Tag Archives: spending

It’s Not Our Money

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That’s the position of New York Governor Andrew Cuomo (D). On the heels of the Progressive-Democrats winning both of Georgia’s Senate seats, giving control of the Senate to the Progressive-Democratic Party, he had this to say:

Washington has…literally have taken billions of dollars from us, and that was a function of the Senate and the president, and they are both gone. And today, Washington theft ends and compensation for the victims of the crimes of the past four years begins. New Yorkers have been crime victims by the theft of the federal government.
We want a return of the state’s property that was stolen by Washington over the past four years. They wouldn’t pay us state and local funding, even though this state has a $15 billion deficit….

Because it’s not our money. It’s not anybody’s money but the New York Government’s.  Pay up, suckers.

It Only Took 50 Years

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Maybe. While it took us ignorant colonials only a decade, or so, to figure it out.

The eurozone has always had a fundamental weakness compared with the US when dealing with financial and economic crises: while its 19 countries share a currency and interest-rate policy, they have no common tax-raising or spending power.
In 2020, the European Union took a big step toward correcting that deficiency by starting to issue bonds on behalf of all member countries, known as common bonds. Beginning in 2021, some common bonds will be repaid through taxes raised by the EU itself.

That’s a one-off, but maybe it’s a first step and not a last one.

The lack of central taxing and spending power—and authority—was a Critical Item in the failure of the diplomatic concord that was our 13 States operating under their Articles of Confederation, and it took our Constitution to rectify the failure.

Of course, the EU still lacks the homogeneity of understanding of the role of government and of the purpose of money so necessary to the success of a polity that our original States, even under the Articles, had.

But, hey, baby steps. Maybe in another 50 years….

Tax Breaks

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In particular, child tax credits and their proposed expansion, but the principle below applies across the board.

…pair the expansion of the child tax credit with extensions of expiring business-tax provisions, some of which have Democratic support.

Pairing in order to get the credit passed, one being a bell for the other’s whistle.  Refundable credits, too, so those who don’t pay much, if any, income tax can get their own taste. Here’s Progressive-Democratic Party Presidential candidate Joe Biden’s offer on the credit:

…a temporary expansion of the child tax credit that would bump the $2,000-per-child credit to $3,000 for most children and to $3,600 for those under age 6. He would expand the credit to include 17-year-olds and allow monthly payments, so families wouldn’t need to wait for lump sums at tax-filing time.
Mr Biden’s proposal would cost more than $100 billion a year.

Leave aside the fact that refundability is spending increase, not taxing cut.

Here’s a better idea: lower income tax rates (permanently) across the board, for both businesses and individuals.

Leaving all that money in the private economy, which is to say in the hands of the businesses and individuals who are earning the money, pays far more benefits far more quickly, running from the folks more efficiently spending their money than can any government spend it for them through businesses having more—again, of their own—money for capital improvement, product/service development, R&D, wages, hiring.

All that increased economic activity—real activity, not the fiction of government spending as economic activity—is what will help families with children. And if Government—or rather the politicians populating Government—take the additional step of not singling out particularly favored groups of Americans for special treatment, that increased economic activity will particularly help minority families, who are the ones most needful of access to that increasing prosperity.

City Pensions

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They’re in trouble. You knew that, though, as city budgets have long favored spending more than revenue, especially spending on public union pensions and other retirement benefits, and so debts piled up—and continue to amass.

One particular arena where that’s having potentially deleterious effect is in pensions with benefits like paid (or mostly paid) health plans.

Cities and states can’t afford to keep the same medical benefits they promised government retirees.
For all 50 states combined, revenue declines for 2020 and 2021 could reach 13% cumulatively, according to Moody’s Analytics projections, while the average cost of an employer health-care plan for an individual increased 4% in 2020 to $7,470, according to the Kaiser Family Foundation nonprofit.

The current excuse is the Wuhan Virus situation having crushed sales-tax income and tourism dollars. In the end, though, the specific crisis du jour isn’t important: there always will be a crisis that will crush city revenues. An example of the reach of any crisis is this:

The Ohio Police and Fire Pension Fund sponsored a self-insured health-care plan for its retirees from 1975 to 2018, said fund spokesman David Graham.
“With no dedicated funding source for this plan, it eventually became unsustainable,” Mr Graham said in a written statement, adding that retirees would have had to increase their contributions to keep the health-care fund solvent.

There’s a hint, in that “dedicated funding source.” There needn’t be one could retiree pension health “benefits” be structured differently.

That brings me to the “potentially deleterious” bit. Deleteriosity is only potential because the overall situation presents opportunity: privatizing health plan provision, returning the provisioning to true health insurance—premiums based on the risks being transferred to the coverage provider—and using the free market and its intrinsically competitive nature to govern both customer costs—those premiums—and product quality.  Quality especially would include the breadth of insurance products offered: single or a very few health matters insured; suites of preventive health care insurance for standard items like colds and flu, annual checkups; a broad range of other coverage offerings that might be relatively specific or relatively broad.

That opportunity often will be beyond an individual city’s capability to implement, but aggregations of cities might approach the capacity, and certainly at the national level, the health coverage industry can be privatized and included in the nation’s free market economy. At that point, cities would be able to step out of the health coverage business altogether beyond—perhaps—providing a cafeteria of market plans purchased on the open, free market for their city employee retirees.

More opportunity: with retirees responsible for choosing their own plans with which to satisfy their own needs and desires and paying for those plans with their own money—as grown adults, they really are capable of that without Big Brother Government or overreaching unions “helping”—they’ll take both their health and their insurance costs seriously.

The Lady Misunderstands

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Senator Kirsten Gillibrand (D, NY) says it’s total BS that the Progressive-Democrat proposed $1 trillion in Federal Wuhan Virus stimulus monies aimed at State and local governments would benefit public sector unions. Whether public sector unions should or should not benefit is a separate matter.

It’s generous, though, to suggest that such an intelligent woman actually misunderstands.

Adding a trillion dollars—or any other amount of money—to a budget means—work with me, now—that budget has those added dollars to spend. Earmark the trillion for specific purposes, or bar it from being used for public unions. Do that by sending the money as cash and tracking serial numbers. That still lets the recipient government move a different [trillion] of dollars from a different part of its budget to benefit its public unions. That’s the fungibility of money. It can be moved around.

Then the Senator said this in all seriousness:

We need to fund government so that we can continue to grow the economy….

Here are the Constitutionally authorized reasons for funding the government:

to pay the Debts and provide for the common Defence and general Welfare of the United States

Nothing in there about “growing the economy,” not even under that general Welfare part. What is the general Welfare of the United States is explicitly defined by the clauses of the rest of Article I, Section 8.

Indeed, as has been demonstrated over the course of our history and across a broad range of nations, the way to grow the economy is to have a free market, capitalist economy with minimal government involvement.

In fine, the State and local governments don’t need the stimulus money; they need to step back, (in many cases) end the lockdowns, and let the private economy function.