Biden’s Demagoguery That Government Spending is Costless

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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 smokescreen 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

Biden always seems impatient whenever he is challenged about any of his decisions. He angrily turns away from any more questions about the American withdrawal from the Afghanistan debacle. He has no intention of rethinking the pilotless drone warfare that enables the United States to arrogantly target anyone, anywhere in the world. He seems to believe that just about everything is in America’s national interest.

He knows the world is threatened by global warming, so he will try to remake how all Americans live and work, and he is closed to any suggestion that the supposed science is challengeable. He talks like an irritated, impatient parent who is tired of the foolishness of the immature child-like citizens who won’t do as they are told. He hides away and won’t even talk about a border crisis of his own making.

Why, then, should it be surprising that Joe Biden just announced that $3.5 trillion of additional paternalist government spending has no cost? If he says so, well, then it is true. It is costless because it will not increase the national debt, since it will be paid for by imposing $2.1 trillion of higher taxes on those designated as rich, and taxing them, remember, has no cost attached to it.

Notice that in Joe Biden’s fiscal world, there are no trade-offs between the use of scarce resources in the private sector versus and by government. Indeed, magically, resources in the government’s hands are somehow automatically more productive. How else can it be asserted that taxing the rich an additional $2.1 trillion will somehow equal $3.5 trillion of redistributive spending?

Ludwig von Mises on the Illogic of Government Spending and Taxing

The mindset behind such policies are, tragically, nothing new. More than 90 years ago, in 1930, the Austrian economist, Ludwig von Mises (1881-1973), wrote about a similar mentality in his native Austria in the years between the two World Wars. Mises was at that time employed as a senior economic policy analyst for the Vienna Chamber of Commerce, Crafts, and Industry. In that capacity, he had a wide and detailed knowledge of the fiscal and regulatory policies of the Austrian government.

Mises delivered a talk before the Industrial Club of Vienna in December 1930 on “Adjusting Public Expenditures to the Economy’s Financial Capacity,” (Chapter 26) in which he discussed the mentality seen in the open in Washington, D.C. today. It is, perhaps, worthwhile, therefore, to quote Mises at some length:

“The errors in our fiscal policy stem from the theoretical misconceptions that dominate public opinion about financial matters. The worst of these misconceptions is the famous, and unfortunately undefeated, idea that the main difference between the state’s and the private sector’s budget is that in the private sector’s budget expenditures have to be based on revenues, while in the public sector’s budget it is the reverse, i.e., the revenue raised must be based on the level of expenditures desired.

“The illogic of this sentence is evident as soon as it is thought through. There is always a rigid limit of expenditures, namely the scarcity of means. If the means were unlimited, then it would be difficult to understand why expenses should ever have to be curbed. If in the case of the public budget it is assumed that its revenues are based on its expenditures and not the other way around, i.e., that is expenses have to be based on its revenues, the result is the tremendous squandering that characterizes our fiscal policy.

“The supporters of this principle are so shortsighted that they do not see that it is necessary, when comparing the level of public expenditures with the budgetary expenditures of the private sector, not to ignore the fact that enterprises cannot undertake investments when the required funds are used up instead for public purposes. They only see the benefits resulting from the public expenditures and not the harm the taxing inflicts on the other parts of the national economy . . .

“When the taxation of enterprises goes too far, it results in the consumption of capital. To a large extent, this has been the case here in Austria for the last eighteen years. Capital consumption is detrimental not only for the owners of property but for the worker as well. The more unfavorable becomes the quantitative ratio of capital to labor, the lower is the marginal productivity of the work force, and, consequently, the lower are the wages that can be paid.

“The view that levying taxes on property in any amount does not affect the interests of the masses is just one of the steps leading to the demagogic and false doctrine that it is safe to burden the state with any amount of costs.”

Fiscal Follies Can Lead to Capital Consumption

The following year Mises co-authored a report for the Austrian government that demonstrated that between 1925 and 1929, tax increases and compulsory union wage demands on the Austrian private sector had actually resulted in capital consumption. Private enterprises were unable to maintain the value and physical capacity of their capital. General corporate business taxes were increased by 32 percent, mandatory social insurance payments rose by 50 percent, industrial wages, in general, had been pushed up by 24 percent, and wages in agriculture by 13 percent, along with higher transportation costs by 15 percent due to various regulatory interventions.

At the same time, an index of the prices of manufactured goods bearing these fiscal and labor union burdens had increased only by 4.74 percent. For many segments of the Austrian economy, revenues were not enough to cover the costs of maintaining capital. Austrian society became economically poorer, as a result.

The difficulty of fully appreciating how fiscal and related policies can lead to such an extreme situation was also something that Ludwig von Mises drew attention to. Near the end of his famous treatise on Socialism: An Economic and Sociological Analysis, he explained:

“Capital consumption can be detected statistically and can be conceived intellectually, but it is not obvious to everyone. To see the weakness of a policy which raises the consumption of the masses at the cost of existing capital wealth, and thus sacrifices the future to the present, and to recognize the nature of this policy, requires deeper insight than that vouchsafed to statesmen and politicians or to the masses who have put them into power.

“As long as the walls of the factory buildings stand, and the trains continue to run, it is supposed that all is well with the world. The increasing difficulties of maintaining the higher standard of living are ascribed to various causes, but never to the fact that a policy of capital consumption is being followed.”

Biden’s Policies Could Lead America Down the Same Road

America may still be far from a situation in which its capital is consumed in the manner that Mises analyzed. But it nevertheless remains that the political and ideological forces at work are not that much different from his time in interwar Austria. Taxing the rich is presumed to have no detrimental effect on the continuing maintenance and increase in the capital that enables more, better, and newer products from coming to the market. We know this because Joe Biden has told us so. The same presumption is made in our time as in Mises’s. More government spending in any and all directions need not be limited to available resources.

Government borrowing and Federal Reserve money-printing are presumed to have no cost or constraint. All you need is a central bank that is willing to keep interest rates near zero, so the cost of borrowing trillions to cover budget deficits can seem to be almost nothing at all. There is always enough fiat money in the banking system to make it seem like there is plenty for anyone and everyone, for almost anything.

Joe Biden’s demagoguery, arrogant impatience, and dictatorial manner do not and cannot change reality. At the end of the day, his policies can only lead to a financial and economic disaster. But why should he care? He gets to sit in the Oval Office, play master of the world, have his staff and supporters bow and grovel at his feet, and dream of his legacy as president of the United States.

Besides, at 78 years of age, most of the disastrous consequences of his own policies will only fully come home to roost after he is long gone. Those will be some other president’s problem. For now, he gets to play the most powerful political paternalist on the planet. As for later, well, Après nous le deluge.

*****

This article was published on September 30, 2021, and is reproduced with permission from AIER, American Institute for Economic Research.

Debt Limit Negotiations – Threat Or Opportunity For Fiscal Conservatives?

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Surprise, surprise! It’s time to go through the debt limit-raising hassle again.

Democrats are clamoring for immediate action to avert a financial crisis which would be blamed on Republicans, just because. Meanwhile, the Republican campaign conservatives aren’t showing much enthusiasm for this rare possibility of achieving significant fiscal reform.

Treasury Secretary Janet Yellen rolled out the traditional arguments for raising the debt limit in the Wall Street Journal. Raising the limit doesn’t authorize additional deficit spending, which is true, as far as it goes. But it does ratify the overspending that has occurred, which keeps the ball rolling for spenders.

But she whiffs on the real point. The greater danger to our creditworthiness would be to continue the present course. As our indebtedness climbs to stratospheric levels and interest rates return to normal, our fundamental ability to service the debt becomes questionable, as our geopolitical rivals well know.

America is going to pay its debts. Yet in an obvious attempt to bullrush Republicans into compliance without conditions, Secretary Yellen warns that any failure could cause economic damage so severe as to be permanent.

Indeed, the titanic struggle over the 2011 debt limit increase, which resulted in a $2.1 trillion spending cut, caused a significant downturn in financial markets. However, spurred by the spending cut and the vitality of America’s private sector, all the losses and more were made up within the year.

Yellen notes that Congress has raised or suspended the debt ceiling 80 times since 1960, so it must be no big deal, right? But what’s wrong with this picture?

All 80 times, the effect was to increase America’s borrowing capacity. It has never been reduced. The routine expected raising of the debt limit is the enabling mechanism that has allowed us to slide into treacherous financial territory.

Republicans have never had a better opportunity to break this self-perpetuating cycle. Democrats are on a world record spending binge. Their majorities are slim and fractious. They desperately need Republican cooperation.

So Republicans are threatened with being saddled, again, with responsibility for the dreaded government “shutdown”. Previous shutdowns prohibited WW II veterans from visiting their DC memorial and prevented the viewing, even from the highway, of Mount Rushmore.

But government employees and beneficiaries were exempted. Nonessential employees got the best deal of all. They were furloughed but promised a complete pay reimbursement after the “shutdown”. Road trip!

Both Yellen and Biden insist that raising the debt ceiling in the past was bipartisan. That doesn’t make it right, of course. Still, the claim holds true only if you consider a 98.8% negative Democrat vote on the three debt ceiling bills during the George W. Bush administration to be “bipartisan“.

But the screws on Republicans get tightened anyway. “I can’t believe Republicans will let the nation default“ by not raising the debt limit, Chuck Schumer mourned at a recent press conference. As usual, the Chuckster was making it up.

Democrats control the White House and both houses of Congress. They don’t need a single Republican vote to do whatever they wish. They could have simply included the debt limit provisions in a budget resolution, a reconciliation bill not subject to the filibuster and thus not requiring Republican votes to pass.

Schumer instead moved the debt limit to regular legislation requiring 60 votes so that Republicans could be blamed for its failure. Democrats understandably don’t want the political blame for pushing our nation deeper into debt. But why should Republicans bail them out when the budget-crushing Biden era spending bills have passed with almost exclusively Democrat support?

Based on their record when in power, Republicans may not be sincerely interested in living within our means either. If they are serious, they must learn from past mistakes. Previous budgetary reforms included in debt limit bills have failed because they were later amended or ignored.

This time, Republicans must demand limitations that are self-activated and self-enforced, not subject to congressional amendment, at least for a time certain. Congressional proposal of a debt-limiting constitutional amendment should be on the table.

For common-sense fiscal conservatives, this is our time. Success requires boldness and bravery.

*****
Thomas C. Patterson, MD is a retired Emergency Medicine physician, Arizona state Senator and Arizona Senate Majority Leader in the ’90s. He is a former Chairman, Goldwater Institute.

YouTube Banning Prominent Anti-Vaccine Mandate Activists and Blocking All Vaccine Critical Content

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Totalitarianism on the left is spreading quicker than any COVID variant. What’s more frightening? The Democrats? Or American apathy?

