Tag Archives: spending

Another Idiotic Idea

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And another attempt to emulate the blatantly failing European model.  This one is backed by the AFL-CIO and the National Nurses United unions….

With that union backing, the Democrats (led by Congressman Peter Defazio (D, OR) in the House and Senator Tom Harkin (D, IA)), are pushing a bill that would impose a .03 cent tax on all financial trades.  Defazio says,

It would benefit long-term investors with stability

but

It’s “tiny,” and it would cost the “average investor” just $1 per year.  Let me see if I understand the logic of this.  It’s too small to matter to the little guy (and since it’s not a progressive tax, it’s even more trivial for the big players) but it’ll influence everyone to move toward trading market stability.

Then Defazio added this:

[I]t will still generate about $35 billion a year in income—income that could be used to rebuild the real economy, infrastructure, other investments.  Or money that could be used to help defray our deficit.

Yeah, sure.  We saw how much the last several Progressive stimulus spending packages did for our “infrastructure” and all those shovel ready jobs that President Obama yucked it up about not actually being shovel ready.  On top of which, when was the last time either party used tax money to reduce a budget deficit, rather than as seed money with which to leverage even more spending?

And this:  Bill Gates and George Soros are cited as backing this…idea…as a fine way to “painlessly” raise “a lot of money without affecting growth.”  There’s that false premise, again, this idea that the government needs more money.

RINO Behavior

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The Wall Street Journal ran a piece on the latest collapse of RINO stalwart-ism, this time under the guise of a bipartisan Highway Spending Bill.  This expenditure of $120 billion of what we used to call, in our cute naivety, our money passed the House 373-52 and the Senate 74-19.  You can do the math and see how many RINOs supported this, and you can read below (or at the link) the depth of the collapse of the RINOs.

For decades, a transportation trust fund financed with an 18.4¢ per gallon federal gasoline tax had covered the costs of our highways.  But in one of those unforeseen consequences, improved mileage in our cars means less gasoline bought, so the monies from that tax no longer are sufficient.  As a result, Congress is funding the present Bill with money taken from the general treasury—the one that’s already $1.2 trillion in the hole.

Republicans had been holding out for some real trades to get those general treasury dollars transferred:

  • more state flexibility over how road money is spent,
  • eliminating some of the $6 billion for white elephant transit projects,
  • streamlining environmental laws that make building roads very expensive,
  • expanding oil and gas drilling on federal lands,
  • green lighting the Keystone XL pipeline.

However.

RINOs stood meekly by and watched Senate Majority Leader Harry Reid (D, UT) blithely strip all of that out of the bill.  Including all those jobs for the pipeline.  Not RINOs at all—eunuchs.

Showing his utter contempt—and a well-deserved contempt it is—for the other party, Reid put in 10 years’ worth of revenues (that’s taxes) and spending cuts to pay for this 2-year Bill.  Never mind these…congressmen’s…objections to the “gladly pay on Tuesday for a hamburger today” trickery that was used to “pay for” Obamacare.  They had no hope of winning that argument, so it was safe to talk tough then and look good in the shower.

On this bill, the Republicans had an excellent chance of winning the argument, but the shower water suddenly turned cold.

One of those “spending cuts” with which Reid sneered at the Republicans of both houses: almost $9 billion of budget “offsets” for this Bill will come from the wholly irrelevant—and vaporous—mechanism of allowing corporations to contribute less over the next several years to their own defined-benefit pensions.  The WSJ explained this “savings and offset” this way:

Companies under this deal would pay slightly higher insurance premiums to the federal Pension Benefit Guaranty Corporation.  Technically this lowers the budget deficit, because employer payments to pensions are tax deductible.  By reducing those payments [at the expense of those premiums], corporations report more taxable income and Uncle Sam magically collects more money.

The Democrats aren’t the only ones who need to be fired this fall.

A Misunderstanding about (Government) Stimulus

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Dr Alan Blinder, in a recent op-ed in The Wall Street Journal, notes that

A debate now rages in Europe over whether fiscal austerity—that is, higher taxes and less spending—helps or hinders growth.  That’s progress of sorts.

He’s right as far as he goes, but then he goes on.

[A] similar debate rages here in the US—with the lone exception that our pro-austerity crowd abhors tax increases.

Here are the beginnings of Binder’s misunderstanding.  I don’t know of a pro-austerity crowd anywhere in the US, at least among Republicans and Tea Partiers.  These folks are plainly pro-growth, and that clearly demands less government spending—and lower taxes.  Contrary to Progressives’ beliefs, it isn’t the government’s money, and the government doesn’t need as much of it as it tries to claim from us in taxes.

…help state and local governments maintain their spending, which has now dropped 6.4% since its 2008 peak[.]

