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Economic Growth
President Obama introduced his budget this week amid lots of calls for Republicans to support the president’s laundry list of new and expanded spending programs, along with a minimal spending freeze and some tax cuts.
For example, Politico cites White House Communications Director Dan Pfeiffer saying that Republicans “have a responsibility now to partner with the President, to try to get things done for the American people.”
In short, Pfeiffer wants Republicans to quit being the party of “no.”
But bipartisanship is only good when the proposed legislation is good. And frankly, most of the president’s proposals have been stinkers.
Take the administration’s proposal to try accused 9/11 planner Khalid Sheikh Mohammed in downtown New York City. Republicans opposed the plan, as did most of the public. Read More...
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Would the REAL Obama agenda please stand up!
On Monday morning the White House released a plan for:
- Doubling the Child and Dependant Care Tax Credit for families making under $85,000;
- Limiting student federal loan payments;
- Expanding tax credits to match retirement savings; and
- Expanding assistance to families caring for elderly relatives.
All of which cost money.
But by Monday evening, the New York Times reported that President Obama wants to freeze spending on many domestic programs for three years, then tie future program growth to the inflation rate.
Talk about trying to have it both ways. So which is it?
Is the economy so bad that we need new or expanded spending programs? Or was last year’s spending spree so massive and irresponsible that we have to freeze the budget?
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What Will the President Say in His State of the Union? The Institute for Policy Innovation’s Dr. Merrill Matthews says he has some explaining to do.
Washington is all atwitter over President Obama’s upcoming State of the Union address. And understandably so, because the president has some serious explaining to do, like:
- How he plans to get control of the $1.4 trillion federal deficit, more than three times the deficit Obama was so critical of under George Bush.
- And how he intends to pay for all the Democrats’ new federal spending. Yes, he could raise taxes, but he already has several new taxes in his health care bill.
- And maybe the president can explain why his much-boasted stimulus bill has had little impact on creating new jobs.
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 Fate of the Union |
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Something remarkable is going on in America.
I can’t quite explain it; I’m not sure anyone can. But we can use Democratic Senator Ben Nelson of Nebraska to exemplify the change.
In order to “persuade”—some might say “payoff”—Nelson to vote for Senator Harry Reid’s health care reform bill, Reid agreed that the federal government would pay Nebraska’s portion of the increased Medicaid cost—forever.
Nelson can be forgiven for thinking his so-called “cornhusker kickback” would be hailed back home as a great achievement because, in the past, it would have been. Trying to maximize federal revenue is like a state hobby.
And Reid certainly thought Nebraska would approve. Why, he essentially called the other states a bunch of chumps for not getting their own kickback.
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Immigration—next to imitation—being the sincerest form of flattery, it’s no wonder new Census Bureau figures show Americans moving to Texas as fast as they can. They like what they see here.
The federal nose-counters say new Texans in 2008-09 numbered nearly half a million—18 percent of all the population growth in the country. Only Wyoming and Utah, with smaller populations, drew larger percentages of newcomers.
We’re not talking just about the foreign-born. Domestic migrants to Texas—from New York, California, wherever—outnumbered international border-crossers two to one.
How come? A good climate would be part of it, and we’re talking both weather and the business climate. Whereas the policies of many other states don’t exactly encourage hard work, savings and investment, Texas pours rewards on workers and entrepreneurs.
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Presidential elections are expensive—something liberals never tire of reminding us every four years when they push for some way to nationalize the cost of presidential elections.
Except, of course, in 2008. Liberals were remarkably quiet when then-candidate Barack Obama spent money like there was no tomorrow—$741 million, more than the Bush and Kerry campaigns combined in 2004—a mindset the president seems to have carried over into the presidency.
But as expensive as presidential campaigns can be, that’s only a fraction of the true cost taxpayers must pay after the candidate is elected.
And we are only now beginning to discover just how much the election of Barack H. Obama will cost. For example:
- There’s the president’s $3.5 trillion budget for 2010 that passed last April, by far the largest in history.
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Is It Time for Some Congressional New Year’s Resolutions? Dr. Merrill Matthews of the Institute for Policy Innovation says yes, before Congress bankrupts the country.
It’s time once again to encourage Congress to make some New Year’s resolutions.
First, with the national debt limit being pushed up to about $14 trillion and no end in sight, members of Congress must resolve to get federal spending under control.
The second resolution should be a commitment to more bipartisanship. This is the most partisan and polarized administration in recent history, barely able to get one or two Republicans to vote for a bill.
Third, Congress needs to be more transparent. Democrats are ramming through major legislation without letting Republicans or the public even see the bill, much less read it, until they’re ready to pass it.
Folks, this is no way to run a country. Read More...
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President Obama keeps claiming he’s willing to “make the hard choices.”
But so far his administration has been characterized by a lack of said hard choices—except perhaps for his choice in dog breeds.
Congress finally got around to passing the 2009 fiscal budget in February, which should have been passed in the fall of 2008. The Democratic-led Congress preferred to wait for a Democratic president who would sign the fiscally irresponsible budget. That budget contained some 10,000 earmarks, which Obama campaigned against.
Did President Hard Choices send it back demanding a bill clean of earmarks? No, Obama signed it. And his press secretary defended the decision saying it was “last year’s business.”
How about the $787 billion stimulus bill, which was this year’s business? Did the president make any hard choices? Maybe, but only because he would have liked one even bigger.
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Is the Stimulus Money Creating Jobs? Dr. Merrill Matthews of the Institute for Policy Innovation says yes, but for most Americans it’s a long commute.
One goal of President Obama’s stimulus bill was to create environmentally friendly “green jobs.”
And it’s done just that. The Washington Times reports that 11 U.S. wind farms have bought nearly 1,000 electricity-producing wind turbines, creating about 4,500 jobs, uh, oversees.
See, nearly 700 of those turbines were bought from China.
Now a new American-Chinese joint venture just announced it plans to buy nearly 250 Chinese-made turbines. That venture wants 30 percent of its $1.5 billion in funding from the stimulus money.
So if you’ve been looking for work for a while, you need to know that taxpayer-financed stimulus money is creating jobs.
And you might even be able to get one of them. Read More...
China Jobs |
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Some Republicans and Democrats, including Sen. Kent Conrad (D-ND), chairman of the Senate Budget Committee, are proposing a bipartisan committee to consider how to address the exploding federal deficit as a condition for increasing the debt limit beyond its current $12.1 trillion, which the government will exceed around mid-December.
And the Obama administration supports the idea as a way to “bring Republicans and Democrats together to make tough decisions about how to cut costs and raise revenue in areas including Social Security, Medicare and taxes,” according to the Wall Street Journal.
Here’s an idea: If the President is serious about “bringing Republicans and Democrats together”, how about not shutting Republicans out of important negotiations and decisions?
This is the pattern we’ve seen for nearly a year. Obama talks one game while simultaneously doing exactly the opposite. Read More...
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There’s maybe 15 new taxes in Senator Harry Reid’s health care plan, including new taxes on:
- “Cadillac plans” (that is expensive, not necessarily rich-benefit plans);
- Medical devices and cosmetic surgery (oops, there went the Hollywood vote);
- Drug companies, health insurers and insurance executives;
- New limits on contributions to flexible spending accounts and increased penalties on non-qualified health savings account expenses;
- Individuals who don’t buy and employers who don’t provide health insurance;
- And, of course, high-income earners, and much more.
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It’s time to expose the lie that the Blue Dog Democrats—a coalition of 52 supposedly fiscally conservative House Democrats—are concerned about federal spending and the budget.
So far this year, the House has seen four major spending bills. Here’s how the Blue Dogs voted:
- The $787 billion stimulus package. Ten of the 52 Blue Dogs, about 20 percent, voted with every Republican against the unprecedented spending bill.
- President Obama’s 2010 federal budget. In April Congress took a vote on the president’s $3.5 trillion budget for 2010—by far the biggest spending package in history. Again, not one House Republican voted for the bill, but only 14 Blue Dogs (27 percent) joined them in opposition.
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So this man or this woman on the public payroll wants out; that’s to say, the man wants to become a woman, or the woman wants to become a man. It’s the taxpayers’ duty to pay for it?
Not so as anyone ever thought before. On the other hand, it’s a crazy time, and there’s this big health care debate going on in Washington, D. C. So, yes, Fort Worth is considering adding sex change operations to health coverage for city employees. Which would make Fort Worth a little bit more like San Francisco, where public insurance plans have covered sex change procedures since 2001.
Our bet is, Fort Worth people aren’t going to let Fort Worth city government model local behavior on what passes for normal in California. Read More...
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I'm in Geneva this week for a meeting of the World Intellectual Property Organization (WIPO), so this week I'm kinda in an IP frame of mind.
Today's good news is that no binding treaty is going to come out of next month's Copenhagen conference on climate change.
It's good news for any number of reasons one of which is that the global IP skeptic community will not be able to use climate issues to undermine international patent rights on "green" technologies, at least not now, and at least not through this mechanism.
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Is the President’s Stimulus a Success? The Institute for Policy Innovation’s Dr. Merrill Matthews says it depends on what one mean’s by success.
President Obama says his $787 billion stimulus package is a huge success.
Even though the economy’s lost more than 2 million jobs, the administration boasts that federal contractors who received $16 billion in stimulus money have created or saved 30,000 jobs.
As the ProPublica website points out, that’s spending more than $500,000 per job.
Hey, where do I sign up?
The administration also claims that for every direct job, an indirect job has been created or saved. So maybe 60,000 jobs.
Democrats now say the first stimulus was such a success they may want to do another. But if the first one had really created jobs, we wouldn’t need a second. Read More...
Stimulus |
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Why Is No One Running the Medicare Program? Dr. Merrill Matthews of the Institute for Policy Innovation says the president may be avoiding some difficult questions.
Health care is important to President Obama, so you’d think after nine months in office he would have appointed someone to head the Centers for Medicare and Medicaid Services.
That’s the federal agency that manages the Medicare program for seniors and Medicaid for the poor. Together they cover about 85 million Americans.
But maybe it isn’t so strange. The appointment needs Senate approval, allowing senators to discuss Medicare’s $90 trillion in unfunded liabilities. Or why Medicare fraud is an estimated $60 billion or more a year.
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Most politicians would wince at being accused of trying to push the biggest tax increase in U.S. history.
But under President Obama and the Democratic leadership in Congress, the question isn’t whether but which tax increase—the “cap and tax” bill or the health care reform legislation—is the biggest in U.S. history.
At IPI we’ve been trying to decide ourselves, but there are so many variables, moving parts and unknowns it’s hard to know.
The Wall Street Journal said last June: “Americans should know that those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history.”
To support the claim, the Journal cited the Heritage Foundation’s analysis, which found Waxman-Markey, the House version of the cap and trade bill, “would cost the economy $161 billion in 2020, which is $1,870 for a family of four. Read More...
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Money, money, money—all we need right now is a whole lot more of it. To finance, say, congressional Democratic lust for spending more on health care.
The supposedly “moderate” Senate Finance Committee plan for health insurance overhaul figures on Texas picking up an additional $20 billion in Medicaid spending over the next decade. That’s to pay for another 2.5 million program enrollees, on top of the 2.9 million we have right now.
There are places in the U.S. where Medicaid pays for about half of the births. Yet one of Congress’s top solutions to solving the problem of the uninsured is expanding Medicaid to even more people.
Here’s another fun statistic. Texas taxpayers right now pay about 42 percent—$19 billion—of state Medicaid costs, with the feds picking up the rest. In the 2006-07 fiscal biennium it was $13.1 billion.
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Has Smokey the Bear Moved to Washington? The Institute for Policy innovation’s Dr. Merrill Matthews says only you can prevent wasteful government spending.
The country’s forests are a national treasure. That’s why Congress appropriated millions of dollars in the stimulus bill for forest fire management, including $2.8 million for that much-loved national forest known as … Washington, D.C.
Now, Washington has its problems, but forest fires aren’t one of them
Steve Moore of The Wall Street Journal reports that when Senator John Barrasso of Wyoming discovered the funding, he introduced an amendment to reassign it to the U.S. Forest Service. The motion passed unanimously.
Ironically, Wyoming, which has lots of forests, got no forest fire management money.
Smokey the Bear used to say, “Only you can prevent forest fires.” And, I might add, only you can prevent Congre Read More...
Smokey |
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Has Washington completely abandoned any effort to stay within the parameters established by the U.S. Constitution?
Last week we learned that then Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke gave Bank of America CEO Ken Lewis an ultimatum: Go forward with BoA’s proposed merger with faltering Merrill Lynch or the government would fire BoA’s executives.
Excuse me, but under which article of the Constitution did the American people give any administration that power?
Similarly, is there any constitutional authority for Washington bailing out Chrysler and GM, then taking them over when just a bailout didn’t work, firing the executives and implementing its own hand-picked board and executives?
Is there any constitutional authority for gathering email addresses on those who might disagree with the administration, otherwise known as “fishy emails,” and using them for who knows what?
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With all the political tricks flying around Washington this week you’d think it was Halloween, but we still have more than a week to go.
Last week, Senate Finance Committee Chairman Max Baucus (D-MT) passed, to much fanfare, his health care reform bill. Much of the buzz around the bill is that the Congressional Budget Office (CBO) “scored” it as costing only $829 billion over 10 years. Democrats cheered.
(It goes to show you just how much ”change” the president has brought to Washington when you can preface $829 billion with the word “only” and no one laughs you out of town.)
But then it became clear that the only reason it came in under a trillion dollars is that the legislation didn’t include the “doc fix,” which costs some $240 billion or so. Read More...
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The Obama Administration has earned kudos for their vision of using of technology to be a primary part of the solution to policy challenges from improved healthcare to efficient energy usage.
And while considering the application of existing technology to current problems is ahead of typical political thinking, it is still fairly two dimensional. The true promise of an information technology-based health system or of a smart grid for greener energy is the ongoing innovation, the promise of better and better solutions.
The administration and Capitol Hill need to broaden their thinking beyond particular solutions and begin considering ways to foster and empower a solution economy.
What makes up the solution economy?—a society that allows the freedom to innovate and experiment with ideas.
That requires an environment that encourages, or certainly allows, risk by providing reward. Read More...
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Eight months ago, when the Democrats and the administration rammed through the $787 billion stimulus package, the public was lectured that the massive spending bill was needed to “save or create” jobs and stop the rise in unemployment.
Well, unemployment has continued to rise—nearly 2.9 million jobs have been lost since the stimulus bill passed—flummoxing the administration. And unemployment is likely to cross the 10 percent mark soon.
Republicans tried to work with the administration in shaping the legislation. Republican leaders met with the president with a list of tax cuts they thought would leave more money in people’s pockets, encourage investment and economic growth, and would ultimately be more effective in stimulating the economy than a massive spending spree.
President Obama pooh-poohed their proposals. The president pointed out that Democrats won the election and so they got to decide. Read More...
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Here’s another casualty of the economic downturn: Social Security.
The Social Security program operates on a pay-as-you-go basis. Money coming in from workers is neither saved nor invested, but rather pays benefits today for current retirees.
Government officials had predicted that Social Security would take in more than it paid out until 2016, whereupon it would start drawing down surpluses from the Social Security trust fund.
But the severe recession has hurt government revenues, which means the future is here. The Congressional Budget Office now says that Social Security is already short: $10 billion this fiscal year and $9 billion next year.
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It would be hard to imagine an industry today that is more “dynamic” than the wireless industry. In a relatively short time a “cell phone” has become a necessity to virtually everyone, and one of the areas of most rapid technological innovation is in wireless handsets. Every few months one company or another introduces a new, feature-rich handset, which consumers eagerly gobble up.
At the same time, service providers compete fiercely for customers, continually upgrading their networks to provide better and faster service and even
financing consumers’ purchase of sophisticated handsets.
It would seem that this is at least one industry that has succeeded in pleasing consumers, delivering innovation, creating high-paying jobs, and funneling tax revenue to virtually every level of government. You’d think government would be pleased, yet every level of government seems to have the wireless industry in its crosshairs.
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Like all of the Democrats trying to push through health care reform with no way of paying for it, Senate Finance Chairman Max Baucus (D-MT) has been on a quest to find new revenue for his plan.
