Sweden is a powerful example of the importance of public policy. The Nordic nation became rich between 1870 and 1970 when government was very small, but then began to stagnate as welfare state policies were implemented in the 1970s and 1980s. The CF&P Foundation video explains that Sweden is now shifting back to economic freedom in hopes of undoing the damage caused by an excessive welfare state. www.freedomandprosperity.org
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.
________________
President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
So who’s right? Well, it depends what you care about.
Jeffrey and other folks on the left are correct in that Sweden has a big government financed by high tax rates. According to OECD data, only France and Denmark have a bigger burden of government spending. And the OECD also shows that Sweden’s top income tax rate of 56.6 percent is the most onerous in the industrialized world.
In a column for Bloomberg, Anders Aslund elaborates on Sweden’s efforts to reduce the size of the state.
Not so long ago, Sweden could claim world leadership in unmitigated Keynesian economics, with a 90 percent marginal tax rate and a welfare state second to none. …but in the last two decades the country has been reformed. Public spending has fallen by no less than one-fifth of gross domestic product, taxes have dropped and markets have opened up. …no turnabout has been as dramatic as Sweden’s. From 1970 until 1989, taxes rose exorbitantly, killing private initiative, while entitlements became excessive. Laws were often altered and became unpredictable. As a consequence, Sweden endured two decades of low growth. In 1991-93, the country suffered a severe crash in real estate and banking that reduced GDP by 6 percent. Public spending had surged to 71.7 percent of GDP in 1993, and the budget deficit reached 11 percent of GDP. …Sweden’s traditional scourge is taxes, which used to be the highest in the world. The current government has cut them every year and abolished wealth taxes. Inheritance and gift taxes are also gone. Until 1990, the maximum marginal income tax rate was 90 percent. Today, it is 56.5 percent. That is still one of the world’s highest, after Belgium’s 59.4 and there is strong public support for a cut to 50 percent. The 26 percent tax on corporate profits may seem reasonable from an American perspective, but Swedish business leaders want to reduce it to 20 percent.
Interestingly, the Swedish people and the Swedish elite (just like the Estonians, as I discussed in my takedown of Paul Krugman) seem to understand that there’s no going back to the statist era of the 1970s and 1980s.
Where are the left-wing intellectuals to challenge this new order? They have disappeared. The old socialist research organizations have closed down. The Center for Labor Market Studies was a state institution that generated propaganda, not research, and the government closed it. The Trade Union Confederation had a sophisticated research institute, which it eliminated for not being sufficiently political. The union economists, who dominated Swedish economic debate in the 1970s and ’80s, have been replaced by bank economists. The free-market right has influential research centers in Stockholm. After many years of absence from the debate, I attended a conference on the Swedish economy in the southern city of Malmo last month. …the 180 speakers represented the full range of Swedish views. I was amazed to hear how far the consensus had moved to the free- market right, even among Social Democrats and trade-union leaders. …The Social Democrats haven’t only joined the free-market consensus, but seem to attack the current government from the right, pushing for a better business environment. Gone are demands for the restoration of social benefits. Opinion polls have rewarded the Social Democrats for their right turn with sharply improved ratings.
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, lowcostsqueegees@yahoo.com
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.
___________
Spending is out of control but some insist on just asking for more revenue.
Tax Increases Won’t Solve Washington’s Spending Problem
“We make some tough spending cuts on things that we don’t need; and then we ask the wealthiest Americans to pay a slightly higher tax rate. And that’s a principle I won’t compromise on.”
At yesterday’s fiscal cliff campaign stop in Redford, Michigan, President Obama delivered these remarks and hammered away at his “balanced” plan to avert the fiscal cliff. Balance, as defined in the President’s plan, consists of $4 in tax increases up front for every $1 in loosely defined spending cuts promised down the road. The balance scale at the White House, it seems, needs to be recalibrated.
Obama’s plan misses a crucial point: Washington does not have a problem of too little revenue. Its problem is too much spending. Though revenue has decreased during the recession, the nonpartisan Congressional Budget Office projects that revenues will return to their normal historical level once the economy fully recovers. Spending, however, is out of control. Instead of debating any variety of tax increases—hiking rates or limiting deductions—Congress and the President should be reducing spending. They can start with entitlement program reforms.
Raising taxes on more affluent Americans and businesses, as Obama’s plan would do, would not generate enough revenue to close our massive deficits. Doing so would require mathematically impossible tax rates. Any such attempt would also seriously hurt the economy and jeopardize job creation.
What if you stretched Obama’s version of balance a bit further, though, and let all current tax policy expire? Such massive tax increases—ignoring the certain economic damage that would occur—would STILL not balance the budget. Entitlement program spending would continue to rise dramatically, soaking up all available revenue and driving deficits deeper. (continues below chart)
Not even Obama is proposing this idea outright, but by virtue of Obama’s insistence on tax increases and unblushing silence on entitlement program reforms, he is leading the nation down this path.
A responsible solution exists to avoid the fiscal cliff without harming the economy. Bipartisan entitlement program reforms also exist that can begin to solve the country’s real fiscal crisis. President Obama insists on taxing his way to prosperity, dealing a blow to capital, investments, and small businesses. The only trouble is that he’s forgetting—or ignoring—that spending is the problem.
Congressman Tim Griffin, c/o Little Rock Office, 1501 N. University, Suite 150, Little Rock, AR 72207
Dear Congressman Griffin,
This is the second time I have written you on this subject. I have met you several times and I have always enjoyed visiting with you. I got to hear you speak at a town meeting at Shannon Hills about a year ago and I must say that you did a great job showing how our country is heading to Greece if we do not tackle entitlement reform in a serious way or we will not control our spending. The issue of runaway spending is one of the issues that I wanted to talk to you about today.
It is obvious to me that if President Obama gets his hands on more money then he will continue to spend away our children’s future. He has already taken the national debt from 11 trillion to 16 trillion in just 4 years. Over, and over, and over, and over, and over and over I have written Speaker Boehner and written every Republican that represents Arkansans in Arkansas before (Griffin, Womack, Crawford, and only Senator Boozman got a chance to respond) concerning this. I am hoping they will stand up against this reckless spending that our federal government has done and will continue to do if given the chance.
First, if raising the debt ceiling is part of this agreement then we are losing our leverage over President Obama. We have enough votes to block a debt ceiling increase. We want a balanced budget but if President Obama does not get a debt ceiling increase then he will have to balance the budget immediately.
Second, spending is our problem and it is not tax revenue. The problem in Washington is not lack of revenue but our lack of spending restraint. We almost had a balanced budget in 2007 and if we had frozen spending at 2007 levels then we would be close to a balanced budget now. Instead of controlling spending our spending has gone from 2.7 trillion to 3.8 trillion in just 5 short years!!!
Third, my blog has exploded the last few days with clicks on past posts I have done like the one below. Take a look at this post below and see why it is one of my most popular.
Fourth, I have included some wise words from a fellow Tea Party favorite like you below. Mo Brooks’ words are true now like they were in August of 2011 when he voted against the debt ceiling increase then.
