Portugal is “on edge of abyss” reads the headline of a Reuters story last week. Despite receiving a $104.5 billion bailout last year from the EU and the IMF, the country’s economy continues to shrink as unemployment soars and uncertainty about its permanence in the euro remains steady. Just like Greece, Portugal might need a second bailout soon.
As has been the case elsewhere, some pundits claim that austerity is in part responsible for Portugal’s current economic malaise. Even the IMF has said that deficit targeting “may not be the best policy” if the country falls deeper into recession. The question then is what we understand by “austerity.”
First, it is important to point out that Portugal got in trouble for having a government that spent too much over a long time. Back in 2001 the country was the first to breach the 3% of GDP deficit ceiling agreed to as part of the Stability and Growth Pact. Since then, it ran significant budget deficits, and in 2009, as a reaction to the global downturn, Portugal implemented a massive stimulus package that shot its deficit to 9.4% of GDP. (It is worth noting that the stimulus didn’t work, unemployment went up from 9.5% in 2009 to 14.9% now).
* Using GDP deflator. Source: European Commission, Economic and Financial Affairs.
Spending in nominal terms increased on average by 5.6% every year from 2000 to 2010. As we can see in the graph, it accelerated in 2009 as the Socialist government of José Socrates tried to fend off the global recession with a Keynesian-style stimulus. It was not until 2011 that the new government of Pedro Passos Coelho began implementing spending cuts, which reduced overall spending by 5.5% from the previous year. Still, government spending in 2011 was at the same level of 2009. In real terms, there has been no decline in spending levels.
As a percentage of the size of the economy, total government spending in Portugal in 2011 stood at 45.2% of GDP, just a whisker down from its 2009 peak of 45.8%.
Early on Socrates tried to tame the deficit with tax increases. He raised the VAT rate from 19% to 21%. As part of last year’s the bailout agreement, Passos Coelho raised the VAT further to 23%, one of the highest rates in Europe. His government also introduced changes in the income tax: some rebates were scrapped; a surtax of 1.5% and 2.5% was introduced for middle and high income earners, respectively. A special corporate tax rate of 12.5% for small businesses was raised to 20%, and a surtax of 3% and 5% was created for medium and big companies, respectively. There were also tax increases on alcohol, fuel and tobacco.
The evidence suggests that even though in the last year there have been measurable spending cuts in Portugal (and I’m sure that people there are feeling the pinch from those cuts), tax increases constitute a significant chunk of the austerity policies implemented in that country.
In an exclusive interview at The Heritage Foundation, Senate Minority Leader Mitch McConnell (R-KY) sharply criticized President Obama for engaging in class warfare and accused him of shifting the focus away from his own failed policies in advance of next year’s election.
“My view is he’ll have a hard time convincing Americans he deserves four more years of this,” McConnell said. “There’s nothing he’s done the American people approve of, so of course, he’s trying to change the subject.”
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I love these videos from the Heritage Foundation. They include great interviews and very good illustrations. Below are some links.
School choice offers families the opportunity to select schools that meet their child’s needs. Watch the video from Heritage Foundation explaining school choice, how it benefits parents and children and why school choice is needed.
What is School Choice? Uploaded by HeritageFoundation on Aug 2, 2011 School choice offers families the opportunity to select schools that meet their child’s needs. Watch the video from Heritage Foundation explaining school choice, how it benefits parents and children and why school choice is needed.
1,000 Days Without A Budget Uploaded by HeritageFoundation on Jan 24, 2012 http://blog.heritage.org | Today marks the 1,000th day since the United States Senate has passed a budget. While the House has put forth (and passed) its own budget, the Senate has failed to do the same. To help illustrate how extraordinary this failure has […]
Sen. Mitch McConnell: Americans Don’t Approve of Anything Obama Has Done Uploaded by HeritageFoundation on Dec 8, 2011 In an exclusive interview at The Heritage Foundation, Senate Minority Leader Mitch McConnell (R-KY) sharply criticized President Obama for engaging in class warfare and accused him of shifting the focus away from his own failed policies in […]
Senator Blunt Vows to Keep Pressure on President Obama Over Contraceptive Mandate Uploaded by HeritageFoundation on Feb 13, 2012 http://blog.heritage.org/2012/02/13/sen-blunt-vows-to-keep-pressure-on-obama-… | Sen. Roy Blunt (R-MO) introduced legislation to protect religious organizations from Obamacare’s overreach last summer. Now, as President Obama presses forward with his anti-conscience mandate, Blunt is prepared to keep the pressure on the […]
Senator Lee Fights Back Against Obama’s Unconstitutional “Recess” Appointments Uploaded by HeritageFoundation on Feb 13, 2012 Few lawmakers have expressed as much outrage over President Obama’s unconstitutional “recess” appointments as Sen. Mike Lee (R-UT). He was among the first to warn about the consequences of the president’s unilateral action on Jan. 4. More than a […]
Senator John Barrasso On the Fight Against Obamacare Uploaded by HeritageFoundation on Mar 26, 2012 Sen. John Barrasso earned the nickname “Wyoming’s Doctor” after working for 24 years as an orthopedic surgeon in Casper. Today he represents the state in the U.S. Senate and is one of the leading critics of Obamacare. More than two […]
David Barton on Glenn Beck – Part 3 of 5 Uploaded by ToRenewAmerica on Apr 9, 2010 Wallbuilders’ Founder and President David Barton joins Glenn Beck on the Fox News Channel for the full hour to discuss our Godly heritage and how faith was the foundational principle upon which America was built. _____________ David Barton is a historian […]
Rep. Paul Ryan Blames Obama for Dividing America Uploaded by HeritageFoundation on Oct 28, 2011 Rep. Paul Ryan (R-WI) is mighty disappointed with President Obama. The chairman of the House Budget Committee, who has bested Obama in head-to-head policy showdowns, blames the president for failing to outline a solution to the debt crisis while dividing […]
The Role of Economic Freedom Uploaded by HeritageFoundation on Jan 6, 2012 According to the 2012 Index of Economic Freedom, a joint publication of The Heritage Foundation and The Wall Street Journal, global economic freedom has declined over the past year. But what does this mean for America and the world? Economic freedom empowers ordinary […]
With the national debt increasing faster than ever we must make the hard decisions to balance the budget now. If we wait another decade to balance the budget then we will surely risk our economic collapse.
