Uncommon Sense

politics and society are, unfortunately, much the same thing

Government worship and deferred compassion

original article: Meals On Wheels Desperately Needs To Get Cut, And We Shouldn’t Stop There
March 23, 2017 by Robert Tracinski

Hey, everybody, the Trump budget guts everything!

Except, of course, that it doesn’t. It cuts about $54 billion from next year’s budget out of a total of $4 trillion in spending—a reduction of a little over 1 percent. It’s kind of a drop in the bucket.

But as part of their program to grow all spending for everything all the time, Democrats have had to find something that makes Trump’s budget cuts look totally radical and draconian, so they have seized on Meals on Wheels, a program that uses volunteers to deliver food to the elderly.

Not only is this factually wrong, but the really radical and dangerous position is the idea that programs like Meals on Wheels have to be part of the federal budget and must never be cut in any way.

First, the facts. Meals on Wheels is supported by volunteers and overwhelmingly funded by private charity. The national organization Meals on Wheels America gets only 3.3 percent of its budget, less than $250,000, from government grants.

Moreover, the money that is supposedly going to be cut doesn’t even come directly from the federal budget, and Trump’s budget doesn’t even mention Meals on Wheels. Instead, it eliminates Community Development Block Grants, some tiny fraction of which—nobody can say for sure exactly how much—is used by state and local governments to support local Meals on Wheels organizations. Apparently, nothing else done with these block grants is particularly defensible, so Democrats have focused all of their attention on Meals on Wheels.

In the meantime, all of the press attention has led to a surge of donations and volunteers. Did you know citizens could do that—take what they think is a worthy program and support it with their own time and money? Apparently, this is a surprise to everyone on the Left.

So the whole “Trump wants to cut Meals on Wheels” story line smacks of—what’s the phrase I’m looking for here?—oh yes, “fake news.”

Yet here’s why it’s important. The outrage over cutting Meals on Wheels from the federal budget implies that it ought to be part of the federal budget and that it ought to be getting more money. That’s the really radical idea here, and it explains why this country is in the deadly budget predicament we are.

Notice that the supposedly devastating Trump budget proposal says nothing about the largest and fastest-growing part of the budget, the big middle-class entitlements like Medicare and Social Security. If we have to fund Meals on Wheels, we definitely can’t make even the slightest changes to any of those programs. In fact, by this reasoning—if a small fraction of indirect support for a charitable venture is sacrosanct—then the assumption here is that anything good has to be funded by the federal government.

By that reasoning, we aren’t just forced to keep spending money for things the government already does. We will have to keep increasing our spending indefinitely, bring into the federal fold more and more programs and ventures. Anything that benefits anybody has to get government money. Not to support it would be monstrous.

If we can’t even say to any program, “You know that last 3 percent of your budget? We think you’ll be okay on that without the federal government,” then the result is going to be exactly what we have seen: vast, ever-increasing, unsustainable increases in government spending and government debt.

Do you know what happens if we carry this all the way to the end of the road? Take a look at Venezuela, which specifically focused its socialist programs on food banks for the poor, with government taking on an increasingly dominant role in the nation’s food supply. The result? People are starving and reduced to rummaging through trash bins to survive. But no matter how cruel that system ends up being in practice, nobody could ever advocate rolling it back, because that would make you reactionary and cruel and heartless and prove that you hate the poor.

The idea that the government must fund everything, that nothing can happen without it, that it must be the source and impetus behind every initiative, and that it must always expand relentlessly—that is the truly radical notion being pushed in this Meals on Wheels hysteria.

That’s why we have to take an axe to federal funds for Meals on Wheels. We have to do it just to establish that there is some limit, any limit to the scope and fiscal appetite of the federal government—before it yawns its throat open and swallows us whole.

budget, bureaucracy, corruption, culture, Democrats, economy, elitism, entitlements, false, funding, government, ideology, left wing, liberalism, nanny state, political correctness, politics, progressive, propaganda, public policy, reform, scandal, socialism, spending, unintended consequences

Filed under: budget, bureaucracy, corruption, culture, Democrats, economy, elitism, entitlements, false, funding, government, ideology, left wing, liberalism, nanny state, political correctness, politics, progressive, propaganda, public policy, reform, scandal, socialism, spending, unintended consequences

Feds Gave Low-Income Housing to Millionaires

original article: Feds Gave Low-Income Housing to Millionaires
July 27, 2015 by Elizabeth Harrington

The Department of Housing and Urban Development (HUD) gave low-income housing to millionaires, according to a recent audit.

The Office of Inspector General (OIG) found over 25,000 families who earned too much to qualify for subsidized apartments, which will cost taxpayers $104.4 million this year.

“Public housing authorities provided public housing assistance to as many as 25,226 families whose annual household income exceeded HUD’s 2014 program eligibility income limits,” according to the audit. “Most of these families had earned more than the qualifying amount for more than 1 year, were not participating in programs that would allow them to reside in public housing, and occupied units while many families were waiting for public housing assistance.”

