Feeds:
Posts
Comments

Posts Tagged ‘Politics’

Hardly anybody noticed because the nation has been focused on protests about police misbehavior, but Joe Biden officially clinched the Democratic nomination this past week.

And he’s now comfortably ahead in the political betting markets as well as public polling.

If Biden wins in November, what does that mean for the nation’s economic policy?

According to folks on the left, a Biden presidency means bigger government and more statism.

For instance, opining for the New York Times, Jamelle Bouie applauds Biden’s leftist agenda.

…if the goal is to move America to the left…then a Biden candidacy…represents an opportunity. …If Biden goes on to win the White House, there’s real space for the pro-Sanders left to work its will on policy. …It can fulfill some of its goals under the cover of Biden’s moderation, from raising the minimum wage nationally to pushing the American health care system closer to single-payer. …Biden…is a creature of the party. He doesn’t buck the mainstream, he accommodates it. He doesn’t reject the center, he tries to claim it. …the center of the Democratic Party as far left as it’s been since before Ronald Reagan, then Biden is likely to hew to that center, not challenge it.

His colleague at the NYT, Michelle Goldberg, is similarly enthused about the prospects for bigger government under a Biden Administration.

Biden’s proposals go far beyond his call for a $15 federal minimum wage — a demand some saw as radical when Sanders pushed it four years ago. While it’s illegal for companies to fire employees for trying to organize a union, the penalties are toothless. Biden proposes to make those penalties bite and to hold executives personally liable. …should Biden become president, progressives have the opportunity to make generational gains. …To try to unite the party around him, he’s making serious progressive commitments. …he’s moving leftward. Biden recently came out for tuition-free college for students whose families earn less than $125,000. He endorsed Elizabeth Warren’s bankruptcy plan…His climate plan already went beyond any of Barack Obama’s initiatives, and he’s pledged to make it even more robust.

According to (supposedly) neutral analysts, a Biden presidency means bigger government and more statism.

In an article for Newsweek, Steve Friess discusses Biden’s shift to the left.

Being stuck running for the presidency from the basement of his home in Wilmington, Delaware, had given the former vice president a lot of time to think, he told them, and he wanted bigger ideas. Go forth, he urged his financial brain trust, and bring back the boldest, most ambitious proposals they’d ever dreamed of to reshape the U.S. economy… Biden began issuing a raft of new proposals that move his positions closer to the progressive wing of the Democratic Party, with a promise to unveil an even more transformative economic plan this summer. …It’s a yes to adding $200 a month to Social Security benefits and lowering the qualifying age for Medicare from 65 to 60. Yes to trillions in new spending, yes to new regulations on banks and industry, yes to devil-may-care deficits. …the leader he most often invokes—in interviews, in public addresses, on his podcast—is no longer Barack Obama but Franklin Delano Roosevelt. …Biden has already made a series of significant leftward policy shifts since effectively sewing up the nomination in March.

Perry Bacon, in a piece for fivethirtyeight, analyzes Biden’s statist agenda.

…if Biden is elected in November, the left may get a presidency it likes after all…if American politics is moving left, expect Biden to do the same. …Biden’s long record in public office suggests that he is fairly flexible on policy — shifting his positions to whatever is in the mainstream of the Democratic Party at a given moment. …Biden is likely to be a fairly liberal president, no matter how moderate he sounded in the primaries. …Biden’s 2020 primary platform…adopted fairly liberal policies…more liberal than his pre-campaign record suggested. The Democratic Party is more liberal now than it was when Bill Clinton took office, or even when Obama was inaugurated, and Biden’s platform reflects that shift. …Biden and his advisers are now…rolling out more liberal policy plans, speaking in increasingly populist terms and joining forces with the most progressive voices in the party. …“Joe Biden is running on the most progressive platform of any Democratic nominee in recent history. But given the pandemic, he has to look at the New Deal and Great Society traditions in the Democratic Party and go bigger,” said Waleed Shahid, the communications director for Justice Democrats, a left-wing group aligned with Ocasio-Cortez.

Writing for the Washington Post, Sean Sullivan documents Biden’s leftward drift.

Joe Biden sought to appeal to liberal supporters of Sen. Bernie Sanders on Thursday with a pair of new proposals to expand access to health care and curtail student loan debt. Biden proposed lowering the eligibility age for Medicare coverage from 65 to 60. He also came out in favor of forgiving student loan debt for people who attended public colleges and universities and some private schools and make up to $125,000 a year. …In another peace offering to liberals, Biden proposed paying for his student debt plan by repealing a provision in the recent coronavirus legislation that Congress passed and President Trump enacted. “That tax cut overwhelmingly benefits the richest Americans and is unnecessary for addressing the current COVID-19 economic relief efforts,” he wrote… Biden endorsed a bankruptcy plan put forth by Sen. Elizabeth Warren (D-Mass.), another rival who ran to his left.

And, according to more market-friendly sources, a Biden presidency means bigger government and more statism.

The Wall Street Journal editorialized about Biden’s leftist agenda.

Already Medicare is scheduled to be insolvent by 2026. …In 1970, life expectancy in the U.S. was 70.8. Now it’s about eight years longer. By lowering the age of eligibility instead, Mr. Biden would begin shifting Medicare’s focus from seniors to everybody else. Don’t worry about the funding, he insists, since the extra costs would be “financed out of general revenues.” …Mr. Biden’s new left turn on student loans is equally sharp. …Cancel all federal undergraduate tuition debt for many borrowers who went to public schools, including four-year universities. This forgiveness would be given to anyone who earns $125,000 a year or less. …How much would it cost? There’s no explanation.

Jeff Jacoby analyzed Biden in a column for the Boston Globe.

Biden…is running on a platform far more progressive — i.e., far less moderate — than any Democratic presidential nominee in history. …on issue after issue, Biden has veered sharply from Obama’s path. On health insurance, for example, Obama rejected a public option as part of the Affordable Care Act and repeatedly stressed the importance of maintaining private coverage. But Biden favors a public option open to everyone… Biden supports government-funded health care even for unauthoritzed immigrants, something Obama never came close to proposing. …No Democratic presidential nominee ever endorsed anything like the radical Green New Deal, with its price tag in the tens of trillions of dollars and its goal of eliminating the use of all fossil fuels. But Biden does. No Democratic nominee ever called for a national minimum wage of $15 an hour. But Biden does. …Sanders may not end up on the November ballot, but it will unmistakably reflect his influence. For he and his band of progressives have pushed their party to the left with such success that even the “moderate” in the race would be the most liberal Democrat ever nominated for president.

Here’s some of what Peter Suderman wrote for Reason.

Biden is a moderate compared to Sanders, but he is notably to the left of previous Democratic standard-bearers. …Biden has proposed a significant expansion of the Affordable Care Act that his campaign estimates would cost $750 billion over a decade… Biden has proposed a $1.7 trillion climate plan that is similar in scope to many candidates on his left and a $750 billion education plan… He favors an assault weapons ban and other gun control measures, a national $15 minimum wage, and a raft of subsidies, loans, and other government-granted nudges designed to promote rural economies. Has proposed $3.4 trillion worth of tax hikes—more than double what former Secretary of State Hillary Clinton proposed when she ran in 2016. …Biden’s leftward drift is thus the party’s leftward shift…, a big-government liberal, a candidate whose current incarnation was shaped and informed by progressive politics, if not wholly captured by them.

The Tax Foundation examined the former Vice President’s tax plan and the results are not encouraging.

Former Vice President Joe Biden would enact a number of policies that would raise taxes, including individual income taxes and payroll taxes, on high-income individuals with income above $400,000. …According to the Tax Foundation’s General Equilibrium Model, the Biden tax plan would reduce GDP by 1.51 percent over the long term. …The plan would shrink the capital stock by 3.23 percent and reduce the overall wage rate by 0.98 percent, leading to 585,000 fewer full-time equivalent jobs. …On a dynamic basis, we estimate that Biden’s tax plan would raise about 15 percent less revenue than on a conventional basis over the next decade. …That is because the relatively smaller economy would shrink the tax base for payroll, individual income, and business income taxes. …The plan would lead to lower after-tax income for all income levels.

Here’s a table summarizing the findings.

So what does all this mean?

At the risk of oversimplifying, Biden unquestionably would move tax policy to the left (he actually said higher taxes are patriotic, even though he engages in aggressive tax avoidance), and the same thing would happen on regulatory issues.

His spending agenda is terrible, though it’s worth noting that Democrat presidents usually don’t spend as much as Republicans (with the admirable exception of Reagan).

And, to be fair, there’s no way he could be as bad on trade as Trump.

Let’s close by looking at some hard data. Back in January, I sifted through the vote ratings prepared by the National Taxpayers Union and the Club for Growth and showed that Biden was not a Bill Clinton-style moderate.

I went back to those same sources an put together this comparison of Biden and some other well-known Democrats (scores on a 0-100 scale, with zero being statism and 100 being libertarian).

In both measures, he’s worse than Crazy Bernie!

Moreover, a lifetime average of zero from the Club for Growth is rather horrifying. His average from the National Taxpayers Union isn’t quite so bad, but the trend is in the wrong direction. Biden’s post-2000 average was less than 10, while his score for the preceding years averaged more than 23.

That being said, my two cents on this topic is that Biden is a statist, but not overly ideological.

His support for bigger government is largely a strategy of catering to the various interest groups that dominate the Democratic Party.

The good news is that he’s an incrementalist and won’t aggressively push for a horrifying FDR-style agenda if he gets to the White House.

The bad news is that he will probably allow Nancy Pelosi and other statist ideologues to dictate that kind of agenda if he wins the presidency.

P.S. My collection of Biden-oriented humor is rather sparse (see here, here, here, and here), an oversight that I’ll have to address in the near future.

Read Full Post »

I would like to think that the election results from Super Tuesday signify a rejection of the evil and destructive ideology of socialism. After all, despite promising the most handouts, Bernie Sanders was defeated in most states and quickly went from being the front-runner to a long-shot candidate.

This chart shows how political betting markets have dramatically changed in the past couple of days. Crazy Bernie (in green) has collapsed with Biden (in blue) has skyrocketed.

Moreover, the other explicitly hard-left major candidate, Elizabeth Warren, saw her support collapse even earlier.

Daniel Henninger of the Wall Street Journal opined today on the implications of this week’s political earthquake.

Before the voting began Tuesday it was conventional wisdom…that something called progressivism was on the march in the U.S., sweeping aside decades if not centuries of belief, history and tradition with a new agenda of wokeness, identity politics and socialism. …Guess what? The voters still get the last word. …Progressives, however much they dominate the culture, keep losing big, competitive elections. …Joe Biden, hardly a commanding presence, is a proxy for Democratic voters’ pragmatism and their doubts about Mr. Sanders, socialism and the American left.

By the way, it’s not just that Crazy Bernie got trounced.

As reported by the New York Times, many hard-left congressional candidates also are being rejected.

Ms. Ocasio-Cortez previously suggested that Democrats who were not sufficiently loyal to an emergent brand of progressive politics should have others like her run against them in a primary. She is now suggesting that, exit polling be damned, Mr. Biden’s latest string of successes is because of the strong-arming of corporate lobbyists, something Mr. Sanders has underscored by repeatedly calling Mr. Biden the establishment candidate. But the results speak for themselves. Ms. Ocasio-Cortez threw her weight behind Cristina Tzintzún Ramirez in her Senate primary campaign in Texas to defeat the Democratic Senatorial Campaign Committee’s chosen candidate, M.J. Hegar. Ms. Hegar ended up easily outpacing a crowded Democratic field.

All of this is very encouraging, but I’m still worried.

There are three reasons why I’m not brimming with optimism.

First, as explained by Annie Lowrey for the Atlantic, a non-trivial number of young people are enamored with the evil ideology of socialism.

A striking generational divide has emerged. Older people still see socialism and communism as dangerous, authoritarian political systems, whereas younger people are more likely to see them as economic systems, and to care far less one way or another. For millions of potential voters, the Red Scare is no longer so scary. …The simple passage of time explains a lot. Millions of Millennials and Gen Zers were never exposed to the threats of the Soviet Union; they did not live through the fall of the Berlin Wall… A recent poll conducted by the Victims of Communism Memorial Foundation showed that 36 percent of Millennials have a favorable opinion of communism, as do a quarter of Gen Zers. Roughly half of the members of those two generations have a favorable view of socialism and thinks the government should act as an employer of last resort. One in five Millennials thinks the Communist Manifesto better “guarantees freedom and equality” than the Declaration of Independence and thinks society would be better off if the government abolished private property.

I’ve shared plenty of additional data to confirm this worrisome trend.

Second, older Democrats may not embrace the socialist label, but they have shifted in that direction.

I previously wrote about how even prominent folks on the left agree that Joe Biden is far to the left of both Barack Obama and Hillary Clinton.

This graphic from the New York Times illustrates how the rest of the Democratic establishment (as measured by party platforms) has also veered toward statism.

For what it’s worth, the “Median party” line shows the average position of the world’s other political parties, so the takeaway is that America’s Democrats (and the U.K.’s Labour Party) are now further to the left than some of the world’s socialist parties.

Third, while the Republican Party hasn’t moved to the left based on its platforms, I fear that the GOP isn’t motivated today by a Reagan-style belief in limited government and individual liberty.

It’s not just that Trump is a big spender (and a protectionist). Every major Republican in the post-Reagan era has expanded the burden of government and rejected the principles of classical liberalism.

Read Full Post »

In an amazing display of incompetence, we still don’t know whether Bernie Sanders or Pete Buttigieg won the Iowa caucus.

This has created some opportunities for satire, with people asking how a political party that can’t properly count 200,000 votes somehow can effectively run a healthcare system for 340 million people.

That’s a very good point, but today let’s focus on a contest that does have a clear winner.

As explained in this video, John Stossel and his team crunched the numbers and they have concluded that “Crazy Bernie” wins the free-stuff primary.

Senator Sanders doubtlessly will be very happy with this victory, especially since he trailed Kamala Harris when Stossel did the same calculations last summer.

America’s taxpayers, however, might not be pleased with this outcome. Especially if Bernie Sanders somehow gets to the White House.

Last week, I shared new numbers from the Congressional Budget Office, which showed that the federal budget is now consuming $4.6 trillion.

Bernie Sanders is proposing a staggering $4.9 trillion of new spending – more than doubling the burden of government spending!

And the 10-year cost of his promises could be as high as $97 trillion.

To make matters worse, all this new spending is in addition to already-legislated spending increases for everything from boondoggle discretionary programs to behemoth entitlement programs.