The first step is to remove all welfare programs and replace them with the negative income tax program that Milton Friedman first suggested.
Milton Friedman points out that though many government welfare programs are well intentioned, they tend to have pernicious side effects. In Dr. Friedman’s view, perhaps the most serious shortcoming of governmental welfare activities is their tendency to strip away individual independence and dignity. This is because bureaucrats in welfare agencies are placed in positions of tremendous power over welfare recipients, exercising great influence over their lives. In addition, welfare programs tend to be self-perpetuating because they destroy work incentives. Dr. Friedman suggests a negative income tax as a way of helping the poor. The government would pay money to people falling below a certain income level. As they obtained jobs and earned money, they would continue to receive some payments from the government until their outside income reached a certain ceiling. This system would make people better off who sought work and earned income.
Friedman: Joe Gardner helped to set up an organization of local black people to protect their own interests. Previously, the blacks had rioted in the streets to try to get their way. Now it was to be done peacefully using government money.
When government funds became available, the Woodlawn Organization got control. They used them to build the kind of houses they wanted. Low rise apartments like these.
The bureaucrats, planners and architects told them that it was uneconomical. That only high-rise blocks would work. They were wrong.
Joe Gardner: A lot of people have this view that, the disadvantaged if you will, have no ideas what their problems are and how to resolve them, that it takes outside professionals to do that. And we say that’s baloney because the outside professional does not feel in his gut what a woman on welfare with six kids living off of a $100 a month in a deteriorated building feels. She can come up with solutions much better than a bureaucrat.
Friedman: The intentions of this local community group are good. They want to rebuild the community as the community wants.
Joe Gardner talking to an elderly woman: I can’t hear you. I said are you pretty pleased with the work we are doing? Yes I am very pleased with it.
Friedman: But government money always corrupts. Look at the number of people rebuilding this garage. It doesn’t make sense except that these are CETA workers paid for by taxpayers money.
Government funds have allowed the organization to take over a whole area of Chicago. They now have their own supermarket.
They’ve built splendid houses for middle class occupiers. Very expensive, protected by the latest security systems. All at the taxpayers expense.
Joe Gardner: In a sense TWA is rapidly becoming a mini-government. At this particular point we have approximately 400 employees. We have an operating budget of, in excess of $5 million per year. So we are large.
Friedman: Large and expanding. Their next project is to redevelop this site. And that’s only the first step in a 20 year plan that will cost $220 million. Most of it coming from the taxpayers.
In the South Bronx, they are very familiar with government protection. Like the rent controls have made it uneconomic for landlords to maintain their buildings. They’ve moved out and the vandals have moved in. The South Bronx is an area where many of the people are on welfare, and where the crime rate is high. But all this could change. A group of local people has begun to renovate these buildings to build new homes. They call themselves “Sweat Equity.” Because at first sweat and effort was all they could put into the project. Only later did they accept a small government grant.
Friedman and Robert Foster: How long ago did you start working on this building? Four months ago for this building right here. And I take it what you are going…to gut the whole thing from beginning to end. Totally gut it. And you’ll have to rewire, right, roof, put new walls up, new floors, new ceilings, new everything in winter and summer whenever there was a chance to work. How many people do you have working here? A good 40 people. How do you keep them working? You know, some of them must want to, get tired of it. We show them what can be done in the future and what will be done in the future. And they get, at first, it’s kind of hard to prove to somebody that in the next three or four years what will come out of it. They can’t see it in long range terms. They only see it in short, they need money right now, not in two years. So we try to show them that it will happen.
Friedman: It’s true they now accept some government money. But so far they’ve managed to retain their original philosophy. That the best way to get something done well is to do it yourself.
Robert Foster: Like what we’re doing. We’re bringing people out of the street and giving them something to look forward to. They have their own apartment, they’ll be taken care of, the area around it, they have a garden, they have something to look forward to. They even get off welfare, you even give them a job. They can drop the welfare and have some self pride. That’s the only thing about it, self pride. The longer you take from the government and sitting back, you’ve got no worries. We’re not sitting back, we’re working. We’re making our money come in. And we are putting it into our building, we’re building ourselves up as well as the buildings.
Friedman: Some of these people are CETA workers. Paid for by the taxpayer. But this isn’t as useful as it might appear.
You ask these fellows which would they rather have, the CETA workers or the money that’s being paid to the CETA workers? Laughter. Which would you rather have?
Robert Foster: The money paid to the workers. Friedman: That’s your answer. That’s very expensive help. In terms of what these people could use with the money. You give these people the amount of money you’re paying to that CETA worker and I’ll bet they’ll have twice as much, three times as much, work. Am I wrong?
Robert Foster: Your right.
Friedman: So it’s a very inefficient way to use their money. The problem is you’ve got bureaucracy and the government bureaucrats, they want to decide what to do. They don’t want to let you decide what to do.
Robert Foster: Exactly.
Friedman: Ask yourself, how does this place get built up in the first place. After all, this was a pretty respectable, solid, substantial region when it was first developed. It wasn’t done through a government project. It was done by people individually having an incentive to put up these buildings and occupying them. What these people we’ve been seeing here are doing is they are trying to restore that feeling and that attitude. You’ll have a far healthier community here that grows out of the self-help of people like the people we’ve been talking to. That it is a paternalistic venture undertaken by governmental civil servants and bureaucrats who have to plan on a large scale for other people.
We must find a way to give everyone caught in the welfare trap the kind of initiative these people have.
The best, or should I say the least bad, solution I have even been able to devise was something called the negative income tax. This is the idea that we should get rid of a large part of the welfare bureaucracy, and for demeaning rules, and we should help people who are poor fundamentally by giving them money.
With a positive income tax, you’re entitled to a certain amount of personal exemptions and deductions. And above that amount you pay tax. But suppose you have no income. Under a negative income tax a fraction of your unused exemptions would be paid to you by the government. Guaranteeing at least a minimum income.
If you earned something, you’d still get a fraction of your unused exemptions. And you’d end up better off.