He was considering imposing a tax on employer health insurance contributions above a certain level, say $20,000 for a family. That means that a worker with dependant coverage whose employer spends $25,000 a year on the policy would have to pay normal income taxes on an additional $5,000. The first $20,000 would still be tax free.
Besides raising revenue to pay for the legislation, there was an expectation that employees would opt for higher deductibles in order to stay under the limit and avoid the additional tax, which would eventually help bend the health care cost curve by lowering utilization.
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I’ve just returned from an overseas trip, and once again I was reminded of how pervasive American entertainment media is around the world.
Wherever you go in the world, you find American television shows and movies on TV, American movies in the theaters, and American music on the radio. Looking beyond entertainment, you’ll see American-made software on their laptops and on the computers in the hotel business center.
And the medicines they’re taking are mostly made by American companies as well.
You don’t find American plumbing fixtures in the hotel bathroom, and you don’t see people wearing American-made clothes. They’re not driving American cars, and they’re not using American-made electrical appliances. But they’re consuming American creative goods almost to the exclusion of anything else. It’s striking, actually.
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President George W. Bush had been in office a little more than a year when, on March 5, 2002, he decided to impose temporary tariffs on steel. It was clearly a calculated political move to try and curry favor with steel unions in the rustbelt swing states of Pennsylvania and West Virginia.
As if backtracking on its strong commitment to free trade weren’t enough, the administration pushed economist and presidential advisor Larry Lindsey into writing an op-ed for The Wall Street Journal defending the tariffs.
Conservatives around the country groaned for their friend Lindsey and pitied the fact that he was compelled to defend what he knew was bad policy.
Now President Barack Obama has imposed a 35 percent tariff on Chinese-made tires, and some are lamenting this as a reversal of his stated support for free trade. Read More...
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In just a few weeks a tax you pay will increase – by 36%.
Part of some plan to fund health care? No. Another bailout? Wrong again.
Without a vote by Congress or a signature from the President, the unelected members of the Federal Communications Commission (FCC) have determined that despite recession, the highest unemployment in decades and rampant government spending, now is the time to hike a tax that almost every telephone user must pay.The FCC has raised the Universal Service Fund (USF) tax to 12.9%, up from 9.5%.
The federal USF tax, typically listed as an individual line item on phone bills, is levied to subsidize telecommunications services for low income households, schools, libraries, and consumers in rural or high cost areas. However, the federal universal service program is widely regarded as too large, too redistributive, largely unnecessary and with potential for serious problems due to lack of adequate oversight.
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Can Health Insurers Compete with a Government Plan? Dr. Merrill Matthews of the Institute for Policy Innovation says when the government’s accounting is so dishonest, who knows.
The real problem with a government-run health insurance option is the government would hide the costs, making it look more affordable than it actually is. We know, because that’s what Medicare does.
Medicare’s official administrative costs only count what it takes to process claims checks. Rent, salaries, management, even the numerous fraud investigations all appear in other parts of the federal budget.
Now some Democrats want to create a health insurance co-op with $6 billion of taxpayer seed money. If you were a private insurance company, you’d have to borrow the money and pay interest or sell stock.
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Public Option |
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President Obama wants to make some changes to the current 401(k) regulations in an effort to make it easier for people to sign up for the plans and thereby save more for the future.
The fact is that many Americans are reluctant to invest (or save for that matter), and most invest very conservatively when they do.
The president wants 401(k)s and especially IRAs to become a voluntary opt-out program, where employees are automatically enrolled unless they choose otherwise. He also wants to make it easier for individuals to put money for unused vacation or sick-leave into their retirement plan, and to receive tax refunds in U.S. Savings Bonds.
These are largely very good ideas—in fact, ideas that were first proposed by conservative-leaning think tanks. But the president should have gone further to create parity among the various individual retirement options.
Workers are currently allowed to invest up to $16,500 this year in the Read More...
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President Obama says that his health care overhaul plan will reduce costs. But the career estimators at the Congressional Budget Office (CBO) say it will actually increase federal spending by close to $1 trillion. President Obama keeps saying that his health plan will reduce the deficit. But CBO says it will increase the deficit by hundreds of billions.
So now liberals are arguing that the CBO actually has a history of overestimating health costs and underestimating savings. A New York Times op-ed, echoed by the Commonwealth Fund, insists that CBO underestimated the cost savings from reduced reimbursements in the past for hospitals, skilled nursing facilities, and home health services, and from the market competition included in the 2003 Medicare prescription drug plan.
But the government’s official estimators actually have a long history of grossly underestimating the costs of new health programs.
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So Congress ponied up an extra $2 billion last week for the Cash for Clunkers program.
Our elected solons were stunned at how popular the program turned out to be. And they’re apparently eager to placate an increasingly restive public, angered by government overspending, by … spending even more.
There’s a lesson in the Cash for Clunkers program that Congress should learn—but probably won’t—with regard to its massive health care reform effort: When the government hands out free money for something the public wants, it will nearly always underestimate the demand for that money.
Yes, those who have stalked Washington for many years can cite some programs where people didn’t take advantage of free money, but that’s usually because the restrictions and bureaucracy made it difficult to navigate the program. The Cash for Clunkers program wasn’t just free money, it was easy money.
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| A common theme in science fiction literature and movies is technology run wild. The machines take over, bioweapons researchers accidentally release an engineered virus into the population, or nano-sized machines suddenly develop intelligence and start malevolently chewing through the biosphere, leaving a sea of “grey goo” in their wake. There’s just enough of a nugget of truth in the setup of these dramas to make them remotely believable. But that’s where science fiction doomsday scenarios depart from human experience. The fact is that innovation and technology have led to the creation of wealth, better health, greater access to knowledge, and thus overall greater quality of life. But there are still parts of the world that innovation hasn’t reached—where people don’t have access to clean water, adequate health care, basic energy and educational resources. Read More...
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Is There an Easy Way to Reduce Greenhouse Gases? The Institute for Policy Innovation’s Dr. Merrill Matthews says it’s time for scientists to ask, where’s the beef?
The UN says that cows are responsible for 18 percent of the world’s greenhouse gases. That’s more than trains, planes and cars, combined.
See, a cow’s digestive system produces a lot of methane gas, which causes them to burp. And that methane goes into the atmosphere.
So scientists are working to change cow diets to reduce those gases—and, hopefully, global warming.
If they do, maybe we won’t need those little electric cars the government wants GM to make—but which consumers may not want to buy.
And we certainly won’t need the Democrats’ new “cap and trade” tax that will raise energy costs for every American household.
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Democrats just can’t seem to get a break on their budget numbers. It seems like every time they try to convince the public that they’re being good stewards of the country’s fiscal future, the Congressional Budget Office (CBO) shoots them down.
First there was the Democratic claim that the various House and Senate health care reform bills would “bend the curve” on health care spending. Not so, said CBO Director Douglas Elmendorf. Health care spending would go up—significantly.
Then, in an effort to get American Medical Association (AMA) buy in for their legislation, Democrats proposed fixing the “sustainable growth rate” (SGR) provision in Medicare that forces doctors’ reimbursement rates down if Medicare spending grows too fast.
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OK, OK, we’re No. 2.
Which is to say, Texas now ranks after Virginia, in a CNBC survey, as the best state in the country in which to do business. Last year we were No. 1.
We’re still tops for overall economy and for transportation and infrastructure. Maybe now is the time to ask what we’re doing right—especially with major governmental turnover in Austin coming our way.
And for the pats on the back, there are areas of needed improvement. Living costs here (7th lowest) are way below rival Virginia’s (27th ); but property taxes, on which state government relies too heavily, especially for education, will drag down our growth rate. Property taxation needs the major overhaul the Legislature should have given it this session.
In addition, Texas ranked 30th for education. Too many Texas high school students, especially in the big cities, never finish school. Read More...
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What Is a Monument to Me? The Institute for Policy Innovation’s Dr. Merrill Matthews says it’s a member of Congress who’s forgotten who he serves....
When members of Congress put pork-barrel funding requests in the federal budget, it’s called an “earmark.”
But when that earmark is to build or support some building or project named after that member, it can be referred to as a “Monument to Me.”
Rep. David Obey, a Wisconsin Democrat who controls the appropriations process in the House, has stopped the Monuments to Me—before Republicans ban them out right.
It looks a little too self-indulgent, he thinks, for congressmen to spend millions of taxpayers’ dollars putting their names on buildings and parks and airports. That honor should be reserved for members who have died or left office.
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Yesterday we learned that, in order to “stimulate the economy,” the federal government spent millions of dollars buying boiled ham. Pushing back against the public outcry, Secretary of Agriculture Vilsack proudly proclaimed that his department had purchased the ham for the needy, and at $1.50 per pound.
It didn’t take long for people to point out that any shopper could purchase that same ham for (drumroll please) about 79 cents per pound.
So the federal government paid twice the market price for ham, right? No, it’s worse than that.
When you’re buying millions of dollars worth of ham, shouldn’t you be able to negotiate the best possible price? A price lower than the full retail price that any consumer pays at the grocery store? Isn’t it more likely that the Feds paid 3 or 4 times what they should have for boiled ham?
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When Is Congress Like the Film Industry? Dr. Merrill Matthews of the Institute for Policy Innovation says when it releases lousy products and hopes the public won’t notice.
When members of Congress are running for re-election, they want to pass popular legislation shortly before the election so they can campaign on it.
That’s what happened in August of 1996. Both Republicans and Democrats passed a health care reform bill known as HIPAA right before the presidential conventions.
But when congressmen think new legislation will anger voters, they try to pass it as far away from the next election as possible.
That’s why President Obama wants to pass this year both health care reform and the cap and trade energy bill that creates huge new taxes with little effect on global warming.
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Well, who couldn’t have seen this one coming?
Presidential candidate Barack Obama campaigned on ending Washington’s culture of earmarks, where members of Congress specify how much and for which projects federal money will be spent in their respective states.
But President Obama has embraced earmarks, signing the $787 billion stimulus bill and the federal budget, both of which were chock full of earmarks.
Now comes the health care bill and, guess what, it appears the House and Senate versions will both include earmarks.
The Boston Globe reports, “Tucked within [the bill] is a provision that could provide billions of dollars for walking paths, streetlights, jungle gyms and even farmers’ markets.”
There has been a growing support in Washington for more preventive care and wellness programs. Read More...
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Congress has passed a massive “cap and trade” energy bill designed to raise the price of energy in the U.S. in order to reduce the use of fossil fuels by 17 percent by 2020 and by 83 percent by 2050.
President Barack Obama has called the bill a “jobs bill.” But sentencing the U.S. economy to high-cost energy is not a particularly good strategy for creating jobs. Charles River Associates, a Harvard-based economics consulting firm, estimates a net loss of about 2.5 million jobs each year.
During the campaign, candidate Obama also pledged that he would never raise taxes in any form on Americans making less than $250,000 per year. But his cap and trade tax is estimated to cost American families almost $2,000 a year when it becomes effective—due to higher prices for electricity, oil, gasoline, natural gas, home heating oil, coal, food and transportation costs—to almost $7,000 a year for a family of four by 2035.
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What’s the Best Way to Clean a House? The Institute for Policy Innovation’s Dr. Merrill Matthews says by letting the sunshine in.
Great Britain is reeling since London’s Daily Telegraph started digging into members’ of Parliament reimbursed expenses. While most of them were legal, many were also outrageous.
- About $3,400 was spent to drain a castle moat.
- Members expensed horse manure, changing light bulbs, tennis court repairs and massage chairs.
- And, one member even expensed an $8 charitable donation.
The scandal has led to several resignations. And the Speaker of the House of Commons has been forced out—the first to do that in 300 years.
In a preemptive strike, Speaker of the House Nancy Pelosi has ordered all House members’ expenses be posted online for public viewing. That’s a good start.
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Clean House |
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Nobel Prize Alert: Robert Reich has discovered a new economic law:
"Without the government as competition, the private sector has little incentive to improve."
This is truly breathtaking. As it turns out, it's not the private sector that drives innovation, growth and efficiency, it's the government.
In other words, we should credit the U.S. Postal Service for the innovation and efficiencies that have been gained by FedEx and UPS. They don't get the credit--they'd be big, fat, inefficient and wasteful were it not for the competition provided by the U.S. Postal Service.
Give me a break.
I'd like anyone, anywhere, to show me an example of where the government has competed along side of the private sector. Government doesn't compete with the private sector in any ind Read More...
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Are You Ready for a VAT Tax? The Institute for Policy Innovation’s Dr. Merrill Matthews says Congress is looking for more money.
The Washington Post reports that support is growing for a Value Added Tax, or VAT tax, to pay for Congress’s massive spending projects, like health care reform.
A VAT tax is similar to a sales tax, only the tax is charged at each level of production. So a car manufacturer would pay a tax on all of the raw materials and parts it buys to make cars. And then pass those multiple layers of taxes on to consumers in the form of higher car prices.
Politicians love a VAT tax because voters can’t tell how much they’re being taxed, or when the tax is increased. They only see much higher prices.
That let’s politicians criticize those “greedy” businesses for charging too much, while it’s the government that’s raking in the extra bucks. Read More...
VAT Tax |
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Well, whatever else can be said about health care reform, it now seems clear it won’t be cheap.
Rep. Charlie Rangel (D-NY), who heads the House Ways and Means Committee, says he expects to raise $1 trillion for health care reform (over 10 years) by cutting Medicare and Medicaid spending by $400 billion (ouch!) and raising taxes by $600 billion (double ouch!!)
President Obama is putting a little detail in his proposed Medicare cuts.
- He wants to chop $106 billion from the disproportionate share hospital program. Actually, cutting the “DSH” program is reasonable. It’s federal money that reimburses certain hospitals that treat a “disproportionate” number of uninsured. If nearly everyone has coverage—and that’s a big IF—then reducing DSH payments makes sense.
- The president also wants to cut $110 billion by making “productivity adjustments” to Medicare providers. Read More...
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So you dodge one bullet. What about the next one? The budget bullet that’s going to be squeezed off in the direction of the Texas Legislature in two years, or sooner?
The Legislature wound up its 2009 session in fairly good shape as far as legislative shapes go. No tax increases. No raids on the “rainy day” fund.
Could have been worse—but may be in the future.
The Lone Star Report, an Austin political newsletter, reminds us that this go-round would have been a killer without federal stimulus spending. Seems that $6.8 billion in programs that would have been covered this year by general revenue are in fact being financed with stimulus money. That means a good-sized budgetary shortfall is coming at the next regular session in 2011. Of course, it’s possible that the Obama administration will still be handing out money then, but we can’t depend on it. Read More...
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Both Democrats and Republicans are coming together to support increased transparency in how funds are being distributed through the Troubled Asset Relief Program (TARP).
When TARP was passed under the Bush administration, it gave the Treasury Department, then run by Treasury Secretary Hank Paulson, the power to distribute the funds as Treasury saw fit.
Lots of people, IPI included, were concerned at the time that there was insufficient transparency and accountability in the legislation.
Under our system of checks and balances, it is Congress’ rightful responsibility to control expenditures of taxpayer dollars, and to exercise oversight over how and where funds are spent. Although Congress delegated to the administration of TARP funds to the executive branch, Congress should not give the Treasury Department a free pass.
Read More...
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The Wall Street Journal reports that Senator Edward Kennedy (D-MA), who chairs the Senate Health, Education, Labor and Pension (HELP) Committee, will soon introduce his disability program known as the CLASS Act.
If you were taking some consolation that Congress had spent so much money over the past few months that funding its remaining wish list, like health care reform, was impossible, well then unconsolate yourself. The CLASS Act could siphon out of the economy the estimated $1.2 trillion over 10 years for the Obama health plan, with billions to spare.
The legislation creates a new government-run disability program. All workers would be automatically enrolled. People could opt out—at least that’s what we’re being told now—but sponsors don’t expect many people to do that.
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Congress has this neat little trick. Whenever it wants something done but doesn’t have the cash or credit, it passes the bill on to the states.
The states haven’t got the money either? Well, find it, Congress sweetly replies.