Hello Greece.

Heck, it may be hello Venezuela if Bernie gets unleashed.

P.S. Trump’s record on spending is bad, though his mistakes are measured in billions rather than trillions.

Read Full Post »

One of the most significant developments in 2020 politics is how Democratic presidential candidates have embraced hard-left economic policies.

Prominent analysts on the left have noted that even Joe Biden, ostensibly the most moderate of the candidates, has a very statist economic platform when compared to Barack Obama.

And “Crazy Bernie” and “Looney Liz” have made radicalism a central tenet of their campaigns.

So where does Michael Bloomberg, the former mayor of New York City, fit on the spectrum?

The New York Times has a report on Bloomberg’s tax plan. Here are some of the key provisions, all of which target investors, entrepreneurs, small business owners, and other high-income taxpayers.

Former Mayor Michael R. Bloomberg of New York unveiled a plan on Saturday that would raise an estimated $5 trillion in new tax revenue… The proposal includes a repeal of President Trump’s 2017 tax cuts for high earners, along with a new 5 percent “surcharge” on incomes above $5 million per year. It would raise capital gains taxes for Americans earning more than $1 million a year and…it would partially repeal Mr. Trump’s income tax cuts for corporations, raising their rate to 28 percent from 21 percent. …Mr. Bloomberg’s advisers estimate his increases would add up to $5 trillion of new taxes spread over the course of a decade, in order to finance new spending on health care, housing, infrastructure and other initiatives. That amount is nearly 50 percent larger than the tax increases proposed by the most fiscally moderate front-runner in the race, former Vice President Joseph R. Biden Jr. …Mr. Bloomberg’s advisers said it was possible that he would propose additional measures to raise even more revenue, depending on how his other domestic spending plans develop.

These are all terrible proposals. And you can see even more grim details at Bloomberg’s campaign website.

Every provision will penalize productive behavior.

But there is a bit of good news.

Though it would be more accurate to say that there’s a partial absence of additional bad news.

Bloomberg hasn’t embraced some of the additional bad ideas being pushed by other Democratic candidates.

It would…maintain a limit on federal deductions of state and local tax payments set under the 2017 law, which some Democrats have pushed to eliminate. …the plan notably does not endorse the so-called wealth tax favored by several of the more liberal candidates in the race, like Senators Elizabeth Warren and Bernie Sanders.

I’m definitely happy he hasn’t embraced a wealth tax, and it’s also good news that he doesn’t want to restore the state and local tax deduction, which encouraged profligacy in states such as California, New Jersey, and Illinois.

It also appears he doesn’t want to tax unrealized capital gains, which is another awful idea embraced by many of the other candidates.

But an absence of some bad policies isn’t the same as a good policy.

And if you peruse his website, you’ll notice there isn’t a single tax cut or pro-growth proposal. It’s a taxapalooza, what you expect from a France-based bureaucracy, not from an American businessman.

To add insult to injury, Bloomberg wants all these taxes to finance an expansion in the burden of government spending.

For what it’s worth, this is my estimate of what will happen to America’s tax burden (based on the latest government data) if Bloomberg is elected and he successfully imposes all his proposed tax increases. We’ll have a more punitive tax system that extracts a much greater share of people’s money.

P.S Take these numbers with a grain of salt because they assume that Bloomberg’s tax increases will actually collect $5 trillion of revenue (which won’t happen because of the Laffer Curve) and that GDP won’t be adversely affected (which isn’t true because there will be much higher penalties on productive behavior).

Read Full Post »

I started fretting about the socialist tendencies of young people early last decade.

And when Sanders attracted a lot of youth support in 2016, I gave the issue even more attention, and I’ve since continued to investigate why so many young people are sympathetic to such a poisonous ideology with a lengthy track record of failure and deprivation.

Some of the recent polling data is very discouraging.

And if you want to be even more depressed, here are some tweets with the most-recent data about the the views of young people.

It’s not just that they have warm and fuzzy thoughts about so-called democratic socialism.

I’m completely horrified to learn that more than one-third of young people even have a positive perception of communism.

In other words, wearing Che t-shirts isn’t just a vapid fashion statement.

These kids are either overtly evil or utterly oblivious.

Yes, I realize I sound like a curmudgeon (“you kids get off my lawn!”), but how else should I react when I see these numbers from Axios.

For what it’s worth, the same problem exists in the United Kingdom.

And it may be even more lopsided.

(Though I’m very relieved the misguided views of young people didn’t prevent a victory for Boris Johnson last month.)

For today’s column, let’s keep our focus on the United States.

What’s the underlying cause of bad polling numbers in America?

In a column for the Washington Times, Robert Knight explains that many young people have been spoon-fed a leftist version of American history.

Why do so many young people hate America and think we’d be better off as a socialist country? …reading and believing Howard Zinn’s best-selling ‘A People’s History of the United States’… First published in 1980, “A People’s History” has sold more than 2.5 million copies and is in virtually every school district, university and local library. …Everything Zinn wrote was couched in the language of Marxist class warfare. Key events were omitted. The mass slaughter that followed the Communist takeover of Cambodia? Good luck finding it in “A People’s History.” …Zinn was a member of numerous Soviet front groups, and he helped found the socialist New Party… Before the fall of the Berlin Wall, Zinn warned that concern over communism was due to “hysteria,”… In a chapter titled “The Coming Revolt of the Guards,” …Zinn states flatly that “capitalism has always been a failure for the lower classes. It is now beginning to fail for the middle class.” …Zinn envisions a utopian future in which “certain basic things” would be “…available — free — to everyone: food, housing, health care, education, transportation.” …The reason this insane, economically illiterate, un-American scheme appeals to so many is that they’ve been miseducated via Howard Zinn into thinking that they live in a bad country that must be rebuilt as a socialist paradise.

Jarrett Stepman opined on the adverse consequences of historical illiteracy in a piece for the Daily Signal.

As young Americans are losing an understanding of civics and American history, they increasingly embrace socialism. …younger generations have a far sunnier view of socialism and communism than their elders. …Perhaps worse than nostalgia for the Soviet Union, “57% of millennials (compared to 94% of the Silent Generation) believe the Declaration of Independence better guarantees freedom and equality over the Communist Manifesto.” That’s appalling. …there’s not only been a worrisome decline in inculcating informed patriotism in young Americans, but a willful attempt to re-educate them to turn them against the foundations of America itself. …So far, we have escaped the curse of socialism… But a troubling collapse in a basic understanding of our history, along with the malignant attempt to reframe our country’s origins to make us more susceptible to doctrines outside our tradition, means that the specter of socialism now hangs over us.

Amen. The government’s education monopoly too often gives kids a diet of statist pabulum. This is another reason why we need school choice.

But it’s not just bad history in government schools.

It’s also bad policy in government.

In a column for the Wall Street Journal, Mene Ukueberuwa shares some insights from Edward Glaeser, a professor at Harvard who warns that statist policies are leading young people to support bigger government.

Bernie Sanders…has become an unlikely voice of the young generation. …this axis of today’s struggle could change politics for generations to come, as millennials reject the country’s capitalist consensus and embrace socialism in record numbers. …Critics often blame today’s socialist surge on millennials’ laziness. …One free-market economist has a different explanation. Edward Glaeser, a Harvard professor…, argues that young people have radicalized politically because “there are a number of ways in which the modern American economy isn’t working all that well for them.” Many public policies make it harder to get a job, save money or find an affordable home, leaving young idealists thinking, “Why not try socialism?” But that cure would merely worsen the disease. Mr. Glaeser decries policies that constrain the job market and increase the cost of living compared with what the economy would produce if left alone. …Consider the housing market. “In the 1960s and earlier,” Mr. Glaeser says, “America basically had a property-rights regime that meant that anyone who had a plot of land could pretty much put up anything reasonable on that plot of land.” …The shift of income toward those Mr. Glaeser calls the “entrenched” is most explicit in entitlement programs. …They’re funded by payroll taxes, which snag a disproportionate share of low-earners’ paychecks. Taxpayers also pony up ever more to fund the retirements of government employees.

Glaeser is right.

Government intervention is increasing the price of housing for the young. Entitlement programs are pillaging the young. And bureaucrat pensions are a scam that victimizes the young.

For all intents and purposes, Prof. Glaeser is describing Mitchell’s Law.

Bad policy causes bad results, which leads some people (in this case, young people) to want more bad policy.

So the obvious solution, he argues, is to get rid of the bad policies that are causing problems in the first place.

And maybe young people will realize that they should support free markets and limited government!

“They say, ‘Well, there are a whole bunch of projects—a whole bunch of government spending that helps old people. I want mine. If we’re going to spend a huge amount on Medicare, why aren’t we spending a whole lot on education for me?’” …To give newcomers a chance, Mr. Glaeser would curtail the influence of entrenched groups and restore incentives for “a capitalism that is inclusive, and that provides a place of opportunity for more people.” …Mr. Glaeser insists that this message would be likelier to catch on if it were backed by policy reforms that make work more fruitful. A program of plentiful job opportunities, cheaper housing, and tax cuts financed by curtailed entitlements could be a significant step toward replacing socialism in the hearts of Mr. Sanders’s young supporters.

For what it’s worth, bad history and bad policy are both good explanations, but they don’t fully explain why young people are misguided.

I suspect many young people also think support for socialism is a way of signalling that you’re a nice person. That you care about others.

I’m not sure how we solve this problem, but this clever video from Kristian Niemietz suggests that part of the answer may be satire.

Though I may be biased since I have an entire collection of humor that targets socialism and communism.

P.S. When it hits close to home, college students actually reject socialism, though maybe they should have learned that lesson in kindergarten.

Read Full Post »

When I was in London last week for Boris Johnson’s landslide victory, many people asked me whether Trump would win again in 2020.

Since I was wrong about 2016, I told them I wasn’t the right person to ask.

That being said, Trump has some positive economic tailwinds.

For those of you who care about political outcomes, there’s a new CNN poll of battleground states.

It’s good news for Republicans, particularly if one assumes that there are some people who don’t want to admit that they will vote for Trump (which seems to have been true in 2016).

Political betting markets also are pointing to a Trump victory.

Here’s a screenshot showing the 2019 odds of success for the various candidates. As you can see Trump’s numbers are trending upwards – including a positive bump after the House voted for impeachment!

Both polls and betting markets were wrong in 2016, so take all this data with a grain of salt.

For those who care about economic policy, I’ll simply regurgitate my usual comment that Trump is good on some issues (taxes and regulation) and bad on other issues (trade and spending).

I expect this pattern to continue if he’s reelected.

The big wild card is monetary policy.

As I said in the interview, I worry there’s a bubble caused by an easy-money approach. And bad things happen when bubbles pop.

P.S. I should have mentioned that the employment-population data is not as positive as the unemployment-rate data.

P.P.S. I mentioned macroeconomic political forecasts in the interview. I wrote about those predictions back in October.

Read Full Post »

There’s an entire field of economics called “public choice” that analyzes the (largely perverse) incentive structures of politicians and bureaucrats.

But is economic analysis also helpful to understand voting and elections?

In the past, I’ve suggested that political betting markets are a useful place to start since “you are seeing estimates based on people defending their views with cold, hard cash.”

In his Bloomberg column, Professor Tyler Cowen takes a more rigorous look at the potential insights of political betting markets.

Prediction markets…are a quick way to get an overview of the state of the campaign. President Donald Trump is currently at about 0.40 to be re-elected… Under normal assumptions about the uncertainty of future economic growth, the markets rate Trump’s chances of winning at 40%. …it is a useful corrective to the argument that Trump is toast — or, alternatively, that he is a shoo-in.  The market incorporates the relevant uncertainties in both directions. (Interestingly, Trump’s re-election odds have stayed pretty steady over the last week or so of negative news.) In many cases, prediction markets…“see through” the day-to-day volatility that may buffet the polls but not affect the final outcome. …Prediction markets…also made me think that a possible Hillary Clinton candidacy…is perhaps an undercovered story. …It is not a valid criticism of prediction markets to say that they didn’t predict Trump, say, or Brexit. The purpose of prediction markets is not to foresee particular upsets. They can, however, tell you in advance what would be an upset — much like probability theory can tell you that getting three heads in a row is unlikely but is of no help in predicting exactly when it will happen.

There are also people who build models that predict elections based largely on economic factors.

The Washington Post just published a very interesting review of how three of these models show Trump comfortably winning.

President Trump is on a fast track to an easy reelection. That’s the conclusion reached by economic forecasters… Moody’s Analytics projects the president will win handily next year if the economy doesn’t badly stumble — and in fact, rack up a greater margin in the electoral college than the 304-to-227 victory he secured against Hillary Clinton in 2016. …The finding jibes with those of other forecasting models that rely on measures of the economy’s strength to predict which major party’s candidate will win the White House next. Oxford Economics sees Trump winning 55 percent of the popular vote next year barring a “significant downturn” in the economy. …by the reckoning of the firm’s model, three key economic indicators — unemployment, inflation and real disposable income growth — all favor Trump’s reelection. They outweigh a “negative exhaustion factor” with Trump that dents his support in the projection. …Another model, assembled by Trend Macrolytics, accurately predicts every presidential victor back to 1952 by focusing on the effects of the economy and incumbency on the electoral college, according to Donald Luskin, the firm’s chief investment officer. It projects Trump will win reelection next year with 354 electoral votes — a margin that seems staggering on its face.

Here’s the Moody’s electoral map, which doubtlessly will cause sleepless nights for the anti-Trump crowd.

Wow, not only do they show Trump winning every state he won in 2016, but they show him picking up New Hampshire, Virginia, and Minnesota.

So which approach is more accurate, betting markets of election models?

Given my inaccurate 2016 predictions, I’m probably not the right person to ask.

I’ll simply observe that both approaches have erred in the past.

And if you believe in guilt by association, some of the people who put together political prediction models also put together deeply flawed Keynesian economic models.

Read Full Post »

When I talked to CNBC on Wednesday, I was very critical of Trump and other Republicans for promoting protectionism, Keynesian monetary policy, and wasteful spending.

Yes, I give Trump and the GOP credit for improvements in regulatory policy and tax policy. And I used to think that the pro-growth effect of those reforms was enough to balance out the anti-growth effects of the bad policies.

But I now think the net effect of the Trump presidency is to expand the overall burden of government.

In early July, my report card on Trump’s economic policy (based on the five key indices in Economic Freedom of the World) had him slightly above a C average.

Now, as you can see, he’s slightly below. And since Republicans in Congress are largely going along with Trump’s policies, they also deserve blame.

