Category Archives: Taxes

Dan Mitchell: All savings should be protected from double taxation, not just what you set aside for retirement. And that means government can tax you one time, either when you first earn the income or when you consume the income!

Protecting Individual Savings from Double Taxation

While speaking last year in Hawaii on the topic of good tax policy, I explained why it is misguided to impose extra layers of tax on saving and investment.

Regarding the problem of double taxation, I’ve addressed how various features of the tax code need to be fixed.

Today, we’re going to focus on the fixing the tax treatment of household savings. And the problem that needs fixing is that the federal government taxes you when you earn money and also taxes any interest you earn if you decide to save some of your after-tax income.

As you can see from the chart, this creates a tax wedge.

And that tax wedge distorts people’s decisions and makes them more likely to choose immediate consumption rather than savings (which can be viewed as deferred consumption).

As mentioned in the video, every economic theoryrecognizes that saving and investment (again, just another way of saying deferred consumption) are critical to future growth and rising living standards. So there are good reasons to fix the tax code.

The good news is that there are two ways to fix this problem.

  1. Tax income only one time when it is first earned.
  2. Tax income only one time when it is consumed.

In practical terms, the first option treats all savings like a “Roth IRA,”, which means you pay tax the year you earn your income, but the IRS does not get another bit at the apple if you save some of your after-tax income and it earns interest or otherwise grows in value.

The second option treats all savings like a 401(k), which means you are not taxed on any income that you place in a savings vehicle, but you are taxed on any money (including any interest or other returns) that you withdraw from the account.

As shown by Adam Michel of the Heritage Foundation, both of these approaches lead to the same long-run result (and thus are superior to what happens when people save without being protected from double taxation).

The good news is that Americans can protect their savings from double taxation by using either individual retirement accounts (IRAs) or 401(k)s.

The bad news is that those “qualified accounts” are restricted. Only people who are saving for retirement can protect themselves from double taxation.

That needs to change.

Here’s what I wrote back in 2012 and I think it’s reasonably succinct and accurate.

…all saving and investment should be treated the way we currently treat individual retirement accounts. If you have a traditional IRA (or “front-ended” IRA), you get a deduction for any money you put in a retirement account, but then you pay tax on the money – including any earnings – when the money is withdrawn. If you have a Roth IRA (or “back-ended” IRA), you pay tax on your income in the year that it is earned, but if you put the money in a retirement account, there is no additional tax on withdrawals or the subsequent earnings. From an economic perspective, front-ended IRAs and back-ended IRAs generate the same result. Income that is saved and invested is treated the same as income that is immediately consumed. From a present-value perspective, front-ended IRAs and back-ended IRAs produce the same outcome. All that changes is the point at which the government imposes the single layer of tax.

The key takeaways are in the first and last sentences. All savings should be protected from double taxation, not just what you set aside for retirement. And that means government can tax you one time, either when you first earn the income or when you consume the income.

This means we need universal savings accounts, sort of like they have in Canada.

Here’s what Robert Bellafiore of the Tax Foundation wrote about the idea back in 2019.

USAs do not penalize withdrawals on account of their purpose or timing. In contrast, some types of existing savings accounts are not neutral, penalizing people who withdraw their money for anything but approved purposes at approved times. For example, withdrawals from 529 accounts can only be made without penalty if they are used to fund education.If a parent has a 529 account for a child but must make a withdrawal to cover emergency expenses, he or she must pay income taxes on the earnings, plus a 10 percent penalty. Withdrawals from 401(k)s before the age of 59½ incur the same penalty, though there are certain exceptions. USAs’ neutrality would likely boost saving, for two reasons. First, when savings are not hit by multiple layers of taxation, savers can expect a higher return and are therefore likely to save more. Both IRAs and 401(k)s tax savings only once, and studies have estimated that roughly half of 401(k) balances, and roughly a quarter of all IRA contributions, constitute new saving—in other words, dollars that would have been spent are saved instead.

The bottom line is that we need to copy jurisdictions such as Hong Kong and Singapore that have little or no double taxation of any kind.

Especially since we now live in a world where inflation has become an issue, which acts as a hidden tax on saving and investment.

I’ll close with this chart from the OECD. It’s a few years old, so I’m sure some nations have changed their policies, but it gives one a good idea of how savings is treated around the world.

The bottom line is that it’s good to avoid Norway and the United States is unimpressive.

I’m very surprised to see that Argentina and Germany have good policy.

P.S. For some of our friends on the left, policies that protect from double taxation are akin to an entitlement.

I enjoyed this article below because it demonstrates that the Laffer Curve has been working for almost 100 years now when it is put to the test in the USA. I actually got to hear Arthur Laffer speak in person in 1981 and he told us in advance what was going to happen the 1980’s and it all came about as he said it would when Ronald Reagan’s tax cuts took place. I wish we would lower taxes now instead of looking for more revenue through raised taxes. We have to grow the economy:

What Mitt Romney Said Last Night About Tax Cuts And The Deficit Was Absolutely Right. And What Obama Said Was Absolutely Wrong.

Mitt Romney repeatedly said last night that he would not allow tax cuts to add to the deficit.  He repeatedly said it because over and over again Obama blathered the liberal talking point that cutting taxes necessarily increased deficits.

Romney’s exact words: “I want to underline that — no tax cut that adds to the deficit.”

Meanwhile, Obama has promised to cut the deficit in half during his first four years – but instead gave America the highest deficits in the history of the entire human race.

I’ve written about this before.  Let’s replay what has happened every single time we’ve ever cut the income tax rate.

The fact of the matter is that we can go back to Calvin Coolidge who said very nearly THE EXACT SAME THING to his treasury secretary: he too would not allow any tax cuts that added to the debt.  Andrew Mellon – quite possibly the most brilliant economic mind of his day – did a great deal of research and determined what he believed was the best tax rate.  And the Coolidge administration DID cut income taxes and MASSIVELY increased revenues.  Coolidge and Mellon cut the income tax rate 67.12 percent (from 73 to 24 percent); and revenues not only did not go down, but they went UP by at least 42.86 percent (from $700 billion to over $1 billion).

That’s something called a documented fact.  But that wasn’t all that happened: another incredible thing was that the taxes and percentage of taxes paid actually went UP for the rich.  Because as they were allowed to keep more of the profits that they earned by investing in successful business, they significantly increased their investments and therefore paid more in taxes than they otherwise would have had they continued sheltering their money to protect themselves from the higher tax rates.  Liberals ignore reality, but it is simply true.  It is a fact.  It happened.

Then FDR came along and raised the tax rates again and the opposite happened: we collected less and less revenue while the burden of taxation fell increasingly on the poor and middle class again.  Which is exactly what Obama wants to do.

People don’t realize that John F. Kennedy, one of the greatest Democrat presidents, was a TAX CUTTER who believed the conservative economic philosophy that cutting tax rates would in fact increase tax revenues.  He too cut taxes, and he too increased tax revenues.

So we get to Ronald Reagan, who famously cut taxes.  And again, we find that Reagan cut that godawful liberal tax rate during an incredibly godawful liberal-caused economic recession, and he increased tax revenue by 20.71 percent (with revenues increasing from $956 billion to $1.154 trillion).  And again, the taxes were paid primarily by the rich:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So we get to George Bush and the Bush tax cuts that liberals and in particular Obama have just demonized up one side and demagogued down the other.  And I can simply quote the New York Times AT the time:

Sharp Rise in Tax Revenue to Pare U.S. Deficit By EDMUND L. ANDREWS Published: July 13, 2005

WASHINGTON, July 12 – For the first time since President Bush took office, an unexpected leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion.

A Jump in Corporate Payments On Wednesday, White House officials plan to announce that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February.

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.

The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be “significantly less than $350 billion, perhaps below $325 billion.”

The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well
.

And of course the New York Times, as reliable liberals, use the adjective whenever something good happens under conservative policies and whenever something bad happens under liberal policies: ”unexpected.”   But it WASN’T ”unexpected.”  It was EXACTLY what Republicans had said would happen and in fact it was exactly what HAD IN FACT HAPPENED every single time we’ve EVER cut income tax rates.

The truth is that conservative tax policy has a perfect track record: every single time it has ever been tried, we have INCREASED tax revenues while not only exploding economic activity and creating more jobs, but encouraging the wealthy to pay more in taxes as well.  And liberals simply dishonestly refuse to acknowledge documented history.

Meanwhile, liberals also have a perfect record … of FAILUREThey keep raising taxes and keep not understanding why they don’t get the revenues they predicted.

The following is a section from my article, “Tax Cuts INCREASE Revenues; They Have ALWAYS Increased Revenues“, where I document every single thing I said above:

The Falsehood That Tax Cuts Increase The Deficit

Now let’s take a look at the utterly fallacious view that tax cuts in general create higher deficits.

Let’s take a trip back in time, starting with the 1920s.  From Burton Folsom’s book, New Deal or Raw Deal?:

In 1921, President Harding asked the sixty-five-year-old [Andrew] Mellon to be secretary of the treasury; the national debt [resulting from WWI] had surpassed $20 billion and unemployment had reached 11.7 percent, one of the highest rates in U.S. history.  Harding invited Mellon to tinker with tax rates to encourage investment without incurring more debt. Mellon studied the problem carefully; his solution was what is today called “supply side economics,” the idea of cutting taxes to stimulate investment.  High income tax rates, Mellon argued, “inevitably put pressure upon the taxpayer to withdraw this capital from productive business and invest it in tax-exempt securities. . . . The result is that the sources of taxation are drying up, wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people” (page 128).

Mellon wrote, “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower taxes.”  And he compared the government setting tax rates on incomes to a businessman setting prices on products: “If a price is fixed too high, sales drop off and with them profits.”

And what happened?

“As secretary of the treasury, Mellon promoted, and Harding and Coolidge backed, a plan that eventually cut taxes on large incomes from 73 to 24 percent and on smaller incomes from 4 to 1/2 of 1 percent.  These tax cuts helped produce an outpouring of economic development – from air conditioning to refrigerators to zippers, Scotch tape to radios and talking movies.  Investors took more risks when they were allowed to keep more of their gains.  President Coolidge, during his six years in office, averaged only 3.3 percent unemployment and 1 percent inflation – the lowest misery index of any president in the twentieth century.

Furthermore, Mellon was also vindicated in his astonishing predictions that cutting taxes across the board would generate more revenue.  In the early 1920s, when the highest tax rate was 73 percent, the total income tax revenue to the U.S. government was a little over $700 million.  In 1928 and 1929, when the top tax rate was slashed to 25 and 24 percent, the total revenue topped the $1 billion mark.  Also remarkable, as Table 3 indicates, is that the burden of paying these taxes fell increasingly upon the wealthy” (page 129-130).

Now, that is incredible upon its face, but it becomes even more incredible when contrasted with FDR’s antibusiness and confiscatory tax policies, which both dramatically shrunk in terms of actual income tax revenues (from $1.096 billion in 1929 to $527 million in 1935), and dramatically shifted the tax burden to the backs of the poor by imposing huge new excise taxes (from $540 million in 1929 to $1.364 billion in 1935).  See Table 1 on page 125 of New Deal or Raw Deal for that information.

FDR both collected far less taxes from the rich, while imposing a far more onerous tax burden upon the poor.

It is simply a matter of empirical fact that tax cuts create increased revenue, and that those [Democrats] who have refused to pay attention to that fact have ended up reducing government revenues even as they increased the burdens on the poorest whom they falsely claim to help.

Let’s move on to John F. Kennedy, one of the most popular Democrat presidents ever.  Few realize that he was also a supply-side tax cutter.

Kennedy said:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

– John F. Kennedy, Nov. 20, 1962, president’s news conference


“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964

“In today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.”

– John F. Kennedy, Jan. 24, 1963, message to Congress on tax reduction and reform, House Doc. 43, 88th Congress, 1st Session.


“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

– John F. Kennedy, Sept. 18, 1963, radio and television address to the nation on tax-reduction bill

Which is to say that modern Democrats are essentially calling one of their greatest presidents a liar when they demonize tax cuts as a means of increasing government revenues.

So let’s move on to Ronald Reagan.  Reagan had two major tax cutting policies implemented: the Economic Recovery Tax Act (ERTA) of 1981, which was retroactive to 1981, and the Tax Reform Act of 1986.

Did Reagan’s tax cuts decrease federal revenues?  Hardly:

We find that 8 of the following 10 years there was a surplus of revenue from 1980, prior to the Reagan tax cuts.  And, following the Tax Reform Act of 1986, there was a MASSIVE INCREASEof revenue.