As your earnings rose, the supplement to your income would become smaller and smaller until your earnings equaled your exemptions. At that point, you’d break even. Neither paying tax nor receiving a subsidy.
It’s not an ideal system. It’s not the system we might have liked to get into, but it’s a system which would have the effect of eliminating the separation of a society into those to receive and those who pay. A separation that tends to destroy the whole social fabric. It would mean that we could each of us take advantage of opportunities that opened up without fearing that if by some chance we lost our jobs, it would be a long time before we could get back on assistance. It would be a system that would give all of us an incentive gradually to improve our lives would perhaps enable us, over time, to work ourselves out of the kind of mess we’ve gotten ourselves into. A mess we’ve gotten ourselves into for the very best of motives but with the very worst of results.
We’ve become increasing dependent on government. We’ve surrendered power to government, nobody has taken it from us. It’s our doing. The results, monumental government spending. Much of it wasted, little of it going to the people whom we would like to see helped. Burdensome taxes, high inflation, a welfare system under which neither those who receive help nor those who pay for it are satisfied. Trying to do good with other people’s money simply has not worked.
_______________
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
With the national debt increasing faster than ever we must make the hard decisions to balance the budget now. If we wait another decade to balance the budget then we will surely risk our economic collapse.
The first step is to remove all welfare programs and replace them with the negative income tax program that Milton Friedman first suggested.
Milton Friedman points out that though many government welfare programs are well intentioned, they tend to have pernicious side effects. In Dr. Friedman’s view, perhaps the most serious shortcoming of governmental welfare activities is their tendency to strip away individual independence and dignity. This is because bureaucrats in welfare agencies are placed in positions of tremendous power over welfare recipients, exercising great influence over their lives. In addition, welfare programs tend to be self-perpetuating because they destroy work incentives. Dr. Friedman suggests a negative income tax as a way of helping the poor. The government would pay money to people falling below a certain income level. As they obtained jobs and earned money, they would continue to receive some payments from the government until their outside income reached a certain ceiling. This system would make people better off who sought work and earned income.
Here is a portion of the trancript of the “Free to Choose” program called “From Cradle to Grave” (program #4 in the 10 part series):
For the past 7 years Maureen Ramsey has had to buy food and clothes for her family out of a government handout. For the whole of that time, her husband, Steve, hasn’t had a job. Each week he collects what’s known in Britain as Social Security. The government looks after him, his wife and their children. But accepting welfare payments means accepting the rules of those who hand them out.
Mrs. Ramsey: My opinion, anyway you feel as they own you. You know, there is no other way of putting it. Say I got a job tomorrow, because I needed something, well I know that means I’ve got to go down there and report it. Because I couldn’t go into the job because you’d be looking over your shoulder thinking well the Social Security is coming in. And I’m going to be done for it. It’s just hopeless, you can’t fight against that.
Mr. Ramsey: The jobs are out there you only come up with about 45 pounds a week. And you need a doctors stamp over there. You see, you finish up with about 29 pound. So what good is it working? You still get the same thing, you know what I mean? I can’t make any sense of it.
Friedman: Of course, he’s quite right. It may not pay to get a job now. That’s not his fault and I don’t blame him. He’s acting sensibly and intelligently for his own interest and the interest of his family. It’s the fault of the system which takes away the incentive from him to get a job.
But suppose you were cruel and simply took away the welfare overnight. Cut it off. What would happen? He would find a job. What kind of a job? I don’t know. It might not be a very nice job. It might not be a very attractive job. But at some wage, at some level of pay, there will always be a job which he could get for himself. It might be also that he would be driven to rely on some private charity. He might have to get soup kitchen help or the equivalent. Again, I’m not saying that’s desirable or nice or a good thing it isn’t, but as a matter of actual fact as to what would happen, there is little doubt that he would find some way to earn a living.
The American government is trying to break the welfare trend. These people were unemployed. They are now being trained at the taxpayers expense. It may or may not lead to a real job.
Lawrence Davenport: Here we have a vast national welfare system which is diametrically opposed to everything that America believes in. Because America was founded on a work ethic, has practiced a work ethic, and it’s said this is what we want everybody to do. An opportunity to hold a job in America.
Friedman: Everyone here has to clock in and do a full days work. It’s an attempt to make it seem like a real job.
Lawrence Davenport: We’re saying a job is a part of the American way of life and we’re going to help you find a job. So that you can get a piece of the pie. You can pay taxes, you can become a part of that American dream.
Friedman: But the dream isn’t working. Schemes like this run under the government’s Comprehensive Education and Training Act (CETA) have a high drop out rate and many trainees end up back where they began, on welfare.
The men and women who administer CETA and similar programs, the officials of the Department of Health, Education and Welfare are dedicated people. Their motives are good. Their achievements are not.
The results of these programs have been disappointing. Why? I believe that the basic reason is because it is very hard to achieve good objectives through bad means. And the means we have been using are bad in two very different respects.
In the first place, all of these programs involve some people spending other people’s money for objectives that are determined by still a third group of people. Nobody spends somebody else’s money as carefully as he spends his own. Nobody has the same dedication to achieving somebody else’s objectives that he displays when he pursues his own.
Beyond this, the programs have a insidious effect on the moral fiber of both the people who administer the programs and the people who are supposedly benefiting from it. For the people who administer it, it instills in them a feeling of almost Godlike power. For the people who are supposedly benefiting it instills a feeling of childlike dependence. Their capacity for personal decision making atrophies. The result is that the programs involved are misuse of money, they do not achieve the objectives which it was their intention to achieve. But far more important than this, they tend to rot away the very fabric that holds a decent society together.
If you think that’s overstating the case, look what ATW found when it made a special investigation into the spending of the vast funds it administers.
Public Health Service worker: We just got the plan from the Public Health Service on reducing unnecessary beds.
Friedman: In these reels of tape that record every payment made, every recipient, they found evidence that a staggering $7.5 billion had been lost by fraud, waste and abuse in one year.
Doctors, building contractors, hospitals, schools, welfare recipients, everyone had been fraudulently dipping into the pot. And the investigation isn’t over yet.
The inevitable consequence of having a huge pot of taxpayers money is that all of us want to get our hands in it. You can be sure that we’ll all be able to find very good reasons why we should be the ones to spend somebody else’s money.
