Yearly Archives: 2011

Surprising facts about America’s poor

September 16, 2011 – 9:54 am

Surprising facts about America’s poor

Here are some interesting facts:

Mike Brownfield

September 13, 2011 at 11:00 am

In his address to the joint session of Congress last week, President Barack Obama called for $477 billion in new federal spending, which he said would give hundreds of thousands of disadvantaged young people hope and dignity while giving their low-income parents “ladders out of poverty.” And today, the U.S. Census released its annual poverty report, which declared that 46.2 million persons, or roughly one in seven Americans, were poor in 2010. What President Obama didn’t tell America as he was pleading for more spending–and what the Census Bureau didn’t report–is what it really means to be poor in America.

In a new report, Heritage’s Robert Rector and Rachel Sheffield lay out what the U.S. government’s own facts and figures really say about poverty in the United States. The results might surprise you, especially if your view of poverty is the conventional one, perpetuated by the media–namely, destitute conditions of homelessness and hunger. In reality, though, the living conditions of those defined as poor by the government are much different than that popular image. The following are facts about persons defined as “poor” by the Census Bureau:

  • 80 percent of poor households have air conditioning
  • Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks
  • Nearly two-thirds have cable or satellite television
  • Two-thirds have at least one DVD player and 70 percent have a VCR
  • Half have a personal computer, and one in seven have two or more computers
  • More than half of poor families with children have a video game system, such as an Xbox or PlayStation
  • 43 percent have Internet access
  • One-third have a wide-screen plasma or LCD television
  • One-fourth have a digital video recorder system, such as a TiVo

As for hunger and homelessness, Rector and Sheffield point to 2009 statistics from the U.S. Department of Agriculture showing that 96 percent of poor parents stated that their children were never hungry at any time during the year because they could not afford food, 83 percent of poor families reported having enough food to eat, and over the course of a year, only 4 percent of poor persons become temporarily homeless, with 42 percent of poor households actually owning their own homes. Want an international comparison? The average poor American has more living space than the average Swede or German. You can read even more of those facts in their report, “Understanding Poverty in the United States.”

None of this is to say that the poor have it easy. Sadly, one in 25 will become temporarily homeless during the year, and one in five poor adults will experience temporary food shortages and hunger at some point in a year. But exaggerating the conditions of poverty does not do America any good, as Rector and Sheffield explain:

The poor man who has lost his home or suffers intermittent hunger will find no consolation in the fact that his condition occurs infrequently in American society. His hardships are real and should be an important concern to policymakers. Nonetheless, anti-poverty policy needs to be based on accurate information. Gross exaggeration of the extent and severity of hardships in America will not benefit society, the taxpayers, or the poor.

Those exaggerations about the symptoms of poverty don’t solve the root causes of the problem, either. As Rector and Sheffield write, “Among families with children, the collapse of marriage and the erosion of work ethic are the principal long-term causes of poverty.” In order to truly benefit the poor, they say, welfare policy must require able-bodied recipients to work or prepare for work as a condition of receiving aid. And it should strengthen marriage in low-income communities, rather than ignore and penalize it.

Poverty is a serious problem that requires serious solutions. But policymakers and the public need accurate information about what poverty in the United States really means. Only then can they implement the right policies to help those Americans who are truly in need.

By Everette Hatcher III | Posted in Current Events | Tagged , , , , | Comments (0)

President Obama’s job speech reacted to by Heritage Foundation scholars (Part 5)

September 16, 2011 – 9:52 am

President Obama’s job speech reacted to by Heritage Foundation scholars (Part 5)

I love going to the Heritage Foundation website because of articles like this:

Heritage’s experts watched President Barack Obama’s jobs speech delivered to a joint session of Congress. Here are some of their immediate reactions:

Obama Calls for Tax Hikes on Job Creators – In Jobs Speech

It was expected that President Obama would rehash and recycle a litany of policies that have no hope of stimulating job creation in his big speech tonight. What comes as a surprise is that he called for offsetting the costs of his sure-to-be-ineffective policies with tax hikes. On job creators.

The President has said himself that tax hikes slow economic growth and deter job creation. That was the justification he gave in December for extending the Bush tax cuts through 2012. It seems he has forgotten what he himself said less than a year ago.

The President called for raising taxes on investors, businesses, and entrepreneurs in his speech. These are the job creators he so desperately needs to help revive the economy. Raising their taxes will reduce the already limited incentives they have to invest and add new workers right now.

This is akin to bailing water into an already-sinking ship.

If Congress foolishly passed the President’s ill-advised plan the tax hikes would be permanent and the jobs policies permanent. The American people would get a permanently enlarged federal government for temporary jobs policies that won’t create any jobs.

Uncertainty is the major factor causing businesses to hold back on new investment and refrain from adding workers. One of the biggest sources of that uncertainty is the President’s never-ending crusade to raise taxes. As long as their taxes might go up, job creators will be hesitant to add new workers.

If the President stopped incessantly demanding higher levies it would relieve some of the uncertainty. That alone won’t cure all that ails the economy, but it would be a big help.