I realize that people also care about other matters, such as social issues, the judiciary, and foreign policy, so it’s not my goal to influence how anyone votes.

But I do want people to understand that economic policy matters. And for readers who like Trump (or at least think he’s a less-worse alternative than Sanders, Harris, Warren, etc), be forewarned that Trump’s big-government policies are increasing the probability of having Democrats win in 2020.

The lesson Republicans should have learned from Ronald Reagan is that good policy is good politics (my Fourth Theorem of Government).

George H.W. Bush didn’t learn that lesson. George W. Bush didn’t learn that lesson. And now Trump is demonstrating that he didn’t learn that lesson.

P.S. Some of us knew ahead of time to expect bad policy from Trump.

P.P.S. Since my 2016 election prediction was wrong, feel free to ignore my political prognosticating.

Read Full Post »

When writing about Bernie Sanders back in 2016, I put together a flowchart to identify different strains of statism.

In part, I wanted to show that genuine socialists, with their advocacy of government ownershipcentral planning, and price controls, aren’t really the same as other leftists (and I’ve made the unconventional claim that “Crazy Bernie” isn’t a true socialist – at least based on his policy positions).

I’m not the only one to notice that not all leftists have the same approach.

Writing for the Washington Post about the battle between Bernie Sanders and Elizabeth Warren for the Democratic nomination, Elizabeth Bruenig opines on the difference between two strains of statism.

What is the difference between Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.)? …much of it comes down to the matter of regulation vs. revolution. For Warren, the solution to our economic ills already exists in well-regulated capitalism. “I believe in markets,”… Warren believes today’s socioeconomic ills are the result of high concentrations of power and wealth that can be resolved with certain regulatory tools and interventions. …for Sanders, those solutions come up short. ,,,Instead, he aims to transfer power over several key segments of life to the people — by creating a set of universal economic rights that not only entitle citizens to particular benefits (such as medical care, education and child care) but also give those citizens a say in how those sectors are governed: in short, democratic socialism.

They both sound like “stationary bandits” to me, but there are some nuances.

Elizabeth Warren basically favors private ownership but she explicitly wants politicians and bureaucrats to have the power to dictate business decisions.

Thomas Sowell points out this economic philosophy is fascism. But I’ll be more polite and refer to it as corporatism.

By contrast, as a self-declared socialist, Bernie Sanders should be in favor of nationalizing companies.

But, as reported by the New York Times, he actually sees himself as another Franklin Roosevelt.

Senator Bernie Sanders of Vermont offered a vigorous defense of the democratic socialism that has defined his five decades in political life on Wednesday… Mr. Sanders cast himself at times in direct competition with President Trump, contrasting his own collectivist views against what he called the “corporate socialism” practiced by the president and the Republican Party. And Mr. Sanders, 77, declared that his version of socialism was a political winner, having lifted Mr. Roosevelt to victory four times… Mr. Sanders…presented his vision of democratic socialism not as a set of extreme principles but as a pathway to “economic rights,”… He argued that his ideology is embodied by longstanding popular programs, including Social Security, Medicare and Medicaid, that Republicans have labeled socialist. …Mr. Sanders called for a “21st-century economic Bill of Rights,” which he said would address health care, wages, education, affordable housing, the environment and retirement.

I’ll make two points.

First, FDR may have won four times, but he was an awful President. His policies deepened and lengthened the Great Depression.

And his proposed “economic bill of rights” would have made a bad situation even worse. He basically said everyone has a right to lots of freebies without ever stopping to think about the impact such policies would have on incentives to lead productive lives.

For all intents and purposes, we wanted to turn this cartoon into reality.

Second, I don’t actually think there’s a significant difference between Sanders and Warren. Yes, their rhetoric is different, but they both want higher taxes, more regulation, additional spending, and more intervention.

Heck, if you examine their vote ratings from the Club for Growth or the National Taxpayers Union, it’s hard to find any real difference.

At the risk of making a radical understatement, neither of them is a friend to taxpayers.

But thinking about this issue has motivated me to modify my statism flowchart. Here’s the new version.

As you can see, I created a much-needed distinction between totalitarian statism and democratic statism.

And while Warren is on the corporatist side and Sanders is on the socialist side, I also put both of them relatively close to the Venezuela-style track of “incoherent statism.” In other words, I think they’re guided by vote buying rather than a cohesive set of principles.

P.S. I wrote last week about the emerging “anti-socialist” wing of the Democratic Party. Presumably they would be the “rational leftists” on the flowchart.

Read Full Post »

Since I’m a policy economist, I rarely comment on political matters.

But I am worried that the Democratic Party is veering too far to the left. Bernie Sanders, an out-of-the-closet socialist is leading the way, followed closely by other leading Democrats with hard-left policy agendas, such as Kamala Harris and Elizabeth Warren.

But not every 2020 candidate is hopping on the socialism bandwagon. Some of the major candidates, such as Joe Biden, have avoided saying anything favorable about socialism.

And two of the candidates have explicitly rejected the poisonous ideology.

Interestingly, they’re both from Colorado.

CNN reports that the former governor, John Hickenlooper. received a very hostile reception when he rejected socialism.

The welcoming cheers 2020 presidential hopeful John Hickenlooper received when he first graced the stage at California’s Democratic Convention quickly crumbled into boos and jeers after he rejected socialism as the answer to Democrats’ problems. “If we want to beat Donald Trump and achieve big progressive goals, socialism is not the answer,” Hickenlooper said to a crowd of more than 4,500 delegates and observers on Saturday.Before he could get finish his next sentence, a chorus of boos…overtook his speech, lasting for more than 30 seconds. …The former Colorado governor is one of 15 Democratic candidates to address the San Francisco crowd, which is known to be home to some of the party’s furthest left progressives.

And, as reported by the Hill, one of the state’s U.S. Senators, Michael Bennet, also condemned socialism for being contrary to American ideals.

Sen. Michael Bennet (D-Colo.), a 2020 presidential hopeful, said on Sunday that his dismissal of socialism as a solution for America is not out of the mainstream for the Democratic Party. “I don’t think I’m out of step,” Bennet told ABC’s “This Week.” “I think we have 230 years of being the longest-lived democracy on the planet. That’s something we need to preserve.” …Bennett made the comments in response to a viral moment in which his fellow Democratic presidential candidate, former Colorado Gov. John Hickenlooper, was booed at the California Democratic Convention over the weekend …Bennet…is on the moderate end of the Democratic primary field.

I hope Joe Biden and other Democrats join Hickenlooper and Bennet.

In my fantasy world, the next Democratic president will turn out to be another Bill Clinton who presides (either intentionally or unintentionally) over an expansion of economic freedom in the United States.

But at the very least, I don’t want the country to take a big step toward statism, which was the mistake the United Kingdom made under Clement Attlee after World War II.

P.S. I realize many Democrats today don’t really have a firm understanding of socialism. Many of them don’t realize it implies government ownershipcentral planning, and price controls. Heck, some of them probably think the market-oriented Nordic welfare states (which have similar levels of economic freedom as the United States) are socialist. Regardless, they definitely want government to get bigger at a faster rate, so I’m hoping they’re not the majority of the Democratic Party.

Read Full Post »

Just last month, I wrote about Argentina’s grim economic outlook and criticized the supposed right-of-center President, Mauricio Macri, for failing to deliver any meaningful economic liberalization.

And reform is desperately needed.

According to Economic Freedom of the World, Argentina is one of the most statist nations on the planet (the only nations that do worse are Libya and Venezuela).

For all intents and purposes, Argentina is suffering from decades of bad policy.

Argentina is a sobering example of how statist policies can turn a rich nation into a poor nation. …After World War II, Argentina was one of the world’s 10-richest nations. But then Juan Peron took power and initiated Argentina’s slide toward big government, which eroded the nation’s competitiveness and hampered growth.

To put it mildly, the country is an economic tragedy and it should be a lesson for all countries about the importance of good policy.

Yet why am I writing again about Argentina after last month’s analysis?

Because a story in the New York Times discusses the nation’s upcoming presidential election and manages to paint a grotesquely inaccurate picture of what’s been happening in the country. We’re supposed to believe that Macri has been a hard-charging free-market fundamentalist.

Since taking office more than three years ago, President Mauricio Macri has broken with the budget-busting populism that has dominated Argentina for much of the past century, embracing the grim arithmetic of economic orthodoxy. Mr. Macri has slashed subsidies… “It’s a neoliberal government…It’s a government that does not favor the people.” …tribulations playing out under the disintegrating roofs of the poor are a predictable dimension of Mr. Macri’s turn away from left-wing populism. He vowed to shrink Argentina’s monumental deficits by diminishing the largess of the state. …Mr. Macri’s…presidency was supposed to offer an escape from the wreckage of profligate spending.

And we’re also supposed to believe that his failed free-market policies are paving the way for a return to left-wing populism.

As the October election approaches, Mr. Macri is contending with the growing prospect of a challenge from the president he succeeded, Cristina Fernández de Kirchner… Her return would resonate as a rebuke of his market-oriented reforms while potentially yanking Argentina back to its accustomed preserve: left-wing populism.

For what it’s worth, I suspect that Kirchner will win the next election. So that part of the article is correct.

But the part about free-market reforms is laughably inaccurate.

You don’t have to believe me. Let’s look at the Argentinian data from Economic Freedom of the World. Maybe I’m being dogmatic, but I hardly think a tiny improvement in 2015 followed by backsliding in 2016 qualifies as “diminishing the largess of the state.”

The bottom line is that Macri should have been bold and made sweeping changes once he was in charge. Like Chile after Allende’s Marxist regime was deposed.

Those reforms doubtlessly would have triggered protests. But if they became law, they would have produced tangible results.

Instead, Macri chose a timid approach and the economy has remained stagnant. Yet because many voters think he adopted reforms, they blame him and they blame free markets.

The net result is that they will probably vote for Kirchner, which presumably will mean even more statism for the long-suffering people of Argentina.

P.S. What’s happening in Argentina is not an isolated example. It’s very common for supposed right-wing politicians to choose bad policies, which then paves the way for left-wing election victories. Look at how Bush’s statist policies created the conditions for an Obama victory. Or how Sarkozy set the stage for Hollande in France. Or how Theresa May’s fecklessness in the United Kingdom may lead to a win for Jeremy Corbyn.

P.P.S. I’m tempted to also warn that Trump’s risky protectionism may lead to a victory for Crazy Bernie or some other Democrat in 2020. But Trump does have some good policies as well, so it’s hard to know whether the economy will be a net plus or net minus in the election.

Read Full Post »

During his final days in office, I gave a thumbs-down assessment of Barack Obama’s presidency. Simply stated, he increased the burden of government during his tenure, and that led to anemic economic numbers.

Now the economy seems to be doing a bit better, which is leading my friends on the left to make two impossible-to-reconcile claims.

  1. It is doing better, but Obama deserves credit.
  2. The economy isn’t doing better.

I’ve previously explained that the first argument doesn’t hold water. Today, let’s address the second argument.

Writing in the Wall Street Journal, former CEO Andy Puzder claims that Trump easily wins over Obama when you look at the numbers.

For eight years under President Obama, the growing burden of government suppressed the economic recovery that should have followed the recession of 2008-09. Mr. Obama nonetheless has claimed responsibility for today’s boom, asking Americans in September to “remember when this recovery started.” Yet it wasn’t until President Trump took office that the economy surged. …The result is a rising tide that is lifting boats across every class and region of the country. …Today unemployment rests at 3.7%, near a 50-year low. Since the government began reporting the data, unemployment has never been as low as it is today for African-Americans, Latinos, Asians and people with only a high-school education.

It’s certainly good news that unemployment rates have dropped. But labor-force participation numbers still haven’t fully recovered, or even come close to fully recovering, so the data on jobs is not quite as impressive as it sounds.

That being said, Puzder has a compelling indictment of Obama’s performance.

During a typical recovery, the economy grows at a rate between 3% and 4%, and the Obama administration predicted such a surge in its 2010 midsession review. It never came. The “recovery” of those years often felt much like a recession.

Amen. This echoes my criticism of Obamanomics. He made the U.S. a bit more like Europe, so it’s no surprise that growth was weak.

Let’s now look at Puzder’s evidence that Trump has done a better job. He compares the end of the Obama economy with the beginning of the Trump economy.

GDP growth staggered along at 1.5% in Mr. Obama’s final six full quarters in office. …growth doubled to 3% during Mr. Trump’s first six full quarters. …the increase in job openings over Mr. Trump’s first 21 months has averaged an impressive 75,000 a month. Over Mr. Obama’s last 21 months in office, the number of job openings increased an average of 900 a month. …During Mr. Obama’s last 21 months, the number of employed Americans increased an average of 157,000 a month. Under Mr. Trump, the increase has accelerated to 214,000 a month, a 36% improvement. …In Mr. Obama’s final 21 months, weekly earnings rose an average of $1.31 a month. Under Mr. Trump, weekly earnings have increased an average of $1.84 cents a month: a 40% improvement that’s come mostly since tax reform took effect in January. Over that period, weekly earnings have grown an average of $2.31 a month, a 76% increase over Mr. Obama’s last 21 months. …The unemployment rate declined 13% during Mr. Obama’s last 21 months, but from there it has dropped another 23% during Mr. Trump’s tenure.

All of this data is compelling, but I caution my GOP/Trump friends about relying on short-run economic data to make their case.

For instance, what if the economy is in a false boom caused by easy money? If that leads to a recession, will they want Trump to take the blame?

Or let’s consider a more tangible example. Trump and his supporters used to make a big deal out of rising stock prices, but that argument no longer appears to be very persuasive.

Let’s close with two charts that take different sides. The first one is from MSNBC, which makes a persuasive case that reductions in unemployment under Trump are simply a continuation of the trend.

On the other hand, this second chart, which comes from the White House, shows that economic outcomes are better than what the Obama Administration predicted.

This also is compelling data, and I’ve explained that even small improvements in economic performance are very desirable.

Though it remains to be seen whether this additional growth is either real or sustainable.

The bottom line is that there’s no reason to expect big economic improvements under Trump, at least in the long run. His good policies on taxes and regulation are offset by bad policies on spending and trade.

Read Full Post »

We had an election yesterday in the United States (or, as Mencken sagely observed, an advance auction of stolen goods). Here are five things to keep in mind about the results.

First, the GOP did better than most people (including me) expected.

This tweet captures the zeitgeist of last night.

The Senate results were especially disappointing for the Democrats. It does appear the Kavanaugh fight worked out very well for Republicans.