YouTube is banning prominent anti-vaccine activists and blocking all anti-vaccine content

By: Gerrit De Vynck, MSN, September 28, 2021:

Kids may not be able to get Pfizer shots until November; vaccination…

Fort Worth police arrested a man they say killed and dismembered three people

SAN FRANCISCO — YouTube is taking down several video channels associated with high-profile anti-vaccine activists including Joseph Mercola and Robert F. Kennedy Jr., who experts say are partially responsible for helping seed the skepticism that’s contributed to slowing vaccination rates across the country.

As part of a new set of policies aimed at cutting down on anti-vaccine content on the Google-owned site, YouTube will ban any videos that claim that commonly used vaccines approved by health authorities are ineffective or dangerous. The company previously blocked videos that made those claims about coronavirus vaccines, but not ones for other vaccines like those for measles or chickenpox.

Misinformation researchers have for years said the popularity of anti-vaccine content on YouTube was contributing to growing skepticism of lifesaving vaccines in the United States and around the world. Vaccination rates have slowed and about 56 percent of the U.S. population has had two shots, compared with 71 percent in Canada and 67 percent in the United Kingdom. In July, President Biden said social media companies were partially responsible for spreading misinformation about the vaccines, and need to do more to address the issue.
Analysis: ‘YouTube magic dust’: How America’s second-largest social platform ducks controversies

The change marks a shift for the social media giant, which streams more than 1 billion hours’ worth of content every day. Like its peers Facebook and Twitter, the company has long resisted policing content too heavily, arguing maintaining an open platform is critical to free speech. But as the companies increasingly come under fire from regulators, lawmakers and regular users for contributing to social ills — including vaccine skepticism — YouTube is again changing policies that it has held onto for months.

“You create this breeding ground and when you deplatform it doesn’t go away, they just migrate,” said Hany Farid, a computer science professor and misinformation researcher at the University of California at Berkeley. “This is not one that should have been complicated. We had 18 months to think about these issues, we knew the vaccine was coming, why was this not the policy from the very beginning?”

YouTube didn’t act sooner because it was focusing on misinformation specifically about coronavirus vaccines, said Matt Halprin, YouTube’s vice president of global trust and safety. When it noticed that incorrect claims about other vaccines were contributing to fears about the coronavirus vaccines, it expanded the ban.

“Developing robust policies takes time,” Halprin said. “We wanted to launch a policy that is comprehensive, enforceable with consistency and adequately addresses the challenge.”
Facebook and YouTube spent a year fighting covid misinformation. It’s still spreading.

Mercola, an alternative medicine entrepreneur, and Kennedy, a lawyer and the son of Sen. Robert F. Kennedy who has been a face of the anti-vaccine movement for years, have both said in the past that they are not automatically against all vaccines, but believe information about the risks of vaccines is being suppressed.

Facebook banned misinformation on all vaccines seven months ago, though the pages of both Mercola and Kennedy remain up on the social media site. Their Twitter accounts are active, too.

In an email, Mercola said he was being censored and said, without presenting evidence, that vaccines had killed many people. Kennedy also said he was being censored. “There is no instance in history when censorship and secrecy has advanced either democracy or public health,” he said in an email.

More than a third of the world’s population has been vaccinated and the vaccines have been proven to be overwhelmingly safe.

YouTube, Facebook and Twitter all banned misinformation about the coronavirus early on in the pandemic. But false claims continue to run rampant across all three of the platforms. The social networks are also tightly connected, with YouTube often serving as a library of videos that go viral on Twitter or Facebook.

That dynamic is often overlooked in discussions about coronavirus misinformation, said Lisa Fazio, an associate professor at Vanderbilt college who studies misinformation.

“YouTube is the vector for a lot of this misinformation. If you see misinformation on Facebook or other places, a lot of the time it’s YouTube videos. Our conversation often doesn’t include YouTube when it should,” Fazio said.

The social media companies have hired thousands of moderators and used high-tech image- and text-recognition algorithms to try to police misinformation. YouTube has removed over 133,000 videos for broadcasting coronavirus misinformation, Halprin said.

There are also millions of people with legitimate concerns about the medical system, and social media is a place where they go to ask real questions and express their concerns and fears, something the companies don’t want to squelch.
A major founder of the anti-vaccine movement has made millions selling natural health products

In the past, the company’s leaders have focused on trying to remove what they call “borderline” videos from its recommendation algorithms, allowing people to find them with specific searches but not necessarily promoting them into new people’s feeds. It’s also worked to push more authoritative health videos, like those made by hospitals and medical schools, to the top of search results for health-care topics.

But those methods haven’t stopped the spread of anti-vaccine and coronavirus misinformation. More than a year after YouTube said it would take down misinformation about the coronavirus vaccines, the accounts of six out of 12 anti-vaccine activists — identified by the nonprofit Center for Countering Digital Hate as being behind much of the anti-vaccine content shared on social media — were easily searchable and still posting videos. Wednesday’s policy change means many of those will now be taken down.

Once communities grow and build bonds on mainstream platforms like Facebook and YouTube, they often survive even if they get kicked off those sites, said Farid. Influential figures that get banned on YouTube can slide to another service like Telegram or Gab which have fewer restrictions on content, and ask their followers to come with them.

“These conspiracy theories don’t just go away when they stop being on YouTube,” Farid said. “You’ve created the community, you’ve created the poison, and then they just move onto some other platform.”

The anti-vaccine movement goes back to well before the pandemic. False scientific claims that childhood vaccines caused autism made in the late 1990s have contributed to rising numbers of people refusing to let their kids get shots that had been commonplace for decades. As social media took over more of the media landscape, anti-vaccine activists spread their messages on Facebook parenting groups and through YouTube videos.
How wellness influencers are fueling the anti-vaccine movement

When the pandemic hit, and vaccines became a topic that was suddenly relevant to everyone, not just parents of young children, many went looking for answers online. Influencers like Mercola, Kennedy and alternative health advocate Erin Elizabeth Finn were able to supercharge their followings. Some anti-vaccine influencers, including Mercola, also sell natural health products, giving them a financial incentive to promote skepticism of mainstream medicine.

The anti-vaccine movement now also incorporates groups as diverse as conspiracy theorists who believe former president Donald Trump is still the rightful president, and some wellness influencers who see the vaccines as unnatural substances that will poison human bodies. All of the government-approved coronavirus vaccines have gone through rigorous testing and have been scientifically proved to be highly effective and safe.

The company is also expanding its work to bring more videos from official sources onto the platform, like the National Academy of Medicine and the Cleveland Clinic, said Garth Graham, YouTube’s global head of health care and public health partnerships. The goal is to get videos with scientific information in front of people before they go down the rabbit hole of anti-vaccine content.

“There is information, not from us, but information from other researchers on health misinformation that has shown the earlier you can get information in front of someone before they form opinions, the better,” Graham said.

Getting authoritative information in front of people early can help, but fact-based videos often have trouble competing for people’s attention with ones spouting misinformation, Fazio said. “If you’re going to make up something you can make it as compelling as you want.”

YouTube’s new policy will still allow people to make claims based on their own personal experience, like a mother talking about side effects her child experienced after getting a vaccine, Halprin said. Scientific discussion of vaccines and posting about vaccines’ historical failures or successes will also be allowed, he said.
Nicki Minaj tweets coronavirus vaccine conspiracy theory, spotlighting struggle against misinformation

“We’ll remove claims that vaccines are dangerous or cause a lot of health effects, that vaccines cause autism, cancer, infertility or contain microchips,” Halprin said. “At least hundreds” of moderators at YouTube are working specifically on medical misinformation, he added. The policy will be enforced in all of the dozens of languages that YouTube operates in.

Still, there are dozens of past examples of videos going viral even if they explicitly break the company’s rules. Sometimes YouTube only catches them after they’ve been flagged by reporters or regular viewers, and have already racked up thousands or millions of views.

“Like always, the devil’s in the details. How well will they actually do at pulling down these videos?” Fazio said. “But I do think it’s a step in the right direction.”

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EDITORS NOTE: This Geller Report column is republished with permission. ©All rights reserved.

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Manchin Drops The Hammer

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After weeks of speculation about the position of Senator Joe Manchin (D-WV), the Senator made the following statement about the proposed $3.5 trillion dollars worth of Biden’s new spending:

“Every Member of Congress has a solemn duty to vote for what they believe is best for the country and the American people, not their party,” Manchin said. “Respectfully, as I have said for months, I can’t support $3.5 trillion more in spending when we have already spent $5.4 trillion since last March.  At some point, all of us, regardless of party must ask the simple question — how much is enough?

“What I have made clear to the President and Democratic leaders is that spending trillions more on new and expanded government programs, when we can’t even pay for the essential social programs, like Social Security and Medicare, is the definition of fiscal insanity. Suggesting that spending trillions more will not have an impact on inflation ignores the everyday reality that America’s families continue to pay an unavoidable inflation tax.

“Proposing an historic expansion of social programs while ignoring the fact we are not in a recession and that millions of jobs remain open will only feed a dysfunction that could weaken our economic recovery. This is the shared reality we all now face, and it is this reality that must shape the future decisions that we, as elected leaders, must make.”

“While I am hopeful that common ground can be found that would result in another historic investment in our nation, I cannot — and will not — support trillions in spending or an all or nothing approach that ignores the brutal fiscal reality our nation faces,” Manchin said. “There is a better way and I believe we can find it if we are willing to continue to negotiate in good faith.

“If there is one final lesson that will continue to guide me in this difficult debate ahead it is this: America is a great nation but great nations throughout history have been weakened by careless spending and bad policies. Now, more than ever, we must work together to avoid these fatal mistakes so that we may fulfill our greatest responsibility as elected leaders and pass on a better America to the next generation.”

We applaud Senator Manchin’s courage and common sense. The fact we could be inches from fiscal disaster is a testament to the insanity of the current Democrat Party. What will be the position of Senator Sinema from our state? She now has political cover to vote NO as well.  While it takes less courage than Manchin just displayed, it would be nice to see more moderate Democrat voices be heard.

Manchin is absolutely correct that we cannot pay for our current commitments, with both Medicare and Social Security just a few years from insolvency. He is also correct that inflation, or depreciation of the currency, is a form of tax, and a very regressive tax we might add that particularly hurts the poor that don’t own appreciating assets like stocks and real estate.

There likely will still be a fight over the debt limit. Democrats have steamrolled Republicans as they  try to pass essentially 100 bills wrapped in one giant appropriations measure and Republicans need to stand up and resist further spending by not voting for a higher debt ceiling.  As Senator Kennedy points out in the accompanying video on this site, the Democrats can raise the debt limit all by themselves.  Republicans should resist so the Democrats own these tax increases, inflation, and economic instability that will follow their wild spending.  Besides, the President says all this spending does not cost anything.  Therefore, under his own twisted logic, a hike in the debt ceiling is not necessary.

 

Does Biden’s $1.2 Trillion Infrastructure Bill Include a Mileage Tax?

