Archives for January 2009

Republican Solutions to Economic Recovery

In case you’re wondering what Congressional Republicans are proposing as a solution for economic recovery, the following statement was issued by the Republican Study Committee on January 14th. (Bear with us, it is a little lengthy but worth the reading.)

Of course the likelihood of any of this passing is remote because Democrats control the House, Senate and Presidency. Elections have consequences.

The Economic Recovery and Middle-Class Tax Relief Act of 2009

“Responsible and immediate economic stimulus for every American family and business without burdening future generations.”

Financial markets are tumbling worldwide. The unemployment rate is climbing. It is clear that more Americans are struggling to make ends meet and that the economy needs a boost. The question is: from where should that boost come, Washington or the private sector? Conservatives believe the answer is the private sector. History shows that the best way to encourage an economic turnaround, help preserve jobs, and spur widespread economic growth is to ensure that job-creators face a lower tax burden.

That’s why the Republican Study Committee (RSC) is introducing the Economic Recovery and Middle-Class Tax Relief Act of 2009-to provide some much-needed, incentive-based relief to job-creators and to reduce the cost that government imposes on middle-class families.

The RSC’s Economic Recovery and Middle-Class Tax Relief Act is designed to provide broad, growth-oriented, permanent incentives for economic activity across all sectors and industries, with immediate application and sustained, long-term implications. This will ensure that Washington takes a back seat to Main Street and job creators are empowered to do what they do best-create jobs.

Highlights: The RSC’s Economic Recovery and Middle-Class Tax Relief Act is based on three main themes: 1) Support Families through Tax Relief; 2) Provide Economic Relief for American Businesses and Entreprenuers; and 3) Save Future Generations from a Crushing Debt Burden.

Support Families through Tax Relief

  1. Five Percent Across the Board Income Tax Cut. This provision would reduce the six federal income tax rates by 5% beginning with 2008, and make the new rates permanent. Under current law, by contrast, income tax rates will increase in 2011.
  2. Increase the Child Tax Credit from $1,000 to $5,000. Under current law, families are eligible for a $1,000 tax credit for each child under the age of 17. This provision would increase, and make permanent, an increase in the child tax credit to $5,000 beginning in 2008. This will provide a substantial, immediate tax cut for middle-class families. The increased credit would not be refundable.
  3. Make the Lower 15% Rate on Capital Gains and Dividends Permanent. The Jobs and Growth Tax Relief Reconciliation Act of 2003 lowered the top tax rates on capital gains and dividends to 15%. Under current law the lower rates currently in effect expire at the end of 2010, which means that the top capital gains rate will go back to 20% and the top tax rate for dividends will be 39.6%. The last time the capital gains tax rate increased (1987), capital gains tax collections fell by 54% over the first five year and then took a full decade to recover. This provision makes the 15% rate permanent.
  4. Repeal the Alternative Minimum Tax on Individuals. The AMT was created in 1969 to prevent 155 wealthy taxpayers from using loopholes in the tax code to avoid paying taxes altogether. Under current law, the tax will hit more than 30 million people in 2009. There is a broad consensus that this is both an unintended result and an unfair one, which is why Congress has repeatedly passed an “AMT patch” to limit the scope of the tax. The legislation would permanently repeal the AMT.
  5. Permanently Repeal Required Distributions on Retirement Accounts. Under current law, senior citizens, beginning at the age of 70-and-a-half, are required to make mandatory withdrawals from their IRAs and 401(k)s. Though temporarily suspended for 2009, this provision in the tax code is scheduled to go back into effect in 2010 and for every year thereafter. This provision in the tax code needlessly complicates financial planning for retirees, restricts the freedom of seniors to make their own decisions on when to make withdrawals, and in the short-term will force many seniors to sell a portion of their assets at a loss. The bill permanently repeals this provision.
  6. Make All Withdrawals from IRAs Tax- and Penalty-Free During 2009. As a general matter, the purpose of 401(k)s and IRAs is to incentivize retirement savings. However, individuals who are facing foreclosure or some other financial emergency during the current recession should have penalty-free access to all of their savings. Especially since, without any other alternative, some families facing hardship will have no choice but to take the penalty. The bill would, for 2009, make all withdrawals from IRAs penalty- and tax-free.
  7. Increase by 50% the Tax Deduction on Student Loans and the Tax Deduction on Qualified Higher Education Expenses. Under current law, the tax code provides a tax deduction of $2,500 for interest on student loans and a tax deduction of $4,000 for higher education expenses. This provision would increase the value of both by 50% or to $3,750 and $6,000 respectively, and apply both provisions to a larger number of middle-class families by allowing any individual earning up to $75,000, or any family earning up to $150,000, to claim the full deduction.