“This condition occurred because HUD regulations require families to meet eligibility income limits only when they are admitted to the public housing program,” it said. “The regulations do not limit the length of time that families may reside in public housing.”

Of the 25,226 overincome families identified, 47 percent earned at least $10,000 more than the income limit, and 70 percent lived in subsidized housing for more than a year.

A millionaire in Oxford, Neb., has been able live in low-income housing since 2010. The monthly rent is $300.

“As of April 2014, the single-member household’s annual income was $65,007, while the low-income threshold was $33,500,” the OIG explained. “Also, this tenant had total assets valued at nearly $1.6 million, which included stock valued at $623,685, real estate valued at $470,600, a checking account with a balance of $334,637, and an individual retirement account with a balance of $123,445.”

HUD did not evict the millionaire because “the tenant was income eligible at admission and has not violated the lease agreement.”

The OIG identified a sample of 25 overincome families who either had more than $1 million in assets, or had income that was significantly greater than the income limits.

Another ineligible family paid only $1,091 a month to live in Los Angeles, even though their annual income was $204,784.

A family in New York City was also able to stay in housing that limited income at $67,100, event though they earned $497,911 annually, plus $790,534 in rental income between 2009 and 2013.

Many housing authorities cited by the OIG said they do not evict wealthy individuals and families from low-income housing because “its policy does not require it to terminate the tenancy or evict families solely because they are overincome.”

budget, bureaucracy, corruption, criminal, entitlements, ethics, fraud, funding, government, nanny state, oversight, public policy, scandal, wealthy, welfare

Filed under: budget, bureaucracy, corruption, criminal, entitlements, ethics, fraud, funding, government, nanny state, oversight, public policy, scandal, wealthy, welfare

Meet the 39 Companies That Donate Directly to Planned Parenthood

original article: Meet the 39 Companies That Donate Directly to Planned Parenthood
July 21, 2015 by Melissa Quinn

In the wake of two videos allegedly showing Planned Parenthood officials discussing the sale of aborted fetal body parts, Republicans in Congress are working to ensure that Planned Parenthood is stripped of its federal funding.

However, it’s not only the government that fills Planned Parenthood’s coffers. According to 2nd Vote, a website and app that tracks the flow of money from consumers to political causes, more than 25 percent of Planned Parenthood’s $1.3-billion annual revenue comes from private donations, which includes corporate contributions.

2nd Vote researched the corporations and organizations to find which supported Planned Parenthood and found that more than three dozen donated to the group. Some companies donated directly, while others matched employee gifts.

Forty corporations and organizations directly contribute to the group.

last week, showed Planned Parenthood senior executive Dr. Deborah Nucatola meeting with actors portraying buyers from a “human biologics company.” The “buyers” discussed the sale of fetal body parts with Nucatola over lunch.

In the second video, released today, Dr. Mary Gatter, president of Planned Parenthood’s medical directors council, is seen negotiating the price of aborted fetal body parts.

Here are the 39 companies that have directly funded Planned Parenthood.

  1. Adobe
  2. American Cancer Society
  3. American Express
  4. AT&T
  5. Avon
  6. Bank of America
  7. Bath & Body Works
  8. Ben & Jerry’s
  9. Clorox
  10. Coca-Cola
  11. Converse
  12. Deutsche Bank
  13. Dockers
  14. Energizer
  15. Expedia
  16. ExxonMobil
  17. Fannie Mae
  18. Groupon
  19. Intuit
  20. Johnson & Johnson
  21. La Senza
  22. Levi Strauss
  23. Liberty Mutual
  24. Macy’s
  25. March of Dimes
  26. Microsoft
  27. Morgan Stanley
  28. Nike
  29. Oracle
  30. PepsiCo
  31. Pfizer
  32. Progressive
  33. Starbucks
  34. Susan G. Komen
  35. Tostitos
  36. Unilever
  37. United Way
  38. Verizon
  39. Wells Fargo

This story has been updated. Xerox was erroneously listed on Planned Parenthood’s website as having been a donor. “We have communicated with Planned Parenthood. They have removed Xerox from this list of companies that match gifts to the organization. It was not correct,” a Xerox representative told The Daily Signal.

Also, a Ford Motor Co. representative contacted The Daily Signal claiming they had been erroneously listed on Planned Parenthood’s website, and have contacted Planned Parenthood to be removed.

abortion, budget, culture, funding, scandal, video

Filed under: abortion, budget, culture, funding, scandal, video

How Government Inaction Ended the Depression of 1921

original article: How Government Inaction Ended the Depression of 1921
May 20, 2015 by Llewellyn H. Rockwell Jr.

As the financial crisis of 2008 took shape, the policy recommendations were not slow in coming: why, economic stability and American prosperity demand fiscal and monetary stimulus to jump-start the sick economy back to life. And so we got fiscal stimulus, as well as a program of monetary expansion without precedent in US history.

