GOP senators: Dems are fiscally AWOL

(Press Release, Dec. 18) According to Legislative Council, which presented its fourth quarter revenue forecast to the Joint Budget Committee today, Colorado is still facing a $600 million shortfall, a total of $631 million shortfall when including the increase in Medicaid caseload. Despite reports that the recession is over, the sobering news for the current budget year has Republicans calling on Gov. Bill Ritter and majority Democrats to step up and show some true fiscal leadership. Just last week Ritter painted a cheerful picture of the budget's future, telling reporters he was hopeful there wouldn't be another shortfall or a need for more cuts. Republicans believed Ritter's comments were naïve and overly optimistic. Ritter has consistently underestimated the budget shortfall beginning in the Fall of 2008 when his office projected the state's budget would actually grow, even in the midst of a historic collapse of the nation's financial markets.

“All the happy talk we've been hearing doesn't obscure that our budget situation continues to deteriorate,” said Senate Minority Leader Josh Penry, R-Grand Junction. “So I ask the question again: when will the Governor stop hiring new employees, when will the Democratic monopoly in the Capitol implement a serious plan to consolidate departments, agencies boards and commissions, when will they implement meaningful and permanent spending reductions rather than relying overwhelmingly on one time gimmicks and federal bailouts, and when will real scrutiny be applied to the battery of new programs created since the Democrats gained unfettered power in 2006?”

Over the past few months, Ritter and fellow Democrats have offered a laundry list of band aids to address Colorado's budget crisis. Of Ritter's proposed fixes, 82 percent are one time solutions, such as federal bailout dollars, cash fund transfers, accounting gimmicks and money raided from state trust funds. This will push the majority of the shortfall, which is anticipated to be $1.5 billion, into the 2010-11 fiscal year.

“How many different ways can we implore the governor and ruling democrats to take our advice and slim the bureaucracy, get off the backs of people trying to create real jobs, and eliminate wasteful spending programs so that our government can get out of the rudderless ship mode it's in?" asked Sen. Mike Kopp, R-Littleton.

Ritter has also proposed closing part of the budget gap with a host of tax and fee increases. “We've been warning Democrats for years to curb their tax and spend approach to government. Ritter still doesn't get that we need to live within our means and stop pounding the people for more dollars while families across Colorado are still struggling to make ends meat,” said Sen. Kevin Lundberg, R-Loveland.

Offering and obtaining loans is not charity

In our easy-money world of low-interest loans, many draw the conclusion that we should be able to borrow money just because we want it. Whether it is conventional loans for the purchase of homes or automobiles, or credit cards for buying practically everything else, terms are easy and cheap–or so it appears. This reflects the larger commercial picture as the Federal Reserve System has been keeping its interest rates low for member banks. This is designed to avoid the monetary disaster which is the likely consequence of the government’s fiscal irresponsibility. Annual budgets of more than a trillion dollars were bad enough; now the Obama Administration and the Democrat Congress have given us trillion dollar deficits!

The national debt now is more than $12 trillion (12,000,000,000,000), which is unfathomable in human terms. But what is clear is that it will never be paid off. In the meantime, the Fed is keeping interest rates low to avoid looming national bankruptcy.

But this is not sustainable. In a commercial recession that shows no significant signs of abating, our currency faces repudiation in world markets and, in due course, our own national market. No policy can keep the dollar sound when in fact it has lost its purchasing power.

If it’s any comfort to anyone, our national policy makers are as inclined to believe in fantasies about loans as all those Americans who moved into homes that they could not afford or avoided credit card fees for unpaid charges. Of course, that is no comfort at all.

Money, like any good in the marketplace, has its price. In a primitive barter system, we would be trading objects which for the most part are incommensurable. Money allows us to value the objects we want or need. But money itself does not, to state the obvious, grow on trees.

If one wants a house or a car, one has to pay for it. (At least, that’s what we all thought until the sub-prime market in real estate was cranked up by a combination of federal laws, ACORN law suits, and Fannie Mae and Freddie Mack credit terms.) If one wants money that one hasn’t got, one must likewise be willing to pay for it. This is plain justice for several reasons.

