Robin Hood Was the Original Tea Party Activist

One of my pet peeves is when people characterize Robin Hood as some sort of left-wing redistributionist. As I’ve explained, that’s utter nonsense.

If you read the book or watch the movie starring Errol Flynn, Prince John and the Sheriff of Nottingham were the bad guys because they over-taxed the peasants. Robin Hood was the good guy because he rescued the money from the tax collectors and returned it to the people who earned it.

Kudos to Ted Cruz, who tried to educate (a poorly informed) Bernie Sanders on this topic.

Cruz accidentally promoted Prince John to King John (or is my aging memory betraying me and did Prince John declare himself King at some point?), but he’s 100 percent correct on the fundamental point.

And now I’m wondering which modern leftists should play the roles of the bad guys from Robin Hood if there’s a remake of the movie. Perhaps Obama should be Prince John, which might be a better fit than the other movie roles people have imagined for our former president.

And the Sheriff of Nottingham obviously could be played by our corrupt IRS Commissioner. He would be a natural for the role.

But let’s not get too distracted. The focus today is on whether Robin Hood belongs to Occupy Wall Street or the Tea Party. This image reinforces the point that the latter is a better fit.

Just in case the message isn’t clear, here’s a nice clip from the cartoon version of Robin Hood.

I’m delighted that children actually were exposed to this message. I suggest sharing this clip widely with your kids, grandkids, nieces, nephew, etc, etc.

For what it’s worth, I also tried to correct the record about Robin Hood in a TV interview back in 2012.

P.S. Leftists aren’t the only people to mischaracterize Robin Hood, as I noted when discussing an otherwise-solid column by Cal Thomas.

P.P.S. Since Cal Thomas mentioned Robin Hood as part of a column explaining that Jesus wasn’t a socialist, I can’t resist showing Libertarian Jesus, who dispenses wisdom here and here.

Ranking Presidents on Economic Policy: The Impressive Record of Ronald Reagan

Back in 2013, I put together a visual showing the good and bad policies that were enacted during the Clinton years. The big takeaway was that the overall burden of government was substantially reduced during his years in office.

Two days ago, I did the same thing for Richard Nixon, but noted that his record was universally awful. I couldn’t think of a single pro-growth policy when he was in the Oval Office.

Now let’s look at the Ronald Reagan. I analyzed his record last year, but mostly looking at the aggregate results.

So let’s look at the details, putting specific pro-growth policies in one column and specific anti-growth policies in another column. As you can see, there was a substantial net improvement during the Reagan years.

I gave extra credit for his tax cuts, the spending restraint, and the taming of inflation.

On the negative side of the ledger, Reagan did approve some post-1981 tax hikes, imposed some protectionism, and also supported Medicare expansion, so he certainly wasn’t perfect.

I also was tempted to give Reagan some credit for NAFTA and the WTO since those initiative got their start during his presidency, but that would break my rule of only counting policies that were implemented while a president was in office.

The bottom line is that Reagan was a net plus for economic liberty. And if you count the collapse of the Soviet Empire, he was a net plus for global liberty.

Let’s close by discussing Henry Olsen’s new book on Ronald Reagan. Henry tried to make the case that Reagan was sort of a New Deal Democrat rather than a libertarian-ish ideologue. Writing for the Claremont Review of Books, Steven Hayward obviously is a fan of the book but is not entirely sympathetic to Henry’s hypothesis.

You should read Steven’s entire review, and also get Henry’s book and read it as well. I’ll simply cite two passages from the review for the simple reason that they match my beliefs (shocking, huh?). First, Reagan (quite correctly) was not a big fan of the New Deal.

Reagan’s long-time economic adviser Martin Anderson once told me that despite Reagan’s general kind words for FDR and the New Deal, he could not recall Reagan ever endorsing a specific New Deal policy… But if anyone wants to see Reagan as the heir of the New Deal, he has to get past one of Reagan’s most famous critiques of it—his 1976 remark that “Fascism was really the basis for the New Deal.” …Reagan, to his campaign managers’ consternation, stoutly defended his comments. In August 1980 Reagan told dumbfounded reporters: “Anyone who wants to look at the writings of the Brain Trust of the New Deal will find that President Roosevelt’s advisers admired the fascist system. . .  They thought that private ownership with government management and control a la the Italian system was the way to go, and that has been evident in all their writings.”

