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Economy

manufacturing-autoworker

Surveys gauging growth or contraction in Midwest manufacturing. (REUTERS)

The Philadelphia Fed’s Manufacturing Business Outlook Survey of manufacturing activity in the mid-Atlantic region rose in August to 8.3 after tanking to 5.7 in July. The reading came in above Wall Street expectations for a gain to 7.

The survey’s broadest measure of manufacturing conditions–the diffusion index of current activity–jumped from 5.7 in July to 8.3 in August, and has hovered around this range throughout the year. The percentage of firms reporting an increase in employees in August (21 percent) exceeded the percentage reporting a decrease (16 percent), and the corresponding diffusion index for current employment increased 6 points, to 5.3. Firms reported modest increases in the workweek: The percentage of firms reporting a longer workweek (16 percent) was greater than the percentage reporting a shorter workweek (7 percent).

The midwest manufacturing report follows the release of the New York Federal Reserve’s Empire State Manufacturing Survey earlier this week, which plummeted to -14.92 in August from 3.86 in July. That is its lowest level since 2009, and the reading not only widely missed expectations but also showed contraction.

The Philadelphia Fed Manufacturing Business Outlook Survey

Economy

existing homes sales reuters

(Photo: REUTERS)

The National Association of Realtors said on Thursday existing home sales to their highest level since 2007, gaining 2 percent to an annual rate of 5.59 million units. Meanwhile, June’s sales pace was revised slightly lower to 5.48 million units from the previously reported 5.49 million units. Economists polled by Reuters had forecast home resales falling to a 5.44 million-unit pace last month. Sales were up 10.3 percent from a year ago.

“The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now,” said NAR chief economist Lawrence Yun. “As a result, current homeowners are using their increasing housing equity towards the downpayment on their next purchase.”

The NAR report comes just days before the release of the composite National Mortgage Risk Index (NMRI) for Agency purchase loans, which stood at a series-high 12.50 percent in June, up 0.4 percent from the average for the prior three months and 0.8 percent on a year-over-year basis. The index gains were fueled by the increase share in high-risk FHA loans, and agency loan originations continued their dangerous migration from large banks to non-banks in June. The shift accounted for much of the upward trend in the composite NMRI. Because non-bank lending is substantially riskier than the large bank, more financially sound business it replaces, many economists aren’t celebrating the NAR data.

“Historically low mortgage rates, an improving labor market, and loose credit standards especially for first time buyers, combined with a 32-month-long seller’s market for existing homes, continue to drive up home prices faster than income,” said Edward Pinto, AEI’s International Center on Housing Risk co-director. But Yun and the NAR, which AEI refers to as the housing lobby, aren’t concerned. Rather, Yun says he sees danger only in the increase in housing prices, which could stifle home-buying in future months.

“Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand,” adds Yun. “Realtors® in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains.”

Nationwide, the median home price fell slightly from the previous month to $234,000, but was up 5.6 percent on a year-over-year basis. The supply of homes for sale fell slightly in July. The NAR says they would like to the government to further intervene in order to make it easier to purchase a home, which Pinto and fellow AEI fellow’s worry is ignoring the cause of the previous crisis.

“The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face,” adds Yun. “Rising rents and flat wage growth make it difficult for many to save for a downpayment, and the dearth of supply in affordable price ranges is limiting their options.”

The NAR report claims the share of first-time buyers declined in July for the second consecutive month, decreasing just 2 percent to 28 from a hefty 30 percent in June. While it is the the lowest share since January of this year–when it was also 28 percent–year ago, first-time buyers represented 29 percent of all buyers.

Regional Breakdown

July existing-home sales in the Northeast decreased 2.8 percent to an annual rate of 700,000, but are still 9.4 percent above a year ago. The median price in the Northeast was $277,200, which is 1.3 percent higher than July 2014. In the Midwest, existing-home sales were at an annual rate of 1.32 million in July, unchanged from June and 10.9 percent above July 2014. The median price in the Midwest was $186,500, up 6.6 percent from a year ago.

Existing-home sales in the South increased 4.1 percent to an annual rate of 2.29 million in July, and are 9.6 percent above July 2014. The median price in the South was $203,500, up 7.0 percent from a year ago.

Existing-home sales in the West rose 3.2 percent to an annual rate of 1.28 million in July, and are 11.3 percent above a year ago. The median price in the West was $327,400, which is 8.4 percent above July 2014.