So Reagan’s tax cuts increased revenue.  But who paid the increased tax revenue?  The poor?  Opponents of the Reagan tax cuts argued that his policy was a giveaway to the rich (ever heard that one before?) because their tax payments would fall.  But that was exactly wrong.  In reality:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So Ronald Reagan a) collected more total revenue, b) collected more revenue from the rich, while c) reducing revenue collected by the bottom half of taxpayers, and d) generated an economic powerhouse that lasted – with only minor hiccups – for nearly three decades.  Pretty good achievement considering that his predecessor was forced to describe his own economy as a “malaise,” suffering due to a “crisis of confidence.” Pretty good considering that President Jimmy Carter responded to a reporter’s question as to what he would do about the problem of inflation by answering, “It would be misleading for me to tell any of you that there is a solution to it.”

Reagan whipped inflation.  Just as he whipped that malaise and that crisis of confidence.

________

The Laffer Curve, Part III: Dynamic Scoring

What Jerry Seinfeld’s ‘Black Card’ Can Teach Lawmakers About Debt Limit

17 Reasons the large national debt is a big deal!!!

We got to stop spending so much money and start paying off our national debt or the future of our children and grandchildren will be very sad indeed. Everyone knows that entitlement spending must be cut but it seems we are not brave enough to do it. I have contacted my Congressmen and Senators over and over but nothing is getting done!!! At least there are 66 conservative Republicans in the House that have stood up  and voted against raising the debt ceiling.

Comedian Jerry Seinfeld waits for the next scene to be filmed for an episode of the program “Comedians in Cars Getting Coffee” near the Capitol in Washington on Dec. 6, 2015. All too many lawmakers under the Capitol dome think they have a no-spending-limits credit card of the sort Seinfeld joked about. (Photo: Matt McClain/The Washington Post/Getty Images)

As members of Congress debate the debt limit, some seem to think the government has an American Express “Black Card.”

In a 2018 episode of “Comedians in Cars Getting Coffee,” Jerry Seinfeld explained his version of how the Black Card came to be:

I was waiting for [the crew] to move some cameras, and the crew guy comes up to me, he says, ‘You got the Black Card?’ And I go, ‘No, what’s the Black Card?’ He says, ‘There’s only three in the world. The Sultan of Brunei has one, the president of American Express has one, and I thought you would have the third one.’ Next morning, I call the president of American Express. I go, ‘Is there a Black Card?’ He says, ‘It’s just a rumor. It doesn’t exist.’ He said, ‘But you know what? It’s not a bad idea.’ And so they developed it, and they gave me the first one.

The so-called Black Card—formally, the Centurion Card—is an exclusive, “no spending limit” credit card, available by invite only. While other companies also have their own versions of “no spending limit” credit cards, the reality is that none offers a blank check on spending.

The cards may have no preset spending limit, but they all limit cardholders’ purchasing power based on a rolling assessment of their creditworthiness and ability to repay.

And that makes sense because neither the Sultan of Brunei, nor Jerry Seinfeld, nor American politicians should be given a limitless line of credit.

America’s debt limit exists as a checkpoint, meant to protect Americans from the reckless accumulation of debt in their names, and those of their children and grandchildren. That’s why a majority of Americans oppose raising the debt limit unless policymakers also reduce spending.

Already, the U.S. has accumulated $31.4 trillion in federal debt—the equivalent of $242,000 per household.

If the federal government’s borrowing were subject to the same constraints as ordinary households, and it actually had to repay its borrowing, every household in America would suddenly have two mortgage or rent payments each month, instead of just one. (At $220,000 in 2021, average mortgage debt was slightly lower than each household’s share of the federal debt.)

But unlike ordinary households—and unlike even exclusive Black Card holders—the federal government can simply vote to raise or temporarily waive its debt limits.

Over the past decade, policymakers have frequently given lip service to the debt limit, choosing to “suspend” the debt limit for periods of time, instead of setting dollar limits, and usually failing to include meaningful measures to alter unsustainable federal spending.

The proof is in the pudding in the case against Congress granting itself unlimited spending periods. Over the course of 74 years, from the establishment of the first debt limit in 1939 (an amount equal to $968 billion in today’s dollars) to 2013, policymakers raised the debt limit by about $15.4 trillion.

In 2013, policymakers began the practice of “suspending” the debt limit instead of setting dollar limits and the consequence was $12 trillion in new debt over the following eight years, through 2021. That’s seven times the inflation-adjusted rate of expansion prior to the reckless practice of suspending the debt limit.

And the federal government blew through Democrats’ $2.5 trillion debt-limit increase enacted in December 2021, adding $19,200 in debt per household over the past 13 months.

>>> Combat the Inflation Reduction Act’s Central Planning

Imposing an actual debt limit and enacting meaningful spending reforms is crucial, because if politicians don’t set their own limits, they’ll face the market’s limits.

At some point, investors will become unwilling to continue lending to the U.S. government at reasonable interest rates, and recent years of reckless spending have pushed us closer to that point. The consequences of a market-imposed federal debt limit will be far more severe than the short-term effects of modest fiscal restraints that should accompany any debt-limit increase.

For example, if markets soured on U.S. debt in 2025, balancing the federal budget in that year alone would require policymakers to take an extra $10,000 per household across the U.S.

If, however, policymakers were to agree to meaningful spending reductions and pro-growth policy reforms in exchange for a specified increase in the debt limit, they could help avoid a fiscal crisis and start reducing the second-mortgage equivalent of federal debt that looms over every household in America.

They might even start to get us out of the red—and into the black.

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June 17, 2013 at 7:13 am

GO-Debt-Denial-rev_600

Remember the debt? That $17 trillion problem? Some in Washington seem to think it’s gone away.

The Washington Post reported that “the national debt is no longer growing out of control.” Lawmakers and liberal inside-the-Beltway organizations are floating the notion that it’s not a high priority any more.

We beg to differ, so we came up with 17 reasons that $17 trillion in debt is still a big, bad deal.

1. $53,769 – Your share of the national debt.  

As Washington continues to spend more than it can afford, every American will be on the hook for this massive debt burden.

willrogers_450

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2. Personal income will be lower.

The skyrocketing debt could cause families to lose up to $11,000 on their income every year. That’s enough to send the kids to a state college or move to a nicer neighborhood.

3. Fewer jobs and lower salaries.

High government spending with no accountability eliminates opportunities for career advancement, paralyzes job creation, and lowers wages and salaries.

4. Higher interest rates.

Some families and businesses won’t be able to borrow money because of high interest rates on mortgages, car loans, and more – the dream of starting a business could be out of reach.

5. High debt and high spending won’t help the economy.

Journalists should check with both sides before committing pen to paper, especially those at respectable outlets like The Washington Post and The New York Times. A $17 trillion debt only hurts the economy.

6. What economic growth?

High-debt economies similar to America’s current state grew by one-third less  than their low-debt counterparts.

7. Eventually, someone has to pay the nation’s $17 trillion credit card bill, and Washington has nominated your family.

It’s wildly irresponsible to never reduce expenses, yet Washington continues to spend, refusing to acknowledge the repercussions.

>>>Watch this video to see how scary $17 trillion really is for your family.

8. Jeopardizes the stability of Medicare, Social Security, and Medicaid.

Millions of people depend on Medicare, Medicaid, and Social Security, but these programs are also the main drivers of the growing debt. Congress has yet to take the steps needed to make these programs affordable and sustainable to preserve benefits for those who need them the most.

9. Washington collects a lot, and then spends a ton. Where are your tax dollars going?

In 2012, Washington collected $2.4 trillion in taxes—more than $20,000 per household. But it wasn’t enough for Washington’s spending habits. The federal government actually spent $3.5 trillion.

>>> Reality check: See where your tax dollars really went.

10. Young people face a diminished future.

College students from all over the country got together in February at a “Millennial Meetup” to talk about how the national debt impacts their generation.

>>>Shorter version: They’re not happy. Watch now.

11. Without cutting spending and reducing the debt, big-government corruption and special interests only get bigger.

The national debt is an uphill battle in a city where politicians too often refuse to relinquish power, to the detriment of America.

12. Harmful effects are permanent.

Astronomical debt lowers incomes and well-being permanently, not just temporarily. A one-time major increase in government debt is typically a permanent addition, and the dragging effects on the economy are long-lasting.

13. The biggest threat to U.S. security.

Even President Obama’s former Chairman of the Joint Chiefs of Staff thinks so:

Mullen_450

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14. Makes us more vulnerable to the next economic crisis.

According to the Congressional Budget Office’s 2012 Long-Term Budget Outlook, “growing federal debt also would increase the probability of a sudden fiscal crisis.”

15. Washington racked up $300 billion in more debt in less than four months.

Our nation is on a dangerous fiscal course, and it’s time for lawmakers to steer us out of the coming debt storm.

16. High debt makes America weaker.

Even Britain’s Liam Fox warns America: Fix the debt problem now, or suffer the consequences of less power on the world stage.

17. High debt crowds out the valuable functions of government.

By disregarding the limits on government in the Constitution, Congress thwarts the foundation of our freedoms.

Read the Morning Bell and more en español every day at Heritage Libertad.

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Debt ceiling vote could save America if House Republicans are willing to stand up to Democrats

Here is one of my favorite videos on this subject below:

What Is The Debt Ceiling?

Published on May 19, 2013

What is the debt ceiling and why does it matter? Find out:http://BankruptingAmerica.org/DebtCei…

Debt ceiling vote could save America if House Republicans are willing to stand up to Democrats

US government took in nearly $5 trillion in 2022. The time to rein in spending and debt is now

Of all the reforms in House rules secured by the conservative rabblerousers last week, arguably the most momentous was the promise that Republicans will not pass any debt ceiling increase until substantial budget process reforms and spending cuts are secured.

The need for such a rule would seem self-evident. The debt has risen by some $4 trillion in just two years. Government borrowing last year hit 13 figures, or $1.4 trillion. Absent budget reforms, we could easily see a decade ahead with another $10 trillion added to the debt. And don’t forget, every one-percentage point rise in interest rates by the Fed raises the debt by well more than a trillion dollars over the next decade.

So, budget hawks and those concerned about our national debt should be applauding this commitment.

Hardly. Instead, President Joe Biden, Senate Majority Leader Chuck Schumer, the entire Washington special interest community, are collectively sounding a primal scream that we will have economic Armageddon if there is even a hint of the debt limit expiring this summer. The New York Times hyperventilated earlier that “Breaching the debt limit would lead to a first-ever default for the United States, creating financial chaos in the global economy. It would also force American officials to choose between continuing assistance like Social Security checks and paying interest on the country’s debt.”

House Speaker Kevin McCarthy will have to stand up to Democrat demands on spending if he hopes to rein in the debt and deficit. 

House Speaker Kevin McCarthy will have to stand up to Democrat demands on spending if he hopes to rein in the debt and deficit. (Kent Nishimura / Los Angeles Times via Getty Images)

This is upside-down logic. The nation’s good credit standing in the global capital markets isn’t imperiled by not passing a debt ceiling. The much-bigger danger is that Congress does extend the debt ceiling, but without any reforms in the way Congress grossly overspends.

We just experienced one painful repercussion of runaway government spending and debt over the past year: The runaway inflation that climbed to a 40-year high – costing the average American family nearly $4,000 in a loss of real take home pay.

The government’s addiction to red ink isn’t due to insufficient tax collections. The Congressional Budget Office just reported this week that in 2022 the United States government raked in a record $4.9 trillion from Americans. As a share of our GDP that was very close to an all-time record high.

Yet Biden and the Democrats in Congress say they want a “clean” debt ceiling bill – with no conditions attached.

To that, Republicans should say “no deal.” The experience of the last 40 years shows definitively that the only time fiscal conservatives have secured major spending reform concessions from Democrats as a condition for raising the debt ceiling. These are “come-to-Jesus moments” for fiscal discipline.

In 1985, the Gramm-Rudman deficit ceilings were enacted as part of the debt bill; that put congressional spending on a diet. In 1996 congressional Republicans and Democratic president signed an historic budget agreement on the eve of a debt-ceiling vote. Three years later the budget was balanced for three straight years – the only time we haven’t run a deficit in the last 50 years. Then in 2011, House Republicans leveraged the debt-ceiling vote to win approval from President Barack Obama for the Budget Control Act, which included automatic spending cuts, and brought the deficit way down.

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The lesson is clear: if we are to make any progress on reducing the debt crisis, House Speaker Kevin McCarthy must use the debt ceiling vote as the bargaining chip to secure spending reductions and reforms.

This is lambasted by the inside-the-Beltway crowd as grossly irresponsible – as holding the country hostage. Wait. If a business owner is many millions of dollars in debt and goes to the bank for a loan or a credit card extension, the bank will rightly say: what’s your financial plan for getting out of debt? If there isn’t a plan, they’ll punt the owner into the street with no loan and no credit card extension.

To rein in the debt, House Republicans will have to resist spending demands from top Democrats including President Joe Biden.

To rein in the debt, House Republicans will have to resist spending demands from top Democrats including President Joe Biden.(Screenshot/Twitter)

We all hope it doesn’t come to this, but If for some reason bullheaded Democrats refuse to budge and the debt ceiling is not raised in time, this doesn’t cause a debt default. Rather, it immediately prohibits Congress from borrowing more money. It can still spend the tax money that comes into the Treasury each day – but not a penny more. Republicans are working on a contingency plan that ensures the debt payments are met and Social Security checks go out as the top priority. But other low-priority programs – like the Department of Education, foreign aid, energy programs, etc. will shut down until a deal is made. There is no default – unless Biden’s Treasury Department allows a default.

