Category Archives: Economist Dan Mitchell

Dan Mitchell article on President Biden’s Tax Ideas

Three Reasons to Reject Biden’s Tax Harmonization Scheme for “Global Minimum Taxation”

Way back in 2007, I narrated this video to explain why tax competition is very desirable because politicians are likely to overtax and overspend (“Goldfish Government“) if they think taxpayers have no ability to escape.

The good news is that tax competition has been working.

As explained in the above video, there have been big reductions in personal tax rates and corporate tax rates. Just as important, governments have reduced various forms of double taxation, meaning lower tax rates on dividends and capital gains.

Many governments have also reduced – or even eliminated – death taxes and wealth taxes.

These pro-growth tax reforms didn’t happen because politicians read my columns (I wish!). Instead, they adopted better tax policy because they were afraid of losing jobs and investment to countries with better fiscal policy.

Now for the bad news.

There’s been an ongoing campaign by high-tax governments to replace tax competition with tax harmonization. They’ve even conscripted international bureaucracies such as the Organization for Economic Cooperation and Development (OECD) to launch attacks against low-tax jurisdictions.

And now the United States is definitely on the wrong side of this issue.

Here’s some of what the Biden Administration wants.

The United States can lead the world to end the race to the bottom on corporate tax rates. A minimum tax on U.S. corporations alone is insufficient. …President Biden is also proposing to encourage other countries to adopt strong minimum taxes on corporations, just like the United States, so that foreign corporations aren’t advantaged and foreign countries can’t try to get a competitive edge by serving as tax havens. This plan also denies deductions to foreign corporations…if they are based in a country that does not adopt a strong minimum tax. …The United States is now seeking a global agreement on a strong minimum tax through multilateral negotiations. This provision makes our commitment to a global minimum tax clear. The time has come to level the playing field and no longer allow countries to gain a competitive edge by slashing corporate tax rates.

As Charlie Brown would say, “good grief.” Those passages sound like they were written by someone in France, not America

And Heaven forbid that  countries “gain a competitive edge by slashing corporate tax rates.” Quelle horreur!

There are three things to understand about this reprehensible initiative from the Biden Administration.

  1. Tax harmonization means ever-increasing tax rates – It goes without saying that if politicians are able to create a tax cartel, it will merely be a matter of time before they ratchet up the tax rate. Simply stated, they won’t have to worry about an exodus of jobs and investment because all countries will be obliged to have the same bad approach.
  2. Corporate tax harmonization will be followed by harmonization of other taxes – If the scheme for a harmonized corporate tax is imposed, the next step will be harmonized (and higher) tax rates on personal income, dividends, capital gains, and other forms of work, saving, investment, and entrepreneurship.
  3. Tax harmonization denies poor countries the best path to prosperity – The western world became rich in the 1800s and early 1900s when there was very small government and no income taxes. That’s the path a few sensible jurisdictions want to copy today so they can bring prosperity to their people, but that won’t be possible in a world of tax harmonization.

P.S. If you want more information, here’s a three-part video series on tax havens, and even a video debunking some of Obama’s demagoguery on the topic.

March 16, 2021

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

Dear Mr. President,

Is our country learning from history? California keeps raising their taxes on the wealthy and people keep moving from California to Texas. What does our federal government do? They also have been raising taxes on the wealthy lately. Take a look at this excellent video below and then read a great article by Dan Mitchell of the Cato Institute on what is happening in California right now.

Will Higher Tax Rates Balance the Budget?

Published on Apr 11, 2012

As the U.S. debt and deficit grows, some politicians and economist have called for higher tax rates in order to balance the budget. The question becomes: when the government raises taxes, does it actually collect a larger portion of the US economy?

Professor Antony Davies examines 50 years of economic data and finds that regardless of tax rates, the percentage of GDP that the government collects has remained relatively constant. In other words, no matter how high government sets tax rates, the government gets about the same portion. According to Davies, if we’re concerned about balancing the budget, we should worry less about raising tax revenue and more about growing the economy. The recipe for growth? Lower tax rates and a simplified tax code.

Like most people, I’m a sucker for a heartwarming story around the holidays.

Sometimes, you get that nice feeling when good things happen to good people, like you find at the end of a classic movie like “It’s a Wonderful Life.”

But since I’m a bit of a curmudgeon, I also feel all warm and fuzzy when bad things happen to bad people.

That’s why I always smile when I read stories about taxpayers moving across borders, thus preventing greedy tax-hiking politicians from collecting more revenue.

“Where’s our tax revenue?!?”

I’m glad when that happens to French politicians. I’m glad when it happens to Italian politicians. I’m glad when it happens to Illinois politicians. And British politicians. And Spanish politicians. And Maryland politicians. I could continue, but I think you get the point.

I’m even glad when it happens to the politicians in Washington.

I smile because I envision the moment when some budget geek tells these sleazy politicians that projected revenues aren’t materializing and they don’t have more money to spend.

So I wish I could be a fly on the wall when this moment of truth happens to California politicians. They convinced voters in the state to enact Prop 30, a huge tax increase targeting those evil, awful, bad rich people.

Governor Brown and his fellow kleptocrats in Sacramento doubtlessly are salivating at the thought of more money to waste.

But notwithstanding a satirical suggestion from Walter Williams, there aren’t guard towers and barbed-wire fences surrounding the state. Productive people can leave, and that’s happening every day. And they take their taxable income with them.

Usually in ways that don’t attract attention. But sometimes a bunch of them leave at the same times, and that is newsworthy. Here’s an example of that happening, as reported by the San Francisco Chronicle.

Chevron Corp. will move up to 800 jobs – about a quarter of its current headquarters staff – from the Bay Area to Houston over the next two years but will remain based in San Ramon, the oil company told employees Thursday. …The company already employs far more people in Houston – about 9,000 full-time employees and contractors – than it does in San Ramon.

We don’t know a lot of details, but these were positions at the company’s headquarters and they were “technical positions dealing with information and advanced energy technologies…tied to Chevron’s worldwide oil exploration and production business.”

Let’s assume these highly skilled employees earn an average of $250,000. I imagine that’s a low-ball estimate, but this is just for purposes of a thought experiment. Now multiply that average salary by 800 workers and you get $200 million of income.

And every penny of that $200 million no longer will be subject to tax by the kleptocrats in the state’s capital.

In other words, we’re seeing the Laffer Curve in action.

Politicians can raise tax rates all day long, but that doesn’t automatically translate into more tax revenue. Politicians keep forgetting that taxable income is not a fixed variable.

What’s happening in a big way with Chevron is happening in small ways every single day with investors, entrepreneurs, small business owners, and other “rich’ people.

That’s good for the people escaping. And it also will warm my heart when California’s despicable politicians discover next year that there’s an “unexpected” revenue shortfall.

P.S. It’s just an anecdote that the Chevron jobs are going to Texas. But when you add together a bunch of anecdotes, you get data. And according to the data, Texas is kicking the you-know-what out of California. Maybe there’s a lesson to be learned?

__________

___________

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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“For years, a lot of us subscribed to the notion that Milton Friedman warned us about,” that government would harm the economy if it didn’t take a light-touch approach to business, said former Connecticut Democratic Sen. Chris Dodd, a longtime Biden friend, referring to the economist who helped define the small-government neoliberal philosophy.

President Biden in the White House on March 18.

President Biden in the White House on March 18.ANDREW HARNIK/ASSOCIATED PRESS

Behind Biden’s Big Plans: Belief That Government Can Drive Growth

Multitrillion-dollar spending program would reverse Reagan-era tacit understanding that public sector is less efficient than the private in allocating resources

WASHINGTON—President Biden envisions long-term federal spending claiming its biggest share of the American economy in decades. He wants to pay for that program in part by charging the highest-earning Americans the biggest tax rates they’ve faced in years.

The Biden economic team’s ambitions go beyond size to scope. The centerpiece of their program—a multitrillion-dollar proposal to be rolled out starting Wednesday, less than a month after a $1.9 trillion stimulus—seeks to give Washington a new commercial role in matters ranging from charging stations for electric vehicles to child care, and more responsibility for underwriting education, incomes and higher-paying jobs.

The administration has also laid the groundwork for regulations aimed at empowering labor unions, restricting big businesses from dominating their markets and prodding banks to lend more to minorities and less for fossil-fuel projects. All while federal debt is currently at a level not seen since World War II.

It all marks a major turning point for economic policy. The gamble underlying the agenda is a belief that government can be a primary driver for growth. It’s an attempt to recalibrate assumptions that have shaped economic policy of both parties since the 1980s: that the public sector is inherently less efficient than the private, and bureaucrats should generally defer to markets.

The administration’s sweeping plans reflect a calculation that “the risk of doing too little outweighs the risk of doing too much,” said White House National Economic Council Director Brian Deese. “We’re going to be unapologetic about that,” he said. “Government must be a powerful force for good in the lives of Americans.”

The pandemic and lockdown measures that followed have become a Rorschach test for the new economic debate. Former President Donald Trumpargued that the booming economy of 2019 and early 2020 was proof his tax-cutting, deregulating agenda was the best for spurring broadly shared prosperity, and he portrayed the coronavirus and lockdowns as a temporary disruption. The Biden team sees the pandemic as exposing myriad flaws and fragilities that liberals had long identified in the economy, masked by prosperity.

Mr. Biden himself casts his program as a throwback to Lyndon B. Johnson’s 1960s Great Society and Franklin D. Roosevelt’s 1930s New Deal. “This is the first time we’ve been able to, since the Johnson administration and maybe even before that, to begin to change the paradigm,” he said at a White House event in mid-March. Mr. Biden recently spoke with a group of prominent American historians, and his aides have studied FDR’s presidency as they plan his economic agenda.

Mr. Biden’s big plans raise big questions, and big risks. He faces an uphill battle to win over a narrowly divided Congress, with solid Republican opposition plus hesitancy among Democratic moderates who blanch at higher taxes and more spending following nearly $5 trillion in coronavirus relief outlays over the past year.

Conservative-tilting courts, increasingly skeptical of executive authority, might block some of his initiatives. Already, a coalition of Republican state attorneys general has sued to challenge some provisions of the stimulus program and some of his executive orders.

Some economists consider the latest spending plan an overkill response to the temporary, albeit severe, hit from the pandemic and lockdowns. They call recent stirrings in the bond market a warning that the vast increase in government spending and borrowing might prompt a return to the high-inflation/high-interest-rate stagnation of the late 1970s and early 1980s—conditions that fed the long-lasting backlash to expansive FDR-LBJ policies in the first place.

“They’re creating too much demand when it’s not needed. When demand runs away from supply, you get inflation,” said Kevin Hassett, a former Trump chief economic adviser now at Stanford University’s Hoover Institution. “The laws of economics can’t be repealed,” he said.

The Biden agenda rests on the notion those laws have evolved. “There appear to have been a broad-based set of structural changes that have had a very significant effect on how the economy works,” Treasury Secretary Janet Yellen said. “There are a lot of ways in which I think our understanding of the economy has shifted.”

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She cited persistently low interest rates and low inflation, defying many conventional forecasts, as reasons to feel more relaxed than before about federal borrowing and low unemployment rates. Ms. Yellen says there’s little sign inflation is in danger of escalating, and is confident that if it does, the Federal Reserve has the tools to contain it.

The administration’s policies are rooted in economic research focused on perceived free-market flaws, much of it conducted and funded by young, left-leaning economists and activists now scattered throughout the administration. Much of the Biden economic agenda is built around the conclusion that climate change in particular is a private-sector breakdown requiring extensive government intervention.

Before joining the Biden Council of Economic Advisers, Heather Boushey ran the Washington Center for Equitable Growth, a think tank devoted to persuading economists and policy makers to take action reducing income inequality. To her and many of her colleagues, the pandemic validates their studies on market failures.

“We’ve talked about inequality—it seems like an abstract concept, but in 2020, this notion of the K-shaped economy became so real,” Ms. Boushey said. She was referring to a recovery where the fortunes of upper-income families—able to keep their jobs, work from home and enjoy gains in their stock portfolios—rose like the letter’s upward-sloping part, while lower-income families were unable to keep jobs in hard-hit service industries such as restaurants.