David Stockman recently noted that we have in effect had fifteen solid years of stimulus — not just the high-profile programs like the $700 billion TARP and the $800 billion in fiscal stimulus, but also $4 trillion of money printing and 165 out of 180 months in which interest rates were either falling or held at rock-bottom levels. The results have been underwhelming: the number of breadwinner jobs in the US is still two million lower than it was under Bill Clinton.

Economists of the Austrian school warned that this would happen. While other economists disagreed about whether fiscal or monetary stimulus would do the trick, the Austrians looked past this superficial debate and rejected intervention in all its forms.

The Austrians have very good theoretical reasons for opposing government stimulus programs, but those reasons are liable to remain unknown to the average person, who seldom studies economics and who even more seldom gives non-establishment opinion a fair hearing. That’s why it helps to be able to point to historical examples, which are more readily accessible to the non-specialist than is economic theory. If we can point to an economy correcting itself, this alone overturns the claim that government intervention is indispensable.

Possibly the most arresting (and overlooked) example of precisely this phenomenon is the case of the depression of 1920–21, which was characterized by a collapse in production and GDP and a spike in unemployment to double-digit levels. But by the time the federal government even began considering intervention, the crisis had ended. What Commerce Secretary Herbert Hoover deferentially called “The President’s Conference on Unemployment,” an idea he himself had cooked up to smooth out the business cycle, convened during what turned out to be the second month of the recovery, according to the National Bureau of Economic Research (NBER).

Indeed, according to the NBER, which announces the beginnings and ends of recessions, the depression began in January 1920 and ended in July 1921.

James Grant tells the story in his important and captivating new book The Forgotten Depression — 1921: The Crash That Cured Itself. A word about the author: Grant ranks among the most brilliant of financial experts. In addition to publishing his highly regarded newsletter, Grant’s Interest Rate Observer, for more than thirty years, Grant is a frequent (and anti-Fed) commentator on television and radio, the author of numerous other books, and a captivating speaker. We’ve been honored and delighted to feature him as a speaker at Mises Institute events.

What exactly were the Federal Reserve and the federal government doing during these eighteen months? The numbers don’t lie: monetary policy was contractionary during the period in question. Allan Meltzer, who is not an Austrian, wrote in A History of the Federal Reserve that “principal monetary aggregates fell throughout the recession.” He calculates a decline in M1 by 10.9 percent from March 1920 to January 1922, and in the monetary base by 6.4 percent from October 1920 to January 1922. “Quarterly average growth of the base,” he continues, “did not become positive until second quarter 1922, nine months after the NBER trough.”

The Fed raised its discount rate from 4 percent in 1919 to 7 percent in 1920 and 6 percent in 1921. By 1922, after the recovery was long since under way, it was reduced to 4 percent once again. Meanwhile, government spending also fell dramatically; as the economy emerged from the 1920–21 downturn, the budget was in the process of being reduced from $6.3 billion in 1920 to $3.2 billion in 1922. So the budget was being cut and the money supply was falling. “By the lights of Keynesian and monetarist doctrine alike,” writes Grant, “no more primitive or counterproductive policies could be imagined.” In addition, price deflation was more severe during 1920–21 than during any point in the Great Depression; from mid-1920 to mid-1921, the Consumer Price Index fell by 15.8 percent. We can only imagine the panic and the cries for intervention were we to observe such price movements today.

The episode fell down the proverbial memory hole, and Grant notes that he cannot find an example of a public figure ever having held up the 1920–21 example as a data point worth considering today. But although Keynesians today, now that the episode is being discussed once again, assure everyone that they are perfectly prepared to explain the episode away, in fact Keynesian economic historians in the past readily admitted that the swiftness of the recovery was something of a mystery to them, and that recovery had not been long in coming despite the absence of stimulus measures.

The policy of official inaction during the 1920–21 depression came about as a combination of circumstance and ideology. Woodrow Wilson had favored a more pronounced role for the federal government, but by the end of his term two factors made any such effort impossible. First, he was obsessed with the ratification of the Treaty of Versailles, and securing US membership in the League of Nations he had inspired. This concern eclipsed everything else. Second, a series of debilitating strokes left him unable to do much of anything by the fall of 1919, so any major domestic initiatives were out of the question. Because of the way fiscal years are dated, Wilson was in fact responsible for much of the postwar budget cutting, a substantial chunk of which occurred during the 1920–21 depression.

Warren Harding, meanwhile, was philosophically inclined to oppose government intervention and believed a downturn of this kind would work itself out if no obstacles were placed in its path. He declared in his acceptance speech at the 1920 Republican convention:

We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn’t been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations.

