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If you took a poll of Washington’s richest and most powerful people, you would probably find more than 90 percent of them support tax increases.

At first glance, this doesn’t make sense. Why would a group of upper-income people want tax hikes? Are they self-loathing and guilt-ridden?

Perhaps, but there’s a better explanation. These are people whose lavish lifestyles are because of big government. And when government gets even bigger, they have more chances to obtain unearned wealth.

So it makes perfect sense for them to support tax increases. They may send an additional 5 percent of their income to the IRS, but their income will be 20 percent higher because of all the money sloshing around Washington.

Once you understand their motivations, it’s easy to understand why Washington insiders are so supportive of “bipartisan budget deals” and why they salivate so much for a value-added tax.

And you can also see why they’re so anxious to get a President who hasn’t signed the no-tax-hike pledge.

Which may explain why Jeremy Scott, the editor of Tax Notes, is upset that Governor Jeb Bush is now expressing opposition to tax hikes. Here’s some of what he wrote for Forbes, starting with a description of Bush’s original open-to-tax-hikes position.

Before announcing his candidacy, former Florida Gov. Jeb Bush said he wouldn’t agree to Grover Norquist’s pledge not to raise taxes, and he hinted that he would, in fact, trade $10 of spending cuts for $1 of tax increases. …he went out of his way earlier this year to talk about his flexibility on fiscal policy.

That part of Mr. Scott’s column is accurate.

I also noticed Gov. Bush’s stance at the time, albeit it caused me to worry because politicians will never impose meaningful spending restraint and reform entitlements if they think tax increases are feasible.

Anyhow, Scott then points out that Gov. Bush seems to have moved to an anti-tax hike position.

At an August 2 conference…, Bush flatly said no when asked if he would accept tax hikes as part of a budget deal. “We’ve raised taxes. What we need to be doing is entitlement reform, curbing the growth of spending, creating a high-growth scenario,” the former governor elaborated.

I’m not sure if what Bush said puts him firmly in the no-tax-hike camp, but it’s certainly true that his rhetoric has moved in the right direction.

Which doesn’t make Scott happy. And here’s where he veers from accurate reporting to sloppy and bizarre assertions.

If Jeb Bush needs to shore up his right flank on taxes, it reveals that the GOP has veered far from its positional flexibility that made the 1980s so successful for tax reform efforts. President Reagan was willing to accept tax increases as part of grand bargains on taxes and fiscal policy. …the GOP…won’t control 60 seats in the upper chamber. That means they will need at least some Democratic support. And no party will want to undertake tax reform without at least some bipartisanship. A Jeb Bush victory in 2016 seemed like the best-case scenario for people who want some kind of broad tax reform. His retreat on a willingness to compromise is a major blow to those hopes.

Wow, that’s a lot of misleading statements in a short excerpt.

Let’s correct some of Mr. Scott’s mistakes.

  1. The 1986 Tax Reform Act was revenue neutral. In other words, it was designed so that the government didn’t get any additional money. Scott is completely wrong to assert that a willingness to raise taxes is a prerequisite for tax reform.
  2. Scott is correct that Reagan acquiesced to some tax increases, but he conveniently fails to share the data showing that “grand bargains” with tax hikes invariably failed to produce good results. The only deal that led to a balanced budget was the 1997 agreement that lowered taxes.
  3. It is incorrect to assert that 60 votes are needed in the Senate to enact major fiscal legislation. Yes, the filibuster still exists, but budget rules explicitly allow “reconciliation” bills that don’t require supermajority support.
  4. A pro-tax hike candidate is only the “best-case scenario” if one thinks that voters should be tricked by using tax reform as a Trojan Horse for tax increases.

The final point is the one that really matters. To reiterate what I stated earlier, the Washington establishment is unified in its support of higher taxes for the obvious reason that more money flowing to Washington is good news for politicians, bureaucrats, consultants, lobbyists, cronyists, special interests, contractors, and other insiders.

Simply stated, a bigger government means they get richer (and they’ve been quite successful, as you can see from this depressing map).

Here’s the bottom line.

Using the term “grand bargain” also doesn’t change the fact that higher taxes will lead to weaker growth, more spending, and larger deficits.

And (mis)using the term “tax reform” doesn’t change the fact that higher taxes will lead to weaker growth, more spending, and larger deficits.