It doesn’t get any clearer than this.  Nor the Feds, nor the states, nor local governments need to “maintain their spending.”  All levels of government need to reduce spending and quit competing with the private sector for goods and services, quit buying for the private sector the goods and services it can—and should—buy for itself.  It’s through private sector economic activity that comes growth, and jobs, which fuel growth.  All government spending can do is substitute for private sector spending—at the expense of taking money out of the private sector to pay for that spending, either in taxes today or taxes tomorrow.

Many Democrats also want to build and repair more roads, bridges, tunnels and the like….  Most Republicans reject that idea, too….

This is just a cynical distortion of the Republicans’ position, and it’s disappointing to see in someone who’s supposed to be a reasonably objective academic.  The need to work on our physical infrastructure is  bipartisanly recognized.  What the Progressives’ programs do, though, and what the Republicans object to, is simply transfer funds to Progressive-favored state and local governments and to union allies.  Honest funding support, that will help—help, mind you, not cover entirely—with actual work, and which funding is itself covered by spending cuts elsewhere, will find Republican support.  Look, for instance, to the 20+ jobs bills the Republican House has passed and that are languishing in the Senate because Blinder’s Democrats won’t even permit them to be debated, much less come to a vote.

He does have some specific ideas:

  •  Budget policy. For openers, as I advocated in these pages last month, we need a two-pronged fiscal package.  In the near term, we need modest stimulus, focused tightly on creating jobs.  But that stimulus should be paired with a vastly larger dose of long-run deficit reduction—perhaps 10 to 20 times as large as the stimulus—over the 10-year budget window.

Economically, this can be done; it’s not even that hard. But if Republicans continue to reject even deals comprised of $10 of spending cuts for each $1 of tax increases, it’s hard to see how we get there politically.

I debunked this here.

  •  Private investment. Republicans are right that business investment is the key to growth. Fortunately, business investment has done very nicely, thank you, despite the sluggish economy—growing 8.4% over the past year and at an annual rate of 10.8% over the past two years.  (The corresponding growth rates for GDP were about 2%.)  So while there’s always room for improvement, business investment is not part of the problem.  The best thing policy can do for private investment is to get the overall economy growing faster.

Indeed.  And the best policy for achieving that is reduced government spending competition with the private sector, lower taxes, and reduced regulatory burden—which has exploded under the present administration.  The EPA’s rules are especially onerous, irrelevant to the economy, and job-destroying.  HHS’ regulations also attack private sector job growth, as well as such minor things as constitutionally protected religious freedom.

  •  Public investment. Unlike private investment, inadequate public investment is part of the problem.  America’s infrastructure needs are so huge, and so painfully obvious, that it’s mind-boggling we’re not investing more.  The U.S. government can now borrow for five years at about 0.75% and for 10 years at about 1.7%.  Both rates are far below expected inflation, making real interest rates sharply negative.  Yet legions of skilled construction workers remain unemployed while we drive our cars over pothole-laden roads and creaky bridges.  Does this make sense?

Public “investment” is, indeed, part of the problem.  “There’s a sale on! Let’s go buy!  Think how much we can save at these prices!”  Think how much more we can save, if we don’t buy at all.  The existence of a sale, whether it’s in a lower price for a good or a lower price for borrowing, is no excuse at all for spending—or borrowing.  Spending and borrowing must have a legitimate purpose, not merely be “cheap.”  All those nickels borrowed today add up to lots of dollars owed—and so taxed for—tomorrow.

Moreover, this administration poured nearly $1 trillion into stimulus—including no small part of infrastructure maintenance buildout and maintenance—in 2009, and it’s been pouring out more since, in the form of loan guarantees, among other routes, for “green” energy infrastructure, among other things.  What have we gotten for all that “investment?” Transfers to unions, transfers to states for their own payoffs, bankrupt “green” energy companies, but no actual infrastructure maintenance buildout or maintenance.  Does this make sense?

  •  Education. Everyone knows that the returns to education, while large, are long delayed.  That means we have no time to waste.  We should be doing a much better job of building a better educated, more productive work force for the future.  A Council on Foreign Relations task force co-chaired by former Secretary of State Condoleezza Rice and former New York City Schools Chancellor Joel Klein recently argued that better K-12 education is critical to American leadership in the world and therefore to our national security.

Indeed, again.  Government needs to stop driving up the cost of education by subsidizing it.  We as a society need to stop stigmatizing those who lack a college degree.  College is not for everyone.  Nor do those in the trades need a college degree; they need a decent VoTech source of education and training—the sort of thing we used to get in our high schools all those years ago, and that could be improved upon by our community colleges—many of which do fill this bill.

Why in the world are we still arguing about this?

Because the Democrats and their Do-Nothing Senate, and the President, are in the way.  If it’s Republican, it’s to be ignored.  It’s all Bush’s fault.  It’s racist.  Pick a Progressive excuse.

Which candidate does that remind you of?

In terms of not understanding the distinction between economic growth and government growth?  That’s pretty clear.