And he also opposed Washington-based income redistribution (another sensible view).

When Reagan opposed Nixon’s guaranteed annual income proposal, the Family Assistance Plan, in 1969 and 1970—the only governor in the country to do so—he said in a TV debate that “I believe that the government is supposed to promote the general welfare; I don’t think it is supposed to provide it.” If welfare was centralized in Washington, Reagan knew, reform would be all but impossible and there would be a bias toward increased spending in the future. …“If there is one area of social policy,” Reagan began to say in his standard stump speech, “that should be at the most local level of government possible, it is welfare. It should not be nationalized—it should be localized.” …In another 1982 speech to the NAACP (amidst a fierce recession), Reagan argued that the Great Society had done more harm than good for black Americans. Liberals howled with indignation about both of these heresies.

Amen.

I’m not a Reagan historian like Olson or Hayward, so I’ll wrap up this conversation with one small observation. Reagan was not as libertarian as I would like. I came to DC near the beginning of his second term and I remember feeling disappointed at the time that more progress could be made. I’ve now learned much more about the very weak records of other senior Republican and I now realize his accomplishment were large and meaningful.

It wasn’t just what he achieved. He also changed the “Overton Window,” meaning that he substantially expanded the acceptability of ideas about free markets and limited government. Prior to the Gipper’s tenure, Republicans rarely challenged the welfare state. They basically accepted the New Deal and Great Society. Reagan didn’t have much success unraveling welfare state programs, but he showed that such programs could be criticized and big-picture ideas about reform were not politically toxic.

P.S. Let’s also not forget that Reagan opposed the value-added tax. The rejection of a bad policy doesn’t belong on the above list, but it’s a notable piece of evidence about Reagan’s economic wisdom.

P.P.S. Reagan also showed that good policy can be good politics.

More Honesty from the Left: The Goal Is Big Tax Increases for the Middle Class

I’ve written several times that the left wants big tax hikes on poor and middle-class taxpayers. Simply stated, that’s the only way they can finance a European-sized welfare state.

Some of them even admit they want to pillage ordinary taxpayers.

• The editors at the New York Times endorsed higher taxes on the middle class in 2010.
• The then-House Majority Leader Steny Hoyer also gave a green light that year to higher taxes on the middle class.
• In 2012, MIT professor and former IMF official Simon Johnson argued that the middle class should pay more tax.
• The Washington Post also called for higher taxes on the middle class a few years ago, as did Vice President Joe Biden’s former economist.
• A New York Times columnist also called for broad-based tax hikes on the middle class in 2012.
• A Senior Fellow from Demos also argued for higher taxes on all Americans that year, specifically targeting the middle class.
• In 2013, the New York Times again (!) editorialized in favor of higher tax burdens on the middle class.

Now we have another addition to our list. Writing in today’s Washington Post, two law professors from UCLA openly argue in favor of tightening the belts of average Americans to enable a bigger federal government.

…we need more tax revenue from the middle class, not less.

They start by complaining that middle-income taxpayers have benefited from big tax cuts over the past 35 years.

Middle-class tax burdens are at historic lows. The Congressional Budget Office reported in 2016 that the average federal income tax rate for the middle class — here meaning the middle 60 percent of the income distribution — declined from 7.8 percent in 1979 to 3.4 percent in 2013. Focusing on all federal taxes (not just income taxes), the average tax rate dropped from 19.2 to 13.8 percent over the same period. With these lower tax rates, the share of taxes paid by the middle class has also declined. The middle class paid 35 percent of income taxes in 1979 but only 16 percent in 2013, while its share of all federal taxes fell from 43 to 30 percent.