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Here’s a dismaying prospect: Paying 6, 8, or 10 cents in new taxes for every mile you drive. It may sound small, but at an 8 cent rate, that would be $1,144 in new annual taxes for the average American, who drives about 14,300 miles a year. Yikes!

Some on social media are claiming that this punitive tax scheme has been slipped into President Biden’s $1.2 trillion infrastructure spending legislation—which, after all, is nearly 3,000 pages and is chock full of unrelated waste and partisan pet projects. But are they right to be concerned about a mileage tax soon becoming reality?

No. At least, not yet.

The infrastructure legislation does not include a mileage tax or another form of driving tax. What it does include is a pilot program to study and test the idea. The legislation authorizes $125 million in taxpayer funding for this test initiative. (A lot of taxpayer money for an experiment, no?)

“People would volunteer to be part of the test,” fact-checkers at local New York news outlet WGRZ-TV report. “The test would require volunteers to record their miles, pay the fees, and then be reimbursed by the government. This pilot program would go through the year 2026 and at that point, if Congress and the president like it, they would have to pass another bill making it into law. This infrastructure bill simply creates the program.”

We can certainly question the wisdom of this endeavor. But rest assured that if the infrastructure legislation ultimately passes—a likely if not certain outcome—you won’t get a new per-mile bill from the IRS. However, this move does represent a shift toward mainstreaming and advancing the idea of a per-mile driving tax.

Such a tax would be highly regressive, meaning that it would disproportionately burden low-income Americans. So, too, the costs would fall harder on rural Americans who drive more than their city-dwelling counterparts. That said, proponents argue it simply funds highway infrastructure by taxing those who use it. They also note that it could replace the gas tax, which currently attempts to do the same yet fails to capture usage by electric vehicles.

Still, the prospect of sizable new taxes levied on working-class Americans solely for the privilege of being allowed to drive your own car isn’t an attractive one. Luckily, we aren’t actually facing this as an immediate reality, even if it is slowly being advanced into the mainstream.

WATCH: New Biden Vax Mandate Doesn’t Make ANY Sense (Here’s Why)

COLUMN BY

Brad Polumbo

Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved. Like this story? Click here to sign up for the FEE Daily and get free-market news and analysis like this from Policy Correspondent Brad Polumbo in your inbox every weekday.

The Most Splendid Housing Bubbles in America: Holy Cow, September Update

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Even the Fed is getting antsy about this raging mania house-price inflation. Housing Bubble 1 is starting to look cute in comparison.

House prices spiked 19.7% from a year ago, the biggest year-over-year increase in the data going back to 1987, according to the National Case-Shiller Home Price Index today. But the national index of this raging mania doesn’t do justice to individual metropolitan areas, where price spikes reached up to 32%.

The Fed is getting seriously antsy about this massive house price inflation, on top to the regular consumer price inflation that has hit 30-year highs. Just today, the president of the Federal Reserve Bank of St. Louis, James Bullard, who’d been fretting months ago about the “threatening housing bubble,” came out with a proposal to reduce the assets on the Fed’s balance sheet right after the taper is completed by mid-2022, which would purposefully allow long-term interest rates, including mortgage rates, to rise significantly.

“Everything can occur much faster than it could have in the previous recovery,” he said.

Markets have started to anticipate the end of QE. Long-term interest rates have started to rise. The 10-year Treasury yield is currently at 1.55%, the highest since mid-June. The average 30-year fixed mortgage rate today was 3.16%.

The mind-boggling price spikes in the charts below for individual metropolitan areas are based on the “July” Case-Shiller Index. The July data are a three-month moving average of closed sales that were entered into public records in April, May, and June. That’s the time frame we’re looking at here.

House price inflation. The Case-Shiller Index uses the “sales pairs method,” comparing the sales price of a house to the price of the same house when it sold previously, and includes adjustments for home improvements. By tracking the amount required to buy the same house over time, it is a measure of house price inflation.

Los Angeles metro: Prices of single-family houses rose 1.4% in July from June and spiked by 19.1% year-over-year.

All Case-Shiller Indices were set at 100 for January 2000. The index value for Los Angeles of 359 means that house prices have soared by 259% since January 2000, despite the Housing Bust in between. The Consumer Price Index (CPI) has risen by 62% over the same period.

This puts Los Angeles on the dubious pedestal of being the most splendid housing bubble on this list. All charts below are on the same scale as Los Angeles to show the relative heat of house price inflation in each market since 2000.

San Diego metro: House prices rose 1.6% for the month and by 27.8% year-over-year. Since 2000, prices have exploded by 255%:

 

Phoenix metro, holy cow: +3.3% for the month, +32.4% year-over-year. The reddest-hottest annual house price inflation among the most splendid housing bubbles here:

*****

Continue reading this article at Wolf Street.

Arizona Could Be Ground Zero in U.S. Microchip Self-Reliance

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Arizona’s technology sector will play a prominent role in American manufacturing’s latest plan to reclaim its title as the world’s leader in semiconductors from Asia.

One of the lessons learned from the COVID-19 pandemic was the need for U.S. manufacturing companies to diversify their supply chains. Semiconductor production slowed to a crawl in 2020, causing microchip shortages worldwide. The void in chips led to a systemic supply chain disruption in several industries, most notably for automobile manufacturers.

According to semiconductor industry leaders, the answer to that dilemma in domestic production is the National Semiconductor Economic Roadmap. The Arizona Commerce Authority said Tuesday the plan would address three steps necessary to creating a thriving semiconductor manufacturing sector in the U.S.: finding and training a workforce, establishing a resilient supply chain, and installing the surrounding infrastructure.

“Today more than ever, we see the strategic importance of a robust U.S. semiconductor industry,” said Pat Gelsinger, CEO of Intel. “Intel has been at the forefront of designing and manufacturing semiconductors in the United States for over 50 years, and many of our leading commercial and technological innovations have grown out of Arizona.”

The group’s first meeting is planned for October, with the final roadmap unveiling due in July 2022.

“States have a pivotal role to play in advancing U.S. competitiveness,” Arizona Gov. Doug Ducey said. “Arizona looks forward to engaging with other states and industry leaders to establish an industry-led roadmap to help drive U.S. semiconductor leadership for decades to come.”

The U.S. once was a major supplier of semiconductors, the silicon-centric material used in microchips that power electronic devices, but 80% of the facilities are now based in Asia.

With Intel announcing in March a $20 billion plan to build two more fabrication facilities (fabs) in Arizona and the Taiwan Semiconductor Manufacturing Company’s plans to build a new fab in Phoenix, the state is expected to see a large share of the planned expansion.

“As Arizona’s experience has shown, states are on the front lines of semiconductor investment and attraction,” Arizona Commerce Authority President Sandra Watson said in a news release. “We’re proud to help lead this historic effort alongside our state and industry partners to develop a shared vision, one that can help drive American semiconductor leadership for decades to come.”

The Arizona Commerce Authority said Arizona is one of the “top-four” states for semiconductor industry share.

*****

This article was published on September 28, 2021, and is reproduced with permission from The Center Square.

Critics Pan Biden’s Claim $3.5 Trillion Spending Bill Costs ‘Zero’

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President Joe Biden is taking fire for comments he made about his $3.5 trillion legislation just as the bill faces a deeply split Congress.

Biden made headlines for claiming the bill would cost “zero dollars,” despite media reports and members of both parties commonly naming the bill’s cost at $3.5 trillion for the last several months.

“My Build Back Better Agenda costs zero dollars,” Biden wrote on Twitter. “Instead of wasting money on tax breaks, loopholes, and tax evasion for big corporations and the wealthy, we can make a once-in-a-generation investment in working America. And it adds zero dollars to the national debt.”

The administration argues tax increases will offset the bill’s expenses, something that is very much in flux given Democrats’ hesitancy about parts of the bill, and the taxes to pay for it.

Even still, critics took issue with the claim of a zero cost, even if Biden does manage to include enough tax increases to fund the legislation.

“The $3.5 trillion in spending and tax credits combined with at least $2 trillion in tax hikes will add to the debt and have a tremendous cost to the economy and to the health of American families,” David Ditch, a budget expert at the Heritage Foundation, said. “The taxes will hit families taking home as little as $30,000 per year, violating President Biden’s promise, reduce private sector investments that create jobs and opportunities for workers, and put America at a disadvantage with our global competitors. Huge increases in welfare spending will discourage work and make families increasingly dependent on government, which is exactly the wrong approach to increasing wealth for low-income households.”

“The bottom line is that the costs are real and deserve more attention from the media,” he added.

Earlier this month, Democrats proposed raising the top tax rates for individuals to 39.6% from 37%, and for corporations to 26.5% from 21%.

Some have estimated the package will exceed $3.5 trillion costs. The Committee for a Responsible Federal Budget estimated the bill could cost $5.5 trillion over 10 years.

“All government spending consumes resources taken from the private sector and thus would generally shrink private GDP,” said Chris Edwards, an economic expert at the Cato Institute. “Contrary to Biden, $3.5 trillion more government spending would likely cost the private economy not just $3.5 trillion but probably more than that. That’s because extracting every additional $1 of taxes causes about $1.50 of damage or ‘deadweight losses to the private economy. When taxes rise, individuals and businesses reduce their productive activities and private output falls.”

The overall price tag has been a key sticking point for Democratic Sens. Joe Manchin and Kyrsten Sinema, both of whom have explicitly said they cannot vote for the measure because of its $3.5 trillion cost. A less expensive plan may be able to get their vote, they said.

“These are not indications of an economy that requires trillions in additional spending,” Manchin said. “Every elected leader is chosen to make difficult decisions. Adding trillions of dollars more to nearly $29 trillion of national debt, without any consideration of the negative effects on our children and grandchildren, is one of those decisions that has become far too easy in Washington. Given the current state of the economic recovery, it is simply irresponsible to continue spending at levels more suited to respond to a Great Depression or Great Recession – not an economy that is on the verge of overheating.”

Biden’s comments drew sharp pushback from Republican lawmakers.

“Joe Biden thinks his $3.5 trillion spending bill will cost ‘zero dollars,’” U.S. Rep. Jim Jordan, R-Ohio, said. “Speaker [Nancy] Pelosi doesn’t want to ‘talk about numbers and dollars.’ Why can’t they just be honest? They’re going to raise your taxes.”

Business leaders also have criticized Biden’s spending plan, saying it poses a serious threat to the nation’s economy.

The U.S. Chamber of Commerce launched a six-figure ad campaign to warn Americans and lawmakers about the legislation.

“This reconciliation bill is effectively 100 bills in one representing every big government idea that’s never been able to pass in Congress,” U.S. Chamber of Commerce President and CEO Suzanne Clark said. “The bill is an existential threat to America’s fragile economic recovery and future prosperity. We will not find durable or practical solutions in one massive bill that is equivalent to more than twice the combined budgets of all 50 states. The success of the bipartisan infrastructure negotiations provides a much better model for how Congress should proceed in addressing America’s problems.”