The National Association of Realtors said existing

Economy

unemployment-benefits

Weekly jobless claims, or first-time claims for unemployment benefits reported by the Labor Department.

The Labor Department said Thursday that number of Americans filing new applications for unemployment benefits unexpectedly rose last week, again. Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 277,000 for the week ended Aug. 15, but remain below the 300,000 threshold for concern.

Claims for the prior week were revised to show 1,000 fewer applications received than previously reported. Economists had forecast claims slipping to 272,000 last week. A Labor Department analyst said there were no special factors influencing the data and no states had been estimated.

While the labor market data on the surface indicates the Federal Reserve is on track to raise interest rates this year, minutes from the Fed’s July 28-29 policy meeting published on Wednesday showed the central bank was worried about persistently weak inflation and a weak global economy fueled by a slowdown in China.

The four-week moving average of claims–which is widely considered a better measure of labor market trends as it irons out week-to-week volatility–rose 5,500 to 271,500 last week. That marks the 21st straight week that the four-week average remained below the 300,000 threshold.

The data from the weekly jobless claims report included the week that the government surveyed employers for the non-farm payrolls portion of August’s employment report. The four-week average of claims fell 7,000 between the July and August survey periods, suggesting another month above 200,000.

Payrolls increased by 215,000 jobs in July, which was below expectations.Still, job gains have exceeded 200,000 in five out of seven months, though the U.S. needs to create 250,000 jobs monthly simply to keep pace with population growth. At a seven-year low of 5.3 percent, the unemployment rate is near the 5.0 percent to 5.2 percent range that most Fed officials think is consistent with full employment. However, it is no secret that labor force participation is at a 37-year low, which drives down the unemployment number artificially.

Thursday’s claims report showed the number of people still receiving benefits after an initial week of aid fell 24,000 to 2.25 million in the week ended Aug. 8.

The Labor Department said Thursday that number

World

North Korea Fires Across DMZ, South Responds With “Dozens” of Artillery Shells

Korea DMZ

South Korean soldiers check a fence near the border city of Paju near the demilitarized zone. (Photo: AFP/Getty Images)

South Korea returned artillery fire in response to Pyongyang launching a projectile at a loudspeaker broadcasting anti-North propaganda, officials confirm. South Korean officials said their detection equipment picked up on the projectile’s trajectory, which was launched around 3:52 pm (0252 EDT). Seoul’s defense ministry said the U.S. ally retaliated by firing “dozens” of artillery rounds across the border toward the source roughly an hour and a half later.

While the attack did not appear to have damaged the loudspeaker or caused any injuries–as it landed in an area approximately 35 miles north of Seoul on the western part of the DMZ–the exchange marks the first time the two countries have clash since November 2010. North Korea shelled a South Korean island near their maritime border, killing four.

“Our military has stepped up monitoring and is closely watching North Korean military movements,” South Korea’s defense ministry said in a statement. “Our side staged a counter-attack with dozens of 155mm shells.”

South Korea’s presidential office said it has called an urgent meeting of the national security council in response to the attack, the military raised its alert status to the highest level, and residents in and around the area of the attack were ordered to evacuate.

The communist dictatorial North and the pro-West South have remained in a technical state of war since signing the armistice following the 1950-1953 Korean War. While it ended in a truce, it is not an actual peace treaty.

South Korea’s won currency (CURRENCY:KRW) weakened in non-deliverable forward trading on the reports of the firing, which came after onshore spot trading had closed. The 1-month contract KRW1MNDFOR= rose as high as 1,192.7 won per dollar from around 1,189.8 earlier.

South Korea returned artillery fire in response

Politics

IAEA, Iran Have Secret Side Agreement to Allow Iran to Inspect Itself

Iran-Foreign-Minister-Mohammad-Javad-Zarif-AP

FILE – A Wednesday, Aug. 12, 2015 photo from files showing Iranian Foreign Minister Mohammad Javad Zarif, during a press conference at the Lebanese foreign ministry in Beirut, Lebanon. An unusual secret agreement with a U.N. agency will allow Iran to use its own experts to inspect a site allegedly used to develop nuclear arms, according to a document seen by The Associated Press. (AP Photo/Bilal Hussein, File)

The Associated Press reported Wednesday a previously undisclosed side deal between Iran and the U.N.’s International Atomic Energy Agency would allow Tehran to use its own inspectors to investigate a site it has been accused of using to develop nuclear arms. The report, which was based on a document obtained by the AP, renewed efforts by top Republican lawmakers who have been to the agreement signed by the Obama administration, Iran and five world powers in July.

