Final Election Predictions, Last-Minute Political Humor, and a Silver Lining to the Dark Cloud of 2016

The bad news is that America is about to elect a statist president. But will we get Hillary’s corruption or Donald’s buffoonery?

According to RealClearPolitics, Hillary Clinton will prevail, albeit by a very narrow margin, with 272 electoral votes. They have a very close race because Trump is projected to prevail in the swing states of Florida, North Carolina, and Nevada. If you believe these numbers, Trump simply has to flip semi-competitive New Hampshire (home to thousands of free-state libertarians) and he is the next President. At which point this joke about emigration to Canada becomes reality.

According to Nate Silver, a highly regarded statistics expert, Hillary Clinton wins comfortably because she carries the swing states of Florida, North Carolina, and Nevada. That should give her 323 electoral votes, but Silver’s model is based on probabilities, so she instead is projected to get 302.4 electoral votes. For what it’s worth, Gary Johnson easily breaks the record for the Libertarian Party, but he falls just short of the 5-percent mark.

According the political betting markets, Hillary Clinton will prevail with 323 electoral votes. The people waging cash believe she will come out on top in Nevada, Florida, and North Carolina, matching Nate Silver’s projection (interestingly, Trump is seen as having a better chance in Michigan than in Nevada). All of the third-party candidates, including Gary Johnson, apparently have a 0.1 percent chance of winning.

Last but not least, we have Professor Larry Sabato’s Crystal Ball. He picks Hillary and says she will get 322 electoral votes. Sabato has the same state-by-state breakdown as Silver and the betting markets, but he projects that Trump will win one electoral vote from Maine, which (like Nebraska) allocates two votes to the statewide winner and then one vote to the winner of each congressional district. In the for-what-it’s-worth department, there are twice as many (90) vulnerable electoral votes that Democrats have to worry about compared to Republicans (43).

So what’s my prediction?

If I wanted to torture the American people by prolonging the race, I would take the RealClearPolitics prediction, shift New Hampshire to Trump and shift Maine’s second congressional district to Hillary. The net result would be a 269-269 tie and the result would be total turmoil since the election would then be decided based on skullduggery in the electoral college or a state-by-state vote in the House of Representatives.

But I don’t expect that to happen, even though it would be highly entertaining (it would make Bush-vs.-Gore in 2000 seem like a bipartisan picnic).

I’m tempted to simply recycle the prediction I put forth one month ago. I showed Hillary winning with 328 electoral votes (basically similar to the consensus above, but with Iowa going for Hillary).

But it does indeed look like Trump will prevail in Iowa, so my final prediction will move the Hawkeye State back in the GOP column.

But I don’t want to have the same guess as almost everyone else (we libertarians have a tendency to be obstreperous), so let’s mix things up. The easy adjustment would be to give one or two of the “leaning Democrat” states to Trump. But my gut instinct tells me that growing Hispanic populations in Nevada and Florida make that unlikely. And North Carolina has too many college-educated whites, as well as an increased Hispanic presence, neither of which is good news for Trump.

So I’m going to defy all the experts and give Trump an extra state from the rust belt. Let’s say Michigan, which means my final electoral prediction is a 306-232 victory for Tweedledee. Or is she Tweedledum? Whatever.

Some of my Republican friends will be disappointed by this outcome, so time to make some predictions that will make them happy. The House stays Republican in my humble opinion, with a final total of 239 seats (my one success in the business of political prognostication occurred six years ago when I was exactly right in my House prediction).

The Senate outcome is even more important and GOPers will be very happen if I am correct in predicting that Republicans will hold the Senate 51-49, which would be a remarkable achievement since they are defending more than twice as many seats as Democrats this cycle. Nonetheless, that still means they will lose three seats, and my guess is that Wisconsin, Illinois, and Pennsylvania is where Republicans incumbents will fall short.

By the way, this outcome is not too bad for libertarians and other advocates of limited government. Consider these implications.

• Hillary will enter office widely disliked and distrusted, and the media will pay much closer attention to her misdeeds once she defeats Trump.
• She’ll have very little opportunity to expand the burden of government since the House (and maybe the Senate) will be controlled by Republicans.
• The 2018 mid-term elections are usually bad news for the party that controls the White House and Democrats have to defend a disproportionate number of Senate seats that cycle.
• The GOP might nominate someone in 2020 who believes in smaller government and that candidate may sweep into office with a Republican House and a Republican Senate.
• In 2021, genuine entitlement reform and sweeping tax reform could get enacted and Dan Mitchell could then safely retire to the Cayman Islands and introduce softball to that population.

Nice scenario, huh?

Then again, I basically made the same argument four years ago, and that didn’t turn out so well.

So if you’re done laughing at my optimistic take, here’s some meant-to-be-funny material to carry you through the day.

We’ll start with Anthony Weiner learning why it’s not a good idea to get on Hillary’s bad side (by the way, I have run into people who actually think that the Clintons have had people murdered and I always give them this column in hopes of calming them down).

And since Donald Trump is on the bad side of lots of Hispanic voters (presumably enough to give the election to Hillary), this quip by Seth Meyers is particularly (and appropriately) savage. Indeed, if Trump loses by a narrow margin and if he is capable of introspection, one wonders whether he will regret some of his rhetoric.

Last but not least, if you liked the “Mitt Romney Style” video from 2012, we can balance it with a video about Hillary, showing how the White House will operate under when pay-to-play become the modus operandi at 1600 Pennsylvania Avenue.

P.S. Don’t forget that there are several important ballot initiatives today.

Addendum: Can’t resist adding this cleverly doctored photo of Chelsea reading a bedtime story.

Though, to her credit, Chelsea isn’t associated with any bad policy ideas. The same can’t be said for Ivanka Trump.

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Hillary Clinton’s 38-Year History of Sleaze and Corruption

I’ve written before about Hillary Clinton’s unethical and (presumably) illegal actions, both in terms of her email server and the Clinton Foundation.

We’ve probably only seen the tip of the iceberg, but one thing that can be said with confidence is that there is strong scent of corruption, cronyism, and insider dealing that surrounds Mrs. Clinton.

Every day seems to bring new evidence. Writing for the Wall Street Journal, Kimberly Strassel puts it in blunt terms.

A Hillary Clinton presidency will be built, from the ground up, on self-dealing, crony favors, and an utter disregard for the law. This isn’t a guess. …It comes in the form of a memo written in 2011 by longtime Clinton errand boy Doug Band, who for years worked simultaneously at the Clinton Foundation and at the head of his lucrative consulting business, Teneo. It is astonishingly detailed proof that the Clintons do not draw any lines between their “charitable” work, their political activity, their government jobs or (and most important) their personal enrichment. Every other American is expected to keep these pursuits separate, as required by tax law, anticorruption law and campaign-finance law. For the Clintons, it is all one and the same—the rules be damned. …Any nonprofit lawyer in America knows the ironclad rule of keeping private enrichment away from tax-exempt activity, for the simple reason that mixing the two involves ripping off taxpayers. Every election lawyer in the country lives in fear of stepping over the lines governing fundraising and election vehicles. The Clintons recognize no lines. Here’s the lasting takeaway: The Clintons…know the risks. And yet they geared up the foundation and these seedy practices even as Mrs. Clinton was making her first bid for the presidency. They continued them as she sat as secretary of state. They continue them still, as she nears the White House. This is how the Clintons operate. They don’t change. Any one who pulls the lever for Mrs. Clinton takes responsibility for setting up the nation for all the blatant corruption that will follow.

Let’s look at some examples.

And we’ll start with the example of a Swiss bank that was being wrongfully persecuted by the American government for the supposed crime of protecting the privacy of clients (i.e., for following Swiss law inside Switzerland).

In other words, I’m very sympathetic to the bank. But I’m not a big fan of the Clintons using the bank’s legal woes as an opportunity to raise a bunch of money in exchange for a favorable disposition. Yet that’s exactly what happened, as reported by the U.K.-based Guardian.

In February 2009, the IRS sued UBS and demanded that it disclose the names of 52,000 possible American tax evaders with secret Swiss bank accounts. …On 19 August 2009, it was announced that UBS would pay no fine and would provide the IRS with information about 4,450 accounts within a year. Since the deal was struck, disclosures by the foundation and the bank show the donations by UBS to the Clinton Foundation growing “from less than $60,000 through 2008 to a cumulative total of about $600,000 by the end of 2014”… The bank also teamed up with the foundation on the Clinton Economic Opportunity Initiative, creating a pilot entrepreneur program through which UBS offered $32m in loans to businesses, the newspaper reported. Other UBS donations to the Clinton Foundation include a $350,000 donation from June 2011 and a $100,000 donation for a charity golf tournament. Additionally, UBS paid more than $1.5m in speaking fees to Bill Clinton between 2001 and 2014, the newspaper reported.

James Freeman, in a column for the Wall Street Journal, cites two other examples of Clinton-style pay-to-play. The first example deals with Morocco.

We now know from emails published by WikiLeaks that before Mrs. Clinton formally launched her campaign, she arranged for the king of Morocco to donate $12 million to Clinton Foundation programs. What’s significant about the Morocco case is that for years the Clintons peddled the fiction that donors write checks simply to support wondrous acts of Clintonian charity. But that cover story isn’t available here. Mrs. Clinton’s trusted aide Huma Abedin put it in writing: The Moroccans agreed to the deal on the condition that Mrs. Clinton would participate at a conference in their country. Panicked Clinton-campaign aides persuaded Mrs. Clinton to avoid such a trip before launching her candidacy—and the foundation got the king to settle for Bill and Chelsea Clinton. But the record is clear. The king wanted the access, influence and prestige that all strongmen crave from legitimate democracies.

The second example comes from Kazakhstan.

This wasn’t the first time the Clintons satisfied such a desire while collecting megadonations. When it comes to human rights, Kazakhstan’s dictator, Nursultan Nazarbayev, makes Morocco’s king look enlightened. In power since 1991 and never freely elected, Mr. Nazarbayev must have enjoyed the sensation of Mr. Clinton endorsing him to lead an international election-monitoring group in 2005. The Kazakh strongman knows how to return a favor, and he granted valuable mining concessions to Clinton Foundation donors. The donors then built a global uranium powerhouse that was eventually sold to the Russians in a deal that required the 2010 approval of a U.S. government committee that included Mrs. Clinton’s State Department.

There’s a lot more material I could share, but the purpose of today’s column isn’t to demonstrate Hillary’s recent unethical behavior.

Instead, I want to show how she has a decades-long pattern of using government for self-advancement and self-enrichment. And I’ll follow by drawing (what should be) a very obvious lesson about public policy.

To keep today’s column manageable, let’s review just two examples.

First, let’s go back more than 20 years to the early days of Bill Clinton’s presidency. Peggy Noonan explains Hillary’s attempt to replace the career professionals at the White House travel with cronies from Arkansas.

Why don’t people like Hillary Clinton? …Why, when some supposed scandal breaks and someone says she’s hiding something, do people, including many of her supporters, assume it’s true? …the scandals stretch back…all the way to her beginnings as a national figure. …It was early 1993. …It was the first big case in which she showed poor judgment, a cool willingness to mislead, and a level of political aggression that gave even those around her pause. It was after this mess that her critics said she’d revealed the soul of an East German border guard.

Let’s look at what happened.

On May 19, 1993, less than four months into the administration, the seven men who had long worked in the White House travel office were suddenly and brutally fired. The seven nonpartisan government workers, who helped arrange presidential trips, served at the pleasure of the president. But each new president had kept them on because they were good at their jobs. A veteran civil servant named Billy Dale had worked in the office 30 years and headed it the last 10. He and his colleagues were ordered to clear out their desks and were escorted from the White House, which quickly announced they were the subject of a criminal investigation by the FBI. They were in shock. So were members of the press, who knew Mr. Dale and his colleagues as honest and professional. A firestorm ensued. Under criticism the White House changed its story. They said that they were just trying to cut unneeded staff and save money. Then they said they were trying to impose a competitive bidding process. They tried a new explanation—the travel office shake-up was connected to Vice President Al Gore’s National Performance Review. (Almost immediately Mr. Gore said that was not true.) The White House then said it was connected to a campaign pledge to cut the White House staff by 25%. Finally they claimed the workers hadn’t been fired at all but placed on indefinite “administrative leave.”

Noonan continues.

Why so many stories? Because the real one wasn’t pretty. It emerged in contemporaneous notes of a high White House staffer that the travel-office workers were removed because Mrs. Clinton wanted to give their jobs—their “slots,” as she put it, according to the notes of director of administration David Watkins—to political operatives who’d worked for Mr. Clinton’s campaign. And she wanted to give the travel office business itself to loyalists. There was a travel company based in Arkansas with long ties to the Clintons. There was a charter travel company founded by Harry Thomason, a longtime friend and fundraiser, which had provided services in the 1992 campaign.

Unsurprisingly, Mrs. Clinton lied about her efforts to turn the travel office into a goodie for a crony.

All along Mrs. Clinton publicly insisted she had no knowledge of the firings. Then it became barely any knowledge, then barely any involvement. When the story blew up she said under oath that she had “no role in the decision to terminate the employees.” She did not “direct that any action be taken by anyone.” In a deposition she denied having had a role in the firings, and said she was unable to remember conversations with various staffers with any specificity. A General Accounting Office report found she did play a role. But three years later a memo written by David Watkins to the White House chief of staff, recounting the history of the firings, suddenly surfaced. (“Suddenly surfaced” is a phrase one reads a lot in Clinton scandal stories.) It showed Mrs. Clinton herself directed them.

By the way, the most disgusting part of this scandal is the way Hillary sicced the government on Mr. Dale.

The White House pressed the FBI to investigate, FBI agents balked—on what evidence?—but ultimately there was an investigation, and an audit. …Billy Dale was indicted on charges including embezzlement. The trial lasted almost two weeks. …The jury acquitted him in less than two hours.

In other words, expect to see more Lois Lerner-type scandals if Hillary reaches the White House. There should be little doubt that she will use the power of government to attack her political opponents.

Now let’s go back even further in time, to the late 1970s when Hillary Clinton somehow managed to turn a $1,000 “investment” into $100,000 is less than one year. The New York Times reported on this rather implausible story back in 1994.

…in 1978 Hillary Rodham Clinton invested $1,000 in commodities futures and that the investment grew in 10 months of trading in the notoriously volatile market into a gain of nearly $100,000. Seeking to dispel suggestions that the trades were risk-free and improperly arranged by an Arkansas lawyer who represents one of the state’s most powerful companies, the White House issued a statement this afternoon that said the First Lady had put up her own money and that she bore all of the financial risks in a marketplace where three out of four investors lose money. The officials also released a year’s worth of brokerage statements from one of Mrs. Clinton’s two accounts. …Mrs. Clinton based her trades on information in The Wall Street Journal.

In other words, we’re supposed to believe that Mrs. Clinton, a complete novice, with no experience in the private sector or the investment business, suddenly decided to sink money into a very complex type of speculation.

And we’re supposed to believe that she made a series of very clever market-timing decisions and turned small amount of money into a big pile of money.

Needless to say, even the reporter for the New York Times couldn’t help but express skepticism and doubt. Particularly since nobody was willing to back up Mrs. Clinton’s story.

The White House insisted today that Mrs. Clinton received no improper financial assistance on the trades from the lawyer, James B. Blair, a close friend who at the time was the top lawyer for Tyson Foods of Springdale, Ark., the nation’s biggest poultry company. Mr. Blair has said that he had suggested that she get into the commodities market, and that he used his knowledge of trading to guide her along the way. During Mr. Clinton’s tenure as Governor, Tyson benefited from several state decisions, including favorable environmental rulings, $9 million in state loans, and the placement of company executives on important state boards. …brokers in the Springdale office of Refco where Mrs. Clinton executed the trades, including the one she describes as her personal broker, said in interviews in recent weeks that they have no recollection of ever talking with her about the trades. Mrs. Clinton and Mr. Blair have said that they used Robert L. (Red) Bone, the broker who founded the Springdale office of Refco, a Chicago commodities firm, to execute the trades. But Mr. Bone, who worked at Tyson for 13 years until 1973, insisted in several interviews this month that he has no recollection of ever trading for Mrs. Clinton or talking to her about commodities trades.

Here’s the bottom line. Back when this scandal surfaced in the 1990s, I talked to several people in the financial markets, every one of whom was 99.99 percent certain that Hillary was the beneficiary of a gift (if they were favorable to her) or a bribe (if they were unfavorable to her). And they all agreed that somebody on the inside arranged to give her, after the fact, the winning side of trades in order to make it look like she was simply a good investor.

Moreover, every single Democrat that I talked to admitted (but only off the record) that she was the recipient of a gift or a bribe.

And she hasn’t changed in the past 38 years. Government is a vehicle for personal advancement and personal enrichment.

Now let’s conclude by bring public policy into the discussion. Corrupt politicians are able to amass lots of power and money because government is big and powerful.

And I’m not making a partisan argument. Indeed, here are the same bullet points I used when pointing out the empty futility of Trump’s plan to “drain the swamp” and end DC corruption.

• Insiders with connections can get a slice of a mammoth $4 trillion budget.
• Insiders with connections can get special favors in a convoluted 75,000-page tax code.
• Insiders with connections can use the massive regulatory state to tilt the playing field.
• Insiders with connections can use protectionism to thwart competitors.

All I’m saying is that Hillary Clinton both supports big government and profits from big government. And as the public sector gets larger, don’t be surprised when you find out that Hillary and her cronies have figured out additional ways of feathering their own nests.

P.S. By the way, I do recognize that there’s an infinitesimally small possibility that Hillary’s story about cattle futures is accurate.

I also recognize, for what it’s worth, that there’s a greater-than-zero possibility that aliens will invade the earth tomorrow.

But neither of these hypotheses is remotely plausible (though if I had to pick, I’d go with the alien invasion for the simple reason that it would bring great joy to Paul Krugman).

P.P.S. Plenty of Republicans will get rich as well as Hillary expands government. If you don’t believe me, just consider how many of them collect campaign cash in exchange for votes in favor of ethanol and the Export-Import Bank.

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Hillary Clinton Wants to Lose a Fight with the Laffer Curve

Based on what she’s been saying during the campaign, Hillary Clinton is a big fan of class warfare. She has put forth a series of “soak-the-rich” tax hikes designed to finance bigger government.

Her official plan includes provisions such as an increase (“surcharge”) in the top tax rate, the imposition of the so-called Buffett Rule, an increase in the tax burden on capital gains (including carried interest), and a more onerous death tax.

The Tax Foundation explains that this plan won’t be good for the economy or the budget.

Hillary Clinton’s tax plan would reduce the economy’s size by 1 percent in the long run. The plan would lead to 0.8 percent lower wages, a 2.8 percent smaller capital stock, and 311,000 fewer full-time equivalent jobs. …If we account for the economic impact of the plan, it would end up raising $191 billion over the next decade.

Here’s a table showing the static revenue impact for the various provisions, followed by the estimated economic impact, which then allows the Tax Foundation to calculate the real-world, dynamic revenue impact.

So what does all this mean?

Well, the Congressional Budget Office estimates that tax revenue over the next 10 years will be $41,658 billion based on current law. Hillary’s plan will add $191 billion to that total, an increase of 0.46 percent.

Which means that she’s willing to lower our incomes by 0.80 percent to increase the government’s take by 0.46 percent. A good deal for her and her cronies, but bad for America.

But it gets worse. Hillary’s official tax plan doesn’t include her biggest proposed tax hike. As I’ve warned before, and as Andrew Biggs of the American Enterprise explains in a new article, she has explicitly stated her support for huge tax hikes to bail out Social Security.

…she has endorsed both of the main tax increases included in Sanders’ Social Security plan: imposing the Social Security tax on earnings above the current $118,500 cap and applying Social Security taxes to investment income in addition to wages.

Andrew warns that busting the wage-base cap may boost payroll tax receipts, but such a policy will lead to lower revenues from other sources.

Eliminating the payroll tax ceiling would require workers and employers to each pay an additional 6.2% tax on all earnings above the ceiling, currently $118,500. Both the SSA actuaries and the Congressional Budget Office assume that when employers are hit with an additional payroll tax they will over time reduce employees’ wages to cover the increased cost, consistent with economists’ view that employees ultimately “pay” for employer-provided benefits through lower wages. Those lost wages would then no longer be subject to federal income taxes, Medicare payroll taxes or state government income taxes. If the average marginal tax rate on earnings above the current payroll tax ceiling is 48% – say, the top earned income tax rate of 39.6%, plus the 3.8% top Medicare payroll tax rate, plus a roughly 5% state income tax – then federal and state tax revenues would fall by 26 cents for each additional dollar of Social Security taxes collected.

