers.” ~Pynchon

    February 8, 2009
  301. Bruce Anderson said:

    You say:

    The state of Minnesota has put a law in
    place last years requiring utility
    companies to get a certain % of their
    energy from “green sources”.

    As a direct result most people have
    seen or will see an increase in their
    utility bill.

    My last bill went up by 30% despite of
    me using less energy then last year.

    So, yes the environmentalist
    extremists have a direct impact on my
    family budget.

    There is essentially no connection between the 2007 law requiring Minnesota electric utilities to provide 25% of their electricity from renewable resources by 2025 (the Next Generation Energy Act of 2007: see and increases in your most recent Xcel bill(s).

    The basic math outlined by Paul Z. is an accurate reflection of what has happened with Xcel’s prices in the past year or so for natural gas and electricity. The primary cause of any increase you would have seen was an interim electricity base rate increase, requested by Xcel Energy in a submittal to the Minnesota Public utilities on November 3, 2008, that went into effect on January 1, 2009. The rate increase is expected to raise costs for the average residential customer by 7.6% (see

    As Xcel points out in the document to which I have provided a link, this rate increase has NOTHING TO DO with the cost of “riders” that cover the cost of fuel used in power plants, capital investments in renewable energy, conservation, etc. It instead is a base rate increase for the following:

    This rate increase is needed to ensure
    we can continue to safely and reliably
    meet our customers’ needs during a
    period of rising costs. We would not
    ask for this unless it was necessary.
    Since 2006, we have invested more than
    $1.2 billion in our electric system to
    maintain reliability and like many
    businesses, we face increased costs.
    The cost of materials such as
    transformers, wires, steel and cables
    have risen dramatically in the past
    three years. We are also investing in
    our nuclear plants – our lowest cost
    and most reliable energy source – to
    keep them safe and reliable. Today,
    nuclear power provides about 28
    percent of all of Minnesota’s
    electricity and emits no greenhouse

    The noted hysterical environmentalist extremist, Governor Tim Pawlenty, had this to say about the Next Generation Energy Act (which also sets a state policy goal of 80% greenhouse gas emission reductions by 2050):

    “The best time to have taken action on
    energy issues would’ve been 30 years
    ago. The second best time is right
    now,” Governor Pawlenty said. “The
    nation has been asleep at the switch,
    but here in Minnesota we are
    kick-starting the future by increasing
    our nation-leading per capita
    renewable fuel use, boosting cost
    saving measures and tackling
    greenhouse gas emissions.”

    Finally, if a customer voluntarily chooses to purchase 100% of their electricity through Xcel’s Windsource Program (see, they would pay about 7% more for their electricity than the standard rate, on average.

    February 8, 2009
  302. john george said:

    Geez, Griff! What is going on? Am I just not doing something right? I thought I had lost 3 posts, but all of a sudden they show up, and not necessarily in order of submission. There are a couple that pretty much duplicate themselves, so feel free to delete any you think are just taking up space. Oh well, I don’t mind being humbled, unless it is by a computer program.

    February 8, 2009
  303. Mike Zenner said:


    I found a link below that somewhat concurs with your meat consumption statements above.

    After reading your statements above and this article made me wonder the questions about global warming and is the issue framed in the right context?

    Is the real “root causes” of environmental degradation really a poor choice of human “lifestyle” and poor land use, or over use?

    Shouldn’t the meat eaters pay a carbon tax as well as the fossil fuel users?

    Or, does it really come down to the overpopulation of the planet?

    Have we reached the “carrying capacity” of the planet?

    Would there even be discussion about global warming if there was 700 million(SUV driving, 5 lbs of meat consumed/day) people instead of close to 7 billion?

    If we cut back on fossil fuel usage without addressing population growth are we solving the CO2 problem?

    February 8, 2009
  304. Griff Wigley said:

    John, apologies for the glitches. For some reason, comments with URL’s in them are being intercepted by the Askimet spam filter. I don’t get alerted to this and so I have to manually retrieve them. So until we get this fixed, let me know if your comments don’t show up immediately.

    February 9, 2009
  305. Peter Millin said:

    How can I reconcile this with your
    figure of 30% increase despite lower

    I am very sorry, but I was having a “senior moment”. On the statement this years usage was in the first colum and last years in the second. I should have been more careful in reading it.

    I still maintain that a switch from traditional energy to “green energy” will cost more then 7%.
    If this raise wasn’t related to the government mandate, then based on current cost of natural gas the price should have stayed the same as last year.

    The direct impact on the bill could very well 7%, but this does not account for the cost related of building the infrastructure.
    These costs will be hidden and diluted in other taxes. I.e carbon tax and cap and trade.
    If based on the current relatively small mandate our costs go up 7% (or whatever the number is) we can calculate easily what the cost will be once we switch all of it to “green energy”.

    February 9, 2009
  306. Bruce Anderson said:

    Let’s stick to the facts. I never said “the switch from traditional energy to green energy” (in your words) will cost no more than 7%. I simply stated what it would cost a current Xcel Energy customer to purchase their electricity through Windsource at this point in time. (Fact, from the Xcel website, linked in my post above.)

    The actual cost to Xcel of the power purchased from wind projects is quite competitive with the power from traditional power plants. For example, Xcel will be purchasing all the power produced by Carleton’s wind turbine (roughly 4.5 million kWh per year, enough to power about 500 average Northfield homes), for 3.3 cents per KWh from September 2004 through September 2024. Seems like a pretty good deal for Xcel customers to me. (Fact, based on my personal knowledge of the power purchase agreement entered into between Carleton and Xcel in 2004.)

    Electricity costs increased by an annual average of about 3.3% over the last 30 years in the United States, in the absence of any significant investment in renewable energy. (Fact, Energy Information Administration, US Dept. of Energy)

    If we, as consumers, ratepayers and taxpayers, want to avoid the costs of building massive infrastructure (e.g. new electric transmission lines), we should do everything possible to

    • conserve energy (through energy efficiency investments and energy-conserving behavior). Saved energy is the cheapest and most readily available energy resource in the US. For example, residential energy use in the US averages more than twice German per capita residential energy use. (Fact:
    • develop local (site-based wherever possible), geographically distributed renewable energy projects which can avoid the need for major electrical grid upgrades. Two recent studies mandated by the MN Legislature found that thousands of megawatts of wind energy could be added strategically to the existing transmission grid with minimal need for major system upgrades, if the geographically distributed model is utilized. (Fact:

    I’ve never advocated making the transition away from fossil fuels and nuclear power to a more sustainable energy system “overnight.” Nor is any other realist. I have consistently advocated making the transition as expeditiously as possible, beginning right now. The best available science indicates that unless we start aggressively now, and achieve something like a global 80% reduction in greenhouse gas emissions by about 2050, we’re in deep trouble.

    I agree with Mike Zenner that we have to look holistically at all of the interrelated issues (population, consumption, lifestyle, planetary carrying capacity, etc.) if we hope to develop a more sustainable global civilization.

    February 9, 2009
  307. Paul Zorn said:

    Now for something completely different, here’s a comment about the ostensible subject of this thread: addressing the immediate budget problems in the state.

    In a recent Strib editorial,

    Mitchell Pearlstein urges those who can afford to do so in difficult times to give more to charities, etc. Read it for yourself.

    Here’s my reaction: I agree fully with Mr. Pearlstein that we who can afford to do so (the “well fed”, as Mr. P. puts it) should step up to the plate in hard times, whether that “plate” is at one’s church, synagogue, temple, coven, Druidic circle, or secular humanist salon.

    Where I think Mr. Pearlstein wimps out is in relation to the state’s “collection plate”, which could also use some help. Mr. Pearlstein invites those who want to do so to make extra contributions to the state, and again that’s fine. But state government is fundamentally different from any voluntary association in all sorts of ways that don’t lend themselves to the charity model.

    I’m glad to contribute more to the state, especially during tough times. But I’d like other relatively fortunate people to be accountable, legally if necessary, to do their part, too. Taxation is the only way I can think of to assure this.

    Mr. P. takes Governor Pawlenty’s anti-tax position as a given, and perhaps even as a Good Thing. I disagree. The Governor’s views are what they are, but our state need not sacrifice its own interests at the altar of keeping an undistinguished politician politically palatable to the right wing of a struggling party.

    February 9, 2009
  308. Peter Millin said:

    I have no problem doing my own things to “go green.” I have no problem with trying to take care of the environment. Heck if I could afford it I would have solar panels on my house and a Tesla in the driveway. The problem I have is when liberals want to use the government to mandate. Mandate what light bulbs I can buy, mandate what temp I can keep my house at. Mandate what cars i can and can’t drive. I don’t see much freedom and liberty in that. So I will continue to do what I can, but will never support folks like Gore.

    February 9, 2009
  309. Jerry Friedman said:

    Mike: In alignment with your post, when members of any species dominate an ecosystem, the ecosystem changes. Human population has been growing dramatically since hygiene and health care have become normalized in human society. Adding more humans continues to make more changes in our ecosystem and the conversation on global warming is one way that our ecosystem has changed.

    Last century, it was widely reported that more species are going extinct than the historical average, probably because of humans converting wild habitat to farmland. Humans changing the planet is not a new idea.

    I need to add ‘weight’ to the measurement. Human population alone is not the issue. Humans in industrial nations cause tremendously more pollution (including greenhouse gasses) than in agrarian and other simpler nations. I add this so Americans don’t point the finger at the Chinese or Indians. Their population is great but the U.S. still creates dramatically more pollution.

    In my view, we can have our cake and eat it too. We can enjoy the luxuries of our industrial society if we are smart about it. I would like to see smaller families and more adoptions, overall reducing our population. I would like to see more attention on “reduce, reuse, recycle”. So much attention is already on recycle, but reduction and reusing is even more important. And when we do buy things, we should buy “green”, meaning that we should choose products with the least environmental impact.

    We still have a cultural prejudice, a psychology to overcome. Some Americans pride themselves on big cars and big steaks. It will take a long time before that pride gives way to social responsibility.

    February 9, 2009
  310. Peter Millin said:

    I am getting a bit tired of all this seriousness here, especially on a Monday morning.

    Have fun.

    February 9, 2009
  311. Peter Millin said:

    Questions for Paul (and others)

    What should be a “fair level” of taxation?

    When do we think will the government have enough tax dollars to run the business of the country or state?

    How much more taxes should we pay?

    I don’t know if it is just timing, but in all of the current budgetary discussions NOT a single liberal has mad ANY suggestions on how to cut spending.

    The DFL has done a lot of complaining about Pawlenty’s budget but has offered very little in terms alternatives, besides “How to raise more revenues”.

    David Bly and Kevin Dahle’s (yes I read them) blogs are no different.

    Am I to understand that raising taxes or fees are our only alternatives?

    If so, see questions one and two.

    February 9, 2009
  312. Peter Millin said:

    This is scary……have we lost our collective minds?
    This is a dangerous gamble we are undertaking. Let’s hope and pray that our leaders know what they are doing.

    If not all the current discussions are pretty much academic.
    The amount of debt we put on our children will put any other future venture in to jeopardy.

    February 9, 2009
  313. Ray Cox said:

    Peter is right on this issue….when is the DFL going to present a budget that they want to support? It is absolutely silly to think we should only work from the Governor’s budget,as they state they are going to do. If they really hold true to that I suspect we will be in for some looooooong and very difficult budget negotiations. Their statement that they want to ‘hold listening sessions’ to hear what people are thinking is very weak. If they don’t know what their constituents are thinking now, they won’t know any better in 2 more weeks.

    Paul, I thought Mitch P’s article was sound. People do need to do all they can to support the organizations you list. (Well maybe not the coven, Druidic circle) I think one of the failures of government has been its effort to ‘take over’ the role of so many private non-profits. The small community non-profits do a far, far better job of delivering services to the needy than does a large bureacracy. Take a look at Northfield’s own CAC, Health Finders, etc and you will see wonders at work. This is where support needs to go.

    I also support Mitch’s statement that people who are able should step up and give more in taxes to the state if they feel the state needs the funds. We’ve seen full page newspaper ads, stuff from the Growth and Justice folks, etc, etc. about raising taxes on the ‘wealthy’. Nothing is stopping the ‘wealthy’ from doing that on their own. (And apparently nothing other than an appointment from President Obama makes some of them pay either) And nothing seems to be stopping the ‘wealthy’ from leaving the state when they retire.

    Minnesota presently has roughly 700,000 individuals receiving some sort of public assistance for health care. In the next biennium, without modifications, that is scheduled to increase by 100,000. Is that sustainable? I don’t think so.

    I want to second Peter’s quesion…How much taxation is enough?

    February 9, 2009
  314. Peter Millin said:

    Link (MNPR)

    David Bly has introduced the “peoples bailout bill”.

    I can support part of it, especially in extending unemployment benefits.

    However to extend welfare benefits for people past the five year deadline indefinitely escapes my feeble mind.
    How will this part of the bill help the economy?

    David Bly and the DFL has chosen to avoid the greater budget picture by trying to pass spending bills before the budget as a whole is discussed.

    It’s pretty smart actually because it would be nearly impossible to reverse prior spending commitments.

    To add injury to insult neither Mr. Bly nor his co sponsor have any idea on what the cost of the bill is. What???

    February 9, 2009
  315. john george said:

    Peter and Ray- I agree with you regarding taxation. Once we start down the road of entitlement, it is like starting a fire. It will continue to burn unless it runs out of fuel, or someone extenguishes it. The running out of fuel really concerns me. Will we eventually kill the goose (taxpayers) that continue to faithfully lay golden eggs (taxes)?

    Ray- Just one point of perspective, here, and I really haven’t thoroughly researched it, but your comment, “…I think one of the failures of government has been its effort to ‘take over’ the role of so many private non-profits…”- has government “taken over” the role of many non-profits, specifically churches, or have the churches passively acquiessed their roll to the government? I think there is a trend toward this that started in the ’50’s, but I cannot find my research that I began on it. Just wondering your opinion on this.

    February 9, 2009
  316. Peter Millin said:

    There is a lot of talk about the fact that the policies of the last eight years have failed, and that the Republicans are offering just more of the same.

    There is much better prove of how an economic system, that has too much government involvement, has collapsed.

    How about all the Eastern Bloc countries?

    February 9, 2009
  317. Paul Zorn said:


    You ask:

    What should be a “fair level” of taxation?

    “Fairness” and “level” are both important questions, but they’re different … let’s not conflate them.

    When do we think will the government have enough tax dollars to run the business of the country or state?

    I’m a bit lost in your syntax here, but I think you’re asking how much money a country or state should raise through taxes. Since this thread is about the state, let’s stick to that. Here’s my short answer is: There is no short answer. It depends on things like changing demographics (balancing costs of schools vs nursing homes), condition of the national economy (bad economic times can raise expenses for social services), maintenance schedules for roads and bridges (as you may recall, one fell down recently), etc.

    So much said, it’s perfectly true — as you often remind us spendthrift liberals — that the tax well isn’t bottomless, so we can’t have everything anybody might want.

    IMO the best way for me to deal with such uncertainty is to look at history over the last few decades. Around 1973 (if I have my history correct … I’m not a native …) Minnesota went from a relatively low tax, low service model to a relatively high tax, high service model of state government (where “low” and “high” are relative to other states, not necessarily to, say, Denmark). By every measure I’ve heard of the results over the last 35 years have been very, very good for Minnesota by comparison with other states. Minnesota has consistently ranked, and still ranks, well above average as regards health, economy, education, social indices, etc.

    Perhaps all this has something to do with Minnesota’s unique moral perfection, divine intervention, and other supernatural effects, but I doubt it. At the very least, I see no reason to impute from history the lesson that (relatively!) high taxation by US standards always leads to economic decline. On the contrary, I take the lesson that prudent investment in public resources can pay good dividends. Sure, some public investments are better than others, and some may be simply wasteful or hare-brained, but the big picture matters most, and the big historical picture seems pretty clear.

    None of this means that more government spending is always better than less. Anything the government spends is not available for anyone else to spend (and vice versa, of course). And, one way or another, some taxing and spending figure must be set.

    Hence, since you ask …

    Taking a historical view suggests to me that Minnesota government should probably be spending something near the same percentage of state GDP in the near future that it has in the relatively recent past. What this percentage is depends on what figures are used for numerator and denominator, but from what I can tell from a few minutes’ research it appears that (i) state GDP is around $240 bn/year; (ii) the state budget now runs about $30 bn/year, or around 12 or 13 per cent of GDP; (iii) the ratio of state budget to GDP has generally fallen over recent decades. Given all this, and the fact that we’ve probably built up some backlog of deferred maintenance of state assets, and the fact that I’m inclined to Keynesianism, it seems to me that the state should probably spend modestly more in the near future than it has in the near past. I’m willing to do my part to address the backlog, and to help fellow Minnesotans in hard times. And I want the other relatively well-fed cats to do theirs. If raising some taxes on people at or above my level is required, so be it.

    OK, there’s my prescription. What’s yours? Please include some numbers.

    February 9, 2009
  318. Paul Zorn said:


    You say:

    Paul, I thought Mitch P’s article was sound. People do need to do all they can to support the organizations you list. (Well maybe not the coven, Druidic circle) I think one of the failures of government has been its effort to ‘take over’ the role of so many private non-profits. The small community non-profits do a far, far better job of delivering services to the needy than does a large bureacracy. Take a look at Northfield’s own CAC, Health Finders, etc and you will see wonders at work. This is where support needs to go.

    I, too, admire organizations like these. In what sense has government “tried to take over” these good works?

    I also support Mitch’s statement that
    people who are able should step up and give more in taxes to the state if they feel the state needs the funds.

    Sure, it’s fine for those who can do so to step up. But the idea of government by noblesse oblige feels all wrong to me. Let’s decide together what we want government to do, account honestly for the costs, and then spread them out with a view to who can afford to pay.

    Nothing is stopping the ‘wealthy’ from doing that on their own. (And apparently nothing other than an appointment from President Obama makes some of them pay either.)

    Yes, Tom D is an embarrassment. But isn’t the lesson according to St Thomas that we need to make the rascals pay? 🙂

    February 9, 2009
  319. john george said:

    Paul Z.- I think Ton D’s indiscration is evidence that greed and corruption know no political boundaries.

    February 9, 2009
  320. Mike Zenner said:


    The “FAIR TAX” answer is pretty simple. Using the numbers for the federal expenditures for 2008 from the web site below (which appears to not be accounting for “off budget” expenses e.g. Iraq War Enron accounting, etc)

    If we subtract the corporations input to the kitty (Assuming they ARE paying their FAIR share) then rough numbers:

    2.1 trillion divided by 300 Million people = $7000/person. So a family of 4 “Federal FAIR TAX” for 2008 would be $28,000! (This includes of coarse SS, Medicare, gas taxes etc.)

    For 2008 Minnesota (I am guessing here) would be 16 Billion divided 4 Million people would come to $4000/person. Family of 4 would be $16,000! (this of coarse includes property taxes, sales taxes, fees, etc.)

    I tell you what Peter, If we did have this FAIR TAX system you would not have anyone arguing with you about cutting taxes, everyone will be joined in a tax revolt at the respective capital houses, including the 700,000 Ray say’s are on the dole in MN!

    February 9, 2009
  321. Mike Zenner said:


    I don’t feel we can easily dismiss the rise of Asia and its growing population as it becomes more industrialized. The peasants are migrating to the big cities to get a taste of the good life (more meat, except for the Hindus, although they’ll keep more cows around for worship.) just like they have seen in the western movies!

    I feel that for every percent of food and energy we conserve they will take up double or triple that amount!

    February 9, 2009
  322. David Henson said:

    tax well isn’t bottomless

    I think if you dove in now your head would hit cement.

    “Zero” is fair Peter. Large city states including roads, sewers, etc have been built without forced taxation. In the case of the current US system, if there were no taxation then even if many fewer dollars flowed to community building they would be spent so much more appropriately we would live in a comparative heaven.

    I saw a number that the federal borrowing for this crisis could pay off every home mortgage in America.

    February 9, 2009
  323. Mike Zenner said:

    Hey Peter,

    Great news, the Senate Republicans were able to trim the stimulus bill to $838Bil.

