Tuesday, November 2nd

As you know, Sane in Bedford is not about partisan politics, it is about restoring fiscal sanity, whether it be here in our school district or our county or our state. Yes, I am a Republican, but I have often been frustrated with Republicans on the fiscal front. Sadly, this frustration reaches a different order of magnitude as I survey the Democrat landscape.

With this in mind, I have some recommendations for Tuesday, should you still be on the fence.

Harry Wilson for State Comptroller. With apologies to my friend Nan Hayworth, this is the single most important election in terms of its direct impact on you and me. The State Comptroller runs New York’s finances, and it has been the playground of crooks and con artists. Alan Hevesi is on his way to jail. Tom DiNapoli, the incumbent, wasn’t elected. He was an insider appointment, and he has no idea what he’s doing. Harry Wilson is hugely qualified, so much so that he endorsements from both the NY Post and the New York Times – something Republicans never get. Absolutely everybody has endorsed this guy, but he’s still an underdog because most voters don’t even know what a State Comptroller is and will just blindly pull the lever for the Democrat.

Bob Castelli for State Assembly. If it seems like we just got done electing Bob, you would be right. He was elected in a special election this February. But in only a short time, he has followed through on his promises, among them introducing legislation to repeal the Triborough Amendment. How the public sector unions must hate him, but that’s why he needs your vote. The Record Review endorsed Bob after not endorsing him in February (see: NY Times, infrequency of Republican endorsements).

Dan Donovan for Attorney General. Both Donovan and his Democrat opponent, Eric Schneiderman, are running on platforms of cleaning up Albany. Excellent. As you know, we can’t fix the budget mess in our school district until laws are changed in Albany, and this can’t happen until the corrupt ass clowns up there are thrown out of office or arrested (less Mr. Castelli, of course). The problem is that Schneiderman is completely in bed with this crowd and had been for some time. They are among his primary contributors. He won’t change a thing.

Anyone but Cuomo for Governor. Cuomo is a vile man, something that we will all come to realize once he is governor. Yes, he has said some good things re limiting state spending on the campaign trail, but even Democrat insiders tell me all this will be forgotten once he’s in power. Does anyone really think Cuomo will take on the teachers unions, his single biggest supporter? Not a chance. But make no mistake, he’s going to win. Sadly, his opponent, Carl Paladino, has run an inept campaign, and it’s questionable whether he has the mental balance to be an effective governor. Here’s why you should vote for him anyway: if Cuomo wins by a surprisingly narrow margin, his feet will be held to the fire and he won’t view his office as a sinecure.

The Two Senate Seats: repeat advice from above.

Last but not least, Nan Hayworth for Congress. On day one, Nan might be the smartest member of Congress (see: Ivy League Tea Partier). But we all know there are lots of smart people with seriously screwed up ideas. Nan’s not one of them. Most importantly, she is committed to curtailing government spending. They all say that, I know, how many have promised not to bring earmarks back to their districts? John Hall has never seen a dollar of other people’s money he didn’t want to spend. The guy is a walking moral hazard and has to go. This race is a dead heat.

This will be the most important election our country has held in quite some time. Maybe not since the Carter/Reagan election has there been such clarity of choice between two competing visions for our country. But I stress to all those who are endorsed here: your feet will be held to the fire. We are not voting for you because there happens to be an “R” next to your name. We couldn’t care less. When your words become actions, we will happily support your re-election.

See you Tuesday.

This Nails It

This is really, really funny. Captures the insanity of public sector unions and you will laugh out loud. Salty language.