Nor does a reference to “flexibility” change the fact that higher taxes will lead to weaker growth, more spending, and larger deficits.

I could continue, but you get the point.

P.S. Let’s close by shifting to another topic. Many people express disbelief when I argue that politicians such as Barack Obama and Bernie Sanders are not socialists.

In my defense, I’m making a technical point about the economic definition of socialism, which means government ownership of the means of production. And the vast majority of American leftists don’t seem overly interested in having government steel companies, government banks, or government farms. They prefer instead to allow private ownership combined with high levels of taxation and regulation.

If you want to see a real socialist, look on the other side of the Atlantic, where the Labour Party appears poised to elect a complete loon as its leader. The U.K.-based Independent reports that Jeremy Corbyn favors “common ownership” of industry.

…the man who has set alight the leadership race says the party needs to reinstate a clear commitment to public ownership of industry in a move which would reverse one of the defining moments in Labour’s history. …Corbyn reveals that he wants to reinstate Clause Four, the hugely symbolic commitment to socialism scrapped under Tony Blair 20 years ago, in its original wording or a similar phrase that weds the Labour Party to public ownership of industry. …The old Clause Four stated that the party was committed to “common ownership of the means of production, distribution and exchange”

I can’t think of any Democrats who admit to favoring similar language for their party platform.

Though I should acknowledge that we have a government-run rail company in America, a government-run postal service, a government-run retirement system, and a government-run air traffic control system, all of which would be better in the private sector. And I’m sure Obama, Sanders, and many other politicians would be opposed to privatization.

So maybe the most accurate way of describing leftist politicians in America is to say that they’re redistributionists with a side order of socialism.

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At the risk of upsetting a certain type of feminist, I’m going to openly admit that I believe in chivalry.

And that means more than just holding open doors for women or giving up my seat on a bus. Because of my old-fashioned values, I also believe in helping out when there’s a damsel in distress.

And Congresswoman Debbie Wasserman Schultz is in distress. The lawmaker (who also serves as Chair of the Democratic National Committee) has now been asked two times to explain the difference between a Democrat and a socialist.

As reported by the Free Beacon, she gets a deer-in-the-headlights look on her face and resorts to empty talking points rather than giving a real answer.

Democratic National Committee chair Debbie Wasserman Schultz (D., Fla.) could not take advantage of a second opportunity Sunday on Meet the Press to explain the difference between Democrats and far-left socialists. Schultz was flustered by MSNBC’s Chris Matthews Thursday when asked the same question during a discussion of the popularity of socialist Sen. Bernie Sanders… Amazingly, despite the clip of her non-answer going viral this week, Schultz gave almost the same answer to host Chuck Todd. He played the clip of her with Matthews and asked her to respond. …Schultz went on to her usual playbook about Republican extremism and that Democrats were the party to help people enter the middle class. Todd, for his part, did not note at the time that Schultz completely failed to answer his direct question.

Here’s the video clip if you want to see Ms. Wasserman Schultz helplessly flounder and she dodges the question.

Painful to watch, right?

And just imagine how much worse it would have been if Todd had been a real journalist and put a stop to her filibuster and actually asked her to answer the question!

So, like Sir Galahad from the Knights of the Round Table, I feel compelled to come to the aid of Ms. Wasserman Schultz. When asked again about the difference between socialists and Democrats, here’s what she should say.

There’s a big difference. As pointed out by my good friend Dan Mitchell, socialists technically believe government should own the means of production, which means government-owned and operated steel mills, car companies, railroads, banks, etc. Democrats, by contrast, believe in nominal private ownership of the means of production, but with lots of subsidies, handouts, redistribution, protectionism, intervention, regulation, and bailouts. The bottom line is that Bernie may call himself a socialist and his rhetoric may be rather heated, but his views – and voting record – make him a conventional Democrat.

See how easy it would be for her to give a good and honest answer. And because of my chivalry, I don’t even expect a $10,000-per-month consulting contract from the DNC.

I offer this advice out of the goodness of my heart (and my belief in honest portrayals of economic policies).

P.S. I also would advise Ms. Wasserman Schultz not to use Thomas Sowell’s description of the left’s economic views. It’s quite accurate, but the term has a wee bit of baggage nowadays.

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As far as I’m concerned, a key gateway test of whether someone might be a libertarian is whether they get upset when ordinary people are mistreated or brutalized by government.