    Add this to the $700Bil TARP and last years 2.1 Trillion your 2009 Federal “FAIR TAX” bill will be 3.638Trillion divided by 303Million = $12,006/person or $48,024 for a family of 4!

    Without their effort it would have been as high as $12,336/person or more, quite an increase from last year’s $7,000!

    If Pawlenty can hold the line for next year at $16,000 for a family of 4 then the total 2009 tax bill will be $64K for a Minnesota family of 4 who’s median income is ~$78K.

    February 9, 2009
  324. Jerry Friedman said:

    Mike: I agree that the changes in Asia, popularizing the Western lifestyle, is concerning. Presently, the U.S. is so far ahead of India and China in consumption, waste and pollution that I don’t want them to distract us from our own shortcomings. Further, I can change my habits, my family’s habits, and my community’s habits much easier than the citizens of another country. And if I am successful at thinking globally and acting locally, perhaps the citizens of other countries will see the changing U.S. attitude as a reason to change their own.

    February 10, 2009
  325. Peter Millin said:


    Buried deep in the stimulus bill is this nugget:

    The bill’s health rules will affect
    “every individual in the United
    States” (445, 454, 479). Your medical
    treatments will be tracked
    electronically by a federal system.
    Having electronic medical records at
    your fingertips, easily transferred to
    a hospital, is beneficial. It will
    help avoid duplicate tests and errors.

    But the bill goes further. One new
    bureaucracy, the National Coordinator
    of Health Information Technology, will
    monitor treatments to make sure your
    doctor is doing what the federal
    government deems appropriate and cost
    effective. The goal is to reduce costs
    and “guide” your doctor’s decisions
    (442, 446). These provisions in the
    stimulus bill are virtually identical
    to what Daschle prescribed in his 2008
    book, “Critical: What We Can Do About
    the Health-Care Crisis.” According to
    Daschle, doctors have to give up
    autonomy and “learn to operate less
    like solo practitioners.”

    February 10, 2009
  326. Peter Millin said:


    In general I agree with the notion that government spending should be proporionate to GDP. Your assesment is about right.

    The more important discussion is “What do we want government to do”.
    My guidelines on this would be the constitution. There our founding fathers clearly define the role of government.
    It’s an amazing piece of document, which has made us the greatest country on earth.

    I think most of us agree that our tax system is broke. We actually could gain some efficencies by simplifying it, juast ask Daschle and Geithner.

    February 10, 2009
  327. Peter Millin said:

    Follow the money. This expalins some of the “urgency” of having to pass TARP.

    TARP Recipients Paid Out $114 Million
    for Politicking Last Year Published by
    Communications on February 4, 2009
    9:52 AM | Permalink The companies that
    have been awarded taxpayers’ money
    from Congress’s bailout bill spent $77
    million on lobbying and $37 million on
    federal campaign contributions, Center
    finds. The return on investment:
    258,449 percent.

    WASHINGTON–(This release has been
    corrected to reflect that Bank of
    America has received $45 billion, not
    $55 billion, from the TARP program.
    The $45 billion includes $10 billion
    that Merrill Lynch received before
    being acquired by Bank of America. An
    earlier version of this release
    incorrectly added Merrill Lynch’s $10
    billion to Bank of America’s $45
    billion. Adjustments to the figures in
    the original release are in bold
    below.) The struggling companies whose
    freewheeling business practices have
    contributed to the country’s economic
    woes are getting a lucrative return on
    at least one of their investments.
    Beneficiaries of the $700 billion
    bailout package in the finance and
    automotive industries have spent a
    total of $114.2 million on lobbying in
    the past year and contributions toward
    the 2008 election, the nonpartisan
    Center for Responsive Politics has
    found. The companies’ political
    activities have, in part, yielded them
    $295.2 billion from the federal
    government’s Troubled Asset Relief
    Program (TARP), an extraordinary
    return of 258,449 percent.

    “Even in the best economic times, you
    won’t find an investment with a
    greater payoff than what these
    companies have been getting,” said
    Sheila Krumholz, the Center’s
    executive director. “Some of the
    companies and industries that have
    received payments may now consider
    their contributions and lobbying to be
    the smartest investments they’ve made
    in years.”

    While the Treasury Department, not
    Congress, doles out TARP funds to
    specific institutions, congressional
    lawmakers had to authorize that money
    in the first place, and lawmakers will
    determine in the future whether to
    release more funds to prop up the U.S.
    economy. During the bill-writing
    process, members of Congress were able
    to specify to some extent where the
    money should go, and they have lobbied
    regulators to urge them to inject
    funds into specific banks and
    financial institutions, including
    those in lawmakers’ own districts.

    “Taxpayers hope their money is being
    allocated entirely on the merits, but
    with Congress controlling how much
    money the Treasury gets to hand out,
    it will be impossible to completely
    exclude politics from this process,”
    Krumholz said.

    Some of the top recipients of
    contributions from companies receiving
    TARP money are the same members of
    Congress who chair committees charged
    with regulating the financial sector
    and overseeing the effectiveness of
    this unprecedented government program.
    They include Sen. Chris Dodd of
    Connecticut, chairman of the Senate
    Committee on Banking, Housing and
    Urban Affairs (he received $854,200
    from the companies in the 2008
    election cycle, including money to his
    presidential campaign) and Sen. Max
    Baucus of Montana, chair of the Senate
    Finance Committee (he received
    $279,000). In total, members of the
    Senate Committee on Banking, Housing
    and Urban Affairs, Senate Finance
    Committee and House Financial Services
    Committee received $5.2 million from
    TARP recipients in the 2007-2008
    election cycle. President Obama
    collected at least $4.3 million from
    employees at these companies for his
    presidential campaign.

    Some, Not All, TARP Recipients Hired

    Of the more than 300 companies that
    have been aided by TARP, 25 paid
    lobbyists a total of $76.7 million to
    represent them on Capitol Hill in
    2008. Treasury Secretary Tim Geithner said recently that institutions
    collecting these funds won’t be
    allowed to lobby the federal
    government going forward. In the 4th
    Quarter of 2008, when Congress was
    crafting bailout legislation, these
    companies spent $17.8 million on
    lobbying–less than what they spent in
    the prior three quarters, probably
    because they were strapped for

    February 10, 2009
  328. Peter Millin said:

    here is a partial list of where the stimulus package spends the money.(source National Review)
    This list will let you know where our money is. I let you decide which one of these actual qualify for stimulus…

    $50 million for the National Endowment for the Arts
    $380 million in the Senate bill for the Women, Infants and Children program
    $300 million for grants to combat violence against women
    $2 billion for federal child-care block grants
    $6 billion for university building projects
    $15 billion for boosting Pell Grant college scholarships
    $4 billion for job-training programs, including $1.2 billion for “youths” up to the age of 24
    $1 billion for community-development block grants
    $4.2 billion for “neighborhood stabilization activities”
    $650 million for digital-TV coupons; $90 million to educate “vulnerable populations”

    $15 billion for business-loss carry-backs
    $145 billion for “Making Work Pay” tax credits
    $83 billion for the earned income credit
    $150 million for the Smithsonian
    $34 million to renovate the Department of Commerce headquarters
    $500 million for improvement projects for National Institutes of Health facilities
    $44 million for repairs to Department of Agriculture headquarters
    $350 million for Agriculture Department computers
    $88 million to help move the Public Health Service into a new building
    $448 million for constructing a new Homeland Security Department headquarters
    $600 million to convert the federal auto fleet to hybrids
    $450 million for NASA (carve-out for “climate-research missions”)
    $600 million for NOAA (carve-out for “climate modeling”)
    $1 billion for the Census Bureau
    $89 billion for Medicaid
    $30 billion for COBRA insurance extension
    $36 billion for expanded unemployment benefits
    $20 billion for food stamps
    $4.5 billion for U.S. Army Corps of Engineers
    $850 million for Amtrak
    $87 million for a polar icebreaking ship
    $1.7 billion for the National Park System
    $55 million for Historic Preservation Fund
    $7.6 billion for “rural community advancement programs”
    $150 million for agricultural-commodity purchases
    $150 million for “producers of livestock, honeybees, and farm-raised fish”
    $2 billion for renewable-energy research ($400 million for global-warming research)
    $2 billion for a “clean coal” power plant in Illinois
    $6.2 billion for the Weatherization Assistance Program
    $3.5 billion for energy-efficiency and conservation block grants
    $3.4 billion for the State Energy Program
    $200 million for state and local electric-transport projects
    $300 million for energy-efficient-appliance rebate programs
    $400 million for hybrid cars for state and local governments
    $1 billion for the manufacturing of advanced batteries
    $1.5 billion for green-technology loan guarantees
    $8 billion for innovative-technology loan-guarantee program
    $2.4 billion for carbon-capture demonstration projects
    $4.5 billion for electricity grid
    $79 billion for State Fiscal Stabilization Fund

    February 10, 2009
  329. Paul Fried said:

    To fix the economy and pay for it, we need to look at the increasing income gap between the richest and poorest in the US. The fact that CEO pay in the US is hundreds of times more than the lowest paid worker in those organizations, and a far greater gap than in Europe, is not due (Ray), to the idea that these CEO’s are working far harder than the lowest paid, or that their work output and efficiency have increased more than the lowest paid, and more than CEO’s in Europe.

    Ray, you say that the richest pay 70% of the taxes, but 20% of the richest in this country own 85% of the wealth. The top 1% of income earners earn 20% of the nation’s wealth.

    So to be fair, when it comes to that slice of the population with more disposable income, the percent of revenue their taxes contribute to the pot should always be larger than their percent of overall income, or their percent of wealth.

    So for example, if the richest 20% of the country owns 85% of the wealth, this group should not be contributing a mere 70% to overall tax revenue, but should be conributing more than 85%.

    And when Republicans debate taxes, we should be quoting what Eisenhower said about taxes in an age when it was assumed that the wealthy would pay a far larger share than they currently do. In Ike’s day, a reduction for the rich from a 92% rate to a 91% rate was workable.

    Right now, for the wealthy, greed is treason. If 80% of the population owns only 15% of the wealth, most of us have little power to turn the economy around except by pressuring our elected officials to tax the rich and spend it wisely. Twenty percent of the population owns 85% of the wealth, so they have most of the economic power to make a difference. If people are still losing their jobs and the economy getting worse, then the richest 20% are not doing their part.

    This is where taxation with representation is a good thing.

    On a global scale, governments in Europe and Asia are fearing mass protests and unrest. Eventually, this would also happen in the US as well. You can gather a bunch of police in St. Paul at the RNC to control a focused crowd of protest, but you can’t do this if the protests are breaking out in every major city, and in smaller ones as well. If we bail out Wall Street but the taxpayer doesn’t get any stock in the rescued banks, the police may be more in sympathy with the protest than with the necessity to end it.

    Continuing to press for failed Republican policies of tax cuts will only result in far greater problems.

    February 10, 2009
  330. Peter Millin said:


    Is there any room for spending cuts in your opinion.
    Or is it just raise taxes on whomever?

    Speaking of rich President Obama makes $ 400000 is he considered rich?

    February 10, 2009
  331. David Henson said:

    Paul – don’t you see any relationship between the growth in government and the growth in income disparity? I assume you agree that both have occurred over the same time period but do you think there is no causal relationship? I wish pro big government liberals would answer this question as it seems critical.

    February 10, 2009
  332. Ray Cox said:

    People can talk ‘class warfare’ all they want, but the bottom line is still out there—-how much money does Minnesota need to operate properly? That is the question that truly needs to be answered now since we are truly in a deep, deep recession. I do not think you can find one viable economist that will advocate for increasing taxes in a situtation like we are presently in. President Obama has ‘seen the light’ since his election promises of raising taxes. I can only assume he has been talked to by econmists louder than he has by his campaign workers.

    Paul F’s comments on high earner income ends up being much like a ponzi scheme. If you raise the tax on high earners up to 91%, what is your plan when government finds out that they don’t generate enough revenue? Remember the child’s verse about the goose and the golden egg.

    I think the price of government is what really needs to be examined. I believe we are now at about 16.6% or so. The legislature actually has to acknowledge the POG in formal action every two years. Historically, I believe the highest percentage we have been at was 17.4% in the late 1990’s. You may remember that was the time Minnesota was generating billions of dollars in surplus funds and we were sending it back to taxpayers as Jesse checks. We are up from about 15.6% of a few years ago.

    I think we also need to look at Minnesota’s spending as compared to our neighboring states. I don’t have exact figures, but I believe we spend about $1,200 more per capital than Wisconsin does. Why? We spend about $2,000 more per capita than Iowa..why? If the answer is that we want to operate XXX programs, then I can be OK with that. But if the answer is that Minnesota’s work rules and basic adminsitration are simply dinosaurs, then we need to take this opportunity and reexamine how the state is spending its money.

    February 10, 2009
  333. Paul Zorn said:

    David H:

    You wrote:

    Paul – don’t you see any relationship between the growth in government and the growth in income disparity? I assume you agree that both have occurred over the same time period but do you think there is no causal relationship? I wish pro big government liberals would answer this question as it seems critical.

    Two things:

    1. If you want to respond to “Paul” please make it clear which one you mean. There are at least two of us out here, and though I suspect we share some opinions we’re not identical.
    2. Do you see a link here? I’ve heard “big government” blamed for a lot of things, but a charge promoting income disparity seems counter-intuitive. Most anti-big-government complaining I’ve heard worries about big government’s supposedly excessive fixation on income equality. Remember all that stuff about Obama’s “share the wealth” comment supposedly revealing his socialistic tendencies?

    One standard measure of income disparity in a country is the Gini coefficient, a number between 0 and 100. (High numbers mean high disparity; low numbers mean relative equality.) Gini coefficients are used by everyone from academic economist to the CIA, and it’s easily seen that, among rich countries, those with the lowest Gini coefficients are the Scandinavian countries, which have big governments by any standard.

    So … I’m confused. Do I understand your question correctly?

    February 10, 2009
  334. David Henson said:

    Paul Z, if bees put honey in 100s of hives all over the forest verses putting all the honey in one big hive which scenario would lead to a few big fat bears and lots of very skinny bears?

    Maybe I just lack the sophisticated understanding of academics and the CIA.

    February 10, 2009
  335. Paul Zorn said:

    David H:

    … if bees put honey in 100s of hives all over the forest verses putting all the honey in one big hive which scenario would lead to a few big fat bears and lots of very skinny bears?

    I like the bears-and-bees fable. Clever!

    But apparently it doesn’t describe reality, since income equality seems lower, not higher, in the democratic socialist states, like Denmark. So what gives?

    February 10, 2009
  336. David Henson said:

    Interesting that the conservatives are Peter and liberals are Paul ??

    Sweden and Denmark are kind of little honey pots if you ask me. I guess the question will be if the EU (assuming it has any taxing authority) brings about greater wage equality.

    Sweden is also a odd socialist example (but often used) as they have been running a thiefdom for centuries … having I think the 3rd largest gold reserves and crown jewels from half the European countries. What is the population? Instead of building an empire they just pillaged and then squirreled it all away. Kinda easy to be generous when it’s not your money to begin with. (disclosure: I’m half Scandinavian)

    February 10, 2009
  337. Paul Zorn said:

    David H:

    You wrote:

    Interesting that the conservatives are Peter and liberals are Paul ?

    Good point. Is it any surprise that, as a liberal, I’m in favor of robbing Peter to pay Paul?

    Sweden … … having I think the 3rd largest gold reserves and crown jewels from half the European countries.

    Hmm …

    I don’t know about the jewels part, but Sweden is nowhere near the top of the heap re gold reserves. According to Wikipedia it’s around #23, just below Algeria and Libya, and above Saudi Arabia and the Philippines. (Portugal, for some unaccountable reason, has huge gold reserves … go figure.)

    You disclosed:

    (disclosure: I’m half Scandinavian)

    This explains a lot. (I’m only 1/8 Scandinavian.)

    February 10, 2009
  338. Peter Millin said:

    I don’t understand the American love affair with socialism, it is a flawed theory.

    History clearly speaks in favor of the US system of capitalism.
    There is no other country in the world that offers the same opportunities and freedom.

    Very strange indeed.

    February 11, 2009
  339. Jerry Friedman said:

    That’s exactly what I was saying when I applied for a job at Enron.

    February 11, 2009
  340. David Henson said:

    Enron is not a free market company. People are not forced to purchase Ipods or Cell Phones. Enron contracted almost exclusively with governments and utilities … these entities made foolish decisions with money that was not their money … just like Northfield invested in a CD scheme that lost millions …. Enron does not represent a “free” market because the losses resulted from “tax” based transactions. Most of investment came from institutional investments (like 401Ks) again favored by tax policy with the errors coming from ‘planners’ handling other peoples money.

    Enron found the big honey pot and jumped right in.

    February 11, 2009
  341. Jerry Friedman said:

    The history of Enron, according to the documentary by the same name, is one of capitalists running amok. Had there been meaningful government oversight, such as stopping their speculative rather than actual accounting practices, Enron would have either prevented itself from its muck up or it would have been stopped at an early point.

    I love a free market with honorable marketeers. The honor code is incompatible with capitalism.

    Who was it that was spiking cigarettes with nicotine, to boost addictions? That’s free market at its best.

    February 11, 2009
  342. David Henson said:

    Jerry – if you want to define Capitalists as people who derive most their income by lobbying for government contracts then I am all behind your being against them. But that has little to do with free markets. Free markets are those where sellers choose “freely” to sell, buyers choose “freely” to buy and prices are set “freely” between the two. In the case of energy, “sellers” are not allowed in to compete (utility), “buyers” have to buy at “prices” set by fiat. In the case of Enron, the government was supposed to oversee the process but was bamboozled by hucksters.

    Cigarettes are allowed to be freely marketed and sold because of the tax revenue. Interestingly, as an aside, Robert Bork was defeated as a supreme court justice by large infusions of money to liberal groups from the tobacco lobby. He had ruled in Puerto Rico that the first amendment did not apply to advertising gambling because if a community could ban gambling itself then it would stand to reason they could also ban gambling advertising. The cigarette companies were horrified that this ruling could be seen as analogous to their operations.

    February 11, 2009
  343. Paul Zorn said:


    You say:

    I don’t understand the American love affair with socialism …

    Are you serious? Among rich countries the US is probably less in love with socialism than any other.

    it is a flawed theory.

    Is any theory not “flawed”? And what brand of socialism to you refer to as “it”? Or are all socialisms, from Scandianavia to North Korea, essentially the same?

    Seems to me that all countries have to choose, in practice, some blend of theories that works as well as possible for them, even if “flawed.”

    February 11, 2009
  344. Peter Millin said:

    Paul Zorn,
    I should have added “recent love affair”. I refer to socialism as to what happens in Europe. North Korea is communism which is a fascist form of socialism.

    I don’t care for either of them, because they both have too much government power to any degree or another.


    The difference between Enron and the government is, that as a consumer you have a choice, not to buy in to Enron or can take Enron to court. Especially if you’ve been miss treated or an illegal act has been committed. Try that with the government.

    February 11, 2009
  345. Peter Millin said:

    Paul Zorn,
    I should have added “recent love affair”. I refer to socialism as to what happens in Europe. North Korea is communism which is a fascist form of socialism.

    I don’t care for either of them, because they both have too much government power to some degree or another.


    The difference between Enron and the government is, that as a consumer you have a choice, not to buy in to Enron or can take Enron to court. Especially if you’ve been miss treated or an illegal act has been committed. Try that with the government.

    February 11, 2009
  346. Jerry Friedman said:

    David: You reinforce my position.

    If capitalism is a “free market”, cigarette companies spiking their products and concealing that fact is taking unfair and hence unethical advantage of buyers. This is kin to adding cocaine to sodas. It’s the government’s role, socialist or not, to put restraints on businesses so the public is not taken advantage of.

    If Enron was supposed to have government oversight and the gov’t was asleep at the wheel (or bribed, or anything else of the sort), then you seem to agree with me that had Enron been properly regulated, everything would probably had worked out fine. Because Enron was given virtually free reign, the public was grievously hurt.