Critics also pointed to the inefficiency of the federal government, saying the money taken from the private sector is often wasted by officials.

“Some new government spending may be worth more than the private spending it displaces, but I have not seen any detailed cost-benefit analyses showing that is the case with the Democratic plans,” Edwards said. “Democrats are simply guessing that their new spending is higher value than the private spending it will displace, but there is little or no evidence of that. Besides, if there was new, high-value spending that the government could do, then it would more efficiently be handled by state governments, not the horribly mismanaged federal government.”

*****

This article was published on September 28, 2021, and is reproduced with permission from The Center Square.

U.S. Household Incomes Increased More in 2018 Than in the Previous 20 Years—Combined

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Why did U.S. incomes suddenly explode in 2018 after decades of tepid growth? The answer is not difficult to find.

For years, a school of economists has complained that US wages have been virtually stagnant for decades.

“Jobs are coming back, but pay isn’t. The median wage is still below where it was before the Great Recession,” former Labor Secretary Robert Reich said in 2015. “Last month, average pay actually fell.”

In fact, it’s not hard to find data showing that wages have barely increased since the 1970s, a figure many have used to stoke classy envy.

The truth is, there have always been problems with the claim that real wages (adjusted for inflation) have been stagnant for years. As economist Don Boudreaux has pointed out (see below), Reich and others overlook several important factors—including how inflation is calculated, compensation outside of wages such as healthcare, and the distinction between individuals and statistics.

The stagnant wage narrative was always mostly wrong. Federal Reserve data (which uses a chain-weighted price index) shows US hourly earnings have seen impressive growth in recent years.

Nevertheless, if one does choose to use Bureau of Labor Statistics data to measure family incomes over the last two decades, the picture is indeed a bit bleaker—at least it was.

Government statistics, which use the Consumer Price Index to measure inflation, show that from 2002 through 2015 median weekly earnings didn’t budge at all, but surged between 2018 and 2020.

I’m not the first person to notice this stunning wage growth. Writing in Bloomberg, economist Karl W. Smith describes the growth in income using a slightly different metric, real median household income.

“In 2016, real median household income was $62,898, just $257 above its level in 1999,” writes Smith. “Over the next three years it grew almost $6,000, to $68,703.”

Indeed, median household incomes increased from $64,300 to $68,700 in 2018 alone—an increase of $4,400. To put it another way, US incomes increased more in 2018 than the previous 20 years combined. (Household incomes were $61,100 in 1998 and $64,300 at the end of 2017.)

The question, of course, is why did US incomes suddenly explode after decades of tepid growth? The answer is not difficult to find.

The year 2017 saw massive deregulation and passage of the Tax Cuts and Jobs Act (TCJA). Estimates placed the deregulation savings at $2 trillion. But what was likely even a bigger factor was the cut businesses saw in corporate taxes.

Prior to 2017, the US had the highest corporate tax in the developed world (if not the whole world). With a top bracket of 35 percent, its corporate tax rate was higher than Communist China and socialist Venezuela.

This was a terrible policy on a number of levels. For starters, the revenue-maximizing rate of a corporate tax is 15-25 percent, which means anything above that isn’t even generating more revenue, it’s simply punitive and economically harmful. (Evidence bears this out. The United Kingdom, for example, reduced its corporate tax rate and saw revenues grow.)

Second, high corporate taxes actually hurt workers more than “Big Business.” Tax experts point out that roughly 70 percent of what businesses earn in profits gets paid to workers in the form of wages and other benefits. So it’s no surprise to see that studies show that workers bear between 50 and 100 percent of the brunt of corporate income taxes.

But the reverse is also true: cutting corporate taxes leaves companies more capital to grow and invest.

“Lower corporate taxes increase rewards for improving techniques, technology, and increasing capital investments, which increase worker productivity and earnings,” writes economist Gary Galles. “They expand rewards for risk-taking and entrepreneurship in service of consumers. They reduce the substantial distortions caused by the tax. And those changes benefit others, such as workers and consumers.”

So in 2017, when the Tax Cuts and Jobs Act was signed into law, companies saw their tax rate fall from 35 percent to 21 percent. Just that fast, businesses suddenly had more capital to spend to grow their business, improve productivity, and hire more workers—and few things attract workers more than higher wages.

Media scoffed at the possibility that corporate tax cuts would actually result in wage increases for US workers. But the data speaks for itself: Families saw incomes increase faster than at any time in generations.

Moreover, though median wages surged, showing the benefits were broad-based, every segment benefited from these wage gains.

“The lowest quintile increased their pay more than the upper quintile,” Americans for Tax Reform president Grover Norquist recently pointed out in a conversation with FEE’s Brad Polumbo.

To be sure, reducing the corporate tax rate wasn’t the sole factor for the surge in wages, but it was likely by far the biggest.

The surge in family incomes no doubt helped soften the impact of the economic destruction the world suffered in 2020 during the recession precipitated by economic lockdowns during the coronavirus pandemic.

Whether the wage gains continue may depend to some extent on the permanency of the corporate tax cut. Former Vice President Joe Biden, who appears poised to become the next US president, has signaled he’d restore the corporate tax to its 35 percent rate or raise it to 28 percent.

“Biden would make our business tax higher than China’s,” Norquist quipped. (He’s not wrong. China’s corporate tax rate stands at 25 percent.)

This appears unlikely to happen, however. Even if Biden’s claim was more than campaign rhetoric, it appears unlikely that he’ll have enough votes in the Senate to roll back the tax cuts.

Even more promising for US workers, Biden appears inclined to roll back Trump’s tariffs, which are basically taxes on Americans and imposed costs on businesses.

“When you put a tariff on steel, you make American cars not competitive anymore. You make everything made with steel less competitive,” Norquist observed. “We did a lot of damage to the American economy that way.”

If a Biden administration rolls back Trump’s tariffs while leaving the corporate tax rate in place, the US economy could build on the gains made prior to the arrival of the lockdowns.

That would be a winning formula for US workers, businesses, and the US economy.

COLUMN BY

Jon Miltimore

Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune. Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

White House Press Secretary Jen Psaki Refuses to Acknowledge Economic Reality Because She Thinks It’s Mean

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Whether Psaki and Biden think that corporate tax hikes should lead to lower wages or high prices is utterly immaterial. They do. 

Ayn Rand famously quipped, “You can avoid reality, but you cannot avoid the consequences of avoiding reality.” White House Press Secretary Jen Psaki’s latest viral flub seems perfectly calibrated to confirm the late author’s wise words.

At a Monday press conference, Psaki was confronted by journalists citing data showing that House Democrats’ proposed tax increases would violate President Biden’s pledge not to raise taxes on anyone earning less than $400,000.

In particular, multiple studies have shown that the proposed increase in the corporate tax rate from 21 to 26.5 percent would lead to lower wages for workers and higher consumer prices. (A de facto tax increase for those earning less than $400,000 if not technically a direct one.) The press secretary responded to the journalist’s query by downplaying the potential pass-along costs and simply declaring them immoral.

“There are some… who argue that in the past, companies have passed on these costs to consumers,” Psaki said. “We feel that that’s unfair and absurd and the American people will not stand for that.”

That’s nice. But the laws of economics are unmoved by Psaki’s personal condemnation, and Americans who will bear the real brunt of the tax hike proposals certainly care more about what the practical impact will be than the White House’s moral musings.

Whether Psaki and Biden think that corporate tax hikes should lead to lower wages or high prices is utterly immaterial. They do.

Both a near-consensus of empirical research and basic economic theory confirm this reality. Indeed, a study by the nonpartisan Tax Foundation found that a previous Biden proposal to raise the corporate tax rate to 28 percent—so, slightly higher than the 26.5 percent proposed now—would have shrunk the size of the economy, lowered wages, and eliminated 159,000 jobs. We can safely assume that similar dysfunction would accompany the latest proposal.

Of course, the destructive fallout of their proposed tax hikes is a politically inconvenient reality for the Biden administration. But that’s no excuse for denying or downplaying it. Jen Psaki’s empty moralizing and hand-waving cannot change the laws of economics. Nor will the press secretary’s words comfort workers who bear the brunt of bad policymaking.

WATCH: Reacting to PAINFULLY Dumb Gun Control TikToks

COLUMN BY

Brad Polumbo

Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved. Like this story? Click here to sign up for the FEE Daily and get free-market news and analysis like this from Policy Correspondent Brad Polumbo in your inbox every weekday.

New Wine Company is an Unabashed Cheerleader for America [+Video]

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It’s becoming a popular fad for companies to focus on America’s so-called faults, not our freedoms.

Bank of America (1.00): “All Americans need to see racism as a national issue.”

American Express (1.00): “George Floyd, Breonna Taylor, Ahmaud Arbery and Christian Cooper are just the latest victims… that indicate we still have a very long way to go as a nation to ensure that the human rights of all people are respected equally.”

Amazon (1.62): “The inequitable and brutal treatment of Black people in our country must stop.”

It doesn’t stop with corporations, either. This pervasive anti-American sentiment is also being passed on to our children. Several weeks ago, a California teacher removed an American flag from her classroom “because it made [her] uncomfortable.” She told her students to pledge allegiance to the LGBT Pride flag, instead.

Clearly, the cultural war on America is in full swing. Thankfully, some courageous organizations are fighting back, branding themselves as unabashed cheerleaders for our nation’s values. We the People Wine (3.68) is one of these companies, offering an alternative to wine-drinkers who proudly stand for our founding principles like freedom and equality.

We the People Wine is intentional about combating the anti-American orthodoxy pushed by many cultural and corporate icons. When he appeared on Fox & Friends last month, founder Ryan Coyne said, “We wanted to build a brand about American exceptionalism. Free people, free markets, free speech – all the values we think are under attack by world culture.”

Every We the People Wine bottle proudly features an American flag, and a portion of proceeds goes toward pro-American causes. Their recent advertisement, which went viral, features a near-prophetic President Ronald Reagan reminding us that freedom in America must be fought for.

That’s exactly what We the People Wine is doing. With their entrance into the market, wine-drinkers who love America now don’t have to buy from wine companies such as Barefoot (2.67) or Constellation Brands (2.67), which 2ndVote shows lean left. Instead, use your wallet to support your American values. To order a bottle (or two!) from We the People Wine today, click here and remember to thank them for what they are doing!

Use your voice to call out Barefoot and Constellation Brands to let them know why you will not continue shopping with them. Click the company names so that you can contact them directly through the 2ndVote page!

EDITORS NOTE: This 2ndVote column is republished with permission. ©All rights reserved.

Biden’s Wrecking Ball for Financial Privacy

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The Biden administration is seeking to compel banks to report to the IRS any bank account with more than $600 in transactions per year. This proposal is a linchpin of Biden’s American Families Plan, and will supposedly help generate almost $500 billion in federal revenue over the next decade. But previous catch-all financial reporting requirements have helped spur national disasters, complete with pervasive federal looting.

