Category Archives: spending out of control

I wish Romney had reworded his comment on the 47%.

I wish Romney had reworded his comment on the 47%. It is true that our country is getting too dependent on the government, but it could have been handled differently.

Mitt Romney is catching a lot of flak for his surreptitiously recorded remarks about 47 percent of voters automatically being in the Obama column because they don’t pay federal income tax and thus see themselves as beneficiaries of big government.

Since I’ve warned about dependency and raised the alarm that we risk becoming another Greece unless entitlements are reformed, one might think I agree with the former Massachusetts governor.

Not quite. I think Romney raised an important issue, but he cited the wrong statistic and drew an unwarranted conclusion.

Here’s what I said to Neil Cavuto about the controversy.

Dan Mitchell Analyzing the 47 Percent Dependency Controversy

Published on Sep 21, 2012 by

No description available.

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To augment on those remarks, here’s where Romney was wrong.

Yes, we have almost half of households not paying federal income tax, and I recognize that there’s a risk on an unhealthy political dynamic if people begin to think they get government for free, but those people are not necessarily looking for freebies from government. Far from it. Many of them have private sector jobs and believe in self reliance and individual responsibility. Or they’re students, retirees, or others who don’t happen to have enough income to pay taxes, but definitely don’t see themselves as wards of the state.

If Romney wanted to be more accurate, he should have cited the share of households receiving goodies from the government. That number also is approaching 50 percent and it probably is much more correlated with the group of people in the country who see the state as a means of living off their fellow citizens. But even that correlation is likely to be very imprecise since some government beneficiaries – such as Social Security recipients – spent their lives in the private sector and are taking benefits simply because they had no choice but to participate in the system.

Moreover, there are some people who pay tax and don’t receive programmatic benefits, yet are part of the proverbial moocher class. Many government bureaucrats obviously would be on that list, as would some union members, trial lawyers, etc.

However, even though Romney picked the wrong statistic and overstated the implications, he indirectly stumbled on a key issue. As seen in both BIS and OECD data, the U.S. is at risk of Greek-style fiscal chaos at some point in the not-too-distant future because of a rising burden of government spending.

I have no idea what share of the population today actually is part of the dependency class that Mitt Romney inarticulately described, but I don’t think I’m going out on limb to say that it has grown during the Bush-Obama years and it will continue to expand.

If we want to maintain American exceptionalism (both in theory and reality), it would be a very good idea to figure out how to avoid having more people trapped in lives of government dependency.

P.S. Here are two amusing cartoons about the dependency mindset, a great Chuck Asay cartoon showing what happens when there’s nothing left to steal, as well as the famous riding-in-the-wagon cartoons produced by a former Cato intern.

Dan Mitchell of the Cato Institute takes on entitlement reform

It is the elephant in the room that nobody wants to talk about. Here Dan Mitchell takes it on.

Most people have a vague understanding that America has a huge long-run fiscal problem.

They’re right, though they probably don’t realize the seriousness of that looming crisis.

Here’s what you need to know: America’s fiscal crisis is actually a spending crisis, and that spending crisis is driven by entitlements.

More specifically, the vast majority of the problem is the result of Medicaid, Medicare, and Social Security, programs that are poorly designed and unsustainable.

America needs to fix these programs…or eventually become another Greece.

Fortunately, all of the problems can be solved, as these three videos demonstrate.

The first video explains how to fix Medicaid.

Promote Federalism and Replicate the Success of Welfare Reform with Medicaid Block Grants

Uploaded by on Jun 26, 2011

The Medicaid program imposes high costs while generating poor results. This Center for Freedom and Prosperity Foundation video explains how block grants, such as the one proposed by Congressman Paul Ryan, will save money and improve healthcare by giving states the freedom to innovate and compete.

The second video shows how to fix Medicare.

Saving Medicare: Free Market Reforms Are Better than Bureaucratic Rationing

Uploaded by on May 17, 2011

This Center for Freedom and Prosperity Foundation video explains how a “premium-support” plan would solve Medicare’s fiscal crisis and improve the overall healthcare system. This voucher-based system also would protect seniors from bureaucratic rationing. http://www.freedomandprosperity.org

And the final video shows how to fix Social Security.

Saving Social Security with Personal Retirement Accounts

Uploaded by on Jan 10, 2011

There are two crises facing Social Security. First the program has a gigantic unfunded liability, largely thanks to demographics. Second, the program is a very bad deal for younger workers, making them pay record amounts of tax in exchange for comparatively meager benefits. This video explains how personal accounts can solve both problems, and also notes that nations as varied as Australia, Chile, Sweden, and Hong Kong have implemented this pro-growth reform. www.freedomandprosperity.org

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Regular readers know I’m fairly gloomy about the future of liberty, but this is one area where there is a glimmer of hope.

