Fun With Wine

I am happy to bring you not one, but two wine-related stories as we head into this weekend. The first comes from the notorious 1st Ward, and Alderman Israel, who is proposing to change the permitted operating hours for wine bars in the MX zone, specifically to allow them to stay open until midnight 7 days a week.

The first thing that strikes me is that I only know of 1 wine bar in the MX district: The Purple Tooth. Catchy name, good cheese, old fire station, fine by me. I just don't like the specificity of the bill--instead of writing a bill for one constituent, how about relaxing the Ward 1 Superiority Doctrine and allowing the rest of the city to operate under the same rule. I think it's a bit of a stretch to compare this bill to Alderman Israel's stance on the 2 a.m. issue, but it's interesting to see how Alderman Israel is willing to extend the business hours for 1 wine bar in his district, yet favors reducing the business hours for the regular bars that comprise the majority of hospitality business in his ward.

The second wine story comes from a letter writer to The Capital. For the ever-increasing new readers of this blog, I enjoy having debates with these letter writers for 2 reasons:

1. These letters writers are either more fanatical, or less fanatical, than me.
2. They cannot debate back.

I have not done one of these in a while. A couple of months ago I cancelled my subscription to The Capital, the result of a joint collaboration of this blog's "save-the-blog-publisher-money" and "stick-it-to-the-man" initiatives. However, I have located a gem on the internet version.

The original text of the letter writer appears in bold, with my uncontested commentary in regular font.

Open letter to Gov. Martin O'Malley:

Since you could not be bothered to attend the Maryland State Wine Festival and present "The Governor's Cup" in person for the second year in a row, I can't be bothered to support you on slots, or for any re-election attempt you may make.

Sadly, I have never won the Governor's Cup. However, I have won the Mayor's Cup, a fictional award that my fictional social club has awarded itself for the past 20 years, in recognition of having the best float in the city's 4th of July parade.

By the way, what an insignificant reason to drop your support for someone!

Dear John McCain: In these troubling economic times with major world issues, I cannot support you on anything because when you had hair, you parted your hair to the right and I part mine to the lef. Dear Gov. O'Malley: I cannot support you, for many other reasons.

Wine production in Maryland is a growing and thriving business. As such it brings in an increasing amount of revenue to this state, which you say is much needed to make up for the shortfall that your tax increases did not bring in.

What O'Malley says about the budget shortfall cannot be believed. He spent us into a deficit by withdrawing $1 billion from the rainy day fund and increasing spending, then "solved" that problem with a special session that raised taxes AND ADDED $600 million or so in new spending, but now there is a deficit again, so O'Malley calls for cuts, but also doesn't call for cuts. Got it?

Many liberals do not understand that raising taxes can actually have a negative effect on total taxes collected, a relationship suggested by the Laffer curve. Not always, not immediately, but eventually. Raising taxes depresses total business output, and encourages businesses to move to lesser taxing jurisdictions (think India, offshore bank accounts, etc.), meaning that the government loses income and payroll taxes. The evidence is too vast for me to enumerate here (mainly because I have a doctor's appointment in an hour), but if commenters press me on the issue, I may be forced to comply.

However, I have noticed that you and your band can play every pub and bar in Baltimore.

Do they take requests?

So I can assume that you're not personally opposed to the sale or consumption of alcohol by adults, just opposed to supporting the entire state instead of just one city.

Have you ever considered a career in politics?

RHONDA RYAN
Gambrills

Dear Rhonda,

I live a maverick's life outside of Annapolis, which is near Gambrills. Please send the wine you set aside for Gov. O'Malley to "The Fourth Most Popular Political and Economic Blog In the General Vicinity of The Annapolis Mall, Annapolis, MD, 21401", so I can surprise Mrs. Politics with a fancy dinner.

O'Malley Math From Herb McMillan

I am friends with former state delegate Herb McMillan, and I have determined that if the "former" is removed from title, that I may be able to take advantage of certain "good old boy" benefits, have no-bid business funnelled my way, etc. For this and other purposes, please read Herb's op-ed below:

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O'Malley Math

The public relations blitz to revive Democrat Governor Martin O’Malley’s 37% approval rating is in full swing. Last week, posturing as fiscal conservatives, Governor O’Malley and liberal legislators claimed to have slashed Maryland’s budget by $1.1 billion since July 2007. It’s undisputed that they’ve raised sales, income, and other taxes by $1.4 billion. But if O’Malley actually made $1.1 billion in real cuts in conjunction with his $1.4 billion tax increase, wouldn’t Maryland have eradicated its $1.7 billion deficit and project an $800 million surplus, even without slots? Yet unless slots pass, Maryland projects a $600 million structural deficit just five months after the biggest tax increase in Maryland history. How is that possible?