    I am a great fan of merit and accountability. I’d like businesses to thrive and fail based on their own cunning, but not if they commit fraud against the public. I want a minimum of smart regulations, I want a minimum of socialism, to let people be free to buy and sell, and to protect people from crooks in suits.

    February 11, 2009
  347. Paul Zorn said:


    Right on about needing to examine the price of government. You and I might differ some as to what that price should be, but I think we agree that the price should be clearly understood.

    As you say, this price has tended to hover around 16% or 17% in recent years. (I’m not sure what those percentages refer to, but they seem to agree with the state’s own numbers.)

    Is 16% or 17% a fair or wise price? If one sees government spending as purely wasteful (as I know you don’t, Ray), then of course any level is too high. But if you think that a lot of government spending is, or can be, investment in our public and private lives, then the calculation is different. Sure, there are such things as waste and fraud and abuse, and nobody I know supports them. But they’re not the whole story.

    As for comparisons with other states’ spending, I have no reason to doubt your numbers:

    .. I believe we spend about $1,200 more per capital than Wisconsin does. Why? We spend about $2,000 more per capita than Iowa..why?

    Fair questions.

    But isn’t it fair also to ask why Minnesota has long been and remains more prosperous and by most measures more successful than these two neighboring states — despite having had higher taxes here for many, many years? Maybe we’ve gotten something for the extra money.

    If … Minnesota’s work rules and basic administration are simply dinosaurs, then we need to … reexamine how the state is spending its money.

    Yah, you betcha. Begone, dinosaurs.

    February 11, 2009
  348. Paul Fried said:

    David H.: It’s a logical fallacy to assert that simultaneous events are causually related simply because they’re simultaneous. Yes, many aspects of the way we do big government now, including lobbyists and the military-industrial-privatized-security complex, are related to the increase in wealth, but certainly not all of them. Credit default swaps and sub-prime mortgages were not invented by big government, though private enterprise will always try to find ways to work the system to its advantage. Single-payer health care might result in more lower-paid bureaucrats tending the system instead of high-paid health care CEO’s.

    February 12, 2009
  349. Paul Fried said:

    Ray, you’re part right about the goose and golden egg, but you’re barking up the wrong tree. It’s not only the price of government. It’s also that there are things fundamentally wrong with the economy and what some consider the “free market.” It’s built on an incredible amount of waste. We use commercials and ads to convince people to want things they don’t need, and in this way, expect such an economy to continue to grow at a given rate, or Wall Street and the investors might take a hit. We don’t have a sustainable economic vision, but necessity is a mother, and eventually we start hitting the wall.

    If we were focused more on a sustainable economy, it would not simply be a matter of controling government spending. It would also use taxes and other measures to encourage sustainability. If our economy served our needs more than it did the profits of a select few, people could all be employed and work shorter work weeks.

    So you’re commenting more with the symptoms than on the disease.

    February 12, 2009
  350. David Henson said:

    Paul F, trying to have a country where a small group decides what everyone “needs” leads to chaos (as we are now in from promotion of housing) and ultimately civil war when people decide they need “a few things” the planners are not offering.

    Absolute power corrupts absolutely. You and Jerry and Paul Z make arguments based on a fantasy of the honorable selfless government leader who is going to be an incorruptible steward of the nations resources – yet history shows a 1000 times that this is pure fantasy.

    The ideal is decentralized power structures whether private or public that check each other as much as possible. Not big government to regulate big business

    February 12, 2009
  351. Peter Millin said:

    Paul Fried,

    You are right about this:

    It’s built on an incredible amount of
    waste. We use commercials and ads to
    convince people to want things they
    don’t need, and in this way, expect
    such an economy to continue to grow at
    a given rate, or Wall Street and the
    investors might take a hit.

    But who will be the arbitrator of what is excess and what isn’t. Who will decide on how much “stuff” every body needs.

    In a way the current crisis is a punishment for some of the excesses created both by consumers and suppliers. The right “punishment” is to let the market re adjust itself by making people pay for their own stupidity.
    The bailout does the exact opposite, which is wrong IMHO.

    i prefer that the market takes care of itself then have a bunch of politicians try to interfere.

    We don’t have a sustainable economic
    vision, but necessity is a mother, and
    eventually we start hitting the wall.

    You seem to be agreeing with me here??
    The question again is “Who’s vision”?

    Didn’t we create a government “by the people and for the people” and fought a war so that we won’t be ruled by a central government, that is detached from it’s people and decides what is best for us??

    Charging the government with the task of prescribing a “sustainable economy” goes back to the times when George III would decide what is best for us.

    February 12, 2009
  352. Peter Millin said:

    The $500-per-worker credit for lower-
    and middle-income taxpayers that Obama
    outlined during his presidential
    campaign was scaled back to $400
    during bargaining by the
    Democratic-controlled Congress and
    White House. Couples would receive
    $800 instead of $1,000. Over two
    years, that move would pump about $25
    billion less into the economy than had
    been previously planned.

    Officials estimated it would mean
    about $13 a week more in people’s
    when withholding tables are
    adjusted in late spring. Critics say
    that’s unlikely to do much to boost

    In the spirit of stimulating the economy…who wants to go party and spend the $ 13 granted to us by DC???

    February 12, 2009
  353. Peter Millin said:

    Source Washington Times

    Other spending questioned by Republicans — but not considered on the chopping block — are $275 million for flood prevention, $200 million for public computer centers at community colleges and libraries, and $650 million for the digital TV converter-box coupons.
    The list goes on: $1 billion for administrative costs and construction of National Oceanic and Atmospheric Administration office buildings, $100 million for constructing U.S. Marshals office buildings, and $1.3 billion for NASA, including $450 million tagged for science.
    Then there is the $300 million for hybrid and electric cars for the federal government. *The funding includes golf carts for federal workers

    I thought golf carts actually were electric??

    February 12, 2009
  354. Paul Fried said:

    David H: I wasn’t talking so much about a small group deciding, but with a huge and broadening gap between rich and poor, we have a small group of the wealthiest making most of the decisions anyway, so I don’t see it in such pessimistic terms as you do.

    I know there is no ideal and incorrupt leader, but small government and decentralized power is also what anarchists talk about. If everyone just owns a gun, that’s decentralized power for you.

    Truth is, some people are worthy of trust and power, and it’s OK to try to find ’em and have them do the job.

    In past times of emergency — consider WWII — FDR said we needed rubber and steel for the war effort, as well as all sorts of other things, including canned goods. He said we needed victory gardens, so folks grew them. Wasn’t such a bad idea.

    It’s true that centralized leadership like that can miss the mark, especially as far as some local needs and resources go.

    But the free market surely doesn’t do that much better at deciding what we need — sub-prime mortgages, home equity loans to buy stuff, credit default swaps, bundled mortgage-backed securities and ponzi schemes, for example. Gosh, a little more leadership and a little less free market can sometimes be a good thing.

    February 12, 2009
  355. Paul Fried said:

    Peter: I don’t think that sustainable economy means going back to monarchs. Thomas Jefferson warned that we should not privatize the control of money and hand it over to the banks; the constitution gives the power to print and coin money to the feds. Instead, we moved toward a private bank control, to the great benefit of some bankers, but not the common good of the country as enshrined in the constitution.

    February 13, 2009
  356. Paul Fried said:

    Ray: It strikes me that you apply the goose and golden egg analogy backwards.

    I mentioned the growing income and wealth disparity in the US, which has a greater problem in that regard than Europe or Japan, so when I talk of raising taxes on the rich, you suggest that might be like killing the goose that laid the golden egg in order to get all the gold, as the story goes.

    But killing the goose is what the rich have been doing to the middle class and poor:

    Middle class wages have been stagnant or decreasing in the face of rising medicare and social security withholding and health care costs. The tax breaks of Repbulicans have not kept pace with the tax increases for the middle class.

    Consumers are bombarded with new things to want and “need”: Cell phones for every family member, iPods, high speed internet and cable, and other endless gadgets. Consumers kept shoveling out the money, and companies and CEO’s kept raking in the profits in record figures. Then, in order to finance sending kids to college, or keeping up with consumtion, we get low-rate home equity loan offers to take equity out of our homes, so we can shovel more wealth toward the CEO’s, and toward expensive health care.

    If there’s any goose being cut open and cooked, it’s the middle class.

    If we want less and consume less, then gosh, the economy will go sour, and we’ll lose jobs. Some folks don’t want that to happen, so in the spirit of Dubya, they want us to go out and keep shopping. It’s not the answer. Our economy is fundamentally flawed and not sustainable.

    For example, wind and solar power have their limitations, but if we could use more of them instead of coal and oil, we’d help Minnesota economy a bunch; we would not send so much cash overseas and to coal states, where their economies are not sustainable either, but addicted to our energy dollars.

    In November, our total (one month) US trade deficit was smaller than what we spent on foreign oil in one month when the price per barrel hit its peak over the summer in July or June. Economic stimulus that builds renewable energy and shrinks the energy portion of the deficit would soon pay for itself, and it would not kill the goose. During Eisenhower’s time, when taxes were 92-91% on the wealthiest (not counting tax shelters and loopholes), businesses still thrived, and rich folks still bought mansions.

    The suggestion that it would kill the goose seems a stretch. We know it’s not historically true. Are the rich that much more spoiled now, that they’d lose all incentive to live and work if taxed at a higher rate? Maybe it would take a while for the shock to wear off. I don’t know.

    February 13, 2009
  357. David Henson said:

    Paul F, you are against Ipods, enough said – now I know your ideaology will never take hold 🙂

    February 13, 2009
  358. Peter Millin said:

    Paul Fried,

    I wasn’t suggesting that having a sustainable economy means going back to monarchs.
    My point was that we can not let government dictate what qualifies as a sustainable economy.
    This should be left up to the people and their own decision making.

    Sorry for the confusion.

    Seems like the feds take Jefferson’s advice, because we sure do print enough money these days. Out of thin air but printing we do nevertheless.

    February 13, 2009
  359. David Henson said:

    Truth is, some people are worthy of trust and power, and it’s OK to try to find ‘em and have them do the job.

    Paul F the only people worthy of the type of power you describe and those the refuse to accept it.

    February 13, 2009
  360. Peter Millin said:

    Consumers are bombarded with new
    things to want and “need”: Cell phones
    for every family member, iPods, high
    speed internet and cable, and other
    endless gadgets. Consumers kept
    shoveling out the money, and companies
    and CEO’s kept raking in the profits
    in record figures. Then, in order to
    finance sending kids to college, or
    keeping up with consumtion, we get
    low-rate home equity loan offers to
    take equity out of our homes, so we
    can shovel more wealth toward the
    CEO’s, and toward expensive health

    Paul Fried,

    Are you suggesting that this behavior is the fault of the rich?
    Nobody puts a gun to anybodies head to participate in this wild consumerism.
    People have take responsibility for their own actions. If one is foolish enough to make bad financial choices, why does it become the responsibility of those who are more frugal to bail out those who act foolish?

    February 13, 2009
  361. Jerry Friedman said:

    Anthony and Peter: FDR put the U.S. into massive debt to pull us out of the Great Depression. The idea was that money was needed in order to re-stimulate the economy. FDR’s critics believed that the U.S. would never recover, but we did and then some.

    I don’t necessarily that Obama will create the same success as FDR. I only pose that the U.S. was in worse shape back then, and the “stimulus” idea worked great.

    I’m eager to see more reliance on U.S. goods and labor. As a young adult, I used to think tariffs were a bad idea, favoring a more pure idea of capitalism. Now, seeing how corporations — after the mighty profit — send jobs overseas, and after understanding how easy foreign governments trump human rights, labor, environmental, and other safeguards, I’d like to see tariffs or their equivalent back in place, to favor U.S. workers. Capitalism is fine so long as human rights, etc., are not an issue. So I would reduce or eliminate tariffs if foreign governments raise their labor and production standards at least to U.S. levels. I don’t demand that foreign workers get paid identically to U.S. workers, but, for example, foreign workers should have 8-hour work days, truly voluntary and premium-paid overtime, mandatory breaks, etc.

    February 16, 2009
  362. Peter Millin said:


    You are correct about FDR. However FDR didn’t have to deal with Government obligations of medicare and social security.

    Despite on which side of the aisle you sit, this will hit all of us, if we don’t start to become fiscally responsible.

    The stimulus bill is doing nothing more then to reward bad behavior.

    We need political leadership on this issue, not pandering.

    February 16, 2009
  363. Mike Zenner said:


    The stimulus package is nothing more than a drug addict (debt addicted economy) switching from private drug dealer (bank debt), who has gone bankrupt, to a public dealer (Gov debt), who will soon also go bankrupt, to sustain his unsustainable bad habit (excess debt/credit and over consumption).

    The Total Credit Market debt as a percent GDP graph in the link below is all one needs to look at to understand the overwhelming economic issue starring us in the face!

    The expansion of public and especially private debt over the past 25yrs is what has driven the “American miracle” economy. It is nothing more than a massive debt pyramid scheme! Due to this debt I would have to say we are actually in worse shape today than in the 1930’s! This excess credit artificially pumps up the economy with stock bubbles, real estate bubbles, commodity bubbles. What’s next, the renewable energy bubble?

    To work down this Credit/GDP ratio to a level of what we had in say the 1960’s for an economy that is 70% consuming will be nearly impossible. This ratio may actually increase as it did in the 1930’s as the economy contracts faster then people can pay down their debt. This growing mountain of debt can potentially crush what’s left of the so called economy.

    It took 25yrs to build this bubble up and will take probably that long to wind it down, especially if Gov interferes by artificially propping up the debt monster longer with more stimuli, (trying to prop up over priced assets) as with the current package.

    There are only 3 solutions to fix this problem and none are pain free. 1) Liquidation- the bankruptcy and foreclosure of all (banks, businesses, individuals) who are financially mal-invested! This is the CORRECT economic solution, which will clean out the mal-investment(e.g. bubble overbuilding), but the effects to the economy will be devastating (Greater Depression) and you will not hear one politician of any stripe advocate this. 2) Boondoggles- this is the current Stimulus Plan approach, it’s effects will be very short lived and only leads to the inevitable easy political solution which will be, 3) Inflation- this will be the way the Federal Gov will ultimately try to wash away all the debt with cheap monetized money.

    I expect that all Governments of the world will do a coordinated currency devaluation within the next year or so. Much like FDR did in 1933 with Gold revaluation, which helped a lot, but did not clear out the mal-investment. Can you say $6/gallon gasoline! Good news though, now your depreciating home that was $300,000 in 2006 but fell to $200,000 in 2009 will be “worth” the new dollar price of $600,000. Ahh, the magic of the printing press in a fiat money system! Welcome to the United States of Zimbabwe!

    February 16, 2009
  364. Paul Fried said:

    Peter, you write, “My point was that we can not let government dictate what qualifies as a sustainable economy. This should be left up to the people and their own decision making.”

    So you’re in favor of leaderless economic anarchy, so that monied interests that have the most power can exploit the middle class, the weak and the poor with impunity; and then you want to blame the middle class, weak and poor for letting themselves be exploited, rather than blame the exploiters?

    That’s called the bootstrap shell-game (follow the pea under the nut shell, now you see it, now you don’t). When this game is played, it’s claimed that people should pull themselves up by their own bootstraps, and those who fall down get the blame, not only for their own irresponsibility, but for the moral vacuity of the greedy who helped them fall.

    February 16, 2009
  365. Jerry Friedman said:

    Mike: I don’t doubt that the drug addict analogy is spot on. And personally, I favor the bozos who got us into this mess going bankrupt. My understanding of history, however, is that the U.S. was in worse straits some decades ago and after FDR’s stimulus, we more than recovered.

    Paul: You said in a few paragraphs what I said earlier in one word: Enron.

    February 16, 2009
  366. Paul Fried said:

    Peter M and David H, it seems to me that the two of you consistently offer a kind of distorted presentation of the idea of free markets and Adam Smith’s concept of the “invisible hand.”

    As I understand it, Adam Smith believed that, in a well-functioning marketplace, you may have one blacksmith charging $10 for a hammer. If another comes along and makes one that’s just as good, and charges only $1 and still makes a profit, the first will either have to charge less, or change his production methods, or sell only to an elite market that drives BMW SUV’s and feels better about their lives if they pay $10 for a $1 hammer. If the guy selling the $1 hammer consistently makes crappy hammers, he’ll have to adjust too, or lose business. The invisible hand of the market will decide who stays in business, or who has to adjust to stay in business.

    That is, in an ideal, well-functioning system where some multinational corporation doesn’t buy up all the hammer manufacturers, or where the government doesn’t contract to buy a thousand of them for $100 each. Adam Smith came from another time and economic world.

    Adam Smith was not against taxation. In fact, he believed the rich should pay more because they had more disposable income. Adam Smith was not against government, or the need for taxation to pay for roads or government or walls, or a navy or army.

    Sometimes so-called free market advocates claim that the government should not get involved to regulate, or to invest in infrastructure, or public education, or highways, or internet, etc. All should be left to the free market, because free markets have the invisible hand, like a kind of god, to guide them, while governments are always bad.

    I don’t think Adam Smith would agree. But he’s dead, of course, and in light of that, I don’t think the free-market-alone approach makes sense.

    If the human activities of government are always so bad, how can we place so much trust in the invisible hand of the market, which represents the human activities of people, all looking primarily after their own self-interests, or irresponsible urges, or desire for a thousand-dollar trash can, or a new corporate jet, or sub-prime mortgages and NINA loans (no income no asset) so that money and fees can be made off of selling loans to folks who can’t afford them?

    Adam Smith never envisioned a world with multinational corporations, or lobbyists, or a military-industrial complex, or corporate boards of directors where other CEO’s vote in favor of giving a fellow CEO an obscene income, so that they can claim the market supports ALL CEO’s getting obscene incomes.

    The free market Adam Smith described was not about getting rid of government, or the police force, so that everyone can just buy a gun and use bootstrap policing (pull yourself up by your own gun and bootstraps, and let the market for guns decide who lives, and which laws get observed or broken).

    Granted, there are many things in corporations and government that need reform, but the free market alone will not solve them all. Adam Smith never believed that.

    February 16, 2009
  367. Peter Millin said:

    Paul Fried,

    You are jumping to extremes or maybe I didn’t make myself clear enough.

    Of course I am not advocating an economic anarchy. The real answer lies between economic anarchy and centralized market economy.
    I made my point in connection with the current stimulus bill, which is noting more then rewarding bad economic behavior.
    Yes, Jerry I agree that those that have created this mess should go bankrupt, that is exactly my point.
    Where we do differ is and our perception on who is guilty and who isn’t.
    Here is my list of bankruptcy candidates. Financial institutions for creating those nasty derivatives. Certain elected officials that put bad regulations in place that created this environment. People that bought houses and got in to mortgages they couldn’t afford.

    February 17, 2009
  368. David Henson said:

    Paul, In this case I agree with you that the big banks are an illegal trust and should be broken up with the leadership either jailed or told to head off to a tropical island. Obama is not doing this, he is re-inflating a popped tire and is afraid to get it on with the big banks. Not one person in the street that I have ever spoken with(Liberal or Conservative)agrees that the banking elite that got America in to this problem should be bailed out by tax payers and left in power. And yet to my knowledge not one national politician is railing against these bankers – THAT MY FRIEND IS POWER! Obama is in a tough spot because to save America he really needs to become like Teddy Roosevelt or Buford Pusser and give some powerful elites a major walloping.

    February 17, 2009
  369. Mike Zenner said:


    If the definition of FDR’s success is moving unemployment rate from 24% to 17% in 6 yrs, then no.
    The GDP did grow from ’34 to ’37 but if it’s all nothing more than dollar devaluation and Gov deficit spending then it is not REAL growth.

    Did his stimulus save the country from political disintegration, yes.

    The reality is WWII is what ended the Depression. After the complete destruction of Europe and Japan, and 16 years of consumption deprivation of the US, and casting the US dollar as a reserve currency of the world, it is hard to see how we could not have succeeded in growing the economy after the war.

