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About Liz Iacobucci

Liz Iacobucci is the former Public Information Officer for the State Employees’ Association of New Hampshire, SEIU Local 1984. Over the past three decades, she has served in government at the federal, state and municipal levels; and she has worked for both Democratic and Republican politicians.

CACR 13: Putting New Hampshire in a Financial Straightjacket

Photo by Joseph Sawicki

On election day Granite Staters will not only choose who will lead us for the next few years, we will also vote on proposed changes to the New Hampshire Constitution.

One of those changes, CACR 13, would put our state into a financial straightjacket.

Right now, New Hampshire has a “crazy-quilt” approach to funding state government.

  • Business taxes account for almost one-third of the revenue necessary to run our state government.  New Hampshire has a business profits tax and a business enterprise tax.  We tax health care facilities and utilities.  Another 2% of state revenues come from a court settlement with tobacco companies.
  • So-called “sin taxes” and gambling revenue account for one-fifth of the state budget.  Between the tobacco tax, the beer tax, and transfers from the Liquor Commission, the Lottery Commission and the Racing and Charitable Gaming Commission, almost $450 million in annual revenues comes from sources that the “religious right” would condemn as immoral.
  • Property taxes don’t just fund local governments – they also account for a whopping 16% of state revenues.
  • Then there are so-called “consumption taxes”.  Taxes on meals and lodging are 11% of revenues.  Then we have taxes on insurance policies, telecommunications services, utility consumption, and real estate transfers.  Taxes on dividends and securities revenue.  Court fees.  Fees to register your car, boat, snowmobile, trailer.  License fees.  Transaction fees.  It seems like every time you turn around, there’s another small tax or large fee.

It’s the “crazy-quilt” to funding state government: New Hampshire raises revenue just about every way possible except by taxing wage income or retail sales.

Is that really the best way to fund state government?

And even if we decide it’s how WE want to fund state government… do we really have the right to decide for future generations how THEY are going to fund New Hampshire’s government?

If we change the state Constitution to eliminate any possibility of an income tax – at any time in the future – we would be putting a financial straightjacket on the state’s revenue system.

We’ve been dealing with nickel-and-dime fee-hikes and tax hikes for decades now.  CACR 13 would enshrine that “crazy-quilt” funding method in the state Constitution forever.

What moral right do we have, to tie the hands of future generations?

Going Behind the Rhetoric on Public Employee Pensions

Wow.  Last week there was yet another out-of-state special interest group trying to tell New Hampshire how to run OUR government.  “State’s ‘stunning pensions’ called lavish by taxpayer group.”

There are so many things wrong with this that it’s hard to know where to start.

First, consider the source of the story.  “Taxpayers United” is actually a tiny organization based in Chicago.  It has only one full-time employee:  its president, James Tobin, a former Elmhurst College economics professor who reportedly founded the organization back in 1976.

Since that time, the organization’s focus has wandered from issue to issue.  According to the marketing pitch for anyone who wants to purchase their mailing list, Taxpayers United is now focused on “the repeal of the 16th Amendment and doing away with the income tax in favor of a consumption or flat tax.”  But it must be easier to generate headlines by attacking public employees than by proposing to amend the US Constitution.  Last month, Taxpayers United was making headlines attacking public employee pensions in North Carolina.  Before that, it was attacking pensions in Minnesota, Kansas, and Indiana.

Odd, how this tiny organization keeps making headlines about something that is so far removed from its goal of changing the Constitution.  Is it because headlines are a good way for the organization to attract the donations necessary to keep it in business?  Free publicity is sure a good way to find those donors who are described in the mailing list pitch as “highly responsive and are vigorous financial backers of any effort to reduce the size of government and cut taxes.”

Now, the actual facts. 

In New Hampshire, public employee pensions aren’t exactly “paid by taxpayers.”  Step away from the right-wing rhetoric and think about this for a minute.  City of Manchester retirees don’t get their retirement checks from the City of Manchester.  Retired Concord teachers don’t get a monthly direct deposit from the City of Concord.

In actual fact, these pensions come from a retirement system that is primarily funded by long-term investment returns. In fact, about 75 cents of every dollar paid in pension benefits comes from investment returns.  Most of the rest is attributable to workers’ contributions to the system. The employer’s contribution – the taxpayers’ portion – represents only a few pennies of each pension dollar – and even that amount was contributed by the employer many years (or even decades) ago.

One very important part of the New Hampshire Retirement System is that some of the public employees are not eligible for social security (group II).  This means that their pension is the only income they will get in their retirement.  This is also why Group II pay a higher contribution rate.  Group I members pay both Social Security and NHRS but get less in retirement payouts from the NHRS.

Public employers used the New Hampshire Retirement System to push wage costs off into the future, because the lower pay offered by government agencies was balanced by promises of retirement security.  It only took a few percentage points of payroll – contributed to the New Hampshire Retirement System – to make up for large disparities between government wages and pay levels offered by the private sector.

In some ways, it was like bonding a school construction project – where a municipality gets the benefits immediately, but pays for it in the future.  As Mitt Romney might say, it’s “kicking the can down the road.”

But then Wall Street led the economy astray.

As recently as 1999, the New Hampshire Retirement System was more than 100% funded.  But then the Trust Fund lost 10% of its value in the recession of 2001.  It lost another 25% of its value in the 2008 recession.

It happened all around the country.  At the same time that public pension funds were losing value due to Wall Street greed, new accounting standards were focusing public attention on the systems’ unfunded liabilities.  Anti-government pundits used the situation to attack public sector pensions and call for pension “reform”.

Lost in all their rhetoric was one basic fact: the trillion dollars in unfunded public pension obligations were the same trillion dollars of public pension funds lost to Wall Street.

In June 2007, before the Wall Street meltdown, the NH Retirement System had $5.9 billion in investments, including

  • $29.7 million of stock in Citigroup, Inc.
  • $23.5 million of stock in American International Group, Inc. (AIG)
  • $14.0 million of bonds issued by Federal Home Loan Mortgage Corp. (Freddie Mac)
  • $13 million of bonds issued by Federal National Mortgage Association (Fannie Mae)

Two years later, when the recession was in full force,

  • Citigroup stock had plunged to only about 6% of its former value
  • AIG stock was worth only about a penny on the dollar
  • Freddie Mac and Fannie Mae had both been placed into federal conservatorship

and the anti-government pundits were getting lots of headlines attacking public employees’ pensions.

Since then, employers’ contributions have increased significantly, to make up some of the money that was lost to Wall Street.  And the NHRS Trust Fund has in fact recovered a lot of ground —it is now almost back to where it was in June 2007.  Give it another decade of steady investment returns, and the System might be back to 100% funded.

But the Republicans are trying to repeal the Dodd-Frank Act, which was passed to prevent the worst of the Wall Street abuses from happening again.  In the meantime, the financial industry is spending $100 million a year on lobbyists trying to create loopholes in the regulations.

And anti-government pundits are still making headlines attacking public employees’ pensions.

What’s that old saying about “those who don’t remember history”…?

More Tax Cuts? Or Keep Social Security?

 

Something to keep in mind while you are watching tomorrow night’s debate between Joe Biden and Paul Ryan:

Back in 2001, then-President George Bush pushed through a package of “temporary” tax cuts that mostly benefited the wealthy.  Joe Biden voted against the tax cuts.  Paul Ryan voted in favor of them.

At the time, conservative pundits said the temporary tax cuts would generate 1.6 million new jobs by 2011 – and that would generate enough federal revenue to pay back the entire federal debt.  (You can read the 2001 Heritage Foundation report here.)

Instead, the tax cuts contributed to record-setting federal deficits.

In 2003, President Bush pushed through a second package of “temporary” tax cuts, which again mostly benefited the wealthy.  And again, Joe Biden voted “nay”; and Paul Ryan voted in favor.

A year later, the new jobs hadn’t materialized.  “Supply-side economics” hadn’t cut the federal debt.

But that didn’t stop the tax-cutters.  Instead, they pushed to have the “temporary” tax cuts made permanent.  Here’s the Associated Press report from February 13, 2004:

Federal Reserve Chairman Alan Greenspan said Thursday that Congress should make President Bush’s tax cuts permanent and cover the $1 trillion price by trimming future benefits in Social Security and other entitlement programs.

Social Security?!!?

During the Bush presidency, Social Security was “running a surplus.”  More money was coming in through payroll taxes than was being paid out in retirement benefits.  And the federal government borrowed every single penny of that surplus.

Today, the Social Security Trust Fund is the single largest creditor of the federal government.  Over $2.7 trillion of the federal debt is owed to the Social Security Trust Fund.  And that’s about the same amount as the 10-year cost of extending the Bush tax cuts for the wealthiest 5%.

That’s what you should keep in mind during tomorrow night’s debate: this election is coming down to a choice between tax cuts for the rich and financial security for the rest of us.

Social Security has stopped running a surplus, now that the Baby Boomers are retiring. Will the federal government honor its IOUs to working families?  Or will the $2.7 trillion in federal debt get washed off the books by the proposed Romney-Ryan “reform” of Social Security?

Union members know what it’s like to see pension benefits vanish.  It’s become all-too-common for corporations to use bankruptcy court to get “relief” from their pension obligations; American Airlines is just one example.  More than 4,000 corporate pension programs are now in the trusteeship of the federal government.  (You can download the list — representing more than 2 million American families! —  here.)

Most of us have been paying into the Social Security system for decades.  We don’t want to see our benefits disappear through a Romney-Ryan “reform” of the Social Security system.  (One more reason why we don’t want to elect a President who will “manage” the federal government as if it were a corporation.)

Tax cuts for the wealthy didn’t create jobs in 2001.

More tax cuts didn’t create jobs in 2003.

Tax cuts in 2013 won’t create jobs, either – but they may cost us our Social Security benefits.

Please remember that, as you watch Joe Biden and Paul Ryan in the Vice Presidential debate tomorrow night at 9:00 pm.

 

Top 10 Reasons Why New Hampshire Doesn’t Want a Governor who is “Scott Walker on Steroids”

The New Hampshire Republican Party has invited Wisconsin Governor Scott Walker to keynote the state Republican Convention this weekend.

Watching Walker lead the convention should be a cautionary tale: Republican gubernatorial candidate Ovide Lamontagne has promised that, if he is elected, he will be “Scott Walker on steroids.”

Here are the Top 10 Reasons Why New Hampshire Doesn’t Want a Governor who is “Scott Walker on Steroids”:

10. New Hampshire believes that taxpayer money should be spent carefullyThe federal government is investigating Wisconsin’s use of block grant monies under Gov. Walker.  According to press reports, federal monies have been improperly awarded as “forgivable loans” rather than being required to be paid back, and to businesses which had not been reviewed for financial soundness.  The federal monies have been paid out by a private corporation run by a political ally of Scott Walker, rather than by a state agency.

9. Scott Walker has a dismal record on the economy.  On Walker’s watch, only about 27,000 jobs have been added in Wisconsin (which has a population four times larger than New Hampshire’s).   Wisconsin’s unemployment rate is still 25% higher than New Hampshire’s.  Wisconsin’s poverty rate is 50% higher than New Hampshire’s.

8.  New Hampshire cares about the quality of our children’s education.  On national standardized tests, the percentage of children scoring “advanced” is 25% higher in New Hampshire than in Wisconsin.  Almost a third of Wisconsin fourth-graders don’t have a basic grasp of reading.  And that’s likely to get worse as the long-term effects of Scott Walker’s “war on teachers” begin to show.

7.  New Hampshire likes our politicians to be independent.  Scott Walker isn’t.  After he was elected Governor, Walker’s first priority was making tax code changes which were drawn from the “wish list” of the corporate lobbying group ALEC (American Legislative Exchange Council).  Read the Center for Media and Democracy’s report “Wisconsin: The Hijacking of a State” at http://bit.ly/JSvZKf.

6.  Scott Walker has divided Wisconsin.  Walker won a bitter, polarizing recall election with only 53% of the vote – after spending more than $30 million to convince voters he should be allowed to serve out his term.  More than two-thirds of his money came from outside the state.   With the backing of outside groups, Walker was able to outspend his opponent nine-to-one.

5.  Our municipalities can’t afford needless cuts in state aid.   Walker cut state aid to municipalities by $100 million, saying the cut was “necessary” to balance the state budget – but instead Wisconsin has a $126 million budget surplus.   Will municipalities get their money back?  Or will it go toward additional cuts in business taxes?

4.  Scott Walker likes the headlines too much.  Ever done a Google News search on “Scott Walker” and gotten less than 50,000 stories?  Walker seems to spend a lot of time in other states campaigning with one or another Republican politician.  Or he’s trumpeting his decision to spend $2 million on a move-to-Wisconsin marketing campaign.  Or he’s making headlines advising Mitt Romney.  Or… whatever it takes to make the news.

3.  New Hampshire wants our politicians to uphold the Constitution.  Both federal and state courts have ruled that Scott Walker’s signature anti-union law violates the Constitution.  But Walker’s still trying to enforce it.

2.  New Hampshire doesn’t like hypocrisy.   When the subject was football, it only took one wretched call by a scab referee before Scott Walker started tweeting that NFL owners should “return the real refs.”   Walker apparently values the quality of services provided by union referees – at the same time he trashes his own union employees.

1.  Scott Walker doesn’t represent the values of New Hampshire Republicans.  In New Hampshire, Republicans believe in the constitutional rights of free speech and association – and Republicans believe in collective bargaining.  About 40% of New Hampshire’s union members are registered Republicans.  Why is Scott Walker trying to throw us out of our own party?

 

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