It’s called an “unfunded mandate,” and it’s how a variety of “good deeds,” like free treatment at emergency rooms (the Emergency Medical Treatment and Active Labor Act) and national standards for public schools (the No Child Left Behind Act), get implemented and paid for.
Understandably riled over such treatment, Texas House members voted 3 to 1 for an unfortunately non-binding resolution (HCR 50) telling the U.S. government, in essence, look, we’ve got constitutionally guaranteed rights around here, too, and, among other things, we’re “serving notice to the federal government to cease and desist certain mandates.”
And such a resolution co Read More...
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Can the Government Help You Get Thinner? Dr. Merrill Matthews of the Institute for Policy Innovation says not if it’s getting fatter.
The Obama administration wants to spend billions of dollars pushing us to be healthy.
But the town of Sommerville, Massachusetts, has found an easy and inexpensive way to encourage healthier lifestyles. It changed some of the foods in the public schools, replacing French fries, candy and sodas with fresh fruit, skim milk and other healthy foods.
The city also built some bike and walking paths.
When the program started seven years ago, 44 percent of the elementary school children were either overweight or at risk of becoming so. Within just one year the city noticed significant weight changes among the children. Now other cities are adopting the model.
We don’t need the government monitoring our calories. Read More...
Fat Government |
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Regular readers know that we tend to promote less government spending. But there are a few areas where current spending levels are justified; even an increase might be warranted. One such case: the Labor Department’s Office of Labor-Management Standards (OLMS).
Under the previous administration, Labor Department Secretary Elaine Chao fought for more transparency in labor union accounting practices—and got it.
Labor unions have been heavily engaged in political activities for decades, spending millions of dollars in union members’ dues supporting political candidates and labor-friendly policies.
But when reporting time would roll around, union management would report little or no political activity. The whole process was a complete sham.
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Note: The Institute for Policy Innovation will be highlighting trade issues this week in recognition of World Trade Week.
Why are domestic policies, both here and abroad, threatening to tear apart the most globally competitive companies? Rather, we should be doing all we can to encourage their success, especially now.
The European Union has been on a tear, swinging a wrecking ball at U.S. globally competitive companies. Just last week the EU fined Intel a record-shattering $1.45 billion for “anticompetitive practices”—the largest fine ever imposed for any breach of EU antitrust law. The previous record-smashing fine was $677 million, imposed on Microsoft in 2004.
Which U.S. companies are next? Could it be: - IBM facing a new complaint after settling a decades-old case?
- How about Rambus or Qualcomm, which are under an ongoing inquiry?
Read More...
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While Iraq may have been “Bush’s War,” it increasingly seems that “Obama’s War” will be a trade war.
The $787 billion stimulus package included a “Buy American” provision requiring companies, governments and agencies receiving stimulus funds to buy products that are “made in America.”
While such provisions are being touted as a way to reduce unemployment, they’re simply back-door protectionism, which allows the president to maintain he both supports global trade while simultaneously undermining it. As a White House spokesperson said recently, “The president is committed to creating jobs in America and committed to global engagement with our trading partners and does not see any contradiction between those two goals,” according to a recent story in The Washington Post.
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Note: The Institute for Policy Innovation will be highlighting trade issues this week in recognition of World Trade Week
A Texas company, Dallas-based Mary Kay, Inc., is wondering what’s going on with Congress.
Mary Kay’s concern: What were the people’s representatives thinking when they decided to make U.S.-made personal care products less attractive and saleable in the Mexican market?
Here’s the deal: U.S. truckers wanted to kill a pilot program, set up under the North American Free Trade Agreement (NAFTA), for resolving safety concerns about Mexican trucks driving on U.S. roads. So Congress, with a nod from the Obama administration, used this year’s omnibus spending bill to kill the pilot program; no more “threat” of Mexican truckers bringing us Mexican goods on Mexican trucks. Read More...
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Is Your Social Security Check Safe? Dr. Merrill Matthews of the Institute for Policy Innovation says yes, but for how long?
When some of us raised concerns about Social Security’s financial soundness, liberals always accused us of being fear mongers.
Well, the fear is here. Steve Moore of the Wall Street Journal reports that President Obama’s budget says this year Social Security will pay out $8 billion more than it’s taking in.
It wasn’t supposed to hit this point for 10 years, but the economic downturn has hurt government revenues.
Defenders claim there’s still a Social Security trust fund to draw from. True, but the government has borrowed all of that money and spent it.
So Social Security is broke in fact, if not on paper. Monthly checks will no doubt still be paid, but it’s borrowed money—and borrowed time. Read More...
Social Security |
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Now we’re beginning to see how President Obama plans to “create or save 3 million jobs.” He’s just going to make government employees out of them.
Trying to get an accurate tally of all of the new government hires isn’t easy; in many cases they are simply part of the beefed-up funding for various departments and agencies.
The Partnership for Public Service, a nonprofit group that promotes government employment, thinks the administration needs to add 200,000 new government jobs. Our bet is that the president’s well on his way to reach that goal—and more. The Wall Street Journal reports that:
• The president’s budget creates 33,600 new defense department jobs by 2015, while it envisions cutting many of its current contractors.
• The Department of labor gets 1,000 new jobs.
Read More...
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Do You Smell a Foul Odor? The Institute for Policy Innovation’s Dr. Merrill Matthews says that smell may be pork-barrel spending.
In these hard economic times, at least the government is being careful with your tax dollars, right?
Well, Citizens Against Government Waste has released its 19th annual “Pig Book,” which identifies all of the pork-barrel spending projects in the federal budget, some 10,000 of them.
- Like spending $1.8 million for swine odor and manure management research in Iowa.
- And $4.5 million for wood utilization research.
While there’s about 1,500 fewer pork-barrel projects in this year’s budget, spending on them is up by 14 percent.
Yes, there are projects the federal government can and should fund.
But before we spend your tax dollars studying swine odor in Iowa, how about we figure out how to stop the stink from Washington Read More...
Pork Barrel |
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It appears that Democrats in Congress have decided to use the budget reconciliation process—which allows the Senate to approve legislation with 51 votes rather than the 60 needed to quash a filibuster—in their effort to pass sweeping health care reform legislation.
For two months some Democratic leaders in the Senate, especially Sens. Kent Conrad (D-ND) and Max Baucus (D-MT) have claimed that health care reform legislation is too costly and important to force it through the reconciliation process. Both senators are from relatively conservative states, and Conrad stands for re-election next year, so they don’t want to rile their constituents.
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Oil and natural gas prices are way down, yet Texans’ electricity bills have remained stable, or have even increased a little. So what gives?
There seems to be a natural tendency for the public and their elected officials—with a big push from the media—to blame profit-hungry energy-company CEOs.
But as in so many other cases, when prices go up, a good place to find the explanation is the state Legislature.
See, even as oil and gas prices have gone down, the state has been requiring energy companies to use more “clean fuels,” such as wind and solar power, which come at a premium.
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Does Congress Deserve a Bonus? Dr. Merrill Matthews of the Institute for Policy Innovation says not if the criterion is successfully managing an organization.
Remember how angry Congress and the country got when we learned that insurer AIG used $165 million of taxpayer money to pay bonuses?
The backlash was from a sense that the company had been horribly managed, and the rest of us would have to pay for it. Bad management doesn’t deserve a bonus.
Well, it seems that members of Congress have also handed out millions of dollars in bonuses—to their staffs. Up to $14,000 a person.
Now, many Hill staff are hard workers and may deserve a bonus.
But if bankrupting an organization and leaving taxpayers with billions of dollars in debt is the hallmark of poor management, that should be condemned, not rewarded, And that sounds almost like a perfect description of … Congress. Read More...
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We have been warning that the budget deficit being pushed through by this administration and Democratic-led Congress is unfathomable. But words don’t quite do it justice.
Thankfully, the nonpartisan Congressional Budget Office, which is charged with estimating the economic impact of all budget-related legislation, has given us a picture of future deficits under the Obama administration.
We take the point that the President inherited some of the financial challenges. But it’s how he’s addressing those challenges that’s the problem.
When President Ronald Reagan was first inaugurated in January 1981, he too was handed a weakened economy—weakened by four years of Carter policies.
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Allow us to make some informed observations about the “Tea Party protests” that have apparently escaped the mainstream media and those currently in political power in our nation’s capital.
(“Informed because IPI Resident Fellow Dr. Merrill Matthews spoke at the Dallas Tea Party event, and IPI president Tom Giovanetti spoke at the Denton County event.)
The Obama administration has dismissed the tea parties with feigned confusion. “We don’t understand what all these people are worked up about? After all, we gave 95% of them a tax cut, didn’t we?”
But people aren’t that stupid, and the tea party protesters aren’t just worked up about taxes. Read More...
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In a brand new op/ed in American Spectator, IPI director of entitlement and budget policy Peter Ferrara writes:
"Suppose to vote in state and national elections you weren't allowed a secret ballot behind a curtain. Suppose to vote you had to go downtown and vote in the baseball stadium, where your choices would be flashed on the scoreboard, before a howling mob. Your boss, and your co-workers, and your neighbors would all know who you voted for.
That is how the unions and liberal Democrats want to change the law in regard to employees choosing whether they want a union.
For decades now, employees have been able to vote in secret ballot certification elections to determine whether they really wanted a union in their work place. In about half of these elections, for many years now, the workers have said no to the union... Read More...
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Just wondering if this is what Obama voters were voting for?
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So now the Democrat-controlled Congress is pumping money out of Washington in an effort to stem a catastrophe—and lots of bad press. And it turns out this Congress isn’t any better at it than the Republicans were.
When Hurricane Katrina hit New Orleans in 2005, the city’s levees broke and disaster flooded in. President George W. Bush was initially slow to respond.
But once the public outcry rose to a crescendo, the government began churning out so much money so quickly that the normal processes for ensuring the money was spent properly were ignored.
That led to numerous negative news stories about exorbitant spending and shady operators reaping huge profits, making the Bush administration look not only uncaring, but incompetent.
Well, now money is beginning to pour out of Washington to rescue us from the economic downturn.
Read More...
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In a brand new op/ed discussing the climate change debate, IPI director of entitlement and budget policy Peter Ferrara says global warming is not really a debate about science, but a battle over money and power.
Peter writes:
The chief source of hysteria over possible man-made global warming has been the United Nations and its Intergovernmental Panel on Climate Change (IPCC). The panel's own climate models project that if man's emissions of carbon dioxide (CO2) and other greenhouse gases were causing global warming, there would be a particular pattern of temperature distribution in the atmosphere, which scientists call "the fingerprint." Temperatures in the troposphere portion of the atmosphere above the tropics would increase with altitude, producing a "hotspot" near the top of the troposphere, about 6 miles above the earth's surface. Read More...
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Why Is the Stock Market Going Down? The Institute for Policy Innovation says the market knows something the president doesn’t...
There are reasons why the stock market’s been tanking this year. It’s pricing in President Obama’s policies. For example, he wants to:
- Raise the income tax rate on higher-income workers from 35 to 39.6 percent;
- Lower their ability to write off charitable contributions;
- And raise the capital gains tax from 15 to 20 percent. That’s the tax people pay on investments like the stock market.
Higher-income people will have less to invest in the market, and will get to keep less when they do.
Those lower returns mean demand for stocks will fall—and so does their price.
While not everyone invests in the stock market, we all have an interest in it doing well. Read More...
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The New York Times reports that the Obama administration is open to the idea of taxing some employee health insurance benefits.
The Times continues by noting that such a tax might create some political difficulties for the president, since he ran campaign commercials criticizing his Republican opponent John McCain for proposing exactly the same thing.
Of course, there was one teeny, weenie little difference: McCain also proposed a $5,000 per-family refundable tax credit intended to offset the increase in taxable income. The Obama administration apparently would use the increased tax revenue to pay for its health care reform goal of providing universal coverage.
The current tax break for employer-provided coverage is unlimited; every penny the employer spends on coverage is excluded from an employee’s income.
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In a brand new op/ed appearing in TCS Daily online, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson write:
Change is here, and people are responding. Bank of America just responded to the decision by Congress to limit hiring of foreign skilled workers under the H-1B program, and did so by canceling contracts to hire a batch of foreign-born business students. Does it mean jobs for Americans? Probably not: Bank of America can either cancel the positions, or outsource the work abroad.
Senator Chuck Grassley, who co-sponsored the H-1B clampdown, says "There is no need for companies to hire foreign guest workers -- when there are plenty of qualified Americans." Read More...
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Officials at the NTIA (the Commerce Department’s National Telecommunications & Information Administration), the FCC and the USDA, (yes, the Department of Agriculture) held a meeting earlier this week to begin to decide how to spend the $7.2 billion in “economic stimulus” funds for the rollout of broadband to un-served and underserved areas as mandated by the recently passed, so-called “stimulus bill.”
These expenditures are rife with controversy and potential to harm rather than enhance broadband deployment, but in at least one area the answer should be pretty clear—reject any plans to expand the costly and failed initiatives of municipal broadband networks.
The NTIA should not support the advancement of taxpayer-funded networks. With all of the bailouts and extensive list of pork projects taxpayers are already shouldering, the last thing they should have to pay for is failed municipal broadband projects.
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“If we want to create jobs and rebuild our economy, then we must address the crushing cost of health care this year, in this administration,” President Barack Obama recently claimed. “By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care.”
The president’s claim—echoed by his Office of Management and Budget Director Peter Orszag—is ridiculous.
Yes, we do spend more on health care than any other country, about 16 percent of our GDP. But we also spend more on cars than any other country, and the administration is trying to get us to buy even more of them—especially “green” cars.
The president says if we don’t buy more cars people will lose their jobs, and companies—especially the automakers—may close.
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In testimony March 8 before the United States Senate Banking Committee, New York Insurance commissioner Eric Dinallo said he isn’t opposed to federal regulation of insurance; its giving insurance companies the option to choose federal regulation over state regulation that he opposes:
I can have a serious conversation about a federal regulator. My view is it shouldn’t be an optional federal regulator…you shouldn't be able to choose the regulator. I'm not steadfastly against any federal involvement in insurance regulation. I feel very uncomfortable about optionality (sic).
A careful examination of Dinallo’s argument reveals that his opposition to allowing insurance companies the same option banks have to choose which level of government regulates them is really all about protecting states’ current regulatory monopoly over insurance regulation, not about achieving the optimal regulatory arrangement. Read More...
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Here’s the answer to the earmark controversy still raging in Washington, D. C.: good old-fashioned sunshine.
“Earmarks” are those pesky little tags on federal spending. Texas Rep. Ron Paul likes to say that earmarks aren’t new spending. He’s right. When Congress passes a budget, it often includes money for states.
The question is who decides how to divvy up the spoils: members of Congress or state-level elected officials and bureaucrats. Members of Congress say it’s better to let them make those decisions.
Dallas Congresswoman Eddie Bernice Johnson claims, “I’ve never asked for anything that didn’t benefit my district.” Well, ma’am, how do we know? Should we take such affirmations on faith? Don’t believe so: not with Congress and the White House playing around with trillions of our dollars.
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Should We Fear Another Great Depression? Dr. Merrill Matthews of the Institute for Policy Innovation says the real threat comes from government policies...
Economic times are tough, but are things as bad as the Great Depression of the 1930s?
President Obama used the fear of another Great Depression to rally support for his economic stimulus package.
But economist Bradley Schiller, writing in the Wall Street Journal, disagrees.
- While unemployment is at 7.6 percent now, it peaked at 25 percent in 1932.
- The economy may decline about 2 percent this year, but from 1930 to ‘32 it declined between 8 and13 percent each year.
- Finally, auto production declined 25 percent last year, but 90 percent in 1932.
It was government policies that turned the 1929 recession into a decade-long depression. The real fear is that government policies will do it again. Read More...
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So Tuesday night I'm watching a bit of Kudlow, and Larry is talking with a screen full of people about some of Treasury Secretary Tim Geithner's recent moves and statements. (this is the video)
Kudlow says something like this to Don Luskin (who is a fellow supply-sider but with whom I've had a minor run-in in the past): "I don't understand how this guy [Geithner] thinks. He's a bright guy. He's not stupid, right?"
