Freedom Line Blog

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Fresh from beating Democratic incumbent Mary Landrieu in a run-off last December, Republican Bill Cassidy is off to a fast start as a freshman in the U.S. Senate.

Making good on his campaign promise to get rid of ObamaCare, Cassidy, a physician, has introduced two bills within just weeks of taking office.

The “No ObamaCare Mandate Act” would repeal the medical device tax, the employer mandate and the individual mandate, according to a report in The Hill.

In addition, “The Employee Health Care Protection Act” would reduce benefit requirements in health insurance plans regulated by ObamaCare, giving providers more flexibility and consumers more options.

And apparently, Cassidy knows how to give a good speech. In defending the Keystone XL pipeline from ideologically motivated attacks by environmentalists, Cassidy said, “We are not to be guided by our prejudice. We’re not to be guided by what we want to be the case. We are to be guided by the facts.”

Usually, it’s liberals who claim the mantle of science and scold conservatives for being fearful of the truth. It’s good to see a conservative U.S. senator return the favor.

A government-owned broadband scheme in Lafayette, Louisiana, is more than $160 million in debt and is losing $45,000 a day, according to Lafayette’s independent auditor. The city’s broadband business is struggling to compete with cable, telephone, wireless and satellite service providers in terms of price, performance and service options, according to a study by the Reason Foundation.

Of course, none of this should come as a shock to anyone who understands basic economic principles or the value of competition.

The government simply lacks the incentive to provide quality service or spend money wisely. After all, if a government-owned/socialist-style enterprise fails, investors don’t lose money, taxpayers lose money. As a result, time and time again, when the government enters an arena already filled by successful private companies, it’s just a matter of time until the government’s offering goes belly up and taxpayers are left paying the bill.

With opposition from Louisiana’s business and religious communities, as well as resistance from Republican state lawmakers, Governor Bobby Jindal announced he will “park” his plan to replace the state’s income tax with a higher sales tax.

The devil was in the details, says Josh Barro, a Bloomberg economics and financial writer.

The other problem was that Jindal’s method of tax-base expansion was not very sensible. An ideal sales tax should apply to all consumption exactly once, meaning it should include business-to-consumer transactions and exclude business-to-business transactions. Taxing transactions between businesses leads to “tax pyramiding”: a sale is taxed multiple times before reaching the final consumer, meaning the tax embedded in the price far exceeds the actual tax rate. This is unfair and also inefficient, because it punishes businesses that choose not to vertically integrate: If I run a restaurant, my customers pay more tax if I buy my pastries from a third-party baker than if I bake them myself. (Depending on how my state taxes pastries.)

Jindal’s administration was bragging that his plan would cause lots of tax pyramiding. An official in Jindal’s department of revenue told the Louisiana House Ways and Means Committee that 80 percent of the new sales tax on services would be borne by businesses. This announcement was meant to be an explanation of how the plan could cut taxes on individuals in all income brackets. But it caused yet two more problems. One, it led the Louisiana Association of Business and Industry, normally friendly to Jindal, to come out against the plan. Two, it undermined the case for reform: Sales-tax base broadening is supposed to make the tax base more ideal, but Jindal was effectively announcing that it would not.

For conservatives, it is part of Economics 101 to remind liberals that all taxes paid by businesses get passed on to consumers.  With a statewide popularity rating now lower than President Barack Obama’s, it’s too bad the very bright Governor Jindal had to (re)learn that lesson the hard way.

A new, higher-than-originally-estimated sales tax will be needed to recoup revenue lost if Louisiana legislators adopt Governor Bobby Jindal’s proposal to swap the state’s income taxes on individuals and businesses for an expanded sales tax.

The revision, released by Jindal’s office last Thursday, raised the proposed sales tax rate from 5.88 percent to 6.25 percent, according to reporting by The Times-Picayune of New Orleans.

The timing of the announcement could hardly have been worse.  So far, no business group has mobilized in support of the proposal.  Instead, some of the state’s most influential business associations are opposing the measure because it shifts $500 million in taxable events onto business transactions that are currently exempt.

