by | BLOG, COVID, ECONOMY, GOVERNMENT
Proposed legislation in Congress has at its core the addition of $1400 per person (on top of the $600 already passed in other legislation) creating a $2,000 per person payment. Its purpose is stated to be to “stimulate the economy” even though what we actually need to focus on is getting more people back to work.
The prospect of giving out an additional $1400 payment is absolute insanity. We don’t need it, as we have the highest rate of savings right now that we’ve had in a long time. The vast majority of “stimulus” funds go to working people who are in as good or maybe even better financial shape than before COVID, so the money is going into savings or to reduce debt. This is NOT stimulus. (Note that having to repay the money borrowed to make the stimulus payments 1) slows the economy by having to service this debt, and 2) adds extraordinary burdens to our children and grandchildren who must pay it back.)
However, the most egregious element of this stimulus fiasco are amounts going to non-working – but being paid – public service employees.
In the private sector, employees who could not or would not do their jobs would have been furloughed or fired, as a private business would do out of necessity. But the public sector can just abuse taxpayers by keeping them on – and even giving them raises! So many of them are home because there has been no productive work to do. In a horrific economy like ours, businesses simply can’t afford to carry people who are not performing work. Just like a hurricane hitting a factory, we have to furlough even public service employees because there is nothing to do.
But public service employees, in an absolutely unethical and immoral way, have, with help of unions, have put themselves in an undeserved place in society: they neither have to work, nor get furloughed. On top of it, we give them “stimulus” funds even after being already unjustly rewarded? To the detriment and abuse of everyone else who is paying them to do nothing? It’s an affront to all taxpayers.
by | BLOG, ECONOMY, ELECTIONS, FREEDOM
When we have a generation of voters who take their policy lessons from a person who believes that billionaires shouldn’t exist, we are in trouble. What’s more, she boasts of having an economics degree but her ideas are not rooted in reality. Let’s take a look at some of her more unorthodox economic positions:
- Green New Deal: AOC created a sweeping bill that puts the environment impact as the basis for economic policy. Not only is this inherently anti-free-market, her objectives of addressing climate and economic inequalities are completely undermined by the staggering cost of her proposal. Estimates fluctuate wildly between a minimum $10 trillion and $93 trillion, which would obviously exacerbate economic inequality by massively increasing American’s debt load on the backs of the taxpayer.
- Socialism: While on the subject of the Green New Deal, did anyone notice 8B in her bill? “It is the duty of the Federal Government to create a Green New Deal (8B) to create millions of good, high-wage jobs and ensure prosperity and economic security for all people of the United States.” It is out-and-out socialism to insist that the government is the chief means of generating wealth and try to do so through policy.
- 70% Tax Rate: Shortly after taking office, AOC proposed a 70% tax rate on incomes over $10 million aimed at going after wealthy Americans for whom she has utter contempt. After all, during an interview with Ta-Nehisi Coates, AOC explained, “I’m not saying that Bill Gates or Warren Buffett are immoral, but a system that allows billionaires to exist when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health is wrong,” But she fails in understanding that Bill Gates or Warren Buffett has earned their wealth through the creation of millions of jobs and products that have improved the lives of Americans and lifted the economy. Yet a 70% tax rate will quite likely limit future entrepreneurs knowing that being successful results in confiscatory taxation.
- Rent Control: In an attempt to combat poverty through affordable housing, AOC has proposed a sweeping national rent control bill that would institute a cap of 3% or the Consumer Price Index for All Urban Consumers (CPI), whichever is greater, for housing markets nationwide. But this is a classical example of price control; what’s more, it would exacerbate the problem of housing affordability that AOC purports to want to fix. Creating new housing (such as apartments) is the best way to help with affordability, but rent control would create scarcity; housing developers will certainly not build if there is a cap on the amount that could be charged to the consumer-renter.
- Investment tax breaks: AOC was viciously against tax incentives for Amazon when they attempted to set up a new, major headquarters in NYC. When New York offered a $3 billion temporary tax break that would result in the creation of 25,000 new jobs for New Yorkers, she proclaimed “If we’re willing to give away $3 billion for this deal, we could invest those $3 billion in our district ourselves if we wanted to.” What AOC fails to grasp is that nothing was being given away as if there was $3 billion locked up somewhere. It’s merely taxes Amazon won’t have to pay on in the future, money that has yet to exist and now won’t at all. Even worse are the other benefits that won’t exist now that Amazon decided against New York: besides the 25,000 jobs (many likely going to people within her own district), there’s additional sales, income, and property tax revenue that would have been generated for New York. Of course, AOC later gloated about a “victory” when Amazon decided to simply expand some existing NY office space, adding about 1,500 new workers, as if that will grow the economy better than 25,000 would have.