The Chairman of the House Budget Committee actually put together a plan that addresses the two biggest problems (Medicare and Medicaid) and the House of Representatives actually adopted the proposal.

The Senate didn’t act, of course, and Obama would veto any good legislation anyhow, so I don’t want to be crazy optimistic. Depending on how things play out politically in the next six years, I’ll say there’s actually a 20 percent chance to save America.

The answer to the education problem is the voucher system

Milton Friedman – Public Schools / Voucher System

Published on May 9, 2012 by

The Machine: The Truth Behind Teachers Unions

Published on Sep 4, 2012 by

America’s public education system is failing. We’re spending more money on education but not getting better results for our children.

That’s because the machine that runs the K-12 education system isn’t designed to produce better schools. It’s designed to produce more money for unions and more donations for politicians.

For decades, teachers’ unions have been among our nation’s largest political donors. As Reason Foundation’s Lisa Snell has noted, the National Education Association (NEA) alone spent $40 million on the 2010 election cycle (source: http://reason.org/news/printer/big-education-and-big-labor-electio). As the country’s largest teachers union, the NEA is only one cog in the infernal machine that robs parents of their tax dollars and students of their futures.

Students, teachers, parents, and hardworking Americans are all victims of this political machine–a system that takes money out of taxpayers’ wallets and gives it to union bosses, who put it in the pockets of politicians.

Our kids deserve better.

“The Machine” is 4:17 minutes.

Written and narrated by Evan Coyne Maloney. Produced by the Moving Picture Institute in partnership with Reason TV.

Visit http://www.MovingPictureInstitute.org to learn more.

No one did more to advance the cause of school vouchers than Milton and Rose Friedman. Friedman made it clear in his film series “Free to Choose” how sad he was that young people who live in the inner cities did not have good education opportunities available to them.

I have posted often about the voucher system and how it would solve our education problems. What we are doing now is not working. Milton Friedman’s idea of implementing school vouchers was hatched about 50 years ago.

Poor families are most affected by this lack of choice. As Friedman noted, “There is no respect in which inhabitants of a low-income neighborhood are so disadvantaged as in the kind of schooling they can get for their children.” It is a sad statement quantified by data on low levels of academic achievement and attainment. Take a look at this article below.

Lindsey Burke

September 25, 2012 at 5:46 pm

SAT scores among the nation’s test-takers are at a 40-year low.

As The Washington Post reports:

Reading scores on the SAT for the high school class of 2012 reached a four-decade low, putting a punctuation mark on a gradual decline in the ability of college-bound teens to read passages and answer questions about sentence structure, vocabulary and meaning on the college entrance exam.

The decline over the decades has been significant. The average reading (verbal) score is down 34 points since 1972. Sadly, the historically low SAT scores are only the latest marker of decline. Graduation rates have been stagnant since the 1970s, reading and math achievement has been virtually flat over the same time period, and American students still rank in the middle of the pack compared to their international peers.

On the heels of the news about the SAT score decline, President Obama filmed a segment with NBC’s Education Nation earlier today. The President notably praised the concept of charter schools and pay for performance for teachers.

But those grains of reform were dwarfed by his support of the status quo. During the course of the interview, President Obama suggested hiring 100,000 new math and science teachers and spending more money on preschool. He also stated that No Child Left Behind had good intentions but was “under-resourced.”

Efforts by the federal government to intervene in preschool, most notably through Head Start, have failed—despite a $160 billion in spending on the program since 1965. And No Child Left Behind is far from “under-resourced.” The $25 billion, 600-page law has been on the receiving end of significant new spending every decade since the original law was first passed nearly half a century ago.

President Obama was also pressed on the issue of education unions by host Savannah Guthrie:

Some people think, President Obama gets so much support from the teachers’ unions, he can’t possibly have an honest conversation about what they’re doing right or wrong. Can you really say that teachers’ unions aren’t slowing the pace of reform?

President Obama responded: “You know, I just really get frustrated when I hear teacher-bashing as evidence of reform.”

Criticizing education unions for standing in the way of reform should not be conflated with criticizing teachers, as the President does in the interview. The unions have blocked reforms such as performance pay and charter schools (which the President supports), have opposed alternative teacher certification that would help mid-career professionals enter the classroom, and have consistently fought the implementation of school choice options for children.

If we ever hope to move the needle on student achievement—or see SAT scores turn in the right direction again—we’ll need to implement many of those exact reforms, particularly school choice.