Provide Economic Relief for American Businesses and Entrepreneurs

  1. Full, Immediate Expensing. The bill would allow all businesses to immediately expense-or fully deduct on their tax returns-the costs of assets (including buildings) they purchase for their business in the year that they buy such assets (“Section 179” expensing). Under current law, businesses can only take limited deductions in pieces, over several years. By uncapping and accelerating the expensing, this provision would encourage the purchase of assets with which to grow a business.
  2. Significant Reduction in the Top Corporate Income Tax Rate. The bill would immediately cut the top corporate income tax rate from 35% to 25%, aligning it with the average rate in the European Union. By allowing businesses to keep more of the money they earn, this provision would encourage the expansion of businesses, the hiring of more workers, and an acceleration of investment, while making American companies more competitive internationally.
  3. End the Capital Gains Tax on Inflation. The bill would index for inflation the cost basis used when calculating the capital gains tax on assets acquired before the end of 2009. Under current law, the capital gains tax is based on the difference in the original purchase price of the asset and the sale price of the asset. However, some of this difference, or “gain,” can be attributed to inflation. By effectively reducing the amount of a gain that is taxable, this provision would encourage the movement of capital in 2009 and spur voluminous economic investment.
  4. Simplify the Capital Gains Rate Structure. The bill would allow corporations to benefit from the 15% capital gains rate. Under current law, individuals pay a top capital gains rate of 15%, but corporations are subject to a 35% top rate. By encouraging corporations to sell unwanted assets, this provision would unleash funds and materials with which to create jobs and grow the economy.
  5. Make the R and D Tax Credit Permanent. The Research and Development tax credit is currently due to expire at the end of 2009. Originally enacted as party of President Reagan’s Economic Recovery Tax Act of 1981, it has since been extended on 13 separate occasions without being made permanent. The purpose of this tax provision is to spur research and development in the private sector.
  6. Extend the Carryback Period for Net Operating Losses to Seven Years. A business incurs a net operating loss when its tax liability is negative in a given year. Under current law, there is a two-year carryback period for businesses to receive refunds on previously paid taxes. In other words, a business may receive a refund equal to their negative tax liability up to the amount of taxes paid over the previous two years. This legislation would extend this period from two years to seven years, which will smooth out changes in business income, and incentivize private sector investment and job creation.

Save Future Generations from a Crushing Debt Burden

  1. NO Trillion Dollar Spending Spree. Even before Congress enacts one penny of spending from a “stimulus” bill currently being put together by Speaker Nancy Pelosi and Senator Harry Reid, this year’s deficit is projected to be, by far, the highest peacetime deficit in the history of the country-8.3% of GDP. And this is because federal spending is projected to be 24.9% of GDP (also the highest figure in American history, excepting World War II), even before any new spending is enacted. This legislation does not contain one penny of new spending, and rejects the idea that massive new government spending will lead to an economic recovery. Borrowing from one part of the economy and redistributing it to others will not grow the economy.
  2. A Down-Payment on Spending Restraint. The bill includes a one-percent reduction to FY 2009 discretionary spending, excepting the Defense and Military Construction-Veterans appropriations bills. This is a modest limit on the extent to which spending will otherwise increase compared to FY 2008, and is a first step toward a commitment of spending restraint.

MCRC: Jerry Davis Appointed Parliamentarian

FOR IMMEDIATE RELEASE: January 28, 2009Jerry Davis Appointed MCRC Parlimentarian

Maricopa County Republican Committee (MCRC) Chairman Rob Haney has appointed former Arizona GOP Chairman Jerry Davis as the Parliamentarian for the MCRC.

Davis is also a past chairman of former Legislative District 18 in North Central Phoenix.

Davis is a co-founder of the Arizona Conservative Union, Arizona Republican Assembly, National Federation of Republican Assemblies and is a board member of Arizona Right to Life. He has also co-chaired the Kemp, Bush, and Buchanan campaigns for Arizona.

He is a graduate of Brophy College Preparatory, Gonzaga University (BA.) and the University of Pennsylvania (JD).

Whither Clean Elections?

