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Posts Tagged ‘Great Society’

Biden Bizarrely Claims That Government Spending Is Costless | Mises Wire

Posted by M. C. on October 10, 2021

In fact, in 2018, the top 1 percent of income earners (those earning $540,000 or more) paid more than 40 percent of all income taxes collected; the top 5 percent of income earners (those making $218,000 or more) paid 60.3 percent of all collected income taxes; the top 10 percent (those earning $152,000 or more) paid 71.4 percent of all income taxes; and the top 25 percent (those making $87,000 or more) paid 87 percent of all income taxes paid.

https://mises.org/wire/biden-bizarrely-claims-government-spending-costless

Richard M. Ebeling

There is only one way to describe the fiscal mindset of those in the White House and in Congress who are proposing new federal budgetary expenditure and taxing increases in the trillions of dollars: a fantasy land of financial irrationality.

The Biden administration insists on additions to the already bloated American welfare state that will see an expansion in entitlement programs and increased societal dependency on government largess not implemented since Lyndon Johnson’s Great Society programs of the 1960s. But to show just how much Joe Biden’s mind seems to operate in some alternate universe, he has recently informed us that the $3.5 trillion of additional government spending over the next several years will cost “nothing.” 

Why nothing? Because over $2.1 trillion will be covered by taxing the rich and large corporations. The remaining difference between $3.5 trillion of greater spending and $2.1 trillion of increased taxes will materialize through some magic formula of government investing in infrastructure, alternative energy sources, and people.

Biden’s Hucksterism of Something for Nothing

Notice the rhetorical hucksterism. All of that additional spending won’t cost anything, because “you” are not being taxed to pay for it, and it will not result in any net increase in the national debt. It’s those others, you know, the millionaires and billionaires, who neither need all that money nor deserve it. You do, in the form of increased government redistribution.

You see, if you are not taxed to pay for it, and if it does not increase the debt, it is all, well, free goodies with other people’s money, other people who really don’t count or matter. How else do we interpret Joe Biden’s words at a recent White House event? “It is zero price tag,” he said, “on the debt we’re paying. We’re going to pay for everything we spend.” He went on to say, “Every time I hear this is going to cost A, B, C, D—the truth is, based on a commitment that I made, it’s going to cost nothing … because we are going to raise the revenue.”

This was clarified by White House deputy press secretary Andrew Bates, “The bill’s price tag is $0 because it will be paid for by ending failed, special tax giveaways for the richest taxpayers and big corporations,” he said, “adding nothing to the debt.” Listening to the president and those around him, you would assume that “the rich” pay little or nothing, while the poor and the middle-class working population bear the brunt of all the good things that government paternalism does for all of us.

Those Who Bear the Tax Burden for Government Spending

In fact, in 2018, the top 1 percent of income earners (those earning $540,000 or more) paid more than 40 percent of all income taxes collected; the top 5 percent of income earners (those making $218,000 or more) paid 60.3 percent of all collected income taxes; the top 10 percent (those earning $152,000 or more) paid 71.4 percent of all income taxes; and the top 25 percent (those making $87,000 or more) paid 87 percent of all income taxes paid. The bottom 50 percent of all income earners (those earning $43,600 or less) paid less than 3 percent of all income taxes collected.

As for corporate taxes, the United States, currently, ranks as 13th in heavily taxing corporations, but if Biden’s tax plan were to be implemented, the corporate tax rate would rise from 21 percent to 26.5 percent at the federal level. But considering that state governments also tax corporations, these business enterprises would (depending on the state) have taxes anywhere between 30 percent and 35 percent. If this happens, the U.S, would rank third in the world in terms of corporate taxes, just behind Portugal and Columbia. 

In a new study, economists Daniel Mitchell and Robert P. O’Quinn estimated that the business tax effects of Biden’s plan would shift about 2 percent of the economy’s output into the hands of the government over several years, with an appreciable negative impact on private sector economic growth looking to the years ahead. They estimate a $3 trillion shortfall in national income from what it otherwise might have been over the next decade if Biden’s policies were not implemented.