AOC is indeed economically illiterate. The fact that so many people have such little understanding about economics themselves that they are not laughing her out of office for her ideas is even more troubling.
by | ARTICLES, BLOG, COVID, ECONOMY, POLITICS
Alan Blinder is a distinguished economist who insists on misleading the public about economic matters. The latest affair is found in Blinder’s Op-Ed, “A Speedy Recovery Depends on More Aid: Will Trump Deliver?” wherein Blinder deliberately misleads his readers about the economy and the road to recovery. Here are some of his statements:
- “Mr. McConnell is a roadblock to more relief funds.” It wasn’t McConnell, but Pelosi who refused to talk. McConnell put forth a relief package but because it did not include the extra state and local bailout funds desired by Pelosi, Pelosi would not even consider it. Yet, Blinder omits this. The assertion that McConnell is the one who is a “roadblock” is not only a difference of opinion, it’s an outright lie.
- “Senators and the public need to understand that it was CARES and the rest that propped up the economy “artificially” as the virus was pulling it down.” The economy is not artificially propped up. It is well on it’s way back to where it was prior to COVID. In fact, just a paragraph prior to this one, Blinder notes that the recovery has been V-shaped, yet he suggests here that the relief given by CARES somehow wasn’t real relief. And if relief packages are indeed “artificial props”, why does he want another one? But what’s even worse is that Blinder, an economist mind you, believes so much in the CARES Act, but if anything, CARES restricted economic growth in the economy by paying people not to work and reducing incentives to work, so the recovery that we have experienced is despite the CARES Act, not because of it.
- “Americans are suffering from the tragic results of the Trump administration’s malign neglect of the virus.” Nothing could be more politically upside down. Trump was the first to restrict travel while the Dems screamed it was wrong to do so. Likewise, his vaccine programs have been aggressive enough to produce multiple vaccines that are now being implemented in the public. Blinder puts the blame on Trump, yet it was the states, not Trump, who imposed the lockdowns — many excessive and some still ongoing — that have shuttered industries and businesses. Some of these will never recover, yet the economic consequences of prolonged shutdowns are real, and rest squarely on the shoulders of states.
- “State and local governments, which are on the front lines in the battle against the virus, urgently need several hundred billion dollars in federal aid. They must balance their budgets.” Here’s the biggest falsehood. Blinder fails to mention that many states and local governments were in economic dire straits prior to COVID as a result of profligate spending and fiscal mismanagement, and this irresponsibility directly affects those particular governments’ recovery efforts today. The states with the biggest budget problems pre-COVID are the ones begging for the biggest bailouts. They are also the ones who have implemented some of the harshest and irrational lockdowns that have made things even worse. What’s more, these same governments have steadfastly refused to institute common sense restrictions on themselves such as freezing pay, furloughing workers, etc. It’s egregious, but Blinder just wants to paper over that part by calling for “balanced budgets.” None of these people who spent recklessly never cared for balanced budgets prior to now. And without changing spending habits nor making drastic cuts to the budget in the future will go right back to being in the hole.
- “These folks have pretty straightforward needs: cash income, food, shelter and health care. The federal government knows how to provide these things.” This is cringe-worthy. Blinder forgets that it’s the American people who are the source of economic prosperity and he forgets that it is their taxpayer money earned through hard work and ingenuity.
This article reveals that Blinder really is a shill for the Democrats, and used his column to mislead people into believing that bailing out states and local governments is the only way our economy is to be “saved.” But it makes virtually no economic sense to spend massive amounts of taxpayer funds to cover up fiduciary irresponsibility. It would be reckless for Congress to commit any more money to such endeavors. McConnell knows this. We know this. Just about everyone knows this except for those leaders and governments who have never shown themselves to be accountable with someone else’s money — which is how they got in their financial budget shortfalls in the first place.