First, it belongs to someone else. However much one may long for someone else’s money, it is mere covetousness to imagine that one has a right to it. Just as one has no right to expect automobile dealers or owners to give one a car, or homeowners or mortgage companies to give one a house, no one is entitled to money from a bank or other lending institution.

Second, money is typically not lying around uselessly. It is invested in properties, securities or businesses that will yield a profit or dividend. The popular mythology of bankers sitting on hoards of money which they are selfishly denying to needy people needs to be discredited. No one in his right mind recklessly gives away money.

Third, money must be lent at a cost because there is no sense in taking it from a profitable venue and putting it into an unprofitable one. Money is not "free." There is a net loss for people who get back only the principal without the interest.

Fourth, loans must be repaid with interest to insure that the money lenders have a continual supply of money to lend to future borrowers. If debts are not repaid or the return falls short of where the money could have been invested more profitably, the capacity of the lenders is in question. Indeed, the capacity of borrowers to get money is seriously impaired.

In fact, the current artificially low interest rates have already pinched the market for loans. Lenders who do not wish to go out of business have found ways to protect themselves against a run on their funds by asking for more collateral or better credit.

Similarly, credit card companies try to protect their reliable customers by imposing more fees on the less reliable. Credit card users who pay off their monthly bills faithfully have been rewarded with no interest charges. Again, money must be flowing back to keep these firms in business. Where is the justice in the careful spenders subsidizing the careless ones?

The sooner we free ourselves from our addiction to easy money, the sooner our commerce will be healthy again. But that means facing facts about loans.

Ritter's 'freeze' more of a slushie

Walk into a typical third grade classroom, and most students can explain what means to "freeze" something. They can explain that when water freezes it becomes ice and is solid. "Little Billie" Ritter may have missed those lessons because, as governor, he regularly demonstrates a poor grasp of elementary science.

Remember in 2007, when Gov. Ritter and Democrats in the state legislature voted to "freeze" property taxes? Now, as most anyone who owns property can tell you, taxes haven't been frozen at all.

Instead, Ritter froze the mill levy portion of your tax bill which had formerly been allowed to decline so that property taxes didn't escalate as rapidly as property values.

And of course Ritter and his Democrat allies did this without even the "courtesy" of a public vote, despite a state constitutional requirement than any tax policy change that increases revenue must be submitted to voters.

The state supreme court's balderdash that collecting more taxes really isn't the same as a tax increase doesn't make the $150 million cost to taxpayers any easier to swallow.

Ritter's recent encounter with linguistic frostbite started last fall when, after months of denying that the state's budget was speeding toward a cliff, he announced a "budget contingency plan" that included, quoting his own press release, "implementing a hiring freeze for the Executive Branch effective Oct. 1."

Now it turns out, this freeze was more of a "slushie."

In January, Denver Post's Jessica Fender reported that despite Ritter's claims that the hiring freeze had saved $12 million, "a review of hundreds of applications for exemptions shows that in three months, Ritter's office approved 326 new hires and promotions - out of 371 requests - that could cost the state more than $12 million."

Now, more than a year after the freeze was proclaimed, KMGH 7News's Arthur Kane and John Ferrugia report that a state personnel database shows 2,300 new state employees hired.

Ritter's chief of staff, Jim Carpenter, says the actual number is 1,454 but concedes, when questioned by Ferrugia, that "during the freeze, the number of employees actually went up."

Analysis of the "database shows that in the three months before the (freeze), the state hired about 1,300 people and in the last three months of the freeze the state hired about 1,100 employees," KMGH reports.

Maybe the governor can blame global warming for turning his hiring slushie into, at most, a cool breeze.

Sen. Al White, a Republican member of the Joint Budget Committee who is quite measured in second-guessing the governor, said that had Ritter's office managed its hiring practices more effectively, "we may not have had to make some of the more dire cuts" necessary to balance the state's budget.