Sen. Mike Crapo (R-ID) denounced the Biden proposal as a “surveillance dragnet,” a “huge violation of privacy,” and “an egregious abuse of Americans’ right to due process by inferring that all U.S. taxpayers are guilty of evading taxes until proven otherwise.” Paul Merski of the Independent Community Bankers of America warns that the Biden proposal would be “be a historic invasion of financial privacy like we’ve never seen before.” Merski also declared, “The IRS is absolutely incapable of handling or processing this massive amount of new data, and they would admit as much — that’s why they’re asking for an additional $80 billion in this budget.”

Actually, federal money cops have long been overwhelmed by too many reports from banks. Prior federal reporting requirements buried bureaucrats in useless reports and became a de facto Terrorist Hijacker Empowerment Act . The 9/11 attacks were preceded by the biggest failure ever by U.S. financial authorities.

The Bank Secrecy Act of 1970 made it a federal crime for banks to keep secrets from the government. This law obliged banks and other financial institutions to submit a currency transaction report (CTR) to the federal government for each cash transaction involving more than $10,000. The feds harvested 17 million CTRs in 2000; federal agencies were flooded with tons of paper that bureaucrats often never bothered to examine. Beginning in 1996, banks were also obliged to file a Suspicious Activity Report on any transaction that “has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage.” The feds were soon receiving two hundred thousand suspicious activity reports per year. Greg Nojeim of the American Civil Liberties Union observed, “Congress barred financial institutions from telling their customers that their bank had spied on them by reporting their transactions to the federal government.”

That deluge of reports provided a smokescreen for the 9/11 plotters. A 2002 United Nations report on terrorist financing noted that a “suspicious transaction report” had been filed with the U.S. government over a $69,985 wire transfer that Mohamed Atta, leader of the hijackers, received from the United Arab Emirates. However, the report noted, “this particular transaction was not noticed quickly enough, because the report was just one of a very large number and was not distinguishable from those related to other financial crimes.” Atta was on a terrorist watch list, but the avalanche of other reports the feds received targeting home buyers, boat buyers, and other innocuous transactions provided sufficient cover for the attack to proceed.

Rather than recognize how pointless reporting requirements swamped federal watchdogs, Congress responded to 9/11 by vastly expanding federal financial vacuum cleaners. On October 17, 2001, Rep. Ron Paul (R-TX) was the only member of the House to oppose the International Money Laundering Abatement and Antiterrorist Financing Act of 2001, which became Title III of the Patriot Act. Paul warned that the bill “has more to do with the ongoing war against financial privacy than with the war against international terrorism” and derided it as “a laundry list of dangerous, unconstitutional power grabs…. These measures will actually distract from the battle against terrorism by encouraging law-enforcement authorities to waste time snooping through the financial records of innocent Americans who simply happen to demonstrate an ‘unusual’ pattern in their financial dealings.”

Paul’s warnings were prescient. The Patriot Act turbocharged reporting requirements, and the feds are now receiving two million “Suspicious Activity Reports” a year. It would be worse than naïve to assume that all the reports that banks send to Washington will sit passively in federal databases.

Financial reporting requirements helped spur one of the most disgraceful federal looting sprees in modern times. The IRS has exploited the technicalities of the Bank Secrecy Act – which requires banks to report any transaction over $10,000 – to preemptively confiscate the bank accounts of innocent Americans. The IRS “enforced” the Bank Secrecy Act by presuming that anyone who deposited slightly less than $10,000 was a criminal. The IRS seized a quarter billion dollars because it disapproved of how businesses and individuals structured their bank deposits and withdrawals. IRS bureaucrats don’t even need to file a criminal charge before snaring citizens’ life savings.

Between 2005 and 2012, the number of IRS seizures for Bank Secrecy Act violations rose more than fivefold, but the vast majority of victims were never criminally prosecuted for structuring offenses. “One-third of those cases involved nothing more than making a series of sub-$10,000 cash transactions,” the Institute for Justice reported. A 2017 Inspector General report found no evidence in 91% of the forfeiture cases that the money came from illegal activities. The IRS chose to seize first, and ask questions later – if at all. IRS investigators simply looked at banking records and then confiscated the accounts of hundreds of people.

Most of the victims were “legal businesses such as jewelry stores, restaurant owners, gas station owners, scrap metal dealers, and others.” The IRS targeted businesses with legal sources of income because “the Department of Justice had encouraged task forces to engage in ‘quick hits,’ where property was more quickly seized… rather than pursuing cases with other criminal activity (such as drug trafficking and money laundering), which are more time-consuming,” the Inspector General reported.

Would the IRS behave as atrociously with a new $600 reporting requirement as it has in the past with the $10,000 reporting requirement in the Bank Secrecy Act? In U.S. Tax Court, IRS determinations of what citizens owe are “presumed correct,” with taxpayers bearing the burden to prove the feds wrong. Corporations with well-fed legal departments routinely defeat the IRS in court but few citizens can afford to fight a federal agency that appears to hold all the cards. Treasury Secretary Janet Yellen declared, “Any suggestion that instead this reporting regime will be used to target enforcement efforts on ordinary Americans is wholly misguided.” Then why do the feds want the data on almost anyone with a bank account?

Biden’s new reporting requirement could be the Bitcoin Relief Act of 2021. Forty banking and financial associations sent a letter to Congress on September 17 warning that the Biden proposal “would create tremendous liability for all affected parties by requiring the collection of financial information for nearly every American without proper explanation of how the IRS will store, protect, and use this enormous trove of personal financial information.” American Banking Association president Rob Nichols warns that requiring “banks to police and report on the accounts of customers…will undermine trust in the banking system and erode the progress we have made reducing the number of unbanked and underbanked in the country.”

The Internal Revenue Service has perennially been the authoritarian means to paternalistic ends. The Washington Post reported that “the single biggest source of new revenue in the [Biden] plan comes from dramatically expanding the clout of the nation’s tax agency.” Biden relishes condemning tax-dodging billionaires but that $600 reporting requirement is a signal that IRS purgatory could soon be crowded with average Americans.

*****

This article was published on September 22, 2021, and is reproduced with permission from the AIER, American Institute for Economic Research.

Phoenix To Use Federal Funding for Universal Basic Income Pilot

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One thousand lucky Phoenix families will get $1,000 in taxpayer funding a month in 2022.

The Phoenix City Council has approved $12 million for a “Financial Assistance for Phoenix Families Program,” a lottery-based form of universal basic income that will begin in January 2022 if not sooner.

The program, which has yet to be finalized, will send approximately 1,000 families a monthly stipend of $1,000 for all of 2022. According to a city document, the funds would be limited toward “basic household necessities” such as housing, childcare, food and other staples.

The city would load money onto a debit card that wouldn’t allow the purchase of a list of forbidden items like alcohol and tobacco.

All low-income families making up to 80% of the area median income – a sliding scale that would be just over $63,000 for a family of four – would be eligible. A representative of the city said in the Tuesday session that anyone on public assistance, in public housing, or receiving public housing vouchers would qualify.

“We’ve seen a lot of cities across the country doing this direct assistance and I’m glad that we’ll be joining them in giving money to folks,” Vice Mayor Carlos Garcia said. “It’s not just for rent or utilities, but if they do have child care needs, if they do have to get medicine, whatever it is, I think people know best what their needs are.”

The program is paid for by the federal American Rescue Plan Act (ARPA). The city received $196 million this year and will receive another $196 million next year.

City documents say staff would recommend continuing this program with the second payout of ARPA funds in 2023.

Council members Jim Waring and Sal DiCiccio voted against the measure.

Phoenix joins a handful of other cities to test out the premise of universal basic income. California’s most recent budget includes $35 million to pay for a similar program. The cities of Los Angeles, Compton and Richmond, Virginia, have approved similar programs.

The city of Chicago is considering a similar program.

*****

This article was published on September 23, 2021, and is reproduced with permission from The Center Square.

China’s Crackdown on Debt, Tech & Evergrande Sends Frazzled Wall Street Titans to China

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The property sector and its debts are possibly the biggest financial mess in China’s history.

The crackdowns by Chinese authorities on some of the biggest hype-and-hoopla industries have sent investors heading for the exits. There is a crackdown on debt to keep the financial system from imploding. There’s a crackdown on property speculation to tamp down on housing prices and on debt. There’s a crackdown on big tech – mostly internet, social media, and online gaming companies – for their monopolistic size and practices and a slew of other issues.

There’s a crackdown on education tech companies that sell off-campus educational courses that have driven the costs of education into the sky, discouraging Chinese couples from having more than one child. There’s a crackdown on all kinds of other activities that include reporting financial news and analysis in a way that the government doesn’t approve.

There are all kinds of reasons for these crackdowns, including the push by President Xi to create “common prosperity,” which has become a mantra to fight the ballooning wealth disparity linked to the surge in asset prices, including home prices that are now making homes unaffordable for the masses.

The crackdowns already resulted in some spectacular effects.

Wall Street is heavily involved in the stocks and bonds of these companies, both in the US and in China, many of which have dropped sharply, and some have collapsed.

Many Chinese companies have issued American Depositary Receipts, or ADRs, such as Alibaba. These ADRs aren’t actual stocks but were issued by an offshore mailbox entity in the Cayman Islands or wherever, that has a contract with the actual company in China.

Wall Street firms make a fortune setting up these ADRs, selling them to investors, managing them in their mutual funds and ETFs, etc. Wall Street makes money coming and going on these ADRs.

But those ADRs have unraveled. The Golden Dragon China ETF, which tracks these ADRs, has plunged by 46% since February, unwinding the entire pandemic hype-and-hoopla spike.

In the Chinese markets, China’s crackdown has caused the shares of affected companies to plunge by a combined $1.5 trillion in a matter of months at the low point a little while ago.

But now these Wall Street titans that made huge amounts of money from China’s debt bubble, from the wild property speculation, from monopolistic tech companies, from the hype and hoopla, from their dealings in China, well, they’ve had enough of these crackdowns.

A Wall Street delegation composed of top executives from Goldman Sachs, mega-asset manager BlackRock, PE firm Blackstone, Citadel, Fidelity, among others, had a three-hour powwow on Thursday with Chinese regulators that included the vice-chairman of the China Securities Regulatory Commission and the head of the People’s Bank of China…..

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Continue reading this article, published on September 22, 2021 at Wolf Street.

Essential Marxist Reading for Liberals and Conservatives

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A review and overview of The Cult of Smart, by Fredrik deBoer, All Points Books, 276 pages.

Fredrik deBoer is the author of The Cult of Smart, a book that unwittingly explains the sharp left turn of the Democrat Party and a growing number of young Americans. It also shows why the widening chasm between the far left and liberals and conservatives will never be bridged.

For those reasons alone, it’s a very important book and should be read by traditional Democrats and Republicans, although a root canal would be less painful. If the book had been published when I was younger, I could’ve learned about Marxist thinking without having to labor through Das Kapital.