    That said, History may not repeat it self but it sure does rhyme, for those who do not remember their history. I would say we are at about 1930 or 31 rhyming time scale. still need to hit bottom in a year or so, followed by a slow climb from the bottom.

    As Nationalism , Stat-ism, and protectionism (“Buy American” in the current Stimulus bill)grow like it did in the 1930’s throughout the world ,I can also see what the final economic fix might be.. WWIII.

    February 17, 2009
  370. Paul Fried said:

    David H and Peter M: There was a brief piece in the news where Obama and Pelosi were talking about, but for now, ruling out nationalizing banks that were bankrupt. If they have more liabilities than capital, it could help to do this temporarily, but I don’t know why there has been so little interest: 1) fear that the move would hurt the markets more? 2) fear of Rush Limberger and conservative shock-jock backlash regarding socialism? Repug Lindsey Graham recently admitted that nationalizing bankrupt banks may be needed. Perhaps they are just taking a slow approach to an inevitable choice.

    Meanwhile, in Europe, Tony Blair and others in the shadow of Iceland are talking about the need for a new economy based more on values (?) than on short-term profits. As Obama said, Americans now are just as willing and able to work as they were two years ago before the inevitable meltdown increased in pace. Maybe we need to rethink economies so they are more grounded locally (local, green energy for one), and more able to withstand the global economic storms.

    And regarding debt: When banks loan money to 1000 people for homes, they don’t have to prove they have all the money in the vault at that second. They get someone to sign a mortgage, and they consider that mortgage a promise of money, like money itself. They create money out of thin air, out of signed contracts, which they sell. They charge money to do this. If the government were to compete with private banks, and if it were to collect interest, there would be less need for taxes, and more money to invest in needed infrastructure.

    I disagree with the idea that governments creating paper money is necessarily a bad thing. And yes, I have seen the photographs of people in Europe, moving around wheelbarrows of money. I don’t think it has to come to that, or always does. If people are put to work and productive, stimulating the economy, this increases demand, and could offset the effects of decreasing the value of currency.

    The currency in a country should not be based on how much gold is in a vault, but on how many goods and services need to be exchanged. Wealth comes from natural resources, but also from creativity, from intelligence and efficiency, from services as well as goods. People need currency in order to exchange the value of their work for the goods and services they need.

    February 17, 2009
  371. Paul Fried said:

    Mike Z: Yes, it was the war spending, but it wasn’t the war that saved the US from the depression. It was a few things: 1) It was much harder for anti-New Deal industrialists to oppose war spending (they would look unpatriotic). Some of them supported Mussolini and Hitler, but it was like the Dems after 9-11: You’d risk looking unpatriotic if you voted against giving Bush power to invade Afghanistan and Iraq.
    2) Many industrialists profitted greatly from the war spending, so while high taxes were imposed, some still made off like bandits.

    It was not the war, but the war spending, and GI Bill spending, and the spreading of wealth around, that got people back to work and stimulated the economy. The more industrialists and bankers profitted, the sweeter the harsh pill was to swallow.

    We could do that just fine without a war, but we might have to arrest Rush Limberger and Anne Coulter on charges of treason first. They did it at Nuremberg to a German radio propagandist. We may have to do that to the right-wing shock jocks who are plotting the downfall of the US.

    February 17, 2009
  372. Jerry Friedman said:

    Mike and Paul: Paul’s assertions are my understanding of FDR’s economic success. WWII was not the reason why the U.S. recovered, but it was a factor among several other factors.

    Nonetheless, it would be funny (for me) if Limbaugh and Coulter were tried for treason, albeit terribly unconstitutional. Which would make it very unfunny.

    February 18, 2009
  373. Peter Millin said:

    Paul Fried,

    Why do you consistently refer to name calling when talking about the right?

    By doing that you are no better then they are or at least the way you think they are.

    Far left rhetoric is as least a damaging as far right rhetoric is. However this is a free country and you are entitled to your opinion.

    February 18, 2009
  374. Peter Millin said:

    This is a vent.

    Here I am 50 years old. Working all my life with barely a sick day. Always play by the rules. Always pay my bills and mortgage on time…and here we are.

    I bought my house two years for $ 315000 dollars. It is now worth $ 260000. Despite that my property taxes went up 12% this year alone.

    Obama just gave away $ 70 billion dollars of our money to people that don’t deserve it. Bailing out people who maybe shouldn’t have had a house in first place, is just plain wrong.

    I still need to get my three kids through college and every time I turn around more of my money is being taking away from me.

    This is frustrating and certainly not the change I was hoping for.

    February 18, 2009
  375. Mike Zenner said:

    Paul F.,

    You have opened my eyes. More Gov spending is the answer. Looking at the chart below it would appear that we had 25% increase as a percent GDP in Gov spending in 1940 get us out of that crisis. Today, that would translate to $4.2 Trillion increase for say 3 years.

    My question then is why is Obama trimming around the edges with $789Bil when we need something like $4.2 Trillion? And if we are not going to spend it on weapons production then where does it go?

    Also, you are right about increasing taxes to. In the graph you can see in charts US had huge tax increases in 1940 and 1941. We need to raise taxes more for all Americans. The treasury said that from 1939 to 1945 the number of taxpayers increased from 4mil to 43mil, with tax rates of 23% on $500 to 94% on $1million!
    Obama, should have kept his campaign pledge to raise taxes.

    How did people survive before 1929 when total Gov spending(Fed,State,Local) only totaled 6-7% of GDP?

    It would appear that empire does have a cost associated with it ?

    February 18, 2009
  376. Mike Zenner said:

    Paul F.,

    You have opened my eyes. More Gov spending is the answer. Looking at the chart below it would appear that we had 25% increase as a percent GDP in Gov spending in 1940 get us out of that crisis. Today, that would translate to $4.2 Trillion increase for say 3 years.

    My question then is why is Obama trimming around the edges with $789Bil when we need something like $4.2 Trillion? And if we are not going to spend it on weapons production then where does it go?

    Also, you are right about increasing taxes to. In the graph you can see in charts US had huge tax increases in 1940 and 1941. We need to raise taxes more for all Americans. The treasury said that from 1939 to 1945 the number of taxpayers increased from 4mil to 43mil, with tax rates of 23% on $500 to 94% on $1million!
    Obama, should have kept his campaign pledge to raise taxes.

    How did people survive before 1929 when total Gov spending(Fed,State,Local) only totaled 6-7% of GDP?

    It would appear that empire does have a cost associated with it ?

    February 18, 2009
  377. Mike Zenner said:


    So what I think you are saying is that the Fed Gov should spend more to pull us out of the economic crisis? I mean the current $790 Billion is on pare with what the 6% increase that FDR ran up from 1930 to 1939 as a percentage of GDP. The war increased spending to 33% from about 8% of GDP, a full 25% jump. that means we should probably have a stimulus package of $4.2Til, for three consecutive years.

    Also, you are right about increasing taxes. Taxes were increased hugely in 1940 and 1941. The Treasury says that the number of taxpayers increased from 4mil to 43mil from 1939 to 1945, with rates going to 23% on $500 to 94% on $1Million. Obama is going to regret backing off of his tax increase pledge.

    Americans forget that the cost of warfare/welfare Empire has its price!

    February 18, 2009
  378. Paul Fried said:

    Consistently? Not regarding all the right (Peter, you’re on the right, and I’m willing to say I’m sorry that I called you a “free market advocate” — if you want me to).

    But regarding Coulter and Limberger, well, OK, I’m fairly consistent in my approach to them, and I admit I’ve called him Limbo (the Catholic in me?).

    But I’m not always advocating Guantanamo for those two. Other prisons could work. I hear there’s one in Afghanistan.

    Also, that part about prison and treason was a joke, meant to be funny in a dark and unfunny way (Jerry, glad you got it).

    And Peter, I agree with you about home value and bailouts and college for the kids. I feel your pain. You’re reading my mail, as they say.

    February 18, 2009
  379. Peter Millin said:

    Paul Fried,

    Your tone is definetly combative, which i personally don’t mind, because I just be combative as well.

    I use the American Thinker, Heritage Foundation and others for sources. You prefer media matters, Huffington and

    Those sources are not exactly “mainstream”.

    February 19, 2009
  380. Paul Fried said:

    It concerns me that some Republican politicans and media figures (not here at LoGroNo, but elsewhere in the country) are being combative and distorting the history surrounding the New Deal. Such things should be exposed.

    Mike Z., besides the New Deal jobs programs and the war spending, FDR also made some fundamental changes in the way farmers dealt with the markets, and this also helped.

    Steve Conn wrote a recent piece about Republicans trying to revise history regarding the New Deal. I know Democrats, at times, are also accused of this Orwellian revisionism, but Republicans seem to do it often lately.

    Here are some clips on the New Deal from an article by Conn, who teaches history at Ohio State U, and who writes for the History News Service. This piece appeared in McClatchey Newspapers:

    Whatever you think of the Obama administration’s proposals, to declare the New Deal a failure gets the history fundamentally wrong. The legacy that FDR created proved remarkably successful and remarkably enduring.

    The New Deal operated at three levels: first, the programs established by the New Deal worked immediately to bring economic relief; second, the long-term changes the New Deal made to the structure of our economy brought the cycles of the economy under better control; and, finally, the New Deal re-shaped the social contract between our citizens and our government.

    We usually associate the New Deal with the programs it created to put people to work, such as the Works Progress Administration and the Civilian Conservation Corps. Republicans hated these programs. They denounced the WPA as “We Putter Around.” The new Republican National Committee chairman, Michael Steele, recently parroted this accusation when he tried to explain that the government never creates jobs, just work.

    But the New Deal did provide jobs to hundreds of thousands of unemployed Americans, and while they “puttered” those workers managed to build tens of thousands of bridges, paved countless miles of roads, and planted 3 billion trees.

    It’s certainly true that those programs by themselves did not end the Great Depression, though they did ease the crisis for the families who gained an income because of the New Deal. So while these short-term programs operated, the New Deal created a set of long-term structural changes to the economy whose impact lasted well beyond the Great Depression.

    A few examples: Our bank deposits are protected by the Federal Deposit Insurance Corp., and the integrity of stock market transactions is guaranteed, or is supposed to be, by the Securities and Exchange Commission, both created as part of the New Deal. Most important, with the passage of Social Security in 1935 future generations of American workers could look forward to a more secure old age.

    Few would argue that these New Deal initiatives have been anything but successful in the roughly 75 years since their creation. Former President George W. Bush wanted to privatize Social Security and do away with FDIC. Notice that Republicans aren’t talking about that any more.

    Finally, the New Deal altered the relationship between government and the economy. After World War II, Republicans and Democrats agreed that the government should take a more active role in regulating the economy, that it should use economic policy to promote the greatest good for the greatest number, and that it was obligated to provide a social safety net. They might quibble over the details, but there was a broad consensus around these points.

    The result of that consensus was the greatest expansion of the middle class the country has ever experienced. The growth of the economy from the 1940s through the 1960s was widely shared. Conversely, when the economy did go into recession during those decades, the supporting frameworks set up by the New Deal helped keep those downturns relatively short.

    In the early 1980s, under the leadership of Ronald Reagan, conservative Republicans set about dismantling this system.

    (Paul adds here: this dismanteling continued under Clinton, with the help of some of the folks in Obama’s administration; this should make Republican Free-Market fans glad, but should strike fear and concern in the hearts of the rest of us.)

    Regulations were gutted or not enforced, the social safety net was largely unraveled, and government tax policy shifted money from the middle class to the wealthiest. Since 1980 the result has been a nasty recession in the early 1990s, caused by the failure to regulate the savings and loan industry, and two devastating downturns, one in the early 1980s and the one we’re in right now.

    More than that, during the 30 years in which we’ve moved away from the New Deal, the middle class has stagnated. As wealth and assets have shifted to the top 10 percent, the middle class has survived largely on credit cards and home equity loans. Now millions have no way to pay that piper.

    That’s Steve Conn’s opinion anyway.

    But if you’re a free-market conservative Republican, and if you believe that people should always pull themselves up by their own bootstraps, here’s another solution: As the real income of the middle class shrinks, and while the rich get richer at an exponential rate, the middle class should simply sell their homes, take a loss, move into trailer parks, and eventually tents, and put the kids up for adoption.
    Maybe some rich family will adopt ’em, and if there are a few kids left over, they can be hired help and mow the lawns.

    While the richest 20% (and especially the richest 1%) is getting richer, the serfs should simply be responsible for themselves and downsize on their way to the poor-house. And then when folks talk about raising wages or shifting the tax burden, like Ray Cox recently here at LoGroNo, you can talk about killing the goose that lays golden eggs. Maybe that will hold ’em off for a while.

    That is, if you’re a conservative, free-market, bootstrap-loving Republican, promoting this kind of personal responsibility (in isolation from just as serious questions about an irresponsible society and system) is the sure way to arrange for the death of your party–don’t you think?

    Instead of the stimulus package, Obama might have just admitted that 20% of the country owns 85% of the wealth, so the richest 20% should hire the other 80% to shovel their walks and wash their windows, and maybe donate some money for the building of Hoovervilles, so the workers can have a place to sleep at night. If you tell them it’s their patriotic duty, the rich and the free market may just take care of it. Ya think?

    February 19, 2009
  381. Mike Zenner said:

    Paul F,

    I did mean to send 3 responses above, I thought the first two were lost to the internet ether, so I tried resending 2 new messages the best I could recall.

    I hope you aren’t grouping me with Republicans? I have equal contempt for both parties. I believe they both work for the moneyed elite class.

    I am not trying out Republican revisionism on FDR, just stating some facts from the time. Actually, I very much respect him for his leadership skills, and I am intrigued by the legacy of the monumental projects that New Deal had built.

    However, unlike the 1920’s and early 30’s when Gov used to have balanced budgets, where we could afford to do a some deficit spending. Today its a different story where Gov,corporations (especially banks),and individuals are choking on massive debts. Inflating the debt pyramid (I posted above) with more Gov debt due our kids just doesn’t make sense if it is not going to have a strong return on investment.

    My idea of a good ROI with the stimulus money would have been to build a literal interconnected smart Grid of HVDC power that spans the whole continent. HVDC can be buried underground. once in place the energy investors can build their renewable and conventional energy systems where they can get optimized operation and power can be directed to loads anywhere in the country. An REA upgrade if you will!

    Bottom line, We can’t keep spending our way (both public and Private) to prosperity like we have been the last 25 yrs. Until we direct resources into a sustainable economy of savings and investment we will continue our decline.

    Paul, you are correct about the concentration of wealth at the top. It peaked in 1929 just like it has today. The coming years of bankruptcies, regulations ,taxes and jail time(Bernie M. etc) should re balance the wealth spread. No matter what economic system your under, the serfs always take a beating!

    February 19, 2009
  382. David Henson said:

    Two points that have been bothering me in this discussion:

    1) The term “free markets” is used in a way that concerns me. “Freedom” is really the goal. To the degree that citizens are “free” then “free markets” are a given. But just having “free markets” is not the same as “freedom.” Even if “freedom” is bad for ‘the economy’ then that is too bad for the economy. And “freedom” is very bad for a super socialist controlled state that makes economic choices for its citizens.

    2) This idea of ‘did the New Deal work or not work’ sort of ignores the million other non-socialist non-governmental factors at work. Factors like ‘automotive technology,’ ‘telecommunications advances,’ ‘cheap land,’ ‘war created markets,’ ‘technology usurped through war,’ ‘immigration,’ and ‘ballooning demographics,’ etc etc.

    February 21, 2009
  383. Paul Fried said:

    Some clarifications:
    1. I’m in favor of economic freedom, but I’m in favor of achieving it by limiting mega-corporations and monopolies and abuses of individual freedom as much as I am in favor of individual freedom. Oppression comes not only from socialist governments, but perhaps even more often by abuses of wealth and power. Lobbyists are hired to promote legislation that favors rich corporations, favors off-shore corporate headquarters and outsourcing of jobs, etc. This is not a simple free market, but the use of wealth and power to accumulate more wealth and power at the expense of many individuals’ freedom and the commom good.

    1. Discussion of the common good has become hijacked by anti-tax advocates. The US wasn’t founded on the idea of no taxes. The founders were in favor of no taxation without representation. We fail to use our power and freedom to let our elected officials know about our priorities and opinions when it comes to taxes and other policies, so we get what others pay for instead of real participatory democracy.

    2. Having some things paid for from public funds is a good thing, especially if there’s democratic consent involved: Highways, schools, single-payer universal health care, and at least temporary nationalization of failed banks can be good examples. This is not socialism, and it is a stretch to compare it to the restriction of personal freedoms in an oppressive socialist system.

    February 21, 2009
  384. David Henson said:

    Paul F, if you read Jefferson – it appears we threw out the constitution regarding banking to our peril along time ago. Maybe the US citizens need to revisit some of these issues before the country is totally ruined.

    It may be said that a bank whose bills would have a currency all over the States, would be more convenient than one whose currency is limited to a single State. So it would be still more convenient that there should be a bank, whose bills should have a currency all over the world. But it does not follow from this superior conveniency, that there exists anywhere a power to establish such a bank; or that the world may not go on very well without it.

    I consider the foundation of the Constitution as laid on this ground: That ” all powers not delegated to the United States, by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people.” [XIIth amendment.] To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.

    February 22, 2009
  385. Peter Millin said:

    For those who are interested David Bly and Kevin Dahle will have an open town meeting in the Public Library.
    They are looking for input on the MN budget.

    Be there.

    February 22, 2009
  386. Griff Wigley said:

    When is the town meeting, Peter? I don’t see anything about it on their blogs.

    February 23, 2009
  387. Peter Millin said:


    I saw a notice of this in the Northfield News weekend edition.
    It almost looks like an attempt to keep this low profile. The notice was tucked away among other things and it didn’t have a date or day on it.

    I read it yesterday and it said that the meeting was tomorrow. However there was no date only the time and location, so now I am not sure if tomorrow meant Sunday or Monday night.

    In any case I will drive by the library tonight after work.

    February 23, 2009
  388. Peter Millin said:

    Thank you David Bly and Kevin Dahle for organizing the town hall meeting yesterday.
    30 – 40 people were present and the meeting took one hour due to another meeting scheduled after it.

    The problem of the Minnesota budget problem is enormous and will require political will ad leadership to solve. It became quiet apparent that the congress and senate do not have an alternative plan to our Tim Pawlenty’s.

    Instead of stepping out ahead of the issue the DFL has decided to dissect the only existing plan.
    I got a small glimpse of how difficult it will be, especially for the DFL, to propose true alternatives. A lot of special interest groups will push hard to keep “their” programs funded and alive.
    Last night the ” ending poverty by 2020″ was present with several members to push their agenda.

    There is also an absence of of political will to address some of the fundamental structural tax issues as reported to our leaders as early as 1995, by the Budget Trends commission.This commission was charged to give policymakers a clear picture of the future budget challenges. So, why is it being ignored?

    My sense is that following those guidelines would force lawmakers to make unpopular decisions. These would jeopardize their changes of re-election. Instead of leading and making fundamental changes it is much easier to put of those decision and revert to a patchwork of fixes.

    Expect more of the same. Higher spending, more debt and more taxes and fees.
    Doesn’t look like “change” to me.

    Paul Zorn
    If you feel you want to pay more taxes..”write a check” and send it to St. Paul. I am sure they can use it….LOL;

    February 24, 2009
  389. Jerry Friedman said:

    Peter: Thanks for reporting on the meeting. Although please don’t ask Paul to send extra tax dollars to St. Paul. I am qualified as a stimulus recipient. He can send his surplus cash to me and I will spend it in Northfield.

    February 24, 2009
  390. Paul Zorn said:

    Peter and Jerry:

    Rumors of my surplus cash are highly exaggerated. And having heard just this morning that I’m in line for a (dental) crown, I may be taking up a collection among LoGroNo addicts.

    Peter? Jerry?

    The serious point I was trying to make at last night’s meeting was that, in times like these, “revenue enhancements” simply can’t be off the table — gubernatorial pledges or no, and despite the predictable howls of “class warfare” from the chorus stage right. New revenue might be raised in various ways (taxing clothing, raising some top rates, etc.) but I see no way around new revenue, especially when more and more of our fellow citizens can be expected to be out of work entirely. Sure, we should economize wherever possible, and perhaps some people would appreciate the symbolism of legislators themselves taking pay cuts.

