In this time when Harrah’s has invaded the state and is pummeling people with TV and radio ads and mailings, giving us the constant message that another casino in Rhode Island would be good for the economy, I thought it apropos to review the facts with a specialist on the issue from the Tax Foundation. This piece, written by Alicia Hansen, originally appeared in the Providence Journal on December 16, 2004.
WASHINGTON — The Rhode Island lottery outsells every other lottery in the country, with total sales per capita last year reaching an astounding $1,200. That’s more than four times what the average American spends on reading material or attending movies.
There are two explanations for Rhode Island’s extraordinarily high gambling rate. First, Rhode Island is one of only six states to offer video-gaming devices as part of the state lottery. Video lottery terminals are electronic games of chance played on computer terminals. They are fast-paced casino-style games, found in jai-alai and greyhound-racing facilities, that allow customers to bet a large amount of money in a short period of time. They have raised concerns about possible gambling addictions, but they’ve also brought in over 80 percent of Rhode Island’s lottery revenue.
The second contributing factor to the state’s high gambling rate is the large number of lottery retailers in Rhode Island: approximately one for every 950 residents. Only four states have a higher concentration of lottery retailers.
In fiscal year 2003, the state government’s percentage of the lottery take was 18.7 percent, bringing in over $241 million.
Although such widespread gambling may be of some concern, at least a lottery is better than taxes, right? Wrong — the lottery is a tax.
State governments kept almost $14 billion, or 31 percent, of the nearly $45 billion spent on lotteries in fiscal year 2003. They did not consider this money to be tax revenue, but they should have. The money left over after lottery agencies pay winners and operating costs (the “profit”) is an implicit tax.
Many people believe the lottery can’t be a tax, because a tax is mandatory and playing the lottery is voluntary. But they’re confusing the purchase with the payment. The ticket purchase is voluntary, but the payment of the tax is mandatory. It’s like buying alcohol in a state-run liquor store: The state levies excise taxes on alcohol, and although the purchase of alcohol is voluntary, those taxes are mandatory. With both alcohol and lotteries, the state prohibits the private sale of a product, creates a monopoly for itself, and taxes the product.
Does it really matter whether the lottery is a tax? Absolutely. Lotteries are simply poor tax policy, for several reasons.
First, high taxes on specific products violate the principal tenet of sound tax policy: what economists call neutrality. By singling out certain goods or industries for higher rates, lawmakers distort consumer spending and ultimately damage a state’s economy.
Second, good tax policy requires taxes that are transparent: clear to the taxpayers. The taxpayers should understand what is being taxed, and at what rate. Lottery retailers do not give customers receipts itemizing the tax, and since states advertise the lottery as a recreational activity rather than a revenue-raising activity, consumers may be unaware of the implicit tax rate.
Third, many studies have shown lotteries to be regressive, meaning that lower-income people spend more on lotteries as a percentage of their income than do higher-income people. Should the government be in the business of advertising, selling and taxing a product on which the poor spend more than other people and bear a disproportionately large share of the tax burden?
Finally, lottery revenue is not always used for the purposes that are claimed. The Rhode Island lottery raises money for its general fund, which means that legislators may allocate it any way they see fit. Some of the money is purportedly used for public education, and in many other states all or most of the government “profit” is used for public education. Sounds good, but money ostensibly raised for sympathetic-sounding purposes can be spent on other things — even in states where there is a “lockbox” protecting lottery tax revenue.
Rhode Island jumped on the lottery bandwagon relatively early, in 1974, making it the ninth state to start a lottery. Since then, 31 other states and the District of Columbia have followed suit, and Oklahoma will soon become the 42nd lottery jurisdiction. The Southern states have been the most reluctant to enact lotteries, but concerns about “losing” money to neighboring states have prompted some of them to give in.
There are a number of reasons why people should oppose the lottery, including concerns that a lottery is an inefficient way to raise government revenue, worries about gambling addiction, and moral qualms about state-sponsored gambling. Tax-policy concerns should be added to that list. A lottery makes a state tax system more regressive, less neutral, and less transparent — in general, less principled.