Plans for selling the administration proposals lean heavily on fears of losing out to China’s model of state-driven capitalism, a concern that resonates across the political spectrum. “China is out-investing us by a long shot, because their plan is to own that future,” Mr. Biden said recently in previewing his program.

In a Wednesday speech in Pittsburgh, the president is preparing to unveil the first part of an economic proposal that would cost $3 trillion or more over 10 years and might be split into multiple pieces of legislation, with more coming in April. The first measure will focus on infrastructure, climate change, domestic manufacturing and research and development. Mr. Biden will find ways to pay for the full cost of the first measure, the White House has said. The second measure will center on child care, healthcare and education.

‘There are a lot of ways in which I think our understanding of the economy has shifted,’ said Treasury Secretary Janet Yellen.

‘There are a lot of ways in which I think our understanding of the economy has shifted,’ said Treasury Secretary Janet Yellen.

PHOTO: DREW ANGERER/GETTY IMAGES

The multipart package would include higher taxes on corporations, upper-income households and investors. It will call for huge investments in infrastructure and climate programs and provide for universal prekindergarten and tuition-free community college, people familiar with the plan said.

Most Republicans are expected to oppose it, and the president’s advisers are already discussing options for continuing to move some of his proposals without GOP support, including through the process known as budget reconciliation.

Mike Donilon, one of Mr. Biden’s closest advisers, acknowledged the challenges but argued the public supports action. “I don’t think the country is in much mood for relentless obstructionism,” he said.

Critics of big-government projects have long argued that bureaucrats are less skilled than market forces in allocating resources. “What they’re trying to do is re-establish government as a major positive force in the economy, and I believe government is a massive negative force” in it, said Stephen Moore, a former Trump economic adviser. “There really is a micromanagement of the economy from the left.”

Presidents of both parties, hesitant to micromanage, have long steered away from anything smacking of an industrial policy that attempts to bolster specific industries. Biden aides are more willing to target and support certain industries such as the health and high-tech sectors. “We are committed to using the levers of government to encourage more domestic production,” Mr. Deese said.

President Biden held notes on infrastructure while speaking during a news conference in the East Room of the White House on March 25.

President Biden held notes on infrastructure while speaking during a news conference in the East Room of the White House on March 25.

PHOTO: OLIVER CONTRERAS/PRESS POOL

The president’s budget and regulatory proposals could disrupt major industries, boosting renewable-energy companies over fossil-fuel firms and expanding markets for emerging technologies. Business groups and Republicans warn that new regulations could stifle growth.

Mr. Biden’s stimulus bill added to federal debt that had already hit peacetime records under Mr. Trump. Mr. Biden has said his full agenda will ultimately be aimed at curbing government borrowing, through tax increases and savings in medical spending.

That will be a challenge. Federal debt, which reached 100% of gross domestic product last fiscal year for the first time since 1946, is expected to rise to a record 107% of economic output by 2031, according to the Congressional Budget Office, fueling concerns that future generations will get stuck with the bill. Fed Chairman Jerome Powell said in March that the federal government can manage its debt at current levels, but policy makers should seek to slow its growth once the economy is stronger.

The long-dominant paradigm Mr. Biden and aides want to change is one widely branded neoliberalism, framed by Ronald Reagan, who declared in his 1981 inaugural address that “government is not the solution to our problem; government is the problem.” He ushered in an era of tax cuts, deregulation and federal programs increasingly designed to work through market forces. That was followed by two of the longest expansions in American history, in the 1980s and the 1990s.

Ronald Reagan speaking at his inauguration on Jan. 20, 1981.

Ronald Reagan speaking at his inauguration on Jan. 20, 1981.

PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES

While Democrats controlled the White House for nearly half the time since then, their policies often were constrained by the core Reagan principles, in the view of many progressives. Bill Clinton tried to juggle liberal goals with a focus on balancing the budget, expanding free trade, and deregulating the financial sector. Barack Obama created a new government health program, but to the chagrin of the left, worked through private insurers. His 2009 program to fight the recession was constrained by fears of big deficits.

“For decades now, people have talked about economics as running against government, ignoring how much we need government to be able to build out opportunities,” said Massachusetts Democratic Sen. Elizabeth Warren, who, as an Obama adviser, often tangled with his aides over how aggressively to rein in Wall Street and support homeowners slammed by the 2008-2009 financial crisis.

A confluence of forces since the turn of the century has shaken support for the market-oriented economic model. A sharp increase in income and wealth inequality, combined with longtime wage stagnation that ended just before the pandemic hit, raised questions about how broadly prosperity gets shared absent government intervention. The swift loss of manufacturing jobs undermined support for free trade. China’s success and Wall Street’s collapse in the financial crisis further sowed doubts about free markets.

Those trends animated critics on the left, fueling the 2016 presidential campaigns of self-proclaimed Democratic Socialist Sen. Bernie Sanders of Vermont and the rise to prominence of his allies such as New York Rep. Alexandria Ocasio-Cortez.

Republicans, too, have faced internal challenges to the party’s free-market orientation. Mr. Trump won the presidency in part by attacking bipartisan support for globalization. In office, he launched a trade war with China, regularly criticized big business and intervened to force domestic investments and pressure companies to relocate manufacturing to the U.S. and cut prices of drugs.

“Some establishment Republicans are too willing to do nothing at all with government. They see an all-natural, organic market having its way,” said Missouri GOP Sen. Josh Hawley. Mr. Hawley, a Trump supporter and possible presidential contender, has called for tougher antitrust laws to break up big tech companies and co-sponsored a bill last year with Mr. Sanders to give households $1,200 direct payments.

The first-term senator voted against the latest stimulus bill and opposes many of Mr. Biden’s policies, but he also says that “old-style conservatives have been too quick to wave away policies to strengthen American workers and promote competition rather than monopolies.”

Trends such as wealth disparities and wage stagnation animated the presidential candidacy of Sen. Bernie Sanders of Vermont, seen here speaking at a rally in Manchester, N.H., in August 2015.

Trends such as wealth disparities and wage stagnation animated the presidential candidacy of Sen. Bernie Sanders of Vermont, seen here speaking at a rally in Manchester, N.H., in August 2015.

PHOTO: RICK FRIEDMAN/CORBIS/GETTY IMAGES

While many of those urging an economic rethink are relatively new voices in the debate, some pillars of the establishment have evolved, including former senior economic aides in the Clinton and George W. Bush administrations. Another Washington veteran whose positions have changed: Joe Biden.

Elected to the Senate in 1972 at age 29, Mr. Biden ousted a Republican incumbent in part by casting himself as more attuned to the needs of the middle class, a theme that became a through-line of his career. He has long espoused the importance of unions, small businesses and a strong working class.

Mr. Biden juggled those causes with a belief in the need to curb government spending and cut taxes. He voted for Mr. Reagan’s historic 1981 tax cuts and backed spending ceilings for most agencies through the 1980s and a balanced-budget constitutional amendment in the 1990s. He regularly floated the idea of limiting Social Security and Medicare.

“For years, a lot of us subscribed to the notion that Milton Friedman warned us about,” that government would harm the economy if it didn’t take a light-touch approach to business, said former Connecticut Democratic Sen. Chris Dodd, a longtime Biden friend, referring to the economist who helped define the small-government neoliberal philosophy.

As Mr. Obama’s vice president during the financial crisis, Mr. Biden walked a tightrope between pushing for spending, especially on infrastructure, and taking the lead in negotiating with Republicans to limit the extent of government expansion. Toward the end of his term, the persistently slow recovery prompted the vice president and his aides to launch a study of wage stagnation, income inequality and ways the government could steer business to do more for workers. That work planted the seeds for his current program.

Joe Biden was first elected to the Senate from Delaware in 1972 after a campaign in which he cast himself as attuned to the needs of the working class.

Joe Biden was first elected to the Senate from Delaware in 1972 after a campaign in which he cast himself as attuned to the needs of the working class.

PHOTO: HENRY GRIFFIN/ASSOCIATED PRESS

Mr. Biden started his 2019 presidential bid determined to lay out more of a big-government agenda than recent Democrats had espoused. But much of the primary field had moved even farther left. He emerged once again as the fiscal scold warning of excessive spending.

The arrival of the pandemic and the killing of George Floyd marked a turning point for Mr. Biden, according to his advisers, bringing into focus what his aides describe as his longstanding desire to “go big.”

Mr. Biden tapped his longtime friend and successor as Delaware senator, Ted Kaufman, to run the transition, and in helping assemble the economic team, Mr. Kaufman said his team focused on people steeped in new economic thinking and steered away from business executives.

“I looked at people who had internalized what Joe Biden’s policy was about, and Joe Biden’s policy was not about taking care of Wall Street or people making over $400,000 a year,” Mr. Kaufman said.

The middle ranks of the administration are filled with academics and activists who have spent the past few years honing a framework for progressive economic policy-making. In March 2019, many of them gathered at a Washington conference called “Bold v. Old.” A panel on toughening antitrust enforcement was led by Jennifer Harris, an official with the Hewlett Foundation—a philanthropy created by one of the founders of Hewlett-PackardCo. —overseeing a program funding researchers seeking to replace the neoliberal paradigm. She was joined by Lina Khan, a young law professor known for laying out the case for breaking upAmazon.com Inc., and Sabeel Rahman, president of Demos, a progressive think tank.

Ms. Harris has joined the Biden National Economic Council. Ms. Khan has been nominated to the Federal Trade Commission. Mr. Rahman works at the Office of Management and Budget.

Few of those new-generation policy makers supported Mr. Biden in the primaries. One of Mr. Deese’s deputies, Bharat Ramamurti, who was Ms. Warren’s chief campaign policy adviser, says the party is now largely unified on economic policy.

President Biden at his first press conference as president on March 25.

President Biden at his first press conference as president on March 25.

PHOTO: OLIVER CONTRERAS/PRESS POOL

A change in the Biden approach to economics is a re-evaluation of the costs of government action, which his team says have receded or always been exaggerated. And on the other side of the equation: an assertion that the cost of inaction is greater than previously estimated.

Progressive economists have generated rafts of research, often contested by conservatives, challenging the links between higher tax rates and lower economic activity. “The evidence suggests that the impact of marginal tax rates on labor supply is not as big as we may have once feared,” said Cecilia Rouse, chair of the Council of Economic Advisers.

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Liberal academics have produced studies examining the costs to the economy’s productive capacity from inequality and long-term unemployment, work invoked by the Biden team to justify spending big and fast to try to return to full employment as soon as next year. Some critics, including former Clinton and Obama economic adviser Lawrence Summers, have said that spending too aggressively to drive down unemployment could backfire, possibly prompting the Fed to raise interest rates and trigger a recession.

This more relaxed view of previous economic limits has freed the Biden team to plan on a grand scale. They designed a two-step strategy that began with the $1.9 trillion coronavirus relief package, which provided $1,400 direct payments to many Americans, extended a $300 weekly jobless-aid supplement, expanded the child tax credit to provide periodic payments and dropped requirements that recipients work.

That was a symbolically significant shift from the Clinton-era move to tie welfare to work and a nod to the burgeoning progressive demands for a no-strings-attached guaranteed government income floor, at least for families with children.

Biden aides are also preparing an aggressive plan of new regulations and enforcement that can be implemented without Congress.

“The president campaigned on concerns about big tech, about labor market competition, about making sure small businesses can compete with the bigger guys,” Mr. Ramamurti said. “The president has a clear agenda there.”

Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com

It appears that only a fraction of the spending proposed in a new $3 trillion to $4 trillion bill would go toward an already too-expansive definition of infrastructure. Pictured: Engineers discuss the progress of an infrastructure construction project. (Photo: Sornranison Prakittrakoon/ Moment/Getty Images)

The media were flooded Monday with news that the Biden administration is working on a colossal new $3 trillion to $4 trillion spending plan.

While full details are not available yet, the plan appears to be another left-wing grab bag of big-government proposals. Rather than stimulating the economy, it would stimulate bigger government while funneling unprecedented amounts of power and money through the hands of politicians in Washington.

All this comes on the heels of President Joe Biden signing into law on March 11 a badly flawed $1.9 trillion legislative package that was originally marketed as a COVID-19 response, but which was more focused on left-wing pet causes, such as bailouts for union pension plans and unnecessary handouts for state governments.

