Outside Erie

54 Responses to “Comment of the Week — Getting ‘Em Here”

1. Melissa
   May 9th, 2008 at 10:03 am

   Many also leave because they cannot stand the cold weather. You can’t exactly control that aspect.

   Just a thought.

2. Dale
   May 9th, 2008 at 10:31 am

   It’s amazing how having enough income to pay the heating bill would help people withstand the cold!!!!!

3. Jim Russell
   May 9th, 2008 at 10:46 am

   While I would support policies designed to help bring people back to Erie, working to keep folks from leaving in the first place is a bad idea. The primary emphasis should be placed upon attracting new workers to Erie. Meanwhile, help your high school and college graduates relocate.

4. Julio C. Reyes
   May 9th, 2008 at 11:07 am

   Peter,

   The answers are:

   1. Jobs, jobs, jobs, jobs, good paying jobs that will attract and retain the best minds.

   2. Serious commitment from the local investors, politicians and pseudo leaders to invest locally in R&D rather than creating mediocre projects just because public money and subsidies are available.

   3. All public money should be used to build infrastructure (communications, roads, streets, etc.) rather than white elephants that will be a waste of money for the years to come.

   Just for fun let me present this idea.

   Instead of building the stupid tire gasification plant in the IP site. Just plant thousands of trees and other vegetation there and then use the Federal and State subsidies to hire the top Engineering graduates from the local universities (well paid!!!) all Engineering categories should do heavy R&D in pollution control, alternative energies, snow removal, soil remediation, software, robotics, public transportation and automation just to name a few.

   You could have all these guys working in Knowledge Park or the Gannon incubator facilities. Maybe the big cheeses at GE might decide to install a light train to transport these guys and others around the area.

   Of course that will never happen. It will take vision, decency, restrain, cooperation and courage to do the right thing to improve the little town for our future generations.

   As we know the US culture is let’s make a buck now. How cares what happen next!!!! Or may be like Melissa says most of the people with the dough go to Florida or the Bahamas for the winter so why they should care?

   Disclaimer about the stupid tire gasification plant - regardless if the gasification technology is valid or not at this time I called it “stupid” because having the plant in the IP site is like me building a mansion to live and then put my trash containers and recycle dump in the middle of my living room. I am sure that if I do that when I invite somebody to my home for a party the first thing they will ask me (politely of course!) how come I was so stupid to do that after I spent a fortune building my mansion.

5. Debbie
   May 9th, 2008 at 11:49 am

   As usual Julio speaks with the voice of reason.

   Our government should be taking care of the infrastructure of our community (and should be able to do it well). This will improve the community for new comers as well as longtime residents. They need to look at current needs and future potential.

   If you read my message a while ago - Erie needs a plan. A long-term plan. They could even use ideas from all our bright college students (i.e. working out a case study working on real life challenges with practical solutions).

   Topic Jobs:
   The best jobs come from companies that are not waiting for government loans. What about the group that moved here from the D.C. area because of the supply of knowledgeable grads from Mercyhurst’s Homeland Security program (I may not have identified it exactly right)? Couldn’t we attract more businesses like that? The cost of living is way better than the D.C. metropolitan area.

   Of course there is the opportunity of John Kansius’ Cancer Research. I think our local hospitals should be working on a joint task force to help guide this. Let’s work together (wow - what a concept). I know the governments seem to be all wrapped up in mapping out their domains, but you’d think the private sector could do a better job.

   Just a few thoughts.

6. MGR
   May 9th, 2008 at 11:59 am

   The best method for Erie to improve its business climate is for one of our universities to establish a serious school for entrepreneurship. My first choice of course would be Penn State Behrend as they have the strongest business school, although they may run into some red tape due to the rules of their charter with Penn State Main Campus. They have offered some paltry courses at this point and are actively encouraging entrepreneurship, but it takes a much more committed and focused effort to have a meaningful impact.

   The current curriculum prepares solid operators of established businesses, however, as any experienced entrepreneur will tell you, building a business from scratch requires a different skill set and approach. To do this properly, the school would have to bring on additional faculty as most of the current professors are very sharp but ill-equipped to teach this subject area. They would then have all of the associated expenses with establishing a new major and developing many new courses. There is always a born vs. bred argument concerning entrepreneurs, but a school of entrepreneurship would provide the training for Erie’s aspiring entrepreneurs as well as attract entrepreneurial talent from outside the area.

   A fledgling program like this will not have the desired effect, though, without a well planned integration to the local business community. My proposal would be to analyze the supply chain needs of local businesses and determine high value services/inputs that they are purchasing outside of Northwest PA. Then, align interested students in the entrepreneurship program to build companies under the direction of an industry professional and an advisory board as part of their schooling to fill these needs and continue building these companies after graduation. Entrepreneurship grads would have ownership stakes and rules to protect against relocating or selling the businesses for some period of time. We could certainly pool enough local investors to form a holding company which funds first round capital for these new ventures and owns a portion of the company. An equally smart move would be to keep this investor group’s earnings prepared to buy out students who may wish to sell their holdings after the lockup period and move on. I think the possibility of being plugged into a lucrative opportunity like this would be exceptionally attractive to students considering pursuing an entrepreneurship major as no other program offers it (Not even Babson). I think that would also allow the School to be highly selective and attract the strongest candidates.

   By signing short term (2-5 year) agreements with the newly established entreprises, local businesses will provide the initial revenue stream to help fund these new ventures. During the time of that agreement, the new companies would be able to pursue additional customers and other avenues of growth with the focus on building national and international scale companies. The agreements with local businesses would have to reach certain quality and price targets of course, and can be renewed or cancelled at expiration. What might make this particularly appealing to local companies for taking a risk on a new venture as a vendor would be for the new company to offer them a much better than market pricing for the subsequent agreement if the new venture has been successful. Since the goal would typically be for the new venture to take on much larger customers than those found in Erie in most cases, this might really give a leg up to companies willing to take a risk.

   This proposal would have the effect of injecting new companies into the Erie business community every year and provide a significant wealth creation tool. Remember, as these ventures succeed, growing companies emerge on our map and new industry clusters would be formed. These companies would eventually begin hiring some of the excess graduates we produce here as well as attracting a large amount of experienced professionals, maybe even some who lived here and left. Additionally, this would do untold wonders for our reputation in the outside world because instead of fighting negative perceptions, we would be eliminating them.

7. MGR
   May 9th, 2008 at 12:20 pm

   To add on, I forgot to point out that entrepreneurial ventures have a very high failure rate, especially when they are at proof of concept stage, pre-revenue etc. In my proposal, I believe we can mitigate that failure rate through several identified mechanisms - a lucrative program that attracts the best and brightest entrepreneurship students; dedicated entrepreneurial education and equity shares for the entrepreneurship grads who are the new company founders; an investor group and an advisory board - both of which are often sorely lacking in new ventures; and a start up customer base (maybe one to three) to provide early stage revenues and let the new company cut its teeth. In addition, since the school will undoubtedly have a stake in the success of these ventures, they would provide additional resources, support, and oversight as each gets up on its feet.

8. Heavy D
   May 9th, 2008 at 1:55 pm

   It’s not just Erie it is all of Pennsylvania. Forbes rates Pennsylvania 47 out of 50 for being a business friendly state. More government subsidies ( a la engineering students) is not the way to go. More school programs and more tax money will not solve this fundamental problem. Lower taxes is the way to go. See Florida & Nevada for growth: neither has a state income tax.

9. MGR
   May 9th, 2008 at 2:25 pm

   Nevada is built on gaming and poor people serving gaming. Florida is a backwater mess that you can count on as a hangout for all the drifters who couldn’t cut it in the north and refugees who escaped Cuba. They’re growing on paper, but these places aren’t what we really want to see in terms of type of growth. I could go on all day about the severe problems in these places no matter what grass is greener logic precludes. The kind of growth we need is Salt Lake City, Utah; Cary, NC; or Nashville, TN. These places have taxes and people get by, but they have put good growth strategies and solid core industries. For a multitude of reasons, age of infrastructure, level of development, and everything else that goes along with being one of the first states in the U.S., Pennsylvania is never going to eliminate state tax. We bark about it all day long, but it’s not going to happen and no one will ever make it happen. In fact, every sentence written about it is a waste of grey matter that could have been committed to finding viable strategies to adapt. We have to play the hand we are dealt rather than thinking that we can just blame bad cards and continue losing.

10. Julio C. Reyes
    May 9th, 2008 at 2:36 pm

    Heavy D.

    I have written extensively about high taxation and poor services in Erie, Pennsylvania and in the USA in general in other topics.

    I believe in paying taxes and I pay my fair share. We have income tax in California. California is the fifth or sixth largest economy in the world. So, I guess something had to be working around here.

    This topic is how to attract new people to little town Erie. So, my point was if we are already getting the subsidies rather than throw them away on insane projects using the OLD methods we should use the money wisely and somehow use our younger people to come with new technology and ideas.

    Going back to my original example. How much money do you think the big companies around the world will pay not for a gasification process and machinery but for new technology that truly could reverse the vulcanization process.

    We need people with new ideas. Ideas and technology are the result of time available and investment.

    For the record as a small example the basis of the internet as we know it was the result of a public funded projects please read about ARPA and ARPANET also about the Xerox Palo Alto research center in Palo Alto California. Would not be nice to have something like that in Erie?

11. Katie
    May 9th, 2008 at 3:51 pm

    I agree it’s important to find a way to keep people here, but pay is not the top reason people aren’t staying. Yes, pay here in Erie is probably on the low side of the average, but so are the costs to live here.

    I’m graduating from college in 9 days, and the main reason I won’t be looking for employment in Erie for now is because I want to be somewhere new for a while, and additionally, there just aren’t the number of jobs here that there are in other areas.

12. Heavy D
    May 9th, 2008 at 3:53 pm

    MGR,

    Your attacks on Nevada (which has a higher average household income than PA) and Florida being transient shows your weak argument. You make broad statements that are false. And provably so. Florida has much higher real estate values than PA (my old house in FLA is worth 3 times more than my house in PA with lower taxes) I paid almost the same for both houses. I guess those transients on their way from Cuba made some REALLY awesome drug deals! and they managed to spread it out among the whole state.

    Nevada’s gambling is so bad we here in PA mimic it (too little, too late). I don’t blame the hand we are dealt (like cold weather). I blame the bad politicians we continue to re-elect. We can change it if we have the will to do so.

    Julio, I agree we need to attract new businesses but subsidies won’t cut it, I think we should stop trying. See our successes at bringing in a juice plant, a grocery store on Parade, and the Koehler project as to how good tax money is at attracting new business.

    No one has ever taxed themselves into prosperity.

13. Danny Lucas
    May 9th, 2008 at 4:22 pm

    In terms of “Getting ‘Em Here”, be careful what you ask for.

    Another perspective from the US Census World Population Clock shows an unusual twist for tomorrow, May 10, 2008.(Saturday).

    On that day, the planet will reach a population of 6.666.666.666.

    Being third largest in PA was difficult; we slipped to 4th place.

    Given planetary growth, it speaks volumes of where we are headed in Erie, PA.

14. Julio C. Reyes
    May 9th, 2008 at 4:43 pm

    Heavy D.

    I will try one last time to explain and I will let it go.

    There is no such thing as a tax free society. Either we liked it or not there will always be taxation. However, to some degree taxation is voluntary if you know how to play the game, you could always hire a good financial advisor, CPA and/or tax attorney.

    Of course I am not happy paying taxes and see them wasted.

    Now, how much money in subsidies do you thing the tire plant is receiving from both the Federal and State and probably even from City Hall under the revised LERTA.