Second, better-than-expected election news for the GOP does not imply better-than-expected news for public policy. Given Trump’s semi-big-government populism, I fear this tweet is right about the increased risk of a counterproductive infrastructure package and a job-destroying increase in the minimum wage.

For what it’s worth, I think we’ll also get even more pork-filled appropriations spending. In other words, busting the spending caps after already busting the spending caps.

The only thing that might save taxpayers is that Democrats in the House may be so fixated on investigating and persecuting Trump that it poisons the well in terms of cooperating on legislation.

Fingers crossed for gridlock!

Third, there was mixed news when looking at the nation’s most important ballot initiatives.

On the plus side, Colorado voters rejected an effort to replace the flat tax with a discriminatory system (in order to waste even more money on government schools), California voters sensibly stopped the spread of rent control, Washington voters rejected a carbon tax, Florida voters expanded supermajority requirements for tax increases, and voters in several states legalized marijuana.

On the minus side, voters in four states opted to expand the bankrupt Medicaid program, Arizona voters sided with teacher unions over children and said no to expanded school choice, and voters in two states increased the minimum wage.

Fourth, Illinois is about to accelerate in the wrong direction. Based on what happened last night, it’s quite likely that the state’s flat tax will be replaced by a class-warfare-based system. In other words, the one bright spot in a dark fiscal climate will be extinguished.

This will accelerate the out-migration of investors, entrepreneurs, and businesses, which is not good news for a state that is perceived to be most likely to suffer a fiscal collapse. It’s just a matter of time before the Land of Lincoln becomes the land of bankruptcy.

Interesting, deep-blue Connecticut voters elected a Republican governor. Given the state’s horrific status, I suspect this won’t make a difference.

Fifth, Obama was a non-factor. Democrats lost almost every race where he campaigned.

Though I should point out that he deserves credit for trying to have an impact in close races. Many top-level politicians, looking to have a good “batting average,” only offer help to campaigns that are likely to prevail.

That being said, this adds to my hypothesis that Obama was basically an inconsequential president.

Read Full Post »

If you look at my election predictions from 2010, 2012, 2014, and 2016, you’ll see that my occasional insights are matched by some big misses. So I don’t think I offer any special insight.

But since readers seem to enjoy these biennial predictions, I’ll once again go out on a limb. The bottom line is that my Democratic friends will be happy.

Since so many Democratic seats are up, it will be a big defeat if Republicans stay at 51 seats in the Senate. And the loss of more than 45 seats in the House is approaching bloodbath territory.

This outcome is why I advised my GOP friends that it might have been better to lose the 2016 presidential election.

Now let’s consider the potential economic implications, which is what I care about.

The first-order effect is that we’ll have gridlock and that’s not a bad outcome as far as I’m concerned. Simply stated, that means less legislation, which presumably means less mischief from Washington.

But not all gridlock is created equal. Here’s a chart published a couple of days ago by the Washington Post. I’ve highlighted in green relative stock market performance when there’s good gridlock with a Republican Congress and not-so-good gridlock with a Democratic Congress.

I don’t think S&P performance is the best indicator of prosperity, and the “sample size” produced by American elections it rather small, so I caution against over-interpreting this data.

That being said, I’ve crunched budget numbers and revealed that Republican presidents generally allow more spending than Democrats. The only exception to this rule is Ronald Reagan.

Unfortunately, as I warned the day after the 2016 election, Trump is no Reagan. As such, I wouldn’t be surprised if the net result (assuming my predictions are remotely accurate) is that the already-excessive growth of spending becomes an even bigger problem.

P.S. There are some very important ballot initiatives that will be decided today.

Read Full Post »

The mid-term elections take place on Tuesday and the crowd in DC is focused on who will control the House and Senate. I’ll make my (sometimes dubious, sometimes accurate) congressional predictions next Monday.

The goal today is to call attention to the key initiatives and referendums that also will occur next week.

As a matter of logic, I can’t really argue with the notion that voting is a waste of time. Nonetheless, I hope the right people in certain states will be illogical.

As far as I’m concerned, the most important contest is in Colorado, where voters are being asked to replace the state’s flat tax with a discriminatory system of graduated rates. Here’s how CNBC describes the awful proposal.

Amendment 73 would break up its current flat tax of 4.63 percent, adding four new individual income tax brackets. Taxpayers earning less than $150,000 would see no change; at $150,001, a new rate of 5 percent would kick in, with a new top rate of 8.25 percent on taxable income over $500,000. The measure also includes a boost in the corporate income rate (from 4.63 percent to 6 percent).

Since I’m a fan of the flat tax (combined with TABOR, it helps to explain the state’s prosperity), I obviously hope voters reject this self-destructive scheme to turn Colorado into California.

The second-most important referendum is probably the battle over school choice in Arizona. Here’s how Reason characterizes that battle.

…since we’ve grown accustomed to the idea that governments should mug us in order to fund an army of loyal employees and their fumbling attempts to hammer knowledge into our kids’ heads, attempts to provide widely accessible alternatives to government schooling inevitably involve diverting some of those stolen funds. And diverting those funds requires political battles against entrenched allies of the state monopoly—such as that playing out in Arizona over an effort to expand a school voucher program. …Last year, lawmakers voted to expand eligibility for the empowerment scholarship accounts program to all students, with participation capped at around 30,000 kids. But opponents of school choice won a battle to put the program’s expansion on the ballot as Proposition 305. …As of last week, polling on Proposition 305 conducted by Suffolk University and the Arizona Republic shows a plurality of Arizona voters (41 percent) supporting expansion of the program, with 32 percent opposed and 27 percent undecided.

The third-most important referendum is actually four different measures. There are proposals to expand Medicaid in Idaho, Montana, Nebraska, and Utah.

The Wall Street Journal editorializes about these dangerous initiatives.

One of the worst deals in state spending is coming to a red state near you, and that’s expanding Medicaid to adult men above the poverty line. …Expansion extends the benefit to prime-age adults without children up to 138% of the poverty line. The feds pay more than 90% of the cost for the new beneficiaries… Every state that has expanded Medicaid has blown the budget by spending more money on more people. The cost overruns are more than double on average. …Medicaid is already the fastest growing line item in nearly every state in the country. …The idea that the feds will continue to pick up 90% of the tab forever is fantasy. The GOP has vowed to equalize the funding formula and make states pay closer to 30% to 50% like they do for traditional Medicaid. States shouldn’t assume that Democrats will be more merciful when they want to pay for something else and stick more of the Medicaid bill on states.

The fourth-most important measure to watch is a referendum for a big carbon tax in the state of Washington. The Wall Street Journal opined about this revenue grab.

Two years ago nearly 60% of Washington voters rejected a ballot initiative to impose a “revenue neutral” carbon tax. Green groups opposed the referendum because it wouldn’t generate money for environmental largess. …Liberals have now fixed what they thought was the fatal flaw of the first referendum—namely, revenue neutrality. This year’s initiative would impose a $15 per ton carbon “fee” that would increase by $2 per year. …the $2.3 billion in revenue it is projected to generate over the next five years would mostly be earmarked for “clean air and energy” programs… But revenues are fungible, and the carbon tax proceeds would invariably finance government spending in other areas. …The tax would raise gas prices by 13 cents a gallon in 2020 and 59 cents a gallon by 2035. Washington currently has the third highest gas prices in the country after Hawaii and California… National Economic Research Associates estimates that the tax would cost Washington households on average $440 in 2020 and would reduce state economic growth by 0.4% over the next two years. …liberals care more about increasing tax revenue to spend than they do about reducing emissions.

This is exactly why I warn against a national carbon tax. No matter what proponents say, it will wind up being an excuse to finance even more wasteful spending.

Last but not least, our fifth-most important ballot initiative is from California, which has a very misguided referendum that would allow more rent control in the state. Michael Tanner has an appropriate description of this scheme in National Review.

But the prize for perhaps the worst ballot idea goes — naturally — to California, which will vote on whether to allow local communities to impose rent control. Approval can be guaranteed to benefit the wealthy and middle class while reducing the availability of rental housing for the poor. It’s almost as if the measure’s supporters had never glimpsed an economics textbook.

For what it’s worth, one of the state’s Senators, Kamala Harris, has a national plan to wreck housing markets.

Here are some additional initiatives on taxes which merit a brief mention, particularly since they may have an impact on competitiveness.

  • Arizona has an initiative to prevent politicians from imposing any new sales taxes on services.
  • There’s a measure to increase tobacco taxes in South Dakota.
  • In California, there’s a referendum to repeal a recent hike in the gas tax and to require future increases to be approved by voters.
  • There’s also an initiative in the Golden State to boost the sales tax to finance more transportation spending.
  • In Florida, where there’s an initiative to require a two-thirds vote of the legislature to increase revenue.
  • Oregon voters will choose whether to impose a requirement that three-fifths of the legislature vote for indirect revenue increases.
  • North Carolina voters will decide whether to lower the maximum-allowable tax rate from 10 percent to 7 percent.

From a libertarian perspective, I’ll also be paying attention to a measure to restrict gun rights in the state of Washington, as well as an initiative to legalize marijuana in Michigan.

There are initiatives to increase the minimum wage in Arkansas (to $11.00 per hour) and Missouri (to $12.00 per hour). If they are approved, the consequences will be both negative and predictable.

Read Full Post »

Time for some political humor.

Though some may consider this tragedy rather than comedy since the theme will be the potential contest between Donald Trump and Elizabeth Warren in 2020.

But some people are happy about the possible match-up. For instance, both likely candidates are a gold mine for satirists.

We’ll start with Elizabeth “Soul Woman” Warren, She claimed Indian ancestry to give herself an advantage when seeking university jobs, but this produced enough mockery that she felt compelled to get a DNA test.

Which led to some brutal mockery (h/t: Powerline blog). Here’s the one that got the most laughs from me.

Maybe Nike can replace Colin Kaepernick?

Here’s another amusing image.

Let’s look at three additional choices.

If a tiny share of DNA is enough to claim Indian status, then the AFLAC duck gets to be a bald eagle.

And if Warren picks Crazy Bernie as her running mate, they already have a campaign poster.

But before we get to 2020, we have this year’s midterm elections. Trump is dragging down GOP candidates, but Democrats also have some liabilities.

Now let’s turn our attention to Trump.

A friend sent me a great site for Putin/Trump memes. Here’s the one that earned the biggest chuckle from me.

And this one also is amusingly brutal.

And I can’t resist sharing this option as well.

For those of you who like Trump because of his “recreational choices,” you may want to jump ship to someone with better qualifications.

Last but not least, here’s a look back at our dismal choice from 2016.

 

Reminds me of the meme about libertarians.

Given the choice between Trump and Hillary, it is kind of amazing that Gary Johnson did so poorly. Though the Onion has a theory about why that happened.

Makes you wonder how they will bungle (what presumably will be) an equally good opportunity in 2020.

Read Full Post »

Move over, Crazy Bernie, you’re no longer the left’s heartthrob. You’ve been replaced by Alexandria Ocasio-Cortez, an out-of-the-closet socialist from New York City who will enter Congress next January after beating a member of the Democratic leadership.

Referring to the boomlet she’s created, I’ve already written about why young people are deluded if they think bigger government is the answer, and I also pointed out that Norway is hardly a role model for “Democratic socialism.”

And in this brief snippet, I also pointed out she’s wrong to think that you can reduce corporate cronyism by giving government even more power over the economy.

But there’s a much bigger, more important, point to make.

Ms. Ocasio-Cortez wants a radical expansion in the size of the federal government. But, as noted in the Washington Examiner, she has no idea how to pay for it.

Consider…how she responded this week when she was asked on “The Daily Show” to explain how she intends to pay for her Democratic Socialism-friendly policies, including her Medicare for All agenda. “If people pay their fair share,” Ocasio-Cortez responded, “if corporations paid — if we reverse the tax bill, raised our corporate tax rate to 28 percent … if we do those two things and also close some of those loopholes, that’s $2 trillion right there. That’s $2 trillion in ten years.” She should probably confer with Democratic Socialist-in-arms Sen. Bernie Sanders, I-Vt., whose most optimistic projections ($1.38 trillion per year) place the cost of Medicare for All at roughly $14 trillion over a ten-year period. Two trillion in ten years obviously puts Ocasio-Cortez a long way away from realistically financing a Medicare for All program, which is why she also proposes carbon taxes. How much she expects to raise from this tax she didn’t say.

To be fair, Bernie Sanders also didn’t have a good answer when asked how he would pay for all the handouts he advocated.

To help her out, some folks on the left have suggested alternative ways of answering the question about financing.

I used to play basketball with Chris Hayes of MSNBC. He’s a very good player (far better than me, though that’s a low bar to clear), but I don’t think he scores many points with this answer.

Indeed, Professor Glenn Reynolds of the University of Tennessee Law School required only seven words to point out the essential flaw in Hayes’ approach.

Simply stated, there’s no guarantee that a rich country will always stay rich.

I wrote earlier this month about the importance of long-run economic growth and pointed out that the United States would be almost as poor as Mexico today if growth was just one-percentage point less every year starting in 1895.

That was just a hypothetical exercise.

There are some very sobering real-world examples. For instance, Nima Sanandaji pointed out this his country of Sweden used to be the world’s 4th-richest nation. But it has slipped in the rankings ever since the welfare state was imposed.

Venezuela is another case study, as Glenn Reynolds noted.

Indeed, according to NationMaster, it was the world’s 4th-richest country, based on per-capita GDP, in 1950.

For what it’s worth, I’m not familiar with this source, so I’m not sure I trust the numbers. Or maybe Venezuela ranked artificially high because of oil production.

But even if one uses the Maddison database, Venezuela was ranked about #30 in 1950, which is still impressive.

Today, of course, Venezuela is ranked much lower. Decades of bad policy have led to decades of sub-par economic performance. And as Venezuela stagnated, other nations become richer.

So Glenn’s point hits the nail on the head. A relatively rich nation became a relatively poor nation. Why? Because it adopted the statist policies favored by Bernie Sanders and Alexandria Ocasio-Cortez.

I want to conclude, though, with an even better example.

More than seven years ago, I pointed out that Argentina used to be one of the world’s richest nations, ranking as high as #10 in the 1930s and 1940s (see chart to right).

Sadly, decades of Peronist policies exacted a heavy toll, which dropped Argentina to about #45 in 2008.

Well, I just checked the latest Maddison numbers and Argentina is now down to #62. I was too lazy to re-crunch all the numbers, so you’ll have to be satisfied with modifications to my 2011 chart.