Though admittedly any decent person should get upset by those examples.

So perhaps we need something more detailed to identify supporters of limited government, individual freedom, and personal responsibility. So when one of my friends sent me the “definitive political orientation test,” I immediately was tempted to see my score.

I don’t know if it’s the “definitive” test, but it seems reasonably accurate. As you can see, I’m about as libertarian as you can be without being an anarchist who wants zero government.

Though I should point out that there aren’t any questions on anarchism. I think the test probably assumes anarchism if your answers are both anti-welfare state and anti-defense.

This “circle test” is probably a simpler way of determining where you are on the big government-some government-no government spectrum.

But the most more sophisticated measure of libertarianism is Professor Bryan Caplan’s test. I only got a 94 out of a possible 160, which sounds bad, but that was still enough for my views to be considered “hard-core.”

And since we’re looking at online surveys, here are my results from the “I Side With” quiz. I don’t endorse candidates (as if anyone would care), but this quiz suggests that Rand Paul is closest to my views, followed by Scott Walker and Marco Rubio.

For what it’s worth, I’m not exactly shocked to see Hillary Clinton and Bernie Sanders at the bottom.

By the way, since we’ve shifted to a discussion of the 2016 race, I was the warm-up speaker for Governor Jeb Bush at a recent “Road to Reform” event in New Hampshire sponsored by Americans for Prosperity. Here’s what I said about fixing the budget mess in Washington.

You can watch the entire event and also see what the governor said by clicking here.

And for folks in Nevada, I’ll be the warm-up speaker for a similar event with Ted Cruz on August 14.

P.S. The most inaccurate political quiz was the one that classified me as a “moderate” with “few strong opinions.”

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I’ve had several reporters ask me to comment on the philosophical and policy differences between Hillary Clinton and Bernie Sanders.

I’m always happy to oblige, yet I don’t think any of them have included my comments in their stories because I always give what seems to be a very unsatisfactory response.  My standard line is that Sanders and Clinton are two peas in a statist pod.

Yes, I realize that Sanders has a more aggressive us-vs-them approach, while Hillary is calculated and cautious, but those are merely differences in rhetoric and style.

What matters is action. And if you look at the Senate voting records of Sanders and Clinton, there’s almost no difference between them (or, for that matter, between them and Obama).

Let’s look at some of their policy proposals. Here are some excerpts from a Townhall column on Sanders’ statist agenda.

According to Bernienomics, raising the minimum wage to $15 an hour would prevent greedy capitalists from exploiting their workers and paying below a “living wage.” …Sanders…is…fighting for European style “free college”…Sanders supports the Environmental Protection Agency’s CO2 emission standards, even though these will raise the costs of energy and manufacturing. Sanders also supported allowing the Federal Communications Commission to regulate the internet as public utility… Sanders wants to raise taxes on the rich as much as possible…he has stated his desire to tax the rich at more than a 50 percent income tax rate. Sanders also recently proposed a massive increase in the estate tax… Sanders believes that Social Security is the “most successful government programs in American history,” so it only makes sense that he wants to expand it. …Sanders is also a major proponent of a single-payer health care system.

In other words, a typical statist agenda.

What about Hillary? Well, she’s must more guarded in what she says, but you can get a sense for her ideological mindset by looking at her new scheme to boost the capital gains tax.

Here’s some of what Ryan Ellis wrote for Americans for Tax Reform.

Hillary Clinton today proposed the most complex and Byzantine capital gains tax rate regime in history. …Under the Clinton plan, there would be six – yes, six — capital gains tax rates for those whose total taxable income puts them in the top 39.6 percent bracket. …or taxpayers not in the 39.6 percent bracket, we already have a graduated capital gains structure on assets held longer than a year. For taxpayers in this range, the rates could be 0, 15, 18.8, 20, or 23.8 percent. …her plan actually creates 10 different tax rates on capital gains, not counting those gains taxed as ordinary income due to their shorter duration of ownership. By anyone’s definition that’s really stupid tax policy. It will only serve to distort capital markets as investors will buy and sell not based on rational market signals, but on exogenous, arbitrary tax holding period considerations.

