Tag Archives: spending

New Jersey Wants Federal Dollars

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But it’s not a bailout, Governor Phil Murphy (D) insists.

“I wouldn’t call it a bailout. I would just say this is a war, we’re at the front lines,” Murphy said, stressing that his state does not want federal help at this time for “legacy” budget issues that predate the pandemic.
“We know what we got to do with the old legacy stuff, we need help with the here and now: educators, police, fire, EMS, the front-line stuff.”

Of course…. To the extent that any Federal dollars should go to States, New Jersey for instance, those dollars should go directly to the educators, police, fire, EMS, the front-line stuff; they should not pass through the State government on the way.

And: to mitigate the fungibility of money, those Federal dollars should be matched by State dollars. A State government should not be able simply to reallocate the funds it would already have been sending to “the front-line stuff” to other purposes on the premise that Uncle Sugar is picking up the front-line tab.

…if we do not get significant direct and flexible financial support from the federal government, we will be forced to make many difficult decisions about programs we all rely upon and which we will lean on in the months ahead.

What decisions to make vis-à-vis excessive public pension commitments and payouts, for instance. Regarding excessive and overwrought regulations that cost tremendous amounts to enforce and tremendous amounts for businesses and individuals to satisfy, and so that divert monies from their more efficient allocations and thereby restrain economic activity and reduce revenues to the State’s government.

Difficult decisions, indeed.

Bernie Budget

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Progressive-Democratic Party Presidential candidate and Senator Bernie Sanders (I, VT) has released the outline of his budget, which he claims would pay for all of his Free Stuff spending.  Here are a couple of the high points of his budget.

  • tax the investing process
    • 5% tax on stock trades
    • 1% fee on bond trades
    • 005% fee on derivative trades
  • wealth tax on the “top 0.1%”

These, without inhibiting investments, including those of the mutual funds in our 401(k)s, 403(b)s, etc, are supposed to raise more than $6 trillion over ten years, and—poof—there go all college expenses and housing costs. Never mind that this would drive up the cost of investing by a factor of five—but no, there’d be no effect on investing.

  • sue the lights out of fossil fuel companies

This is supposed to raise another $3 trillion. Never mind that with the courts being returned to ruling on the Constitution and the law rather than ruling on the feel-good social issue du jour, that’s a bit chancy.

  • cut defense spending by $1.215 trillion

This one, in the end, may be the most effective at eliminating concerns about paying for the Sanders Free Stuff industry. Once we’re no longer able to defend ourselves, we’ll be easy prey for our enemies. Or the least effective, depending on whether the perspective is ours or our enemy’s.

And as an aside, one non-economic cynical contradiction:

[A]fter arguing that people should not be judged solely by their skin color, Sanders promised that his vice president “definitively” would not be an “old white guy.”

Contradictions

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Japan raised its sales tax—consumption tax/value added tax—and promptly saw a 6.3% year-on-year drop in GDP in the last quarter of 2019. Consumer spending (did I mention that the tax was a consumption tax?) fell by 11.5% that quarter.

Color me—and hosts of others much smarter than me—unsrurprised.

Now come the contradictions, from the just US Congress-revived IMF, yet.

The International Monetary Fund thinks the consumption-tax rate will have to rise to 15% over the next decade, and to 20% by 2050. But first the fund’s wizards say Tokyo must expand its Keynesian spending to make the economy “strong” enough to bear the tax hikes to pay for the spending.

Increasing government spending, which is tax increases now or later, reduces consumption by a number of paths: it takes money out of consumers’ hands directly via those taxes; by competing for the same goods and services as consumers’, it drives up the prices of those goods and services to consumers, which reduces consumers’ purchase of them; by competing for the same resources that private enterprises need to produce it drives up the price of the resources, which drives up the prices of the end-product goods and services to consumers, which….; and it crowds out many private enterprises and consumers altogether.

And so, of course, it’s necessary to raise even further the taxes on all that reducing consumption.

Business is falling off. Gotta raise prices to make up for the decreased revenue.

Make sense? It does to the IMF. And to the Japanese government.

Protections through Cuts

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That’s how President Donald Trump’s budget proposal represents support for his campaign commitment to protect programs like Medicare and Medicaid.

[The proposal] targets $2 trillion in savings from mandatory spending programs, including $130 billion from changes to Medicare prescription-drug pricing, $292 billion from safety-net cuts—such as work requirements for Medicaid and food stamps—and $70 billion from tightening eligibility access to federal disability benefits.

Medicare is threatened with bankruptcy nearly as badly as is Social Security, but that doesn’t mean Medicare would disappear—only that benefit payouts would be reduced to what payroll tax revenues could support, rather than what’s currently available from those tax revenues plus earnings and principle from its trust funds.

By tightening eligibility requirements and by requiring actual work, efforts toward being able to gain work, or doing forms of community service benefits those who actually need the benefits would be preserved.

The same situation exists for Medicaid: these State-run programs threaten the fiscal health of those States, and Federal transfers to those States, far from helping them, do nothing but reduce the States to dependencies of the Federal government.

One item in the proposed budget with which I disagree with Trump concerns the VA.

Winners in Mr Trump’s budget include the Department of Veterans Affairs, with a 13% increase next year….

This is a waste of money. The VA has repeatedly shown itself incapable of taking care of our veterans with any generality or reliability.  The VA needs to be completely disbanded and its budget (this year with that 13% increase) and putative future budgets converted to vouchers for our veterans so they can get the medical care and financial support they need at the time they need it from doctors, clinics, and hospitals that suit them.

Veteranos Administratio delende est.

A Cost of Impeachment

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It seems the Progressive-Democrats’ attempt to impeach President Donald Trump was not all that fiscally expensive as such things go.

According to an estimate from the Heritage Foundation in December, the [Progressive-]Democrat-led House of Representatives inquiry, and eventual impeachment of Trump for abuse of power and obstruction of Congress on December 18, cost taxpayers an estimated $3.06 million.

That compares with the effort against ex-President Bill Clinton (D):

According to CNN, the independent probe into Clinton cost taxpayers $80 million in 1994.

That bill includes the Senate trial, while the Heritage Foundation estimate doesn’t include the Senate’s in-progress impeachment trial, but it’s unlikely that the Senate trial will cost $77 million.

It should be no surprise, though, that the House’s seemingly slapdash effort was done on the cheap. The present effort has never been about actual impeachment and removal; it has been solely an effort to conduct a prolonged smear campaign and with that to prejudice the 2020 election.