5 months ago

Heading for a fiscal cliff?

Is the Federal government spending us into financial ruin? The current numbers and budget projections suggest so. Yet I think that the scary numbers reflect an unresolved conflict over the role of government more than a threat of bankruptcy.

The national debt of the United States, the accumulated borrowing since the Republic’s founding, stands at $21.85 trillion. The deficit, or amount borrowed to cover spending in excess of tax revenues, for fiscal year 2018 was $780 billion.

A sense of magnitude is difficult to maintain once we get into the “illions” – meaning millions, billions, and trillions. A good way to size up Federal red ink is as a percentage of U.S. GDP, the value of all the goods and services produced in a year, which is currently $20.1 trillion. So 2018’s deficit and the national debt are 3.9 and 109 percent of GDP respectively.

A second debt figure, the debt held by the public, confuses the matter. What is the difference? Some Federal government agencies hold debt, including Social Security and the military and civilian pension plans. As this debt is sometimes described as “owed to ourselves,” some experts focus on debt held by the public, which is currently $16 trillion (78 percent of GDP).

Which measure matters more? Debt held by the public is the amount the U.S. Treasury borrows in global credit markets. Interest rates are prices adjusting to bring demands for borrowing – by businesses and households in addition to government – into line with the supply of funds from savers and investors. Publicly-held debt potentially crowds out productive investment.

The intra-government debt is also real. The $800 billion the Treasury has borrowed from the Department of Defense’s pension program is supposed to pay retirement benefits, but was used for other Federal spending. If not repaid, military pensions would need to be paid out of current taxes.

Does the national debt spell inevitable bankruptcy? Warren Buffett has observed that the debt is not necessarily a problem because it was higher relative to GDP at the end of World War II. Mr. Buffett’s observation highlights the importance of budget projections. We borrowed to fight World War II, and investors expected spending to decline precipitously after the war. It did, and debt fell below 40 percent of GDP during the 1950s.

By contrast, spending is expected to increase significantly in the future. The most recent Congressional Budget Office (CBO) 30-year forecast projects Federal spending to increase from 20.6 to 27.9 percent of GDP. An aging population using more medical care will increase spending on Social Security, Medicare, and Medicaid. The CBO expects debt held by the public to reach 152 percent of GDP by 2048. This will be uncharted territory for the U.S. and could trigger a debt cycle through rising interest rates.

Will debt at 150 percent of GDP mean bankruptcy? Perhaps. Greece has teetered on the verge of bankruptcy with debt at 180 percent of GDP. But Japan remains sound despite debt at 220 percent of GDP.

Debate over insolvency obscures a common assumption that tax revenues will not rise significantly. The CBO, for instance, projects Federal revenues of 19.5 percent of GDP in the 2040s, only three percentage points higher than today. A Cato Institute analysis of fiscal imbalance kept tax revenue at current levels.

Potential Federal insolvency demonstrates that we cannot afford a European-style welfare state without European-style taxes. This tension, I think, goes back to Ronald Reagan, who pursued tax cuts even though his desired spending cuts proved politically unachievable. Reagan set Federal spending on a collision course with our distaste for taxes, likely hoping that his tax cuts would eventually force spending cuts. Maintaining Social Security and Medicare as they are given demographic changes will require paying more taxes.

I am not advocating for higher taxes and would prefer downsizing government. We cannot, however, afford a Cadillac on the payments for a Chevy and will soon have to decide whether we are truly willing to pay for big government.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

6 hours ago

Can cleaning the ocean be marketed?

Trillions of pieces of plastic are creating huge garbage patches in the world’s oceans. One company’s efforts to do something about this problem can lead us to rethink some perceived economic wisdom.

The National Oceanic and Atmospheric Administration estimates that two million tons of plastic enters the world’s oceans each year. Most of this waste results from irresponsible disposal. Ocean currents have created five major garbage patches. The most notable is the Great Pacific Garbage Patch between California and Hawaii, double the size of Texas and containing 1.8 trillion pieces of plastic. The patches are nuisances, can harm ocean life, and provide one rationale for banning plastic straws, silverware, and bags, although the wisdom of plastic bans is a topic for another day.