Just a day later, House Speaker Nancy Pelosi, D-Calif., released a statement calling for bipartisan work on legislation that would focus on infrastructure. While there were good reasons to question how beneficial or “bipartisan” such legislation would be, there was at least a chance of finding some across-the-aisle support.

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But the potential for bipartisanship was quickly scuttled by news of the latest multitrillion-dollar plan.

It would be bad enough if the latest plan was just a big-spending infrastructure package. However, it appears that only a fraction of the new spending would go toward an already too-expansive definition of infrastructure.

Instead, most of the new spending and tax subsidies would go toward expanding the welfare state, including “free” tuition for community colleges, “free” child care, and other handouts that lack right-of-center support.

This would likely be the largest expansion of the federal government since the “Great Society” of the 1960s, even eclipsing Obamacare in scope.

Reports indicate that Democrats might attempt to split the plan into two bills—one focused on social spending that passes narrowly along party lines, the other focused on actual infrastructure aimed at winning bipartisan support.

However, it’s clear that the $3 trillion-plus total price tag is already souring prospects for bipartisan infrastructure legislation.

House Republicans boycotted the annual Ways and Means Committee “Member’s Day” hearing on Tuesday in the wake of news reports on the plan, since they indicated that Democrats have already made up their minds to pursue as much spending as possible through the legislative procedure known as reconciliation.

Coincidentally, two respected nonpartisan groups released reports this week that show why Biden and Pelosi should pause their aggressive agenda.

First, the Congressional Budget Office published a paper demonstrating what would happen if a sustained increase in federal spending were coupled with big tax increases to pay for the spending.

While the analysis points to different long-term effects from different types of taxes, any tax-and-spend approach would lead to reductions in economic growth and personal income that are larger than the size of the tax hikes.

For example, the analysis found that having 10% more federal government would mean a 12% to 19% reduction in personal consumption.

And that’s a conservative estimate. Most estimates show tax hikes shrink the economy by two to three times more than the revenues they raise.

That doesn’t mean Congress could escape the consequences of a continued spending spree by simply adding to the national debt. The CBO paper cautions that that would not only impose significant costs and divert resources away from the private sector, but it also would be unsustainable and increase the risk of a devastating financial crisis.

Along the same lines, the Government Accountability Office released a sobering reporton the nation’s poor financial health.

Now that Congress has passed a combined total of $6 trillion in legislation in the aftermath of the COVID-19 pandemic (more than $48,000 per household), it must quickly address the unsustainable growth of major benefit programs, such as Social Security, Medicare, and Medicaid.

Even before the pandemic struck, these programs were on a path to bankruptcy. Addressing these shortfalls in a way that is fair to both current retirees and future generations who will have to foot the bill is one of the greatest policy challenges facing the nation.

Unfortunately, Washington is exacerbating the problem by adding excessively to the national debt and potentially stunting economic growth with higher taxes.

While the Biden administration has repeatedly claimed that it will only seek to raise taxes on the wealthy, a government of the size that it’s seeking would require amounts of money that can only be generated through steep across-the-board tax increases on middle-class Americans.

Regardless of whether those taxes are levied tomorrow or in a few years, they would be an inevitable part of expanding the size and scope of the federal government.

Rather than continuing down the path of centralized power and socialism, lawmakers should recognize the costs associated with endless federal spending and chart a course toward financial responsibility and prosperity.

If they don’t, it will be the public’s duty to hold them accountable.

Have an opinion about this article? To sound off, please email letters@DailySignal.com and we will consider publishing your remarks in our regular “We Hear You” feature.

March 31, 2021

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

Dear Mr. President,

Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.

President Barack Obama speaks about the debt limit in the East Room of the White House in Washington. | AP Photo

“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!

Washington Could Learn a Lot from a Drug Addict

Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?

Making more dependent on government is not the way to go!!

Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.  

David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:

Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt

Posted by on Mon, Jan 14, 2013 at 1:02 PM

Baby carrot Arkansas Medicaid expansion image

Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.

Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.

Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.

It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.

______________

Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”

How sad it is that liberals just don’t get this reality.

Here is what the Founding Fathers had to say about welfare. David Weinberger noted:

While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Thomas Jefferson to Joseph Milligan

April 6, 1816

[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.

[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]

_______

Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.

_____________

_________

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

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5

Related posts:

Welfare Spending Shattering All-Time Highs

  We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]

We need more brave souls that will vote against Washington welfare programs

We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with  everyone else that keeps spending our money. I am glad that at least […]

Welfare programs are not the answer for the poor

Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]

Private charities are best solution and not government welfare

Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]

The book “After the Welfare State”

Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]

President Obama responds to Heritage Foundation critics on welfare reform waivers

Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]

Welfare reform part 3

Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]

Welfare reform part 2

Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]

Why did Obama stop the Welfare Reform that Clinton put in?

Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]

“Feedback Friday” Letter to White House generated form letter response July 10,2012 on welfare, etc (part 14)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]

Dan Mitchell article Big-Government Republicans Enable Big-Government Democrats

Big-Government Republicans Enable Big-Government Democrats

I get asked why I frequently criticize Republicans.

My response is easy. I care about results rather than rhetoric. And while GOP politicians often pay lip service to the principles of limited government,they usually increase spending even faster than Democrats.

Indeed, Republicans are even worse than Democrats when measuring the growth of domestic spending!

This is bad news because it means the burden of government expands when Republicans are in charge.

And, as Gary Abernathy points out in a column for the Washington Post, Republicans then don’t have the moral authority to complain when Democrats engage in spending binges.

President Biden is proposing another $3 trillion in spending… There are objections, but none that can be taken seriously. …Republicans had lost their standing as the party of fiscal responsibility when most of them succumbed to the political virus of covid fever and rubber-stamped around $4 trillion in “covid relief,”… With Trump out and Biden in, Republicans suddenly pretended that their 2020 spending spree happened in some alternate universe.But the GOP’s united opposition to Biden’s $1.9 trillion package won’t wash off the stench of the hypocrisy. …I noted a year ago that we had crossed the Rubicon, that our longtime flirtation with socialism had become a permanent relationship. Congratulations, Bernie Sanders. The GOP won’t become irrelevant because of its association with Trump, as some predict. It will diminish because it is bizarrely opposing now that which it helped make palatable just last year. Fiscal responsibility is dead, and Republicans helped bury it. Put the shovels away, there’s no digging it up now.

For what it’s worth, I hope genuine fiscal responsibility isn’t dead.

Maybe it’s been hibernating ever since Reagan left office (like Pepperidge Farm, I’m old enough to remember those wonderful years).

Subsequent Republican presidents liked to copy Reagan’s rhetoric, but they definitely didn’t copy his policies.

  • Spending restraint was hibernating during the presidency of George H.W. Bush.
  • Spending restraint also was hibernating during the presidency of George W. Bush.
  • And spending restraint was hibernating during the presidency of Donald Trump.

I’m not the only one to notice GOP hypocrisy.

Here are some excerpts from a 2019 column in the Washington Post by Fareed Zakaria.

In what Republicans used to call the core of their agenda — limited government — Trump has been profoundly unconservative. …Trump has now added more than $88 billion in taxes in the form of tariffs, according to the right-leaning Tax Foundation. (Despite what the president says, tariffs are taxes on foreign goods paid by U.S. consumers.) This has had the effect of reducing gross domestic product and denting the wages of Americans.…For decades, conservatives including Margaret Thatcher and Ronald Reagan preached to the world the virtues of free trade. But perhaps even more, they believed in the idea that governments should not pick winners and losers in the economy… Yet the Trump administration…behaved like a Central Planning Agency, granting exemptions on tariffs to favored companies and industries, while refusing them to others. …In true Soviet style, lobbyists, lawyers and corporate executives now line up to petition government officials for these treasured waivers, which are granted in an opaque process… On the core issue that used to define the GOP — economics — the party’s agenda today is state planning and crony capitalism.

Zakaria is right about Republicans going along with most of Trump’s bad policies (as illustrated by this cartoon strip).*

The bottom line is that Republicans would be much more effective arguing against Biden’s spending orgy had they also argued for spending restraint when Trump was in the White House.

P.S. It will be interesting to see what happens in the near future. Will the GOP be a small-government Reagan party or a big-government Trump party?

Or maybe it will go back to being a Nixon-type party, which would mean bigger government but without mean tweets. And there are plenty of options.

If they make the wrong choice (anything other than Reaganism), Margaret Thatcher has already warned us about the consequences.

*To be fair, Republicans also went along with Trump’s good policies. It’s just unfortunate that spending restraint wasn’t one of them.

—-

March 31, 2021

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

Dear Mr. President,

Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.

President Barack Obama speaks about the debt limit in the East Room of the White House in Washington. | AP Photo

“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!

Washington Could Learn a Lot from a Drug Addict

Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?

Making more dependent on government is not the way to go!!

Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.  

David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:

Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt

Posted by on Mon, Jan 14, 2013 at 1:02 PM

Baby carrot Arkansas Medicaid expansion image

Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.

Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.

Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.

It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.

______________

Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”

How sad it is that liberals just don’t get this reality.

Here is what the Founding Fathers had to say about welfare. David Weinberger noted:

While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Thomas Jefferson to Joseph Milligan

April 6, 1816

[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.

[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]

_______

Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.

_____________

_________

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

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5

Related posts:

Welfare Spending Shattering All-Time Highs

  We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]

We need more brave souls that will vote against Washington welfare programs

We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with  everyone else that keeps spending our money. I am glad that at least […]

Welfare programs are not the answer for the poor

Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]

Private charities are best solution and not government welfare

Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]

The book “After the Welfare State”

Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]

President Obama responds to Heritage Foundation critics on welfare reform waivers

Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]

Welfare reform part 3

Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]

Welfare reform part 2

Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]

Why did Obama stop the Welfare Reform that Clinton put in?

Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]

“Feedback Friday” Letter to White House generated form letter response July 10,2012 on welfare, etc (part 14)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]

Dan Mitchell rightly noted about Biden’s stimulus: “We’re now saddled with a bigger burden of government spending”

The Biden Stimulus was very Wasteful!
Below is a portion of a great article by Dan Mitchell:

More Stimulus Failure

According to data on jobs and growth, President Obama’s so-called stimulus was a failure.

But at least politicians and bureaucrats were able to concoct new and clever ways to waste money. Including research grants tointerview people about their sexual histories and to study erectile dysfunction.

In other words, stimulus spending on stimulus (though at least we did get some clever humor in exchange for nearly $1 trillion of wasted money).

Now we’re wasting nearly $2 trillion on Biden’s spending spree.

.But I’m a policy nerd, so I’m focused on how we’re now saddled with a bigger burden of government spending.

The problem is much bigger than the humorous/irritating example discussed above.

In a column for the Foundation for Economic Education, Brad Polumbo shares some big-picture data on how politicians have squandered our money.

Whenever the government spends money, a significant portion is lost to bureaucracy, waste, and fraud. But the…unprecedented scope of federal spending in response to the COVID-19 pandemic—an astounding $6 trillion total—has led to truly unthinkable levels of fraud. Indeed, a new report shows that the feds potentially lost $200 billion in unemployment fraud alone.…More than $200 billion of unemployment benefits distributed in the pandemic may have been pocketed by thieves… To put that $200 billion figure in context, it is equivalent to $1,400 lost to fraud per federal taxpayer. (There goes your stimmy check!) Or, comparing it to the $37 billion the federal government spent on vaccine and treatment development, it’s more than five times more lost to fraud than went to arguably the most crucial COVID initiative of all. That’s just scratching the surface. According to the American Enterprise Institute, “unemployment fraud” now ranks as the 4th biggest federal COVID expenditure out of more than 17 different categories.

If you’re a taxpayer, hundreds of billions of dollars in fraud sounds like a bad outcome.

But if you’re a Keynesian economist, it’s not a problem. All they care about is having the government borrow and spend a bunch of money. They think that making government biggerautomatically generates benefit for the economy, even if the money goes to thieves and crooks.

I’m not joking. This is why people like Paul Krugman said a fake attack by space aliens would be good for the economy because Washington would spend a bunch of money in response.

And it’s why Nancy Pelosi actually said the economy benefits if we subsidize joblessness.

Waiving PAYGO on $1.9T ‘Stimulus’ Is Reckless. There Are Better Ways to Go.