    But getting serious about addressing deficits, some one-time and some systemic, while paying due attention to maintenance (in all senses of that word) will take more than symbolic posturing. It will take flexible and creative thinking about what we want and need, and how to pay for it. And it will probably require more money from some sources to compensate for getting less from others.

    Holding such opinions, I can hardly excuse myself from paying some share of the freight. When I said so in last night’s meeting the expected response came right on cue: Just send it in.

    Sure, I can do that, but I want others equally or better able to pony up, too. We’re in this quagmire together.

    February 24, 2009
  391. Peter Millin said:

    Paul Zorn,

    I suspect that we will be hard pressed not to raise new revenue through taxes. Despite my resistance to support bad fiscal policy and budget mismanagement.
    My hope is that we will apply “the rule of necessity” to the spending part as well.

    Problem is that while everybody sees the necessity for spending cuts, everybody wants to protect their own pet projects.
    The shift to determine the actual role of government as a whole would certainly aid in the process.
    But in the current hysteria and anxiety surrounding the economy there is no political will for that.

    As a result we will see “token cuts” and higher taxes.

    February 25, 2009
  392. Patrick Enders said:

    Breaking news: Apparently, there are still three branches of government in Minnesota.

    Challenging Gov. Pawlenty’s power to cut the budget himself, a judge Wednesday halted some spending reductions and set the stage for a showdown between the governor and DFL legislature.

    Ramsey County District Court Judge Kathleen Gearin said the governor “trod upon the constitutional authority of the legislature” when he unilaterally cut the budget last summer through an acton known as unallotment.

    “The authority of the Governor to unallot is an authority intended to save the state in times of a previously unforeseen budget crisis,” wrote Gearin. “It is not meant to be used as a weapon by the executive branch to break a stalemate in budget negotiations with the legislature or to rewrite the appropriations bill.”

    (fixed HTML/blockquoting.)

    December 30, 2009
  393. peter millin said:

    Pawlenty has done what the legislator was unwilling to do.
    I believe that the democrats knew very well that their budget wouldn’t be accepted by Pawlenty, but they refused to make compromises.

    It was a calculated move by the DFL to push the responsibilities on cuts to the Governor. That way they could avoid making the necessary cuts themselves and it gave them enough political cover for the next election.

    The theme of the next election will be Pawlenty is the bad guy and we are the good guys…LOL.

    Unfortunately both approaches don’t help the situation very much.
    At the end of the day none of the structural issues have been addressed, and the political game surrounding our money will continue.

    The game of finger pointing continues and in the end we the people are left holding the bag.

    We need leadership that is willing to make necessary cuts and uses prudence and honesty in budgeting.
    A good step would be making a budget based on actual revenue and not on projected revenue. Another good step would be to slow the growth of the budget to the rate of inflation.
    Only spend what you have…..geez there is a concept.

    December 31, 2009
  394. john george said:

    Peter- That is the problem with your furi’ners (no racism intended)- you always come up with something that is un-American. Only spend what you have? LOL! Just think where we might be without all the toxic mortgages in the banking system and unfunded mandates in the legislative branch.

    January 2, 2010
  395. Paul Zorn said:

    Peter, John:

    Whether taxes and budgets are too high or too low in Minnesota is an interesting question.

    But Judge Gearin’s ruling was about something else: whether the role Gov Pawlenty played in the budget process was or wasn’t constitutional.

    January 3, 2010
  396. David Ludescher said:

    Patrick: Do you have the reference to the actual case?

    I wonder how the judge thought that she had the constitutional authority to be involved in the case. It appears that an intended beneficiary of an unfunded program sued the governor.

    If this case is allowed to stand as precedent, the legislature could, in theory, mandate all kinds of unfunded programs. And, worse yet, any politically aggrieved party could take their issue to the courts, creating a hopeless mess.

    I don’t see that the governor had much choice. If there wasn’t enough money to pay for all of the programs, what was he supposed to do?

    January 4, 2010
  397. john george said:

    Paul Z.- Yes, that is the question. When I heard about Gov. Pawlenty threatening to do that, I wondered if this is a way to balance power between the legislative branches. Pawlenty does have the authority to completely veto the budget. Then, the legislature can see if they have enough votes to overturn that veto. The concept of line-item veto is an interesting one. No matter what political stripe the governor might be, it allows for funding of those services that everyone agrees are necessary until the ones in question can be delineated further. I’m no constitutional law expert by any means, so it will be interesting to see how the courts rule on this.

    January 4, 2010
  398. john george said:

    David L.- Enter the word “deficit.” Whether the budget is one thousand, one million or one billion over revenue projections, the fact of the matter is that there is not enough money. The question I see in this is whether someone is willing to do something about it or just keep their head in the sand and pass the problem on to future generations.

    January 4, 2010
  399. Jim Haas said:

    This has been a worthwhile discussion and I look forward to more give-and-take about the state’s financial health. But very few of the 400+ comments respond directly to the original question: How would you balance the state’s budget? (That’s a paraphrase, not a quote). There has been some discussion of revenue (extending sales taxes to clothing and lawyers’ fees and such), but almost nothing specfic regarding cuts. Real, substantial, non-technical cuts in state spending. Though I do not identify with those who decry government; who assume that government is inefficient or corrupt or wasteful or evil; or who think lowering taxes will spur development, I DO think there is a lot that state government does which isn’t necessary or could be done better and cheaper by local governments or the private sector. It might be fun to identify one thing each week that the state spends money on and see whether that thing is worth doing at all or worth doing with less. Kind of like Ludescher’s zero-based budgeting idea (I was around during the 70’s ecomonic downturn and remember zero-based budgeting fondly).

    My nomination for the chopping block: driver licenses.

    Most people who get a DL have completed a driver education course. Presumably, that course is a worthy investment because it makes for safer drivers. But I would theorize that the possession of a driver license in no way contributes to public safety. It is proof of nothing, save a rudiemntary vision exam and a heafty fee. Whay do we spend millions of dollars issuing and re-issuing driver licenses? What justification is there for this expenditure? What would happen if the state simply got out of the DL business?

    January 4, 2010
  400. Jim Haas said:

    The FY 2009 operating budget for the Driver and Vehicle Services Division of the Department of Public Safety was just over $71 million.

    January 4, 2010
  401. Sean Fox said:

    Jim do you have any evidence that the fees charged for drivers licenses don’t already cover the cost of that program? Since this same agency also collects vehicle registration taxes (which are far more than $70 million/year) I’m guessing this is an agency which raises more money in fees than it spends. So if you’re suggesting that eliminating some/all of it then you’ll have to explain how that’s going to help to balance the budget if in fact it reduces revenue more than it reduces spending.

    Then of course there’s the issue that drivers license are widely used as legal id so there would be a strong argument that we’d need a system of issuing id’s even without the driving part. And of course some people might suggests that having anyone allowed to drive (12 year olds? repeat drunk driving offenders? ) might not be a great idea. And if you’re going say some people can drive and some people can’t then you’ll need a system for tracking those people (which sounds a lot like a driver license system). Also, all other states require drivers licenses and while they’ll happily honor minnesota-issued licenses I’m guessing they’d be less than happy about a “anyone who claims to be from minnesota can drive on our roads” arrangement. So it would likely mean Minnesota drivers would need to obtain a license in some other way (Federal driver’s license anyone?) in order to drive out of the state.

    January 4, 2010
  402. David Ludescher said:

    Jim: I don’t know how to balance the budget. But, I do know that the courts telling the governor that he has to spend money on programs that are unfunded doesn’t help, and may be the worst possible way to get a balanced budget.

    January 4, 2010
  403. Paul Zorn said:



    … the courts telling the governor that he has to spend money on programs that are unfunded …

    would be a bad way to set or balance budgets. But this hasn’t happened in the present case. To repeat, Judge Gearin’s ruling was about the governor’s role in the budget process, not about whether too much or too little is being spent.

    January 5, 2010
  404. David Henson said:

    Peter, I think all the government spending benefits many businesses and gov’t employees and these businesses and employees don’t want to lose their piece of the pie even knowing the system overall is failing. This is the long term evil of governmental growth. Unless something huge can be done (like when the phone system was deregulated but on a massive scale) then the system will have to completely fail like the USSR … which will be sad and painful.

    January 5, 2010
  405. Jim Haas said:

    Sean @ 410.2:

    Excellent point about fee revenue supporting state services. I have tried to find out what portion of the Driver and vehicle Services budget is supported by fees. I haven’t been able to figure that out yet. I assume — because a lot of what they do (vehicle registrations and driver licenses) comes with fees — that the fee revenue takes care of a large percentage of the budget. BUT…does that justify the services they provide?

    Also a valid question about the value of a DL for purposes other than driving. A driver license is indeed the most common form of ID, although many people carry several other forms of ID (passport, school ID, work ID, credit card with photo). What I’m trying to get at is Ludescher’s question about government expenditures — that we shouldn’t just assume the value or assume that because a service exists that it should always exist and therefore always without challenge consume fees and taxes.

    Is there some other way to derive some of the benefits [although I’m still not sure that there are very many] of a driver license without spending $71 million each year?

    Next week, I’ll propose another target.

    January 5, 2010
  406. David Ludescher said:

    Paul: I haven’t seen the case. but, I understand that the Judge issued an order advising the Governor that, in her opinion, he had to operate a particular program even though there are unfunded programs. Essentially, the court opined that the Governor doesn’t have the authority to balance an unbalanced budget.

    This is dangerous precedent if upheld. It effectively means that the Governor is powerless to make the Legislature live within budget. Now the threat of a tax (revenue) veto can’t stop the Legislature. There is no incentive for the Legislature to create a balanced budget.

    January 5, 2010
  407. David Henson said:

    Jim, your idea would also strengthen the right to “free assembly” by removing one legal road block.

    January 5, 2010
  408. Ray Cox said:

    David, I believe you are correct in your analysis of what the Judge ruled regarding the food issue before the court. I don’t think she said unallotment is not allowed, but somehow she seems to have stated that the Governor went too far in using unallotment. I’m not clear what that means—if $2.7B is too far, is $1.7B OK? or if not, is $700M OK?

    I’m glad that the Governor is taking this to a higher court for a look as it seems unallotment needs some clarity if a trial court judge can deny the Governor the right to balance a state budget, a requirement in our constitution.

    January 6, 2010
  409. Patrick Enders said:

    A Supreme Curt ruling on ‘unallotment’ seems like a very good idea.

    January 6, 2010
  410. David Ludescher said:

    Patrick: I think that it would have better for Judge Gearin to have told the Plaintiff that the issue is a political problem between the Legislature and the Governor. Like Ray said, all she did was muddy the waters by saying that he can do it but in this case he went too far. We now know less about unallotment than we did before she issued her opinion.

    January 6, 2010
  411. Patrick Enders said:

    She has simply issued an injunction pending resolution of the issue. Now we’ll go go a higher court and find out whether or not the plaintiffs were right. The injunction will end once that is determined.

    January 6, 2010
  412. john george said:

    David & Patrick- If I were a betting person, I would put money on odds that either side will not be satisfied with whatever decision is handed down, and we will see a few years of attempts at legislation to “correct” the procedure.

    January 6, 2010
  413. Patrick Enders said:

    John, I’d guess you are right – though from my point of view, any reestablishment of constitutional limitation upon the Governor’s declared right to set his own budgets would be an improvement over the present situation.

    January 6, 2010
  414. Ray Cox said:

    Minnesota realized a problem decades ago and instituted unallotment. Patrick, without unallotment as an option there could be a constitutional crisis in that if the legislature doesn’t create a balanced budget that the Governor agrees is in order and signs into law, the legislature is in direct violation of our constitutional requirement for a balanced budget. Unallotment also must be available to act quickly when unplanned budget shortfalls are discovered and the legislature either decides not to deal with it, or there simply is not enough time to deal with it in a legislative manner.

    I seem to recall at the start of the 2004 legislative session we discovered tax collections were down and the budget was about $400M off. The Governor used unallotment to correct that deficiency. There was no great huffing and puffing, it was done quickly and reasonably. And it allowed more months for state agencies and local governments to deal with a reduction than if the legislature acted at the end of May.

    January 7, 2010
  415. William Siemers said:

    Jim H….

    I don’t think anyone writing here can say exactly how to balance the budget. All anyone can do is give some ideas that might move the process in the right direction.

    As for cuts in spending…I would start by asking the DFL and the Republicans to reduce or eliminate narrowly focused programs that serve a relatively small number of people who need the government assistance the least. Obviously the impact of such cuts would be small, but they would signal that both political parties are willing to begin to reduce funding to favored constituencies that do not necessarily need the economic assistance that the program provides.

    For example…I think most programs that specifically target the basic economic needs of minority communities are necessary. But do they need funding for every program that promotes their ‘culture’? It seems to me, that in most cases their cultures are alive and well. On the other hand, do cattle farmers need state assistance to increase the size of their herds? Does a specific industry need continuing state ‘incentives’?

    Additional revenue? Eliminate the tribal monopoly on casinos (talk about a program that benefits a few people!), and license state taxed casinos. Expand the sales tax to luxury food and clothing.

    January 7, 2010
  416. Paul Zorn said:

    Ray et al.,

    I don’t know about the constitutional law issues surrounding unallotment (David L’s the legal wallah … maybe he could render an official opinion). My sense (wholly uninformed by the ruling itself, I grant) of Judge Gearin’s point is that (i) she did not diss unallotment itself; (ii) she ruled that Gov P had misused the unallotment process.

    I hope Judge Gearin agrees with my summary, because it makes sense to me. It seems reasonable enough to me that a governor should have authority to withhold spending, even after the budgeting process, in cases where state income goes unexpectedly south, natural disasters occur, etc.

    To unallot at the *start* of the process seems, to put it mildly, imperious. I seriously doubt that lawmakers of either party really wanted the Governor to sit back through the budget process and then swoop in at the end, Caesar-style. Could this guy be running for something?

    January 7, 2010
  417. john george said:

    William- Good ideas, there. When are you going to get on the ballot? Of course, meddling with the tribal casinos begins to cross over into some treaties based on sovereignity. That’s a real hot potato! I could say something here, but I dare not!

    January 7, 2010
  418. David Ludescher said:

    Paul: Your summary is probably what Judge Gearin thought, which means that she had no business ruling on unallotment.

    It seems to me that whether the budget imbalance is unexpected or expected is irrelevant to the constitutional or even the political question. There is not enough money and someone has to do something about it. The governor can’t raise revenue or cut programs on his own. So, what are his options when the Legislature doesn’t do its job?

    January 11, 2010
  419. David Ludescher said:


    I’ve now read the opinion. Your analysis of Judge Gearin’s opinion is almost dead-on. The trouble with her opinion – there is no support for the Judge’s decision. She indicates that the Governor only had two choices – call a special session or he could have vetoed the appropriations bills which passes earlier.

    Interestingly, the Judge points out that the Governor’s office was involved in a lawsuit in 2005 when the Governor called a special session, but money hadn’t been appropriated. The Governor asked for money for “core functions of government”. In that case, the Court intervened and allowed expenditures of money without any Legislative allocation.

    January 14, 2010
  420. Ray Cox said:

    David, you are correct in the 2005 matter. It would have been much better for all of us if the courts had ruled on the lawsuit several legislators brought regarding the Special Master dispensing funds. It was a very, very strange time in St. Paul then. People/groups came marching in and testified before the Special Master to make a case that their funding was part of ‘essential state services’.

    January 15, 2010
  421. David Henson said:

    The rise in gambling has paralleled the rise in irresponsible lending ~ maybe a cause and effect. Our economy is in peril in a way that did not exist when gambling was limited to Vegas. Maybe “Get Rich Quick” signs on billboards and in every gas station is not the way to build a successful society.

    January 15, 2010
  422. Jane Moline said:

    I think we could balance the budget by eliminating redundant legislators–we have too many and we should go to a single house instead of having both the “Reps” and the “Senators”. We should also pare down the numbers–say between 80 and 100 instead having twice that.

    Secondly, I wholeheartedly agree with Judge Gerrin’s ruling–unallotment is not for a petulent governor to use when the legislature refused to institute his vision for a balanced budget–we elected the legislators to legislate, and they presented 2 balanced budgets to the governor–he is the one who vetoed them and decided he had a dictatorship that allowes him to cut whatever he felt like.

    Unallotment was intended to be used in a budget crisis that might occur after a budget is passed and adopted–and when revenues were not as projected or where some other crisis changed the budget picture, the Governor would then be able to save the state some headaches. Instead, Pawlenty is using unallotment as a budgeting method, and that is incorrect, wrong, and heartless in this current economic times. Pawlenty is a sniveling, self-serving, presidential candidate wannabe who is grandstanding for political gain. He is not governing to do what is best for the citizens of Minnesota.

    January 15, 2010
  423. David Ludescher said:

    Jane: The question for Judge Gearin was the constitionality, not incorrect, wrong, or heartless. Unallotment is constitutional. There isn’t anything in the Constitution that says that the Governor has to approve bills that he doesn’t like, or that he has to call a special session.

    I think Judge Gearin will rule otherwise if the matter goes to trial. I think her real intent was political – give the Legislature enough time to do the job that they should have done before the end of the session – pass a balanced budget. The Legislature’s intent was to give the Governor’s a Hobson’s Choice – either approve the spending bill, or force a special session to approve a spending bill. The Governor outwitted them by doing neither.

    Let’s hope that they do their job this time. And, let’s hope that they don’t wait until the last minute to do what they should have done last May. If they have enough votes to override a veto, then fine. But, don’t send another spending bill that is just wasting time to posture for the people.

    January 15, 2010
  424. john george said:

    Jane- Is your comment-
    “…–we elected the legislators to legislate, and they presented 2 balanced budgets to the governor–…”
    correct? I thought the whole brouhaha was over the size of the defcit, which means the budget was not balanced. Perhaps I am missing something here, but when we decide to spend more than we make, then we are not working with a balanced budget.

    January 15, 2010
  425. Patrick Enders said:

    I’m pretty sure the budgets were balanced. The Governor just didn’t like how they were balanced.

    January 15, 2010
  426. David Ludescher said:

    Patrick: I think that the budget would have been balanced if the Guv had signed the bill to raise taxes. One of the points made by Judge Gearin is that the Guv should have vetoed the spending bill if he knew that he was going to veto the tax bill. That is a good point.

    So, no. I don’t think they were even close to balanced at the end of the Legislative session.

    January 15, 2010
  427. john george said:

    Patrick- I was just going by what Rep. Bly said in his post above-
    “…The $5.2 billion short fall will not be made up by using one approach or by a simplistic solution and the more ideas we have to work with the better…”
    Is this some new kind of accounting system, where budgets with short falls are considered balanced?

    January 15, 2010
  428. Ray Cox said:

    This whole mess is completely avoidable if the legislature behaved in a prudent manner…..pass the revenue bill first. That’s a really basic thing to do. You have the fiscal department give advice on what revenue the current tax code will generate. Then you have three simple options before you….decrease the tax code, increase the tax code or leave it the same. If the revenue bill is passed first, then it would be much easier for the legislature to carve up the ‘known’ pie of revenue.

    No business or family could possibly remain solvent if they behaved the way the legislature behaves. Passing all sorts of spending bills when you know you do not have the money to fund this is simply irresponsible. As some politicans have said in the past, if a family operated the way the legislature does they would write checks for all the things the family ‘needed’ during the month and at the end of the month walk into the employers office and say “I need more salary to fund my checkbook”. Obviously that scenario is not realistic. It shouldn’t be an option for the legislature either.

    January 16, 2010
  429. john george said:

    Ray- Sorry, but you have presented an oxymoron- “realistic government spending”, at least the way they go about it now.

    January 16, 2010
  430. Jane Moline said:

    Our elected legislators presented two balanced budgets to the governor–he vetoed because he refuses to raise taxes. Ray makes a good point that they should pass the revenue bill first.