Word from the Capitol is that Clean Elections has hired powerhouse lobbyist Mike Williams to lobby for a proposal to give every candidate seeking public financing the maximum amount of money.  This is, of course, in response to the court decision invalidating the matching funds provision of the Clean Elections Act.  To their credit, Clean Elections realizes that without matching funds or a change in the law to give candidates seeking public financing the maximum amount which in the case of the State Legislative races would be somewhere in the neighborhood of $55,000 or so, Clean Elections will effectively cease to exist as a credible means to run a campaign.  

However, the likelihood of getting the requisite 75 percent necessary to make changes in the law is all but a non-starter at the Capitol.  Why would any Legislator who does not use public financing vote to give their potential opponents $55,000?  Money that would, if races from recent years are any indication, be used to attack them.  That answer is that they wouldn’t.  Furthermore, giving every candidate the max would require any candidate choosing not to use public financing to work that much harder to raise money.  

In addition, there is an argument to be made that giving all candidates the max would in effect compel even more candidates to use public financing.  If you were guaranteed upwards of a $100,000 for the primary and the general, you would have no choice with our low donation limits but to use public financing.  

The more likely outcome, pending a reprieve from the 9th circuit, is that Clean Elections will cease to exist as a realistic funding source for any credible candidate and slowly whither away.  

And for those who oppose the concept of using public money to finance political campaigns, it won’t come fast enough.  

So Democrats What is the Alternative?

Anyone who has been following the efforts to close the budget gap will have seen the Democrats and their liberal allies pushing their attacks on Republicans for the inevitable spending cuts that are necessary to close the gap.  Of course, it wouldn’t take a political genius to foresee that these attacks would focus almost exclusively on possible cuts in education.  This is smart politics and it plays well in the press.

Strangely missing though is a credible alternative from the Democrats.  Their proposal of borrowing and budget gimmicks can and should be a non-starter.  These tricks come straight from our former Governor’s playbook and are frankly a direct contributor the situation we face today.  In essence their proposal of putting off payments until the next budget cycle in hopes of an upturn are nothing more than robbing Peter to pay Paul or in other words – a Ponzi Scheme.  And like all Ponzi schemes it will collapse.

The simple fact is that there are only two ways to fix the budget problem.

Cut spending or raise taxes.

Republicans in the Legislature and Governor Brewer correctly understand that raising taxes in a tough economy will lead to more economic pain for Arizona citizens and business.  Pain that in a declining job market is the last thing anyone needs.

So if raising taxes is a non-starter – not even Democrats with the exception of their new liberal State Chairman are proposing that – then the question becomes what to do?

The only answer is to cut spending, and as Democrats and their allies know, voter mandated spending is off the table.  That of course leaves education squarely in the crosshairs.

It’s easy when you are in the minority to take a shot at the majority who will have to make hard choices.  And politically, that is what the Democrats should and are doing.  But once you get past the politics, the question still remains.

What is the alternative?

Thousands of ASU students protest abortion funding at state universities

Thousands of ASU students flooded Arizona’s state capitol today, protesting a bill that would fund abortions at state universities. The students were outraged that taxpayers would be forced to pay for something they philosophically disagreed with, destroying a human life. A lead organizer stood in front of the Capitol with ASU President Michael Crowe and listed off the reasons why abortion is murder and should not be funded by the universities.

Troublesome? Surprised that THOUSANDS of students showed up, as well as the university president? This scenario is what could have happened if students were PAID to show up and protest for a politically favored agenda promoted by the universities. In reality, today, University of Arizona students were given CLASS CREDIT for showing up at the state Capitol and protesting cuts in funding to the universities (remember ASU is already the biggest university in the U.S. – not sure why Arizona’s public universities need to continue growing)

Here is a very powerful video sweeping the country this week we may as well show you while we’re on the topic –

Abortion ad

And guess who was behind today’s student-credited protest? That’s right, the Democrat Party. It wasn’t just some students. Wonder how they got UA to give students credit for showing up? Here is an email they sent out:

Subject: Join the rally against university cuts TODAY!
Arizona Democratic Party

Dear Subscriber,

Republicans are planning to slash university funding 40 percent – even while they give away hundreds of millions of dollars in corporate tax breaks!

This is irresponsible, short-sighted and unnecessary. Let’s raise our voices together and tell the Republicans we will not be silent while they shortchange our schools.

Come show the Republicans the power of our beliefs: that we need to invest in our future, that universities create good jobs and that all Arizona students should have access to a solid education!

Park at the Arizona Democratic Party, 2910 N. Central Ave., and travel to the Capitol via light rail and the Dash.

