Category Archives: Economics

Miscellaneous economy stuff

There’s a Hint There

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The farm bill just passed out of the House Agriculture Committee contains a provision barring the Secretary of Agriculture from increasing, on his own alleged authority, SNAP spending above the amounts provided for in the legislation:

[c]orrects egregious Executive branch overreach and disallows future unelected bureaucrats from arbitrarily increasing or decimating SNAP benefits.

Austin Scott (R, GA):

The Farm Bill includes protective language that prevents extreme changes to SNAP benefits without Congressional input and continues the cost-neutral status that the TFP [Thrifty Food Plan] has maintained for over 40 years.

The Progressive-Democrat Ag Secretary Tom Vilsack claimed, though, that

the proposal would amount to a roughly $27 billion cut to SNAP[.]

This is the AgSec’s confession that he fully intended to spend—on his own and without any Congressional spending authority to do so—at least those $27 billion above his authorized level. He’s not alone in this. Congresswoman Yadira Caraveo (D, CO):

…it is necessary that we go back to the negotiating table and remove this provision[.]

Senator Debbie Stabenow (D, MI):

It…does not have the votes to pass on the House floor. And certainly not in the Senate[.]

This is the budgeting and spending paradigm of the Progressive-Democratic Party: Congressional appropriations and allocations are mere suggestions, and they are to be disregarded whenever inconvenient to Party. After all, it’s only your and my money they’re spending.

There’s an election coming up. Maybe us average Americans should vote our tax dollars.

School Choice, Public Schools

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A letter-writer in The Wall Street Journal‘s Wednesday Letters section is opposed to Educational Savings Accounts that Texas parents could use to send their children to private schools.

School choice in Texas will benefit no one except those who already pay for private school. Moving to public funding of private schools will also tend to resegregate society. Our state-level elected officials are doing the bidding of billionaires in- and out-of-state who have other agendas than excellence in our public schools.

School choice will greatly benefit the children, especially those in families on Texas’ lower economic rungs, by letting them escape from failing public schools. Nor is it an either-or choice; the one leads to improvements in the other. School choice, from that competition, will greatly benefit those children remaining in public schools.

That success, far from increasing segregation, will contribute to decreasing it. The majority of those kids on the lower rung are from minority families. Being increasing their ability to compete academically, they’ll be better able to compete for jobs, and for promotions once employed, as adults. That more even competition is the stuff of desegregation.

The idea that no one but a few billionaires will benefit is just so much irrational hype.

He concluded with:

Let’s put public funding of private schools to a statewide vote.

We just did. In the Republican primaries and the runoffs in some of those primaries, public funding won very widespread support. We will again soon: school choice will be on the ballot again this November. Those State-level elected officials, elected in the primaries and will be elected in the general election, having campaigned on the matter, are much more likely to do the bidding of those who hired and will hire them—their constituents—than were Texas to maintain the status quo with its politicians in November.

Terminology…and a Solution

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Two questions sit before Congress over the coming year, as posed (correctly IMNSHO) by The Wall Street Journal in its headline and lede:

Republicans’ $4 Trillion Question: Should They Pay for Extending Trump Tax Cuts?

And

Republicans want to extend the Trump-era tax cuts that lapse after 2025. A big point of debate now: should they cover any or all of the $4 trillion cost—and how?

The terminology confusion is illustrated by the WSJ‘s change in wording from “pay for” in its headline to “cover” in its lede.

It’s long been my contention that it doesn’t cost the government anything to not get what doesn’t belong to it in the first place; there’s nothing for which government need pay. On the other hand, there’s the real world imbalance between tax collections and spending when the latter exceeds the former, as any grade schooler understands when he wants to spend more than his allowance will cover, whether he’s saved fractions of his allowance against an upcoming large expenditure or he’s spending as he gets. And, yes, the analogy is that direct.

There’s also the real world, empirically demonstrated, fact that within broad limits, the more money left in the hands of us average Americans and our businesses—the nation’s private economy—the more economic activity, now including government spending, there is overall, and from that increase, revenues to government, those tax collections, increase even in the face of reduced tax rates. The broad limit is the minimum of tax collections—the allowances we grant the government—needed to cover the constitutionally mandated spending requirements of paying the government’s debts, providing for an adequate national defense, and paying for the constitutionally defined items constituting the general Welfare.

Given the government’s current spending levels, that increased economic activity-driven increase in revenues to government won’t cover all of the government’s spending. That spending includes vast amounts of welfare spending. In the early days of our republic, we couldn’t afford any welfare spending, to the point that then-Congressman James Madison made a constitutional argument against helping Haitian refugees in the aftermath of an earthquake. From the Annals of Congress, House of Representatives, 3rd Congress, 1st Session:

Mr Madison wished to relieve the sufferers, but was afraid of establishing a dangerous precedent, which might hereafter be perverted to the countenance of purposes very different from those of charity.  He acknowledged, for his own part, that he could not undertake to lay his finger on that article in the Federal Constitution which granted a right of Congress of expending, on objects of benevolence, the money of their constituents.