To which Don Luskin replies "I don't think we can rule out that he's [Geithner] stupid."
Funny line, but tragic if true.
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The election of Barack Obama has sometimes been characterized as a return of John F. Kennedy’s “Camelot.” Both Obama and JFK were young, attractive, articulate senators, with accomplished wives with young children.
Both Kennedy and Obama came to office amidst economic concerns. But when Kennedy became President, higher-income people paid significantly higher rates on their taxes than middle-income workers. Sound familiar? That’s exactly what President Obama wants.
But not President Kennedy. He thought tax rates on high-income earners were too high and stifled investment. And Kennedy’s push for lower tax rates resulted in a burst of economic growth and economic recovery.
Kennedy began a trend moving tax rates in the right direction—down. President Obama is taking tax rates the other direction.
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Nope, no such thing as a free lunch. No such thing as free federal money, either—as Texas and other states are learning.
Under the just-passed $787 billion stimulus law, Texas is due nearly $17 billion—$555 million of it for increased benefits to the unemployed. Hold on, though. It appears that to get the latter sum, the state has to change some eligibility requirements in current law, making benefits available to thousands of temporary and part-time workers. Permanently. Forever.
Of course, when the stimulus money runs out in about two years, the Legislature could, technically, say to these newly covered workers: That’s it; see you around.
We all have a big picture of that happening, don’t we?
No wonder Gov. Rick Perry and several other governors—from Mississippi, Georgia, Louisiana, Idaho, South Carolina and Alaska—grumbled last week that they might steer clear of some of the stimulus money. Read More...
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In a brand new op/ed featured today in Forbes.com, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson write:
“Can you stimulate the economy by shutting out foreign workers? Sens. Bernie Sanders and Chuck Grassley think so. And for all his anti-protectionist rhetoric, President Obama has shown surprisingly little interest in stopping them.
The stimulus bill the president signed into law restricts the use of bank bailout funds (money banks get from the Financial Stability Plan, formerly known as the Troubled Asset Relief Program) to hire skilled foreign workers under the H-1B visa program… Read More...
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We thought we should highlight a recent USA Today story because, well, the public needs to know … and the politicians are trying to ignore it.
Millions of Americans are already concerned about the future of Social Security and Medicare—as well they should. According to the Social Security and Medicare Trustees Reports, Social Security’s unfunded liabilities was an estimated $15.8 trillion in 2008, and $86 trillion for Medicare. That’s a total of $101.7 trillion (in today’s dollars) for both programs.
Yes, that’s “trillion” with a “T.”
Now USA Today tells us that states have retiree health care obligations totaling about $445 billion. Not all states, however. Read More...
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It is now officially President Barack Obama’s economy.
In his first press conference, the president made it clear that the economic slowdown wasn’t his doing. He inherited it from President Bush. Fair enough.
But Mr. Obama’s $787 billion economic stimulus bill—which received only three Republican votes, all in the Senate—is his doing.
He set up markers to determine whether he would support the bill. For example, it had to save or create 3 million new jobs. And it had to provide an immediate boost to the economy.
And while some in the media have noted that most members of Congress didn’t know what was actually in the bill, the more important issue is that no one knows whether the stimulus package will help, or even hurt, the economy.
Read More...
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Are CEOs Wasting Their Bailout Money? Dr. Merrill Matthews of the Institute for Policy Innovation says some are, but they’re amateurs when compared to Congress...
Senator Claire McCaskill of Missouri has introduced legislation that would limit CEO pay to $400,000 if that company is getting federal bailout money.
Referring to some of the huge bonuses being paid by bailed-out CEOs, the senator said, “I don’t get it. These people are idiots.”
But CEOs aren’t the only ones wasting taxpayer money. The economic stimulus package is filled with expenditures that do nothing for the economy, like:
$50 million for the National Endowment for the Arts, and
$2.5 billion for the National Science Foundation.
Maybe Senator McCaskill should instead introduce legislation that limits congressional pay every time Congress wastes taxpayers’ money. Read More...
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A study by a coalition of Texas municipalities—the Cities Aggregation Power Project—says the state needs “meaningful reform” of its electric deregulation policies to compensate for what it calls generally higher electricity prices since deregulation began 10 years ago.
The power industry responds that the Texas Electric Choice Act of 1999 is achieving what it was meant to achieve—the replacement of regulation with “fierce competition” that not only enhances investment in new power sources but maintains downward pressure on prices.
Who’s right?
A good way to think about the perpetual problem of energy prices is to recall that price regulation is a game governments play in order to appear protective of voters who also happen to be consumers.
Government just thinks it knows a commodity’s right price. Read More...
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In his 1981 inaugural speech Ronald Reagan famously said “In the present crisis, government is not the solution to our problem; government is the problem.”
During the debate over how to get the economy going again, we are witnessing a case study in Reagan’s observation.
Consider that government created the problem in the first place through too loose money (Federal Reserve), and purposely distorting the mortgage markets for social engineering purposes (Fannie Mae, Community Reinvestment Act).
Now to fix their mess, our political leaders propose to borrow enormous sums of money that future generations will have to repay. But is it possible that in this crisis, government is again the problem rather than the solution?
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The Heritage Foundation has thankfully explained why the idea Sen. Mitch McConnell has been floating to have the government offer fixed 4% mortgages is a bad idea.
refinancing mortgages at very low interest rates would be a costly initiative and a massive new government intervention in housing and finance markets that would yield few if any of the promised benefits. Read More...
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IPI senior fellow Dr. Lawrence Hunter will appear Thursday morning on Ft. Lauderdale’s WFTL Morning News.
Tune in live at 7:40 am EST as Hunter explains to host Russ Morley how consumers may be impacted by news of State Farm’s departure from the Sunshine State’s homeowners insurance market. Read More...
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Can Democrats Make the Health Care System More Efficient? Dr. Merrill Matthews of the Institute for Policy Innovation says they’ve never done it in Medicare, after 40 years...
Democrats say they want to make health care more affordable by reducing inefficiencies in the health care system.
But Medicare, the 40-year-old federal health insurance program for seniors, is riddled with fraud and inefficiency. And Congress has never fixed those problems.
The government estimates there is $60 billion of fraud in Medicare—every year.
- A recent government report found that Medicare paid as much as $92 million since 2000 for equipment supposedly prescribed by dead doctors.
- And a Justice Department strike force recently prosecuted 120 people for trying to bilk Medicare out of $400 million.
Read More...
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Defenders of the economic stimulus package have shifted from being disingenuous to just plain crazy talk.
President Barack Obama, along with others, claims the stimulus package will boost total gross domestic product (GDP) by $1.50 for every $1.00 the government spends. The justification for the claim is what economists call the “multiplier effect.”
Assume Jones invests $10 million in a new factory. He hires contractors to get his new business ready, and he hires new employees. Those individuals will spend that new income on things they need, and they may put some of it in a bank, which can then loan part of it to others.
These transactions tend to expand the original $10 million, although no one is sure by exactly how much. Most economists think it’s in the range of 1.5 or 2.0 times the original amount. Thus, a $10 million initial investment could ultimately add $15 million to $20 million to the economy.
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I received an email this morning from a gentleman in India who had read my op/ed in the Fort Worth Star-Telegram the other day.
My Indian correspondent said:
I live in India and have been following the sequence of bailouts in the U.S with bewilderment for various reasons:
1. U.S is supposed to be the capitalist mecca of the world ...
2. Economic policy was to reward risk ..
3. Taking care of companies was not Government's business ..
4. Those who make crass and stupid mistakes are punished ..
5. Regulators who slept at the wheel would be asked to take a walk ....
Does any of the above hold good today?
The only positive I can see is that we need not listen to lectures on capitalism from the U.S ANYMORE .... Those living in glass houses should not throw stones...
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IPI senior fellow Dr. Lawrence Hunter will appear Friday on Florida’s “The Marc Bernier Show” to discuss what’s caused State Farm Insurance to leave the Florida homeowners insurance market, and what the impact will be for consumers.
To catch the discussion, listen live online at 5:35 pm EST at http://www.wndb.am/. Read More...
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The last time an American president dared someone to "make my day," he and the American people lived to regret it. Now, the governor of Florida is reaping the whirlwind, and Floridians are suffering, for his challenging insurance companies two years ago to make his day by pulling out of the Sunshine State. He found it detestable that they might want to flee a state that was forcing them to write actuarially unsound homeowners' insurance policies and face financial ruin if they continued doing business in the state.
Governor Crist blustered: "When these insurance companies threaten us with this "We're going to leave your state stuff,' we say, 'Go ahead.' We don't need that kind of business in Florida."
The governor's bravado rings hollow today. Yesterday, State Farm Insurance Company, Florida's largest writer of homeowners' insurance (933,000 policyholders) announced it is going to discontinue writing homeowners' policies in the state.
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These days it seems that almost every discussion includes the word “stimulus.”
But about all most of the proposals coming out of Washington would stimulate is higher taxes in the future. They aren’t what most economists consider “economic stimulus,” much less have the ability to produce any jobs and grow the economy.
There is, however, at least one available option with a track record of success that so far has been excluded from consideration: allowing companies to bring capital from abroad back to the U.S.
Many U.S. companies, especially those in the pharmaceutical or technology industries, have significant financial assets overseas. Why? Because in our global marketplace companies need to grow and compete in those markets with the greatest opportunities … wherever they are located. Many companies earn more than 50 percent of their revenue, and sometimes as high as 80 percent, outside the U.S.
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How Can We Get Consumers Spending Again? The Institute for Policy Innovation’s Dr. Merrill Matthews says former President Bush avoided this problem
The economy is struggling as consumers, even those with jobs and money, are cutting back on spending.
And now the question around Washington is, “How can we get consumers spending again?”
We were faced with a similar situation nearly eight years ago, right after the 9/11 terrorist attack. In an effort to keep consumers from hunkering down and holding onto their money, President Bush encouraged the public to go shopping.
Well, liberal commentators have ridiculed him repeatedly for that comment. They opined that in a war patriotic consumers should stop spending and keep their cash—which is exactly what they’re doing now.
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In a brand new op/ed featured today in American Spectator online, IPI’s Peter Ferrara discusses why the “economic recovery bill” is no stimulus bill at all.
Ferrara writes:
“Now what we have is not only a stimulus bill that will not work. What we have is a fraudulent bill that is not even focused on stimulus at all, but on runaway spending for liberal, big government spending programs, meaning more welfare, overgrown bureaucracy, pork, political payoffs, and waste.”
To read the full op/ed, please visit American Spectator online. Read More...
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Out of the $825 billion House version of the proposed economic stimulus package, $157 billion is tagged for health care. But roughly 75 percent of that spending really does nothing for the uninsured. Rather, it goes to projects like:
- $20 billion to improve health information technology (HIT);
- $1 billion for the Agency for Healthcare Research and Quality to create a comparative effectiveness research program that’s supposed to compare different medical devices, prescription drugs and specified medical procedures to see which are the most effective, including the issue of cost;
- $2 billion for renovations at NIH facilities and new agency research grants and $1.5 billion for renovations at university laboratories that conduct research sponsored by the agency;
There is $30 billion to help workers losing their jobs pay their COBRA premiums, but is that a good thing?
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The cost of Obama’s stimulus package is now approaching $1 trillion. The entire budget adopted for fiscal 2008 was $3 trillion, so Obama is proposing a massive increase in Federal spending of one-third in just his first two months in office! In a couple of weeks, Obama’s proposed budget for the next fiscal year will be released. I expect it to show a budget deficit of about $1.5 trillion, which is half as large as the entire federal budget for 2008!
This should have been expected from electing the most liberal member of the U.S. Senate as President, a man with a very left wing intellectual history. But during the campaign, many people bought off on the Obama spin that those old labels don’t matter any more. These people have now been exposed as suckers.
But even after Obama was elected, many commentators soon started saying he was chartering a moderate course. The numbers cited above show he is no moderate.
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In a brand new op/ed featured today in the Fort Worth Star-Telegram, IPI president Tom Giovanetti tells taxpayers there’s still time to fight against the misnomered “economic recovery” plan.
Giovanetti writes:
“In the last six months the productive, taxpaying sector of the U.S. economy has been bullied and intimidated by its government as never before. Government mistakes, ranging from bad decisions about the money supply and lack of oversight of Fannie Mae and Freddie Mac to purposely distorting the housing and credit markets for political purposes, were responsible for the economic crisis.
But has anyone in the federal government yet apologized or accepted at least fractional responsibility for the disaster? Not that I’m aware of. Read More...
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Have You Gotten Your Farm Subsidy Yet? The Institute for Policy Innovation’s Dr. Merrill Matthews says just get in line … behind the Saudis.
The great thing about farm subsidies is they help so many people, like millionaires in Saudi Arabia, Hong Kong and the United Kingdom.
The Associated Press reports that a recent government study found that between 2003 and 2006, some 2,700 millionaires got farm-subsidy money, and some of them were Saudis.
Even though they don’t do a lot of farming in the sands of Saudi Arabia, U.S. taxpayers are apparently helping them out.
Back in the U.S., people are eligible for a farm subsidy if their average adjusted gross income doesn’t exceed $2.5 million.
So if you have been unsuccessful in getting a bailout from the federal government, you might try for a farm subsidy. If it’s good enough for a desert sheik, it’s good enough for us. Read More...
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In a new op/ed published in American Spectator, IPI’s Peter Ferrara analyzes the economic policies of the brand new Barack Obama presidency, writing:
“It is the same question the people asked the last time liberal Democrats held dominant power for an extended period -- the 1970s. Obama's political forebears back then produced both roaring inflation and soaring unemployment, along with stratospheric interest rates. If Obama and his liberal allies do that again, yes, indeed, the people will be asking what happened to government that works?
It is, in fact, the exact same question that Ronald Reagan asked the people in 1980, Are you better off today than you were four years ago? Read More...
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The new Congress has a housewarming present ready for President Obama—a whopping $825 billion spending package that reflects the majority’s spending priorities and also helps the new president fulfill some of his campaign promises.
At any other time and under any other administration, this would be called the largest pork-barrel spending bill ever to emerge from Congress. But in some sort of Orwellian “newspeak,” the spending package is being referred to as a “stimulus bill.”
Most economists believe there are certain actions the government can take to stimulate the economy in the short term. But this bill includes few of them, instead focusing on enormous increases in spending on education, experimental energy programs, mass transit, airports, lakes and parks, and a number of provisions that would probably embarrass even Keynes.
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With anticipated state revenues falling, more than a few fans of bigger Texas government are whispering about the need for a state income tax.
The Center on Budget and Policy Priorities, a liberal policy study group with tentacles in Texas and other states, says, “Texas needs to address its antiquated tax system.” The center suggests in another essay considering “new sources of revenue as part of a balanced approach to our budget.”
Expect more of the same if voters come to embrace Keynesian-Obamanomics responses to the economic crisis: that is to say, spend, spend, spend.
Odd. Texas, despite a recent jump in joblessness, isn’t having a “crisis.” The state government’s budget isn’t in the red, unlike the budgets of income-tax-levying states like New York ($15.4 billion) and California ($40 billion). Indeed, it’s been in the black for a while.
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In a brand new op/ed published in American Spectator, IPI director of entitlement and budget policy Peter Ferrara discusses what works in order to get the economy booming again.
Ferrara writes:
“We know how to get the economy booming again. The fundamental, practical principles of economics have worked over and over again, wherever they have been tried, throughout human history. Reagan's economic recovery program was based on these principles, with 4 concrete components reiterated over and over again throughout his campaign, and implemented after he was elected.
Those components were (1) across the board reductions in tax rates to provide incentives for saving, investment, starting and expanding businesses, job creation, entrepreneurship, and work, (2) removing the costs of unnecessary regulation, which today would especially mean Read More...
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Why Is Congress so Upset with Bernie Madoff? Dr. Merrill Matthews of the Institute for Policy Innovation says Congress has its own scam going...
Congress is upset with Wall Street investor Bernard Madoff for scamming thousands of trusting investors out of perhaps $50 billion.
But Congress has been doing the same thing for 70 years. It’s called Social Security.