A Philosophy of Plunder, Envy, and Paternalism

What is as disturbing as the possible economic impacts of these spending and taxing policies is the philosophy behind them. From Biden’s own mouth, the largess coming from government can be viewed as costless for those said to be the interest group beneficiaries, only as long as someone else can be made to pay the fiscal tab for it. This is an out-and-out politics of plunder, under which people may be promised practically anything, because the rich Peter will be taxed for the benefit of the deserving Paul.

The political paternalists always insist that those they designate as the rich do not really deserve or have a right to their higher incomes and wealth. First, this is because of the clear envy hidden behind the smoke screen of convoluted conceptions of equality. The mere having of more than others becomes a mark of social injustice.

Second, underlying this are forms of the Marxian and socialist presumptions that accumulated wealth and high income can have no origin other than by the exploitation and the oppression of others. If some have significantly more than others, there can be no rational reason for it other than it represents ill-gotten gains taken from others to whom it legitimately belongs. As a consequence, taking more of it away from the rich is merely—through the intermediation of the redistributing political authority—getting back what is rightfully due to those from whom it should never have been stolen in the first place under the capitalist system.

The only modern variation on this theme is that social classes in conflict with one another have been widened to incorporate a white, male, capitalist exploitation and oppression of all people of color, and female and related genders, along with the workers of all ethnicities and races. (See my article “Identity Politics and Systemic Racism Theory as the New Marxo-Nazism”.)

Biden’s Socialism Is of the Fascist Variation

It is noteworthy that when democratic socialists like Bernie Sanders or Alexandria Ocasio-Cortez are asked how much would be enough for the capitalist rich to pay their “fair share,” there is never a truly straight answer, other than implicitly a number approaching 100 percent. Biden, of course, has gone out of his way to insist that he is not a socialist.

But when your starting premise is that all good things come only through government planning, directing, and dictating, and that the resources and wealth of the entire country are at the discretionary disposal of those in political power who think like him, it is difficult not to view Biden as a central planner. And when central planning takes the form of government directly or indirectly commanding how those who own private businesses may go about their business in terms of what, how, where, and when to produce, employ, sell, and price what is being offered for sale, we end up with fascism.

When a president of the United States declares that he will use every political power at his disposal to compel as many people as possible to be vaccinated against a virus; when he insists that good citizenship requires every American to wear a facial mask, and pressures businesses to impose vaccine and masking rules on virtually every working American; when he commands that within a handful of years the majority of vehicles on the roads and highways of America must be powered and fueled a certain way, and threatens penalties if auto manufacturers do not comply with this demand; when he imposes retroactive regulatory rules and prohibitions on various forms of enterprise structures and market conduct through active antitrust enforcement; when he does these, and dozens more in a matter of a few months that he has been in office, one is reminded of Benito Mussolini’s description of the fascist, totalitarian system: “All within the state, nothing outside the state, nothing against the state.”

Biden Gets Arrogantly Impatient with a World Not Obeying Him

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Contact Richard M. Ebeling

Richard M. Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel.

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What ‘Experts’ Miss About Economic Inequality | The Libertarian Institute

Posted by M. C. on October 4, 2020

Of course, that’s not what we have. But instead of advocating for a more free economy to address inequality, the “experts” consulted by USA Today advocate for more state interference that would likely make inequality worse, while ignoring perhaps the largest source of inequality, the Federal Reserve.

https://libertarianinstitute.org/articles/what-experts-miss-about-economic-inequality/

by Bradley Thomas

How can the U.S. reduce economic inequality?

That’s a question USA Today posed to three “policy experts on the left and the right” in this recent article. The responses, while unsurprising, were nevertheless disappointing.

For libertarians, economic inequality itself is not problematic, as long as it is in the context of an unfettered market economy free of government privileges and interference.