What: Rally against university cuts!
Where: State Capitol, 1700 W Washington St. Phoenix 85007 – map
When: TODAY! @ Noon

What are Goddard’s priorities?

Terry Goddard just hired Greg Stanton away from his elected position as Phoenix City Councilman for a $119,000 lobbying gig at the Attorney General’s Office instead. This at a time when the state is in the worst budget fiscal crisis ever. The Attorney General’s Office laid off 20 employees this month, including seasoned prosecutors like Gail Thackeray, a national expert in computer crimes. The office has scheduled another round of layoffs for March. Another statewide layoff is planned for October.

The question is, why is Goddard laying off seasoned employees and hiring an overpriced politician to lobby, who didn’t need a job and should be serving the people he was elected to serve? Four support staff positions could have been saved instead of hiring Stanton. Or two attorney positions.

The reason is apparent to us. Goddard is helping Stanton run for Attorney General, because Stanton currently has no legal background. Goddard is using our government – our tax dollars – to ensure that his favorite politician gets elected in two years, at the expense of retaining experienced prosecutors.

We wonder how Gail Thackeray feels about the importance of hiring Stanton for the office.

McCaffrey Joins Blue Point

Looks like former Executive Director, Sean McCaffrey has found somewhere to land as far as employment. McCaffrey has accepted a position with Scottsdale-based Blue Point, LLC, a political consulting firm headed by political consultant, Chris Baker.

McCaffrey has been named Senior Vice President of the firm. During the 2008 Election, Blue Point Consulting ran several campaigns including Pinal Sheriff Paul Babieu, Tony Bouie (LD-6), Laurin Hendix (LD-22) and David Schweikert (CD-5).

In adding McCaffrey to the team, Blue Point will further expand into development and strategic communications practices while building its voter-outreach, political and campaign practices – something in which the firm has long specialized.

Congratulations to both Sean and Blue Point on their work together!

Congressman Franks Statement on “Stimulus Package”

FOR IMMEDIATE RELEASE: January 28, 2009

Franks Statement on Democrats’ Trillion Dollar Spending Bill
Rejects “Stimulus” Spending Package as Yet Another Flawed Government Bailout

January 28, 2009 – U.S. Congressman Trent Franks (AZ-02) gave the following statement today as the U.S. House of Representatives passed H.R. 1, American Recovery and Reinvestment Act of 2009, by a vote of 244-188. Despite repeated calls from Republicans to replace misguided spending measures with pro-growth tax relief, congressional Democrats pushed through the largest borrowing-and-spending bill in American history.

“Obviously there is no limit to Democrats’ capacity to contort the English language in their attempt to depict today’s bill, a massive government spending spree, as a “stimulus” for an ailing economy. As bad as it is, the $825 billion price tag is a completely misleading figure, when after figuring in interest the so-called stimulus package is estimated to cost between $1 trillion and 1.5 trillion.

“Over 1.3 billion of that is allocated to over 32 new government programs that in all likelihood will never be phased out and will only continue adding inefficient bureaucracies contributing to the national debt. The pet-projects contained in the bill are equally appalling during a time when nearly all other hard-working Americans are being forced to tighten their belts.

“If there is any proof that Washington cannot borrow-and-spend money it doesn’t have to create prosperity and reinvigorate a lagging economy, it is in the failure of each bailout package it has passed thus far to do anything more than increase the debt burden we are handing to our children. Any true economic stimulus must place the emphasis on spurring the development of small business through tax relief and the regulatory reform necessary to unleash the creativity, determination, and resourcefulness of the American people.

“Whether President Obama and Congressional Democrats will work with Republican to advance those critical priorities remains to be seen.”

Note: The Republican Study Committee has introduced H.R. 470, the Economic Recovery Act, legislation based on three main themes: 1) Support Families through Tax Relief; 2) Provide Economic Relief for American Businesses and Entrepreneurs; and 3) Save Future Generations from a Crushing Debt Burden. For a full summary, click here.

Congressman Franks is serving his third term in the U.S. House of Representatives, and is a member of the Committee on Armed Services, Strategic Forces Subcommittee, Military Readiness Subcommittee, Committee on the Judiciary, and is Ranking Member on the Constitution Subcommittee.

How They Voted – House Stimulus Package

Late this afternoon, the US House passed HR1 – The House Stimulus Package – by a vote of 244-188.

All Republican voted against the bill. Eleven Democrats joined with those 177 Republicans.