And this estimate is based solely on the reduction in taxable income that occurs as businesses give their employees less take-home buy because of the higher payroll tax.

To be accurate, you also have to consider how workers will react (and rest assured that upper-income taxpayers have plenty of ability to alter the timing, level, and composition of their income). Andrew looks at the potential impact.

…revenue losses occur even if individual earners themselves make no adjustments to their earnings in response to higher tax rates. They’re purely a function of employers adjusting wages to compensate for their payroll tax bills. But if affected earners react to higher tax rates by reducing their earnings, either though less work or by tax avoidance strategies, then net revenue losses would be even higher. A 2010 literature survey by economists Emmanuel Saez, Joel Slemrod, and Seth Giertz found that high earners reduce their earnings by between 0.12% and 0.40% for each 1% increase in their taxes. These estimates imply that total revenues gained by eliminating the Social Security tax max would fall one-third to one-half below the static assumptions that Social Security reforms rely upon. Other credible academic studies find even higher sensitivities of taxable income to tax rates.

For more information, here’s a video I narrated on the issue for the Center for Freedom and Prosperity.

Let’s close on a grim note. If Hillary Clinton goes forward with her plan to bust the wage base cap and change Social Security from an actuarially bankrupt social insurance program into a conventional tax-and-spend redistribution program, she won’t collect very much tax revenue because of the way workers and employers will react.

But from Hillary’s perspective, she won’t care. Under the budget rules governing Washington, she’ll still be able to increase spending (i.e., buy votes) based on how much revenue the Joint Committee on Taxation inaccurately predicts will materialize based on primitive “static scoring” estimates.

In other words, the Laffer Curve will prevail, but – other than the ability to say “I told you so” – proponents of good policy won’t have any reason to be happy.

And when, in the real world, the long-run fiscal and economic outlook weakens because of her misguided policies, Mrs. Clinton will just propose additional tax hikes to deal with the “unexpected” shortfalls. Lather, rinse, repeat, until we become Greece.

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Crying (but also Laughing) about Clinton and Trump

One interesting feature of this election is that many voters, grappling with the unpalatable choice of Hillary Clinton and Donald Trump, are dealing with the feelings of dismay and despair that libertarians experience almost every election.

All I can say is, “welcome to my world.”

Though I admit our experiences aren’t the same. Ordinary voters presumably are agitated by Hillary’s corruption and Donald’s buffoonery.

As a free-market policy wonk, by contrast, I’m more concerned that both Clinton and Trump are statists. Heck, I’d tolerate some unseemly behavior and sleaze if a politician actually reduced the burden of government (hence, my bizarre ex post facto fondness for Bill Clinton’s presidency).

But since Hillary isn’t Bill and Trump isn’t Reagan, the dark cloud that we’re facing doesn’t have any silver lining.

Unless, of course, you’re a fan of political humor. In which case the 2016 election is Nirvana.

And since I’m a fan (even when libertarians are the intended target), I’m greatly enjoying each and every time that Clinton and Trump are mocked.

And the best of all worlds is when there’s some humor that nails both of them at the same time. So it’s easy to see why I like this bit of satire that combines the controversy over Trump’s undisclosed tax returns and the controversy over Clinton’s illegal (and vulnerable) email server.

Here’s another example of this genre.

Here’s an amusing image showing what might happen if Trump was capable of time travel.

And this anti-Hillary image obviously is satire, though I think it makes a very sensible point about the dangers of interventionism.

Indeed, to be momentarily serious, the moral of the story is that Hillary’s recklessness is likely to create more risk for America, whereas the libertarian approach (illustrated by George Will, Barack Obama (in theory but not practice), and Mark Steyn is based on prudence and a Bastiat-like appreciation for unintended consequences.

Let’s get back to the funny stuff.

Did your parents ever say “America is great because anyone can grow up to be President”? Well, as you can see, that’s not such a good idea.

Last but not least, this cartoon captures the outcome of the election, regardless of which major-party candidate prevails.

Though Libertarians say you can escape this dilemma by choosing with “The Johnson.”

P.S. Since Putin made an appearance in our first item, it reminded me that he featured in a couple of amusing bits of satire (here and here) mocking Obama.

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It’s not Just Campaign Rhetoric, Hillary Clinton Actually Believes Keynesian Economics

Since it’s very likely that Hillary Clinton will be our next President, I’m mentally preparing myself for upcoming fights over her agenda of bigger government and class warfare. But the silver lining to this dark cloud is that I don’t think I’ll be distracted by also having to fight against protectionist policies.

My tiny bit of optimism is based on the fact that hackers at Wikileaks got access to the secret speeches she gave to Wall Street and other corporate bigwigs and we learned that, when she can speak freely with no cameras and outside observers, she believes in “open trade.”

In other words, I was right when I said on TV that she was lying about being in favor of protectionism.

Since I don’t think bureaucrats and politicians should have the power to interfere with our buying decisions, I’m glad Hillary is a secret supporter of free trade.

That’s the good news.

The bad news is that she also is a genuine and sincere supporter of the perpetual motion machine of Keynesian economics (i.e., the theory that more government spending is a form of “stimulus” notwithstanding all the evidence of failure from the spending binges of Obama, Hoover and Roosevelt, and Japan).

Here’s what the Daily Caller is reporting about one of her secret speeches to a corporate audience.

Hillary Clinton argued that expanding food stamps and other safety net programs is essential to fuel economic growth at a speech to General Electric executives, according to an excerpt of the transcript made public by WikiLeaks Friday. “Economic growth will take off when people in the middle feel more secure again and start spending again,” Clinton said in her speech at General Electric’s Global Leadership Meeting in January, 2014. …Giving people income assistance, like the food stamps program, would help the economy because families on food stamps will have more money to spend, Clinton argued.

Wow, this is depressing. If this was an off-the-record speech to the Democratic National Committee, a George Soros group, or some other left-leaning outfit, I’d be tempted to dismiss her remarks as rhetoric.

But GE executives presumably aren’t big fans of income redistribution (other than to themselves, of course). So Hillary’s comments were not a form of pandering. She presumably really believes that Keynesian economics is some sort of elixir, that you actually can boost economic performance by taking money out of the economy’s right pocket and putting it in the economy’s left pocket.

Not only is this wrong, it’s backwards.

• When the crowd in Washington spends money, much of it is lost to bureaucracy and waste. This may not matter to Keynesians since they just want there to be spending (no joke, Keynes actually did write that  it would be good policy to bury money in the ground so that people would get paid to dig it out). Sensible people, by contrast, understand that it matters for the economy whether money is spent wisely.
• Moreover, redistribution spending tends to be especially harmful since it subsidizes people for not working or for having low levels of income, which is why research has shown that policies such as Obamacare, jobless benefits, and food stamps are associated with lower levels of employment. In other words, redistribution is bad for economic performance.

The bottom line is that we shouldn’t expect any sort of economic renaissance if Hillary is our next president. Just another four years of the kind of anemic performance we’ve experienced under Obama.

P.S. Click here to learn more about the failure of Keynesian economics.

P.S. If you want both substance and entertainment, here’s the famous video showing the Keynes v. Hayek rap contest, followed by the equally entertaining sequel, which features a boxing match between Keynes and Hayek. And even though it’s not the right time of year, here’s the satirical commercial for Keynesian Christmas carols.

 

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Hillary Clinton’s Destructive (and Grossly Hypocritical) Plan to Increase the Death Tax

As part of her collection of class-warfare tax proposals, Hillary Clinton wants a big increase in the death tax.

This is very bad tax policy. In a good system, there shouldn’t be any double taxation of income that is saved and invested, especially since that approach means a smaller capital stock (i.e., less machinery, technology, equipment, tools, etc). And every single economic school of thought – even Marxism and socialism – agrees that this means lower productivity for workers and therefore lower wages.

In a must-read column for the Wall Street Journal, Steven Entin of the Tax Foundation elaborates on why the death tax is pointlessly destructive. He starts by explaining that the tax is unfair.

…estate taxes are always double taxation. Estates are built with savings that have already been taxed as income, or soon will be. …The superrich can afford to give away assets during their lives or hire estate planners to help minimize the tax. …The main victims of the death tax are middle-income savers and small-business owners who die before transferring ownership to their children.

And because the tax reduces investment and wages, the revenue gained from imposing the tax is largely offset by lower income tax and payroll tax receipts.

The estate tax…produces so little revenue, only $19 billion last year. But because the tax has recoil effects, even this revenue is illusory. Because the tax reduces the stock of capital, it lowers the productivity of labor and reduces wages and employment. Much of the burden of the tax is shifted to working people. Research suggests that the estate tax depresses wages and employment enough to actually lower total federal revenue over time.

He then reports on some of the Tax Foundation’s analysis of the good things that happen if the tax is repealed.

…to eliminate the estate tax…would raise GDP by 0.7% over 10 years and create 142,000 full-time equivalent jobs. After-tax incomes for the bottom four-fifths of Americans would rise by 0.6% to 0.7%, mainly due to wage growth. …Revenue losses in the first six years would be almost entirely offset by gains later in the decade, with more gains thereafter. Both the public and the government would be net winners.

But he also warns of the bad things that will happen if Hillary’s class-warfare scheme is enacted.

Mrs. Clinton plans to lower the exempt amount to $3.5 million for estates and $1 million for gifts. She would raise the top rate to 45% for assets over $3.5 million, with further increases up to 65% for individual estates above $500 million. …Mrs. Clinton’s plan would lower GDP by 1% over 10 years and cost 194,000 full-time equivalent jobs. After-tax incomes for the bottom four-fifths of Americans would fall by 0.9% to 1%, due to slower wage growth. …the public and the government would be net losers.

So what’s the bottom line?

The revenue numbers cited here also do not take into account increased efforts to avoid the tax. If these imaginative and highly productive people plan ahead to direct their assets to causes they deem worthy, rather than cede their wealth by default to the government, Washington will not see a dime from an estate-tax increase. …Mrs. Clinton’s plan would not so much redistribute wealth as destroy it. Everyone would lose except estate lawyers and life insurers.

Over the years, I’ve shared other research on the death tax, including a recent column on Hillary’s grave-robber plan, as well as my own modest efforts to impact the overall debate in print and on TV.

But my favorite bit of research on the death tax comes from Australia, where repeal of the tax created a natural experiment and scholars found that death rates were affected as successful people lived longer so they could protect family money from the tax collector.

Now there’s research from another natural experiment.

An economist from the University of Chicago produced a study examining a policy change in Greece to determine what happens when taxes are reduced on the transfer of assets. Here’s a bit about her methodology.

I exploit a 2002 tax reform in Greece that reduced succession tax rates for transfers of limited liability companies to family members from 20% to less than 2.4%. …In the quasi-experimental setting made possible by the tax policy change, I employ two different methodologies to measure the effect of this policy change on investment. …by comparing the two groups before and after the tax reform, the analysis disentangles the effect of the identity of the new owner (family or unrelated) from the effect of the succession tax.

And here are her results. As you can see, there’s a notable negative impact on investment.

…estimates reveal a negative effect of transfer taxes on post-succession investment for firms that are transferred within the family. In the presence of higher succession taxes, investment drops from 17.6% of property, plant, and equipment (PPE) the three years before succession to 9.7% of PPE the two years after. This impact of succession taxes on investment is economically large: the implied fall in the investment ratio (0.079) is approximately 40% of the pre-transition level of investment. For those firms, successions are also associated with a depletion of cash reserves, a decline in profitability, and slow sales growth. Note that to the extent that entrepreneurs can plan ahead for the succession and the related tax liability, the estimates I report in the paper provide an underestimate of the true effect of succession taxes.

Even academics who seem to support the death tax for ideological reasons admit that it undermines economic performance, as seen in this study published by the National Bureau of Economic Research.

…aggregate capital and income go up as the estate tax is lowered. When the labor income tax is used to balance the government budget constraints, for given prices, reducing estate taxation does not reduce the rate of return to savings for anyone in the population and still increases the return to leaving a bequest… As a result, aggregate capital goes up a bit more…and so does aggregate output.

By the way, the economists who produced this study constrained their analysis by assuming other taxes would have to be increased to compensate for any reduction in the death tax. To my knowledge, there’s not a single lawmaker who wants to raise other taxes while reducing or eliminating the tax. As such, the results in the above study almost certainly understate the economic benefits of reform.

If you don’t like reading academic studies and dealing with equations and jargon, here’s what you really need to know.

• Rich people aren’t idiots, or at least the tax advisors they have aren’t idiots.
• Those upper-income taxpayers have tremendous ability to manage their finance.
• Rich people (and their smart advisors) figure out how to protect themselves from tax.
• The death tax is a voluntary tax it can be avoided by people with substantial assets.
• But the various means of avoidance all tend to result in a less dynamic economy.

In other words, when politicians shoot at rich taxpayers, the rich taxpayers manage to dodge much of the incoming fire, but ordinary people like you and me suffer collateral damage.

Let’s close by shifting from economics to morality.

The death tax is odious in part because it is a pure (in a bad sense) form of double taxation, but it also is bad because the government shouldn’t be imposing double taxation simply because someone dies.

Actually, let’s add one more wrinkle to the discussion. If it’s immoral to impose tax simply because of a death, then it’s doubly immoral to impose such taxes while simultaneously (and hypocritically) taking steps to dodge the tax.

Which is a good description of Hillary’s behavior, as reported by the Washington Examiner.

Bill and Hillary, like most millionaires whose wealth is mostly in housing and liquid assets, have engaged in sophisticated estate planning to avoid the death tax. …the Clintons placed their Chappaqua home — the one that housed the secret servers Hillary used to evade transparency laws — into two separate trusts. For complex reasons, this protects Chelsea from having to pay the estate tax when she inherits the house. …The Clintons also hold five life insurance policies, worth somewhere around $2 million. This is “designed to transfer assets outside of the estate,” one estate planner told Time. Life insurance payouts are generally exempt from death taxes.

Oh, and you probably won’t be surprised to learn that Hillary has close ties to the special interest cronyists who profit from the death tax.

The death tax brings in a paltry sum for Uncle Sam, but it provides a windfall for a couple of tiny segments of the economy: estate planners, and well-funded investors who buy out the family businesses threatened by the death tax. Jeff Ricchetti is a longtime Clinton confidant, a revolving-door corporate lobbyist on K Street, and a donor to all of Hillary Clinton’s campaigns. …Jeff has spent two decades lobbying to preserve and expand the death tax. In 1999, When Jeff cashed out of the Clinton administration, he joined the Podesta Group, co-founded by Clinton’s current campaign manager John Podesta. One client there: the American Council of Life Insurers, where Ricchetti lobbied in favor of taxing inheritances. …Life insurers, such as the members of ACLI and AALU, sell estate-planning products that could become worthless — or at least worth less — if parents were simply able to hand the fruits of their life’s work to their children. That’s why in April, TheTrustAdvisor.com ran a piece headlined “Estate Tax Repeal: Has Hillary Become the Estate Planner’s Best Friend?”

I’m shocked, shocked.

By the way, one of the main practitioners of cronyism is Hillary’s political ally, Warren Buffett.

Buffett advocates the death tax because it has been so very good to him over the years. To fully understand the depth of Buffett’s cynicism and self-interest, let’s take a look at how one might avoid paying the death tax. If you’re a wealthy person and want to steer clear of this tax, you have three options: Set up complicated trust arrangements, which mostly serve to enrich lawyers and merely delay and shift a tax that must eventually be paid; arrange for your estate to make tax-deductible contributions to charitable organizations; or plow your wealth into life insurance before you die. By law, when your heirs are paid the life-insurance disbursement, it’s tax-free. It doesn’t take a genius to see how certain industries could make a tidy profit off these death-tax escape hatches. In fact, some of the most ardent opponents of permanent death-tax repeal are (surprise, surprise) estate lawyers (who set up the trusts), charities (who fear their spigots of money turning off), and the life-insurance lobby (which does all it can to preserve its tax loopholes). Buffett has major investments in companies that sell life insurance. The death tax has helped make him rich while it has made other families poor. What’s sad and ironic is that it takes families with the resources of the Buffetts (and the Hiltons and the Kardashians) to set up the trusts and life-insurance schemes that are necessary to avoid paying the death tax.

Once again, I’m shocked, shocked.

P.S. Our death tax is even more punitive that the ones imposed by left-wing hell-holes such as Greece and Venezuela.

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Assessing the Trump Meltdown and Predicting the 2016 President Election (not that It Matters for those Who Fight for Liberty)

I’m a policy wonk rather than a political partisan or political prognosticator, so I generally don’t comment on elections. But since I’ve received several emails asking my opinion of the Trump debacle and this is the topic dominating the headlines, I will offer my two cents on the mess.

My first observation is that there are nearly 325 million people in the United States, so it’s rather amazing that neither Republicans nor Democrats could find candidates more appealing than Donald Trump and Hillary Clinton. It’s almost as if Democrats had a secret meeting and decided, “Hey, let’s deliberately lose this election by nominating a corrupt, statist hack.” Which led Republicans to convene their own secret meeting, where they decided, “Two can play at this game. Let’s nominate an empty-suit populist who is famous for being a reality TV huckster.”

And if that is what happened, both the polls and the betting markets indicate that the GOP is more competent at losing (since they are adept at throwing away simple-to-win policy fights, it stands to reason that they’d also be good at fumbling away sure-thing political victories).

But have they thrown away victory in the presidential race? Let’s look at the analysis of Scott Adams, the Dilbert creator who has now become famous as a quasi-pundit because he predicted Trump would get the GOP nomination when the rest of us thought it would never happen.

Here are his 14-points, each followed by my assessment.

1. If this were anyone else, the election would be over. But keep in mind that Trump doesn’t need to outrun the bear. He only needs to outrun his camping buddy. There is still plenty of time for him to dismantle Clinton. If you think things are interesting now, just wait. There is lots more entertainment coming.

Yes, it’s probably true that Hillary could still lose. And, yes, things will probably get more interesting. But my guess, for what it’s worth, is that the additional “entertainment” that we’ll experience will not be favorable to Trump. Don’t be surprised if women come forward to say that Trump coerced them into sex, into abortions, into whatever.

2. This was not a Trump leak. No one would invite this sort of problem into a marriage.

I wasn’t aware that anybody was even speculating that Trump or his people would leak a tape with him bragging about grabbing women’s privates.

3. I assume that publication of this recording was okayed by the Clinton campaign. And if not, the public will assume so anyway. That opens the door for Trump to attack in a proportionate way. No more mister-nice-guy. Gloves are off. Nothing is out of bounds. It is fair to assume that Bill and Hillary are about to experience the worst weeks of their lives.

Trump was being a nice guy up to this point?!? More important, what can he dump on Hillary at this stage that will change minds? People already recognize that she’s corrupt and dishonest. But her sleaze is boring and conventional, and voters probably prefer that to an unconventional and erratic Trump.

4. If nothing new happens between now and election day, Clinton wins. The odds of nothing new happening in that timeframe is exactly zero.

I’m tempted to repeat my response to point #1, but let’s hypothesize about what can happen that might derail Hillary. We now have the alleged transcripts of her speeches to Wall Street and the only revelation of any note is that she’s for free trade (as many of us suspected). But since voters already know she lies, I don’t think this matters. Some folks speculate that the Russians or some other foreign power (or a random hacker) will release top secret emails that she illegally transmitted on her insecure private server. But I suspect most voters already know and accept that she put America’s national security at risk. Or what if we learn that she altered government policy in response to bribe money going to the Clinton Foundation? Again, most voters probably already accept this as a given. Maybe I don’t have a sufficiently vivid imagination, but I just can’t think of a (pro-Trump, anti-Hillary) game changer between now and election day.

5. I assume that 75% of male heads of state, including our own past presidents, are total dogs in their private lives. Like it or not, Trump is normal in that world.

I suspect there’s some truth to this. But those various heads of state didn’t brag about their conquests and advertise their infidelities. To be sure, Trump fans do have a point that he is being held to a tougher standard than Bill Clinton or Ted Kennedy, both of whom allegedly engaged in sexual assaults on women. But Trump isn’t running against Bill Clinton or Ted Kennedy.