C’mon Mr. President, surprise us in your next major speech by not calling for tax hikes.

– Curtis Dubay

Unsurprisingly, Obama Ignores Energy Exploration as a Solution

Increasing energy supply should have been a no-brainer for President Obama.  It’s a policy that can lower energy prices, create jobs and generate hundreds of billions in revenue from more royalties, leases, and rent.   And it’s a massive revenue raiser that occurs without raising taxes. Instead, the president used the opportunity to take a jab at oil companies and the “tax loopholes” they receive.

To be clear, what the President and anti-oil crusaders label a tax loophole is not tax treatment specific to the oil and gas industry. These are broad tax policies that apply to many industries.

The reality is the economy is weak and steep energy prices will hurt the economic recovery.  Despite the fact that oil settled at $89 per barrel, gas prices remain high and the economic pain as a result of higher gas prices spreads far beyond the pump. Higher energy prices also drive up production costs, which must be reflected in product prices, especially for goods reliant on transportation. Since higher prices reduce quantities sold, producers produce less. In turn, this drives wages down and incomes decline.

At least the people of Louisiana have the Saints to watch, because they don’t have jobs. Despite the fact that the administration lifted the official moratorium on deepwater drilling, the molasses-like permitting process is impeding the Gulf’s economic recovery; 20 rigs are in jeopardy of leaving the Gulf.

But it’s not just the Gulf that would benefit from allowing access for energy exploration and creating an efficient regulatory process that allows energy projects to move forward in a timely manner.  Colorado, Montana, New Mexico, North Dakota, Utah, and Wyoming have all suffered from a slower permitting process would see tremendous economic benefits if companies could explore and drill in a more timely manner.  Alaska has 19 billion barrels of oil of its coasts and another 10.4 billion in the Arctic National Wildlife Refuge (ANWR).  Increased proven natural gas reserves increased states like Pennsylvania, New York, Texas, Oklahoma, Arkansas and Louisiana has increased regional interest.

Increasing access to oil and natural gas reserves in the United States both onshore and offshore, would help offset rising demand, increase jobs and revenue, and provide the real economic boost our country needs rather than more the same tried-and-failed government spending programs.

– Nicolas Loris

By Everette Hatcher III | Posted in President Obama, spending out of control | Tagged , , , , | Comments (0)

Social Security is a Ponzi scheme (Part 2)

September 16, 2011 – 9:48 am

Social Security is a Ponzi scheme (Part 2)

John Stossel – Government’s Ponzi Scheme

Uploaded by on Apr 21, 2010

A look at the Social Security system. By contrast, Bernie Madoff seems like a shoplifter. http://www.LibertyPen.com

Uploaded by on Jan 8, 2009

Professor Williams explains what’s ahead for Social Security

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Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. This is a series of articles that look at this issue.

Personal Accounts and the Savings Rate

by Timothy B. Lee

This article appeared on Forbes.com on September 11, 2011.

Rick Perry’s recent comparison of Social Security to a Ponzi scheme has resurrected the long-running debate over the solvency of Social Security. Many libertarians and conservatives advocate shifting from the current pay-as-you-go system — in which taxes on today’s workers finance the Social Security checks of today’s retirees — to a system of personal accounts in which each worker’s retirement funds are set aside for his own retirement. One of the key arguments for such a system is that the stock market’s historically high returns would allow the average worker to retire with more money in his pocket than the meager returns the Social Security system now promises (and projections suggest the system may not even deliver on those promises).

The underlying reason this works is that the money in personal accounts would be invested in private sector businesses, which would use them to create new wealth. In contrast, Social Security taxes are used to finance current government spending. But in a blog post last month, Karl Smith argued that the two situations are more similar than they seem:

I think that sometimes lay people get confused and think that a private retirement system implies that people will only be paying in and thus adding to the capital stock. They forget that on the opposite end people will be extracting and thus depleting the capital stock.

Timothy B. Lee is an adjunct scholar at the Cato Institute. He covers tech policy for Ars Technica and blogs at Forbes.com.

More by Timothy B. Lee

The “investment bonus” is only the time between when the money goes in and when it comes out. I wish I could go into more detail, but you actually get the exact same effect from a Social Security trust fund. Less borrowing by the government — and hence a higher capital stock — when money is going in. More borrowing by the government — and hence a lower capital stock — when money is going out.

To unpack this a bit, the Social Security administration was (until last year) taking in tens of billions of dollars more from payroll taxes than it is sending out in Social Security checks. The difference was lent to the Treasury Department to finance other government programs.

Smith’s point is that if the SSA weren’t running a surplus, then the Treasury Department would have had to go to borrow that money from private bond markets instead, which would have meant less money being invested in private-sector wealth creation. Hence, switching to private accounts doesn’t actually increase the amount of money being invested in the private sector, and hence doesn’t produce any new wealth that can be used to pay future retirees.

In theory, this argument makes sense. But it has a couple of practical problems. First, it assumes that a dollar invested in stocks should have the same wealth-creating effect as a dollar invested in bonds. It’s not obvious that this is true. Stocks have historically generated a higher rate of return than bonds, after all, and it’s not crazy to think this reflects the fact that equity investments generate more wealth per dollar than debt investments.