It isn’t the economy. That resulted in a $300 million reduction of revenue estimates, so we should still have a $500 million surplus, even without slots. It isn’t that we don’t tax enough. Maryland had the 9th highest total tax burden per person before O’Malley’s tax hike.

It’s O’Malley’s spending. O’Malley hasn’t cut the budget, or used the $1.4 billion tax increase to cover the deficit. Last year’s budget spent $30 billion. This year’s budget spends $31.2 billion. That’s a $1.2 billion (4%) increase. A budget that increases spending by $1.2 billion hasn’t been cut. If state spending increases 4% per year for the remainder of O’Malley’s term, it will grow 13%. How many of us have paychecks that will grow that fast?

When tax and spenders like O’Malley say they’ve “cut the budget” it means “we’re spending more, but not as much as we want.” Maryland’s General Fund budget is driven by formulas that mandate automatic annual spending increases, regardless of need or results. Liberals spin legislation reducing mandated increases into “ budget cuts”, even when they still result in higher spending. This year, state education funding increased by 4%, but not by as much as the Thornton formula required. Using O’Malley Math, the education budget was cut even though education spending increased by $185 million.

That’s just part of the O’Malley Math equation. During the Legislative Special Session called to “fix” O’Malley’s $1.7 billion deficit, spending on new or expanded programs nearly equaled spending reductions. Additionally, 40% of the $1.4 billion tax increase went to increased spending, not deficit reduction. Total spending wasn’t cut, it was redistributed and increased.

When the Special Session ended in November, Maryland still projected a $377 million deficit. This year, despite a record tax increase, the legislature had to raid the Transportation and Chesapeake Bay Trust Funds to balance the budget.

O’Malley Math attempts to put a fiscally conservative face on a liberal agenda that equates more government spending to a better quality of life for everyone. Unfortunately, putting lipstick on a pig doesn’t make it a prom queen. The budget formulas mandating increased spending also require the redistribution of your tax dollars to other counties. The state spends an average of $6,270 in education aid per pupil. Montgomery County receives only $3,789 per pupil, while Baltimore City receives $11,235 per pupil. Anne Arundel County receives $4,356 per pupil, the fourth lowest amount in Maryland.

You are paying more in state taxes, but they aren’t being used to improve your quality of life. Seventy-six cents of every state tax dollar collected in Anne Arundel County is spent in another county. More spending isn’t improving our test results either. Advocates for Children and Youth noted that Maryland’s scores on independent national tests had failed to improve, despite a $2.2 billion increase in education funding since 2002. Students have performed only marginally better on state tests.
George Santayana noted that fanaticism consists of redoubling your efforts when you’ve forgotten your aims. Maryland’s budget has doubled, increasing by $15 billion in the last ten years. Yet test scores have shown little improvement, the Chesapeake Bay is no cleaner, and crime is worse. O’Malley’s solution is to…….spend more.

We cannot spend ourselves out of a deficit or tax and gamble ourselves into a better quality of life. To successfully resolve our problems, including the deficit, we must change the big government mindset that created them, not simply repackage spending increases as budget cuts.

With spending exceeding tax receipts, O’Malley plans to resolve his deficit with slots. That’s a tough sell. To many, Slots and cuts instead of higher taxes are arguably the lesser of two evils. Slots after a record tax and spending increase are just an additional evil.

As Maryland families struggle with higher taxes, rising gas prices, and sky-high BG&E bills, they’re going to feel what the numbers already show: O’Malley math doesn’t add up to a better quality of life.

Herb McMillan is President of the Maryland Taxpayers Association and served in the Maryland House of Delegates from 2003-2007. Data used in this column was obtained from the Maryland Department of Legislative Services.

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Maryland Senate Doesn't Fix Budget "Deficit": It Worsens It!!

I want to take a minute to point out that at this moment in time, we don't have a budget deficit. Indeed, the special session is predicated on an expected budget deficit for next fiscal year based on all the spending the Democrats want to do. If during the next regular session the legislature were to reduce spending, we wouldn't have a deficit! If they simply waited until the regular session to do ANYTHING, good or bad, at least the public would have adequate time to show what they really think.

So why the special session? The Democrats have a monopoly on power, and they believe in big government, endless programs, and ever-growing taxation. They just can't wait to shove it down our throats, and they don't want to wait until the regular session because there is too high of a chance that the public would actually get what it wants--reasonable tax policy.

Moving on, even if you take the political-speak at face value, the purpose of this special session was to FIX the budget deficit. So what did our legislators do? Just the opposite.

A version of Governor O'Malley's proposed expansion in health care coverage passed in the Senate yesterday, and a similar version of the bill is expected to pass in the House today. When the dust settles, THIS WILL COST US $200-$600 MILLION MORE EVERY YEAR.

