Category Archives: political economy

Income Inequality and Education

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Senators Lamar Alexander (R, TN) and Tim Scott (R, SC) are proposing legislation that would address income inequality (while acknowledging that income inequality by itself is not, of necessity, bad) by addressing a critical aspect of opportunity equality (or inequality): education.

While I disagree with the details of the plans, the two Senators most assuredly are on the right track.

Alexander’s proposed bill, the Scholarships for Kids Act, would transfer Federal dollars to States, and each State then would determine how parents could apply the funding.  Scott’s proposed bill, the CHOICE Act, would use Federal transfers to States to facilitate each State’s ability to supplement existing scholarship programs for “military families, those with children facing physical challenges, and students in impoverished areas.”

I remain adamantly opposed to using our Federal tax code for social engineering; that simply distorts the market being engineered.  Such Federal transfers have two additional seriously negative aspects: they maintain State addiction to Federal handouts, and they transfer citizens’ Federal tax dollars from, for instance, those of bankrupt Illinois to those of more flush Iowa.

It is encouraging, though, to see Alexander and Scott acknowledging the need for each State to be responsible for its own education spending (albeit with OPM) and for identifying and addressing its unique education needs.  We just need to eliminate Federal involvement (and resulting Federal diktats) from the equation.

For all that, the proposed legislations are steps in the right direction, and I don’t oppose them outright—but we need to take care in the next Congressional session to move these programs, and other programs involving Federal transfers, in the direction of eliminating the transfers altogether by eliminating the taxes that produce the funds being transferred.  Those funds should not be taken out of the pocketbooks of those who earned them.

Equality of opportunity will inevitably lead to unequal incomes (and to unequal outcomes, generally), but that opportunity will allow everyone to prosper to the extent each one is willing to work and has the talent to do so.  Education is one of a very few critical aspects of that opportunity.

A Tiny Step

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But sufficient for the moment.  Recall this in the next Congress, though, and address it more firmly then.

What is this?  It’s the food stamp compromise just reached between the Democrat-controlled Senate and the people’s House of Representatives.  The compromise keeps food stamp benefits for most Americans while cutting them overall by $800 million per year—a 1% cut.

That’s a step in the right direction, albeit chump change, but serious revamping isn’t possible so long as the Democrats control the Senate.  First things, first, and that means here, as with most items to come up this year, Republicans and Conservatives have to stay focused—and they have to develop a unified message with concrete solutions beyond just saying “No” to the Democrats (“No” is the Progressives’ knee-jerk answer to real reform) on which to focus—on the failures of President Barack Obama and the Reid/Schumer/Durbin Senate and on Republican/Conservative solutions to those failures.

With that, they can increase their hold on the House and gain control of the Senate and thereby start, in the next Congress, making real progress toward redressing the damage done by the Progressive policies of the last five (six, by this fall) years.  Building on that, they can also win the White House in 2016 and then truly start repairing the damage done.

Income Inequality

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According to a recent Fox News poll, most Americans don’t agree with President Barack Obama’s emphasis on income inequality, nor are we as dumb as Obama makes us out to be on the matter.

Obama’s latest squirrel is income inequality.  However,

  • all of 21% of voters with annual household incomes below $30,000 think the government should do something about it
  • 12% of those with incomes $100,000 or more feel that way.

What’s up with that?  It turns out that most Americans understand that economics in a free market isn’t a zero-sum game.

  • 84% of voters understand that if someone makes a lot of money, it does not mean someone else has to make less

It’s income agnostic, too:

  • 83% of voters with incomes below $50,000 say that
  • 84% of those with incomes $50,000 or more say that

Most Americans also understand that “spreading the wealth around” isn’t the path to prosperity.

  • 55% of voters think giving unemployment benefits to people who have been out of work for a long time discourages them from looking for a job.

Again, it’s income agnostic:

  • More voters than not in both higher and lower income groups say the benefits keep people from trying to find work.

Obama’s Obamacare Tax Increases

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Here are many of the ones that start this year.  As does President Barack Obama’s war on marriage, using his IRS to prosecute it.

  • top marginal tax rate rose to 39.6% for those at higher incomes
    • $400,000 for single filers
    • $450,000 for married couples filing jointly
    • $425,000 for heads of household
  • itemized deductions and personal exemptions phase out as income increases
    • beginning at $300,000 for married couples filing jointly
    • $250,000 for singles
  • higher capital gains taxes—up to 20% for some taxpayers
  • additional 0.9% Medicare tax
    • on earnings over $250,000 for married couples filing jointly
    • $200,000 for singles and heads of household
  • 3.8% tax on investment income
    • on earnings over $250,000 for married couples filing jointly
    • $200,000 for singles and heads of household

Notice that marriage penalty.

It’s Time

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…I think, to end the monopoly that is the United States Post Office.  The Constitution does not support this monopoly, saying only that one of the powers of Congress is To establish Post Offices and Post Roads.  Congress can do this just fine by fostering competition and getting out of the way of the private sector handling all of our mail delivery.

The trigger for this is the USPS’ union mendacious claims concerning USPS’ new partnership with Staples to open mini-post offices in Staples stores

…staffed by Staples employees, not postal workers

The American Postal Workers Union objects; the move “replaces good-paying union jobs with low-wage, nonunion workers.”

Don’t worry about what’s good for the customer; worry only about what’s good for the union.  Meanwhile, the price of a first class stamp keeps rising steadily.

In the end, nearly the only thing left to de-monopolize is first class mail delivery; the private sector competes quite effectively in all other classes of mail.  Package delivery, for instance, in direct competition with the USPS is faster and cheaper.  The only place where the private sector declines to compete (as opposed to being barred from competing) is in bulk junk mail delivery.  I still get my Tuesday and Wednesday rations of that like clockwork.  And I won’t miss it in the slightest.  I suspect my city’s recycling center won’t miss the clutter, also.