Sen. Lindsey Graham, R-S.C., a 2016 presidential candidate and foreign policy hawk, released a statement putting the Obama Administration on notice by threatening to cut off United States contributions to the International Atomic Energy Agency (IAEA) unless the “side agreements” made with Iran over its nuclear program are released to the Congress. In a letter to Secretary of State John Kerry, Graham, the Chairman of the Senate Appropriations Subcommittee on State, Foreign Operations, and Related Programs, which oversees contributions to the IAEA, said the response with dictate pending legislative action in Congress.

“Given anticipated legislative action on this controversial deal in the Senate next month, firsthand information on IAEA side agreements are vital to both the debate and decision making process for all Members – irrespective of their views of Iran or the merits of the deal,” Graham said. “As an indication of how serious I view the provision of copies of these side agreements to our national security, I intend to condition and/or withhold voluntary contributions to the IAEA in fiscal year 2016 should they not be provided prior to the congressional debate next month.”

In the face of severe criticism, Obama administration officials have repeatedly claimed the Iran nuclear agreement was not based in trust but verification. The White House argues they have confidence in the ability to conduct “rigorous inspections,” despite the fact no Americans are allowed to participate in those inspections, according to the deal. According to recent polls, Americans overwhelmingly agree with the GOP and notable Democrats who have announced they will not support the deal. Average opposition–which PPD calculates using a variety of pollsters’ questions–was largely unchanged over the past few weeks since we first aggregated the data on August 3. On average, 58 percent of Americans oppose the deal, while just 29 percent support it.

“President Obama boasts his deal includes `unprecedented verification.’ He claims it’s not built on trust,” said House Speaker John Boehner, R-Ohio. “But the administration’s briefings on these side deals have been totally insufficient – and it still isn’t clear whether anyone at the White House has seen the final documents.”

The newly disclosed side agreement, which specifically details inspections of the Parchin nuclear site, was hatced out between the IAEA and Iran. The United States and the five other world powers were not party to it, but have endorsed it after they were allegedly briefed by the agency.

White House National Security Council spokesman Ned Price said the Obama administration was “confident in the agency’s technical plans for investigating the possible military dimensions of Iran’s former program. … The IAEA has separately developed the most robust inspection regime ever peacefully negotiated.”

Again, the reason for public opposition to the deal has been equally consistent and two-fold. First, no one believes Iran will keep their end of the deal and, second, that it will make the world and/or region a safer place. A whopping three-quarters (75 percent) of voters say Iran cannot be trusted to honor the agreement (75 percent), which includes almost all Republicans (93 percent), most independents (80 percent) and even a majority of Democrats (59 percent).

“Allowing Iran to conduct their own inspections, particularly at nuclear facilities, is like allowing the inmates to run the prison,” Graham said. Sen. Tom Cotton, R-Ark., a staunch opponent of the Iran deal, echoed Graham’s sentiment at a Republican senate meeting on Capitol Hill Thursday. Cotton said the secret side agreement is like allowing NFL players to give themselves their own drug test while trying to prevent steroid use.

Sen. Lindsey Graham, R-S.C., is threatening to

Entertainment, Opinion

Broadway-Patti-LuPone

Broadway legend Patti LuPone after returning to 54 Below to perform her solo show Far Away Places. (Photo: Broadway.com)

Broadway star Patti LuPone made headlines recently when she grabbed a cellphone from a woman texting in the second row. It may have helped that she was in character, playing a tough-broad diva from a community theater.

The play, “Shows for Days,” was being performed at Lincoln Center, where generations of mostly well-mannered audiences have gone for live performances. The texter’s orchestra-section ticket could not have been inexpensive.

Are mobile devices rewiring some of our brains? That is, are certain audience members unable to recognize that the figures onstage, whether acting or playing the violin, are not pixels but living, breathing humans capable of hearing and seeing what we in the audience are doing?

Also not to be dismissed were the other theatergoers trying to focus on the drama onstage but distracted by a neighbor’s tapping on her little flashing screen. That might be regarded as bad form even at movie theaters where serious works are shown.