But the more serious problem with the argument is that it implicitly holds other taxes and government spending constant. That is, it assumes that when the SSA lends a dollar to the Treasury, the result is one less dollar of private-sector borrowing rather than one more dollar of government spending or one more dollar of tax cuts.

But this isn’t a reasonable assumption at all. Consider the late 1990s, the only period in my lifetime the federal government has run a surplus. Bill Clinton began bragging that he’d balanced the budget toward the end of fiscal year 1998. And in that year, the federal governmentdid run a slight surplus of $70 billion dollars. But this surplus is the result of adding a $30 billion “on budget” deficit to Social Security’s $100 billion surplus. If Social Security is ignored, the government didn’t reach a surplus until 1999.

If the US had a system of personal accounts in the 1990s, then elected officials couldn’t have plausibly counted the accumulation of funds in peoples’ accounts as part of a federal budget surplus. And so the deficit would have looked worse than it did. It’s impossible to know how that would have affected the budget debates of the 1990s, but it seems reasonable to assume that politicians would have enacted deeper spending cuts and/or larger tax increases to close what was perceived as a substantially larger deficit.

In other words, one way to think about personal accounts is as a mechanism for Congress to exert self-discipline. As long as Social Security surpluses are saved in a single giant lockbox managed by the government, politicians are going to face irresistable temptations to raid it to finance other programs. It’s simply not credible to think the federal government can “save” money by lending it to itself.

Splitting the lockbox up into millions of individual accounts with peoples’ names on them makes that harder to do, because people are going to be much more sensitive about the government pretending the money in their personal accounts really belongs to the government.

And this means that personal accounts are likely to increase the savings rate. Not because Smith’s technical point is wrong, but because switching to personal accounts changes the political dynamics of the budget process. Without the ability to hide deficits behind Social Security surpluses, politicians in the coming decades would face greater pressure to cut spending and/or raise taxes in order to produce budgets that are actually balanced.

By Everette Hatcher III | Posted in Social Security | Tagged , , , , | Comments (0)

Obama wants to raise taxes on job creators

September 16, 2011 – 7:42 am

Uploaded by on Aug 6, 2010

Cenk Uygur (host of The Young Turks) filling in for Chris Jansing on MSNBC talks to Dan Mitchell of the Cato institute to compare Reaganomics to Obamanomics.

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What should we do when we are caught in a slow economy? What did Reagan do in 1981? He lowered taxes to stimulate the economy. However, President Obama wants to raise taxes.

Obama’s Jobs Plan: Permanent Tax Hikes on Job Creators

By Curtis Dubay
September 15, 2011

When President Obama unveiled his much-hyped American Jobs Act to a joint session of Congress last week, he promised that the increased spending and temporary tax cuts the plan entails would be fully “paid for.” He did not specify in that speech the details of how he would offset the costs of his plan other than he would charge the “super committee” with this responsibility.

This week, he released his own proposals to pay for the plan. To no one’s surprise, the plan would offset the costs of its jobs policies solely with tax hikes and not one penny of spending reductions.

The tax increases the President proposes are the same old hodgepodge of tax hikes he has proposed often since taking office, and they have been rejected by Democratic and Republican Congresses alike each time he’s pushed for them. In the end, the tax hikes would be permanent while the jobs policies temporary; thus, the proposal is really a tax hike plan rather than a jobs plan.

Tax Hike on Job Creators

Almost all of the $447 billion in increased revenue called for by President Obama would come from raising taxes on job creators,[1] the same job creators whom President Obama wants to hire more workers to reduce the unemployment rate.

The plan would raise taxes on job creators by capping the deductions that families and businesses earning more than $250,000 a year could claim. It would reduce the deductions of these families and businesses to the amount they could claim had they only earned enough to qualify for the 28 percent tax bracket instead of the higher tax brackets (33 percent and 35 percent) they face now.

For example, under the current tax code, $100,000 of deductions for a family that pays the 35 percent rate reduces its tax bill by $35,000. Under the plan’s tax hike, this family’s deductions could only reduce its tax bill by $28,000, or what it would have been under the 28 percent rate. The tax hike would be bigger as the family’s deductions increase.

This tax hike would be on top of the 3.8 percent surtax on investment income (passed as part of Obamacare) that these same families and businesses will pay beginning in 2013 and the higher marginal income tax rates they will pay if President Obama gets his way and the Bush tax cuts expire at the end of 2012. If marginal income tax rates rise, the tax increase from limiting deductions would increase as well.

The families that would pay these higher taxes are the investors that the economy needs to provide capital to businesses and entrepreneurs so they can expand and start new operations that would employ new workers. A recent study from President Obama’s own Treasury Department shows that 90 percent of businesses that pay their taxes through the individual income tax code and employ workers would pay the higher taxes under the President’s plan.[2]

This tax hike would negate any benefits of the President’s jobs policies. Capping deductions as President Obama’s plan does would raise the marginal effective tax rate of these important job creators and therefore reduce their incentives to invest and take on new risk—permanently. Less investment and less risk-taking means fewer new jobs created.