    It is stupidity in extreme to use tax money in that way for the long future. I already mentioned other white elephants projects in prior postings.

    I guess the big difference here is that I already know we do not have a choice as somebody else said before the only true things in the USA are death and taxes.

    So then let me ask you:

    How do we use the “pseudo-free” tax money coming from the State and the Feds. We just let it go because we believe taxation is wrong or we rather try to use it to best of our capabilities. Or we let the pseudo-leaders build castles and pay friends’ consulting fees and have construction projects with low quality, future high maintenance and horrendous utilities bills. Of course we could always blame the weather. Did you ever hear about the Red Sea building in the Behrend campus?

    I also said in my original post that the best scenario for using public money is to build mainly infrastructure.

    I do agree that project’s like the ones you mentioned create a crony capitalism that sooner or later affects society. But I am taking about Research and Development that at present time does not exist in Erie, PA so the public money will not compete with any local business. All other project presently in their plans (including the downtown improvement district) will compete with current local businesses and sooner or later we will be paying the consequences if something goes wrong.

    Now going back to this topic and my original post. The only way I know to attract and retain people is having good paying jobs, jobs, jobs. Until the local investors decide to invest their own money locally in a bigger scale we will just be dreaming. And the new college graduates will be as I call them “escapees” because they will escape from Erie.

    I sincerely hope you understand my points.

15. Danny Lucas
    May 9th, 2008 at 5:48 pm

    While I would support policies designed to help bring people back to Erie, working to keep folks from leaving in the first place is a bad idea. The primary emphasis should be placed upon attracting new workers to Erie. Meanwhile, help your high school and college graduates relocate.
    —- Jim Russell

    Is that how they do it in Pittsburgh, Jim?

    The entire Mission Statement at GlobalErie states :
    “Putting Erie’s Brain Drain to Use”.

    I see nothing in there about draining our brains, or worse as you state…help them to relocate!

    The whole idea is retention, with a tad of return.
    Generally, many who leave yearn for the best that Erie has to offer, but decline a permanent return when they recall the worst that Erie has to offer.

    We drain brains BIG TIME in these parts That claim is what instigated Mike to make his comment…and become comment of the week.

    Katie is leaving soon; a college grad headed for new pastures and experiences. If she were to finish school here with a job offer between $50,000 and $100,000, Katie would likely postpone traipsing the world (always a good thing to do in my opinion; you appreciate what we have when you see what elsewhere has).

    But let us pretend our Community College were already in effect. It had a low cost to attend; her loans are minimal. THERE we have the opportunity for college grads to stick around without the need for job relocation; they could pay loans on more meager salaries.

    What about health care?
    Kansius can not get the local hospitals to walk the line without weaving, in support of his gold nugget cure. An entire industry could be formed around that.

    I would like to see our hospitals and manufacturing/service sectors work out a local plan to get everybody covered for health insurance.
    The federal and state are not doing a thing on health care.
    BUT, if we did it as a mutual understanding that it is required out of decency, it benefits all who live here, and would attract those brains who drained, when they find that Erie, PA is in the forefront of healthcare, it becomes a WIN for everyone.

    Something as simple as that would dent the bottom line temporarily.
    Why? It could easily be coupled with a reduction in premiums for non-use. Younger folks would pay less in their starter years (so they could pay loans; start a retirement fund).
    Education on taking care of yourself healthwise, and more restaurants getting on board with health oriented presentations of food that taste like a winner would benefit everyone living here. We could easily set the bar on health care for the nation, and raise it.

    That simple deed would make lower salary an offset.

    Now we are not talking politics here.
    We are talking cooperation for a mutual advantage for all people in the community compared to elsewhere. Live healthy. Enjoy four seasons of weather with activities outside in each one.
    Know that health care is a given.
    Set up R & D here in medicine.
    Maybe attract a pharmaceutical firm or two.
    Bio and gene studies is growing; get a couple of those as part of the mix. I am sure more could be added.

    My point is that with a tweak of one sector in the way we do things could affect all of our lives and the community extremely well.
    The idea of attracting new folks while draining the current one is a John Morris-ism philosophy covered before. It is madness to set up a sieve community that encourages relocation of graduates while attempting to pretend you are concerned about brain drain.

    I would like to see more comment on new ways that the community could work with synergy to take a few threads of life here, and get MORE out of combining those threads, than letting those threads stand alone.

    Healthcare is only one area.

    (Add dental care in this mix above. We should have a school of dentistry second to none. Just as Tri-State allows the hairstylists to work on folks while training, some simple dental necessities could be done by dentistry students here. Cleaning teeth; X-rays; piddle things that add huge cost to HMO bills.

    Let’s end HMO’s in Erie too and get back to doctors being in charge of healthcare. We could use some reverse movement of doctors around these parts.)

16. Heavy D
    May 9th, 2008 at 6:18 pm

    Julio, ( & company)

    I understand the need for taxes and that some government intervention & regulation is a good thing. I complain that too much is bad. Something like 70% of the US federal budget is in “transfer payments”. This is transferring money from one group to another in the form of subsidies, grants, and welfare ( corporate & personal). See the bail out of Bear Stearns as a great example.

    We have HUGE infrastructure problems because politicians choose entitlement over infrastructure every time. Why? because bridges don’t vote!

    I am not one of these “no taxes” libertarian nuts, but I’d sure like to go back to the good old days when the total US federal budget was ‘only’ 1 trillion dollars (under Reagan). Now it’s 3+ trillion. This growth is even more true on the state level.

    Here’s an article from the Pittsburgh Trib about the HUGE growth of PA state government over the years as it correlates to the LACK of private sector growth. It is from 2003 but not much has changed.

    We’ve tried government run projects as the solution, how about we try something different? There is lots of proof that lowering taxes and encouraging businesses works. Ireland is a great example.

17. Julio C. Reyes
    May 9th, 2008 at 7:30 pm

    Heavy D.

    If you read my postings carefully you will find that I actually agree with you about the abuses and waste of tax money. In fact my grandmother thought me that everything in excess is really bad.

    I have personally invested in Erie (Parade St and Little Italy) my own money. I never took any grant or subsidy for my business enterprises there because I share your opinion. More importantly by using my own money I only have to report to my lovely wife. I do not owe any favors to anybody.

    Excess taxation is really bad!!! In another topic here we already know that government (City, County, State and Federal combined) and Wal-mart are the biggest employers in Erie County.

    Your comment about Reagan while might be valid about the size might not be too realistic. According to some scholars Bush (Senior) was forced to raise taxes and never got reelected because he bailed out some of Reagan concepts based on trickledown economics. I want to remind you that Clinton balanced the Federal budget I guess for the first time in recent times. When he left office we had a surplus that now is totally gone. Clinton had been the only one that used the line veto to contain unnecessary waste and he was sued by both Republicans and Democrats to allow the continuation of wasteful practices.

    http://www.cnn.com/ALLPOLITICS/1998/06/25/scotus.lineitem/

    I am realistic, at the present time unless something dramatic really happens there is no way we could just wipe out all the bureaucracy and government wasting tax moneys. I guess the only answer will be to contain how it grows and educate the new generations about taxes and government.

    In another topic under politics I have even presented some ideas how to use terms limits and stop career politicians from causing more harm.

    Going back to this topic we need well paid jobs, jobs, jobs, for new graduates and younger people.

    I want to say it again. With all the money already allocated to Erie. We better use it to do something good if not the money will go to other region or to other crazy projects.

    R&D is the way to go right now while keeping the monster (insane unnecessary taxation) under control !!!!

18. MGR
    May 9th, 2008 at 10:38 pm

    D,

    You are right about our taxes being a disadvantage, but it’s not going to change. Also, you just highlighted my point on Florida with your house comment, there are no core industries with the possible exception of tourists. Approximately 50% of their economy was built on real estate via construction, mortgages, brokers, and development fueled by speculators and snowbirds. It has taken a massive hit from the credit market deterioration. I worked on a few deals down there over the past couple years and several more in the past. My experience has always been that the place is much more downtrodden and low class than its national image of golf courses and beaches reflects. There are a few rich spots peppered in between and a steady flow of retirees, but it is not some sophisticated area. I can’t quantify this, but the place is a major magnet for drifters. Maybe it is just the warm weather and wild party spots. It always seems that if you think about the 5 biggest derelicts you have ever met, inevitably one or two of them at least had the blind ambition to relocate to Florida for no apparent reason (Phoenix is big for this also). On my last trip down there, I was discussing it with a female bartender who was very irritated by the trend. She noted that very few of her high school classmates and friends stayed there and that all the party types from the North were bringing the place down. Too many trailers for my blood.

    If the averages look good, read between the lines and run the same analysis without the best spots populated by solid white shoes such as Boca Raton, Key West, or Palm Beach. If you look at most of Florida - Tampa, Clearwater, Jacksonville, Miami you will find a very mixed bag. When a place builds its economy on buying and selling houses while borrowing more than they are really worth for spending cash, it is a formula for disaster. I have numerous clients with real estate holdings in Florida that have tanked horribly. One client has a large amount of development land that he can’t unload at any price because the market simply doesn’t have any buyers who would consider developing it under current conditions or at conditions expected in the next five years. The same things have happened in California, but they actually have an industrial base to weather the fallout. I would take the development in Nashville or Cary any day as it is stronger and more sustainable.

    As far as Nevada goes, I am not saying gaming isn’t lucrative, it’s rigged to be a winner and built entirely on tourist money. My point is that as a country, I don’t see anyone building a mecca like Las Vegas again and I wouldn’t want to look at Nevada’s averages without Las Vegas and its bedroom communities. I am certain it would pale vs. Salt Lake City and its suburbs and probably Pennsylvania.

    The reality is that we rank where we rank on taxes and that’s that. Julio is dead right about maximizing the use of this overtaxation because it’s really the only way we have to make lemonade out of our tax lemons.

19. john morris
    May 9th, 2008 at 11:33 pm

    I’m glad Jim Russell is on here to speak for himself once in a while.

    I think there are two different goals here.

    Peter states a very rational goal”GlobalErie is about finding ways to get more people who want to live and work in Erie to, well, live and work in Erie.” While I think Mike’s goal to retain Erie residents above all else is less rational. No healthy community retains all it’s residents or even tries. No place is for everybody and the right idea is to build growth around finding people who will like Erie.

    That comments like this seem controversial on here is pretty weird.

20. john morris
    May 9th, 2008 at 11:58 pm

    Danny, perhaps you should give some examples of succesful American cities with the kind of demographics you are describing, which retain almost all thei residents and then gain the few who left back while building R&D skill bases in new industries? I think Florida’s transient demographics are well described here but I don’t know of many places that fit your fantasy.

21. TJ
    May 10th, 2008 at 12:38 am

    People too often say “Erie needs to attract new and better jobs”.

    Well, here is the situation.

    Erie has a trained workforce but–of how many and in what specialties?

    Who wants to hire fresh college graduates as business executives?

    Who in their right mind believes that the Manufacturer’s Association doesn’t place downward pressure on workers wages regionally?

    Weather is not a concern. Culture, People, Business Environment and Strategic location drive companies’ location decisions.

    Something I have noticed is that Erie has relatively few foreign owned companies.

    Also, when I think of cities, I think of something they are associated with. For instance: Akron: Rubber, Columbus, OH: Insurance, Buffalo: Steel, Pittsburgh, Steel and IT, Philadelphia: Big Pharm, Erie: Trains.

    Now…think about the each of those cities affiliated industries. What makes Erie different? The answer is: Erie’s HHI index for the major industry in town (trains) is closer to 1800 than any other city’s most reputable industry.