6. As fictional mob boss Tony Soprano once said in an argument with his wife, “You knew what you were getting when you married me!” Likewise, Trump’s third wife, Melania, knew what she was getting. It would be naive to assume Trump violated their understanding.

No argument with this. But I also don’t think this point has any political relevance.

7. Another rich, famous, tall, handsome married guy once told me that he can literally make-out and get handsy with any woman he wants, whether she is married or not, and she will be happy about it. I doubted his ridiculous claims until I witnessed it three separate times. So don’t assume the women were unwilling. (Has anyone come forward to complain about Trump?)

Let’s accept, for the sake of argument, that some women are turned on by money and power and that they are amenable to advances by someone like Trump. My response is “so what?” What will matter, for purposes of handicapping the election, is whether any women come forward to say that they didn’t welcome the advances. And it won’t even matter if they’re telling the truth.

8. If the LGBTQ community wants to be a bit more inclusive, I don’t see why “polyamorous alpha male serial kisser” can’t be on the list. If you want to label Trump’s sexual behavior “abnormal” you’re on shaky ground.

This seems very weak. The issue isn’t whether Trump is “abnormal.” I don’t think anyone will be shocked if we learn he’s cheated on all of his wives, including the current one. But if it come out that he actually has grabbed an unwilling woman by the you-know-what, that’s something that could impact voting behavior.

9. Most men don’t talk like Trump. Most women don’t either. But based on my experience, I’m guessing a solid 20% of both genders say and do shockingly offensive things in private. Keep in mind that Billy Bush wasn’t shocked by it.

I know plenty of guys (and even a few gals) who talk like Trump. And since I have a juvenile sense of humor (I used to enjoy hearing Trump as a guest on the Howard Stern show), I confess that I’m amused by what’s now being called “locker-room banter.” But I’ll repeat what I just said. People probably won’t change their votes based on Trump’s rhetoric, but some of them will change their votes if they learn his actions matched his bluster.

10. Most male Hollywood actors support Clinton. Those acting skills will come in handy because starting today they have to play the roles of people who do not talk and act exactly like Trump in private.

Probably true, but does any of that matter for the election? No.

11. I’m adding context to the discussion, not condoning it. Trump is on his own to explain his behavior.

Fair enough.

12. Clinton supporters hated Trump before this latest outrage. Trump supporters already assumed he was like this. Independents probably assumed it too. Before you make assumptions about how this changes the election, see if anyone you know changes their vote because of it. All I have seen so far is people laughing about it.

Perhaps true, but Republican strategists are probably terrified that there will be revelations that Trump crossed the line from mere rhetoric to actual misbehavior.

12. I hereby change my endorsement from Trump to Gary Johnson, just to get out of the blast zone. Others will be “parking” their vote with Johnson the same way. The “shy Trump supporter” demographic just tripled.

Republicans (at least the ones who want Trump to win) are praying and hoping that the “Bradley Effect” is real and that there are lots and lots of voters who will secretly vote for Trump even though they’re telling pollsters otherwise. I’m guessing that there are lots of these people. But probably not “lots and lots,” which is probably what Trump would need to prevail.

13. My prediction of a 98% chance of Trump winning stays the same. Clinton just took the fight to Trump’s home field. None of this was a case of clever strategy or persuasion on Trump’s part. But if the new battleground is spousal fidelity, you have to like Trump’s chances.

Even if the new battleground was spousal fidelity, that doesn’t help Trump since he’s running against Hillary rather than Bill. But I think Adams is wrong. The new battleground is potential abuse of power.

To be sure, Hillary has plenty of vulnerabilities in this regard, most notably with the pay-to-play antics at the Clinton Foundation. But the media doesn’t want to cover that example of corruption and I doubt Trump has the discipline to make her sleaze an issue.

By the way, since Trump is at 20 percent in the betting markets, Mr, Adams has a chance to become very rich. I wonder if he’s putting his money where his mouth is.

However, before dismissing his prediction, it’s worth remembering that he was right about Trump getting the GOP nomination when everyone else (including me) didn’t think is would ever happen.

14. Trump wasn’t running for Pope. He never claimed moral authority. His proposition has been that he’s an asshole (essentially), but we need an asshole to fight ISIS, ignore lobbyists, and beat up Congress. Does it change anything to have confirmation that he is exactly what you thought he was?

A very good point. I bet a big part of Trump’s appeal is that people think he would kick butt in Washington (for what it’s worth, he might disrupt Washington, but I very much doubt that he would shrink Washington).

But let’s stick with the political side of things. I repeat what I’ve already written about the difference between saying coarse things and engaging in actual coarse (and unwelcome) behavior. That is Trump’s bigger vulnerability.

Adams concludes by arguing that “reason is not part of decision-making when it comes to politics” and that none of what’s discussed above will impact voters.

I’m dubious about this claim. Besides, what matters for elections is whether some voters are affected, not whether all of them care about a particular issue. And on that basis, I suspect Trump is heading for defeat. And since we’re a month from the election, here’s my prediction of a comfortable victory for Hillary.

The good news is that Trump’s presumed loss is not a defeat for limited government. In part because he doesn’t believe in small government, but also because Democrats may rue the day Hillary prevailed because of what that implies for the 2018 midterm election and whether that sets the stage for total GOP control in 2020.

Though keep in mind that I’ve made the same argument in the past. Here’s what I wrote back in 2012.

…keeping Obama for an additional four years would be the best way of laying the groundwork for a Reagan-style victory in 2016 with a presumably small-government advocate like Rand Paul, Marco Rubio, or Paul Ryan at the top of the ticket. …my first political decision was to favor Carter over Ford in 1976 in hopes of paving the way for Reagan in 1980.

So maybe the real issue is whether Republicans would be crazy enough to nominate another Trump in 2020 or whether they might actually find another Reagan-style limited-government conservative.

And if this hypothetical poll is any indication, that would be the route to electoral success.

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The Clump Version of Political Humor

I’m somewhat chagrined that my collection of libertarian-oriented humor contains more jokes created by statists to make fun of libertarians rather than the other way around.

Since everyone should have the ability to laugh at themselves, I certainly don’t mind sharing clever humor mocking libertarians (such as the how-the-world-sees-libertarians collage).

That being said, I would like to augment my collection with more mockery of statists (such as Libertarian Jesus).

Well, the good news (so to speak) is that the Tweedledee and Tweedledum choice that we’ve been given by the two main parties is a target-rich environment for political humor.

Building on what I shared last week, let’s look at some amusing analysis of the Clinton-Trump (Clump) contest.

Some masochistic readers may have watched the first Clump debate and you may even be thinking about subjecting yourself to one of the upcoming debates. If you do, this drinking game may help preserve your sanity.

But if you’re not a heavy drinker (or don’t want to become one within the first 10 minutes of the next debate), perhaps you can modify the game so it resembles the state-of-the-union bingo game I shared back in 2012.

Our next bit of humor is from the folks at Balanced Rebellion, who put together this clever video giving Democrats and Republicans an option to preserve their dignity.

Heck, since they equate their idea to Tinder, maybe they can even turn it into a dating service after the election.

P.S. Some folks have written to ask why I haven’t produced election predictions, like I did back in 2012. I suppose I’ll force myself to do that in the next few weeks, but I can safely say at this point that America will lose regardless of who wins.

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Some Bipartisan Humor to Survive the Clinton-Trump (Clump) Debate

Since I’ve put forth plenty of bipartisan criticism of Hillary Clinton and Donald Trump (a.k.a., Tweedledee and Tweedledum), it’s time to lighten the mood with some bipartisan humor about the two major party candidates.

Glenn McCoy has an amusing (in a sad way) cartoon about Donald Trump’s assertion that he’s in great health.

And here’s a guy who came up with some very clever humor referencing Hillary’s email scandal.

Hopefully these two images will help you survive the Clinton-Trump debate.

P.S. Since I’m not feeling particularly charitable to the political class, let’s close by recycling some biting humor against the crowd in Washington, starting with this clever image.

Reminds me of this Star Wars-themed joke about Washington.

If you like mocking the political class, I have lots of other material for you to enjoy. You can read about how the men and women in DC spend their time screwing us and wasting our money. We also have some examples of what people in Montana, Louisiana, Nevada, and Wyoming think about big-spending politicians.

This little girl has a succinct message for our political masters, here are a couple of good images capturing the relationship between politicians and taxpayers, and here is a somewhat off-color Little Johnny joke. Speaking of risqué humor, here’s a portrayal of a politician and lobbyist interacting.

Returning to G-rated material, you can read about the blind rabbit who finds a politician. And everyone enjoys political satire, as can be found in these excerpts from the always popular Dave Barry.

Let’s not forgot to include this joke by doctors about the crowd in Washington. And last but not least, here’s the motivational motto of the average politician.

P.P.P.S. One serious point. If we want to clean up corruption in Washington, more campaign finance laws won’t work. The only way to reduce corruption is to shrink the size of government.

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Hillary’s Grave-Robber Tax Hike

What’s the worst possible tax hike, the one that would do the most economic damage?

Raising income tax rates is never a good idea, and there’s powerful evidence from the 1980s about how upper-income taxpayers have considerable ability to change their behavior in response to changes in incentives.

But if you want to know the tax hikes that do the most damage, on a per-dollar raised basis, it’s probably best to focus on levies that boost double taxation of saving and investment.

The Tax Foundation ran some estimates on five different tax increases, for instance, and found that worsening depreciation rules (an arcane part of the tax code dealing with the degree to which new investment is taxed) would do the most damage, followed by a higher corporate tax rate, and then higher individual income tax rates.

But I wonder what they would have found if they also modeled the impact of a higher death tax. That levy is particularly destructive because it directly requires the liquidation of capital. The assets of investors, entrepreneurs, farmers, small business owners, and other victims take a big hit as politicians grab as much as 40 percent of what they’ve worked for during their lives.

This is bad for the economy because it directly reduces the capital stock. Sort of like harvesting apples by cutting down 40 percent of the trees in an orchard. The net result is that the economy’s ability to generate future income is undermined.

But it’s also bad for the economy because it reduces incentives for successful taxpayers to both earn and invest while they’re alive. Why bust your rear end when the government immediately will take at least 39.6 percent (actually more when you consider Medicare taxes, state taxes, and double taxation of interest, dividends, and capital gains) of your income, and then another 40 percent of what you’ve saved and invested when you kick the bucket?

Unfortunately, Hillary Clinton doesn’t seem to care about such matters. She actually just decided to double down on her destructive tax agenda by endorsing an even bigger increase in the death tax.

I’m not joking.

The editorial page of the Wall Street Journal is not exactly impressed by Hillary’s class-warfare poison.

On Thursday she decided that her proposal to raise the death tax to 45% from 40% isn’t enough and endorsed even higher levies that would apply to thousands of estates. Though she defeated Bernie Sanders in the primary, she is adopting the socialist’s death-tax rate structure. She’d tax all estates over $10 million at 50%, apply a 55% rate on estates over $50 million, and go to 65% on assets above $500 million. The 65% rate would be the highest since 1981 and is another example of how she is repudiating the more moderate policies of her husband and the Democrats of the 1990s. …the Sanders plan that Mrs. Clinton is copying did not index exemption levels for inflation. …Mrs. Clinton would also end the “step-up in basis” on stock valuations for many filers, triggering big capital gains taxes for a much broader population.

Wow, this is class warfare on steroids. And the part about this being more like Bernie Sanders than Bill Clinton hits the mark. Economic freedom actually increased in America between 1992 and 2000.

Hillary, by contrast, is a doctrinaire and reflexive statist. I’m not aware of a single position she’s taken that would reduce the burden of government.

By the way, here’s a bit of information that won’t shock anyone familiar with the greed and hypocrisy of the political class.

Hillary and her friends will largely dodge the tax, which mostly will fall on small business owners who lack the ability to create clever structures.

…most of her rich friends will set up foundations, as she and Bill Clinton have, to shelter most of their riches from the estate tax. …In any case, Mrs. Clinton is now promising total tax hikes of $1.5 trillion over a decade if elected President.

Gee, knock me over with a feather.

The Tax Foundation may not have included the death tax when it compared the harm of different tax hikes, but it has looked at how the death tax hurts the economy by discouraging capital formation and capital accumulation.

…an estate tax increase would cause economic production to be allocated away from business equipment, reducing the quantity of business equipment in the economy. …Many of the assets that fall under the estate tax, such as residential structures, commercial structures, and business equipment, enhance productivity, or gross domestic product (GDP) per hour worked. …The relationship between these assets and productivity is the focus of one of the most common models in economics, an equation called the Cobb-Douglas production function, which describes how workers and capital goods together produce economic output. Under this model, more capital increases output or income, even as the number of workers is held constant. It therefore increases GDP per hour worked, making people richer. Under such a model, reallocating economic production away from the capital goods that enhance output would reduce GDP in the long run. This is an effect that one might expect to see in a macroeconomic analysis of the estate tax.

Amen. If you want more output and higher living standards, you need to boost worker pay by increasing the quality and quantity of capital in the economy.

But politicians like Hillary

Here are the estimates of what happens to the economy with a 65 percent death tax.

So what would happen if lawmakers instead did the right thing and abolished this wretched example of double taxation?

The Tax Foundation has crunched the numbers. Here’s the impact on the overall economy.

And here’s what happens to federal revenue over the same period.

By the way, the Wall Street Journal editorial cited above did contain a bit of good news.

Congress is starting to push back against President Obama’s stealth death tax increase. Rep. Warren Davidson (R., Ohio) read our recent editorial about Treasury plans to raise taxes on minority stakes in family businesses by artificially inflating their value, and he’s drafted a bill to stop Treasury’s tax grab as a violation of the separation of powers. …A former owner of several businesses, Mr. Davidson says the U.S. economy needs owners focused on “growing assets, not structuring them for life events.” He explains that many farms in particular may carry high values but hold little cash, and so the death tax triggers land sales to pay the IRS. “The whole concept of a death tax is immoral,” Mr. Davidson says, and he’s right. The tax confiscates assets that have already been taxed once or more when first earned, and it punishes a lifetime of investment and thrift.

I wrote about this issue the other day, so I’m glad to see that there’s pushback against this Obama Administration scheme to unilaterally boost the burden of the death tax.

P.S. Politicians are not the only beneficiaries of the death tax.

 

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Hillary Clinton’s Plan to Create More Poverty and Dependency

Because of my disdain for the two statists that were nominated by the Republicans and Democrats, I’m trying to ignore the election. But every so often, something gets said or written that cries out for analysis.

Today is one of those days. Hillary Clinton has an editorial in the New York Times entitled “My Plan for Helping America’s Poor” and it is so filled with errors and mistakes that it requires a full fisking (i.e., a “point-by-point debunking of lies and/or idiocies”).

We’ll start with her very first sentence.

The true measure of any society is how we take care of our children.

I realize she (or the staffers who actually wrote the column) were probably trying to launch the piece with a fuzzy, feel-good line, but let’s think about what’s implied by “how we take care of our children.” It echoes one of the messages in her vapid 1996 book, It Takes a Village, in that it implies that child rearing somehow is a collective responsibility.

Hardly. This is one of those areas where social conservatives and libertarians are fully in sync. Children are raised by parents, as part of families.

To be fair, Hillary’s column then immediately refers to poor children who go to bed hungry, so presumably she is referring to the thorny challenge of how best to respond when parents (or, in these cases, there’s almost always just a mother involved) don’t do a good job of providing for kids.

…no child should ever have to grow up in poverty.

A laudable sentiment, for sure, but it’s important at this point to ask what is meant by “poverty.” If we’re talking about wretched material deprivation, what’s known as “absolute poverty,” then we have good news. Virtually nobody in the United States is in that tragic category (indeed, one of great success stories in recent decades is that fewer and fewer people around the world endure this status).

But if we’re talking about the left’s new definition of poverty (promoted by the statists at the OECD), which is measured relative to a nation’s median level of income, then you can have “poverty” even if nobody is poor.

For the sake of argument, though, let’s assume we’re using the conventional definition of poverty. Let’s look at how Mrs. Clinton intends to address this issue.

She starts by sharing some good news.

…we’re making progress, thanks to the hard work of the American people and President Obama. The global poverty rate has been cut in half in recent decades.

So far, so good. This is a cheerful development, though it has nothing to do with the American people or President Obama. Global poverty has fallen because nations such as China and India have abandoned collectivist autarky and joined the global economy.

And what about poverty in the United States?

In the United States, a new report from the Census Bureau found that there were 3.5 million fewer people living in poverty in 2015 than just a year before. Median incomes rose by 5.2 percent, the fastest growth on record. Households at all income levels saw gains, with the largest going to those struggling the most.

This is accurate, but a grossly selective use of statistics.

If Obama gets credit for the good numbers of 2015, then shouldn’t he be blamed for the bad numbers between 2009-2014? Shouldn’t it matter that there are still more people in poverty in 2015 than there were in 2008? And is it really good news that it’s taken Obama so long to finally get median income above the 2008 level, particularly when you see how fast income grew during the Reagan boom?

We then get a sentence in Hillary’s column that actually debunks her message.

Nearly 40 percent of Americans between the ages of 25 and 60 will experience a year in poverty at some point.

I don’t know if her specific numbers are accurate, but it is true that that there is a lot of mobility in the United States and that poverty doesn’t have to be a way of life.

Hillary then embraces economic growth as the best way of fighting poverty, which is clearly a true statement based on hundreds of years of evidence and experience.

…one of my top priorities will be increasing economic growth.

But then she goes off the rails by asserting that you get growth by spending (oops, I mean “investing”) lots of other people’s money.

I will…make a historic investment in good-paying jobs — jobs in infrastructure and manufacturing, technology and innovation, small businesses and clean energy.

Great, more Solyndras and cronyism.

And fewer jobs for low-skilled workers, if she gets here way, along with less opportunity for women (even according to the New York Times).

And we need to…rais[e] the minimum wage and finally guarantee… equal pay for women.

The comment about equal pay sounds noble, though I strongly suspect it is based on dodgy data and that she really favors the very dangerous idea of “comparable worth” legislation, which would lead to bureaucrats deciding the value of jobs.

Then Hillary embraces a big expansion of the worst government department.

…we also need a national commitment to create more affordable housing.

And she echoes Donald Trump’s idea of more subsidies and intervention in family life.

We need to expand access to high-quality child care and guarantee paid leave.

And, last but not least, she wants to throw good money after bad into the failed Head Start program.

…we will work to double investments in Early Head Start and make preschool available to every 4-year-old.

Wow, what a list. Now perhaps you’ll understand why I felt the need to provide a translation of her big economic speech last month.

The moral of the story, based on loads of evidence, is that making America more like Europe is not a way to help reduce poverty.

P.S. The only other time I’ve felt the need to fisk an entire article occurred in 2012 when I responded to a direct attack to my defense of low-tax jurisdictions.

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Clinton and Trump (Clump?) vs. Taxpayers and Free Enterprise

When Donald Trump and Hillary Clinton agree on things, it’s always bad news for taxpayers.

• They both want to boost the capital gains tax rate on private equity investment.
• They both want to let the entitlement problem fester and worsen.
• They both want more federally financed pork-barrel spending on infrastructure.

Now they both agree that it’s somehow the federal government’s job to subsidize child care, though they’ve each concocted different ways of implementing this new form of redistribution.

The Wall Street Journal opines on this fiscally incontinent bidding war.

…both candidates [are] offering multiple subsidies for raising kids. This will end up raising prices and it won’t address the real reason parents feel squeezed: a decade of slow or no economic growth. Donald Trump on Tuesday proposed a tax deduction that would let families write off the average cost of child care for up to four children, among other ideas. Hillary Clinton has already promised to limit care expenses to 10% of income; raises for caretakers; universal pre-K; an increase in the $1,000 per child tax credit; a new program for student parents, and more.

Looking at the details, Trumps plan would exacerbate the EITC problem.

Here’s the dirty detail: Mr. Trump proposed an up to $1,200 child-care tax rebate for low-income families that would be delivered by expanding the earned-income tax credit. But the credit would inevitably phase out as income increases and disappears at $31,200. The result would be a higher inframarginal tax cliff—when people are discouraged from earning more income because they lose more in benefits than they can gain in wages. This disincentive to advancement is already steep.

He’s also proposing a new subsidy for savings accounts.

Mr. Trump also proposes savings accounts for child care to add to the tax-free destinations for retirement, health care, college and more. This new benefit, worth up to $2,000 a year, would make tax reform more difficult. The government would also match parental contributions at 50% up to $1,000 a year for low-income families. That’s a wonky way of unveiling a new $500 transfer payment.