On the other side of the spectrum, a group of three hundred religious leaders signed a letter to Jindal arguing that the tax swap would amount to a tax increase on the poor.

Even fiscally conservative Republicans are wary because of the administration’s inability to peg a consistent revenue amount if the state moves from income to sales to fund the government.  That skepticism will now grow with Jindal’s higher tax rate, since it looks to some like a tacit admission that previous estimates were overly optimistic.

So far, Jindal appears to be making one of his few missteps in an otherwise very successful run as Louisiana’s governor.

Two state-based think tanks, Louisiana’s Pelican Institute and Massachusetts’ Beacon Hill Institute, released a study (pdf) highlighting the likely benefits of Louisiana Republican Governor Bobby Jindal’s proposal to scrap the state’s income tax and raise its sales tax.

In a nutshell, the study estimates that Jindal’s plan would increase disposable income by $1.749 billion by 2017. That’s an extra $910 for each Louisiana family.

The question left unaddressed by the study is the one most likely to be asked by critics – What will be the impact on low income citizens whose cost of living (along with everyone else’s) will go up with a greatly expanded sales tax base?

Whereas progressive income taxes take a larger bite out of the paychecks of wealthy citizens, sales taxes take a larger bite from those of the poorer classes.

One way to avoid the charge that a sales-for-income tax swap would amount to a disproportionate tax increase on the poor is to exempt certain items like food and other necessaries from the tax. So far, Jindal’s plan does this.

That, of course, can lead to the same kind of pockmarked tax code that currently infects most states, as well as the IRS.

To my mind, it makes the most sense to argue for a flat tax on income with very few exemptions or deductions. It’s fair, easy to understand, and is the concept most resistant to special interest tampering.

Moreover, when it comes to the national debate over tax reform, it has one huge advantage over a beefed up sales tax: It can be easily replicated at the federal level.

Unless Jindal has become a fan of a national sales tax replacing the national income tax, then maybe his push to swap Louisiana’s income tax for a bigger sales tax is the clearest sign yet he’s not running for President of the United States in 2016.

H/T: The Pelican Post

A few weeks ago I wrote on the income-for-sale-tax swap some conservative governors are pursuing as an alternative to Washington’s income tax rate debate.

Today, Governor Bobby Jindal of Louisiana, a big proponent of the sales-for-income-tax swap, announced his plan in Baton Rouge.

A press release from Jindal’s office lists the estimated benefits:

The plan will ensure revenue neutrality by:

• Eliminating~$2.7 Billion in personal income tax and corporate income and franchise tax
• Eliminating over 200 exemptions, resulting in $114 Million in additional revenue
• Broadening the state sales tax base and raising the state rate to 5.88%, which will result in ~$2.1 billion in revenue
• Maintaining vital local tax offsets and business competitiveness incentives
• Implementing targeted tax offsets, including a change in the cigarette tax rate, and tightening severance tax exemptions

But there are also some possible drawbacks. As I mentioned in my column, moving to a heavier reliance on the sales tax often requires lawmakers to carve out lots of exemptions. The danger is that, over time, a sales tax code could become as special interest driven as the current income tax code with all its byzantine deductions and exemptions.

Without agreeing to the substance of this critique, Jindal’s press release gives a clue as to what might be in store if his plan passes:

To keep the sales tax rate as low as possible, the plan will expand the sales tax base to many services that are already taxed in other states in addition to eliminating over 200 current exemptions. Many of these exemptions are no longer relevant since they were related to the personal income tax and/or corporate income and franchise tax.

Reducing the number of tax exemptions has many benefits, including limiting the state sales tax rate increase required to generate sufficient revenue and greater stability in revenues. The sales tax exemptions retained under the plan will help protect low-income residents and also preserve Louisiana’s business competitiveness. These include:

• Constitutionally protected sales tax exemptions, including food for home consumption, residential utilities, prescription drugs and fuel.
• Manufacturing, machinery, and equipment (MM&E), non-residential utilities, farm and agriculture, drilling rigs, vessels greater than 50 tons, tangible personal property for lease or rental, manufacturers’ rebates and trade-in value on new vehicle purchases, and preservation/rehabilitation of historic structures.
• Exemptions for vendors compensations
• Exemptions for certain non-profit organizations (religious, military, disabled)
• Sales tax exemptions on purchases whose cost is already borne by the taxpayer: those made by federal, state and local governments.