Republicans in the House can make the case that almost all of the increase in the debt over the past two years is because Biden and congressional Democrats ran up the debt by spending $4 trillion we don’t have – most of that spending happened with few if any Republican votes. The Democrats own this debt increase.

But if Republicans agree to go-along-to-get-along by raising the debt ceiling without any concessions from Democrats, they will be aiding and abetting Biden’s big-government socialism agenda. And that, ladies and gentlemen, would be the biggest financial crisis for America of all.

CLICK HERE TO READ MORE FROM STEPHEN MOORE

Stephen “Steve” Moore is a Fox News contributor. He previously wrote on the economy and public policy for The Wall Street Journal.

Congress’s dance with the debt limit can be confusing and, frankly, the details can be a real snooze fest for many Americans. Sometimes a little humor clarifies the absurdities of Washington antics better than flow charts and talk of trillions.

The 31-second video and accompanying infographic “The Debt Ceiling Explained” by Bankrupting America offers the facts, leavened with a dose of levity. The conclusion is serious, however: The country’s debt threatens economic growth, and spending cuts are the answer.

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It is obvious to me that if President Obama gets his hands on more money then he will continue to spend away our children’s future. He has already taken the national debt from 11 trillion to 16 trillion in just 4 years. Over, and over, and over, and over, and over and over I have written Speaker Boehner and written every Republican that represents Arkansans in Arkansas before (GriffinWomackCrawford, and only Senator Boozman got a chance to respond) concerning this. I am hoping they will stand up against this reckless spending that our federal government has done and will continue to do if given the chance.

Why don’t the Republicans  just vote no on the next increase to the debt ceiling limit. I have praised over and over and over the 66 House Republicans that voted no on that before. If they did not raise the debt ceiling then we would have a balanced budget instantly.  I agree that the Tea Party has made a difference and I have personally posted 49 posts on my blog on different Tea Party heroes of mine.

What would happen if the debt ceiling was not increased? Yes President Obama would probably cancel White House tours and he would try to stop mail service or something else to get on our nerves but that is what the Republicans need to do.

I have written and emailed Senator Pryor over, and over again with spending cut suggestions but he has ignored all of these good ideas in favor of keeping the printing presses going as we plunge our future generations further in debt. I am convinced if he does not change his liberal voting record that he will no longer be our senator in 2014.

I have written hundreds of letters and emails to President Obama and I must say that I have been impressed that he has had the White House staff answer so many of my letters. The White House answered concerning Social Security (two times), Green Technologieswelfaresmall businessesObamacare (twice),  federal overspendingexpanding unemployment benefits to 99 weeks,  gun controlnational debtabortionjumpstarting the economy, and various other  issues.   However, his policies have not changed, and by the way the White House after answering over 50 of my letters before November of 2012 has not answered one since.   President Obama is committed to cutting nothing from the budget that I can tell.

 I have praised over and over and over the 66 House Republicans that voted no on that before. If they did not raise the debt ceiling then we would have a balanced budget instantly.  I agree that the Tea Party has made a difference and I have personally posted 49 posts on my blog on different Tea Party heroes of mine.

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It is obvious to me that if President Obama gets his hands on more money then he will continue to spend away our children’s future. He has already taken the national debt from 11 trillion to 16 trillion in just 4 years. Over, and over, and over, and over, and over and over I have written Speaker Boehner and the Congressmen (Griffin, Womack, Crawford) in Arkansas concerning this. I am hoping they will stand up against this reckless spending that our federal government has done and will continue to do if given the chance.

Here are the 37 letters:

Open letter to Speaker of the House John Boehner (Part 37)

Open letter to Speaker of the House John Boehner (Part 37) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 36)

Open letter to Speaker of the House John Boehner (Part 36) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 35)

Open letter to Speaker of the House John Boehner (Part 35) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 34)

Open letter to Speaker of the House John Boehner (Part 34) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 33)

Open letter to Speaker of the House John Boehner (Part 33) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 32)

Open letter to Speaker of the House John Boehner (Part 32) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 31)

Open letter to Speaker of the House John Boehner (Part 31) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 30)

Open letter to Speaker of the House John Boehner (Part 30) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 29)

Open letter to Speaker of the House John Boehner (Part 29) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 28)

Open letter to Speaker of the House John Boehner (Part 28) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 27)

Open letter to Speaker of the House John Boehner (Part 27) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 26)

Open letter to Speaker of the House John Boehner (Part 26) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 25)

Open letter to Speaker of the House John Boehner (Part 25) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 24)

Open letter to Speaker of the House John Boehner (Part 24) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 23)

Open letter to Speaker of the House John Boehner (Part 23) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 22)

Open letter to Speaker of the House John Boehner (Part 22) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 21)

Open letter to Speaker of the House John Boehner (Part 21) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 20)

Open letter to Speaker of the House John Boehner (Part 20) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 19)

Open letter to Speaker of the House John Boehner (Part 19) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 18)

Open letter to Speaker of the House John Boehner (Part 18) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 17)

Open letter to Speaker of the House John Boehner (Part 17) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 16)

Open letter to Speaker of the House John Boehner (Part 16) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 15)

Open letter to Speaker of the House John Boehner (Part 15) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want […]

Open letter to Speaker of the House John Boehner (Part 14)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. ___________ Sen. Rand Paul Urges […]

Open letter to Speaker of the House John Boehner (Part 13)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you […]

Open letter to Speaker of the House John Boehner (Part 12)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. If we want the economy […]

Open letter to Speaker of the House John Boehner (Part 11)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you […]

Open letter to Speaker of the House John Boehner (Part 10)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. Dan Mitchell of the Cato […]

Open letter to Speaker of the House John Boehner (Part 9)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you […]

Open letter to Speaker of the House John Boehner (Part 8)

Government Must Cut Spending Uploaded by HeritageFoundation on Dec 2, 2010 The government can cut roughly $343 billion from the federal budget and they can do so immediately. __________ John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected […]

Open letter to Speaker of the House John Boehner (Part 7)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you […]

Open letter to Speaker of the House John Boehner (Part 6)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. DON’T LET THEM RAISE THAT […]

Open letter to Speaker of the House John Boehner (Part 5 on debt ceiling)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you […]

Open letter to Speaker of the House John Boehner (Part 4 on ‘TEFRA Debacle of 1982′)

  John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. DO NOT TAKE THE […]

Open letter to Speaker of the House John Boehner (Part 3 on debt ceiling)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you […]

Open letter to Speaker of the House John Boehner (Part 2 on raising taxes)

 Open letter to Speaker of the House John Boehner (Part 2 on raising taxes) John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but […]

Open letter to Speaker of the House John Boehner (Part 1 on debt ceiling)

John Boehner, Speaker of the House H-232, The Capital, Washington, DC 20515 Dear Mr. Speaker, I know that you will have to meet with newly re-elected President Obama soon and he will probably be anxious for you to raise taxes and  federal spending, but he will want you to leave runaway entitlement programs alone. When that happens then you […]

Dan Mitchell: Continuing Migration from Blue States to Red States

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Continuing Migration from Blue States to Red States

I wrote a few days ago about how some New York Democratic politicians have awakened to the fact that it’s not a good idea to be too greedy.

After all, if taxes are excessively high, the geese with the golden eggs can simply fly away – and that can mean less tax revenue.

But I warned that saying no to additional tax increases was a necessary but not sufficient condition.

…the “good news” from New York is that politicians want to freeze the current (very bad) policy in place. That’s better than galloping faster in the wrong direction, of course, but a far cry from what’s needed.

Here’s some evidence for my assertion, courtesy of some new data from the Census Bureau. Like we saw last year, New York continues to lose population compared to the rest of the country.

Unsurprisingly, Illinois shows up again as a state with very high levels of out-migration as well.

John Phelan of the Center of the American Experiment put together a ranking of the states based on these annual population changes.

Obviously, people move between states for reasons other than economic policy, but it’s impossible not to notice that there’s an overall trend of red statesgaining people and blue states losing people.

In other words, state economic policy matters.

P.S. In the past, skeptics used to claim that state migration trends were simply a story of people moving to states with better climates. That presumably is part of the story, but notice how California (the state that arguably has the nation’s best climate) is now a net loser and routinely gets mocked for driving away jobs and people.

Texas vs. California, Part VII

To begin the seventh edition of our series comparing policy in Texas and California (previous entries in March 2010, February 2013, April 2013, October 2018, June 2019, and December 2020), here’s a video from Prager University.

There will be a lot of information in today’s column, so if you’re pressed for time, here are three sentences that tell you what you need to know.

California has all sorts of natural advantages over Texas, especially endless sunshine and beautiful topography.

Texas has better government policy than California, most notably in areas such as taxation and regulation.

Since people are moving from the Golden State to the Lone Star State, public policy seems to matter more than natural beauty.

Now let’s look at a bunch of evidence to support those three sentences.

We’ll start with an article by Joel Kotkin of Chapman University.

If one were to explore the most blessed places on earth, California, my home for a half century, would surely be up there. …its salubrious climate, spectacular scenery, vast natural resources… President Biden recently suggested that he wants to “make America California again”. Yet…he should consider whether the California model may be better seen as a cautionary tale than a roadmap to a better future… California now suffers the highest cost-adjusted poverty rate in the country, and the widest gap between middle and upper-middle income earners. …the state has slowly morphed into a low wage economy. Over the past decade, 80% of the state’s jobs have paid under the median wage — half of which are paid less than $40,000…minorities do better today outside of California, enjoying far higher adjusted incomes and rates of homeownership in places like Atlanta and Dallas than in San Francisco and Los Angeles. Almost one-third of Hispanics, the state’s largest ethnic group, subsist below the poverty line, compared with 21% outside the state. …progressive…policies have not brought about greater racial harmony, enhanced upward mobility and widely based economic growth.

Next we have some business news from the San Francisco Chronicle.

Business leaders fear tech giant Oracle’s recent announcement that it is leaving the Bay Area for Austin, Texas, will lead to more exits unless some fundamental political and economic changes are made to keep the region attractive and competitive. “This is something that we have been warning people about for several years. California is not business friendly, we should be honest about it,” said Kenneth Rosen, chairman of the UC Berkeley Fisher Center for Real Estate and Urban Economics.Bay Area Council President Jim Wunderman said… “From consulting companies to tax lawyers to bankers and commercial real estate firms, every person I talk with who provides services to big Bay Area corporations are telling me that their clients are strategizing about leaving…” Charles Schwab, McKesson and Hewlett Packard Enterprise have all exited the high-cost, high-tax, high-regulation Bay Area for a less-expensive, less-regulated and business-friendlier political climate. All of them rode off to Texas. …the pace of the departures appears to be increasing. …A recent online survey of 2,325 California residents, taken between Nov. 4 and Nov. 23 by the Public Policy Institute of California, found 26% of residents have seriously considered moving out of state and that 58% say that the American Dream is harder to achieve in California than elsewhere.

Are California politicians trying to make things better, in hopes of stopping out-migration to places such as Texas?

Not according to this column by Hank Adler in the Wall Street Journal.

California’s Legislature is considering a wealth tax on residents, part-year residents, and any person who spends more than 60 days inside the state’s borders in a single year. Even those who move out of state would continue to be subject to the tax for a decade… Assembly Bill 2088 proposes calculating the wealth tax based on current world-wide net worth each Dec. 31. For part-year and temporary residents, the tax would be proportionate based on their number of days in California. The annual tax would be on current net worth and therefore would include wealth earned, inherited or obtained through gifts or estates long before and long after leaving the state. …The authors of the bill estimate the wealth tax will provide Sacramento $7.5 billion in additional revenue every year. Another proposal—to increase the top state income-tax rate to 16.8%—would annually raise another $6.8 billion. Today, California’s wealthiest 1% pay approximately 46% of total state income taxes. …the Legislature looks to the wealthiest Californians to fill funding gaps without considering the constitutionality of the proposals and the ability of people and companies to pick up and leave the state, which news reports suggest they are doing in large numbers. …As of this moment, there are no police roadblocks on the freeways trying to keep moving trucks from leaving California. If A.B. 2088 becomes law, the state may need to consider placing some.

The late (and great) Walter Williams actually joked back in 2012that California might set up East German-style border checkpoints. Let’s hope satire doesn’t become reality.

But what isn’t satire is that people are fleeing the state (along with other poorly governed jurisdictions).

Simply state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big government).

Interestingly, even the New York Times recognizes that there is a problem in the state that used to be a role model for folks on the left.

Opining for that outlet at the start of the month, Brett Stephens raised concerns about the Golden State.