The reverse is true as well. There are many nations that used to be poor, but now are rich thanks to the right kind of policies.

The bottom line is that no country is destined to be rich and no country is doomed to poverty. It’s simply a question of whether they follow the right recipe for growth and prosperity.

Read Full Post »

In 2016, I posed a rhetorical question about whether young people are so stupid that they shouldn’t be allowed to vote. After all, many of them thought Bernie Sanders would make a good president (of America, not Greece or Venezuela).

Well, maybe we really should increase the voting age. It seems 2016 was not an anomaly. Millennials are dangerously ignorant.

Here’s some analysis from CNN.

Millennials are…bringing a distinctly Millennial approach to policy and governing. And that might include Democratic socialism. Case in point: Alexandria Ocasio-Cortez, the 28-year-old Democratic socialist who won her primary in New York Tuesday in an upset over a 10-term incumbent. More than any other generation before them, Millennials are OK with socialism. A 2016 Gallup poll found 55% of those then aged 18-29 said they had a positive view of it (it’s worth noting 57% supported capitalism and 78% supported free enterprise). …Bernie Sanders’ presidential campaign was instrumental in mainstreaming Democratic socialism.

What’s particularly galling is that young people are pessimistic about their economic future and they’ve decided to blame capitalism for problems that exist because of excessive government!

Millennials’ economic situation also plays a role. …A recent study by the Federal Reserve Bank of St. Louis found Millennials born in the ’80s have a net worth 34% below what was expected. And student debt since 2009 has doubled to $1.4 trillion… For many cash-strapped Millennials in debt, Democratic socialism isn’t radical, it’s a way to fix a system they believe failed them.

In other words, young people want to make Mitchell’s Law a never-ending reality.

Let’s look at another example. Here’s some of what Michelle Goldberg wrote in a fawning column in the New York Times.

…all over the nation, people, particularly women, are working with near supernatural energy to rebuild democracy from the ground up… For younger people who see Donald Trump’s election as the apotheosis of a rotten political and economic system, it often means trying to remake that party as a vehicle for democratic socialism. …Alexandria Ocasio-Cortez, a 28-year-old democratic socialist, shook the Democratic Party by toppling Joseph Crowley, a 19-year incumbent, chairman of the Queens County Democratic Party and potential heir to House minority leader Nancy Pelosi. …the real red wave may be democratic socialism’s growing political influence, especially among young people. …The D.S.A., to which Ocasio-Cortez belongs, is the largest socialist organization in America. Its growth has exploded since the 2016 election… Many of the D.S.A.’s goals, reflected in Ocasio-Cortez’s platform, are indistinguishable from those of progressive democrats. But if the D.S.A. is happy to work alongside liberals, its members are generally serious about the “socialist” part of democratic socialist. Its constitution envisions “a humane social order based on popular control of resources and production, economic planning, equitable distribution, feminism, racial equality and non-oppressive relationships.”

In other words, these cranks are real socialists. They actually want government to own and manage the means of production (“popular control of resources and production” and “economic planning”).

This is a problem for the non-crazy left.

Talk of popular control of the means of production is anathema to many older Democrats, even very liberal ones. …After Ocasio-Cortez’s win, Pelosi denied Republican claims that socialism is ascendant in the Democratic Party. It’s hard to blame her for being defensive, since for generations “socialist” was considered a slur, and it’s one that’s hurled at Democrats indiscriminately.

But young people seem prone to fantasy.

…one recent survey shows that 61 percent of Democrats between 18 and 34 view socialism positively. The combination of the Great Recession, the rising cost of education, the unreliability of health insurance and the growing precariousness of the workplace has left young people with gnawing material insecurity. They have no memory of the widespread failure of Communism, but the failures of capitalism are all around them.

Needless to say, Ms. Goldberg doesn’t list the “failures of capitalism,” but it’s a very safe bet that she’s blaming free markets for problems caused by government (a common theme in US economic history).

No wonder young people are so deeply confused. This is probably what they’re taught in government schools.

But there is a silver lining. Courtesy of Libertarian Reddit, we can enjoy some humor poking fun at Ms. Ocasio-Cortez’s overly earnest form of socialism.

Amusing, but very unfair to religion. After all, we can’t go back in time to confirm details from the bible.

But we can look today at countries like Cuba, Greece, Venezuela, and North Korea to confirm the utter insanity of supporting any type of socialism.

Let’s close with a video from 2013. It’s about Obamanomics and young people, but it’s really about why big government makes it hard for young people to get ahead.

I especially like the explanation of how young people are big losers because of the entitlement state.

Makes me wonder if Ms. Ocasio-Cortez will take the lead on, say, Social Security reform when she gets to Congress?

Needless to say, I won’t be holding my breath.

P.S. Young people aren’t a (totally) lost cause. They may not like capitalism, perhaps because they confuse it with cronyism, but they are sympathetic to “free enterprise.”

Read Full Post »

I gave Trump 50-day grades and 100-day grades, but those were largely speculative assessments.

Now we have a full year of data and that real-world evidence can be used to grade Trump’s first year in office.

But before I get into the details, allow me to start with a broad observation. William F. Buckley famously said that he would rather be governed by 2000 random people from the Boston phone book than by the faculty of Harvard University. Well, one can argue that he posthumously got his wish. The 2016 election was a choice between:

  • Hillary Clinton, a very well-credentialed leftist who would have staffed her administration with other well-credentialed leftists (the Harvard faculty in spirit), who nonetheless was defeated by;
  • Donald Trump, a novice politician who has random-guy-from-the-phone-book opinions (as I described him to a TV audience in New Zealand, he’s “your Uncle who spouts off at Christmas dinner”).

It’s not my role to say whether the American people made the right choice, but I am willing to analyze the economic consequences.

So let’s look at the five major policy areas that determine a nation’s level of economic liberty and see whether Trump is moving America in the right direction or wrong direction.

  • Fiscal Policy – It’s not easy to give Trump a grade because he’s like Dr. Jekyll and Mr. Hyde on the budget. On the tax side of the ledger, he pushed for and ultimately signed a better-than-expected tax bill featuring an impressive reduction in the corporate tax rate and some much-needed limits on the deductibility of state and local taxes. On the spending side of the ledger, however, the first year of Trump has been a disappointment. According to the Committee for a Responsible Federal Budget, he actually approved more than $250 billion (over eight years) of additional outlays. And we haven’t gotten any entitlement reform (though Trump supported the Obamacare repeal legislation on Capitol Hill, which included some reasonably good spending provisions). Trump Grade: B
  • Trade – Trump has moved policy in the wrong direction, though the first year was not as bad as feared. In other words, he’s been doing a lot of saber-rattling, but fortunately not drawing too much blood. That being said, he is threatening to pull the United States out of NAFTA, which would be a very big mistakeTrump Grade: D
  • Regulation – This is Trump’s best issue area. He’s rolled back some Obama-era regulations, and he’s made some very sensible appointments, which means there’s hope of ameliorating the statist orientation of bureaucracies such as the FDA and the FCCTrump Grade: A-
  • Monetary Policy – Trump hasn’t said much about monetary policy, so we can only grade him on the basis of the people he has appointed to the Federal Reserve. But even that doesn’t allow us much room for analysis since his picks have been very conventional. One hopes a Trump-influenced Fed will support a gradual end to artificially low interest rates, but that’s unclear at this stage. Trump Grade: C
  • Rule of Law – Trump has been aggressive with executive orders, which worries me even if I happen to agree with the underlying policy. The White House hasn’t tried to flout court decisions, however, so that’s a good sign. The appointment and confirmation of Justice Gorsuch also bodes well (assuming he doesn’t “grow in office” like Justice Roberts). Trump Grade: B-

Overall, I think economic policy has moved slightly in the right direction, and I’ll be curious to see whether my back-of-the-envelope grading is confirmed by Economic Freedom of the World.

Here’s some of what I wrote for the latest issues of Cayman Financial Review.

…his first year in office has been a net plus for the U.S. economy. The regulatory state has been curtailed and a semi-significant tax reform has been enacted. …Equally important, Trump has not destabilized global trade. His protectionist rhetoric has not (yet) translated into major anti-trade initiatives. Nor has he implemented any populist policies on immigration or the budget. In other words, we have dodged a bullet. …That is the good news. The bad news (or, to be fair, unsettling news) is that Trump still has at least three more years in office. …The fact that Trump’s first year has been characterized by a “normal” set of Republican policies is besides the point. Almost everyone assumes he is capable of doing something out of the ordinary.

I’ll close by making a second broad observation. The fact that economic liberty increased during Trump’s first year in office does not mean that his presidency will be a net plus. It’s possible that his personal unpopularity will trigger a backlash that makes it easier over time to impose statist policies (just as I suggested that a Hillary victory might have produced desirable long-run consequences).

Check with me in 2021 for a final assessment on whether picking a president from the Boston phone book (metaphorically speaking) was a good idea.

P.S. For what it’s worth, here’s a speech I gave back in Trump’s first month in office. I think my predictions were on target (mostly because I paid attention to what Trump was saying, not because of any special insight).

P.P.S. Whether you’re a left-leaning opponent of Trump or a right-leaning opponent of Trump, remember there’s always the silver lining of mockery.

Read Full Post »

There are several challenges when trying to analyze the impact of policy on economic performance.

One problem is isolating the impact of a specific policy. I like Switzerland’s spending cap, for instance, but to what extent is that policy responsible for the country’s admirable economic performance? Yes, I think the spending cap helps, but Switzerland also many other good policies such as a modest tax burden, private retirement accounts, open trade, and federalism.

Another problem is the honest and accurate use of data. You can make any nation look good or bad simply by choosing either growth years or recession years for analysis. This is known as “cherry-picking” data and I try to avoid this methodological sin by looking at multi-year periods (or, even better, multi-decade periods) when analyzing various policies.

But not everyone is careful.

Jason Furman, who was Chairman of the Council of Economic Advisers during Obama’s second term, has a column in today’s Wall Street Journal. What immediately struck me is how he cherry-picked data to bolster his claim that the government shouldn’t reduce its claim on taxpayers. Here’s his core argument.

…the 1981 and 2001 model of tax cuts makes no sense in today’s fiscal environment. Tax revenue as a percentage of gross domestic product is lower today than it was when Presidents Reagan and George W. Bush cut taxes.

And here the chart he shared, which apparently is supposed to be persuasive.

But here’s the problem. If you look at OMB data for the entire post-World War II era, tax revenues have averaged 17.2 percent of GDP. If you look at CBO data, which starts in 1967, tax revenues, on average, have consumed 17.4 percent of GDP.

So Furman’s implication that tax receipts today are abnormally low is completely wrong.

Moreover, he shows the projection for 2017 tax receipts, which is appropriate, but he neglects to mention that the Congressional Budget Office’s forecast for the next 10 years shows revenues averaging 18.1 percent of GDP (or the 30-year forecast that shows revenues becoming an even bigger burden).

In other words, a substantial tax cut is needed to keep the tax burden from climbing well above the long-run average.

Furman’s slippery use of data is disappointing, but it’s also inexplicable. He could have offered some effective and honest arguments against tax cuts, most notably that reducing revenues is problematical since Trump and Republicans seem unwilling to restrain the growth of government spending.

Let’s close by looking at a few other interesting passages from his column.

I found this sentence to be rather amusing since he’s basically admitting that Obamanomics was a failure.

Growth has been too low for too long and raising it should be a top priority.

He then asserts that tax cuts never pay for themselves. I would have agreed if he wrote “almost never,” or if he wrote that the new GOP package won’t pay for itself. But his doctrinaire statement is belied by data from the United States, Canada, and United Kingdom.

…no serious analyst has ever claimed that tax cuts generate enough growth to pay for themselves.

By the way, Furman openly admits the Laffer Curve is real. And if the Joint Committee on Taxation shows revenue feedback of 20 percent-30 percent when scoring the Republican plan, that will represent huge progress.

Estimates by a wide range of economists and the nonpartisan scorekeepers at the Joint Committee on Taxation have found that the additional growth associated with well-designed tax reform may offset 20% to 30% of the gross cost of tax cuts—not counting dynamic feedback.

Last but not least, he comes out of the tax-increase closet by embracing the truly awful Simpson-Bowles budget plan.

The economy needs a fiscal plan that combines an increase in revenues with entitlement reforms that protect the poor a la Simpson-Bowles.

As I’ve explained before, Simpson-Bowles is best characterized as lots of new revenue on the tax side and plenty of gimmicky provisions on the spending side (rather than genuine reform).

P.S. Even though Republicans are not serious about controlling spending and even though I don’t think the GOP tax cut will come anywhere close to “paying for itself,” the tax cuts are still a good idea. Both to generate growth and also because reduced tax receipts hopefully will translate into pressure to control spending at some point.

Read Full Post »

Every time I’ve gone overseas in the past six months, I’ve been peppered with questions about Donald Trump. It doesn’t matter whether my speech was about tax reform, entitlements, fiscal crisis, or tax competition, most people wanted to know what I think about The Donald.

My general reaction has been to disavow any expertise (as illustrated by my wildly inaccurate election prediction). But, when pressed, I speculate that Hillary Clinton wasn’t a very attractive candidate and that Trump managed to tap into disdain for Washington (i.e., drain the swamp) and angst about the economy’s sub-par performance.

What I find galling, though, is when I get follow-up questions – and this happens a lot, especially in Europe – asking how it is possible that the United States could somehow go from electing a wonderful visionary like Obama to electing a dangerous clown like Trump.

Since I’m not a big Trump fan, I don’t particularly care how they characterize the current president, but I’m mystified about the ongoing Obama worship in other nations. Even among folks who otherwise are sympathetic to free markets.

I’ve generally responded by explaining that Obama was a statist who wound up decimating the Democratic Party.

And my favorite factoid has been the 2013 poll showing that Reagan would have trounced Obama in a hypothetical matchup.

I especially like sharing that data since many foreigners think Reagan wasn’t a successful President. So when I share that polling data, it also gives me an opportunity to set the record straight about the success of Reaganomics.

I’m motivated to write about this topic because I’m currently in Europe and earlier today I wound up having one of these conversations in the Frankfurt Airport with a German who noticed my accent and asked me about “crazy American politics.”

I had no problem admitting that the political situation in the U.S. is somewhat surreal, so that was a bonding moment. But as the conversation progressed and I started to give my standard explanation about Obama being a dismal president and I shared the 2013 poll, my German friend didn’t believe me.