Harding, that least fashionable of American presidents, was likewise able to look at falling prices soberly and without today’s hysteria. He insisted that the commodity price deflation was unavoidable, and perhaps even salutary. “We hold that the shrinkage which has taken place is somewhat analogous to that which occurs when a balloon is punctured and the air escapes.” Moreover, said Harding, depressions followed inflation “just as surely as the tides ebb and flow,” but spending taxpayer money was no way to deal with the situation. “The excess of stimulation from that source is to be reckoned a cause of trouble rather than a source of cure.”

Even John Skelton Williams, comptroller of the currency under Woodrow Wilson and no friend of Harding, observed that the price deflation was “inevitable,” and that in any case “the country is now [1921] in many respects on a sounder basis, economically, than it has been for years.” And we should look forward to the day when “the private citizen is able to acquire, at the expenditure of $1 of his hard-earned money, something approximating the quantity and quality which that dollar commanded in prewar times.”

Thankfully for the reader, not only is Grant right on the history and the economics, but he also writes with a literary flair one scarcely expects from the world of financial commentary. And although he has all the facts and figures a reader could ask for, Grant is also a storyteller. This is no dry sheaf of statistics. It is full of personalities — businessmen, union bosses, presidents, economists — and relates so much more than the bare outline of the depression. Grant gives us an expert’s insight into the stock market’s fortunes, and those of American agriculture, industry, and more. He writes so engagingly that the reader almost doesn’t realize how difficult it is to make a book about a single economic episode utterly absorbing.

The example of 1920–21 was largely overlooked, except in specialized treatments of American economic history, for many decades. The cynic may be forgiven for suspecting that its incompatibility with today’s conventional wisdom, which urges demand management by experts and an ever-expanding mandate for the Fed, might have had something to do with that. Whatever the reason, it’s back now, as a rebuke to the planners with their equations and the cronies with their bailouts.

The Forgotten Depression has taken its rightful place within the corpus of Austro-libertarian revisionist history, that library of works that will lead you from the dead end of conventional opinion to the fresh air of economic and historical truth.

budget, conservative, crisis, economics, economy, funding, government, history, ideology, philosophy, politics, president, public policy, recession, Republicans, right wing, spending

Filed under: budget, conservative, crisis, economics, economy, funding, government, history, ideology, philosophy, politics, president, public policy, recession, Republicans, right wing, spending

Playing politics with abortion instead of helping the poor

The pro-abortion lobby loves to call pro-lifers who support abortion regulations extremists; however, we’re not the ones filibustering late-term abortion bans and bipartisan legislation to stop human trafficking, or throwing fits about the non-controversial Hyde amendment.

As LifeNews previously reported, prior to the passage of the pro-life amendment in 1976, the federal Medicaid program paid for 300,000 abortions a year.

Unbelievably, now Senate Democrats are trying to stop a bipartisan deal on Medicare between Rep. Nancy Pelosi and House Speaker John Boehner.

Roll Call reports that Pelosi and Boehner are working on a piece of legislation that would benefit the poor by ditching the yearly fixes to the payment formula for Medicare doctors. The deal would do this by blocking a 21% cut in doctors’ Medicare fees and change how doctors are reimbursed for Medicare patients in the future. It would also provide money for a health program for low-income children.

However, Minority Leader Harry Reid expressed concern that the tentative House agreement would write restrictions on abortions at community health centers into law. Of course Planned Parenthood jumped at the opportunity to support abortion and said on Twitter, “Senator Reid is standing up for women against #HydeandSneak attacks. Ask Sen. McConnell, SpeakerBoehner, and NancyPelosi to do the same!”

The post is truly laughable considering Pelosi’s infamous love affair with abortion. If you don’t remember, she’s the representative who called late-abortion “sacred ground” in 2013 after a reporter asked her about the difference between gruesome abortions and infanticides done by Kermit Gosnell.

full article: Democrats in Congress Would Rather Fund Abortions Than Help the Poor
March 24, 2015 by SARAH ZAGORSKI

abortion, bias, budget, bureaucracy, congress, Democrats, funding, government, health care, legislation, liberalism, pandering, politics, progressive, public policy, spending

Filed under: abortion, bias, budget, bureaucracy, congress, Democrats, funding, government, health care, legislation, liberalism, pandering, politics, progressive, public policy, spending

How School Choice Saves Money

September 30, 2014 by JASON BEDRICK

School choice programs expand educational opportunity, but at what cost?

Opponents of school choice frequently claim that vouchers and scholarship tax creditssiphon” money from public schools and increase the overall cost of education to the taxpayers. However, these critics generally fail to consider the reduction in expenses associated with students switching out of the district school system, wrongly assuming that all or most school costs are fixed. When students leave, they claim, a school cannot significantly reduce its costs because it cannot cut back on its major expenses, like buildings, utilities, and labor. But if that were true, then schools would require little to no additional funds to teach additional students. A proper fiscal analysis considers both the diverted or decreased revenue as well as the reduction in expenses related to variable costs.

