A blog post by the Cato Institute raises an interesting question: What happens when taxpayers can’t afford to pay the salaries and benefits of the expanding government workforce? The obvious answer is, "Taxpayers can always afford it." We’ll just likely end up debating the meaning of the word "afford" as much as President Clinton debated the meaning of the word "is." At any rate, the post from Tad DeHaven (former deputy director of the Indiana OMB, btw) is worthwhile:

Dennis Cauchon of USA Today and Stephane Fitch of Forbes recently penned articles on the excessive nature of state and local government employee benefits and the threat taxpayers face as a result.

First, Cauchon reports that “State and local governments have set aside virtually no money to pay $1 trillion or more in medical benefits for retired civil servants…With bills coming due as Baby Boomers start to retire, states, cities, school districts and other governments may be forced to raise taxes, cut benefits or both — a task made especially difficult in an economic downturn.”

I would add that the task of cutting benefits for government employees is especially difficult because state and local politicians are generally beholden to the government employee unions. Even those policymakers not predisposed to carry water for the unions are hesitant to ruffle the feathers of a sizable voting block, not to mention a vocal one that still has a lot of regular citizens conned into believing government employees are underpaid, selfless, public “servants.”  Trust me, I’ve witnessed this game first hand.

Cauchon also spotlights the big picture problem: “These medical costs are part of a larger burden taxpayers face in providing health care for an aging population. The federal government has a $1.2 trillion unfunded obligation to pay medical costs for retired federal workers and military personnel. Medicare and Social Security push the nation’s unfunded promises above $50 trillion.”  He also notes that the same private sector employees who pay for these benefits via taxes are not so lucky: “Unlike private companies, most governments subsidize health insurance for retired employees.”

A press release from the Small Business Administration:

WASHINGTON – The U.S. Small Business Administration issued a scam alert (Feb. 18) to small businesses, warning them not to respond to letters falsely claiming to have been sent by the SBA asking for bank account information in order to qualify them for federal tax rebates. 

The fraudulent letters were sent out with what appears to be an SBA letterhead to small businesses across the country, advising recipients that they may be eligible for a tax rebate under the Economic Stimulus Act, and that SBA is assessing their eligibility for such a rebate.  The letter asks the small business to provide the name of its bank and account number. 

These letters have not been sent by or authorized by the SBA, and all small businesses are strongly advised not to respond to them.

The scheme is similar in many ways to e-mail scams often referred to as “phishing” that seek personal data and financial account information that enables another party to access (an) individual’s bank accounts or to engage in identity theft.

The SBA is working with the SBA Office of Inspector General to investigate this matter. The Office of Inspector General asks that anyone who receives such a letter report it to the OIG Fraud Line at 1 (800) 767-0385, or e-mail at OIGHotline@sba.gov.

Did you watch the Oscars last night? Well, if you haven’t heard, the awards confirmed the fact that "Slumdog Millionaire" is not a bad picture. (It also confirmed that "Wolverine" is surprisingly deft at singing show tunes. Take that, Magneto.)

But according to Reason magazine’s blog, "Slumdog" is much more than an interesting tale of gameshow prowess. It also serves as an illumination on the plight of India, begging discussion about the progress the country has made by freeing up its markets and ultimately its people, and the steps it still needs to take to help its poor rise above poverty:

For decades would-be entrepreneurs staggered under the weight of corruption and bureaucracy. Want to import a computer for your business? You’d have to get permission from a bureaucrat. Want to sell food from a small cart? You’d need all kinds of licenses. 

But in the 1990s, India emerged as a high-tech powerhouse. What changed?

"In the 1990s India started liberalizing its economy," says (Shikha Dalmia, Reason Foundation senior analyst), "and it did three things: cut taxes, liberalized trade, and deregulated business." Although they failed to cut the kind of red tape that entangled Slumdog‘s orphans, the reforms did make it easier for more Indians to start businesses and hire employees.

"One IT company doesn’t just employ computer professionals," says Dalmia. "It also needs landscaping services, cleaning services, and restaurants. There was this tremendous spillover effect that allowed people to lift themselves out of poverty."

Since the early 1990s, India has cut its poverty rate in half. About 300 million Indians—equivalent to the population of the entire United States—escaped the hunger and deprivation of extreme poverty thanks to pro-market reforms that increased economic activity.

Yet here in America we’re turning away from market reform. Says Dalmia, "It’s just this great conundrum that at the same time that deregulation and markets have produced such dramatic results in India, they are falling into suspicion in America." Dalmia’s prescription for India is at odds with what politicians have chosen to "stimulate" the United States. "What India needs to do is continue apace with its liberalization effort, but expand it to include the poor. Release them from the shackles of government corruption and government bureaucracy."

Unnecessary government intervention or prudent oversight? In this case, I’ll vote for the former.

The situation is whether you and I will have the opportunity for domain suffixes beyond the .com, org., .edu and others that dominate today. In the little-known-fact category, there are 21 such options currently available. Why not more?

The Internet Corporation for Assigned Names and Numbers (ICANN) has a plan in place to open the domain name floodgates. Our September-October BizVoice (see bottom of the first page) gave an overview of the strategy.

The U.S. Department of Commerce is putting the brakes to the proposal. The Heartland Institute has that story. Take a look and let us know what you think. Heartland writes:

Tech experts expressed alarm at what they see as a federal government attempt to bully an independent organization that has a long record of competent Internet management.

“ICANN has been an independent organization, and it’s important that any government play a minimum role, if any, in deciding domain names,” said Ryan Radia, an information policy analyst at the Competitive Enterprise Institute. “If ICANN has a new technology, it should be free to implement any domain name systems without intervention from the Commerce Department.”

Apparently, the United States government is putting the pressure on Swiss banks to reveal the identities of their American customers for tax purposes.

This reminds me: When I was a kid watching sitcoms in the ’80s and a character would mention Swiss bank accounts (likely Alex P. Keaton), I always imagined a bank made of Swiss cheese, where the tellers interacted with customers through the holes. In related news, I was not a bright child. And sadly, now an adult, the only thing I can ponder about this is whether or not the potent smell of such a workplace would warrant an OSHA violation. Oh to long for the carelessness of youth. Anyway…

MSNBC writes:

Federal authorities have filed a lawsuit against Swiss-based bank UBS AG seeking the identities of tens of thousands of U.S. customers.

The suit filed in Miami Thursday seeks to force the firm to turn over information on as many as 52,000 U.S. customers who hid their accounts from the U.S. government in violation of tax laws. According to the government’s lawsuit, the accounts in question held about $14.8 billion in assets in the past decade.

The company said it will fight in court to keep the names private, arguing Swiss bank secrecy laws shield those customers.

A federal judge will now decide whether the U.S. courts can force a bank to violate Swiss bank secrecy laws and provide the account information.

The move came as Switzerland desperately sought to reassure its citizens and international banking clients that it would safeguard a treasured tradition of confidential accounts after taking the unprecedented step of revealing over 250 tax cheats to U.S. authorities.

Hat tip to Chamber staffer Tim Brewer for the article.

Colleague Mark Lawrance, the Chamber’s point person on local government reform efforts over the past half-dozen years, started off his description of the ambush of reform efforts in the Indiana Senate this week with an homage to Buffalo Springfield: "There’s Something Happening Here and It Is Exactly Clear."