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Floridians Andrew Cooper and Alex Schulze witnessed the ocean trash problem while surfing in Bali and started 4Ocean in response. As the company’s website describes it, “Devastated by the amount of plastic in the ocean, they set out to find out why no one was doing anything about it.”
The problem was that no one could get paid to pick up the trash, and Mr. Cooper and Mr. Schulze hit upon an idea. For $20, customers can buy a 4Ocean bracelet made from recycled plastic and remove one pound of trash. To date, 4Ocean has removed more than 4.4 million pounds of plastic.
Can we trust that 4Ocean removes trash from the ocean? To assure customers, 4Ocean relies on Green Circle Certification. Green Circle provides third party certification of a variety of environmental claims, including recycled content in products, energy savings, and carbon footprint reduction. Companies like 4Ocean pay Green Circle to assess their operations. For certified claims, Green Circle lets the customer use their symbol and enters the product in their online database.

Certification seemingly faces a conflict of interest: Won’t Green Circle always certify the claims of paying customers? While this is a danger, ultimately a third party certifier really sells only its veracity. 4Ocean will only pay if Green Circle’s seal matters to potential customers. Green Circle, which has been in business since 2009, makes money over time only by being honest.

Third party certification has a long history. The case most studied by economists is Underwriters’ Laboratories, which tests consumer products for safety. The UL stamp assures insurers that lamps, toasters, and other products are not fire hazards.

How does this relate to government and environmental protection? Americans value protecting the environment, but conventional wisdom holds that business cannot make money protecting the environment. Any commercial venture must charge for its product or service, and normally does so by allowing only paying customers to get the product or service.

Yet allowing only paying customers to benefit from environmental protection is almost impossible: everyone benefits if the Great Pacific Garbage Pile is cleaned up. If businesses cannot market environmental protection, we will have to turn to government and taxes.

We have an incentive to let someone else clean up the ocean, but also like to contribute to good causes. 4Ocean taps into this sentiment, and their bracelet lets customers to show off their good deed. Environmental groups raise millions of dollars in a similar fashion. Charities do this too; Save the Children allows donors to learn the story of a child they “rescue.”

Proponents of government action will point with justification that the funds raised through markets to protect the environment are small relative to the scale of the problems. The 2,200 tons of plastic 4Ocean is just a drop in the bucket. Yet government efforts can be poorly funded, very costly, and of poor quality. The Government Accountability Office has repeatedly documented the flaws of the Energy Star labeling program.

Ultimately we must pay for environmental protection. Businesses and charities must deliver to continue being supported by their customers or patrons. Each success in marketing environmental protection enables a valuable alternative and should be celebrated.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.

6 hours ago

VIDEO: Alabama’s abortion bill gets plenty of attention, changes to a proposed lottery fund education, tariffs hurt Alabama farmers and more on Guerrilla Politics …

Radio talk show host Dale Jackson and Dr. Waymon Burke take you through this week’s biggest political stories, including:

— Is Alabama’s abortion ban good policy or good politics?

— Will the 25 percent allocated for education secure the passage of a lottery in Alabama?

— Will Alabama farmers blame President Donald Trump or the previous administration for the current impact tariffs are having on their livelihoods?

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Jackson and Burke are joined by Democratic activist Pam Miles to discuss plans to protest Alabama’s abortion ban and how Democrats in Alabama move forward.

Jackson closes the show with a “parting shot” at those perpetrating the “25 white men” narrative when discussing Alabama’s abortion ban.

https://www.facebook.com/303363616352436/posts/2418925051462938/

Dale Jackson is a contributing writer to Yellowhammer News and hosts a talk show from 7-11 am weekdays on WVNN.

9 hours ago

Roby: A pro-life update from the federal level

Throughout my time in Congress, I have been staunchly and unapologetically pro-life. I will continue to use this platform to fight for life at every stage because unborn babies cannot fight for themselves. Since much of the news in our state and throughout the country lately has focused on recent pro-life efforts, I would like to take this opportunity to share an update about my work on the federal level to defend the unborn.