So I felt motivated to quickly go online and find some additional data to augment my argument. And I was very happy to find a Quinnipiac poll from 2014. Here are some of the highlights, as reported by USA Today.

…33% named Obama the worst president since World War II, and 28% put Bush at the bottom of post-war presidents. “Over the span of 69 years of American history and 12 presidencies, President Barack Obama finds himself with President George W. Bush at the bottom of the popularity barrel,” said Tim Malloy, assistant director of the Quinnipiac University Poll. …Ronald Reagan topped the poll as the best president since World War II, with 35%. He is followed by presidents Bill Clinton (18%) and John F. Kennedy (15%).

Yes, Ronald Reagan easily was considered the best President in the post-World War II era.

Here’s the relevant chart from the story. Kudos to the American people from giving the Gipper high scores.

And what about the bottom of the list?

Here’s the chart showing Obama edging out George W. Bush for last place.

By the way, I suspect these numbers will look much different in 50 years. I’m guessing many Republicans picked Obama simply because he was the most recent Democrat president and a lot of Democrats picked W because he was the most recent Republican President.

With the passage of time, I think Nixon and Carter deservedly will get some of those votes (and I think LBJ deserves more votes as the worst president, for what it’s worth).

The bottom line, though, is that I now have a second poll to share with foreigners.

P.S. If there’s ever a poll that isn’t limited to the post-World War II era, I would urge votes not only for Reagan, but also for Calvin Coolidge and Grover Cleveland.

P.P.S. People are surprised when I explain that Bill Clinton deserves to be in second place for post-WWII presidents.

Read Full Post »

The last time there was a presidential election in France, I like to think my endorsement made a difference in the outcome.

Now that another election is about to take place, with a first round this Sunday and a runoff election between the top-2 candidates two week later, it’s time to once again pontificate about the political situation in France. But before looking at the major candidates, let’s consider a couple of pieces of economic data to get a sense of the enormous challenges that will have to be overcome to boost France’s anemic economy.

We’ll start with this measure of implicit pension debt (IPD) in various European nations. France, not surprisingly, has made commitments to spend money that greatly exceed the private sector’s capacity to generate tax revenue.

By the way, the accompany article notes that the numbers for France are even worse than suggested by the chart.

Most tax and accounting codes require companies to report such implicit debts on the liability side of the ledger as obligations. Not so with governments, whose accounting practices would under normal circumstances be considered as falsifying public accounts. …According to a recent study, six European countries – Austria, Finland, France, Germany, Italy and Poland – have an IPD exceeding 300 percent of gross domestic product. …And the kicker? The data cited above are based on the present value of future pensions as of 2006. More up-to-date figures probably won’t be available until the end of 2017. …The issue is no longer when France goes bankrupt, but when Europe does. The level of debt declared in the national accounts is already worrying. With implicit pension liabilities a multiple of that, it appears that a systemic implosion is unavoidable.

Here’s another sobering visual. France is doing a very good job of scaring off the geese that lay the golden eggs. It is losing more millionaires than any other country.

The combined message of these two visuals is that the already-enormous burden of spending in France will get worse, yet the country is chasing away the people who finance the lion’s share of the government’s budget.

And lots of young entrepreneurs also are escaping, which further exacerbates the nation’s long-run troubles.

Now that we’ve looked at where France is heading, let’s contemplate whether the politicians running for President will make the situation better or worse.

We’ll start with this helpful table summarizing the views of the major candidates (though the hard-left vote apparently has consolidated behind Mélenchon, so Hamon can be ignored).

What’s not captured in this table, however, is that the presidential race pits two outsiders (Mélenchon and Le Pen) against two establishment candidates (Macron and Fillon).

And this is leading to some interesting analysis. The establishment point of view is captured by Sebastian Mallaby’s column in the Washington Post. He is very opposed to Fillon, Le Pen, and Mélenchon, and also rather concerned that his preferred candidate – Emmanuel Macron – won’t make it to the runoff.

In the first round of its presidential election, to be held on Sunday, some three-quarters of the French electorate are expected to back candidates who stand variously for corruption, a 100 percent top tax rate, Islamophobia, Russophilia, Holocaust denial, the undermining of NATO and the traumatic breakup of Europe’s political and monetary union. France was once the cradle of the Western Enlightenment. Now it threatens to become a spectacle of decadent collapse.

I disagree with some of Mallaby’s analysis, but enjoyed his depiction of Mélenchon, who bizarrely thinks Venezuela is a role model.

Jean-Luc Mélenchon, the Communist-allied candidate who styles himself after Venezuela’s Hugo Chávez and promises a “citizens’ revolution.” No prizes for guessing that he’s the one who proposes a 100 percent top tax rate… Oblivious to the fact that France has taxed and regulated its way to a 25 percent youth unemployment rate and a government-debt trajectory that threatens Armageddon, he wants further cuts to the French workweek, an additional 10,000 civil servants and a shift in the retirement age from 62 to 60.

To put it in simple terms, Mélenchon is appealing to voters who think Hollande didn’t go far enough.

CNN reports that Mélenchon is even more fixated on class warfare than Bernie Sanders.

Instead of a 90 percent top tax rate, he wants to steal every penny from the supposedly evil rich.

Jean-Luc Mélenchon, who has been endorsed by the French Communist Party, says he would introduce a 100% tax on income above €400,000 ($425,000). …France already has some of the world’s highest rates of income tax, and previous attempts to push them even higher have failed. …Around 10,000 millionaires left the country in 2015, followed by 12,000 last year, according to New World Wealth.

Though maybe he’s the French version of Obama, who also got support from communists.

And, like Obama, he thinks he should get to decide when someone has earned enough money.

“I believe that there is a limit to the accumulation [of wealth],” Mélenchon said in March. “If there are any who want to go abroad, well, goodbye!”

Though at least he has the courage of his convictions. He doesn’t mind if upper-income taxpayers leave. Though I wonder if he’s given any thought to who will then pay the bills?

Anyhow, the 100 percent tax is just one of many crazy ideas.

He also wants to limit pay for CEOs to 20 times the salary of their worst-paid employee. …Here’s a quick look at Mélenchon’s other economic policy proposals: Cut France’s working week to four days…More vacation days for workers…Raise minimum wage by 16%…Increase the tax on inherited wealth…100% renewable energy by 2050…No new free trade agreements…Nationalize French energy company EDF and gas provider Engie.

Now let’s shift to other candidates. I’m irked that Macron generally is portrayed as a centrist and even more irked that Le Pen is portrayed as being on the right.

Prince Michael of Liechtenstein is a very astute observer of European political and economic affairs and his analysis is more accurate. We’ll start with what he wrote about Le Pen’s support for statism.

Ms. Le Pen’s…socialist economic program will continue the ongoing destruction of the French economy, its competitiveness and public finances. …Such a scenario would, however, only accelerate a disaster that was already looming. The present government’s socialist policies, which have shied away from reform and preserved France’s oversized public sector, will eventually bear the same results.

To augment that analysis, Le Pen is considered on the right simply because of her anti-immigrant policy. But on economic policy, she is very much on the left.

Prince Michael also exposed Macron’s support for a more burdensome government.

Mr. Macron…claims that he will bring France’s budget deficit below the European benchmark of 3 percent. …The candidate’s plan…does not appear plausible in light of his intention to further increase government spending. Mr. Macron’s pronouncements indicate an adherence to the Keynesian economic policy approach at the EU level. According to him, Europe should end austerity and introduce a growth model in which additional spending – on top of the already lavish outlays planned by European Commission chief Jean-Claude Juncker – ought to be implemented. The Macron policies boil down to more state and more EU centralization. At the heart of the scheme is the creation of a European Ministry of Finance and Economy, an all-powerful body to plan and monitor the EU economy. …Macron intends to continue treating the French cancer with aspirin and transmit the disease to Germany and the rest of the EU, while demanding that they pay for France’s subsistence in the meantime.

In other words, Macron wants this cartoon to be official French policy. Yet some people actually think of him as a pro-market reformer. Wow.

Let’s conclude with these wise words from an editorial in today’s Wall Street Journal, which is very worried that the runoff may feature two pro-big government outsiders.

All four major candidates are polling at around 20%, but Mr. Mélenchon has momentum and the highest personal favorability. A Le Pen-Mélenchon finale would be a political shock to markets and perhaps to the future of the EU and eurozone. …Mr. Hollande’s Socialists have made France the sickest of Europe’s large economies, with growth of merely 1.1% in 2016, a jobless rate above 10% for most of the past five years, and youth unemployment at nearly 25%. His predecessor Nicolas Sarkozy and the Republicans talked a good reform game but never delivered. …the stage is set for candidates who appeal to nativism or a cost-free welfare state. Let’s hope a French majority steps back from the political brink.

By the way, it’s not yet time for me to make an official endorsement, though I’ll share my leanings.

I confess that I’m torn between Fillon and Mélenchon. By French standards, Fillon is apparently very pro-free market. So I should like him. He could be the Ronald Reagan or Margaret Thatcher of France.

But what if he turns out to be another Sarkozy, a big-government fraud?

If I support Mélenchon, by contrast, at least I can say with great confidence that I will be able to continue using France as an example of bad public policy. I realize that’s not an ideal outcome for the French people, but you know what they say about omelets and eggs.

In any event, I’ll wait until the runoff election before selecting a candidate.

Read Full Post »

For three decades, I’ve been trying to convince politicians to adopt good policy. I give them theoretical reasons why it’s a good idea to have limited government. I share with them empirical evidence demonstrating the superiority of free markets over statism. And I’m probably annoyingly relentless about disseminating examples of good and bad policy from around the world (my version of “teachable moments”).

But if you want to get a politician to do the right thing, you need more than theory, data, and real-world case studies. You need to convince them – notwithstanding my Second Theorem of Government – that good policy won’t threaten their reelection.

My usual approach is to remind them that Ronald Reagan adopted a bunch of supposedly unpopular policies, yet he got reelected in a landslide because reducing the burden of government allowed the private sector to grow much faster. George H.W. Bush, by contrast, became a one-term blunder because his tax increase and other statist policies undermined the economy’s performance.

I’m hoping this argument will resonate with some of my friends who are now working in the White House. And I don’t rely on vague hints. In this clip from a recent interview, I bluntly point out that good policy is good politics because a faster-growing economy presumably will have a big impact on the 2020 election.

Here’s another clip from that same interview, where I point out that the GOP’s repeal-and-replace legislation was good news in that it got rid of a lot of the misguided taxes and spending that were part of Obamacare.

But the Republican plan did not try to fix the government-imposed third-party-payer distortions that cause health care to be so expensive and inefficient. And I pointed out at the end of this clip that Republicans would have been held responsible as the system got even more costly and bureaucratic.

Now let’s shift to fiscal policy.

Here’s a clip from an interview about Trump’s budget. I’m happy about some of the specific reductions (see here, here, and here), but I grouse that there’s no attempt to fix entitlements and I’m also unhappy that the reductions in domestic discretionary spending are used to benefit the Pentagon rather than taxpayers.

The latter half of the above interview is about the corruption that defines the Washington swamp. Yes, it’s possible that Trump could use the “bully pulpit” to push Congress in the right direction, but I wish I had more time to emphasize that shrinking the overall size of government is the only way to really “drain the swamp.”

And since we’re talking about good policy and good politics, here’s a clip from another interview.

Back when the stock market was climbing, I suggested it was a rather risky move for Trump to say higher stock values were a referendum on the benefits of his policies. After all, what goes up can go down.

The hosts acknowledge that the stock market may decline in the short run, but they seem optimistic in the long run based on what happened during the Reagan years.

But this brings me back to my original point. Yes, Reagan’s policies led to a strong stock market. His policies also produced rising levels of median household income. Moreover, the economy boomed and millions of jobs were created. These were among the reasons he was reelected in a landslide.

But these good things weren’t random. They happened because Reagan made big positive changes in policy. He tamed inflation. He slashed tax rates. He substantially reduced the burden of domestic spending. He curtailed red tape.

In other words, there was a direct connection between good policy, good economy, and good political results. Indeed, let’s enshrine this relationship in a “Fourth Theorem of Government.”

For what it’s worth, Reagan also demonstrated leadership, enacting all those pro-growth reforms over the vociferous opposition of various interest groups.

Will Trump’s reform be that bold and that brave? His proposed 15-percent corporate tax rate deserves praise, and he seems serious about restraining the regulatory state, but he will need to do a lot more if he wants to be the second coming of Ronald Reagan. Not only will he need more good policies, but he’ll also need to ditch some of the bad policies (childcare subsidies, infrastructure pork, carried-interest capital gains tax hike, etc) that would increase the burden of government.

The jury is still out, but I’m a bit pessimistic on the final verdict.

Read Full Post »

A couple of years ago, filled with disgust at the sleazy corruption of the federal Leviathan, I put forth a simple explanation for what happens in Washington, DC.

I call it the “First Theorem of Government,” and I think it accurately reflects the real purpose and operation of government. Except I probably should have added lobbyists and contractors. And it goes without saying (though I probably should have said it anyhow) that politicians are the main beneficiaries of this odious racket.

I think this theorem has stood the test of time. It works just as well when Republicans are in charge as it does when Democrats are in charge.

But it doesn’t describe everything.

For instance, Republicans have won landslide elections in recent years by promising that they will repeal Obamacare the moment they’re in charge. Well, now they control both Congress and the White House and their muscular rhetoric has magically transformed into anemic legislation.

This is very disappointing and perhaps I’ll share some of Michael Cannon’s work in future columns about the policy details, but today I want to focus on why GOP toughness has turned into mush.

In part, this is simply a reflection of the fact the rhetoric of politicians is always bolder than their legislation (I didn’t agree with 98 percent of what was said by Mario Cuomo, the former Governor of New York, but he was correct that “You campaign in poetry. You govern in prose.”)

But that’s just a small part of the problem. The real issue is that it’s relatively easy for GOP politicians to battle against proposed handouts and it’s very difficult to battle against existing handouts. That’s because government goodies are like a drug. Recipients quickly get hooked and they will fight much harder to preserve handouts than they will to get them in the first place.

And that’s the basic insight of the “Second Theorem of Government.”

Here’s a recent interview on FBN. The topic is the Republican reluctance to fully repeal Obamacare. I only got two soundbites, and they both occur in the first half of the discussion, but you can see why I was motivated to put forth the new theorem.

Simply stated, I’m disappointed, but I’m more resigned than agitated because this development was so sadly predictable.

And here are a couple of follow-up observations. I guess we’ll call them corollaries to the theorem.