Of course, that’s not what we have. But instead of advocating for a more free economy to address inequality, the “experts” consulted by USA Today advocate for more state interference that would likely make inequality worse, while ignoring perhaps the largest source of inequality, the Federal Reserve.

First up is Scott Winship of the American Enterprise Institute, who focuses on income mobility. Winship points out that if every child had equal economic opportunity, then we would see an equal percentage among races of children remaining in the bottom fifth of income when they become adults.

Winship notes that roughly 30% of white children remain in the bottom fifth in adulthood, while the percent for black children exceeds 50%.

Absent from Winship’s observation, however, is the recognition of why this might be the case.

According to Pew Research, 30% of single mothers and their families are living in poverty compared to 8% of married couples and families. In other words, children are nearly four times as likely to be living in poverty in a single mother household compared to a household headed by a married couple. Meanwhile, 58% of black children are living with an unmarried parent, compared to 24% of white children and just 13% of Asian children.

Moreover, the welfare state has facilitated a dramatic rise in single-parent homes. Nationally, since LBJ’s Great Society ratcheted up government welfare programs in the mid-1960s, the rate of unmarried births has tripled.

Single parenthood fueled by the welfare state is an outsized source of inequality, but the welfare state escapes any blame by the “expert” Winship.

To his credit, Winship in his recommendations mentions in passing that “shoring up marriage where it has become an anomaly” would help reduce inequality, but fails to target the welfare state as the major culprit.

His other recommendations include the vague notion of “expanding access to high opportunity neighborhoods,” perhaps a nod to government programs to inject affordable housing projects in middle class suburbs, along with increased government spending on early childhood programs. Encouraging more state involvement in child rearing while ignoring the glaring problem of single parenthood caused in large part by the welfare state sounds like a recipe to exacerbate inequality, not combat it.

Next up is American Compass research director Wells King, who blames growing economic inequality on the fact that the “labor movement has lost power.”

King overlooks basic economic analysis while giving labor unions undeserving credit for boosting worker wages on a broad scale. As Henry Hazlitt wrote, “the blunt truth is that labor unions cannot raise the real wages of all workers.”

As Hazlitt explained, “whenever the unions gain higher wage rates for their own members than free competition would have brought, they can do this only by increasing unemployment,” in that industry, because the above market wage rates decrease employer demand.

As a result, more workers are forced to compete for other nonunionized jobs, and the increased supply of workers in other industries drives down those wages. Therefore, Hazlitt concludes, “All union ‘gains’ (i.e., wage rates above what a competitive free market would have brought) are at the expense of lower wages than otherwise for at least some if not most nonunion workers. The unions cannot raise the average level of real wages; they can at best distort it.”

As Hazlitt explained, King’s calls for a more robust union movement as a means to reduce economic inequality are ill-founded.

Moreover, King’s blinkered focus on unions as being a force for growing worker wages blinds him to a far more potent force driving inequality.

“The steady erosion of unions over the past 50 years has been responsible” for growing inequality, King insists while noting a correlation between declining union membership and growing wealth inequality during that time.

But what else happened fifty years ago that might influence wealth inequality?

Of course it was Nixon’s severing the final ties of the dollar to gold in 1971, which has enabled the Federal Reserve to create fiat money completely unchecked.

As demonstrated in multiple charts at the website WTFhappenedin1971, there is a clear divergence in incomes between high and low earners beginning sharply in 1971.

According to this 2018 Mises.org article, the base (M1) money supply ballooned by an incredible 17 times, with more than $3.2 trillion being created from 1971 to 2018. And it’s only getting worse, with another 33% increase in the first 7 months of 2020 alone.

Why does Fed money printing increase economic inequality?

In short, the rich receive a significant share of their income from investments, while the middle class primarily relies on their income from labor, and the poor a combination of labor income and government welfare payments.

When the Fed creates new fiat money out of thin air, it isn’t distributed evenly throughout the economy. Instead, it is inserted at specific points, typically via credit to business investors. As the Fed inflates a bubble, speculation with the new money also increases—which inflates the stock market, benefitting the investor class.