http://www.fullertonsfuture.org/2010/stop-the-madness-now/

Excellent Letter in Record Review on Union Contract

It’s unacceptable and irresponsible for the school board to agree to lavish pay increases to a labor force where the current number
of resumes for teaching jobs resemble the White Pages. The new contract treats the teachers as a protected class, a sacred organization.The new contract's increases,handed out in a great recession, provides leverage for the unions to negotiate much larger increases 4 years from now in a normal growing economy. Of course the new normal will not include a meteoric rise in housing prices we enjoyed before the housing bubble popped.  The severe and lengthy recession has confounded economists and investors alike, some are concerned the economy will undergo a Japan like deflationary economy that began in the 90's and continues today. In a period of deflation, the two most commonly held household investments, housing and equities, will fall in price. Others are concerned with a scenario of hyperinflation, as indicated by the huge spike in the price of gold over the last few years.  Both scenarios breed uncertainty and pain that leaves school boards with no option but to hold firm against union representative’s gluttonous demands. Union President Adam Yuro disingenuously describes the process as collaborative, knowing the district is shackled with Triborough and Taylor laws that corrupt Albany lawmakers have passed in exchange for the lucrative teacher union dues that are funneled as campaign cash. Yuro   absurdly characterizes the settlement as “in the best interest of the students”.  The best interest of the students would be the abolishment of tenure and the end of collective bargaining for teachers. There is absolutely no benefit that unionized labor brings to our students. None at all. Today’s economic conditions and reality are reason alone for teachers to compete for their jobs on a daily basis , in a free market private sector, as over 90 pct of America does. Who can justify guaranteed employment for teachers? Why should we fund teacher’s retirements? Why do we cede control over our schools?  For those parents and taxpayers who support unionized labor,  it’s crucial to note this support comes at a costly price to our children,  as it fosters a workforce which is not only more expensive than a non unionized workforce, but is inherently inflexible- and inflexibility denies us rights , choice and control over the schools our children attend. It’s imperative we place our children's education before the support of the unions. Each concession made to the demands of the unions are resources taken from our children. Yes, an anti-union stance is a pro-children stance. “Waiting for Superman”, playing in theatres today, is an eye opening documentary that exposes the damage unions have inflicted on our children and public schools. Taxpayers, parents and children looked to the school board and were “Waiting for Superman”, unfortunately, we still wait and the villain remains.

                                                   -Sal DiCarlo

Yard Sales Are So 2009

Saw this on Route 172 this morning.

Want to Understand What's Wrong With Bedford's Teachers Union?

The following is a statement from Graham Anderson, member of the BCSD board:

Statement Regarding BTA Contract – August 31, 2010

Madame President, fellow members of the Board of Education, and Administration – thank you in advance for granting me this opportunity to speak.  The following remarks represent my personal opinions and do not necessarily represent those of the Board of Education.

Because we do not have the ability to change the fundamental nature of our District’s employee contracts, I believe we delay making tough decisions and ultimately make the future more painful for our students, taxpayers and employees.  We vote today to make a slight improvement over the status quo, which is why I am very reluctantly voting “yes” for the proposed BTA contract.  A deal is better than no deal – and although we make important inroads in areas such as health insurance and we begin the process of changing our spending trajectory, we fall short of the fundamental rethinking of contracts necessary for success in the future.

In agreeing to a contract, we grant our able Superintendent and Administration the freedom to set aside contentious negotiations and focus more appropriately on educating our students.  District teachers can now do the same. 

Nevertheless, today we agree to a contract that does not solve the fundamental problem our district faces.  The Bedford Central School District has incurred contractual obligations that it cannot afford to meet in the future.  Our district cannot meet such obligations because it cannot secure voter approval to raise tax rates to a level high enough to support our employee contracts.  We know this is the case from our In Focus Survey conducted last year. 

For a great many years in the past, school districts underpaid teachers and compensated them instead with increased benefits and generous contractual terms.  Over time, however, teachers’ salaries improved, but these benefits and contractual terms accumulated to impose substantial costs and prevent needed change.  Therefore, to resolve this problem, our District must change the fundamental nature of the contracts it has entered into and reduce the growth rate of its spending.  Today, we agree to incremental alterations rather than substantial changes.

I want to be out of the business of firing classroom teachers and back in the very difficult business of determining how to educate our children properly and prepare them to compete in the global markets of the 21^st century.  With the approval of this contract, we are not out of the business of firing teachers and will almost certainly have to do so in the next several years.  Moreover, we do not have the financial flexibility to increase the elementary school day by 1 hour to bring it more in line with regional averages, to introduce foreign language education into elementary schools, or to provide more compelling computer science and information technology skills and education that our middle and high school children definitely need in order to become college or career ready.  Therefore, we are not making some important progress we need to make toward preparing our students to compete effectively in a global market.

One of the major difficulties we face is that our district is primarily financed by local property taxes.  The proverbial straw has broken the camel’s back and we cannot afford to return to mid to high single digit annual tax increases.  Our taxes are some of the highest in the country and the situation is grim for homeowners.  New York Metro Area home prices are the lowest since 2004.  Home prices do not appear to be headed higher anytime soon so increasing local property taxes becomes a heavier burden with each tax year – especially in an economic climate where private sector jobs are scarce. 

The benefits packages (both health and pension) for the employees of our schools have become unaffordable when combined with contractually and legislatively mandated salary increases.  Most taxpayers do not know that under “step schedules” teacher salaries rise by several percentage points even before cost-of-living adjustments.  Moreover, benefits now total nearly 30 percent of the total compensation package, far exceeding private-sector averages.