Reasonable people can debate the merits of which kind of tax reform is best to make the code simpler and fairer. Personally, I prefer a flat tax on income with few if any exemptions because it leaves the least amount of room for special interest mischief.

That said, Jindal’s plan deserves a hearing. If it passes and works in practice, expect to see Jindal’s tax reform model – if not Jindal himself – on the 2016 presidential campaign trail.

I’ve posted here on the blog before about the ongoing fight over Governor Bobby Jindal’s bold education reforms in Louisiana, which have left the Pelican State’s teachers unions incensed. And in my column this week, I discussed the relentless tendency of liberals to rhetorically exploit African-Americans while supporting policies that harm black communities. Yet even though these two trends are not new, I’m still gobsmacked that it has come to this shameful nadir. From the Heritage Foundation’s The Foundry:

A major state-level teachers union accused a group promoting school choice for African-American families of supporting the notorious white supremacist group the Ku Klux Klan in a series of statements on Thursday.

The Louisiana Federation of Teachers accused the Louisiana Black Alliance for Educational Options (BAEO) of advancing a “pro-KKK agenda,” in the words of one tweet sent from the union’s official Twitter account. Another claimed that the group “endorses teaching that the KKK is good.”

The BAEO works to “increase access to high-quality educational options for Black children by actively supporting parental choice policies and programs that empower low-income and working-class Black families,” according to its website.

In response to this filth, the head of the BAEO put out a statement reading, in part:

BAEO and its allies fight every single day to give children from low-income families access to the best educational options possible. We fight to overcome the institutional bigotry that has sentenced thousands of black children across the country to a substandard education. It’s a sad day when an organization like the Louisiana Federation of Teachers, which says it cares about kids, is among the organizations using degrading, race-baiting tactics to demean the very people who are doing their best to give kids hope.

Unfortunately, we’re well past the point when the teachers unions’ arguments were about the kids. These days, it’s about nothing more than holding on to power. The children are little more than collateral damage.

A few months ago, I authored a column here touting the extraordinary accomplishments of Louisiana Governor Bobby Jindal in enacting perhaps the most sweeping piece of education reform in the country. Part of what made the reform possible, I noted at the time, was the relative weakness of teacher unions in the Pelican State:

The laws passed by the Louisiana legislature last week read like a conservative education reformer’s wish list. Teacher tenure, which previously required three years of employment, will now be contingent on educators receiving a “highly effective” rating in five out of six consecutive years. Back-to-back “ineffective” ratings will be a firing offense. Seniority will no longer be a dominant factor in layoff decisions. Decisions about teacher employment and pay will largely devolve to principals and superintendents (they had previously been dominated by local school boards), allowing them to act with the dispatch becoming of an executive.

The reforms go well beyond personnel matters, however. They open up opportunities for charter schools, allowing new providers to enter the market. They offer vouchers that will allow poor and middle-income children in Louisiana’s worst schools to attend private or parochial institutions. They even expand opportunities for online learning.

Had Jindal tried something nearly as audacious in a union-dominated state like California, Illinois or New York, the proposal surely would have been stillborn in committee. But in right-to-work Louisiana, where the unions aren’t subsidized by compulsory membership, the best that organized labor can do is flail in anger after the fact. And flail they have.

Well, the flailing is now reaching a crescendo. As is the tendency of unions that can’t win arguments at the ballot box, organized labor is now taking the fight to the courts. From the Wall Street Journal (subscription required):

On Thursday, lawyers representing the unions faxed letters to about 100 of the 119 schools that are participating in the voucher program. “Our clients have directed us to take whatever means necessary,” the letter reads. Unless the school agrees to turn away voucher students, “we will have no alternative other than to institute litigation.” The letter demanded an answer in writing by the next day.