Somebody or other put up a good case for spending taxpayers money to subsidize rents in New York City, including the rents of these apartments. The people who occupy these apartments pay something like $200 a month less than the market rent. And that subsidy comes out of the taxes of people, most of whom are much poorer than the people who live here. It’s not unusual for this sort of thing to happen when government tries to do good with our money.
Look at what happened in Chicago. For most visitors, the immediate impression is of a rich, prosperous, bustling city. But like every large city in America, it has its problem areas. Over crowded slums breeding poverty and crime.
After WWII, one such area developed in Hyde Park. In the 50’s, plans were drawn up to pull down large areas of slum buildings and to rebuild using government funds under an urban renewal program. It was to be a show project replacing a blighted area with an integrated community. Who controlled the spending of that government money? It was in fact, my own University of Chicago which felt it’s very existence threatened by the spread of urban blight and crime. Government money was used to tear down an area that contained many small shops as well as families of low income. Once the area was cleared, private money rebuilt it with middle class apartments, townhouses and shopping complexes. The blight had been cleared here, but only to be shifted elsewhere.
Joe Gardner: In may instances, when government administers large grants, a lot of those funds don’t wind up directly serving the people and achieving the objectives that were the intent of the programs. Because the grant has too feed that large government bureaucracy.
_______________
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 liberal John Brummett in his article, “The fine art of thinking,” Arkansas Democrat-Gazette, August 2, 2012, asserted:
This pledge has become ruling Republican creed and a requirement to escape a GOP primary since it was cooked up by Grover Norquist. He’s a pugnacious lobbyist and conservative activist, formerly with the rabidly right-wing U.S. Chamber of Commerce, who heads a group he calls Americans for Tax Reform.
The pledge is probably not wholly responsible for destroying Washington.
Part of the blame also must be assigned to money, particularly the kind to which Burris referred that comes only if you sign the pledge.
If exercised to its logical conclusion, the pledge would force Republicans in Congress to reduce spending without adding new tax revenue. That, in turn, would send new burdens for roads and human services to state governments, where Republican legislators also would have vowed not to raise taxes.
Not only is that the logical conclusion, but it is also, I suspect, the real objective. By that I mean trying to squeeze government nearly out of business.
Liberals like Brummett think the government knows better than us how to spend money and that is why he is so angry at Grover Norquist. I come from a conservative point of view and I see the world much differently.
Government will spend whatever money we give it. About 100 years ago the federal government was spending than 5% of GDP and state and local governments were spending about double that amount. Now the federal government is at 24.7%. We need to stop giving them so much money and the only way to do that is to cut taxes.
“.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
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. […]
The private sector does such a better job than the public sector at everything. We need to seriously consider looking at every aspect of the philosophy of our government. It is my view that we can no longer have programs that give incentives to people not to work.
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
Why not pass the Balanced Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion).
On my blog www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, I did not see any of them in the recent debt deal that Congress adopted. Now I am trying another approach. Every week from now on I will send you an email explaining different reasons why we need the Balanced Budget Amendment. It will appear on my blog on “Thirsty Thursday” because the government is always thirsty for more money to spend.
As Congress considers what to do about federal overspending and overborrowing, conservatives must maintain focus. We must pursue the path that drives down federal spending and borrowing and gets to a balanced budget, while preserving our ability to protect America and without raising taxes. An important part of that conservative agenda is adoption of a sound—repeat, a sound—Balanced Budget Amendment.[1] A Balanced Budget Amendment is not sound if it leads to balancing the federal budget by tax hikes instead of spending cuts. Thus, a sound Balanced Budget Amendment must prohibit raising taxes unless a two-thirds majority of the membership of both Houses of Congress votes to raise them. Without the two-thirds majority requirement, the Balanced Budget Amendment becomes the means for big spenders to raise taxes.
Supporters of the Balanced Budget Amendment rightly want to force the federal government to live within its means—to spend no more than it takes in. Because the government has failed for decades to follow that balanced budget principle, America is now $14.294 trillion in debt, a debt of more than $45,000 for every person in the United States.[2]
President Obama is making things worse. In discussions with congressional leaders, he has pushed hard to get authority to borrow yet more trillions of dollars and hike taxes. And the White House reiterated this week that President Obama opposes amending the Constitution to require the federal government to balance its budget.[3]
A Sound Balanced Budget Amendment Must Require Two-Thirds Majorities to Raise Federal Taxes
Like 72 percent of the American people, The Heritage Foundation favors passage by the requisite two-thirds of both Houses of Congress and ratification by the requisite 38 states of an effective Balanced Budget Amendment to become part of our Constitution.[4] Heritage has made clear that an effective Balanced Budget Amendment must control spending, taxation, and borrowing; ensure the defense of America; and enforce, through the legislative process and without interference by the judicial branch, the requirement to balance the budget.[5] A sound Balanced Budget Amendment will drive down federal spending and end federal borrowing.
To date, Congress has proposed one largely sound Balanced Budget Amendment for consideration—Senate Joint Resolution 10, often called the Hatch-Lee Amendment after its main proponents.[6] It has a number of important features, such as an annual federal spending cap of not to exceed 18 percent of the economy’s annual output of goods and services (called the gross domestic product, or GDP) that Congress cannot exceed, except by a law passed with two-thirds majorities in both Houses of Congress or in specified circumstances involving military necessity.
A crucial feature is included in section 4 of the Balanced Budget Amendment proposed by Senate Joint Resolution 10: “Any bill that imposes a new tax or increases the statutory rate of any tax or the aggregate amount of revenue may pass only by a two-thirds majority of the duly chosen and sworn Members of each House of Congress by a roll call vote.” The requirement that no tax hikes occur without the approval of 290 Representatives and 67 Senators is essential in a sound Balanced Budget Amendment. Without the requirement for two-thirds majorities for any tax increase, the Balanced Budget Amendment becomes a sword for big spenders to use to raise taxes, instead of a shield to protect Americans from tax hikes. Those who seek to anchor into our Constitution a requirement to balance the budget must always remember that, if the only requirement is “balance,” that can be achieved two ways—cut spending or hike taxes. A sound Balanced Budget Amendment will balance the budget by driving down federal spending and not by driving up federal taxes.