Alicia Hansen is author of “Lotteries and State Fiscal Policy,” a report by the Tax Foundation in Washington.
Ms. Hansen makes the point that Rhode Island gambling already outsells every other state gambling program in the country, and that we already have one gambling retailer for every 950 citizens. And yet Harrah’s and their supporters want you to believe we need more gambling facilities, which will drive our tax system further away from the principles of fairness, transparency, and neutrality.
As a follow-up to my previous post on President Bushâ€™s unhealthy (to our democracy) infatuation with signing statements, I offer the cartoon above, courtesy of Ben Sargent and the Austin American-Statesman, and the article below, courtesy of Thomas Ferraro and the Washington Post:
A top Senate Republican said on Monday he will challenge U.S. President George W. Bush’s practice of claiming a right to ignore or not enforce sections of bills that he signs into law.
Judiciary Committee Chairman Arlen Specter said he plans to introduce legislation this week that would give the U.S. Congress the right to bring a lawsuit against Bush’s “signing statements.”
Bush has used these statements to reserve the right not to enforce certain provisions of laws if he believes they impinge on his authority or interpretation of the Constitution.
An American Bar Association task force issued a report on Monday that said Bush has flouted the U.S. constitution by issuing more than 800 signing statements to highlight provisions of laws he might not enforce, more than every previous U.S. president combined.
ABA President Michael Greco noted that under the Constitution there is a balance of power in which Congress is to pass bills and the president is to sign or veto them, and give lawmakers an opportunity to override any veto.
“By using a signing statement to ignore an entire or portions of a new law, the president undermines this entire system of checks and balances,” Greco told reporters in releasing the report.
Speaking in the Senate, Specter said his legislation would authorize a judicial review, with the goal of having such actions “declared unconstitutional.”
The White House has defended signing statements, saying they have been used by past presidents and help the public understand how a given law will be enforced and can provide guidance to courts.
For example, Bush signed a bill banning the torture of U.S.-held prisoners, but used a signing statement to signal that he might bypass the ban.
He has also used them to show that he might ignore provisions in an anti-terrorism law seeking more congressional oversight and reject a requirement that government scientists transmit findings to Congress uncensored.
Specter’s Judiciary Committee held a hearing on presidential signing statements last month and he also concluded they “threaten our separation of powers.”
Specter said his staff was drafting a bill to challenge signing statements with Bruce Fein, a former member of the Reagan administration who also served on the ABA task force.
This article in Business Week describes the vast amounts of taxpayer dollars that are being lost to graft and corruption in Iraq:
The U.S. Military has lost billions to fraud and mismanagement by private contractors in Iraq who do everything from cooking soldiers’ meals to building hospitals to providing security. That raises a question: Does Pentagon outsourcing make sense?
“The presumption is that it is cheaper,” says Jerrold T. Lundquist, director of the defense and aerospace practice at the consulting firm McKinsey & Co. Competitive bidding can keep the price of services down. Contractors are, in theory, more nimble at mobilizing and paring back their forces than a huge military bureaucracy. A recent study by the nonpartisan Congressional Budget Office concluded that in 2004 the U.S. reduced its costs by one-third for feeding and housing troops by paying one contractor to do the work — a savings of nearly $3 billion. Such findings point to the conclusion that even with a lot of fraud and waste, outsourcing may still pay off.
But some experts on the topic aren’t convinced. Because no one has an authoritative overall estimate of how much has been lost in Iraq to contractor deceit and incompetence, and many investigations are just getting under way, the financial harm could in the end outstrip any savings. There’s also the intangible cost of taxpayers seeing their money wasted or stolen rather than spent to support troops risking their lives and dying. “What has happened in Iraq is just disgraceful,” says Jeffrey H. Smith, a former Central Intelligence Agency general counsel during the Clinton Administration who now represents military contractors in private law practice.
