Tag Archives: political economy

The Ryan Budget Proposal

Posted on by
Reply

House Budget Committee Chairman Paul Ryan (R, WI) has laid out the Republican budget proposal for the decade beginning FY2015.

It begins by balancing the Federal budget over those 10 years, a measure of fiscal responsibility to which the present crop of Democrats don’t even pretend—vis., the Democrat-controlled Senate’s refusal even to produce a budget their first four years of the Obama administration, and which refusal they’ve renewed in the current year, insisting that they don’t need to bring up a budget anymore.

It repeals Obamacare, with that act’s enormous deficit-increasing costs.

It increases Defense spending, contra Democrat—White House—desires.  Plussing up our military is an especially glaring need in this day of a resurgent Russia routinely invading and occupying parts of its neighbors—Georgia and Ukraine come to mind—and an equally aggressive, if more subtly so, People’s Republic of China and its territorial grabs of the East and South China Seas.

It renews the Republican proposal to give “premium subsidies” to senior citizens enrolling in Medicare beginning in 2024—folks today who are not older than 56—and letting them shop for their own insurance in a free(r) market, rather than being dragooned in to Medicare.  Even so, Medicare would be one of their choices, and guaranteed to be no more than second least expensive.  Democrats deride this as a voucher system and object to it.  Aside from the fact that Democrats object to voucher systems in any form, I have to wonder why Democrats object so vociferously to older Americans making up their own minds, without the oversight of Democrat Betters.

It walks away from past practice of projecting budget effects into the future under the assumption that today’s conditions won’t change over the period being projected, including the premise that the economy won’t respond to spending changes by the Federal government—a static analysis—and makes use, instead, of the more realistic assumption that the economy does, in fact, respond to such inputs—dynamic analysis.

This is an outline that should be pursued, and Democrats who insist on continuing their profligate spending instead de-elected.

A Political Party’s Fiscal Philosophy in Microcosm

Posted on by
Reply

The Wall Street Journal has the tale.

Today, a year and a half after the 2012 elections, the Democratic National Committee owes its creditors $15 million.  It closed out the 2012 election season owing $22 million, and after all this time, it’s only paid down a third of that debt.

Today, a year and a half after the 2012 elections, the Republican National Committee owes its creditors…zip.  Nada.  The RNC has no debt.  It also closed out the 2012 election season with…wait for it…no debt.  The RNC, in fact, had $3 million cash on hand.

And with those relative fiscal performances, the Republicans won everywhere—the House, with fewer than usual losses for the minority party in a Presidential election year; the Senate, with fewer than usual losses for the minority party in a Presidential election year; in the state houses, with net gains in legislatures and Governors’ offices—except the White House race.

The Democrats lost everywhere—the mirror image in a two-party system—but the White House.  And we’ve seen how effective this President has been.

Which party’s fiscal performance indicates which party is more fit to govern a nation?

Value of Your Tax Bill

Posted on by
Reply

…if the money were left in your hands to put toward your own retirement.  WalletHub has looked at the differing state and local tax bites that they charge you for the privilege of living in their fair states.  Not surprisingly (to some of us) Red states take a sharply lower bite out of your money than do Blue states, as the figure below illustrates. 

But what does this mean in practical terms?  I looked at how the tax money could be used for an individual’s or family’s retirement program were the money left in the pockets of the earner.  Even though this study indicated that Wyoming’s state and local tax bite was the lowest, at $2,365, I used Texas’ more middling $5,193 take (middling because, even though Texas was rated as having the 7th lowest collection rate, the difference between Wyoming and Texas was $2,828, and adding that to Texas’ number got me to the neighborhood of DC’s $8,034, which was ranked 37th lowest) as my baseline because that’s where I live.

I also made a couple of heroic assumptions: working from WalletHub‘s assumption of a single filer, I fleshed that out to say he’s just turned 30 (yeah, he’s late to marriage), and he can afford to set aside the amounts identified below in his retirement program (actually, he chooses to afford, since he already can afford—he’s paying the taxes already).  Those amounts are the differences between the state and local taxes he’d pay in the state indicated in the table below and the taxes he’d pay in Texas.  I also assumed our young man can get a 3% return on investing his money, thereby roughly matching historical inflation.  As a 30-year old, he’ll work for 37 years before retiring.    Finally, this is a static analysis; it assumes no tax differential changes over those 37 years.

State, Local Taxes

Tax Difference from Texas

3% Investment Return

New York

$4,525

$172,300

California

$4,316

$164,400

New Jersey

$3,637

$138,500

DC

$2,841

$108,200

Even with that middling difference between Texas and DC, DC’s “state” and local tax bite is worth more than $100,000 over our man’s remaining working lifetime were he allowed to keep his money.  What does he get for that extra tax money taken?  A higher cost of living, and not much else.  More restrictions on individual freedom and responsibility—gun laws, for instance—and a denser population; although lots of folks like that part.

But think about what our man can do for himself with all that extra money—like visits to states with denser populations for all those attractions, while living more cheaply when he’s done with his vacation.  And more support for charities of his choice, through means of his choice, rather than those of government’s choices.

Rookie Gaffe?

Posted on by
Reply

That’s what Paul Edelstein of IHS Global Insight thinks, according to The Wall Street Journal.  In the Fed’s post-FOMC presser last Wednesday, Fed President Janet Yellen suggested that interest-rate increases might start beginning roughly six months after the Fed’s QEx (which is in the process of being…tapered) ends or as soon as this fall.  Edelstein had this to say as the stock market reacted negatively to Yellen’s remarks:

This could have been a rookie gaffe on Yellen’s part.  This was, after all, her first press conference.

Or, it’s possible that Yellen knew what she was doing, and she said what she said with carefully chosen words.

It’s also possible that Yellen knew another thing that Edelstein and his ilk seem to have conveniently forgotten: the Fed exists to stabilize the economy’s price behavior and to work toward full employment, however that’s defined.  In particular, the Fed does not at all exist to prop up stock prices for the benefit of investors like Edelstein, or me.  Our performance—work with me on this, it seems to be a lost concept for many—is on us; it’s a part of our personal responsibility.

And we had to know that QEx would end, we do know that is ending, and we should know that it’s on us to deal with the inflation that will result on OEx’s completion.  The Fed has no obligation—it cannot have this obligation in a free market economy—to inure us from the outcomes of our decisions.

A Progressive Contradiction

Posted on by
Reply

Don Boudreaux at Cafe Hayek cites Professor Todd Henderson, a University of Chicago law professor, who makes one Progressive contradiction explicit.

[R]eading all your [Boudreaux’] posts about the minimum wage and global warming this morning, I was struck by the paradox in the proposed remedies for these two problems by politicians.  The first problem is income inequality, and the remedy is to set minimum contract terms.  The second problem is externalities from carbon protection, and the remedy is to tax output levels.

Progressives correctly surmise that if the cost of carbon output is raised (for instance, by taxing it), we’ll get less output of carbon.

On what basis, then, do Progressives surmise that if the cost of labor is raised (for instance, by raising the legal minimum wage), we’ll not get less labor?