Federal Redistributions of State Funds

In response to Robert Poole’s Wall Street Journal bit about making some aspects of our infrastructure more affordable, a couple of folks wrote Letters to the Editor.  And so I have my own response.

[A]sset recycling is not about finding more efficient ways to modernize and expand infrastructure. It’s about raising money for cash-starved treasuries….

and

The solution is to allow all states to retain the federal gas tax generated by each state.

Fairness

Various nations around Europe and Asia are looking at ways to add to the tax burden on multinational technology companies doing business in those nations.

Bruno Le Maire, French Minister of the Economy and Finance, rationalized the movement this way:

It is a question of fairness.

Leave it to a European politician to not understand the concept.

No. Fairness is cutting taxes, not raising them, thereby leaving more of the citizens’ money in their hands.

Income Taxes and Retirement Savings

Professor Benjamin Harris (Kellogg School of Management) made a case for redoing our 401(k) retirement savings system.  He had several good points, too: the tax break today compared to the taxes due on withdrawal during retirement’s usually lower tax rate is irrelevant to those whose current income is low enough to go untaxed or not taxed much.  Contributions are tax deductions vs tax credits equal to a portion of contributions.  The whole system is complex from a tax-figuring perspective (what are the tax brackets in play for a particular saver, what taxes will be in play when the saver retires, how will investments perform in the interim).

Austerity

Continuing the theme that other parts of the world still exist, this thought on Brazil’s upcoming presidential election.  In a Wall Street Journal piece about the Brazilian presidential candidates’—all 13 of them—big economic plans with no money to implement them, the item’s author offered this bit:

Mr. Bolsonaro has raised the most hopes in financial markets of tackling the endemic spending problem. …his top economic adviser, economist Paulo Guedes, has promised investors fiscal austerity….

Budgets and Austerity

The Italian coalition government (interesting in its own right, consisting as it does as a teaming up of the far left 5 Star Movement and the far right Liga) has decided to increase government spending and decrease taxes.  This has been projected to produce a 2.4% budget deficit.  For a government already badly in debt, this deficit isn’t good.

Cutting taxes has been decried by others as being the cause of such deficits and debts.  Spending cuts cannot be allowed, say the same folks, because that would be an austere measure.

They’re wrong.

Greece and Austerity

Greece finally is out from under its EU/IMF bailout yoke, and now it wants give its citizens relief from the austerity measures it implemented during its years-long crisis.

[Prime Minister Alexis Tsipras]…announced ambitions to cut taxes as well as increase spending to boost employment and on welfare programs.

Reducing taxes is consistent with reducing austerity—provided the government also tightens its tax collection regime.

Increasing spending, though, increases austerity: it crowds out private businesses as government, which doesn’t have to worry about the cost of money, outcompetes businesses, both for sales and for the resources needed for production. That increased spending also drives up the cost of money for those private enterprises.

Rescissions and Politics

Senator Richard Burr (R, NC), recall, voted against a rescission of $15 billion  in unspent money because he wanted to preserve $15 million in unspent money in the Land and Water Conservation Fund.

The good Senator, objecting to The Wall Street Journal having called him out, wrote a Letter to the Editor, explaining himself.  The center of his argument is this:

The LWCF isn’t, as you suggest, a “slush fund” or a “land grab.” Nor is it a piggy bank Washington should raid at its convenience. Instead, it is a rare example of an effective government program that costs taxpayers nothing and benefits them entirely.

Two Birds

I’ve often argued against government spending on matters unrelated to the Constitutionally mandated payment of government debt, providing for the national defense, and seeing to the general Welfare (as defined by the clauses of Article I, Section 8).  I’ve also argued for privatizing the major social welfare programs of Social Security and Medicare.

Now Oklahoma illustrates the failure to limit the one and do the other at the State level, with Medicaid standing in for Medicare.

Taxing vs Spending

In a Wall Street Journal piece about Tennessee’s required closure of failing bridges problem, a Leake County Democrat supervisor, Joe Andy Helton, had this:

…he was frustrated by politicians being afraid to raise taxes—even to pay for basic services like roads and bridges.

“There’s only but one way to fix things on the local, state or federal level and that’s taxes,” he said.

Of course. Reallocating spending is utterly inconceivable to him.

The two bridges in Helton’s county that must be closed until repaired would cost, at most, a bit over a half-million dollars, together.  That’s not pocket money for a rural county like Leake, but it’s not that much, either.  County and State spending could be (re)directed toward the repairs.

Infrastructure Funding

Much has been made about the deteriorating state of our nation’s infrastructure, from past todos that worked out to be just political chit-chat with nothing done to today’s efforts and commentary.

The commentary, as far as it goes, isn’t far wrong: our infrastructure, our roads, bridges, railroads, airports, even our communications infrastructure are in terrible shape.  But the commentary continues to be largely chit-chat, and the NLMSM isn’t helping.

Take this opening from a piece on President Donald Trump’s latest budget proposal from Fox News, for instance.