Tag Archives: economics

Distortions by Progressive-Democrats

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The latest are illustrated by two graphs from The Wall Street Journal. The graphs illustrate the impact on us taxpayers—rich and poor—of the recently passed tax cuts in the One Big Beautiful Bill Act.

The first shows in dollar terms the impact of the tax cuts.

Progressive-Democratic Party politicians favor this graph because it emphasizes dollars while ignoring both their importance to the taxpayer relative to his income and it ignores the percentage of income received by each taxpayer and the percentage of the tax burden paid by each taxpayer—which for the rich is a larger percentage than their percentage share of income earned.

The second illustrates the changes in percentage terms, which demonstrate the importance of those dollars to taxpayers’ incomes.

Overall, the tax cuts become more important as income level drops from the wealthiest to the poorest. Those with increasingly lower incomes receive increasingly higher tax reductions relative to their incomes, with the poorest getting the greatest relative reductions. The Evil Rich—the top 20% of income earners—get far smaller relative tax drops, with the Evilest Rich—those heinous top 1% of income earners—getting the smallest relative drop.

And that’s entirely appropriate since they start out with the largest tax burden, one that’s much larger even than their relative share of income. This is a detail that Progressive-Democrats actively ignore in their distortionate descriptions of the bill.

Uncertainty?

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A Wall Street Journal article centered on one American company’s claimed uncertainty regarding adjusting its supply chain to no longer be in the People’s Republic of China cited this:

American Outdoor Brands spent months coming up with a plan to minimize the pain of tariffs. Now it is stuck waiting to see where to go.
Most of American Outdoor Brands’ products, which range from fishing tools to hunting gear and pizza ovens, come from China. Executives were prepared to reposition the company’s supply chain ahead of July 9, when the so-called reciprocal tariffs were set to take effect, betting that it could move quickly to reduce any pain points once the new levies kicked in.
But President Trump’s decision last week to extend the deadline for trade deal negotiations to August 1 has prolonged the uncertainty for many companies. That means American Outdoor Brands’ supply-chain reshuffling plan remains on ice.

Why? Where’s the uncertainty? These companies—not just American Outdoor Brands—still know they need to move their supply chains out of the PRC. At worst, they just have more time in which to do so.

American Outdoor Brands’ CFO Andy Fulmer:

We’re very comfortable that we’ve done all the upfront work on where we’d go by product category. We’re just kind of waiting for those firm rates to come out.

Stop dithering, then, and execute. The likely range of tariffs already is well-known, and they’re unlikely to be raised in the face of intransigence; they’ll just go into effect on the deadline, or be delayed again.

In the meantime, there are a myriad other places from which to source intermediate components and—in American Outdoor Brands’ and others similarly situated—final products. Bangladesh, comes to mind, as does Jordan. And manufacturing-experienced Vietnam, Republic of Korea, Japan, Philippines. It would be easy enough in those latter cases to contractually require components not come from the PRC directly or indirectly.

Even move the supply chains to…the United States.

No, It Won’t

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This time, it’s an op-ed writer in The Wall Street Journal who is making misleading claims. In his piece regarding the likelihood of wealth flight from a Zohran Mamdani-run New York City, their subheadline reads

The state will lose wealthy taxpayers, and the federal government will have to cough up more aid.

The opinion-writer ties the weal of our nation to the weal of New York, and the article fails utterly on the false premise of a necessary Federal bailout.

No, the Federal government will not have to cough up more aid. New York’s political machinations, including its drumbeat attacks on successful Americans and on businesses domiciled there, would be coming to a head under a socialist Mamdani city administration, and that outcome is solely that New York State’s responsibility.

The good citizens of States running from Maine through New Jersey, Illinois, Texas, Wyoming, Nevada, on to California, Alaska, and Hawaii have absolutely no obligation to bail out a fiscally and regulatorily irresponsible New York City or State. The Federal government has no business forcing the rest of the nation’s citizens to do so.

The other side of the matter: only if New York—city and State—are left to stew in their own fetid spending, taxing, and regulation messes will either have any chance of mending its ways. In that way, the weal of the nation is impacted by the weal of New York State: a healthy State, not dependent of Federal funding, would be an unalloyed good for our nation.

Where Have We Heard This Before?