  1. You break it, you buy it – Government intervention had screwed up the system well before Obamacare was enacted, but people now blame the 2010 law (and the Democrats who voted for it) for everything that goes wrong with healthcare. Republicans fear that all the blame will shift to them if their “Repeal and Replace” legislation is adopted.
  2. Follow the money – What’s partly driving GOP timidity is their desire not to anger many of the interest groups – such as state governments, hospitals, doctors, insurance companies, etc – who benefit from various Obamacare handouts. That’s what is motivating criticism for politicians such as Ohio’s John Kasich and Alaska’s Lisa Murkowski.
  3. Don’t throw the baby out with the bathwater – The “Cadillac Tax” is the one part of Obamacare that’s worth preserving because it will slowly cut back on the distorting tax preferences that lead to over-insurance and third-party payer. For what it’s worth, the GOP plan retains that provision, albeit postponed until 2025.
  4. The switch in time that saved…Obamacare – I’m still upset that Chief Justice John Roberts (aka, the reincarnation of the 1930s version of Justice Roberts) put politics above the Constitution by providing the decisive vote in the Supreme Court decision that upheld Obamacare. If the law had been blocked before the handouts began, we wouldn’t be in the current mess.

For these reasons (as well as other corollaries to my theorem), I’m not brimming with optimism that we’ll get real Obamacare repeal this year. Or even substantive Obamacare reform.

P.S. Now you know what I speculated many years ago that Obamacare would be a long-run victory for the left even though Democrats lost many elections because of it. I sometimes hate when I’m right.

Read Full Post »

President Trump gave his first address to a joint session of Congress last night.

The one thing I can say with great confidence, based on applause patterns, is that it didn’t generate the same spirit of bipartisan good will as the Pope’s address back in 2015.

But let’s set aside the Republican-vs-Democrat silliness and focus on public policy.

What was good in Trump’s speech? Overall, there were nine things that seemed positive.

These are the three things that got my blood pumping.

  1. Lower corporate tax rate – Trump didn’t specifically reference the 15-percent rate he mentioned in the campaign, but he aggressively argued for a big drop in America’s punitive corporate tax rate.
  2. Obamacare repeal – The president effectively outlined how Obamacare is a disaster for taxpayers, for consumers, for the economy, and for the healthcare system.
  3. Food and Drug Administration – Trump correctly criticized the bureaucrats at the FDA for stifling medical progress. I think it’s safe to assume that bureaucracy will be better behaved for the next four years. Maybe we’ll even get rid of the milk police.

What was hopeful about Trump’s speech?

Quite a bit, actually. Here are six things that caught my attention where it’s possible that we’ll see progress.

  1. Jobs – President Trump correctly diagnosed the problem of dismal labor force participation. It remains to be seen whether the net effect of his policies is more job creation.
  2. Washington corruption – I like that he focused on trying to clean up Washington, but I don’t think a handful of restrictions that make it hard for Administration officials to become lobbyists will make a difference. You need to shrink government to “drain the swamp.”
  3. Obamacare replacement – While the repeal message was strong, the replace message was fuzzy. It seems Trump wants more of everything, but at lower cost. That’s what a free market can deliver, but I worry that’s not quite what he has in mind. In the back of my mind, I’m worried that I was right five years ago when I predicted that Obamacare would decimate the Democrats politically but nonetheless be a long-fun victory for statism.
  4. Medicaid reform – We didn’t get the necessary specifics, but the President definitely used rhetoric that suggests he is not going to be an obstacle to at least this slice of entitlement reform. I feel good about the soft prediction I made two months ago.
  5. School choice – Trump’s comments on education were very uplifting. At the very least, the White House will use the bully pulpit to promote choices for parents rather than throwing more money into a failed system. It would be great if there was some follow-up, ideally leading to the abolition of the Department of Education.
  6. High-skilled immigration – I was surprised that the President said nice things about skilled immigration. Maybe this is a positive sign for the EB-5 program and other job-creating initiatives that are designed to attract successful investors and entrepreneurs to the United States.

And here’s what was negative about Trump’s remarks.

We’ll start with the five things that left me feeling somewhat pessimistic that we’ll have bigger government when the dust settles.

  1. Transportation infrastructure – The President wants a lot of money spent on infrastructure. Fortunately, he was careful not to say that the federal government will be the sole source of the new spending. But I worry that we’ll get a bigger and more wasteful Department of Transportation at the end of the process.
  2. Border-adjustable taxation – It’s troubling that Trump recycled the myth that foreign nations discriminate against American products when they impose value-added taxes on their citizens. It may be an indication that he will sign on to the misguided “border-adjustable tax” in an otherwise pro-growth House tax plan.
  3. Veterans – Trump said he wants to take care of veterans. That’s a good idea, and the ideal solution is to abolish the Veterans Administration. I’m worried, though, Trump will simply throw good money after bad by padding the budget of a bloated and incompetent bureaucracy that rewarded itself with bonuses after putting veterans on secret waiting lists.
  4. Immigration – Notwithstanding the positive comments about skilled immigrants, his overall tone was very anti-immigration. Given that so many immigrant groups from all over the world prosper enormously in the United States (and thus generate benefits for the rest of us), it would have been better if he has a more welcoming attitude while focusing instead on restricting access to the welfare state.
  5. Pentagon blank check – President Trump gave a mixed message. He criticized the heavy cost of needless overseas interventionism, yet then urged more money for a bureaucracy-heavy Pentagon. Yet why spend even more money if there aren’t going to be any more nation building exercises?

What was really disappointing about Trump’s speech? Here’s my list of three things that were unambiguously depressing.

  1. Protectionism – The president seems determined to harm American consumers and undermine America’s economy. Let’s hope these policies don’t lead to a global trade war like in the 1930s.
  2. Childcare Entitlement – Federal subsidies have resulted in higher costs and inefficiency in health care and higher education. Trump now wants to cause the same problems in childcare. This won’t end well.
  3. Paid Parental Leave – When even columnists for the New York Times confess that this type of policy backfires on women by making them less attractive to employers, it’s bizarre that it would be endorsed by a Republican president.

So what’s the bottom line?

To be blunt, beats the heck out of me.

I wondered back during the campaign whether Trump is a big-government Republican or a small-government conservative. I contemplated the same question when he got elected. And also when he got inaugurated.

Last night’s speech left me still wondering, though it’s safe to say Trump does not share Reagan’s instinctive understanding that government is the problem rather than solution.

That doesn’t necessarily mean we’ll get bad policy over the next four years. But there’s no guarantee we’ll get good policy, either.

Read Full Post »

As part of an otherwise very good tax reform plan, House Republicans have proposed to modify the corporate income tax so that it becomes a “destination-based cash-flow tax.”

For those not familiar with wonky inside-the-beltway tax terminology, there are three main things to understand about this proposal.

  • First, the tax rate on business would drop from 35 percent to 20 percent. This is unambiguously positive.
  • Second, it would replace depreciation with expensing, which is a very desirable change that would eliminate a very counter-productive tax on new investment outlays. This is basically what makes the plan a “cash-flow” tax.
  • Third, any income generated by exports would be exempt from tax but the 20-percent tax would be imposed on all imports. These “border-adjustable” provisions are what makes the plan a “destination-based” tax.

I’m a big fan of the first two provisions, but I’m very hostile to the third item.

I don’t like it because I worry it sets the stage for a value-added tax. I don’t like it because it is designed to undermine tax competition. I don’t like it because it has a protectionist stench and presumably violates America’s trade commitments. I don’t like it because that part of the plan only exists because politicians aren’t willing to engage in more spending restraint. And I don’t like it because politicians should try to reinvent the wheel when we already know the right way to do tax reform.

Heck, I feel like the Dr. Seuss character who lists all the ways he would not like green eggs and ham. Except I can state with complete certainty I wouldn’t change my mind if I was suddenly forced to take a bite of this new tax.

Today, I’m going to augment my economic arguments by noting that the plan also is turning into a political liability. Here are some excerpts from a news report in the Wall Street Journal about opposition in the business community.

A linchpin of the House Republicans’ tax plan, an approach called “border adjustment,” has split Republicans and fractured the business world into competing coalitions before a bill has even been drafted. …There is also global uncertainty: Other countries may retaliate, either by border-adjusting their corporate taxes or by challenging the U.S. plan at the World Trade Organization as too tilted toward American producers.

And The Hill reports that grassroots organizations also are up in arms.

Americans for Prosperity is stepping up its efforts to advocate against a proposal from House Republicans to tax imports and exempt exports, as lawmakers are increasingly raising concerns about the proposal. …AFP has hundreds of volunteers and staff who are making phone calls about the proposal. The group has about 100 meetings set up with Congress members and their staff for next week, while Congress is in recess.

Meanwhile, the Economist reports that the plan is causing uncertainty around the world.

To offset a border-adjusted tax of 20%—the rate favoured by House Republicans—the greenback would need to rise fully 25%, enough to destabilise emerging markets burdened with dollar-denominated debts. If the dollar stayed put and wages and prices rose 25% instead, the Federal Reserve would have to decide how to respond to an unprecedented surge in inflation. Why tolerate such disruption?

Holman Jenkins of the Wall Street Journal has a devastating take on the issue.

Like a European value-added tax, its cost would be deeply hidden in the price of goods, thus easily jacked up over time. Also, compared with the current tax structure, businesses would see less incentive to move abroad in search of lower taxes, eroding a useful pressure on politicians to be fiscally sane. And because the tax would alter the terms of trade, it would be expected to lead to a sharp increase in the dollar. U.S. holders of foreign assets would suffer large paper losses. Since many foreigners borrow in dollars too, a global debt crisis might follow. The tax might also violate World Trade Organization rules, inviting other countries to impose punitive taxes on U.S. exports.

Last but not least, John Tamny outlines some of the political downsides at Real Clear Markets.

…the House of Representatives…is aggressively promoting a…tax on imports. …When we get up and go to work each day, our work is what we exchange for what we don’t have, including voluminous goods and services produced for us around the world.  …Party members are proudly seeking a tax on our work. …Only the “stupid” Party could come up with something so injurious to every American, to the American economy, and to its growth-focused brand.  But that’s where we are at the moment.  The Party that attained majorities with its tax cutting reputation is aggressively seeking to shed its growth brand through the introduction of tax hikes meant to give politicians even more of what we the people produce.  If so, the majority Party can kiss its majority goodbye.  It will have earned its minority status.

For what it’s worth, I think John overstates the case against the plan. The additional revenue from border-adjustable tax provision would be used to cut taxes elsewhere. Heck, the plan is actually a significant net tax cut.

But John is right when you look at the issue through a political lens. If the DBCFT actually began to move through the legislative process, opponents would start running commercials about the “GOP scheme to impose new consumption tax on Americans.” Journalists (most of whom dislike Republicans) would have a field day publicizing reports about the “GOP plan to raise average family tax bill by hundreds of dollars.”

Such charges would be ignoring the other side of the equation, of course, but that’s how politics works.

All of which brings me back to one of my original points. We already know that the flat tax is the gold standard of tax reform. And we already know the various ways of moving the tax code in that direction.

My advice is that Republicans abandon the border-adjustable provision and focus on lowering tax rates, reducing double taxation, and cutting back on loopholes. Such ideas are economically sounder and politically safer.

Read Full Post »

President Obama gave his farewell speech last night, orating for more than 50 minutes. As noted by the Washington Examiner, his remarks were “longer than the good-bye speeches of Ronald Reagan, Bill Clinton and George W. Bush combined.”

But this wasn’t because he had a lengthy list of accomplishments.

Unless, of course, you count the bad things that happened. And there are three things on my list, if you want to know Obama’s legacy for domestic policy.

And those three things, combined with his other policies, produced dismal results.

In other words, Obama’s legacy will be failed statism.

Writing for the Orange County Register, Joel Kotkin is not impressed by Obama’s overall record.

Like a child star who reached his peak at age 15, Barack Obama could never fulfill the inflated expectations that accompanied his election. …The greatest accomplishment of the Obama presidency turned out to be his election as the first African American president. This should always be seen as a great step forward. Yet, the Obama presidency failed to accomplish the great things promised by his election: racial healing, a stronger economy, greater global influence and, perhaps most critically, the fundamental progressive “transformation” of American politics. …Eight years after his election, more Americans now consider race relations to be getting worse, and we are more ethnically divided than in any time in recent history. …if there was indeed a recovery, it was a modest one, marked by falling productivity and low levels of labor participation. We continue to see the decline of the middle class.

And Seth Lipsky writes in the New York Post that Obama’s economic legacy leaves a lot to be desired.

Obama’s is the only modern presidency that failed to show a single year of growth above 3 percent… Plus, the Obama economy failed to prosper even though the Federal Reserve had its pedal to the metal. Its quantitative easing, $2 trillion balance-sheet expansion and zero-interest-rate policy all produced zilch. …The recent declines in the unemployment rate are due less to the uptick in employed persons than to an increasing number of persons leaving the labor force.

All these accusation are very relevant, and I would add another charge to the indictment. Median household income has been stagnant during the Obama years. And the data for Obamanomics is especially grim when you compare recent years to what happened under Reagan.

By the way, the bad news isn’t limited to economic policy.

Here’s what Tim Carney of the Washington Examiner wrote about Obama’s cavalier treatment of the Bill of Rights.

The Bill of Rights is a barricade protecting Americans from their government. Part of President Obama’s legacy will be that he inflicted damage on that barricade, eroding freedom of speech, free exercise of religion, the right to bear arms and the right to due process. Through his political arguments, executive actions and political leadership, Obama has taken some of the holes punched by previous presidents and made them broader or more permanent. This means that after Obama leaves office, people will be more easily silenced, killed or disarmed by their own government.

Tim extensively documents all these transgressions in his article. The entire thing is worth reading.

To be sure, there are people who defend Obama’s legacy.

From the left, Dylan Matthews wants readers of Vox to believe that Obama has been a memorable President. And he means that in a positive sense.

Barack Obama is one of the most consequential presidents in American history — and that he will be a particularly towering figure in the history of American progressivism. He got surprisingly tough reforms to Wall Street passed as well, not to mention a stimulus package that both blunted the recession and transformed education and energy policy.

A “towering figure”? That might be an accurate description of Woodrow Wilson, the despicable person who gave us both the income tax and the federal reserve. Or Franklin Roosevelt, who doubled the size of the federal government and wanted radical collectivism. Or Lyndon Johnson, the big spender who gave us Medicare and Medicaid.

All of those presidents changed America in very substantial (and very bad) ways.