Fifth, let me share these two videos with you that make very good points concerning this issue:
This video belows shows how silly the federal government is when they pass “spending cuts.”
The problem in Washington is not lack of revenue but our lack of spending restraint. This video below makes that point.
Please take the time to read Mo Brooks’ words and respond to me and tell me if you will vote against the debt ceiling increase. It is the only leverage we have on President Obama. Others have responded to me in the past and for that I am very grateful.
The on-going debate over raising the debt ceiling has focused on many areas of disagreement between Democrats and Republicans but none bigger than the Republican determination not to raise taxes. Many pundits credit this to the political power of Grover Norquist and his Americans for Tax Reform who have spent years collecting “No Tax Increase” pledges from Republican candidates. Others attribute Republican intransigence on taxes to a near religious belief in supply side economics, a school of thought founded by economist Arthur Laffer and journalist Jude Wanniski in the late 1970s.
The true seeds of this attitude toward tax increases, in my view, actually go back farther and can be traced to an even nobler pedigree. The real inspiration for this conviction comes from the late Nobel prize-winning economist, Milton Friedman. It is only by understanding Friedman’s reasoning and his values that one can fully understand why Republican refuse to see spending cuts and tax increases as simply two sides of the same budget-balancing coin.
This was not always the Republican, or even the conservative, position. During the 1950s, it was Democrats who advocated tax cuts to stimulate the economy and President Eisenhower who insisted “we can never justify going further into debt to give ourselves a tax cut at the expense of our children.”
In 1964, the eventual Republican nominee for president, Senator Barry Goldwater, voted against the so-called Kennedy tax cuts (actually passed after Kennedy’s assassination the previous year) because he was convinced the resulting deficits would be inflationary. Even after losing the presidential election to President Lyndon Johnson in a landslide later that year, Goldwater predicted a Republican comeback, telling U.S. News & World Report that a no-win war in Vietnam and high inflation would prompt a backlash against the Democrats two years later (he was right on both counts).
So if Eisenhower and Goldwater represented Republican orthodoxy in the 1950s and ‘60s, what happened? In large part, it was an intellectual revolution in conservative/libertarian thought prompted by economist Milton Friedman. While Friedman rejected the simplistic Keynesian (and later supply-side) notion that tax cuts automatically stimulate the economy, he believed that higher taxes were bad because they led to more and bigger government, which he was convinced at best led to waste and at worse to greater government control over our economy, our lives and our freedoms.
In 1967, three year’s after the Kennedy tax cuts, the Johnson Administration was already running huge deficits thanks to the a combination of Great Society social programs and the Vietnam War. Writing in his regular Newsweek column on August 7, 1967, Friedman expresseded his concern that this would soon lead to higher taxes, using an analysis that would become familiar to his readers over the years:
“.If we adopt such programs, does not fiscal responsibility at least call for imposing taxes to pay for them? The answer is that postwar experience has demonstrated two things. First, that Congress will spend whatever the tax system will raise—plus a little (and recently, a lot) more. Second, that, surprising as it seems, it has proved difficult to get taxes down once they are raised. The special interests created by government spending have proved more potent than the general interest in tax reduction.
“If taxes are raised in order to keep down the deficit, the result is likely to be a higher norm for government spending. Deficits will again mount and the process will be repeated.”
Sure enough, a year later a 10% income tax surcharge was enacted by Congress to cut the deficit and fight inflation. His prediction having been confirmed, Friedman returned to the subject in another Newsweek column dated July 15, 1968. He now described a familiar pattern of how Democrats used the traditional view of fiscal conservatism to convince Republicans to help pay for the Democrats’ own profligate spending:
“The standard scenario has been that the Democrats—in the name of the New Deal, the Fair Deal, or the Great Society—push through large spending programs . . . generally against the opposition of the Republican leadership. The spending programs not only absorb the increased tax yield generated by the ‘fiscal drag,’ they go farther and produce deficits.
“The Democrats then appeal to the Republicans’ sense of fiscal responsibility to refrain from cutting tax rates or, as in this case, to raise them. The Republicans cooperate, thereby establishing a new higher revenue base for further spending. The Democrats get the ‘credit’ for the spending; the Republicans, the ‘blame’ for the taxes; and you and I pay the bill.”
Fast forward seven years, when Republican President Gerald Ford was proposing a tax cut to stimulate the economy during a brief recession. As an economist who believed monetary, not fiscal, policy was the best way to keep the economy on a stable path to growth, Friedman did not believe the proposed tax cut would have its intended stimulatory effect. He explained why in another Newseek column on July 15, 1975 but went on to say:
“Yet I must confess that I favor tax cuts—not as a cure for recession but for a very different reason. Our basic long-term need is to stop the explosive growth in government spending. I am persuaded that the only effective way to do so is by cutting taxes—at any time for any excuse in any way.
“The reason is that government will spend whatever the tax system raises plus a good deal more—but not an indefinite amount more. The most effective way to force each of us to economize is to reduce our income. The restraint is less rigid on government, but it is there and seems to be the only one we have.
“So hail the tax cut—but let’s do it for the right reason.”
Another six years went by and now it was the newly-elected president, Ronald Reagan, who was proposing a large, multi-year tax cut to get the economy moving. At the time, he was also proposing off-setting spending cuts (which we all know didn’t happen). Friedman wrote yet another Newsweek column dated July 27, 1981, refuting objections to the plan by liberal economists while also discounting many of the claims of supply-siders in the Reagan Administration. Friedman still supported the tax cuts, of course, and explained why liberals were suddenly worried about deficits:
“The analysis so far treats government spending and taxes as if they were two independent entities. They clearly are not. We know full well that Congress will spend every penny—and more—that is yielded by taxes. A cut in taxes will mean a cut in government spending. And there is no other way to get a cut in spending.
“That is the real reason why the big spenders and the big inflationists of the past have suddenly been converted to fiscal conservatism and to preaching the virtues of fighting inflation. They know that a multi-year tax cut will force multi-year spending reductions. They hope that a one-year tax cut will quiet public agitation and allow them to revert next year to their high-spending ways.”
Taken as a whole, these excerpts from columns written for a popular magazine by a Nobel laureate economist between 1967 and 1981—44 to 30 years ago—spell out precisely the philosophy that today motivates many Republicans in and out of Congress to firmly oppose any tax increase as part of a deficit reduction or budget-balancing plan proposed by Democrats.
Like Milton Friedman, they are firmly convinced that any taxes they raise will ultimately result in increased government spending. They believe government spending necessarily translates into more and bigger government. They believe the federal government is already too big, threatening not just the health of the economy but their freedom and way of life as well.
One can argue with Friedman’s assumptions as well as the conclusions he draws from them. But until those on the other side—including the President, Democratic congressional leaders and the media—understand the reasoning and motivations behind the anti-tax sentiments of Republicans from Capitol Hill to the Tea Party activists, it’s hard to imagine anything more than a temporary truce in the battle being waged over the budget.