Balanced-Budget States That Allow Simple Majorities for Tax Hikes Face Situations Very Different from That of the Federal Government
Some look at the experience of states that have requirements in their constitutions for a balanced state budget and draw the wrong conclusion about the need for two-thirds majorities for taxation. They mistakenly conclude that a requirement merely for simple majorities in state legislatures to raise taxes suffices to keep state taxation under control and therefore that a federal Balanced Budget Amendment should require only simple majorities in Congress to raise taxes. But the balanced budget requirement at the state level occurs in a very different context from such a requirement at the federal level.
As a practical matter, state legislators regularly work and live among the people they represent, often do their legislative work face-to-face with their constituents, and often depend upon direct contact with voters to persuade voters to keep the legislators in office. As a result, state legislators tend to be closely attuned and responsive to the need of their constituents for reasonableness in taxation. In contrast, U.S. Senators and Representatives spend much of their time distant from the people they represent, often deal with their constituents through the insulation of large staffs, and amass large campaign funds through political fundraising that allow them to depend more upon expensive mass communications than upon direct contact with voters to persuade the voters to keep them in office. As a result, U.S. Senators and Representatives tend to be less directly attuned and responsive to the need of their constituents for reasonableness in taxation than state legislators are. Accordingly, while a requirement for merely simple majorities in state legislatures to raise taxes may suffice to keep taxes under control in that state, simple majorities are not likely to keep taxes under control at the federal level—as the experience of federal tax increases in the last 50 years proves.
Some who recognize the need for taxpayer protection by requiring supermajorities, rather than just simple majorities, of the two Houses of Congress to raise taxes think a supermajority of three-fifths of both Houses would suffice. While three-fifths would add a modicum of taxpayer protection in the House, three-fifths would add little if anything in the way of taxpayer protection in the Senate, which already often requires a three-fifths majority to proceed to consideration of legislation. The existing three-fifths rule in the Senate has often failed to protect taxpayers from federal tax increases in the past. A sound Balanced Budget Amendment would add protection for taxpayers in both Houses of Congress by a requirement for two-thirds majorities of the membership of both Houses to raise taxes.
Conclusion: Adopt the Two-Thirds Majority Requirement for Tax Hikes, to Make the Balanced Budget Amendment the Instrument of Spending Cuts and Not Tax Hikes
America’s soon-to-be New Minority—people who pay federal income tax—need protection from unreasonable taxation.[7] When all Americans have the right to vote, but only a minority has the duty to pay the federal income taxes from which all Americans benefit, the risk is high that a non-taxpaying majority will elect a Congress pledged to adopt taxation that oppresses the taxpaying minority. The impulse to seek something for nothing has regrettably taken root in the American body politic in the past century. The requirement in the Balanced Budget Amendment of a two-thirds majority of the membership of both Houses of Congress to raise taxes will protect a taxpaying minority against oppressive taxation.
As Congress continues on the path toward adopting a joint resolution to recommend a Balanced Budget Amendment to the states for ratification, Congress should ensure that the Amendment includes a requirement for approval by two-thirds of the membership of the two Houses of Congress for tax hikes. Absent such a requirement, the Balanced Budget Amendment will encourage tax hikes instead of spending cuts as the means to balance the budget, making the Amendment the friend of the tax, spend and borrow crowd, instead of the friend of those who believe in limited government, free enterprise, and individual freedom.
Edwin Meese III is the Ronald Reagan Distinguished Fellow in Public Policy and Chairman of the Center for Legal & Judicial Studies at The Heritage Foundation.
Edwin Meese III is a prominent leader, thinker and elder statesman in the conservative movement – and America itself.
Meese holds the Ronald Reagan Chair in Public Policy at The Heritage Foundation, where he is responsible for keeping the late president’s legacy of conservative principles alive in public debate and discourse.
He also is Chairman of Heritage’s Center for Legal and Judicial Studies, founded in 2001 to educate government officials, the media and the public about the Constitution, legal principles and how they affect public policy.
These two Heritage “hats” keep Meese, a trusted counselor to Reagan before becoming Attorney General, among the major conservative voices in national policy debates at an age when most men and women enjoy quiet retirements.
In 2006, for example, Meese was named to the Iraq Study Group, a special presidential commission dedicated to examining the best resolutions for America’s involvement in Iraq.
Immediately after Reagan’s death in 2004, and in the years since, Meese appeared on the major cable and broadcast news programs to discuss the lasting impact of his old friend, mentor and boss. He often summarizes the Reagan legacy in three accomplishments: 1) Reagan cut taxes and kept them low. 2) He worked to defeat and end the Soviet Union and its worldwide push for communism. 3) He restored America’s faith in itself after years of failure and “malaise.”
“I admired him as a leader and cherish his friendship,” Meese wrote in a 2004 essay for Heritage members and supporters. “Ronald Reagan had strong convictions. He was committed to the principles that had led to the founding of our nation. And he had the courage to follow his convictions against all odds.”
Meese spent much of his adult life working for Reagan, first after the former actor, sports announcer and athlete was elected Governor of California in 1966 and then when he sought and won the presidency in 1980.
Meese served as the 75th Attorney General of the United States from February 1985 to August 1988. As the nation’s chief law enforcement officer, he directed the Justice Department and led international efforts to combat terrorism, drug trafficking and organized crime.
From January 1981 to February 1985, Meese held the position of Counsellor to the President – the senior job on the White House staff – and functioned as Reagan’s chief policy adviser. In 1985, he received Government Executive magazine’s annual award for excellence in management.
Meese joined Heritage in 1988 as the think tank’s first Ronald Reagan Distinguished Fellow – the only policy chair in the country to be officially named for the 40th president.
His relationship with Heritage began eight years earlier, however, when Meese met with senior management to discuss the think tank’s landmark policy guide, Mandate for Leadership, prepared for the incoming administration. Meese later recalled that Reagan personally handed out copies of the 1,093-page book to members of his Cabinet and asked them to read it. Nearly two-thirds of Mandate’s 2,000 recommendations would be adopted or attempted by the Reagan Administration.