As far as I’m concerned, this is good news, not something to bemoan. Indeed, my goal is to have similar reductions in tax burdens for all taxpayers.

But the authors raise a very valid point. We will have giant tax increases in the future and people at all income levels will be adversely impacted. Though there is one way of avoiding that grim European future.

Unless Congress is willing to dramatically cut major entitlement programs.

Incidentally, we don’t need to “dramatically cut” those programs. The authors are relying on dishonest Washington budget math.

In reality, the problem is solved and tax increases are averted so long as reforms are adopted to ensure that entitlement programs no longer grow faster than the private sector.

But that’s not what the authors want. They actually look forward to big tax increases.

What the middle class needs is not meager tax cuts but a muscular commitment to robust public institutions designed to benefit middle-income individuals. The higher taxes could come from our current income tax (from tax increases on the middle class and the wealthy) or a broad-based consumption tax (such as a VAT or carbon tax).

I’m greatly amused by the language they use. They want readers to believe that bloated European-style welfare states are “robust public institutions” and that politicians grabbing more money to buy more votes is a way of showing “muscular commitment.”

I’m also not surprised that they embraced a carbon tax or value-added tax.

By the way, the column compares the United States with other industrialized nations. Simply stated, we win (at least from my perspective).

Data from the Organization for Economic Cooperation and Development reveal that American families with children face substantially lower average income-tax rates (in some cases, less than half) than similar families in other developed countries. And this is before factoring in consumption taxes, which represent a large share of middle-class tax burdens in most countries, but not in the United States.

Those are remarkable numbers. Income taxes grab a much bigger share of family income in Europe. And then governments take an even bigger slice thanks to onerous value-added taxes.

The authors would argue that Europeans get “robust public institutions” in exchange for all that money, but what they really get is less growth and lower living standards.

Indeed, it’s worth noting that the richest European nations are on the same level (or below) the poorest American states.

That’s not exactly a ringing endorsement for higher tax burdens.

The bottom line is that left-wing politicians usually pontificate about raising taxes on the rich, but the truly honest folks on the left openly admit that the real targets are lower-income and middle-class households.

Ranking Presidents on Economic Policy: The Awful Record of Richard Nixon

A few days ago, using several methodologies, I calculated how fast government spending increased during the presidencies of Lyndon Johnson, Richard Nixon, Jimmy Carter, Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, and Barack Obama.

One of my big takeaways was that Republican presidents – with the exception of Reagan – allowed the burden of government spending to increase far too rapidly. Oftentimes faster than budgets grew under Democratic presidents.

That column generated a lot of feedback. And whether the responses were positive or negative, a common theme was that presidents shouldn’t be judged solely based on the growth of federal spending – both because Congress plays a big role and because there are many other policies that also matter when assessing economic policy.

I fully agree, and I explicitly noted that the relatively good spending numbers during the Obama years were because of policies – sequestration, shutdowns, etc – he opposed.

And I also concur that other policies matter. That’s one of the reasons I’m always highlighting Economic Freedom of the World. Yes, fiscal policy is one of the variables, but monetary policy, trade policy, regulatory policy, and the rule of law are equally important.

Indeed, I did an overall assessment of Bill Clinton a few years ago, comparing the pro-growth polices that were adopted during his tenure with the anti-growth policies that were implemented.

The bottom line is that economic liberty increased during his presidency. Significantly. Others can debate about whether he deserves full credit, partial credit, or no credit, but what matters to me is that the overall burden of government shrank. And that was good for America.

It’s time to do an overall assessment of economic policy for other presidents. And we’ll start with one of America’s worst presidents, Richard Nixon.

He’s mostly infamous for Watergate, which led to his resignation, but he also should be scorned because every single major economic policy of his presidency expanded the size, scope, and power of the federal government. Here’s the list, with a couple of the items getting larger bars because the policies were so misguided.

Is it true that there were no good economic policies under Richard Nixon? I asked Art Laffer, who worked at the Office of Management and Budget at the time, whether there were any pro-market reforms during the Nixon years.