Not to mention that higher tax rates on investment will discourage risk-taking and entrepreneurship. And let’s not forget that it’s not a smart idea, from the perspective of competitiveness, to have the world’s highest capital gains tax rate. Or to pursue policies that will depress capital formation and thus lead to lower wages.

Now let’s get back to the main question. Is there a difference between Sanders and Clinton?

One could argue that Sanders has a more robust left-wing agenda. But that doesn’t make Clinton a moderate. Indeed, I challenge anyone to identify a single position she holds that would result in smaller government or less intervention.

The bottom line, as illustrated by this cartoon prepared by Jonathan Babington-Heina, is that Sanders and Clinton only differ in how fast they want to travel in the wrong direction.

P.S. This is the second cartoon from Jonathan I’ve shared. He also put together a superb cartoon that depicts the senseless damage caused by double taxation.

P.P.S. You also can get a sense of Hillary’s leftist mindest by looking at some of the crazy things she’s said over the years.

And to be balanced, Bernie also says crazy things. Let’s close with this example of political humor I saw on Twitter.

And here’s some more Hillary humor if you still haven’t received your recommended daily allowance.

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A few days ago, I had some fun by writing a tongue-in-cheek column about the world’s most misleading headlines.

Today, I want to share a strong contestant for the world’s most depressing headline.

It’s from The Hill, and it’s the lead to a story about giddy times for Washington’s lobbying community.

So why are lobbyists rolling in cash? What accounts for all the dollars flowing to the influence-peddling community?

The answer, as noted in the article, is that there’s been an end to gridlock.

Nearly all of Washington’s top lobby shops saw gains in revenue in the first half of 2015 as an uptick in activity within both Congress and the Obama administration translated to a boon for K Street. Following a period of relative stagnation in the two-year span preceding the 2014 elections, the Beltway’s biggest lobbying firms have broken through the malaise… “Corporations are a lot more optimistic about whether to invest in Washington,” said Marc Lampkin, a former aide to Speaker John Boehner (R-Ohio)… K Street’s top firm — Akin Gump Strauss Hauer & Feld — continued to bolster its advocacy revenue, earning $10.23 million in the second quarter. …“I think our success during the first half of 2015 reflects the…high degree of activity in Congress,” said Don Pongrace, head of the firm’s public law and policy practice.

In other words, an “uptick in activity” in what gives special interests an incentive to “invest in Washington.”

So the obvious lesson is that if you want to reduce lobbying in Washington, the best option is for Washington to do nothing. My personal preference is to make Congress a part-time legislature. That’s worked out quite well for Texas, so why not try it in the nation’s capital?

But if that option isn’t available, then I’m a big fan of gridlock. Simply stated, if my choices are for politicians to do nothing or to have politicians make government bigger, the answer is obvious.

Which is why I was initially very worried when I saw this headline from another story published by The Hill.

This sounds like my worst nightmare. The last thing we should want is productive politicians!

That’s sort of like having productive pickpockets.

But if you read the story, Governor Bush says he wants a lot of activity as part of an effort to shrink “the federal footprint.”

…the GOP presidential candidate said he’d announce tax and regulatory reform proposals over the “coming months,” as well as changes to entitlement programs and a replacement for ObamaCare. …”The overspending, the overreaching, the arrogance and the sheer incompetence in that city — these problems have been with us so long that they are sometimes accepted as facts of life…” Bush criticized Washington for operating on autopilot, ticking off a slew of pitches meant to push back against what he characterized as a needless expansion of the federal footprint.

And it’s true. Fixing all these problem will require lots of legislation.

So while I’m generally very uneasy with the notion of a “productive” Congress, I also realize that lots of reforms will be needed to restore economic vitality.

Now let’s consider one final headline. This one is from a report in the New York Times, and it also revolves around Jeb Bush and his campaign.

And here’s some of what’s in the article.

Jeb Bush…outlined a wide-ranging plan on Monday to rein in the size of the federal government and curb the influence of lobbyists who live off it. …His proposals, modeled on his record as a budget-cutting governor, amounted to…an assault on the culture of Congress

By and large, this sounds good.

But here’s the catch. You don’t need specific anti-lobbying reforms (such as Bush’s proposed six-year ban on lobbying when Senators and Representatives leave office) if you actually are serious about reducing the size and scope of the federal government.

Reducing the power of Washington is the best way of starving DC’s special-interest community.