Louisiana’s voucher program is adjusted for family income and is intended above all to give a shot at a decent education to underprivileged minorities, who are more likely to be relegated to the worst public schools. Forty-four percent of Louisiana public schools received a D or F ranking under the state’s grading system, and some 84% of the kids in the program come from one of those low-performing schools.

Demand for vouchers has been overwhelming: There were 10,300 applications for 5,600 slots. Despite claims to the contrary by school-choice opponents, low-income parents can and do act rationally when it comes to the education of their children.

That last sentence, I think, says it all. Liberals — who reflexively bay about the plight of the underclass — are actively complicit in keeping them “under”; that is, in denying them both opportunity and aspiration. They are there for the poor only to the extent that it does not conflict with the interests of one of their client groups. In this instance, they have chosen the pecuniary interests of the unions over the future of Louisiana’s children. There is much shame in that. Citizens of Louisiana would do well to make them bear it.

Dan Walters of the Sacramento Bee is the dean of California political writers and today he’s got a gem.  Walters criticizes including yet another entry on the state’s list of population groups required to be taught in a positive light in history classes.

The latest effort is Senate Bill 993 by Sen. Kevin de León, D-Los Angeles, which would require social science instruction on the “braceros,” a long-expired federal program that brought workers into the country, mostly from Mexico, during and after World War II to offset farm labor shortages.

Lest Walters be accused of insensitivity, he rightly directs attention to the real crisis facing California’s schools:

In a state as diverse as California, there’s literally a bottomless well of ethnic and cultural groups that could seek inclusion not only on the instruction list but in the liturgy of those that must be portrayed only in the most positive terms.

We don’t need to brainwash our kids. We need to give them well-rounded, accurate instruction that prepares them for life beyond childhood – and our poor academic test scores indicate that we’re neglecting that important task while filling their minds with feel-good pap.

Wouldn’t it be nice to have an alternative to such a broken system by applying your tax dollars to tuition at a private or charter school of your choice?  If you think so, check out Troy’s column on Bobby Jindal’s school reform breakthrough in Louisiana.

And if you’re a pap-hating Californian with school-age kids, consider moving.

Last week, Quin blogged about the progress being made on behalf of school choice in Louisiana, largely because of the leadership of Governor Bobby Jindal. This week, the teachers unions are striking back in the manner they know best: abandoning their students. From Southwest Louisiana’s American Press:

Calcasieu Parish Superintendent of Schools Wayne Savoy announced Monday morning that all public schools in the parish would be closed Tuesday due to “excessive employee absences.”

Teachers will be traveling to Baton Rouge to protest pending legislation regarding public education and express their opinions on the voucher system and tenure laws that was approved by the state House last week.

Here in California, the unions did the same thing during last year’s “state of emergency” protests, abandoning their classrooms to converge on Sacramento (and doing so the same week that important statewide tests were being administered, no less). I bring that up only to note that this is business as usual for organized labor throughout the country. They get paid by the taxpayers; But they serve only themselves.

The unions are fond of telling us “the children” are their first priority. Their actions tell us otherwise.

Bobby Jindal and school reform both won big today in the LA House of Reps.

This bears celebrating, as it is expected to pass the state Senate as well. Already, the vast bulk of New Orleans public schools are charters; this bill would spread various forms of choice statewide. Charters in New Orleans post-Katrina have been remarkably successful.

On Saturday, Rick Santorum is favored to win, albeit narrowly, in the Louisiana primary. But the actual delegate allocation from Louisiana could range from a wide Santorum win to, oddly enough, a significant victory for Ron Paul who barely is even bothering to campaign in the primary.

How could this be?

Well, here’s how it works: The primary will be determinative for only 20 of Louisiana’s 46 delegates. Those 20 will be allocated in accord with the proportion of the vote won by each presidential candidate — assuming that a candidate gets at least 25 percent of the vote. ANY votes for all candidates who do not cross that 25 percent threshold will be added together and their proportion of the whole will be allocated as UNCOMMITTED delegates. Three other officially uncommitted delegates will be the state’s members of the Republican National Committee.’

