Category Archives: political economy

The Addiction of Government Handouts

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It’s not the handout recipients who are addicted that are the problem, although their addiction is tragic in its own right. It’s the government men and women who are addicted to giving handouts who are the problem. The former are individual problems, even though those problems aggregate. Government men and women, though, are inflicting their nation-level addiction on the nations over which they reign, and their addiction is a national security threat approaching existential as they render their nations helpless against aggressor nations. That is immoral enough, as those government betray the same people they’re charged with protecting.

The immorality extends, though, when it comes to Europe’s NATO member nations. European NATO governments provide canonical examples of both immoralities.

When the Cold War ended, European governments slashed their military budgets and spent a windfall of several trillion dollars on social programs—a popular policy with voters when Europe faced few external threats and enjoyed the security protection of the US.
Now, European nations are finding it difficult to give up those peacetime benefits, even as the war in Ukraine has revived Cold War-era tensions and the US tries to shift its focus to China. Most are failing to get their armies in fighting shape.

The German army, in particular has been shrunk to a paltry 180,000 men and women, a large fraction of whom are in non-combat jobs, and not even combat-supporting jobs at that. The German army has only a couple hundred tanks, a large fraction of which are not operational. The army, by Government politician conscious decision, is not capable of defending itself, even as it trickles out arms to Ukraine. The decision to not defend gets worse [emphasis added].

During negotiations for Germany’s 2025 budget earlier this year, Finance Minister Christian Lindner wanted to free up money for defense by freezing social spending for three years—letting it lag inflation. The move was rebuffed by other parties in the governing coalition…. Spending on military aid for Ukraine was cut to €4 billion, about half this year’s level.
What the coalition parties did agree on was a €108-a-year increase over two years in Kindergeld—an annual €3,000 payment per child to all families, regardless of income. Today, that benefit alone, payable for offspring up to age 25, costs more than €50 billion a year, as much as Berlin’s annual Defense Ministry budget.

Economic Affairs Minister Robert Habeck articulated very clearly the addiction and its immorality, although he didn’t recognize it.

The idea—we are dismantling the welfare state because we need more money for the military—I would find fatal.
Social spending is necessary to keep the country together.

Leave aside the foolishness of that claimed threat of dissolution from any lack of socialism. Even such a one as Habeck can recognize that an intact nation that has been conquered and occupied through its government’s refusal to defend that nation has been functionally dissolved.

The lesson: it was easy to swap guns for butter; reversing the trend is far more challenging.

Any rational person—even a government politician—knows it’s far easier to get addicted than it is to break the addiction.

Nor is Germany alone in these immoralities. Here are just a few of the one-third of NATO members whose government men have chosen not to enable their nations to defend themselves or to come to the aid of their fellow members.

Prime Minister Keir Starmer has refused to put a date on [any increase in defense spending relative to GDP]. Military spending in Italy and Spain, meanwhile, sits under 1.5%.

The immoralities and the betrayals are done deliberately, as these men and women refuse even to try to curb, much less to control, their addiction.

The immorality extends one more time: those government men still refuse to prepare their governments and to enable their defense establishments to defend the nations over which they rule, and with that failure, they betray their fellow NATO members by rendering themselves incapable of aiding their fellows against an invasion. Instead, they create their nations as dependent on the treasure, and especially the blood, of their fellows should they be the target of attack.

These conscious and continuing moral betrayals by NATO member nations render NATO a waste of American money, and blood.

That’s the price of addiction—it even prevents those responsible for it from resisting it.

Wrong Response

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As usual. And as usual, the wrongness of the response is due to mischaracterizing the problem.

The Treasury Department on Thursday released 603 pages of proposed rules for the corporate alternative minimum tax, or CAMT, reaching a milestone in this exceptionally complex endeavor for regulators and corporate tax executives. The proposal comes more than two years after Congress passed the law creating the tax and more than 20 months after it took effect.

The rationalization is offered by the Biden-Harris’ Deputy Treasury Secretary Wally Adeyemo:

This is about tax fairness. The ability to use accountants and lawyers to reduce tax bills down to zero gives billion-dollar corporations a competitive advantage over smaller businesses.

They don’t understand what’s fair. Here’s what’s fair: make the problem irrelevant by simplifying the corporate tax code, rather than complexifying it, by reducing the corporate tax rate to that paid by those ill-treated small businesses. Even fairer, and not just for businesses, would be to reduce the corporate tax rate to zero for all businesses. That way, large corporations, with their accountants and lawyers, won’t have any “unfair” advantage over smaller businesses.

And there’d be no need to write 603 pages of regulation to implement a simple-sounding and wrong-headed tax rule. Which would reduce the need for all those Treasury bureaucrats whose jobs center on writing arcane, excessively complex regulations.