Indeed, it’s the only genuinely effective way. I explain in this video that laws to control corruption in Washington don’t work because they don’t address the real problem of politicians having far too much influence over the economy.

I hope you noticed the balloon analogy at the end of the video. If you don’t like Washington’s parasite class, the only way to curtail their privileged existence is with smaller government.

By the way, I don’t want to imply that all lobbying is bad. It all depends on whether lobbyists are engaged in self-defense or extortion. Here’s some of what I wrote last year.

…lobbying is not necessarily bad. If a handful of business owners want to join forces to fight against higher taxes or more regulation, I’m all in favor of that kind of lobbying. They’re fighting to be left alone. But a big chunk of the lobbying in Washington is not about being left alone. It’s about seeking undeserved benefits by using the coercive power of government.

Moreover, I also pointed out two years ago that we need to respect what the Founding Fathers envisioned.

…the First Amendment protects our rights to petition the government and to engage in political speech.

So at the risk of repeating myself, I urge people to fix the real problem of big government and not get overly distracted by the symptom of favor-swapping and corruption in Washington.

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There’s an old saying that states are the laboratories of democracy. But since I’m a policy wonk, I focus more on the lessons we can learn from the states about public policy.

Such as the importance of limiting the destructive nature of taxes.

Such as the economic benefits of not having an income tax.

Such as the horrible consequences of adopting an income tax.

Such as the negative effects of excessive compensation of bureaucrats.

Such as better job creation in states with less government.

But it’s always good to have more data and evidence.

So I was very interested to see that the Mercatus Center at George Mason University has a new report that ranks states based on their fiscal solvency.

Here are some of the details.

Budgetary balance is only one aspect of a state’s fiscal health, indicating that revenues are sufficient to cover a desired level of spending. But a balanced budget by itself does not mean the state is in a strong fiscal position. State spending may be large relative to the economy and thus be a drain on resources. …How can states establish healthier fiscal foundations? And how can states guard against economic shocks or identify long-term fiscal risks? Before taking policy or budgetary action, it is important to identify where states may have fiscal weaknesses. One approach to help states evaluate their ongoing fiscal performance is to use basic financial indicators that measure short- and long-run fiscal position.

Here are some of the findings.

The five dimensions (or indexes) of solvency in this study—cash, budget, long-run, service-level, and trust fund—are…combined into one overall ranking of state fiscal condition. …States with large long-term debts, large unfunded pension liabilities, and structural budgetary imbalances continue to hover near the bottom of the rankings. These states are Illinois, New Jersey, Massachusetts, Connecticut, and New York. Just as they did last year, states that depend on natural resources for revenues and that have low levels of debt and spending place at the top of the rankings. The top five states are Alaska, North Dakota, South Dakota, Nebraska, and Florida.

And here’s a map so you can see the rankings of each state. Dark green is good and yellow is bad.

I’m shocked and amazed to see California, Illinois, and New York near the bottom of the list.

Here’s the same information, but in a table so you can see the specific scores for each state.

So what should we learn from these rankings?

According to an editorial from Investor’s Business Daily, there are some very obvious lessons.

What do the most fiscally sound states have in common? Good weather? Oil? Blind luck? Or is it conservative policies such as keeping taxes low, regulations reasonable and spending under control? …There’s only one factor these fiscal winners and losers share in common. And that’s their political leanings. …if you look at the 25 best-performing states, only three could be considered reliably liberal. …There’s only one factor these fiscal winners and losers share in common. And that’s their political leanings. Of the top 10 states in the Mercatus ranking, just two — Florida and Ohio — voted for the Democratic presidential candidate in the past four elections, and just one — Montana — has a Democratic governor. Even if you look at the 25 best-performing states, only three could be considered reliably liberal.

Now let’s shift from policy lessons to political implications. There are several governors and former governors running for President.

Based on the Mercatus ranking, can we draw any conclusions about whether these candidates are in favor of taxpayers? Or do they support big government instead?

We’ll start with the current governors.

Kasich – Ohio ranks surprisingly high on the list, particularly given the Ohio governor’s expansion of Obamacare in the state. Maybe the state’s #7 ranking is due to fiscal restraint by his predecessors.

Christie – New Jersey ranks low on the list, and this isn’t a surprise. The relevant question is whether Christie can argue, based on some of the fights he’s had, that the state legislature is an insurmountable impediment to pro-growth reforms.

