Tag Archives: spending

I Have a Question

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President Donald Trump (R) wants to set up financial accounts for children, initially funded with $1,000 of government money—taxpayer money redistributed. Wall Street wants in on the action. This bit is what raises my question:

Participating financial firms likely would earn lower management fees than their typical rates, but the program would be a potential gateway to acquire millions of new customers the companies hope will stay with them into adulthood and grow their accounts over time.

And this:

One priority for the government is to offer low-fee investment options.

Who will pay those fees? Would they be one-time set up fees, or would they be ongoing account maintenance fees? If the latter, and if they’re paid by the account holder, which is the usual case, even low fees would sap the accounts over time just as thoroughly as even low management fees on mutual funds do.

On the other hand, there’s this:

The Treasury Department is considering choosing an exchange-traded fund or working with firms to potentially create a market-tracking fund with no fees, one of the people familiar with the matter said.

That’s the firms betting on the account holders becoming future broader account holders/investors with those firms, and that would be a good bet.

No-fee (as most brokerages do for DIY investors) or (very) low fee, these accounts would seem like a good idea—give children a leg up on investing and thereby give them a long-term level of game skin for their betterment and their better judgment and interest in our economy.

Except.

How strong would that skin be if handed to the children (even if managed with the assistance of, or by, their parents)? Possibly, the benefits would outweigh that risks, given the size of the proposed seed money.

The far greater danger, though, is the Progressive-Democratic Party, with its penchant for Know Better Government intrusions, returning to power. At that point, the accounts will become permanently and annually government funded in ever increasing amounts—so long as the accounts invest in Party-approved vehicles. See, for instance, Party’s demand for continued (and increasing) subsidies for their unaffordable Affordable Care Act policies.

Some Thoughts on Tariffs

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The Wall Street Journal‘s editors have twisted their panties on tariffs, again, this time showing their lack of understanding of tariff rebates to us low- and middle-income American citizens (in addition to their lack of understanding of tariffs as foreign policy tools. That President Donald Trump (R) has muddled that use is not an excuse for the editors’ failure).

Begin with a couple of things the editors have elided.

President Donald Trump (R) early on said tariffs would let him reduce income taxes—something the editors completed ignored in their present missive. Trump wants to give a $2,000 tariff rebate to us American citizens. While this isn’t a direct reduction of our income taxes, it certainly offsets that much of each of our income tax bills. As a first step in reducing income taxes, it’s not bad.

Then there’s this:

In arguing [before the Supreme Court] that tariffs aren’t really taxes and are mainly a tool of foreign policy, Mr Sauer said “these tariffs, these policies, it is clear that these policies are most effective if nobody ever pays the tariff. If it never raises a dime of revenue, these are the most effective use of these—of this particular policy.”

Sauer went on to say that these foreign policy tariffs do, in fact, generate revenue, but that’s deeply secondary to their purpose, which is to persuade the tariffed nation to change its ways. The editors acknowledged that in an earlier editorial, though only by deeply burying it near the end of that piece. This time, the editors completed elided it.

Then there’s this bit of illogic, even as the editors deride the Trump administration’s logic.

If tariffs are most effective if no one ever pays them [as Sauer also argued], then how are they going to raise the revenue Mr Trump needs to pay those rebates?

Here the editors are exposing the fantasy of their world. “No one” ever pays tariffs because they work perfectly, nations are persuaded, and Hallelujah. No. The world isn’t an ideal place, no foreign policy measure ever works perfectly, friction occurs, and nations adapt according to their own imperatives. Foreign policy tariffs will still raise revenue, even as they do move nations to change, if not completely so, in desired directions.

Finally, this bit of editorial foolishness.

This is a teaching moment for a high school logic class. Start with the contradiction that Mr Trump can both pay a tariff rebate and pay down the national debt. The annual federal budget deficit is roughly $1.8 trillion even with tariff revenue, so paying a rebate would add to the national debt, not reduce it.

Start with the derision of Trump both paying a tariff rebate and paying down the national debt. Of course, both can be done. The rebate won’t, of necessity, absorb all of the current tariff revenue raised, and there’s no reason to expect it to do so in the future. Tariff revenue easily can be committed to, and split between, both goals.

And this: paying a rebate would add to the debt? The editors announce this as received wisdom, declining to provide any facts or logic to support their announcement. That’s because they cannot. The debt arises from spending more of individual and business taxpayer money than the government receives in individual and business taxpayer money. Tariff money is outside of that path. Even if foreign policy tariff revenue were taxes, their expenditure is outside the citizen and business tax revenues the government receives, and spending that revenue adds nothing to our national debt, even if all of the foreign policy tariff revenue were committed to rebates.

And this, straight from the horse’s mouth (which postdates the editors’ missive):

All money left over from the $2000 payments made to low and middle income USA Citizens, from the massive Tariff Income pouring into our Country from foreign countries, which will be substantial, will be used to SUBSTANTIALLY PAY DOWN NATIONAL DEBT. Thank you for your attention to this matter! President DJT

A Misconception

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The headline and subheadline say it all.