Meese took on a new role as Chairman of Heritage’s Center for Legal and Judicial Studies more than a decade after joining the think tank. Under his guidance, the center has counseled White House staffers, Justice Department officials and Senate Judiciary Committee members on the importance of filling judicial vacancies with qualified men and women who are committed to interpreting the Constitution according to the founding document’s original meaning.
The center also became known for hosting “moot court” practice sessions to sharpen the arguments of attorneys slated to bring important cases before the Supreme Court. Those cases addressed constitutional issues ranging from property rights to racial preferences in primary and secondary schools to restrictions on free speech in campaign finance law.
Meese headed the center’s Advisory Board for the writing and editing of the best-selling book, The Heritage Guide to the Constitution (Regnery, 2005). The book assembles 109 experts to walk readers through a clause-by-clause analysis of the Constitution. Sen. Tom Coburn (R-Okla.) was among those keeping the reference work handy during Judiciary Committee hearings on Supreme Court nominees.
Meese’s other books include Leadership, Ethics and Policing (Prentice Hall, 2004); Making America Safer (Heritage, 1997); and With Reagan: The Inside Story (Regnery Gateway, 1992).
He also is a Distinguished Visiting Fellow at the Hoover Institution at Stanford University in California and lectures, writes and consults throughout the United States on a variety of subjects.
As both Attorney General and Counsellor to President Reagan, Meese was a member of the Cabinet and the National Security Council. He also served as Chairman of the Domestic Policy Council and the National Drug Policy Board.
After Reagan won the White House in the 1980 election, Meese headed the transition team. In the campaign, he was the Reagan-Bush Committee’s senior official.
During the Reagan governorship, Meese served as Executive Assistant and Chief of Staff from 1969 through 1974 and as Legal Affairs Secretary from 1967 through 1968. He previously was Deputy District Attorney in Alameda County, Calif.
Reagan never forgot Meese’s loyalty and hard work over the years. During a press conference at which reporters questioned Meese’s actions at the Justice Department, Reagan replied: “If Ed Meese is not a good man, there are no good men.”
Meese had a career outside government and politics. From 1977 to 1981, he was a Professor of Law at the University of San Diego, where he also directed the Center for Criminal Justice Policy and Management.
He was an executive in the aerospace and transportation industry as Vice President for Administration of Rohr Industries Inc. in Chula Vista, Calif. He left Rohr to return to the practice of law, doing corporate and general work in San Diego County.
Edwin Meese III was born Dec. 2, 1931, to Edwin Jr. and Leone Meese in Oakland, Calif. He graduated from Yale University in 1953 and holds a law degree from the University of California-Berkeley. A retired Colonel in the Army Reserve, he remains active in numerous civic and educational organizations.
He and his wife, Ursula, have two grown children and reside in McLean, Va.
B-b-b-but it’s his fault … he started it”…..a must read
TheWashington Post babbled again todayabout Obama inheriting a huge deficit from Bush. Amazingly enough, a lot of people swallow this nonsense. So once more,a short civics lesson.
Budgets do not come from the White House. They come from Congress and the party that controlled Congress since January 2007 is the Democratic Party.
Furthermore, the Democrats controlled the budget process for FY 2008 and FY 2009 as well as FY 2010 and FY 2011.
In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.
For FY 2009 though, Nancy Pelosi and Harry Reid bypassed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to complete the FY 2009 budgets.
And where was Barack Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY 2009. Let’s remember what the deficits looked like during that period: (below)
If the Democrats inherited any deficit, it was the FY 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets.
If Obama inherited anything, he inherited it from himself.
In a nutshell,what Obama is saying is I inherited a deficit that I voted for and then I voted to expand that deficit four-fold since January 20th.
In the debate of job creation and how best to pursue it as a policy goal, one point is forgotten: Government doesn’t create jobs. Government only diverts resources from one use to another, which doesn’t create new employment.
Video produced by Caleb Brown and Austin Bragg.
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Keynesian Catastrophe: Big Money, Big Government & Big Lies
Based on a theory known as Keynesianism, politicians are resuscitating the notion that more government spending can stimulate an economy. This mini-documentary produced by the Center for Freedom and Prosperity Foundation examines both theory and evidence and finds that allowing politicians to spend more money is not a recipe for better economic performance.
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Obama’s So-Called Stimulus: Good For Government, Bad For the Economy
President Obama wants Congress to dramatically expand the burden of government spending. This CF&P Foundation mini-documentary explains why such a policy, based on the discredited Keynesian theory of economics, will not be successful. Indeed, the video demonstrates that Obama is proposing – for all intents and purposes – to repeat Bush’s mistakes. Government will be bigger, even though global evidence shows that nations with small governments are more prosperous.
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Big Government Is Not Stimulus: Why Keynes Was Wrong (The Condensed Version)
The CF&P Foundation has released a condensed version of our successful mini-documentary explaining why so-called stimulus schemes do not work. Based on a theory known as Keynesianism, politicians are resuscitating the notion that more government spending can stimulate an economy. This mini-documentary produced by the Center for Freedom and Prosperity Foundation examines both theory and evidence and finds that allowing politicians to spend more money is not a recipe for better economic performance.
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Eight Reasons Why Big Government Hurts Economic Growth
This Center for Freedom and Prosperity Foundation video analyzes how excessive government spending undermines economic performance. While acknowledging that a very modest level of government spending on things such as “public goods” can facilitate growth, the video outlines eight different ways that that big government hinders prosperity. This video focuses on theory and will be augmented by a second video looking at the empirical evidence favoring smaller government.
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Keynesian Economics Is Wrong: Economic Growth Causes Consumer Spending, Not the Other Way
Politicians and journalists who fixate on consumer spending are putting the cart before the horse. Consumer spending generally is a consequence of growth, not the cause of growth. This Center for Freedom and Prosperity video helps explain how to achieve more prosperity by looking at the differences between gross domestic product and gross domestic income. www.freedomandprosperity.org
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Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending
Huge budget deficits and record levels of national debt are getting a lot of attention, but this video explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this CF&P mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending. www.freedomandprosperity.org
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Now that I have been critical of the Democrat President, I wanted to show that I am not concerned about taking up for Republicans but looking at the facts. President Clinton did increase government spending at a slower rate than many other presidents. Here are two videos that praise both Reagan and Clinton for both accomplished this feat.