22. Greg
    May 10th, 2008 at 1:44 am

    Heavy is correct that a nation can not tax itself into prosperity, and it appears that Julio agrees with him to some degree when he later writes, “Excess taxation is really bad!!!” However, the analysis of President Reagan’s economic policy as compared to that of the first President Bush and President Clinton misses the mark. Reagan’s economic concepts based on “trickledown” policy did not need to be “bailed out” by his successor’s tax increases. Consider that from 1982 to 1989 (after the Reagan tax cuts) federal revenues increased by 24.1%. During the seven year period of 1990 to 1997 which coincided with Bush and Clinton tax increases, federal revenues missed that mark by almost 5 percent at 19.3%.

    Reagan Tax Cuts vs. Bush-Clinton Tax Hikes:
    Overall Real Revenue Growth
    After Reagan Tax Cuts After Bush-Clinton Tax Hikes
    Year Total Revenue* Percentage Change Year Total Revenue* Percentage Change
    1982 738 1990 914
    1983 684 -7.3 1991 895 -2.1
    1984 730 6.7 1992 895 0.0
    1985 777 6.4 1993 922 3.7
    1986 790 1.7 1994 982 6.5
    1987 854 8.1 1995 1,034 5.3
    1988 877 2.7 1996 1,082 4.6
    1989 916 4.4 1997 1,090 0.7
    Total 24.1 19.3
    Source: Historical Tables, Budget of the United States Government, Fiscal Year 1997.
    *Billions of 1987 dollars.
    .
    The bottom line here is that tax cuts grow the economy and bring more money into the government’s coffers. The other half of this discussion concerns how government spends the money.

    Julio repeats an almost decade old myth when he writes,

    “I want to remind you that Clinton balanced the Federal budget I guess for the first time in recent times. When he left office we had a surplus that now is totally gone.”

    President Clinton never balanced the budget and there was never any surplus. The closest he came was the FY 2000 budget which recorded a deficit of 17.91 billion dollars. Clinton did not continue this deficit reducing trend, however, as his next and final budget (FY 2001) left the next administration a 133.29 billion dollar. The national debt went up every year during President Clinton’s two terms and he left office with a growing national debt.

    The National debt at the end of each of the Clinton Fiscal Year Budgets

    Fiscal
    Year Year
    Ending National Debt Deficit
    FY1993 09/30/1993 $4.411488 trillion
    FY1994 09/30/1994 $4.692749 trillion $281.26 billion
    FY1995 09/29/1995 $4.973982 trillion $281.23 billion
    FY1996 09/30/1996 $5.224810 trillion $250.83 billion
    FY1997 09/30/1997 $5.413146 trillion $188.34 billion
    FY1998 09/30/1998 $5.526193 trillion $113.05 billion
    FY1999 09/30/1999 $5.656270 trillion $130.08 billion
    FY2000 09/29/2000 $5.674178 trillion $17.91 billion
    FY2001 09/28/2001 $5.807463 trillion $133.29 billion

    Source: The United States Treasury

    With regard to Clinton’s ability to reduce wasteful spending via the line item veto, I too am in favor of the President having that veto power. However, the line item veto had nothing to do with deficit spending or Clinton’s phantom surplus except to the extent that it perhaps helped him perpetuate the surplus myth. Clinton reduced the public portion of the debt by borrowing from intergovernmental holdings, otherwise known in this instance as Social Security. This creative accounting, coupled with the massive reduction of the U.S. military at the end of the cold war arms race is the source for this canard. Call it a shell game, call it smoke and mirrors, just don’t call it a surplus because it never really existed.

    Julio, I agree with so much of what you have written at the end of your post:

    “…there is no way we could just wipe out all the bureaucracy and government wasting tax money…the only answer will be to contain how it grows and educate the new generations about taxes and government…we need well paid jobs for new graduates and younger people…With all the money already allocated to Erie. We better use it to do something good if not the money will go to other region or to other crazy projects… keeping the monster (insane unnecessary taxation) under control !!!!”

    I know that R&D would be great for Erie, just as I know that Erie would be great for any organization choosing to do R&D work here. I know this because I know the same things about Erie that you and Heavy D and Danny Lucas and Peter and all the proponents of Erie who read and write on this site know: Erie is not a backwater; Erie is full of people who are experts in their fields; Erie can do any job; Erie can offer just about anything to anybody. Yet, how often have we lamented that if only given the infusion of capital this little city would be world class. I think we are world class in spite of our lack of infrastructure.

    Consider the boom within Ireland, a nation that suffered a brain drain loss of population so devastating in the 1980s and early 1990s that is was second only to the potato famine. Today, Ireland is on fire and the main reason is infrastructure. The government built the roads that business needed for offices and plants, the schools tailored their curriculum to the workforce needs of business, the country sought immigrants with skills and abilities specific to the needs of business, the connectivity required for high speed data was planned and executed before it was actually needed.

    Contrast what has been called the “Celtic Tiger” with our struggles to get approval for a runway we should have had twelve years ago and if built today, less the final 1000’, would still be too short. Consider our telecom and media providers who lack the will or ability to offer Erie current services, the same services that are already being enjoyed by customers in similar markets. Why must Erie be among the last to have fully deployed HDTV or next generation cell towers or FIOS or even a waiver from a local broadcast affiliate to get satellite network programming from out of town? These things are often discussed on Jack Tirak’s pages and discarded by some as luxury or gadgets. The argument is that we should stop whining about our lack of hi-def picture because there are no jobs here and the economy is too poor to support such fancy extravagances. This is a tough if not impossible place to live if one is an early adopter of technology. The workforce of the future will be steeped in technology and decision makers will more often than not be early adopters. It is about so much more than making Perry Square a wi-fi hot spot or getting a cell signal in the Bayfront Convention Center.

    Infrastructure is not a luxury it is a necessity. Business will demand it. There are facets of this region that are indeed cutting edge, most typically business/manufacturing, some medicine, and on occasion education. We must provide a workforce that can do the jobs. I do not know how I feel about the community college as it is currently proposed. I think training for a trade is still a viable path into the workplace. But I also know that many future jobs will require higher degrees. Unfortunately, John Dineen’s recent plea for more engineers is not a new concern. Donald Alstadt, when he was CEO of LORD, warned in the early 80’s that Erie’s higher education institutions were not producing enough of the science and engineering majors he needed for LORD’s headquarters. I’m not suggesting that we would not have lost headquarters to Cary, NC, or that Behrend and Gannon to a lesser degree did not respond. What I am suggesting is that this problem was effectively identified over 25 years ago and yet we still have little or no solutions.

    Reduce taxes and business will grow and invest, that investment will grow the economy and in turn the government revenues will expand. The increased revenues can be used by the government to create infrastructure because that is the one thing government can do to help create jobs.

23. Danny Lucas
    May 10th, 2008 at 8:11 am

    Danny, perhaps you should give some examples of succesful American cities with the kind of demographics you are describing, which retain almost all thei residents and then gain the few who left back while building R&D skill bases in new industries? I think Florida’s transient demographics are well described here but I don’t know of many places that fit your fantasy.
    —-John Morris

    “There you go again!” as Reagan would say.

    I repeatedly tell you that my interest is Erie, PA.

    You repeatedly point out that NYC and Pittsburgh offer insight into how Erie can BE or NOT to be. Now you add Florida — a new place you do not know of what you speak.

    I rejoin that is ludicrous to compare.
    Further, your negative experience in NYC and your worse experience in Pittsburgh, is in direct contrast to my overwhelmingly positive experince with Erie, PA. (and previously living in Florida).

    So now we are to compare all the cities of the USA in order to maximize your metric of immigration/migration models. Your theory works well for Pittsburgh. The dynamic growth of that town is obvious.

    Russel’s blog generates what,…. ten comments a week with 9 of them John Morris? An email to that blog is the equivalent of a delete button; nothing happening. Pittsburg has their hands full with you two determining ideas for the future there.

    Mike is hardly any less rational than Peter and the goals you finally admit for Global Erie (they are printed at the beginning each day and could be missed as they only appear daily instead of hourly).

    Just as NYC declined by the failure to retain John Morris, Mike seeks to protect Erie from a similar demise. He states pretty much that it is difficult to fill a bathtub with the plug pulled out

    YOU, John Morris, find this irrational.
    Your theory is too add so much inflow that an outflow becomes irrelevant. I find that irrational and akin to MGR’s description of transient life in Florida — on that he is correct.

    Erie is adept at attracting immigrants and has a century head start on the nation in that field. Trends are changing as many immigrants sought manufacturing jobs for life improvement. Erie is leaner in that sector. Just a week or so ago, a woman committed suicide by age 45 or so by drowning here. She came from the Ukraine. She cleaned banks for a living. I find that more typical to immigrant lifestyle in Erie right now; also more typical to Erie residents in general (or restaurant/casino trade).

    The incessant gibberish to look at other cities that Russell and Morris portray as vital is nonsense. Each location has pluses and minuses.
    I find it fruitful to maximize the pluses you already have, minimize those minuses.

    We can not become another city, and the studies of such often lead to vital errors when followed by Erie. Tullio’s shutting down State Street and putting in “shopping” is but one folly learned ala Morris’ best practices.

    Morris is pleased that Russell spoke for himself here (as opposed to Morris dumping the blather himself here). I am glad too.
    Russell says this:
    “The primary emphasis should be placed upon attracting new workers to Erie. Meanwhile, help your high school and college graduates relocate.”
    The silence since that thought is golden. Duct tape is silver. Both are effective at shutting down nuisance noise.

    Niagara Falls has a steady rate of outflow. Let us increase it by 100% outflow EVERY year. Soon, the Great Lake would be running on empty.
    NOT TO WORRY.
    Morris and Russel would fix that by attracting new water to the Lake instead of damming the Niagara and preventing leakage.

    Speaking of rational and the irrational, John now chimes in with Florida.
    I have lived in Erie; you have yet to step into Erie county per you.
    Florida has NO state or local income tax. (I lived there too).

    Florida is putting on a major effort to attract manufacturing (despite MGR’s observation to the contrary) to diversify the economy and take advantage of globalism; it is easy to export from Florida.
    MGR failed to include Miami, Tampa, and Jacksonville, but I do not think solving Florida woes is relevant here. They are aware that their eggs are in one basket and are going through change as we do here. They are getting their act together via low taxes on income.

    Perhaps John Kansius noted that when he filed income taxes and saw no need for two forms in Florida; state and local.
    And maybe THAT influenced the location of Cancer Research to Lee Memorial Hospital in FLORIDA over Erie. PA.

    Regionalism is a flawed theory.
    China is beating the crap out of the world and doing nothing of the sort.
    They are developing market clusters as they drive people off agriculture and into sweat shops of city life. The city is built from scratch out of farmland. They rise to produce a given item or industry; and, all components of that item are also manufactured in clusters nearby.

    New cities spring up for a given product and it is distributed worldwide.
    All components to that product are LOCAL, not regional. Such clustering gives a huge advantage and even beats the “just-in-time” economy of the Japanese.

    It is the future and Erie can play that game.
    But only if we try to be the best Erie we can be. Any time spent on trying to be Pittsburgh or NYC or Racine, Wisconsin is time lost on being a growing Erie.

    Say John, if you ever make it to Erie, drive up I-90 to Niagara Falls and see how you could lose a lake by letting that flow grow…… heh-heh.

24. Jim Russell
    May 10th, 2008 at 8:28 am

    The carrot of lower taxes won’t solve much. Look at any state with relatively low taxes. There is plenty of economic development variation within those states. Entire states aren’t struggling. Individual communities are.