And as he has in the past, President Obama stated that his Administration wants to “use evidenced-based approaches and find out what works.” We know what works: giving families choices when it comes to finding schools that best meet their children’s needs. Instead of continuing to call for more spending and more Washington intervention in education, let’s try something new: choice and freedom.

Related posts:

Milton Friedman remembered at 100 years from his birth (Part 4)

I ran across this very interesting article about Milton Friedman from 2002: Friedman: Market offers poor better learningBy Tamara Henry, USA TODAY By Doug Mills, AP President Bush honors influential economist Milton Friedman for his 90th birthday earlier this month. About an economist Name:Milton FriedmanAge: 90Background: Winner of the 1976 Nobel Prize for economic science; […]

Milton Friedman videos and transcripts Part 11

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 […]

Open letter to President Obama (Part 117.3)

A Taxing Distinction for ObamaCare Published on Jun 28, 2012 by catoinstitutevideo http://www.cato.org/publications/commentary/it-now-falls-congress http://www.cato.org/publications/commentary/taxing-decision http://www.cato-at-liberty.org/supreme-court-unlawfully-rewrites-obamacare-to… http://www.cato-at-liberty.org/congress-its-not-a-tax-scotus-yes-it-is/ The Cato Institute’s Roger Pilon, Ilya Shapiro, Michael F. Cannon, Michael D. Tanner and Trevor Burrus evaluate today’s ruling on ObamaCare at the Supreme Court. Video produced by Caleb O. Brown and Austin Bragg. ____________ President Obama c/o The […]

Milton Friedman videos and transcripts Part 10

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 videos and transcripts Part 9

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 […]

Milton Friedman’s biography (Part 2)(Interview by Charlie Rose of Milton Friedman part 3)

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 at Hillsdale College 2006 (part 2)

Milton Friedman at Hillsdale College 2006 July 2006 Free to Choose: A Conversation with Milton Friedman Milton Friedman Economist Milton Friedman is a senior research fellow at the Hoover Institution at Stanford University and a professor emeritus of economics at the University of Chicago, where he taught from 1946-1976. Dr. Friedman received the Nobel Memorial […]

Milton Friedman videos and transcripts Part 8

Milton Friedman videos and transcripts Part 8 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 remembered at 100 years from his birth (Part 2)

Testing Milton Friedman – Preview Uploaded by FreeToChooseNetwork on Feb 21, 2012 2012 is the 100th anniversary of Milton Friedman’s birth. His work and ideas continue to make the world a better place. As part of Milton Friedman’s Century, a revival of the ideas featured in the landmark television series Free To Choose are being […]

Milton Friedman believed in liberty (Interview by Charlie Rose of Milton Friedman part 1)

Charlie Rose interview of Milton Friedman My favorite economist: Milton Friedman : A Great Champion of Liberty  by V. Sundaram   Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three US Presidents – Nixon, Ford and Reagan – died last Thursday (16 November, 2006 ) in San Francisco […]

Free or equal? 30 years after Milton Friedman’s Free to Choose (Part 1)

Free or Equal?: Johan Norberg Updates Milton & Rose Friedman’s Free to Choose I got this below from Reason Magazine: Swedish economist Johan Norberg is the host of the new documentary Free or Equal, which retraces and updates the 1980 classic Free to Choose, featuring Milton and Rose Friedman. Like the Friedmans, Norberg travels the globe […]

Reason Magazine’s rightly praises Milton Friedman but makes foolish claim along the way

I must say that I have lots of respect for Reason Magazine and for their admiration of Milton Friedman. However, I do disagree with one phrase below. At the end of this post I will tell you what sentence it is. Uploaded by ReasonTV on Jul 28, 2011 There’s no way to appreciate fully the […]

Video clip:Milton Friedman discusses his view of numerous political figures and policy issues in (Part 1)

Milton Friedman on Hayek’s “Road to Serfdom” 1994 Interview 1 of 2 Uploaded by PenguinProseMedia on Oct 25, 2011 Says Federal Reserve should be abolished, criticizes Keynes. One of Friedman’s best interviews, discussion spans Friedman’s career and his view of numerous political figures and public policy issues. ___________________ Two Lucky People by Milton and Rose Friedman […]

Milton Friedman remembered at 100 years from his birth (Part 1)

What a great man Milton Friedman was. The Legacy of Milton Friedman November 18, 2006 Alexander Tabarrok Great economist by day and crusading public intellectual by night, Milton Friedman was my hero. Friedman’s contributions to economics are profound, the permanent income hypothesis, the resurrection of the quantity theory of money, and his magnum opus with […]

Milton Friedman videos and transcripts Part 7

Milton Friedman videos and transcripts Part 7 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 […]

Transcript and video of Milton Friedman on Bill Clinton and Ronald Reagan (Part 1)

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 […]

Dan Mitchell’s article on Chili and video clip on Milton Friedman’s influence

Milton Friedman and Chile – The Power of Choice Uploaded by FreeToChooseNetwork on May 13, 2011 In this excerpt from Free To Choose Network’s “The Power of Choice (2006)”, we set the record straight on Milton Friedman’s dealings with Chile — including training the Chicago Boys and his meeting with Augusto Pinochet. Was the tremendous […]

 

In Free to Choose, Milton Friedman and his wife, Rose, argued for a constitutional amendment requiring a balanced budget.