A new study by Jeff Spalding, Director of Fiscal Policy at the Friedman Foundation for Educational Choice, does exactly that. The study examines the fiscal impact of 10 of the 21 school voucher programs nationwide, finding a cumulative savings to states of at least $1.7 billion over two decades. Spalding, the former comptroller/CFO for the city of Indianapolis, is cautious, methodical, and transparent in his analysis. He walks readers through the complex process of determining the fiscal impact of each program, identifying the impact of each variable and explaining equation along the way. He also makes relatively conservative assumptions, such as counting food service and interscholastic athletics as fixed costs even though they are variable with enrollment. Critically, Spalding accounts for those students who would have attended private school anyway, explaining:

One common complicating factor is student eligibility. If a voucher program allows students already enrolled in a private school to qualify, then those students do not directly relieve the public school system of any costs. Thus, there is a new public cost incurred for the vouchers provided to those students, but no corresponding savings for the public school system. Anytime voucher eligibility extends to students not currently enrolled in a public school, the net savings calculation must include that complicating factor.

States save money when the variable cost of each student to the district schools is greater than the cost of the voucher, accounting for the students who would have attended private school anyway. After wading through each state’s byzantine school funding formula, Spalding calculated that the voucher programs reduced expenditures across all 10 programs by $4.5 billion over two decades while costing states $2.8 billion, producing $1.7 billion in savings.

In the last 40 years, government spending on K-12 education has nearly tripled while results have been flat. Moreover, the Census Bureau projects that the elderly will make up an increasingly larger share of the population in the coming decades, straining state budgetswith spending on health care and retirement benefits. Schools will have to compete with hospitals and nursing homes for scarce resources.

In other words, our education system needs to become more effective and financially efficient, fast. Large-scale school choice programs promise to do both.

original article: How School Choice Saves Money

budget, bureaucracy, economics, education, freedom, funding, government, nanny state, oversight, spending

Filed under: budget, bureaucracy, economics, education, freedom, funding, government, nanny state, oversight, spending

The Democrats embrace trickle-down economics

August 26, 2014 by Kevin D. Williamson

Approximately 99.44 percent of the time, it is a safe assumption that when you disagree with Thomas Sowell, you are wrong. But on the issue of the “trickle-down” theory of economics, Professor Sowell is in fact wrong to claim that “trickle-down” is a nonexistent theory, absent from “even the most voluminous and learned histories of economic theories.” Trickle-down is there — just not where its critics are looking for it.

Getting to the bottom of this will require a little background.

Professor Sowell is correct that trickle-down functions in our current discourse mainly as a caricature of certain conservative, supply-side, and/or free-market economic ideas, mostly pertaining to taxes: “Repeatedly, over the years,” he writes,

the arguments of the proponents and opponents of tax rate reductions have been arguments about two fundamentally different things. Proponents of tax rate cuts base their arguments on anticipated changes in behavior by investors in response to reduced income tax rates. Opponents of tax cuts attribute to the proponents a desire to see higher income taxpayers have more after-tax income, so that their prosperity will somehow “trickle down” to others, which opponents of tax cuts deny will happen. One side is talking about behavioral changes that can change the total output of the economy, while the other side is talking about changing the direction of existing after-tax income flows among people of differing income levels at existing levels of output. These have been arguments about very different things, and the two arguments have largely gone past each other untouched.

What sort of “behavioral changes” do the tax-cutters expect? In Andrew Mellon’s day, tax cuts were intended to lure wealthy investors out of tax-free government securities, which Mellon had proposed abolishing, into more-productive private-sector investments, which he believed would raise overall economic output. As Professor Sowell points out, the aggregate reported income of those earning $300,000 a year or more in 1916, back when three hundred grand meant something, was cut in half by 1918, and it probably was not because Scrooge McMoneybags actually was earning less: The consensus is that the very rich shifted their investments into tax-free securities as taxes went up and tax shelters became more attractive. Most of a century later, billionaire presidential candidate Ross Perot would be criticized for keeping his copious loot in tax-free munis. The more things change . . .

President Woodrow Wilson and others argued at the time that the combination of high taxes on income and zero taxes on certain government securities created a situation that discouraged private investment and encouraged profligate government spending, while lowering the tax burden on the wealthy and thus necessarily increasing the burden on everybody else. Presidents Calvin Coolidge and John Kennedy would make similar arguments.

The cartoon version of conservative economic thinking — that we should subsidize gazillionaires in order to create work opportunities for yacht painters, monocle polishers, and truffle graters — is fundamentally at odds with the facts. The supply-siders may have wrong economic ideas, but they do not have those wrong economic ideas. President Ronald Reagan, for example, loved to boast of the number of poor and modestly-off Americans his policies had removed from the federal tax rolls entirely. George W. Bush promised that he’d take the poorest fifth of taxpaying U.S. households off the federal tax rolls; Heritage estimates that he succeeded in doing so for about 10 million low-income households.