Rep. John Yarmuth, D-Ky., seen here July 10, 2019, is calling for pretending that the deficit-financed spending spree for special interests in the $1.9 trillion so-called American Rescue Plan never occurred for PAYGO purposes. (Photo: Bill Clark/CQ-Roll Call/Getty Images)

President Joe Biden’s $1.9 trillion “American Rescue Plan” was passed under the guise of responding to COVID-19. In reality, less than 10% of the bill was for public health.

The massive “stimulus” package was stuffed with partisan special-interest payoffs for liberal priorities and other wasteful spending.

Significantly, the law will spend nearly $1.9 trillion without a plan to pay for it. That means that, unless Congress passes new laws with equal or greater reductions in spending by the end of the year, statutory pay-as-you-go (aka “PAYGO”) enforcement will kick in.

The basic premise of statutory PAYGO is straightforward. In the words of former President Barack Obama, who championed the policy and signed it into law, it tells Congress: “You can’t spend a dollar unless you cut a dollar elsewhere.”

Want to keep up with the 24/7 news cycle? Want to know the most important stories of the day for conservatives? Need news you can trust? Subscribe to The Daily Signal’s email newsletter. Learn more >>

If, over the course of a year, laws are enacted that are projected to increase the deficit, statutory PAYGO requires that deficit increase to be paid for by automatic spending reductions (known as sequestration) over the next several years.

However, most spending accounts and programs are exempt from sequestration.

The law has fairly significant flaws, and it would be better to replace it with a more robust fiscal rule that more effectively restrains excessive spending. Politicians of both parties have abused loopholes, adding higher spending without paying for it.

The Congressional Budget Office estimated that because of the large amount of spending in the stimulus law, statutory PAYGO would require a sequestration order to reduce spending by $381 billion next January.

That actually exceeds the total amount of the spending accounts that are subject to sequestration because most major programs are exempted or are capped.

Now that Democrats have enacted their $1.9 trillion spending binge, they do not want to pay for it.

Rep. John Yarmuth, D-Ky., chairman of the House Budget Committee, has introduced a bill that would declare that the stimulus bill “shall not be counted” on the PAYGO scorecard. In effect, it would attempt to pretend that the deficit-financed spending spree for special interests never occurred.

The bill is pitched as a “legislative fix to avert sequestration.” It isn’t a “fix.” It is fiscal recklessness.

Yarmuth said, “If Republicans play political games and don’t do their jobs, Medicare and the seniors that depend on it will pay the price.”

Of course, nothing could be further from the truth.

The CBO estimates that the sequestration order could reduce total Medicare payments to providers and insurance companies by just 4% of the $943 billion that will be spent on Medicarenext year.

Not a single Republican voted for the stimulus. The limited reductions in Medicare spending as a result of the Democrats’ overspending would be enforced by the terms of Obama’s statutory PAYGO law and carried out by Biden’s director of the Office of Management and Budget.

Members of Congress who voted against the irresponsible $1.9 trillion spending bill should not feel pressured to excuse that fiscal recklessness by voting to waive statutory PAYGO enforcement. Simply waiving it retroactively would be just as irresponsible as the spending bill itself.

The potential of sequestration does, however, present an opportunity to implement much-needed fiscal responsibility in a more thoughtful way.

There are a number of smart policy alternatives to achieve spending reductions of equal or greater amounts of savings over time than would the blunt instrument of a sequestration order:

It’s vital that policymakers start to turn the tide against overspending. Even before the outbreak of COVID-19, the federal budget was on an unsustainable path due to the growth of spending outpacing the growth of the economy.

The CBO’s “Long-Term Budget Outlook” showsthat even though tax revenues are projected to rise above normal historical levels, spending will continue to grow out of control.

The national debt has skyrocketed to $28 trillion, about $225,000 per American household. The public debt is already at its highest level relative to the national economy since World War II, but unlike the postwar period when spending fell back to more normal levels, spending and debt are projected to only continue rising.

The CBO says that the current fiscal trajectory would “reduce business investment and slow the growth of economic output,” and would “increase the risk of a fiscal crisis.” But more important are the negative consequences of government that grow too large and burdensome for families and communities.

When the federal government grows beyond its proper limits, and spends and taxes too much, it stifles prosperity, infringes on liberty, and makes it more difficult to live the American dream.

Given all that is at stake, pretending the $1.9 trillion spending bill never happened and retroactively waiving statutory PAYGO enforcement would be beyond irresponsible. However, Congress can and should take advantage of the opportunity to implement thoughtful fiscal responsibility.

Have an opinion about this article? To sound off, please email letters@DailySignal.com and we will consider publishing your remarks in our regular “We Hear You” feature.

March 31, 2021

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

Dear Mr. President,

Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.

President Barack Obama speaks about the debt limit in the East Room of the White House in Washington. | AP Photo

“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!

Washington Could Learn a Lot from a Drug Addict

Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?

Making more dependent on government is not the way to go!!

Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.  

David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:

Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt

Posted by on Mon, Jan 14, 2013 at 1:02 PM

Baby carrot Arkansas Medicaid expansion image

Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.

Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.

Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.

It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.

______________

Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”

How sad it is that liberals just don’t get this reality.

Here is what the Founding Fathers had to say about welfare. David Weinberger noted:

While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Thomas Jefferson to Joseph Milligan

April 6, 1816

[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.

[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]

_______

Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.

_____________

_________

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

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5

Related posts:

Welfare Spending Shattering All-Time Highs

  We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]

We need more brave souls that will vote against Washington welfare programs

We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with  everyone else that keeps spending our money. I am glad that at least […]

Welfare programs are not the answer for the poor

Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]

Private charities are best solution and not government welfare

Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]

The book “After the Welfare State”

Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]

President Obama responds to Heritage Foundation critics on welfare reform waivers

Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]

Welfare reform part 3

Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]

Welfare reform part 2

Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]

Why did Obama stop the Welfare Reform that Clinton put in?

Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]

“Feedback Friday” Letter to White House generated form letter response July 10,2012 on welfare, etc (part 14)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]

$3T Infrastructure Grab Bag Would Strangle Economy, Americans With Debt, Taxes

It appears that only a fraction of the spending proposed in a new $3 trillion to $4 trillion bill would go toward an already too-expansive definition of infrastructure. Pictured: Engineers discuss the progress of an infrastructure construction project. (Photo: Sornranison Prakittrakoon/ Moment/Getty Images)

The media were flooded Monday with news that the Biden administration is working on a colossal new $3 trillion to $4 trillion spending plan.

While full details are not available yet, the plan appears to be another left-wing grab bag of big-government proposals. Rather than stimulating the economy, it would stimulate bigger government while funneling unprecedented amounts of power and money through the hands of politicians in Washington.

All this comes on the heels of President Joe Biden signing into law on March 11 a badly flawed $1.9 trillion legislative package that was originally marketed as a COVID-19 response, but which was more focused on left-wing pet causes, such as bailouts for union pension plans and unnecessary handouts for state governments.

Just a day later, House Speaker Nancy Pelosi, D-Calif., released a statement calling for bipartisan work on legislation that would focus on infrastructure. While there were good reasons to question how beneficial or “bipartisan” such legislation would be, there was at least a chance of finding some across-the-aisle support.

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But the potential for bipartisanship was quickly scuttled by news of the latest multitrillion-dollar plan.

It would be bad enough if the latest plan was just a big-spending infrastructure package. However, it appears that only a fraction of the new spending would go toward an already too-expansive definition of infrastructure.

Instead, most of the new spending and tax subsidies would go toward expanding the welfare state, including “free” tuition for community colleges, “free” child care, and other handouts that lack right-of-center support.

This would likely be the largest expansion of the federal government since the “Great Society” of the 1960s, even eclipsing Obamacare in scope.

Reports indicate that Democrats might attempt to split the plan into two bills—one focused on social spending that passes narrowly along party lines, the other focused on actual infrastructure aimed at winning bipartisan support.

However, it’s clear that the $3 trillion-plus total price tag is already souring prospects for bipartisan infrastructure legislation.

House Republicans boycotted the annual Ways and Means Committee “Member’s Day” hearing on Tuesday in the wake of news reports on the plan, since they indicated that Democrats have already made up their minds to pursue as much spending as possible through the legislative procedure known as reconciliation.

Coincidentally, two respected nonpartisan groups released reports this week that show why Biden and Pelosi should pause their aggressive agenda.

First, the Congressional Budget Office published a paper demonstrating what would happen if a sustained increase in federal spending were coupled with big tax increases to pay for the spending.

While the analysis points to different long-term effects from different types of taxes, any tax-and-spend approach would lead to reductions in economic growth and personal income that are larger than the size of the tax hikes.

For example, the analysis found that having 10% more federal government would mean a 12% to 19% reduction in personal consumption.

And that’s a conservative estimate. Most estimates show tax hikes shrink the economy by two to three times more than the revenues they raise.

That doesn’t mean Congress could escape the consequences of a continued spending spree by simply adding to the national debt. The CBO paper cautions that that would not only impose significant costs and divert resources away from the private sector, but it also would be unsustainable and increase the risk of a devastating financial crisis.

Along the same lines, the Government Accountability Office released a sobering reporton the nation’s poor financial health.

Now that Congress has passed a combined total of $6 trillion in legislation in the aftermath of the COVID-19 pandemic (more than $48,000 per household), it must quickly address the unsustainable growth of major benefit programs, such as Social Security, Medicare, and Medicaid.

Even before the pandemic struck, these programs were on a path to bankruptcy. Addressing these shortfalls in a way that is fair to both current retirees and future generations who will have to foot the bill is one of the greatest policy challenges facing the nation.

Unfortunately, Washington is exacerbating the problem by adding excessively to the national debt and potentially stunting economic growth with higher taxes.

While the Biden administration has repeatedly claimed that it will only seek to raise taxes on the wealthy, a government of the size that it’s seeking would require amounts of money that can only be generated through steep across-the-board tax increases on middle-class Americans.

Regardless of whether those taxes are levied tomorrow or in a few years, they would be an inevitable part of expanding the size and scope of the federal government.

Rather than continuing down the path of centralized power and socialism, lawmakers should recognize the costs associated with endless federal spending and chart a course toward financial responsibility and prosperity.

If they don’t, it will be the public’s duty to hold them accountable.

Have an opinion about this article? To sound off, please email letters@DailySignal.com and we will consider publishing your remarks in our regular “We Hear You” feature.

March 31, 2021

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

Dear Mr. President,

Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.

President Barack Obama speaks about the debt limit in the East Room of the White House in Washington. | AP Photo

“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!

Washington Could Learn a Lot from a Drug Addict

Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?

Making more dependent on government is not the way to go!!

Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.  

David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:

Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt

Posted by on Mon, Jan 14, 2013 at 1:02 PM

Baby carrot Arkansas Medicaid expansion image

Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.

Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.

Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.

It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.

______________

Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”

How sad it is that liberals just don’t get this reality.

Here is what the Founding Fathers had to say about welfare. David Weinberger noted:

While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Thomas Jefferson to Joseph Milligan

April 6, 1816

[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.

[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]

_______

Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.

_____________

_________

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

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5

Related posts:

Welfare Spending Shattering All-Time Highs

  We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]

We need more brave souls that will vote against Washington welfare programs

We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with  everyone else that keeps spending our money. I am glad that at least […]

Welfare programs are not the answer for the poor

Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]

Private charities are best solution and not government welfare

Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]

The book “After the Welfare State”

Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]

President Obama responds to Heritage Foundation critics on welfare reform waivers

Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]

Welfare reform part 3

Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]

Welfare reform part 2

Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]

Why did Obama stop the Welfare Reform that Clinton put in?

Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]

“Feedback Friday” Letter to White House generated form letter response July 10,2012 on welfare, etc (part 14)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]

Dan Mitchell article Bigger Government Will Reduce Living Standards According to New CBO Research

Bigger Government Will Reduce Living Standards According to New CBO Research

I’ve been warning that the United States should not copy Europe’s fiscal policy, largely because living standards are significantly lower in nations with large welfare states.

That’s true if you look at average levels of consumption in different nations, but the most compelling data is the fact that lower-income people in the United States generally enjoy living standards that are equal to or even higher than those for middle-class people in most European countries.