Ponzi schemes like Madoff’s take money from current investors and hand it out to others. There are no real assets because the money is never invested.
That’s pretty much how Social Security works. The government takes current workers’ 12.4 percent payroll tax and immediately hands it over to current retirees. But Madoff’s $50 billion scam is chump change compared to the $2.2 trillion Social Security is supposed to have, but doesn’t.
Of course, most of those who trusted Madoff will lose their money. Read More...
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The media reports that President-elect Barack Obama plans to propose a whopping $310 billion in tax cuts as part of his overall $775 billion stimulus package. But the “tax cuts” Obama is considering are not going to stimulate anything, much like the rest of his stimulus package.
Tax cuts stimulate the economy when they involve reductions in tax rates. The reduction in rates encourages savings, investment, business creation and expansion, job creation, entrepreneurship, and work by allowing people to keep a greater percentage of the reward produced by these activities.
These types of cuts improve the economy not just by the dollar amount of the tax cut. When they occur at the margin, the improved incentives affect every economic decision and every dollar in the entire economy. Read More...
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IPI’s Peter Ferrara will appear as a guest today on “The Tara Servatius Show,” heard on Charlotte, NC’s WBT 1110 AM.
Peter will join Tara live at 4:00 pm EST to discuss President-elect Obama’s stimulus package and tax cut plan.
To listen live, visit WBT online. Read More...
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IPI director of entitlement and budget policy Peter Ferrara will be featured on talk radio today across the country discussing President-elect Obama’s tax cut and economic stimulus proposals.
4:05 pm ET: “Let’s Talk Frank” with hosts Lee and Terry Frank.
5:09 pm ET: “The Vicki McKenna Show” with host Vicki McKenna.
6:20 pm ET: “The Lars Larson National Show” with host Lars Larson. Click here to to find a station near you.
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How many times this past year did you hear some expert make some variation of the following statement: “We’ll never see gas prices below $X again.”
And yet, over the Christmas holidays, prices as low as $1.34 per gallon were spotted, and prices around $1.50 per gallon are typical at the time of this writing.
Ain’t a functioning market wonderful?
Back in August when gas prices were in excess of $4.00 per gallon, the cries were loud for government intervention.
The most popular among these proposals were windfall profits taxes on the oil companies and anti-gouging or caps on the price of retail sales. And it is remarkable how many otherwise intelligent people climbed on board. But whether by good sense, political reality or just plain dumb luck, these price-distorting policies were not enacted.
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In the January 12 edition of Forbes magazine, Dr. Merrill Matthews, resident scholar with the Institute for Policy Innovation, discusses why India’s economic policies have led to the nation’s shortage of vitamin C.
Matthews writes:
“The Times of India reports that the country is facing a growing shortage of vitamin C. The reason? The Indian government imposed price controls on the vitamin in an effort to make it more affordable. But pharmaceutical companies making vitamin C tablets have seen the cost of the raw ingredients soar by 300% or more. That means it's costing the companies more to make the tablets than they can charge for them. So they've quit making them. While that vitamin C shortage may not affect the U.S., the economic policy behind it could. Democrats in Congress think price controls will lower the cost of prescription drugs here. Read More...
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In a new op/ed featured in American Spectator online, IPI director of entitlement and budget policy Peter Ferrara discusses what free market conservatives should now do with the dawn of the New Year.
Ferrara writes:
“…We don't need a lot of new ideas here. Our substantive agenda is intellectually well developed and sound. And a lot of the supposed new ideas for conservatives we are hearing about these days are not good.
The fundamental theme for conservatives is freedom and prosperity, including the freedom for those who believe in traditional religious and moral values to live their lives in accordance with those values. For long-term political success, the emphasis needs to be on economic growth, because that is what moves conservative political support from the mid-40s toward 60%, enough for a governing majority.
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If ever there was a real world example that puts the lie to arguments against regulatory competition and in favor of regulatory centralization, Bernie Madoff's Ponzi Scheme did. As Wall Street expert Pam Martens puts it:
"Naturally, the Madoff money trail of special favors and exceptions leads straight to Washington. From 1998 through 2008, Bernard L. Madoff Investment Securities paid $590,000 lobbying Congress and the SEC, according to the Center for Responsive Politics. His lobby firm for most of those years was Lent, Scrivner & Roth, with Norman F. Lent III signing the disclosure documents in the House and Senate. One of Madoff's hot button issues during those years according to the disclosure documents was getting a single regulator. Read More...
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In a new op/ed featured on Forbes.com, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson discuss why “costly carbon will dampen an economy that’s already down.”
In the piece, ‘How to Be Environmentally and Economically Sound,’ the authors write:
“Barack Obama's energy and environment cabinet choices will likely also shape his economic policy.
Yes, the trio of Energy Secretary Steven Chu, climate change czar Carol Browner and Environmental Protection Agency Director Lisa Jackson could well outweigh the impact of financial leaders Tim Geithner, Larry Summers and Peter Orszag, thanks to the former group's determination to strip the U.S. economy of its carbon.
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In a new op/ed published in Investor’s Business Daily, IPI Cobden fellow Doug Bandow discusses a prominent bank’s fall to what Bandow describes as “economic extortion.”
Bandow writes: “'Victory for the Sit-in Strikers,' exulted the AFL-CIO blog. Let's hear it for economic extortion! The Bank of America was the victim of a concerted shakedown that may soon be replicated around the country. Even President-elect Obama supported this new example of Chicago blackmail." To read the full op/ed, please visit Investor’s Business Daily online. Read More...
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In a new op/ed published in American Spectator online, IPI director of entitlement and budget policy Peter Ferrara discusses the work of the late Robert Nozick, “Anarchy, State and Utopia,” and the superiority of free-market capitalism.
Ferrara writes:
“The most intelligent person I have ever met was the late Robert Nozick, formerly the Chairman of the Harvard Philosophy Department. When he lectured, his mind seemed to race with the energy of a champion thoroughbred. Following the wisdom of Churchill, Nozick was committed to Marxist revolution at the age of 20. But continuing his study with the intense pursuit of truth, he became a capitalist libertarian long before the age of 40. He wrote one of the greatest books of political philosophy of all time, Anarchy, State and Utopia. Read More...
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IPI director of entitlement and budget policy Peter Ferrara joins other noted economic experts in a National Review symposium discussing the “Christmas season of deflation.”
Ferrara writes:
“A central point of Milton Friedman’s work was that the Fed caused the Depression by allowing the money supply to collapse, causing sharp deflation. The Fed should maintain a stable effective supply of money, including raising the supply to offset any declining velocity. But the real solution is a stiff dose of Reaganomics, which would get the real sectors of the economy booming again, in turn unfreezing the credit markets as lenders are induced to participate in the boom, aided by a new worldwide influx of investment capital. Read More...
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IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson are featured together with a new op/ed in TCS Daily discussing the ailing U.S. economy and the subsequent response from the government in repeated industry bailouts, entitled “Casino Socialism.”
Pieler and Laurson write:
“High-risk behavior is endemic when governments override market decisions. Some good will come (on the stopped-clock theory: right twice a day), but no government can deploy its forces with the efficiency market discipline provides. That is a moral problem, too, as planned inefficiency by definition sacrifices life-enhancing wealth creation, jobs, and innovations that raise living standards. Unfortunately, governments make mistakes which scarcely get corrected in the same manner that markets punish bad decisions, poor products, or shoddy service. Read More...
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IPI director of entitlement and budget policy Peter Ferrara is featured with a new op/ed in American Spectator discussing the ailing U.S. auto industry, entitled “Big Three Weekend at Bernie’s.”
Ferrara writes:
“Washington is not bailing out the Big Three automakers. It is nationalizing them. Wake up and smell the coffee. Who do you think is going to be designing the next generation of auto products from these companies? The corporate leadership or the Congressional leadership? After being rescued by billions and billions in government handouts, will the car companies be able to deny Congressional bigwigs anything they want in the design of their cars? Fuel economy standards, hybrid technology, electric cars, cars that run on ethanol, natural gas, switch grass, Bermuda grass, fine Colombian weed. Read More...
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During the presidential campaign Barack Obama claimed that under his tax plan 95 percent of working Americans would get a tax cut.
But given where President-elect Obama’s health care reform initiative is likely heading, it would be more accurate to say that every American will see a tax increase.
Obama was very careful to say during the campaign that he did not want to require every American to buy health insurance—known as an individual mandate—or pay a fine, as his Democratic challenger Hillary Clinton wanted to do.
Rather, he claimed he would only impose a health insurance mandate on children. Of course, that’s a distinction with only a minor difference—since children don’t buy their own health insurance, their parents do.
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In a brand new op/ed in American Spectator online, IPI's Peter Ferrara points out that shortly following the Bush Administration's failed stimulus package, President-elect Barack Obama is reportedly on the verge of assembling a stimulus package of $500-800 billion, running the deficit on his proposed budget plan up to $1 trillion.
Ferrara writes:
"This ‘stimulus’ package is not going to produce economic recovery. Economic prosperity is not based on government spending. It is produced by incentives for economically productive activity, such as saving, investment, entrepreneurship, starting or expanding businesses, job creation, and work, along with other pro-growth policies (the rule of law, property rights, freedom of contract, sound money, free trade). Those incentives are strengthened by tax rate cuts, reduced regulatory costs, and other measure Read More...
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In a brand new op/ed published in South Africa’s Business Day, International Affairs Forum editor-in-chief Jens F. Laurson and IPI senior fellow George Pieler discuss that while the news is focused on the current transition period in Washington, it is important to consider President Bush's final words of advice on the financial crisis, free trade and open markets.
Pieler and Laurson write:
"Here Bush’s advice and policy stance is the only right one, and his words of warning might be the most pertinent, the most needed, of his presidency…
Free trade, lest we forget, is the foundation of that global growth we are so desperately trying to keep alive."
To read the full op/ed, please visit Business Day online. Read More...
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Want Your 401(k) to Lose Even More Money? The Institute for Policy Innovation’s Dr. Merrill Matthews says it could … if Congress takes control of it.
Tough economic times can lead to some really dumb proposals.
Take, for example, Democratic Congressman George Miller, who thinks that 401(k) accounts are an “inadequate vehicle” that “has not been terribly successful.”
He’s referring, of course, to the recent stock market decline that has dramatically reduced most accounts’ values.
Miller appears to think that handing your retirement funds to the federal government, as we do our Social Security contributions, would be safer.
One economist even testified before Miller that once the government gets your money, it should invest it globally in risky assets to get high returns, while guaranteeing you 3 percent.
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In a brand new op/ed published today in American Spectator online, IPI’s Peter Ferrara discusses how capitalism was born in America after the Pilgrims of the Mayflower, suffering under their own socialist system, instituted successful reforms.
Ferrara writes: “As indicated, this experiment in private agriculture was hugely successful, with the colony's agricultural output soaring. But the settlers still increasingly complained that the colony's remaining communal practices and lack of complete private property were constraining and unfair… Thus was capitalism born in America, sentimental notions of socialism having been tried and failed, not only as a matter of economics, but also because it was seen as a regime of unjust restrictions on personal liberty. Read More...
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IPI’s Peter Ferrara joins a host of noted economic experts in a symposium featured on National Review Online discussing the new Obama administration and the economic crisis.
Ferrara writes:
“The Obama economic team is more moderate than I had feared. But instead of Hugo Chavez socialists, they are still hopeless liberals. They are going to try to solve the financial crisis with unprecedented Keynesian overspending and deficits, proven to fail, rather than Reaganite supply side economics, proven to work. They have a blind spot for global warming regulation and central economic planning for energy, which is enough to crush the economy by itself, and produce blackouts and gas rationing. In the long run this crowd will bring back ruinous inflation as well. Read More...
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Many people are bemoaning the current financial crisis facing most states.
We at IPI, on the other hand, tend to view it as an opportunity … for states to get their fiscal house in order.
The Kaiser Foundation recently published a Center on Budget and Policy Priorities assessment of each states’ fiscal plight. As you cans see here, 37 states plus Washington DC, are facing a total 2009 budget gap of $72 billion.
Not that you’d notice from some of the states’ recent fiscal actions. It was just over a year ago that several of the states were demanding that the Bush administration allow them to increase eligibility for the State Children’s Health Insurance Program (SCHIP) up to 400 percent of the federal poverty level.
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International Affairs Forum editor-in-chief and IPI senior fellow George Pieler are featured in a new op/ed in TCS Daily discussing why Asia and its markets may be the ‘chief beneficiary’ of today’s global economic turmoil.
Laurson and Pieler write: “For President-elect Obama, the danger of forgetting such basic truths is acute. He has signaled his belief in a winners-vs-losers concept of markets. A global recession creates losers globally, but there are those who profit in times of distress. In the mid-term, Asia may be the chief beneficiary of this turmoil, thanks to movements in the West that will exacerbate the crisis while trying to fight it.
Among the latter, are France's habitual, knee-jerk protectionist reactions to any crisis, the undue interference of German politicians in coercing banks into being 'rescued', and last but far from least Read More...
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IPI director of entitlement and budget policy Peter Ferrara is featured today in The Wall Street Journal with Newt Gingrich in brand new op/ed discussing why President-elect Obama’s tax credits won’t stimulate the economy.
In “Let's Have a Real Middle-Class Tax Cut,” Ferrara and Gingrich write:
“President-elect Barack Obama is right: America needs a real and meaningful middle-class tax cut. Unfortunately, despite the rhetoric, that is not what his proposals offer. Mr. Obama's tax plan includes creating or expanding nine or more federal income tax credits mostly focused on low- and moderate-income earners, with an estimated cost of $1.3 trillion over 10 years. These tax credits are provided for certain social purposes, such as child care, health care, education, housing and retirement. Read More...
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While the conventional wisdom among most Democrats and many pundits is that the Big Three auto manufacturers are too big to fail, we wonder if they are too big not to fail.
It’s time to say hello to Chapter 11 and goodbye to those suffocating contracts with labor, dealers and suppliers.
We need to stress here that the U.S. auto industry is not in trouble, just the unionized auto industry.The Big Three have huge legacy costs (including retiree pension and health care benefits). While foreign manufacturers on U.S. soil pay about the same in wages, the U.S. manufacturers have much higher benefits packages. And the companies have been slow to adopt quality and design enhancements.
The result has been declining U.S. sales for years—not just in the past few months, which might be forgivable. Read More...
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IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens Laurson are featured today on the dangers of economic protectionism in Atlantic Community.
Pieler and Laurson write:
“The first dangerous results from governmental overreaction to the financial crisis are beginning to show. Bailout bills have counterproductive effects as political pressure is even brought on institutions that do not need the governmental help. Following protectionist approaches could lead to a harmful and tragic economic outcome. Last month we wrote about the dangers of the well intended and plausibly-argued necessity for government intervention into the banking sector. The salient danger we cited was "[o]verreaction and overregulation. Read More...
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On Oct. 21 the leftist government of Argentina announced its plans to nationalize the country’s private pension plans.
In 1994, the then-conservative government set up 10 private pension plans, which currently have about $30 billion in assets, and take in $4 billion to $5 billion annually.
That’s a lot of money, and socialist President Cristina Kirchner—it’s OK to use that term for HER, isn’t it? —needs a lot of money because tax revenues are dropping while government largesse is rising.
But, you say, what does that have to do with you and your 401(k)?
Well, no good money-grab goes unnoticed by a big-spending Congress that also needs new revenue streams. Recently, Rep. George Miller, Democratic chairman of the House Education and Labor Committee, heard testimony from economist Teresa Ghilarducci of the New School for Social Research in New York.
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IPI senior research fellow Bill Murchison is featured in the Dallas Morning News discussing what conservatives should do now the election is over to further the ideals of freedom, opportunity and responsibility.
Murchison writes:
“A conservative party – which is what the GOP must remain, if only to offset the occasionally terrifying liberalism of the Democrats – doesn't instinctively do 'change.' It's better at affirming. Affirming what, then? Freedom. Opportunity. Personal responsibility. Read More...
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IPI director of entitlement Peter Ferrara and Jack Kemp are featured today in Human Events discussing how Barack Obama’s tax hike plans are already adversely affecting the U.S. economy.