A new rash of bad audience behavior may have any number of causes. One could be, as suggested above, an inability to distinguish between what happens on screens and what occurs in real life. It may be a collapse in basic manners or ignorance of what the rules are — especially in regard to digital natives, for whom live theater might seem retro without irony.

Consider the case of Nick Silvestri. Before a show began, the 19-year-old jumped on the stage at the venerable Booth Theatre and tried to plug his cellphone into an electrical outlet. Adding a dash of (SET ITAL) opera buffa (END ITAL) to the story — look it up, Nick — the outlet was a fake, part of the scenery.

Bizarre as his action may have seemed, it was impossible not to forgive Silvestri after his charming apology. Promoters of the show, “Hand to God,” sensing perhaps both a teachable moment and a shot at some free publicity, held a news conference outside the theater, starring Silvestri and his explanations.

The young man noted that his judgment may have been clouded by a few pre-theater drinks. His contention that he doesn’t “go to plays very much” was easy to believe. “I didn’t realize that the stage is considered off-limits” sounded more of a stretch.

For brazen misbehavior, a recent incident at a theater in Washington, D.C., beats them all. It happened during a performance of “The Fix,” a musical at the Signature Theatre. A drunken woman from the audience sauntered onto the stage, searching for a ladies’ room, and then staggered backstage just as the star was about to make her entrance.

“There she was,” Christine Sherrill told The Washington Post, “kind of loudly asking me where the bathroom was.”

At that point, another audience member walked through a curtain leading to the backstage and told the workers there that she also needed a restroom. The crew escorted both women to the lobby. They soon took off from the theater.

The last example did not directly involve a mobile phone device, but you have to wonder: Had these women’s personal boundaries been blunted by a life attached to screens on which all kinds of urges are loosed without consequence? It can’t just have been the booze. No amount of alcohol would prompt most ladies, for example, to break a storefront window.

Clearly, some members of today’s audiences can’t appreciate that there are human beings on the stage communicating with them. They might consider quarantining themselves before a flat screen at home, where no one would care whether they are singing along, texting or sitting on the toilet.

Clearly, some members of today's audiences, particularly

Opinion

Obama Immigration Speech

U.S. President Barack Obama speaks about immigration reform during a visit to Del Sol High School in Las Vegas, Nevada November 21, 2014. (Photo: Reuters)

One of the most lame excuses for doing nothing is that we can’t do everything. Such excuses have been repeated endlessly, even by some conservatives, when it comes to illegal immigration.

We can’t deport millions of illegal immigrants already living in the country, some say, so the wise thing is to just learn to live with them, according to the supposedly sophisticated crowd.

This completely sidesteps the plain, obvious and galling fact that we are not deporting those illegal immigrants who are arrested by the police for violating other laws — and are then turned loose back into American society. In so-called “sanctuary cities” across the country, local police are under orders not to report illegal immigrants to the federal authorities.

Nobody has a right to obstruct justice when it comes to federal laws — not even the President of the United States, as Richard Nixon discovered when he had to resign after Democrats threatened him with impeachment and Republican Senators told him that they would not defend him.

Today, any mayor of any city of any size across the country can publicly announce that he is going to obstruct federal laws against illegal immigrants — and then bask in a glow of self-satisfaction and the prospect of winning votes.

Even people who are gung-ho to punish employers who do not take on the role of immigration police, for which they have neither training nor authority, are often ready to overlook elected officials who do have both the duty and the authority to uphold the laws, but openly refuse to do so.

The federal government itself, under the Obama administration, has refused to enforce immigration laws, and has ordered its own agents to back off when it comes to enforcing some laws that President Obama happens not to like.

Then there is also what might be called the pretense of enforcement — when people who have been caught illegally entering the country are turned loose inside the country and told to report back to a court later on. How surprised should we be when they don’t?

One of the most widely known abuses of the immigration laws is the creation of “anchor babies” to get automatic citizenship when a pregnant woman simply crosses the U.S. border to have her child born on American soil. This is not limited to people who cross the Mexican border. Some are flown in from Asia to waiting posh facilities.

Not only do their children get automatic American citizenship without having to meet any requirements, this also increases the opportunities for other family members to gain admission later on, in the name of “family reunification.”