In February of this year, the Trump Administration’s Department of Health and Human Services issued a rule that would restrict Title X family planning grants from being steered to entities that are not physically and financially separate from abortion providers. A series of court injunctions have frozen these rule changes, and as a result, hundreds of abortion facilities, like Planned Parenthood, are still receiving federal tax dollars through Title X grants.

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While the rule is going through the judicial process, the Democrat majority on the House Appropriations Committee has elected to tie the hands of the Department of Health and Human Services through legislation stating that the Department may only act in accordance with regulations established prior to January 18, 2017, just two days before Donald Trump became President. This is unacceptable – we simply cannot handcuff the current administration to regulations of the past.

During the recent full Appropriations Committee markup of the Labor, Health and Human Services, and Education Subcommittee Fiscal Year 2020 funding bill, I offered an amendment that would allow the courts, rather than the Democrat majority in the House, to decide the fate of the Trump administration’s proposed rule restricting Title X family planning grants from being awarded to facilities that provide abortions. Despite the inclusion of the Hyde Amendment, abortion providers have been able to get their hands on American tax dollars through these Title X funds. I am unapologetically pro-life, so I don’t want this to happen, and the majority of the people I represent don’t want this to happen.

The Trump administration’s proposed rule would draw a clear, bright line between family planning services and abortion providers. Unfortunately, my amendment did not pass, but to ensure that the rule has a fighting chance of becoming law, we must allow it to go through our judicial process – not block it legislatively as part of a political game.

In addition to the Department of Health and Human Services, the Food and Drug Administration (FDA) is also taking measures to stand up for the unborn. Two foreign companies, Aid Access and Rablon, have been known to distribute chemical abortion drugs to customers in the United States by mail-order. This practice is already illegal, and the FDA has taken action against it, but it is still happening.

This abortion drug, called Mifeprex, is approved by the FDA, but it is only legally available to patients in the United States through health care providers. It is not available in retail pharmacies, and it is certainly not legally available on the Internet. However, these abortion-by-mail providers, primarily based in Europe, have widened their consumer base to include the U.S. They provide remote consultations, send prescriptions to be filled in India, then send the abortion drug to U.S. customers by mail.

By violating the FDA’s safety protocols, these companies are endangering the health of American women and their children. The FDA has been combating these practices, but I recently led a letter, signed by 117 of my colleagues, that was sent to Dr. Norman Sharpless, acting FDA commissioner, urging him to further crackdown. I was proud to join my fellow pro-life colleagues in sending the clear message that we will not tolerate these dangerous, illegal practices, and I applaud the steps the FDA has already taken to protect women and unborn children.

I share these updates to make the point that while we still face challenges, our pro-life momentum is strong, and I will keep pushing forward on the federal level. I want the people I represent in Alabama’s Second District to know that defending the unborn remains a top priority of mine, and I will continue to speak out for those who cannot speak for themselves.

Martha Roby represents Alabama’s Second Congressional District. She lives in Montgomery, Alabama, with her husband Riley and their two children.

11 hours ago

University of Alabama, other Southern flagship universities see biggest bump in enrollment

Enrollment at several universities in the South jumped more than 50 percent in a decade, according to data from the College Board.

University of Arkansas saw its number of full-time students grow 63 percent from 2007 to 2016, the most of any flagship university. University of Alabama and University of Mississippi had the next largest increases at 55 percent and 51 percent, respectively.

In addition to the allure of football tailgate parties, students may have been enticed by lower tuition fees and living expenses. Among the 50 flagships, University of Arkansas ranked No. 38 in cost, while Alabama was No. 30 and Ole Miss came in at No. 44.

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Admissions officers should take note. The high school class of 2012 ushered in a first wave of declines in the number of graduates nationwide, according to a report by the Western Interstate Commission for Higher Education in Boulder, Colorado. The trend will worsen after 2025, when the impact hits from a drop in births that began with the 2007 recession.

Some of the boost in enrollment at schools in warmer locales coincides with a rise in the region’s population growth, with exceptions. Florida’s population grew by 2.45 million since 2010 while its flagship university saw enrollment slide 4.4 percent from 2007 to 2016.

Studying in the Sunshine State comes with a hefty price tag for non-residents. Out-of-state students at the University of Florida pay more than four times what their in-state counterparts pay, the largest premium among the 50 flagship schools. University of North Carolina at Chapel Hill ranks second. Out-of-state students there pay more than $35,000 in tuition while those in-state pay less than $9,000.

