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Posts Tagged ‘Politics’

I’m not a fan of the International Monetary Fund. The bureaucracy was created in 1944 to manage and coordinate the system of fixed exchange rates created as part of the 1944 Bretton Woods agreement. But once fixed exchange rates disappeared, the over-funded bureaucracy cleverly adopted a new rationale for its existence and its main role now is to bail out insolvent nations (what that really means, of course, is that it exists to bail out big banks that foolishly lend money to profligate third-world governments).

As part of this new mission, the IMF acts like the Pied Piper of tax hikes. The bureaucrats parachute into nations, refinance and restructure the debt of those countries, and insist on a bunch of tax increases in hopes that more revenue will then be available to service the new debt.

Needless to say, this is not exactly a recipe for growth and prosperity. The private sector in these countries gets hammered with tax increases, the big banks in rich nations get indirect bailouts, and the real problem of bloated government generally is left to fester and metastasize.

This is why I’ve referred to the IMF as the Dr. Kevorkian of the global economy. But the bureaucracy is bad for other reasons. It also has decided that it should grade all nations on their economic policies and it routinely uses that self-assigned authority to recommend big tax hikes all over the world. Including lots of tax increases in the United States.

The IMF even tries to interfere with American elections. Just recently, the chief bureaucrat of the organization launched a not-too-subtle attack on Donald Trump.

Though in this case, which involved trade barriers, the IMF actually is on the right side (the bureaucracy generally has a pro-tax bias, but the one big exception is that it favors lower taxes on global trade).

Anyhow, the IMF’s Managing Director warned that additional protectionist taxes on global trade threaten the global economy. And even though she didn’t specifically mention the Republican nominee, you can see from the various headlines I’m sharing that reporters put 2 + 2 together and realized that Ms Lagarde was criticizing Trump.

And he deserves condemnation. The post-World War II shift to lower trade taxes has been a big victory for economic freedom (indeed, tariff reductions have helped offset the damage caused by increasingly bad fiscal policy over the past several decades).

Nonetheless, there is something quite unseemly about an international bureaucracy taking sides in an American election (who do they think they are, the IRS?). Especially since American taxpayers underwrite the biggest share of the IMF’s activities.

Let’s look specifically at an analysis of the IMF’s actions from the UK-based Guardian.

The managing director of the International Monetary Fund, has launched a thinly veiled attack on the anti-free-trade sentiments expressed by US presidential candidate Donald Trump… Lagarde made it clear she strongly opposed the Republican candidate’s policies, which include higher US tariffs and a barrier along the border with Mexico. …“There is a growing risk of politicians seeking office by promising to ‘get tough’ with foreign trade partners through punitive tariffs or other restrictions on trade…” She added that throughout history there had been arguments about trade. “But history clearly tells us that closing borders or increasing protectionism is not the way to go…”

By the way, while I agree with her comments on trade, her comments about a “barrier along the border with Mexico” reek of hypocrisy.

Christine Lagarde criticises his policies including plans for…a US-Mexico border wall.

Those who have visited the IMF’s lavish headquarters can confirm that there is a very heavily guarded barrier separating the IMF from the hoi polloi and peasantry of Washington.

Call me crazy, but a bureaucracy with lots of security to prevent unauthorized people from entering its building is in no position to lecture a nation for wanting security to prevent unauthorized people from crossing its borders. And I say this as someone who generally favors immigration.

But let’s set that issue aside. There’s actually a very serious sin of omission in the IMF’s analysis that needs to be addressed.

The international bureaucracy (correctly) opposes trade taxes and wants to build on the progress of recent decades by further reducing government-imposed barriers to cross-border economic activity. As noted above, this is the right position and I applaud the IMF’s defense of lower tariffs and expanded trade.

That being said, the level of protectionism has fallen significantly in the post-World War II era. In other words, trade taxes already are reasonably low. Yes, it would be better if they were even lower (ideally zero, like in Hong Kong).

My problem (or, to be more accurate, one of my problems) with the IMF is that the bureaucracy acts as if the world economy is hanging in the balance if there’s some sort of increase in the currently low tax burden on trade.

Yet what about the tax burden on behaviors that actually generate the income people use to purchase goods from other nations? Top tax rates on personal income average more than 40 percent in the developed world, dwarfing the average tariffs of trade.

And the burden on income that is saved and invested is even higher because of double taxation, which is especially destructive since all economic theories – including Marxism and socialism – agree that capital formation is a key to long-run growth and higher living standards (i.e., the ability to buy more goods, including those produced in other nations).

So here’s the question that must be asked: If it is bad to have very modest taxes on the share of people’s income that is used to buy goods produced in other nations, then why isn’t it even worse to have very onerous taxes on the productive behaviors that generate that income?

In other words, if the IMF is correct (and it is) to criticize Trump for threatening to increase the modest tax rates that are imposed on global trade, then why doesn’t the IMF criticize Hillary Clinton for threatening to increase the rather harsh tax rates that are imposed on working, saving, and investment?

Maybe Madame Lagarde’s army of flunkies and servants (one of the many perks she gets, in addition to a munificent tax-free salary) can explain that sauce for a goose is also sauce for a gander.

By the way, I can’t resist addressing one final aspect to this story. The Guardian‘s report notes that Lagarde wants to offset the supposedly harmful impact of trade by further increasing the size and scope of government.

…the solution was for governments to provide direct financial support for those with low skills through higher minimum wages, more generous welfare states, investment in education and a crackdown on tax evasion.

Wow, that’s a lot of economic illiteracy packed into one sentence fragment.

Now you understand why I refer to the IMF as the dumpster fire of global economics.

P.S. While the IMF likes to push bad policy for the United States, the bureaucracy’s proposals for China are akin to a declaration of economic warfare.

P.P.S. The IMF’s flip-flop on infrastructure spending reveals a lot about the bureaucracy’s inner workings.

P.P.P.S. While the IMF often produces sloppy and dishonest research, every so often the professional economists on the staff slip something  useful past the political types. Though my all-time-favorite bit of IMF research was the study that inadvertently showed why a value-added tax is so dangerous.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yes, but I’m not brimming with optimism.

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

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

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

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

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

And I also opined on the issue in this interview.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wow, this is hard-core spending restraint.

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

I must be a big-government squish!

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

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

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

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

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

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

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

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

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

But skepticism isn’t the same as bias.

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

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

He issued a strong and effective indictment of Obamanomics.

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

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

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

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

But you don’t have to believe me.

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

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

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

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

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

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

Unfortunately, these models were wrong. Wildly wrong.

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

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

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

Amen.

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

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

Obama wanted the second coming of the New Deal.

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

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

Which leads to the lesson that everyone should learn.

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

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

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