Tag Archives: spending

Another Case for Tax Reform

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British Prime Minister had this to say Thursday (if that link doesn’t work, the Daily Mail has a good summary and paraphrase):

We know the economic case for cutting taxes: in a competitive world we cannot afford to carry on as a bloated, high-taxing, welfare-heavy nation.

We have to direct our resources to incentivising work through tax cuts and not incentivising welfare through extra benefit entitlements.

We have to fight the notion that you can endlessly suck more taxes out of businesses and bite the hand that feeds…. For me, the simplest way to help with living standards is this: allow people to take home more of their own money.

And

Every single pound of public money started as private earning. Every million in the Treasury represents a huge amount of hard work: early morning alarms, long commutes, hours spent on the factory floor, the office, the hospital ward, or the classroom.

The Wall Street Journal rightly offered kudos for this awakening, but they missed a key point.

[T]he case for tax cuts is as much about freedom as it is about spurring growth.

True enough. But freedom is what allows those spurs to exist. Freedom is what allows economic growth to occur. Freedom is what allows prosperity.

In A Separate Report….

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Overall household spending [Note: household spending is different from the consumer spending I referenced in yesterday’s article, and this is a different report from the one I referenced yesterday] fell 0.2% from August, the first decline since January and only the third since the recession ended in mid-2009, the Commerce Department said Friday. The drop reflected a big decline in purchases of big-ticket items such as cars.

Falling demand for cars, household appliances, and other big-ticket (read: expensive—have you priced refrigerators or dryers lately?) items: is this a one-time blip or a trend resulting from pent-up demand being momentarily released? The old family beater finally wore out, and the family had to buy another car? That’s consistent with anemic consumer spending generally these last several quarters. Still, it could be a blip, and household spending (not the same as consumer spending, but close enough for the context) could be discovered to have resumed its slow growth when October’s numbers are published.

Meanwhile,

Americans’ overall income—including money from wages, investments, and government aid—climbed 0.2%, the smallest increase of the year.

And

Inflation-adjusted household spending on durable goods fell 1.9% from August, the sharpest decline since September 2009.

That’s at the consistently very low inflation rates, too. This is what we’re actually spending (or not) in terms of buying power—how far our paychecks go—and it’s a long-term trend. These wage and adjusted spending numbers don’t comport with hopes of higher spending, and so of real economic recovery in the near or medium-term future.

And this:

Friday’s report also showed US inflation remains below the Federal Reserve’s annual 2% target. The price index for personal consumption expenditures—the Fed’s preferred inflation measure-rose 0.1% from August and 1.4% from a year earlier.

Low inflation is good, but inflation this low is reflective of low demand. See above, regarding income, for an idea of future recovery.

Who Pays for Political Campaign Travel?

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In the case of some Democrats, like President Barack Obama, it looks like us taxpayers pay a significant fraction of the costs. As Mark Knoller of CBS News noted the other day,

Under Federal Election Commission (FEC) rules, the government must be reimbursed for parts of presidential political travel.

“When a trip is for political or unofficial purposes, those involved must pay for their own food and lodging and other related expenses, and they must also reimburse the government with the equivalent of the airfare that they would have paid had they used a commercial airline,” states the Congressional Research Service in a 2012 analysis of “Presidential Travel: Policy and Costs.”

Further, when a presidential trip includes both political and official appearances, the White House is permitted to prorate the reimbursable costs.

However,

As President Obama embarks Thursday on a three-day Democratic fundraising trip to California, the White House again refuses an umpteenth request from CBS News for the political travel information.

[R]epeated requests are turned down for a breakdown of the costs and an explanation and specific examples of how the White House calculates how much is paid by taxpayers and how much must be reimbursed to the government by the Democratic National Committee or others.

The Obama White House justification? They insist that prior administrations also have refused such disclosures.

There’s that Democrat morality with which we’re all so familiar: the rightness or wrongness of a thing isn’t inherent in the thing; it’s entirely in whether someone else did first, or is doing it also.

Crony Capitalism and Big Government

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California’s health insurance exchange has awarded $184 million in contracts without the competitive bidding and oversight that is standard practice across state government, including deals that sent millions of dollars to a firm whose employees have long-standing ties to the agency’s executive director.

Several of those contracts worth a total of $4.2 million went to a consulting firm, The Tori Group, whose founder has strong professional ties to agency Executive Director Peter Lee, while others were awarded to a subsidiary of a health care company he once headed.

It isn’t just state government, though, nor is this problem limited to government-run medical “care.” Think, also, Solyndra and A123, Tesla in Nevada, “green” energy subsidies, Dodd-Frank and too big to fail, farm subsidies, loan guarantees for big corporations like Boeing and GE (roughly $6 billion between them, via the Ex-Im Bank), even the Senate barbershop (!).

If our government weren’t so big, so taxing, so spending; if we turned the rascals out more often in our biennial elections, our government wouldn’t have the wherewithal with which to engage in crony capitalism, and we citizens could get back to capitalist capitalism and general prosperity.