Food Stamps and Poverty

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John Hinderaker, at Power Line, notes that the Progressives in the Senate have voted down even a modest (some might say trivial) reduction in Federal spending on food stamps—using your tax money.  (Note, by the way, that 100% of the spending on food stamps is by the Feds; no state spends one red cent of state monies on these.)  The offered reductions were in the form of three  amendments, two put forward by Jeff Sessions (R, AL):

  • establish a federal asset test to ensure that food stamps aren’t going to families that may not have an income but have tens of thousands of dollars in savings or may even live in a million-dollar home
  • prevent states from waiving federal eligibility requirements for the program
  • eliminate the bonuses that the federal government now pays to states that deliberately swell the ranks of food stamp recipients.

The spending mandated by the Farm Bill to which these amendments were to be attached is shockingly weighted, as this graph shows: There are a couple of other aspects of this Progressive demand to spend your money on their food stamps.  Forty-six million Americans currently live below the poverty line as a result of President Obama’s failed economic and social welfare policies.  Thirty-nine states have no limits at all on the fiscal well-being of a family in determining that family’s eligibility for food stamps—anyone who applies qualifies—and twenty-eight states have limits that are more than 130% above the Federal Poverty Guideline (which differs in a trivial way from the Federal Poverty Threshold that the Census Bureau uses to determine the number of Americans living in poverty).

Of those 39 states (the full list can be seen in Table 1 of the Congressional Research Service’s “The Supplemental Nutrition Assistance Program: Categorical Eligibility“), California, Illinois, and New York alone account for 70.5 million Americans.

Under Federal law, which the Progressives have refused to alter in any meaningful way, vastly more Americans are eligible for food stamps than are actually living in poverty.  Food stamps no longer are a program to help the needy; they’re a program to get and keep Americans dependent on a Progressive-run government for their welfare.  They’re a Progressive Incumbency Welfare program.

More on the EU Crisis

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The Wall Street Journal asks whether, with the EU and the euro zone falling deeper into their pit, Germany will act.

Germany, the only euro-zone nation with the economic heft to do so, has done the minimum necessary to keep vulnerable countries afloat…

they say, and

[T]he German government must decide whether saving the euro is worth putting the country’s own prosperity at risk.

But Germany has been acting, and for the most part quite appropriately—that “minimum” being too much intervention.

No one can save us from ourselves, or the Greeks from themselves.  We—and the Greeks—are the only ones who can do this.  Indeed, “salvation” imposed from outside can only make the inevitable conflagration that much worse.  It does so, in part, by not allowing the natural forces, of a free market in this case, to clear away the dead brush as it accumulates, so that when an otherwise lesser recession succeeds in igniting that inflammable detritus in several areas, they all explode into an out of control disaster—the current EU debt crisis.

The imposed “salvation” also acts, in part, to create a moral hazard that anaesthetizes its victims against the pain of acting on one’s own obligations and suffering the consequences of choosing unwisely or unfortunately (and those of choosing wisely or fortunately) without eliminating the critical need.  And this results, in the other nations “needing” the same bailout, which series threatens to bankrupt the benefactors as well as the beneficiaries.  The beneficiaries of this “aid” will be bankrupted by it; have no doubt of this.  The recipients of the loans being forced can never hope to repay them, and this can only cost the taxpayers of the lending nations—taxpayers who have the wherewithal explicitly because they, and their nations, have been acting responsibility.

Germany, which the rest of Europe and especially the Greeks, sees as their piggy bank, recognizes this risk, at least sub rosa, as demonstrated by their reluctance to fork over the cash.  It’s time for the rest of Europe to man up, also.

As the WSJ notes,

At a conference in Brussels last week, Thomas Steffen, state secretary at the German finance ministry, responded to criticism that Germany had been too slow to help its neighbors by making reference to the fable of the ant and the grasshopper.  The ant, he noted, works through the summer to store up food for the winter while the grasshopper wastes the warm months singing.

Some in the audience took the analogy as a call on southern Europe to take their fate into their own hands.

Mr. Steffen didn’t tell audience members how the fable ends: When winter comes, the starving grasshopper begs the ant for food. Rebuking the grasshopper for his idleness, the ant turns his back and crawls away.

Those in the audience took the analogy correctly—knowing the outcome of the fable.  It’s time for the Greeces of the EU, in particular, take their fate into their own hands; it’s late summer, and the fall approaches.

The growth policies they need to emplace must not be the currently proposed—or forced from outside—policies of government growth through higher taxes (if with proclaimed spending cuts).  Rather, the growth policies must be policies of shrinking governments, greatly reduced government spending, and greatly reduced taxes.  And in the cases of some countries, actually collecting those taxes that are levied.  The social practice of not paying the taxes is a social practice of stealing from one’s neighbors.  If the tax is disliked so much, then the people of that polity must elect a government that will rescind that tax.