Category Archives: Fiscal Policy

Community Conservatism – Reviving the Middle Class Economy

median_income

Governing for a Healthy Middle Class Economy

Conservatives do not believe that the government can “create” jobs directly. This canard of the left does nothing but destroy market-driven, sustainable jobs at the expense of increasing the national debt and attaching an anchor to GDP growth in exchange for short term government employment and expanded private sector government influence. That doesn’t mean that a conservative Congress can’t stand for job creation. The way we get there is by providing the modern infrastructure, economic freedom, and competitive tax code that attract, rather than repel the world’s wealth. We want to decrease the cost of doing business here at home and focus government resources on business-supportive roles, rather than coercive ‘partnerships’. It begins with a smarter tax code.

A) Pass Corporate Tax Reform (dare Obama to veto)

I don’t recommend settling for half-measures here and I recommend putting this near the top of the agenda for 2015. Obama has, on multiple occasions, put Corporate tax reform in his state of the union address in his 6 years in office (five addresses, 4 mentions). Corporate tax reform that accomplishes the closing of certain loopholes, the ending of certain forms of corporate welfare, and the reduction of rates to something that competes with the rest of the developed world has broad, bipartisan support among the voting middle class. In Washington, such measures have met with stiff resistance from corporate lobbies who do not want to see the corporate tax base broadened to include them, specifically (through the removal of loopholes). Let the GOP stand for the voters, not for special interests, and pass comprehensive corporate tax reform that does the following:

• Cuts the corporate tax rate to 25% at most
• Creates a two-tiered capital gains tax bracket, where all capital gains are taxed at a much lower rate below $250,000 each year
• Excises many of the tax-sheltering loopholes used by the biggest corporations to avoid paying; in particular, the shelters to profits earned overseas by American companies
• Gives corporations a ‘tax holiday’ to repatriate foreign capital until January of 2021
• Creates a lower corporate tax rate for wealth generated by manufacturing concerns – 15%, perhaps

There are, I’m certain, other great ideas that could be included in a sweeping change like this, and we’re all ears. This is just a start. The goal is to create an environment that encourages businesses to take risks and expand their workforce here at home without taking the punitive approach championed by Obama (penalize companies that keep their money overseas, rather than improve the economic climate at home).

B) Pass the REINS Act (obtain Obama’s veto)

REINS is a relatively simple piece of legislation passed in the GOP-controlled house and left to gather dust in Harry Reid’s file cabinet. It requires congress to approve all regulations in excess of $100M as scored by the Congressional Budget Office each year. If said regulations cannot be approved, they are immediately stricken. This is good policy on so many levels, not the least of which is that it maintains the separation of the non-political government agencies from the political process in the drafting of public policy regulations but forces Congress to exercise some oversight on those regulations that are particularly costly. We recognize that regulatory science should not be trapped by the political process, but we also believe that unelected agencies should not have carte blanche to pass regulatory rules without oversight that serve as a huge burden to economic growth. It will give the voters some ability to hold their representatives responsible for the regulatory state and encourage those who draft said regulations to minimize their costs or garner broad public support for their necessity. It will also make public the CBO scoring of the cost of every major regulation, helping the public to get a sense for the true costs and benefits of each.

C) Return the Full-Time Workweek to 40 Hours

We’ll talk more about the Affordable Care Act when we get to healthcare, but one of the most pernicious things the ACA accomplished was to effectively reduce the American workweek to 30 hours in the eyes of the law. Democrats supported this concept to avoid the tendency of corporations to get 39 hours of work per week out of employees to avoid having them counted as full time and thus be forced to offer benefits. The problem, of course, is that reducing the workweek to 30 hours meant a lot of people just got cut down to 29 hours. If you’re a struggling poor or working class American, this tends to drive you to take two part time jobs and you end up working more and still not getting benefits, or working drastically less and not making enough money to survive. If all else fails, regarding the ACA, increasing the workweek back to 40 hours at least offers some relief for people in this situation (and the CBO projects a big surge in part time labor under the ACA as it currently stands).

D) Expand the Earned-Income Tax Credit

Right now, if you earn less than $11,000 for an individual or $88,000 for a family filing jointly, and are legally eligible for that work, you can claim an earned-income tax credit (variable by family size and earnings). The EITC is good policy for the poor and working classes and should be expanded with increased credit sizes (perhaps another 30-40% proportionally) and availability (up to incomes of less than $125,000 for a family filing jointly). Make this revenue neutral by creating a “super-wealthy” tax bracket (>$1,000,000) that is taxed at a slightly higher rate and by eliminating eligibility for certain tax credits for people in this new upper tax bracket. Normally, the GOP is not associated with eve the smallest of tax increases for the wealthy, but if we reduce corporate taxes as previously outlined, this sort of minor compromise will come out in the wash while selling as good, fair tax policy to middle class voters.