At the leading edge of the millennial generation, Mr. deBoer is an avowed Marxist, a professor with a PhD from Purdue, a former high school substitute teacher, a contributor to the New York Times and other mainstream liberal publications, a descendant of “red diaper babies” (his words), and an admirer of Bernie Sanders, Alexandria Ocasio-Cortez, Karl Marx, and Frederick Engels. Also, like so many ideologues in history, he is the product of an apparent unhappy childhood, stemming from his mother dying when he was a child and his father dying when he was fifteen, after a life of alcoholism and depression.

The author lambastes both liberals and conservatives for believing in meritocracy and in the power of education to significantly reduce inequality. Liberals will no doubt applaud his rebuke of conservative values, and conservatives will applaud his rebuke of liberal values; but they should be aware that he wants to put a ticking time bomb of social revolution under the backsides of both of them.

Mr. deBoer goes so far as to write:

That education is the great economic leveler stands as one of the ubiquitous nostrums in contemporary politics. Barack Obama, the pope of modern American progressivism, repeated the trope endlessly, insisting that the American dream could only be secured through an invigorated education sector.

. . . we should reject the idea of education as an anti-poverty tool for being wrong on its face. Because education is not a weapon against inequality; it is an engine of inequality. Far from making society more equal, our education system deepens inequality, sorting winners from losers and ensuring even greater financial rewards for the former. Nowhere is this dynamic more prevalent than in college.

A major premise of The Cult of Smart is that intelligence is hereditary and inherited to the same degree across all races. Genes help to explain why some people excel in school and in abstract thinking and some people don’t. Of course, such factors as parental influence and socioeconomic class come into play in how someone does in life, but, according to deBoer, inherited intelligence accounts for about half of success, especially in this era of knowledge work, where those with lower IQ are being left behind in increasing numbers.

The author understands the danger of the premise being misunderstood and how it can lead to racism and had led to the eugenics movement of the first half of the twentieth century, a movement that he admits was led by progressives. He makes clear that inherited intelligence, or a lack thereof, does not vary by race.

According to deBoer, it follows from the premise that additional spending on education is mostly a waste of money, because more money cannot overcome a lack of inherited intelligence, and because more money is not needed for gifted students with inherited high intelligence who are going to succeed regardless of spending levels. This goes against the liberal belief in more education spending and the conservative belief that everyone can succeed through hard work, no matter their personal circumstance.

Taken to an extreme, the idea of inherited intelligence can also go against the foundations of Western moral philosophy, namely Judeo-Christian beliefs about right and wrong, sinning and redemption, and crime and punishment. The idea calls into question how much free will and agency humans really have when all of the factors of nature and nurture are considered. This is not a new philosophical question, but it is complicated by new science, especially cherry-picked science.

It’s undeniable that humans don’t reach adulthood with a blank slate. On the nurture side, behavioral choices and learning are strongly influenced by the circumstances of childhood—by parenting, neighborhood mores, environmental factors, and socioeconomic class. On the nature side, as science is revealing but has a long way to go, behavior and learning are influenced by hormones, other bodily chemicals, and the condition of the parts of the brain that control impulses.

Take a kid who has two Nobel Prize-winning parents, who have an innate ability to concentrate and control impulses, and who lives in a house full of books in a neighborhood of college graduates. Certainly, that kid has a wider range of good choices than a kid who has a single parent on drugs, who has an innate difficulty in concentrating and controlling impulses, and who lives in a household with no books but a lot of TV, in a neighborhood of drug dealers and crime.

To that point, some behavior is so self-defeating that it’s hard to imagine that it’s the result of rationality and thoughtful consideration of the consequences.

This commentary isn’t the place to debate such deep questions of moral philosophy, but a debate is needed elsewhere in order to develop a counterargument to Marxists like deBoer, one that is geared to the way that young people obtain and process information.

To continue with the book:

Mr. deBoer is merciless in his criticism of liberals who feign concern for the poor and social justice but engage in selective breeding and do whatever they can to get their kids into the best k-12 schools and into elite universities, so that their ticket is punched for the rest of their life—and, as deBoer’s Marxist thinking goes, at the expense of the less fortunate. He questions whether the education is any better at elite schools and posits that the schools are key members of the “Cult of the Smart,” where credentialing takes precedence over other considerations and leads to self-reinforcing and self-replicating elitism.

Naturally, being an academic, he buys into the progressive zeitgeist about white privilege, about the goodness of wokeness, and about America being racist, sexist, and classist. At the same time, he lambastes his “fellow leftists” (as he calls them) for their phony virtue-signaling. He writes that if they were “simply a new kind of nouveau riche with culturally liberal politics, they would probably be harmless, if somewhat obnoxious. But there’s a far larger problem: simply by living upper-middle-class lives, these woke go-getters perpetuate inequality.”

To those who have attended elite colleges, he says:

Privilege theory, intersectionality, cultural studies—each has value and important insights to impart, but more important for your lived experience is their signaling value. Peppering your speech with abstruse academic vocabulary these fields have developed demonstrates to your social peers that you believe in the right things, that you are politically enlightened, that you are woke. And to be woke has come, in the past decade, to confer considerable professional benefits.

He goes on to cite the inconvenient truth that locales with a high number of such people have the most income inequality.

Continuing the skewering, he says that “it’s essential to bear this thought in mind: many of those who are ostensibly part of a political movement to change our society are the ones who most benefit from the status quo and who hold back others simply through living the lives they do.” Then he administers the coup de grace: “I am persistently pessimistic when it comes to progressive social change.”

He also dislikes the wealthy, as evidenced by this bloodcurdling statement: “Certainly, if I had the power, I’d ensure that the very wealthy didn’t exist.”

As with Marxists of yesteryear, deBoer has antipathy for the upper middle class, or what the Bolsheviks characterized as the petite bourgeoisie. I would add that many of today’s leftists in academe, politics and the media extend that antipathy downward to the middle class, especially the members of the middle class who have “white” values about work and marriage. However, as with deBoer, they’re largely silent about Asians having the same white values and being at the top in income in America, with a median household income of $94,903, versus $74,912 for non-Hispanic whites.

Likewise, deBoer says nothing about the realities of Marxism and one-party authoritarian government in general. Left unmentioned are the purges, gulags, mass starvations, privileges for top party cadres and their families, and, as can be seen in China today, discrimination against minorities, women, and what the party has called “sissy boys.”

Mr. deBoer even buys into the old Marxist trope that a worker paradise could be built upon the existing industrial foundation of capitalism, leading to a second phase of communism in which workers would be self-actualized and not have to toil in jobs they didn’t like. The second phase has never been realized, however. Drudgery, bad management, immovable bureaucracy, and an out-of-touch hierarchy are just as alienating, if not more so, under communism than under capitalism.

To his credit, deBoer is honest about pre-kindergarten and after-school programs being ineffectual in the long run in improving academic results. Yet he supports these programs for reasons of social welfare and because they can be a stepping stone to the kind of society he envisions.

Surprisingly, he has an objection to a universal basic income. To wit: “It has the same problem that liberal social programs almost always do: it does nothing to strengthen the hand of the poor and working-class relative to the rich, to the bosses, and to political leaders.”

Not surprisingly, he supports nationalized medical care and free college. But the latter seems to contradict his belief that college doesn’t benefit those without the intelligence to succeed in college.

He also disdains charter schools, repeats the popular canard that public school teachers are underpaid for their abilities and hard work, and claims that teachers are unfairly blamed for not being able to improve the test results of students who don’t have the intelligence to do well. He says nothing about how Norway dramatically improved its test results by making a degree in education one of the toughest degrees to obtain and raising the pay of those teachers who met the higher standards.

Speaking of standards, deBoer wants to eliminate one-size-fits-all state testing standards and curricula for public schools, a point that I agree with in concept as long as it results in furthering the education of the less gifted students who need a curriculum tailored to their intellectual capacity, and as long as it doesn’t crimp the education of the more gifted students. Easier said than done, however, given the difficulties in determining a student’s IQ and potential, as well as the political challenge of telling parents that their child doesn’t have what it takes to succeed in college.

All of the foregoing is but a prelude to what deBoer really believes and wants. He really believes that equal opportunity will never be achieved, even if all differences in individual circumstances were to be eliminated. As such, what he really wants is for the existing political and economic order to be replaced with the Marxist idea of “from each according to his ability and to each according to his need,” so that equal outcomes are achieved. He doesn’t say how that would be achieved and who would decide, but he no doubt sees ideologues like himself in charge.

Make no mistake: I, too, want to eliminate poverty and think that it’s unacceptable for a rich country like the U.S. to have widespread urban slums and rural poverty; to have high crime, broken families, and drug addiction in those places; and to have large numbers of homeless people living and dying on city streets like animals. This is particularly unacceptable in light of the trillions of dollars we have spent on foreign wars.

On the other hand, the last thing I want is for people of deBoer’s ideology to be in charge. Unfortunately, that’s what a growing number of Americans seem to want, especially younger Americans taught by the likes of deBoer.

Democrats’ $3.5 Trillion Socialist Dream Is Tax-and-Spend Nightmare

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House Speaker Nancy Pelosi plans a vote soon to push Sen. Bernie Sanders’ $3.5 trillion socialist dream budget one step closer to law

The news gets worse from there. Every other detail about this onerous legislation merits scorn, revulsion, and rejection.

The so-called Build Back Better budget resolution boasts a $3.5 trillion price tag. Taxpayers should be so lucky.

That figure assumes that several key initiatives, including the child tax credit, will expire in three to five years. Since government programs are virtually immortal, this is not wishful thinking. It’s pure fantasy.

Reasonably assuming that these programs grind on for 10 years swells the budget’s true price to $5.5 trillion. Add the Senate’s $1 trillion “infrastructure” bill, which most House Democrats hope to append, and Sanders’ budget hits $6.5 trillion.

Next, blend in $400 billion for interest payments on the exploding national debt. That pushes the “$3.5 trillion” package’s real cost to $6.9 trillion—nearly double its advertised price.

“Bernie’s budget is all about inserting the federal government into the daily lives of all Americans and spending as much money as possible while doing so,” warned Rep. Jason Smith, R-Mo., the ranking member of the House Budget Committee.

Democrats plan to underwrite this bachelor-party-like extravaganza by borrowing from the Chinese Communist Party and by hiking levies on America’s beleaguered taxpayers. Sanders’ budget constitutes the biggest tax increase since 1968—before man walked on the moon.

The Club for Growth Foundation counts $3.6 trillion in new taxes in this measure. Among them:

  • Higher revenues from growing the size and reach of the IRS: $266 billion.
  • A boost in long-term, combined capital gains taxes from 29% to 48.4%: $322 billion. (If the bill is enacted, investors seeking lower capital-gains taxes could find them in communist China.)
  • New IRS spying and subsequent taxes on transactions in bank accounts with balances of $600 or more: $463 billion.
  • A new global minimum tax on U.S. companies operating overseas: $534 billion.
  • A more-than-25% hike in the corporate tax, from 21% to 26.5%: $858 billion.