All other delegates, all 23 of them, will be chosen at a state convention not held until June 2. Moreover, the delegates to that state convention will not be chosen in any way, shape or form as a result of the primary this Saturday. Instead, they will be chosen at caucuses to be held throughout the state on April 28. So it is perfectly feasible, for instance, for Ron Paul to get less then 10% of the vote on Saturday, and thus to win not a single one of the 20 delegates chosen this week, but still to win the vast majority of the other 23 delegates on June 2.

Word on the ground is that Paul is extremely well organized for the caucuses. It might be that the only way to defeat him is for the Santorum and Gingrich organizations to join forces, at least in tactical alliances if not formally, at each of the caucuses.

But here’s the deal: If Santorum wins a narrow victory on Saturday and gains, say, 6 delegates to 5 each for Gingrich and Romney… but Gingrich later drops out and his Louisiana campaign organization folds into Santorum’s, then the caucus rules (which are too complicated to explain here) are such that Santorum could come close to sweeping the other 23 delegates on June 2. (Obviously, the same would be true if Gingrich and Romney joined forces, but that isn’t going to happen.)

This is another example of how Gingrich’s presence in the race directly hurts Santorum. Everybody has been calling Louisiana a “proportional allocation state,” giving the impression that even a Santorum popular vote win would not do much to bolster his overall national delegate position. But because slim majorities or even pluralities can have outsized influence in caucuses, the truth is that half of all the Louisiana delegates are very much up for grabs and could swing very strongly in one direction or another. Gingrich’s continued presence in the race could swing almost all of those 23 to Paul; his withdrawal from the race would swing them mostly to Santorum. And since Paul is thought, in the long run, to be in far more friendly to Romney, those delegates in the end would probably be likely to move Romney’s way in a contested convention.

It’s all highly convoluted. But the arithmetic is undeniable: Gingrich’s presence hurts Santorum. This is not to say whether this is a good thing or a bad thing; it’s just a straight analysis of how the rules combined with the arithmetic combined with the situation on the ground are likely to play out.

Our DoJ whistleblowing friend J. Christian Adams speaks at Tulane University tonight, about a fight between Louisiana and the Obama InJustice Department. Note, please, the amazing percentages of people registered to vote in LA, but the Obamites don’t care. (Hint: It is literally impossible for more than 100% of residents to be registered to vote!) The otherwise rotten Sen. David Vitter, to his credit, has weighed in on this issue as well, and he is on target. Outside of Louisiana, meanwhile, just about every week brings more examples of how voter fraud is a real problem, even though the left claims otherwise.

For every crisis there is an opportunity.  The Detroit public school system is in a fiscal state of emergency with a mandate to eliminate its $327 million deficit.  At first, leadership planned to close 40 of the district’s 142 schools.

Now, more innovative heads have prevailed.  Yesterday it was announced that instead of closing schools the district would convert 41 of them into privately-run charter schools.  Estimated savings to the taxpayer: more than $28 million.  Estimated benefit to parents looking for a hand-up out of failing classrooms: priceless.

Of course, teachers’ union advocates bristle at the idea that nearly one-third of their Detroit membership will be laid off and required to reapply for jobs without costly pension funds and tenure protection.

But the data doesn’t support the status quo.  Since Louisiana lawmakers transformed New Orleans into the only public school system where a majority of students attend charter schools, scores on student achievement exams have risen dramatically.

Louisiana’s reform was made possible by the devastation of Hurricane Katrina.  Michigan’s ongoing financial crisis may be just the opportunity Detroit families need to get the education – and the tax relief – they deserve.

Typically, discretion isn’t a virtue associated with government; yet under the Obama Administration it’s being treated like a mortal sin.

The latest example comes in the aftermath of the president’s decision to impose a six-month moratorium on all deepwater (i.e. 500 feet or more below sea level) drilling.  The stated reason is to ensure that no other oil rigs accidentally blow up and gush more black crude into American waters.