One of the perverse consequences of conservatives’ success in lowering the federal income-tax burdens of those on the left half of the earnings bell curve is that we have finally arrived at the point where our critics are partly correct: Most conservative plans for tax cuts at this point in history do disproportionately favor the wealthy and the high-income, for the mathematically unavoidable reason that they pay a steeply disproportionate share of federal income taxes, making it very difficult to design a tax-cut plan that does not disproportionately benefit them. It’s hard to cut taxes without cutting them for the taxpayers.

I myself am mostly neutral on the question of tax cuts, on the grounds that cutting taxes while the government is running significant deficits is not inadvisable but impossible — in that situation, taxes are not cut but merely deferred. All accounts must in the end be settled, so the real rate of taxation is the rate of spending.

The point of rehearsing this history is not to determine whether traditional supply-side thinking on economic policy is true or false, but rather to show that it is something fundamentallydifferent from the trickle-down caricature offered by the progressives and others generally hostile to the idea of a smaller federal financial footprint. But that is not to say that “trickle-down” is an idea without adherents, a banner without partisans marching under it. Perversely, those advancing trickle-down ideas are mostly the same ideologues who denounce “trickle-down.” But they do not call it trickle-down — they call it “stimulus.”

There are three main ways in which the federal government goes about trying to stimulate the economy. Traditionally, the most popular and most bipartisan method has been tax cuts. The popular if intellectually dodgy Keynesian analysis holds that during periods of economic weakness, there is a glut of underutilized productive capacity — capital and labor both — and that government can help clear it by increasing “aggregate demand,” i.e., stimulating consumption. As President Obama put it, “For businesses across the country, it would mean customers with more money in their pockets.” If you want Republicans on board, then the easiest way to put money in consumers’ pockets is with tax cuts, but you can achieve much the same thing with various kinds of welfare spending, the second form of stimulus, as seen with the bump in food-stamp and unemployment spending under President Obama’s American Recovery and Reinvestment Act. You can also sometimes forcibly deputize others to do some spending for you — in the speech above, President Obama was talking about raising the minimum wage.

The president and congressional Democrats treat tax cuts and spending as though they were the same thing, and from a federal accounting point of view, they are not entirely wrong: Cutting a $50,000-a-year household’s taxes by $1,000 a year is functionally identical to cutting them a check for $1,000 every year. Cutting an unemployed worker’s taxes by $1,000 a year is functionally the same thing as giving him an extra $1,000 in unemployment benefits. On the question of economic stimulus through tax cuts vs. through targeted social-welfare spending, the real dispute is about the method of targeting those distributions — and that’s about nothing but politics. Democrats do not want to do too much to establish the precedent that tax cuts might be good for the economy in some circumstances, lest it come back to bite them, and Republicans do not want to establish the precedent that some welfare spending might be good for the economy.

For what it’s worth, I’m not convinced that either approach does much more than provide a short-term sugar rush at the expense of the economy’s long-term health, and the Congressional Budget Office shares that suspicion, estimating that in the long run the Recovery Act will decrease economic output for reasons that would have been familiar to Andrew Mellon back in his day:

To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital. In the long run, each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital, CBO estimates.

One of the problems with the traditional Keynesian view of stimulus is that it assumes that the increased aggregate demand in the economy will be matched by a mirror image of underutilized productive capacity. But we know from experience that this is not always the case. For example, we spent years around the turn of the century stimulating the economy with lower interest rates, tax cuts, and welfare spending, and the result wasn’t general prosperity — it was a housing bubble. These things tend to be unpredictable, and it is as likely that such efforts will deepen the misalignment between production and consumption as it is that they will mitigate it.

The third way that government attempts to stimulate the economy is through project spending, i.e. the so-called infrastructure investments that politicians always are nattering on about. From the politicians’ point of view, infrastructure spending has one important advantage over tax cuts or welfare outlays: They get to control what the money is spent on and where. Cut somebody’s taxes, and he might put the money toward his children’s college tuition — or he might put it toward a few lines of cocaine. Additional welfare dollars might find their way to the grocery store — or a casino. But if you spend a billion dollars on a bridge, you can be pretty sure that you’re going to get a bridge out of the deal, and a bridge right where you wanted one.

Needless to say, that’s not the same as building a bridge where a bridge is needed — but if we buy the traditional model of stimulus, that shouldn’t matter. Through the magic of the multiplier effect, $1 spent on a bridge works its way through the economy, creating $1.25, or $2, or $22 in value, depending on whom you ask. (All of which assumes that the multiplier generally is greater than 1, rather than less than 1, which has not been established, but never you mind. And if this looks to you like nothing other than the contemporary supply-siders’ self-financing tax cut in drag, then you’re on the right track.)