Broun Introduces Balanced Budget Amendment

Uploaded by on Feb 23, 2010

No description available.

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When I think about the life work of Milton Friedman two issues keep coming up. Private vouchers for schools and lowering federal government spending. Those two issues were very close to his heart. I am hoping in the future our leaders will see that after increasing spending every year for the last 40 years and at the same time our test results have dropped that we must gave private vouchers a chance.

Also as our national debt keep rising we must adopt the Balanced Budget Amendment which was also close to Friedman’s heart.

The US Needs Milton Friedman More Than Ever

 

In compiling a list of the greatest economists of all time, Milton Friedman’s name will surely be one of the first to come to mind.  There is of course his technical work, such as his famous Monetary History of the United States (co-authored with Anna Schwartz), that established him as the chief architect of the theory of monetarism. More important was his ability to explain in clear layman’s terms the basic principles of our economic system, how it creates wealth for all members of society, and the importance to a successful society of individual liberty.  If one were to pick two books that our country’s leaders should read, they would be his Capitalism and Freedom and Free to Choose.  They are a treasure trove of solutions to the social problems of today.

Freidman wrote the first of these in 1962.  In a period where we were about to launch The Great Society, as is the case today, people were looking to the federal government to improve their lives. Friedman offered an alternative based upon market forces and individual liberty. His cogent examination of the effect of incentives on people’s behavior led him to offer solutions to societal problems that were both insightful and effective.  He offered ideas such as allowing individuals to invest in the education of others, so poor children would be able to obtain funding for high school and college in return for the investor receiving a fraction of their future earnings.  This innovative idea would be much more successful than Pell Grants in encouraging and enabling students to finish high school and graduate from college.  

Today we are more than ever in need of a resurgence and rediscovery of Milton Friedman’s ideas. Examples of this need abound.  The stimulus package was supposed to keep the unemployment rate below 8 percent. Instead we have unemployment between 9.5 and 10 percent and $800 billion added to the federal debt.  The Obama administration is now pushing for a second stimulus package. Thirty years ago Friedman explained that fiscal policy is not an effective method of reducing unemployment.  Had we followed Friedman’s advice, we would be less burdened in debt and further along in economic recovery. 

His argument for vouchers as a mechanism of moving public education from a socialist system to a market system has found traction in the last decade.  Nonetheless, voucher proposals are very difficult to pass due to the power of the teachers unions.  As a consequence of not following Friedman’s advice thousands of children in our urban schools have lost their chance for a good education.   

Due to a massive 2000 page health care bill, the federal government is now managing the entire health care and health insurance industry.  Freidman explained in a cogent article in The Public Interest, that health care costs are so high and customer satisfaction with the system is so low because government intervention has pushed us into an employer and government-based third party payment system.  In typical Friedman fashion he forces us to observe that advances in technology in every area other than health care have led to reduced costs and increased satisfaction with the product or service and to ask why this is so.  He asks why we single out medical care for tax-free status.  Food is more important than medical care and yet we do not exempt the cost of food if provided by the employer. He must be surely rolling over in his grave the new health care legislation will compound the problem of third-party payment.

The President recently signed a 2300 page bill granting the federal government control over the entire financial industry.  Professor Friedman wrote famously of how the Federal Reserve was not capable of determining how to manipulate the credit markets effectively due to its inability to know the information necessary to conduct effective monetary policy, and thus argued that the Federal Reserve should be constrained by rules. He certainly would have argued strenuously against giving the Federal Reserve and Securities and Exchange Commission the enormous powers that they received under the financial regulation legislation.

In Free to Choose, Friedman and his wife, Rose, argued for a constitutional amendment requiring a balanced budget.  As we see deficits of nearly $1.5 trillion staring us in the face for at least the next few years, this suggestion too has gained new relevance.

Concluding Free to Choose, he wrote:

“The two ideas of human freedom and economic freedom working together cane to their greatest fruition in the United States.  Those ideas are still very much with us. But we have been straying from them.  We have been forgetting the basic truth that the greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else.  We have persuaded ourselves that it is safe to grant power, provided it is for good purposes.”