    The majority of the voters clearly voted to raise taxes–we still want schools for our kids, snow plowing for the roads, nursing-care for the elderly, and welfare for the poor. Voters overwhelming rejected the Republican platform. Pawlenty did not get a majority of the votes, due to the three-way race.

    Pawlenty refuses to share power or compromise. He acts like a dictator, and he is impoverishing the state with his policies. It won’t be too long before we see the results of these policies, including the disastorous deterioration of education. The only thing Minnesota has going for it now is that other states are struggling and may not be able to improve. The result is mediocrity across the states–so maybe we won’t lose businesses because they won’t have anywhere better to go–except for a continued out-sourcing of jobs to better educated countries.

    January 16, 2010
  431. john george said:

    Jane- I guess it is a matter of how we look at it. By proposing a budget that falls short of incoming revenue, then this does force some reaction. If it is possible to raise taxes by $5.2 billion to cover this shortfall, then that is definitely a realistic solution, and you can call it a balanced budget proposal. If I figured the math correctly, this averages about $13.00 for every man, woman, and child in the state. That doesn’t sound like much in a society that regularly pay $5.00 for a cup of coffee. The only problem I see is that there are a lot of families that cannot afford even $13.00 per member (part of the spending is wefare, after all). What I do not have is how this would average out over the number of households that can pay taxes.

    Just because of my up-bringing, I tend to agree with Ray above. I approach my spending on what I actually receive for income, not what I think I can shake out of my employer. There are some wage earners who do not have the ability to increase their taxes by $13 per family member. With the progressive tax structure we have, the burden then falls on a smaller percentage of wage earners. Whether a person can justify that or not is where there are political divisions, and some would say moral obligations. Both approaches probably have merit in and of themselves, so we as the electorate do have some choice in the matter depending upon whom we elect.

    January 17, 2010
  432. Ray Cox said:

    Jane, we are far, far away from being an impoverished state. We spend more per capita than most other states. And at our current tax rates I’m sure we are in the top 10 states. The big question to deal with is ‘how much is enough?’. We deal with that in education spending, transportation spending, health care, and on and on. That is why passing a revenue bill first makes a lot of sense…and, as John points out, is why our legisalture will not do that.

    Our state population is staying very stable. Evidence of this will come forth shortly and may end up costing Minnesota a Congressional seat. But, if our population is staying flat, or in a slight decline, then it is more and more difficult to keep expanding government, as you have to keep increasing taxes and fees on citizens to do so. At some point I would think Minnesota would look at reigning in government growth, consolidating local governments, etc. to keep costs in line. The question is when.

    January 17, 2010
  433. Paul Zorn said:


    I’m not sure I follow your $13/person calculation. Dividing a (biennial) deficit of $5.2 billion by Minnesota’s population (about 5.2 million) gives about $1000/person over the 2-year period, or about $1.30 per person per day. To put this in context, note that (if I’m reading the docs at right) the total biennial general budget runs around $35 billion, or about $7000 per person — or about $10 per person per day.

    These are huge amounts, any way you slice them, and irrespective of your tax philosophy. One clear message, though, is that it can’t work just to bill each Minnesotan for the same amount. Some inequality in tax burden will come with the territory if we want to have anything recognizable as a modern state.

    And then:

    Just because of my up-bringing, I tend to agree with Ray above…

    Well … I have no doubt about the quality of your upbringing, or of Ray’s, but one wonders about the relevance of all that to a political discussion. Surely you don’t suggest that those who disagree (with Ray or me or you) suffer from some defect of upbringing.

    January 18, 2010
  434. Paul Zorn said:


    It might indeed be a good idea to see first to revenue and then to spending. No system is perfect, of course, and I’d expect some political game-playing either way.

    And of course you’re right that we’ve long been a high tax, high services (HTHS) state, and that this strategy raises special problems when we have stagnant growth in population or in the economy.

    But let’s also acknowledge two other key things.

    First, Minnesota’s HTHS strategy has actually worked quite well over the last 35 years or so. (I’ve argued this often on LoGroNo, and in many ways it’s self-evident, so I won’t repeat that schtick now.)

    Second, the idea that Minnesota government is unduly and across the board “expanding”, with ever-increasing taxes and fees, is at best debatable, and it’s arguably false. By the State’s computation (go to and click on Price of Government) our price of government has hovered around 16% of state personal income for quite a few years, and has sometimes been higher than it is now.

    January 18, 2010
  435. john george said:

    Paul Z.- Thanks for the correction on the ammounts. My calculator dropped a couple zeros. I just divided the $5.2 billion by the approximate 4 million population of the state. Your numbers slant the budget proposal as being even more realistically unattainable.

    I don’t see how you interpret my upbringing as being some higher plane than others. I only used the comment to illustrate how long I have held my convictions. I still look at the solutions to this problem as being rooted in politics as much as economics.

    January 18, 2010
  436. john george said:

    Paul Z.- Why do we have a $5.2 billion shortfall? Is someone not paying their taxes? Has the economic climate affected revenues?

    January 18, 2010
  437. Ray Cox said:

    Paul, you and I agree on the fact that a high tax, high services state has served Minnesota rather well. We started talking about this model in the late 1950’s and implemented it by the mid-1960’s. So, for the majority of my life I have enjoyed the largess of Minnesota. We also need to look at that model and understand that it worked because we essentially said ‘if we invest in these kids (the baby boomers) maybe they will amount to something, stay around, and pay their taxes’….sort of when we all do better all of us do better philosophy.

    My concern is that with a change in demographics we have to closely monitor our state efforts. Where do we need to concentrate our dollars to again get the biggest bang for our buck. Just because something seemed to work in 1960 does not mean the same model will work in 2020. In fact the legislature has a 2020 Caucus or R’s and D’s that is working on this very issue.

    Thanks for correcting John’s math. Your figures do put things in an even
    tougher light. And you are right that our progresssive tax structure will not collect any shortfall evenly. And our progressive tax structure is one of the reasons we are in the financial problem we are in today. As those well off baby boomers retire and drop their incomes, stop spending like they did, or even move their place of residence to another state, we really, really miss the good old days. And when the economy stalls and the private world reigns in salary and bonuses, we immediately feel it in the state coffers.
    .-= A recent blog post from Ray Cox titled Deer =-.

    January 18, 2010
  438. john george said:

    The letter of the day in the today’s Strib raises a topic often bandied about in government budget discussions. The link for it is here:

    I would really like to find some firm data on this idea. I tried looking at some labor statistics and got nothing I could understand. I’m not sure how the number of state employees translates into their earning power. Also, state employees pay taxes like civilian employees, so some of their wages are offset by their witholdings. It would seem to me that the tipping point this writer refers to would have to be reflected in dollar amounts rather than sheer numbers of employees. Also, how does a person break out those civilian employees who get income from both the private sector and state funded programs, such as medical and elderly care workers? Much as I would like a simple solution, and much as I dislike to agree with David Bly, I have to admit that his statement, “The $5.2 billion short fall will not be made up by using one approach or by a simplistic solution…” is accurate.

    January 19, 2010
  439. David Henson said:

    “In an epic upset in liberal Massachusetts, Republican Scott Brown rode a wave of voter anger to win the U.S. Senate seat held by the late Edward M. Kennedy for nearly half a century, leaving President Barack Obama’s health care overhaul in doubt”

    The Dems should have gone with a decentralized medical debit card for everyone. Big giveaways to banks and insurance companies just never goes over well with the voters.

    January 19, 2010
  440. Paul Zorn said:


    The letter of the day you linked to is arrant nonsense, at least on the statistical front.

    The total number of jobs in the US is something like 150 million. A moment’s research on the web suggests that the total number of federal, state, and local employees is around 17.5 million, or something under 12%. How precise these numbers are is debatable, perhaps, but the writer’s assertion that government employees actually outnumber “productive” ones is absurd — even if one accepts the writer’s equally ridiculous notion that government employees are, as a class, unproductive.

    One wonders why the Strib so often prints such balderdash.

    January 19, 2010
  441. Paul Zorn said:

    David H:

    If you quote something, please attribute the quote.

    As for medical care, the payment vehicle — debit cards, cash, bags of gold dust — matters much less than the program, and (as your mysterious quote-ee says) that’s now in jeopardy. Bay State voters may indeed be mad about lots of things, but they seem to be getting even by shooting themselves, and us, in the foot.

    January 19, 2010
  442. john george said:

    Paul Z.- I’m not sure about your word “arrant”, but I agree with your last statement-
    “One wonders why the Strib so often prints such balderdash.”
    I’ve wondered that for a long time.

    Arrant- is that an amalgam of “arrogant” and “errant?” I’m not making fun of it. I just like that word.

    January 20, 2010
  443. Anthony Pierre said:

    seems like the voters LOVE nekked pics of doods tho

    January 20, 2010
  444. Ray Cox said:

    John, I think what the Strib letter writer was trying to get at is the fact that even in this depression we are in, the total number of government workers on government payrolls expanded significantly….even here in Minnesota. One would think that perhaps the government might be thinking about slightly downsizing their operations in a time when tax revenue is steadily shrinking. But, other than a couple of states, they have not done that. I personally think this is simply because government is too far removed from ‘the people’. If managers in government offices had to follow me and my remaining workers around for a month they might get an idea of what is happening in our economy. But if they have not connection to our private, local economy then they won’t get it.

    January 20, 2010
  445. john george said:

    Ray- The bright side of the increase in government workers during a recession is that it does help aleviate the unemployment problem. Also, since the government is not affected by market pressures or lack of working capital, they can “create” as many jobs as they want. Of course, these jobs do not contrubute any goods to the GDP, but that is something our children and grandchildren can worry about.

    January 20, 2010
  446. Paul Zorn said:


    “Arrant” means something like “utter” or “complete” — and usually has a pejorative connotation. Here’s more:

    I believe the word has etymology in common with “errant”, but probably not with “arrogant”. But I haven’t researched it …

    January 20, 2010
  447. David Henson said:

    Paul, that was just a news story quote from yahoo or somewhere. I think the voters are right that the current plan is no good and will get worse and worse over time. We need a simple decentralized plan that does not wildly pander to insurance companies.

    January 20, 2010
  448. Paul Zorn said:

    Today’s Strib has a worthwhile article on state finances, tax and spending cuts, and their connection to the gubernatorial race:

    The piece includes (hurray!) some useful numbers; largest is the projected $5.4bn revenue shortfall through the 2012-13 biennium. Also included are some projections on what various “revenue enhancements” might bring in if they were enacted. A 10% surcharge on income taxes (an extra $100 if you owe $1000) would raise about $680mn annually, for instance, while extending the sales tax to clothing would raise about $280 million.

    On the spending side, it’s pointed out that Minnesota spends about 70 percent of its general fund on (i) schools, and (ii) health and human services.

    There are some gaps and unclarities among the numbers reported, and (unless I misunderstand) some inconsistencies. But some messages seem clear to me.

    One is that none of the gubernatorial candidates mentioned in the piece, with the possible exception of Tom Bakk, seem willing to discuss the problem forthrightly.

    On the DFL side some of the candidates mention some revenue-raising possibilities, but nothing mentioned in this article would come close to addressing the problem (Bakk may be the partial exception).

    The Republicans are, IMO, even worse. Seifert and Emmer, as quoted here, offer slogans and pieties and unspecified cuts, but no numbers. And both seem opposed to doing anything at all on the revenue side.

    My comment (not necessarily the Strib’s): Neither party comes out looking good—or even grown up—here. But the R’s are worse than the D’s. Thanks mainly to the R’s, serious discussion of the T-word at the state level has become toxic, or even fatal. We won’t solve, or even seriously address, our budget problems until some antidote to this toxin is found.

    January 24, 2010
  449. john george said:

    Paul Z.- I think that antidote may be an increase in our GDP, because even if we do increase our taxes and fees, it still falls short, as your numbers indicate. Somehow, there needs to be an increase of wealth in the state. But then, I’m certainly no economist.

    January 24, 2010
  450. Paul Zorn said:

    John G:

    Sure, having more money around would help with our money problems … point well taken.

    But the antidote I yearned for was specific to our aversion to any revenue-based discussion.

    January 25, 2010
  451. john george said:

    Paul Z.- I know my suggestion doesn’t really address what we have going on right now in the state budget. In my simple understanding of it, it appears a last bienium budget was put together with expectations that the economy would continue to grow at its rate at that time. There were additional spending programs introduced based on this assumption. When the economy turned sour, there was not a cut-back in these extra expenditures. A case in point is David Bly’s introduction of a program to add 40,000 uninsured children to a stae funded medical plan. This is all fine and has admirable motivations. How this was done, though, was to redistribute the funds alloted to Human Services. What actually happened is that about 50,000 nursinghome aides did not get a raise for three years. Nursinghome care is pretty much government funded, because an estate will last about 3-6 months covering nursing care, on the average. When questioned about these care givers not getting a raise, his reply was that he couldn’t do that on the backs of 40,000 children. The elephant in the room is that he provided health care for 40,000 people on the backs of 50,000 employed health care workers. That was the same budget that the legislators voted themselves a huge salary increase. That is hypocracy, IMO, even though the raise was a drop in the bucket dollar wise relative to the total budget. My opinion is that our budget woes have more to do with distribution of available funds. These are tough choices to make in the face of actual dollar shortfalls, but someone has to do it or we will continue on the road to soaring deficits.

    January 25, 2010
  452. Ray Cox said:

    John, distribution of available funds is a huge part of our budget problem. And right along side is deciding what things the state should be doing. Over the past 30-40 years we have expanded areas of state govenment in many, many areas. We may now learn that our ‘day of reckoning’ has arrived. We need to examine whether Minnesota is going to go down a path that will include many new levels of taxation never seen in the state before, or if Minnesota is going to reprioritize spending decisions and deliverly methods….or some combination of both.

    Paul points out the Strib article which was very good in presenting numbers for various taxes, plans, etc. I thought it was interesting that the article noted Mark Dayton’s plan to ‘fix’ Minnesota is to increase taxes on the wealthy by something like $3.2 billion. Then it noted that in reality there would be all sorts of fallout to such a plan and that it wouldn’t end up raising near that level of revenue.

    I do know that taxes are a very tricky issue to deal with at the state level. People react in unpredicted ways many times so what appears to be a good revenue source often doesn’t generate what was planned.
    .-= (Ray Cox is a blogger. See a recent post titled Geothermal System) =-.

    January 25, 2010
  453. Paul Zorn said:


    Indeed, the state needs to decide what to do and what not to do, and how to pay for what it does. None of this will be easy.

    But let’s keep in mind, meantime, that (as I think you and I agree) Minnesota has actually done quite well economically, compared to other states in our region, over the 30-40 year period you reference in #427, during which Minnesota invested in building general prosperity. And (sorry to keep repeating this) state spending on these investments has not been going through the roof: it’s hovered around 16% of state income for a long time.

    It isn’t clear, of course, that the future will be exactly like the past; perhaps it will be very different. But the basic dynamic of prudent state investment in state prosperity has worked well in the past, and the burden of proof is properly on those, like our present governor, who want to change, or even reverse, that dynamic.

    January 25, 2010
  454. Ray Cox said:

    Paul, I don’t think Governor Pawlenty wants to change or reverse the prosperity of our state. Quite the contrary, I believe he wants to do all in his power to make it as successful as he can. But I think one thing you said is the clue to all this discussion: “it isn’t clear, of coures, that the future will be exactly like hte past; perhaps it will be very different.” I am one that believes that the future will indeed be very different from our past. When a State Representative that’s why I participated in the Legislative 2020 Caucus of R’s and D’s who are concerned about Minnesota’s future.

    We have had over a decade of challenging budgets in Minnesota. Is a decade long enough for legislators to look hard and say “things are different here and we need to adjust”. I say a decade is enough to set a pattern, especially when it involves retiring baby boomers. Many DFL’ers are saying that we simply need to ‘tax the rich’ (Mark Dayton, et al) But as the Strib article you referenced pointed out, even going to the extreme of tax raising will not come close to meeting our spending appetite. So, like it or not, Minnesota is probably going to have to adjust its spending. But it is also a good thing in that if the adjustments are done properly, we can get real value, priortize spending, and eliminate wasteful spending. Will this legislature make sensible reductions or just try to support the status quo?
    .-= (Ray Cox is a blogger. See a recent post titled Water Damage) =-.

    January 26, 2010
  455. Jane Moline said:

    Ray, I believe Gov Pawlenty has reversed the prosperity of Minnesota with his myopic policies. And claiming that Mark Dayton only wants to “tax the rich” is a cheap-Republican-shot.

    Minnesota was historically the most prosperous when taxes were the highest. Now, under Pawlenty, we have underfunded every department, including MNDOT, and we have proof of what that led to–with a falling bridge that somehow left T-Paw unscathed. When MNDOT didn’t plow roads, Minnesota was up in arms–and Pawlenty and Mornau had to reverse that decision. Pawlenty has a Q-comp program that does not improve schools but is where he wants to put dollars. Many prominent, wealthy Minnesotans have petitioned the government to tax fairly, and suggested and return higher rates for the rich–because it makes sense, and because they value what taxes pay for–schools, roads, and social services.

    Contrary to popular belief, taxes do not inhibit economic growth. In Minnesota and across the nation, empirical data proves that we prosper under higher taxes. These false claims that raising taxes will mean losing jobs ridiculous in light of our no-tax governor under who we have lost jobs like crazy.

    Most importantly, our taxes are not wasted (except on the governor’s political appointees.) Claiming that government is a big waste of money is a nice claim for those that expect a free ride–there are always stories of inefficiencies, but in the whole government has served the citizens of Minnesota very well. We can always work for improvement–but menawhile, we need to fund schools, our department of transportation, our court system, the DNR, and other social services, including caring for the old, sick and infirm. Most of Minnesota’s welfare dollars go for care for the elderly.

    Right now, our counties and cities are in crisis due to underfunding by the state–and you can lump in our court system, where we are failing to pay for speedy trials or public defenders.

    Our poor are poorer and our middle class is lower class, while failed Republican policies have condemned us to an uneducated work force. I think the future for Minnesota is predictable–a cold Mississippi–unless we can bring about a new “Minnesota Miracle” that should include fair-taxation for the services we expect in a first-class state. Unfortunately, Pawlenty is more interested in his political future than our state’s future.

    January 26, 2010
  456. john george said:

    Jane- Can you name one government program that has increased the MnGDP?

    January 26, 2010
  457. john george said:

    Here is an interesting quote:
    I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
    Winston Churchill

    And, another one:
    Government is the great fiction, through which everybody endeavours to live at the expense of everybody else.
    Frederic Bastiat, French Economist (1801-1850)

    January 26, 2010
  458. Paul Zorn said:


    I didn’t say, and don’t believe, that Gov Pawlenty wants to reverse or end the state’s prosperity. What the Gov seems to want to end is the dynamic of state investment in Minnesota’s future prosperity.

    Perhaps he truly believes that we can have the benefits of public investment (education, health, infrastructure, a healthy environment) without proportional costs, but I doubt it. More likely, IMO, the Gov is driven by some combination of opportunism (gotta maintain those right wing bona fides) and the belief that unwanted state obligations can usually be offloaded to other levels of government and modes of taxation.

    This belief, by the way, seems not unfounded in practice. In the case of Hennepin County Medical Center, for instance, Minnesotans don’t really want the poor dying on the streets, and so Hennepin County probably will do what it can, gubernatorial unallotments notwithstanding.

    January 26, 2010
  459. Sean Fox said:

    I’m not Jane but I wager if MN had gotten rid of k-12 education in the 70’s we’d have a GDP of about zero by now.

    January 26, 2010
  460. Paul Zorn said:


    I’m not Jane, either. But we’ve had this discussion before, at length.

    True, government doesn’t run for-profit businesses, like Malt-o-Meal. But Malt-o-Meal doesn’t—and shouldn’t—dig sewers or maintain the highways or fight fires, even though Malt-o-Meal relies on these services. Different entities, different tasks, but they work together to build economic value. It’s not complicated.

    January 27, 2010
  461. Jane Moline said:

    John: You continue the Republican mantra that by claiming that government is the problem you have made some point, and the next step, which tells the masses that they don’t have to pay for a civil society.