This is such an obvious racket, and so widely known, for so long, that you might think our “responsible” leaders would agree that it should be stopped. But, here again, there are excuses rather than action. One distinguished conservative commentator even said recently that this is such a small problem that it is not worth bothering with.

The anger of Americans who feel betrayed by their own elected officials is not a small thing. It goes to the heart of what self-government by “we the people” is supposed to mean.
To say that it is a small thing is even worse than saying that we can’t do anything about it. We certainly can’t do anything about it if we won’t lift a finger to try.

Some legal authorities say that the 14th Amendment confers automatic citizenship on anyone born on American soil. But the very authors of that Amendment said otherwise. And some distinguished legal scholars today, including Professor Lino Graglia of the University of Texas Law School, say otherwise.

Even if it were necessary to revise the 14th Amendment, it is sheer Progressive era dogma that Constitutional Amendments are nearly impossible to revise, repeal or create. There were four new Constitutional Amendments added in just eight years, during the height of the Progressive era in the early 20th century.

But it is indeed impossible if you are just looking for excuses for not trying. Republicans who are worried about Donald Trump should be. But their own repeated betrayals of their supporters set the stage for his emergence. This goes all the way back to “Read my lips, no new taxes.”

One of the most lame excuses for

Opinion

Hillary-Clinton-Ed-Henry

Hillary Clinton takes questions from Fox News’ Ed Henry in New Hampshire Tuesday amid reports the FBI believes someone tried to wipe the server.

While the scandal surrounding the emails sent and received by Hillary Clinton during her time as U.S. secretary of state continues to grow, Clinton has resorted to laughing it off. This past weekend she told an audience of Iowa Democrats that she loves her Snapchat account because the messages automatically disappear. No one in the audience laughed.

Clinton admits deleting 30,000 government emails from her time in office. She claims they were personal, and that because they were also on a personal server, she was free to destroy them. Yet, federal law defines emails used during the course of one’s work for the federal government as the property of the federal government.

She could have designated which of the government’s emails were personal and then asked the government to send them to her and delete them from government servers. Instead she did the reverse. She decided which of her emails were governmental and sent them on to the State Department. Under federal law, that is not a determination she may lawfully make.

Yet, the 55,000 emails she sent to the feds were printed emails. By doing so, she stole from the government the metadata it owns, which accompanies all digital emails but is missing on the paper copies, and she denied the government the opportunity to trace those emails.

When asked why she chose to divert government emails through her own server, Clinton stated she believed it would enable her to carry just one mobile device for both personal and governmental emails. She later admitted she carried four such devices.

Then the scandal got more serious, as Clinton’s lawyers revealed that after she deleted the 30,000 emails, and printed the 55,000 she surrendered to the feds, she had the server that carried and stored them professionally wiped clean.

She had already denied routing classified materials through her server: “I did not email any classified material to anyone on my email. … (I) did not send classified material.”

Then, the inspector general of the State Department and the inspector general of the intelligence community, each independent of the other, found four classified emails from among a random sample of 40.

Then the State Department inspector general concluded that one of the four was in fact top secret. Since it discussed satellite imagery of a foreign country and since it revealed intercepts of communications among foreign agents, it received additional legal protections that were intended to assure that it was only discussed in a secure location and never shared with a foreign government, not even an ally.

When Clinton was confronted with these facts, she changed her explanation from “I did not send classified material” to “I never sent or never received (SET BOLD) any email marked classified (END BOLD).” Not only is she continually changing her story, but she is being deceptive again. Emails are not “marked classified.” They are marked “top secret” or “secret” or “confidential.” Her explanations remind one of her husband’s word-splitting playbook.

Last weekend the State Department located 305 of her undeleted emails that likely are in the top secret or secret or classified categories.

What should be the consequence of her behavior with the nation’s most sensitive secrets?

If Clinton is indicted for failure to secure classified information, she will no doubt argue that if one of the above markings was not on the email, she did not know it was top secret. If she does make that incredible argument — how could satellite photos of a foreign country together with communications intercepts of foreign agents possibly not be top secret? — she will be confronted with a judicial instruction to the jury trying her.

The judge will tell the jury that the secretary of state is presumed to know what is top secret and what is not. The only way she could rebut that presumption is to take the witness stand in her own defense and attempt to persuade the jury that she was so busy, she didn’t notice the nature of the secrets with which she was dealing.