Some thirty years later those words again ring true.  Our hope should be that his final statement also is true:

“Fortunately, we are waking up….Fortunately, also, we are as a people still free to choose which way we should go—whether to continue along the road we have been following to ever bigger government, or to call a halt and change direction.”

This post originally appeared at The Business and Media Insitute’s Balance Sheet of July 28, 2010

Videos by Dan Mitchell of the Cato Institute found here on www.thedailyhatch.org

Dan Mitchell of the Cato Institute has some great videos and I have posted lots of them on my blog. I like to go to Dan’s blog too. Take a look at some of them below and then the links to my blog.

It’s Simple to Balance The Budget Without Higher Taxes

Uploaded by on Oct 4, 2010

Politicians and interest groups claim higher taxes are necessary because it would be impossible to cut spending by enough to get rid of red ink. This Center for Freedom and Prosperity video shows that these assertions are nonsense. The budget can be balanced very quickly by simply limiting the annual growth of federal spending.

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Six Reasons Why the Capital Gains Tax Should Be Abolished

Uploaded by on May 3, 2010

The correct capital gains tax rate is zero because there should be no double taxation of income that is saved and invested. This is why all pro-growth tax reform plans, such as the flat tax and national sales tax, eliminate the capital gains tax. Unfortunately, the President wants to boost the official capital gains tax rate to 20 percent, and that is in addition to the higher tax rate on capital gains included in the government-run healthcare legislation. http://www.freedomandprosperity.org

 

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Keynesian Economics Is Wrong: Bigger Gov’t Is Not Stimulus

Uploaded by on Dec 15, 2008

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

Uploaded by on Jan 26, 2009

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)

Uploaded by on Jan 13, 2009

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

Uploaded by on Aug 17, 2009

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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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

Uploaded by on Feb 14, 2011

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

Uploaded by on Feb 22, 2011

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

Here are some posts that include videos from Dan Mitchell:

Videos by Cato Institute on failed stimulus plans

In this post I have gathered several videos from the Cato Institute concerning the subject of failed stimulus plans. _____ 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 […]

Balanced Budget Amendment the answer? Boozman says yes, Pryor no, Part 28 (Input from Norm Coleman, former Republican Senator from MN)

  It’s Simple to Balance The Budget Without Higher Taxes Steve Brawner in his article “Safer roads and balanced budgets,” Arkansas News Bureau, April 13, 2011, noted: The disagreement is over the solutions — on what spending to cut; what taxes to raise (basically none ever, according to Boozman); whether or not to enact a […]

Obama’s plan is not too smart on taxes

Dan Mitchell did a great article concerning the affect of raising taxes in these two areas and horrible results: How Can Obama Look at these Two Charts and Conclude that America Should Have Higher Double Taxation of Dividends and Capital Gains? Posted by Daniel J. Mitchell As discussed yesterday, the most important number in Obama’s […]

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Must keep spending down

Got to get rid of all the huge increases in spending. Milton Friedman believed the Balanced Budget Amendment would be the best way to slow down government spending as long as it is tied to a percentage of GDP.

Below is an excellent article by Dan Mitchell on this issue of keeping government spending down.

I have many frustrations in my life, and near the top of the list is the conservative fixation about balancing the budget.

This view is very misguided. Red ink isn’t good, but the fiscal problem in America (as well as Europe, Japan, etc) is that the public sector is too big. Milton Friedman was right when he wrote, “I would rather have government spend one trillion dollars with a deficit of a half a trillion dollars than have government spend two trillion dollars with no deficit.”

To put it in simple terms, government spending is the disease and deficits and debt are the symptoms.

But even that analogy is inadequate. When politicians focus on borrowing rather than spending, it opens a door allowing the left to argue that tax increases are a solution.

Yet we know from historical experience that higher taxes encourage more spending and slow economic growth, and the combination of those two factors leads to more red ink.

Consider, for example, the experience in Europe. Beginning about 20 years ago with the adoption of the Maastricht Treaty, all members of the European Union agreed to limit annual budget deficits to 3 percent of GDP and total national debt to 60 percent of GDP.

And what happened after these rules were instituted? Well, according to data from the OECD, government got bigger, the tax burden rose, and there was more red ink.

Heck, the Europeans are in the middle of a fiscal crisis, so their rules to limit deficits and debt obviously haven’t been very successful.

Seems like maybe it’s time for them to realize that the problem is too much spending. But, no, that would make too much sense.

Amazingly, but not surprisingly, the Europeans now want to double-down on their failed policies by imposing, as part of a new fiscal pact, even more rules to supposedly control deficits and debt.