But mandating stasis will do more than head-off a highly improbable second Gulf Oil Spill, says Louisiana Attorney General Buddy Caldwell.  In papers supporting a lawsuit against the moratorium, Caldwell is calling for a “balanced approach” response instead of the current policy that is “costing between $165 million and $330 million each month in lost wages for Louisiana jobs tied to the drilling,” according to the effected companies.

Caldwell argued that drilling can be safely resumed within 30 days if federal inspectors are permanently stationed on each rig. The inspectors would re-certify all blowout prevention equipment, enforce compliance with all drilling procedures, and ensure training of all rig personnel to industry standards, including any new safety recommendations made by the presidential commission.

“After confirming the correctness and preparedness of each rig and well design, these deepwater rigs should be permitted to resume work, and the Department of Interior should resume issuing permits,” Caldwell said in yesterday’s brief. Such a “balanced approach” would allow safe resumption of a vital portion of the state’s economy “without the necessity of shutting down an entire industry segment,” he said.

It is tragic that the Louisiana Attorney General has to point out this basic fact in federal court papers.  Like Louisiana Governor Bobby Jindal’s recent decision to defy the Coast Guard after repeated attempts to go through the proper channels, we can assume that Caldwell is only doing this because previous informal requests went unanswered.

Only in a managerial labyrinth like the federal government could a common sense plan to address the real problems of deepwater drilling be ignored in favor of an across-the-board job killer like a half-year moratorium.

H/T: Bloomberg News

The most toxic substance floating around Louisiana’s coastline isn’t oil – it’s the confusion that comes with the federal government’s alphabet soup of bureaucracy.  Click on any article describing the feds’ response, and you get a myriad of people and institutions allegedly “in charge” of directing the cleanup activity.  So far, the heads of the EPA, Interior Department, Homeland Security, and Coast Guard have all visited the state and personally weighed in on what should be done.  Now, they are contradicting each other.

In a news conference on Sunday outside the BP headquarters in Houston, Mr. Salazar repeated the phrase that the government would keep its “boot on BP’s neck” for results. He also said the company had repeatedly missed deadlines and had not been open with the public.

Mr. Salazar added, “If we find they’re not doing what they’re supposed to be doing, we’ll push them out of the way appropriately.”

That statement, however, conflicted with comments made only hours earlier by the Coast Guard commandant, Adm. Thad W. Allen, who said on CNN’s “State of the Union” program that the access BP has to the mile-deep well site meant that the government could not take over the lead in efforts to stop the leak.

“They are necessarily the modality by which this is going to get solved,” he said.

One of the consequences of bloated bureaucracies is overlapping areas of responsibility.  Coupled with a politician’s aversion to risk (an element of bold decision making), and the result is many people responsible, but no one is ultimately in charge.

And while they dither, 65 miles of Louisiana coastline are “oiled.”

It’s a well known fact that Majority Leader Harry Reid is scrambling to find the 60 votes necessary to move his government-run health care bill to the Senate floor.  Indeed, Reid is doing everything in his power to “encourage” the three or four Democrats supposedly on the fence to vote “yea” tomorrow night on the motion to proceed on the legislation.

And when we say everything, we mean E-V-E-R-Y-T-H-I-N-G.

ABC News’ Jonathan Karl reports:

On page 432 of the Reid bill, there is a section increasing federal Medicaid subsidies for “certain states recovering from a major disaster.” 

The section spends two pages defining which “states” would qualify, saying, among other things, that it would be states that “during the preceding 7 fiscal years” have been declared a “major disaster area.” 

I am told the section applies to exactly one state:  Louisiana, the home of moderate Democrat Mary Landrieu, who has been playing hard to get on the health care bill.

In other words, the bill spends two pages describing [what] could be written with a single world:  Louisiana.

The price tag for this provision?  Karl writes, “According to the Congressional Budget Office: $100 million.”

Read the full story, complete with the actual bill language, here.