Since it is likely President Obama’s job proposals would create few, if any permanent, positions, taken together with the tax hike on job creators, his plan would likely reduce employment in the long term.[3]

Industry Specific Tax Hikes

The rest of the tax hikes in President Obama’s plan specifically target the oil industry and jet manufacturers. He would mostly raise their taxes by limiting their ability to “expense” (or deduct at the time of acquisition) their purchases of capital equipment.

The President’s desire to strip these targeted industries of the ability to deduct their capital purchases faster than current depreciation schedules allow is at odds with his own position on expensing. The President insisted that the 2010 tax deal to extend the Bush tax cuts include 100 percent expensing for all capital purchases for all businesses for one year. This latest jobs bill—which oil and jet tax hikes are supposed to help pay for—includes an extension of that expensing policy.

More troubling is the President’s apparent lack of understanding of the actual impact that his policies would have. He frames the jet tax hike as a hike on the owners of corporate jets, but the burden of his policy would fall on the workers that manufacture the jets. The tax hike would raise the cost of jets, which would reduce the demand for them. Reduced demand would ultimately result in fewer jobs for the blue-collar workers who manufacture the planes.

This is not just theory. In 1990, a 10 percent tax on luxury yachts went into effect. Congress passed the measure assuming that the rich buyers of yachts would pay the burden. But when the price of yachts rose, orders dried up and the yacht-building industry dried up as well. As The New York Times chronicled then, it was the blue-collar workers who lost their jobs and ended up bearing the pain of the tax.[4] The situation was dire enough that Congress repealed the devastating tax in 1993.

Stop Digging

In the Administration’s poorly crafted and contradictory jobs package, the American people get permanent tax hikes that would enlarge the federal government to offset the cost of temporary jobs policies that would not create any jobs. In the long run, the tax hikes in this plan are more likely to destroy more jobs than the jobs policies create.

Unfortunately, President Obama will not consider policies that would actually create jobs by reducing the high level of uncertainty that persists in the economy today. This would include doing things such as:

  • Fundamental revenue-neutral tax reform that repairs the tax base and lowers marginal tax rates to improve the incentives for income production;
  • Reducing the crushing amount of regulations coming from various federal government agencies;
  • Repealing Obamacare and its onerous regulations and taxes;
  • Repealing the Dodd–Frank financial reform legislation; and
  • Stopping incessant calls for higher taxes.

American workers do not need policies that will further inhibit job creation and dig deeper the already-deep jobs hole that the President’s policies have created.

Curtis S. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

By Everette Hatcher III | Posted in Cato Institute, President Obama, Ronald Reagan, Taxes | Tagged , , , , | Comments (0)

Crystal Bridges Museum of American Art opens on 11-11-11

September 16, 2011 – 6:52 am
 

Around 4 years ago I was in Philadelphia and the local radio station had a talk show that was blasting Alice Walton for coming into town and buying  the 1876 Thomas Eakins’ masterpiece “The Gross Clinic” which was hanging at the  Jefferson Medical College. However, the people of Philadelphia were given 45 days to match the 68 million dollar price and they did. So the painting stayed in town.  Walton did not leave town empty handed though. She purchased a smaller Eakins’ masterpiece depicting Dr. Benjamin Rand for $20 million.

The Arkansas Times Blog’s article on the Alice Walton project is below:

Taylor Swift, hot; “Ring of Fire” at the renovated Arkansas Rep, great; “Judgment at Nuremberg” at the Weekend Theater, moving. But the biggest art event in Arkansas this fall has nothing to do with the performing arts: It’s the opening of Crystal Bridges Museum of American Art, Alice Walton and family’s billion-dollar investment in Bentonville.

Even if portraits of George Washington by Gilbert Stuart and Charles Willson Peale don’t make your heart beat faster or bring you to tears, they are part of American history and treasured works of art. And the sweep and beauty of Asher Durand’s “Kindred Spirits” just might make you sob a bit (folks in New York have definitely wept bitter tears over their masterpiece going to Arkansas, Alice Walton having outbid, at $35 million, the Metropolitan Museum of Art for the painting).

The museum won’t be all portraits of significant figures in history, but a broad look at the history of American art, from rare 17th century portraits to the Hudson River School, early 20th century art to contemporary installation pieces. So there will be plenty to see at Crystal Bridges when it opens Nov. 11, 2011, or 11-11-11 (which happens to be Veterans Day) and for years to come. The museum puts Arkansas on the map.

The opening day celebration is sure to be accompanied by much as yet unpublicized but sure to happen hullaballoo. Having no facts, let’s suppose: One of the museum’s acquisitions is a Nick Cave “Soundsuit,” which is just as it sounds: A sculptural costume crafted to make sound when the wearer moves. Naturally, dancers have choreographed performances for the suits, and what better way to tie performance art and the CBMAA collection together than to have dancers in soundsuits swishing and swirling about the spring-fed ponds the museum bridges?