…today’s Democratic leaders might look to the very Democratic state of California as a model for America’s future. You remember California: People used to want to move there, start businesses, raise families, live their American dream. These days, not so much. Between July 2019 and July 2020, more people — 135,400 to be precise — left the state than moved in… No. 1 destination: Texas, followed by Arizona, Nevada and Washington. Three of those states have no state income tax.

California, by contrast, has very high taxes. Not just an onerous income tax, but high taxes across the board.

Californians also pay some of the nation’s highest sales tax rates (8.66 percent) and corporate tax rates (8.84 percent), as well as the highest taxes on gasoline (63 cents on a gallon as of January, as compared with 20 cents in Texas).

Sadly, these high taxes don’t translate into good services from government.

The state ranks 21st in the country in terms of spending per public school pupil, but 27th in its K-12 educational outcomes. It ties Oregon for third place among states in terms of its per capita homeless rate. Infrastructure? As of 2019, the state had an estimated $70 billion in deferred maintenance backlog. Debt? The state’s unfunded pension liabilities in 2019 ran north of $1.1 trillion, …or $81,300 per household.

Makes you wonder whether the rest of the nation should copy that model?

Democrats hold both U.S. Senate seats, 42 of its 53 seats in the House, have lopsided majorities in the State Assembly and Senate, run nearly every big city and have controlled the governor’s mansion for a decade. If ever there was a perfect laboratory for liberal governance, this is it. So how do you explain these results? …If California is a vision of the sort of future the Biden administration wants for Americans, expect Americans to demur.

Some might be tempted to dismiss Stephens’ column because he is considered the token conservative at the New York Times.

But Ezra Klein also acknowledges that California has a problem, and nobody will accuse him of being on the right side of the spectrum.

Here’s some of what he wrote in his column earlier this month for the New York Times.

I love California. I was born and raised in Orange County. I was educated in the state’s public schools and graduated from the University of California system… But for that very reason, our failures of governance worry me. California has the highest poverty rate in the nation,when you factor in housing costs, and vies for the top spot in income inequality, too. …but there’s a reason 130,000 more people leave than enter each year. California is dominated by Democrats, but many of the people Democrats claim to care about most can’t afford to live there. …California, as the biggest state in the nation, and one where Democrats hold total control of the government, carries a special burden. If progressivism cannot work here, why should the country believe it can work anywhere else?

Kudos to Klein for admitting problems on his side (just like I praise the few GOPers who criticized Trump’s big-government policies).

But his column definitely had some quirky parts, such as when he wrote that, “There are bright spots in recent years…a deeply progressive plan to tax the wealthy.”

That’s actually a big reason for the state’s decline, not a “bright spot.”

I’m not the only one to recognize the limitations of his column.

Kevin Williamson wrote an entire rebuttal for National Review.

Who but Ezra Klein could survey the wreck left-wing Democrats have made of California and conclude that the state’s problem is its excessive conservatism? …Klein the rhetorician anticipates objections on this front and writes that he is not speaking of “the political conservatism that privatizes Medicare, but the temperamental conservatism that” — see if this formulation sounds at all familiar — “stands athwart change and yells ‘Stop!’”…California progressives have progressive policies and progressive power, and they like it that way. That is the substance of their conservatism. …Klein and others of his ilk like to present themselves as dispassionate pragmatists, enlightened empiricists who only want to do “what works.” …Klein mocks San Francisco for renaming schools (Begone, Abraham Lincoln!) while it has no plan to reopen them, but he cannot quite see that these are two aspects of a single phenomenon. …Klein…must eventually understand that the troubles he identifies in California are baked into the progressive cake. …That has real-world consequences, currently on display in California to such a spectacular degree that even Ezra Klein is able dimly to perceive them. Maybe he’ll learn something.

I especially appreciate this passage since it excoriates rich leftists for putting teacher unions ahead of disadvantaged children.

Intentions do not matter very much, and mere stated intentions matter even less. Klein is blind to that, which is why he is able to write, as though there were something unusual on display: “For all the city’s vaunted progressivism, [San Francisco] has some of the highest private school enrollment numbers in the country.” Rich progressives have always been in favor of school choice and private schools — for themselves. They only oppose choice for poor people, whose interests must for political reasons be subordinated to those of the public-sector unions from which Democrats in cities such as San Francisco derive their power.

Let’s conclude with some levity.

Here’s a meme that contemplates whether California emigrants bring bad voting habits with them.

Though that’s apparently more of a problem in Colorado rather than in Texas.

And here’s some clever humor from Genesius Times.

P.S. My favorite California-themed humor (not counting the state’s elected officials) can be found here, hereherehere, and here.

High-tax states are languishing but  zero-income-tax states such as Texas are growing rapidly!!!!

Much of my writing is focused on the real-world impact of government policy, and this is why I repeatedly look at the relative economic performance of big government jurisdictions and small government jurisdictions.

But I don’t just highlight differences between nations. Yes, it’s educational to look at North Korea vs. South Korea or Chile vs. Venezuela vs. Argentina, but I also think you can learn a lot by looking at what’s happening with different states in America.

So we’ve looked at high-tax states that are languishing, such as California and Illinois, and compared them to zero-income-tax states such as Texas.

With this in mind, you can understand that I was intrigued to see that even the establishment media is noticing that Texas is out-pacing the rest of the nation.

Here are some excerpts from a report by CNN Money on rapid population growth in Texas.

More Americans moved to Texas in recent years than any other state: A net gain of more than 387,000 in the latest Census for 2013. …Five Texas cities — Austin, Houston, San Antonio, Dallas and Fort Worth — were among the top 20 fastest growing large metro areas. Some smaller Texas metro areas grew even faster. In oil-rich Odessa, the population grew 3.3% and nearby Midland recorded a 3% gain.

But why is the population growing?

Well, CNN Money points out that low housing prices and jobs are big reasons.

And on the issue of housing, the article does acknowledge the role of “easy regulations” that enable new home construction.

But on the topic of jobs, the piece contains some good data on employment growth, but no mention of policy.

Jobs is the No. 1 reason for population moves, with affordable housing a close second. …Jobs are plentiful in Austin, where the unemployment rate is just 4.6%. Moody’s Analytics projects job growth to average 4% a year through 2015. Just as important, many jobs there are well paid: The median income of more than $75,000 is nearly 20% higher than the national median.

That’s it. Read the entire article if you don’t believe me, but the reporter was able to write a complete article about the booming economy in Texas without mentioning – not even once – that there’s no state income tax.

But that wasn’t the only omission.

The article doesn’t mention that Texas is the 4th-best state in the Tax Foundation’s ranking of state and local tax burdens.

The article doesn’t mention that Texas was the least oppressive state in the Texas Public Policy Foundation’s Soft Tyranny Index.

The article doesn’t mention that Texas was ranked #20 in a study of the overall fiscal condition of the 50 states.

The article doesn’t mention that Texas is in 4th place in a combined ranking of economic freedom in U.S. state and Canadian provinces.

The article doesn’t mention that Texas was ranked #11 in the Tax Foundation’s State Business Tax Climate Index.

The article doesn’t mention that Texas is in 14th place in the Mercatus ranking of overall freedom for the 50 states (and in 10th place for fiscal freedom).

By the way, I’m not trying to argue that Texas is the best state.

Indeed, it only got the top ranking in one of the measures cited above.

My point, instead, is simply to note that it takes willful blindness to write about the strong population growth and job performance of Texas without making at least a passing reference to the fact that it is a low-tax, pro-market state.

At least compared to other states. And especially compared to the high-tax states that are stagnating.

Such as California, as illustrated by this data and this data, as well as this Lisa Benson cartoon.

Such as Illinois, as illustrated by this data and this Eric Allie cartoon.

And I can’t resist adding this Steve Breen cartoon, if for no other reason that it reminds me of another one of his cartoons that I shared last year.

Speaking of humor, this Chuck Asay cartoon speculates on how future archaeologists will view California. And this joke about Texas, California, and a coyote is among my most-viewed blog posts.

All jokes aside, I want to reiterate what I wrote above. Texas is far from perfect. There’s too much government in the Lone Star state. It’s only a success story when compared to California.

P.S. Paul Krugman has tried to defend California, which has made him an easy target. I debunked him earlier this year, and I also linked to a superb Kevin Williamson takedown of Krugman at the bottom of this post.

P.P.S. Once again, I repeat the two-part challenge I’ve issued to the left. I’ll be happy if any statists can successfully respond to just one of the two questions I posed.

Related posts:

California is the Greece of the USA, but Texas is not perfect either!!!

California is the Greece of the USA, but Texas is not perfect either!!! Just Because California Is Terrible, that Doesn’t Mean Texas Is Perfect January 21, 2013 by Dan Mitchell Texas is in much better shape than California. Taxes are lower, in part because Texas has no state income tax. No wonder the Lone Star State […]

Dan Mitchell on Texas v. California (includes editorial cartoon)

We should lower federal taxes because jobs are going to states like Texas that have low taxes. (We should lower state taxes too!!) What Can We Learn by Comparing the Employment Situation in Texas vs. California? April 3, 2013 by Dan Mitchell One of the great things about federalism, above and beyond the fact that it […]

Ark Times blogger claims California is better than Texas but facts don’t bear that out (3 great political cartoons)

I got on the Arkansas Times Blog and noticed that a person on there was bragging about the high minimum wage law in San Francisco and how everything was going so well there. On 2-15-13 on the Arkansas Times Blog I posted: Couldn’t be better (the person using the username “Couldn’t be better)  is bragging […]

California burdensome government causing some of business community to leave for Texas

Does Government Have a Revenue or Spending Problem? People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too […]

Arkansas Times blogger picks California business environment over Texas, proves liberals don’t live in real world(Part 2)

       Former California Governor Arnold Schwarzenegger with his family   I posted a portion of an article by John Fund of the Wall Street Journal that pointed out that many businesses are leaving California because of all of their government red tape and moving to Texas. My username is SalineRepublican and this is […]

John Fund’s talk in Little Rock 4-27-11(Part 4):Responding to liberals who criticize states like Texas that don’t have the red tape that California has

John Fund at Chamber Day, Part 1 Last week I got to attend the first ever “Conservative Lunch Series” presented by  KARN and Americans for Prosperity Foundation at the Little Rock Hilton on University Avenue. This monthly luncheon will be held the fourth Wednesday of every month. The speaker for today’s luncheon was John Fund. John […]

California and France have raised taxes so much that it has hurt economic growth!!!

___________ California and France have raised taxes so much that it has hurt economic growth!!! Mirror, Mirror, on the Wall, which Nation and State Punish Success Most of All? September 25, 2014 by Dan Mitchell I’ve shared some interested rankings on tax policy, including a map from the Tax Foundation showing which states have the earliest […]

Jerry Brown raised taxes in California and a rise in the minimum wage, but it won’t work like Krugman thinks!!!

___________   Jerry Brown raised taxes in California and a rise in the minimum wage, but it won’t work like Krugman thinks!!!! This cartoon below shows what will eventually happen to California and any other state that keeps raising taxes higher and higher.   Krugman’s “Gotcha” Moment Leaves Something to Be Desired July 25, 2014 by […]

Open letter to President Obama (Part 573) Are the states of Illinois and California going to join Detroit in Bankruptcy one day?

Open letter to President Obama (Part 573) (Emailed to White House on 7-29-13.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get […]

Open letter to President Obama (Part 561) We should lower federal taxes because jobs are going to states like Texas that have low taxes

Open letter to President Obama (Part 561) (Emailed to White House on 6-25-13.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get […]

Dan Mitchell: The Unavoidable Choice: Entitlement Reform or Massive Middle-Class Tax Increases

The Unavoidable Choice: Entitlement Reform or Massive Middle-Class Tax Increases

I worry about big tax increases because of America’s grim long-run fiscal outlook.

The video clip is less than two minutes (taken from this longer discussion with Fergus Hodgson), but I can summarize my key point in just one very important sentence

Anybody who opposes entitlement reform is unavoidably in favor of big tax increases on lower-income and middle-class Americans.

There are three reasons for this bold (and bolded) statement.

  1. The burden of spending in the United States is going to dramatically expand in coming decades because of demographic change combined with poorly designed entitlement programs.
  2. There presumably is a limit to how much of this future spending burden can be financed by borrowing from the private sector (or with printing money by the Federal Reserve).
  3. Many politicians claim that future spending on entitlements (as well spending on new entitlements!) can be financed with class-warfare taxes, but there are not enough rich people.

My left-leaning friends almost surely would agree with the first two points. But some of them (particularly the ones who don’t understand budget numbers) might argue with the third point.

To confirm the accuracy of the argument, let’s look at this chart from Brian Riedl’s famous Chartbook.

As you can see, even confiscatory 100-percent taxes on the rich (which obviously would cripple the economy) would not be nearly enough to eliminate America’s medium-term fiscal gap.

Heck, even if we look at just the next 10 years and include every possible tax hike, it’s obvious that a class-warfare agenda (which also would have negative economic effects) would not be enough to finance all the spending that is currently in the pipeline.