He mentioned that the top tax rate on labor and small business income was reduced from 70 percent to 50 percent as part of the Tax Reform Act of 1969. I would have included that law in the pro-growth column, except that was the legislation that also created the alternative minimum tax (for both households and corporations). And there was an increases in the tax burden on capital gains, as well as a more onerous tax regime for new investment. My assessment is that these bad provisions basically offset the lower tax rate.

For what it’s worth, Nixon also proposed a value-added tax, which is yet another piece of evidence that he was a terrible statist. But I only include policies that were enacted rather than merely proposed (if I did include proposed policies, Bill Clinton would take a hit for Hillarycare).

P.S. I’m open to revising this list. I probably missed some policies, perhaps even a good one. And maybe I’m overstating the negative impact of spending increases and price controls, or understating the bad consequences of other policies. Feel free to add your two cents in the comments section.

Australia, Donald Trump, and Limited Government

I gave a couple of speeches about fiscal policy in Australia late last week.

During the Q&A sessions (as so often happens when I speak overseas), the audiences mostly asked questions about Donald Trump. I generally give a three-part response.

• I tell them I was surprised by the election results.
• I tell them Trump is not a small-government Republican.
• I plead with them (often with no success) to ask questions about fiscal policy.

So when I was asked to appear on Australian television, you won’t be surprised to learn that I was asked several questions about Trump.

But the good news is that the segment lasted for more than 18 minutes so I got a chance to pontificate about taxes and spending.

In particular, I had an opportunity to explain two very important principles of fiscal policy.

First, I explained the Rahn Curve and discussed why both Australia and the United States should worry that the public sector is too large. This means less growth in our respective nations because government spending (whether financed by taxes or borrowing) diverts resources from the productive sector of the economy.

Second, I explained the Laffer Curve and tried to get across why high tax rates are a bad idea (even if they raise more revenue). As always, my top goal was to explain that a nation should not seek to be at the revenue-maximizing point.

I also had an opportunity to take some potshots at international bureaucracies such as the IMF and OECD. Yes, we get good statistics from such organizations and even some occasional good research, but they have a statist policy agenda that undermines global growth. And I never cease to be offended that bureaucrats at these organizations get tax-free salaries, yet get to jet around the world urging higher taxes on the rest of us.

Mirror, Mirror, on the Wall, Obama Definitely Was Not the Biggest Spender of All

I’ve learned that it’s more important to pay attention to hard numbers rather than political rhetoric. Republicans, for instance, love to beat their chests about spending restraint, but I never believe them without first checking the numbers. Likewise, Democrats have a reputation as big spenders, but we occasionally get some surprising results when they’re in charge.

President Obama was especially hard to categorize. Republicans automatically assume he was profligate because he started his tenure with a Keynesian spending binge and the Obamacare entitlement. But after a few years in office, some were arguing he was the most frugal president of modern times.

• So I crunched the data in 2012 and discovered that he was either a big spender or a closet Reaganite depending on how the numbers were sliced.
• I then re-calculated the budget numbers in 2013 and found that spending grew at a slower rate the longer Obama was in office.
• And when I did the same exercise in 2014, using another year of data, Obama looked even more like a tight-fisted fiscal conservative.

Or, to be more accurate, what I basically discovered is that debt limit fights, sequestration, and government shutdowns were actually very effective. Indeed, the United States enjoyed a de facto spending freeze between 2009 and 2014, leading to the biggest five-year reduction in the burden of federal spending since the end of World War II. And it’s unclear that Obama deserves any of the credit since he was on the wrong side of those battles.

Anyhow, I’ve decided to update the numbers now that we have 8 years of data for Obama’s two terms.

But first, a brief digression on methodology: All the numbers you’re about to see have been adjusted for inflation, so these are apples-to-apples comparisons. Moreover, all my calculations are designed to show average annual increases. I also made sure that the “stimulus” spending that took place in the 2009 fiscal year was included in Obama’s totals, even though that fiscal year began (on October 1, 2008) while Bush was President.