Alice Walton announced she would build the museum in 2006, then expected to be a three-year project. Her vision for the museum continued to grow, and she ditched the planned 1950s cut-off date to expand into contemporary work. The Moshe Safdie-designed complex began to grow too. A rectangle of connected buildings, tucked into a ravine that recalls “Kindred Spirits,” bank the reflecting pools fed by Crystal Springs. Six galleries showcase the art chronologically; one of the bridges contains the restaurant. A library holds manuscripts and other ephemera Walton has collected to support study of the collection, an amphitheater (nicknamed “the turtle” for its shape) will accommodate public gatherings, classrooms will be available for students and studios for artists. Of course, there will be a gift shop. More than three miles of trails crisscross the 120-acre site and they, too, are galleries of sorts, passing through Ozark uplands and wetlands, by cultural features, all dotted with sculpture.

So what’s on the walls? The museum has made periodic announcements of acquisitions, crumbs that Arkansas’s art lovers will follow to Bentonville. Paintings, drawings, sculpture. The work, bought at auction and privately, is by such American masters, besides those already mentioned, as John Singleton Copley, Thomas Eakins, Thomas Moran, Benjamin West, Winslow Homer, John Singer Sargent, Maxfield Parrish, George Wesley Bellows, Marsden Hartley, Norman Rockwell. Romare Bearden. Thomas Hart Benton. Jacob Lawrence. Andrew Wyeth. Ground-breaking modern artists Jackson Pollock, Arshile Gorky and Adolph Gottlieb. Pop artists Andy Warhol, Roy Lichtenstein, Marisol and Claes Oldenburg. Hyperrealist Chuck Close. Silhouette cutting artist Kara Walker. Contemporaries we won’t have to travel to the coasts to see: Sculptor Karen LaMonte. Installation artists Jenny Holzer and Devorah Sperber. Weird naturalists Walton Ford and Tom Uttech. Social commentator Kerry James Marshall. You get the picture.

Walton has collected work by Arkansas artists as well — Carroll Cloar, George Dombek, Pat Musick, Doug Stowe. If there’s not sculpture by Anita Huffington, I’d be surprised.

All of this is richly supported by the Walton Family Foundation, which announced a staggering $800 million contribution to the endowment last spring, the largest gift ever made to an American museum at one time (according to the Wall Street Journal) and a sum that puts the museum in the big leagues. (The Metropolitan Museum of Art has a billion-dollar endowment, but it’s been around awhile.) Northwest Arkansas businesses are making donations to the museum as well.

Admission to Crystal Bridges is free, thanks, the museum says, to a $20 million contribution by Walmart. Memberships (whose costs range from $35 for students to $5,000 for benefactors) bring certain perks, including free admission to special exhibits and store discounts. The first 3,000 to buy memberships were rewarded with invitations to preview the museum Nov. 9; the museum will be open around the clock to accommodate them. Museum hours are still to be determined.

By Everette Hatcher III | Posted in Current Events | Tagged , , , , , , | Comments (0)

Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 44)

September 16, 2011 – 12:30 am

Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 44)

This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.

Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the  debt limit “a sugar-coated satan sandwich.”

“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.

 
WASHINGTON, August 1, 2011 – Rep. Scott Garrett (R-NJ), Vice Chairman of the House Budget Committee and Chairman of the Budget and Spending Task Force for the Republican Study Committee (RSC), issued the following statement tonight after voting against the agreement to raise the debt ceiling:

“While a step in the right direction, this is hardly the resolution I was hoping to come out of this process.  The American people wanted to see us come up with an actual solution to address our deficit and debt crisis, not another ‘deal’ rushed through Congress at the last minute.  Aside from an insufficient amount of spending cuts and the threat of tax hikes on the American people, what is most unfortunate about this bill is the fact that it doesn’t address the exploding costs of our entitlement programs, which are by far the biggest threat to our credit rating.  

“Above all else, I am most disappointed in the lack of commitment on the part of negotiators to seeing that a balanced budget amendment was sent to the states for ratification.  No matter how much spending we cut, no matter how many blue ribbon commissions we form, a balanced budget amendment is the only solution that will resolve our long-term deficit and debt problem.  The American people expected more of us—it’s regrettable we put off the tough decisions once again.”
By Everette Hatcher III | Posted in spending out of control | Comments (0)

Milton Friedman Friday:(“Free to Choose” episode 4 – From Cradle to Grave, Part 2 of 7)

September 16, 2011 – 12:10 am

 I am currently going through his film series “Free to Choose” which is one the most powerful film series I have ever seen.