Jindal – The governor of Louisiana has proposed some big reforms, but the state’s #35 ranking doesn’t give him any bragging rights on fiscal policy (though the state is leading the way on education reform).

Walker – Thanks to his high-profile fight with unionized bureaucrats, Walker has a very strong reputation. But his state doesn’t rank very high, and he can’t blame the legislature because it’s GOP-controlled as well. But perhaps the low ranking is a legacy of the state’s historically left-wing orientation.

What about former governors?

Well, there’s probably not much we can say because we don’t have long-run data. There was a similar Mercatus study last year, but that obviously doesn’t help with the analysis of governors that left office years ago.

Nonetheless, here are a few observations.

Bush – I’m very suspicious of politicians who express an openness to tax hikes, and Bush is in that group. But he did govern Florida for a couple of terms and never flirted with imposing an income tax. And former governors, particularly from recent history, presumably can take some credit for Florida’s relatively high ranking.

Pataki – Since New York is one of the worst states, Pataki has guilt by implication. But he did lower a few taxes during his tenure, and you also have the same issue that exists with Christie, which is whether a governor should be blamed when the state legislature is hostile to good policy.

Perry – It’s hard to argue with the success Texas has enjoyed in recent years, and Perry (like Bush) never even hinted at the imposition of a state income tax. Though the #19 ranking shows that there are issues that should have been addressed during Perry’s several terms in office.

Huckabee – There aren’t many conclusions to draw about Arkansas and Huckabee. He’s been out of office for a while and the state is in the middle of the pack.

The bottom line is that the Mercatus study is very helpful in identifying well-governed (and not-so-well-governed) states, but the newness of the project means we can’t make any sweeping statements about governors because of limited data.

Fortunately, the Cato Institute for years has been publishing a Report Card that grades governors based on fiscal policy. So fans (or opponents) of different candidates can peruse past issues to see the degree to which governors pushed policy in the right or wrong direction.

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I can understand why immigration reform is so contentious since it touches on all sorts of hot-button issues, such as jobs, politics, national identity, and the welfare state.

But I don’t understand why there’s a controversy just because Governor Walker of Wisconsin supports a specific part of the immigration system that provides easier access for foreigners who are willing to invest money and create jobs in America.

Seems like a win-win situation, but check out these excerpts from a report in the Milwaukee Journal Sentinel.

We’ll start with a description of the program.

Congress created the EB-5 program in 1990… Under the Citizenship and Immigration Services’ Immigrant Investor Program, foreigners can obtain these visas by investing $500,000 in high unemployment areas — or $1 million elsewhere — in projects generating or saving 10 jobs over two years. According to The New York Times, the federal government puts the green card applications from these foreign investors on the fast track. In general, it takes about two years to obtain legal residency through the program; other visa programs take much longer.

Not let’s get to the controversy over Governor Walker’s support.

…there’s one federal visa program you won’t hear him attack. It’s the controversial and deeply troubled immigrant investor program. The program — known as EB-5 — puts wealthy foreigners on the path to U.S. citizenship if they invest at least $500,000 in an American commercial project that will create or preserve 10 jobs. Critics have called the abuse-riddled program a “scam” that essentially sells green cards to the affluent and their families, with more than 80% of those in the program coming from China. …David North, a fellow with the conservative Center for Immigration Studies, said…the program is flawed in its premise. “I think it’s immoral, fattening and otherwise unattractive to sell visas, which is what we’re doing now,” North said.

By thew way, there are reasons to be unhappy about the EB-5 program, at least in the way it operates.

I’ve already shared examples of how political insiders are manipulating the program for cronyist purposes.

But today let’s look at the concept of whether it’s good to have an “economic citizenship” program.

And we’ll start the very relevant point that any immigration system is going to be arbitrary.

  • A lottery system is arbitrary because you get to come to America because of luck.
  • A family-reunification system is arbitrary because you get to come to America because of your genes.
  • A system based on refugee status is arbitrary because you get to come to America based on geopolitical circumstances.
  • Even an “open borders” system is arbitrary because you don’t get to come to America if you’re a terrorist, criminal, have communicable diseases, etc.

So if a system is going to be based on arbitrary factors, what’s wrong with deciding that one of the criteria is economic benefit to the United States?

