Tuesday, August 08, 2006

Charlie Crist Economics 101

I really wonder if Charlie Crist has any concept about economics and state budgets.


"I don't think so," Crist said. "As we all know, Florida continues to grow. As a result, our budget continues to grow. ... We can do it by living within our means, because our means continue to grow without raising taxes in our state."

Crist said steady growth in tax receipts provides sufficient money to pay for smaller class sizes and the costs can be offset by promoting alternatives to public school classrooms such as virtual schools, homeschooling and team teaching.

"I think there are ways that we can implement the class size amendment without breaking the bank," Crist said.


Crist wants to $118-million on the anti-murder bill. 25% raises for teachers, and a billion-a-year on education while pushing for tax cuts. This is politics are making the policy. Crist is promising everything so he can get elected. Increased spending with less tax revenue doesn't work. George W. Bush tried and failed as Governor and President. Sales taxes are not stable. What will probably happen is counties raising taxes to handle class-size and growth management.

19 Comments:

At August 08, 2006 8:48 PM , Blogger Bryan said...

The article you linked indicates a substantial surplus in the current budget.
Given that Crist is correct about Florida's growth, what exactly is wrong with his economic understanding, assuming that that the inherent instability of sales-tax revenue in a tourist-reliant state doesn't lead to an exceptional decrease in revenue?

And if that were the case, wouldn't Crist be able to react in some manner, as by recommending a change in policy to account for the loss in revenue?

 
At August 08, 2006 8:51 PM , Blogger Michael Hussey said...

Florida is having problems paying for current growth management. Roads, schools, etc. The house bubble also just popped. I don't believe growth projections are as sunny as Charlie believes.

I have seen tax cuts and increased spending. It doesn't work. The counties will get shafted.

 
At August 09, 2006 10:48 AM , Blogger Bryan said...

If Florida is having problems paying for current growth management, then why is there a current surplus?

The housing bubble "popped"?
The bubble pops when prices start going down, not when the rise in prices slows.
http://www.naplesnews.com/news/2006/jul/12/economist_southwest_florida_housing_market_cooling/?business

Your argument against Crist's understanding of economics boils down to your past observations of tax cuts with increased spending?

We should assume that your past observations were made with similar anticipations of growth, or what?

 
At August 09, 2006 4:14 PM , Blogger Michael Hussey said...

The national housing bubble has popped. I have read things where people believe the trend will hit Tampa. Let's not forget that the FED will continue to raise housing. How long will Florida have a surplus (which is not that big). With increased spending and tax cuts. Remember, Jeb came in with a bigger surplus and lost it before 9-11. And Jeb wasn't promising the spending increases Crist is. I'm actually for increasing teachers' pay. I'm wondering how Crist is going to be paying for his spending proposals.

 
At August 09, 2006 7:41 PM , Blogger Bryan said...

It's popped, eh? Perhaps you should call Reuters and give them the exclusive.
http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-07-26T195123Z_01_N25145429_RTRIDST_0_ECONOMY-HOUSING.XML&rpc=66&type=qcna

News of the bubble bursting hasn't reached the UK as of now, either.
http://www.dailyreckoning.co.uk/article/09082006.html

Smartmoney.com is oblivious to your insight, also.
http://www.smartmoney.com/theproshop/index.cfm?story=20060727

We shouldn't forget that the Fed will raise housing? Why on earth not? The Fed has hinted for months now that the series of prime rate ncreases is nearing its end; recent adjustments in economic figures from earlier this year gave the Fed indications that inflation was less of a threat than expected.
That's why the Fed has been raising rates, of course--because of high employment and the threat of inflation.

What of the Chiles/Bush transition?
"Due in large part to recent population growth and the burden of various court orders, the outgoing administration anticipated a $300 million budget shortfall for fiscal 2000."
http://www.governing.com/gpp/1999/gp9fl.htm
Guess who the outgoing administration was in 1999?

Huh. Chiles seems to have borrowed the surplus according to these numbers.
http://www.gfoa.org/services/dfl/debt/FL_debt_affordability_analysis-2002.pdf

Sorry about the truncated URLs.
Ever thought about letting Haloscan host your response threads?

 
At August 09, 2006 7:58 PM , Blogger Michael Hussey said...

Chile got his surplus from suing the tobacco industry. That's no secret.

Do you read your links? The Reuters article for example?

***
Downward momentum in the U.S. housing market is leading some of America's biggest mortgage lenders to adapt business plans for even softer demand.

The lenders are launching new cost cuts and risk reduction strategies that suggest growing concern that the outlook is worsening for the $9.5 trillion home mortgage industry.

It marks another racheting down of expectations for the big players in a housing market where slowing sales have pushed inventories up 39 percent in the past year and set home prices on the path of decline, some analysts said. Builders of new homes, meantime, reported the lowest confidence about their prospects in June than anytime in the past 14 years.
***

Heh.

Part of the article talks about a soft landing. I'm not betting on it. Florida has a regressive sales tax system. New jobs and higher pay to keep up with inflation will be needed.

The issue is how is Crist going to pay for his spending programs while cutting taxes. There is no guarantee that the growth will create enough tax revenue to cover spending. Florida hasn't even tackled the state home insurance debt. Not a vote of confidence.

 
At August 09, 2006 9:35 PM , Blogger TheMax said...

Shift in home market leaves sellers in lurch
A year ago it was a seller's market. But home buyers now have the upper hand.

http://www.sptimes.com/2006/08/08/Tampabay/Shift_in_home_market_.shtml

 
At August 10, 2006 12:01 AM , Blogger Bryan said...

"Do you read your links?"

Of course. What part did you quote that you think translates into the housing market having popped?
The part about decreased confidence about the future?
Does "downward momentum" mean slowing price gains or decreasing prices?

Do you just read into stuff what you want to see, or what?

 
At August 10, 2006 3:17 PM , Blogger Michael Hussey said...

Max, you are correct. Prices for houses in Florida are overinflated. Especially for the prefab pieces of shit that are built in this state.

Bryan, are you arguing with me about Florida's future economic outlook or because you are a Charlie Crist supporter. That's what I'm curious about.

 
At August 11, 2006 3:31 PM , Blogger Bryan said...

"Bryan, are you arguing with me about Florida's future economic outlook or because you are a Charlie Crist supporter. That's what I'm curious about."

What's the choice other than my being a Crist supporter, again?

You attacked Crist's understanding of economics. You either have a good foundation for your criticism or you do not. That shouldn't have anything to do with my political leanings, should it?

It appears more and more that you do not have a decent understanding of economics, which may account for the quality of your criticism of Crist.

 
At August 11, 2006 3:59 PM , Blogger Michael Hussey said...

Bryan, I think you are looking for a fight. I asked you the question to understand why you are so passionate about this tread. It's your right to support Crist. I wouldn't and that's my right.

The economics is Crist is advocating increases spending based on growth. He will also cut taxes. That will bring in less revenue. I write a blog about Florida issues and read a lot about growth management problems. The state legislature balked at Jeb's tax cut. The counties were having a problem dealing with the class-size amendment.

There is also the matter of new roads (which the cost has rised 4 time because of the price of petroleum), a hurricane insurance crisis,

Jeb had a $2 billion surplus. He lost it from the tax cuts. Jeb was actually fiscally conservative in some areas (expect private contracts.) Crist sounds like a pre-Clinton Democrat. I'm actually fiscally conservative in some areas myself. I think Pam Iorio's Riverwalk idea is a huge waste of taxpayers money. Jeb was right not to provide funding.

 
At August 11, 2006 4:34 PM , Blogger Bryan said...

"Bryan, I think you are looking for a fight."

If answering questions about your claims amounts to fighting, then I guess you're right.
You'd prefer the peace of not having your statements challenged?

"Jeb had a $2 billion surplus. He lost it from the tax cuts."

