Monthly Archives: October 2014

The Justice Chronicles, Volume 17: Governor Brownback, We Warned You

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I’m upset that this isn’t a bigger story, but the standing Governor Sam Brownback of Kansas is in the political fight of his life. This is news because he is a Republican.

Remember this is Kansas. The state that has declared war on teaching evolution.

Four years ago Sam was elected Kansas’ governor in a landslide after a 14 year career in the U.S. Senate. Sam is a strong believer in “supply side economics” or what many of us call “trickle down economics”. Basically this economic theory claims that if we cut income taxes, especially to the richest among of us, that will stimulate the economy. The people who get to keep more of their money will invest it. Ordinary people spend more money. Small businesses, who benefit from this increase in spending, will expand and hire more workers. The money lost on the tax cuts will be offset by more money in income taxes by the people who are hired and the sales taxes paid by the people who spend more.

The best part of this model is that it both looks good and feels good. Who doesn’t want to raise revenue by cutting taxes? Here’s the problem: it doesn’t work. It’s like all the “eat whatever you want and lose weight” diets.

Four years ago Sam was elected and he promised “an experiment.” OK, I have to ask this: someone who has declared war on science is conducting an experiment? In any case he promised to cut state income taxes on small businesses and wealthy individuals and he did. Small business taxes were cut to 0% (that’s right: no taxes) and the highest individual tax bracket was cut by 24% (you can see this here). He promised that while state revenue may take an immediate hit, it will be soon made up by people and businesses who move to Kansas to take advantage of this experiment.

Did it work? No. The NPR story provides an excellent outline of what happened, but basically this is what happened: small businesses benefitted because they didn’t pay taxes but they didn’t expand because there was no increase in business. NPR spoke with Alex Harb, who owns a computer store in Wichita. He spoke about how his tax cut allowed him to purchase more products for his store, but this has not led to an increase in business. Because of this he has not opened new stores or hired more employees. He has not become a job creator.

Is there a downside? Amazingly the supply side/trickle down guys don’t talk about this. Kansas anticipated a drop of $300 million in revenue while the tax cuts kicked in. Alas, they saw a drop of $600 million with no end in sight. If you are wealthy Kansan or a small business owner you have more money in your pocket. But if you work for the state you’re screwed.

The town of Marquette, Kansas was so devastated by the tax cuts that they had to close their last remaining school. You can read this on the Topeka Capital-Journal website. Amazingly the loss of jobs by the school district wasn’t expected by Sam.

So how has the state done? Sam promised that his “experiment” would show that Kansas’ economy would outpace the economies of neighboring states. Has it?

No. Employment in Kansas has grown by about two percent in Kansas, which sounds fine until you recognize that, according to the NPR article, Kansas has fallen behind the national average and three of the four states that border Kansas (and they all have higher tax rates).

I found this at the web page for the Joint Economic Committee of the U.S. Senate. They track several trends, and I looked at private sector job growth since February of 2010. Kansas and its neighbors (Missouri, Oklahoma, Colorado, and Nebraska) showed these results:

  • Colorado: 12.8%
  • Oklahoma: 10.8%
  • Kansas: 6.8%
  • Nebraska: 6.1%
  • Missouri: .8%

According to this Kansas is in the middle of the pack. That’s fine except Sam promised they would leave their neighbors in the dust. Clearly he hasn’t.

The best part of this story for me is the loyalty Sam expected from his fellow Republicans. He should have recognized Republican loyalty is a synonym for jumbo shrimp. Given the opportunity they headed for safety. This story shows how 100 prominent Republicans are endorsing his Democrat opponent Paul Davis. Do you think these Republicans endorsed Davis out of principle? Neither do I. They made a political decision that their future lies in abandoning Sam after cheering him on.

Sam may win or lose, but if he wins, the people of Kansas lose.

The Money Chronicles Volume 11: Was This a Scam?

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Nancy and I each drive a Toyota Prius. I bought mine in 2006 and she bought hers in 2011. A few days ago I got a call from Toyota asking if we wanted to trade in Nancy’s car. The teaser was this: they would sell us a comparable 2014 Prius at about the same monthly payment and we would get a car 3 years newer. I declined because Nancy is happy with her car and we’re looking forward to paying it off. But it got me wondering if this is a good deal or not.