    Under the constitution of the State of Minnesota, we must pay for public schools and provide a “free and appropriate” public education for all of our children (even ones we don’t like or are not related to us.) Lately, we have not wanted to live up to that committment as it keeps going up in price.

    The people love to hear the mostly Republican claim that government is a big waste and does not have to be funded, schools are dens of wastefulness and don’t need anymore money, and really, poor people just need to pull themselves up by their boot straps and don’t need any help–we don’t need taxes to fund the state–we can do it with a casino!

    This is a failure by the people to assume their responsibility to themselves and their fellow citizens. Taxes are necessary and good for paying for services–and in fact do lead to prosperity. Having sewer and water services, garbage collection, public roads that allow for rapid transportation of goods and people, police and court systems, and our public schools all fall into this category. Claiming that government is a waste and the cost should never increase is like claiming that my telephone bill should be the same as it was in 1967. Both our needs and our desire and use of services change over time, as well as the affect time has on the value of a dollar.

    Government is not meant to compete with private business. (In fact, I would say my criticism of government is its reliance on private businesses–like paying private contractors for services, like unneccesary market studies on hotels.) Consequently, if government is contributing to GDP, it is taking the place of a private business.

    That is not the point. We are failing our state and each other by not paying for the services that are needed–yes, we can argue over whether some services are “needs” or “wants”, which is what our legislators should do. But to claim that we can’t raise taxes beacuse we don’t WANT to pay more–well it won’t work at the grocery store–they are not going to give you your groceries for the old price just because you don’t want to pay the new higher prices.

    We NEED to fund our schools. We NEED to pay for elderly in nursing homes. We NEED to pay for our police and fire protection, and we NEED to fully fund our court system. We NEED to pay for the maintenance, including snow removal for freeways, highways, local roads and city streets. We NEED to pay for health care for people who cannot afford it.

    We have serious problems in our economy that affect government–and we need serious people to respond. We need to quit running to the safe but silly argument that government is bad and somehow we can get everything we need without stepping up to the plate and forking over some cash.

    We can argue the different ways that taxes should be charged–I am for progressive, not regressive, so I think we should have an income based tax that taxes higher incomes at higher rates–it is the system in place right now in Minnesota. I have a quirky attitude about corporate taxes–I am against corporate income taxation–I think corporation should pay a fee that reflects services, rather than an income tax. Unlike the supreme court, I do not think corporations are people, and I don’t think they should be taxed (after all, they don’t get to vote.)

    The idea that we should reform government spending by rejecting any tax reform and only paying attention to the spending side is like trying to have a boxing match where we have one arm tied behind our backs and one leg tied up. It’s not a fair fight and we all look a little silly hopping around trying to head-butt government into submission.

    The state of Minnesota is in this economic vortex because of the failed Republican policies spear-headed by Tim Pawlenty and seconded by the obstructionist party members–of course the people want to hear that tax increases are not going to happen–of course they agree with the bald-faced lie that they are taking a reasonable position. It is a lie.

    These are the facts: Minnesota was at its peak financially when our taxes were the highest. We had companies clammoring to come here and set up shop, we had one of the higheste average incomes in the nation, we were prosperous, we had the best schools and the best medical care and all of our kids were above average AND good-looking (except for those with special needs–who then had access to best array of supportive services and education in the nation.)

    I am not suggesting in any way that increasing taxes will mean instant return to those prosperous times. I am just saying that we should not try to dumb-down Minnesota to the dumbed-down expectations of a nation convinced by George W. Bush, Sarah Palin, Rush Limbaugh, and Glenn Beck that there really is free lunch. We need to step up to our responsibilities as citizens and seriously consider the problems of our state budget–and taxes must be part of that budget solution.

    January 27, 2010
  462. john george said:

    Jane, Paul Z., Sean F., et. al.- There is a symbiotic relationship between business and government. Neither can exist without the other. What we need to figure out is that dollar point at which the relationship is not sustainable. That would seem to be a simple economic equation, but perhaps it is not. The solution for this is where political differences enter in, and rightfully so. I contend that neither capitalism nor socialism is the cure all for the ills of mankind, nor the shortfalls in funding. What Ray and I and others have said is that it appears we cannot continue to increase government programs when there is insufficient funds to cover the cost of them. When the economic studies report that there will be a $5.2 billion shortfall over the next couple years, then I think we are at a point of needing to get all the cards on the table. This includes increased taxes and decreased spending.

    January 27, 2010
  463. Jane Moline said:

    John–I guess that is why the funding part should not be cut out of the equation. When you sit down at your “kitchen table” to do your budget, do you keep any increases in your salary for yourself and NOT consider them as contributing to your budget? If you lost your job and did not have an income–would you stop paying for food or your mortgage? Or would you try to economize and still eat? We need to look at the state budget through realistic, not rose-colored-no-tax-glasses.

    January 27, 2010
  464. john george said:

    Jane- I agree. I also agree with Ray’s statement that it is better to know what revenues are available BEFORE we start spending it. There are definitely necessities in the budget, but there is also pork. I suppose what pork gets cut depends a little bit on whose hog it is.

    January 27, 2010
  465. Ray Cox said:

    Jane, I hardly think speaking of Mark Dayton’s plan to increase taxes a minimum of $3.2 billion is “a cheap-Republican-shot.” If you watched Tom Hauser’s Sunday morning political show when Mr. Dayton appeared as a Governor candidate, it was essentially his only platform.

    I will say that you are falling in line for the cheap-DFL rhetoric when you identify the collapsed bridge as a failure on Governor Pawlenty’s part. The failure of that bridge started decades ago. It most likely reached a critcal failure point due to a number of factors which may include summer heat, roller bearing failure, construction repairs being undertaken, etc. etc. The US Dept of Transportation has weighed in on the failure and I’m sure some courts will also weigh in. But I doubt that a defendant in any court action will be Gov. Pawlenty.

    Your opinions on Q-Comp are free to express. Many schools across Minnesota have signed up for the program. Just a few days ago their was an excellent article by a veteran teacher about how he felt Q-Comp really helped his district and the teachers there improve their teaching delivery systems.

    And yes, we do need to pay for our schools. In the 2005 biennium we gave schools slightly more than an 8% increase in funding. In the 2007 we gave them another 8% funding increase. That increase is far in excess of what the vast majority of businesses and families have seen. And it came after a very tiny increase in 2003 and what may again be a very tiny increase in 2011. Higher education during this time received increases as well. So all in all I don’t think Minnesota has been competely neglectful of education funding. But, as many have pointed out, we are dealing with an area of the budget where many try to make the case that there is never enough funding.

    Minnesota has many choices and plans to evaluate in the next couple of years. Our population is not growing. Our working population is shrinking. Our average income is not increasing much. We are projecting somewhere around a $5-6 billion shortfall in the 2011 biennium….depending upon how the legislature deals with our current $1.2 billion shortfall this year.

    Minnesota was at its peak a few years ago because the baby boomers were roaring into their peak earning years. We were buying goods and services for our growing families at a record pace. We were in a period of low cost money and prosperity. That is all changing now. As I’ve said before, the BIG QUESTION
    .-= (Ray Cox is a blogger. See a recent post titled Water Damage) =-.

    January 27, 2010
  466. Ray Cox said:

    sorry….hit a bad key

    The BIG QUESTION for me is how will the legislature deal with all this? Will they study and analyze Minnesota and then come up with plans to get us back on track? Or will they work to preserve a status quo?
    .-= (Ray Cox is a blogger. See a recent post titled Water Damage) =-.

    January 27, 2010
  467. Jane Moline said:

    Ray: There is no evidence that Q-comp works-and you may have a few stories where some teacher had a great experiences, but it is counterintuitive to rely on a system that rewards some teachers over others based on student performance, where student performance is not adjusted for ability.

    And yeah, I will blame the collapse of the bridge on an administration that favors cutting budgets over safety. MN Dot had studies from consultants that warned of weaknesses in the bridge, but because of budget constraints chose to seek other consultant’s advice and ignore what was prophetically correct.

    And quit claiming that all Democrats want to do is tax. Democrats are realists, and know that budgeting should not be one sided–your claim that we can just look at our revenues and then set our spending is simplistic–what if our revenues are not enough to cover our NEEDS–like schools and police and courts and sewer and water? Should we just tell old people to go off in the woods and die? We must consider raising revenues as part of the solution of a balanced budget.

    And explain in real terms how school funding has worked over the last 20 years–your “8%” increases barely have schools back to 1994 funding levels. And this isn’t even real funding. Minnesota is failing to pay to the schools–holding back a quarter of our obligation until August and then telling Districts that have been frugal and saving for budget needs that the state is going to keep even more of the schools money.

    We have proof that Tim Pawlenty’s approach to state funding is a disaster–we live with it every day. Unless Republicans can offer real solutions without resorting to “false facts”, they should get out of the way.

    January 27, 2010
  468. john george said:

    Jane- Here’s a couple thoughts out of an column by David Brooks that I linked in the State of the Union thread.

    “The populists have an Us versus Them mentality. If they continue their random attacks on enterprise and capital, they will only increase the pervasive feeling of uncertainty, which is now the single biggest factor in holding back investment, job creation and growth. They will end up discrediting good policies (the Obama bank reforms are quite sensible) because they will persuade the country that the government is in the hands of reckless Huey Longs.

    They will have traded dynamic optimism, which always wins, for combative divisiveness, which always loses.”

    January 27, 2010
  469. William Siemers said:

    Declaring that things were great when taxes were high is of limited value. Were things great because taxes were high? Maybe…maybe not. If tax burden was the measure of state quality, then New Jersey and New York would be the best places in the country. On the other hand,it looks like increasing revenues has to be part of the budget balancing process.

    It seems to me there are cuts that can be made and there are taxes/fees that can be increased.

    We can cut some school funding. Everything that is spent in schools is not sacrosanct. We can cut some social service spending. We can ask state employees to take a 5% pay cut, or face a 10% RIF.

    We can levy a temporary 10% income tax surcharge. We can extend sales tax to food and clothing. We can allow casino gambling at race tracks. We can try to find a way to collect taxes, or equivilant fees, from ‘residents’ of no tax and low tax states who spent 5 months collecting income in MN but pay no MN income tax.

    Few if any of these proposals will be enacted. And not necessarily because they are bad policy, but because of a lack of political will.

    January 28, 2010
  470. Ray Cox said:

    William, great comments, especially about the tax ideas. Contrary to what Jane has stated, I am not advocating no addtional taxes or that Minnesota may not need some additional revenue. Your comments about expanding sales taxes to pick up the millions and millions of dollars that are spent by people visiting here warrant serious discussion. As you note, a sensible plan that includes spending reductions and revenue increases is most likely what is needed in Minnesota.

    It is foolish to blindly believe that increasing spending on any program automatically makes it better. We have seen Minnesota do that in recent years and we need to make some revisions to that concept. But as I said earlier, we are also navigating in uncharted waters with the retiring of baby boomers and an entirely new economic world situation. Business as usual will definitely not work.

    Jane, no one ever had proof that modular school days worked really well….but it fanned across the nation like a wildfire. No one ever had proof that open classrooms worked really well, but it too ran up and down the education system. Outcome based eduction….another fad that ran up the pole. Maybe Q Comp will help some teachers/districts; I’m sure it will not help everyone. But to condemn districts that are voluntarily enrolling in it I believe is wrong. I’m not faulting Northfield teachers for voting it down because I assume they talked it over and felt it was not for this district. But I do think the choice needs to be left out there for those that do think it will help them.

    Finally, schools surplus funds are being tapped because that is what the law says must happen—-there is no choice in the matter. State law directs that school surplus funds must be used when the state doesn’t have the cash flow to meet its obligations. In other words, schools, which receive almost all their funding from the state, that have saved some of that state money do not get new state money on top of their surplus funds on a temporary basis. That frees up many millions of dollars of cash flow that the state can then use for oblgations to people/organizations that do not have massive cash reserves. Jane, you being a CPA know all about this. This is not really much different from the state law that impacted Northfield and many other schools when I was on the school board. At that time the legislature declared schools would get XX amount of dollars per pupil….unless a district had X percent per pupil fund balance, then they would get $XX-X. In that case the state permanently took some funding away from schools that were managing their budgets well.

    I’m not sure which case of school funding is the best for schools or taxpayers. One thing that does concern me is that if the state withholds payments to schools that have substantial fund balances I know there will be a push to make the ‘delayed’ payment a permanent cut. Since some school districts, such as Northfield, approved substantial voter approved operating levies, one can argue that the state isn’t taking ‘their own state money’ back, they are taking the money that local taxpayers funded to the school district.
    .-= (Ray Cox is a blogger. See a recent post titled NAF Grants Breakfast) =-.

    January 28, 2010
  471. Patrick Enders said:

    Very cute. Gotta love this:

    Last year the lottery generated $482.2 million in revenue, with $118.2 million in profits going to state programs. Forty percent of that money is constitutionally dedicated to an environmental fund, and the other 60 percent — $64.72 million in 2009 — goes into the state’s general fund.

    …”People will say it should go into schools or roads or whatever, but … that’s another way to do the [the stadium],” Pawlenty said during a Minnesota Public Radio program.

    How exactly is the Governor’s proposal different from the state simply buying a stadium for Zigi outright, using general funds?

    Hmmm. Vikings stadium vs. “schools or roads or whatever.” Tough choice.

    February 7, 2010
  472. Paul Zorn said:


    How exactly is the Governor’s proposal different from the state simply buying a stadium for Zigi outright, using general funds?

    Good question. Seems to me, given the fungibility of money, that the difference is almost entirely political. One way or another, the state (i.e., its citizenry) pays.

    I’m not opposed in principle, by the way, to public money contributing toward a stadium. States do, and fund, various things that are arguably recreational or related to quality of life, and a case might be made for a stadium in that category. (Someone else should make that case, as I’m not much of a stadium consumer.)

    I am opposed in principle to politico-financial gimmickry—as we have here—with or over public expenditure.

    February 8, 2010
  473. john george said:

    Paul and Patrick- I found this study by an economist with the Federal Reserve Bank in Kansas City. It is a few years old, but the history of the economic effect of a major league team on a metro area seems consistwent.

    This should cause some people in higher up places to take a serious look at publicly funding a stadium, especially if they fear a downtrun in the local economy if a team leaves. I really do not want my tax money going to build a stadium for a billionaire, but my voice is just a whisper in a hurricane when it comes down to it.

    February 8, 2010
  474. Patrick Enders said:

    The study’s conclusion:
    So does it makes sense for metro areas to use public funds to attract
    and retain major league sports franchises? The answer is definitely not if
    benefits are limited to increases in economic activity and tax revenue
    collection. A strong case can be made, however, that the quality-of-life
    benefits from hosting a major league team can sometimes justify the
    large public outlays associated with doing so.22
    Quality-of-life benefits are rarely explicitly included in the debate
    on using public funds to attract and retain a major league sports franchise.
    Acknowledging that the main benefit from hosting a team comes
    from improved metro-area quality of life should help to value this contribution.
    Doing so does not require impact studies. Residents and
    elected officials who understand that the benefits of a sports team are
    the same sort that flow from parks, zoos, museums, and theater can
    decide on their own how much hosting a major league team is worth.

    …which seems to concur with what I read back when the Brewers were blackmailing Milwaukee into building a stadium.

    February 8, 2010
  475. Patrick Enders said:

    There were supposed to be blockquotes in there.

    February 8, 2010
  476. john george said:

    Sooo, how do you make an objective decision on intangibles?

    February 8, 2010
  477. Patrick Enders said:

    As far as I’m concerned – you don’t.

    I think Green Bay got it right when the Packers proposed partial public financing of their stadium remodel: they put a referendum on the ballot, and the voters of Brown County approved a 0.5% sales tax on themselves expressly for the purpose of funding the project.

    Of course, that referendum was made more fair by the fact that the Packers couldn’t threaten to take their team out of town (which is not really possible under the publicly-owned team’s bylaws). But still, it would seem that any public funding of a stadium for Zygi should be put to the voters, and if a majority of the affected voters approve the tax on themselves, then so be it.

    February 9, 2010
  478. john george said:

    The decision may not be objective, but at least those most affected by the use of public funds (namely- the public) would have a choice in the matter. That sounds objective to me, or at least fair.

    February 9, 2010
  479. Ray Cox said:

    Patrick, you bring up an imporant point about stadium financing….voters. We can in fact finance things with voter approval if it is granted. I have no idea if funding for a Viking stadium would pass with the public, but the last several tax increases put before the voters have passed. (MVST dedication, sales tax increase, etc)

    One thing that is always important to examine is ownership of the stadium. I don’t really have a huge problem with Hennepin County paying for the Twins stadium because they also own it. Hennepin County owns lots of facilities that the voters pay for and use. But if we are talking about outright gifts to someone to help build and own a project, then I have real problems with any tax money being used.

    February 9, 2010
  480. Paul Zorn said:

    Not exactly about Minnesota finances, but the federal situation is presumably analogous in many respects, including the medical-spending elephant in the room.

    Paul Ryan, Republican rep. from the southeast corner of Wisconsin, has been getting a lot of press, including *two* editorials in today’s Strib, for his Roadmap plan to address the deficit. My sense (but what do I know of such things?) is that mainstream Republicans are partly supportive (young guy, ambitious, full of ideas) but also wary (change hurts … a lot).

    Here’s a link to an informative (and not entirely unfavorable) summary and commentary in the Washington Post:

    If you want Ryan’s own version, find the link in Klein’s editorial.

    The most important feature of Ryan’s plan—appropriately, given the size of the problem—pertains to medical costs. Ryan would essentially privatize almost everything medical — including Medicare, our deeply (but in some sense paradoxically) popular program of socialized medicine for seniors. Federal involvement, if I understand correctly, would be limited mainly to insurance, and insurance benefits would be indexed to rise less rapidly than medical costs.

    There’s a lot more to like or dislike about Ryan’s plan. IMO a serious, perhaps fatal, flaw is the assumption that medical care is a commodity like soap or cell phone subscriptions that is best controlled by free-market discipline. The CBO appears skeptical of this, too.

    But IMO Ryan deserves some credit for coming (partly) clean about the pain that will be involved in getting serious about deficits and debt.

    February 10, 2010
  481. Paul Zorn said:

    Ray, Patrick:

    I think Ray and I may be together (but correct me if I’m wrong) in the embattled minority of people with mainly positive views about the okay-ness, with appropriate caveats and due attention to priorities, of public funding for stadia. I don’t expect to spend much time in stadia, lavish or austere, but I do plan to haunt parks, zoos, museums, libraries, and other publicly subsidized venues. Why should the public subsidize my pastimes and not others’? Quality of life may be hard to measure, let alone price, but it’s no less real for all that.

    So much said, we should indeed be careful. You warn, rightly, against “outright gifts [of public money] to someone to help build and own a project”. Indeed, that’s right out (for a stadium, at least, though governments do it all the time to lure or keep businesses, factories, etc.).

    But IMO such direct stadium giveaways are less likely, and thus less worrisome, than other forms of profiteering at public expense. An instructive example involves former president GW Bush, whose rise from (relative) rags to (relative) riches was fueled by public subsidy of a Texas baseball stadium. The story is briefly outlined by the NYT’s Nicholas Kristof here:

    As Kristof acknowledges, nothing illegal seems to have been done. But the irony of such an episode in the rise of a small-government advocate is pretty striking. Brings to mind St Augustine, who eventually found chastity and continence — but not too soon.

    February 10, 2010
  482. Patrick Enders said:

    I’m with you on the okayness of the voters approving financing of stadia – if the public is properly informed,* and deems that the intangible benefits of a stadium warrant the cost.

    My guess is that the best way to approve/fund a new stadium would be through a metro-area referendum and tax hike of some sort. I’m guessing that a state-wide referendum/tax would not pass, but if the whole state wants to fund the Vikings, that’s their/our choice, too.

    As a non-Vikings fan, I would probably be one of the people voting against such a tax. I’d also think that this is a particularly bad time to be building a new stadium, given our terrible state budget situation. A few years from now the price might be easier to justify.