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The Wall Street Journal editors opined regarding the Progressive-Democratic Party’s “abundance” campaign in contrast with Party’s New York City mayoral candidate Zohran Mamdani’s campaign of paucity:

…higher taxes on the rich, greater income redistribution, and expanding government control over private business—or, as he put it in 2021, “seizing the means of production.”

Then they wrote this:

Despite the tension between the two camps, both believe government should re-engineer the economy and society to their desired liberal ends.

They seem surprised by this. But. But, but, but. Progressive-Democratic Party leaders have sung this song before, and we’ve heard Party’s singing.

Then-Progressive-Democratic Party Presidential candidate Barack Obama, on the eve of his election bragged that he was just days away from fundamentally transforming America. In his first address to Congress, the then-Progressive-Democrat President Joe Biden announced his intention to fundamentally transform our national economy.

Mamdani should come as no surprise at all, and New Yorkers would be well to heed this and elect accordingly.

An Outline was Passed

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The House-Senate reconciliation bill has been passed. The bill contains a number of beneficial things and a number of suboptimal things, along with a couple of items that are no good at all (vis., a cut in real dollars on defense spending and an increase in deficit spending and so in national debt of highly dubious estimates, both in size and sign).

So now what?

President Donald Trump (R) offered to use his executive authority to limit spending beyond what’s in the Senate version of the bill, which is what the House passed last Thursday.

In the meetings, Russ Vought, Trump’s White House budget chief, also reassured lawmakers that the administration would use its authority to limit spending, according to people familiar with the conversations. Trump and his advisers have argued that Trump has the authority to refuse to spend money appropriated by Congress, a contention likely to be tested in court.

That’s nice, even if the courts uphold the specific actions (or most of them) Trump might take. At best though, these would be temporary measures, easily undone by a subsequent President.

Now what, then, are the 12 appropriations bills that the current crop of House Republicans have been promising to pass individually and on time for a couple of Congresses. The outline reconciliation bill represents ceilings on spending and tax rates, not floors, even though the Progressive-Democrats will howl that the levels are floors and so spending and tax rates still should go up.

The 12 appropriations bills are

  • Military Construction, Veterans Affairs, and Related Agencies appropriations bill
  • Defense appropriations bill
  • Homeland Security appropriations bill
  • State Department and Foreign Operations appropriations bill
  • Interior and Environment appropriations bill
  • Legislative Branch appropriations bill
  • Agriculture, Rural Development, Food and Drug Administration, and Related Agencies appropriations bill
  • Commerce, Justice, Science, and Related Agencies appropriations bill
  • Energy and Water Development appropriations bill
  • Labor, Health and Human Services, Education, and Related Agencies appropriations bill
  • Transportation, Housing and Urban Development, and Related Agencies appropriations bill
  • Financial Services and General Government appropriations bill

These are where real spending and tax rate reductions (not formally part of appropriations, but easily enough included by amendment) can—and must this time—occur. Military construction needs to be focused on facilities for housing our soldiers and on bases—new or modified—for housing more of our weapons systems and for our new weapons systems as they come on line. The VA needs no spending increases, it even could stand spending cuts. I’ve argued for its elimination altogether, and this would be a good time to do that.

State, with its more focused foreign aid spending and more tightly controlled embassies and consulates, can absorb reduced spending. After that, all of the appropriations bills, save Defense and Homeland Security, should get 10% cuts in spending across the board. Defense needs, badly, a 10% increase in real terms, and Homeland Security, given the success of the Trump administration—so far—in resecuring our borders, needs a 5% (vice Defense’s 10%) increase.

With all of that, Congress—the House especially—would have some choices to make, any of which would be to the benefit of our nation: statutorily require the vast bulk of the resulting budget surplus go specifically to Treasury to pay down our national debt, further reduce individual and corporate income tax rates and make permanent the existing temporary tax reductions, or some combination of the two.

Congressmen in both houses need now to focus the energy they spent arguing over spending and tax rate maneuvers in the runup to passing the reconciliation bill on achieving real cuts in spending and tax rates via the appropriations bills. And they need to quit dithering about it this time. Pass the bills individually and on time—no more omnibus bills, no more continuing resolutions. Achievement of this would make arguing over the debt ceiling irrelevant by making the debt ceiling itself irrelevant.

Trump could exercise his executive authority in real, proven terms: announce that he’ll veto any omnibus bills and any continuing resolution, even if it means Congress shuts down the Federal government with its failure to perform. And then do so if Congress actually does fail and cause a shutdown.