Unfortunately, Ritter and his administration have never been adept at managing the state's money, and no evidence suggests that they have learned from their mistakes.

Ritter has signed three state budgets, each adding at least 1,450 new state employees, despite budget woes. By comparison, Gov. Bill Owens, who also endured some tough budget years, signed two budgets that actually reduced the number of state employees below the previous year's level.

As late as December 2008, Ritter's budget office grossly underestimated the looming budget shortfall, and even now, his administration somehow imagines $783 million more in tax revenues over the next three years, compared to more conservative projections by the legislature's economists.

Ritter refused to throw his political clout behind proposals to build a state budget reserve fund when revenues were strong. But when revenues were already declining, he called for creation of an "unprecedented" new budget reserve.

Given his poor understanding of things physic and fiscal, perhaps the governor's next move will be to institute a spending "freeze." If so, expect spending to instead accelerate even faster.

Czars to the right, czars to the left

Much conservative angst has been expressed of late about a proliferation of federal positions designated as “czars.” These officials are given broad responsibility for a specific area with few obstacles to the exercise of their authority, hence the title, “czar.” There does indeed appear to be a raft of autocratic authorities in a presidential administration only seven months old. But, in fairness, it must be acknowledged that the president is doing nothing unprecedented in establishing these positions, which require no Senate confirmation, for the practice began with Franklin Delano Roosevelt.

According to Wikipedia, FDR offered the country 10 czar positions, filled by 15 people during his 12 years in office. Thereafter, there were only either one or two of them, except for six in Harry Truman’s administration and seven in William Clinton’s. A total of 133 have served.

The biggest increase occurred under the administration of Barack Obama’s predecessor, George W. Bush, who authorized a full 36 during his eight years. Obama so far has established 32. The latter has at least three years and five months to surpass the former.

What matters have these czars been responsible for? Interestingly, all of Roosevelt’s czars were appointed during the Second World War, dealing with manpower, prices, rubber, censorship and economic stabilization (“the czar of czars”).

Most readers will remember the drug czar first established by Richard Nixon, a position continued by his successors., and an energy czar, which has not. The drug czar has since become subject to Senate confirmation.In fact, other czars have been regularized in that way, while retaining the same broad, largely untrammeled authority. The new automobile czar was appointed by the Secretary of the Treasury alone.

Some of these czars do not survive the administration in which they are brought into being, such as Bush’s for abstinence, bioethics and bird flu. Clinton’s AIDS czar has been continued. Other new czars deal with Iran, the Middle East, technology, urban affairs, weapons proliferation and weatherization.

So criticizing Obama for establishing so many czars is a baseless charge. Fair enough, although like anyone else serving in the government of the United States, they are accountable directly to the president and ultimately to all the citizens.

But it is worth remarking that a new administration that has been so determined to distinguish itself in multiple ways from its predecessor seems to be carrying on with multiple czars. Perhaps there is this distinction, that what it took Bush to do in eight years Obama looks like he will accomplish in eight months.

More generally, the resort to czars is explained by at least two factors. First, as was the case with FDR, wartime demands untrammeled authority if victory is to be obtained, so his czars, which understandably repugnant to republican sensibilities, are sometimes necessary.

But peacetime presents a challenge. Why do need czars then? I submit it is a way of coping with the huge growth in the federal bureaucracy, particularly in New Deal days, when FDR began with an annual budget of $3 billion dollars and a few thousand civilian employees, and grew to tens of billions of dollars and hundreds of thousands of civil service workers. (We are leaving out the military personnel here.) Today, of course, it's three trillion dollars and millions of civilian personnel.

Civil service reform was intended to put an end to the abuse of political patronage (known as the “spoils system”) by establishing professional standards and providing protection against capricious employers.

Those familiar with civil service know that it has long since tipped to the other extreme so that it is virtually impossible to fire an incompetent person. The millions who serve see cabinet secretaries and other administrators come and go, but they go on forever.

