Category Archives: political economy

Don’t Mention Cutting Spending

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Don’t you dare. The newly proposed Australian budget contains some tax cuts here, some tax structural changes nearby, and some tax increases there.

The tax cuts and structural changes are small steps in the right direction. The tax increases, though, are rationalized in this way: Saul Eslake, ex-Chief Economist at Merrill Lynch in Australia is claiming, as paraphrased by the WSJ:

If the process of reform is to be extended from here, policy makers should consider increasing and/or broadening the country’s goods-and-services tax to repair the revenue side of the federal budget and help ease the significant tax burden faced by wage earners and companies[.]

“Repair the revenue side?” What’s to repair? It isn’t the government’s money; it belongs to the good citizens of Australia. Their government only takes the money away from them; any seeming shortfalls in collections are nothing less than more money in those citizens’ hands.

And this from Shane Oliver, AMP Ltd‘s Head of Investment Strategy and Chief Economist:

If you do one reform without looking at income tax, then you miss the bigger picture[.]

There are two things wrong with these criticisms. One is the utter lack of justification for the amount of money the government collects through its taxing regime, whether current or as proposed. That “need” is simply assumed as received wisdom. The other is the equally utter lack of consideration of government spending cuts. The supposed necessity of current (or increased) spending levels also is simply assumed as received wisdom, albeit the spending is occasionally weasel-wordedly justified by announced social need—but even that isn’t seriously justified, merely announced from on high.

If Australia—and others, including us—want serious, durable prosperity, it’s necessary to cut taxes and cut spending further. That’s not austerity, no matter how hysterically the Left generally proclaims it to be. Leaving more money in the hands of the citizens is not austerity being inflicted on them, it’s their prosperity being restored to them. And that’s the bigger picture that Oliver is missing.

He’s Right

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But not in the way he thinks. Joe Calvello, New York Mayor Zohran Mamdami’s Press Secretary, said this:

That does not negate the fact, however, that our tax system is fundamentally broken.

“That” was referring to Ken Griffin, his high-value secondary home in New York City, and his supposed failure to pay a deliberately, cynically undefined “fair share” of taxes. After all, Calvello says that the tax system “rewards extreme wealth while working people are pushed to the brink….”

“The tax system,” the city’s, the State’s, and the nation’s are, indeed, broken. The fix, though, is not to constantly raise taxes on those Evil Rich like Griffin. The fix is something so inconceivable to Progressive-Democrats, including Mamdani, that they can’t even say the words: lower tax rates on the middle class and poor, and more broadly, restructure the tax system and its taxing targets so that those middle class and poor pay the same low tax rates on the same things as the Evil Rich do.

The PRC’s Economic Arsenal

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The People’s Republic of China is stepping up its economic war on us, adding additional weapons to its arsenal. Those weapons include

a blacklist for foreign firms it deems hostile, a law authorizing punishment of any company that helps enforce U.S. sanctions on Chinese targets, a rule ordering Chinese parties to ignore those sanctions outright, and expanded powers for its antitrust regulators to kill cross-border merger deals on national-security grounds.

Two responses come to mind. One is that Mark Zuckerberg, Meta’s boss and controlling shareholder, should simply ignore the PRC’s order to unwind its acquisition of Manus. Meta should, instead, proceed with what it has already collected via Manus. The unwinding is strictly a matter between Manus and its government masters. To the extent the PRC then takes economic or legal action against Meta, that should finally demonstrate even to Zuckerberg the lack of utility in doing any sort of business within the PRC.

The other response is that all the players should proceed as though the PRC’s threat to sue or its actual suing have no effect. Such suits, occurring as they will within PRC courts, can have no effect outside the PRC’s borders. In the event the PRC then acts against those intermediate businesses with operations inside the PRC, see above.

The Second Best Way

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The Wall Street Journal‘s editors have a way to get us average Americans to save more for our retirements, proposed at the end of its worry (justified) about unintended consequences associated with President Donald Trump’s (R) retirement saving program for our lowest income citizens.

The best way to get Americans to save more for retirement is by bringing down inflation and growing real wages.

The second best way, though, and one with more immediate effect, is to eliminate the contribution caps on our existing retirement programs–401(k), Traditional IRA, and Roth IRA. These are purely arbitrary limits with no fiscal meaning. They were set in order to get Progressive-Democrat buy-in and so actual passage. The limits were demanded by Party in order to cap the more successful and deny them the retirement capacity their greater success otherwise would have facilitated.

It’s time to be done with that.

Couldn’t Possibly Be

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It seems that more than 3 million folks once getting “Federal food aid” have stopped getting that aid. This is due, primarily, to tighter work requirement restrictions:

Under the new rules, able-bodied adults aged 18 to 64 without children under 14 must work, volunteer or participate in approved job-training programs for at least 80 hours a month. The previous age limit for work requirements was 54, and allowed exemptions for adults with children under 18.

Naturally, the Left is engaging in its manufactured angst over this.

Colleen Heflin, a professor at Syracuse University who studies food insecurity, said larger state drops like Arizona’s were “beyond anything we’ve ever seen.” Heflin said she was concerned it would result in vulnerable Americans not getting enough to eat.
“These large state drops in SNAP caseloads represent a fundamental restructuring of the food-assistance safety net,” she said. “We should expect to see a surge in food insecurity and its related negative consequences at new levels.”

Of course. The large drop couldn’t possibly be an indication of the bloat in the program and the number of ineligible folks taking the aid “beyond anything we’ve ever seen.”

And there’s Bruce Meyer, a University of Chicago Harris School of Public Policy Professor, who accidentally let that cat out of the Leftists’ bag:

Most of the people who are getting food stamps are needy. When you’re cutting that many people, you’re probably cutting into some people who really do need the benefits.

It certainly should be “most,” and it should be far more than just that. Only cutting “some” who really need the benefits is a strong indicator of the amount of bloat that’s been present.