Tag Archives: spending

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.

Raise Those Taxes

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Progressive-Democrat-run States are looking at ways to cover putative budgetary shortfalls.

  • Minnesota State Representative Aisha Gomez, a Democrat…sponsored legislation that would implement a higher tax rate for joint filers in Minnesota making over $1 million a year if federal Medicaid cuts take effect
  • Connecticut legislators have proposed a bill that would raise income-tax rates on couples making at least $500,000 and individuals making at least $250,000
  • Washington Governor Bob Ferguson, a Democrat, in May signed into law a budget that includes an increase in the capital-gains tax, among other things
  • Maryland Governor Wes Moore, a Democrat, in May signed into law his tax proposal, which includes higher income-tax rates for state residents making more than $500,000 a year
  • Rhode Island in June imposed a new tax on certain vacation homes valued at $1 million or more

And this:

Many states face projected budget deficits after increasing spending and cutting taxes in the flush postpandemic years….

Notice that. Profligate spending leads to revenue shortfalls, so—raise those taxes, especially on the rich, who Owe Us. That’s akin to a business losing money, so it raises the prices it charges for its products.

Nowhere in there is any Progressive-Democrat-run State reallocating its spending to stay within existing revenues, much less cutting spending to do so.

I repeat a long-standing challenge of mine: can any Progressive-Democratic Party politician even say the words, “Cut spending?”

Universal Basic Income

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The Leftist dream of socialism won’t die, and neither will the Leftist dream of free money, which they masquerade as universal basic income, the steady handout of taxpayer money to everyone because—well, just because. The Left doesn’t care that handing out free money—one of the more extreme aspects of socialism—doesn’t work.

The Left simply doesn’t care about making lives better for Americans, only making their own lives better. Free money, this universal basic income, is just modern day bread and circuses offered in payment for votes so the Left can keep their Progressive-Democrat politicians in power, favoring them. They hope.

The editorial at the second link lays out a number of the ways that UBS fails us all.

Here’s another path to that failure. A UBS increases overall demand for goods and services beyond what producers can supply. This is textbook inflation. Eventually, production succeeds in getting supply increased to match that increased demand, and inflation abates. However, the higher price levels resulting from that bout of inflation remain in place, which means the handed-out money doesn’t have the buying power that it was represented as having: recipients can’t buy significantly more goods and services than they could before the handouts started due to that eroded dollar.

It gets worse. One of the areas of failure that the editorial pointed out was that recipients of free money took advantage of that largesse to work less. Since there is less work being done—this is a universal basic income handout, recall; all of us get it—it would take producers commensurately longer for production to catch up to demand. This would let that inflation run longer, elevating overall price levels even higher. That, in turn, would reduce the buying power of the handed-out money even further, leaving us recipients even less well off than before the handouts began, likely worse off in absolute terms.

Leftists and their politicians, of course, know this full well. They’re hoping us average Americans are too grindingly stupid to figure out that these folks are merely buying, and playing, us for their own power gains.