I have health insurance that covers myself and 1 other person, which costs me $582 every month. I own a seasonal business (7 months out of the year), and each of my 14 employees are eligible for health insurance, of which I pay 50%. Their premiums are either $209, $252, or $291 PER PERSON PER MONTH, and I pay my half year round--even when we are not operating. This is a lot of money that I pay--why should I have to kick in my share of $200-$600 million for everyone else?

For those of you who don't like math, I will tell you that it is easier to eliminate a budget deficit when you spend less money. If, however, you wish to push through an unpopular program at a bad time with the least resistance possible, simply refer to what is happening this week.

Herb McMillan Op-Ed

I have no idea which paper this will appear in, or if it has already appeared, but Herb forwarded this information to me and I shall forward it to you.

Boo! O’Malley’s Scary Budget Story

Give Governor Martin O’Malley credit. He knows how to tell a scary story. Last week, O’Malley announced that the failure to pass his 1.3 billion dollar tax package would result in deep cuts to education, public safety, and health care that would “irreparably damage” Maryland’s quality of life. Those opposed to a Special Session, slots, and higher taxes would bear responsibility for this tragedy.

O’Malley is hardly the first politician to use misdirection, fear, and a manufactured sense of urgency to push his agenda. But before we run screaming into the arms of some pretty frightening tax increases and slots, let’s unmask some of O’Malley’s Special Session goblins.

Misdirection is the most reliable trick in the tax increase playbook. Faced with a deficit, liberal politicians claim the most important, worthy, and politically leverageable programs are up for deep cuts. No one wants to irresponsibly cut these items. Tax Increases and slots are much easier to justify if people believe the gain outweighs the pain. By framing the debate this way, cuts to duplicative, ineffective, wasteful, and bloated programs aren’t debated because they aren’t even on the table.

O’Malley’s “Cost of Delay” Budget utilizes this tactic expertly. For example, O’Malley claims without tax increases and slots, he would have to cut University of Maryland funding by 10%, and Medicaid by $240 million. Of course, reductions of this type and size aren’t necessary to balance the budget. Earlier this year, the non-partisan Department of Legislative Services (DLS) developed a balanced budget without any new taxes or slots. As DLS Director Warren Deschemaux put it, “Our budgetary approach was to be as easy as possible on the programs that help people, and as hard as possible on the people that can help themselves”. The DLS Budget, which O’Malley ironically labeled a “doomsday scenario” would actually increase the University of Maryland budget based on enrollment growth, instead of an automatic inflation formula. This simple measure would save taxpayers 54 million dollars. And while O’Malley would arbitrarily gut Medicaid by $240 million, the DLS proposal would institute necessary reforms and prune it by $62 million. Common sense measures, like requiring non exempt Medicaid recipients to pay a small 2% premium and use generic drugs when medically allowable, are part of the DLS package.

But prudent and necessary cuts won’t sell a tax increase; only deep and threatening ones will get the job done.

The week prior to O’Malley’s “Cost of Delay” budget, a Democrat Senator said, “O’Malley needs to show people it’ll hurt. Closing police stations worked when Schaeffer was governor.” Sure enough, O’Malley’s budget proposed closing state police stations and parks. None of these deep cuts made the DLS budget.

Even the most liberal Democrats know O’Malley’s creating a false sense of urgency to push his tax and slots plan. Comptroller Peter Franchot, who as a delegate voted for every tax increase O’Malley’s proposed, stated in a letter to the legislators that, “I must question the timing and necessity of [O’Malley’s] approach…through June 30, 2008, Maryland has a balanced budget…the volatility of the US AND Maryland economies, the absence of an immediate fiscal crisis, and the lack of detail about the plan could all combine to create a perfect storm of unintended consequences”.

With the special session underway, O’Malley continues to create drama to keep up the pressure. One day, he proposes cutting Medicaid by $243 million; the next, increasing it by $743 million. Three weeks ago, he proposed a small property tax cut. This week, he tied the property tax cut to approval of slots.

Ironically, O’Malley’s property tax cut is a mirage anyway. The average Anne Arundel County homeowner will save $100 the first year. But within three years, rising property assessments automatically reduce O’Malley’s $100 cut to a $30 cut.

O’Malley’s tax and slots blitzkrieg is about using fear to expand the size of government and entitlements, not resolving the deficit As the DLS has demonstrated, we can adequately find our needs, provide a safety net, and balance the budget without tax increases or slots.

In reality, “the only thing we have to fear is fear itself.” Before we’re scared into giving government more of our money to “invest” for us, lets remember that the private sector provides far more jobs and health care for working families than government ever has. Why would we take more money from working families to “invest” in a government bureaucracy that has consistently failed to improve education, health care, or the environment, despite huge funding increases?

It’s time to put the needs of middle class families ahead of expanding government entitlements. Allowing these families to keep more of what they earn would be a good start.

