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Mega Policy Wonk Richard Rahn joins Eugene Delgaudio Condemning Governor's Tax Increase Bill ... Adviser to Virginia governor predicts "train wreck" -resigns!

March 11, 2013


Katie Watson of Watchdog.org tells me:

'TRAIN WRECK': That's where Virginia is headed with its new tax-raising transportation bill, says the economist who resigned from Gov. Bob McDonnell's Joint Advisory Board of Economists. (see photo Richard Rahn)

RESIGNED: Richard Rahn, who has worked under multiple presidential administrations as an economist, has resigned from a state board over the state's new transportation plan.

RESIGNED: Richard Rahn, who has worked under multiple presidential administrations as an economist, has resigned from a state board over the state's new transportation plan.

Richard Rahn has a pithy summary of the last-minute legislation roaring down the tracks out of the Virginia General Assembly and into the governor's office: "train wreck."

Rahn, a globally recognized economist, resigned this week from Gov. Bob McDonnell's Joint Advisory Board of Economists - a protest, he said, of the General Assembly's proposal to raise taxes for a controversial $6 billion road and rail funding plan.

What Virginia really needs is to reform expensive entitlements, pensions and tax policy, Rahn told Watchdog.org in an exclusive interview on Thursday.

Instead, the state is getting "a predictable train wreck."

"Virginia is relatively in a very strong position," Rahn said.

"You know, we have a surplus, and I've always liked the way Virginia is managed. I don't' want to overstate how bad it's going to be in Virginia, but it's not headed in the right direction."

Rahn, one of 15 governor-appointed economists on the board, created a buzz this week with his widely circulated letter of resignation.

"The new taxes and spending will grow the size of the Virginia government relative to (the) state's GDP - a large and unnecessary step backwards," Rahn wrote in his March 4 letter to the governor.

Rahn, chairman of the Institute for Global Economic Growth, a nonprofit institute that researches pro-growth policies around the world, should know.

Rahn doesn't oppose all public spending. His economic theory, the Rahn Curve, suggests there's a level of government spending that maximizes economic growth; beyond that, spending limits growth. Factors vary, but generally for countries, under 12 percent government spending-to-GDP is too little, and 25 percent government spending-to-GDP is too much, he said.
The United States' spending-to-GDP relationship is nearing 25 percent.

Of course, Rahn isn't alone in predicting harm to taxpayers and the Old Dominion's economy as a result of the plan. Dozens of small-government policy and taxpayer groups warned Virginia's leadership, too.


....................Rahn in his resignation letter offered his services to help restructure the state's archaic and complicated tax system, which is putting the commonwealth at a competitive disadvantage with states that have nixed both, he said. "I am prepared to volunteer time to assist in a serious effort to reform the Virginia tax structure - which is badly needed," Rahn wrote.

Caldwell refused to say whether McDonnell will take Rahn up on his offer.

But Virginia can still turn this train around, Rahn said.

"I'm hoping to the extent that there's a little bit of publicity about what I've said and some of what the others are saying, that whoever's running this next year, that maybe someone will pick up some of the ideas," Rahn said. "Because we have such a huge amount of expertise here in the state."


For the entire story please go to Katie Watson, Watchdog.org
http://watchdog.org/73653/economist-resigns-as-advisor-to-virginia-governor-predicts-train-wreck/

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