E) Exempt Small and Moderate-sized Businesses from Burdensome Regulation

Small business start-ups are responsible for the majority of new jobs that pay above the media household income. They’re also in sharp decline here in the US. One of the major reasons for this is that, when Congress enacts legislation to regulate business, it does so with larger businesses in mind. We recognize that it is indeed necessary to regulate larger corporations, because they can have disproportional impacts on the environment, the free market, and the welfare of the people. We also recognize that big business can absorb the cost of our most aggressive regulations, but small business cannot. We also believe it is unreasonable for small businesses, frequently run by citizens without the resources to educate themselves on the full extent of the regulatory state cannot be expected to comply to the same degree as larger corporations, and that their likely impact on people, the market or the economy is greatly reduced. We, therefore, must pass a law stating that regulations determined to be of great impact by the CBO as in the REINS act, should be applied only to corporations with greater than 250 employees or more than a negotiable amount of total assets.

F) Repeal Sarbanes-Oxley and Replace with Common Sense Reporting

Again on the subject of over-regulation, this panic-move following Enron’s collapse is among the worst offenders for needless corporate regulatory burden, annually costing billions in the private sector for compliance and producing no change in accounting transparency. It reminds us of the mindless and often pointless busywork we used to get in school, and compliance requires companies to hire a fleet of folks who are specifically experts in the labyrinthine letter of this law. It must go and be replaced by much simpler-to-follow guidelines for financial reporting.

G) Greenlight Keystone XL and Other Energy Infrastructure Projects on Federal Lands

The latest estimate by industry sources is that Keystone XL pipeline would create in excess of 20,000 good paying jobs immediately and have extensive multiply impacts on the job market, not to mention making it cheaper to move oil to high-demand parts of the country where oil prices are currently far too high. Our best environmental impact studies conclude that the XL pipeline would be a net positive for the environment if you assume that the alternative is transport by rail, rather than non-use. This is a no-brainer.

H) Abolish the Nuclear Regulatory Commission and Allow Nuclear Energy Expansion – Complete Yucca Mountain Facility for Waste Management

As the science improves to reduce waste products from nuclear fission power, and as the EU and Japan continue to move ahead of us on safe, clean nuclear energy, our ability to innovate and, perhaps, solve the problem of excessive fossil fuel emission is stymied by the anti-science left’s crusade against Nuclear Energy. It’s time to stop being parochial and superstitious in the face of overwhelming evidence that nuclear energy is, by far, our best source of affordable, clean energy.

I) Abolish the Export/Import Bank

It may not be immediately apparent how ending this brand of corporate welfare can help create jobs, but it becomes clearer when you realize that many of the businesses that benefit from Ex/Im assistance are the non-dynamic, struggling corporations not likely to hire a large labor force, and it always seems to come at the expense of healthy competition. Again, the key to job creation is a competitive, free market that rewards well-run companies, not the ones out begging for federal dollars to stay afloat and squash upstarts.

How Do You Measure The ‘American Dream?’

The question of class mobility has come to define the “American Dream” in political discourse. And, although this post will take a bit of a contrarian position, it is absolutely inarguable that there is a problem with economic immobility today that is having a very depressing impact on the way we communicate to solve problems and on our freedoms in general. But this is not how you go about making that point.

There are many accepted indicators of whether a person has “done everything right” but the most important such indicators have traditionally included college advancement (graduation and especially graduate degrees), marriage, and home ownership.

The original graphic is a classic example of a complex topic simplified into uselessness. When I look at the graph, I see that, in fact, college grads who started poor move up to the middle classes and stay there at much higher rates than rich kids who drop out of high school (yay!)…but somehow the Post comes away with the misleading headline: Poor kids who do everything right don’t do better than rich kids who do everything wrong.

Really? This only looks at the shear proportions who “graduate college” vs. “drop out of high school” – that can hardly be seen as “doing everything right” vs. “getting everything wrong”. What did the college grads major in? There is ample research supporting the conclusion that most college majors these days are bad long term investments. What did the rich kids who didn’t finish HS go on to do? Were they drop-outs because they had alternative plans? Did they pick up a trade?