The important point here is this: The argument that the government should spend on infrastructure because a certain piece of infrastructure is needed is one kind of argument; the argument that government should spend on infrastructure because doing so is good for the economy is a different kind of argument — specifically, it is a trickle-down argument.

If you doubt that, ask yourself: What kind of firms get federal contracts? Do you think any of those unhappy people in Ferguson, Mo., own firms that are in line for Department of Defense or Department of Energy contracts? Do you think impoverished Appalachian pillbillies are in the running for upgrading Treasury’s computer networks? If so, I have a bridge I’d like to build you at a very reasonable price.

Federal contracting is dominated, as one would expect, by large firms, often the dreaded multinational corporations of angsty soy-latte-liberal legend. Call the roll: In first place, we have Lockheed Martin, followed by those poor, Dickensian waifs at Boeing, who would be bereft without the support of the Export-Import Bank. Then we have the plucky upstarts at Northrop Grumman, General Dynamics, and Raytheon. And, lest Wall Street feel left out, Cerberus Capital Management comes in at No. 11. Deloitte, Rolls-Royce, and our friends at the Kuwait Petroleum Corporation all make the list — because federal spending is all about Main Street, albeit Main Street in Abu Dhabi, where the national oil company does nearly $2 billion a year in business as a federal contractor.

That’s a non-issue if your argument is that Uncle Stupid needs to build a spur on I-35 because it is having trouble getting trucks to Fort Sam Houston, or if you believe that it should buy its oil from whoever has the best price. Jim Bob’s Mom-and-Pop Interstate Highways, Aircraft Carriers, and Bait Shop (“No Job Too Small!”) is not a thing that exists.

But that is a big, hairy Gordian knot of an issue if your argument is that infrastructure spending, and other federal project outlays, are a desirable form of economic stimulus in and of themselves. If the latter is your argument, then you have to believe something far stronger than even the cartoon trickle-down version of supply-side tax cuts: You have to believe that having the federal government literally write enormous checks to gigantic international conglomerates and the rich guys who own and operate them will create prosperity by, forgive me for noticing, trickling down through the economy to the guys who spread asphalt and the guys who sell those guys work boots and burritos and bass boats. “Deep voodoo,” as Paul Krugman would put it in another context.

Inevitably, there are federal rules setting aside a portion of contracts and subcontracts — 23 percent, in fact — for small businesses. This works about as well as you’d expect: Large firms simply organize subsidiaries or make other arrangements to meet small-business ruleswhich are pretty flexible to begin with — or they fraudulently misrepresent themselves. And so “small business” awards to go firms with 150 employees and $400 million a year in revenue — or, in some cases, a hell of a lot more. By the American Small Business League’s count, 16 of the top 100 small-business contractors in 2013 were actually small businesses. It finds that many small-business contracts are in effect awarded to Apple, Bank of America, PepsiCo, General Electric, and all the usual suspects, through arrangements that made small businesses the names on the contracts while the majority of the revenues went to Fortune 500 companies.

But still, might this stimulate the economy, create jobs, raise wages? There is reason to be skeptical about that proposition. Under the Recovery Act, stimulus spending went to doomed firms such as Solyndra, Evergreen Solar, and SpectraWatt, all of which took the money and ran into bankruptcy. The Export-Import Bank’s defenders make a very conventional case that its subsidies stimulate the economy, but there is no evidence that they do. Even hard infrastructure projects are not always obviously good ideas: roads to nowhere, bridges to nowhere. Such projects likely are net losses for the economy once everything is accounted for: the opportunity cost of the labor and capital that went into them, their effect on the debt and interest expenses, long-term maintenance costs, etc.

If the federal government needs a nuclear submarine or an upgraded computer system, so be it. (Although maybe not the kind of information technology that the stimulus bill bought for the Veterans Administration.) But if you think that dumping another billion dollars into the pockets of General Electric or Raytheon is going to produce trickle-down prosperity for the general public, you’re subscribing to an economic theory that makes Arthur Laffer look like Chairman Mao.

original article: Blue Voodoo

bias, budget, bureaucracy, cronyism, Democrats, economics, economy, funding, government, ideology, left wing, liberalism, nanny state, philosophy, politics, poverty, propaganda, public policy, reaganomics, socialism, spending, taxes, wealthy, welfare

Filed under: bias, budget, bureaucracy, cronyism, Democrats, economics, economy, funding, government, ideology, left wing, liberalism, nanny state, philosophy, politics, poverty, propaganda, public policy, socialism, spending, taxes, wealthy, welfare

Political stunt rigged for publicity

July 31, 2014 by Maggie Thurber

In an effort to gain sympathy for raising the federal minimum wage to $10.10 an hour,numerous politicians accepted a challenge to “Live the Wage.” To no one’s surprise, they couldn’t do it.

They were going to live for a week on $77 because that’s all that the challenge sponsors say a full-time worker earning minimum wage makes, after average taxes and housing expenses are deducted, of course.