We’ll start with a look at total outlays. On this basis, Obama is actually the most conservative President since World War II. And Bill Clinton is in second place.

But total outlays doesn’t really capture a President’s track record because interest payments are included, which effectively means they get blamed for all the debt run up by their predecessors.

So if we remove payments for net interest, we get a measure of what is called primary spending (total outlays minus net interest). As you can see, Obama is still in first place and Reagan jumps up to second place.

I would argue that one other major adjustment is needed to make the numbers more accurate.

There have been two major financial bailouts in the past 30 years, the savings & loan bailout in the late 1980s and the TARP bailout at the end of last decade. Those bailouts created big one-time expenses, followed by an influx of money (from asset sales and repaid loans) that actually gets counted as negative spending.

Those bailouts added a big chunk of one-time spending at the end of the Reagan years and at the end of the George W. Bush years, while then producing negative outlays during the early years of the George H.W. Bush Administration and Obama Administration.

So if we take out the one-time effects of those two bailouts (which I categorize as “non-TARP” for reasons of brevity), we get a new ranking.

Reagan is now in first place, followed by Clinton and Obama.

By the way, Lydon Johnson has been in last place regardless of how the numbers are calculated, and George W. Bush has had the second-worst numbers.

For all intents and purposes, the above numbers are how a libertarian would rank the various Presidents since both domestic spending and military spending are part of the calculations.

So let’s close by looking at how a conservative would rank the presidents, which is a simple exercise because all that’s required is to remove military spending. Here are the numbers showing the average inflation-adjusted increase in overall domestic outlays for various Presidents (still excluding the one-time bailouts, of course).

By this measure, Reagan easily is in first place. Though it’s worth noting that three Democrats occupy the next positions (though Obama’s numbers are no longer impressive), while Republicans (along with LBJ) get the worst scores.

The bottom line is that Reaganomics was a comparative success. But should we also conclude that Obama was a fiscal conservative?

I don’t think he deserves credit, but I won’t add anything to what I wrote above. Instead, I’ll simply note that Brian Riedl of the Manhattan Institute has a good analysis of Obama’s fiscal record. Here’s his conclusion.

It is important to recognize that Obama did not stop trying to expand government after 2010. The president’s eight annual budget requests gradually upped their 10-year revenue demands from $1.3 trillion to $3.4 trillion, while proposing an average of $1.0 trillion in new program spending over the next decade. His play, in short, was to gradually trim the budget deficit by chasing large spending increases with even larger tax increases. The Republican Congress stopped him. My assessment: Obama’s most important fiscal legacy was a sin of omission. Despite promising to confront Social Security and Medicare’s unsustainable deficits, the president refused to endorse any plan that would come close to achieving solvency. This surrendered eight crucial years of baby-boomer retirements while costs accelerated. With baby boomers retiring and a national debt projected to exceed $90 trillion within 30 years, this was no small surrender.

In other words, the relatively good short-run numbers were in spite of Obama. And the long-run numbers were bad – and still are bad – because he chose to let the entitlement problem fester. But he was still better (less worse) than Bush I, Bush II, and Nixon.

New Jersey’s Continuing Fiscal Decay

When companies want to boost sales, they sometimes tinker with products and then advertise them as “new and improved.”

In the case of governments, though, I suspect “new” is not “improved.”

The British territory of Jersey, for instance, has a very good tax system. It has a low-rate flat tax and it overtly brags about how its system is much better than the one imposed by London.

In the United States, by contrast, the state of New Jersey has a well-deserved reputation for bad fiscal policy. To be blunt, it’s not a good place to live and it’s even a bad place to die.

And it’s about to get worse. A column in the Wall Street Journal warns that New Jersey is poised to take a big step in the wrong direction. The authors start by observing that the state is already in bad shape.

…painless solutions to New Jersey’s fiscal challenges don’t exist. …a massive structural deficit lurks… New Jersey’s property taxes, already the highest in the nation, are being driven up further by the state’s pension burden and escalating health-care costs for government workers.