    The other lesson is that tax incentives have not worked well in the past. Under-bidding another city for a new Google plant is a poor excuse for an economic development policy.

    Lastly, plenty of businesses locate in costly cities (SF, NYC, etc…). The types of businesses that seek the lowest rents should be of little to no interest to Erie or any other shrinking city. There will always be some place cheaper.

    As for Ireland, the EU dumped a lot of money in that country. But that government pork didn’t work everywhere. There’s more to the Celtic Tiger than investment in infrastructure.

    Take a step back a find a city that struggled with a similar situation as Erie. There are cities with bad winters and high taxes that are now thriving. How did they do it?

    If the answer was as simple as investing in infrastructure or lowering taxes, then we’d see a lot more economic miracles.

25. Heavy D
    May 10th, 2008 at 8:56 am

    Greg,

    Thank you so much for the great post. You are much better at this than I am. I was lucky enough to spend a week in Ireland in the 90s and it was thriving and bustling but I didn’t know that the concentration on infrastructure was such a major part of it.

    MGR,

    As for Florida, the whole place is booming. A better example of the economy you’re talking about is Atlantic City: a row of shiny casinos surrounded by slums. My parents own a thriving manufacturing company down there. My father started it in 1998 from scratch and they now employ about 25 people. He does have trouble hiring competent workers as a lot of people do come to Florida to slack off. They just hired a kid straight out of High School as a day laborer and they started him at $15.50 an hour.

    My parent’s house is worth about $800,000, ( it’s one house from the water) and they pay about $6000 in taxes on it. Which means by value their property tax rate is less than 1/3 of what I pay here in the city.

    The taxes are much lower, yes the state gets HUGE dollars from tourist taxes. That is the hand they are dealt: over 1000 miles of beaches and warm weather all year. Erie ( and PA) will never be able to compete with that directly, nor should we try to, like with a convention center.

    It’s like that movie Other People’s Money with Danny Devito. The local town keeps soaking the local factory over the years and eventually they are forced to close. Then the locals complain about the company for not being loyal. We need to foster the businesses we already have and keep them from going the way of IP & Sterris.

26. john morris
    May 10th, 2008 at 9:16 am

    Greg,

    Thanks for your great post on the Clinton years. They are perhaps the best example of the country’s use of phony accounting. Military spending cuts (which may or may not have been good) and fake surpluses in places like the Social Security trust fund made up most of the reduced deficit. Apres moi le deluge.

27. Jim Russell
    May 10th, 2008 at 9:27 am

    “Is that how they do it in Pittsburgh, Jim?”

    I’m not aware of any city in the United States promoting the relocation of its human capital. Some nation-states do it, China being the most notable example.

    What is the out-migration rate for Erie over the past 5 or 10 years? I’ve looked at a number of domestic initiatives to stem the tide of brain drain, which is always framed as a problem of people leaving. What I find interesting is that most of the regions obsessing brain drain actually have relatively low rates of out-migration. Almost across the board, the shortfall is a result of anemic in-migration.

    I recognize that promoting the relocation of recent graduates is counter-intuitive and not the least bit popular. Mr. Lucas, your reaction to the idea is par for the course in Pittsburgh.

    If graduates want to stay in Erie, you should help them do so. However, I see considerable upside in helping Erie expatriates thrive thanks to the success of other Erie expatriates. What I am suggesting is a long-distance return on the investment in human capital.

28. George Vietze
    May 10th, 2008 at 9:28 am

    In yesterdays Erie Times another article in a series stories spotlighting “Your Image of Erie?” “Let’s turn the spotlight on ourselves throughout 2008. Erie is on the verge of something great.”
    A young attorney, Timlothy Wachter, writes about the many organizations that are working towards growth goals that promise to define the area for the next century and beyond.

    He writes, “The fruits of this common vision IS beginning to bloom.
    The seeds have been sown for a vibrant mixed-use residential -retail-cultural business district in the downtown. A mixed use parking, residential and commercial structure has been proposed for the corner of Fifth and Peach Streets. The area surrounding Griswold Park will soon be redeveloped. The Perry Square are is being improved. The Mercantile Building is being transformed into a mixed use residential and commercial establishment. Our waterfront has taken impressive steps toward the transformation from industrial to entertainment and commercial viability. …..Sustaining this movement is vital to our continued success. That can be achieved through the increased leadership of the younger generations consisting of the 20-40 years old.
    …..Todays younger generation must become invested in the process that is occuring now to ensure that they will be prepared for their role in creating the final product that will be ERIE.

    There is a necessity of a succession plan so that we are able to easily transfer to the leadership of the next generation…….

    It is often said that Erie is experiencing a brain drain due to a lack of opportunity. I challange the validity of that conclusion. While a generational gap in Erie professionals has occurred over the years, the gap is BEGINNING to be filled with young professionals returning to the region……”.

    Two points, the local media has finally started to “get it” that it is important for the media to take the lead diseminating up-to-date facts to support the NEW ERIE. People and companies planning to move here and learn about Erie and the area read the local papers and form perceptions. These stories and series of articles help change the old perceptions to the NEW.

    Second, it is important that the new generation take the lead and not follow the path of the older and past generations that were willing to accept politics as they are and not make the necessary changes. Complaining about things and changing things are different diciplines.
    The older generations were too accepting, I remember when I would hear and observe people taking things like medicine and not even knowing what they werre taking and the answer was “The doctor told me to take this medicine.” For years, and years the same old politics have kept this area from growing to its potential. The new politics need to be accountable and the younger people need “own” that responsibility.

    Perceptions are changing, in just a few short months, on this forum alone the tone has turned more positive, the local media has stepped up a more positive outlook. Things are changing.

    Julio talks about jobs and infrastructure and Debbie speaks of planning
    Danny adds his knowledge of manufacturing and other areas and the other comments are added to the mix and slowly changes are manifested as our representatives are getting more energized and have stepped up their marketing efforts.

    Yesterday, Presque Isle Downs opened its first racing season, over 2,400 attended with on track wagering of $69,600 and off-track simulcast wagering of $659,619. This was 22.7% higher than opening night last year. That adds to the Casinos $4million a week slot revenue. Not many other businesses generate that kind of cash flow locally, although not all of that money is local, a major percentage is contributed to the State of Pa.’s revenue of which the area has some benefit. Now that a full racing season is here and they race from May-September the impact of the economy of the horse business locally will be significant. FOUR FULL MONTHS of racing bringing tourists here from all over will impact our hotels, shops, and other local business.

    This activity is important because it adds to our economy and our critical mass of diversified development that will eventually attract more of the kinds of business and HIGHER paying jobs that are needed in this area, as our downtown changes, convention center prospers, new hotels are built and the occupancy rate increases in the existing hotels and upgraded attractions such as Waldermeer, Splash Lagoon, Family Sports Parks and others together with our beaches, theatres, culture, etc., our quality of life changes and more and more people will want to live here. We are well on our way to a more prosperous area, people from Ohio, New York, Pittsburg and other areas are beginning to come here more often and as the media and others point out our assets rather than our constraints more and more people will want to relocate here. For example the race horse business in Maryland and Ohio is on the downslide and Presque isle Downs is becoming a premier facility and the incentives for PENNSYLVANIA BRED HORSES/PURSES are
    attractive, hence eventually we will attract more horse farms.

    If we continue to improve what is already in Erie, that critical mass and synergy will help attract more jobs.jobs,jobs and if we PLAN for that growth we will benefit in the FUTURE OF THE ERIE AREA..

29. MGR
    May 10th, 2008 at 10:51 am

    TJ hits on a critical point about businesses not wanting to hire fresh college grads as business execs. There is little chance that Erie county (280k people) or even NWPA (400k people) can possibly hope to retain the majority of the entry level grads we produce (@4k/yr.). Especially given the competing efforts of people who leave for school and seek to return. Once people gain 5 years experience or more they are often able to secure very attrative opportunities in Erie and this happens frequently. Honestly, I would guess that a high percentage of Erieprofessionals fit this model.

    Where the second migration problem occurs is when those people seek to leave the companies they are with. Because we do not have sufficient industry clustering, these people often end up relocating. We have clusters in rail, healthcare, injection molded plastics, and machining; however, most of our best companies are outliers of those areas and frequently the professional skills do not transfer among them. One bright spot here never admitted on the blogs is that we have brain gains from this as skilled professionals do relocate to Erie to fill these positions. Come on now, how else do you think the county population stays steady as it has for decades.

    The problem is that we gain as much as we lose rather than growing. If we had more clusters, the 5-10 year people we bring in might be able to progress their careers further adding value to our workforce for much longer on average than they do at present.

    The key to building clusters is spin-offs. Our community has a respectable track record for people leaving a local company to build a new company in that industry. The problem which I have highlighted before, is that these companies remain smaller lifestyle companies. Therefore, in conjunction with our critical need for an entrepreneurship school at one of the local universities, we need to provide much better continuing education for existing entrepreneurs. Professionally, I have many licenses which require CPE and sadly there is not one local program offered that I think would add meaningful knowledge to my repertoire. Given that the average businessman has no CPE requirement, I can’t envision any of them paying for the continuing ed courses offered here. Also, most of the growing business owners I know don’t have enough time to travel for such education. This is putting them at a disadvantage.

30. Rob
    May 10th, 2008 at 10:54 am

    I go away for a day and I miss such a lively thread. Whoops.

    There are two big points that I have seen others make at different times, and I have commented on several times as well. First, the Erie area has no problem attracting college aged students. There are 20,000 students enrolled in the four colleges in Erie County every year. But where do they all go when they graduate? It certainly is not here in Erie. Sure some of them stay here, but most (like myself) go elsewhere. I ended up in a place where the cost of living is slightly higher than Erie, but I am making much more money than I could make working in Erie. It is simple economics. Until there are better paying jobs in Erie, the mass exodus of college students is going to continue into the future.

    This leads me to my second point with the runway extension at the airport. A lot of people seem to think it is not needed at all, and think it is money that is just being thrown away. However, a lot of people conveniently seem to forget that half of the extension is for safety reasons. The runway we have now is too short for the current size of planes that fly in and out of Erie right now, and those planes are the smallest kind of commercial planes that fly. So if there is to be any kind of commercial service in Erie, we need a longer runway. The second extension is just for the potential of larger planes to fly in and out of Erie. Will that ever happen? Given the state of the commercial aviation industry right now, nobody knows. I think it will only help in attracting and keeping viable routes for travelers.

    This can only go to help the business sector because it will enhance access to Erie by employees and clients of companies here. If you are able to increase the ability to travel to Erie, it makes it easier to be here. Call it the ‘if you build it, they will come’ situation, but if you never provide the opportunity in the first place, nobody will ever come…

31. Danny Lucas
    May 10th, 2008 at 12:02 pm

    First, the Erie area has no problem attracting college aged students. There are 20,000 students enrolled in the four colleges in Erie County every year. But where do they all go when they graduate?
    —Rob

    Bingo!
    The area has NO trouble attracting students.
    This is a commodity we produce well here. We take young minds of mush and orchestrate talent within. We then ship em off to wherever they choose to go. Some were never from here and only came for a great education. there is no lament to the loss; it was a temporary (and repeated) gain.

    I took my daughter through a local university and was shocked to see the job postings on the walls everywhere. NONE of those jobs will go to the newspaper or “free” Erie Blogs Job Board, or even to the local headhunters that are so skilled at human resources they can put anyone into a $7 an hour job.