University of Michigan is the most expensive flagship university for out-of-state students, at close to $50,000 per year. Next are University of Virginia and University of California at Berkeley. All three are consistently among the top-ranked U.S. public colleges.

Meanwhile, the cost gap for in-state and out-of-state students decreased the most at University of Georgia over the last decade.

University of MontanaUniversity of Idaho and University of Alaska saw the biggest declines in enrollment despite their in-state tuition costs trailing their faster-growing counterparts. Enrollment also tumbled at University of South Dakota, which has the best deal for out-of-state students. Tuition and fees for the 2018-19 school year there were just $12,425.

(With assistance from Janet Lorin and Marie Patino. Contact the reporter at shagan9@bloomberg.net.)

This article first appeared on Bloomberg.

(Courtesy of Alabama NewsCenter)

13 hours ago

Birmingham Botanical Gardens water features get a makeover

Every spring, visitors stream into the Birmingham Botanical Gardens. Children dart among the uprights at the Granite Garden fountain and dash to the Rose Gardens to see if the roses have started to bloom, or humor their parents and pose for photos.

Whether they’re coming for exercise or inspiration, guests of all ages and interests have a chance to enjoy the sights and sounds of springtime, and among these – in no small part – are the artistry and lyrical babbling of the gardens’ beloved water features.

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Over the past two years, more than half of the gardens’ 14 water features have undergone a transformation, thanks to membership support and the combined efforts of Jane Underwood, operations manager with the Friends of Birmingham Botanical Gardens, and Virgil Mathews, district horticulture supervisor with the city of Birmingham. During your next visit, check out these newly refurbished water features – a testament to the dynamic relationship between garden and water landscape.

The Cochran Water Wall in the Hill Garden was the first to be rehabbed. Dedicated in 1988, it is the focal point of the garden.

“The water wall had stopped sheeting over the entire top edge. As a result, the basin was not filling up and recirculating,” Underwood says. “We had to figure out where water was going and how to repair it.”

Underwood and Mathews worked with Alabama Aquatics, which removed the tile on the back wall and sealed the wall before replacing the tile. Problem solved.

They then turned their attention to the 1967 Japanese Garden streambed because the water was not cascading over the waterfalls.

“It was flowing into cavities before it ever reached the waterfall,” Underwood says.

Parrot Structural Services pumped the cavities with hydraulic cement to fill the voids. They applied the same treatment to the Abroms Rhododendron Species Garden basin, the Curry Rhododendron Garden pond and the Fern Glade streambed.

The team was excited to discover a way to have the iconic North and South Urns repaired on-site. Dedicated in 1988, the urns are fixtures of the Formal Garden and help frame the space. Estes Paintingused epoxy to fill rust holes in the cast-iron vessels, sanded the urns and repainted them.

Alabama Aquarium & Pond Services (AAPS) then installed new pumps and placed them in such a way that they’re not visible from the paths,” Underwood says.

Other improvements were less extensive but no less important. In the Curry Rhododendron Garden pond, “horticulturist Tiffany Sutton had been filling the pond with a hose when the water level dropped,” Underwood says. A new pump with an auto-fill feature now fills it as needed.

The 2006 Loblolly Pine Cone fountain by sculptor Brad Morton in the Southern Living Garden also received a new pump. The Abroms Rhododendron Species Garden basin, which like most streambeds at the gardens was created with shotcrete applied directly to the soil without rebar to reinforce it, was rebuilt using reinforced concrete. Thanks to the combined efforts of Bright Future Electric and AAPS, the quaint pond in the McReynolds Garden greets visitors with the gentle welcome of a bubbly fountain.

“It’s amazing – the feel of the place – when the fountains are up and running,” Underwood says. “When you walk through the Japanese Garden or sit in the new swings in the Abroms Rhododendron Species Garden, water makes such a difference in the aesthetic of these spots. The gardens feel so alive.”

This story first appeared in the spring 2019 issue of The Garden Dirt magazine published by Friends of Birmingham Botanical Gardens.

(Courtesy of Alabama NewsCenter)