In other words, interest groups (especially overpaid bureaucrats) control the political process and they are pressuring politicians to divert even more money from the state’s beleaguered private sector.

…politicians seem to think New Jersey can tax its way to budgetary stability. At a debate this week in Newark, the Democratic gubernatorial nominee, Phil Murphy, pledged to spend more on education and to “fully fund our pension obligations.” …But just taxing more would risk making New Jersey’s fiscal woes even worse. …New Jersey is grasping at the same straws. During the current fiscal year, the state’s pension contribution is $2.5 billion, only about half the amount actuarially recommended. The so-called millionaire’s tax, a proposal Gov. Chris Christie has vetoed several times since taking office in 2010, will no doubt make a comeback if Mr. Murphy is elected. Yet it would bring in only an estimated $600 million a year.

The column warns that New Jersey may wind up repeating Connecticut’s mistakes.

Going down that path, however, is a recipe for a loss of high-value taxpayers and businesses.

Let’s look at a remarkable story from the New York Times. Published last year, it offers a very tangible example of how the state’s budgetary status will further deteriorate if big tax hikes drive away more successful taxpayers.

One man can move out of New Jersey and put the entire state budget at risk. Other states are facing similar situations…during a routine review of New Jersey’s finances, one could sense the alarm. The state’s wealthiest resident had reportedly “shifted his personal and business domicile to another state,” Frank W. Haines III, New Jersey’s legislative budget and finance officer, told a State Senate committee. If the news were true, New Jersey would lose so much in tax revenue that “we may be facing an unusual degree of income tax forecast risk,” Mr. Haines said.

Here are some of the details.

…hedge-fund billionaire David Tepper…declared himself a resident of Florida after living for over 20 years in New Jersey. He later moved the official headquarters of his hedge fund, Appaloosa Management, to Miami. New Jersey won’t say exactly how much Mr. Tepper paid in taxes. …Tax experts say his move to Florida could cost New Jersey — which has a top tax rate of 8.97 percent — hundreds of millions of dollars in lost payments. …several New Jersey lawmakers cited his relocation as proof that the state’s tax rates, up from 6.37 percent in 1996, are chasing away the rich. Florida has no personal income tax.

By the way, Tepper isn’t alone. Billions of dollars of wealth have already left New Jersey because of bad tax policy. Yet politicians in Trenton blindly want to make the state even less attractive.

At the risk of asking an obvious question, how can they not realize that this will accelerate the migration of high-value taxpayers to states with better policy?

New Jersey isn’t alone in committing slow-motion suicide. I already mentioned Connecticut and you can add states such as California and Illinois to the list.

What’s remarkable is that these states are punishing the very taxpayers that are critical to state finances.

…states with the highest tax rates on the rich are growing increasingly dependent on a smaller group of superearners for tax revenue. In New York, California, Connecticut, Maryland and New Jersey, the top 1 percent pay a third or more of total income taxes. Now a handful of billionaires or even a single individual like Mr. Tepper can have a noticeable impact on state revenues and budgets. …Some academic research shows that high taxes are chasing the rich to lower-tax states, and anecdotes of tax-fleeing billionaires abound. …In California, 5,745 taxpayers earning $5 million or more generated more than $10 billion of income taxes in 2013, or about 19 percent of the state’s total, according to state officials. “Any state that depends on income taxes is going to get sick whenever one of these guys gets a cold,” Mr. Sullivan said.

The federal government does the same thing, of course, but it has more leeway to impose bad policy because it’s more challenging to move out of the country than to move across state borders.

New Jersey, however, can’t set up guard towers and barbed wire fences at the border, so it will feel the effect of bad policy at a faster rate.

P.S. I used to think that Governor Christie might be the Ronald Reagan of New Jersey. I was naive. Yes, he did have some success in vetoing legislation that would have exacerbated fiscal problems in the Garden State, but he was unable to change the state’s bad fiscal trajectory.

P.P.S. Remarkably, New Jersey was like New Hampshire back in the 1960s, with no income tax and no sales tax. What a tragic story of fiscal decline!