But then, they weren’t supposed to be able to get by on that amount. That was the point, as the challenge is designed with failure as the goal.

Most people on minimum wage don’t waste money like that.

So I wondered if I could do better?

I took the food stamp challenge when it was all the rage and realized that I could feed myself and my husband on the $23 a week that organizers said was all we had to spend. I also realized how ridiculous other politicians could be when it came to such stunts.

I showed how to do it rather than succumb to the hysteria and myths about the Supplemental Nutrition Assistance Program — SNAP for short. Apparently, everyone ignored the fact that it is supposed to be a “supplement” to the weekly food budget.

That’s true of this “Live the Wage” challenge, too. You’re not supposed to be able to support a family on a minimum wage job. It’s designed to be a starting wage for unskilled workers until they gain experience and merit a raise.

In fact, only 1.7 percent of Ohioans are single parents earning minimum wage, while less than 5 percent nationally are heads of households earning minimum wage. According to data from the U.S. Bureau of Labor Statistics, only 4.3 percent of those in the workforce earn at or below the federal minimum wage.

And those individuals are eligible for several other government benefits like SNAP, Aid to Dependent Children, Temporary Assistance to Needy Families, utility vouchers and transportation vouchers. They’re not really getting by on just $77 a week.

Perhaps what this challenge really proves is that too many politicians have no clue how to plan and live within a budget. But then, one look at the federal deficit tells us that — and without all the publicity and hype of them failing to “Live the Wage.”

read full article: Politicians can’t make it on minimum wage, but we did

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Educator: States led into Common Core deception

July 3, 2014 by LINDA MURPHY

Time and again state leaders say Common Core is “state led.” The mantra “state led” has been repeated from federal officials, the National Governors Association, Council of Chief State School Officers and other supporters.

Fact is, they’ve been sold a bill of goods for bait. The inspiring images that have been painted of more rigorous standards, “higher-order thinking skills” and highly educated “career and college ready” students are a mirage, luring state officials to stay the course as opposition from informed citizens intensifies.

Big government, big business and education progressives have prideful delusions that their creation will be the best ever. The builders “buy in” to get a part in the reform process. Some have tremendous financial investments, such as Bill Gates’ tab of more than $5 billion. Jeb Bush’s Foundation for Excellence in Education got a Gates grant and is a major Common Core supporter, which influences state leaders and their policy. Also on board is the PTA, another Gates beneficiary. This is the tip of the iceberg but you see how it works. Then there’s the education industry that makes millions on tests and curriculum.

Federal money was used to entrap state education systems through grants given to two national assessment consortia run by top state school officials through the Partnership for Assessment of Readiness for College and Careers (PARCC) and the Smarter Balanced Assessment Consortium. Oklahoma schools Superintendent Janet Barresi is on the PARCC board.
A major shift in the federal role was revealed this spring when this was announced: “The U.S. Department of Education has created a technical-review process for the assessments for common standards. The technical review will focus on two aspects of the work the assessment consortia are doing: item design and validation.” Everyone knows the tests drive what will be taught.

Common Core implementation results in:

Losing state and local control.

Extensively and frequently testing students.

Collecting extensive personal student data stored in data banks without parental consent.

Dropping superior state academic standards.

Adopting inferior untested national standards.

Committing states to multimillion dollar additional expenses.

Americans have been distressed by the federal government’s growing control over banking, manufacturing and health care but most are unaware of the federal/corporate takeover of education.

read full article: Educator: States led into Common Core deception

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New Website Exposes Sky-High Public School Salaries, Including Dozens of Six-Figure Custodians

July 30, 2014 by Victor Skinner

California school employees are squirming to justify their top-dollar salaries to the public after a government watchdog group recently launched an online database with the eye-opening compensation records of over a half-million employees.

“The public votes on tax measures, bond measures without complete knowledge about how the money is being spent,” Ed Ring, executive director of the California Policy Center, told the LA Times. “Taxpayers are paying these salaries so they have a right to know.”

That’s why the Center recently launched Transparent California, a searchable online database with compensation figures for more than 581,000 California public school employees, as well as pay data for other public sector employees.

And the figures are staggering.

“Last year, James Hammond, the superintendent of the Montclair-Ontario Unified School District in the Inland Empire, was paid $492,077. Jonathan Eagan, the principal of a junior high school in the Bay Area city of Martinez made $279,669,” the Times reports.

“And 31 custodians at California public schools were paid more than $100,000 in 2013.”

The data was collected through public information requests sent by the Center to 1,058 school districts across the state, though only about 653 responded with relevant data. The Los Angeles school district, for example, hasn’t released the salary figures for its school employees.

The data the Center did receive back, however, certainly erode the relentless claim by union and school officials that school districts are underfunded.

read full article: New Website Exposes Sky-High Public School Salaries, Including Dozens of Six-Figure Custodians

budget, education, funding, government, nanny state, scandal

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