A bigger burden of government is not just a theoretical concern. President Biden has already pushed through a $1.9 trillion spending bill that includes some temporary provisions – such as per-child handouts – that, if made permanent, could add several trillion dollars to the burden of government spending.

And the White House has signaled support for $3 trillion of additional spending for items such as infrastructure, green energy, and other boondoggles.

This doesn’t even count the cost of other schemes, such as the “public option” that would strangle private health insurance and force more people to rely on an already-costly-and-and bankrupt government program.

So what will it mean for America if our medium-sized welfare state morphs into a European-style large welfare state?

The answer to that question is rather unpleasant, at least if some new research from the Congressional Budget Office is any indication. The study, authored by Jaeger Nelson and Kerk Phillips, considers the impact on growth based on six different scenarios (based on how much the spending burden increases and what taxes are increased).

If permanent spending is financed by new or increased taxes, then those taxes influence people’s decisions about how much to work and save. Those decisions then affect how much the economy produces and businesses invest and, ultimately, how much people can consume. Different types of taxes have different economic effects. Taxes on labor income reduce after-tax wages, so they reduce the return on each additional hour worked. …Higher taxes on capital income, such as dividends and capital gains, lower the average after-tax rate of return on private wealth holdings (or the return on investment), which reduces the incentive to save and invest and leads to reductions in saving, investment, and the capital stock. …we compare the effects of raising additional revenues through three illustrative tax policies: a flat tax on labor income, a flat tax on all income (including both labor and capital income), and a progressive tax on all income. The additional revenues generated by these policies are in addition to the revenues raised by taxes that already exist and are used to finance two specific increases in government spending. The two increases in government spending are set to 5 percent and 10 percent of GDP in 2020.

Here are some of the key results, as illustrated by the chart.

The least-worst result (the blue line) is a decline in GDP of about 3 percent, and that happens if the spending burden expand by 5-percentage points of GDP and is financed by a flat tax.

The worst-worst result (dashed red line) is a staggering decline in GDP of about 10 percent, and that happens if the spending burden climbs by 10-percentage points and is financed by a progressive tax.

Here’s some additional analysis, including a description of why progressive taxes impose the most damage.

This paper shows that flat labor and flat income tax policies have similar effects on output; labor taxes reduce the labor supply more, and income taxes reduce the capital stock more. For all three policies, the decline in income contracts the tax base considerably over time. As a result, to continuously generate enough revenues to finance the increase in government spending in each year, tax rates must steadily increase over time to account for the decline in the tax base. Moreover, labor and capital taxes put upward pressure on interest rates by reducing the capital-to-labor ratio over time… The largest declines in economic activity among the financing methods considered occur with the progressive tax on all income. Those declines occur because high-productivity workers reduce their hours worked and because higher taxes on asset income reduce the incentive to save and invest relatively more than under the two flat taxes.

There’s lots of additional information in the study, but I definitely want to draw attention to Table 4 because it shows that lower-income people will suffer big reductions in living standards if there’s an increase in the burden of government spending (circled in red).

What makes these results especially remarkable is that the authors only look at the damage caused by higher taxes.

Yet we know from other research that the economy also will suffer because of the higher spending burden. This is because of the various ways that growth is reduced when resources are diverted from the productive sector to the government.

For background, here’s a video on the theoretical reasons why government spending hinders growth.

 —

P.S. The CBO study also points out that financing new spending with a value-added tax wouldn’t avert economic damage.

…by reducing the cost of time spent not working for pay relative to other goods, a consumption tax could reduce hours worked through a channel like that of a tax on labor.

For what it’s worth, even the pro-tax International Monetary Fund agrees with this observation.

P.P.S. It’s worth noting that the CBO study also shows that young people will suffer much more than older people.

…older cohorts, on average, experience smaller declines in lifetime consumption than younger cohorts

Which raises an interesting question of why millennials and Gen-Zers don’t appreciate capitalism and instead are sympathetic to the dirigiste ideology that will make their lives more difficult.

In One Image, Everything You Need to Know about Government Intervention

While I freely self-identify as a libertarian, I don’t think of myself as a philosophical ideologue.

Instead, I’m someone who likes digging into data to determine the impact of government policy. And because I’ve repeatedly noticed that more government almost always leads to worse outcomes, I’ve become a practical ideologue.

In other words, when looking at at an issue, I now have a default assumption that government is going to be the problem, not the solution.

I think more people will share my viewpoint if they peruse this chart from Mark Perry.

It shows changes in prices for selected goods and services over the past 21 years, and the inescapable conclusion (as I noted when writing about the 2014 version of his chart) is that we get higher relative prices in sectors where there’s the most government intervention.

Especially healthcare and higher education.

By contrast, we see falling relative prices (and sometimes falling absolute prices!) in sectors where there is little or no government intervention.

Here’s some of Mark’s description of what we can learn from his chart.

I’ve updated the chart above with price changes through the end of last year. During the most recent 21-year period from January 2000 to December 2020, the CPI for All Items increased by 54.6% and the chart displays the relative price increases over that time period for 14 selected consumer goods and services, and for average hourly wages.…Various observations that have been made about the huge divergence in price patterns over the last several decades… The greater (lower) the degree of government involvement in the provision of a good or service the greater (lower) the price increases (decreases) over time, e.g., hospital and medical costs, college tuition, childcare with both large degrees of government funding/regulation and large price increases vs. software, electronics, toys, cars and clothing with both relatively less government funding/regulation and falling prices.

By the way, I can’t resist also calling attention to Mark’s data on what’s happened over time to prices for various health care services and procedures.

We find that prices have skyrocketed in areas of the healthcare sector where government plays a big role, especially hospital care.

By contrast, prices have been steady (or even falling!) in areas of the healthcare sector where competitive markets are allowed to operate, most notably for cosmetic procedures.

It’s almost as if it makes sense to have a default assumption that government is the problem rather than the solution.

P.S. While the data in Mark’s chart tell a depressing story about the harmful effect of government intervention, he shares one bit of good news in his article.

The annual increase in college tuition and fees of only 1.4% last year was the smallest annual increase in the history of the CPI for college tuition and fees going back to 1978, and the only annual increase ever below 2%. That increase is far below the average annual increase in college tuition of nearly 7% over the last 42 years. So perhaps the “higher education bubble” is finally starting to show signs of deflating?

I hope he’s right, but worry he’s wrong.

P.P.S. Sadly (but predictably), some people seem to thinkgovernment-caused price increases are a reason to support more government intervention.

How are we going to attack the healthcare costs in this country? 1st, we raise deductibles and 2nd, we attack the “Third Party” payment party.

If people have to pay directly for a large part of their healthcare costs then they will be more frugal when they can.

The 4 Ways to Spend Money by Milton Friedman

Uploaded by on Aug 26, 2006

1. You spend your own money on yourself.
2. You spend your own money on someone else.
3. You spend someone else’s money on yourself.
4. You spend someone else’s money on someone else.

___________

Milton Friedman on the four ways you can spend money

Jason Fried

Jason Fried wrote this on / 43 comments

  1. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.
  2. You can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.
  3. I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!
  4. I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get.

Via Joshua Kaufman.

Jason Fried wrote this on Mar 03 2010 There are 43 comments.

Jason Fried

About Jason Fried

Jason co-founded 37signals back in 1999. He also co-authored REWORK, the New York Times bestselling book on running a “right-sized” business. Co-founded, co-authored… Can he do anything on his own?

Read all of Jason Fried’s posts, and follow Jason Fried on Twitter.

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I like to think that very few people despise Obamacare more than me.

I don’t like Obamacare because it’s a fiscal boondoggle.

I don’t like Obamacare because it’s bad healthcare policy.

I don’t like Obamacare because it generated an embarrassingly bad decision by the Supreme Court.

I don’t like Obamacare because it is driving people out of the labor force and into government dependency.

I don’t like Obamacare because it has increased corruption in Washington.

And I don’t like Obamacare because it further enriches and empowers Washington’s political class.

But I also like being honest and that means I’m willing to acknowledge that there’s one small part of Obamacare that will have a positive impact.

More specifically, the so-called Cadillac tax on expensive employer-provided health plans will slightly reduce the distortion in the tax code that encourages over-insurance and exacerbates the healthcare system’s pervasive third-party payer problem.

Indeed, we’re seeing some signs of this already, even though the tax preference isn’t capped until 2018. Here are some excerpts from a story published by Fox News, starting with a description of the law.

…companies desperate to avoid a 40 percent ObamaCare “Cadillac tax” are finding ways to shift the costs to workers. The so-called “Cadillac tax,” now four years away, will affect health plans that spend more than $10,200 per worker. “The excise tax, when it hits in 2018, will affect both employers and employees,”said Brian Marcotte, president of the National Business Group on Health.

Allow me to make an important correction before sharing other parts of the story.

Companies aren’t shifting costs to workers. The money currently spent on health insurance policies is part of total employee compensation.

Think of it this way. If a company hires you for a salary of $50,000 and also includes a $10,000 health insurance policy, what’s your total compensation?

If you give an answer other than $60,000, you’re either very bad at math or you have the logic skills of a politician.

So the story should have stated that the Cadillac tax is merely making workers more aware of costs that already exist.

Thanks for letting me vent. Now back to our main point, which is that the Cadillac tax discourages overinsurance, and this is already leading to some positive changes in the marketplace.

Employees will get incentives to reduce costs through such arrangements as wellness programs, including losing weight or stopping smoking. Meanwhile, employers are shifting workers into plans with higher deductibles, just as ObamaCare does in the health care exchanges, and using health savings accounts to help defray the costs.

I’m particularly happy that employers and employees are shifting to plans with higher deductibles. As I’ve explained before, health insurance should cover large, unanticipated costs, such as the onset of cancer or getting injured in a car wreck.

But it shouldn’t cover annual checkups, elective surgery, and other routine and/or predictable expenses.

And we have one other bit of good news. The tax isn’t going to raise nearly as much money as the politicians wanted!

The “Cadillac tax” was originally intended to take effect sooner, but unions and other groups convinced officials to delay it until 2018, reducing the anticipated income from $137 billion to $80 billion over ten years. But many analysts predict it will be far less than that. Henry Aaron of the Brookings Institution said, before then, it’s expected that most of the businesses that offer that form of insurance will back off and make the insurance less generous, so the tax won’t bite.” …if employers are able to avoid it and less than expected is collected, ObamaCare could fall tens of billions short in paying for itself as promised.

I should hasten to add, by the way, that I’m glad that Obamacare isn’t paying for itself since that simply means lots of taxes to accompany all the additional spending.

I’d be even happier, of course, if we could figure out how to get rid of all the spending as well.

Just in case folks are thinking I’ve gone soft, let’s close today’s post with some humor directed at the rest of Obamacare.

Since the IRS is a big part of Obamacare, here’s a particularly good bumper sticker that shares a line with the above poster.

Here’s a poster mocking the delightful fiscal impact of the law.

Though whoever put this together should have been careful of using The Joker.

I like this next poster since it highlights how politicians have exempted themselves from the law.

Last but not least, here’s Dr. Obama making a cameo appearance.

Ah, the IRS shows up again. Do you sense a theme?

And don’t forget the IRS bureaucrats want to be exempt from the law as well.

P.S. If you’re a glass-one-tenth-full person, here’s some other good news about Obamacare.

________________

To be fair here is the opposite point of view from the Huffington Post:

Finally, A Senator In A Tough Re-Election Fight Bets On Obamacare

The Affordable Care Act, in its brief time on this earth, has endured its share of storm and stress. The bungled rollout of the federal online interface cost proponents lots of political capital. There have been high-wire legal challenges to surmount. While public approval of the law’s ends remains steadily high, the popularity of the law itself is often recorded as lacking. There have been uneasy periods for Obamacare’s chief proponents as they’ve waited for enrollment milestones to be reached and rate-hike hysteria to be put to bed. (There’s recent news on that front, actually.) And as the law promises so much, over such a long time frame, there will be more uneasy periods to endure for the lawmakers who put their stamp on the reform.

But the simple fact is that some lawmakers voted for Obamacare and some voted against it, and there’s only so far any of them can run from their decision. That’s why I’ve had the occasion to talk about “the Obamacare bet.” The bill’s opponents have largely settled on a claim: The law is going to fail and their admonitions against it will be proven wise and correct. The bill’s supporters should go ahead and stake the opposite claim. Many of those who supported the bill, however, have been reluctant to go “all in” on the decision they made. Especially among those who voted for the law and have since found themselves in a tough electoral race.