Not only would such an argument be incredible coming from a person of her intellect and government experience, but it begs the question. That’s because by using only her own server, she knowingly diverted all classified emails sent to her away from the government’s secure venue. That’s the crime.

Will she be indicted?

Consider this. In the past month, the Department of Justice indicted a young sailor who took a selfie in front of a sonar screen on a nuclear submarine and emailed the selfie to his girlfriend. It also indicted a Marine who sent an urgent warning to his superiors on his Gmail account about a dangerous Afghani spy who eventually killed three fellow Marines inside an American encampment. The emailing Marine was indicted for failure to secure classified materials. Gen. David Petraeus stored top-secret materials in an unlocked desk drawer in the study of his secured and guarded Virginia home and was indicted for the same crimes. And a former CIA agent was just sentenced to three years in prison for destroying one top-secret email.

What will happen if the FBI recommends that Clinton be indicted and the White House stonewalls? Will FBI Director Jim Comey threaten to resign as he threatened to do when President George W. Bush wanted him to deviate from accepted professional standards? Will Clinton get a pass? Will the public accept that?

The scandal surrounding the emails sent and

Polls

Donald-Trump-Arizona

Republican presidential candidate Donald Trump speaks to thousands at a political rally at the Phoenix Convention Center on July 11, 2015 in Phoenix, Arizona. (Photo: Getty)

The recently released 3-point Donald Trump immigration plan might have been mocked by media pundits, but voters and experts give the plan high marks. A new poll conducted by Rasmussen Reports and released Wednesday finds American voters strongly back The Donald’s immigration plan.

On the Republican frontrunner’s plan to build a wall on the U.S.-Mexican border, 70 percent of likely Republican voters and over 50 percent of the likely general electorate agree. A whopping 92 percent of Republicans and 80 percent of all likely voters agree that the U.S. should deport all illegal immigrants who have been convicted of a felony in this country–point two in the Trump immigration plan–while just 4 percent disagree. A separate Rasmussen Reports survey released this week found 51 percent of likely voters believe illegal immigrants are taking jobs away from U.S. citizens.

The third point in the proposal took the most heat from mediates and nay-sayers, by far. However, 54-percent majority of voters disagree with the current federal policy that says a child born to an illegal immigrant here is automatically a U.S. citizen, otherwise known as the anchor baby and birth-rite citizenship policy. Voters aren’t the only voices crying out in support of the proposal, either.

Norm Matloff, a self-described Democrat, professor at UC Davis and “longtime admirer” of socialist Sen. Bernie Sanders, gave the “surprisingly detailed” Trump immigration plan an A+ in a blog post Monday night. Matloff has written extensively about the failures of the H-1B visa program, which has been widely cited in the academic and reform communities.

Worth noting–and, for those who read PPD, you know we have been a very, very vocal critic of Rasmussen Reports–the firm made a great point on the tricky and often misleading pollster data on immigration.

Gallup (PPD Pollster ScoreCard Rating: B-)released a new survey last week with the headline, “In U.S., 65% Favor Path to Citizenship for Illegal Immigrants.” But the actual question shows that 65 percent of Americans favor a pathway to citizenship for illegal immigrants “if they meet certain requirements over time.” Unspecified in the question is what those requirements are and the length of time in question.

Rasmussen Reports has found consistently for years that most voters want the border with Mexico secured to prevent further illegal immigration before there is any talk of amnesty. In May, 63 percent said gaining control of the border is more important than legalizing the status of undocumented workers already living in the United States, the highest level of support for border control since December 2011.

On this one, Rasmussen is dead on and, Gallup, which is following in the misleading footsteps of 2014’s notoriously inaccurate Pew Research (PPD Pollster ScoreCard Rating: D+), should reassess their reporting.

The survey of 1,000 Likely Voters was conducted on August 17-18, 2015 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.

The 3-point Donald Trump immigration proposal released

Policy

national-debt-capitol-hill-budget

(Photo: PBS)

I’ve argued (repeatedly) that we should abolish the Department of Transportation and allow states to make decisions on how to fund and whether to fund transportation projects. As an interim measure to control federal spending, involvement, and intervention,I’ve explained that Congress should do nothing to increase revenues into the highway trust fund.