Indeed, maybe I’m too myopic because of my background and training, but it seems like economic benefit should be a factor that everyone can support. After all, these won’t be people seeking handouts from the welfare system.

Consider these passages from a recent New York Times story about all the EB-5 money that’s boosting the Empire State’s economy.

Through a federal visa program known as EB-5, foreigners, more than 80 percent of them from China, are investing billions of dollars in hotels, condominiums, office towers and public/private works in the hope it will result in green cards. Twelve-hundred foreigners have poured $600 million into projects at Hudson Yards; 1,154 have invested $577 million in Pacific Park Brooklyn, the development formerly known as Atlantic Yards; and 500 have put $250 million into the Four Seasons hotel and condominium in the financial district. The list of projects involving EB-5 investments also includes the International Gem Tower on West 47th Street and the New York Wheel on Staten Island. …In the last four years, the program’s popularity has surged. In fiscal year 2010, 1,885 visas were issued. But by fiscal year 2013 that figure jumped 354 percent to 8,564, according to government data. Last year, the entire annual allotment of 10,000 visas had been claimed by August — before the end of the fiscal year in October. This year the quota was reached even earlier, on May 1.

As an aside, this program isn’t attractive to those with lots of money because of America’s punitive tax system.

“This program is not for the very rich in China, because the superwealthy do not want to pay U.S. taxes.” Instead, he said, the wealthiest Chinese prefer to have their legal residences in low tax jurisdictions like Hong Kong or Singapore, and then take advantage of 10-year tourist visas to the United States.

While I’m tempted to now explain why we should fix our bad tax system, let’s stick to the topic of immigration and delve further into the issue of whether it’s good to attract economically successful foreigners to America.

Some scholars say the answer is yes, but they think the EB-5 program is inefficient.

Here’s some of what Professor Eric Posner of the University of Chicago Law School wrote for Slate.

The program is a mess. …it’s almost impossible to figure out whether a specific investment generates jobs rather than reshuffles them from one place to another. There have also been examples of outright fraud and political cronyism. Part of the problem is a lack of documentation but the real problem is that the program is misconceived. …the price we charge for citizenship is extraordinarily low. …A shrewd investor will find an investment that pays a couple percentage points below the market rate. If he invests $500,000 in order to obtain, say, a 6 percent return rather than an 8 percent return, then the true price he pays for U.S. citizenship is $10,000 in foregone return.

So what’s the alternative?

Gary Becker, the late University of Chicago economist and Nobel laureate, once proposed that the United States should sell citizenship to foreigners for a flat fee. The EB-5 program approximates Becker’s proposal, albeit in the most inefficient way possible. Becker argued that citizenship is a scarce good just like tomatoes and hula hoops, and is thus subject to the law of supply and demand. America owns visas and should sell them to willing buyers at the market-clearing price. We would attract immigrants who are skilled enough to earn wages that would cover the fee, and we would gain again from the tax on their wages once they began work in this country. These types of immigrants—the ones who could afford the fee—would be least likely to burden the public fisc by needing welfare payments.

The Becker plan, which Posner basically supports, certainly would be simpler than the EB-5 program.

And it presumably eliminates the instances of corrupt cronyism that taint that otherwise good system.

Moreover, many of the nations with economic citizenship programs use this approach.

But here’s the downside. If you sell citizenship directly, the money goes to the government rather than to the productive sector of the economy.

That might be acceptable if it meant that the politicians reduced or eliminated some tax. But I fear the real-world impact would be to simply give the crowd in Washington more money to waste.

So perhaps the real challenge is to figure out some smarter way of operating the EB-5 program so we get even more private investment and job creation while also reducing opportunities for cronyist intervention.

P.S. If you want to enjoy some immigration-themed humor, here’s some involving Peru and Canada.

P.P.S. While I don’t like government getting more money, that shouldn’t be the only factor when grading a policy proposal. I fretted, for instance, that pot legalization in Colorado would be a mixed blessing because it would generate more tax revenue. But thanks to Colorado’s Taxpayer Bill of Rights, the politicians haven’t been able to spend all the new money, so it’s unambiguously a win-win situation.

P.P.P.S. The Princess of the Levant is in America because of the immigration lottery, so I certainly won’t be complaining too much about arbitrary systems. [correction: The PoTL has informed me that her U.S. residency is the result of her grandfather’s application and not the lottery]

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