Washington, D.C. – Today Congressman Mo Brooks (R-AL) made the following statement concerning his vote on the Budget Control Act of 2011:
Summary
The Obama-Reid-Boehner Debt Ceiling Bill is bad for America, bad political process, bad for national defense, does not prevent unsustainable budget deficits, kicks the debt ceiling crises down the road to 2013 (when America will have more debt and less financial strength with which to fix the problem), and fails to satisfactorily decrease the risk of an American credit rating downgrade.
Overview
America must, and will, raise the debt ceiling. The question is not whether Congress will raise the debt ceiling; the question is when and how. Regardless of when the debt ceiling is raised, every bill and obligation of America to its citizens and creditors will be paid in full (albeit, with the exception of creditors, some payments may be delayed).
I have voted to raise the debt ceiling provided the debt ceiling bill makes America’s financial condition better, not worse.
I voted to raise the debt ceiling on July 22, 2011, when I voted for the Cut, Cap and Balance Plan (cutting FY 2012 expenditures by a modest $111 billion in the context of a $1.5 trillion deficit; capping federal government expenditures within historically justifiable 18-20% ranges; and passing a Balanced Budget Constitutional Amendment that protect future generations of Americans from revisiting the financial mess we face).
I voted to raise the debt ceiling on July 29, 2011, when I voted for the Boehner Plan (which included a Balanced Budget Constitutional Amendment requirement).
I will not vote for the Obama-Reid-Boehner Debt Bill (herein the “Debt Bill”) because it is not up to the financial challenges America faces.
Background: The Problem
Years of spending binges by the federal government have come home to roost. America’s debt exceeds $14 trillion. America has suffered three consecutive years of trillion dollar deficits (and faces trillion dollar deficits into the foreseeable future).
Annual deficits and accumulated debt force America to confront two major financial threats, both with one common cause: unsustainable budget deficits.
In the short term, America faces a debt ceiling crisis. Over the longer term, America faces a debt crisis.
If trillion dollar deficits continue indefinitely, America’s insolvency and bankruptcy is certain, thereby risking America’s national defense, Social Security, Medicare, Medicaid, NASA, and everything else the federal government does.
Debt Bill Deficiencies That Compel a “No” Vote
The accumulative deficiencies in the Debt Bill compel me to vote “No.” The deficiencies are:
1. Minimal Time for Consideration and Deliberation.
The Debt Bill is 74 pages of interwoven, complicated legal and budgetary terms. I have read and studied the Debt Bill in the limited time available. The Debt Bill forces onto our children and grandchildren another $2.4 trillion in debt burden, yet we are expected to vote on it with less than 24 hours notice.
This is insufficient time to thoroughly understand the Debt Bill’s nuances, for budget experts to digest the Debt Bill and offer their insights, for the public to analyze the legislation and share their insight, and for Congress to make a wise and deliberative decision.
While some argue the Debt Bill must pass by the White House’s August 2 deadline; I believe it is better to act wisely than in haste. The economy will be much worse if Congress, in haste, makes a $2.4 trillion error.
2. Significant Defense Cuts in FY 2012 & 2013.
In FY 2012, the Debt Bill cuts national defense by $2 to $17 billion (the variance is due to different Debt Bill interpretations by the House Armed Services Committee).
The Debt Bill creates a 12-member Joint Select Committee (six Senators and six Congressmen; six Republicans and six Democrats). By November 23, the Committee must recommend $1.2 trillion in deficit reduction measures (spending cuts and/or tax increases). If the Committee makes a recommendation, Congress must vote on the recommendation on or before January 15.
If the Committee splits 6-6 and makes no recommendation, or if either House of Congress rejects the Committee’s recommendation, then the Debt Bill mandates that the Defense budget be cut $60 Billion in FY 2013 (i.e. – in the fiscal year beginning 14 months from now, on October 1, 2013).
National defense is the top priority of the federal government. If the Debt Bill passes, there is an unnecessary and substantial risk that it will trigger risky defense cuts in just 14 months that undermine the defense capabilities of America.
3. The Bill Does Not Fix the Underlying Problem.
The Bill makes America’s financial challenges worse by inadequately addressing unsustainable deficits that threaten America with insolvency and bankruptcy and force debt ceiling increases.
The Debt Bill’s “cuts” bind no future Congresses. Hence, the only “cuts” that count are those for Fiscal Years 2012 and 2013.
In FY 2012, the Debt Bill cuts discretionary federal government spending by only $7 billion (versus FY 2011 levels), while overall federal government spending actually increases (“discretionary spending” is less than 30% of total federal government spending).
In FY 2013, the Debt Bill increases discretionary federal government spending by $4 billion (over FY 2012 levels). Overall federal government spending again increases significantly.
Hence, in both FY 2012 and 2013, the federal government deficit is estimated to exceed $1 trillion/year if the Debt Bill passes and, under the best of scenarios, the Debt Bill’s “solution” increases America’s debt by $2.4 trillion in less than two years, which makes America’s debt problem much worse, not better.
4. Balanced Budget Constitutional Amendment.
The Debt Bill requires a vote of Congress on a Balanced Budget Constitutional Amendment but does not require that Congress pass a Balanced Budget Amendment.
The July 29 Boehner Bill required passage of a Balanced Budget Amendment before the Phase II debt ceiling increase would occur. The Debt Bill eliminates the requirement for a Balanced Budget Amendment, thereby eliminating the only long-term fix to America’s unsustainable deficits.
5. Punting the Debt Ceiling Crisis to 2013.
Because of 2012 election considerations, the Debt Bill “kicks the can down the road” to 2013, when a financially weaker America will be less capable of facing yet another debt ceiling crisis.
America will be weaker because debt service burdens will be $2.4 trillion more and the total debt of $16.7 trillion will likely be subject to higher interest rates and more onerous payment obligations.
America must face its unsustainable deficit issue while it is stronger, not weaker. The longer America waits, the worse the economic outcome will be.
6. Credit Rating Cuts.
In my judgment, the Debt Bill substantially increases the long-term risk of a cut in America’s credit rating.
Standard & Poor stated on July 14, 2011, that America’s credit rating is at risk if Washington has “not achieved a credible solution to the rising U.S. government debt burden and [is] not likely to achieve one in the foreseeable future.” Standard & Poor president Deven Sharma reiterated this concern on July 27, 2011 when he testified before the House Financial Services Committee that, “The more important issue is really the long-term growth rate of the debt… that is the more important issue at hand.”
Similarly, Moody’s stated on July 13, 2011 that, if the debt ceiling is raised, America’s credit rating outlook “would very likely be changed to negative… unless [there is a] substantial and credible agreement [on] long-term deficit reduction.”
The Debt Bill does not cut America’s short or long-term deficits enough to minimize the risk of downgrade in America’s credit rating… a downgrade that will, in turn, drive up America’s debt service cost and reduce funding for all other federal government programs. To make matters worse, if America’s interest rates go up; state, local and private interest rates are likely to also go up… thereby hurting all Americans at every level.