Today, however, comes a change. As Greg Sargent reports over at The Plum Line, Sen. Mark Pryor (D-Ark.) — currently in a tough re-election race against his Republican opponent, Rep. Tom Cotton — is up with a new ad in which he heralds his yes vote on the Affordable Care Act. You can watch the spot and read the transcript below. While Pryor doesn’t exactly go “all in,” he lays more of his chips on the felt.

DAVID: When Mark was diagnosed with cancer, we thought we might lose him.

MARK: My family and my faith helped me through the rough times.

DAVID: But you know what? Mark’s insurance company didn’t want to pay for the treatment that ultimately saved his life.

MARK: No one should be fighting an insurance company while you’re fighting for your life. That’s why I helped pass a law that prevents insurance companies from canceling your policy if you get sick or denying coverage for pre-existing conditions.

(David, by the way, is Mark’s dad as well as a former senator from and governor of Arkansas.)

Now Mark Pryor’s ad could have been a bit bolder. You’ll note that nowhere does he say the words “Obamacare” or “Affordable Care Act,” just that he “pass[ed] a law.” Of course, he does make mention of the law’s most popular features — it prevents people from getting kicked off plans when the time comes to avail themselves of their coverage, and it ends the practice of denying coverage for pre-existing conditions. It’s hard to imagine voters tolerating a return to the status quo ante, which is one of the reasons that it’s been so devilish for the law’s opponents to craft an alternative.

Pryor may have buried the lead in this ad, in fact. As Gallup reported earlier this month, Arkansas leads “all other states in the sharpest reductions in their uninsured rate among adult residents since the healthcare law’s requirement to have insurance took effect at the beginning of the year.”

Per Sargent:

Republicans will undoubtedly cast this as an acknowledgment that their attacks on Pryor over the law are working and could no longer be ignored. They’ll argue Pryor is, in desperation, using his faith and personal experience as a shield against those attacks. But this misses what’s really going on here. This ad is actually coming at a point where there are signs the anti-Obamacare fires are cooling somewhat. GOP advertising against the law has fallen off sharply, and is surprisingly low in Arkansas.

This is correct. As Bloomberg News’ Heidi Pryzbyla reported earlier this week, Republicans have cut way back on on ads that attack Obamacare, in “a sign that the party’s favorite attack against Democrats is losing its punch.” Pryzbyla continues:

The shift — also taking place in competitive states such as Arkansas and Louisiana — shows Republicans are easing off their strategy of criticizing Democrats over the Affordable Care Act now that many Americans are benefiting from the law and the measure is unlikely to be repealed.

“The Republican Party is realizing you can’t really hang your hat on it,” said Andrew Taylor, a political science professor at North Carolina State University. “It just isn’t the kind of issue it was.”

There is a good reason for this shift. As Matt Yglesias pointed out back in June, the “phony Obamacare debate” — the one that broadly alleged that death panels existed, that the fubar launch of the federal website was the law’s death knell, that enrollment numbers would be way off target — has run its course, leaving only the most fundamental debate of all:

[Obamacare] is a large-scale effort to improve living standards for people in the bottom half of the income distribution by giving them additional economic resources. One of America’s political parties doesn’t like that idea in any non-health context and they don’t like it for health care either. They think the money it costs to provide those subsidies should be taken away, and it should be given to high-income households in the form of tax cuts.

This is an excellent and important policy debate to have. One of the great ideological issues not just of our time and place, but of democratic politics across eras and countries. Should economic resources be distributed more equally or less equally?

Since Yglesias wrote that piece, we’ve seen a brief return to the “phony” debate, thanks to a pair of judges on the D.C. Circuit appeals court, who issued a ruling in the Halbig v. Burwell case contending that (to quote Simon Maloy in Salon) “a single poorly worded snippet of the Affordable Care Act invalidates subsidies for people who purchased health coverage through the federal exchanges.” As Maloy inventively points out, this is a hilariously bad-faith argument to make, akin to George Costanza’s “Moops” argument in “Seinfeld”:

Beyond that, however, we are ultimately left with the discussion that Yglesias mentions as the real underlying debate: whether it is right and proper to redistribute money from the top to the bottom so that those on the lower rungs of the economic ladder can live and work longer without going into catastrophic debt.

This argument’s signature virtue is that — unlike all the “death panels” and doom-saying — it is, legitimately, a good-faith argument. Which may cause one to wonder: Why has it taken so long to burn off all the bad-faith arguments and get down to the real bone of contention? I’d posit that arguing that poor people aren’t morally fit enough to deserve health insurance lacks a certain salability outside the Ayn Rand set.

With that in mind, you might think it’s strange that so many of Obamacare’s proponents have seemed reluctant to take “the Obamacare bet.” I agree! It’s strange. From my perspective, the die has long been cast, so lawmakers who affirmed the bill with their vote may as well own it. Pryor’s ad suggests that perhaps those lawmakers long deemed to be vulnerable due to their votes on the Affordable Care Act may be coming around to this position.

None of this should cause you to expect some sort of sea change in the overall fundamentals of the 2014 election. The GOP is still in great shape for the midterms, and they may even discover that they don’t need an anti-Obamacare blitz to win in November. But that’s really just an even better reason for vulnerable lawmakers who supported the Affordable Care Act to put some sustained ballyhoo behind their decision to vote for the law. Win or lose, may as well remind people where you stood. Pryor’s effort is a lot bolder than most.

[Would you like to follow me on Twitter? Because why not?]

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___________ Halbig, King and ObamaCare (Michael F. Cannon) Published on Jul 22, 2014 Two federal circuit courts have now ruled on ObamaCare’s health insurance exchanges and have arrived at different conclusions. Michael Cannon, one of the chief architects of this legal challenge, explains what the rulings mean and what’s in store for the future health […]

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Will Republicans defeat Obamacare in Arkansas?

  ________ Will Republicans defeat Obamacare in Arkansas? February 21, 2014 4:24PM Spending Restraint in Arkansas By Nicole Kaeding Share For the fourth day in a row, the Arkansas House of Representatives has refused to approve the yearly appropriation for its Medicaid program, dubbed the “private-option.” If the legislature continues this refusal and reverses its […]

Open letter to President Obama (Part 520) (Should Politicians Be Allowed to Exempt Themselves and their Staff from Obamacare?)

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Obama just made the 18th executive branch’s unilateral change to Obamacare but who will challenge him on it?

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Obamacare Death Panels Kills Jobs more often than people!!!

____________ Obamacare Death Panels Kills Jobs more often than people!!! Crying about Obamacare, but also Laughing at Obamacare February 8, 2014 by Dan Mitchell I asked back in September whether all the bad news about Obamacare meant it was time to feel sorry for President Obama and other statists. Some people apparently didn’t realize I was […]

Open letter to President Obama (Part 514) (Why We Should Be Optimistic about Repealing Obamacare and Fixing the Healthcare System)

Open letter to President Obama (Part 514) (Emailed to White House on 4-15-13.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get […]

Dan Mitchell article What Biden’s Corporate Tax Increase Means for American Competitiveness

What Biden’s Corporate Tax Increase Means for American Competitiveness

Thanks to globalization (as opposed to globalism), jobs and investment are now very mobile. This means the costs of bad policy are higher than ever before, and it also means the benefits of good policy are higher than ever before.

Which is why it’s very useful to look at various competitiveness rankings, most notably the ones that are comprehensive (most notably Economic Freedom of the World and the Index of Economic Freedom).

But since my specialty is public finance, I’m also interested in measures of fiscal competitiveness (best tax system, worst tax system, costliest welfare state, etc).

Today, let’s narrow our focus and look at business tax competitiveness. This is an area where the United States traditionally has lagged, both because we used to have one of the world’s highest corporate tax rates and because onerous tax rules put U.S.-based companies at an added disadvantage.

Trump lowered the federal corporate tax rate from 35 percent to 21 percent, which definitely helped, but now Biden wants to push the rate back up to 28 percent.

What will that mean for U.S. competitiveness?

It’s not good news.

The Tax Foundation calculated the combined tax rate on business income (including the double tax on dividends) for various developed nations.

As you can see, America will have the most onerous tax regime if Biden is successful.

What if we look only at the corporate tax rate? And what if we consider every jurisdiction in the world?

Professor Robert McGee pulled together all the numbers and ranked nations from #1 to #223.

The United States currently is in the bottom half, which isn’t good since we’re below average. But you can see from these two tables that Biden will drop America to the bottom 10 percent.

Needless to say, it’s not good to rank below France.

But let’s think of the glass as being 1/10th full rather than 9/10ths empty. At least the U.S. beats Venezuela!

The bottom line is that it will not be good news if Biden’s plan is enacted.

P.S. From Professor McGee’s study, here are the jurisdictions tied for 1st place.

P.P.S. Needless to say, politicians from high-tax nations resent the 15 jurisdictions that don’t have a corporate income tax.

Indeed, that’s why many of those politicians are pushing the “global minimum tax” that I wrote about yesterday.

Those politicians basically want to turn back the clock and reverse the progress depicted in this set of charts from the Tax Foundation.

P.P.S. This is why it’s important to defend the liberalizing process of tax competition.

March 16, 2021

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

Dear Mr. President,

Is our country learning from history? California keeps raising their taxes on the wealthy and people keep moving from California to Texas. What does our federal government do? They also have been raising taxes on the wealthy lately. Take a look at this excellent video below and then read a great article by Dan Mitchell of the Cato Institute on what is happening in California right now.

Will Higher Tax Rates Balance the Budget?

Published on Apr 11, 2012

As the U.S. debt and deficit grows, some politicians and economist have called for higher tax rates in order to balance the budget. The question becomes: when the government raises taxes, does it actually collect a larger portion of the US economy?

Professor Antony Davies examines 50 years of economic data and finds that regardless of tax rates, the percentage of GDP that the government collects has remained relatively constant. In other words, no matter how high government sets tax rates, the government gets about the same portion. According to Davies, if we’re concerned about balancing the budget, we should worry less about raising tax revenue and more about growing the economy. The recipe for growth? Lower tax rates and a simplified tax code.

Like most people, I’m a sucker for a heartwarming story around the holidays.

Sometimes, you get that nice feeling when good things happen to good people, like you find at the end of a classic movie like “It’s a Wonderful Life.”

But since I’m a bit of a curmudgeon, I also feel all warm and fuzzy when bad things happen to bad people.

That’s why I always smile when I read stories about taxpayers moving across borders, thus preventing greedy tax-hiking politicians from collecting more revenue.

“Where’s our tax revenue?!?”

I’m glad when that happens to French politicians. I’m glad when it happens to Italian politicians. I’m glad when it happens to Illinois politicians. And British politicians. And Spanish politicians. And Maryland politicians. I could continue, but I think you get the point.

I’m even glad when it happens to the politicians in Washington.

I smile because I envision the moment when some budget geek tells these sleazy politicians that projected revenues aren’t materializing and they don’t have more money to spend.

So I wish I could be a fly on the wall when this moment of truth happens to California politicians. They convinced voters in the state to enact Prop 30, a huge tax increase targeting those evil, awful, bad rich people.

Governor Brown and his fellow kleptocrats in Sacramento doubtlessly are salivating at the thought of more money to waste.

But notwithstanding a satirical suggestion from Walter Williams, there aren’t guard towers and barbed-wire fences surrounding the state. Productive people can leave, and that’s happening every day. And they take their taxable income with them.

Usually in ways that don’t attract attention. But sometimes a bunch of them leave at the same times, and that is newsworthy. Here’s an example of that happening, as reported by the San Francisco Chronicle.

Chevron Corp. will move up to 800 jobs – about a quarter of its current headquarters staff – from the Bay Area to Houston over the next two years but will remain based in San Ramon, the oil company told employees Thursday. …The company already employs far more people in Houston – about 9,000 full-time employees and contractors – than it does in San Ramon.

We don’t know a lot of details, but these were positions at the company’s headquarters and they were “technical positions dealing with information and advanced energy technologies…tied to Chevron’s worldwide oil exploration and production business.”

