• John McCain's speech last week after cinching the Republican nomination was, in effect, his first of the general election campaign.
The conventional wisdom is that presidential candidates pivot to the center for the general election. McCain did not.
Instead, he sketched a very
conservative challenge to the Democratic nominee, be it Barack
Obama or Hillary Clinton.
They want to surrender in Iraq, McCain said. I will fight for
victory.
They want to increase taxes. I'll lower them.
They want more government-run health care. I'll reduce
health-care costs and empower individuals without jeopardizing
the finest health-care system in the world.
They want to improve the economy through more government. I'll
improve the economy through less government and regulation.
The only place that McCain pivoted toward the center was in
effectively promising to match the Democrats subsidy for subsidy
for alternative fuels. Other than that, his opening salvo was
orthodox conservatism.
Conservatives may still not be comfortable with McCain, but it
appears he's going to run as one.
• The federal House of Representatives recently approved big
subsidies and tax credits for alternative fuels, paid for by tax
hikes on major oil companies.
Before passage, Republicans moved to strip the tax hikes from
the bill. Gabrielle Giffords was one of only eight Democrats to
vote for the motion, even though she supports the tax hikes and
was an ardent supporter of the underlying legislation.
So, what gives?
Well, Republicans had set this up partially as a "gotcha" vote.
In addition to stripping the tax increases on big oil, the
amendment would have made permanent the Bush tax cuts
eliminating the marriage penalty and increasing in the child
credit.
Those provisions had no place in a bill about energy taxation.
Most Democrats ran the risk of being depicted as against
middle-class tax cuts. Giffords opted not to.
• Democrats are describing the tax provisions of the bill as
eliminating tax breaks or subsidies to big oil. That's a bunch
of hooey.
Congress recently effectively reduced the corporate income tax
for manufacturers from 35 percent to 33 percent. This bill would
remove oil companies from the manufacturing class, subjecting
them to the higher rate.
It would also reduce the ability of major oil companies to
offset their domestic tax liability for foreign taxes paid in
the same manner as other multinational businesses.
In other words, the oil companies are not being stripped of tax
benefits not provided to other industries. Instead, they are
being singled out for punitive tax treatment different from that
of other industries.
• The Arizona Tax Research Association published an eye-opening
report on state and local government debt last week. It now
stands at $32 billion, or $5,204 per capita.
Perhaps more significantly, it has increased 57 percent over the
last five years. By contrast, personal income in the state over
that period increased just 46 percent.
Now, Arizona governments still enjoy high credit ratings and I'm
not a conservative who's allergic to governmental debt.
Still, debt cannot long grow faster than personal income without
adverse consequences. According to the ATRA, Arizona already
ranks 16th highest among the states in state and local debt as a
percentage of personal income.
Something for the Legislature to consider in contemplating Gov.
Janet Napolitano's proposals to increase state debt by more than
$1 billion to avoid spending cuts.
• Projections are now for essentially flat revenues for this
budget year and next. Assuming a tax increase is to be avoided,
the sensible thing would be to drain the rainy-day fund and
freeze all state spending at current levels through next year.
The budget holes are simply too big to trim programs here and
there or to fill them prudently with debt.
Unfortunately, however, a comprehensive spending freeze would be
unconstitutional. What idiot made a spending freeze in a revenue
crunch unconstitutional, you ask. Well, dear readers, that would
be you.
In 1998, voters enacted a constitutional amendment saying the
Legislature couldn't mess with ballot measures they approve.
Subsequently, voters approved measures mandating increased
spending in education, health care and children's programs.
Now, if a ballot measure had been put forward banning a spending
freeze during a revenue shortfall, I suspect voters would have
rejected it. Yet that's the cumulative effect of what voters did
approve.
Which illustrates the inherent problem and folly of
appropriating through ballot measures.