The Solution
The best solution that protects America from the short term debt ceiling and long term insolvency threats is a debt ceiling increase coupled with a Balanced Budget Constitutional Amendment that is phased in over a 5 year period.
Inasmuch as constitutional amendments often take years to pass, time that America may not have, the debt ceiling should be raised in a two-step process. The first step partially raises the debt ceiling when Congress passes a substantive and effective Balanced Budget Amendment. If the Senate and House concur, this can be done in as little as a week.
The second step raises the rest of the debt ceiling requirement when the states ratify the proposed Balanced Budget Amendment. This process gives the states an incentive to ratify the Balanced Budget Amendment in less than one year (or trigger the effects of not raising the debt ceiling).
Milton Friedman videos and transcripts Part 11 On my blog http://www.thedailyhatch.org I have an extensive list of posts that have both videos and transcripts of MiltonFriedman’s interviews and speeches. Here below is just small list of those and more can be accessed by clicking on “Milton Friedman” on the side of this page or searching […]
Milton Friedman – White House Tribute (2002) Published on May 31, 2012 by BasicEconomics President Bush spoke about the life and career of Milton Friedman at a ceremony honoring him for his work and impact in the field of economics. Friedman was awarded a Nobel Prize in 1976 ___________ Milton Friedman – Biography From Milton […]
MILTON FRIEDMAN: THE MIND BEHIND THE REPUBLICAN TAX REVOLT Jack Roberts | Jul 22, 2011 | 0 comments The on-going debate over raising the debt ceiling has focused on many areas of disagreement between Democrats and Republicans but none bigger than the Republican determination not to raise taxes. Many pundits credit this to the […]
Milton Friedman videos and transcripts Part 10 On my blog http://www.thedailyhatch.org I have an extensive list of posts that have both videos and transcripts of MiltonFriedman’s interviews and speeches. Here below is just small list of those and more can be accessed by clicking on “Milton Friedman” on the side of this page or searching […]
Milton Friedman – Power of Choice (Biography) Part 3 Published on May 21, 2012 by BasicEconomics Tribute to Milton Friedman English Pages, 8. 9. 2008 Dear colleagues, dear friends, (1) It is a great honor for me to be asked to say a few words to this distinguished and very knowledgeable audience about one of our greatest […]
Milton Friedman on the American Economy (6 of 6) Uploaded by donotswallow on Aug 9, 2009 THE OPEN MIND Host: Richard D. Heffner Guest: Milton Friedman Title: A Nobel Laureate on the American Economy VTR: 5/31/77 _____________________________________ Below is a transcipt from a portion of an interview that Milton Friedman gave on 5-31-77: Friedman: […]
Milton Friedman videos and transcripts Part 9 On my blog http://www.thedailyhatch.org I have an extensive list of posts that have both videos and transcripts of MiltonFriedman’s interviews and speeches. Here below is just small list of those and more can be accessed by clicking on “Milton Friedman” on the side of this page or searching […]
Below is a discussion from Milton Friedman on Bill Clinton and Ronald Reagan. February 10, 1999 | Recorded on February 10, 1999 audio, video, and blogs » uncommon knowledge PRESIDENTIAL REPORT CARD: Milton Friedman on the State of the Union with guest Milton Friedman Milton Friedman, Senior Research Fellow, Hoover Institution and Nobel Laureate in […]
Biography Part 2 In 1977, when I reached the age of 65, I retired from teaching at the University of Chicago. At the invitation of Glenn Campbell, Director of the Hoover Institution at Stanford University, I shifted my scholarly work to Hoover where I remain a Senior Research Fellow. We moved to San Francisco, purchasing […]
Milton Friedman was a great economist and a great american. A Tribute to Milton Friedman by Mark Skousen on November 28, 2006 Mark Skousen and Milton Friedman at lunch I was at the New Orleans Investment Conference when I learned that free-market economist extraordinaire Milton Friedman, died on November 16. He was a dear friend. […]
Open letter to Speaker of the House John Boehner (Part 55)
John Boehner, Speaker of the House
H-232, The Capital, Washington, DC 20515
Dear Mr. Speaker,
I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you have one thing you can hold over his head and that is the debt ceiling.
Washington, D.C. – Today Congressman Mo Brooks (R-AL) made the following statement concerning his vote on the Budget Control Act of 2011:
Summary
The Obama-Reid-Boehner Debt Ceiling Bill is bad for America, bad political process, bad for national defense, does not prevent unsustainable budget deficits, kicks the debt ceiling crises down the road to 2013 (when America will have more debt and less financial strength with which to fix the problem), and fails to satisfactorily decrease the risk of an American credit rating downgrade.
Overview
America must, and will, raise the debt ceiling. The question is not whether Congress will raise the debt ceiling; the question is when and how. Regardless of when the debt ceiling is raised, every bill and obligation of America to its citizens and creditors will be paid in full (albeit, with the exception of creditors, some payments may be delayed).
I have voted to raise the debt ceiling provided the debt ceiling bill makes America’s financial condition better, not worse.
I voted to raise the debt ceiling on July 22, 2011, when I voted for the Cut, Cap and Balance Plan (cutting FY 2012 expenditures by a modest $111 billion in the context of a $1.5 trillion deficit; capping federal government expenditures within historically justifiable 18-20% ranges; and passing a Balanced Budget Constitutional Amendment that protect future generations of Americans from revisiting the financial mess we face).
I voted to raise the debt ceiling on July 29, 2011, when I voted for the Boehner Plan (which included a Balanced Budget Constitutional Amendment requirement).
I will not vote for the Obama-Reid-Boehner Debt Bill (herein the “Debt Bill”) because it is not up to the financial challenges America faces.
Background: The Problem
Years of spending binges by the federal government have come home to roost. America’s debt exceeds $14 trillion. America has suffered three consecutive years of trillion dollar deficits (and faces trillion dollar deficits into the foreseeable future).
Annual deficits and accumulated debt force America to confront two major financial threats, both with one common cause: unsustainable budget deficits.
In the short term, America faces a debt ceiling crisis. Over the longer term, America faces a debt crisis.
If trillion dollar deficits continue indefinitely, America’s insolvency and bankruptcy is certain, thereby risking America’s national defense, Social Security, Medicare, Medicaid, NASA, and everything else the federal government does.
Debt Bill Deficiencies That Compel a “No” Vote
The accumulative deficiencies in the Debt Bill compel me to vote “No.” The deficiencies are:
1. Minimal Time for Consideration and Deliberation.
The Debt Bill is 74 pages of interwoven, complicated legal and budgetary terms. I have read and studied the Debt Bill in the limited time available. The Debt Bill forces onto our children and grandchildren another $2.4 trillion in debt burden, yet we are expected to vote on it with less than 24 hours notice.
This is insufficient time to thoroughly understand the Debt Bill’s nuances, for budget experts to digest the Debt Bill and offer their insights, for the public to analyze the legislation and share their insight, and for Congress to make a wise and deliberative decision.