    *: and not just an unquestioned stream of propaganda about the HUGE!! economic benefits that inevitably stream from an NFL franchise with a new stadium.

    February 10, 2010
  483. Ray Cox said:

    Paul, you are on the right track in the way you look at public expenditures. Right now the state is wrestling with funding a bear and a gorilla exhibit at our zoos. And there are millions and millions of dollars dedicated to everything from planetairiums to public fishing docks. I agree that we should’nt simply eliminate one venue without discsussion.

    I also agree with you that public assistance, to make a stadium happen, will most likely enrich the owners of the Vikings just as it did the owners of the Twins. A franchise with a spiffy new home, even if it is owned by Hennepin County, is worth a lot more than without one. I’m not sure how one deals with that and that is what makes stadium plans a bit unique. I don’t think the bears or gorillas are worth any more when their homes are spiffed up.

    On the Congressman Ryan plan(s) I do want to look at them and see how he is projecting that they work. Most of the time when I hear about privatizing Social Security it tends to leave out all the important things SS does for the disabled and others in our world. Private accounts, much like 401(k) plans can be OK but someone has to be taking care of those without the private accounts.

    Like you I do appreciate a plan on health care and SS coming forward. There are those that attempt to say the Republicans are not bringing plans forward. That is simply untrue. There have been plans from the R’s for year after year. Not all of them the best. And not many of them being discussed right now. What this country truly needs is good bipartisan discussion of ideas. We don’t seem to be in a position to do that right now.
    .-= (Ray Cox is a blogger. See a recent post titled Trims at The Crossing) =-.

    February 10, 2010
  484. Paul Zorn said:

    This is really the place — note the ostensible discussion subject — where we should be wrangling over Minnesota finance follies.

    To get things going again here … today’s Strib editorial

    includes (on the page linked to above; see the middle column) some possible “scenarios” related to the 2012-13 biennium, for which the current forecast predicts a $5.6bn deficit.

    None of the scenarios come anywhere near addressing the deficit. At least one is downright scary: the state reneges on the $1.2bn in delayed payments owed to school districts. And most of the scenarios don’t account honestly for inflation, which is assumed to raise the state’s income but not its expenditures.

    Any comments?

    March 3, 2010
  485. In Jane M’s #417 statement she is right on to pare down the number of Lawmakers. Another step to take is close down all non-essential sevices like closing the Parks and Trails and set them up for a user only fee so others who do not use this service have to pay for it. And we need to prioritize Long-Term Care. Long-Care provides over 112,600 jobs state wide. That is alot of revenue and taxes coming into the state. There are jobs on the outside Long-Term Care supports,Some of these jobs pay more than a Nursing Assistant. Nursing Assistants perform essential services and we need to pay them properly for their dedication and hard work that has little benefits. So Long-Term Care is a Jobs maker and that is good for Minnesota’s Economy so call your law makers and urge them to properly fund Long-Term Care. Thank-You David Roberts

    March 9, 2010
  486. Patrick Enders said:

    Hey Griff:
    Here’s a idea to put LGN to an interesting use…

    How about a “balance the City’s budget” thread? Gather the available information about the current city budget, as well as current proposals for future spending, future cuts, and future taxes. Then let everyone argue for or against their favorite targets.

    Personally, I think it’d be very enlightening to review, in one place, how the city spends all its money, and where it gets it.

    April 1, 2010
  487. Griff Wigley said:

    That’s a great idea, Patrick. I’d want city fathers and mothers to participate, however. Think they would?

    April 2, 2010
  488. Patrick Enders said:

    Maybe some would. Are they all still speaking to you? Also, some councilpersons have had personal attacks directed at them when they have previouly dropped by here.

    Perhaps it would be better to start a citizen discussion, and if it is productive, maybe some of them would drop by.

    April 2, 2010
  489. Griff Wigley said:

    I think it’s a toss-up between an informal citizen discussion vs. a more highly produced forum/panel discussion. Hmmm.

    April 4, 2010
  490. Paul Zorn said:

    Another long-dormant thread that should, perhaps, be re-awakened.

    State Rep. Tom Emmer, now the Republican gubernatorial candidate, has some ideas (I’m paraphrasing Lori Sturdevant’s Sunday column in the Strib): Eliminate state aid to cities. Replace government health care subsidies for the poor with tax incentives for charity care. Prohibit government support for alternative energy. Cut the state’s all-funds spending by 1/3.

    Big ideas, to be sure. Do they add up to a program, or is this just posturing?

    Hint: Emmer also supports an amendment to require a 2/3 legislative vote and a gubernatorial signature before new federal laws would take effect in Minnesota. There’s a little problem with the US Constitution …

    May 2, 2010
  491. kiffi summa said:

    IMO, Emmer hasn’t ‘got a clue’ and is a disaster waiting to happen if , with the support of the conservative Republicans of MN takes us further down the road to the loss of progressive reputation that MN used to have…

    We started that perilous journey with Gov. Pawlenty who hid some of his more conservative agendas in his campaigning for the seat; if Emmer goes this far in his campaign speech, what lies around the next bend in the road?

    ‘There be Dragons’ ?

    May 2, 2010
  492. kiffi summa said:

    Hey, readers… this thread just turned over a new page and it is important for you to go back to comment 450, Paul Zorn from earlier this AM, because he re-upped this thread with that comment…

    May 2, 2010
  493. Paul Zorn said:

    Thanks for the reminder about “page breaks”, Kiffi.

    Here, for convenience, is the content of #450:

    Another long-dormant thread that should, perhaps, be re-awakened.

    State Rep. Tom Emmer, now the Republican gubernatorial candidate, has some ideas (I’m paraphrasing Lori Sturdevant’s Sunday column in the Strib): Eliminate state aid to cities. Replace government health care subsidies for the poor with tax incentives for charity care. Prohibit government support for alternative energy. Cut the state’s all-funds spending by 1/3.

    Big ideas, to be sure. Do they add up to a program, or is this just posturing?

    Hint: Emmer also supports an amendment to require a 2/3 legislative vote and a gubernatorial signature before new federal laws would take effect in Minnesota. There’s a little problem with the US Constitution …

    Like Kiffi, I worry about Emmer. But I wonder what our (relative) conservatives think. Ray?

    May 2, 2010
  494. kiffi summa said:

    The news media already picking up on Emmer’s statements re: MN not following Federal law…
    I remember when “Harper’s” literary magazine had a cover with a cartoon of J. Ventura, and the cover story was “Minnesota elects a toy/ action figure Governor” …

    Are we headed for another embarrassing magazine cover? or have the Republicans assured a democratic Governor in MN?

    May 3, 2010
  495. john george said:

    I really don’t have a lot of hope in either political party alone to get us out of our present morass. It appears to me that neither party has a monopoly on greed and cronyism. I always thought Wellstone had a good ideal in his litany to stand up for the little guy. Unfortunately, he found out that it was the big guys who actually paid his meal ticket. You soon learn not to bite the hand that feeds you. I don’t think it matters if you are talking about “big” business, “big” oil, “big” labor unions or “big” government. The common problem here is “big”, as if bigger somehow means better.

    As far as balancing the budget by just shifting funding responsibilities around from federal to state to local levels, anyone who thinks this is actually going to reduce the cost of government is, IMO, deceiving himself. Unless there is an actual reduction in the cost of government, there cannot be a balanced budget without raising taxes. Right now, there seems to be in the general public a sentiment of distrust in the current government system to efficiently distribute the taxes collected. It seems to be the age-old tension between the philosophies of large or limited central government. Unless anarchy overtakes us, this tension will continue, and, hopefully, in the balance of the two, we will be able to come up with a system which actually works. In the mean time, who is paying, and to whom, the interest on the national debt? I think it was Margaret Thatcher who said something like socialism will only work until they run out of people to tax.

    May 3, 2010
  496. Ray Cox said:

    Kifi, I think what Tom Emmer is meaning is that state government has simply grown too large for us to support. There are many reasons for this which I won’t go into here, but one of the easiest ways to look at it is this: If state spending had kept pace with regular inflation for the past 20 years we would be spending about $8 billion less in our budget. That isn’t holding things flat—it is granting a generous full inflation adjustment each and every year. But as we all know, state spending has been moving along at almost twice that rate hitting about 5% per year for the past several years. I believe Emmer will take the position that we have an unsustainable growth in state spending.

    Can Tom Emmer remove $6 billion of spending from the budget next year? I think it would be very, very difficult given that the legislature is going to probably remove another $1B yet this biennium. However, I know he will want to give it his every effort to reduce state government.

    There are many things that got bloated over the past 20 years. Local Government Aid is one of them. While I don’t support a wholesale abandonment of LGA, I do fully support a major overhaul that would probably lead to far less LGA spending that we will end up with this current biennium. When you have a strong, healthy, property rich city like Northfield that at one time I believe received about $2.5 million in LGA you have a broken system. It should be reigned in substantially.

    But the biggest issue, and one I keep harping on, is demographics. Minnesota’s population is aging very quickly. We are going to look far different in 10 years than we do now. Legislators who only have ‘one trick’ which is to preserve the status quo are doing us all a huge disservice. We need to start major work on planning on a new Minnesota. It is impossible to ‘tax the rich’ to close a budget gap that ‘protects the status quo.’ It simply cannot be done. And while our demographics are difficult, our economy is creating temporary (I hope) problems in that all tax collections are down.

    I will say this—our election for Governor in November will surely give us two distinct choices. For years many people have said ‘it doesn’t matter who you vote for; they are all the same.’ The DFL is going to have the most far left candidate I believe has ever been on the ballot for Governor when they sort out their three. The Republicans have endorsed a fairly far right candidate in Tom Emmer. The voters have a real choice this year.

    May 3, 2010
  497. William Siemers said:

    Ray…You said…

    “The DFL is going to have the most far left candidate I believe has ever been on the ballot for Governor when they sort out their three. The Republicans have endorsed a fairly far right candidate in Tom Emmer. The voters have a real choice this year.”

    Maybe it’s time for a win by the Independent party? Someone who is willing to look at both revenues and expenditures, rather than electing either the ‘no cuts’ or the ‘no taxes’ candidate.

    May 4, 2010
  498. Patrick Enders said:

    “The Republicans have endorsed a fairly far right candidate in Tom Emmer.”

    That’s an understatement. Tom Emmer is a serious anti-Federalist, with a unique vision for reconfiguring our nation.

    Mr. Emmer wants to amend the Minnesota state constitution to require that EVERY SINGLE LAW of the United States would have to be approved by a 2/3 majority of the Minnesota state legislature before it would be considered the law of the land in our state.

    Sure, it will never pass constitutional muster – but it would be kinda fun to see the country forever after referred to as The United* States of America.(*: status not applicable in the State of Minnesota without prior endorsement by a supermajority of Minnesota state legislators.)

    May 4, 2010
  499. john george said:

    William- You might have something there. It has happened before, so, if the Independents serve up a realist with some common sense and a workable plan, it might actaully happen. Of course, a realist with common sense would probably not be in politics. That, unfortunately, may limit their ability to propose a viable candidate, but then, that is just my opinion.

    May 4, 2010
  500. David Ludescher said:

    Patrick: Emmer’s interpretation is not unique. State supremacy was a given until the time of the Civil War (or perhaps more accurately, the War of the Northern States’ Invasion). When southern states attempted to exercise the apparently legal perogative of forming their own confederacy, Abraham Lincoln used federal troops (who were supposed to be protecting the country not invading its own people) against the southern states.

    As far as I know, there is no constitutional provision preventing a state from ceding from the United States of America, nor has the issue been decided by a court of competent jurisdiction. What is clear is that the Constitution cannot be amended except by a supermajority of states, that states can offer its citizens greater protections than the feds offer, that states may keep their own militias, that states get to send their own elected officials to govern the federal government, and that states, acting through their electorates to the Electoral College, get to pick the president.

    Emmer’s idea is goofy because it will never happen, not because it is unconstitutional.

    May 4, 2010
  501. Patrick Enders said:

    When I said “unique,” I was referring not to his general philosophy, but to his particular proposal – which goes far beyond what most states’ righters advocate. His remarkable proposal not only claims a right of the state to reject federal laws, but goes one step further by nullifying EVERY Federal law by default, and only allowing them to be accepted individually, and by a higher threshold than is required for passing a state law – or even the threshold currently required to cut off debate in the U.S. Senate. It’s a beautiful recipe for guaranteeing that no federal laws would ever apply in Minnesota.

    However, I do agree that Tom Emmer shares his general belief in Nullification with the Southerners who seceded from the Union in order to preserve their “peculiar institution” of slavery, as well as with their descendants who attempted to nullify the laws intended to end desegregation a century later.

    Still, this places Tom Emmer, at best, well outside the mainstream of modern political thought. On the other hand, the crazies are resurgent, so maybe he’ll fit right in when Palin is elected President.

    May 4, 2010
  502. Patrick Enders said:

    …that’s “end segregation”…

    May 4, 2010
  503. Paul Zorn said:


    As you say, Emmer’s views are not unique. “Tenthers” have been around since the founding fathers. But the constitutionality question seems to me more complicated than your summary would suggest. And, while the Civil War certainly touched on state supremacy, that doctrine seems hardly to have been a “given” until then.

    Here are some excerpts from The American Prospect (published by a liberal-leaning think tank), which bear on the “tenther” perspective and its history:

    President Franklin Delano Roosevelt spent much of his first term combating a tenther majority on the Supreme Court, which routinely struck down substantial portions of the New Deal.

    … while the Depression-era justices provided much of the movement’s intellectual framework, today’s tenthers are extreme even by 1930s standards. T he Constitution gives Congress the power “to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States,” thus empowering the federal government to levy taxes and leverage these revenues to benefit the American people. Tenthers, however, insist that these words don’t actually mean what they say, claiming that spending on things like health care, education, and Social Security is simply not allowed.

    Their basis for ignoring the plain language of the Constitution is a statement by James Madison that federal spending is only really permitted when it advances one of Congress’ other enumerated powers, such as by building a post office or funding a war. Since the words “health care” do not appear in the Constitution, there can’t be any federal power to pay for health care, and the uninsured can eat cake.

    Although tenthers are correct that Madison did make such a statement, his views hardly reflect the founding generation’s consensus. Alexander Hamilton, the nation’s first Treasury secretary and a co-author of Madison’s Federalist Papers, emphatically rejected Madison’s claim that the words “provide for the … general welfare of the United States” have any kind of secret meaning. Moreover, it is not even clear that Madison still believed that the Constitution requires a decoder ring when he was elected to the White House. Justice Joseph Story, whom President Madison appointed to the Supreme Court, was a Hamiltonian.

    I’m interested to know that there may be no constitutional provision preventing a state from “ceding” (do you mean “seceding”?) from the US.

    But surely not even Emmer is proposing this, is he? If so, I’d really like to know.

    May 4, 2010
  504. David Ludescher said:

    Patrick: In 1857, the United States Supreme Court reaffirmed that slavery was legal (Dred Scott). It wasn’t until after the war that slavery was declared illegal. (Abe Lincoln’s Emancipation Proclamation issued almost 2 years after the war began had no binding effect upon the other branches of government.)

    While it is convenient, especially for Northerners to believe that the Civil War was fought over slavery, the reality is that the southern states wanted greater state autonomy over its own issues (including slavery).

    May 5, 2010
  505. Curt Benson said:

    David, I think Lincoln would disagree with what you wrote:

    “While it is convenient, especially for Northerners to believe that the Civil War was fought over slavery, the reality is that the southern states wanted greater state autonomy over its own issues (including slavery).”

    Check out Lincoln’s Second Inaugural Address, especially the third paragraph:

    David, your interpretation belongs to the “Lost Cause” school of thought, which believes that slavery was not central to the cause of the civil war.

    May 5, 2010
  506. Jerry Friedman said:

    David, the Southerners wanted autonomy including keeping slaves despite the North’s ‘writing on the wall’ that slavery was coming to an end. Dividing the issue as “autonomy vs. slavery” is completely inaccurate. The two issues were inseparably joined.

    Remember the effect of John Brown’s terrorism (if I may call it that). Brown’s effort to give guns to slaves is considered by some historians to be the turning point, a galvanizing act that made the Civil War inevitable. Brown apparently didn’t care about autonomy, but slavery, and slavery was the issue that galvanized the North. Whatever war the South was fighting, the North was fighting against slavery. Slavery was the issue that threatened the Union.

    At best, autonomy was a second reason for the Civil War. At worst, I hear this white washing of American history, trying to honor the racist and vile Confederates as heroes of states’ rights. How amazing, how horrifying it must have been to live in a time when killing, torturing and exploiting a class of people was accepted by those in power, and to see 150 years later that issue minimized and dismissed. Does anyone allege that the South intended to end slavery on its own? While mechanized labor was in its nascent stage, and some historians said that slavery would have inevitably ended because of machines, does anyone now say that the pre-war South was planning or in the process of ending slavery before the first shots were fired? If so, please cite. If not, any effort to minimize the role of slavery in the Civil War is unreasonable revisionism.

    May 5, 2010
  507. Phil Poyner said:

    Here are the articles of Secession of South Carolina:

    As you may notice, southern secession was EXPLICITLY (though not necessarily exclusively) about slavery. This wasn’t about States Rights. Many northerners opposed States Rights when it came to determine the status of slavery within a state/territory. Many southerners opposed States Rights on fugitive slave laws. The defining issue was slavery, with Federalism vs. States Rights being inconsistently used to justify positions on slavery.

    May 5, 2010
  508. David Ludescher said:

    Curt: Lincoln’s address makes it pretty clear. The Northern states wanted to contain slavery; the southern states wanted to keep it. The southern states seceded; Lincoln waged war to save the Union (not to free the slaves).

    May 5, 2010
  509. Paul Zorn said:


    How literally do you mean the “no cuts” label for the DFL? Has any candidate made such a pledge? Or do you just mean that DFL-ers tend to resist cuts more than they resist taxes? (I’m not, here, advocating for or against anything … just wonder what’s been promised or proposed.)

    In any event, I see electing an Independence Party candidate as asking for trouble, and continued gridlock. It’s easy for an IP candidate to triangulate the major parties on contentious issues, and thus to come across as a voice of sweet, moderate reason. (Our unhappy Ventura adventure is just an anecdote, but an instructive one.)

    Big parties, for all their faults, are pretty much the only games in town for building coalitions large enough to pass legislation. That’s why I’m a (two) party animal.

    May 5, 2010
  510. William Siemers said:

    Paul…I don’t have much faith in either party’s candidate to lead in a moderate, common sense manner. So if we can get a leader that can build coalitions of moderate republicans and moderate democrats because he or she is not of either party, then I’m all for it. I don’t think that will be possible with the current candidates.

    May 5, 2010
  511. Paul Zorn said:

    David can “speak” for himself, but I don’t read him as minimizing or dismissing the evil of slavery.

    The questions at hand, I think, concern states’ rights, the 10th amendment, and (originally) the connection of all of this to candidate Emmer’s (IMO) peculiar and demagogic, but not historically unprecedented, views on “nullification.”

    The role of states’ rights in the Civil War is an interesting and complicated question in its own right — even if somewhat tangential to Emmer’s candidacy and its implications for the Minnesota budget. Even if — as I believe — the states’ rights argument was used cynically then by the Confederacy as a fig leaf for slavery, and since then often in other deplorable and racist ways, it doesn’t follow that the states’ rights controversy is nothing but a cover for slavery. On the contrary, some of the earliest flareups centered mainly around issues of taxation … seems we’re back to that now.

    I’m no historian, but even casual browsing suggests that the states’ rights issue is old and broad in American history. It’s related to the difference between the Articles of Confederation and the Constitution, and it has often pitted one big shot against another: Madison vs. Hamilton, John C. Calhoun (he’s got a lake in Minneapolis) vs. Andrew Jackson (when Calhoun was his veep!). Daniel Webster and Henry Clay also got into this act.

    And now comes … sigh … Tom Emmer.

    May 5, 2010
  512. kiffi summa said:

    just my not so humble opinion: David: you do like to champion “lost causes”!

    May 5, 2010