Instances of military outsourcing gone bad in Iraq are now legion. For example, Parsons Global Services Inc. of Pasadena, Calif., lost its contract to build 150 health centers after it completed just six centers and collected $190 million — $30 million over the project’s budget. The U.S. Special Inspector General for Iraq Reconstruction is now reviewing all of Parsons’ Iraq work. Officials at Parsons, which eventually completed an additional 13 centers, stand by their work, saying employees performed well under “extremely volatile conditions.” [full text]
The article goes on to discuss no-bid contracts such as those given to Halliburton subsidiary Kellogg, Brown & Root — contracts which have been charged by auditors as excessive, duplicative, or otherwise questionable. The author makes the obvious point that this problem could be addressed by stepping up contract procurement oversight, but instead, these quality control measures are being further reduced.
Carl Sheeler for US Senate has a new ad out, produced by Ava Lowery, the 15-year-old who produced a video of injured and killed Iraq children set to the voice of a young person singing â€œJesus loves me, this I know.â€? You can see a preview of the ad here:
Iâ€™d be interested in peopleâ€™s responses to the ad.
There would appear to be a growing consensus, at least among members of the legal community, that President Bushâ€™s use of signing statementsâ€”written pronouncements that accompany the signing (or vetoing) of a lawâ€”to assert broad executive authority and circumvent portions of the law with which he does not agree are deeply troubling, if not unconstitutional. In todayâ€™s Washington Post, Michael Abramowitz reports on the findings of an American Bar Association task force that was recently convened to study the matter:
A panel of legal scholars and lawyers assembled by the American Bar Association is sharply criticizing the use of â€œsigning statementsâ€? by President Bush that assert his right to ignore or not enforce laws passed by Congress.
In a report to be issued today, the ABA task force said that Bush has lodged more challenges to provisions of laws than all previous presidents combined.
The panel members described the development as a serious threat to the Constitutionâ€™s system of checks and balances, and they urged Congress to pass legislation permitting court review of such statements.
â€œThe president is indicating that he will not enforce either part or the entirety of congressional bills,â€? said ABA president Michael S. Greco, a Massachusetts attorney. â€œWe will be close to a constitutional crisis if this issue, the presidentâ€™s use of signing statements, is left unchecked.â€? [full text]
One week ago, writing in The American Conservative, James Bovard also expressed concern about Bushâ€™s excessive and overreaching use of signing statements:
For generations, Republican politicians have spoken reverently of the rule of law. But since 2001, this hoary doctrine has been redefined to mean little more than the enforcement of the secret thoughts of the commander in chief.
George W. Bush has added more than 750 â€œsigning statementsâ€? to new laws since he took office. Earlier presidents occasionally appended such comments to new statutes, but Bush is the first to use signing statements routinely to nullify key provisions of new laws. He perennially announces that he will not be bound by limits on his power and that he will scorn obligations to disclose how federal power is being used.
While Bush supporters speak glowingly of originalist interpretations of the Constitution, Bushâ€™s signing statements have far more in common with George III than with George Washington. The Constitution specifies that Congress shall â€œmake all lawsâ€? and that presidents must â€œtake care that the laws be faithfully executed.â€? But Bushâ€”his ego swollen by swarms of groveling intellectualsâ€”has embraced theories that convince him that the president alone may decree what shall be the law. [full text]
A week previously, Norman J. Ornstein, a scholar with the American Enterprise Institute, offered his own words of caution:
Presidents have used signing statements since early in the republic. But the character, intent and volume have changed since George W. Bush became president.
Since 2001, President Bush has objected on constitutional grounds to more than 500 provisions in more than 100 pieces of legislation–a number approaching the 575 constitutional statements issued by all of his predecessors combined.
These bills cover not only the so-called war on terror but also affirmative action programs, requirements of statistical compilations by executive agencies, and establishing basic qualifications for executive appointees.