Supporters of centralization disagree, arguing that there would be inadequate transportation funding if the federal government doesn’t have a large – and growing – role. Most of them want a higher gas tax to finance an expansion of federal transportation spending.

I’ve never thought this claim made sense. After all, how do you magically get more roads built by sending money in a leaky budget to Washington, only to then turn around and send those funds in a leaky budget back to the states? Seems to me like that’s nothing more than a unsavory recipe for an additional layer of bureaucracy and lobbying.

Well, we now have some very powerful evidence from a report in the Washington Post that states will act – at least once they conclude that “free” money from Uncle Sam won’t be as forthcoming.

While Congress remains stalled on a long-term plan for funding highways, state lawmakers and governors aren’t waiting around. Nearly one-third of the states have approved measures this year that could collectively raise billions of dollars through higher fuel taxes, vehicle fees and bonds to repair old bridges and roads and relieve traffic congestion, according to an analysis by The Associated Press. The surge of activity means at least half of the states — from coast to coast, in both Republican and Democratic areas — now have passed transportation funding measures since 2013. And the movement may not be done yet. …The widespread focus on transportation funding comes as state officials are becoming frustrated by federal inaction in helping to repair roads and bridges described as crumbling, aging and unsafe.

By the way, I have no idea if these states are making sensible decisions. Indeed, based on what was proposed (and rejected) in Michigan, I wouldn’t be surprised to learn that many of these initiative contain wasteful pork-barrel projects (just like when funded from DC). And my colleague Chris Edwards has poked holes in the assertion that we’re facing an infrastructure crisis.

But who cares? The beauty of federalism is that states are free to make their own decisions so long as they’re playing with their own money.

If they waste the money and make bad choices, at least the damage will be contained. And voters presumably have some ability to change the direction of policy if repeated mistakes are made.

To get a sense of how things would work at the state level with real federalism, here are some excerpts from a column in the Tampa Tribune by Karen Jaroch, a member of the Hillsborough Area Regional Transit agency.

…what if you could pay less at the pump? With passage of H.R. 2716 — the Transportation Empowerment Act — this could be possible. H.R. 2716 would devolve the responsibility for our surface transportation programs (including transit) to the states by incrementally decreasing the federal gas tax over five years from 18.3 cents to 3.7 cents per gallon. That reduction would empower the states to fund and manage it — not politicians and Washington bureaucrats. The bill was filed by Florida’s U.S. Rep. Ron DeSantis, R-Ponte Vedra Beach, and cosponsored by Rep. David Jolly, R-Indian Shores, with Sen. Marco Rubio co-sponsoring the bill’s twin in the Senate.

I can understand why Florida lawmakers are especially interested in decentralization. As you can see from this map and table, the Sunshine State is one of many that lose out because of the redistribution inherent in a centralized scheme.

gas-taxes-by-state-eps

 

The real question if why politicians in California, Texas, and Ohio aren’t also pushing for federalism. Though it’s important to underscore that this issue shouldn’t be determined based on which states get more money or less money. It’s really about getting better decisions when states raise and spend their own money.

Particularly when compared to a very inefficient Washington-centric system, as Ms. Jaroch explains.

Well-heeled lobbyists and those in Congress who would see their power base decline are in opposition. …The feds fund roughly 30 percent of Florida’s transportation infrastructure; however, the costly regulations, red tape and strings they tack on permeate the process almost universally. As a board member of the Hillsborough Area Regional Transit Authority (HART), I’ve witnessed the agency routinely shackled by federal handcuffs that are common when accepting federal funds. H.R. 2716 would wrest control from D.C. bureaucrats and politicians in 49 other states that have never commuted on our streets and roads and instead empower state and local agencies like HART that are better positioned to make these decisions. …A new state-led process would be controlled entirely by Floridians and would be absent the horse trading and infighting between 49 other states, two houses of Congress, a president of a different party and a myriad of federal agencies.

Last but not least, state and local governments will be far less likely to engage in boondoggle spending if they can’t shift some of the cost to Uncle Sam.

P.S. While decentralization is a good first step, the ideal end point is to have more private-sector involvement in transportation.

P.P.S. If you think the federal government’s involvement is bad now, you probably don’t even want to know about some of the ideas floating around Washington for further greedy and intrusive revenue grabs.

CATO economist Dan Mitchell compares the gas

People's Pundit Daily
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