Add state levies on such enterprises, and U.S. companies would strain beneath the developed world’s highest tax burden. That’s dreadful for American businesses, jobs, and growth, and a boon to this country’s economic rivals.

Beyond spending and taxes, the Sanders budget would bludgeon the Land of the Free into a socialist “workers’ paradise.”

Among its far left social-engineering schemes:

  • An annual methane-emissions tax would cost dairy farmers an extra $6,504 per cow.
  • Tax credits for university “environmental justice programs”: $1 billion.
  • A $1,500 tax credit on electric bicycles that cost up to $8,000: $7.4 billion.
  • A $1,200 tax credit for “green” doors, windows, and skylights: $15 billion.
  • Individuals with incomes up to $200,000 could collect $82,000 in federal housing down-payment subsidies.
  • “Free” college: $50 billion
  • “The Democrat bill also shovels $3.5 billion of your money so D.C. bureaucrats can create something called the ‘Civilian Climate Corps’—a make-work program for young climate activists,” Americans for Tax Reform founder Grover Norquist said. “Perhaps they’ll knock on your door with a clipboard and tell you to put on a sweater instead of heating your home adequately.”

These taxpayer-funded eco-busybodies also would be unionized. And, of course, their union dutifully would kick back a chunk of their members’ mandatory dues into the Democratic Party’s campaign coffers.

“In the face of mounting inflation and economic instability, a rational Congress would enact pro-growth tax and spending reforms that pave the way to a smoother recovery,” Andrew Moylan, the National Taxpayers Union’s executive director said, adding, “Instead, current leaders are marching full speed ahead with the most sweeping expansion in the size and scope of government in decades. It’s like throwing a drowning child an anvil instead of a life preserver.”

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This article was published September 26, 2021 and is reproduced with permission from The Daily Signal.

4 Ways to Understand Democrats’ $3.5 Trillion Spending Bill

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House Democrats have unveiled pieces of the $3.5 trillion spending bill over the past several weeks.

Most legislation focuses on specific issues, which makes it possible to have constructive debate. However, this bill covers welfare, immigration, taxes, energy, families, and much more, making it extremely difficult to comprehend.

Providing context on this tax-and-spend bill’s size and cost helps bring into focus just how radical it is, and why some Democrats are now pushing back against it.

1. $27,000 Cost Per Household
The U.S. Census Bureau’s 2020 data shows that there are 128.5 million households in the United States. If we divide the cost of the $3.5 trillion package across each household, the numbers are substantial in relation to a typical family budget.

This legislation would cost over $27,000 for every household in America. That’s more than the cost of a brand new Toyota RAV4 sport utility vehicle, or five years of groceries for a typical family, or 13 years of clothing purchases and tailoring for an average household.

The left tries to deflect from the exorbitant cost by pointing to tax increases focused on high-income households and businesses. Yet that fundamentally misunderstands how the economy works.

When the government increases taxes on investment, there is less incentive to start or expand a business, which is the source of the job creation and wage growth that all workers depend on.

In addition, the tax hikes in the massive spending bill would place American businesses at a severe disadvantage with our global competitors. Over time, high taxes mean lower wages, higher prices, and weak returns for individual retirement accounts.

In contrast, the 2017 Tax Cuts and Jobs Act (which would be gutted by the tax hikes) helped drive strong wage growth and low unemployment before the pandemic.

While we don’t yet know exactly how much the new legislation would add to the national debt, it would likely be somewhere between $1 trillion and $2 trillion. That burden would be layered on top of $28.4 trillion in existing debt, which amounts to $219,000 for every household in the country.

Adding recklessly to the debt would increase risks to the health of the economy and add to the immoral and unsustainable burden being handed down to future generations.

2. A 111-Year Spending Spree
Stores will occasionally have a contest where the winner gets to buy as much as he or she can over the course of a few minutes. Even under those circumstances, in most stores it would be impossible to grab $1,000 of goods per second.

The $3.5 trillion spending bill equates to spending $1,000 per second for 111 years straight.

Yet the spending would be crammed into just a decade, meaning that the legislation would enable a spending spree of over $11,000 per second for those 10 years.

What would Congress buy with all that money? An army of taxpayer-funded climate activists, new welfare programs that would disincentive work, corporate welfare for politically favored sectors like journalism and “green” energy, and an increased risk of 1970s-style inflation.

That’s not a good deal for the American public.

3. Far More Expensive Than Major Programs
The $3.5 trillion spending bill is enormous even when compared to other major pieces of legislation and long-term federal programs.

The inflation-adjusted cost of the interstate highway system through its completion in 1992 was $543 billion. The cost of veterans’ benefits from 1962 through 2020 was $2.9 trillion.

Amazingly, both decades-long federal efforts cost less than the $3.5 trillion spending bill.

A more recent example: The Coronavirus Aid, Relief, and Economic Security Act, which was the key federal response to the COVID-19 outbreak, cost $1.9 trillion.

The initial 10-year cost of Obamacare was $1.1 trillion in today’s dollars. The cost of those two enormous bills falls well short of the current package.

4. Over 2,400 Pages of Jargon, Legalese

Although final legislative text is still in flux, what has been released by House committees weighs in at over 2,400 pages—and there will likely be some additions before it’s said and done.

Moderate Democrats have made a modest request: that they have at least 72 hours to review the bill before a vote on the House floor. Yet that would be nowhere near enough time to ensure that the final product doesn’t include big mistakes or hidden handouts.

Reading legislative text isn’t like reading a novel. Rather, legislation is a dense soup of legalese and references to existing federal laws that takes serious time to consider.

At a pace of five minutes per page, someone would need 202 hours straight—not 72 hours—to properly read such a mammoth piece of legislation.

This legislation is simply too long, too expensive, and would do too much damage to the economy to properly justify it.

Rather than rushing to centralize power and control in Washington, D.C., through a series of tax hikes and new entitlement programs, Congress should take a different approach: restraining spending, maintaining a pro-growth tax code, and reforming existing benefit programs to make them financially sustainable.

This would pave the way for a post-pandemic economic boom that would benefit all Americans.

*****

This article was published on September 23, 2021, and is reproduced with permission from The Daily Signal.

U.S. Chamber of Commerce: Dems’ $3.5 Trillion Spending Bill ‘Existential Threat’ to Economy

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One of the nation’s leading economic and business groups is warning that the $3.5 trillion spending bill before Congress is an “existential threat” to the nation’s economy.

The U.S. Chamber of Commerce has launched a six-figure television ad campaign targeting the proposed tax hikes in the measure that would be “taking more hard-earned money from small businesses and working families.”

The initial ads will play in California, Minnesota, Virginia, New York and Iowa.

“This reconciliation bill is effectively 100 bills in one representing every big government idea that’s never been able to pass in Congress,” U.S. Chamber of Commerce President and CEO Suzanne Clark said. “The bill is an existential threat to America’s fragile economic recovery and future prosperity. We will not find durable or practical solutions in one massive bill that is equivalent to more than twice the combined budgets of all 50 states. The success of the bipartisan infrastructure negotiations provides a much better model for how Congress should proceed in addressing America’s problems.”

The chamber also sent a letter to the House of Representatives last week warning members to not support the legislation.

“This ‘everything but the kitchen sink’ approach to raising taxes and creating new government spending and regulatory programs is an existential threat to America’s fragile economic recovery and future prosperity, and will hamstring America as we work to compete globally, especially with China,” the letter said. “No member of Congress can achieve the support of the business community if they vote to pass this bill as currently constructed.”

But some lawmakers are threatening to sabotage a bipartisan infrastructure bill if the $3.5 trillion spending plan doesn’t pass. On Wednesday, 11 Democratic senators said they would kill the $1 trillion infrastructure bill without passage of the $3.5 trillion measure.

The senators, who released a joint statement, include Sens. Cory Booker, D-N.J., Kirsten Gillibrand D-N.Y., Mazie K. Hirono, D-Hawaii, Ed Markey, D-Mass., Jeff Merkley, D-Ore., Alex Padilla, D-Calif., Bernie Sanders, I-Vt., Brian Schatz, D-Hawaii, Tina Smith, D-Minn., Elizabeth Warren, D-Mass., and Sheldon Whitehouse, D-R.I.

“We voted for the bipartisan infrastructure bill with the clear commitment that the two pieces of the package would move together along a dual track,” the senators said in the joint statement. “Abandoning the $3.5 trillion Build Back Better Act and passing the infrastructure bill first would be in violation of that agreement. Congress must not undercut the President’s proposals that will create new opportunities for America’s families and workers. The House of Representatives should wait to pass the bipartisan infrastructure bill until the budget reconciliation bill, which enacts the rest of the President’s Build Back Better agenda, is sent to the President’s desk.

“We strongly support the Congressional Progressive Caucus and other members in the House who have said they intend to vote for the bipartisan infrastructure bill only once the Build Back Better Act is passed,” they added. “That is what we agreed to, it’s what the American people want, and it’s the only path forward for this Congress.”

This stance complicates things for Democratic leadership, especially after multiple Democratic senators have said they cannot support the larger bill because of its hefty price tag. Sen. Joe Manchin, D-W.V., and Sen. Kyrsten Sinema, D-Ariz., have both balked at voting for the $3.5 trillion bill.

“These are not indications of an economy that requires trillions in additional spending,” Manchin said. “Every elected leader is chosen to make difficult decisions. Adding trillions of dollars more to nearly $29 trillion of national debt, without any consideration of the negative effects on our children and grandchildren, is one of those decisions that has become far too easy in Washington. Given the current state of the economic recovery, it is simply irresponsible to continue spending at levels more suited to respond to a Great Depression or Great Recession – not an economy that is on the verge of overheating.”

*****

This article was published on September 23, 2021, and is reproduced with permission from The Center Square.

Eliminating Crude Oil Is Like Jumping Out Of A Plane Without A Chute

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The world and the Intergovernmental Panel on Climate Change (IPCC) are proposing banishment of fossil fuels and are focused on reducing emissions from fossil fuels at any costs, but a safety net of having a viable replacement should be in place before we jump off that cliff.

Banning oil imports, fracking, and ceasing oil production to focus on the symbolic renewable energy as the fossil fuels replacement is fooling ourselves as that “clean energy” is only electricity generated from breezes and sunshine.

Before the healthy and wealthy countries abandon all crude oil fracking and exploration that will eliminate the supply chain to refineries and put an end to that manufacturing sector, we should have a safety net to live without the crude oil fuels and derivatives that are manufactured from that energy source. Without any clones to access everything we get from crude oil; the termination of its use could be the greatest threat to civilization.