For the past 7 years Maureen Ramsey has had to buy food and clothes for her family out of a government handout. For the whole of that time, her husband, Steve, hasn’t had a job. Each week he collects what’s known in Britain as Social Security. The government looks after him, his wife and their children. But accepting welfare payments means accepting the rules of those who hand them out.
Mrs. Ramsey: My opinion, anyway you feel as they own you. You know, there is no other way of putting it. Say I got a job tomorrow, because I needed something, well I know that means I’ve got to go down there and report it. Because I couldn’t go into the job because you’d be looking over your shoulder thinking well the Social Security is coming in. And I’m going to be done for it. It’s just hopeless, you can’t fight against that.
Mr. Ramsey: The jobs are out there you only come up with about 45 pounds a week. And you need a doctors stamp over there. You see, you finish up with about 29 pound. So what good is it working? You still get the same thing, you know what I mean? I can’t make any sense of it.
Friedman: Of course, he’s quite right. It may not pay to get a job now. That’s not his fault and I don’t blame him. He’s acting sensibly and intelligently for his own interest and the interest of his family. It’s the fault of the system which takes away the incentive from him to get a job.
But suppose you were cruel and simply took away the welfare overnight. Cut it off. What would happen? He would find a job. What kind of a job? I don’t know. It might not be a very nice job. It might not be a very attractive job. But at some wage, at some level of pay, there will always be a job which he could get for himself. It might be also that he would be driven to rely on some private charity. He might have to get soup kitchen help or the equivalent. Again, I’m not saying that’s desirable or nice or a good thing it isn’t, but as a matter of actual fact as to what would happen, there is little doubt that he would find some way to earn a living.
The American government is trying to break the welfare trend. These people were unemployed. They are now being trained at the taxpayers expense. It may or may not lead to a real job.
Lawrence Davenport: Here we have a vast national welfare system which is diametrically opposed to everything that America believes in. Because America was founded on a work ethic, has practiced a work ethic, and it’s said this is what we want everybody to do. An opportunity to hold a job in America.
Friedman: Everyone here has to clock in and do a full days work. It’s an attempt to make it seem like a real job.
Lawrence Davenport: We’re saying a job is a part of the American way of life and we’re going to help you find a job. So that you can get a piece of the pie. You can pay taxes, you can become a part of that American dream.
Friedman: But the dream isn’t working. Schemes like this run under the government’s Comprehensive Education and Training Act (CETA) have a high drop out rate and many trainees end up back where they began, on welfare.
The men and women who administer CETA and similar programs, the officials of the Department of Health, Education and Welfare are dedicated people. Their motives are good. Their achievements are not.
The results of these programs have been disappointing. Why? I believe that the basic reason is because it is very hard to achieve good objectives through bad means. And the means we have been using are bad in two very different respects.
In the first place, all of these programs involve some people spending other people’s money for objectives that are determined by still a third group of people. Nobody spends somebody else’s money as carefully as he spends his own. Nobody has the same dedication to achieving somebody else’s objectives that he displays when he pursues his own.
Beyond this, the programs have a insidious effect on the moral fiber of both the people who administer the programs and the people who are supposedly benefiting from it. For the people who administer it, it instills in them a feeling of almost Godlike power. For the people who are supposedly benefiting it instills a feeling of childlike dependence. Their capacity for personal decision making atrophies. The result is that the programs involved are misuse of money, they do not achieve the objectives which it was their intention to achieve. But far more important than this, they tend to rot away the very fabric that holds a decent society together.
If you think that’s overstating the case, look what ATW found when it made a special investigation into the spending of the vast funds it administers.
Public Health Service worker: We just got the plan from the Public Health Service on reducing unnecessary beds.
Friedman: In these reels of tape that record every payment made, every recipient, they found evidence that a staggering $7.5 billion had been lost by fraud, waste and abuse in one year.
Doctors, building contractors, hospitals, schools, welfare recipients, everyone had been fraudulently dipping into the pot. And the investigation isn’t over yet.
The inevitable consequence of having a huge pot of taxpayers money is that all of us want to get our hands in it. You can be sure that we’ll all be able to find very good reasons why we should be the ones to spend somebody else’s money.
Somebody or other put up a good case for spending taxpayers money to subsidize rents in New York City, including the rents of these apartments. The people who occupy these apartments pay something like $200 a month less than the market rent. And that subsidy comes out of the taxes of people, most of whom are much poorer than the people who live here. It’s not unusual for this sort of thing to happen when government tries to do good with our money.
Look at what happened in Chicago. For most visitors, the immediate impression is of a rich, prosperous, bustling city. But like every large city in America, it has its problem areas. Over crowded slums breeding poverty and crime.
After WWII, one such area developed in Hyde Park. In the 50’s, plans were drawn up to pull down large areas of slum buildings and to rebuild using government funds under an urban renewal program. It was to be a show project replacing a blighted area with an integrated community. Who controlled the spending of that government money? It was in fact, my own University of Chicago which felt it’s very existence threatened by the spread of urban blight and crime. Government money was used to tear down an area that contained many small shops as well as families of low income. Once the area was cleared, private money rebuilt it with middle class apartments, townhouses and shopping complexes. The blight had been cleared here, but only to be shifted elsewhere.
Joe Gardner: In may instances, when government administers large grants, a lot of those funds don’t wind up directly serving the people and achieving the objectives that were the intent of the programs. Because the grant has too feed that large government bureaucracy.
By Everette Hatcher III | Posted in Milton Friedman | Comments (0)

Taking care of the taxpayer’s money?