Spending Restraint, Part I: Lessons from Ronald Reagan and Bill Clinton
Ronald Reagan and Bill Clinton both reduced the relative burden of government, largely because they were able to restrain the growth of domestic spending. The mini-documentary from the Center for Freedom and Prosperity uses data from the Historical Tables of the Budget to show how Reagan and Clinton succeeded and compares their record to the fiscal profligacy of the Bush-Obama years.
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Spending Restraint, Part II: Lessons from Canada, Ireland, Slovakia, and New Zealand
Nations can make remarkable fiscal progress if policy makers simply limit the growth of government spending. This video, which is Part II of a series, uses examples from recent history in Canada, Ireland, Slovakia, and New Zealand to demonstrate how it is possible to achieve rapid improvements in fiscal policy by restraining the burden of government spending. Part I of the series examined how Ronald Reagan and Bill Clinton were successful in controlling government outlays — particularly the burden of domestic spending programs. www.freedomandprosperity.org
Lawmakers are considering extending temporary payroll tax cuts. But the policy is based on faulty Keynesian theories and misplaced confidence in the government’s ability to micromanage short-run growth.
In textbook Keynesian terms, federal deficits stimulate growth by goosing “aggregate demand,” or consumer spending. Since the recession began, we’ve had a lot of goosing — deficits were $459 billion in 2008, $1.4 trillion in 2009, $1.3 trillion in 2010, and $1.3 trillion in 2011. Despite that huge supposed stimulus, unemployment remains remarkably high and the recovery has been the slowest since World War II.
Policymakers should ignore the Keynesians and their faulty models, and instead focus on reforms to aid long-run growth…
Yet supporters of extending payroll tax cuts think that adding another $265 billion to the deficit next year will somehow spur growth. That “stimulus” would be on top of the $1 trillion in deficit spending that is already expected in 2012. Far from helping the economy, all this deficit spending is destabilizing financial markets, scaring businesses away from investing, and imposing crushing debt burdens on young people.
For three years, policymakers have tried to manipulate short-run economic growth, and they have failed. They have put too much trust in macroeconomists, who are frankly lousy at modeling the complex workings of the short-run economy. In early 2008, the Congressional Budget Office projected that economic growth would strengthen in subsequent years, and thus completely missed the deep recession that had already begun. And then there was the infamously bad projection by Obama’s macroeconomists that unemployment would peak at 8 percent and then fall steadily if the 2009 stimulus plan was passed.
Some of the same Keynesian macroeconomists who got it wrong on the recession and stimulus are now claiming that a temporary payroll tax break would boost growth. But as Stanford University economist John Taylor has argued, the supposed benefits of government stimulus have been “built in” or predetermined by the underlying assumptions of the Keynesian models.
Policymakers should ignore the Keynesians and their faulty models, and instead focus on reforms to aid long-run growth, which economists know a lot more about. Cutting the corporate tax rate, for example, is an overdue reform with bipartisan support that would enhance America’s long-run productivity and competitiveness.
If Congress is intent on cutting payroll taxes, it should do so within the context of long-run fiscal reforms. One idea is to allow workers to steer a portion of their payroll taxes into personal retirement accounts, as Chile and other nations have done. That reform would feel like a tax cut to workers because they would retain ownership of the funds, and it would begin solving the long-term budget crisis that looms over the economy.
Dan Mitchell discusses the effectiveness of the stimulus Uploaded by catoinstitutevideo on Nov 3, 2009 11-2-09 When I think of all our hard earned money that has been wasted on stimulus programs it makes me sad. It has never worked and will not in the future too. Take a look at a few thoughts from […]
Government Spending Doesn’t Create Jobs Uploaded by catoinstitutevideo on Sep 7, 2011 Share this on Facebook: http://on.fb.me/qnjkn9 Tweet it: http://tiny.cc/o9v9t In the debate of job creation and how best to pursue it as a policy goal, one point is forgotten: Government doesn’t create jobs. Government only diverts resources from one use to another, which doesn’t […]
In his recent article Ernie Dumas sticks to his guns that we should balance the budget without being forced to with a “Balanced Budget Amendment,” but I wonder how well that has worked so far? I have made this a key issue for this blog in the past as you can tell below: Dear Senator […]
(Picture from Arkansas Times Blog) When I think about all the anger and hate coming from the Occupy Wall Street crowd, I wonder if they have read this story below? Solyndra: Crooked Politics or Just Bad Economics? Posted by David Boaz Amy Harder has a good take on the Solyndra issue in National Journal Daily […]
Dear Senator Pryor, why not pass the Balanced Budget Amendment? (Part 13 Thirsty Thursday, Open letter to Senator Pryor) Office of the Majority Whip | Balanced Budget Amendment Video In 1995, Congress nearly passed a constitutional amendment mandating a balanced budget. The Balanced Budget Amendment would have forced the federal government to live within its […]
Andrew Demillo pointed this out and also Jason Tolbert noted: PRYOR OPPOSES THE OBAMA JOBS BILL THAT HE VOTED TO ADVANCE Sen. Mark Pryor has been traveling around the state touting a six-part jobs plan that he says “includes a number of bipartisan initiatives, is aimed at creating jobs by setting the table for growth, encouraging new […]
Is a lack of money the problem for our public schools? Everything You Need to Know About Public School Spending in Less Than 2½ Minutes Posted by Adam Schaeffer Neal McCluskey gutted the President’s new “Save the Teachers” American Jobs Act sales pitch a good while back, as did Andrew Coulson here. Thankfully, it seems […]
With the national debt increasing faster than ever we must make the hard decisions to balance the budget now. If we wait another decade to balance the budget then we will surely risk our economic collapse.
The first step is to remove all welfare programs and replace them with the negative income tax program that Milton Friedman first suggested.