And Trump even wants to engage in a no-win bidding war with Hillary Clinton to create a new European-style entitlement for paid maternity leave (even though, as a columnist for the New York Times even admitted, this type of scheme will backfire against women by making them less attractive to employers).

Then there’s six weeks of paid maternity leave that Mr. Trump says he would guarantee through unemployment insurance. He claims he’ll pay for this by cleaning out fraudulent payments, though this is his funding mechanism for every proposal. Mr. Trump will nonetheless lose the family bidding war with Mrs. Clinton, who wants 12 weeks of paid leave for new mothers and fathers.

The Clinton plan, meanwhile, is a predictably statist prescription for more intervention and subsidies.

And the WSJ‘s editorial correctly points out that is a recipe for ever-higher costs.

Mrs. Clinton raises the Trump offer in every regard, from more Head Start funding to salary support for day-care workers. And if you think care is expensive now, wait until Mrs. Clinton wades in. She likes to say that child care can be more expensive than college tuition, which is false. The irony is that her day-care blowout would recreate what has made college notoriously expensive—large subsidies for the provider and buyer. Day-care centers and pre-Ks could raise prices, confident that government will cover the increase.

The fact that Hillary Clinton wants bigger government is not the most shocking revelation in the world.

Her voting record as a Senator was almost identical to Bernie Sanders’.

And every single proposal in her big economic speech last month required a larger burden of government.

But it’s rather odd to find the Republican nominee being the statist Tweedledee to match the statist Tweedledum.

In an article for Commentary, Noah Rothman looks at Trump’s overall approach to fiscal policy.

Donald Trump…is a self-described Republican who has cast aside the austere facade of fiscal conservatism in favor of any and every spending proposal that crosses his transom. Promising the electorate the world in the campaign with every intention of working out the details after the election is hardly a new phenomenon, but it used to be one that Republicans rejected. Today, under Trump’s corrupting umbra, the GOP has become the party of wild assurances and cascading spending proposals with no intention of ever making good on them.

Actually, I fear the spending promises would be fulfilled if Trump got to the White House. Though I agree that Trump personally doesn’t care if they are either adopted or forgotten.

Here are just a few of the spending promises Trump has made.

Trump promised to augment the Pentagon’s budget by repealing the portions of the Budget Control Act of 2011 (aka, “Sequester”) that imposed limits on defense spending. …Trump has called for “more funding” for the Department of Veterans Affairs to augment job training, research on traumatic stress, brain injury, and suicide prevention, and to hire more service providers at VA hospitals. The Republican nominee promised a massive $500 billion public works program that you dare not call a “stimulus,” which he proudly boasted would spend more than double what Hillary Clinton has pledged to refurbish America’s infrastructure. …He has attacked as cold-hearted the idea that America’s entitlement state must be curtailed and reformed—a massive expenditure that already consumes nearly two-thirds of the nation’s annual outlays.

In other words, Trump is a big-government, Nixon-style Republican.

Which means advocates of limited government are not exactly thrilled about November.

P.S. Other Republican presidential candidates have boosted the burden of government when they took office (President George H.W. Bush and President George W. Bush are two dismal examples of this phenomenon). But they at least pretended to be vaguely in favor of smaller government during their respective campaigns. The fact that Trump doesn’t even fake it during the campaign suggests that economic policy would be very bad if he ever got to the White House.

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Hillary Is Wrong: Subsidies for Higher Education Are the Problem, not the Solution

“So many bad ideas, so little time.”

That’s my attitude about Hillary Clinton. She proposes misguided policies at such a rapid rate that I feel like I’m having to spend too much of each day trying to correct all the economic mistakes that emanate from her and her campaign.

For the fifth time over the last seven days (see other examples here, here, here, and here), I feel obliged to do it again.

Our topic is her proposal to increase handouts, subsidies, and bailouts for colleges and universities.

Here’s a brief interview I just did on the topic. Our discussion had to be abruptly ended because of what the industry calls a “hard break,” but I got out my main points that 1) subsidies benefit college bureaucracies rather than students and 2) that Hillary’s ostensible reforms will make things worse.

By the way, I can’t resist chuckling about the main assertion put forth by Alan Colmes. He thought it would be effective to point out that some of the handouts started under President George W. Bush.

But so what?!? The fact that a bad policy originated under a Republican before being expanded by a Democrat doesn’t somehow turn a pig’s ear into a silk purse.

Also, just in case you’re curious about what I was planning to say when the interview was cut off. I was going to point out that I agreed with Alan about President Bush’s role, but I was going to say that was additional evidence (given Bush’s overall statist record while president) against what Hillary is proposing.

And then, my additional point was going to be that it’s a very bad idea to allow loan forgiveness just for former students who become bureaucrats (i.e., go into “public service”). For Heaven’s sake, people who get government jobs already are getting far higher compensation than taxpayers in the private sector. Needless to say, it’s not a good idea to make a life of bureaucratic indolence even more attractive.

But let’s return to the bigger issue of why it’s misguided to have bailouts, subsidies, and handouts for higher education. If you want the opinions of a real expert on this issue, Charlie Sykes has a column on the topic in the Wall Street Journal.

Hillary Clinton’s plan for higher education is simple: a massive bailout wrapped in the promise of free tuition and relief from student loans. It’s a proposal that seems specifically designed to further inflate the higher-education bubble, while relieving the college-industrial complex of any pressure to reform. …College today costs too much, takes too long and offers dubious value to too many students. For decades, the price of a degree has risen much faster than the rate of inflation. …schools are spending more than ever on administration, promotions, athletics and noninstructional student services. The New England Center for Investigative Reporting and the American Institutes for Research found that between 1987 and 2012, colleges added 517,636 administrators and professional employees, creating a ratio at public colleges of two non-academic staffers for every full-time, tenure-track faculty member.

The current system has been bad news for students, who – thanks to subsidy-induced increases in tuition and fees – have been trapped on a treadmill.

Mr Sykes elaborates.

If the student finances the bill with loans, it’s more like buying a Lamborghini on credit—and then driving it off a cliff. Total student-loan debt has hit $1.3 trillion, according to the Federal Reserve, exceeding both the nation’s credit-card debt and its auto loans. Two-thirds of students now borrow to pay for their education, up from 45% in 1993, according to a New York Times analysis of federal data. At the end of 2014 the average student-loan borrower owed $26,700,according to analysts at the New York Fed, while 4% owed $100,000 or more.

More giveaways from government may seem like a good idea for students, but that’s only made possible by instead hurting taxpayers.

And students almost surely will suffer as well when you consider the indirect effects of this intervention.

Forgiving student debt or providing “free” tuition, with no new accountability measures, will only worsen today’s problems for future generations. The multibillion-dollar bailout Mrs. Clinton has proposed would only shift the costs of higher education to taxpayers, many of whom have not had the benefit of college. The Democratic nominee’s plan would also encourage more students to make poor educational choices by creating the illusion that college is free.

By the way, it’s very important to note that taxpayers are getting a rotten deal.

We’ve had lots more spending in recent decades, but no actual improvement in education.

Over the past five decades, billions in state and federal subsidies have contributed significantly to the exploding cost of higher education by making it easier for colleges to justify outrageous amenities. “Free” tuition will only further distort the incentives. …there is little evidence that additional spending has enhanced the value of the college degree. In a 2014 academic study of collegiate spending, economists Robert E. Martin and R. Carter Hill noted that research universities had cumulatively spent more than half a trillion dollars from 1987 to 2005. “There should be evidence of higher quality at these investment levels,” they wrote. Instead, “completion rates declined, grade inflation increased, students spend less time studying, adult numeracy/literacy rates declined, and critical thinking skills did not improve.”

Amen.

Indeed, this is exactly what we’ve seen in K-12 education.

Someone (more clever than me) needs to come up with the collegiate equivalent of this famous chart from the late Andrew Coulson.

We already know that the United States spends more per student on K-12 education than any other nation and gets mediocre results . That’s probably mostly due to the inefficient monopoly structure of elementary and secondary education.

The problems at the collegiate level are third-party payer and the inevitable negative effects of bureaucratic bloat and inefficiency.

The bottom line is that Hillary is right when she says higher-education spending is an investment. The problem is that she likes making investments that generate negative returns.

P.S. You won’t be surprised to learn that Paul Krugman also approves of investments with negative returns.

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Hillary Clinton’s “Exit Tax” Is an Unseemly Example of Banana Republic Economics

If you get into the weeds of tax policy and had a contest for parts of the internal revenue code that are “boring but important,” depreciation would be at the top of the list. After all, how many people want to learn about America’s Byzantine system that imposes a discriminatory tax penalty on new investment? Yes, it’s a self-destructive policy that imposes a lot of economic damage, but even I’ll admit it’s not a riveting topic (though I tried to make it culturally relevant by using ABBA as an example).

In second place would be a policy called “deferral,” which deals with a part of the law that allows companies to delay an extra layer of tax that the IRS imposes on income that is earned – and already subject to tax – in other countries. It is “boring but important” because it has major implications on the ability of American-domiciled firms to compete for market share overseas.

Here’s a video that explains the issue, though feel free to skip it and continue reading if you already are familiar with how the law works.

The simple way to think of this eye-glazing topic is that “deferral” is a good policy that partially mitigates the impact of a bad policy known as “worldwide taxation.”

Unfortunately, good policy tends to be unpopular in Washington. This is why deferral (and related issues such as inversions, which occur for the simple reason that worldwide taxation creates a huge competitive disadvantage for U.S.-domiciled companies) is playing an unusually large role in the 2016 election and concomitant tax debates.

Consider the tax controversy involving Apple. The CEO does not want to surrender money that belongs to shareholders to the government.

Apple CEO Tim Cook struck back at critics of the iPhone maker’s strategy to avoid paying U.S. taxes, telling The Washington Post in a wide ranging interview that the company would not bring that money back from abroad unless there was a “fair rate.”

Since the discussion is about income that Apple has earned in other nations (and therefore about income that already has been subject to all applicable taxes in other nations), the only “fair rate” from the United States is zero.

That’s because good tax systems are based on “territorial taxation” rather than “worldwide taxation.”

Though a worldwide tax system might not impose that much damage if a nation had a low corporate tax rate.

Unfortunately, that’s not a good description of the U.S. system, which has a very high rate, thus creating a big incentive to hold money overseas to avoid having to pay a very hefty second layer of tax to the IRS on income that already has been subject to tax by foreign governments.

Along with other multinational companies, the tech giant has been subject to criticism over a tax strategy that allows them to shelter profits made abroad from the U.S. corporate tax rate, which at 35 percent is among the highest in the developed world.

“Among”? I don’t know if this is a sign of bias or ignorance on the part of CNBC, but the U.S. unquestionably has the highest corporate tax rate among developed nations.

Indeed, it might even be the highest in the entire world.

Anyhow, Mr. Cook points out that there’s nothing patriotic about needlessly paying extra tax to the IRS, especially when it would mean a very punitive tax rate.

…a few particularly strident critics have lambasted Apple as a tax dodger. …While some proponents of the higher U.S. tax rate say it’s unpatriotic for companies to practice inversions or shelter income, Cook hit back at the suggestion. “It is the current tax law. It’s not a matter of being patriotic or not patriotic,” Cook told The Post in a lengthy sit-down. “It doesn’t go that the more you pay, the more patriotic you are.” …Cook added that “when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we’re in, which is about 5 percent, so think of it as 40 percent. We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it.”

Cook may be right that there’s “no debate” about whether it’s sensible for a company to keep money overseas to guard against bad tax policy.

But there is a debate about whether politicians will make the law worse in a grab for more revenue.

Senator Ron Wyden, for instance, doesn’t understand the issue. He wrote an editorial asserting that Apple is engaging in a “rip-off.”

…the heart of this mess is the big dog of tax rip-offs – tax deferral. This is the rule that encourages American multinational corporations to keep their profits overseas instead of investing them here at home, and it does so by granting them $80 billion a year in tax breaks. This policy…defies common sense. …some of the most profitable companies in the world can put off paying taxes indefinitely while hardworking Americans must pay their taxes every year. …that system creates a perverse incentive to keep corporate profits overseas instead of investing here at home.

I agree with him that the current system creates a perverse incentive to keep money abroad.

But you don’t solve that problem by imposing unconstrained worldwide taxation, which would create a perverse incentive structure that discourages American-domiciled firms from competing for market share in other nations.

Amazingly, Senator Wyden actually claims that making the system more punitive would help make America a better place to do business.

…ending deferral is a necessary step in making sure…the U.S. maintains its position as the best place to do business.

Wow, this rivals some of the crazy things that Barack Obama and Hillary Clinton have said.

Though I guess we need to give Wyden credit for honesty. He admits that what he really wants is for Washington to have more money to spend.

Ending deferral will also generate money from existing deferred taxes to pay for rebuilding our country’s crumbling infrastructure. …This is a priority that almost all tax reform proposals have called for.

By the way, can you guess which presidential candidate agrees with Senator Wyden and wants to impose full and immediate worldwide taxation?

If you answered Hillary Clinton, you’re right. But if you answered Donald Trump, that also would be a correct answer.

This is a grim example of why I refer to them as the Tweedledee and Tweedledum of statism.

Though to be fair, Trump’s plan at least contains a big reduction in the corporate tax rate, which would substantially reduce the negative impact of a worldwide tax system.

The Wall Street Journal opines on the issue and is especially unimpressed by Hillary Clinton’s irresponsible approach on the issue.

Mrs. Clinton is targeting so-called inversions, where U.S.-based companies move their headquarters by buying an overseas competitor, as well as foreign takeovers of U.S. firms for tax considerations. These migrations are the result of a U.S. corporate-tax code that supplies incentives to migrate… The Democrat would impose what she calls an “exit tax” on businesses that relocate outside the U.S., which is the sort of thing banana republics impose when their economies sour. …Mrs. Clinton wants to build a tax wall to stop Americans from escaping. “If they want to go,” she threatened in Michigan, “they’re going to have to pay to go.”

Ugh, making companies “pay to go” is an unseemly sentiment. Sort of what you might expect from a place like Venezuela where politicians treat private firms as a source of loot for their cronies.

The WSJ correctly points out that the problem is America’s anti-competitive worldwide tax regime, combined with a punitive corporate tax rate.

…the U.S. taxes residents—businesses and individuals—on their world-wide income, not merely the income that they earned in the U.S. …the U.S. taxes companies headquartered in the U.S. far more than companies based in other countries. Thirty-one of the 34 OECD countries have cut corporate taxes since 2000, leaving the U.S. with the highest rate in the industrialized world. The U.S. system of world-wide taxation means that a company that moves from Dublin, Ohio, to Dublin, Ireland, will pay a rate that is less than a third of America’s. A dollar of profit earned on the Emerald Isle by an Irish-based company becomes 87.5 cents after taxes, which it can then invest in Ireland or the U.S. or somewhere else. But if the company stays in Ohio and makes the same buck in Ireland, the after-tax return drops to 65 cents or less if the money is invested in America.

In other words, the problem is obvious and the solution is obvious.

But there are too many Barack Obamas and Elizabeth Warrens in Washington, so it’s more likely that policy will move in the wrong direction.

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Hillary’s Statist Agenda

I’ve been accused of making supposedly inconsistent arguments against Hillary Clinton. Make up your mind, these critics say. Is she corrupt or is she a doctrinaire leftist?

I always respond with the simple observation that she’s both. Not that this should come as a surprise. Proponents of bigger government have long track records of expanding their bank accounts at the same time they’re expanding the burden of the public sector. This is true for radical leftists in places like Venezuela and it’s true for establishment leftists in places like America.

And it’s definitely true for Hillary Clinton. I shared lots of information about Hillary’s corruption yesterday, so let’s spend some time today detailing her statist policy agenda.

Consider her new entitlement scheme for childcare. As the Wall Street Journal opines, it’s even worse than an ordinary handout.

Hillary Clinton is methodically expanding her plans to supervise or subsidize those remaining spheres of human existence unspoiled by government. Mrs. Clinton rolled out her latest proposal…to make child care more affordable for working parents and also to raise the wages of child-care workers. The Democrat didn’t mention how she’d resolve the contradiction between her cost-increasing ideas and her cost-reducing ideas, though you can bet it will be expensive. …Her solution is for the feds to cap the share of a family’s income that goes toward care at 10%, with the rest of the tab covered by various tax benefits, direct cash payments and scholarships.

Her scheme to cap a family’s exposure so they don’t have to pay more than 10 percent may be appealing to some voters, but it is terrible economics.

Although we don’t have details on how the various handouts will work, the net effect surely will be to exacerbate a third-party payer problem that already is leading to childcare costs rising faster than the overall inflation rate.

After all, families won’t care about the cost once it rises above 10 percent of their income since Hillary says that taxpayers will pick up the tab for anything about that level.

There’s more information about government intervention in the editorial.

The auditors at the Government Accountability Office report that there are currently 45 federal programs dedicated to supporting care “from birth through age five,” spread across multiple agencies. The Agriculture Department runs a nursery division, for some reason. …Mrs. Clinton also feels that caregivers are paid “less than the value of their worth,” and she promises to increase their compensation. How? Why, another program of course. She’ll call it the Respect and Increased Salaries for Early Childhood Educators (Raise) Initiative, which she says is modelled after another one of her proposals, the Care Workers Initiative. …If families think day care and health care are “really expensive” now, wait until they have to pay for Mrs. Clinton’s government.

Just as subsidized childcare will be very expensive if Hillary gets elected, the same will be true for higher education.

But in a different way. The current system of subsidies and handouts gives money (in the form of grants and loans) to students, who then give the money to colleges and universities. This is a great deal for the schools, who have taken advantage of the programs by dramatically increasing tuition and fees, while also expanding bureaucratic empires.

Hillary’s plan will expand the subsidies for colleges and universities, but students apparently no longer will serve as the middlemen. Instead, the money will go directly from Uncle Sam to the schools.

Here’s some analysis from the Pope Center on Hillary’s new scheme.

Clinton has come out with a plan to make public colleges and universities free for families with earnings less than $125,000 annually by 2021. …“free” college…would depend on state governments going along with her scheme whereby the federal government would pay them if they cooperate by charging no tuition… Suppose a state decides to adopt Clinton’s free college plan. What would the consequences be? …That would mean at least a modest increase in enrollment, but it would come mainly from the most academically marginal students. The colleges and universities that gained in those enrollments would also find they need to increase remedial programs. …Another adverse result from making college tuition free would be that many students would devote less effort to their courses. …Federal Reserve Bank of New York economist Aysegul Sahin…studied the effort college students put into their work in a 2004 paper“The Incentive Effects of Higher Education Subsidies on Student Effort.” She concluded, “Low-tuition, high-subsidy policies cause an increase in the ratio of less highly-motivated students among the college graduates and that even highly-motivated ones respond to lower tuition by choosing to study less.”

As with much of Hillary’s agenda, we don’t have full details. I strongly suspect that colleges and universities will have a big incentive to jack up tuition and fees to take advantage of the new handout, though I suppose we have to consider the possibility (fantasy?) that the plan will somehow include safeguards to prevent that from happening.

Oh, and don’t forget all the tax hikes she’s proposing to finance bigger government.

The really sad part about all this is that her husband actually wound up being one of the most market-oriented presidents in the post-World War II era. I’ve written on this topic several times (including speculation on whether the credit actually belongs to the post-1994 GOP Congress).

Is it possible that Hillary decides to “triangulate” and move to the center if she gets to the White House?

Yes, but I’m not brimming with optimism.

The Wall Street Journal has some depressing analysis on Bill Clinton vs Hillary Clinton.

…the Obama-era Democratic Party has repudiated the Democratic Party’s Bill-era centrist agenda. They now call themselves progressives, not New Democrats… The Clinton contradiction is that she claims she’ll produce economic results like her husband did with economic policies like Mr. Obama’s.

The editorial looks at Bill Clinton’s sensible record and compares it to what Hillary is proposing.