The president has not simply objected to an overall law–he has said flatly that he will not enforce, or will use his own interpretation, for specific provisions of the laws….
This use of presidential signing statements seems to us clearly to violate the Constitution. Article I of our founding document gives Congress, not the president, the power to make the laws. Article II requires the president to take care that the laws be faithfully executed. The Constitution also gives the president the authority to veto laws that he finds objectionable. And if he does, the Constitution states that Congress may either “override” the veto, in which case it becomes law, or it may sustain it, and the bill will fail.
By signing a particular bill into law and then issuing a signing statement that declares that he will not give effect to it, or to a provision of it, the president effectively circumvents these constitutional requirements, as well as displaces the courts as the final expositor of the Constitution.
The broad use of signing statements is not an aberration for the Bush administration. Indeed, this White House has advocated and pursued the most executive-centered conception of American constitutional democracy in contemporary history. Its reading of the inherent powers of the presidency, especially on matters of national security, has gone largely unchallenged by a supine Congress and a deferential judiciary. [full text]
I cannot help but wonder if this nation is in the midst of a largely ignored constitutional crisis. We take our freedoms for granted at our own peril.
This past Wednesday, for the very first time in his presidency, George W. Bush exercised a power that many thought he might never utilize. Contrary to what you might think or hope, it was neither common sense nor self-restraint. It was a veto, as the President refused to sign off on the Stem Cell Research Enhancement Act of 2005, which had previously been approved by both the Senate (63-37) and the House of Representatives (238-194). In putting the kibosh on the legislation, Mr. Bushâ€”who is to scientific progress what Fox News is to journalistic integrityâ€”offered the following reasoning: â€œThis bill would support the taking of innocent human life in the hope of finding medical benefits for others. It crosses a moral boundary that our decent society needs to respect, so I vetoed it.â€? The good news, of course, is that the President is actually aware that there is a moral boundary. The bad news is that waging a preemptive war that takes innocent human life, infringing upon the civil liberties of innocent Americans, and ignoring the laws of the land somehow do not manage to cross that moral boundary. Thatâ€™s some boundary. Fortunately, the incomparable Jon Stewart is around to poke fun at the Prez and poke holes in his reasoning, as posted here on the Crooks and Liars website. On the more serious side, the Philadelphia Inquirer offers the following fine editorial on Bushâ€™s veto, offered here in full:
When President Bush vetoed the DeGette-Castle bill on embryonic stem-cell research Wednesday, he surrounded himself with children. The real point was who wasn’t there.
There was no one suffering from Alzheimer’s. Parkinson’s sufferers? Nowhere. Also absent was anyone with myasthenia gravis, leukemia, liver disease, or dozens of ailments that someday may be treatable thanks to research employing human embryonic stem cells.
The veto leaves in place the silly 2001 Bush restrictions on federal funds for research using embryonic stem cells. So ESC-derived treatments may be hamstrung further. The people they could help? Tough.
The beautiful children surrounding Bush were “snowflake” children, born from frozen embryos and adopted. The purported point: Don’t waste embryos in scientific research – use them to produce unique human lives (thus the term “snowflake”).
But the veto won’t lead to fewer embryos being destroyed.
The bill would have extended funding to research using discarded embryos from fertility clinics. Thousands of embryos that could have been used in research will now simply be thrown away, thanks to the president’s principled pen.
Bush correctly identified the question: Is it right to balance the (supposed) rights of human embryos against the possible (and not yet known) benefits of embryonic stem-cell research? A wrenching dilemma: human embryos vs. human suffering. Despite Bush’s characteristic sureness, the answer isn’t clear.
His portrayal sure was frightening and inaccurate: “the taking of innocent human life in the hope of finding medical benefits for others.” Along with the conservatives he is courting for the November elections, Bush seeks to depict the use of embryonic stem cells as murder.