September 15, 2011 – 10:15 pm

When I look at how the Obama administration has used the taxpayer’s money it makes me want to cry.

Solyndra: Another Energy Boondoggle

Posted by Tad DeHaven

The details surrounding the $535 million government loan to Solyndra – the now-bankrupt solar energy company that had been the green apple of the president’s eye – are still emerging. It remains to be seen whether or not the Obama administration broke any laws when it pushed the loan out the door despite obvious problems with the company’s finances.

At the very least, the administration is guilty of wasting taxpayer money. In that regard, it’s no different than all the other administrations that have tried to tinker with energy markets. When the dust settles, Solyndra will take its place alongside other infamous federal energy boondoggles, including the Synthetic Fuels Corporation, the Clinch River Breeder Reactor, and the Superconducting Super Collider. (All of these and more are discussed in a Cato essay on federal energy subsidies.)

Congressional Republicans are salivating over the prospects of a scandal involving a key initiative of the administration. But Republicans should be careful when casting stones given their past and present support for energy subsidies. (Note to investigative reporters: Republican [and Democratic] governors like to hand out subsidies to businesses, which often backfire on taxpayers. I’d know.)

As the political circus over the Solyndra loan unfolds, let’s not lose sight of the fact that the more important question is whether taxpayers should be forced to subsidize energy companies to begin with. The Cato essay argues that they shouldn’t:

The private sector is entirely capable of performing research into coal, nuclear, solar, and alternative energy sources for itself. Businesses will fund new technologies when there is a reasonable chance of commercial success, as they do in every other private industry. Federal subsidies may even be actively damaging to our energy future by steering markets in the wrong direction, away from the best long-term energy solutions…

Policymakers often make grandiose promises, such as proposing to make America ‘energy independent’ or to convert the nation to a ‘green economy.’ Those visions don’t make any sense, but even if they did history shows that the Department of Energy would be incapable of putting them into place with any degree of competence. Federal energy schemes are often poorly managed and generate huge cost overruns, or they aim at objectives that make little economic sense[.]

By Everette Hatcher III | Posted in Cato Institute, President Obama | Tagged , , , , | Comments (0)

President Obama’s job speech reacted to by Heritage Foundation scholars (Part 4)

September 15, 2011 – 7:09 am

President Obama’s job speech reacted to by Heritage Foundation scholars (Part 4)

Ernest Istook at the Saint Paul Tea Party Rally 4/16/2011 Part 1

Ernest Istook, US Congressman, Heritage Foundation, http://www.heritage.org, spoke at the Saint Paul Tea Party Rally 4/16/2011. Hosted by North Star Tea Party Patriots, and Sue Jeffers.

I love going to the Heritage Foundation website because of articles like this:

Heritage’s experts watched President Barack Obama’s jobs speech delivered to a joint session of Congress. Here are some of their immediate reactions:

President Calls for Ill-advised Federal School Construction

As expected, tonight President Obama called on taxpayers to send their hard-earned money to the federal government so that Washington can pour that money into public school construction. In an attempt to boost job growth, the president suggested spending billions on school infrastructure projects to “modernize 35,000 public schools.”

Since President Obama came into office, spending on public education has skyrocketed:

  • Education budget in 2008: $59.2 billion
  • Education budget in 2011: $69.9 billion
  • Department of Education “stimulus” award (Spring 2009): $98 billion
  • “Edujobs” public education bailout (Summer 2010): $10 billion

And state and local school construction spending has also seen significant increases.

By some estimates, inflation-adjusted school construction spending has increased 150 percent in the last two decades. And unfortunately, profligacy and waste are the norm. Remember the $500 million RFK high school in Los Angeles, built last year after a California bond referendum was enacted? There are certainly schools in ill-repair, but this maintenance should be a local concern. Washington should not be in the business of school window repair, updating facilities, or repainting buildings. Schools don’t need increased federal funding for school repairs; they need more flexibility with funding to be able to use dollars for needs they consider pressing.

The president’s proposal to funnel more taxpayer dollars into school construction has both constitutional and pragmatic problems. School construction has historically been – and should remain – the job of states and localities. Federal forays into school construction have been rare and indirect. Federally-funded school construction is also a terribly expensive way to build schools: Washington-funded jobs must pay prevailing wages, increasing costs on average by 22 percent.

In calling for federally-funded school construction, President Obama is once again supporting Washington overreach in education. But he’s also behind the game in terms of the direction school policy is trending. As states and localities begin embracing online learning  – and as education shifts to a world outside of the walls of physical school buildings – President Obama is pushing to subsidize the old model. The administration might think “school construction” polls better than other government “jobs” projects, but it’s just as destined to be a waste of taxpayer money, and a public policy failure.

– Lindsey Burke

Not A ‘Jobs Plan’ — Just Stimulus Redux

What President Obama calls a “jobs” plan is really just stimulus redux: a typical Keynesian-style set of infrastructure, school construction, teacher pay, unemployment benefits, and temporary tax breaks that have demonstrably failed in the two-and-a-half years since the $825-billion Recovery Act.