His wife wants to nearly double the top tax rate on long-term cap gains to 43.4% from 23.8%, in the name of ending “quarterly capitalism.” That’s higher than the 40% rate under Jimmy Carter, and she’d also impose a minimum tax on millionaires and above, details to come. …Mrs. Clinton has repudiated the Trans-Pacific Trade Partnership that she had praised as Secretary of State. …She wants to extend Dodd-Frank regulation to nonbanks, and she promises to entrench Mr. Obama’s anticarbon central planning at the EPA and expand ObamaCare with price controls on new medicines. …Mrs. Clinton is proposing to impose many more such work disincentives. She’ll bestow tax credits on everything from child care to elderly care, from college tuition to businesses that share profits with workers. To the extent her new mandates for family leave, the minimum wage, overtime and “equal pay” increase the cost of labor, she’ll drive more Americans out of the workforce. Oh, and…Mrs. Clinton wants to “enhance” Social Security benefits and make Medicare available to pre-retirees.

I’ve already written about her irresponsible approach to Social Security.

And I also opined on the issue in this interview.

The bottom line is that we’re in a very deep hole and Hillary Clinton, simply for reasons of personal ambition, wants to dig the hole deeper. As I remarked in the interview, she’s akin to a Greek politician agitating for more spending in 2007.

Given all this, is anyone surprised that “French President Francois Hollande endorsed Hillary Clinton”? What’s next, a pro-Hillary campaign commercial featuring Nicolas Maduro? A direct mail piece from the ghost of Che Guevara?

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Big Government Means Big Corruption (especially when the Clintons are involved)

Back in 2009, I shared some academic research showing the unsavory link between lobbying expenditures and bailout cash from TARP.

Just in case anybody naively thinks that such distasteful favor-swapping no longer occurs, here’s some more evidence. A column in the International Business Times summarizes some new scholarly research, once again showing the corrupt nexus between big government and the financial sector.

…analysis from London Business School professors Ahmed Tahoun and Florin Vasvari analyzed how the personal finances of congressional lawmakers changed once they were appointed to the Senate Finance Committee, the Senate Banking Committee or the House Financial Services Committee. It also evaluated how their finances compared with other lawmakers who are not on those panels. …the researchers found that finance committee members’ personal borrowing tended to jump in the first year they were appointed to the panels — a trend not seen for other lawmakers who were given seats on other powerful committees. Similarly, the data show that upon joining the finance panels, lawmakers tended to be given 32 percent more time — or on average 4 and a half years more — to pay back those new debts than loans they previously had and that other members of Congress have. The study found that lawmakers also “report more favorable debt terms when they join the finance committee, relative to other years and to the terms other congressional members obtain including those on other powerful committees.”

Needless to say, the companies aren’t giving special treatment to these politicians because of altruism. For every quid, there’s a quo.

…the influence may operate in the other direction, too. Looking at which particular financial institutions are lending to lawmakers, the researchers found that underperforming banks provided new — and bigger — loans to more finance committee members than to other Members of Congress. They say that because those firms could face more regulatory scrutiny and financial instability from new federal policies, they are more reliant on strong political connections than competitors that are in better shape.

In other words, if you can’t succeed by competing in the marketplace, then curry favor with politicians so that you can be propped up by big government.

Though companies presumably have learned from the Countrywide scandal to be more cautious about disguising the fact that they are dispensing goodies.

…mortgage industry titan Countrywide Financial created a “VIP loan unit” that gave lower mortgage rates and expedited loan processing services to lawmakers that oversaw legislation affecting the firm. …Democratic U.S. Senators Chris Dodd and Kent Conrad were cleared by the ethics committee, which said they did not knowingly seek the perks. The committee, though, told the lawmakers they “should have exercised more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as a senator.”

By the way, I’m not exactly shocked that the congressional ethics committee (wow, talk about an oxymoron) didn’t even bother slapping the wrists of the politicians who got the favors. After all, imagine how much harder it would be to raise campaign cash if politicians couldn’t use the coercive power of government to swap favors with interest groups.

But the folks on Capitol Hill are amateurs compared to Bill and Hillary Clinton. The Wall Street Journal explains that the charity they set up has basically been a scam to advance their personal and political interests.

The foundation served for years as a conduit for corporate and foreign cash to burnish the Clinton image, pay for their travel expenses for speeches and foreign trips, and employ their coterie in between campaigns or government gigs. Donors could give as much as they wanted because the foundation is a “charity.” …the foundation promised the White House when Mrs. Clinton became Secretary of State that the foundation would restrict foreign donations and get approval from the State Department. It turned out the foundation violated that pledge, specifically when accepting $500,000 from Algeria. The foundation also agreed to disclose donor names but failed to do so for more than 1,000 foreign donors until the failure was exposed by press reports.

Some readers may think it doesn’t matter where the money came from. What really counts is that the Clinton Foundation used the money to make the world a better place, right?

Um, not exactly. Only pennies on the dollar were used for charitable purposes.

The rest of the money was a slush fund to finance the Clinton family’s political machinery.

If you think this sounds unfair to the Clinton Foundation, you may change your mind after reading this article from the Daily Caller. Here are some excerpts.

Clinton Foundation officials have ignored virtually all of the “best practices” urged by good governance organizations for public charities… Most glaringly, for example, the foundation’s insular board of directors…are among President Bill and Hillary Clinton’s closest and richest friends. The “good governance” movement in the nonprofit field has been gathering strength for two decades, but it clearly has yet to reach the Clinton Foundation. …Good governance groups also encourage well-managed non-profits to create dedicated oversight committees… The Clinton Foundation has none of those committees, according to its Internal Revenue Service 990 tax filings. …the Clinton Foundation spent $12.6 million on Bill Clinton’s 60th birthday party. The foundation recorded the expense as “fundraising expenses.” …In December 2014 the board approved a $395,000 pay package for Braverman to become the new CEO.  But the next month he abruptly resigned. Politico reported that Clinton’s insular staff were appalled at Braverman’s attempts at reforms. Braverman never explained the reasons for his departure. But Politico believes it was a backlash from Bill and Hillary’s hardened loyalists and “mega-donors” who chafed at the notion of more openness and transparency.

If the Clinton Foundation was a truly private organization, it wouldn’t be anybody’s business whether how it operated.

Moreover, it would be hypocritical for me to make that accusation. After all, I’m on the Board of the pro-tax competition Center for Freedom and Prosperity and the other Board members are long-time friends. And we don’t have a bunch of oversight committees since CF&P’s annual budget has averaged less than $200,000, which means such things don’t seem necessary (though we’ve managed to do a lot with a little, even earning a front-page attack from the Washington Post).

The real issue, however, is whether a nonprofit organization is genuinely private. In the case of the Clinton Foundation, ” the organization seemingly operated as a “pay-to-play” gatekeeper for goodies from the State Department?

Consider these blurbs from a column in the Wall Street Journal.

…more than two dozen companies and groups and one foreign government paid former President Bill Clinton a total of more than $8 million to give speeches around the time they also had matters before Mrs. Clinton’s State Department, according to a Wall Street Journal analysis. Fifteen of them also donated a total of between $5 million and $15 million to the Bill, Hillary and Chelsea Clinton Foundation, the family’s charity… In several instances, State Department actions benefited those that paid Mr. Clinton.

Here’s one of the examples discussed in the column.

…the capital of the United Arab Emirates asked for a facility to clear travelers for U.S. entry before they boarded planes so they could avoid delays when arriving in the U.S. …U.S.-based airlines, which have no direct flights between Abu Dhabi and the U.S., opposed the idea as a giveaway to the government-owned airline, Etihad Airways. …While Mrs. Clinton’s State Department and the Department of Homeland Security were working out a “letter of intent” with Abu Dhabi for the facility, Mr. Clinton sought permission to give a paid speech in Abu Dhabi. …On Dec. 6, 2011, U.S. officials signed the letter of intent. One week later, Mr. Clinton gave a 20-minute talk on climate change to the Abu Dhabi government environmental gathering. He collected $500,000, his wife’s disclosure report shows. In December 2012, Mr. Clinton sought approval for another speech in Abu Dhabi before the World Travel and Tourism Council…the speech was sponsored by three Abu Dhabi tourism agencies, all owned by the government. …Mr. Clinton gave a keynote address on the value of tourism. He was paid $500,000, his wife’s disclosure filings say. One week later, the U.S. and Abu Dhabi signed the final agreement for the facility. …Mrs. Clinton’s spokesman said it was “farcical” to suggest any connection between the speeches and the facility’s opening.

The “farcical” part of this is the notion that a) Bill Clinton is an expert on the “value of tourism”, and b) that his supposed expertise on the topic is worth $500,000.

Though I have to give Bill Clinton credit for getting good deals. When I give a speech, I’m content with simply getting the organizer to pay for a coach ticket and a hotel room.

But the L.A. Times reveals that Bill Clinton gets much better treatment, not even counting the giant piles of money funneled to the Clinton Foundation.

Clinton changed the rules of political speech-making for cash. He would push not just corporate hosts but also nonprofits and universities to pay fees well beyond what they were accustomed to. …He and Hillary Clinton would become so skilled at churning profits out of their lectures that they would net more than $150 million from speaking alone after he left the White House. …refusing questions that were not screened by his staff in advance. There is the nearly $1,400 bill for a day’s worth of phone calls from San Francisco’s Fairmont Hotel and the $700 dinner for two. …Clinton would demand in his contract to be shuttled by private jet from San Francisco to UC Davis, where he spoke at the Mondavi Center. The center had to appeal to its network of donors to find someone able to fly him the 70 miles, something it had never done and hasn’t since.

By the way, I don’t object to Bill Clinton being treated far better than me. But I do get agitated if he’s getting goodies because some interest group is participating in a pay-for-play scam based on favors from government.

And that does come out of my pocket, as well as from the pockets of every other taxpayer, consumer, and worker.

Speaking of pay-to-play, here’s a story from the Washington Examiner about some unseemly behavior from the Clinton Foundation.

A Clinton Foundation official asked an aide to then-Secretary of State Hillary Clinton if the government would allow the well-connected charity to accept a donation from an oil company with extensive ties to Iran. …The email shows Petronas, a Malaysian state-owned oil company, wanted to send CEO Shamsul Azhar bin Abbas to a Clinton Global Initiative event as a paying member. …Two months earlier, the State Department highlighted a $150 million contract between Petronas and General Electric in Malaysia. …David Bossie, president of Citizens United, said the timeline of the State Department’s announcement of the deal with GE should raise questions. “A month after the announcement, the Clinton Foundation staff is contacting the State Department saying, ‘Hey, we want to shake down the CEO, essentially, of Petronus, is that ok?’…,” Bossie said. “That is political crony capitalism — that’s the definition of it, is using your political contacts and your political achievements for financial gain for the foundation,” he continued. “Clearly, [there was] a conflict of interest.”

The only good news is that the proposed shakedown of Petronas apparently didn’t happen, though it’s unclear from the records whether this was because the company said no or because the idea was so over-the-top corrupt that it was rejected by the State Department.

Let’s close with a really nauseating example of Clintonian sleaze. A story in National Review exposes how the family’s Foundation victimized the people of Haiti.

Their story goes back to 2010, when a massive 7.0 earthquake devastated the island, killing more than 200,000 people, leveling 100,000 homes, and leaving 1.5 million people destitute. The devastating effect of the earthquake on a very poor nation provoked worldwide concern and inspired an outpouring of…some $10.5 billion in aid, with $3.9 billion of it coming from the United States.

But all this money hasn’t helped the poor people of Haiti.

…very little of this aid money actually got to poor people in Haiti. …Port-au-Prince was supposed to be rebuilt; it was never rebuilt. Projects aimed at creating jobs proved to be bitter disappointments. Haitian unemployment remained high, largely undented by the funds that were supposed to pour into the country. Famine and illness continued to devastate the island nation.

Why didn’t all the money have a positive impact?

Part of the answer is that foreign aid generally ineffective. Another part of the answer is that Haiti has statist policies that inhibit growth and prosperity.

But a final part of the answer is that a bunch of grifters diverted the money to their own pockets.

Where did it go? …Bill Clinton was the designated UN representative for aid to Haiti. …his wife Hillary was the United States secretary of state. She was in charge of U.S. aid allocated to Haiti. …an interesting pattern involving the Clintons and the designation of how aid funds were used. …a number of companies that received contracts in Haiti happened to be entities that made large donations to the Clinton Foundation. …For example, the Clinton Foundation selected Clayton Homes, a construction company owned by Warren Buffett’s Berkshire Hathaway, to build temporary shelters in Haiti. Buffett is an active member of the Clinton Global Initiative who has donated generously to the Clintons as well as the Clinton Foundation. …the contract was never competitively bid for. Clayton offered to build “hurricane-proof trailers” but what they actually delivered turned out to be a disaster. The trailers were structurally unsafe, with high levels of formaldehyde and insulation coming out of the walls. There were problems with mold and fumes. The stifling heat inside made Haitians sick and many of them abandoned the trailers because they were ill-constructed and unusable.

Here’s another example of pay-to-play favoritism.

The Clintons also funneled $10 million in federal loans to a firm called InnoVida, headed by Clinton donor Claudio Osorio. …Normally the loan approval process takes months or even years. …InnoVida had not even provided an independently audited financial report that is normally a requirement for such applications. This requirement, however, was waived. On the basis of the Clinton connection, InnoVida’s application was fast-tracked and approved in two weeks. The company, however, defaulted on the loan and never built any houses. An investigation revealed that Osorio had diverted company funds to pay for his Miami Beach mansion, his Maserati, and his Colorado ski chalet.

Gee, isn’t government a great racket!

Here’s one final oleaginous example.

In 2011, the Clinton Foundation brokered a deal with Digicel, a cell-phone-service provider seeking to gain access to the Haitian market. The Clintons arranged to have Digicel receive millions in U.S. taxpayer money to provide mobile phones. The USAID Food for Peace program, which the State Department administered through Hillary aide Cheryl Mills, distributed Digicel phones free to Haitians. Digicel didn’t just make money off the U.S. taxpayer; it also made money off the Haitians. When Haitians used the phones, either to make calls or transfer money, they paid Digicel for the service. Haitians using Digicel’s phones also became automatically enrolled in Digicel’s mobile program. By 2012, Digicel had taken over three-quarters of the cell-phone market in Haiti. Digicel is owned by Denis O’Brien, a close friend of the Clintons. O’Brien secured three speaking engagements in his native Ireland that paid $200,000 apiece. These engagements occurred right at the time that Digicel was making its deal with the U.S. State Department. O’Brien has also donated lavishly to the Clinton Foundation, giving between $1 million and $5 million sometime in 2010–2011. Coincidentally the United States government paid Digicel $45 million to open a hotel in Port-au-Prince.

If you’re not thoroughly nauseated, read the entire article for many more examples of pay-to-play sleaze.

By the way, I’m not merely picking on the Clintons. Yes, they seem to be remarkably amoral in their approach to politics, but the underlying problem is that big government enables corruption regardless of who is in charge.

That’s the moral of the story.

P.S. Don’t forget that the Clinton Foundation easily got approved by the IRS while innocuous Tea Party groups were stonewalled. Another typical example of government in action.

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Hillary Clinton, Willie Sutton, and Class-Warfare Tax Policy

If I had to summarize my views on fiscal policy in just two sentences, here’s what I would say.

1. Government spending undermines growth by diverting labor and capital from more productive uses to less productive uses.
2. Tax rates on productive economic behaviors such as work, saving, investment, and entrepreneurship should be as low as possible.

So you can imagine that I’m not overly enthused about Hillary Clinton’s embrace of class-warfare tax policy to finance an ever-growing burden of government spending.

Here’s a story that’s giving me heartburn. The Washington Examiner reports that Hillary is “going where the money is.”

Hillary Clinton promised Tuesday that she would pay for her ambitious White House agenda by hitting up the wealthy. “I’ll tell you how we’re going to pay for it,” she said Tuesday in Pennsylvania, referring specifically to her economic agenda. “We’re going where the money is. We are going after the super wealthy, we are going after corporations, we are going after Wall Street so they pay their fair share.”

So what does it mean for various groups to “pay their fair share”?

Well, since even the IRS has admitted that upper-income taxpayers finance a hugely disproportionate share of the federal government, logic tells us that these supposedly evil rich people should get a tax cut.

But that’s not what Hillary means. She wants voters to adopt and us-vs-them mentality, so she demonizes successful people and implies that their wealth is somehow illegitimate.

In part, she is perpetuating the traditional leftist myth that the economy is a fixed pie and that the rest of us have less because someone like Bill Gates has more.

But I also think she wants to imply that upper-income people somehow don’t deserve their money. Maybe they are a bunch of Paris Hilton types with trust funds, living indolent lives while the rest of us have to work.

That’s never been a compelling argument to me. If Paris Hilton’s family earned money honestly (and already paid tax on the money when it was first earned), it’s their right to give it to their children without all sorts of punitive extra layers of taxation.

But this stereotype isn’t even accurate in the first place. James Pethokoukis of the American Enterprise Institute shows that people like the late Steve Jobs are more the norm. In other words, rich people are rich because they are innovating and creating, building new businesses and new products that make the rest of our lives better.

Since innovation, risk-taking, investment, entrepreneurship, and hard work are the keys to long-run growth, it certainly seems that the tax code shouldn’t be punishing those things.

Yet that’s what Hillary has in mind when she demagogues about the “super wealthy.”

Interestingly, another New York Democrat seems to understand the negative relationship between taxes and good outcomes, at least on a selective basis. Larry O’Connor explains.

Without the teeniest sense of irony, Sen. Chuck Schumer (D-NY) has proposed that America’s Olympic medal winners should not have to pay taxes on the cash prizes they are awarded with their medals. Schumer’s reasoning behind lifting the tax? Because “hard work” and excellence shouldn’t be punished.

The problem, of course, is that Senator Schumer routinely supports higher taxes.

Indeed, the only tax hike he doesn’t favor, to my knowledge, is the Trump-Clinton plan to hike the capital gains tax on “carried interest.” But Schumer’s only good on that issue because of the money he gets from the private-equity folks on Wall Street, not because he actually understands or favors good tax policy.

But Schumer’s make-believe support for lower taxes on Olympic medal winners is good news, if for no other reasons than it gave Mark Perry an excuse to produce another one of his famous Venn diagrams.

Let’s close by contemplating Hillary’s statement that she wants to go “where the money is.”

That statement rang a bell. Someone else said almost the exact same thing.

And then I remembered. It was an infamous bank robber named Willie Sutton, who is widely reported to have said he robbed banks because “That’s where the money is.”

Needless to say, I don’t want to imply that there’s some moral equivalence between Hillary Clinton and Willie Sutton. Perish the thought!

After all, I’m sure Willie Sutton never expected gratitude from his victims.

P.S. In my role as the Don Quixote of fiscal policy, I have helpfully shared evidence with Mrs. Clinton about the consequences of higher tax burdens in both Europe and various American states.

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Deciphering Hillary’s Statist Economic Plan: A Helpful Translation into English

I need combat pay. Or maybe some kind of bonus for pain and suffering. First, I had to watch Donald Trump’s incoherent speech on the economy and try to decipher his mish-mash economic plan.

And then, without the benefit of a lengthy vacation or counseling for post-foolishness stress disorder, I had to endure Hillary Clinton’s speech about the economy.

Though I will admit it was very coherent and there wasn’t much to decipher. As I pointed out in this interview, she wants more wasteful spending, more punitive taxes, and more stifling regulation.

There are two points from this interview that deserve some additional emphasis.

1. Copying Obama and referring to subsidies and handouts as being an “investment” doesn’t make bigger government a wise use of other people’s money.
2. Keynesian spending is a scam. It’s the fiscal version of a perpetual motion machine that ostensibly spits out dollar bills when you put quarters in a slot.

I closed the interview by pointing out that it makes no sense to make America more like Greece or Venezuela.

Yet Hillary is too clever to say that’s her agenda. To clear up this confusion, here are a few phrases from her recent speech in Michigan. I’ve helpfully translated them into English.