The inability to identify the Article remains today, but that notwithstanding, our republic’s weal has improved to the point that we can, as a nation, afford a measure of welfare for our citizens (and for other nations, but that’s for another discussion). But not too much. The external threats to our nation have grown immensely, and so has the cost of our defending ourselves against them. Profligacy in spending, especially after WWII, has so far exceeded tax collections that our national debt has exploded, and the need to pay that down and then off, also has grown commensurately.

Spending outside those three constitutional mandates needs to be greatly cut back. There are three types of that extra spending that come to mind out of the myriad of them. These are Social Security, Medicare/Medicaid, and infrastructure.

I’ve written before about those first two; I’ll only summarize here: privatize Social Security and Medicare, which will be deucedly expensive in the transition, but that cost will only get worse with delay—and doing nothing will itself result in a 25% cut in Social Security payout, anyway, within the next 10 years, and an even more severe cut in Medicaid, if after a longer delay. Medicaid transfers to each of the several States should be converted to block transfers on an annually declining basis until the block grants have bee eliminated altogether. Medicaid is after all, and as it should be, a State-run program.

Regarding infrastructure, all Federal transfers to the States should be on a matching basis, with the States required to make the first and then sustained moves: no money should flow from Federal coffers to a State until the State has let contracts with the builders; ground has been broken; and concrete, publicly measurable and assessable progress has been made in the building. The match itself should be no more than 50% of what the State has spent and subsequently spends in accordance with its contracted schedule, and those subsequent Federal transfers should flow only after the State has spent its own citizens’ tax remittances on the State’s contracted schedule.

None of that is possible, though, without clearing up that terminology confusion. As long as politicians think tax monies remitted to government are owed to and are the property of government, they’ll spend and tax without limit.

Too Bad, So Sad

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Ford is having trouble peddling all the battery cars and trucks it has committed itself to manufacturing in response to Progressive-Democrat President Joe Biden’s functional battery car mandate, a mandate centered on ruinous tailpipe emission limits he’s put together via his EPA. So far this year alone, Ford has lost $1.3 billion, or roughly $132,000 on each battery car or truck it has sold.

Ford’s competitors aren’t in such dire straits, having eschewed such a foolish commitment. Ford’s answer, though, isn’t to wise up and walk away from that commitment. Instead, it’s intervening in a 25-State law suit in the DC Circuit that’s trying to eliminate the rule forcing those tailpipe limits. Ford is defending the limit in its effort to force its competitors into the Ford boat. In its filing, Ford claims that

Ford has taken steps to transform its business to ensure compliance with stricter emissions standards. Ford is investing billions in electrification efforts [and it] has a critical interest in ensuring that a level regulatory playing field applies to the entire industry.

Never mind that the regulatory playing field would apply levelly across the entire industry if the tailpipe emission limits were rescinded.

No. Too bad. Ford’s bad choices in no way obligates its competitors to follow along, nor does it obligate us average Americans to pay for Ford’s folly.

The IRS Is Going Broke?

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The IRS is in front of Congress, saying the $60 billion with which Congress plussed up its money pot last year—an addition that was supposed to last for 10 years—already is used up, and Commissioner Danny Werfel is in, pleading for an additional $104 billion. The Wall Street Journal editors are correct to wave a big, red BS flag on that, saying Congress should demand (and conduct, I say) an audit of the IRS and its spending instead.

I agree. But I also say there’s an alternative path to controlling the IRS, and its spendthrift ways, and that alternative would benefit all of us average Americans and our businesses. It’s a proposal I’ve offered before.

Congress should pass, and the President should sign, legislation that would vastly simplify our tax code. The new tax code should have no income tax levied on our businesses—which don’t pay much in the way of income tax, anyway; business customers pay most of it—and the new personal income tax should be a single flat rate on all income, regardless of source, and with no credits, deductions, subsidies, or other frou-frou gerrymanders on income.

A rate in the range of 10% to 15% would raise all the revenues for the Federal government it needs to provide for the only three Constitutionally mandated spending types: providing for our national defense, paying our Federal government debts, and providing for the Article I, Section 8-enumerated items of the general Welfare of the United States.

A vastly reduced IRS, consisting primarily of receiving clerks, would be all that’s necessary to manage the resulting tax code. It’d be hard for such a reduced agency, even a Federal government one, to waste $60 billion.