Ferrara and Kemp write:
“Are Barack Obama’s proposed tax increases adversely affecting our financial markets? We say yes, unambiguously. The senator has done a masterful job detracting attention from his tax increases with his $500-per-worker tax credit supposedly for 95 percent of Americans.
Obama has set forth more than half a dozen refundable income tax credits targeted to low- and moderate-income workers for child care, education, housing, welfare, retirement, health care and other social purposes.
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IPI resident scholar Dr. Merrill Matthews will appear Thursday morning at 7:40 am PST on CBC-British Columbia’s “Early Edition” radio program, hosted by Rick Cluff.
Dr. Matthews will discuss the results of the presidential election, as well as the national and international economic issues the Obama administration will be facing.
To listen live, visit Early Edition online. Read More...
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IPI director of entitlement and budget policy Peter Ferrara offers perspective on the heels of Election Night in a new op/ed featured today in American Spectator, entitled "Catch a Falling Flag."
Ferrara writes: "In 1980, I had a vision of an American flag on a pole on top of a hill, starting to fall over. I was looking for a hand to reach out and grab it before it fell to the ground. I am having that same vision now. The economy is weak and trending downward because of the bursting of the housing bubble. But the agenda of the ultraliberal new President and Congressional majorities is everything that could possibly be wrong for this new economic environment -- higher taxes, especially higher marginal tax rates, explosive increases in government spending, expensive new regulatory burdens for the economy, protectionism closing down free trade. Read More...
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For years the Institute for Policy Innovation has supported fundamental tax reform, such as the suggested “flat” income tax. There are, of course, other tax reform plans as well that accomplish the goals of a tax code that is low, flat, broad-based, simple, neutral, and rewards investment without trying to manipulate taxpayer behavior.
But we increasingly wonder whether it remains possible for the country to move to such a system, even with favorable political winds. The issue is the growing progressivity of our current income tax system, and the trend toward using the tax code for redistribution.
Notwithstanding all the liberals’ and Barack Obama’s claims to the contrary—that only the rich get the tax breaks—the bottom 40 percent of workers pay no—zero, nada, zilch—income tax. And that 40 percent is trending higher.
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IPI director of entitlement and budget policy Peter Ferrara is live today at noon EST on the G. Gordon Liddy national radio show to discuss how the U.S. landscape will change under the policies of an Obama administration, and how the Democratic candidate misled Joe the Plumber on tax cuts for the working and middle classes.
To listen live, visit Radio America online. Read More...
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| Peter Ferrara will join Lee and Terry Frank on ‘Let’s Talk Frank’ live today at 3:30 am EST to discuss the economic landscape under the policies of an Obama administration. Listen live online at leeandterryfrank.com. Read More...
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| IPI resident scholar Dr. Merrill Matthews appears in the Nov. 17th edition of Forbes magazine discussing the Congressional spending records of John McCain and Barack Obama. Matthews writes in ‘Other Comments’: “The National Taxpayers Union Foundation recently looked at the spending records of presidential candidates Barack Obama and John McCain. During the first session of the 110th Congress John McCain sponsored or cosponsored 22 bills, which would have increased federal spending by $8 billion annually. Barack Obama, by contrast, sponsored or cosponsored 114 bills, increasing federal spending $75 billion annually. That's a little more than $9 of government spending for Obama for every $1 for McCain.” Read ‘Other Comments’ in Forbes magazine, or at Forbes.com. Read More...
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| IPI director of entitlement and budget policy Peter Ferrara is cited today in M. Jay Wells article, ‘Why The Mortgage Crisis Happened,” featured today in Investors Business Daily. Wells writes: “With the prospect of expansions and mergers threatened, banks settled cases and, significantly, increasingly made loans they would not have normally made. The net effect, as ACORN litigation increased, was that credit standards lowered. At first, the GSEs resisted purchasing these risky mortgages. But eventually the Clinton administration instructed them to substantially increase the percentage of these mortgages in their portfolios. Government-backed Fannie Mae and Freddie Mac of the Clinton reforms became ‘a feeding trough,’ in the phrase of Peter Ferrara, director of budget and entitlement policy at the Institute for Policy Innovation... Read More...
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In a new op/ed on American Spectator, IPI director of entitlement and budget policy Peter Ferrara discusses what the policies of an Obama presidency may have in store for the American economic landscape.
Ferrara writes: “Raising taxes, indeed sharply raising every major Federal tax, increasing government spending by unprecedented trillions of dollars, and increasing regulatory costs by over another trillion dollars through Obama's global warming energy plan, is not the way to restore the American economy to prosperity. This is the road to economic disaster... Read More...
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So what do you do if you’re Barack Obama and you’ve just been elected president of the United States and you’ve promised to spend a gazillion dollars to improve education and health care and the infrastructure and to hand out “tax cuts” (many of which will actually be income transfers) to 95 percent of the public?
And you’re fiscally constrained because the government is bailing out or buying out banks left and right?
What you need is some serious new inflows of cash, you need it fast, and, contrary to everything you’ve claimed on the campaign trail, you know you can’t get it all by dinging the people making over $250k.
Fortunately—for a President Obama, that is—Senator Edward Kennedy (D-MA) is pushing legislation that would create that government income stream. And a really BIG stream at that.
Read More...
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In the Cato Institute’s recent “Fiscal Policy Report Card on America’s Governors: 2008” author Chris Edwards gave Florida Governor Charlie Crist an “A” for his tax and spending proposals and accomplishments. In fact, Governor Crist was at the top of his class, earning Cato’s highest score (84 out of 100) among all the governors. Crist’s score was almost one-fourth higher than the second-ranking governor, Mark Sanford of South Carolina, who also received an “A” but managed to earn only 64 points out of a possible 100. Mr. Edwards clearly graded on a curve. The top ranking “F” student among the governors was Jodi Rell of Connecticut who earned 39 points.
Read More...
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In a brand new op/ed featured today in National Review Online, IPI director of entitlement and budget policy Peter Ferrara goes behind the 95 to explain Obama’s new tax welfare.
Ferrara writes:
"Barack Obama says he plans to cut taxes for 95 percent of American workers. That sounds terrific, but there are three problems. One, it is meant to draw attention from the real core of the Obama tax plan: proposed increases in every major federal tax. Two, the structure of the cuts will create perverse incentives. And three, many of the people receiving ‘tax cuts’ don’t pay taxes to begin with, meaning they’ll be in effect getting welfare.
Read More...
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As best we can tell, the free market had little or nothing to do with the banking crisis that has caused panic throughout the world.
That blame can, to varying degrees, be handed to: the Community Reinvestment Act; the efforts of Congress and several administrations to expand low-income families’ access to home loans; a prolonged period of low interest rates; political protection from several members of Congress who were feeding at the trough of Fannie Mae and Freddie Mac; the mark-to-market accounting requirement; some innovative new credit vehicles; and possibly some corruption among private and perhaps public figures.
How any of that is the fault of the free market is a mystery, especially given the already high levels of regulatory control. As The Economist recently pointed out, “After all, the American mortgage market is one of the most regulated parts of finance anywhere.…”
Read More...
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On Fox News.com, IPI resident scholar Dr. Merrill Matthews goes up against AFL-CIO president John Sweeney to explain why John McCain is better for the economy, and not Barack Obama.
Matthews writes:
“There are at least three necessary ingredients for jumpstarting a faltering economy. John McCain embraces all three; Barack Obama shuns them. It's just that simple.
Free Trade -- Economist Milton Friedman once said that of all the pro-growth policies a government should adopt, free trade is the most important. Former Federal Reserve Bank Chairman Alan Greenspan has said that taxing trade between countries makes no more economic sense than taxing trade between states...”
To read the full debate between Dr. Matthews and Sweeney, please visit Fox News online. Read More...
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So you thought Congress may have learned its lesson about creating huge entities that will need to be bailed out at taxpayer expense? If you did, you were wrong.
From the same folks who brought you a global financial meltdown triggered by the institutions they created in an industry under heavy regulatory control, Congress is considering (as is the Federal Communications Commission) a proposal to hold a restricted auction on spectrum to establish one national wireless provider—a government-fashioned, government-favored firm in the tradition of Fannie Mae and Freddie Mac.
In IPI’s report entitled “Should the U.S. Favor a Free Nationwide Wireless Network Provider?” IPI adjunct fellow and communications policy specialist Solveig Singleton says, “This kind of company would not be allowed to fail and therefore sets up a future bailout at taxpayer expense.”
Read More...
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IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson are featured today with a new op/ed entitled “Too Much Political Meddling Will Only Prolong the Financial Crisis.”
Pieler and Laurson write:
”The economic crisis has brought harmony to trans-Atlantic affairs. Europeans might secretly blame the calamity on US “Casino Capitalism,” but they know they are rowing in the same boat and so cooperation is the order of the day. The stock markets treat this as good news now, but it could easily do more harm than good. Economic crisis management by the state can be necessary, as it is now, to restore trust in the markets and the facilitators of commerce - the lenders. Mis-trust in its psychological aspects sometimes trumps rational behavior. Read More...
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Because so many members of Congress have drunk deeply from the big-spending troughs of Washington—especially after many of them campaigned as fiscal hawks—we think it’s time for them to step forward, confess their failures and get right with the U.S. Constitution. In an effort to help them mend their big-spending ways, we offer this “12-Step Plan for Congressional Spendaholics.”
- I admit that I have become powerless over spending taxpayers’ money—and so my political promises have become meaningless.
- I have come to believe that only a power greater than myself—the U.S. Constitution, and maybe voter rebellion—can restore me to sanity.
- I have made a decision to turn my life over to the guidance of sound economic and fiscal principles. Read More...
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In a brand new op/ed published today by the DC Examiner, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson write:
“When Congress and Hank Paulson agreed government should relieve financial firms of bad assets, the world of global finance breathed a sigh of relief. Socializing the cost of liquidating ‘toxic assets’, mostly bad-mortgage paper, is supposed to get credit flowing again and prevent things from getting worse. Will it? When the House voted ‘no’ on this exceptional experiment in bipartisanship, the market went way down. When the Senate voted ‘yes’ on its heavily sweetened version of the same thing, the market went way down. When the House finally approved the behemoth… the market went down. Since then the Dow Jones has dropped over 1,000 points. Read More...
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In a brand new op/ed published today in The American Spectator online, IPI director of entitlement and budget policy Peter Ferrara discusses a prescription for a “fatal economic heart attack for America.”
Ferrara writes:
“Obama promises across the board tax increases, America's corporate tax rates are already the second highest in the industrialized world, prices are already rising and the dollar is declining, America is turning its back on free trade, the federal budget is already spiraling out of control and entitlements threaten far worse, regulations already strangle energy production, producing high energy costs for the economy, cap and trade global warming regulations threaten to shut the economy down, unions calling for legal powers to force unionization, the left campaigns for costly but low quality socialized medicine, these are all indicators of a fatal Read More...
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Who’s the Big Spender: Obama or McCain? The Institute for Policy Innovation’s Dr. Merrill Matthews says just look at their Senate records...
The National Taxpayers Union Foundation recently looked at the spending records of presidential candidates Barack Obama and John McCain.
During the first session of the 110th Congress:
• John McCain sponsored or cosponsored 22 bills, which would have increased federal spending by $8 billion annually.
• Barack Obama, by contrast, sponsored or cosponsored 114 bills, increasing federal spending $75 billion annually. And vice presidential candidate Joe Biden wasn’t far behind.
That’s a little more than $9 of government spending for Obama for every $1 for McCain.
Read More...
Big Spenders |
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The U.S. Treasury's bailout of the banking industry has dominated the news for the past month, and will probably be the dominant factor in public policy decisions for at least the next four-year presidential term.
The bailout will affect regulatory policy, tax policy and the funds available for any number of other programs, to say nothing of affecting our ability to deal with any future crisis that might arise.
Americans are rightly concerned not only about the cost of the bailout, but of the precedent of letting actors in the market make enormous profits while having the risk backstopped by taxpayers. And taxpayers are disturbed by the fact that elected officials were repeatedly warned about these risks and problems, but did nothing.
But if you think this one is bad, we've got news for you—this mortgage bailout is only the first, and the smallest, of a series of bailouts that are going to be necessary in the future. Read More...
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When it comes to insurance premiums, Texas has a system of price controls lite. In theory, if insurance companies find it necessary to raise premiums under the Texas “file-and-use system,” the company may raise rates immediately once they have notified the state. While the state regulator may disapprove the rate increase and force the company to roll it back, the burden is upon the insurance department to justify its price fixing. In fact, the situation is much worse than it appears on paper. Although Texas is a “file-and-use” state, it actually operates more like a de facto prior-approval system much of the time.
Even on paper, this system is far from ideal. Read More...
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"If you came here because you believe in limited government and the freedom of the American marketplace, vote in accordance with those convictions. Duty is ours, outcomes belong to God," said Rep. Mike Pence (R-IN) as he implored his fellow members of Congress to place a priority on solving a problem rather than just passing legislation.
Vote in accordance with convictions they did, demonstrating true leadership, and perhaps saved the country from a terrible deal.
Political opportunism led Speaker Nancy Pelosi (D-CA) to bash not only Mr. Pence and others like him for opposing the bail out plan, but also the last decade of pro-growth policies.
But the real reason for the "no" votes is that many recognized a bad deal for the American taxpayer—confirmed by the flood of calls from their constituents who don’t like the deal.
Call it representative democracy.
Read More...
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Can Increased Prevention Save Health Care Money? The Institute for Policy Innovation’s Dr. Merrill Matthews says it will more likely cost money—and freedom...
Both Barack Obama and John McCain say they will reduce health care costs by focusing on prevention.
That means encouraging vaccinations, mammograms, prostate screening and other tests. And that’s good.
But while catching and treating diseases early is cheaper than waiting until they become a medical crisis, many actuaries say we can spend a lot more testing people than we’ll ever save catching diseases early.
Prevention also means helping people exercise, lose weight and stop smoking.
Of course, getting people to live healthier lifestyles would save money, but do you really want the government scrutinizing and even dictating your eating, drinking and exercising habits?
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Prevention |
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The American people are being asked to spend an incredible amount of money and to yield unprecedent powers to the federal government in order to stave off a liquidity crisis being predicted by people we don't trust.
In our own lives, we expect to suffer the downside of risk and markets, and we are suspicious that politicans are climbing over themselves to insulate the well-connected from the natural consequences of their actions.
Further, we know that, if a massive federal bailout package becomes reality, the well-connected and the powerful will find ways to game the system and enrich themselves and the people they attend the opera with, all at the expense of working Americans who will pay the bill.
Further, we know that this is only the first of several such bailouts that we will be expected to fund because of the failure of our elected officials. Just as Congress and the White House have been warned for decades about Fed policy, GSE risk and Read More...
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Peter Ferrara will discuss his recent oped, featured in the American Spectator, today on Little Rock's 'The Dave Elswick Show,' at 3:10 pm CT.
Click here to listen live. Read More...
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IPI director of entitlement and budget policy Peter Ferrara will appear live Thursday morning at 10:33 am ET on ‘The Right Balance’ with Greg Allen
Ferrara will discuss how the current financial crisis on Wall Street is a result of actions from the Federal Reserve, Fannie & Freddie, and not by free market policy and deregulation.
You can read Peter’s new op/ed on this issue in the American Spectator online by clicking here. Read More...
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IPI director of entitlement and budget policy Peter Ferrara will appear live tonight at 7:30 pm ET on The David Boze Show, broadcasting from Seattle-Tacoma talker KTTH, ‘The Truth.’
Ferrara will discuss how the current financial crisis was sparked not by free market policy and deregulation, but by actions from the Federal Reserve, Fannie & Freddie.
Read Ferrara’s new op/ed on this issue in today’s edition of the American Spectator online. Read More...
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In a brand new op/ed featured today in American Spectator online, IPI director of entitlement and budget policy Peter Ferrara explains the roots of today’s financial crisis, and discusses a ‘winning platform’ to get America back on the road to recovery.
An excerpt:
“The financial panic gripping America right now, and threatening to throw the entire economy into a serious tailspin, was not caused by corruption on Wall Street, deregulation, free market economic philosophy, the 1999 repeal of the outdated, 1930s Glass-Steagall Act, or any of the other far left talking points advanced by the Obama campaign.