• “…support advanced manufacturing” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “a lot of urgent and important work to do” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “go out and make that happen” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “enormous capacity for clean energy production” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “if we do it together” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “things that your government could do” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “I will have your back every single day” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “make our economy work for everyone” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “restore fairness to our economy” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “go to bat for working families” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “pass the biggest investment” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “modernizing our roads, our bridges” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “help cities like Detroit and Flint” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “repair schools and failing water systems” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “we should be ambitious” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “connect every household in America to broadband” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “build a cleaner, more resilient power grid” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “creating an infrastructure bank” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “we’re going to invest $10 billion” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “bring business, government, and communities together” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “fight to make college tuition-free” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “liberate millions of people who already have student debt” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “support high-quality union training programs” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “We will do more” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “Investments at home” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “we need to make it fairer” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “we will fight for a more progressive…tax code” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “pay a new exit tax” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “Wall Street, corporations, and the super-rich, should finally pay their fair share” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “I support the so-called ‘Buffett Rule,” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “add a new tax on multi-millionaires” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “close the carried interest loophole” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “Just think about what we could do with those $4 billion dollars” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “I want to invest” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “affordable childcare available to all Americans” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “Paid family leave” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “Raising the federal minimum wage” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “expanding Social Security” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “strengthening unions” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “improve the Affordable Care Act” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “a public option health insurance plan” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.
• “build a new future with clean energy” = Notwithstanding all the previous failures of government, both in America and elsewhere in the world, I’m going to make American more like Greece and Venezuela by using coercion to impose more spending, taxes, and regulation.

The only good news is that Hillary is an incremental statist. Unlike crazy Bernie Sanders, she doesn’t want to become Greece at 90 miles-per-hour. She’s content to travel in the wrong direction at a steady 55 miles-per-hour.

And since Greece is such a basket case, even two terms of Hillary Clinton probably would only result in America having French-type levels of economic freedom. Or lack thereof, to be more accurate.

In other words, it will take a lot of bad policy over a couple of decades to completely hollow out America’s economy. The already-baked-into-the-cake expansion of entitlements will take us part of the way to that unfortunate destination.

And, to mix my metaphors, Hillary will be content to add a few more straws to the camel’s back.

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The Penny Plan Is a Spending-Cap Formula to Make the Trump Tax Cuts Feasible

I don’t like election years because the policy debate tends to revolve around the various proposals put forth by candidates. And since those ideas generally don’t make much sense, it’s a frustrating period.

But the silver lining to that dark cloud is that it does create opportunities to comment on what the candidates are saying…and hopefully steer the discussion in a more productive direction.

For instance, I just authored a column about Trump’s plan for Time. I pointed out what’s good (such as a lower corporate rate and death tax repeal), what’s bad (pork-barrel infrastructure and a whiff on entitlement reform), and what’s ugly (protectionism and a new loophole for childcare costs).

But my biggest complaint, which was part of the “bad” section, dealt with Trump’s failure to produce any plan to control the size of government. And echoing a point I made late last year, a big tax cut simply isn’t viable unless it’s accompanied by a credible proposal to rein in Leviathan.

It will be very hard to have a tax cut of any size unless Trump also has some sort of plan to limit the growth of government spending. Unfortunately, outside of vague rhetoric about “waste, fraud, and abuse,” it’s unclear that he is serious about the spending side of the fiscal ledger.

I also made similar points in this CNBC interview, which covered all of the main features of Trump’s economic agenda.

You’ll notice in the interview that I said Trump should propose some sort of spending cap.

Well, maybe my wish will be granted. A story published by Bloomberg looks at Trump’s flirtation with a specific form of spending cap known as the Penny Plan.

Donald Trump on Tuesday revisited a budget-trimming measure called the “penny plan” in response to fresh questions about how he’d finance his agenda. “Well, we’re cutting back, I mean whether it’s a penny plan—which is something that, as simple as it is, I’ve always sort of liked,” the Republican presidential nominee said on Fox Business… Trump remained short on further specifics about how he’d pay for his proposals.

But let’s say he goes beyond sympathetic comments and actually embraces the Penny Plan. The article gives some detail of the proposal.

In variations of the “penny plan,” …one cent is cut per dollar in the federal budget over a period of six or seven years and a spending cap is imposed until the budget is balanced. Different programs can see greater than 1 percent cuts—or no cuts—as long as overall spending is reduced by 1 percent each year… The math generally works out, the nonpartisan fact-checking website PolitiFact found in 2012 when analyzing a Republican lawmaker’s version of the proposal.

And for further detail, Justin Bogie and Romina Boccia have a column in the Daily Signal.

Last week, a House Budget Committee member, Rep. Mark Sanford, R-S.C., and the Senate Budget Committee chairman, Sen. Mike Enzi, R-Wyo., introduced the “Penny Plan,” which would implement an aggregate spending cap beginning in 2017 and “would cut a single penny from every dollar the federal government spends.” Under this plan, for fiscal year 2017, the cap would be $3.6 trillion for total noninterest outlays minus 1 percent. For each subsequent year through 2021, outlays would be capped at the previous year’s level (not including net interest payments) minus 1 percent.

Wow, this is hard-core spending restraint.

I have written favorably about the Penny Plan, but I normally promote the Swiss Debt Brake, which is a spending cap that has allowed government spending to grow each year by an average of 2 percent.

I must be a big-government squish!

Here are more details on the Penny Plan. Most important, it is enforced by sequestration.

…spending reductions necessary to arrive at the capped level would be enforced by sequestration. Unlike the current form of sequestration applied to the Budget Control Act spending caps, the Penny Plan would not exempt any of the programs listed under the Balanced Budget and Emergency Deficit Control Act of 1985, except payments for net interest. …Spending caps, enforced with automatic cuts, serve to motivate Congress to prioritize among competing demands for resources. Designed properly, caps can curb excessive spending growth over the long run.

The bottom line, according to Bogie and Boccia, is that a sequester-enforced spending cap is critical for good long-run fiscal policy.

The Penny Plan takes a step toward consideration of a statutory spending cap to limit the growth in government and improve the nation’s fiscal course. Congress must put the country’s budget on a sustainable path to secure prosperity for current and future generations, and a spending cap is one important tool to get there.

My bottom line is similar. I’m a huge fan of spending caps (which have a much better track record than balanced budget requirements).

The key is to make sure that government grows slower than the private sector. And the more spending is restrained (especially if it’s actually cut 1 percent each year), the quicker and better the results.

There’s lots of evidence of nations getting good results when they cap spending. I don’t know if Donald Trump is serious about a spending cap (or whether he’s serious about the policies needed to make sure overall spending stays within a cap), but I know it’s the right policy.

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Trump’s Accurate Indictment of Hillarynomics

It’s no secret that I’m very leery of Donald Trump. Simply stated, I don’t sense any genuine commitment to smaller government and free markets.

In addition to fretting about his overall approach on the big issue of liberty vs. government, I’ve specifically criticized his views on protectionism, on bailouts, on entitlements, monetary policy, tax policy, and (just yesterday) distorting tax loopholes.

But skepticism isn’t the same as bias.

I commend Trump when he says something accurate or when he proposes good policies, and I defend him when he’s unfairly attacked.

With this in mind, it’s time to point out something very accurate in his big speech yesterday to the Detroit Economic Club.

He issued a strong and effective indictment of Obamanomics.

…let’s look at what the Obama-Clinton policies have done nationally. Their policies produced 1.2% growth, the weakest so-called recovery since the Great Depression… There are now 94.3 million Americans outside the labor force. …We have the lowest labor force participation rates in four decades. …Meanwhile, American households are earning more than $4,000 less today than they were sixteen years ago.

Trump’s basically right. No matter how you slice and dice the data, Obamanomics (which he refers to as Obama-Clinton policies for obvious reasons) clearly hasn’t worked.

We’ve had the weakest recovery since the Great Depression. Labor-force participation is dismal. And median household income has lagged.

I touched on some of those issues in this discussion on Fox Business News.

But you don’t have to believe me.

Former Senator Phil Gramm and former Senate staffer Mike Solon dissect Obamanomics in a column for the Wall Street Journal.

When President Obama took office during the 2007-09 recession no president was ever better positioned to lead a strong recovery. With an impressive electoral mandate, Mr. Obama enjoyed a filibuster-proof Senate supermajority, a 79-vote House majority and a nation ready for change. History too seemed to smile on Mr. Obama’s endeavor. The recession ended just six months into his first term and, with the sole exception of the Great Depression, every severe recession since 1870—when reliable annual data were first collected—had been followed by a vigorous recovery.

They point out that President Obama used the opportunity to push Keynesian fiscal and monetary policy.

No resources were spared. The Obama $836 billion stimulus exceeded all previous U.S. economic stimulus programs combined. The Treasury borrowed over $1 trillion a year for four years in a row, according to Office of Management and Budget data. The Federal Reserve injected $3 trillion of new reserves into the banking system, generating record-low interest rates.

And the institutions with Keynesian models predicted (what a surprise) that we would get good results.

In August 2010, the Congressional Budget Office projected 3.3% average real GDP growth for 2010-15. The Federal Reserve forecast growth as strong as 3.7%. Mr. Obama’s own Office of Management and Budget expected peak growth of 4.5%.

Unfortunately, these models were wrong. Wildly wrong.

…not once in the last seven years has annual economic growth ever reached 3%. Average real per capita income grew five times faster during the Clinton recovery, seven times faster during the Reagan recovery and 10 times faster during the Kennedy/Johnson recovery than during the Obama recovery.

Gramm and Solon point out that there’s only been one other “recovery” remotely similar to the one we’re having now.

…in only two recoveries did government impose economic policies radically different from the policies pursued in all the other recoveries—different than traditional policy but similar to each other— FDR’s Great Depression and Mr. Obama’s Great Recession. …When Mr. Obama replicated some of FDR’s “progressive” policies, history was there to reteach its lessons.

Amen.

The so-called New Deal was a statist disaster than lengthened and deepened the Great Depression.

Indeed, it was only a Great Depression because of awful policies that began under Herbert Hoover and then continued under Franklin Roosevelt.

Obama wanted the second coming of the New Deal.

The good news is that he wasn’t able to impose nearly as much bad policy as Hoover and FDR.

The bad news is that he imposed enough bad policy to produce an abnormally weak recovery.

Which leads to the lesson that everyone should learn.

The dominant lesson of the Great Depression and the Great Recession is that when government overspends, overtaxes and over-regulates, economic freedom is suppressed and economic growth vanishes.

Sadly, I don’t think either Donald Trump or Hillary Clinton understand this lesson.

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Masochism Exercise, Part I: Reviewing the Democratic Platform

It’s very risky to trust the promises made by politicians.

But at least there’s a potential downside when they break their word. President George H.W. Bush lost the 1992 election, for instances, after violating his read-my-lips, no-tax-hike promise.

So I think it’s useful to get politicians to explicitly commit to good policies, such as the no-tax-increase pledge.

But what about getting language in a party platform? Is that a vehicle for getting good policy, or at least is it a way of blocking bad policy?

For the most part, I don’t think party platforms bind politicians or constrain their behavior. To be sure, I’m happy when platforms embrace policies that I like, but I’m not foolish enough to think that this automatically will translate into better policy after politicians get elected.

For the most part, platforms are a way for politicians to appease the more philosophically inclined people in their parties. So the Democratic platform is generally farther to the left than Democratic politicians and the GOP platform is generally farther to the right than Republican politicians.

With these caveats taken care of, let’s review the proposals and policies in the Democratic platform (I’ll assess the Republican platform tomorrow). I’ve excerpted the items that are noteworthy and I follow each item with a brief observation.

Let’s get started.

Democrats will expand Social Security…[and] will achieve this goal by taxing some of the income of people above $250,000.

This is like stepping on the accelerator while approaching a cliff. In inflation-adjusted dollars, the program’s unfunded liability is a staggering $37 trillion, yet Hillary and her friends want even more spending. And they want to compound the damage with a huge tax increase on investors, entrepreneurs and small-business owners.

Democrats will also create an independent, national infrastructure bank.

This is a recipe for cronyism that will further expand the federal government’s role into an area that should be reserved for states, local governments, and the private sector.

Democrats will defend the Export-Import Bank.

Bernie Sanders was good on this issue, so this platform language means Hillary Clinton’s support for corporate welfare prevailed.

Democrats will provide direct federal funding for a range of local programs that will put young people to work and create new career opportunities.

Since job-training programs have a long track-record of failure, too bad they didn’t suggest repealing job-killing minimum-wage laws.

Democrats will not hesitate to use and expand existing authorities as well as empower regulators to downsize or break apart financial institutions when necessary to protect the public and safeguard financial stability, including new authorities to go after risky shadow-banking activities.

Other than pointing out that big isn’t necessarily bad, I don’t really have any policy reaction. I’m only sharing this blurb since I imagine you’ll also laugh out loud at the platform’s implicit assertion that Hillary Clinton somehow will crack down on her friends and donors at Goldman-Sachs. Yeah, I’m sure that’s high on her list. Right after putting inner-city schoolkids before the teacher unions.

We will ban golden parachutes for those taking government jobs.

Will that rule apply retroactively to Treasury Secretary Jacob Lew?

Democrats will claw back tax breaks for companies that ship jobs overseas, eliminate tax breaks for big oil and gas companies, and crack down on inversions and other methods companies use to dodge their tax responsibilities.

There are no “tax breaks” for companies that invert.

We will end deferrals so that American corporations pay United States taxes immediately on foreign profits and can no longer escape paying their fair share of U.S. taxes by stashing profits abroad.

The “fair share” should be zero for income that is earned (and therefore already subject to tax) in other nations.

We will ensure those at the top contribute to our country’s future by establishing a multimillionaire surtax to ensure millionaires and billionaires pay their fair share.

Even the IRS admits the tax system is very biased against the so-called rich.

…we will shut down the “private tax system” for those at the top, immediately close egregious loopholes like those enjoyed by hedge fund managers, restore fair taxation on multimillion dollar estates, and ensure millionaires can no longer pay a lower rate than their secretaries.

Wow, endorsing higher capital gains taxes, higher death taxes, and dishonest math in one sentence fragment.

We will work to crack down on tax evasion.

Unfortunately, they want higher compliance by expanding the power of the IRS, not by lowering tax rates.

…we will make sure that law-abiding Americans living abroad are not unfairly penalized by finding the right solutions for them to the requirements under the Foreign Account Tax Compliance Act (FATCA) and Report of Foreign Bank and Financial Accounts (FBAR).

This language is vacuous, but it’s nonetheless noteworthy that even the Democrats feel compelled to say bad things about one of Obama’s worst laws.

Democrats believe it is long past time to close this racial wealth gap. Disparities in wealth cannot be solved by the free market alone, but instead, the federal government must play a role in eliminating systemic barriers to wealth accumulation for different racial groups and improving opportunities for people from all racial and ethnic backgrounds to build wealth.

More vacuous language, though it’s disappointing that the platform doesn’t endorse personal retirement accounts, which would fix one of the ways minorities are hurt by government policy.

We believe that the states should be laboratories of democracy on the issue of marijuana, and those states that want to decriminalize it or provide access to medical marijuana should be able to do so.

Easily the most pro-liberty part of the Democratic platform.

Democrats will develop a national strategy, coordinated across all levels of government, to combat poverty. We will direct more federal resources to lifting up communities that have been left out and left behind.

Anyone think this will work any better than all the other failed anti-poverty schemes from Washington? I didn’t think so.

Democrats will protect proven programs like the Supplemental Nutrition Assistance Program (SNAP)—our nation’s most important anti-hunger program—that help struggling families put food on the table.

The only thing “proven” about the food stamp program is that it’s riddled with fraud and it creates dependency.

We will dramatically increase federal infrastructure funding for our cities.

It’s not the role of the federal government to pave roads and and build bridges and corrupt big-city political machines shouldn’t be offloading their responsibilities onto taxpayers in the rest of the country.

We will continue to support public funding for the National Endowment for the Arts, for the National Endowment for the Humanities, and for programs providing art and music education in primary and secondary schools.

If I want to listen to cowboy poetry, I should pay for it myself.

We believe America must be running entirely on clean energy by mid-century. We will take bold steps to slash carbon pollution.

Mostly vacuous rhetoric, but it could lead to “bold steps” to undermine prosperity.

Democrats believe that carbon dioxide, methane, and other greenhouse gases should be priced to reflect their negative externalities, and to accelerate the transition to a clean energy economy and help meet our climate goals.

You don’t have to read between the lines to recognize that “should be priced” is DC-speak for a big energy tax.

All corporations owe it to their shareholders to fully analyze and disclose the risks they face, including climate risk. Those who fail to do so should be held accountable. Democrats also respectfully request the Department of Justice to investigate allegations of corporate fraud on the part of fossil fuel companies accused of misleading shareholders and the public on the scientific reality of climate change.

This is probably the most reprehensible part of the Democratic platform. America is not a banana republic and people shouldn’t be attacked with “lawfare” for disagreeing with the political establishment.

Democrats are unified in their strong belief that every student should be able to go to college debt-free, and working families should not have to pay any tuition to go to public colleges and universities.

A plan that unambiguously will increase the cost of college.

Democrats believe that health care is a right, not a privilege, and our health care system should put people before profits. …Americans should be able to access public coverage through a public option, and those over 55 should be able to opt in to Medicare.

For those who think the Obamacare boondoggle didn’t go far enough.

Democrats will fight any attempts by Republicans in Congress to privatize, voucherize, or “phase out” Medicare as we know it. And we will oppose Republican plans to slash funding and block grant Medicaid and SNAP.

Let’s bury our heads in the sand and pretend there’s no entitlement crisis.

Democrats believe that global institutions—most prominently the United Nations—and multilateral organizations have a powerful role to play

A powerful role is not the same as a productive role or positive role. Though the United Nations is mostly feckless. The real damage is caused by the International Monetary Fund and the Organization for Economic Cooperation and Development.

I could analyze additional planks, but there’s a limit to have much statist claptrap I can endure.

If I had to give a grade to the Democratic platform, it would be “L” for leftist. Just like the Party’s nominee.

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Clinton-Style Corruption Is the Inevitable Result When You Mix Big Government and Sleazy People

My main problem with Hillary Clinton is that she not only supports the bloated and enervating welfare state that already exists, but she wants to make it even bigger. Indeed, there’s only a very small gap between her and crazy Bernie Sanders when you examine their voting records.

There’s only a trivially small difference…between Hillary Clinton’s lifetime rating of 10.6 from the National Taxpayers Union and Bernie Sanders’ lifetime rating of 9.4. They both earned their failing grades by spending other people’s money with reckless abandon.

That being said, I’m disgusted and outraged by her dishonest and corrupt behavior.

The rule of law is one of the most important building blocks of a just and prosperous society, so it’s both morally nauseating and economically destructive when members of the elite enjoy special treatment.

Josh Barro definitely isn’t a member of the vast right wing conspiracy, so his list of Hillary’s ethical lapses should carry extra weight.

It’s possible that Clinton and Lynch were just catching up — “a social meeting,”… Similarly, it’s possible foreign governments donated to the Clinton Foundation because they viewed it as the most efficient available philanthropic opportunity, without regard for the favorable impression it might make on Bill and Hillary Clinton. It’s possible Goldman Sachs paid Hillary Clinton $675,000 for three speeches because they thought she would be really interesting, not because they thought the payment might help the bank make a favorable impression on a potential future president. It’s possible a major Clinton donor ended up on a State Department nuclear advisory board for perfectly innocent reasons, and that there were no untoward effects from top Clinton staffers being simultaneously on State Department and private payrolls. …The list goes on and on. …the Clintons have no apparent concern for appearances of impropriety, as long as they believe their actions cannot get them in trouble with the law.

And the Clintons get away with things that would land ordinary Americans in jail, so you have to give them credit for knowing how to exploit their political connections and power.

And that has a lot of people legitimately upset. The Washington Examiner opined about Hillary’s free pass from the FBI.

The Founding Fathers embraced principles that transcended their own human weaknesses and those of their posterity. They created a system in which process and law could check base personal ambition, favoritism and other low and common temptations. The idea was to put in place a system that would survive incompetent and corrupt leaders. …the public witnessed what happens when the system fails. Special people receive special treatment. Equal protection under the law turns out to be a fancy fiction. Some people are more equal than others. …An average government official who spent five years breaking the rules to frustrate the Freedom of Information Act, and who recklessly compromised classified information (more than 100 times), including top secret information (eight times), would serve time in federal prison. But Hillary Clinton is almost certain to suffer no consequences at all.

But what about Hillary supposedly having no bad intent, as the FBI Director offered up as a distraction?

This is bunk. Intention is something this law does not require. “Gross negligence” alone is sufficient grounds for prosecution because the officials to which it applies are entrusted with secrets that bring greater obligations than average citizens must bear. Precisely because of that greater risk of prosecution, high-ranking government officials who handle classified information, including Clinton, sign agreements that spell out their legal jeopardy.

Jacob Sullum of Reason also addresses this topic.