While some argue the Debt Bill must pass by the White House’s August 2 deadline; I believe it is better to act wisely than in haste. The economy will be much worse if Congress, in haste, makes a $2.4 trillion error.
2. Significant Defense Cuts in FY 2012 & 2013.
In FY 2012, the Debt Bill cuts national defense by $2 to $17 billion (the variance is due to different Debt Bill interpretations by the House Armed Services Committee).
The Debt Bill creates a 12-member Joint Select Committee (six Senators and six Congressmen; six Republicans and six Democrats). By November 23, the Committee must recommend $1.2 trillion in deficit reduction measures (spending cuts and/or tax increases). If the Committee makes a recommendation, Congress must vote on the recommendation on or before January 15.
If the Committee splits 6-6 and makes no recommendation, or if either House of Congress rejects the Committee’s recommendation, then the Debt Bill mandates that the Defense budget be cut $60 Billion in FY 2013 (i.e. – in the fiscal year beginning 14 months from now, on October 1, 2013).
National defense is the top priority of the federal government. If the Debt Bill passes, there is an unnecessary and substantial risk that it will trigger risky defense cuts in just 14 months that undermine the defense capabilities of America.
3. The Bill Does Not Fix the Underlying Problem.
The Bill makes America’s financial challenges worse by inadequately addressing unsustainable deficits that threaten America with insolvency and bankruptcy and force debt ceiling increases.
The Debt Bill’s “cuts” bind no future Congresses. Hence, the only “cuts” that count are those for Fiscal Years 2012 and 2013.
In FY 2012, the Debt Bill cuts discretionary federal government spending by only $7 billion (versus FY 2011 levels), while overall federal government spending actually increases (“discretionary spending” is less than 30% of total federal government spending).
In FY 2013, the Debt Bill increases discretionary federal government spending by $4 billion (over FY 2012 levels). Overall federal government spending again increases significantly.
Hence, in both FY 2012 and 2013, the federal government deficit is estimated to exceed $1 trillion/year if the Debt Bill passes and, under the best of scenarios, the Debt Bill’s “solution” increases America’s debt by $2.4 trillion in less than two years, which makes America’s debt problem much worse, not better.
4. Balanced Budget Constitutional Amendment.
The Debt Bill requires a vote of Congress on a Balanced Budget Constitutional Amendment but does not require that Congress pass a Balanced Budget Amendment.
The July 29 Boehner Bill required passage of a Balanced Budget Amendment before the Phase II debt ceiling increase would occur. The Debt Bill eliminates the requirement for a Balanced Budget Amendment, thereby eliminating the only long-term fix to America’s unsustainable deficits.
5. Punting the Debt Ceiling Crisis to 2013.
Because of 2012 election considerations, the Debt Bill “kicks the can down the road” to 2013, when a financially weaker America will be less capable of facing yet another debt ceiling crisis.
America will be weaker because debt service burdens will be $2.4 trillion more and the total debt of $16.7 trillion will likely be subject to higher interest rates and more onerous payment obligations.
America must face its unsustainable deficit issue while it is stronger, not weaker. The longer America waits, the worse the economic outcome will be.
6. Credit Rating Cuts.
In my judgment, the Debt Bill substantially increases the long-term risk of a cut in America’s credit rating.
Standard & Poor stated on July 14, 2011, that America’s credit rating is at risk if Washington has “not achieved a credible solution to the rising U.S. government debt burden and [is] not likely to achieve one in the foreseeable future.” Standard & Poor president Deven Sharma reiterated this concern on July 27, 2011 when he testified before the House Financial Services Committee that, “The more important issue is really the long-term growth rate of the debt… that is the more important issue at hand.”
Similarly, Moody’s stated on July 13, 2011 that, if the debt ceiling is raised, America’s credit rating outlook “would very likely be changed to negative… unless [there is a] substantial and credible agreement [on] long-term deficit reduction.”
The Debt Bill does not cut America’s short or long-term deficits enough to minimize the risk of downgrade in America’s credit rating… a downgrade that will, in turn, drive up America’s debt service cost and reduce funding for all other federal government programs. To make matters worse, if America’s interest rates go up; state, local and private interest rates are likely to also go up… thereby hurting all Americans at every level.
The Solution
The best solution that protects America from the short term debt ceiling and long term insolvency threats is a debt ceiling increase coupled with a Balanced Budget Constitutional Amendment that is phased in over a 5 year period.
Inasmuch as constitutional amendments often take years to pass, time that America may not have, the debt ceiling should be raised in a two-step process. The first step partially raises the debt ceiling when Congress passes a substantive and effective Balanced Budget Amendment. If the Senate and House concur, this can be done in as little as a week.
The second step raises the rest of the debt ceiling requirement when the states ratify the proposed Balanced Budget Amendment. This process gives the states an incentive to ratify the Balanced Budget Amendment in less than one year (or trigger the effects of not raising the debt ceiling).
DEBT LIMIT – A GUIDE TO AMERICAN FEDERAL DEBT MADE EASY. Uploaded by debtlimitusa on Nov 4, 2011 A satirical short film taking a look at the national debt and how it applies to just one family. Watch the guy from the Ferris Bueller Superbowl Spot! Produced by Seth William Meier, DP/Edited by Craig Evans, […]
DEBT LIMIT – A GUIDE TO AMERICAN FEDERAL DEBT MADE EASY. Uploaded by debtlimitusa on Nov 4, 2011 A satirical short film taking a look at the national debt and how it applies to just one family. Watch the guy from the Ferris Bueller Superbowl Spot! Produced by Seth William Meier, DP/Edited by Craig Evans, […]
Rep Himes and Rep Schweikert Discuss the Debt and Budget Deal Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Here is a study done on the votes of the 87 incoming freshman republicans frm the Club for Growth. Freshman Vote Study In the 2010 election, 87 freshmen House Republicans came to Washington pledging fealty to the Tea Party movement and the ideals of limited government and economic freedom. The mainstream media likes to say […]
Tea Party Conservative Senator Mike Lee interview Here is an excellent interview above with Senator Lee with a fine article below from the Heritage Foundation. Sen. Mike Lee (R-UT) came to Washington as the a tea-party conservative with the goal of fixing the economy, addressing the debt crisis and curbing the growth of the federal […]
I feel so strongly about the evil practice of running up our national debt. I was so proud of Rep. Todd Rokita who voted against the Budget Control Act of 2011 on August 11, 2011. He made this comment: For decades now, we have spent too much money on ourselves and have intentionally allowed our […]
Rep. Quayle on Fox News with Neil Cavuto __________________ We have to get people realize that the most important issue is the debt!!! Recently I read a comment by Congressman Ben Quayle (R-AZ) made after voting against the amended Budget Control Act on August 1, 2011. He said it was important to compel “Congressional Democrats and […]
What future does our country have if we never even attempt to balance our budget. I read some wise words by Congressman Jeff Landry (R, LA-03) regarding the debt ceiling deal that was passed on August 1, 2011:”Throughout this debate, the American people have demanded a real cure to America’s spending addiction – a Balanced Budget […]
I read some wise comments by Idaho First District Congressman Raúl R. Labrador concerning the passage of the Budget Control Act on August 1, 2011 and I wanted to point them out: “The legislation lacks a rock solid commitment to passage of a balanced budget amendment, which I believe is necessary to saving our nation.” I just […]
Congressmen Tim Huelskamp on the debt ceiling I just don’t understand why people think we can go on and act like everything is okay when we have a trillion dollar deficit. Sometimes you run across some very wise words like I did the other day. Kansas Congressman Tim Huelskamp made the following comment on the […]
I do not believe the federal government should be in the welfare business. It actually creates a welfare trap that poor people get caught in and hurts their ability to advance up the economic ladder.