The EU Observer reports that: “Countries must introduce a ‘debt brake’ into their constitutions or at an “equivalent” legal level, requiring balanced budgets, which are defined as not exceeding deficits of 0.5 percent of GDP.” Furthermore, another EU Observer report says that “rules will have to include automatic correction mechanisms.” Knowing the mindset of the Euro-crats, this probably means automatic tax increases.

The obvious problem, of course, is that the Europeans have adopted the wrong measuring stick. When they talk about a “golden rule,” they mean limits on deficits and debt. Instead, they should be following Mitchell’s Golden Rule, which requires that government spending grow slower than the private economy.

This video is less than six minutes, but it provides all the key arguments about why the goal should be smaller government rather than fiscal balance.

Deficits are Bad, but the Real Problem is Spending

Uploaded by on Dec 15, 2009

Huge deficits and skyrocketing debt levels are creating considerable worry. This Center for Freedom and Prosperity Foundation video explains that that government borrowing is excessive – and will get worse in coming decades. But this mini-documentary explains that deficits and debt are merely the symptoms, and a rising burden of government spending is the real problem.

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Last but not least, it’s worth noting that Europe’s new fiscal agreement (assuming it ever gets implemented) is bound to fail. In part, this is because they are targeting red ink, which is the wrong variable.

But it’s also because the supposed enforcement mechanisms won’t work. The tentative pact assumes that European Commission bureaucrats in Brussels somehow will impose fiscal discipline.

To be more specific, a report in the EU Observer says: “The European Commission will carry a big stick: it will look at national budgets before national MPs and make demands.” Does anyone believe this will have any impact on Italian politicians?

And another story in the EU Observer notes: “Under the proposals, almost all fiscal policy-making would be taken out of the hands of national assemblies and delivered up to European civil servants.” Good luck with that. Does anyone think Spanish parliamentarians will cede budget authority to Brussels?

This is why I stand by my original arguments that bailouts won’t work and that a tough-love policy of benign neglect is the only feasible solution.

Ron Paul quotes Milton Friedman concerning Balanced Budget Amendment

Rand Paul A balanced Budget Amendment is the only way (29-Jul-11)(GLOBAL FOCUS series – US)

Uploaded by on Jul 31, 2011

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The main reason we need a Balanced Budget Amendment is to control spending. Milton Friedman was right about that. Notice below that Ron Paul quotes Friedman on this issue.

Ron Paul: Constitutional Amendment Needed to Limit Taxes and Spending

Submitted by bobbyw24 on Wed, 07/20/2011– 07:09

Congressman Ron Paul (R-Texas) says merely scaling back to 2008 spending levels is nowhere near enough to fix the massive government debt problems.

“As Milton Friedman famously argued, what we really need is a constitutional amendment to limit taxes and spending, not simply to balance the budget,” Paul said in a speech to the House of Representatives made prior to the vote on the “Cut, Cap and Balance” bill. The bill is expected to pass the House tonight, but President Barack Obama has said he will veto it if it clears the Senate and reaches his desk.

What is needed is a dramatically smaller federal government, says Paul. “If we achieve this, a balanced budget will take care of itself,” he says. “We need to cut back at least to where spending was a decade ago.”

Why can’t we attack the debt and get rid of it?

It seems like everyone is not concerned with coming up with real solutions to our debt problem.

We Need a Better Debt Debate

by Michael D. Tanner

Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Added to cato.org on October 10, 2012

This article appeared on National Review (Online) on October 10, 2012

If there was a bigger loser than President Obama on that Denver debate stage last week, it was the conversation about our national debt and the fiscal crisis threatening this country. Throughout the 90-minute debate, both candidates made frequent references to the deficit, the debt, or balancing the budget, but showed little willingness to actually do anything about it.

As of the night of the debate, last Wednesday, our national debt was $16.153 trillion. Let’s put that in perspective: The New York Yankees have the biggest payroll in baseball. For $16 trillion, you could pay the Yankees for 81,000 years, and still have money left over for a couple of free-agent pitchers. And, speaking of New York, $16 trillion could buy all the real estate in New York City — 20 times over. If we were to stack $16 trillion of one-dollar bills on a football field, it would cover the field to a depth of more than two miles. Alternatively, a single stack of 16 trillion one-dollar bills would be 1.085 million miles high, enough to reach the moon and back, twice over. If we were to pay our national debt back at the rate of $1 per second, we could wipe it out in a mere 507,000 years.

Beginning to get the idea? We are talking about a lot of money. Each American’s share of that debt is nearly $53,000.