Another Reason to Shift

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Boeing and union leaders reached a tentative labor deal that includes:

  • 25% pay increase over four years
  • bolster retirement benefits
  • lower healthcare costs
  • commit Boeing to building its next plane in the unionized Pacific Northwest

The rank-and-file object. They want a 40% pay increase over four years, and they’ve characterized it as a hard line. They’re also still upset that Boeing dared set up an aircraft production plant in the non-union south. They voted Thursday to reject the contract and then to strike beginning that night at midnight.

The strike will halt most of Boeing’s aircraft production, and that would occur

at a time the aerospace giant is bleeding cash and piling up debt….
A prolonged work stoppage could further strain the industry’s supply chain and exacerbate jet shortages for airlines struggling to meet resurgent travel demand.

A strike—telling company management that if the union doesn’t get its way, it’ll destroy the company by preventing it from operating at all—is nothing more than legalized extortion.

This is one more reason to move even more aircraft production to right-to-work States.

With unions having monopoly power over business labor, and this Boeing branch of the International Association of Machinists and Aerospace Workers union (among so many other unions) so blatantly abusing its monopoly power, this also is one more reason to rescind the special status of unions as being exempt from antitrust laws.

What She Said Then, What She Says Now

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News outlet writers are starting to object, however mildly, to Progressive-Democratic Party Presidential candidate Kamala Harris’ reluctance to do interviews and news conferences. Harris did do the one interview recently, with a friendly interviewer and while accompanied by her Comfort Running Mate, but that’s it. The press does have a beef about her apparent fear of sitting for unscripted interviews with objective interviewers—and doing them frequently and alone—and to have unscripted, free-wheeling news conferences of some duration and frequency where she wouldn’t know the questions in advance.

The press, though, couches their objections in the premise that without these interviews and news conferences, they won’t know what her platform is or what policies she intends to push were she elected.

Those of us outside the press, us less credulous average Americans, do know what her platform and policies are—Harris has told us quite clearly over the last several years, right up to mid-2024 when she supplanted Joe Biden as Party’s candidate.

Here is her platform made manifest, from what she has said and what she’s saying now, even if her remarks today are scattered about, and her remarks yesterday are being busily ignored by those same news outlet writers.

What She Said Then What She Says Now
There’s no question I’m in favor of banning fracking. I made that clear on the debate stage in 2020 that I would not ban fracking, as vice president I did not ban fracking, as president I will not ban fracking
“an undocumented immigrant is not a criminal”
And: once pledged to close all privately-run immigration detention centers “on day one” during her first presidential campaign		 Harris’ campaign manager: “I think at this point, you know, the policies that are, you know, having a real impact on ensuring that we have security and order at our border are policies that will continue”
January 2017 criticized t Obama’s refusal to veto a UN Security Council resolution on Israeli settlements. Israel has a right to defend itself, and how it does so matters.
I also expressed with the prime minister my serious concern about the scale of human suffering in Gaza…the images of dead children and desperate, hungry people fleeing for safety, sometimes displaced for the second, third, or fourth time.  We cannot look away in the face of these tragedies [not set at the feet of Hamas].
What She Said Then What She Still Says
Tax each stock and bond trade
Roll back 2017 tax cuts
Raise capital gains tax rates at the same rates as ordinary income		 Raise corporate taxes
Tax unrealized capital gains
4% “income-based premium” on households making more than $100,000 annually to pay for her version of “Medicare for All”
$10 trillion in public and private spending over 10 years to create millions of jobs and reduce greenhouse gas emissions		 Expand child tax credit and Earned Income Tax Credit, to be paid for by “there’s a great return on investment.”
Spending $25,000 via “tax credit” to cover the down payment costs for “first-time home buyers”

Do we believe her when she was saying what she believed, or do we believe her foxhole conversions of convenience today? I suggest, on the other hand, that where her positions today are substantially of those from yesterday, we certainly can take her at her word, and these are part of her clearly stated platform, also.

Here’s a Thought

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The article opens with this subheadline and lede:

There might be better ways to help low-income families than vastly expanding the child tax credit
The child tax credit is one of the few government entitlements that both political parties want to make more generous.

The problem with the child tax credit, though, is that rewards folks for not working—the credit is fully refundable, meaning that families get the full handout credit even if their income is lower than the credit.

My thought is this: switch to a low, flat income tax rate regardless of the source of income. That will leave more money in the hands of all American citizens—more than just the credit’s value—it’ll leave that money in our hands throughout the year, instead of our having to struggle through all twelve of the months of the current year, plus tax time, in order to get the money back in the following year (only a fraction of the credit is handed out in installments).

And it’ll encourage getting more work, or at the least reduce the government’s handout-induced discouragement of work, by leaving that erstwhile tax money in the hands of folks who work and pay taxes. Further, that erstwhile tax money already is coordinated [sic] with income; there’s no need to play games with indexing.

The problem with that, though, is strictly political. The move directly challenges the Progressive-Democratic Party’s addiction to constantly raising taxes. The move also would greatly reduce Party’s ability to curry favor and buy votes with credits and circuses’ handouts.