My January 22, 2021 letter to President Joe Biden, Milton Friedman once said that “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

Ep. 4 – From Cradle to Grave [6/7]. Milton Friedman’s Free to Choose (1980)

January 22, 2021

President Biden c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

Thank you for taking time to have your office try and get a pulse on what is going on out here in the country.

I read this article on January 15, 2021 about your announcement the previous night concerning your first proposal to Congress.

Biden’s $1.9 Trillion COVID Relief Package Includes More Stimulus Checks, State Government Bailout, $15 Federal Minimum Wage

President-elect Joe Biden called Thursday night for a $1.9 trillion COVID-19 package that will include another round of relief checks for most Americans, a bailout for state and local governments, boosted unemployment payments, and a higher federal minimum wage.

The package is the first part of what Biden called a two-step plan to get America through the rest of the pandemic. The second part will be the centerpiece of Biden’s first State of the Union address, scheduled for next month.

Biden is also proposing $170 billion to assist in reopening schools and a $350 billion bailout of state and local governments. And on top of all that, Biden called for raising the national minimum wage to $15 an hour.

Those last two details may be the most contentious details. Democrats pushed for a similar bailout in earlier negotiations over COVID stimulus bills, but Senate Republicans blocked them. Democrats will have a slim Senate majority once the winners of two Georgia run-off elections are sworn-in, but the case for a state bailout remains shaky.

Democrats may still need Republican votes for much of Biden’s plan. The reconciliation process could be used to amend existing tax and budget matters with a simple majority vote in the Senate—perhaps to do something like adjusting the amount of the child tax credit—but relief checks and a state government bailout will likely require 60 votes.

That may also explain why some other Democratic priorities, such as the restoration of the state and local tax deduction (the “SALT” deduction), are not included in the package Biden outlined Thursday. The abolition of the SALT deduction was a major element of the tax overhaul passed by Republicans in 2017, and undoing that would likely cost Biden any shot at GOP support for this proposal.

The big unanswered question is how Biden plans to pay for it all. Thanks to years of poor budgeting and overzealous spending by Congress and President Donald Trump, America faces a $3 trillion budget deficit and a national debt that’s zooming towards $30 trillion. An additional $1.9 trillion will only add to the nation’s already overburdened credit card.

Biden did not address plans for spending offsets or tax increases in his speech. An unnamed Biden official told The Wall Street Journal on Thursday that the president-elect did not believe now was the time for worrying about widening budget deficits and that Biden’s focus was on the more immediate emergency.

Previously, Biden has indicated that he will push for higher taxes on corporations and on individuals making more than $400,000 annually.

In the coming days, Biden intends to outline his plans for a national vaccination effort, including an ambitious goal to deliver 100 million vaccinations during the new administration’s first 100 days. To the extent that Biden can in fact streamline the process and get more shots in more arms, that’s welcome. So too is a push to reopen the schools as soon as possible. And targeted relief for unemployed workers will help people harmed by the pandemic and by the government-imposed lockdowns it inspired.

But near-universal $1,400 checks are not good policy, no matter how popular they might be. States and local governments have the ability to make their own taxing and spending decisions and should not expect or require federal aid—and certainly not when the federal government is in such dire fiscal straits on its own. And ambitious plans to increase social spending and hike wages that don’t have anything to do with the pandemic should be considered separately.

Congress should scrutinize each element of Biden’s “part one” relief plan, and pass only the proposals that will directly and immediately help to end the pandemic or relieve its effects.

I wanted to let you know what I think about the minimum wage increase you have proposed for the whole country and I wanted to quote Milton Friedman who you are familiar with and you made it clear in July that you didn’t care for his views! Let me challenge you to take a closer look at what he had to say!

Companies Are Preparing to Cut Jobs and Automate if Biden Gets $15 Minimum Wage Hike, Reporting Shows

Let’s hope that Joe Biden’s minimum wage fantasies never become law—or workers will pay the price for his economic naiveté.

Nobel laureate Milton Friedman once said that “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” When it comes to the $15 minimum wagehike supported by Joe Biden and many of his fellow Democrats, it’s becoming increasingly clear that the results will be ugly.

New reporting reveals that Chief Financial Officers at top American companies are “considering raising prices, cutting workers’ hours and investing in automation to offset a potential rise in labor costs.”

“Companies including Chipotle Mexican Grill Inc., Potbelly Corp. and Texas Roadhouse Inc. are already doing the math to assess what a higher federal minimum wage could mean for their operations and cost base,” the Wall Street Journal reports.

“Some executives fear that increases to the federal pay floor would drive up wages across income classes, hurting profits and forcing businesses to find savings to offset higher spending on labor,” the paper continues.

First and foremost, we can expect businesses to respond to artificially-high wage mandates by cutting jobs and reducing employee hours.

Why?This new reporting is bad news for low-skilled workers—the very group that a $15 minimum wage is supposed to help.

Well, labor is a product like any other. If the cost of soda was artificially mandated at $10 per can by the government, the simple fact is that consumers would buy less of it. When employers are legally forced to pay more for labor than it is worth in the market, they naturally and inevitably do the same.

“By the simplest and most basic economics, a price artificially raised tends to cause more to be supplied and less to be demanded than when prices are left to be determined by supply and demand in a free market,” famed economist Thomas Sowell wrote inBasic Economics. “The result is a surplus, whether the price that is set artificially high is that of farm produce or labor.”

“Unfortunately, the real minimum wage is always zero,” Sowell concluded. “And that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage.”

Ample evidence confirms these theoretical predictions.

For example, the nonpartisan Congressional Budget Office projects that enacting a $15 minimum wage nationwide would destroy from 1.3 to 3.7 million jobs. Similarly, analysis from the Employment Policies Institute concludes that a federal $15 minimum wage would kill 2 million jobs.

These studies aren’t outliers. A research review by the Cato Institute concluded, “The main finding of economic theory and empirical research over the past 70 years is that minimum wage increases tend to reduce employment.”

So, it’s fair to assume that the warnings CFOs are offering about potential slashes in employment can be extrapolated beyond their specific companies. Proponents of a $15 minimum wage might intend to help workers, but they will inevitably and invariably put millions of them out of work altogether if their efforts are successful.

Meanwhile, other companies told the Journal they would pass the costs onto consumers by hiking prices. (Is that a win for the working class?)

And in an another twist, some companies said they would seek additional opportunities to invest in automation and eliminate their demand for labor altogether in lieu of paying mandated wages that far exceed a worker’s value.Let’s hope that Joe Biden’s minimum wage fantasies never become law—or workers will pay the price for his naiveté.

“Pool Corp., a distributor of swimming pool supplies, plans to ramp up investments in technology to offset the potential rise in labor costs,” the Journalreports. “The company would look to reduce manual processes such as product orders and certain warehouse operations.”

“[Automation is] the most significant investment that we can make…when it comes to lowering the impact of potentially higher labor costs down the road,” Pool Corp CFO Mark Joslin said.

All of this is bad, bad news for workers. You know, the group that a $15 minimum wage is supposed to help.

So, let’s hope that Joe Biden’s minimum wage fantasies never become law—or workers will pay the price for his naiveté.

_____________

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733

Williams with Sowell – Minimum Wage

Thomas Sowell

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By WALTER WILLIAMS

—-

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