Our official national debt numbers do not include the unfunded future liabilities of entitlement programs such as Social Security and Medicare. But even under the most optimistic projections, those liabilities, the difference between projected benefits and revenue, total more than $59 trillion. Other projections suggest that they could run to more than $111 trillion. Thus, our true debt actually is somewhere between $75 trillion and $127 trillion.

Romney and Obama didn’t seriously tackle debt and deficits in their first debate.

But in the face of this looming wave of red ink, both candidates more or less ducked.

Governor Romney laid down a useful marker, promising that he would cut any program that was not worth “borrowing money from China to pay for it.” Yet he was so unwilling to offend any potential voting group that he proposed no serious budget cuts. In fact, Romney seemed to spend most of his time explaining all the spending that he wouldn’t cut: defense spending, Medicare, Social Security, education spending; basically, nothing except Big Bird and Obamacare. Public broadcasting is certainly ripe for the cutting block, but given that PBS accounts for 0.01 percent of federal spending, we’ll still be doing a lot of borrowing from China.

Meanwhile, President Obama has not quite doubled the federal debt, as Governor Romney suggested, but he has increased it by $6 trillion during his first four years in office, compared to a $4.9 trillion increase over George Bush’s eight years. Instead, he attacked Romney for wanting to cut much of anything at all.

The president did trot out the old and discredited $4 trillion deficit-reduction plan that he has periodically offered over the past couple of years. But most of the spending cuts he vaguely hinted at were little more than smoke and mirrors: reductions already enacted as part of last year’s budget agreement, savings from previously scheduled pull-outs from Iraq and Afghanistan, interest savings from these budget gimmicks, etc.

The heart of the president’s plan was another call for raising taxes on the rich (and the not-quite-so rich, such as those earning $250,000 per year). But the president’s idea of balancing the budget on the backs of the evil 1 percent is as much of a myth as his proposed spending cuts. If the president received every penny in tax increases that he wants, he would raise roughly $390 billion annually. That might be enough to wreck the economy, but it isn’t going to come close to solving the problem. In fact, it will barely cover all the new spending that the president wants, let alone pay down the debt. As the president likes to say: It’s not ideology; it’s arithmetic.

On the other hand, Romney rejected any tax hike to reduce the deficit, even if part of a deal that included $10 in spending cuts to $1 in tax hikes. Of course, such a deal is pure fantasy. No Democrat has ever supported anything even close to that. Governor Romney correctly puts the blame for our debt where it belongs; federal spending that has averaged 24.4 percent of GDP during the Obama years, and is projected to reach 43 percent by mid-century.

Given Paul Ryan’s legitimate reputation as both a budget wonk and a deficit hawk, we can expect more of a focus on the debt and deficit at this Thursday’s debate. (We can have a new drinking game every time someone mentions the “Ryan budget.”)

Biden is expected to be on the attack, warning that any cut of anything will cause death and destruction unprecedented since the Bush administration or the Black Death, whichever was worse. No one is better situated than Ryan to answer those charges. The question will be whether the vice-presidential candidates will be more honest than the top of their tickets in telling the American people that the federal government is going to have to cut spending, even on programs that might be politically popular.

Yes, election season is a difficult time to call for such cuts. But as Governor Romney noted during the Denver debate, the debt is “not just an economic issue… it’s a moral issue. I think it’s, frankly, not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation and they’re going to be paying the interest and the principal all their lives.”

One hopes that sometime before November, one of the candidates offers a serious plan to deal with that moral issue.

Do we want “Bipartisanship” or do we want to look out for the taxpayers?

Milton Friedman said that getting George Bush I to be his vice president was his biggest mistake because he knew that Bush was not a true conservative and sure enough George Bush did raise taxes when he later became President. Below is a speech by George W. Bush honoring Milton Friedman:

Milton Friedman Honored for Lifetime Achievements 2002/5/9

______________

Bipartisanship has not served us well in the past. It has resulted in going further and further in debt. We need conservatives who know what the problem is and are willing to cut spending no matter what in order to balance the budget and get our percentage of federal spending under 18% of GDP like it has been the last 50 years and not at 24.8% like it is now.

Bipartisanship versus Taxpayers

Posted by David Boaz

Last month George Will pushed back against the bipartisan Washington wish for bipartisanship:

Bipartisanship, the supposed scarcity of which so distresses the high-minded, actually is disastrously prevalent.

Since 2001, it has produced No Child Left Behind, a counterproductive federal intrusion in primary and secondary education; the McCain-Feingold speech rationing law (the Bipartisan Campaign Reform Act); an unfunded prescription drug entitlement; troublemaking by Fannie Mae and Freddie Mac; government-directed capitalism from the Export-Import Bank; crony capitalism from energy subsidies; unseemly agriculture and transportation bills; continuous bailouts of an unreformed Postal Service; housing subsidies; subsidies for state and local governments; and many other bipartisan deeds, including most appropriations bills.