Here’s another Riedl chart (which even includes some proposals that would hit the middle class).

I’ll conclude with two further observations.

  • First, there are plenty of honest leftists (the ones who understand budget numbers, including Paul Krugman) who openly admit that big tax increases will be needed if the burden of government spending is allowed to increase.
  • Second, there are plenty of disingenuous (or perhaps naive) folks on the right who oppose entitlement reform while not admitting that their approach means massive tax increases on lower-income and middle-class taxpayers.

Needless to say, genuine entitlement reform would be far preferable to any type of tax increase.

P.S. In the absence of entitlement reform, politicians will first choose class warfare taxes, of course, but that simply will be a precursor to higher taxes on the rest of us.

P.P.S. The bottom line is that you can’t have European-sized government without European-style taxes. Including a money-siphoning value-added tax.

If our country is the grow the economy and get our budget balanced it will not be by raising taxes!!! The recipe for success was followed by Ronald Reagan in the 1980’s when he cut taxes and limited spending. As far as limiting spending goes only Bill Clinton (with his Republican Congress) were ability to control the growth of government better than Reagan.

I had the pleasure of hearing Arthur Laffer speak in 1981 and he predicted all the economic growth that we would see because of the Reagan tax cuts and he was right. Unfortunately in California today they have forgotten all of those lessons!!!

President Obama’s fiscal policy is a dismal mixture. On spending, he wants a European-style welfare state. On taxes, he is fixated on class-warfare tax policy.

If we want to know the consequences of that approach, we can look at the ongoing collapse of Greece. Or, if we don’t like overseas examples, we can look at California.

If the (formerly) Golden State is any example, it turns out that having high tax rates doesn’t necessarily translate into high tax revenues. Here’s a blurb from an editorial in today’s Wall Street Journal.

California Controller John Chiang reported last week that April tax collections were a gigantic 20.2%, or $2.44 billion, below 2012-13 budget projections. …Among the biggest surprises is a 21.5% or nearly $2 billion decline in personal income tax payments from what Governor Jerry Brown had anticipated. This reinforces the point that when states rely too heavily on the top 1% of taxpayers to pay the bills, fiscal policy is a roller coaster ride. California is suffering this tax drought even as most other states enjoy a revenue rebound. State tax collections were up nationally by 8.9% last year, according to the Census Bureau, and this year revenues are up by double digits in many states. The state comptroller reports that Texas is enjoying 10.9% growth in its sales taxes (it has no income tax), while California can’t seem to keep up despite one of the highest tax rates in the land.

The WSJ editorial suggests a supply-side response, but you won’t be surprised to learn that the state’s kleptomaniac governor is pushing an Obama-style soak-the-rich tax hike.

This would seem to suggest that California should try cutting tax rates to keep more people and business in the state, but Sacramento is intent on raising them again. Governor Brown and the public-employee unions are sponsoring a ballot initiative in November to raise the state sales tax by a quarter point to 7.5% and to raise the top marginal income-tax rate to 13.3% from 10.3%. This will make the state even more reliant on the fickle revenue streams provided by the rich. Meanwhile, an analysis by Joseph Vranich, who studies migration of businesses from one state to another, finds that since 2009 the flight of businesses out of California “has increased fivefold due to high taxes and regulatory costs.”

I’ll be very curious to see what happens this November when the people of California vote in the referendum. Will they be like the morons in Oregon, who approved a class-warfare tax hike? Or will they be like the voters of Switzerland and reject class warfare?

Sadly, I suspect Oregon will be their role model – even though that decision hurt the Beaver State’s economy.

But while voters can impose higher taxes, they can’t repeal the laws of economics. So if California voters do the wrong thing, they will learn a hard lesson about the Laffer Curve.

And then, as this cartoon demonstrates, they’ll learn the ultimate lesson about not biting the hand that you mooch from.

The Laffer Curve, Part III: Dynamic Scoring

Incoming House Oversight Chairman: ‘Imperative’ to Stop Omnibus Spending Bill

Rob Bluey  @RobertBluey / December 21, 2022

James Comer in a grey suit in front of an American flag

Rep. James Comer, R-Ky., the incoming chairman of the House Oversight and Reform Committee, is urging his Senate counterparts to reject the $1.85 trillion omnibus spending bill in order to strengthen GOP’s oversight authority for the next Congress.

Comer will ascend to chairman of the powerful House committee Jan. 3 with a range of investigations planned. Before he’s even able to get started, however, Senate Republicans who support the omnibus spending bill could strip Comer of important leverage—the power of the purse.

With 20 Republican senators already votingTuesday on a procedural motion to advance the bill, Senate Majority Leader Chuck Schumer, D-N.Y., appears to have enough GOP support to get the bill done this week.

That hasn’t stopped Comer and other House Republicans from warning about the consequences.

“It’s imperative that we stop the massive omnibusso that Republicans can use our majority power next Congress to conduct oversight of the federal government, hold the Biden Administration accountable, and enact good government reforms,” Comer told The Daily Signal in a statement.

Withholding money from the Biden administration is one tool House Republicans can use to exercise effective oversight—particularly if federal agencies and government officials are uncooperative or not forthcoming with information in the new year.

“The primary method that Congress can use to hold federal agencies accountable is via appropriations,” said Paul Winfree, former budget policy director for President Donald Trump and a distinguished fellow at The Heritage Foundation. “They should not be appropriating until they’ve figured out just how to use their oversight powers.” (The Daily Signal is the multimedia news organization of The Heritage Foundation.)

Passage of the omnibus spending bill would insulate the Biden administration from a spending fight for the next year. The bill making its way through the Senate funds the president’s agenda from through Sept. 30, 2023.

>>> No Surprise: Republicans Won’t Hold Biden Accountable

Comer was first elected to Congress in 2016 and served as ranking member on the House Oversight and Reform Committee while Democrats had the majority. He’ll ascend to the top spot once the 118th Congress starts in less than two weeks.

He’s among a vocal group of House Republicans who are warning about implications of passing the massive spending bill during the current lame-duck Congress rather than waiting until next year when Republicans have control of the House.

“It’s no surprise that Democrats are racing to use their waning days of power to force through trillions of dollars in new spending and a host of bad policies that will weaken our country,” Comer told The Daily Signal. “Democrats’ unhinged, inflation-inducing spending binge over the last two years caused 40-year high inflation that’s harming the pocketbooks of Americans and has allowed rampant government waste.”

In addition to Comer, 13 House Republicans are promising to oppose and stymie the legislative priorities of any Republican senator who votes in favor of the omnibus spending bill this week. They have the support of likely incoming House Speaker Kevin McCarthy, R-Calif., as well.

>>> Warning Shot: House Conservatives Threaten Revenge If GOP Senators Vote for Pelosi-Schumer Spending Bill

Schumer already has the support of Senate Minority Leader Mitch McConnell, R-Ky., and Sens. Richard Shelby, R-Ala., vice chairman of the Senate Appropriations Committee. They were among the 20 Senate Republicans who voted to move forward on the bill Tuesday.

Earlier this year, House Republicans outlined an ambitious oversight agenda. It includes an investigation of Homeland Security Alejandro Mayorkas’ failures leading to the border crisis, the government’s collusion with Big Tech to censor speech, the origins of COVID-19, Hunter Biden’s corrupt business dealings, the disastrous withdrawal from Afghanistan, politicization of the FBI, the administration’s promotion of critical race theory, and many other topics.

Have an opinion about this article? To sound off, please email letters@DailySignal.com and we’ll consider publishing your edited remarks in our regular “We Hear You” feature. Remember to include the url or headline of the article plus your name and town and/or state.

A.F. Branco for Oct 21, 2021

 

Incoming House Oversight Chairman: ‘Imperative’ to Stop Omnibus Spending Bill

James Comer in a grey suit in front of an American flag

“It’s imperative that we stop the massive omnibus so that Republicans can use our majority power next Congress to conduct oversight of the federal government, hold the Biden Administration accountable, and enact good government reforms,” Rep. James Comer, incoming chairman of the House Oversight and Reform Committee, said in a statement. (Photo by Anna Moneymaker/Getty Images)

Rep. James Comer, R-Ky., the incoming chairman of the House Oversight and Reform Committee, is urging his Senate counterparts to reject the $1.85 trillion omnibus spending bill in order to strengthen GOP’s oversight authority for the next Congress.

Comer will ascend to chairman of the powerful House committee Jan. 3 with a range of investigations planned. Before he’s even able to get started, however, Senate Republicans who support the omnibus spending bill could strip Comer of important leverage—the power of the purse.

With 20 Republican senators already votingTuesday on a procedural motion to advance the bill, Senate Majority Leader Chuck Schumer, D-N.Y., appears to have enough GOP support to get the bill done this week.

That hasn’t stopped Comer and other House Republicans from warning about the consequences.

 

“It’s imperative that we stop the massive omnibusso that Republicans can use our majority power next Congress to conduct oversight of the federal government, hold the Biden Administration accountable, and enact good government reforms,” Comer told The Daily Signal in a statement.

Withholding money from the Biden administration is one tool House Republicans can use to exercise effective oversight—particularly if federal agencies and government officials are uncooperative or not forthcoming with information in the new year.

“The primary method that Congress can use to hold federal agencies accountable is via appropriations,” said Paul Winfree, former budget policy director for President Donald Trump and a distinguished fellow at The Heritage Foundation. “They should not be appropriating until they’ve figured out just how to use their oversight powers.” (The Daily Signal is the multimedia news organization of The Heritage Foundation.)

Passage of the omnibus spending bill would insulate the Biden administration from a spending fight for the next year. The bill making its way through the Senate funds the president’s agenda from through Sept. 30, 2023.

>>> No Surprise: Republicans Won’t Hold Biden Accountable

Comer was first elected to Congress in 2016 and served as ranking member on the House Oversight and Reform Committee while Democrats had the majority. He’ll ascend to the top spot once the 118th Congress starts in less than two weeks.

He’s among a vocal group of House Republicans who are warning about implications of passing the massive spending bill during the current lame-duck Congress rather than waiting until next year when Republicans have control of the House.

“It’s no surprise that Democrats are racing to use their waning days of power to force through trillions of dollars in new spending and a host of bad policies that will weaken our country,” Comer told The Daily Signal. “Democrats’ unhinged, inflation-inducing spending binge over the last two years caused 40-year high inflation that’s harming the pocketbooks of Americans and has allowed rampant government waste.”

In addition to Comer, 13 House Republicans are promising to oppose and stymie the legislative priorities of any Republican senator who votes in favor of the omnibus spending bill this week. They have the support of likely incoming House Speaker Kevin McCarthy, R-Calif., as well.

>>> Warning Shot: House Conservatives Threaten Revenge If GOP Senators Vote for Pelosi-Schumer Spending Bill

Schumer already has the support of Senate Minority Leader Mitch McConnell, R-Ky., and Sens. Richard Shelby, R-Ala., vice chairman of the Senate Appropriations Committee. They were among the 20 Senate Republicans who voted to move forward on the bill Tuesday.

Earlier this year, House Republicans outlined an ambitious oversight agenda. It includes an investigation of Homeland Security Alejandro Mayorkas’ failures leading to the border crisis, the government’s collusion with Big Tech to censor speech, the origins of COVID-19, Hunter Biden’s corrupt business dealings, the disastrous withdrawal from Afghanistan, politicization of the FBI, the administration’s promotion of critical race theory, and many other topics.

By voting for the $1.7 trillion spending bill, Senate Republicans would strip their House counterparts of the leverage they need on all those investigations and more by giving Biden and Democrats exactly what they want—money to continue on, unaffected, for another year.

Have an opinion about this article? To sound off, please email letters@DailySignal.com and we’ll consider publishing your edited remarks in our regular “We Hear You” feature. Remember to include the url or headline of the article plus your name and town and/or state.


March 31, 2021

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

Dear Mr. President,

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

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

 

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

Washington Could Learn a Lot from a Drug Addict

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

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

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

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

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

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

Baby carrot Arkansas Medicaid expansion image

 

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

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

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

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

______________

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

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

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

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

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

Thomas Jefferson to Joseph Milligan

April 6, 1816

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

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

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

_______

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

_____________

_________

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

Sincerely,

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

Williams with Sowell – Minimum Wage

Thomas Sowell

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

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

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

Welfare reform part 2

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

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

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

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

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

Dan Mitchell comments on surprising quote from NY Mayor Eric Adams “To continually attack high income earners when 51% of our taxes are paid by 2% of New Yorkers — this blows my mind when I hear people say ‘so what if they leave.’ No you leave! I want my high income earners right here in this city!”

 

 

An Overdue Wake-Up Call for New York Democrats?

The economic outlook in New York (both the stateand the city) has been very depressing in recent years.

  • New York is ranked #50 in the Economic Freedom of North America.
  • New York is ranked #48 in the State Business Tax Climate Index.
  • New York is ranked #50 in the Freedom in the 50 States.
  • New York is next-to-last in measures of inbound migration.
  • New York is ranked #50 in the State Soft Tyranny Index.