Funding Freeze Threatens an Economic Lifeline in Chicago
Washington’s move halts plan to extend a train line into a depressed pocket of the city

Except that Washington’s move needn’t halt anything. Chicago could reallocate its spending priorities and fund the extension itself.

There’s no political will to do so, though; too many politicians in the city are addicted to Federal dollars, and apart from that, they benefit personally politically from bringing in the pork rather than spending city money.

Too, relying on Federal dollars—the taxes paid in by citizens from elsewhere in the State and especially by citizens of other States—lets city politicians avoid the drudgery of worrying about, and doing something about, the costs of such a project. And that benefits the politicians’ union employers donors.

A major factor in those costs is labor, which is driven by Federal construction dollar strings mandating union wage rates whether the builders are union shops or not. Allowing non-union wages would greatly reduce the cost of any construction project, including this train line extension.

One small example of the city officials’ shortsightedness on the revenue side is this from Wendy Jones, who runs a nonprofit that mentors young men:

The Red Line would have been a huge improvement, and it probably would have increased the property value here[.]

That increase in property value would have increased property tax revenues for the city. There would be sequelae, too, were the city managers ever to get serious about solving its crime problem: an influx of businesses, with attendant jobs, into the area fed by the train line extension, with an associated increase in income and business tax revenue to the city.

All of that would be in addition to all the construction jobs that building the extension would entail, and would still be available were the city to spend its own money on the construction.

As a bonus, the city spending its own money on the project would reduce the city’s dependency on the Federal government and reduce the latter’s leverage over the former.

That it’s a widespread and longstanding misconception that halting Federal construction funds transfers must perforce halt construction projects only demonstrates the knee-jerk response to and dependency on Federal funding that too many on both sides—politicians and citizens—have settled into.

The Federal government isn’t the only level of governing where spending discipline and reallocations are necessary.

Disingenuousness in Health Coverage

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David Merritt, of the Blue Cross Blue Shield Association, demonstrates some in his Wall Street Journal Letters letter. He wrote to dispute the WSJ‘s opinion piece that Obamacare tax credits help those who don’t need help.

Consider a family of four that earns $64,000 a year. If the tax credit expires in December, it will see its premiums rise by more than $2,500 in 2026.

Merritt chooses not to say why his, or any other, health coverage company charges such high premiums in the first place. Neither does he specify to which of the several policies on offer in the Obamacare exchanges for this family this premium “spike” would apply.

You add that “making these plans ‘free’ has allowed insurers to get paid for people who may not even know they’re enrolled. Some 40% of those in fully subsidized plans had zero claims in 2024.” But the presence of enrollees with few or no medical claims is the sign of a healthy market. It is common in all insurance markets to find young adults who use less healthcare and therefore file fewer claims.

This is a cynical deflection from the fact that health coverage providers make their money off those unused (by the policy holder) premiums, which the providers invest in order to both make their profit and to fund their payouts. None of that is illegal; it’s even a smart use of those premiums. Merritt’s deflection is real, nonetheless.

Thanks to targeted efforts by the Centers for Medicare and Medicaid Services, enrollment integrity has never been stronger.

Except that, under the Biden administration, far too many illegal aliens have access to taxpayer-funded health coverage. More, those hard-working families of which Merritt pretends to be worried, are untouched by letting the subsidies expire. The only families whose coverage might be imperiled are those who are able to work but make no effort to do so.

Obamacare Subsidies and Appropriations Bills

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The Progressive-Democratic Party’s Congressmen and Senators are attempting to extort Republicans into surrendering on extending/restoring Progressive-Democrat-passed (in 2021) Obamacare expanded subsidies.

Unfortunately, they’ll likely succeed, as too many Republicans in each house are too timid to stand their ground.

Never mind that if those Republicans would crawl out from under their desks, they easily could make the case that any government shutdown would be (and after the realization, was) the sole doing of those Progressive-Democrats. It’s those Party members, after all, who threatened to close our government if they weren’t meekly obeyed and who in the realization did close our government.

These Republicans think they face regarding the Progressive-Democrats’ announcement is a chimera, too. The Federal government never really shuts down. With current tax law, funds come flowing in to Federal coffers are plenty for the Federal government to keep paying, on schedule, almost all of existing Federal outlays. The losses from any supposed shutdown would be primarily via Federal contracts with businesses that provide services to the Feds, but most of these businesses would be made whole under the terms of those same contracts.

The larger, underlying problem this extortion exposes, though, is the Republicans’ failure, in their aggregate, to pass all of the dozen separate appropriations bills they’re nominally required to pass every year. These appropriations bills are the actual spending bills that commit actual dollars that the Federal government has committed through its various allocation bills, which is where the government says what it wants to fund. Appropriations are those funds.

Had the Republicans in Congress actually passed those dozen bills on schedule, or at least by the end of the current fiscal year (which has another week left, so theoretically they still could), as they promised at the start of the year and of which they’ve only passed three or four, there would be no risk of a shutdown, and the Progressive-Democrats would have no extortion bricks to throw threw government windows.

Will the Republicans learn this lesson for the second year of this Congressional session? They never have in the past. I’m not holding my breath for the future.