  District employment contracts do not enable us to keep combined wage and benefits increases to 3% or less per year.  If we cannot keep increases to such a supportable level, we must draw down reserves or let go of more teachers and programs or do both.  Therefore, once prudent reserves are exhausted, our district will have to make annual staff cuts just to pay teachers for staying on for one more year.  

     What can we do?  Today, we can do nothing without the help of the BTA.  I encourage the teachers to help the BTA reinvent itself.  I would like to see the BTA become a champion of public service instead of primarily a defender of the current salary and benefits of its own, more senior members.  Instead of demonstrating endless obsession with wages and conditions in a contract that exceeds 100 pages, I challenge the BTA to be a force of change to improve the quality of education in our schools.  We can no longer afford to reward failure and laud mediocrity.  We desperately need fresh ideas on the local level to combat the Washington policy wonks and non-governmental agencies that have elegant “solutions” that never seem to work.  I would like to see the BTA serve as a constructive force for change rather than an obstructive force bent on getting its “fair share” to the detriment of the students its members purport to serve.  We can only improve our financial situation and our schools with the support of the employees willing to make a fresh start and scrap preconceived notions, outdated ideas, and archaic contracts.

More specifically, we need to remove regulations that strictly define specific staff positions and the use of school time.  We need to become more flexible.  Subjects and programs do not have the same requirements and time commitments and we need to recognize this fact.  We need to remove lockstep pay and alter teacher compensation, including benefits and pensions, to increase rewards for teachers who have the most marketable skills, who have the best results and who contribute the most to improving student performance.  We should work with the BTA to define what this means for our District and how to implement it. 

We need to move toward a post-Us/Them world and toward a more civic minded community so that together we and the BTA can find mutual support for the difficult, inevitable changes that we are facing in our public finances and in our educational system.  Although we were not able to do so today, in the future I hope we will be able to work together more effectively and not at cross purposes to make Bedford Central a leading district in the nation and avoid the bunker mentality that will lead us to irrelevance.

Thank you for your time and patience this morning.

Appearance on Fox

Had some fun on Fox News today:

http://ktmcfarland.com/2010/08/16/the-international-economy/

Taxation and Morality

Last year, I went to a local school board meeting on the proposed school budget, which voters in our town get to vote on. Our district was spending $28,000 per student, and I got up to the microphone and suggested this was too high, and that high property taxes were starting to have a pernicious effect on the town. Cue the disapproving shaking of heads. He wants to take money from our children!

The next woman got up to the mic and said that we needed large school budgets to protect our home values. Then she declared those of us in opposition as "greedy." What I wish I had then said was this:

This town has been unfailingly generous to the school system for decades. In fact, the growth in the school budget has been close to 8%, far outpacing inflation. And yes, while good schools help home values, there reaches a tipping point where high taxes hurt more than good schools help. We passed that tipping point long ago. Now, property taxes are crushing our home values. Just as importantly, they are changing the culture of our town. We are becoming a temporary residence for people with school age children. They stay as long as they have kids in school, then leave. Retirees, who had paid off their mortgages years ago, can no longer remain because of property taxes. The voraciousness of the school system is slowly destroying our town from the inside, and yet you call me greedy?

The point here is that there is a moral and social component to keeping taxes low - it's not simply about
individuals wanting to keep more money in their pockets. This is an argument that, in particular, Republicans need to hear, because while they profess to like low taxes, they retreat into their turtle shells  every time a Democrat yells, "Tax cuts are for the rich!"

Republicans do understand that tax moderation spurs economic activity. But not all possess the philosophical underpinning that gives one the confidence to fend off specious attacks. Some don't, in a nutshell, understand the morality of their own position. This makes them weak advocates.

My town is a great example. Taxes are driving away the elderly and actually breaking up multi generational families. The town is slowly losing its unique culture and institutional memory. Oh, and yes, our home values are getting crushed, but that's not an argument that the left is particularly concerned with. Playing on their pitch, though, they are supposed to be concerned with things like culture and population diversity. So they tell us, almost constantly. And yet their position on matters of tax run counter to their own goals.

I remember Reagan's trickle down thesis being mocked, but history shows us over and over again that it is precisely how the world works, and thank goodness for that. Job creation - from CEO down to night janitor - doesn't happen without business creation. Business creation doesn't happen unless those that have capital (the rich!) can be enticed to remove it from the comfort of a bank account and risk it on some new enterprise. There has to be a reward in it, in other words.