Let’s assume these highly skilled employees earn an average of $250,000. I imagine that’s a low-ball estimate, but this is just for purposes of a thought experiment. Now multiply that average salary by 800 workers and you get $200 million of income.

And every penny of that $200 million no longer will be subject to tax by the kleptocrats in the state’s capital.

In other words, we’re seeing the Laffer Curve in action.

Politicians can raise tax rates all day long, but that doesn’t automatically translate into more tax revenue. Politicians keep forgetting that taxable income is not a fixed variable.

What’s happening in a big way with Chevron is happening in small ways every single day with investors, entrepreneurs, small business owners, and other “rich’ people.

That’s good for the people escaping. And it also will warm my heart when California’s despicable politicians discover next year that there’s an “unexpected” revenue shortfall.

P.S. It’s just an anecdote that the Chevron jobs are going to Texas. But when you add together a bunch of anecdotes, you get data. And according to the data, Texas is kicking the you-know-what out of California. Maybe there’s a lesson to be learned?

__________

___________

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

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By WALTER WILLIAMS

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Waiving PAYGO on $1.9T ‘Stimulus’ Is Reckless. There Are Better Ways to Go.

Waiving PAYGO on $1.9T ‘Stimulus’ Is Reckless. There Are Better Ways to Go.

Rep. John Yarmuth, D-Ky., seen here July 10, 2019, is calling for pretending that the deficit-financed spending spree for special interests in the $1.9 trillion so-called American Rescue Plan never occurred for PAYGO purposes. (Photo: Bill Clark/CQ-Roll Call/Getty Images)

President Joe Biden’s $1.9 trillion “American Rescue Plan” was passed under the guise of responding to COVID-19. In reality, less than 10% of the bill was for public health.

The massive “stimulus” package was stuffed with partisan special-interest payoffs for liberal priorities and other wasteful spending.

Significantly, the law will spend nearly $1.9 trillion without a plan to pay for it. That means that, unless Congress passes new laws with equal or greater reductions in spending by the end of the year, statutory pay-as-you-go (aka “PAYGO”) enforcement will kick in.

The basic premise of statutory PAYGO is straightforward. In the words of former President Barack Obama, who championed the policy and signed it into law, it tells Congress: “You can’t spend a dollar unless you cut a dollar elsewhere.”

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If, over the course of a year, laws are enacted that are projected to increase the deficit, statutory PAYGO requires that deficit increase to be paid for by automatic spending reductions (known as sequestration) over the next several years.

However, most spending accounts and programs are exempt from sequestration.

The law has fairly significant flaws, and it would be better to replace it with a more robust fiscal rule that more effectively restrains excessive spending. Politicians of both parties have abused loopholes, adding higher spending without paying for it.

The Congressional Budget Office estimated that because of the large amount of spending in the stimulus law, statutory PAYGO would require a sequestration order to reduce spending by $381 billion next January.

That actually exceeds the total amount of the spending accounts that are subject to sequestration because most major programs are exempted or are capped.

Now that Democrats have enacted their $1.9 trillion spending binge, they do not want to pay for it.

Rep. John Yarmuth, D-Ky., chairman of the House Budget Committee, has introduced a bill that would declare that the stimulus bill “shall not be counted” on the PAYGO scorecard. In effect, it would attempt to pretend that the deficit-financed spending spree for special interests never occurred.

The bill is pitched as a “legislative fix to avert sequestration.” It isn’t a “fix.” It is fiscal recklessness.

Yarmuth said, “If Republicans play political games and don’t do their jobs, Medicare and the seniors that depend on it will pay the price.”

Of course, nothing could be further from the truth.

The CBO estimates that the sequestration order could reduce total Medicare payments to providers and insurance companies by just 4% of the $943 billion that will be spent on Medicarenext year.

Not a single Republican voted for the stimulus. The limited reductions in Medicare spending as a result of the Democrats’ overspending would be enforced by the terms of Obama’s statutory PAYGO law and carried out by Biden’s director of the Office of Management and Budget.

Members of Congress who voted against the irresponsible $1.9 trillion spending bill should not feel pressured to excuse that fiscal recklessness by voting to waive statutory PAYGO enforcement. Simply waiving it retroactively would be just as irresponsible as the spending bill itself.

The potential of sequestration does, however, present an opportunity to implement much-needed fiscal responsibility in a more thoughtful way.

There are a number of smart policy alternatives to achieve spending reductions of equal or greater amounts of savings over time than would the blunt instrument of a sequestration order:

It’s vital that policymakers start to turn the tide against overspending. Even before the outbreak of COVID-19, the federal budget was on an unsustainable path due to the growth of spending outpacing the growth of the economy.

The CBO’s “Long-Term Budget Outlook” showsthat even though tax revenues are projected to rise above normal historical levels, spending will continue to grow out of control.

The national debt has skyrocketed to $28 trillion, about $225,000 per American household. The public debt is already at its highest level relative to the national economy since World War II, but unlike the postwar period when spending fell back to more normal levels, spending and debt are projected to only continue rising.

The CBO says that the current fiscal trajectory would “reduce business investment and slow the growth of economic output,” and would “increase the risk of a fiscal crisis.” But more important are the negative consequences of government that grow too large and burdensome for families and communities.

When the federal government grows beyond its proper limits, and spends and taxes too much, it stifles prosperity, infringes on liberty, and makes it more difficult to live the American dream.

Given all that is at stake, pretending the $1.9 trillion spending bill never happened and retroactively waiving statutory PAYGO enforcement would be beyond irresponsible. However, Congress can and should take advantage of the opportunity to implement thoughtful fiscal responsibility.

Have an opinion about this article? To sound off, please email letters@DailySignal.com and we will consider publishing your remarks in our regular “We Hear You” feature.

March 31, 2021

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

Dear Mr. President,

Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.

President Barack Obama speaks about the debt limit in the East Room of the White House in Washington. | AP Photo

“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!

Washington Could Learn a Lot from a Drug Addict

Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?

Making more dependent on government is not the way to go!!

Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.  

David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:

Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt

Posted by on Mon, Jan 14, 2013 at 1:02 PM

Baby carrot Arkansas Medicaid expansion image

Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.

Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.

Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.

It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.

______________

Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”

How sad it is that liberals just don’t get this reality.

Here is what the Founding Fathers had to say about welfare. David Weinberger noted:

While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Thomas Jefferson to Joseph Milligan

April 6, 1816

[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.

[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]

_______

Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.

_____________

_________

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

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5

Related posts:

Welfare Spending Shattering All-Time Highs

  We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]

We need more brave souls that will vote against Washington welfare programs

We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with  everyone else that keeps spending our money. I am glad that at least […]

Welfare programs are not the answer for the poor

Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]

Private charities are best solution and not government welfare

Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]

The book “After the Welfare State”

Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]

President Obama responds to Heritage Foundation critics on welfare reform waivers

Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]

Welfare reform part 3

Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]

Welfare reform part 2

Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]

Why did Obama stop the Welfare Reform that Clinton put in?

Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]

“Feedback Friday” Letter to White House generated form letter response July 10,2012 on welfare, etc (part 14)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]

5 Charts Show Why Congress Must Stop Adding to National Debt

Debt Stimulus Package

An enormous “stimulus” package was signed into law on Thursday, which is expected to bring government spending for this year to $6.9 trillion. This will add dramatically add to the national debt, which is currently at $28 trillion. Pictured: Speaker of the House Nancy Pelosi, D-Calif., conducts a news conference on the on the stimulus bill on Tuesday. (Photo: Tom Williams/CQ-Roll Call, Inc./Getty Images)

President Joe Biden signed into law an enormous, debt-financed “stimulus” package on Thursday. This was the final step in a multi-month process to pass a heavily flawed piece of legislation.

We might be tempted to hope that this will finally sate the left’s appetite for big government. After all, the size and scope of government will expand more than 54%—from $4.5 trillion of annual spending in 2019 to about $6.9 trillion this year—once the new spending bill is factored in, based on calculations by experts at The Heritage Foundation.

Washington added $4.5 trillion to the national debt over the last year alone. This brings the total debt level to $28 trillion, or roughly $225,000 per U.S. household.

Unfortunately, even that might not be enough to get congressional leaders and the Biden administration to pump the brakes on the spending spree. A planned infrastructure spending package could top $2 trillion, and there is little appetite to pay for it.

Want to keep up with the 24/7 news cycle? Want to know the most important stories of the day for conservatives? Need news you can trust? Subscribe to The Daily Signal’s email newsletter. Learn more >>

There are plenty of reasons why Congress should avoid another bloated spending deal. The nonpartisan Congressional Budget Office issued a report last week detailing one of the most important reasons: our nation’s finances are rapidly heading into dangerous territory.

While the numbers involved can seem incomprehensibly large, these charts can help to visualize the looming disaster.

The federal government amassed a record-setting amount of debt during the Great Depression and World War II. When the war was over, federal spending was adjusted from 41% of the economy in 1945 to 11.4% in 1948.

A combination of lower spending and rapid revenue increases from the post-war economic boom meant that the national debt shrank dramatically relative to the economy.

Unfortunately, such rapid debt reduction would be almost impossible to duplicate today.

Even the most optimistic growth forecasts fall well short of what was seen after World War II. More importantly, because most federal spending goes towards established benefit programs like Social Security and Medicare, it would be extremely difficult to cut spending at a similar pace.

However, policies to boost economic growth and restrain spending are still the best way to prevent the national debt from reaching crisis proportions.

In 2020, the federal government spent almost twice as much as it took in from taxes. The new legislative package means that this year’s deficit will likely be even bigger than last year’s.

These sky-high deficits add to an even larger total debt.

Uncle Sam has benefitted from a run of low interest rates over the last several years, blunting the cost of the escalating debt. Yet we can’t assume that this will last forever.

If you went to a bank for a big loan, you would expect them to ask some tough questions about your finances. The same holds true for the global financial system, which we count on to buy our debt.

While short-term federal bonds are still considered a safe investment, markets are demanding much higher yields for longer-term debt. Credit rating agencies have recently warnedthat our credit rating could be downgraded unless steps are taken to address overspending and the debt.

They have also cautioned us that interest rates will rise. This signals that our days of cheap creditcould be coming to an end sooner than we would want. If that happens, America will pay a steep price.

That “steep price” is not metaphorical. The Congressional Budget Office’s new report shows that the cost of servicing the national debt was already set to explode before the stimulus package passed.

Right now, interest on the debt is a burden the economy can handle. However, even a modest interest rate increase—coupled with continued irresponsibility from Washington—will cause interest costs to increase more than five-fold in the next few decades.

This would be an anchor around the neck for the economy, and would make the growth and prosperity we take for granted next to impossible for future generations to experience.

In the not-so-distant past—specifically, the year 2018—the amount of public debt per person was just under $50,000. Today, it stands at nearly $67,000 for every American, including children.

It only gets worse from there. A baby born tomorrow is expected to have over $111,000 in debt to their name when they turn 18, and nearly $192,000 by age 30.

Those numbers do not account for the new stimulus bill, a potential infrastructure package, or expanded benefit programs. Instead, the main reason why debt will skyrocket over the coming years is because federal spending is being allowed to grow without limits.

While some on the left blame the 2017 tax cuts for deficits, this chart makes it clear that the culprit for our long-term financial gap is an explosion in federal spending.

Spending was already above the historical average in 2019, and will grow much faster than the economy from 2022 onwards. Meanwhile, revenue will soon return to normal levels.

Why do we expect such a rapid increase in federal spending? A handful of programs, primarily Social Security, Medicare, and Medicaid, have been set up in an unsustainable way. Reforming these programs by balancing the needs of both retirees and future generations would be a tremendous breakthrough.

However, Congress has consistently avoided the issue of unsustainable programs, and has even made things worse by expanding benefits. The longer Washington waits to confront this problem, the more drastic the remedies will have to be.

Experts from The Heritage Foundation have provided legislators with the policy tools they need to address this mounting crisis, meaning members of Congress can’t plead ignorance.

Those in positions of leadership have a responsibility to do the right thing for present and future Americans, and the public must hold them accountable if they do not.

Have an opinion about this article? To sound off, please email letters@DailySignal.com and we will consider publishing your remarks in our regular “We Hear You” feature.

