QUOTE OF THE DAY
WSJ: Mickelson and Sports Star Tax Migration
America's top-grossing golfer Phil Mickelson drove himself into a bunker on Jan. 20 when he said that federal and California state tax hikes had made him contemplate making "drastic changes" in his life—including, it was widely assumed, moving to a no-income-tax state such as Texas or Florida. But he was only stating publicly what many professional athletes are mulling privately.
No doubt they'll keep their thoughts private, too, given the uproar that ensued. The golfer known as Lefty outraged lefties by noting that a tax burden of more than 60% seemed excessive. Didn't he know that athletes—unlike Hollywood celebrities—are supposed to keep their politics to themselves? Mr. Mickelson quickly apologized for teeing off his critics. "Finances and taxes are a personal matter," he said. In any event, Mr. Mickelson certainly wouldn't be the first athlete to consider relocating for tax purposes.
Last week, Lefty's rival, Tiger Woods, acknowledged that he left California for Florida in 1996 when he turned pro because of the difference in state tax. California's top marginal rate then was 9.3% for individuals earning more than $32,000. The move was particularly farsighted given that rates on high earners in California have since soared.
Forbes: U.S. Needs To Win The Battle To Limit Government Now
America greeted 2013 numbed to the absurdity of 0% interest rates, endless Federal Reserve bond purchases and $1 trillion deficits. President Obama imposed a January fiscal deal that added $4 trillion to the projected national debt, on the surreal claim that the U.S. government doesn’t have a spending problem. His Cabinet and policy choices show satisfaction with the status quo and a state of denial over the dangers ahead. In December he made the claim of national well-being: “Our economy is really starting to recover, and we’re starting to see optimistic signs.”
However, per the U.S. census, inflation-adjusted median household income has fallen for more than a decade, a stunning national failure. The federal debt has topped $16 trillion, which is more than our entire GDP. Much of the increase is being funded by the Fed’s $1.6 trillion in dangerous overnight debt to the banking system.
Financial Times: US faces fresh financial shock
The $1.2tn in automatic spending cuts that Barack Obama once promised to avert are looking increasingly likely to occur because of entrenched politics in Washington, threatening a shock to confidence in the US economy.
Economists have long assumed that the so-called sequester – a budgetary mechanism passed in 2011 that takes effect on March 1 and slashes the Pentagon’s budget by $600bn over 10 years while cutting discretionary spending for government programmes by another $600bn – would be replaced or reversed by Congress.
Many saw a recent move by Republicans on Capitol Hill to extend the US borrowing authority as a sign of greater co-operation with the White House. But conservative lawmakers have recently made it clear that they were simply gearing up for another fight, and are prepared to take a hard line on the $1.2tn in cuts even amid objections from military hawks.
“I think the sequester is going to happen,” said Paul Ryan, the influential Republican congressman on NBC’s “Meet the Press”. While he and other Republicans are expressing regret that defence will take the brunt of the hit, a fact that the Obama administration has warned threatens national security, he and other Republicans say the reduction in spending is paramount.
Reason: WWII Spending Did Not End the Great Depression
Conveniently for most politicians, a popular doctrine holds that government spending is good for the economy. According to this doctrine, when the economy needs to recover from a recession or even a slowdown, an increase in government spending is indispensable—even if huge budget deficits and a growing national debt result. Keep spending! is the battle cry. This is one reason why there is widespread opposition to "sequestration," the scheduled across-the-board reductions in the rate of growth in government spending. (For the most part, absolute reductions in spending are not on the table.)
The advocates of spending think they have a killer piece of evidence for their position that economic vitality requires larger government budgets: World War II. The standard story has it that despite Franklin D. Roosevelt's best efforts, the New Deal did not quite end the Great Depression. What did? According to this story, it was the massive spending behind U.S. participation in the wars in Europe and the Pacific. The vigorous economic growth of the late 1940s and 1950s is touted as evidence for the blessings of big government spending.
This version of events is routinely conveyed by Keynesian economists, including at least one Nobel laureate with a prominent newspaper column, and the pundits who parrot their doctrine. Hardly a day goes by that a cable-TV commentator doesn't credit World War II with "getting us out of the Depression." This belief has prompted members of the intelligentsia to lament that perhaps nothing short of a big war can cure a sick economy. The political will for major domestic spending is lacking, they say, but a national emergency (perhaps rumor of an alien invasion) would unite the country and dispel fears of deficits and debt.
School Choice Week on Storify
School Choice takes center stage during a week celebrating all educational options. The spotlight will shine on effective schools for every child.
National School Choice Week is underway. Follow this feed for updates from across the country.
The State: Tuition Tax Credits Proposed in South Carolina Senate
A bill to help S.C. parents pay the cost of private school was introduced again in the state Senate Wednesday.
State Sen. Larry Grooms, R-Berkeley, introduced the bill, similar to one that passed in the S.C. House last year but stalled in the Senate.
The bill would give tax deductions to parents who home school their children or send them to private school. It also would give tax credits for donations to nonprofit scholarship programs that provide grants for low-income children or those with disabilities to attend private schools.
State EdWatch: Indiana Governor's K-12 Budget Includes Performance Funding
Indiana Gov. Mike Pence, a Republican elected on Nov. 6, has proposed in his two-year 2013-15 state budget that K-12 spending increase by 1 percent in each of the next two years, but that in 2014-15, that K-12 increase would be "performance-based" for both "outstanding schools and teachers."
Earlier this month, I wrote about big K-12 education issues for legislatures and governors in 2013, and one of the big ideas that could gain traction this year is performance funding. This new momentum for rewarding success, or at least some officials' definition of success, is due to lawmakers disappointment with a cycle of public school investments that don't correspond to better results in higher education and, even more crucially, their states' economies, as Richard Laine, the National Governors Association education division director, discussed with me.
Back to Pence, who used to represent the Hoosier State in the U.S. House of Representatives. The 1 percent increase in funding for public schools in both fiscal 2014 and fiscal 2015 in Indiana, the Indianapolis Star reported, would amount to $63 million and $64 million, respectively. But here's the key passage from the introduction to Pence's budget: "We recommend the 1 percent increase in the second year (FY 2015) be performance-based, using factors such as school quality, graduation rate, and third-grade reading assessment. We intend to fund excellence through performance-based awards to Indiana's outstanding schools and teachers. We also increase teacher excellence grants by $6 million in order to increase pay for our high-performing teachers."
CARTOON OF THE DAY