Alas for him and his party, most Americans, while they rightly grieve over the moral ambiguities, seem willing to trade some embryonic stem-cell research for medical benefit. Polls show wide support, including up to 70 percent of Republicans in some polls. That reflects a GOP hurt by calculated grandstanding on medicine and science. (Remember the Terri Schiavo fracas?)
Both the House and Senate passed the bill by wide but not veto-proof margins. A House override failed shortly after the veto; now it doesn’t matter what the Senate does.
And it doesn’t matter (to Bush, at least) that, as much as he may believe in the principles he champions with such aggression, such principles are far from settled. A true debate awaits, and a small, extreme coterie is trying to short-circuit it – because it may lead to tradeoffs that coterie dislikes.
Embryonic stem-cell research will continue. The Bush policy pretends to take a stand but lets private businesses do what they please with embryonic stem cells. (If academic researchers want to do it, they can, just not with federal funds.) There are now about a dozen private stem-cell research centers in the United States, the largest at Harvard.
The main point, however, is not research but democracy. Bush showed the world Wednesday that, under the guise of “leadership,” he will ignore a growing social consensus in favor of the politics of the moment and his favored coterie.
Snowflakes? Snow job.
When I was in my teens, not long after dinosaurs roamed the Earth, I had a vivid nightmare one evening. I dreamt that I was a passenger, along with my mother and brothers, in a car being driven along an unfamiliar woodland road by my father. At some point in the drive, perhaps following some distraction, my father inadvertently left the road, and we found ourselves on a parallel path, unpaved, with a fence isolating our vehicle from the main road. Sensing danger, I urged my father to reverse course and return to the main road. But he offered blithe reassurances and drove on, even as we drifted further and further away from whence we had come. And then, abruptly, the path ended, and the car tumbled off a high cliff and fell to Earth. I awoke to the imagined sound of screaming and crashing.
The residue of this nightmare was that, in the face of impending danger, I could not rely upon those responsible for my well-being. I could not rely upon those so entrusted to use care, pay heed, and take appropriate action to ensure that my family and I remained safe and secure. What brings the memory of this nightmare alive more than 30 years later is a news itemâ€”not widely coveredâ€”published in The Guardian yesterday, entitled â€œEarth facing â€˜catastrophicâ€™ loss of species.â€? Here is an excerpt:
The Earth is on the brink of â€œmajor biodiversity crisisâ€? fuelled by the steady destruction of ecosystems, a group of the worldâ€™s most distinguished scientists and policy experts warn today.
Nineteen leading specialists in the field of biodiversity, including Robert Watson, chief scientist at the World Bank, and Professor Georgina Mace, director of the Institute of Zoology, are calling for the urgent creation of a global body of scientists to offer advice and urge governments to halt what they call a potentially â€œcatastrophic loss of species.â€?
Destruction of natural habitats and the effects of climate change are causing species to die out at 100 to 1,000 times faster than the natural rate, leading some scientists to warn we are facing the next mass extinction.
Nearly one-quarter of the worldâ€™s mammals, one-third of amphibians and more than one-tenth of bird species are threatened with extinction. Climate change alone is expected to force a further 15%- 37% of species to the brink of extinction within the next 50 years.
Writing in the journal Nature today, the experts from 13 nations urge for the new body, the international mechanism of scientific expertise on biodiversity (Imoseb), to be set up to force better biodiversity policies around the world.
â€œWe are on the verge of a major biodiversity crisis. Virtually all aspects of diversity are in steep decline and a large number of populations and species are likely to become extinct this century. Despite this evidence, biodiversity is still consistently undervalued and given inadequate weight in both private and public decisions,â€? the authors say. more…
In short, an abyss yawns ahead, and we are traveling towards the edge, without adequate regard for the peril. And the country that is in the best position to show leadership and initiative in managing this â€œmajor biodiversity crisisâ€?â€”that would be USâ€”will no doubt respond blithely, treating the issue with the same respect accorded to global warming. Meanwhile, the cliff nears, and we are gathering speed. Wake me up, wonâ€™t you please?