—-

March 31, 2021

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

Dear Mr. President,

Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.

President Barack Obama speaks about the debt limit in the East Room of the White House in Washington. | AP Photo

“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!

Washington Could Learn a Lot from a Drug Addict

Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?

Making more dependent on government is not the way to go!!

Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.  

David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:

Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt

Posted by on Mon, Jan 14, 2013 at 1:02 PM

Baby carrot Arkansas Medicaid expansion image

Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.

Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.

Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.

It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.

______________

Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”

How sad it is that liberals just don’t get this reality.

Here is what the Founding Fathers had to say about welfare. David Weinberger noted:

While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Thomas Jefferson to Joseph Milligan

April 6, 1816

[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.

[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]

_______

Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.

_____________

_________

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

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5

Related posts:

Welfare Spending Shattering All-Time Highs

  We got to act fast and get off this path of socialism. Morning Bell: Welfare Spending Shattering All-Time Highs Robert Rector and Amy Payne October 18, 2012 at 9:03 am It’s been a pretty big year for welfare—and a new report shows welfare is bigger than ever. The Obama Administration turned a giant spotlight […]

We need more brave souls that will vote against Washington welfare programs

We need to cut Food Stamp program and not extend it. However, it seems that people tell the taxpayers back home they are going to Washington and cut government spending but once they get up there they just fall in line with  everyone else that keeps spending our money. I am glad that at least […]

Welfare programs are not the answer for the poor

Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ Liberals argue that the poor need more welfare programs, but I have always argued that these programs enslave the poor to the government. Food Stamps Growth […]

Private charities are best solution and not government welfare

Milton Friedman – The Negative Income Tax Published on May 11, 2012 by LibertyPen In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration. http://www.LibertyPen.com Source: Firing Line with William F Buckley Jr. ________________ Milton […]

The book “After the Welfare State”

Dan Mitchell Commenting on Obama’s Failure to Propose a Fiscal Plan Published on Aug 16, 2012 by danmitchellcato No description available. ___________ After the Welfare State Posted by David Boaz Cato senior fellow Tom G. Palmer, who is lecturing about freedom in Slovenia and Tbilisi this week, asked me to post this announcement of his […]

President Obama responds to Heritage Foundation critics on welfare reform waivers

Is President Obama gutting the welfare reform that Bill Clinton signed into law? Morning Bell: Obama Denies Gutting Welfare Reform Amy Payne August 8, 2012 at 9:15 am The Obama Administration came out swinging against its critics on welfare reform yesterday, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful […]

Welfare reform part 3

Thomas Sowell – Welfare Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. The Continuing Good News About Welfare Reform By Robert Rector and Patrick Fagan, Ph.D. February 6, 2003 Six years ago, President Bill Clinton signed legislation overhauling part of the nation’s welfare system. […]

Welfare reform part 2

Uploaded by ForaTv on May 29, 2009 Complete video at: http://fora.tv/2009/05/18/James_Bartholomew_The_Welfare_State_Were_In Author James Bartholomew argues that welfare benefits actually increase government handouts by ‘ruining’ ambition. He compares welfare to a humane mousetrap. —– Welfare reform was working so good. Why did we have to abandon it? Look at this article from 2003. In the controversial […]

Why did Obama stop the Welfare Reform that Clinton put in?

Thomas Sowell If the welfare reform law was successful then why change it? Wasn’t Bill Clinton the president that signed into law? Obama Guts Welfare Reform Robert Rector and Kiki Bradley July 12, 2012 at 4:10 pm Today, the Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare […]

“Feedback Friday” Letter to White House generated form letter response July 10,2012 on welfare, etc (part 14)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 10, 2012. I don’t know which letter of mine generated this response so I have […]

Dan Mitchell’s article The World’s Most Politically Illiterate Statement

The World’s Most Politically Illiterate Statement

Exactly one month ago, I declared that Congresswoman Ayanna Pressley deserved an award for the “world’s most economically illiterate statement” because of her claim that “poverty is not naturally occurring.”

In reality, poverty has been the norm throughout history. As documented by Professors Deirdre McCloskey and Don Boudreaux, it was only the development of capitalism (starting a few hundred years ago in Europe) that enabled humanity to enjoy amazing and unprecedented increases in living standards.

Moreover, Ms. Pressely was trying to argue that redistribution was the proper way to address poverty, and I concluded my column by noting “that part of her statement also is wrong, according to both U.S. data and global data.”

Today, I want to debunk another preposterous assertion.

David Smith of the U.K.-based Guardian wrote a columnyesterday claiming that Biden’s so-called stimulus should be celebrated since it marks an end to forty years of Reaganomics.

…he will…be on a mission to restore faith in government. Confidence in it “has been plummeting since the late 60s to what it is now”, Biden noted in his remarks last week. His legislation, called the American Rescue Plan, can correct that with the biggest expansion of the welfare state in decades. …Biden knows better than anyone what that means. When he was born, in 1942, the president was Franklin Roosevelt, architect of the New Deal… When Biden was a student at the University of Delaware, Lyndon Johnson embarked on his project of the “Great Society”… Then came Ronald Reagan and his famous quip: “The nine most terrifying words in the English language are: I’m from the government and I’m here to help.” …He described Johnson’s “Great Society” as a fundamental wrong turn and set about dismantling it. …This orthodoxy held and dominated the political centre ground. …Biden’s could hardly be more of a polar opposite. …All the more reason to enjoy his victory lap and celebrate that four decades of Reaganism and “trickle down” economics are at an end.

Some of that political analysis is reasonable. FDR’s failed New Deal did expand government, as did LBJ’s failed War on Poverty.

And it’s also true that Reagan challenged their big-government orthodoxy and was somewhat successful in reining in the welfare state (“dismantling it” is a huge exaggeration, however).

But the author’s claim that there were “four decades of Reaganism” is breathtaking nonsense.

  • George H.W. Bush expanded the burden of government.
  • George W. Bush expanded the burden of government.
  • Barack Obama expanded the burden of government.
  • Donald Trump expanded the burden of government.

That’s 24 years of statist policies after Reagan left office.

If Mr. Smith actually knew the subject matter and wanted to write an honest article, he could have made an argument about16 years of Reaganism because we also benefited from a net reduction in the burden of government during Clinton’s eight years in office.

But the 21st century has been nothing but bad news for proponents of free markets. If you peruse Economic Freedom of the World, you’ll find that America’s level of economic freedom peaked in 2000 with a score of 8.67 (on a 1-10 scale).

Now the score for the United States has dropped to 8.22.

By the way, that’s not catastrophically bad. There’s no immediate risk of America becoming another Greece. And we’ll presumably never turn into Venezuela, no matter how hard Biden tries (it wouldn’t even happen if Vice President Harris took over).

That being said, what we’ve endured over the past two decades definitely is not Reaganism. The “Washington Consensus” is just a distant memory.

P.S. David Smith’s article is an example of sloppy journalism at a left-wing newspaper, but I’ll always have a bit of fondness for the Guardian because of the unintended compliment it bestowed upon me back in 2009.

P.P.S. For younger readers who did not experience the Reagan years, here’s my assessment of his record and here are some videos of some of his iconic remarks (and here’s a bonus video).

Rand Paul questions if US borrowing puts country on path to become Venezuela

Paul’s comments came just a day after the Senate passed President Biden’s $1.9 trillion COVID-19 relief bill

Sen. Rand Paul, one of the most outspoken Republicans about government spending, took to Twitter Sunday to ask if Congress’ borrowing is putting the U.S. economy on the same path as Venezuela’s.

“New 1,000,000 bolivar note in Venezuela worth 53 cents,” Paul tweeted, while linking to a Bloomberg report on hyperinflation in Caracas. “Will US be the next Venezuela with Congress borrowing over $6 trillion in one year?”

Paul’s comments came just a day after the Senate passed President Biden’s $1.9 trillion COVID-19 relief bill in a 50-49 vote. Sen. Mitt Romney, R-Utah, also expressed dismay over some of what he identified as wasteful spending in the bill, including providing billions in financial assistance to states that do not need it.

“We’re going to be asking the American people to allow us to borrow money from China and others, pass that on to our kids and grandkids so that we can send money to states like California and mine that don’t need the money,” Romney said. “That doesn’t make any sense at all.”

GET THE FOX NEWS APP

Venezuela’s economy has deteriorated due to, oil prices, the coronavirus and years of hyperinflation, according to Reuters. Its central bank issued a new banknote worth 1 million bolivars that will be worth 52 cents. The report said that many Venezuelans use U.S. currency to complete transactions.

March 31, 2021

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

Dear Mr. President,

Please explain to me if you ever do plan to balance the budget while you are President? I have written these things below about you and I really do think that you don’t want to cut spending in order to balance the budget. It seems you ever are daring the Congress to stop you from spending more.

President Barack Obama speaks about the debt limit in the East Room of the White House in Washington. | AP Photo

“The credit of the United States ‘is not a bargaining chip,’ Obama said on 1-14-13. However, President Obama keeps getting our country’s credit rating downgraded as he raises the debt ceiling higher and higher!!!!

Washington Could Learn a Lot from a Drug Addict

Just spend more, don’t know how to cut!!! Really!!! That is not living in the real world is it?

Making more dependent on government is not the way to go!!

Why is our government in over 16 trillion dollars in debt? There are many reasons for this but the biggest reason is people say “Let’s spend someone else’s money to solve our problems.” Liberals like Max Brantley have talked this way for years. Brantley will say that conservatives are being harsh when they don’t want the government out encouraging people to be dependent on the government. The Obama adminstration has even promoted a plan for young people to follow like Julia the Moocher.  

David Ramsey demonstrates in his Arkansas Times Blog post of 1-14-13 that very point:

Arkansas Politics / Health Care Arkansas’s share of Medicaid expansion and the national debt

Posted by on Mon, Jan 14, 2013 at 1:02 PM

Baby carrot Arkansas Medicaid expansion image

Imagine standing a baby carrot up next to the 25-story Stephens building in Little Rock. That gives you a picture of the impact on the national debt that federal spending in Arkansas on Medicaid expansion would have, while here at home expansion would give coverage to more than 200,000 of our neediest citizens, create jobs, and save money for the state.

Here’s the thing: while more than a billion dollars a year in federal spending would represent a big-time stimulus for Arkansas, it’s not even a drop in the bucket when it comes to the national debt.

Currently, the national debt is around $16.4 trillion. In fiscal year 2015, the federal government would spend somewhere in the neighborhood of $1.2 billion to fund Medicaid expansion in Arkansas if we say yes. That’s about 1/13,700th of the debt.

It’s hard to get a handle on numbers that big, so to put that in perspective, let’s get back to the baby carrot. Imagine that the height of the Stephens building (365 feet) is the $16 trillion national debt. That $1.2 billion would be the length of a ladybug. Of course, we’re not just talking about one year if we expand. Between now and 2021, the federal government projects to contribute around $10 billion. The federal debt is projected to be around $25 trillion by then, so we’re talking about 1/2,500th of the debt. Compared to the Stephens building? That’s a baby carrot.

______________

Here is how it will all end if everyone feels they should be allowed to have their “baby carrot.”

How sad it is that liberals just don’t get this reality.

Here is what the Founding Fathers had to say about welfare. David Weinberger noted:

While living in Europe in the 1760s, Franklin observed: “in different countries … the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.”

Alexander Fraser Tytler, Lord Woodhouselee (15 October 1747 – 5 January 1813) was a Scottish lawyer, writer, and professor. Tytler was also a historian, and he noted, “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Thomas Jefferson to Joseph Milligan

April 6, 1816

[Jefferson affirms that the main purpose of society is to enable human beings to keep the fruits of their labor. — TGW]

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, “the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.” If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree; and the better, as this enforces a law of nature, while extra taxation violates it.

[From Writings of Thomas Jefferson, ed. Albert E. Bergh (Washington: Thomas Jefferson Memorial Association, 1904), 14:466.]

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Jefferson pointed out that to take from the rich and give to the poor through government is just wrong. Franklin knew the poor would have a better path upward without government welfare coming their way. Milton Friedman’s negative income tax is the best method for doing that and by taking away all welfare programs and letting them go to the churches for charity.

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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

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

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Ronald Reagan with Milton Friedman
Milton Friedman The Power of the Market 2-5

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