Milton Friedman points out that though many government welfare programs are well intentioned, they tend to have pernicious side effects. In Dr. Friedman’s view, perhaps the most serious shortcoming of governmental welfare activities is their tendency to strip away individual independence and dignity. This is because bureaucrats in welfare agencies are placed in positions of tremendous power over welfare recipients, exercising great influence over their lives. In addition, welfare programs tend to be self-perpetuating because they destroy work incentives. Dr. Friedman suggests a negative income tax as a way of helping the poor. The government would pay money to people falling below a certain income level. As they obtained jobs and earned money, they would continue to receive some payments from the government until their outside income reached a certain ceiling. This system would make people better off who sought work and earned income.
Here is a transcript of a portion of the “Free to Choose” program called “From Cradle to Grave” (program #4 in the 10 part series):
Friedman: After the 2nd World War, New York City authorities retained rent control supposedly to help their poorer citizens. The intentions were good. This in the Bronx was one result.
By the 50′s the same authorities were taxing their citizens. Including those who lived in the Bronx and other devastated areas beyond the East River to subsidize public housing. Another idea with good intentions yet poor people are paying for this, subsidized apartments for the well-to-do. When government at city or federal level spends our money to help us, strange things happen.
The idea that government had to protect us came to be accepted during the terrible years of the Depression. Capitalism was said to have failed. And politicians were looking for a new approach.
Franklin Delano Roosevelt was a candidate for the presidency. He was governor of New York State. At the governor’s mansion in Albany, he met repeatedly with friends and colleagues to try to find some way out of the Depression. The problems of the day were to be solved by government action and government spending. The measures that FDR and his associates discussed here derived from a long line of past experience. Some of the roots of these measures go back to Bismark’s Germany at the end of the 19th Century. The first modern state to institute old age pensions and other similar measures on the part of government. In the early 20th Century Great Britain followed suit under Lloyd George and Churchill. It too instituted old age pensions and similar plans.
These precursors of the modern welfare state had little effect on practice in the United States. But they did have a very great effect on the intellectuals on the campus like those who gathered here with FDR. The people who met here had little personal experience of the horrors of the Depression but they were confident that they had the solution. In their long discussions as they sat around this fireplace trying to design programs to meet the problems raised by the worst Depression in the history of the United States, they quite naturally drew upon the ideas that were prevalent at the time. The intellectual climate had become one in which it was taken for granted that government had to play a major role in solving the problems in providing what came later to be called Security from Cradle to Grave.
Roosevelt’s first priority after his election was to deal with massive unemployment. A Public Works program was started. The government financed projects to build highways, bridges and dams. The National Recovery Administration was set up to revitalize industry. Roosevelt wanted to see America move into a new era. The Social Security Act was passed and other measures followed. Unemployment benefits, welfare payments, distribution of surplus food. With these measures, of course, came rules, regulations and red tape as familiar today as they were novel then. The government bureaucracy began to grow and it’s been growing ever since.
This is just a small part of the Social Security empire today. Their headquarters in Baltimore has 16 rooms this size. All these people are dispensing our money with the best possible intentions. But at what cost?
In the 50 years since the Albany meetings, we have given government more and more control over our lives and our income. In New York State alone, these government buildings house 11,000 bureaucrats. Administering government programs that cost New York taxpayers 22 billion dollars. At the federal level, the Department of Health, Education and Welfare alone has a budget larger than any government in the world except only Russia and the United States.
Yet these government measures often do not help the people they are supposed to. Richard Brown’s daughter, Helema, needs constant medical attention. She has a throat defect and has to be connected to a breathing machine so that she’ll survive the nights. It’s expensive treatment and you might expect the family to qualify for a Medicaid grant.
Richard Brown: No, I don’t get it, cause I’m not eligible for it. I make a few dollars too much and the salary that I make I can’t afford to really live and to save anything is out of the question. And I mean, I live, we live from payday to payday. I mean literally from payday to payday.
Friedman: His struggle isn’t made any easier by the fact that Mr. Brown knows that if he gave up his job as an orderly at the Harlem Hospital, he would qualify for a government handout. And he’d be better off financially.
Hospital Worker: Mr. Brown, do me a favor please? There is a section patient.
Friedman: It’s a terrible pressure on him. But he is proud of the work that he does here and he’s strong enough to resist the pressure.
Richard Brown: I’m Mr. Brown. Your fully dilated and I’m here to take you to the delivery. Try not to push, please. We want to have a nice sterile delivery.
Friedman: Mr. Brown has found out the hard way that welfare programs destroy an individual’s independence.
Richard Brown: We’ve considered welfare. We went to see, to apply for welfare but, we were told that we were only eligible for $5.00 a month. And, to receive this $5.00 we would have to cash in our son’s savings bonds. And that’s not even worth it. I don’t believe in something for nothing anyway.
Mrs. Brown: I think a lot of people are capable of working and are willing to work, but it’s just the way it is set up. It, the mother and the children are better off if the husband isn’t working or if the husband isn’t there. And this breaks up so many poor families.
Friedman: One of the saddest things is that many of the children whose parents are on welfare will in their turn end up in the welfare trap when they grow up. In this public housing project in the Bronx, New York, 3/4′s of the families are now receiving welfare payments.
Well Mr. Brown wanted to keep away from this kind of thing for a very good reason. The people who get on welfare lose their human independence and feeling of dignity. They become subject to the dictates and whims of their welfare supervisor who can tell them whether they can live here or there, whether they may put in a telephone, what they may do with their lives. They are treated like children, not like responsible adults and they are trapped in the system. Maybe a job comes up which looks better than welfare but they are afraid to take it because if they lose it after a few months it maybe six months or nine months before they can get back onto welfare. And as a result, this becomes a self-perpetuating cycle rather than simply a temporary state of affairs.
Things have gone even further elsewhere. This is a huge mistake. A public housing project in Manchester, England.
Well we’re 3,000 miles away from the Bronx here but you’d never know it just by looking around. It looks as if we are at the same place. It’s the same kind of flats, the same kind of massive housing units, decrepit even though they were only built 7 or 8 years ago. Vandalism, graffiti, the same feeling about the place. Of people who don’t have a great deal of drive and energy because somebody else is taking care of their day to day needs because the state has deprived them of an incentive to find jobs to become responsible people to be the real support for themselves and their families.
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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, lowcostsqueegees@yahoo.com
* Using GDP deflator. Source: European Commission, Economic and Financial Affairs.
The Daily Hatch 