The root of the problem began with bad, mismanaged monetary policy by the Fed. Earlier this decade, the Fed overexpanded money and credit, reflected in historically low interest rates for far too long. Read More...
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In a prior TaxByte, we saw that Obama’s tax plan would increase marginal tax rates for just about every major federal tax. So how is it he claims to be a tax-cutter?
Obama combines these comprehensive tax increases with a slew of refundable tax credits primarily for low- and moderate-income workers, which he calls middle-class tax cuts.
“Refundable” means that if the worker doesn’t have enough tax liability to take advantage of the credit, the government sends the worker a check to cover the full amount of the credit. So if the tax credit is $1,000, but the taxpayer would otherwise only pay $200 in income taxes, the credit covers the $200 tax bill and the government sends the taxpayer a check for the remaining $800.
If the taxpayer pays nothing in federal income taxes, the government would send him a check for the whole $1,000.
Read More...
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When things go wrong, politicians revert to form, not reform. Incumbents claim things are not nearly as bad as they feel and blame people for whining. Challengers claim things are a whole lot worse than they appear and blame incumbents for not doing enough to fix them. Both incumbents and challengers offer up new interventions, redistribution schemes, more government spending, taxing and regulating to make everything better.
Government intervention creates problems worse than those it seeks to correct, and it stimulates heightened political demands, which call forth more government intervention to “fix” the problems and satisfy the political demands the interventions create. The more government fails, the bigger it grows; the bigger it grows, the more it fails. Read More...
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Will Barack Obama Cut Most Americans’ Taxes? Dr. Merrill Matthews of the Institute for Policy Innovation says he’s really just expanding welfare...
Democratic presidential candidate Barack Obama says that under his tax plan, 95 percent of Americans will get a tax cut.
But is it really a tax cut?
Currently, workers in the bottom 40 percent of income pay little or no income taxes. So how does a worker pay less tax than zero? Obama’s answer is a “refundable” tax credit.
For example, if the government gives workers, say, a $1,000 refundable tax credit, those who owe no income taxes will actually get a check for $1,000. Those who owe, say, $600 in taxes won’t pay any tax and will get a check for the $400 difference.
In other words, Obama would take money from some taxpayers and hand it out to others. Folks, that’s not a tax cut; that’s welfare. Read More...
Tax Cuts |
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Read IPI director of entitlement and budget policy Peter Ferrara’s brand new op/ed featured in National Review Online, “The American Association of Never Retiring Taxes and Spending.”
An excerpt:
“During both the Democrat and Republican conventions, the American Association of Retired Persons (AARP) spent a fortune running ads over and over with very troubling personal stories of individuals who were bankrupted with medical bills even though they thought they had health insurance. Some apparently even lost their houses as a result. The ads didn’t offer a solution. Their theme was simply “something needs to be done about it.”
Not enough details were given to understand exactly what happened in these cases. Generally, the individuals involved seemed not to understand the insurance coverage they had, or thought they had. Read More...
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Last night on The Charlie Rose Show, Maurice (Hank) Greenberg pleaded for a federal bailout of American Internation Group (AIG), of which he is the major stockholder and former CEO. Greenberg said part of the problem that caused the current financial crisis is that "there is no federal regulator of insurance." He didn't say, "There is no option of a federal regulator, as there is with banks;" he said "There is no federal regulator." He went on to say there ought to be a single federal regulator of insurance and recommended that Congress create a single federal regulator of the financial services industry—the Fed—which should include insurance.
Read More...
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Is This a Do-Nothing Congress? Dr. Merrill Matthews of the Institute for Policy Innovation says yes, and that may be the good news....
The Wall Street Journal says this Democratic-led Congress has passed 294 bills, fewer than any Congress in the last 20 years.
But it’s also passed the largest number of resolutions—1,932.
Resolutions are usually expressions of support for something and don’t do much harm—or good. Taxpayers for Common Sense has identified its top 10 list. They include:
- Designating July as National Watermelon Month;
- Recognizing the 70th anniversary of the Idaho Potato Commission;
- And naming June 30 National Corvette Day.
Democrats want to postpone passing real laws because they think a new President Obama will sign whatever they pass.
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Resolutions |
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Treasury Secretary Henry Paulson finally got one right.
According to news accounts, the secretary had a looooong weekend.
It started Friday when he and Federal Reserve Bank Chairman Ben Bernanke apparently called in the “sages” of Wall Street to inform them that there would be no more bailout money.
They were told, “There is no political will for a federal bailout,” according to The Wall Street Journal, and that they would need to come back Saturday morning and figure out what they were going to do—with the administration’s assistance, but without the taxpayers’ money.
For our part, we wish Paulson had taken this stand last March with Bear Stearns, or even last month with Fannie Mae and Freddie Mac. But better late than never. Read More...
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Are You Pumped Up? The Institute for Policy Innovation’s Dr. Merrill Matthews says more drilling means lower taxes.....
The country’s facing a whopping $400 billion budget deficit next year.
That’s prompting Democrats to say we need to raise taxes.
But there’s a better way: in the words of Newt Gingrich, “Drill here, drill now.”
The country makes money from oil production. The Wall Street Journal estimates that drilling for oil offshore and in Alaska could yield about $2 trillion for the government over 30 years.
And U.S. oil companies pay taxes on the money they make. Exxon paid $65 billion in taxes over the past five years—more than it made in profits.
Drilling here reduces the money we give to other oil-producing countries and keeps those royalties, taxes and jobs in the U.S.
In short, we don’t need to pump more taxes, just more oil. Read More...
Drilling |
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This week, the U.S. federal government has seized control of the country’s two major home-mortgage funding agencies, the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.
We predict lots of disagreement in coming days over whether or not the feds should have taken this action. After all, the two agencies have not yet failed, and have both claimed sufficient liquidity to handle existing obligations. And the result of the fed’s actions is the disappearance of billions of dollars in shareholder value, which we're guessing won't happen without an outcry.
(Don't forget, if you have a 401k or an IRA, the odds are very strong that you owned stock in either or both Fannie Mae and Freddie Mac.)
But regardless of whether or not you agree with federal seizure of control, the action was the endgame of a dramatic policy failure with regard to the two institutions. Read More...
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IPI senior fellow Dr. Lawrence A. Hunter is featured in the Fort Myers, Florida News-Press with a brand new op/ed on insurance regulation, “Gov. Crist is Trying to Play FDR.”
An excerpt:
”Would someone please tell Gov. Charlie Crist he is not Franklin Delano Roosevelt, and that he won't have any more success setting the price of insurance by executive order than FDR had setting the price of gold every morning over eggs in his White House bedroom? During the Great Depression, Treasury Secretary Henry Morgenthau would meet with President Roosevelt every morning in Roosevelt's bedroom to set the U.S. government's bidding price for gold. According to a Time magazine news account at the time, "On what principle they fixed their premium above the world (gold) price remained a deep secret." Read More...
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Once again this year, a continuous late-summer news barrage about the devastation wreaked by hurricanes and tropical storms reminds us how vulnerable people living in coastal areas are to Mother Nature’s vagaries. The only thing that stands between people living there and the risk of financial ruin is their homeowners insurance, and that protection is threatened by the vagaries of bureaucracies state government have created to fix prices and regulate the insurance industry in America today.
Because state insurance regulators in coastal states like Florida insist on fixing insurance premiums below actuarially sound levels, insurance companies are having to cancel old policies and must refuse to write new policies in particularly vulnerable areas. This perfectly rational economic response to irrational government policies creates thousands of homeowners-insurance refugees.
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Is the Spirit of the Boston Tea Party Alive and Well? Dr. Merrill Matthews of the Institute for Policy Innovation says something’s brewing in the Bay State.......
Massachusetts is often referred to as “Taxachusetts” because the state’s taxes are so high.
Now the Committee for Small Government wants to change that image by pushing legislation called the Small Government Act, which Bay Staters will vote on in November.
The legislation repeals the state income, wage and capital gains taxes. That’s a $12.5 billion state revenue cut—with no other revenue to replace it.
That reduction would force state legislators to seriously rethink their financial priorities. But it would also leave that money in the hands of families, where it will surely be better spent.
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Bostonians |
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IPI director of entitlement and budget policy Peter Ferrara has a brand new op/ed featured today in the American Spectator online. In the piece, "Morning in America," Ferrara discusses the tax and fiscal policies of the McCain-Palin ticket.
An excerpt:
"With one bold masterstroke, everything that was so wrong with American politics has been made right. It is as if Frodo just dropped the Ring of Power in the lake of fire at Mount Doom, and, as the third book of The Lord of the Rings reports, "There was a roar and a great confusion of noise...Towers fell and mountains slid, walls crumbled and melted, crashing down....Then all the Captains of the West cried aloud, for their hearts were filled with a new hope in the midst of the darkness."
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Democratic presidential nominee Barack Obama doesn’t just pledge to raise taxes; he proposes to raise the most economically damaging marginal tax rates of every major federal tax:
Obamanomics would: - Raise individual income taxes, increasing the top two income tax rates, with the top rate climbing by 13 percent, to almost 40 percent. This tax increase particularly hits small business—which creates the most new jobs in America—as small businesses often pay taxes under the individual rather than corporate income tax.
- Raise the top capital gains tax rate by 33 percent, to 20 percent.
- Raise the top dividends tax rate by 33 percent, to 20 percent.
- Increase Social Security payroll taxes by 16 percent, to 32 percent, for families earning over $250,000 a year. Read More...
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Why do some companies move offshore?
The Institute for Policy Innovation’s Dr. Merrill Matthews says Congress should learn a lesson from them.
Senator Hillary Clinton is mad—that is, angry.
She claims a growing number of companies are flocking to places like the Caymen Islands to avoid paying U.S. taxes. And she wants to punish them by denying them any government contracts.
But she never addresses why some companies move offshore. The U.S. has one of the highest corporate tax rates in the world. And some Democrats want to raise them even higher.
Clinton says she wants to reward “responsible companies” that stay inland.
Of course, Exxon does just that, yet many Democrats want to punish it and other oil companies with a huge “windfall profits tax.”
Read More...
Tax Breaks |
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| Catch Peter Ferrara, IPI director of entitlement and budget policy, live today discussing more economic policy differences between presidential hopefuls Barack Obama and John McCain. Tune in to Seattle-Tacoma’s “The David Boze Show” on 770 AM KTTH at 7:30 pm Eastern/4:30 pm Pacific. To read Peter’s new op/ed co-authored by Jack Kemp on National Review Online, “Which Way To Prosperity?” click here. Read More...
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Those famous lyrics from “New York, New York” just might have to be changed, at least for online retailers.
“Start spreading the news
I'm leaving today
I [don’t] want to be a part of it, New York, New York
These vagabond shoes
Are longing to stray
And make a brand new start of it
[anywhere but] New York, New York”
A new law from the state of New York thumbs its nose at the Supreme Court’s Quill decision, which held that for a state to require sales tax collections from a retailer that retailer must have some physical connection with the state.
Read More...
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IPI’s Peter Ferrara will be interviewed by Greg Allen, host of “The Right Balance” this Wednesday, August 13.
Peter will be clearly illuminating the vast economic policy differences between presidential hopefuls John McCain and Barack Obama, recently featured in an op/ed co-authored with Jack Kemp in this weekend’s Washington Times.
To listen live from 10:33 – 10:50 am ET, please visit “The Right Balance” online.
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In a new op/ed featured today in the Washington Times, IPI director of budget and entitlement policy Peter Ferrara and Jack Kemp discuss the economic positions of John McCain and Barack Obama.
An excerpt: "It's a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise revenues in the long run is to cut the rates now." Those are the words of President John F. Kennedy in 1962. He went on to say, "The purpose of cutting taxes now is not to incur a budget deficit but to achieve the more prosperous, expanding economy which can bring a budget surplus."
What's more, in Kennedy's annual message to Congress, circa 1963, he said: "In today's economy, fiscal prudence and responsibility call for tax reduction, even if it temporarily enlarges the federal deficit. Read More...
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In a new op/ed featured today exclusively by the American Spectator online, IPI senior fellow Dr. Lawrence A. Hunter discusses how regulatory competition is the solution—not the problem—when it comes to success for the nation’s insurance market.
An excerpt:
As a frustrated Al Pacino complained in The Godfather Part III, "Just when I thought I was out, they pull me back in."
And he wasn't even in the insurance business!
Government modernizers, until recently, seemed ready to inject a modicum of regulatory competition into an industry barred from the same option enjoyed by banks -- choosing between state and national chartering and thus getting to decide who regulates them.
Read More...
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IPI director of entitlement and budget policy Peter Ferrara discusses “What Kansas Knows” this week in a new op/ed featured in the American Spectator online.
An excerpt:
Few outside the Democrat party understand what has just happened in the historic primary season that recently ended. But in those primaries, the party made a fundamental decision that marks a dramatic turning point in American politics.
Bill Clinton swept up the Democrats in 1992 based on the new politics of the Democrat Leadership Council (DLC), which he headed. The DLC sought to remake the Democrats based on recognition of what had then just happened in the real world of American politics. Reagan's Republicans had won three straight national elections, thrashing unreconstructed liberals like Mondale and Dukakis in landslides.
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IPI senior fellow George Pieler is featured with International Affairs Forum editor-in-chief Jens Laurson with a new op/ed on Forbes.com entitled, “Ireland’s ‘No’ Gives Europe Breathing Room.”
Pieler and Laurson write: “Parochial polemics, misinformation and propaganda that feed on citizens' ignorance and distrust. These, according to some supporters of the European Union (E.U.), are what caused Ireland's electorate on Friday to vote decisively against the Treaty of Lisbon, a document formerly known as the European Constitution that lays out a number of centralizing governmental reforms, provided it's approved by all 27 member states. Now E.U. officials are convening in Brussels for a two-day summit to tweak the treaty and assuage its critics, which include not only Ireland but also the Czech Republic and Poland.” Read More...
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H.R. 1201, the ill-named “Freedom and Innovation Revitalizing U.S. Entrepreneurship” (FAIR USE) Act, is the latest attempt to unravel the Digital Millennium Copyright Act (DMCA), while taking the Supreme Court’s unanimous Grokster decision and recent U.S. trade treaties down with it in a single piece of legislation.
As “Still Bad: A Critique of the Latest Attempt to Gut the DMCA” notes, the bill has little to do with “freedom,” “innovation,” “revitalizing entrepreneurship,” or even “fair use.”
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Any glimmer of respect I might have had for our lawmakers was extinguished with their condescending and “holier-than-thou” treatment of the big five oil executives at the “Oil Inquisition” on Wednesday.
The abuse cannot be portrayed well in print, but the session began with Chairman Patrick Leahy of Vermont asking “How much money did you make last year?”
Charles Shumer of New York grilled Vice Chairman Peter Robertson of Chevron regarding Chevron’s activities in Burma. When Robertson admitted that Chevron had committed $2 million in aid to the cyclone victims, Shumer had the audacity to respond, “Do you think they could use a lot more than $2 million?”
OK Comrade Shumer, how much do you want us to give? How much will you MAKE us give? But wait a minute…then it’s not “giving” is it? How much have YOU given? How much has the government been successful in giving? Read More...
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The theory of free trade is based on the idea of comparative advantage. In a nutshell, it says that people do well when they do what they do best and buy everything else from others. Indeed, that’s the hallmark of economic advancement.
This idea has been the basis of trade policy throughout the modern era, with its chief expositors being the British political economist Adam Smith and statesman Richard Cobden.
Empirical data consistently show that trade between nations has helped to achieve significant economic gains in those nations that have embraced it, and especially in the United States.
But in the U.S., the belief that trade between nations benefits both parties has recently come under assault.
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IPI Director of Entitlement and Budget Policy Peter Ferrara will appear tomorrow morning on the BizRadio Network’s “Mike Norman Show” to discuss the impact the government’s economic stimulus checks will have on the economy, and what the keys are to get America booming again. Tune in to listen to the discussion Thursday morning live at 8:20 am EST/7:20 am CST.