Arizona’s House Delegation voted as follows:

Ann Kirkpatrick (D-1) – YEA
Trent Franks (R-2) – NAY
John Shadegg (R-3) – NAY
Ed Pastor (D-4) – YEA
Harry Mitchell (D-5) – YEA
Jeff Flake (R-6) – NAY
Raul Grijalva (D-7) – YEA
Gabrielle Giffords (D-8) – YEA

(Official Roll Call)

The bill now moves over to the US Senate where it will likely pass.

Elections have consequences…

Occam’s Razor: AZ Budget Needs More Than Stimulus

by Gayle Plato-Besley

If our economy seems limp to you, have no fear. This federal financial flat line is vital to the Donkey Dems in Congress. They need the Fiscal Erectile Dysfunction (F-ED), in order to pop the pill- aka Stimulus Bill ‘09—Viva Viagra!

All of the politico palms will be good and greasy soon in this latest ponzi scheme, and there is nothin’ you can really do about it. Alas in AZ, we are all wimpy in the wallet area, back here where Janet used to lie. So forget about drinking Kool-aid; get the lil blue pill for the hard times.

Where’s the romance gone? The Ol’ West lured those stuck in the Ice Age back East: property sold easily and everybody was either buying it or brokering the deal. Small businesses flourished, tax bases were strong, and we all drank $4.00 lattes. We were young and strong, playing in the sun, and living for the moment of quick bucking. We were so in love.

But the F-ED and the AZ version don’t always need Stimulus. Sometimes it just needs to be let alone. Sometimes the best thing is to slim down too. Cuz we all know, when you get too fat, it’s just harder to see whatchya got that still works.

I’ve recently written of a need to help AZ by using lottery money in a new way. There was some clever finance schmoozing once upon a time to get lots of the money shuffled into transportation. Yet, is there a parent out there who’s rather see Light Rail get a billion and us not even a port-o potty on the route? Would we rather a bus stop with artsy seats over a school reading program or public healthcare for kids? Get real and stop this shell game.

Some complained that I was jumping on with Janet and agreeing to sell the gold mine that is the lottery. No. We need to revamp and funnel the money brought in from this voluntary revenue raising. If the Arizona legislature can yank back tax credits and change up mandated expenditures, it can revamp the statutes. Get the half a billion dollars raised annually from AZ Lottery; while about half of that goes to prizes and running it, a good deal of it can be used in the ‘general fund’ manner and put forth for the ABSOLUTELY necessary programs. Maybe we could borrow from it’s future profits, but let’s not sell it!

Occam’s Razor– always best in a slash

While readers may see this concept as simplistic or naïve; I say leave up to a 14th century philosopher/thinker to say it: All other things being equal, the simplest solution is the best.”(http://en.wikipedia.org/wiki/Occam’s_razor)

SIMPLY PUT- We cannot find a quarter of a billion dollars ( the half after runnin’ it) ANY OTHER PLACE during this economic downturn.

“The Arizona Lottery took in a record $473 million during the fiscal year that ended in June.” (Arizona Republic – 10/13/08)

Let the people decide and put forth an initiative including a three point proposal:

1) Lottery revenues are distributed through a general fund concept including a bulk of the money going to local transportation programs including mass transit. We feel this is not the best use of the revenue in a budgetary crisis. Public safety, K-12 education and healthcare are priority to all other issues. Each area will need restructuring of expenditures and define critical programs.

2) All state programs submit new budgets showing cuts of a minimum of 25% of overall expenditures immediately. Staffing costs are a bulk of expenditure. Local groups can best determine their cuts, but no funds will be available until full compliance with new guidelines. All new budget proposals will be made available to the public before submission. Projection of how services will be rendered under the new budgets will be delineated in public meetings and announcements. Total transparency will help streamline services in the long run. Recommendations to schools and public programs will be presented and include staff reduction, and a shortened work week where possible. State-wide school summer closures of one month will be mandatory. All agencies will revamp retirement and leave-based status of employees. All state agencies receiving state funds must stop all new programming not dictated by voter mandate (override or bond). All state directors or administrators will have salaries capped at 100K with no raises for any state employees. Any agency receiving lottery revenue must submit accountability checks of how monies were spent and compliance of their scaled back budgets.

3) Add more games and revamp the lottery. There’s been steady growth when there are big jackpots. Review how to increase the sales. Once again, this is a volunteer revenue generator. Let’s make it work for us.