I have enjoyed reading this series of reviews by T. Kurt Jaros on Milton and Rose Friedman’s book “Free to Choose.” I hope you enjoy it as much as I did.
T. Kurt Jaros is currently a Master’s student studying Systematic Theology at King’s College in London. He holds a B.A. in Philosophy and Political Science cum laude and an M.A. in Christian Apologetics high honors from Biola University, an evangelical Christian university outside of Los Angeles.
He enjoys learning and thinking about theology, specifically historical theology, philosophical theology and philosophy of religion, and issues pertaining to monergism and synergism. Additionally, he enjoys learning and thinking about political philosophy, economics, American political history, and campaigns.
This is part of a series on Milton Friedman’s “Free to Choose.”
In my previous post, I summarized Friedman’s beliefs about the Federal Reserve, its proper role, and how its failure is what leads us to economic problems (not capitalism). In his following chapter, “Cradle to Grave,” Friedman explains how the welfare state began to take off during the FDR administration.
FDR’s first election “marked a major change in both the public’s perception of the role of government and the actual role assigned to government.” This is clearly seen in the amount of national income spent by the government (national, state and local). For the federal government, FDR’s administration and Congress began to fundamentally change the way our economy had worked. They passed into law a nationwide minimum wage, the Securities and Exchange Commission, the National Labor Relations Board and more. Some of his damage to our economy (such as the National Recovery Administration and the Agricultural Adjustment Administration) was, thankfully, ruled unconstitutional by the Supreme Court.
WWII led to massive budgets and power within the federal government, and because the government was able to employ lots of people for the single purpose, unemployment shrunk and people began to believe in Keynesian principles. However, Friedman explains the problem with this thinking, which is worthy to quote at length:
It is one thing for government to exercise great control temporarily for a single overriding purpose shared by almost all citizens and for which almost all citizens are willing to make heavy sacrifices; it is a very different thing for government to control the economy permanently to promote a vaguely defined ‘public interest’ shaped by the enormously varied and diverse objectives of its citizens.
He thinks it mistaken to believe that Keynesian economics works for something broad and diverse like an economy. WWII had a specific objective for which people could be unified to join together in (which led to people’s willingness to make sacrifices). Yet the public perception was that the government should begin to take care of us. This perception led to the welfare state being inflated by LBJ and his supposed “War on Poverty” (creation of Medicare and Medicaid). Examples such as Jimmy Carter’s Department of Education and Barack Obama’s Patient Protection and Affordable Care Act (better known as “Obamacare”) provide us epitomes of socialism.
The present day examples of central economic planning are not the perfect description of socialism, which is best described as the means of production being planned by the government. But rather, it is a masked version of socialism because it transfers the results of production. And this masking of socialism still has the same consequences, albeit ones that take longer to witness (and perhaps easier to hide or to deceive people into thinking that such results are good). Consider this recent news article which seeks to show that Mitt Romney’s budget would mean guns over butter.
What seems to be more necessary and helpful to a person, a gun or butter? The deception is in the unsaid assumption: “Government should provide butter.” It tugs at our heartstrings that people should have butter (or food), but it duplicitously avoids the truth about how wealth is created or what the role of government ought to be.
In my next post, I’ll provide some examples of how the welfare state is uncontrollable and what Friedman thinks we should do to solve the problems.
__________
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, lowcostsqueegees@yahoo.com
The new issue of International Economy has an article by Canada’s Liberal finance minister from the 1990s, Paul Martin, who succeeded in shrinking that country’s federal government. If a new President Mitt Romney wants to cut spending in Washington, Martin has some tips for him, such as cutting spending broadly, forecasting conservatively, and aiming to eliminate the deficit in a fixed time frame and sticking to it. (I’d also advise President Obama to follow the Canadian example, but he’s issued four budgets so far and seems to be more interested in following the Greek fiscal approach).
Paul Martin says:
I tabled the 1995 Budget in the House of Commons. No department of government escaped untouched. Transfers to the provinces for healthcare and education were reduced, public sector employment was cut by 20 percent, the Department of Transport was cut deeply, historic subsidies in the Department of Agriculture were eliminated, and spending in the Department of Industry was cut by 65 percent.
These were massive cuts, far greater than anything Canada had ever seen. Nor were the cuts simply reduction in the growth of future spending as is so often the case. These were absolute cuts in existing spending, such that by the end of the process the federal government’s expenditures as a percentage of GDP were lower than they had been at anytime in the previous fifty years.
From a libertarian perspective, Canada’s cuts weren’t actually “massive,” but for a Liberal government in a country with a population that had gotten used to government coddling, it was pretty impressive. As I noted in my recent article on Canada, Martin and his team cut the budget by 10 percent in just two years.
So my suggested goal for Romney and team if elected this Fall: at least match the Canadians and push for $380 billion of cuts out of otherwise expected spending in 2015 of $3.8 trillion. And do what the Canadians did: cut everything, including entitlements, aid to subnational governments, defense, business subsidies, farm subsidies, and much more in one big push. Many in Congress will resist of course, but presidents have their most leverage in the first year. Mitt will have nothing to lose but the country into a vortex of debt and economic despair if he doesn’t at least try.
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, lowcostsqueegees@yahoo.com
Let’s use an analogy to explain what I mean. Imagine you were playing a game of chess and your opponent openly stated that he wanted you to move your rook to a certain point on the board.
If your IQ was above room temperature, you would probably be suspicious that he wasn’t trying to help you win the game.
Well, the same thing happens in fiscal policy. I quoted the Hill newspaper last year when some Democrats admitted that their top political goal was to seduce the GOP into a tax increase.
The Democrats’ counter-strategy is a bit more subtle, but has essentially been to find ways to make it very uncomfortable for Republicans to maintain such a rigid anti-tax orthodoxy — to ultimately force Republicans to break their anti-tax pledges and badly splinter their party. That’s what the Buffett Rule is about; that why Dems insist they won’t dismantle the so-called “sequester” — big cuts to defense and even to Medicare — unless Republicans agree to tackle deficits in a balanced way, i.e. by supporting significant new tax revenues. The results have been mixed. They’ve won a small number of GOP votes here and there, and vulnerable members are nowadays more likely to trash or dismiss Grover Norquist in the press than they were last year. But at a very high level within the Democratic Party, there’s a recognition that breaking the GOP on taxes is an absolutely crucial strategic imperative for defending safety net programs over the long term.