…one of the statutes guiding the FBI’s investigation, 18 USC 793, makes it a felony to “mishandle classified information either intentionally or in a grossly negligent way” (emphasis added), as Comey himself notes… Former New York City Mayor Rudy Giuliani, …who was the U.S. attorney for the Southern District of New York during the Reagan administration, says Comey’s description of Clinton’s behavior plainly qualifies as a violation of 18 USC 793(f). …Giuliani told NBC’s Brian Williams yesterday, “because he clearly found a direct violation of 18 United States Code, Section 793, which does not require intent. It requires only gross negligence in the handling of anything relating to the national defense. …The definition of gross negligence under the law is extreme carelessness. It’s the first definition that comes up in the law dictionary. …So that is a clear, absolutely unassailable violation of 18 United States Code, Section 793, which is not a minor statute. It carries 10 years in prison.”

For those who think Rudy Giuliani is perhaps exaggerating because of his support for Trump, then consider the views of former Attorney General Michael Mukasey, who is part of the #neverTrump camp.

It is a felony for anyone entrusted with lawful possession of information relating to national defense to permit it, through “gross negligence,” to be removed from its proper place of custody and disclosed. “Gross negligence” rather than purposeful conduct is enough. …As an example of the kind of information at stake, he described seven email chains classified at the Top Secret/Special Access Program level. These were the emails that the government had said earlier are so sensitive that they will never be disclosed publicly. …To be “extremely careless” in the handling of information that sensitive is synonymous with being grossly negligent.

Needless to say, ordinary Americans would never get this kind of preferential treatment.

David French, a former military officer, explains what would happen to someone in the armed forces who treated national security with the same degree of disdain.

I served ten years as an Army lawyer, and one of my responsibilities was advising the command on matters of military justice, including incidents where soldiers mishandled classified information. And if Hillary Clinton was a soldier, she would lose her security clearance, face administrative action, and face the specter of criminal prosecution. I’ve not only seen the pattern, I’ve also participated in the process. …If Hillary were Captain Clinton instead of the presumptive Democratic nominee and wife of a disbarred former president, the following things would occur, more or less simultaneously. First, the command would immediately suspend her security clearance. …Next, her commander would probably draft an administrative reprimand. …a career-killer if placed in an officer’s permanent file…Finally, the command would consider criminal charges. …the officer would in all likelihood not only violate the Espionage Act (the same statute at issue in Clinton’s case) but also the Uniform Code of Military Justice. …In other words, her actions would have ended her military career, and she would have been fortunate to resign in lieu of enduring a court-martial. In her post-military civilian life, she would have been unemployable in any serious government position… To say that Hillary Clinton is unfit to be commander-in-chief is to give her too much credit. It implies that she might be fit for other positions of responsibility. She’s not fit to be POTUS, and she’s not fit to be a private.

But there is a silver lining to the dark cloud of Hillary favoritism.

We can enjoy some dark humor while the rule of law is further eroded.

The clever folks at Reason TV put together this video showing how Hillary Clinton has blatantly lied about her actions.

By the way, Hillary’s negligence and disdain for national security is just the tip of the iceberg.

She already has engaged in countless other shady acts, such as allowing her top aide, Huma Abedin, to be on the government payroll while simultaneously getting payoffs as an influence peddler.

Or consider the Clinton Foundation. Investor’s Business Daily makes a compelling case that it’s nothing but a racket.

…the Clinton Foundation gathered some $100 million from a variety of Gulf sheikhs and billionaires, not to mention taking in millions of “donations” from private businesses that later benefited from their supposed “charitable” largesse. Some of those who gave big bucks to the Clintons had interests that were, to put it mildly, not in keeping with U.S. interests. …now comes a more serious, far-reaching question: Is the entire Clinton Foundation so full of conflicts of interest and questionable dealings that it amounts to little more than a massive fraud intended solely to enrich its presidential namesake and his family? Charles Ortel, a Wall Street financial analyst, who pored over the Clinton Foundation’s books, filings and records, thinks so. He concluded that “a substantial portion of Clinton Foundation activities is certainly not ‘charitable’ or ‘tax-exempt’ in the accepted legal senses…” the nonprofit watchdog Charity Navigator removed the Bill, Hillary and Chelsea Clinton Foundation from its list of charities because of its “atypical business model.” …Getting rich isn’t a crime. But it might be if you did it in the guise of being a tax-free humanitarian charity, interested only in the betterment of humankind.

The Washington Examiner also has looked at the Clinton Foundation’s dodgy finances and activities.

The Clinton Global Initiative has a curious record of leaving its projects unfinished, despite receiving multiple large donations from foreign interests that could benefit if Hillary Clinton is elected president (and may have already benefited from her service at the State Department). …the initiative has completed fewer than half of the commitments made since 2005. Thirty-six percent of them are listed as being “in progress.” Many others are listed as “stalled,” “unfulfilled,” or haven’t had any progress reported in at least two years. This may just be a sign of bad timing or ineffective philanthropy, but when combined with the rest of the information available about the Clintons’ philanthropic activities, it hints at something more sinister. …accepted a great deal of money in donations from businesses and foreign governments that had a lot to gain from her help.

Here one of the examples that certainly seems tawdry, if not sinister.

In one well-known case, a group of Canadian mining magnates made millions in undisclosed donations to the Clinton Foundation, and a Russian bank closely linked to the Kremlin paid Bill Clinton $500,000 to give a single speech in Moscow. All of these parties involved in funneling money to the Clintons and their enterprises were part of a large mining deal that required approval from a government panel on which Clinton sat.

We also have the Clintonian equivalent of Trump University, as outlined by Professor Jonathan Turley.

Donald Trump has been rightfully criticized and sued over his defunct Trump University. There is ample support for claiming that the Trump University was fraudulent in its advertisements and operations. However, the national media has been…sidestepping a scandal involving the Clintons that involves the same type of fraud allegations. The scandal involves a dubious Laureate Education for-profit online college (Walden) and entails many of the common elements with other Clinton scandals: huge sums given to the Clintons and questions of conflicts with Hillary Clinton during her time as Secretary of State.

Here are some of the sordid details.

Laureate Education was sued over its Walden University Online offering, which some alleged worked like a scam designed to bilk students of tens of thousands of dollars for degrees. Students alleged that they were repeatedly delayed and given added costs as they tried to secure degrees, leaving them deeply in debt. …The respected Inside Higher Education reported that Laureate Education paid Bill Clinton an obscene $16.5 million between 2010 and 2014 to serve as an honorary chancellor for Laureate International Universities. …Various sites have reported that the State Department funneled $55 million in grants during Hillary Clinton’s tenure to groups associated with Laureate’s founder.  That would seem a pretty major story… The Wall Street Journal reported that Laureate was able to “skirt” regulations on reporting “gainful employment” due to its large number of schools and students outside of the country… Laureate has come up in the Clinton email scandal.  In her first year as Secretary of State, Clinton is quoted as directly asking that Laureate be included in a high-profile policy dinner — just months before the lucrative contract was given to Bill Clinton. …the size of the contract to Clinton, the grants from State and the complaints over alleged fraud should warrant a modicum of attention to the controversy.

Let’s close with one final example of Clintonesque sleaze. She apparently thinks insider trading is a good idea so long as the insiders are members of her family.

In 2012, Mezvinski, the husband of Chelsea Clinton, created a $325 million basket of offshore funds under the Eaglevale Partners banner through a special arrangement with investment bank Goldman Sachs. The funds have lost tens of millions of dollars predicting that bailouts of the Greek banking system would pump up the value of the country’s distressed bonds. …newly released emails from 2012 show that she and Clinton Foundation consultant, Sidney Blumenthal, shared classified information about how German leadership viewed the prospects for a Greek bailout. Clinton also shared “protected” State Department information about Greek bonds with her husband at the same time that her son-in-law aimed his hedge fund at Greece. …sharing such sensitive information with friends and family would have been highly improper. Federal regulations prohibit the use of nonpublic information to further private interests or the interests of others. The mere perception of a conflict of interest is unacceptable. …monitoring Greece was part of Clinton’s job description, but, ethically, that does not mean that a family member should make bets that depend upon the actions of another family member.

The point of all this is not that Hillary Clinton is sleazy and corrupt, though that’s one obvious conclusion.

Instead, as I’ve demonstrated over and over again, the real lesson is that Washington is filled with people like her.

And the reason that sleazy people gravitate to Washington is that we have Leviathan-sized government that enables politically well-connected people to obtain vast amounts of unearned and undeserved wealth.

Including lots of Republicans, so this isn’t a partisan argument.

Moreover, the problem almost certainly won’t get solved by electing different people. The only real solution is shrinking the size of government so there’s less opportunity for graft.

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Donald Trump and Hillary Clinton: The Tweedledee and Tweedledum of Statism?

It’s not easy being a libertarian, especially in election years.

• Do you choose not to vote because you either reject your choices or even the entire principle of majoritarianism?
• Do you vote for the Libertarian Party even though that historically is nothing more than an ineffective way of sending a message?
• Or do you strategically cast a vote for a major-party candidate, fully aware that such a person inevitably will be a disappointment in office?

If you’re normally in the last category, 2016 will be especially difficult.

Let’s start with Trump. On the positive side, he’s proposed a good package of tax cuts. And he’s…….ummm……..errrr……well……(scratch head)……

Actually, in terms of specifics rather than rhetoric, the tax cut is about the only market-oriented policy he’s embraced.

On the negative side, he’s a big fan of protectionism, and that’s definitely not a recipe for prosperity. And he’s rejected much-need reforms to entitlement programs, which therefore makes his big tax cut totally unrealistic.

But mostly it’s impossible to know what he really thinks for the simple reason that he probably doesn’t have deep thoughts about public policy (look at his flailing response to the question of debt). Even when he’s been specific, does anyone think he’s philosophically committed to what he has said while campaigning?

So my assessment, as explained in this interview with Neil Cavuto, is that Trump is a grenade that will explode in an unpredictable fashion.

So if you’re a libertarian and you choose to vote for Trump, just be forewarned that you’ll probably be standing next to the grenade when it explodes.

So what about the alternative? Is there a libertarian argument for Hillary Clinton (other than the fact that she’s not Trump)? Can a politician who has spent decades promoting cronyism and redistributionism actually deliver good policy?

Her husband actually did a good job when he was in the White House, but you can probably sense from this debate with Juan Williams on the Stossel show, I’m not overflowing with optimism that she also would preside over a shift to better policy.

Here are a few additional thoughts on my debate with Juan.

Keynesian economics doesn’t work, either in theory or in reality. And it’s laughable that the excuse for Keynesian failure is always that politicians should have spent more money.

Entitlements will cripple America’s economy if left on auto-pilot. I’ve repeatedly made the point that we’re like Greece 10 or 15 years ago. By claiming at the time that there was no crisis, Greek politicians ensured that a crisis eventually would occur. The same thing is happening here.

I’m skeptical about the claim that climate change is a crisis, but a revenue-neutral carbon tax is the most sensible approach if action genuinely is required. But the left prefers sure-to-fail (but very lucrative to cronies) industrial policy.

Government can help create conditions for prosperity by providing core public goods like rule of law, but that only requires a very small public sector, not the bloated Leviathans that exist today.

I’d be delighted to have a woman as President if she had the same principles and judgement as Margaret Thatcher. To be colloquial, that ain’t a description of Hillary Clinton.

Last but not least, I was rhetorically correct but technically wrong about welfare dependency in Hong Kong. I said fewer than 3 percent of Hong Kong residents get public assistance when I should have said that Hong Kong spends less than 3 percent of GDP on redistribution. That’s an amazingly small welfare state, but it does ensnare about 5.5 percent of the population. Which if far lower than the share of the population getting handouts in America, so my point was still very much correct.

Not that any of this matters in the short run since there’s a 99.9 percent probability that America’s next President will be perfectly content to let the country sink further into the swamp of statism.

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Hypocrisy Update: Leftists Want the Peasants (but not Themselves) to Endure Big Government

I wrote last month about Secretary of State John Kerry being a giant hypocrite because he’s been a critic of so-called tax havens, yet he and his family benefits immensely from investments in various low-tax jurisdictions.

But perhaps that’s something that Obama requires when selecting people for that position. It turns out that Kerry’s predecessor also utilized tax havens.

Earlier this year, the New York Post editorialized about Hillary Clinton’s attack against tax havens, which they found to be absurd since the Clinton family benefits significantly from places such as the Cayman Islands.

Hillary Clinton last week lunged into her most flagrant fit of hypocrisy yet. …she took new aim at the rich — including their use of tax dodges. She told MSNBC: “We can go after some of these schemes … the kind of…routing income through the Bahamas or the Cayman Islands or wherever.” Huh. …the Clintons’ family wealth has grown big-time thanks to firms with significant holdings in places like . . . the Caymans. As The Daily Caller notes, Bill Clinton spent years as a partner in his (now-ex-) buddy Ron Burkle’s investment fund Yucaipa Global — registered in the Cayman Islands. …It’s a family thing: Chelsea Clinton’s hubby, Marc Mezvinsky, is a partner in a hedge fund with multiple holdings incorporated in the Cayman Islands.

This isn’t to criticize Cayman, by the way. It’s one of the best jurisdictions in the world if you want high levels of honest governance and very sensible tax and regulatory policies.

But shouldn’t politicians practice what they preach? So why aren’t Kerry and Clinton instead investing in France or Greece to show their support for high tax burdens?

By the way, the editorial also cited the Clinton family’s house, which is owned by a trust to help dodge the death tax, something that I also called attention to back in 2014.

Let’s shift from taxes to the environment. Writing for Real Clear Politics, Ed Conard takes aim at the moral preening of Leonardo DiCaprio.

Time Magazine released its list of the top 100 Most Influential People and placed Leonardo DiCaprio on the cover of its magazine for the personal example he sets on climate change. How Ironic! …According to the leaked Sony documents for example, DiCaprio took six private roundtrip flights from Los Angeles to New York over a 6-week period and, a private jet to the 2014 World Economic Forum in Davos Switzerland. Pictures of him vacationing on big yachts… What hypocrisy! He enjoys the very luxuries that he admonishes others not to indulge.

Oh, wait, he buys carbon offsets, the modern version of purchasing an indulgence.

But Mr. Conard is not very impressed by that bit of moral preening.

So who really paid for DiCaprio’s grossly polluting ways? The rest of the world of course, not DiCaprio. …A person’s consumption is their true cost to the rest of society, not their income, nor their unspent wealth. Does the tax DiCaprio imposes on himself for polluting the world reduce his polluting consumption? Hardly! In fact, it encourages more of it. …DiCaprio, and others like him, buy carbon offsets to sooth their guilt—guilt they never needed to incur in the first place. …they sooth their guilt by voting to spend someone else’s income helping others. They think they have done a good deed when they have really done nothing at all.

I’m not sure I agree that carbon is pollution, and I also don’t like referring to consumption as a cost, but he’s right on the money about DiCaprio being a fraud or a phony (something that Michelle Fields exposed in a recent interview).

Let’s now shift back to taxes.

When I was in Montreal last year for a conference on tax competition, one of the highlights was hearing Governor Sam Brownback talk about his pro-growth tax policy. My least favorite part of the conference, by contrast, was hearing Margaret Hodge, a politician from the United Kingdom, pontificate about the evils of tax avoidance.

And the reason that was such an unpleasant experience is that she’s a glaring hypocrite. Here are some excerpts from a report published by the International Business Times.

Labour’s Margaret Hodge was, according to The Times, among the beneficiaries in 2011 of the winding-up of a Liechtenstein trust that held shares in the private steel-trading business set up by her father. The Times reports that just under 96,000 Stemcor shares handed to Hodge in 2011 came from the tiny principality, which is renowned for low tax rates. Three quarters of the shares in the family’s Liechtenstein trust had previously been held in Panama, which Ms Hodge described last month as “one of the most secretive jurisdictions” with “the least protection anywhere in the world against money laundering”.

Let’s close by identifying one more hypocritical “champagne socialist” from the United Kingdom, as reported by the U.K.-based Telegraph.

Dame Vivienne is now accused of hypocrisy over tax avoidance allegations that put her in direct conflict with one of the Green Party’s main policies. The most recent company accounts show Dame Vivienne’s main UK business is paying £2 million a year to an offshore company set up in Luxembourg for the right to use her name on her own fashion label. Tax experts have described the arrangement as “tax avoidance” that cheats the UK Treasury out of about £500,000 a year. The model is similar to one used by Starbucks, the coffee chain, which found itself at the centre of a protest over its use of Luxembourg to reduce its tax bill in the UK. …One City accountant, who studied the accounts of Vivienne Westwood Ltd, said: “This has to be tax avoidance. Why else would you make these payments to a company in Luxembourg? It makes the Green Party hypocrites for taking her money and Westwood a hypocrite for backing a party with policies she does not appear to endorse.”

So we can add Ms. Hodge and Ms. Vivienne to the list of American leftists who also utilize tax havens to minimize their tax burdens.

And all of the people above, as well as those above, will be charter members of the Statist Hall of Fame whenever I get around to setting up that page.

• The Paris-based Organization for Economic Cooperation and Development, which advocates higher tax for everyone else while providing gold-plated tax-free salaries and benefits to its own employees.
• The leftist political types who say tax havens are bad and immoral while simultaneously utilizing these low-tax jurisdictions to protect and grow their own wealth.
• The politicians and congressional staffers who decided to coerce others into Obamacare while seeking special exemptions for themselves.
• The rich leftists who advocate higher taxes for other people even though they refuse to send more of their own money to Washington.
• Prince Charles of the United Kingdom, who preaches coerced sacrifice for ordinary people even though his “carbon footprint” would be in the top 1 percent.
• The statists who fight against school choice for poor families while sending their own kids to pricey private schools for the elite.
• George Soros for supporting regulation for you and me, but not for himself.
• The Canadian politician who supports government-run healthcare for his constituents but comes to America for private treatment when he’s sick.

And there are a lot more that deserve to be mocked for their statist hypocrisy.

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Taxing Lessons from Europe for Hillary Clinton (a Supposed Fiscal Conservative)

I wrote yesterday about the Obama Administration’s head-in-the-sand approach regarding the anti-competitive nature of America’s corporate tax system (though maybe fiddling while Rome burns is a better metaphor).

Fortunately, some nations have more sensible policy makers. Even in Europe, which might come as a surprise to the pair of class warriors battling for the Democratic nomination.

Consider, for instance, what’s happening in Norway.

Norway will cut the corporate income tax rate to 23 percent from the current 27 percent by 2018…the country’s political parties announced on Wednesday. The basic personal tax rate will also be cut to 23 percent from 27 percent. …As part of the deal, further reductions in the company tax rate will be considered in the future. The compromise included…a small cut in Norway’s wealth tax.

What’s most remarkable about this story from Scandinavia is not that there’s a tax cut, though that surely would be a shock to Bernie Sanders’s mythological view of the Nordic nations.

I think it’s even more noteworthy that Norway already has a far lower corporate tax rate than the United States, yet the government is implementing a further reduction.

And Croatia also is poised to move policy in the right direction.

The reports from government circles that, as part of the tax reform, it could abolish the highest income tax rate of 40 percent have been welcomed by many observers. …“We support such a move. Croatia has a huge ‘brain drain’ of highly educated people, and they fall into the category of those whose salaries are covered by the 40 percent tax rate. Therefore, this decision would contribute to such people remaining in Croatia”, said Bernard Jakelić, the deputy director of the Croatian Employers’ Association. …Former Finance Minister Boris Lalovac (SDP) agreed that the abolition of the tax bracket would be a step in the right direction. …“Croatia is the only country in the region which has such a high rate of income tax. None of the countries in the region have income tax rates higher than 25 percent, and many countries have a flat tax. Its abolition would simplify the tax system and contribute to the reduction of the shadow economy. After all, the taxation of income at a rate of 25 percent is enough”, said Lalovac.

I especially like that the former finance minister makes both an argument based on tax competition and an argument based on the moral principle that there should be a limit on how much government should tax.

Maybe GOPer some day will be smart enough to include a moral component when seeking better tax policy. Especially if they learn that it’s politically persuasive.

So where can voters find a candidate who might implement such reforms in the United State?

Catherine Rampell of the Washington Post suggests that there is a “fiscally conservative” option already available.

Suppose you’re a hardcore fiscal conservative. …All you care about is getting the nation’s fiscal house in order. …the candidate you should vote for might surprise you. …the most fiscally conservative presidential contender left standing is…

Drum roll, please.

…Hillary Clinton.