That taxes affect economic behavior would seem to be straightforward enough, but policy makers rarely stop to consider it. Remember the Clinton era luxury tax? It was applied to expensive cars and boats, and the intent was to get more money out of rich people. Do you remember what happened? Rich people stopped buying. In particular, they stopped buying boats. The immediate and unintended consequence of this was that shipyards in Maine went out of business and lots of workers were thrown out of work. Rich people can do just fine without a boat, middle class workers cannot do fine without employment. Where's the morality in that?

There exists, I would suggest, a "taxation morality curve" that may look like this:

Sometimes concepts are understood most easily if one looks at the most extreme examples first. Zero taxation anywhere in society - the left edge of my graph - gets a score of "zero" morality. Government couldn't exist, and therefore there would be no property rights or assurance of liberty. Society would be dominated by well armed thieves. This is not conjecture, we can see it today in places like Mogadishu that have no functioning government.

The other end of the spectrum - full confiscatory taxation - produces the same result. At a 100% marginal tax rate, the entire economy would operate on the black market. Government couldn't exist since it couldn't collect anything. Thus, again, we would have a society dominated by thieves and violent anarchy. Justice would be a distant notion. I will also give this society a morality score of zero.

Since we know it is possible to construct a moral society somewhere in between, it therefore has to be that there exists a morality curve. This is interesting, because it is then a given that some taxation is highly moral. It pays for the things we need to preserve our rights and liberty. Rights are preserved, for instance, by the existence of our legal system, which must be supported by courts, public prosecutors, etc. Our liberty is preserved by a system of national defense as well as domestic law enforcement. These are not the only examples, but they are certainly the most important.

What's more interesting, though, is that it is also a given that after a certain point, marginal taxation decreases societal morality. If the curve ends up at zero, it has to go into decline at some point. As with property taxes in my town, taxation manufactures immoral outcomes. Those immoral outcomes fall hardest on the working classes, not the rich.

It is no coincidence that my graph looks a whole lot like the Laffer Curve, which postulates that after a certain level of taxation, revenues decline. The existence of the Laffer Curve - as well as the Morality Curve - cannot be in doubt. The open issue is the shape of these curves, i.e. at what point of taxation does revenue or morality decline? I believe the "real" morality curve (and Laffer Curve) looks something like this:

But back to the process. How, exactly, does taxation create immorality. If you have been following these letters, you know I have looked extensively at state-by-state fiscal and taxation comparisons. Many states like New York, California, and Illinois are in dire straits and need to close enormous budget gaps. Many want to raise marginal rates, particularly on top earners. This is a bad idea with a highly immoral outcome.

Witness the recent experience of Maryland, where the state legislature raised the top rate on millionaire households to 6.25% from 4.75%. Using static analysis - which postulates that behavior is never affected by rate changes - they estimated that they would collect an extra $106 million in revenue. Instead tax receipts from rich filers - wait for it - fell by $257 million.

The number of millionaires filing fell by a whopping 30%. Certainly, some had income declines, but fully 12% didn't file, suggesting that most had just up and left. I'm guessing Florida is the beneficiary. (See: http://thenakeddollar.blogspot.com/2010/03/buy-florida-real-estate-plus-what-not.html.) You see, the people who have the most resources - and pay the lion's share of the taxes - are precisely the ones that can leave the easiest. In all likelihood, they already have homes in other states. Rush Limbaugh moving to Florida is costing New York close to $50 million over the life of his contract. How many dock workers or bus drivers do you need to cover that loss? LeBron James not coming to New York cost the state $12 million.

I'm not asking you to feel sorry for LeBron, Rush, or any of the other rich folks. Yes, it's immoral that they have to base where they live based on something as ridiculous as tax rates, but they'll get along somehow. What's really immoral is what happens to the people who don't have the same ability to live where they want. If you run a hedge fund, you can do it from anywhere. If you depend on others for your employment, you can try to move, but you'd have to find someone else willing to hire you. Good luck with that right now.

Businesses are also much more mobile than in the past. Once upon a time, if the state of Michigan raised taxes on the auto industry, they could count on GM (et al) to swallow hard and pony up. Now, they can outsource. Take a look at Detroit and tell me that's not exactly what happened:

But more to the point, today's businesses are more information based. Why does an internet company need to be based in New York? It can move tomorrow.

So what happens is that the lower rungs of the economic ladder are left holding the bag. Taxes spiral upward and services are systematically cut. Poverty and crime escalate, people suffer. If we accept that human misery is a form of immorality - at least, when we know we could have prevented it - then you understand how high levels of taxation are immoral.

This is a message that all Republicans need to internalize. Only then will they become effective advocates. (Incidentally, I'm not being partisan here. I welcome Democrats to internalize it, too. I'm just not holding my breath.)