The more than 6,000 products including asphalt roofing, asphalt roads, fertilizers, and all the products in hospitals that come from the derivatives manufactured from crude oil are more important than the various fuels to the world to operate planes, trucks, militaries, construction equipment, merchant ships, cruise ships, and automobiles.

Electricity alone can recharge your iPhones and EV batteries, but wind turbines and solar panels cannot manufacture the derivatives that are needed to make the parts of those iPhones and Tesla’s and the components in solar panels, wind turbines, and automobiles.

Reliance on intermittent electricity from breezes and sunshine is unfathomable as electricity by itself is unable to support the prolific growth rates of the military, airlines, cruise ships, supertankers, container shipping, trucking infrastructures, and the medical industry that is already about 90 percent dependent for the products from petroleum, to meet the demands of the exploding world population.

Only healthy and wealthy countries like the USA, Germany, Australia, and the UK can subsidize electricity generation from breezes and sunshine, and then, its only intermittent electricity at best. The 80 percent of the 8 billion on earth living on less than $10 a day cannot subsidize themselves out of a paper bag.

Those poorer countries must rely on affordable and abundant coal for reliable electricity, while residents in the healthy and wealthier countries pay dearly for those subsidies with some of the highest costs for electricity in the world.

Before the healthier and wealthier countries cease all oil production, they need to focus on an answer to what safety parachute exists to replace what we get from crude oil.

  • Before the 1900’s we had NONE of the 6,000 products from oil and petroleum products. By ceasing oil production and fracking, the supply chain to refineries will be severed and there will no need for those manufacturing refineries.
  • Without refineries we would be terminating the manufacturing of the derivatives that make the thousands of products used in our daily lives and terminating the manufacturing of the various fuels for transportation infrastructures and the military.
  • Without crude oil, the world would be in desperate need for “clones” to those oil derivatives that provide the thousands of products from petroleum that are essential to our medical industry, electronics, communications, transportation infrastructure, our electricity generation, our cooling, heating, manufacturing, and agriculture—indeed, virtually every aspect of our daily lives and lifestyles.
  • The world has had more than 100 years to develop clones or generics to replace the crude oil derivatives. Without replacements for those derivatives manufactured from crude oil, there will be gigantic reductions in living standards of the population in the so-called industrial countries, and any attempt to develop the colonial countries would come to a dead stop.
  • The “green” preachers have yet to promote the need for clones to the oil derivatives that are the basis of billionaire’s lifestyles and worldwide economies.
  • Wind turbines and solar panels are not only incapable of manufacturing any such derivatives, but the manufacturing of the components for wind and solar are themselves 100 percent dependent on the derivatives made from crude oil, the same crude oil that the world wants to eliminate from our economies.

Energy is more than electricity from breezes and sunshine. Electricity by itself cannot provide the thousands of products from petroleum that are essential to our medical industry, transportation infrastructure, our electricity generation, our cooling, heating, manufacturing, and agriculture—indeed, virtually every aspect of our daily lives and lifestyles. Nor can electricity alone, support the military, airlines, cruise ships, supertankers, container shipping, and trucking infrastructures.

The greatest threat to civilization would be from the elimination of crude oil as that commodity is manufactured into the oil derivatives and transportation fuels that can bring the poor out of poverty and are the reasons, we have healthy and wealthy developed countries. Going cold turkey to electricity from breezes and sunshine is not the wisest move without a safety net to rely upon that can support worldwide lifestyles and economies as we now know it.

*****

This article was published on September 22, 2021, and is reproduced with permission from CFACT, The Committee for a Constructive Tomorrow.

American Investors Are At Risk If Congress Continues To Give Fraudulent Chinese Companies A Pass

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Beijing’s refusal to comply with U.S. law while continuing to access our capital markets has subjected U.S. investors to the risk of enormous financial losses.

Concern this week about the possible collapse of China’s Evergrande, which has a massive debt burden of $305 billion, highlights one more reason Congress needs to act to protect U.S. investors from Chinese companies.

The Sarbanes-Oxley Act of 2002 mandates the Public Company Accounting Oversight Board (PCAOB) and the U.S. Securities and Exchange Commission (SEC) inspect audit paperwork of all companies that issue securities in the U.S. The goal is to “protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports.” More than 50 foreign jurisdictions comply with this U.S. law. But in the name of national security concerns, the Chinese government has prevented both domestic and foreign auditors of Chinese companies listed on U.S. exchanges from submitting audit reports to PCAOB and the SEC for inspection.

SEC Chairman Gary Gensler issued a warning to Chinese companies listed on U.S. stock exchanges recently: comply with our audit rules or be delisted. But Gensler’s threat came with a caveat: Chinese companies will have a three-year grace period before they may have to face any consequences. Given all the known risks of investing in Chinese companies, Kyle Bass, Hayman Capital founder and a vocal critic of China, said the SEC’s delayed enforcement would allow Chinese companies to have an “open season on U.S. investors” for three more years.

For decades, Chinese companies have successfully tapped into the U.S. capital market and U.S. investors have helped fund China’s astonishing economic growth. As of May 2021, there are 248 Chinese companies listed on U.S. stock exchanges, with a market capitalization of $2.1 trillion.

Past Fraud at Chinese Companies Listed on U.S. Stock Exchanges 

U.S. regulators have good reasons to be concerned about investors’ risk exposure because corporate fraud in China is a well-known epidemic. In 2018, auditors in China declined to endorse 219 annual reports prepared by Chinese companies because the auditors either found problems with these companies’ financial statements or had expressed concern about the companies’ likelihood of survival.

Last year, Luckin Coffee, a Chinese startup that went public on NASDAQ in May 2019, disclosed that several of its employees, including its chief operating officer, had fabricated the majority of the company’s 2019 sales. Two months later, NASDAQ delisted Luckin stock. At the time, Luckin’s share price was only $1.48, a stunning 97 percent decline from its all-time high of $51 per share less than a year ago. Investors of Luckin stock suffered massive losses.

Shortly after Luckin’s financial fraud was exposed, another U.S.-listed Chinese company, TAL Education Group, one of the largest education providers in China that offer K-12 after-school tutoring services, revealed that one of its employees had inflated the company’s sales by “forging contracts and other documentation.” The share price of TAL dropped 23 percent in one day. The accounting scandals of Luckin and TAL renewed the concern that Beijing’s refusal to comply with the U.S. law while continuing to access U.S. capital markets has subjected U.S. investors to significant investment risk.

A succession of U.S. administrations has engaged many rounds of diplomatic negotiations with Beijing, hoping that China would comply with U.S. law and let PCAOB and SEC inspect audit reports for Chinese companies listed on U.S. exchanges. Beijing never budged. In 2012, a frustrated SEC filed administrative proceedings against five Chinese accounting firms (all of them global firms’ Chinese subsidiaries), for failing to hand over audit records of the Chinese companies under SEC investigation. The five firms claimed that if they followed SEC’s order, they would violate Chinese laws.

Even if PCAOB or SEC were granted access to Chinese companies’ auditors, another ongoing concern is that some of China’s homegrown accounting and auditing firms are just as unreliable as their corporate clients. Rather than acting as gatekeepers, these firms have turned a blind eye to their clients’ fabricated financial statements to maintain lucrative business relationships. For example, Chinese regulators launched investigations of China’s accounting firms Ruihua and GP in 2019. The regulator found that one of GP’s corporate clients inflated its cash holding by $4 billion, and one of Ruihua’s corporate clients overstated its profit for four years by $1.7 billion.

Shell Companies Are Another Risk

Widespread corporate fraud of Chinese companies and lax oversight from Chinese auditors are only some of the many known problems investors and U.S. regulators have to deal with. Another significant problem is Chinese companies’ circuitous corporate structure.

Since Beijing bars foreigners from taking ownership in what it deems strategic sectors of the Chinese economy, many large Chinese companies created offshore holding companies or variable-interest entities (VIEs) to raise capital outside of China. Since these VIE shares do not represent ownership, they offer foreign investors minimal legal rights or protections. According to Paul Gillis, an economics professor at Peking University, in the event of any dispute between foreign investors and VIEs, foreign investors “risk finding themselves owning shares in a shell company with no assets and no business if the contracts fall apart.”

Chinese Communist Party Influence on Chinese Companies

While foreign investors do not have ownership of Chinese companies they invested in, the Chinese Communist Party (CCP) has vast influence over Chinese companies and their management. For example, between 2016 and 2017, more than 30 Hong Kong-traded Chinese companies required their boards to consult Communist Party committees before making major business decisions.

Yet, Chinese companies listed on U.S. exchanges have yet to disclose either the CCP’s ownership stake or its power to influence their business operations. Without such disclosure, foreign investors in these Chinese companies are in the dark regarding the magnitude of risks they are exposed to.

Congress Must Authorize the SEC to Act Now

U.S. lawmakers sought to protect U.S. investors and address China’s decades-long refusal to comply with the Sarbanes-Oxley Act by passing the Holding Foreign Companies Accountable Act (HFCAA) in 2020. President Trump signed it into law. HFCAA stipulates auditors of foreign public companies must allow PCAOB to inspect their audit reports of non-U.S. operations, and if “a company’s auditors fail to comply for three consecutive years, then the company’s shares would be prohibited from trading in the United States.”

The lawmakers clearly aimed at China when they drafted HFCAA, but a three-year grace period is too long to address problems we have known of for decades. While the SEC is still drafting new rules to implement HFCAA, new challenges from China have emerged.

Less than two months ago, foreign investors who have funded China’s economic growth by investing in Chinese companies had suffered their most significant loss since the 2008 financial crisis. The CCP launched a crackdown on China’s largest technology firms, private education businesses, video game makers, and food-delivery companies. Bloomberg estimates that the Chinese government’s action has wiped out $1.5 trillion in value of these companies. Even investors who do not own these stocks directly suffer losses because many mutual funds hold these Chinese stocks in their investment portfolios.

There are indications the CCP hasn’t finished its crackdown yet, as its leader Xi Jinping is determined to reshape China’s economy by will and consolidate power and control in his own hands. Xi announced in early September that China would launch a new stock exchange in Beijing to help small to medium-sized companies raise capital. China already has three stock exchanges: Shanghai, Shenzen, and Hong Kong. The establishment of the Beijing stock exchange is the latest indication that China intends to develop its own capital market further and reduce Chinese businesses’ reliance on foreign capital markets. The SEC would have very little leverage left if it waited three years to delist Chinese companies that don’t comply with U.S. law. By 2024, China’s capital market will be mature enough that these Chinese companies probably will be more than happy to take their businesses back to China and re-list on Chinese stock exchanges.

The U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act this summer, which, if enacted, would reduce the three-year grace period to two. But even two years in the investment world is still a long time. American investors continue to face the risk of enormous financial losses as Beijing stonewalls U.S. laws. To truly protect American investors, the U.S. Congress needs to authorize the SEC to take action now, not two or three years from now.

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This article was published on September 22, 2021, and is reproduced with permission from The Federalist.

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