And today I see this banner headline in the (actual paper edition of the) Washington Post:

In Senate, farm bill produces a rarity: cooperation
Some see signs of renewed bipartisanship

Paul Kane reports:

To the purported short­list of certainties in life — death and taxes — add large, bipartisan support in the Senate for the farm bill.

Despite the pattern in recent years of intense partisan acrimony, backroom bickering and publicly staged fights over nearly every piece of legislation, the Senate has begun to plod through a nearly $1 trillion farm bill that is likely to get a bipartisan vote for its approval by week’s end.

A trillion dollars. For a farm bill. Have we become so accustomed to throwing around the phrase “a trillion dollars” that this isn’t headline news?  Not to worry, though, Congress is thinking of the taxpayers: They say they’ve cut $23 billion out of the trillion. Sure, let’s look back in a decade and see if those cuts really happened.

Meanwhile, shoveling out money to the farmers isn’t the only time Congress can be bipartisan. There’s also shoveling out money to Boeing and a handful of other big companies with the Export-Import Bank, as the Los Angeles Times reported on May 30:

President Obama has signed into law a bill reauthorizing the Export-Import Bank, saying the rare example of bipartisan cooperation should be a model for a future legislation.

Yessiree, as George Will said, the one thing Congress can join hands and agree on is giving taxpayers’ money to interest groups — whether it’s farmers or airplane manufacturers or college students and their parents or Medicare recipients. Bipartisanship is typically a conspiracy against the taxpayers.

Senator Pryor asks for Spending Cut Suggestions! Here are a few!(Part 163)

Senator Pryor asks for Spending Cut Suggestions! Here are a few!(Part 163)

Senator Mark Pryor wants our ideas on how to cut federal spending. Take a look at this video clip below:

Senator Pryor has asked us to send our ideas to him at cutspending@pryor.senate.gov and I have done so in the past and will continue to do so in the future.

On May 11, 2011,  I emailed to this above address and I got this email back from Senator Pryor’s office:

Please note, this is not a monitored email account. Due to the sheer volume of correspondence I receive, I ask that constituents please contact me via my website with any responses or additional concerns. If you would like a specific reply to your message, please visit http://pryor.senate.gov/contact. This system ensures that I will continue to keep Arkansas First by allowing me to better organize the thousands of emails I get from Arkansans each week and ensuring that I have all the information I need to respond to your particular communication in timely manner.  I appreciate you writing. I always welcome your input and suggestions. Please do not hesitate to contact me on any issue of concern to you in the future.

I just did. I went to the Senator’s website and sent this below:

Here are some great suggestions from the Heritage Foundation.  Alison Acosta Fraser Director, Thomas A. Roe Institute for Economic Policy Studies

Nowhere to Cut?

  • In 2008 and 2009 alone, the Department of Justice spent (DOJ)$121 million to host or participate in 1,832conferences.
    • At one conference, petite Beef Wellington made the hors d’oeuvres menu, at a cost of $7.32 per serving.
    • An internal audit found DOJ did not keep costs to a minimum, despite federal guidelines. The most expensive conference reviewed in the audit was held in Istanbul, Turkey, and cost $1.18 million.
  • The General Services Administration (GSA), which is responsible for managing federal buildings and helping to cut costs, held a conference costing $822,751 in Las Vegas. At more than $2,500 per employee, it included $44-per-person breakfasts and commemorative coins for conference participants that cost $6,325.
  • In fiscal year 2010, the federal government spent nearly $1.7 billion to maintain 77,700 underused or unused buildings.
  • Eliminating both the New Starts and Small Starts transit grants programs would save taxpayers $5.6 billion over the next five years and $16.3 billion over 10 years. It would get the federal government out of the business of subsidizing high-cost, low-value local transit projects, such as $900 million for a 10-mile extension of the Bay Area rail system in San Jose and a $1.6 billion grant to construct a Honolulu rail line.
  • The Department of Agriculture’s Office of the Chief Information Officer funded a $2 million intern program. Only one intern was hired full time as a result.
  • Fifteen federal agencies are involved in administering 30 food safety laws, resulting in fragmented food safety oversight.
  • The U.S. Navy bought 450,000 gallons of biofuels for $12 million, or almost $27 per gallon, to conduct exercises to showcase the fuel and bring it closer toward commercialization. It is the largest biofuel purchase ever made by the government.
  • The Internal Revenue Service stored 22,486 items of unused furniture in a warehouse at an annual cost of $862,000.