    Those jobs are posted for students about to graduate and they are great paying jobs. They are among the best in the region and employers are seeking computer literate youngsters (as opposed to the layoff weary middle and older folks).

    Given the change in marketing and globalism, older folks do not adjust to the quick change scenario as do these grads, who can text message two women for dates with two cell phones in each pocket, while doing a spreadsheet on Excel for an exam. Those kids are dy-no-mite in the workforce and get snapped up before they hit the street.

    There is nothing wrong with an education industry that moves mighty dollars into the local economy, plus need for food and housing.

    Now let’s turn to Jim Russel’s magic golf game that is not content with par for the course.

    “Lower taxes is the way to go. ”
    —Heavy D

    “You are right about our taxes being a disadvantage, but it’s not going to change”
    —MGR

    “No one has ever taxed themselves into prosperity”
    —-Heavy D.

    Now Jim Russell picks up a Driver and swings:
    “The carrot of lower taxes won’t solve much. Look at any state with relatively low taxes”.

    There is a reason my thoughts are also par for the course in Pittsburgh too, Jim. You can win with par; double bogeys rarely do it.

    Your concept on taxes is as good a bogus, er,…bogey, as your idea that Erie grow by helping grads go.
    Woah there!!! Rust belts go on sale for Father’s Day. Need a few dozen?

    The antithesis to your testimony would run like this:
    “”The carrot of HIGHER taxes WILL solve much. Look at any state with relatively HIGH taxes”. Maybe you can see how foolish that proposal for Erie growth looks when stated upside down, but consistent with the economic plan you propose.

    We clearly have an in-migration of students.
    Katie (grad to be and made of honor) speaks direct that she wants to see the world a little before settling down ANYWHERE. That is par for the course in Gen…whatever letter we are up to nowX,Y,Z,………….. L,M,N,O,P!

    And God saw that it was good; on the Seventh Day He rested.
    Well, the kids have been studying 16 or more years and want a rest before running the race of life. Go for it!

    LECOM is blooming here and soon, down South.

    I have been surprised that all that lumber that used to float up to Hammermill has yet to be converted into new industries locally. The Amish are cutting wood like crazy for our pallets so we must be shipping stuff somewhere.

    We have had a history of being manufacturing oriented. Our eggs are now being placed in many baskets and diversified. I like that approach.
    Retirement folks always leave Florida when one spouse dies as they have no community roots except the spouse. Erie is blessed with roots, even Joe Roots for perch sandwich (good!)
    (ox roast — No Way at Joe’s—-Joe that is pot roast, not ox. Fix it).

    We need ancillary businesses for the Casino and Racetrack.
    Not just motels. Vets for the horses; breeding farms; pscychobabble folks for the gambling addicted. Attornies to do peacemaking after taking the biggest piece for themself.

    We are running out of doctors fast. Hello??

    Older folks need retirement activities.

    Teens need a teen center like Sportland on 26th and Asbury used to provide.

    One I can never understand is this.
    We need Homeland Security Center set up in Erie.
    Surely Tom Ridge as former Governor and former Homeland guy could be tapped, along with Arlen and Phil to set up a training center of future spies, language knowledgable folks, CSI types, whatever. Bob Byrd did this with West Virginia getting a CIA Center second to none. Erie needs an anti-terrorist center that leads the nation in training and reporting direct to Washington on Worldwide activities.

    I wrote on EMGR about personally working with a California firm on taking voice to text messages and gearing it from business prioritization (now) to hard-of-hearing folks and replacing court reporters nationwide. [You speak and the text is verbatim by machines].

    Why can’t we do this with languages in Erie now? Intercept those satellite Arabic and Mandarin and let the machines convert to English text! Where are ya Tommy Ridge???
    We can train the analyzers.
    I was happy to see Bill Gates catch up this week by pronouncing the Internet of today and the internet of 10 years away, will not resemble each other. A key difference? Voice to text. We can market this in Erie bigtime. A spy college can not be far behind, eh?

    Jobs. Jobs. Jobs. Every kind of em. Everywhere you look.
    We accept any, because we have folks for every occasion here.

32. Jim Russell
    May 10th, 2008 at 12:37 pm

    Mr. Lucas,

    The issue of taxes is a thorny one, but we have to reconcile the nickname “Taxachusetts” with Boston’s thriving innovation economy. The costs of dealing with an aging infrastructure and making good on all the industrial era entitlements are not going away. Are Birmingham’s current economic struggles a result of high state taxes in Alabama? If so, how is Mobile booming? Why not compare Chattanooga with Nashville? I’m still waiting for the New Hampshire miracle.

    There are a number of low tax states with high rates of out-migration. Ah, but lowering taxes will work in Erie!

    As for policies for addressing that out-migration (aka “brain drain”), they are a dime-a-dozen, Pittsburgh included. The list of states pursuing anti-brain drain initiatives is instructive. To name a few: Georgia, South Carolina, Colorado, and Iowa.

33. john morris
    May 10th, 2008 at 1:12 pm

    For the record, I have to disagree with Jim on this one. It’s true that having high taxes is no guarantee of failure but it just stacks the deck against you. A place like NY or Boston with a huge base of fixed and human capital can survive it but when you add high taxes to areas that already suffer from other disadvantages it has a big effect.

    Just as important is the damage of what these high taxes fund which is an ingrained antimarket culture.

    Ireland is a good example. As far as I know, they sucked in huge EU subsidies for many years and only saw a positive turnaroud as they lowered taxes.

34. Julio C. Reyes
    May 10th, 2008 at 1:30 pm

    MGR,

    I should restrain myself but I need to do this post.

    While I agree with everybody about insane taxation and I encourage everybody to demand a good use of our taxes I can not remain quiet about your comment about Florida.

    First I must disclose that I really never like to live in Florida in fact amazingly enough I do not like their weather, bugs and alligators. I must recognize that Florida above California is the USA bridge to all the Latin American emerging markets.

    I do not know how they did it (being cynic maybe like Heady D said it might be the scarface connection) but Florida has far more advantages that you could get in a single vacation visit to that place.

    Regardless what people think if you want to do heavy duty business with any country south of Mexico you have to go through Florida. I guess it is really geography after all a fly to Brazil from Florida takes less time than a fly to Brazil from California.

    Either we like or not with the US culture Florida now as well as California is an icon.

    Few silly samples, Gatorade, The headquarters for the biggest Spanish network (radio, TV, cable, etc) are located there; how many times Florida has won the NCAA football championship; Cape Canaveral (everybody should have a mandatory visit to see the launching of the space shuttle); Disneyworld; I even think these guys even won the world series already and finally the Miami dolphins and Dan Marino. Maybe he is one of the people drifting to Florida because they can not make it up north?

    Could it even be that they have better jobs and better pay over there?

    Disclaimer, I am steeler’s fan since I was a little kid living in Mexico.

    Going back to this topic we need good paying jobs but first we must recognize reality we are who we are and if we want to be better than the rest we must be ready to learn, compete and win.

35. Danny Lucas
    May 10th, 2008 at 1:41 pm

    The issue of taxes is a thorny one, but we have to reconcile the nickname “Taxachusetts” with Boston’s thriving innovation economy
    —Jim Russell

    Speaking of high taxes, infrastucture, government intervention, and whether it leads to innovation, I present the Big Dig and the final cost
    $14,800,000,000.00,
    better known as $14.8 billion bucks spent.

    I doubt you could have presented a better example to make my case, Jim. Say, have you noticed the brain drain problem they have in Boston?
    Divide that cost by the total residents and print them a check.

    http://www.city-data.com/forum/massachusetts/219738-final-cost-big-dig-14-8-a.html

36. Danny Lucas
    May 10th, 2008 at 2:04 pm

    Do you need a job?
    Do you like manufacturing?
    Well step right up and look at a single firm, Fastenal.
    The company supplies maintenance and repair supplies to Industry, Government, Contractors, Fleets, you name it.

    The careers open as of May 10, 2008 can be accessed on the following link for any and all states. Take a look at ALL jobs category.
    For fun, take a new search for the State of Florida, then do Pennsylvania.
    Do “ALL” jobs open in both states.

    http://www.fastenal.com/web/Employment.ex?action=Search&jobDept=all&jobState=FL

    I was going to drop the fallacy provided by MGR on manufacturing in Florida, but Julio is on the spot with his observation. I know.
    I was there until Labor Day, 2007.

    This outfit is a lifeblood to industry. It is only one company and they can not open enough new locations fast enough. I was in Oregon the year before and they opened 17 new locations in Portland alone.
    Portland serves Asian markets and Boeing is a biggie too.
    Government is all over that coast.

    But Florida? The next North Carolina is sitting on that sand spit.
    And, they are doing it now. Sorry MGR. Julio is right.
    I could easily link a dozen more companies begging for workers there.

37. Julio C. Reyes
    May 10th, 2008 at 2:12 pm

    Greg,

    Thank you very much for the treasury department web site. I know that sometimes the numbers means different things depending on people’s perspectives.

    I must clarify my position to help the readers understand where I am coming from.

    First the easiest part.

    By looking at the web site you provided everybody could see that even in Reagan Golden years and his now infamous trickledown economic theories the national debt was growing. The explanation is simple back then as we do now we were spending more money that we are taking in.

    http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm

    Technically there is nothing wrong with borrowing money for a short period of time as long as you pay it back and as soon as you can make the necessary adjustments to prevent long term problems.

    You could confirm what I just said by looking at the web site. Except for a few years in the last 200 years the debt continues to grow regardless who is in charge. Left-Right or somebody in between.

    Now about Billy,

    You said:

    “President Clinton never balanced the budget and there was never any surplus. The closest he came was the FY 2000 budget which recorded a deficit of 17.91 billion dollars.”

    Billy took credit because “balancing the budget” meant for the first time in history be willing to spend only your projected revenue. It really did not matter how he did it. He of course is a gifted politician and probably a BSer but he was the only person that was able to cut spending on the military after the cold war was over and passed the welfare reform.

    Trust me missing the mark for 17.91 billion is very close when you are talking about macroeconomics.

    In fact, I believe Billy also wanted to pass a requirement about “balancing the budget” and of course it will require a constitutional amendment. Obviously both ends of the political spectrum said no way!.

    Any person in the USA should know now that paying off the outstanding debt balance will take a monumental effort and probably this effort will take more than one generation.

    The secret here is how we stop it from growing. My solution is no corporate no social welfare. That simple, everybody pays.

    Now, revenue.

    I have no idea where you are getting your numbers from but I visited your source I found out that the revenue numbers between Ronnie and Billy are not too different (%) indeed the revenue section of the document shows a constant number off for all those years.

    http://www.gpoaccess.gov/usbudget/fy97/pdf/hist.pdf

    Please show me the page number to facilitate my analysis and help me understand.

    As an added bonus with Billy. Hillary was way ahead of her time talking about the health care crisis in the USA.

    Disclaimer, as I said many times in my postings. I do not vote and do not belong to any religious, political or social organization. I have not emotional or philosophical interest of any kind while doing these posts. I work with computers and I just try to look at the facts from a non emotional non romantic perspective.

    As I said before we better find a way to create good paying jobs in the region, slow and/or contain insane taxation and bureaucracy and reject crony capitalism including the infamous “trickledown’ economy theories that privatize earnings and socialize risk and deregulate critical components for the financial stability of the country. Otherwise our children will pay the consequences.

    Greg or somebody else I have a question.

    If Ronnie trickledown economic theories were so good and the country was paradise at that time why Bush (Senior) increased the taxes. He did it for fun? Was it the devil? the Democrats? The War? I would like to know the answer and unfortunately I do not think I could ask him directly.