And more to the point – how many of those poor kids had good parenting examples at home upon which to build the foundations of healthy marriages?

Slate takes on many of my same talking points here. They mention other confounding factors, and note the misleading nature of the Post’s article title. Props to them!

But they make the unfortunate logical leap that there is something inherently wrong with a system where not all poor college grads do well later in life, or that the forces leading to their remaining in poverty are things we can fix.

An excerpt:

The real issue, as O’Brien points out, is that rich kids enjoy lots of advantages that keep them from falling to the very bottom of income distribution, and sometimes those advantages keep them at the very top. They might be able to go to work for family businesses, for instance, or family friends. Researchers like Brookings’ Richard Reeves call that collection of advantages “the glass floor.” Educated poor kids are in the exact opposite position. Many attend second- or third-rate (and possibly for-profit) colleges that churn out less-than-useful degrees. And instead of a floor propping them up, their families and friends can act like an anchor pulling them down. A classic example: a college-educated woman who goes home and marries a boyfriend who never made it past high school and has trouble holding down a job.

Emphasis mine. Notice the not-so-subtle insinuation that colleges that operate for profit are bad for the poor, and that the less-useful degrees are not to be found in the halls of elite, expensive colleges, only those second rate low-end state schools or the aforementioned dirty capitalist institutions. Of course, even top end colleges (including the ivy leagues) are now offering degrees in a wide array of financially useless liberal arts curricula. Also notice the suggestion that the problem isn’t with the failure of people raised in poverty to establish and keep stable families, but that those families are holding them back. They’re getting it exactly backwards. Every credible study on the persistence of poverty finds that single parents and people who suffer divorce are the most likely to get stuck in poverty.

So let’s summarize the position of Slate’s team (and likely that of the Washington Post):

1) Economic mobility continues to be problematic at best for the poorest Americans, even with hard work.
2) Graduating from college is a mark of hard work.
3) Hard work should be rewarded with a high rate of success.
4) If we could separate the poor from the things that hold them back (especially their struggling families and their alternative education sources), they would thrive.

If the writers at Slate would like to address the problem of hard-working, driven poor people being less able to move up the economic ladder than (perhaps) would be ideal, I suggest that they stop grinding political axes and start looking at the hard data. The data all indicates that the leading indicator for economic immobility is single parenthood, and that children of single parents are more likely to also be single parents themselves later in life. Get to the root of the problem and you find that this is not something that government can forcefully correct – and frankly, I’d be terrified if they tried.

Watch A Couple Of Millennials Talk About Barack Obama’s Policies Have Harmed Their Generation

A couple of young Millennial women, Alyssa Lafage and Elly Mae, appeared on “The Rick Amato Show” on the One America News Network (don’t worry, you probably don’t even get the channel). Amato had both young ladies on to talk about how the policies of President Obama and progressives have harmed the Millennial generation.

Some reports show that Millennial unemployment remains high at 15% in September. This summer, it was estimated that Millennials are 40% of the overall unemployed in this country. Millennials still cannot afford health insurance, despite Obamacare’s promises.  Finally, Millennials are trapped by high amounts of student loan debt, which cannot be discharged in bankruptcy, in order to obtain near worthless degrees.

Watch these two Millennial women describe how the polices of President Obama and progressives have harmed their generation and made their generation worse off than ever. Also, check out our own Quincy’s takedown of Obama drone Paul Krugman’s proclamation of Obama as one of the greatest presidents ever which touches on some of these same issues.

h/t: Wayne Dupree

I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at The Hayride.com and Rare. You can also find me over at the R Street Institute.

Cost is NOT Price, and Neither Cost, nor Price, are Value

Prices Provide a Misleading Measure of Dollar Devaluation
Forbes Magazine Online – Keith Weiner

There’s not a human being alive who doesn’t know the dollar is falling. Everyone over 25 has stories of what prices were like, way back when (and younger people have heard them). I remember when gasoline was 60 cents a gallon, and my mom remembers when it was 20 cents.

Federal Reserve Chair Janet Yellen acknowledges the official objective to push the dollar down by 2 percent per year. This intention is behind the Fed’s ill-conceived loose money policy.

It’s important to measure each drop. This is not just to keep a scorecard on the Fed, but because a change in the dollar skews historical comparisons and distorts business decisions, like giving increases to workers and pensioners….