That’s a pretty clear statement. We have folks on the left who say they want higher taxes both to prop up big government and to cause internal damage to the GOP.
Unless, of course, they’re motivated by a belief in bigger government (high likely) or a suicidal desire to harm their own electoral prospects (highly unlikely since even I don’t think GOPers are that stupid).
____________
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, lowcostsqueegees@yahoo.com
Open letter to Speaker of the House John Boehner (Part 54)
John Boehner, Speaker of the House
H-232, The Capital, Washington, DC 20515
Dear Mr. Speaker,
I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you have one thing you can hold over his head and that is the debt ceiling.
WASHINGTON—U.S. Rep. Martha Roby (AL-02), a member of the House Committee on Armed Services, made the following comments today regarding the House of Representative’s vote to increase the statutory limit on the national debt:
“I applaud the efforts of Speaker Boehner, Majority Leader Cantor, Majority Whip McCarthy, and Budget Chairman Ryan over the last month. Every dollar saved under the plan approved tonight is a result of their steadfast advocacy on behalf of the American People. While the final legislation is far from perfect and while many of us would prefer the more fundamental reforms found in the ‘Cut, Cap, and Balance Act,’ this compromise cuts a dollar of spending for every new dollar of debt. That is a significant accomplishment given that Democrats—who wanted new taxes and no spending reductions—outnumbered Republicans two to one at the negotiating table.
“During this debate, I voted for two separate proposals that would significantly cut future spending, put our nation on firmer financial footing, and avoid a potentially catastrophic default. Each was killed by Senate Democrats.
“I am pleased that a default has been avoided as a result of the vote tonight. However, I was unable to support this legislation because, after a careful reading of the bill, I fear it could ultimately result in devastating and unjustified cuts to our national security. This bill, unlike previous proposals I supported, has a weak firewall against potentially destructive defense cuts. To be sure, there are savings to be found in the Pentagon’s budget, and I have already voted this year to trim wasteful and unnecessary defense spending. But this bill goes much too far. The legislation would use our defense budget as an insurance policy to guarantee savings in the event that the special joint committee, which this legislation creates, fails to achieve cuts in other areas of the government bureaucracy.
“Of course we lack a crystal ball to know how it will play out, but my best judgment is that the chances the special joint committee will fail are too high to risk our national defense, which is one of few legitimate government functions enumerated in the Constitution. If required, the cuts would be so deep as to affect the readiness of our troops around the world—a risk I am not willing to take. As important as deficit reduction is, what good is it for a country that is unable to adequately defend the freedom and liberty it cherishes? Certainly there are other places in the massive federal bureaucracy that are more deserving of deep cuts.
“I reject the idea that we need not worry about these cuts because Washington will never let them happen. To make that suggestion is to say that the legislation does not actually do what we have said it does.
“In the end, I hope that the special joint committee will find the spending cuts that it is charged to identify, and I look forward to reviewing the product of its work. Our prayer is that the special joint committee members will do their jobs, thereby ensuring that the damaging military cuts that could occur never see the light of day.
“On the broader question of restoring fiscal responsibility, our work has just begun. This has been a long and convoluted process, but the takeaway is simple: in a short period of time, House Republicans have successfully changed the conversation in Washington from ‘how do we spend more’ to ‘how do we spend less.’ Even so, much work remains, and only a sustained, dedicated effort will truly change the spending culture in Washington.”
# # #
NOTE: Congress debated how best to raise the debt limit for many months. Members considered numerous proposals, and the House of Representatives and the Senate each took several votes on the issue. On May 31, Rep. Martha Roby voted against President Obama’s original request for a clean debtincrease that would expand the government’s ability to borrow money without placing any restrictions on future spending. She saidthat any debt limit increase should be accompanied by “significant” spending cuts. On July 22, Roby voted in favor of the “Cut, Cap, and Balance Act,” referringto the “strong” measure as her “preference.” The Democratic Senaterejected the measure. With the debt deadline looming, Roby supported Speaker Boehner’sproposal on July 29, notingthat it was “far from perfect” but that it cut a dollar of spending for every dollar of additional debt and included no new taxes. Again, the Senaterejected that measure. On July 28, Roby opposed Sen. Reid’s proposal, which she pointed outincluded an unacceptable budget gimmick that would not result in real savings. (The Senatealso rejectedthe Reid proposal.) That vote was followed by the events described in the press release above.
DEBT LIMIT – A GUIDE TO AMERICAN FEDERAL DEBT MADE EASY. Uploaded by debtlimitusa on Nov 4, 2011 A satirical short film taking a look at the national debt and how it applies to just one family. Watch the guy from the Ferris Bueller Superbowl Spot! Produced by Seth William Meier, DP/Edited by Craig Evans, […]
DEBT LIMIT – A GUIDE TO AMERICAN FEDERAL DEBT MADE EASY. Uploaded by debtlimitusa on Nov 4, 2011 A satirical short film taking a look at the national debt and how it applies to just one family. Watch the guy from the Ferris Bueller Superbowl Spot! Produced by Seth William Meier, DP/Edited by Craig Evans, […]
Rep Himes and Rep Schweikert Discuss the Debt and Budget Deal Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 […]
Michael Tanner of the Cato Institute in his article, “Hitting the Ceiling,” National Review Online, March 7, 2012 noted: After all, despite all the sturm und drang about spending cuts as part of last year’s debt-ceiling deal, federal spending not only increased from 2011 to 2012, it rose faster than inflation and population growth combined. […]
Here is a study done on the votes of the 87 incoming freshman republicans frm the Club for Growth. Freshman Vote Study In the 2010 election, 87 freshmen House Republicans came to Washington pledging fealty to the Tea Party movement and the ideals of limited government and economic freedom. The mainstream media likes to say […]
Tea Party Conservative Senator Mike Lee interview Here is an excellent interview above with Senator Lee with a fine article below from the Heritage Foundation. Sen. Mike Lee (R-UT) came to Washington as the a tea-party conservative with the goal of fixing the economy, addressing the debt crisis and curbing the growth of the federal […]
I feel so strongly about the evil practice of running up our national debt. I was so proud of Rep. Todd Rokita who voted against the Budget Control Act of 2011 on August 11, 2011. He made this comment: For decades now, we have spent too much money on ourselves and have intentionally allowed our […]
Rep. Quayle on Fox News with Neil Cavuto __________________ We have to get people realize that the most important issue is the debt!!! Recently I read a comment by Congressman Ben Quayle (R-AZ) made after voting against the amended Budget Control Act on August 1, 2011. He said it was important to compel “Congressional Democrats and […]
What future does our country have if we never even attempt to balance our budget. I read some wise words by Congressman Jeff Landry (R, LA-03) regarding the debt ceiling deal that was passed on August 1, 2011:”Throughout this debate, the American people have demanded a real cure to America’s spending addiction – a Balanced Budget […]
I read some wise comments by Idaho First District Congressman Raúl R. Labrador concerning the passage of the Budget Control Act on August 1, 2011 and I wanted to point them out: “The legislation lacks a rock solid commitment to passage of a balanced budget amendment, which I believe is necessary to saving our nation.” I just […]
Congressmen Tim Huelskamp on the debt ceiling I just don’t understand why people think we can go on and act like everything is okay when we have a trillion dollar deficit. Sometimes you run across some very wise words like I did the other day. Kansas Congressman Tim Huelskamp made the following comment on the […]
Republicans seem to give in most of the time. I wish for the good of the country someone would step up and try to reverse the trend towards more spending and start cutting the budget for a change. We only had a budget deficit of about 161 billion in 2007 with income about where it is now. Then why do we have a budget deficit over one trillion today? It is because our problem is spending and not revenue!!!