Obama, by contrast, wanted to “fundamentally transform” America but instead turned out to be an incremental statist. Sort of like Bush.

And I can’t help but laugh at the assertion that Obama got “tough reforms to Wall Street” Dodd-Frank was supported by Goldman-Sachs and the other big players!

Let’s get back to the Matthews’ article. His strongest praise is reserved for Obamacare.

He signed into law a comprehensive national health insurance bill, a goal that had eluded progressive presidents for a century. …it established, for the first time in history, that it was the responsibility of the United States government to provide health insurance to nearly all Americans, and it expanded Medicaid and offered hundreds of billions of dollars in insurance subsidies to fulfill that responsibility.

I’ll agree that this is Obama’s biggest left-wing accomplishment. I’ve even noted that it may be a long-term victory for the left even though Republicans now control the House and Senate in large part because of that law (and it may not even be that if GOPers get their act together and actually repeal the law).

But I hardly think it was a game-changing reform, even if it isn’t repealed. Government was already deeply enmeshed in the healthcare sector before Obama took office. Obamacare simply moved the needle a bit further in the wrong direction.

Again, that was a victory for the left, just as Bush’s Medicare expansion was a victory for the left. But it didn’t “fundamentally transform” anything.

And here’s his conclusion.

You can generally divide American presidents into two camps: the mildly good or bad but ultimately forgettable (Clinton, Carter, Taft, Harrison), and the hugely consequential for good or ill (FDR, Lincoln, Nixon, Andrew Johnson). Whether you love or hate his record, there’s no question Obama’s domestic and foreign achievements place him firmly in the latter camp.

I strongly suspect that Obama will wind up in the former camp. He was bad, but largely forgettable. At least if the metric is policy.

Let’s close with a couple of observation on the political side.

I’m amused, for instance, that Obama’s bitter that he couldn’t rally the nation behind has anti-gun ideology.

President Obama said his biggest policy disappointment as president was not passing gun control laws, according to an interview CNN aired… Obama was unable to convince Congress to pass legislation that would change those policies, including enhancing background checks and not selling firearms at gun shows and other venues.

And I’m also amused that he believes the American people would have reelected him if he was on the ballot.

Arguing that Americans still subscribe to his vision of progressive change, President Barack Obama asserted in an interview recently he could have succeeded in this year’s election if he was eligible to run.

To be sure, he may be right. He definitely has better political skills than Hillary Clinton, and I’ll be the first to acknowledge that he was better at campaigning rather than governing.

But his victories in 2008 and 2012 were against very weak Republican candidates. And it’s interesting that a hypothetical poll showed him and Trump in a statistical dead heat. Given Trump’s low approval rating, that doesn’t exactly translate into a vote of confidence for Obama.

More important, I shared some hypothetical polling data back in 2013 which showed that Reagan would have defeated Obama in a landslide.

Once again, that’s hardly a sign of Obama being a memorable or transformative President.

And I imagine Reagan would have an even bigger lead if there was a new version of the poll.

For what it’s worth, I think the most insightful analysis of Obama’s legacy comes from Philip Klein. He notes that Obama wanted Americans to believe in big government. But he failed. Miserably.

President Obama entered office in 2009 with the twin goals of expanding the role that government plays in the lives of individuals and businesses and proving to Americans that the government could be trusted to achieve big things. He was only half successful. …the gulf between his promises and the reality of what was implemented dramatically hardened public skepticism about government. …As the Obama epoch wanes, trust in government has reached historic lows. A Pew poll last fall found that just 19 percent of Americans said they could trust the government to do the right thing most of the time — a lower percentage than during Watergate, Vietnam or the Iraq War. …Obama saw himself as the liberal answer to Reagan who could succeed where Clinton failed, putting an optimistic face on government expansion, passing historic legislation and getting Americans believing in government again. …Obama’s failure to repair the image of the federal government as a bungling institution — think of the DMV, just on a much bigger scale — will create enormous challenges for any Democratic successors trying to sell the public on the next wave of ambitious government programs.

This is spot on. I joked several years ago that the Libertarian Party should have named Obama “Man of the Year.”

But given how his bad policies have made people even more hostile to big government, he might deserve “Man of the Century.”

Read Full Post »

Wow.

I don’t know what else to say.

Almost all the experts said Trump couldn’t win the GOP nomination. Then the expert consensus was that Trump had virtually no chance of winning the White House.

Now, for better or worse, he’s going to be America’s next President.

What about my 2016 prediction? Well, other than my guess that Michigan might go for Trump (outcome still not confirmed), I don’t look very prescient. At the very least, I missed Pennsylvania, Florida, Wisconsin, and North Carolina.

For what it’s worth, I did better with Congress. Depending on the outcome of the Senate contest in New Hampshire, my prediction for a 51-49 GOP majority may be spot on (though I generally wasn’t right about the seats that would change hands). But who cares about my prediction. It’s downright remarkable that Republicans held on to the Senate, something that seemed improbable considering that the GOP was defending more than twice as many seats as Democrats.. Moreover, the leading Tea Party-type Senators from the 2010 election – Marco Rubio, Rand Paul, Ron Johnson, and Pat Toomey – were all reelected.

And we may not know the final number for a few days, but my guess that there would be 239 House Republicans also will be very close. Again, the accuracy of my prediction is trivial compared to the fact that the GOP will have lost fewer than 10 seats when they were defending their largest majority in almost 90 years. A stunning outcome.

So what does the election mean? The political answer is that Barack Obama has been a disaster for Democrats. I joked back in 2010 that Libertarians should name him as “Man of the Year” for restoring interest in the ideas of limited Government. Republicans should turn that joke into reality since Obama turned a dominant Democrat Party (majority of senators, representatives, governors, and state legislators) into a hollow shell.

The policy answer is a bit more difficult. I’ve fretted many times that Trump doesn’t believe in economic liberty. Some folks say that doesn’t matter since House and Senate Republicans can drive the agenda. But, as indicated by this slide that I shared in several recent European speeches, I don’t think that’s realistic.

A Republican Congress almost certainly isn’t going to push policies unless they get some sort of positive signal from the White House (remember how the Bush years led to lots of statism, notwithstanding a supposedly conservative House and Senate).

The real mystery is predicting the signal Trump will send. Here’s what I hope for – and what I’m afraid of – in the next four years.

My fantasy outcome – Given his disappointing rhetoric, it’s highly unlikely that Trump will embrace comprehensive entitlement reform. It’s especially doubtful that he will touch the programs (Social Security and Medicare) that provide benefits to seniors. But it’s plausible to think he might be open to reforming the “means-tested” programs. Even if he simply decided to support the block-granting of Medicaid, that would be a big achievement. And repealing Obamacare would be great as well. He did propose a rather attractive tax plan as part of his campaign, though I didn’t get too excited since a large tax cut seemed unrealistic in the absence of a concomitant plan to limit the growth of spending. But if Trump can get one or two of the big provisions approved, most notably a lower corporate rate and death tax repeal, that would be a very positive step in the right direction. And if he actually gets serious about the “Penny Plan,” that would give him a lot more leeway for big tax cuts. Needless to say, I also hope  his protectionist campaign rhetoric doesn’t translate into actual proposals for higher taxes on trade.

My feared outcome – In his acceptance speech, Trump focused on two policies. More infrastructure spending and helping veterans. This is not a good sign. Regarding infrastructure, my nightmare scenario is that he pushes a giant stimulus-type scheme that would increase the federal government’s role in transportation. On the issue of veterans. I’m not aware of any specific plans, but my fear is that he will simply throw more money at the failed VA system. Let’s also not forget he has endorsed a higher capital gains tax on “carried interest.” And if he does decide to push protectionist legislation, that could wreak a lot of havoc. In the long run, I’m also worried that Trump will commit a “sin of omission” by leaving entitlements untouched. And if we wait another four – or eight – years to address the problem, the slow-motion train wreck may turn into an about-to-happen train wreck. Last but not least, what if Trump gets to the White House and feels that all his big plans for tax cuts and new spending aren’t feasible because the numbers don’t add up? Will he then decide that he needs a big revenue plug like a value-added tax? Sounds crazy, right, but don’t forget that Rand Paul and Ted Cruz were seduced into adding VATs to their plans, so why wouldn’t Trump be susceptible to the same mistake? A horrifying, but not implausible, scenario.

Now perhaps you understand why, in yesterday’s column, I focused on the potential silver lining of a Hillary victory. It’s because I don’t like to dwell on the potential downside of a Trump victory.

Let’s close with a quick review of the major ballot initiatives I highlighted last month.

  • The Good – The biggest slam-dunk of the night was the overwhelming 80-20 rejection of single-payer health care in Colorado. Voters in the state also rejected a tax hike on tobacco. A pro-gun control initiative in Maine is narrowly failing. In other news, a sales tax increase was defeated in Oklahoma, as was the gross receipts tax in Oregon and the carbon tax in Washington. Also, lots of state legalized pot (although voting to tax it as well).
  • The bad – Voters appear to have approved class-warfare tax hikes in Maine and California. Maine voters also hiked the minimum wage, as did voters in Colorado, and California voters approved higher cigarette taxes. Soda taxes were approved in a handful of locations.
  • The ugly – The defeat of charter school expansion in Massachusetts is a crippling blow to the hopes of poor families for a better education.

As you can see, a mixed bag. Some good results, but also some bad choices.

But this is why I like federalism. States can innovate and experiment, constrained by the fact that really crazy policies will eventually lead to California-style decline. And I’d rather have a couple of states in a death spiral rather than the entire nation.

Read Full Post »

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.

Read Full Post »

In just 10 days, voters will go to the polls and deal with the rather distasteful choice of Donald Trump and Hillary Clinton.

In some states, they also will have an opportunity to vote for or against various ballot initiatives and referendums.

Here are the five proposals that would do the most damage in my humble opinion.

ColoradoCare (Amendment #69) – Apparently learning nothing from what happened in Vermont, advocates of big government in Colorado have a proposal to impose a 10 percent payroll tax to finance statewide government-run healthcare. The Tax Foundation points out that, if this scheme is approved, Colorado’s score in the State Business Tax Climate index “would plummet from 16th overall to 34th,” while the Wall Street Journal opines that “California would look like the Cayman Islands by tax comparison” if Colorado voters say yes.

Oregon Gross Receipts Tax (Measure #97) – Back in 2010, presumably guided by the notion that it’s okay to steal via majoritarianism, Oregon voters approved a class-warfare tax hike on upper-income taxpayers. Now they’re about to vote on a scheme to pillage the state’s businesses with a gross receipts tax, which is sort of like a value-added tax but with no credit for taxes paid earlier in the production process, which means the burden “pyramids” as goods and services are created. The Tax Foundation warns that this levy could lead to “a 25 percent increase in the Oregon state budget” and that “Oregon’s corporate tax climate would be the worst in the nation.”

Maine Income Tax Hike (Question #2) – Voters are being asked whether to boost the state’s top income tax rate to 10.15, which would be the second-highest in the nation. According to the Tax Foundation, the Pine Tree State “would drop to 45th overall” in the State Business Tax Climate Index (down from #30) if this class-warfare scheme is enacted. The National Taxpayers Union warns that the ” tax would make the state a less competitive place in which to do business.”

Oklahoma Sales Tax Increase (Question #779) – Sales taxes don’t do as much damage, per dollar raised, as income taxes, but it’s still a foolish idea to impose a big tax hike in order to finance bigger government. And that’s what will happen if voters in the state agree to boost the state sales tax by one-percentage point. The Tax Foundation notes that “Question 779 would give the Sooner State the second highest combined state and local sales tax rate in the nation, after only Louisiana.

California Tax-Hike Extension (Proposition #55) – One of worst ballot initiatives in 2012 was California’s Proposition 30, which imposed a big, class-warfare tax hike on upper-income residents and gave the Golden State the nation’s highest income tax rate. One of the arguments in favor of Prop 30 was that the tax increase was only temporary, lasting until the end of 2018. Well, as Milton Friedman famously observed, there’s nothing so permanent as a temporary government program. And that apparently applies to “temporary” taxes as well.  Proposition #55 would extend the tax until 2030.

Unfortunately, there aren’t a lot of ballot initiatives that would move policy in the right direction. Here’s the one that probably matters most.

Massachusetts Charter Schools (Question #2) – Much to the dismay of teacher unions (and presumably the hacks at the NAACP as well), this initiative would expand charter schools. It’s remarkable that even the very left-leaning Boston Globe is embracing Question 2, opining that “the proposal would create new opportunities for the 32,000 students, predominantly black and Latino, who are now languishing on waiting lists hoping for a spot at a charter school” and that “Students in all Massachusetts charter schools gain the equivalent of 36 more days of learning per year in reading and 65 more days of learning in math.”

A related measure is Amendment #1 in Georgia.

Now let’s shift to a ballot initiative that is noteworthy, though I confess I don’t have a very strong opinion about the ideal outcome.

Washington Revenue-Neutral Carbon Tax (Initiative #732) – The bad news is that a carbon tax would be imposed. This means, according to the Tax Foundation, that the “average household would pay $225 more per year for gasoline under the proposal, and $64 more for electricity.” The good news is that the sales tax would drop by one cent and the state’s gross receipts tax would almost disappear. So is this a good deal? Part of me says no because it’s never a good idea to give politicians a new source of tax revenue. But the fact that the measure is opposed by many hard-left green groups suggests that the idea probably has some merit.

For what it’s worth, I would vote against I-732 because of concerns that it eventually will lead to a net increase in the burden of government.

Last but not least, I’ll also be following the results on initiatives dealing with marijuana and tobacco.

States Voting for Marijuana Legalization (and Taxation) – Voters in Arizona, California, Maine, Massachusetts, and Nevada will have an opportunity to fully or partly legalize marijuana. These initiatives also include buzz-kill provisions to levy hefty taxes on producers and consumers.

States Voting for Tobacco Tax Increases – Politicians in California, Colorado, Missouri, and North Dakota all hope that voters will approve tax hikes that target smokers (and, in some cases, vapers). In every case, the tax hikes will fund bigger government.

P.S. I can’t resist adding that I’m also keeping my fingers crossed that other voters in Fairfax County will join me in rejecting a scheme to add a 4 percent tax on restaurant meals. Not just because it’s a tax hike to fund bigger government, but also because the hacks in the county government are using dishonest and reprehensible arguments to push the tax.

P.P.S. I will be updating my prediction for the presidential election, and also making predictions for the House and Senate, the morning of November 8.

Read Full Post »

Older Posts »

%d bloggers like this: