…. but in the wrong direction:

….. the latest news of Michigan’s deepening budget woe is a national warning of what happens when you raise taxes in a weak economy.

Officials in Lansing reported this month that the state faces a revenue shortfall between $350 million and $550 million next budget year. This is a major embarrassment for Governor Jennifer Granholm, the second-term Democrat who shut down the state government last year until the Legislature approved Michigan’s biggest tax hike in a generation. Her tax plan raised the state income tax rate to 4.35% from 3.9%, and increased the state’s tax on gross business receipts by 22%. Ms. Granholm argued that these new taxes would raise some $1.3 billion in new revenue that could be “invested” in social spending and new businesses and lead to a Michigan renaissance.

Not quite. Six months later one-third of the expected revenues have vanished as the state’s economy continues to struggle. Income tax collections are falling behind estimates, as are property tax receipts and those from the state’s transaction tax on home sales.

When a government increases taxes on economic activity, it gets less of it, meaning that tax collections come in lower than expected, e.g., Michigan.

When a government cuts taxes on economic activity a bit, it gets a bit more economic activity, meaning that the expected reduction in tax collections ends up not being as high as expected.

When a government cuts taxes by enough to really matter, its get lots more economic activity, often to the point where tax collections end up being higher — sometimes a lot higher — than they were before, e.g., the 2001 and especially the 2003 Bush tax cuts.

Yet the reality denial by those who believe they can tax us into prosperity, like Michigan’s Granholm (and in Ohio, former Governor Bob Taft and the go-along General Assembly that cooperated with him), never stops.

With all the hype about the home-price plunge, the Office of Federal Housing Enterprise Oversight’s (OFHEO) House Price Index, the most comprehensive nationwide home-price report there is, reported that home prices fell 1.7% in the first quarter (stat is near the bottom of OFHEO’s home page). Prices nationwide were 3.1% lower than they were a year ago.

This is clearly not good, but it follows these six March-to-March increases, rounded a bit:

3/2007, +3.2%; 3/2006, +8.9%; 3/2005, +9.4%;
3/2004, +8.0%; 3/2003, +7.6%; 3/2002, +6.6%.

WITH the decrease during the last four quarters, that’s 47.6% appreciation in seven years. Appreciation during the seven years that ended on March 31, 2001, almost all of it before George Bush took office and started ruining everything (/sarc), was 36.3%.

Oh, and guess how many states had actual price decreases of more than than 2% in those 12 months?

Answer: Only six.

Unfortunately, one of them is California, which declined 10.58%. Even with that horrible result, the state’s 5-year appreciation is better than all but 12 other states. But, as is the case with unemployment and welfare, as I noted last week, housing is another area where California is disproportionately dragging down the rest of the country, which is, again, largely doing fine. Thanks, Arnold.

The idea that the “housing crisis” is a nationwide phenomenon doesn’t stand up.

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After nearly three years essentially on the lam, Evan Montvel-Cohen, founder of the first incarnation of Air America Radio, has been arrested (HT Radio Equalizer). Al Franken, the beneficiary of much of the $800,000-plus Mr. Cohen stole (and that is the right word) from a charitable foundation to fund AAR’s start-up, should be asked if he knew he was receiving stolen funds, in the form of his bloated salary and perks at the time.

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Now THIS is settled science, but the racial dividers don’t like it. Michelle Malkin has caught on to an attempt to overrule common sense:

The same folks who proclaim to support a color-blind America are aggressively pushing to stop non-black families from adopting black children in the name of preserving their “culture.” They are peddling a study, trumpeted by the NYTimes, which purports to show that de-emphasizing race in the adoption process is hurting adoptees. The identity politics crowd would rather have minority children languish in foster homes than have them placed with loving families who put compassion above racial boxes.

The idea that kids are better off adopted and in stable families than in foster care, regardless of their racial make-up, is beyond rational argument. Ohio’s recently-departed arch-liberal Howard Metzenbaum, who was the driving force behind the Multi-Ethnic Placement Act of 1994, understood that. What Metzenbaum didn’t understand is that the despicable divisiveness agenda of many of his fellow travelers is more important than the well-being of real children.

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From Peggy Noonan last Friday, about the presidential candidate I refer to as HR4C (Hillary Rodham Cackling Crying Complaining Clinton):

Mrs. Clinton’s supporters are now complaining about the Hillary nutcrackers sold at every airport shop. Boo hoo. If Golda Meir, a woman of not only proclaimed but actual toughness, heard about Golda nutcrackers, she would have bought them by the case and given them away as party favors.

Her column is entitled “Sex and the Sissy.”

From Washington, rural Pennsylvania and other points:

May 23, 2008

WASHINGTON (Army News Service, May 23, 2008) – President Bush has announced that Spc. Ross McGinnis will posthumously be awarded the Medal of Honor in a White House ceremony June 2, two weeks shy of what would have been his 21st birthday.

McGinnis will be just the second U.S. Soldier to receive the medal for actions in Operation Iraqi Freedom and a special Web site dedicated to his heroics has been created by the Soldiers Media Center at www.army.mil/medalofhonor/McGinnis. The site includes a profile on the 1st Infantry Division Soldier, battlescape, background on the medal, video news reports and a number of other resources.

Story of a Hero
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