It’s never a good idea to display weakness during negotiations. Your opponent will sense your fear and up his demands.
That’s certainly what we’re seeing in Washington. The cartoon at this link captures the GOP’s wobbly attitude on taxes, and this interview is about the ever-increasing demands of the Obama Administration.
It’s important to define austerity correctly. To provide an analogy, we have to drink liquid to survive, but that doesn’t mean it would be a good idea to guzzle paint thinner. Likewise, we need austerity, but that shouldn’t mean higher taxes. We need to be like Estonia and tighten the belts of the public sector, not the private sector.
It’s not my job to give Republicans political advice, but I also want to expand upon the arguments I made a couple of days ago, when I wrote a post giving five policy reasons and five political reasons why the GOP shouldn’t surrender on tax increases.
A couple of readers correctly pointed out that I forgot to mention that tax increases are political poison because middle-class voters turn against the GOP once “revenue” is on the table. They are completely right, and my oversight is inexplicable since I’ve actually made that point in the past. Here’s some of what I wrote last year.
If Republicans put tax increases on the table, however, the politics get turned upside down. Instead of being united against all tax increases, voters realize somebody is going to get mugged and they have an incentive to make sure they’re not the ones who get victimized. That’s when soak-the-rich taxes become very appealing. Democrats, for all intents and purposes, can appeal to average voters by targeting the so-called rich. And even though voters will be skeptical about what Democrats really want, they don’t want to be the primary target of the political predators in Washington. Think of it this way. You’re a wildebeest running away from a pack of hyenas, but you know one member of your herd will get caught and killed. You despise hyenas, but at that critical moment, you’re main goal is wanting another member of the herd to bite the dust. This is why surrendering to tax increases put Republicans in a no-win situation. They oppose class-warfare taxes because they understand the disproportionately damaging impact of higher top income tax rates and increased double taxation of dividends and capital gains. So when GOPers get bullied into agreeing to raise taxes, they want to target less destructive sources of revenue. But that usually means…taxes that are more likely to hit the middle class. Needless to say, Democrats almost always win if there is a fight on whether to tax the middle class or to tax the rich.
I have to pat myself on the back for that passage, particularly the analogy that equates politicians with hyenas (though in the past I’ve apologized to hyenas for that unfair comparison).
Let’s close with a very good cartoon, which points out the foolishness of the media for wanting to send more money to Washington when even they understand that the town is filled with clowns and buffoons. That’s actually a very serious point, as I note about halfway through the interview included in my five-political-reasons-five-policy-reasons post.
But it’s hard to laugh when you contemplate what’s happening. Obama is bullying the GOP, and the Republicans are in the process of surrendering to his class-warfare demands.
That will lead to bad policy, but it will also result in an emasculated, compliant, and house-broken GOP for at least the next two years, and perhaps even Obama’s entire second term. So even though the fiscal cliff tax hike is bigger than what Obama’s currently demanding, the long-run policy damage of surrender almost surely will be far greater.
Republicans don’t have many options in this fight. But they can show some cojones and tell Obama that the only way he’ll get a tax hike is if he wants to take the nation over the cliff.
P.S. If you like the Henry Payne cartoon in this post, you can enjoy some of his other work here, here, here, here, here, here, here, and here.
But what really makes the cartoon funny is the petulant stance of the elephants. Very effective artwork, mush as I praised Ramirez for the visual genius of his recent cartoon.
We got to cut these welfare programs before everyone stops working and wants to get the free stuff. The Bible says if you don’t work then you should not eat. It also says that churches should help the poor but it doesn’t say that the government should step in and do that.
How many Americans depend on a government program for a basic (or not so basic) need? According to recently released Census Bureau data and Heritage Foundation calculations, the number is 128.8 million. That is the number of individuals directly receiving aid that they depend on for their daily consumption of things such as rent, prescription drugs, and higher education.
That is 41.3 percent of theU.S.population as of July 2011.
TheWall Street Journal puts the number of people living in a household where at least one member receives help at an even higher 49.1 percent.
The 41.3 percent number is surely undercounting. It is based on survey responses to the Census Bureau’s Current Population Survey (CPS) of March 2011. These responses are well known to undercount the number of people receiving Medicaid, Medicare, Social Security, State Children’s Health Insurance, and Temporary Assistance to Needy Families. Heritage research shows that the undercount in higher education subsidies may be the most dramatic.
The calculations that Heritage ran on the Census Bureau data do not, however, double-count individuals. So if someone receives Medicare and Social Security, he is counted only once. Therefore, the dramatic undercounting in higher education subsidy beneficiaries makes the biggest difference, because recipients of education subsidies are generally younger and not likely to be on other dependency-creating programs.
Those subsidized by the government for their higher education are generally dependent only on that government program. Heritage research shows that of the small number of people in the March CPS survey who admitted that they received higher education subsidies—about 2 million—less than one-half of 1 percent relied on Social Security retirement income; only 1.5 percent were on Medicare in 2011; and only 16 percent were on food stamps. The 2 million admitting they received higher education subsidies is assuredly a vast undercount, because the number of people receiving Pell grants in 2011 was 9.7 million, according to the Department of Education.
Just counting true Pell grant recipients would add millions to the lowball estimate of 128.8 million government dependents.
Sixteen years after President Bill Clinton erroneously declared “the era of big government” over, it’s not over; it’s still with us and growing. Unless something is done,Americaas we have known it will cease to exist.
There is a way out of the dependence-on-government trap. Steps are laid out in Heritage’s Saving the American Dream plan. If this plan were implemented, the economy would grow, government expenses would be held in check, and more Americans would support themselves. Some of the good results for individuals and the country would be:
More Americans climbing the prosperity ladder.
Fewer Americans stuck in the rut of “just getting by.”
Those who currently receive more from the government than they pay in taxes could become contributing taxpayers.
Catastrophe averted by shrinking the runaway national debt.
More happiness as the intergenerational cycle of government dependence would be shattered and replaced by an intergenerational cycle of self-reliance and private-sector opportunities for all.
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.
________________
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, lowcostsqueegees@yahoo.com
The Daily Hatch 