In the Dallas-Fort Worth area, tune in to 1360 AM. In the Houston area, go to 1110 AM. For all other areas, or to listen online, click here.
To read Peter’s op/ed on Forbes.com, “Let’s Get America Booming Again,” click here.
We welcome your feedback on the discussion.
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In a new op/ed published by the Heartland Institute, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens Laurson say when it comes to job competition in the marketplace, “It's not a matter of ‘outsourcing America’ but ‘insourcing productive labor,’ finding the most rational way to utilize the best ideas and talent for America to compete in the global marketplace.”
An excerpt:
One facet of the immigration debate has seldom been controversial but is now unnecessarily unsettled because of politics and the nation's economic situation. That's the issue of tailoring U.S. immigration law to the nation's critical workforce needs by granting better accommodation to well-educated foreign-born workers skilled in high-tech industries.
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Is It Time for a Free Trade Agreement with Colombia?
The Institute for Policy Innovation’s Dr. Merrill Matthews says only if we want a strong economy.
The key to an individual’s economic success is being able to sell what you have to others, whether it’s products or your time. And being able to buy what you need at the best available price.
That’s also the key to a country’s economic success.
So why do so many Democrats oppose what’s known as free trade agreements with other countries, especially Colombia?
Colombians pay tariffs, or taxes, on about 8 percent of what they sell to the U.S.
Americans, by contrast, pay tariffs of up to 37 percent on nearly all of the products we sell to Colombia.
Those tariffs make U.S. products more expensive and harder to sell. A free trade agreement would end that disparity.
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Tough times lead to bad ideas—and sometimes, really bad ideas.
Consider the tax break being pushed by the National Association of Homebuilders.
They would get to offset their current losses by looking back to previous years and getting a retroactive tax break. The provision is estimated to cost about $6 billion and is part of a larger $15 billion bill that passed the Senate last week.
Now, we’re all for most tax breaks, especially those that cut marginal tax rates and spur economic growth. (We’d be even more supportive of fundamental tax reform that eliminated most breaks, and set a low flat rate in its place.)
But that’s not what this tax break does. It’s meant to bailout homebuilders in the hope that they will keep on building and, consequently, keep construction workers employed.
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Republican Presidential nominee John McCain gave a speech on economic issues this morning, and there is much in the speech that should help cheer conservatives and make them more enthusiastic about the McCain candidacy.
McCain is talking about ideas that appeal directly to the conservative base, but are also in direct contrast with the positions that are being taken by both Obama and Clinton. These are ideas that should appeal to every common sense voter, leaving either Obama or Clinton with only the hardcore leftists, and that's not enough to win an election with.
For one thing, McCain is talking about tax cuts, not tax increases:
In the same way, many in Congress think Americans are under-taxed. They speak as if letting you keep your own earnings were an act of charity, and now they have decided you've had enough. By allowing many of the current low tax rates to expire, they would impose -- overnight -- the single largest tax increase since the Second World War. Among supporters of a tax increase are Senators Obama and Clinton. Both promise big "change." And a trillion dollars in new taxes over the next decade would certainly fit that description. Read More...
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Presumptive Republican presidential nominee Senator John McCain has proposed a radical reform for the tax treatment of health insurance. He would eliminate the current employer tax exclusion (i.e., employees do not count as income the money employers spend on employee health insurance; it is “excluded” from income) and replace it with a refundable tax credit: $2,500 for an individual and $5,000 for a family.
Critics of the McCain proposal—and they are legion—say that a $5,000 tax credit for a family doesn’t come near covering the cost of the average family policy, about $12,000 a year.
But to make that claim is to display a woeful ignorance of how the current tax exclusion affects a family’s income tax bill.
Consider, for example, a family making $60,000 a year, which has an employer-provided policy that costs $12,000 a year.
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I don’t expect the stimulus rebates to be received by taxpayers next month to have any significant lasting effect in boosting the economy. That is because these rebates do not involve marginal tax rate cuts. They are simply old-fashioned Keynesian cash grants, financed by Federal government borrowing. Any stimulus from taxpayers spending that money would be offset by the borrowing drawing the same amount of money out of the private sector.
Maybe the policymakers who dreamed up this outdated policy for President Bush and the Democrats in Congress will be lucky, and the economy will rebound this summer on its own. But maybe not, maybe the economy will deteriorate further this summer, providing an enormous political boost for the Democrats.
I think the election will turn on the economy, not on the war in Iraq. The challenge for McCain is to frame the issue as who has the better plan to turn the economy around and get it booming again.
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Maybe, just maybe, Great Britain is finally getting serious about welfare reform.
The country has certainly been talking about welfare reform for years. But talk’s cheap; welfare isn’t.
A recently released government report, the largest of its kind ever done, has quantified the extent of the problem. According to the report, illness and disability claims cost Great Britain more than £100 billion a year.
Currently, some 2.6 million Brits are on “incapacity benefit,” those determined by a doctor to be unfit to work. According to David Freud, the government’s welfare reform advisor, 1.9 million of them have no business being there.
In the Welsh town of Merthyr, just outside of the capitol Cardiff, 20 percent of the working-age population is on incapacity benefit. That’s one out every five adults, unable to work.
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The next big issue is going to be the federal bailout of Fannie Mae and Freddie Mac. We better start getting prepared. Read More...
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If you like taxes, you should love the wireless phone industry!
One of IPI’s fundamental principles of tax reform is transparency. In a nontransparent system, politicians can slip in lots of taxes and regularly increase the rates without individuals ever knowing they are getting dinged.
And your wireless service is subject to one of the most nontransparent tax systems we know.
According to a new study published in State Tax Notes, the combined federal, state and local taxes and fees (as of July, 2007) on wireless service range from 22.54 percent in Nebraska to 5.85 percent in Oregon.
Do Nebraska wireless-service consumers know that they are paying the highest wireless taxes in the country? Of course not.
Do Oregon consumers know they are paying the lowest rates? Of course not.
No one knows. And trying to wade through all of those tax inputs in the monthly bill is daunting.
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Just when you think politicians can’t get any wackier, one comes up with a new doozey. Back on November 30, 2007, we published an opinion piece on Forbes.com entitled “Great New Idea: Sub-prime Insurance” in which we suggested that a prominent scheme being bandied about in the U.S. Congress to “spread insurance risk” has strikingly similar characteristics of exotic financial derivatives collateralized by sub-prime mortgages:
“[Federal] Legislation is supposed to empower Florida and other states similarly situated (risk-prone and averse to letting market forces do their job) pool their collective risks as backing for marketable bonds and reinsurance. Those instruments would get federal (i.e., American taxpayer) guarantees to back them up.
“Gosh. Read More...
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Yesterday I read a very interesting paper by Francois Leveque and Yann Meniere, entitled "Patents and Innovation: Friends or Foes?" It included the following thoughtful foreword describing the trends in economic thinking about patents over recent decades, and how these have given rise to the perception that patents do not support innovation:
Economists are not innocent for this change in perception. 50 years ago they established (Nordhaus, 1969) that patent law tends to stimulate R&D too much in organizing races to patent first with too many firms. By contrast, during the 1990s, they pointed out that patents hinder innovation in reducing incentives for secondary inventors when research is cumulative and in raising an anticommons problem whereby patents are allotted to a multitude of small owners. For people unfamiliar with how economic theory goes, it may seem that economists also changed their mind and burnt today what they incensed over the past. Read More...
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We’ve been trying to keep up with all of the new spending programs Senator Barack Obama promises to implement if he is elected president and, well, it hasn’t been easy. Because there are so many of them.
Here are some of them, taken from his campaign material:
1. “Obama will provide a $500 ‘Making Work Pay’ tax credit to almost every worker in America . . .”
Of course, the government doesn’t make money, it only transfers it. So before you can “give” the vast majority of Americans a $500 tax credit, you have to take it from them first.
2. “The Obama middle class tax plan will also provide 10 million homeowners a new mortgage interest credit that directly lowers the interest rate homeowners pay on their mortgages . . .”
3. “[E]liminate federal income taxes for all seniors making under $50,000 per year.”
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The ultraliberalism of Sen. Barack Obama is demonstrated by his legislative proposal now before the U.S. Senate, entitled “The Global Poverty Act.” The bill commits U.S. taxpayers to the goal of the 2000 United Nations Millenium Summit to reduce world poverty by 2015. This includes “the elimination of extreme global poverty” and “reducing by one half the proportion of people worldwide…who live on less than $1 per day.” The legislation would commit the U.S. to spending 0.7% of GDP for this goal, which would increase our foreign aid by $65 billion per year. That would amount to over a quarter trillion in increased foreign aid during one term of a Barack Obama Presidency.
Former Harvard economist Jeffrey Sachs heads the Millenium Project for the UN, which is to spearhead this new global war on poverty. Sachs is now arguing for a new, UN sponsored, global tax for U.S. taxpayers and others to fund the new worldwide handouts.
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Allan Meltzer takes a welcome and needed look at the reality behind the facile “explanations” for the current sub-prime-induced financial-market crisis, which are being widely promoted by the popular media and self-interested politicians looking for another “hook” on which to hang legislation for which they can take credit. Meltzer concludes that:
Ironically, most of the buyers and sellers were graduates of elite business schools. Better than most, they should have known enough to avoid making loans with no down payments to borrowers who had few assets and poor credit records. The reason they didn’t is that their incentive structure encouraged them to ignore the quality of what they sold and bought. Read More...
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"What I try to do every day is figure out how to help somebody. . . But you can try to help somebody every single day. And I’ve tried to do that as a public servant, as an activist, and now as a senator, and that’s what I will do as president.” (Hillary Clinton presidential ad)
Call us old fashioned. Or maybe call us Constitutionalists. But we can’t for the life of us figure out why or when the presidency morphed into the Salvation Army.
The president of the United States is the leader of the free world, not the leader of a charity. The Commander-in-Chief, not Mother Teresa. The one trying to grow the economy, not grow economic dependency.
When he was running for president, Bill Clinton liked to say “I feel your pain”: apparently his wife thinks she feels everyone’s pain.
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In case you’ve forgotten recently why not so long ago many conservatives could not abide Senator John McCain, read the transcript of George Stephanopoulos’s interview with him Sunday on This Week with George Stephanopoulos.
When asked, what would differentiate a McCain Administration from that of George W. Bush, the first thing out of the Senator’s mouth was “global warming.”
STEPHANOPOULOS: “Both Sen. Clinton and Sen. Obama are basically saying, ‘Vote for John McCain, you're voting for a third Bush term.’”
MCCAIN: “We will wage this campaign on profound and significant philosophical difference. . .How am I different? Climate change. Climate change is an issue.”
Not only does the Senator embrace the dubious evidence of man-made global warming as scientifically sound and settled, he also reveals a remarkable misunderstanding of the basic precepts of economics when he talks about the issue. The heir presumptive to the Republican presidential nomination told Stephanopoulos that capping and trading carbon emissions would actually be beneficial economically—a new profit center for American business, as it were: Read More...
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According to a new oped featured on Forbes.com today by Peter Ferrara, in order to create another economic boom, Washington should focus on the “basic incentives determining saving, investment, innovation, entrepreneurship, business expansion and work,” instead of giving people more money to spend.
In “Let’s Get America Booming Again,” Ferrara describes what long-term economic reforms are needed to revive a robust economy.
An excerpt:
“The stimulus package just signed into law seems to be carefully crafted--to achieve little or nothing. The billions in cash rebates are based on old-fashioned Keynesian economics, which were discredited 30 years ago. The government will first be taking those billions out of the economy by borrowing it. Read More...
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While we liked much of what President George Bush said last night in his seventh State of the Union Address, the best we can say is: too little, too late.
Yes, the president wants Congress to make permanent several of his tax cuts, many of which played a significant role in boosting economic growth. . . BUT there is something depressingly dissonant about having a president make supply-side arguments for tax cuts but yet make Keynesian arguments for economic stimulus. It gives one the impression that the president never really understood the reason why tax cuts stimulate economic growth. Perhaps this is why the president hasn’t succeeded in selling his tax cuts.
Yes, the president also made some excellent comments about the need for entitlement reform, especially Social Security and Medicare. . . Read More...
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The recently announced economic stimulus package includes an income tax rebate. So I raise the question should it be a rebate or should we adjust marginal rates? People tend to use rebates to pay off short term debt or buy piled up inventory of consumer goods. Sometimes they may even put it into savings. But none of these will have any significant or lasting effect on the economy. Reducing marginal rates on the other hand would result in capital formation and the corresponding jobs creation and retention. So why the rebate?
There are two reasons and neither of them is rooted in good economic theory. Congressional Democrats have become terrified that they'll be accused in this election year of not having done anything to help the economy. And the President is desperately trying to protect his legacy. Election year politics and a fading legacy do not make good economic policy. Read More...
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In a new oped published today in Business Day, “West Must Go Straight to the People of Zimbabwe,” IPI senior fellow George A. Pieler and International Affairs Forum editor-in-chief Jens Laurson discuss the benefits of sending foreign aid to the people, not the government, of economically devastated Zimbabwe.
An excerpt: Foreign aid seems like a diplomatic, benevolent, largely uncontroversial tool in international relations. Giving aid to developing countries (and also the threat to stop giving) means donors have some leverage against nations reluctant to modernize, democratize, and adopt "advanced" notions of "good governance". Read More...
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This week, Sen. Arlen Specter (R-Pa.) cited research conducted by the Institute for Policy Innovation (IPI) to introduce expensing legislation as part of the effort to sculpt a fiscal stimulus package.
For the dicussion, Specter submitted to the record a January 12 Wall Street Journal oped by Ernest S. Christian and Gary A. Robbins, “The JFK Stimulus Plan,” and quoted IPI’s 2001 analysis of first-year expensing:
“Each $1 of tax cut from first-year expensing produces about $9 of additional GDP growth.”
In his testimony, Specter agreed first-year expensing would help advance innovation and economic growth, saying:
“By allowing firms to deduct the cost of a new asset in year one, expensing spurs new investments quickly, which helps to drive immediate job creation.”
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Still Keynesian After All These Years
Talk of economic stimulus plans is afoot in Washington, but almost every idea being floated is wrongheaded, and tragic.
The central idea seems to be to “put money in people’s pockets” so that they can “spend it”—WRONG. The thought is that the economy needs some sort of short-term boost in demand (spending), and that the best way to do that is to borrow from the future and put some modest amount of money in the hands of middle-class and lower-income families through an immediate tax rebate so that they can go right out and spend it, thus rescuing Wall Street and the world economy—WRONG.
Upper income workers would not receive the tax rebate, because upper income workers tend to save and invest, rather than spend. And, of course, we need people to spend the money rather than save and invest it—WRONG. Read More...
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| If there was ever any doubt about it, Fed Chairman Ben Bernanke’s endorsement yesterday of George W. Bush’s idea that we need a “fiscal stimulus” package makes it clear that Keynesianism reigns supreme in Washington, DC.—still crazy after all these years. On the heels of Bernanke’s congressional appearance, Bush himself ran up the flagpole the idea of giving everyone a $1,600 “tax rebate,” a.k.a. a federal handout. How many times must we relearn the lesson that it is impossible for the government to increase real national income by borrowing, spending and printing money? Endlessly, it appears, since generation after generation of policy makers continues to fall prey to the same Keynesian fallacy. Read More...
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The conservative website TownHall.com, of which IPI was once a member organization, has recently been aggressively promoting their young bloggers and columnists to the television talking head shows. This works for both parties: The shows have an insatiable appetite for new (as opposed to the same old) faces, and TownHall provides the TV shows an endless stream of especially young, attractive and mostly female faces. And since TownHall.com is in the business of selling advertising, attractive young females on TV is a great way to draw eyeballs to your website.
But this is a recipe for potential disaster to the conservative movement, if TownHall.com promotes spokespersons don’t really have much of an idea what they are talking about.
The latest example was this afternoon, when someone I’ve never heard of named Amanda Carpenter of TownHall.com appeared on Neil Cavuto’s show on the FoxNews Channel and proclaimed that John McCain was not a conservative. Read More...
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Author: Merrill Matthews Jr. || Location: Lewisville, Texas, USA