The Biggest Loser

You’ve got to hand it to Gary Marbut. The man is either going big or going home.

Marbut, who appears to run the Montana Shooting Sports Association as his personal fiefdom, was in town last week promoting a bill to give tax breaks to folks who might someday manufacture ammunition makings right here in Montana. The bill, SB 122, is sponsored by Matt Rosendale, the Republican Senate majority leader and well known drone assassin.

Most people, when they want the legislature to give their pet projects a little juice, settle for something – a credit or deduction or a rate cut - that will reduce their taxes for a while. It’s usually temporary, the idea being that once whatever-it-is is up and running, special treatment will no longer be needed.

Now I am not crazy about this kind of tinkering with the tax system. It creates a slew of inequities and often serves special interests rather than the interests of the public at large. So in that sense, I guess we should be grateful to Marbut, because rather than messing around at the edges of the tax system, he's going big and proposing that his ammunition makers pay no taxes at all.

I am not making this up: Gary Marbut would like businesses that make ammunition components to pay no state taxes at all. Ever.  No state property taxes for schools. No business equipment taxes. No individual income taxes. No corporate income taxes. No taxes even on the income banks or others earn from making loans to ammunition component manufacturers. And even though these businesses will pay no taxes to the state, they will be eligible for economic development grants from the Department of Commerce.

Why on earth is all this largesse needed? Well, it turns out that none of this stuff – powder, primers, and so forth – is produced in Montana, and not much is produced in the rest of the country. A lot of it is imported, presumably because foreign manufacturers are more efficient and produce at lower cost. And would be Montana manufacturers apparently can only compete if they are given a free pass on their state taxes. So what we have here is protectionism, pure and simple.

Folks seeking this kind of special treatment always try to justify it as somehow being in the public interest. So Marbut would have you believe that our Second Amendment rights (you knew that was coming, didn’t you?) will be hollowed out unless we can buy ammunition made right here at home. He presents no evidence at all that there’s a shortage of ammunition, or that foreign manufacturers or Barak Obama are plotting to cut us off cold  turkey, or that gun owners don’t have  enough ammunition lying around already to deal with the threats they endlessly worry about. In other words, he gives us no reason to think that ammunition is more deserving of protection than the thousands of other vital products - medicines, for example - that we import and use in Montana every day.

Marbut also wants us to coddle the ammunition industry because doing so will create jobs. In the questionable game of picking economic development winners and losers, he wants us to pick an industry that by his own admission is too costly and  too inefficient to compete without being propped up by the public. In other words, in Marbut’s topsy turvey world, the biggest loser should be the big winner.

Voodoo Economics

The Missoulian reported this week that Reps. Art Wittich and Keith Regier appeared in front of the House Tax Committee Tuesday, seeking approval for a couple of great big tax cut bills and dishing out the usual conservative Republican assurances about how wonderful the results would be.

You’ve probably heard all this before: If we cut tax rates and let people (and especially rich people) hold on to the money they make, they’ll want to make a lot more of it. The economy will flourish, the tax base will expand, and lo and behold, total tax revenues will rise. This notion, that a cut in tax rates will produce an increase in tax revenue, is usually attributed to the economist Art Laffer, who allegedly hit on the idea while drinking with some buddies in a D.C. bar. Laffer was an adviser to Ronald Reagan, who became enamored of the idea and put it into practice, thereby becoming the first president in 35 years to grow the national debt faster than the economy as a whole.* In 1980, George H.W. Bush, anticipating the train wreck that was to come, famously accused Reagan of espousing "voodoo economics."

Wittich also argues that we are sitting on a great big pile of money - $350 million idling in the checking account – and that it’s only right to give it back to the taxpayers. The problem is that we are about to have a battle royal about whether that money is really there to give back.

The first thing we have to do when we start to build a budget – that is, figure out what services we want to provide, what we can pay for them, how much of a cushion we need to leave in the bank, how much we can afford to cut taxes, and so forth – is to estimate revenue. And it turns out that right now the Governor’s budget director thinks we will have a lot more revenue than the Legislature’s own analysts are forecasting. How much more? Well, coincidentally, a little more than $350 million.

Now usually when Republicans are presented with several revenue estimates, they gravitate towards the smallest one they can see. What better way is there to “shrink government.” The irony here for Wittich is that if he’s going to do business as usual, he’ll want to low ball the revenue estimate. But that will eat up all the money he wants to give back. What to do, what to do?

Stay tuned on this one. It’s going to get interesting. And don’t be surprised if the conservatives figure out that the only way to low ball the revenue estimate and give back a lot of tax money is to gut programs. It’s what Paul Ryan would do.

*When Reagan entered office in 1981, total public debt equaled 30.8% of gross domestic product. When he left office 8 years later, it was 49.6% Prior to 1981, the debt had declined in relation to GDP under every president, Republican or Democrat, since the end of the WW II.

It's a Miracle!

You may have read a couple of weeks ago about the miraculous ability of Republican senators to multitask. As the Montana Street Fighter reported recently, Senate Republicans this year have managed to generously pad their majorities on several key committees, and the way they did it was to appoint four of their number to each serve on two committees that meet every day at the same time. I’m not sure how that’s working out for those four – they must be awfully busy flying back and forth between committee meetings, trying to be in two places at the same time – but I imagine they can take some comfort in the fact that they are not the only GOP senators working miracles.

Take, for example, John Brenden.

Brenden, who comes from Scobey, had a bill in the Senate this week requiring the publication of a state government telephone directory, on paper, every two years.  You might wonder why, with both a state phone book and state employee directory instantly available on line, Brenden thinks such a throwback is needed. Well, if you listen to his presentation of the bill on the floor (click here), it will all become clear, sort of.

Suppose, Brenden says, that a constituent calls when you are driving down the road, and you need to give her contact information for someone in state government. And suppose you are in an area where there is no cell service, so you can’t access the on-line directories on your smart phone. Well gee, if you have that phone book with you, you’re all set.

Here’s where that miraculous Republican multitasking comes in. Brenden is apparently able to drive, read a phone directory, and talk on the phone without access to cell service, all at the same time! How he does that plumb evades me.