38. john morris
    May 10th, 2008 at 3:08 pm

    Julio,

    This is taking us seriously off subject but i think it’s important. I think the so called Social Security surplus in 1999 was around $600 Billion which of course was spent by the government and replaced by IOUs. There was also around 31 billion in a “highway trust” fund which helped hide the true deficit in 2000 as well as a number of other cooked numbers. Greg is right, there never was anything close to being a balanced budget.

    http://www.ontheissues.org/Background_Social_Security.htm

    http://www.fhwa.dot.gov/ohim/onh00/onh2p10.htm

    You really need to take the stated debt numbers and multiply by at least 5 to come up with the true cost of all the federal government’s outstanding promises.

39. Julio C. Reyes
    May 10th, 2008 at 4:27 pm

    John Morris,

    I was only using Greg’s provided web sites to understand the numbers. Both web sites are government web sites: White House and the US Treasury. Why do you change them now?

    From my point of view you are doing exactly what politicians do just messing and confusing things up to avoid answering my direct question below and try hiding the true situation.

    Let’s say that I agree with your arguments and Billy did indeed wipe out not just the Social Security funds and the highway funds and NASA and other and even his mother’s bank account. Then I have to assume that when Billy was cooking the books the whole Congress top to bottom left to right were accomplices.

    Just to keep with the “balance budget” concept regardless if it is government, private enterprise or personal finances. Nobody should spend more than their income in a continued basis.

    The fact of the matter is we do not have money and government (both Republic and Democrats) continue spending like there is no tomorrow. So my basic question again is: why Bush (Senior) raised taxes if Ronnie’s theories are marvelous and in theory they work. Again, now if you look at Greg’s source it really clearly shows that in Ronnie’s Golden years the deficit was still growing.

    Using a quintessential US saying.

    You can not have you cake and eat it at the same time.

    Why Bush raised taxes if Ronnie’s left the country in Paradise?

    Just to continue in the topic, insane taxation and wasteful corporate and social welfare sooner or later creates problems and kills jobs. We need good paying jobs without any subsidy left or right.

40. john morris
    May 10th, 2008 at 5:32 pm

    I added the other links because Greg’s links don’t come close to showing an accurate picture which Greg himself said when he refered to the Social Security “surplus”. This is not evading anything. As to the question of who is responsible, you are right that both parties have been cooking the books. Really cash accounting makes no attempt at all to show the real outstanding obligations of the government. Clinton happened to be the last president to have books that looked good on a cash basis. He also, with the forced help of a Republican congress made modest progress in controlling discretionary spending.

    Bringing ourselves to Reagan, the numbers speak for themselves– revenues went up pretty dramatically during his presidency but spending increased even more. If you wish to blame him for not controling spending or making progress in reforming any of the auto-pilot entitlement programs, I am with you but the facts don’t support the idea that tax rate reductions accounted for the increased deficits. Many people also believe his increases in military spendig were repaid later by the fall of the Soviet Union and the later “peace dividend”.

    The so called “Laffer curve” is not really an item of debate among most economists– the question is it’s exact nature. Many governments in Latin America once had tax rates as high as 90%. They didn’t get much money out of that since the result was that 90% of their economies were forced “underground.”

41. Jim Russell
    May 10th, 2008 at 6:10 pm

    “For the record, I have to disagree with Jim on this one. It’s true that having high taxes is no guarantee of failure but it just stacks the deck against you. A place like NY or Boston with a huge base of fixed and human capital can survive it but when you add high taxes to areas that already suffer from other disadvantages it has a big effect.”

    Mr. Morris,

    While I’m not against lowering taxes, there is no proof that doing so will stem out-migration. However, there is a strong positive correlation between increasing levels of education and increasing levels of out-migration.

    In other words, cities with a relatively well educated populous tend to have relatively high rates of out-migration. As for Richard Florida’s spiky cities, they are domestic net-migration losers. International migration is what glosses over the out-migration from so-called prosperous MSAs.

    Besides, it isn’t as if tax-heavy states didn’t use bribes to attract and retain businesses. It didn’t work. That’s because there is a lot more to market forces than tax rates.

    And, of course, there is nothing pro-market about massive EU subsidies, at least in the narrow libertarian sense.

42. MGR
    May 10th, 2008 at 6:17 pm

    Back on the subject of improving Erie, here is a an idea to expand entry level opportunities - forming collaborative employment and training agreements among non-competing industry participants in the area. While our smaller companies in each industry sector cannot effectively shoulder the cost of hiring and training, they could split the cost and share the use of the grads. This would simulate training programs in larger corporations where new hires are moved through departments to broaden their experience. At some point, the companies could hire the grads full time.

43. Greg
    May 11th, 2008 at 1:41 am

    Jim:

    The carrot of lower taxes is preferable to the stick of a higher tax burden that will inevitably choke investment and stifle growth. My main premise in this and my previous post is that business will invest and grow when the tax burden is reduced. It always has and it always will.

    You are correct that entire states are not struggling. At the state level many budgets have enjoyed surpluses precisely because of the 2003 Bush tax cuts. This is also true for cities. New York City, historically plagued by deficits, has run some surpluses recently. Are the mayors and city leaders taxing too much or not investing enough on infrastructure? Of course conditions will vary from one community to the next and many regions are no doubt struggling. The variation within any given state has more to do with local factors such as leadership, geography and municaipal codes rather than unified state-wide legislation.

    You also write that tax incentives have not worked and state, “Under-bidding another city for a new Google plant is a poor excuse for an economic development policy.” The notion that competing for economic development is poor policy leaves me to wonder just what the foundation of good, strong economic development policy could be. We have no choice but to compete and I can not really find fault with any company that actively tries to reduce the tax burden for their shareholders. Consider your own example of Google pitting Erie against another city in a bidding war to be the location of a new Google campus. I would certainly hope that our economic development leaders would throw in every type of incentive imaginable to bring that type of employer to the region. Now if you want to talk about Millcreek and Summit beating each other up over retail development, that is indeed a poor use of economic development resources as ultimately it pits us against ourselves.

    The fact that plenty of businesses choose to operate in expensive cities such as San Francisco and the aforementioned New York City speaks well for those cities. There are plenty of factors that push and pull for any given city. Places like NY and SF have great things pulling for them such as established banking and trading institutions, access to professional theater and entertainment, and very large population centers. These larger cities that have survived have also always had a greater diversity of industry. New York is known for many things (banking, entertainment, trade, etc) while the less than successful Detroit only conjures up the auto industry and that city certainly has a lot of thing pushing development away (high crime, high taxes, a deserted inner city).

    Yes there is more to Ireland than infrastructure, but without it there is no Celtic Tiger.

    You ask me to, “Take a step back a find a city that struggled with a similar situation as Erie. There are cities with bad winters and high taxes that are now thriving.”

    I know it’s not Detroit, and I don’t believe Cleveland or Buffalo are applicable either. I don’t really know much about Rochester, Binghamton or Schenectady. Perhaps Toledo or Grand Rapids? If you have a city in mind I would welcome any evidence, statistical or anecdotal that you might have. I do know that Houston, Texas and Jacksonville, Florida are two of the top ten cities with the lowest taxes and they are both booming. Fargo, North Dakota is a metropolitan area of 192,000 people with some really cold winters that increased in population by 22% during the last census. It is #8 on Kiplinger’s Top 10 Tax Friendly Cities List.

    Heavy:

    Thank you for the kind words. I too was in Ireland in throughout the 1990’s and was amazed at the boom. I’m told it is unrecognizable today.

    John:

    Thank you for bringing up Laffer. The theory that he supposedly sketched out on a bar napkin in the company of none other than Dick Cheney and Don Rumsfeld is the heart of supply-side economics. It was proven when Reagan cut taxes and the 2003 Bush tax cuts have yet proven it again. I’m preaching to the choir, but you can even go back to President Kennedy’s tax cuts as the impetus for the huge growth in the early 1960’s. And still the first thing I think of when I see the Laffer Curve is Ben Stein in Ferris Bueller’s Day Off. Sadly, I think Stein himself does not get it.

    Julio:

    You are welcome for the link. You are also absolutely correct that deficit spending increased during Reagan’s two terms. I never stated or implied that the Reagan budgets were anything other than you see them to be. The sole point of my argument is simply that the reduction of taxes created more revenue than tax increases. The separate argument regarding the deficit was a direct response to your suggestion that Clinton reduced the deficit, balanced the budget and had a surplus upon leaving the White House. In your description of Bill Clinton you say, “he was the only person that was able to cut spending on the military after the cold war was over” In fact, military spending cuts began in earnest with George H.W. Bush and continued with Bill Clinton. The reduction in the defense budget accounted for a very large portion of the balanced budget surplus that the Clinton’s stake a claim to.

    As a side note, America has a history of wanting to return to a more peaceful posture during times of post-war. Every time we have turned our swords into plough shares it has been to our detriment. We demilitarized after WWI only to have to retool for WWII. We again went soft post-Vietnam before the massive build-up from Reagan against the Soviets. Post cold-war was again no different, as if there would no longer be any conflict in the world and the U.S. would no longer need to project strength around the globe or ultimately defend herself.

    “Now, revenue. I have no idea where you are getting your numbers from but I visited your source. … Please show me the page number to facilitate my analysis and help me understand.”
    My apologies for not providing a clearer path to the information. A pdf file of the FY1997 Budget historical tables can be found here:
    http://www.gpoaccess.gov/usbudget/fy97/pdf/hist.pdf
    The information is from Table 1.3. It begins on the printed page number 23 and ends on page 24.

    Finally, you are asking why George H.W. Bush raised taxes. I can’t say for certain, and I am not here in defense of President Bush or his tax increase. Remember that the first President Bush was not a supply-sider at all. He used the phrase “voodoo economics” to disparage Reagan’s economic policies when they were challengers for the nomination in the republican presidential primary. I believe he probably raised taxes to try and reduce the deficit and yes the democrats in the house and senate at the time were the “devil” he made the deal with. By turning his back on the Reagan tax cuts, he actually reduced revenue into the treasury, upset his base, and got hammered with the “no new taxes” sound bite in the three way race against Bill Clinton and Ross Perot. It was not “no new taxes” that ultimately lost Bush a second term, however. Perot siphoned off almost 20% of the popular vote, a large portion that would have most likely gone to Bush or any other republican running that year as Perot did fairly well with conservatives of all party affiliation (dem, rep, ind). Since Clinton won with only 43% and Bush was just 6% behind, a two man race would have almost certainly changed the balance of the Electoral College to Bush’s favor.

    At any rate, to bring this closer to home, I think that you and I are probably actually arguing agreement here on the greater issues as they concern Erie. You continually decry high taxes, you call for fiscal responsibility and self reliance. You also understand the value of work and the importance of jobs. You mention that you do not vote and I’m not sure if that is by choice or a function of your citizenship or nationality status. If you have been afforded the privilege of the franchise, I would encourage you to vote. You and I may not always agree on which lever to pull but I can certainly tell that your heart and your brain would be engaged in the process.

44. Jim Russell
    May 11th, 2008 at 10:47 am

    Greg,

    I agree that lower taxes are preferable to higher taxes. But there isn’t any substantive proof that a lower state tax burden will benefit Pennsylvania’s struggling cities. If that was the case, then El Paso wouldn’t be struggling to bring its natives home or keep graduates from leaving.

    Lowering PA taxes as to compete with Texas and Florida is impractical, but I consider the prospect. That puts all PA cities into play. As in Texas and Florida, there will be winners and losers based upon the same unique assets that advantage places such as Boston or Minneapolis.

    At the scale of city taxes, businesses can locate or relocate just outside city limits to avoid municipal tax burdens. That threat has often resulted in bribes in the form of a tax reduction. Rust Belt cities and states have been employing this strategy for a long time, such as designating enterprise zones with competitive tax structures. It failed.

    Almost every industrial city was built upon some geographic comparative advantage. When that evaporated, not even the carrot of lower taxes could stop the exodus.

    I am suggesting that Erie and other cities struggling to make the transition to a post-industrial economy once again cultivate a unique comparative advantage. Once we do that, we’ll talk about tax reduction strategies to further fuel growth.

    I have one idea that I consider to be a unique comparative advantage: Diaspora Networks. The Great Lakes are another that I’ve seen in the press lately. Concerning diaspora networks, one big reason for the rise of the Celtic Tiger is demographics. Pre-boom, Ireland was one of the youngest countries in the EU. The dependency ratio was relatively small, putting much less stress on government social services. But another factor was (and is) the strong ties of the Irish Diaspora to the homeland. On that count, I think Erie could copy the economic turnaround of Ireland.

    As for Rust Belt cities like Erie currently experiencing better economic times, read Richard Longworth’s book, “Caught in the Middle.” A city I’m tracking is Milwaukee, which has a way to go but is making great strides.

45. john morris
    May 11th, 2008 at 12:59 pm

    I’m glad the subject of the federal government’s finances came up because it helps one understand what can and cannot be done. Money from the sky like Ireland recieved is not going to happen. By the way, many poorer EU states like Greece also got lots of cash but only Ireland made it pay.

    I also can’t fully explain why, but the U.S. has a history of making very bad choices in terms of government infrastructure spending making the case for just getting them out of it. The federal highway system might be our largest socialist scheme and combined with the distortion of the housing market, is likely most responsible for our energy problems.

    My personal prediction is a gradual return to the kind of urban and town centered life connected by rail lines which preceeded the highway system. Milwaukee is just an hour out of Chicago and seems to be the first city in the midwest developing like that.

46. Julio C. Reyes
    May 11th, 2008 at 2:31 pm

    Greg,

    This is what you originally wrote in your first post to me about increasing tax revenue:

    “Consider that from 1982 to 1989 (after the Reagan tax cuts) federal revenues increased by 24.1%. During the seven year period of 1990 to 1997 which coincided with Bush and Clinton tax increases, federal revenues missed that mark by almost 5 percent at 19.3%.”

    Now this is your source in the latest post.

    “FY1997 Budget historical tables can be found here:
    http://www.gpoaccess.gov/usbudget/fy97/pdf/hist.pdf
    The information is from Table 1.3. It begins on the printed page number 23 and ends on page 24.”

    I have to say that unless the “devil” (Democrats are messing around with my computer the table clearly shows that your arguments are bogus to say the least or you are still counting with the English system and I am counting the numbers from a Metric system perspective.

    Below is a quick summary for pages 23 & 24 that our readers could validate at any time.

    Year: receipts as % of GDP

    1979 19.1
    1980 19.6
    1981 20.2
    1982 19.8
    1983 18.1
    1984 18.0
    1985 18.5
    1986 18.2
    1987 19.2
    1988 18.9
    1989 19.2
    1990 18.8
    1991 18.6
    1992 18.4
    1993 18.4
    1994 19.0
    1995 19.3
    1996 19.4
    1997 19.4
    1998 19.5
    1999 19.4
    2000 19.4
    2001 19.3
    2002 19.4

    I am afraid that from my perspective this chart only proofs that Bush (Senior) probably was right referring to the “voodoo economics” and cut the deal with the Devil to raise taxes and fix the mess. Except for 1981 when the % ”jumped” to 20.2 (never to 24.1% as you originally claimed) It declined two years in arrow and remained below 19%. After that you could see that Bush (senior) and Billy brought things back to “normal” somewhere between 18% and 19%. To be honest with you I really do not know if the Ronnie’s tax breaks were valid for only one year (1981) or more.

    By the way you might want to visit Reagan Presidential Library in Simi Valley California (you have to pay $12.00 to get in if your are over 18) and find out some papers that describe that contrary to urban legends and popular believes Ronnie indeed raised taxes in more than one occasion. How I know, I paid my money to get in, I live very close in North Hills in the San Fernando Valley in CA.

    Oops, before I forgot I am a US Citizen I do not vote because the system is broken. You could do your own research about electoral frauds, electoral colleges, and finance reform, just to name a few, at you convenience.

    You said:

    “The reduction in the defense budget accounted for a very large portion of the balanced budget surplus that the Clinton’s stake a claim to.”

    In this regards I also said before that my statement about balancing the budget was precisely that: finding a way to spend only the money we take in and reduce the deficit. If that means that we need to cut insane defense spendiitures trying to patrolling the whole world so be it. We can not longer afford paying for thousand and thousands of nuclear missiles and $800 screwdrivers.

    You said:

    “You and I may not always agree on which lever to pull but I can certainly tell that your heart and your brain would be engaged in the process.”

    See from my perspective once upon a time in the USA most of the politicians were willing to compromise for the benefit of all around the country now the only thing they do is fighting each other and call each other names including “Devils”. That has to stop, we are in this together and regardless of stupid party affiliations and loyalties we need to find a way to build a better future together.

    Going back to the “locals” in Erie,

    One more time we need jobs, jobs, jobs, (well paid jobs1). The first thing we have to agree is that in the free world capitalist society there is nothing like a free lunch. Everybody should work and pay taxes we have limited resources and it is safer for the long haul to stays away from Crony Capitalism with tax subsidies for major corporations (I call this corporate welfare and or Corporate Socialism) and creating public funded projects not dedicated to infrastructure that compete with private enterprise.

    Now, going back to my original concept about R&D jobs in Erie, PA. wouldn’t be nice to hire the brightest minds around and have them working in projects about how to have a more effective military, technology, communications, video, etc. the sky should be the limit.

47. Heavy D
    May 11th, 2008 at 3:32 pm

    Julio,

    I’m going to call you on this one: taxes as a percentage of GDP is not the same as revenue to the treasury. As the economy grows that rate should fall right? i mean the government would never increase taxes just because it can. McDonald’s doesn’t raise the price of a Big Mac just I make more money, the cost of providing services to the populace shouldn’t be tied to how that populace makes. maybe you’d prefer that the government get a bigger slice of the pie, but I’d prefer that the pie get bigger and the government slice not grow in size any more than inflation or per capita would dictate.

    Reagan’s tax breaks in 1981? He took office in 1981. The high percentage in that year was thanks to Jimmy Carter. Double digit unemployment and inflation. Interest rates at 20% Gold at record highs, it took tax cutes to get us out of that mess.

    Reagan’s tax cuts took affect in 1983. Link on it here: http://findarticles.com/p/articles/mi_m1282/is_v37/ai_3853978.

48. Julio C. Reyes
    May 11th, 2008 at 4:40 pm

    Heavy D,

    I do not know if you really understood my post or not. This chart is not my chart I am just responding to the %s Greg claimed made Ronnie’s tax breaks so glamorous. If you use the same chart and look for revenue numbers you will find that Tax revenues precisely in 1983 also drop. You better look at the chart (provided by Greg) first.

    Also, I have said many times NO, I am not in favor of any additional or higher tax rates. To the contrary I want to say. Establish a fare rate for everybody and then live with it for the long haul until we pay off the debt. Stop fooling around Republicans, Democrats, etc. Use our tax money wisely and build a better environment for the future.

    I have also said that the using arguments about blaming other political parties are just a waste of time. Both are equally bad when blinding taking an extreme position.

    Finally regardless what you might say or thing GDP is the standard measuring number accepted by everybody involved. I did not make it. Again is not my chart.

49. Julio C. Reyes
    May 11th, 2008 at 5:39 pm

    John Morris,
    Just to continue having fun I want to answer your post:
    You said:
    “Bringing ourselves to Reagan, the numbers speak for themselves– revenues went up pretty dramatically during his presidency but spending increased even more.”
    Did ever occurred to you to review (page 23) in the same chart (provide by Greg not me) and find out that the revenues had constantly increased every year except in 1983. From my point of view the growth is natural growth more people working more people paying taxes. I know the politicians want to tell you that their magic works but the reason is rather simple; there is no magic just more people living in the USA. Obviously if you consider inflation that will be a totally different ball game as well.
    Here I need to make a commercial about me:
    Some how my comment will be related to the second issue in your post that I will answer at the end.
    Once upon a time (around the 70’s) a multinational company operating all over the world. Could not really have a good measure about their real business growth especially in places with high inflation. Every subsidiary around the world used the software the headquarters created in the USA. It turned out that a young guy working in the Mexico City subsidiary (me) noticed that these guys where only counting in a single unit of measure (dollars) of course with the necessary rate conversion from the other monetary units (peso, quetzal, Francs, pesetas, etc.). So I decided to help them to count a little better while trying to establish real growth patterns. I created software that included a new dimension (units in quantities). Needless to say that my software then made it to every single subsidiary around the world and life has treated me very well since then.
    Now, why is this important, because if I would have been responsible to try to establish the thru results of a tax policy (in this case focusing on tax revenue in Greg’s chart) I would have included a new set of variables at least to know how many fools like me are paying taxes in a particular year. Anyway, we should be able to determine if the revenue increased because the IRS became a bigger enforcer or because people decided that if they pay taxes they will go to heaven. As you could see anybody could play with numbers but sooner or later when somebody review those numbers in the necessary details the true facts will appear.
    I guess our experts decided to use the GDP as the other element to balance their equation and charts.
    Now my second answer:
    You said:
    “The so called “Laffer curve” is not really an item of debate among most economists– the question is it’s exact nature. Many governments in Latin America once had tax rates as high as 90%. They didn’t get much money out of that since the result was that 90% of their economies were forced “underground.””
    You might want to Google or check Wikipedia about Laffer curve at your own convenience. Warning even Laffer recognized that a Muslim created way back then. Ha-ha, ha. This is of course a joke in my part.
    My serious answer in regards to your comment about taxation in Latin America, with all do respect unless you have lived there for a long period of time and truly understand the economic, social and cultural conditions in those places you have no idea what you are talking about.
    How I know, about taxes in countries like Mexico. I was born there and I lived there until I was 29 years old. I could reassure you that way back then as it is the case today collecting taxes in that places has nothing to do with the tax rates. The “underground” economies in any place in the world, including the US, are not created by exclusively by taxation.
    Oops, for the record, a cultural tip, Mexico is recognized as Latin American country from a pure linguistic perspective only. From a Geographical point of View is located in the North American continent.

50. john morris
    May 11th, 2008 at 6:04 pm

    Julio,

    Normally you are a rational voice on here but you are seriously wrong here. Gregs numbers show a solid growth in federal tax revenues in the years after the tax cuts. 1983, was the year we had the very bad, but sharp reccession caused by Paul Volker stopping the government money printing presses and controled the inflation that had haunted our economy through the 1970’s. The years after 1984 show growth.

    Measuring taxes as a percent of GNP does not measure revenues and really just helps to prove the point that lowered rates seemed to produce more revenue.

    The real lesson from this period is that federal budget deficits are caused by runnaway government spending and any attempt to control them without controlling spending is hopeless.

    The other point I seriously disagree with is that “bi partisan” acton will automaticaly fix our problems. If two people are in the same car headed off a cliff and one is trying to turn the wheel away from the cliff– that’s a good thing. It’s a sad statement, but many of the very worst decisions in American history had broad support from both parties.

51. Julio C. Reyes
    May 11th, 2008 at 7:16 pm

    John Morris,

    To avoid confusion I am putting the numbers from page 23 on Greg’s chart to be sure we are seeing oranges with oranges and apples with apples:

    Anybody should be able to validate the numbers with the link provided by Greg.

    http://www.gpoaccess.gov/usbudget/fy97/pdf/hist.pdf

    Of course we must control unnecessary spending not only at the Federal Level but State and City as well you are again changing the subject.

    The original subject was does Tax reduction changes increases revenue for the long haul? It is quite obvious that any person will take advantage from a tax holiday the question is how long it last before everything goes back to normal. Our readers could take a look at the numbers and decide.

    year Revenue Current $ % Revenue %
    billions increase In Constant increase
    vs. last year vs. last year

    1977 $355.60 $643.80
    1978 $399.60 12.37 $674.00 4.69
    1979 $463.30 15.94 $719.20 6.71
    1980 $517.10 11.61 $728.00 1.22
    1981 $599.30 15.90 $766.60 5.30
    1982 $617.80 3.09 $738.20 -3.70
    1983 $600.60 -2.78 $684.30 -7.30
    1984 $666.50 10.97 $730.40 6.74
    1985 $734.10 10.14 $776.60 6.33
    1986 $769.10 4.77 $790.00 1.73
    1987 $854.10 11.05 $854.10 8.11
    1988 $909.00 6.43 $877.30 2.72
    1989 $990.70 8.99 $916.20 4.43
    1990 $1,031.30 4.10 $914.10 -0.23
    1991 $1,054.30 2.23 $894.70 -2.12
    1992 $1,090.50 3.43 $895.10 0.04
    1993 $1,153.50 5.78 $921.90 2.99
    1994 $1,257.70 9.03 $981.60 6.48
    1995 $1,355.20 7.75 $1,034.20 5.36
    1996 $1,426.80 5.28 $1,062.10 2.70
    1997 $1,495.20 4.79 $1,082.50 1.92
    1998 $1,577.90 5.53 $1,112.70 2.79
    1999 $1,652.50 4.73 $1,135.10 2.01
    2000 $1,733.80 4.92 $1,160.10 2.20
    2001 $1,819.80 4.96 $1,186.30 2.26
    2002 $1,912.20 5.08 $1,214.80 2.40

    After presenting the chart then I need to ask you:

    Here we go again, Why Bush (Senior) was forced to increase taxes? My theory is the numbers (revenue) were already self-adjusting so he did not have a choice.

    Again, the culture here must be changed stop wasting tax money on ridiculous subsidies and tax break regardless if you are left-right, poor-rich, a major corporation or a single individual everybody pays. Magic (voodoo economics) will not work in the long term.

52. Greg
    May 11th, 2008 at 7:20 pm

    Julio,

    My apologies for any confusion regarding the chart I posted as compared to the link I later provided. Please allow me to clarify:

    The percentage in the chart that I posted measures the percentage of change in revenue from year to year.

    The link I offered to you was a link to the historical tables from FY1997 which was the source of the of and confirms the revenue numbers used in the chart. The percentage in that document is “As Percentage of GDP” which is different and not what I am referring to in my first post.

    As to where the chart originally comes from: I was introduced to the concept of tax reduction creating greater revenue during the 1996 presidential race when Bob Dole was running against Bill Clinton. The CATO Institute published an article debunking the myths of the Reagan economy and I believe that the chart is from that article. I do not have the article any more, only the chart. I believe this type of metric is a valid and fair comparison. If you calculate the percentage of change in evenue from one year to the next and compare 7 years of Reagan versus a similar 7 years for Bush/Clinton, Reagan out performs Bush/Clinton. Yes 1983 was a huge loss at -7.3 (I think John has addressed that better than I can) but even in spite of that big negative, Reagan and his tax cuts win the day (or the decade in this case.)

    I hope this helps to clarify any confusion I may have created.

    Regards,

    Greg

53. George Vietze
    May 12th, 2008 at 8:37 am

    The other side of the coin of the “jobs” issue in the Erie area, todays HEADLINES-Erie Times “There’s Work to Do- People need jobs, and jobs are aout there. Why aren’t they being filed?”

    The article points to examples at Sipco Molding Technologies in Meadville where they claim that milling machines sit silent while work is available but not enough people to do the job. They mention that while the recent figures for Penn. Center for Workforce Information show that 7,800 people-5.5 percent unemployed in Erie County, another 2,200 or 5.2 percent in Crawford County unemployed–the numbers do not indicate approx. 1800 to 2000 jobs in Erue County go unfilled on any given day. Jack Rouch, from the Erie Reg. Chamber sees three main reasons: 1. Skills that local employees need.
    2. Lack of adequate training and unqualiffied workers. 3. Failure to pass drug tests is an increasing problem.

    While I feel sure that the “jobs” problem in this area is made up of a series of complex problems, this particular view of the local employment situation at least lends to the perception that there are some jobs in the Erie marketplace that are available and helps balance the perception that there are “no jobs” in Erie worth having which helps gives the perception that moving to Erie and finding a job is impossible. This article is a major article with front page headlines
    and half of page 5A and was written by Jim Martin and is evidence that the local media has stepped up its responsibility to promote the current facts that add to the positive perception of this area, together with the series of YOUR IMAGE OF ERIE? articles that try to keep readers current as the local climate changes from the OLD to the NEW
    has raised the level of optomistic comments and negative comments are getting less and less, this is not to say that constructive comments aren’t welcome but the tone of this community has drastically changed with less emphasis on the negative aspects of our community.

    I don’t want to sound like a total pollyana always being positive and blinded to the other side of the coin, there are serious issues that concern me about this area, environmental issues lead the list, for example, projects like the tire plant should not be approved if in FACT,
    it is determined that it will detract from the quality of life in this area, the clean water issue concerns me, after speaking with some people who claim to be knowledgeable about the clean water problem and the pollutions of our water supply of drinking water, to me, is troublesome, if true, the high rate of cancer in this area concerns me, the lack of local support on a comprehensive basis to keep the Cancer Institute in this area instread of moving to Florida, the local control of some of the AUTHORITIES is an issuse that I would like to know more about but is the kind of issue that can hold back outside participation in our economy, the brain drain is also a major concern but it seems that a lot of focus is being placed in that area and progress is being made, local infrastructure is a concern but I prefer to concentrate of the positive aspects that are here NOW and build the critical mass of synergy that will add to the economy and eventually attract quality development.
    The lack of a comprehensive land use planning department is a major concern because uncontrolled growth leaving all the development choices in the hands of developers is not good for our quality of life, not that I favor undue restrictions but would like to see appropriate architectural controls to keep the cultural historic country flavor intact and things like quality looking signage. I see a tremendous potential for this area, not through a blind view of reality but from an assessment of the assets of this area compared to its liabilities and I come up with
    more assets than liabilities which add to the NET WORTH of Erie’s future as I compare it to its past. Erie is on the MOVE forward.

    My personal belief is that this forum has made a major contribution to changing our local perception by presenting the comments of the residents and others to our representatives both in the political arena and the media and help shape the direction of the politics and the media. The young people of this area need to take responsibility and ownership of staying on top of the politics and other issues and make changes when necessary and give support when warranted, the older generations have failed this task and the only cure is that the New generation will take control. It looks as if signs of that are taking place on a national basis where the status quo is being challanged, it won’t go without dissapointment, but it will go forward just as Erie has made progress the path to growth is not without it’s challenges.

    When the comments of the residents help change the attitude and perception of the local political and business representatives and the local media supports that endeavor change will be inevitable……the path to the future….one brick at a time…will lead to a better quality of life
    and a FUTURE. OF ERIE.

54. Julio C. Reyes
    May 12th, 2008 at 3:38 pm

    I know we are now way out of the original topic but I still have to answer Greg and John Morris last posts.

    Greg,

    Thank you very much for your clarification we know now The CATO Institute published a chart you do not have anymore but according to the chart published in your link which suppose to be valid and correct. Both your numbers and John Morris numbers will make Pythagoras (the Greek mathematician) really mad. Your numbers are comparing (inadvertently or intentionally) apples with oranges to fit your moral (moral: in this case means to me how you would like things to be) and philosophical circumstances. I in the other hand I only look at the numbers from a numerical point of view no strings attached.

    Let me elaborate:

    I know the chart in my previous post is not that clear. Unfortunately Peter’s web site does not take excel spreadsheet yet but these is how I see those numbers, from my perspective of course.

    The valid comparison (in revenue billions) should be the presidential terms for each one Ronnie and Billy to try to determine which approach works better in the long haul. It is totally unproductive to include some Bush (Senior) numbers in Billy’s numbers the same way that will be silly to include some Carter’s number in Ronnie’s just to compare from one decade to another.

    Reagan Presidency was January 1982 to January 1989.
    Clinton Presidency was January 1993 to January 2001.

    Ronnie’s current Dollars from 1981 to 1988 are from $599.30 to $909.0 for a compound growth of 59.56%
    Billy’s current Dollars from 1993 to 2000 are from $1153.5 to $1733.88 for a compound growth of 47.82%. It is quite obvious Ronnie’s numbers at first sight look far superior no question about it.

    However, as everyone knows, in macroeconomics, it’s pointless to compare budget costs and revenue across multiple years without adjusting for inflation. So these are the adjusted numbers.

    Ronnie’s adjusted numbers from 1981to 1988 are from $766.6 to $877.3 for a compound growth of 19.91%

    Billy’s adjusted numbers from 1993 to 2000 are from $921.9 to $1160.01.07 for a compound growth of 26.45%

    So, under the adjusted column Billy’s numbers seem to be better.

    One interesting thing is that in the current percentages show that in Ronnie’s years the %s go up and down and in Billy’s the % values are more constant. Economist, actuaries, and risk assessment people prefer to see a constant value rather than highs and lows because in macroeconomics “things” self-adjust.

    Can I say for sure who was better the answer is both Ronnie in the immediate gratification and retribution and Billy in the long haul. I will personally take the long term approach because I really do care about my children and my children’s children.

    In these charts of course the scholars, pseudo-experts and experts had agreed that the balancing element is the GDP. I also said before that I would like to see another element, such as quantity of entities paying taxes, in the matrix for true comparison purposes.

    Needless to say that Ronnie (contrary to popular believe and urban legends), Bush (senior) and Billy all raised taxes and spent money like crazy therefore the growing deficit.

    To be honest with all of you I am simple kind of guy so rather than keeping track and monitor esoteric formulas and magic pandering to each political group I rather use a simple formula everybody pays left-right, top-bottom. Again, I am not in favor of higher or additional taxes to the contrary I believe we should live within our own means.

    We should keep track about true tax revenues and use enforcement, avoid tax subsidies of any kind and then someday our debt will not be as big as it is today.

    John Morris,

    I do not know if you are really serious about your example about non-partisan or bi-partisan collaboration. This is what we have, USA suppose to be a Democracy not a Monarchy so we do not have a choice. The only option is trying to work together regardless left-right, purple-yellow, etc.

    In positive note in the interest of collaboration following your example about the car going down the cliff: Did it ever occurred to you that rather than yelling and shouting to the other guy and try to take the wheel to turn the car; it will be much better to first convince the other driver that it will far safer to slow down and eventually stop and discuss honestly what are the options and consequences before attempting turning the wheel?

    Honest and sincere dialog looking for everybody’s best interest is the only way!

    In fact to enlighten the moment I want to say that in a bi-partisan situation is very simple to split a cake in a fair quantity. One party cuts the cake and other chooses first. I could assure you that this little trick if it is ever used will do marvelous things and will remove any kind of rhetoric and demagogy.