Those are not leaders. Blinder does a disservice to his readers by espousing some of the worst economic fallacies that will ultimately hurt, rather than help, fellow Americans.
by | BLOG, FREEDOM, GOVERNMENT
Missouri Senator Josh Hawley is leading the charge to amend Section 230 of the Communications Decency Act, essentially giving the government broad powers to regulate tech industry giants. This legislation undermines free speech and would be an egregious overreach of federal powers under the guise of “fairness.”
As Section 230 was construed, it’s aim “was to protect the openness of online culture while also protecting kids from online smut, and protecting the web at large from being overrun by defamatory, hateful, violent, or otherwise unwanted content.” The legal framework that was developed ensured that digital platforms are different entities from their users and are therefore not legally responsible for user content — good, bad, or otherwise. It was a way to protect First Amendment rights in an online world.
Hawley’s amendment would weaken the protections granted to social media companies by requiring them to first show regulators how they make decisions about content and then prove to those regulators that their moderation systems are neutral. Essentially, Hawley’s attempt to push back at various instances (real or imagined) of right-leaning users being treated unfairly or blocked by tech giants means that we have a Republican willing to not only institute severe regulatory behavior but also create anti-free speech monitors. Furthermore, facing possible legal repercussions from user content, companies would likely just ban or remove content others have flagged for any and all reason of being offended.
The antidote to bad speech is not good speech; it is free speech. Removing such free speech protections is an outrageous proposal, and putting the government in charge of deciding speech neutrality is even worse. Shame on Senator Hawley for attempting to regulate “fairness” and launching an assault on our First Amendment rights.
by | ARTICLES, ECONOMY, FREEDOM, GOVERNMENT, LAW, POLITICS, TAXES, TRUMP
The Tax Cuts and Job Act made some positive changes to the tax code. The reduction in marginal rates, especially on the corporate side, is noteworthy. However, there were several changes on the individual side which were absolutely ludicrous. These are noted below:
Without any discussion, Congress eliminated the miscellaneous itemized deductions. As I have written about before, in actuality, this one is truly the only legitimate deduction and is absolutely necessary to maintain the integrity of the tax code. With the new change now removing the miscellaneous itemized deduction, this person now has to pay taxes on the full amount earned without being able to deduct expenses accumulated while earning the income they are taxed on.
Another deduction Congress removed summarily is the moving deduction. Similar to the miscellaneous itemized deduction, this is a real expense that is incurred when moving to get a new job (in order to earn the income that will be taxed.) Now with the elimination of the deduction, taxpayers are no longer allowed to write off this cost.
The casualty loss deduction was also eliminated. This enabled you to deduct a loss that was due to a sudden unexpected event — such as a fire, hurricane, or robbery. Now if your house burns down, you can no longer write it off. The exception to this change is if your loss is in a federally-declared disaster area. So if your house burns down due to faulty wiring, you get no deduction. But if it burns down in a large wildfire that was later declared a disaster, you can claim the deduction. This is very egregious because the effect on the individual — the loss of a house due to a fire — is absolutely the same. This deduction elimination is unacceptable.
Furthermore, the alimony deduction was thrown out. The alimony deduction is a mechanism that prevented an inequitable tax burden to be created when a married family unit is split into two. Now, one can no longer deduct alimony payments, a move that is mean-spirited and creates a targeted tax burden on people who suffered a family breakup.
Additionally, there were two business-related deductions that were unnecessarily changed. The first one now caps the limit on the amount of business losses one can deduct at $250K ($500K if married), whereas the prior tax law did not. Furthermore, carryover losses are now limited. It used to be that you could carryover losses from one year to the next; for instance, if you had a $1 million loss on year but a $1 million gain the next, you could use that gain to offset the prior year loss. With the tax law changes, you can now only offset up to 80%.
While eliminating these important and equitable donations, Congress left in place a number of purely political/social engineering deductions and credits. Congress left in a substantial part of the mortgage deduction, which is really nothing more than a government subsidy to the real estate industry. They left in energy credits, rehabilitation and low income housing credits, and the Alternative Minimum Tax (AMT). It’s disappointing to see Congress talk about simplicity, efficiency, and equitability, while simultaneously removing good provisions from the tax code and leaving in parts that are merely political appeasements to various groups and industries. It would be wise for Congress to reinstate these various deductions as a means to truly maintain fairness within the IRC.