You just succeeded in ignoring the evidence I provided that the Chiles' administration was anticipating an $500 million budget shortfall.
The current numbers show a reserve of $6.4 billion, for that matter. How did Bush accomplish that despite cutting taxes and losing the wondrous Chiles surplus?

 
At August 12, 2006 1:56 PM , Blogger Michael Hussey said...

Bryan, you're blaming Jeb losing the surplus on Chiles. That doesn't pass the laugh test.

 
At August 12, 2006 9:13 PM , Blogger Bryan said...

You're committing a straw man fallacy, Michael.
I am not blaming the loss of the surplus on Chiles. I am pointing out that fact that Chiles' administration pointed out a shortfall trend in the year Bush took over, irrespective of any policy that Bush had enacted (sensible, since Bush hadn't enacted anything) and then I pointed out that Bush's current surplus is far greater than that of Chiles, whom you lauded.

So, something's obviously amiss in your analysis, but you want to laugh it off by ridiculing a straw man instead of wrestling with the inconsistency between your claims and the facts of the Florida budget.

 
At August 14, 2006 2:57 PM , Blogger Michael Hussey said...

Bryan, I don't think Bush's tax cuts had anything to do with the surplus. That was do to an influx of people moving to Florida.

I don't mind if my posts are challenged. It certainly won't be the last time.

Here is the reason Florida faced a budget shortfall.

***
Florida’s revenue challenges exist in part because there is no income tax and the sales tax applies to some goods while exempting others, as well as exempting most services. As Florida and the nation have moved toward a more service-oriented economy over the past twenty years, the base of the sales tax has likely eroded. Efforts to extend the sales tax to include more goods or services have met with stiff resistance in the state legislature. Florida’s Department of Revenue has estimated that while the sales tax will raise $17 billion in state revenue in 2003, it will exempt $23 billion worth of products and services. Localities have increasingly felt the need to provide services—and raise the requisite revenue—on their own.
***

John MacKay and to fix the system, but was shot down.

I can't find administration's 500 million projection. You have a source? If true, what did Jeb do with that information.

 
At August 14, 2006 10:54 PM , Blogger Bryan said...

Bryan, I don't think Bush's tax cuts had anything to do with the surplus. That was do to an influx of people moving to Florida.

Decreased taxes,increased spending.
You say it doesn't work, yet Bush built a reserve.
That's the point, so please address it.

Here is the reason Florida faced a budget shortfall.

Baloney. It was the slow economy that caused the shortfall (taking tax revenues lower).

John MacKay and to fix the system, but was shot down.

And in the wake of MacKay's failure, the budget was exceeded by revenues such that in 2006 "Florida budget writers are awash in extra cash."

FYI, most state governments suffered shortfalls in the early 2000s. That's what an economic slowdown will produce.

I can't find administration's 500 million projection.

$300 million; I quoted myself inaccurately. I provided the citation in an earlier post.

You have a source? If true, what did Jeb do with that information.

Here's the URL again.
http://www.governing.com/gpp/1999/gp9fl.htm

Bush cut taxes, and the budget makers are awash in surplus cash.
And you're a genius. ;)

 
At December 26, 2008 1:40 AM , Anonymous lauren said...

Wow! Reading this post and the debate that it sparked is painfully ironic in December 2008. I almost couldn't help but laugh a bit at the short-sighted bloggers that challenged the "housing bubble has popped" line. Kudos for your insight- history has unfortunately made Hussey a prophet and Bryan an idiot.

 
At January 16, 2009 2:10 AM , Blogger Bryan said...

Lauren, Michael was using a drop in the rate of increases in home prices as his evidence of the popped housing bubble. No passage of time will ever make him correct.
I repeat: It is a drop in prices that indicates that a bubble has popped, not a mere decreased rate of increase.

 
At January 16, 2009 2:17 AM , Blogger Bryan said...

Correction: I was incorrect that Hussey used a decreased rate of increase as his evidence (at least in terms of written justification). That's simply what the market was showing when he wrote. My apologies for the mistake.

 

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