No, it isn’t April Fool’s Day.

Ms. Rampell wants us to believe that Hillary Clinton is fiscally conservative because her agenda of much bigger government is matched by proposals for much higher taxes.

I’m not joking. Here’s what Rampell wrote.

Here’s the bottom line for the nation’s bottom line: Clinton’s spending increases and other proposals that cost money have a total price tag of about $1.8 trillion over the next decade. But her offsets, which come mostly from tax hikes, would save an estimated $1.9 trillion over that same period… Maybe when (if) voters start to notice this, Clinton will finally receive the praise she’s been due, from arithmetic fans and fiscal conservatives alike.

I suppose this is the point where I should explain that good fiscal policy is defined by a modest-sized government and a tax code that is designed to raise revenue in a relatively non-destructive fashion, not by whether lots of wasteful spending is okay if accompanied by lots of destructive tax hikes (i.e., a fixation on fiscal balance).

But I’ve made that point many times before, so instead I’ll merely observe that Ms. Rampell is either shockingly uninformed or (more likely) she thinks that she has some really stupid right-leaning readers who can be easily tricked into voting for Clinton.

And since we’re focusing on Mrs. Clinton’s ideological bona fides, ask yourself whether Ira Stoll of the New York Sun was describing a “fiscally conservative” candidate last December.

Call it Hillary’s Reichsfluchtsteuer. The former secretary of state and senator from New York, Hillary Clinton, reportedly will announce on Wednesday plans to impose an “exit tax” on companies that move their headquarters out of America or merge with foreign firms to escape America’s unreasonably high corporate taxes. …the Reichsfluchtsteuer, or Reich flight tax, was a 25% levy imposed originally…by the pre-Hitler, centrist government of Heinrich Brüning… Not exactly something to try to emulate. …As I pointed out back in 2012, the Universal Declaration of Human Rights, a product of the United Nations, says, “Everyone has the right to leave any country, including his own” and “No one shall be arbitrarily deprived of his property.” …it is unjust to force people or companies to stay where they do not want to be. …In 1963, at the Berlin Wall, President Kennedy said, “Freedom has many difficulties and democracy is not perfect, but we have never had to put a wall up to keep our people in, to prevent them from leaving us.” Hillary Clinton’s exit tax would do exactly what Kennedy said we’ve never had to do: set up a virtual wall, in the form of a tax, to prevent companies from leaving America.

There’s something rather odious about a politician who wants to extort money from taxpayers as a price for re-domiciling. As a general rule, only very evil regimes levy such taxes.

Speaking of unsavory regimes, let’s play a fill-in-the-blank game. Here’s the first sentence from a recent Associated Press story.

___________ is looking to increase revenue from taxation.

Is the answer Hillary Clinton? That’s a good answer, but not correct in this case. What about Bernie Sanders of Barack Obama? Once again, smart guesses but not accurate for this story.

Give up? Well, here’s your answer.

The Islamic State extremist group is looking to increase revenue from taxation.

I share this item because this it reminded me of the time I gave a speech about reforming the welfare state and a leftist in the audience basically accused me of being a racist because the KKK also didn’t like the welfare state. The fact that I urged reform in part because poor people are hurt by such programs apparently didn’t matter to my accuser.

That being said, if we accept his logic, I guess this means we can accuse Hillary Clinton, Bernie Sanders, and Barack Obama of being in favor of Islamic terrorism because they share a goal with the Islamic State crazies.

Sigh. Needless to say, Hillary isn’t a radical Islamist. Just like Obama isn’t a communist simply because he was endorsed last election by the former head of the U.S. Communist Party.

I just wish folks on the left were equally prudent about avoiding absurd guilt-by-association charges.

P.S. Bruce Bartlett also claimed (presumably for the same disingenuous reason) that Obama is a conservative because of his proposed tax hikes, so Ms. Rampell is not alone.

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Three Simple Reasons Why Hillary and Bernie’s Real Plan Is to Soak the Middle Class

If you follow the contest between Hillary Clinton and Bernie Sanders, most of the tax discussion is about who has the best plan to squeeze the rich with ever-higher tax rates.

For those motivated by spite and envy, Bernie Sanders “wins” that debate since he wants bigger increases in the tax rates on investors, entrepreneurs, business owners, and other upper-income taxpayers.

For those of us who don’t earn enough to be affected by changes in the top tax rates, this may not seem to be a relevant discussion. Some of us like the idea of higher tax rates on our well-to-do neighbors because we expect to get a slice of the loot and we think it’s morally okay to use government to take other people’s money. Others of us don’t like those higher rates because we don’t resent success and we also worry about the likely impact on incentives to create jobs and wealth.

But all of us are making a mistake if we think that the policy proposals from Bernie and Hillary won’t mean higher taxes on ordinary Americans.

Here are three basic proposition to help explain why lower-income and middle-income taxpayers are the ones who face the biggest threat.

1. Hillary and Bernie want government to be much bigger, because of both built-in expansions of entitlements and a plethora of new handouts and subsidies.
2. There’s not much ability to squeeze more money from the “rich” and America already has the developed world’s most “progressive” tax system.
3. The only practical way to finance bigger government is with big tax hikes on the middle class, both with higher income taxes and a value-added tax.

There’s not really any controversy about the first proposition. We know the two Democratic candidates are opposed to genuine entitlement reform, so that means the burden of government spending automatically will climb in coming decades. And we also know that Hillary and Bernie also want to create new programs and additional spending commitments, with the only real difference being that Bernie wants government to expand at a faster rate.

So let’s look at my second proposition, which may strike some people as implausible, particularly the assertion that America has the most “progressive” tax system. After all, don’t European nations impose higher tax rates on the “rich” than the United States?

Yes and no, but first let’s deal with the issue of whether the rich are a never-ending spigot of tax revenue. The most important thing to understand is that there’s a huge difference between tax rates and tax revenue. If you don’t believe me, simply look at the IRS data from the 1980s, which shows that upper-income taxpayers paid far more to Uncle Sam at a 28 percent tax rate in 1988 than they paid at a 70 percent tax rate in 1980.

And keep in mind that there are incredibly simple – and totally legal – steps that well-to-do taxpayers can take to dramatically lower their tax exposure.

The bottom line is that high tax rates penalize productive behavior and encourage inefficient tax planning, the net effect being that higher tax rates won’t translate into higher revenue.

Moreover, as shown by a different set of IRS data, the American tax system already is heavily biased against the so-called rich. Even when compared with other countries. There are some nations that impose higher top tax rates than America, to be sure, but that’s only part of the story. The “progressivity” of a tax system is based on what share of the burden is paid by the rich.

And if you look at this data from the Tax Foundation, particularly the two measures of progressivity in columns 1 and 3, you can see that the United States gets a greater share of taxes from the rich than any other developed nation.

By the way, the data is from the middle of last decade, so the numbers are probably different today. But since we’ve taken more people off the tax rolls in the past 10 years in America while also increasing tax rates on upper-income households, I would be shocked if the United States didn’t still have the most “progressive” tax code.

In any event, the most important takeaway from the Tax Foundation data is that America has the most “progressive” tax system not because we impose the highest tax rates on the rich, but rather for the simple reason that the tax burden on lower-income and middle-income taxpayers is comparatively mild.

In other words, the tax burden on the rich in America is not particularly unusual. Some nations impose higher tax rates and some countries impose lower tax rates. But because other taxpayers in the U.S. pay very low effective tax rates, that’s why the overall tax code in the United States is so tilted against the rich.

Which brings us to the third proposition about the middle class being the main target of Hillary and Bernie.

Simply stated, the only practical way of financing bigger government is by raising the tax burden on lower-income and middle-income Americans. As already explained, there’s not much leeway to generate more tax revenue from the “rich.”

In other words, the rest of us have a bulls-eye painted on our backs. Our tax burden is relatively low by world standards and there are simple and effective ways that politicians could grab more of our income.

Let’s look at some of the details. The folks at the Pew Research Group crunched the data for 39 developed nations to compare tax burdens for various types of middle-income households. As you can see, taxpayers in the United States are relatively fortunate, particularly if they have kids.

Here are some excerpts from the article.

…most research has concluded that, at least among developed nations, the U.S. is on the low end of the range.  We looked at 2014 data from the Organization for Economic Cooperation and Development’s database of benefits, taxes and wages, which has standardized data from 39 countries going back to 2001 and allows comparisons across different family types. …We calculated this for four different family types: a single employed person with no children; two married couples with two children, one with both parents working and the other with one worker; and a single working parent. In all cases, the U.S. was below the 39-nation average – in some cases, well below. …Much of the difference in relative tax burdens among different countries is due to the taxes that fund social-insurance programs, such as Social Security and Medicare in the U.S. These taxes tend to be higher in other developed nations than they are in the U.S.

And here’s the most shocking part of the article. The aforementioned data only considers income taxes and payroll taxes.

…the OECD data don’t include…other national taxes, such as…value-added taxes.

This is a huge omission. The average VAT in Europe is now 21 percent, so the actual tax burden on taxpayers in other nations is actually much higher than shown in the chart prepared by Pew.

Let’s look at the scorecard.

• Non-rich Europeans pay higher income tax rates.
• Non-rich Europeans pay higher payroll taxes.
• Non-rich Europeans pay the value-added tax.

And because all these taxes on lower-income and middle-income people are the only effective and realistic way to finance European-sized government, this is the future Hillary and Bernie want for America. Even though they won’t admit it.

P.S. I can’t resist pointing out that the countries most admired by Bernie Sanders, Denmark and Sweden, both have tax systems that are far less “progressive” than the United States according to the Tax Foundation data. And the reason for that relative lack of progressivity is because of a giant fiscal burden on lower-income and middle-income taxpayers. And that’s what will happen in the United States if entitlements aren’t reformed.

P.P.S. Since I’m a fan of the flat tax, does that mean I like the countries with lower scores in column 3 of the Tax Foundation table? Yes and no. A lower score obviously means that a nation’s tax code isn’t biased against successful taxpayers, but it’s also important to look at the overall size of the public sector. Sweden’s tax system isn’t very progressive, for instance, but everyone pays a lot because of a bloated government. It’s far better to be in Switzerland, which has the right combination of a modest-sized government and a non-discriminatory tax regime.

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Tax-the-Rich Delusions from Hillary and Bernie

Hillary Clinton and Bernie Sanders are basically two peas in a pod on economic policy. The only difference is that Sanders wants America to become Greece at a faster rate.

Folks on the left may get excited by whether we travel 60 mph in the wrong direction or 90 mph in the wrong direction, but this seems like a Hobson’s choice for those of us who would prefer that America become more like Hong Kong or Singapore.

Consider the issue of taxation. Clinton and Sanders both agree that they want to raise tax rates on investors, entrepreneurs, small business owners, and other “rich” taxpayers. The only difference is how high and how quickly.

Scott Winship of the Manhattan Institute has a must-read column on this topic in today’s Wall Street Journal.

He starts by speculating whether there’s a rate high enough to satisfy the greed of these two politicians.

Here is a question to ask Hillary Clinton and Bernie Sanders: What is the best tax rate to impose on high-income earners…? Perhaps they think it is 83%, a rate that economists Thomas Piketty and Emmanuel Saez hypothesized in 2014… Or maybe it is 90%, which Sen. Sanders told CNBC last May was not out of the question.

He then points out that there were very high tax rates in America between World War II and the Reagan era.

…the U.S. had such rates in the past. From 1936 to 1980, the highest federal income-tax rate was never below 70%, and the top rate exceeded 90% from 1951 to 1963. …The discussion of these rates can easily create the impression that the federal government collected far more money from “the rich” before the Reagan administration.

But rich people aren’t fatted calves awaiting slaughter. They generally are smart enough to figure out ways to avoid high tax rates. And if they’re not smart enough, they know to hire bright lawyers, lobbyists, and accountants who figure out ways to protect their income.

Which is exactly what happened.

The effective tax rates actually paid by the highest income earners during the 1950s and early ’60s were far lower than the highest marginal rates. …In the 1960s, for example, the average rate paid by the top 0.1% of tax filers—the top 10th of the top 1%—ranged from 26.5% to 29.5%, according to a 2007 study by Messrs. Piketty and Saez. Even during the 20 years after the Reagan tax cuts, the top 10th of the top 1% paid an average rate of 23.7% to 33%—essentially the same as in the 1960s.

Gee, sounds like Hauser’s Law – a limit on how much governments can tax – is true, at least for upper-income taxpayers.

And Winship provides some data showing that high tax rate are not the way to collect more revenue.

When average tax rates went up from 27.6% in 1965 to 34% in 1975, revenues went down, from 0.6% to 0.5% of the sum of GDP plus capital gains. When average tax rates declined to 23.7% over the second half of the 1970s and the ’80s, tax revenues from the top went up, reaching 0.8% of GDP plus capital gains in 1990. …in the early 1990s, Presidents George H.W. Bush and Bill Clinton raised average tax rates at the top, and revenue from the top 0.1% eventually skyrocketed. But the flood of revenue overwhelmingly reflected not the increase in rates but the stock market’s takeoff… Consider: If the higher top tax rates had caused the growth in revenue, then revenues should have fallen when Mr. Clinton cut the top tax rate on capital gains to 20% from 28% in 1997. But revenues from the top 0.1% kept pouring in.

And if you want more detail, check out the IRS data from the 1980s, which shows that rich taxpayers paid a lot more tax when the top rate was dropped from 70 percent to 28 percent.

That was a case of the Laffer Curve on steroids!

No wonder some leftists admit that spite is their real reason for supporting confiscatory tax rates on the rich, not revenue.

But what if the high tax rates are imposed on a much bigger share of the population, not just the traditional target of the “top 1 percent”?

Well, even hardcore statists who favor punitive tax policy admit that this would be a recipe for economic calamity.

Mr. Piketty said, “I firmly believe, that imposing a 70% or 80% marginal rate on large segments of the population (say, 25% of the population, or even 10%, or even a few percentage points) would lead to an economic disaster.” In other words, sayonara increased tax revenue.

Heck, even the European governments with the biggest welfare states rarely impose tax rates at those levels.

And when they do (as in the case of Hollande’s 75 percent tax rate in France), they suffer severe consequences.

Which is why the real difference in taxation between the United States and Europe isn’t the way the rich are taxed. Government is bigger in Europe because of higher tax burdens on the poor and middle class, specifically onerous value-added taxes and top income tax rates that take effect at relatively modest levels of income.

In other words, the rich already pay the lion’s share of tax in the United States. But not because we have 1970s-style tax rates, but because the tax burden is relatively modest for lower- and middle-income people.

Which brings us to Winship’s final point.

Proposals to soak the rich by raising their tax rates are unlikely to yield the revenue windfall that Mr. Sanders or Mrs. Clinton are dangling before voters. Leveling with the American people means…admitting that they will have to raise the money from tax hikes on middle-class voters.

Though he “buried the lede,” as they say in the journalism business. The most important takeaway from his column is that the redistribution agenda being advanced by Clinton and Sanders necessarily will require big tax hikes on the middle class.

Indeed, the “tax-the-rich” rhetoric they employ is simply a smokescreen to mask their real goals.

Which is why I included that argument in my video that provided five reasons why class-warfare taxation is a bad idea.

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Unicorns and Loch Ness Monsters Aren’t Real, but Hillary Clinton and Jerry Brown Prove that there Are (Occasionally) Honest Leftists

On rare occasions, our government-loving friends let their guard down and say things that reveal the true nature of leftism as a punitive philosophy that subjugates the individual to the state.

An English leftist named Richard Murphy, for instance, actually argued that private income is the “rightful property” of government.

An American statist named Matt Yglesias openly expressed a desire for ultra-high tax rates solely for reasons of spite rather than to finance bigger government.

We now have another leftist who deserves recognition for openly embracing the notion that people should be pawns of government. The Governor of California, Jerry “Moonbeam” Brown, has bragged that coercion is the core of modern leftism.

Here are some excerpts from a recent Los Angeles Times story.

Gov. Jerry Brown has been…been making an explicit case for the power of government. …Brown said politicians need to be willing to use the blunt force of government intervention… “You need the coercive power of government to say, do this,” the governor said during a panel discussion… “Never underestimate the coercive power of a central state…,” he said.

Kudos to Gov. Brown. He didn’t use fatuous rhetoric about “government is just a word for things we do together.”

He openly acknowledges that statism is force, backed up by men with guns, based on what politicians want other people to do.

Now let’s look at another politician who deserves credit for honesty.

Though, rather ironically, we’re talking in this case about a politician who generally is known for mendacity and prevarication, so this belongs in the stopped-clock-is-right-twice-a-day category.

That’s because the Daily Caller reports that Hillary Clinton accidentally stumbled into a bit of honesty when discussing the economic impact of Obamacare.

Democratic Party front-runner Hillary Clinton inadvertently slammed President Barack Obama’s signature piece of domestic legislation, the Affordable Care Act, as a full-time job killer. …a women stood up and asked, “I just want to know why there’s like discrimination against the part-time workers… Clinton said. “That…Affordable Care Act.” …Clinton continued, “…we have built in some unfortunate incentives that discourage full-time employment.”

But these excerpts from the story don’t fully capture what Hillary said.

Watch this short video and it will be very clear that she’s admitting that Obamacare has undermined full-time work.

Wow, this sounds like she’s actually aware that Obama’s failed policy is pushing people into part-time work.

And maybe she’s even familiar with the research, from both private scholars and the Congressional Budget Office, on Obamacare having a negative impact on employment.

In any event, I think you’ll agree with me that Hillary deserves recognition for recognizing that there are real-world consequences to statist policy.

Sort of like these other leftists who have admitted that big-government policies backfire.

Nicholas Kristof wrote on the problem of government-caused dependency.

Jeffrey Goldberg admits gun ownership reduces crime.

Justin Cronin explains how he became a left-wing supporter of gun rights.

Jamelle Bouie pours cold water on Obama’s gun control agenda.

Though we shouldn’t be overly impressed that Hillary recognize a problem since it’s quite possible – indeed, probably nearly certain – that her solution will be to expand the size and scope of government and make the situation even worse.

In other words, she’ll probably combine the sentiments in this poster with the sad reality of Mitchell’s Law.

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Hillary Humor

Looking through my archives, Hillary Clinton rarely has been the target of political humor. I did share a quiz last year that definitely had a snarky tone, but the main goal was to expose her extremist views.

Similarly, I mocked both her and her husband that same year for plotting to minimize their tax burden, but I was simply calling attention to their gross hypocrisy.

The only pure Hillary-focused humor I could find was from 2012 and it wasn’t exactly hard hitting.

Well, it’s time to correct this oversight. Thanks to the bubbling email scandal, we have lots of material to share.

Let’s start with a video from the clever folks at Reason TV.

Needless to say, cartoonists also have had lots of fun with the former Secretary of State’s dodgy behavior.

Here’s Steve Kelley’s contribution.

And here’s how Dana Summers assessed the situation.

And Ken Catalino reminds us that Email-gate is just the tip of the iceberg when looking at Hillary scandals.

And since we’re have some fun with Mrs. Clinton, here’s someone’s clever photoshop exercise, calling attention to her habit of extorting huge payments for platitude-filled speeches.

And here’s a bit of humor that has a PG-13 rating, so in keeping with my tradition, it’s minimized so only folks who enjoy such humor will go through the trouble of clicking on the icon. The rest of you can continue below.

P.S. Hillary Clinton is portrayed as the “establishment candidate” for the Democrats. Some people interpret that to mean she’s a moderate, particularly when compared to a fraudster like Elizabeth Warren. But if you check out these statements, you’ll see that she’s a hard-core statist on economic issues. Indeed, there’s every reason to think she’s as far to the left as Obama.

P.P.S. Bill Clinton, by contrast, did govern from the center.

Sure, his reasonable (and in some cases admirable) track record almost certainly was a result – at least in part – of having a GOP Congress, but you’ll notice that Obama hasn’t moderated since GOPers took control on Capitol Hill.

For more evidence, check out this interesting (albeit complex) graph put together by Professor Steve Hanke. You’ll notice that Bill Clinton’s pro-market record generated results similar to what Reagan achieved (and Michael Ramirez makes the same point in this cartoon).

Needless to say, I fear that Hillary Clinton would be more like Obama and less like her husband.

P.P.P.S. In addition to his decent performance in office, Bill Clinton also has been the source of lots of enjoyable humor. You can enjoy my favorites by clicking here, here, here, here, here, and here.

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