Sales Taxes on Services

I am particularly concerned about the Governor's plan to expand the sales tax to services. You see, I operate a service based business in Prince George's county, which is a short ride away from DC and a slightly longer way away from VA.

Currently I do not pay sales tax, because I am not selling any products. Over the years, I have found a competitive advantage and a niche for the business. What will happen if I have to suddenly pay a 6% sales tax?? Well, perhaps a service business located in DC will come and undercut my prices by 6%, and I will be out of work, along with 10+ workers living in the state of Maryland. So the state will lose all of our income taxes that they were getting. Or maybe I will relocate to DC so that I could stay in business, which would deprive MD of the property taxes, sales taxes on things that I buy, and income taxes that they currently get from me.

As I ponder my future, I can't help but notice the hypocrisy in the Maryland tax code. Maryland publishes the constant yield tax rate for property taxes, which designates the property tax rate that will provide municipalities with the same tax revenue as the year before. Since the value of houses go up (usually), the property tax rate can go down and achieve the same tax revenue.

Where is this thinking with the sales tax? If only some of the people (businesses selling goods) paid sales taxes before, and now the sales tax is expanded to more people, shouldn't the rate go down? I understand that the rhetoric is based on the theory that we need $1.7 billion in new money, and they would have us believe that merely collecting the same amount of taxes is not good enough*, but goodness gracious.

(*total poppycock.)

(A funny back story: in the first civics class I ever took in high school, our teacher would always refer to "rhetoric"....."what was Reagan's rhetoric", or "today we will examine the rhetoric", or things like this. But none of us ninth graders knew what rhetoric was, so one day we asked our teacher. He thought for a minute and responded: "Bullshit, I guess, I don't know....the philosophy of talk." How true.)

The Governor either doesn't know or doesn't care that his tax plan will hurt you and me. Might I suggest the following campaign slogan for his future Presidential run: "Martin O'Malley, stupid or ignorant, take your pick."

O'Malley Will Not Save Your Tax Money

That may seem obvious, but by reading The Capital's headlines, you would never know. Recent front page headlines have included "95% of taxpayers to save under O'Malley plan" and "O'Malley to reduce education spending".

Today, a letter writer took the paper to task:

These taxpayers will not save taxes when one considers the total tax package presented by Gov. Martin O'Malley and the Democrats.

The Capital has fallen for the Deomcratic Party's Clintonesque parsing of words and phrases, in its attempt to disguise a massive tax increase on all citizens of the state.

Don't worry my friend...we aren't falling for it!

You don't spend $1.7 billion through tax cuts--it wouldn't work. It's all coming from us.

Fuzzy Tax Math

As part of his rhetoric at the "kitchen table" unveiling of more details on new taxes, "Governor MOM" declared that 95% of taxpayers would save money under the new proposal.

First of all, the 5% who would pay more are, of course, the rich. I am not even going to go into the arguments as to why taxing the rich at a disproportionately high rate hurts precisely the poor and middle class people that people are trying to help, and instead focus on the fact that the 95% statistic is total balderdash in the first place!

(I recently learned that 'balderdash' is a synonym for 'nonsense', and I have been striving to use the word frequently.)

The current state tax code provides that all persons are taxed at a rate of 4.75% of income for all incomes over $3,000. Since almost everybody makes more than $3,000 per year, basically we all pay a 4.75% state income tax.

The new tax code makes some changes, but single persons making $15,000-$150,000 and married persons making $22,500-$200,000 still pay 4.75%!! The median household income in Maryland is about $53,000--this means that the average family is paying basically the same income tax!!!

AND, THIS IS ONLY THE INCOME TAX!! If you raise the sales tax by 20%, raise the gas tax by who knows how much, and expand the sales tax to include services--the real tax environment that we will be facing rears its true, ugly head.

In other words, if you keep income taxes basically the same, and increase every other tax, taxpayers will be worse off than before and will have less money to spend or save.

As Ron George says, "Only the governor could call a tax increase a tax cut."

O'Malley Tax and Spend Mentality

Gov. O'Malley apparently sat down for a lengthy interview with a reporter from The Capital, resulting in some fabulous blogging material. See the full article here. Crossposted.

I imagine the Governor making time for this interview in between sets of bench press at Merritt Athletic Club, and right before his nightly reading of How to Run For National Office, by Spiro Agnew. (Note: this book does not exist.)

When elaborating on his strategy regarding where money to 'fix' the structural deficit will come from, Mr. O'Malley clarified:

"It'll come from the places it always come from."

The governor listed some of Maryland's economic numbers - last among the 50 states and the District of Columbia in spending as a percentage of wealth, corporate and sales taxes lower than surrounding states, a gas tax not indexed to inflation and kept level since 1992 - and said the flat income tax also will be changed so people who make large incomes pay a higher percentage than other Marylanders.

"I don't think too many people would scream about that," he said.

Oh my goodness.