Obamanomics has left the economy with a growth rate just a fraction above 1 percent, nearly 2 million fewer Americans working, and an unemployment rate higher now than when he took office. Government cannot “grow the economy” (as if it were a field of strawberries), and it cannot create private sector jobs. It can only maintain conditions conducive to growth — limiting government spending and regulation, keeping tax rates low, and removing the uncertainties caused by feckless public policies.

– Patrick Knudsen

By Everette Hatcher III | Posted in President Obama, spending out of control | Tagged , , | Comments (0)

The poor in the USA have best chance in the world to go up

September 15, 2011 – 7:00 am

I love Milton Friedman’s film series “Free to Choose.” In that film series over and over it is shown that the ability to move from poor to rich is more abundant here than any other country in the world. This article below reminded me of that that.

Are Poor Really Helpless Without Government?

By Michael Medved

9/14/2011

A version of this column appeared originally in THE DAILY BEAST.

Do proposed cuts in federal programs threaten to deny the downtrodden any chance for “a meaningful and productive life,” as claimed by one of the most prominent progressives in Congress?

The question is preposterous and the answer is obvious: long before Washington created such programs, millions of underprivileged citizens found ways to climb out of poverty and to build decent homes and brighter futures for their families.

But the office of Representative Andre Carson of Indiana issued a statement insisting that the “Tea Party agenda jeopardizes our most vulnerable and leaves them without the ability to improve their economic standing.” Jason Tomcsi, Carson’s official spokesman, made these claims in an e-mail to the press, attempting to explain previous remarks in which the Congressman told an approving crowd in Miami at a Congressional Black Caucus event that “some of them in Congress right now of this Tea Party movement would love to see you and me hanging on a tree.”

This outrageous accusation led Representative Alan West of Florida, one of two African-American Republicans in the House, to threaten to remove himself from the Congressional Black Caucus.

But while Carson’s office refused to apologize and stood behind the admittedly “strong language” in the charges of murderous Tea Party racism, their defense actually compounded the problem by insulting not just conservative activists, but smearing every American who receives federal assistance. To suggest that budget cuts would leave them “without the ability to improve their economic standing” suggests that recipients of government aid aren’t just “vulnerable” but helpless.

According to the official explanation, Carson’s “hanging on a tree” comment came “in response to frustration voiced by many in Miami and in his home district in Indianapolis regarding Congress’s inability to bolster the economy.”

Leaving aside the questionable notion that our political and economic system actually allows Congress to “bolster the economy”, the statement entered even more dubious territory by declaring: “We are talking about child nutrition, job creation, job training, housing assistance and Head Start, and this is just the beginning. A child without basic nutrition, secure housing, and quality education has no real chance at a meaningful and productive life.”

In other words, the many children who currently lack these advantages (despite lavish federal funding for programs meant to provide them) might as well give up, not only abandoning efforts to compete with kids from more fortunate backgrounds, but also renouncing all hopes for a life worth living.

Fortunately, Carson’s own grandmother – the late Congresswoman Julia Carson – never accepted that message. Born in Kentucky in 1938, long before the Civil Rights revolution or the costly Great Society programs her grandson now defends, she worked her way up to a job as a secretary in a union office, and then won a position in the Indiana Legislature.

My own grandfather, Harry Medved, had less success in the US after his 1910 immigration from Ukraine. He worked as a barrel-maker his entire life but somehow managed to raise a son (my father) who made his way through college and graduate school. My grandparents (who I remember vividly) would have laughed at the notion that they depended on generous funding from governmental bureaucracies for the chance they seized to create a “meaningful and productive life.”

On most occasions when Democrats and Republicans fight over the value of federal anti-poverty efforts they argue about the effectiveness of these programs. Many conservatives believe that these well-intentioned initiatives often do more damage than good because they foster a sense of dependence and discourage individual initiative and accountability, while most liberals insist that government plays a useful role in assisting the poor. But Carson’s statement suggesting that disadvantaged families are hopeless and helpless without Washington’s sustaining, life-giving hand–that they can’t possibly move ahead on their own without federal intervention–conveys a dismissive view of the poor that might be considered racist and bigoted had it come from a white conservative.

Moreover, the wildly exaggerated view of government’s power to transform lives, and the sad contention that the impoverished can’t possibly change their circumstances with any other form of aid, combine to illustrate the profound truth in an observation by best-selling author and radio host, Rabbi Daniel Lapin. “The Democratic Party is filled with ardent idealists who have decided to worship the little g – government – and feel uncomfortable with any worship of the big G – God.”

Though Congressman Carson presents himself as a devout Muslim, his recent comments leave no doubt as to which “g” inspires his deepest faith and most fervent prayers.

Michael Medved

Michael Medved’s daily syndicated radio talk show reaches one of the largest national audiences every weekday between 3 and 6 PM, Eastern Time. Michael Medved is the author of eleven books, including the bestsellers What Really Happened to the Class of ’65?, Hollywood vs. America, Right Turns, The Ten Big Lies About America and 5 Big Lies About American Business

By Everette Hatcher III | Posted in Milton Friedman | Tagged , , , , | Comments (0)