That’s a very depressing list. New York’s low rankings are rivaled only by a few other outlier states such as California and New Jersey.

But maybe a turnaround is possible.

There are two recent signs of rationality, one in New York City and one in Albany (the state’s capital).

Let’s start with this tweet from Phil Kerpen, which features some comments from Mayor Adams of New York City.

Remarkably, the Mayor understands it is not a good idea if the geese with the golden eggs fly away.

“To continually attack high income earners when 51% of our taxes are paid by 2% of New Yorkers — this blows my mind when I hear people say ‘so what if they leave.’ No you leave! I want my high income earners right here in this city!”

I don’t know if the Mayor’s comments will actually translate into better policy, but it certainly seems like he has a better understanding of reality than his predecessor.

Now let’s shift to the state level.

The Wall Street Journal opines about a potential outbreak of rationality by the state’s governor.

’Tis the season for epiphanies, and what do you know? It’s finally dawning on some New York Democrats that the state’s steep income tax rates are driving away top earners who fund essential public services. …miracles of miracles, Gov. Kathy Hochul last week ruled out tax increases and said she planned to hold the line on spending next year. “I don’t believe that raising taxes…makes sense,” she said. …A New York City Independent Budget Office report this month showed that the number of taxpayers who earned between $1 million and $5 million plunged 11% in 2020 from the prior year. …The culprits are high taxes and Covid lockdowns. According to IRS data, New York County lost $14.5 billion in adjusted gross income from out-migration between 2019 and 2020. And this was before Democrats in Albany last spring raised income taxes on individuals making more than $1 million, jacking up the combined state and New York City top rate to 14.8% from 12.7%. Even New York Comptroller Thomas DiNapoli, who is no moderate, told Bloomberg News last week that the exodus of taxpayers at the upper end “should be a concern for everybody.” He added that “we might be getting near that tipping point where we do make it economically unsustainable for enough of those folks to stay here.”

For what it’s worth, I think New York already passed the tipping point. Thousand and thousands of well-to-do taxpayers have already escaped and moved to zero-income-tax Florida.

That means New York’s parasitical politicians have lost billions and billions of tax revenue. And I suspect that’s why we are seeing some semi-sensible comments from the Mayor and the Governor.

Let’s close with a depressing observation. The reason the comments from the Mayor and Governor are “semi-sensible” is that they are only saying there should be no more tax increases.

That’s not the same as saying that there should be tax cuts. Or TABOR-style spending caps.

In other words, the “good news” from New York is that politicians want to freeze the current (very bad) policy in place. That’s better than galloping faster in the wrong direction, of course, but a far cry from what’s needed.

Especially when many other states are seizing opportunities to become more competitive.

 

 

 


Dan Mitchell does a great job explaining the Laffer Curve

Free-market economics meets free-market policies at The Heritage Foundation’s Tenth Anniversary dinner in 1983. Nobel Laureate Milton Friedman and his wife Rose with President Ronald Reagan and Heritage President Ed Feulner.

Free-market economics meets free-market policies at The Heritage Foundation’s Tenth Anniversary dinner in 1983. Nobel Laureate Milton Friedman and his wife Rose with President Ronald Reagan and Heritage President Ed Feulner.

Since the passing of Milton Friedman who was my favorite economist, I have been reading the works of Daniel Mitchell and he quotes Milton Friedman a lot, and you can reach Dan’s website here.

Mitchell in February 2011.
Wikipedia noted concerning Dan:

 

Mitchell’s career as an economist began in the United States Senate, working for Oregon Senator Bob Packwood and the Senate Finance Committee. He also served on the transition team of President-Elect Bush and Vice President-Elect Quayle in 1988. In 1990, he began work at the Heritage Foundation. At Heritage, Mitchell worked on tax policy issues and began advocating for income tax reform.[1]

In 2007, Mitchell left the Heritage Foundation, and joined the Cato Institute as a Senior Fellow. Mitchell continues to work in tax policy, and deals with issues such as the flat tax and international tax competition.[2]

In addition to his Cato Institute responsibilities, Mitchell co-founded the Center for Freedom and Prosperity, an organization formed to protect international tax competition.[1]

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

Dear Mr. President,

I enjoyed this article below because it demonstrates that the Laffer Curve has been working for almost 100 years now when it is put to the test in the USA. I actually got to hear Arthur Laffer speak in person in 1981 and he told us in advance what was going to happen the 1980’s and it all came about as he said it would when Ronald Reagan’s tax cuts took place. I wish we would lower taxes now instead of looking for more revenue through raised taxes. We have to grow the economy:

What Mitt Romney Said Last Night About Tax Cuts And The Deficit Was Absolutely Right. And What Obama Said Was Absolutely Wrong.

Mitt Romney repeatedly said last night that he would not allow tax cuts to add to the deficit.  He repeatedly said it because over and over again Obama blathered the liberal talking point that cutting taxes necessarily increased deficits.

Romney’s exact words: “I want to underline that — no tax cut that adds to the deficit.”

Meanwhile, Obama has promised to cut the deficit in half during his first four years – but instead gave America the highest deficits in the history of the entire human race.

I’ve written about this before.  Let’s replay what has happened every single time we’ve ever cut the income tax rate.

The fact of the matter is that we can go back to Calvin Coolidge who said very nearly THE EXACT SAME THING to his treasury secretary: he too would not allow any tax cuts that added to the debt.  Andrew Mellon – quite possibly the most brilliant economic mind of his day – did a great deal of research and determined what he believed was the best tax rate.  And the Coolidge administration DID cut income taxes and MASSIVELY increased revenues.  Coolidge and Mellon cut the income tax rate 67.12 percent (from 73 to 24 percent); and revenues not only did not go down, but they went UP by at least 42.86 percent (from $700 billion to over $1 billion).

That’s something called a documented fact.  But that wasn’t all that happened: another incredible thing was that the taxes and percentage of taxes paid actually went UP for the rich.  Because as they were allowed to keep more of the profits that they earned by investing in successful business, they significantly increased their investments and therefore paid more in taxes than they otherwise would have had they continued sheltering their money to protect themselves from the higher tax rates.  Liberals ignore reality, but it is simply true.  It is a fact.  It happened.

Then FDR came along and raised the tax rates again and the opposite happened: we collected less and less revenue while the burden of taxation fell increasingly on the poor and middle class again.  Which is exactly what Obama wants to do.

People don’t realize that John F. Kennedy, one of the greatest Democrat presidents, was a TAX CUTTER who believed the conservative economic philosophy that cutting tax rates would in fact increase tax revenues.  He too cut taxes, and he too increased tax revenues.

So we get to Ronald Reagan, who famously cut taxes.  And again, we find that Reagan cut that godawful liberal tax rate during an incredibly godawful liberal-caused economic recession, and he increased tax revenue by 20.71 percent (with revenues increasing from $956 billion to $1.154 trillion).  And again, the taxes were paid primarily by the rich:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So we get to George Bush and the Bush tax cuts that liberals and in particular Obama have just demonized up one side and demagogued down the other.  And I can simply quote the New York Times AT the time:

Sharp Rise in Tax Revenue to Pare U.S. Deficit By EDMUND L. ANDREWS Published: July 13, 2005

WASHINGTON, July 12 – For the first time since President Bush took office, an unexpected leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion.

A Jump in Corporate Payments On Wednesday, White House officials plan to announce that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February.

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.

The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be “significantly less than $350 billion, perhaps below $325 billion.”

The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well
.

And of course the New York Times, as reliable liberals, use the adjective whenever something good happens under conservative policies and whenever something bad happens under liberal policies: ”unexpected.”   But it WASN’T ”unexpected.”  It was EXACTLY what Republicans had said would happen and in fact it was exactly what HAD IN FACT HAPPENED every single time we’ve EVER cut income tax rates.

The truth is that conservative tax policy has a perfect track record: every single time it has ever been tried, we have INCREASED tax revenues while not only exploding economic activity and creating more jobs, but encouraging the wealthy to pay more in taxes as well.  And liberals simply dishonestly refuse to acknowledge documented history.

Meanwhile, liberals also have a perfect record … of FAILUREThey keep raising taxes and keep not understanding why they don’t get the revenues they predicted.

The following is a section from my article, “Tax Cuts INCREASE Revenues; They Have ALWAYS Increased Revenues“, where I document every single thing I said above:

The Falsehood That Tax Cuts Increase The Deficit

Now let’s take a look at the utterly fallacious view that tax cuts in general create higher deficits.

Let’s take a trip back in time, starting with the 1920s.  From Burton Folsom’s book, New Deal or Raw Deal?:

In 1921, President Harding asked the sixty-five-year-old [Andrew] Mellon to be secretary of the treasury; the national debt [resulting from WWI] had surpassed $20 billion and unemployment had reached 11.7 percent, one of the highest rates in U.S. history.  Harding invited Mellon to tinker with tax rates to encourage investment without incurring more debt. Mellon studied the problem carefully; his solution was what is today called “supply side economics,” the idea of cutting taxes to stimulate investment.  High income tax rates, Mellon argued, “inevitably put pressure upon the taxpayer to withdraw this capital from productive business and invest it in tax-exempt securities. . . . The result is that the sources of taxation are drying up, wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people” (page 128).

Mellon wrote, “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower taxes.”  And he compared the government setting tax rates on incomes to a businessman setting prices on products: “If a price is fixed too high, sales drop off and with them profits.”

And what happened?

“As secretary of the treasury, Mellon promoted, and Harding and Coolidge backed, a plan that eventually cut taxes on large incomes from 73 to 24 percent and on smaller incomes from 4 to 1/2 of 1 percent.  These tax cuts helped produce an outpouring of economic development – from air conditioning to refrigerators to zippers, Scotch tape to radios and talking movies.  Investors took more risks when they were allowed to keep more of their gains.  President Coolidge, during his six years in office, averaged only 3.3 percent unemployment and 1 percent inflation – the lowest misery index of any president in the twentieth century.

Furthermore, Mellon was also vindicated in his astonishing predictions that cutting taxes across the board would generate more revenue.  In the early 1920s, when the highest tax rate was 73 percent, the total income tax revenue to the U.S. government was a little over $700 million.  In 1928 and 1929, when the top tax rate was slashed to 25 and 24 percent, the total revenue topped the $1 billion mark.  Also remarkable, as Table 3 indicates, is that the burden of paying these taxes fell increasingly upon the wealthy” (page 129-130).

Now, that is incredible upon its face, but it becomes even more incredible when contrasted with FDR’s antibusiness and confiscatory tax policies, which both dramatically shrunk in terms of actual income tax revenues (from $1.096 billion in 1929 to $527 million in 1935), and dramatically shifted the tax burden to the backs of the poor by imposing huge new excise taxes (from $540 million in 1929 to $1.364 billion in 1935).  See Table 1 on page 125 of New Deal or Raw Deal for that information.

FDR both collected far less taxes from the rich, while imposing a far more onerous tax burden upon the poor.

It is simply a matter of empirical fact that tax cuts create increased revenue, and that those [Democrats] who have refused to pay attention to that fact have ended up reducing government revenues even as they increased the burdens on the poorest whom they falsely claim to help.

Let’s move on to John F. Kennedy, one of the most popular Democrat presidents ever.  Few realize that he was also a supply-side tax cutter.

Kennedy said:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

– John F. Kennedy, Nov. 20, 1962, president’s news conference


“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964

“In today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.”

– John F. Kennedy, Jan. 24, 1963, message to Congress on tax reduction and reform, House Doc. 43, 88th Congress, 1st Session.


“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

– John F. Kennedy, Sept. 18, 1963, radio and television address to the nation on tax-reduction bill

Which is to say that modern Democrats are essentially calling one of their greatest presidents a liar when they demonize tax cuts as a means of increasing government revenues.

So let’s move on to Ronald Reagan.  Reagan had two major tax cutting policies implemented: the Economic Recovery Tax Act (ERTA) of 1981, which was retroactive to 1981, and the Tax Reform Act of 1986.

Did Reagan’s tax cuts decrease federal revenues?  Hardly:

We find that 8 of the following 10 years there was a surplus of revenue from 1980, prior to the Reagan tax cuts.  And, following the Tax Reform Act of 1986, there was a MASSIVE INCREASEof revenue.

So Reagan’s tax cuts increased revenue.  But who paid the increased tax revenue?  The poor?  Opponents of the Reagan tax cuts argued that his policy was a giveaway to the rich (ever heard that one before?) because their tax payments would fall.  But that was exactly wrong.  In reality:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So Ronald Reagan a) collected more total revenue, b) collected more revenue from the rich, while c) reducing revenue collected by the bottom half of taxpayers, and d) generated an economic powerhouse that lasted – with only minor hiccups – for nearly three decades.  Pretty good achievement considering that his predecessor was forced to describe his own economy as a “malaise,” suffering due to a “crisis of confidence.” Pretty good considering that President Jimmy Carter responded to a reporter’s question as to what he would do about the problem of inflation by answering, “It would be misleading for me to tell any of you that there is a solution to it.”