This is where the math nerd in me kicks in. In the days following this I began to wonder if this would have been a good deal for us. Truth be told I’m a child of parents who grew up in the Great Depression and I still think of debt as a necessary evil. I’d be most happy if I didn’t have to pay off our home or our cars. Still I found it a fascinating question and I tried to crunch the numbers. It wasn’t easy because the auto world changes dramatically. The hot new feature of a few years ago is standard now. Think of anti-lock brakes and airbags.

Still, I started looking into the numbers. When we bought Nancy’s car in March of 2011 we paid $33,070.20 and financed the whole cost at 2.9% interest (her old car was so old we donated it to the San Diego Zoo). It was a five year loan with a monthly payment of $550.52.

Had we taken the offer we would get a comparable Prius for $30,930. It’s essentially a wash as the cost increased by only a little over $200. Interestingly enough the interest rate has decreased from 2.9% to 0.9%. Had we done this our payment would have been $527.42, a savings of $23.10 per month. At face value that sounds like a good idea: We pay less money each month for a newer car.

But wait: If we keep Nancy’s car we can pay it off in March 2016. But if we get this newer car we’ll be paying it until October 2019. That’s 3 1/2 years longer to have a car payment (assuming Nancy’s car lasts that long, and since my car is 8 1/2 years old and has nearly 189,000 miles on it, we can). What if we sell Nancy’s car now and use that money for a down payment on a 2014?

Glad you asked. The current blue book value of Nancy’s car is a little over $17,000. Let’s use that as a benchmark. OK, we sell Nancy’s car and use that as a down payment on a 2014. We still owe $9144 so we’ll need to deduct this. Our downpayment goes down to $7,856. If the car is $30,930 and we put down $7,856, the finance price goes down to $23,074. I’m not sure Toyota will finance this, but my Credit Union will finance the car for 1.99%. On a five year loan that makes our payment $404.34. By the way, if we did get the 0.99% rate from Toyota, our payment would decrease to $394.30

Thanks Toyota, but we think we’ll pass.

The Justice Chronicles Volume 16: Are We Tipping On Marriage Equality?

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When we see a shift in public opinion about something we sometimes talk about a “tipping point,” that is, a time where it appears that the momentum has shifted and what was once a minority opinion has now become the majority.

It’s hard to remember this, but just a few years ago this was thought impossible. In 1996, 18 years ago, President Clinton signed the Defense of Marriage Act, or DOMA. It mandated that the federal government not recognize any marriage except between one man and one woman.

Fifteen years ago, in 1999, California led the country in issuing domestic partner licenses; it provided some of the benefits of marriage. Other states followed.

Massachusetts, in 2004, became the first state to allow gay couples to marry. But because of DOMA these married couples could not file joint income tax returns, or benefit from each others’ social security or other benefits. There had been a residency requirement (that you had to live in Massachusetts or plan to live there). This was a 1913 law and was intended to prevent Southern interracial couples from coming to Massachusetts to get married. It was repealed in 2008.

Also in 2008 the California Supreme Court ruled that the state could not ban gay marriage under the rules of the state constitution. Almost immediately there were calls to amend the California constitution to prevent marriage equality. Later that year Proposition 8 amended the constitution, though the state upheld the marriages that were performed between June 16th and November 4th.

In 2010 the District Court of Northern California ruled that Proposition 8 was unconstitutional (even though it was an amendment to the constitution). In 2012 the U.S. Ninth Circuit upheld the ruling; it was appealed to the Supreme Court but the Supreme Court ruled against them in 2013. Ever since then marriage equality has been legal in California.

There is much more to this and I encourage everyone to read the entire timeline at here.

The 50 states are divided into 11 circuits: you can view the map at here.

The 4th, 7th, 9th, and 10th circuits have all ruled in favor of marriage equality. In a surprise to many, the Supreme Court refused to hear any these appeals.

It’s a bit of a disappointment to those of us who favor marriage equality; we were hoping for the equivalent of Loving v. Virginia when the Court ruled that bans on interracial marriages were unconstitutional.

That said, it’s a devastating blow to those who oppose marriage equality. It appears that as of today Virginia, Indiana, Wisconsin, Oklahoma, Colorado, and Utah will start issuing marriage licenses to gay couples. Because they belong to the 4th, 7th, 9th, and 10th circuits Wyoming, Kansas, West Virginia, North Carolina, and South Carolina will soon follow.

The Supreme Court could still take cases from the other circuits (the 5th circuit is looking at this) but I think this sends a clear message to the other circuits that the Supreme Court will rule in favor of marriage equality.

It appears that homophobia is the latest casualty in the march for justice.