Read the whole piece, and then come back…

The thesis statement of the piece is correct, in that prices provide a misleading indicator of currency valuation (and that our weak dollar policy, as pursued by every administration since Bush 1 to some degree or another, is fundamentally wrong and destructive for that matter).

Unfortunately the author suggests that simply using a different price denomination and comparison (to gold) is a less misleading indicator… In this, he’s absolutely incorrect.

What you really want to compare is purchasing power parity (PPP) as measured by equivalent standard of living, expressed as a dollar cost in constant dollars normalized to average labor hour wage or compensation.

i.e. this item costs 5 minutes of average labor, this costs 8 hours, this costs 20 years; the cost to maintain this equivalent normalized standard of living across an aggregate population is 1940 hours of median labor wage etc… etc…

Note, this is NOT an expression of the fallacious labor theory of value, it is an explicit measure of purchasing power parity as actual cost, INCLUDING opportunity cost (in terms of time), not currency denomination.

The critical function isn’t price, and it isn’t wage… it’s cost, in this case expressed as a cost to value ratio as a normalized dollar (to make it easy to relate to wages and prices).

Cost is not price; it’s a totalized measure of inputs including resources, time, and opportunity.

I am a cynically romantic optimistic pessimist. I am neither liberal, nor conservative. I am a (somewhat disgruntled) muscular minarchist… something like a constructive anarchist.

Basically what that means, is that I believe, all things being equal, responsible adults should be able to do whatever the hell they want to do, so long as nobody’s getting hurt, who isn’t paying extra

Tax Hike Mike Threatens To Take His Toys And Go Home

Former Arkansas Governor “Tax Hike Mike” Huckabee was a guest on the American Family Association’s “Today’s Issues” program where he ripped into the Supreme Court’s decision this week to not hear gay marriage cases, which essentially increased the number of states in which gay marriage became legal to 30 plus the District of Columbia.

Here’s a video of Tax Hike Mike threatening to leave the GOP over gay marriage:

For those of you who prefer to not watch the Huckster, Rare has transcribed what he said:

“If the Republicans want to lose guys like me and a whole bunch of still God-fearing Bible-believing people, go ahead and just abdicate on this issue,” Huckabee said.

“And go ahead and say abortion doesn’t matter, either, because at that point, you lose me, I’m gone, I’ll become an independent, I’ll start finding people that have guts to stand. I’m tired of this,” he said.

Poor Tax Hike Mike is not getting his way so he’s going to take his toys and go home. Well, the problem for Tax Hike Mike is that the Republican Party and the country are changing and it’s not to his liking.

Young Republicans are overwhelmingly in support of gay marriage for example. Pew Research Center found that 61% of young Republicans support gay marriage.

Gay marriage isn’t the only issue where young Republicans are bucking social conservatives. Young Republicans are also bucking social conservatives on marijuana as the AP reported back in May.

Beyond being a generational issue, young Republicans say their positions stem from the party’s belief that government shouldn’t intrude on people’s lives. Ron Paul’s 2012 presidential campaign got most of its following from younger Republicans attracted by his libertarian message that allowed for gay marriage and the legalization of marijuana.

It’s not just Tax Hike Mike’s increasingly out of date positions on social issues that should stop anyone who loves liberty from shedding tears over his departure from the GOP, it’s his terrible positions on just about everything. Here’s a brief summary:

  • There’s a reason why we call him Tax Hike Mike around here, because as Governor of Arkansas, he loved to raise taxes
  • Tax Hike Mike increased spending by 65% as Arkansas governor and Cato gave his overall reign a “D” on their grade for fiscal policy.
  • Tax Hike Mike continues to defend his fiscal progressivism.
  • Tax Hike Mike has supported cap and trade in the past and says “God wants us to fight global warming.
  • Who can forget Tax Hike Mike’s support of Common Core
  • Oh social conservatives, do you know that Tax Hike Mike signed a law in 2005 that mandated contraception coverage, even for religious organizations?
  • For more goodies about Tax Hike Mike, please visit this blog that has compiled a list of the numerous times Mike Huckabee has supported big government.

    After the disaster that was the presidency of George W. Bush and “big-government conservatism”, the last thing the Republican Party and the country needs is for that banner to be carried to victory in an election. It’s time to show Tax Hike Mike and those who support the big government nanny state the left does, except their own version of it, the door.

    I’m one of the original co-founders of The Liberty Papers all the way back in 2005. Since then, I wound up doing this blogging thing professionally. Now I’m running the site now. You can find my other work at The Hayride.com and Rare. You can also find me over at the R Street Institute.
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