Reagan whipped inflation.  Just as he whipped that malaise and that crisis of confidence.

________

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

________

The Laffer Curve, Part III: Dynamic Scoring

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Dan Mitchell: The Conservative Party is unwilling to do anything to restrain spending on the NHS (or any other part of the UK budget), which is why their main role nowadays is to be the tax collectors for the welfare state!

A.F. Branco for Oct 21, 2021

 

 

In Five Sentences, Everything You Need to Know about Bureaucracy

One thing that became very apparent during the pandemic is that government schools are mostly run for the benefit of bureaucrats rather than students.

Not that any of us should have been surprised.

The same is true for other government bureaucracies, as well as parts of the private sector where there is a lot of government intervention that subsidizes featherbedding.

What’s especially galling is when budget increases are used to hire more bureaucrats, yet taxpayers get nothing of value in exchanges.

That’s certainly the case in the United States, where education bureaucracies (and education spending) have dramatically increased, yet there has been no concomitant increase in educational outcomes.

Another examples come from the United Kingdom where the government-run National Health Service gets more money and more bureaucrats every year, as explained in CapX by Fiona Bulmer, yet there’s never an improvement in health outcomes.

Indeed, these five sentences are a perfect example of government bureaucracies in action.

…the NHS in England employs the full time equivalent of 1.2 million people, nearly 200,000 more than they did in 2012.

…in 2021, the NHS was around 16% less productive than before the pandemic.

…one of the managers lamented to me that he could schedule a maximum of four knee operations a day but in the private sector they manage eight a day. 

…7m people on NHS waiting lists.

The NHS, like all organisations where users have no choice defaults to accommodating the providers not the consumers.

I’m left with two conclusions after reading those depressing numbers.

The obvious takeaway, as I’ve previously noted, is that if you don’t want massive future tax increases, there’s no alternative to what critics call “free-market fundamentalism.”


March 31, 2021

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

Dear Mr. President,

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

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

 

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

Washington Could Learn a Lot from a Drug Addict

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

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

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

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

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

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

Baby carrot Arkansas Medicaid expansion image

 

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

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

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

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

______________

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

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

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

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

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

Thomas Jefferson to Joseph Milligan

April 6, 1816

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

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

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

_______

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

_____________

_________

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

Sincerely,

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

Williams with Sowell – Minimum Wage

Thomas Sowell

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

—-

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

Related posts:

Welfare Spending Shattering All-Time Highs

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

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

Welfare programs are not the answer for the poor

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Private charities are best solution and not government welfare

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

The book “After the Welfare State”

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

President Obama responds to Heritage Foundation critics on welfare reform waivers

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

Welfare reform part 3

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

Welfare reform part 2

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

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

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

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Dan Mitchell: “This is an opportunity to see how all the pandemic spending by Washington has encouraged bad fiscal policy at the sub-national level!”

_________

Federally Subsidized State Profligacy

I was going to write about Argentina again today, following up on yesterday’s column.

But the National Association of State Budget Officers has released a new report about spending in the 50 states.

This is an opportunity to see how all the pandemic spending by Washington has encouraged bad fiscal policy at the sub-national level.

To be succinct, the answer is “a lot.”

Figure 1 shows that all the grants and handouts enabled reckless policy. For all 50 states, the burden of spending climbed 24.7 percent between 2020 and 2022.

But not all states are created equal.

So I went to Table 1 of the report to see how much spending increased in various states.

Here are some of the highlights. Special applause for Georgia (home of my beloved Bulldawgs!), which actually reduced the spending burden over the past two years. And honorary mention to North Carolina, which is further enhancing its reputation for sensible fiscal policy.

Colorado also was one of the best states, doubtlessly thanks to TABOR. And New Hampshire also deserves further plaudits for relative frugality.

The big states of Texas and Florida increased spending by less than the 24.7 percent average. As did New York, surprisingly.

I’m sure nobody is surprised to see such bad results from New Jersey and California. And Illinoisdeserves some sort of Booby Prize for its recklessness.

P.S. I’ll close by shifting to a different topic. As you can see from Figure 5, Medicaid (the government’s health entitlement for poor people) is consuming ever-larger shares of state budgets (and the federal budget).

Medicaid reform (block granting the program) is a very good idea to fix budget problems at the state level and to fix budget problems in Washington. And reduce fraud as well.

Texas vs. California, Part VII

To begin the seventh edition of our series comparing policy in Texas and California (previous entries in March 2010, February 2013, April 2013, October 2018, June 2019, and December 2020), here’s a video from Prager University.

There will be a lot of information in today’s column, so if you’re pressed for time, here are three sentences that tell you what you need to know.

California has all sorts of natural advantages over Texas, especially endless sunshine and beautiful topography.

Texas has better government policy than California, most notably in areas such as taxation and regulation.

Since people are moving from the Golden State to the Lone Star State, public policy seems to matter more than natural beauty.

Now let’s look at a bunch of evidence to support those three sentences.

We’ll start with an article by Joel Kotkin of Chapman University.

If one were to explore the most blessed places on earth, California, my home for a half century, would surely be up there. …its salubrious climate, spectacular scenery, vast natural resources… President Biden recently suggested that he wants to “make America California again”. Yet…he should consider whether the California model may be better seen as a cautionary tale than a roadmap to a better future… California now suffers the highest cost-adjusted poverty rate in the country, and the widest gap between middle and upper-middle income earners. …the state has slowly morphed into a low wage economy. Over the past decade, 80% of the state’s jobs have paid under the median wage — half of which are paid less than $40,000…minorities do better today outside of California, enjoying far higher adjusted incomes and rates of homeownership in places like Atlanta and Dallas than in San Francisco and Los Angeles. Almost one-third of Hispanics, the state’s largest ethnic group, subsist below the poverty line, compared with 21% outside the state. …progressive…policies have not brought about greater racial harmony, enhanced upward mobility and widely based economic growth.

Next we have some business news from the San Francisco Chronicle.

Business leaders fear tech giant Oracle’s recent announcement that it is leaving the Bay Area for Austin, Texas, will lead to more exits unless some fundamental political and economic changes are made to keep the region attractive and competitive. “This is something that we have been warning people about for several years. California is not business friendly, we should be honest about it,” said Kenneth Rosen, chairman of the UC Berkeley Fisher Center for Real Estate and Urban Economics.Bay Area Council President Jim Wunderman said… “From consulting companies to tax lawyers to bankers and commercial real estate firms, every person I talk with who provides services to big Bay Area corporations are telling me that their clients are strategizing about leaving…” Charles Schwab, McKesson and Hewlett Packard Enterprise have all exited the high-cost, high-tax, high-regulation Bay Area for a less-expensive, less-regulated and business-friendlier political climate. All of them rode off to Texas. …the pace of the departures appears to be increasing. …A recent online survey of 2,325 California residents, taken between Nov. 4 and Nov. 23 by the Public Policy Institute of California, found 26% of residents have seriously considered moving out of state and that 58% say that the American Dream is harder to achieve in California than elsewhere.

Are California politicians trying to make things better, in hopes of stopping out-migration to places such as Texas?

Not according to this column by Hank Adler in the Wall Street Journal.

California’s Legislature is considering a wealth tax on residents, part-year residents, and any person who spends more than 60 days inside the state’s borders in a single year. Even those who move out of state would continue to be subject to the tax for a decade… Assembly Bill 2088 proposes calculating the wealth tax based on current world-wide net worth each Dec. 31. For part-year and temporary residents, the tax would be proportionate based on their number of days in California. The annual tax would be on current net worth and therefore would include wealth earned, inherited or obtained through gifts or estates long before and long after leaving the state. …The authors of the bill estimate the wealth tax will provide Sacramento $7.5 billion in additional revenue every year. Another proposal—to increase the top state income-tax rate to 16.8%—would annually raise another $6.8 billion. Today, California’s wealthiest 1% pay approximately 46% of total state income taxes. …the Legislature looks to the wealthiest Californians to fill funding gaps without considering the constitutionality of the proposals and the ability of people and companies to pick up and leave the state, which news reports suggest they are doing in large numbers. …As of this moment, there are no police roadblocks on the freeways trying to keep moving trucks from leaving California. If A.B. 2088 becomes law, the state may need to consider placing some.

The late (and great) Walter Williams actually joked back in 2012that California might set up East German-style border checkpoints. Let’s hope satire doesn’t become reality.

But what isn’t satire is that people are fleeing the state (along with other poorly governed jurisdictions).

Simply state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big government).

Interestingly, even the New York Times recognizes that there is a problem in the state that used to be a role model for folks on the left.

Opining for that outlet at the start of the month, Brett Stephens raised concerns about the Golden State.

…today’s Democratic leaders might look to the very Democratic state of California as a model for America’s future. You remember California: People used to want to move there, start businesses, raise families, live their American dream. These days, not so much. Between July 2019 and July 2020, more people — 135,400 to be precise — left the state than moved in… No. 1 destination: Texas, followed by Arizona, Nevada and Washington. Three of those states have no state income tax.

California, by contrast, has very high taxes. Not just an onerous income tax, but high taxes across the board.

Californians also pay some of the nation’s highest sales tax rates (8.66 percent) and corporate tax rates (8.84 percent), as well as the highest taxes on gasoline (63 cents on a gallon as of January, as compared with 20 cents in Texas).

Sadly, these high taxes don’t translate into good services from government.

The state ranks 21st in the country in terms of spending per public school pupil, but 27th in its K-12 educational outcomes. It ties Oregon for third place among states in terms of its per capita homeless rate. Infrastructure? As of 2019, the state had an estimated $70 billion in deferred maintenance backlog. Debt? The state’s unfunded pension liabilities in 2019 ran north of $1.1 trillion, …or $81,300 per household.

Makes you wonder whether the rest of the nation should copy that model?

Democrats hold both U.S. Senate seats, 42 of its 53 seats in the House, have lopsided majorities in the State Assembly and Senate, run nearly every big city and have controlled the governor’s mansion for a decade. If ever there was a perfect laboratory for liberal governance, this is it. So how do you explain these results? …If California is a vision of the sort of future the Biden administration wants for Americans, expect Americans to demur.

Some might be tempted to dismiss Stephens’ column because he is considered the token conservative at the New York Times.

But Ezra Klein also acknowledges that California has a problem, and nobody will accuse him of being on the right side of the spectrum.

Here’s some of what he wrote in his column earlier this month for the New York Times.

I love California. I was born and raised in Orange County. I was educated in the state’s public schools and graduated from the University of California system… But for that very reason, our failures of governance worry me. California has the highest poverty rate in the nation,when you factor in housing costs, and vies for the top spot in income inequality, too. …but there’s a reason 130,000 more people leave than enter each year. California is dominated by Democrats, but many of the people Democrats claim to care about most can’t afford to live there. …California, as the biggest state in the nation, and one where Democrats hold total control of the government, carries a special burden. If progressivism cannot work here, why should the country believe it can work anywhere else?

Kudos to Klein for admitting problems on his side (just like I praise the few GOPers who criticized Trump’s big-government policies).

But his column definitely had some quirky parts, such as when he wrote that, “There are bright spots in recent years…a deeply progressive plan to tax the wealthy.”

That’s actually a big reason for the state’s decline, not a “bright spot.”

I’m not the only one to recognize the limitations of his column.

Kevin Williamson wrote an entire rebuttal for National Review.

Who but Ezra Klein could survey the wreck left-wing Democrats have made of California and conclude that the state’s problem is its excessive conservatism? …Klein the rhetorician anticipates objections on this front and writes that he is not speaking of “the political conservatism that privatizes Medicare, but the temperamental conservatism that” — see if this formulation sounds at all familiar — “stands athwart change and yells ‘Stop!’”…California progressives have progressive policies and progressive power, and they like it that way. That is the substance of their conservatism. …Klein and others of his ilk like to present themselves as dispassionate pragmatists, enlightened empiricists who only want to do “what works.” …Klein mocks San Francisco for renaming schools (Begone, Abraham Lincoln!) while it has no plan to reopen them, but he cannot quite see that these are two aspects of a single phenomenon. …Klein…must eventually understand that the troubles he identifies in California are baked into the progressive cake. …That has real-world consequences, currently on display in California to such a spectacular degree that even Ezra Klein is able dimly to perceive them. Maybe he’ll learn something.

I especially appreciate this passage since it excoriates rich leftists for putting teacher unions ahead of disadvantaged children.

Intentions do not matter very much, and mere stated intentions matter even less. Klein is blind to that, which is why he is able to write, as though there were something unusual on display: “For all the city’s vaunted progressivism, [San Francisco] has some of the highest private school enrollment numbers in the country.” Rich progressives have always been in favor of school choice and private schools — for themselves. They only oppose choice for poor people, whose interests must for political reasons be subordinated to those of the public-sector unions from which Democrats in cities such as San Francisco derive their power.