It is not surprising, and not unforgivable, then, that presidents have appointed czars to get around the bureaucracy in order to accomplish what they intended to when they ran for the office. Still there are concerns. 

Like everything else, we must judge officials and institutions by their results, and we must expect obedience to the U.S. Constitution by czars no less than officials with less restricted authority. Too, we must be mindful of the spirit that informs the choice of these czars, to be sure that they aren’t tempted to ignore the consent of the governed.

After all, we did not fight a revolution, establish a constitution, and fight a civil war and two world wars so that we would be indistinguishable from those despotic regimes of the old world, which also had kaisers, and which like czars, derive from the word Caesar.

Fiscal epiphany for Ritter & Bennet?

Impending mortality tends to focus the mind, and looming elections tend to focus politicians' ears on vox populi. But just as theologians debate the sincerity of "deathbed conversions," voters should be skeptical of lawmakers who find religion as elections near. Although 15 months remain until the 2010 elections, Democrats are learning — just as Republicans discovered after their 2004 victory tour — how quickly the political winds can shift for the party in power.

In less than a year, Governor Bill Ritter has seen his favorable/unfavorable margin flip from plus-13 to minus-8, according to Public Policy Polling. Newly imposed vehicle licensing "fees," championed by Ritter, won't make Coloradans with cars or trucks any more charitable, either.

Ritter's beneficiary, appointed Senator Michael Bennet, hasn't impressed many outside his own party during his eight months in office. Bennet's approval/disapproval rating stands at minus-7 (34%-41%) among all voters, but even worse (minus-11) among unaffiliated voters.

Nationally, the trend is no more comforting for vulnerable Democrats: Rasmussen shows the generic congressional ballot favoring Republicans 43% to 38%, while Gallup says voters are souring on President Obama's health care push with 50% disapproving and 44% approving.

Not coincidentally, both Ritter and Bennet sought to induce a bit of voter amnesia recently with tough talk on taxing and spending.

Ritter told a gathering of municipal leaders that he won't ask for a tax hike in 2010. The AP report didn't mention whether Ritter's proclamation was met with audible laughter or just snickering.

Here's a governor who convinced the legislature and the state supreme court that legislation increasing property tax revenue isn't really a tax increase and therefore doesn't trigger the constitutional requirement for a public vote. As a result, property owners will pay some $200 million more this year than they would have without Ritter's "tax freeze."

In the wake of that ruling, Ritter and the Democrat legislature used a new loophole manufactured by the supreme court to enact an additional $125 million in tax increases — also without a vote of the people.

Just this year Ritter championed two new "fees" so large as to make taxes superfluous. First he enacted his famous vehicle fee to raise an estimated $250 million by increasing the cost of licensing almost every vehicle in the state by $41 to $51 annually. Then he signed a "hospital provider fee" that will, when fully implemented, raise $600 million a year from new charges on patient services.

With fees like that, who needs taxes?

Note that Ritter didn't vow to veto any tax increases sent to him by the legislature; he merely vowed not to ask for them.

Bennet's charade is pathetically weak, too, introducing the so-called Deficit Reduction Act of 2009 in an attempt to build credentials as a "fiscal hawk."

Remember that Bennet cut his senatorial teeth by voting for President Obama's $787 billion stimulus package — the one that stimulated very little and really costs $3.7 trillion, including $1 trillion in interest.

Bennet also helped kill a measure that simply sought to limit new federal debt over the next 10 years to no more than the old federal debt accumulated in the previous 220 years. That's right, the amendment would have allowed for a doubling of the federal debt but no more. Even that medicine was just too strong for Colorado's appointed junior senator.

Bennet's fiscal hawkishness is so feeble that he doesn't even bother to suggest that the federal budget should be balanced — only that overspending should be capped at 3% of GDP, not this year or next year or the year after that but by 2013. By that miserly standard, President Bush succeeded at least half the time.

No, Colorado's big spenders aren't changing their ways — just their words.

Mark Hillman served as Colorado senate majority leader and state treasurer. To read more or comment, go to www.MarkHillman.com.