Meanwhile, the fiat money creation creates price inflation that permeates over time throughout the economy. Some of the more highly skilled in the middle class may receive salary increases to keep up with the inflation, while many of the lower-skilled middle class will struggle to keep up with rising prices.

Meanwhile, the poor, who lack the bargaining power to raise their wages to keep pace with inflation, and otherwise rely on relatively fixed incomes, fall further behind.

The failure of King to recognize the Fed’s major role in growing inequality undercuts any credibility his recommendations should be given.

Lastly is Economic Policy Institute research director Josh Bevins who incredibly calls for more money printing to help reduce economic inequality.

“Policymakers should re-target genuine full employment (the Fed is making good steps in this direction)” Bevins implores. How this supposed “expert” believes more asset bubble inflating money creation will reduce economic inequality goes without explanation.

Bevins further calls for a “substantially increased” federal minimum wage, without acknowledging that pricing low-skilled workers out of the workforce and eliminating their first rung on the career ladder will reduce the ability for low-income people to increase their earning power and narrow economic inequality.

More generous unemployment benefits is another of Bevins’ recommendations. But increasing the incentive to not work will result in more people, especially those already on the margins of employment, staying out of the workforce for longer periods of time—a great recipe to stymie the steady career track needed to climb out of low-income status.

How disappointing that a national publication like USA Today can do no better than “experts” who recommend government interventions that would end up increasing, rather than shrinking, economic inequality.

Bradley Thomas is creator of the website Erasethestate.com and author of the book “Tweeting Liberty: Libertarian Tweets to Smash Statists and Socialists.” He is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics. Follow him on twitter @erasestate.

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Name ONE TIME a government program accomplished its goal | The Daily Bell

Posted by M. C. on April 10, 2019

How these politicians intend to pay for their social programs is actually beside the point. Even when they have the money to pay for their programs, they can’t execute.

https://www.thedailybell.com/all-articles/news-analysis/name-one-time-a-government-program-accomplished-its-goal/

by Joe Jarvis

Illinois has the worst credit rating of any state.

It has $8 billion in outstanding bills and a $3.2 billion deficit in just next year’s budget.

But the worst part is the $250 billion they need to pay their state pensions…

When you or I have debt, the first thing we have to do is tighten the belt. We save money and cut expenses.

But imagine if instead you could just waltz up to your boss and demand a raise. And not because you’re doing more work, or because you hit a home-run with last quarter’s goals… just because you got yourself into debt.

If Illinois was an employee, they would have been fired by now. They haven’t hit any of their goals and continuously fail to deliver on the promises they have made.

But the taxpayers will once again face tax increases in order to pay for more government, more promises, and more mismanaged policy.

The Governor recently proposed a graduated income tax to raise rates on the highest earners.

This will bring in more revenue they say… when have they been wrong before?

Meanwhile, 137,000 net residents have left the state since 2013.

Somehow I’m guessing their estimates for revenue are going to be just as wrong as their pension and budgeting calculations.

Never do governments even remotely consider that the solution is to spend less.

And never does anyone ask, what about the outcome?

Why would more money solve these problems when the government has spent so much money already, and still failed to execute on their promises?

It’s the same in business. We just went through a decade of low-interest rates, which meant easy money for stupid investments. People sunk money into terrible ideas that never got executed, and destroyed value.

The difference is it destroyed value for a very select group of people: investors and business owners.

And those people made the choice to put their own money into those businesses.

Raising the money is the easy part. Show me ONE TIME a government program did what it said it was going to do.

The war on drugs, Great Society to end poverty, the war on crime, the war on terrorism…

And yet the newest crop of socialist politicians say right up front that results don’t matter.

When it came to fighting for a cleaner environment, Alexandra Ocasio-Cortez said:

The power is in the person who is trying, regardless of the success. If you’re trying, you’ve got all the power, you’re driving the agenda…

Like, I just introduced Green New Deal… and it’s creating all this conversation, why? Because no one else has even tried…

 

 

 

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