Let’s conclude with some levity.

Here’s a meme that contemplates whether California emigrants bring bad voting habits with them.

Though that’s apparently more of a problem in Colorado rather than in Texas.

And here’s some clever humor from Genesius Times.

P.S. My favorite California-themed humor (not counting the state’s elected officials) can be found here, hereherehere, and here.

High-tax states are languishing but  zero-income-tax states such as Texas are growing rapidly!!!!

Much of my writing is focused on the real-world impact of government policy, and this is why I repeatedly look at the relative economic performance of big government jurisdictions and small government jurisdictions.

But I don’t just highlight differences between nations. Yes, it’s educational to look at North Korea vs. South Korea or Chile vs. Venezuela vs. Argentina, but I also think you can learn a lot by looking at what’s happening with different states in America.

So we’ve looked at high-tax states that are languishing, such as California and Illinois, and compared them to zero-income-tax states such as Texas.

With this in mind, you can understand that I was intrigued to see that even the establishment media is noticing that Texas is out-pacing the rest of the nation.

Here are some excerpts from a report by CNN Money on rapid population growth in Texas.

More Americans moved to Texas in recent years than any other state: A net gain of more than 387,000 in the latest Census for 2013. …Five Texas cities — Austin, Houston, San Antonio, Dallas and Fort Worth — were among the top 20 fastest growing large metro areas. Some smaller Texas metro areas grew even faster. In oil-rich Odessa, the population grew 3.3% and nearby Midland recorded a 3% gain.

But why is the population growing?

Well, CNN Money points out that low housing prices and jobs are big reasons.

And on the issue of housing, the article does acknowledge the role of “easy regulations” that enable new home construction.

But on the topic of jobs, the piece contains some good data on employment growth, but no mention of policy.

Jobs is the No. 1 reason for population moves, with affordable housing a close second. …Jobs are plentiful in Austin, where the unemployment rate is just 4.6%. Moody’s Analytics projects job growth to average 4% a year through 2015. Just as important, many jobs there are well paid: The median income of more than $75,000 is nearly 20% higher than the national median.

That’s it. Read the entire article if you don’t believe me, but the reporter was able to write a complete article about the booming economy in Texas without mentioning – not even once – that there’s no state income tax.

But that wasn’t the only omission.

The article doesn’t mention that Texas is the 4th-best state in the Tax Foundation’s ranking of state and local tax burdens.

The article doesn’t mention that Texas was the least oppressive state in the Texas Public Policy Foundation’s Soft Tyranny Index.

The article doesn’t mention that Texas was ranked #20 in a study of the overall fiscal condition of the 50 states.

The article doesn’t mention that Texas is in 4th place in a combined ranking of economic freedom in U.S. state and Canadian provinces.

The article doesn’t mention that Texas was ranked #11 in the Tax Foundation’s State Business Tax Climate Index.

The article doesn’t mention that Texas is in 14th place in the Mercatus ranking of overall freedom for the 50 states (and in 10th place for fiscal freedom).

By the way, I’m not trying to argue that Texas is the best state.

Indeed, it only got the top ranking in one of the measures cited above.

My point, instead, is simply to note that it takes willful blindness to write about the strong population growth and job performance of Texas without making at least a passing reference to the fact that it is a low-tax, pro-market state.

At least compared to other states. And especially compared to the high-tax states that are stagnating.

Such as California, as illustrated by this data and this data, as well as this Lisa Benson cartoon.

Such as Illinois, as illustrated by this data and this Eric Allie cartoon.

And I can’t resist adding this Steve Breen cartoon, if for no other reason that it reminds me of another one of his cartoons that I shared last year.

Speaking of humor, this Chuck Asay cartoon speculates on how future archaeologists will view California. And this joke about Texas, California, and a coyote is among my most-viewed blog posts.

All jokes aside, I want to reiterate what I wrote above. Texas is far from perfect. There’s too much government in the Lone Star state. It’s only a success story when compared to California.

P.S. Paul Krugman has tried to defend California, which has made him an easy target. I debunked him earlier this year, and I also linked to a superb Kevin Williamson takedown of Krugman at the bottom of this post.

P.P.S. Once again, I repeat the two-part challenge I’ve issued to the left. I’ll be happy if any statists can successfully respond to just one of the two questions I posed.

Related posts:

California is the Greece of the USA, but Texas is not perfect either!!!

California is the Greece of the USA, but Texas is not perfect either!!! Just Because California Is Terrible, that Doesn’t Mean Texas Is Perfect January 21, 2013 by Dan Mitchell Texas is in much better shape than California. Taxes are lower, in part because Texas has no state income tax. No wonder the Lone Star State […]

Dan Mitchell on Texas v. California (includes editorial cartoon)

We should lower federal taxes because jobs are going to states like Texas that have low taxes. (We should lower state taxes too!!) What Can We Learn by Comparing the Employment Situation in Texas vs. California? April 3, 2013 by Dan Mitchell One of the great things about federalism, above and beyond the fact that it […]

Ark Times blogger claims California is better than Texas but facts don’t bear that out (3 great political cartoons)

I got on the Arkansas Times Blog and noticed that a person on there was bragging about the high minimum wage law in San Francisco and how everything was going so well there. On 2-15-13 on the Arkansas Times Blog I posted: Couldn’t be better (the person using the username “Couldn’t be better)  is bragging […]

California burdensome government causing some of business community to leave for Texas

Does Government Have a Revenue or Spending Problem? People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too […]

Arkansas Times blogger picks California business environment over Texas, proves liberals don’t live in real world(Part 2)

       Former California Governor Arnold Schwarzenegger with his family   I posted a portion of an article by John Fund of the Wall Street Journal that pointed out that many businesses are leaving California because of all of their government red tape and moving to Texas. My username is SalineRepublican and this is […]

John Fund’s talk in Little Rock 4-27-11(Part 4):Responding to liberals who criticize states like Texas that don’t have the red tape that California has

John Fund at Chamber Day, Part 1 Last week I got to attend the first ever “Conservative Lunch Series” presented by  KARN and Americans for Prosperity Foundation at the Little Rock Hilton on University Avenue. This monthly luncheon will be held the fourth Wednesday of every month. The speaker for today’s luncheon was John Fund. John […]

California and France have raised taxes so much that it has hurt economic growth!!!

___________ California and France have raised taxes so much that it has hurt economic growth!!! Mirror, Mirror, on the Wall, which Nation and State Punish Success Most of All? September 25, 2014 by Dan Mitchell I’ve shared some interested rankings on tax policy, including a map from the Tax Foundation showing which states have the earliest […]

Jerry Brown raised taxes in California and a rise in the minimum wage, but it won’t work like Krugman thinks!!!

___________   Jerry Brown raised taxes in California and a rise in the minimum wage, but it won’t work like Krugman thinks!!!! This cartoon below shows what will eventually happen to California and any other state that keeps raising taxes higher and higher.   Krugman’s “Gotcha” Moment Leaves Something to Be Desired July 25, 2014 by […]

Open letter to President Obama (Part 573) Are the states of Illinois and California going to join Detroit in Bankruptcy one day?

Open letter to President Obama (Part 573) (Emailed to White House on 7-29-13.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get […]

Open letter to President Obama (Part 561) We should lower federal taxes because jobs are going to states like Texas that have low taxes

Open letter to President Obama (Part 561) (Emailed to White House on 6-25-13.) President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President, I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get […]

Dan Mitchell: Last week, I explained that “supply siders” need to be ardent advocates of spending restraint. After all, there is no chance of good tax policy in the future if the burden of federal spending continues to expand!

A.F. Branco for Oct 21, 2021

Republican Warfare, Part IV: Will the GOP Get Serious about Spending?

Last week, I explained that “supply siders” need to be ardent advocates of spending restraint. After all, there is no chance of good tax policy in the future if the burden of federal spending continues to expand.

I also wrote about “national conservatives” and pointed out that their opposition to entitlement reform means they implicitly embrace massive tax increases.

The bottom line is that the United States has a built-in spending crisis. Democrats are not serious about addressing the problem. So if Republicans bail as well, the nation is doomed to become a decrepit, European-style welfare state.

What does that mean? Nothing good, at least for people in the productive sector of the economy.

In an article for National Review, Philip Klein speculates whether there is any appetite for spending restraint, even among self-described conservatives.

For much of the history of the American conservative movement, limiting the size and scope of government has stood as one of its central goals. …In 2022, such messages were barely anywhere to be found on the campaign trail…conservatives have largely moved on from making the case for reducing the size and power of Washington. In some cases, this shift has been passive. …It has become popular in some circles on the right to mock “zombie Reaganism” and insist that while it may have made sense back in the 1980s to argue for smaller government, such a message is now outdated. …the argument that the battle to limit government has already been lost also neglects to recognize that things could always get worse. That is, even though the federal government has gone through extraordinary growth since the New Deal, it would have grown even larger had there been no conservative movement to push back. One need only look at Europe, where conservative parties long ago made their peace with the welfare state, to see how government agencies have crowded out civil society… There is no way in which a nation with…a ballooning welfare state will be an accommodating place for conservatives in the long run, no matter how much some may fantasize about seizing the dragon and precisely aiming its fire at their enemies during the relatively brief windows in which Republicans have power. Conservatives…should not abandon the fight for limited government.

At the risk of understatement, I fully agree.

I wrote two days ago and also the previous week to make the case for spending restraint.

Those are easy columns to write since it is the same argument I’ve been making my entire life. But what is depressing now is that there is opposition from Republicans as well as Democrats.

Maybe they should all be forced to watch my video series on the economics of government spending.

Augmenting the Case for Spending Restraint

I explained last week that excessive government spending is responsible for about 97 percent of America’s fiscal deterioration in the 21st century.

I followed that column with two post-election pieces that explained how huge tax increases will be inevitable if there is no effort to deal with the spending problem.

Simply stated, lawmakers need to copy the fiscal restraint of the Reagan years and Clinton years.

Why? To help people enjoy better lives thanks to faster growth and more opportunity.

In the Wall Street Journal, Andy Kessler explains that smaller government is the recipe for more growth.

Winston Churchill…said: “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucketand trying to lift himself up by the handle.” The U.S. should heed that advice… economic growth is going to come from efficient supply chains and productivity in manufacturing in the U.S. Tax andspending cuts are the cure. …Republicans must resist the urge to subsidize higher energy costs and instead help slay inflation and bring back a strong, productive economy.

Let’s look at some new academic research bolstering Kessler’s argument.

Megha Jain Aishwarya Nagpal, and Abhay Jain published a study last year in the South Asia Journal of Macroeconomics and Public Finance.

The key findings deal with the Armey-Rahn Curveand can be found in the abstract.

The current study attempts to examine the linkage between government (public) spending and economic growth in the broader framework of selected South Asian Nations (SANs), BRICS and other emerging nations by using two sets of empirical modelling over the period 2007–2016 by using inverted U-shaped hypothesis, propounded by Armey curve (1995).…The key findings signify the existence of an inverted U-shaped relationship for the selected data set of emerging nations and, therefore, support the Armey curve hypothesis. The projected threshold (tipping) levels (as a percentage of GDP) are 24.31% for the government total expenditures (GTotExp), 12.92% for consumption spending (GConExp) and 7.11% for investment spending (GInvExp). It has been observed that a rise in the public spending (size) resulted in a substantial…decrease…in the growth rate when the public spending was…after…the optimal threshold level, indicating a non-monotonic association.

For what it’s worth, I think the study is wrong and that the growth-maximizing level of government spending is much lower than 24.3 percent of economic output.

But since total government spending in the United States now consumes about 40 percent of GDP, at least we can all agree that there will be more prosperity if America’s fiscal burden is dramatically reduced.

If we ever bring the spending burden back down to 24.3 percent of economic output, we can then figure out whether the ultimate goal is even lower (as it was for much of America’s history).

There is one point from the study that merits further attention. The authors estimated not only the growth-maximizing level of total spending, but also how much the government should spend on “consumption” and “investment” outlays (an issue I addressed last month).

Here’s a chart from the study showing that consumption outlays should be less than 13 percent of economic output.

P.S. If you want to watch videos that address the growth-maximizing size of government, click here, here, here, here, and here.

P.P.S. Ironically, the case for smaller government is bolstered by research from normally left-leaning international bureaucracies such as the OECD, World Bank, ECB, and IMF.

March 31, 2021

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

Dear Mr. President,

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

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

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

Washington Could Learn a Lot from a Drug Addict

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

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

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

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

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

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

Baby carrot Arkansas Medicaid expansion image

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

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

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

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

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

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

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

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

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

Thomas Jefferson to Joseph Milligan

April 6, 1816

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

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

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

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

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

Sincerely,

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

Williams with Sowell – Minimum Wage

Thomas Sowell

Thomas Sowell – Reducing Black Unemployment

By WALTER WILLIAMS

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

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