by | ARTICLES, BIDEN, BLOG, COVID, ECONOMY, ELECTIONS, OBAMA, TAXES
As Biden is gaining closer to winning the upcoming election, his economic plan deserves more scrutiny. So far, Biden is clearly looking to Obama for his policy aspirations. Unfortunately, Obama was following FDR’s playbook to the detriment of our economy. Let’s take a look:
Obama’s policies resulted in the poorest recovery since the New Deal, just as FDR’s meddling only prolonged America’s longest depression ever. Obama followed FDR’s failed playbook – he raised taxes, over-regulated businesses, gave organized labor excessive power, instituted policies that discouraged people from working, and hurt international trade.
Firmly entrenched in Keynesian economics, Obama believed in government spending while wholeheartedly crowding out private spending; he substituted inefficient political and crony-based spending for free-market, give-the-public-what-they want spending.
This week in the WSJ, Jay Starkman issued a warning on Biden’s plans, in “Bidenomics May Repeat FDR’s Blunder.” He notes, “Today the U.S. economy is recovering from a great crash, as it was before Roosevelt’s tax onslaught. Unfortunately, Mr. Biden doesn’t seem to have learned the right lessons. Should he win in November, he proposes to cancel the Trump tax cuts, raising the top federal income-tax rate back to 39.6%, and raise the corporate income tax from 21% to 28%. He also promises to limit low capital-gains tax rates to the first $1 million in profits and extend the full Social Security tax to income above $400,000.” With Biden also promising to increase regulation and institute energy policy that will produce less energy at a much higher cost, danger is in the wind.
Why go back to the policies that have so clearly failed us before. After three years of robust economic activity during Trump’s administration before the onslaught of COVID, this country can neither risk nor afford Biden’s plans.
by | BLOG, FREEDOM, GOVERNMENT, TAXES
Let’s put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
>-The first four men (the poorest) would pay nothing
>-The fifth would pay $1
>-The sixth would pay $3
>-The seventh $7
>-The eighth $12
>-The ninth $18
>-The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But, what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?” The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being “paid” to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:
>-The fifth man, like the first four, now paid nothing (100% savings)
>-The sixth now paid $2 instead of $3 (33% savings)
>-The seventh now paid $5 instead of $7 (28% savings)
>-The eighth now paid $9 instead of $12 (25% savings)
>-The ninth now paid $14 instead of $18 (22% savings)
>-The tenth now paid $49 instead $59 (16% savings)
Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth. “But he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”
“That’s true!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes also get the most “benefit” from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
Author Unknown
by | ARTICLES, BLOG, ECONOMY, FREEDOM, GOVERNMENT, POLITICS, TAXES
The great Don Boudreaux a friend of mine, made mention of this picture last week over on his superb blog, Cafe Hayek. The picture is apparently a favorite among Trump supporters.
“What to say? Perry Potts Eidelbus, a Facebook friend, describes it as “a distillation of economic ignorance into pure form.” Indeed. It’s much like Trump himself: the very image of economic ignorance.
Trump is doing now from the political right what Paul Krugman has done so successfully over the past decade and a half from the political left, which is the following: boisterously assuring people that their untutored instincts about the economy are indeed accurate – telling people that what they immediately see in economic affairs and policies is all that there is to see in economic affairs and policies (that is, that there is no ‘unseen’ whose reality can be perceived and understood only by looking beyond that which is immediately obvious). According to this bastardized, pandering version of economics, actual consumable goods (such as are pictured here) are reckoned to be costs, while toil is reckoned to be a benefit. The economic problem is not rooted in scarcity, it is rooted in abundance. Social benefactors, therefore, are those who promise to deny to us the fruits of the economy’s abundance (along with, by the way, our economic freedoms) as they bestow upon us ever-greater scarcity that will bless us with the need for more toil.
The photo shown here is, in short, itself an intellectual cargo ship loaded down with countless tons of economic ignorance.”
by | ARTICLES, BUSINESS, ECONOMY, GOVERNMENT, HYPOCRISY, OBAMA, POLITICS
Bernie Sanders recently chose to test the waters of a possible Presidential campaign by weighing in on the deliberations regarding the Post Office. Thankfully, we have this Op-Ed so early on, because it reveals Sanders’ complete and utter inability to comprehend basic economics and accounting.
Bernie argues two main points: 1) the Post Office is not broke and 2) those who believe it is are “anti-government”, “wealthy special interest”, profit-seeking, or all of the above. These points rest entirely on his premise that pre-funding health benefits to postal workers is a very bad thing.
Sanders actually believes that planning for future promised benefits is not a fiscally sound practice. If he feels this way about the Post Office, surely he feels the same about Social Security and Medicare (two programs who have trillions in future liabilities). Does Sanders know that his type of accounting would land any business executive in jail?
Sanders says that if we didn’t have to pre-fund future benefits, than the Post Office would make a profit. Simple, right?
What he fails to mention that if we didn’t pre-fund benefits, the Post Office would merely be sloughing off paying its promises to some future nebulous day and time for some other taxpayers else to take care of –only when its liabilities were astronomical and the finances were on the edge of a precipice.
That result is precisely what we are facing programs like Social Security, Medicare, and many defined benefits plans across the country: politicians made future monetary promises without planning for them, and now the economic pressure has ballooned into severe fiscal instability. Sanders belongs to the ‘spend first, fix (maybe) later” group of bureaucrats who refuse to follow basic accounting practices like any business would be required to practice.
With the Post Office, we actually have an quasi-government entity following good, non-gimmick accounting so taxpayers can see first-hand the true financial picture (current and future) of the post-office. Pre-funding benefits to account for future and current liabilities is a proper and healthy way to do business. And if the Post Office cannot turn a profit while protecting its current and future liabilities, than it must make changes to its business operations
By repealing the legislation to pay for future liabilities, Bernie Sanders is ostensibly demanding someone in the future — your kids and grandkids — to clean up the mess of his government and his generation’s deliberately poor financial planning.
Which bring us two his second point. Bernie Sanders does what the Left does best, which is resort to name calling, straw-man arguments to build up his weak ideas. Sanders actually thinks that those who wish to pass on a health economic future while practice basic and principled accounting practices are anti-government, bought-and-paid-for, or profit-mongers. No, Mr. Sanders, we only wish for the government and its entities to practice the same kind of accounting standards that any other business or family is required to do.
Watch out, America — Bernie Sanders is just more of the same. Another bureaucratic imbecile who refuses to face economic and financial realities when it comes to the Post Office — or any big government program which deals with current and future liabilities. Sanders would rather pass the buck to the next generation in order to save a few union jobs.
by | ARTICLES, ECONOMY, OBAMA, POLITICS
During Bob Beckel’s recent appearance on “Cashin In”, Bob stated that “Wall Street investment bankers should be in jail because they nearly threw this country into depression”. This statement is quite ridiculous. Since when is the economic cycle grounds for throwing people in jail?
Bob Beckel has absolutely no information that anybody from Wall Street who committed any wrongdoing has not already been appropriately prosecuted. There is no more evidence that any of these people should be in jail than there is evidence that the economic recession was caused by Bob Beckel and his statements on television. Bob Beckel’s cluelessness was further demonstrated by his comment that implied that he did not believe that executive compensation is reduced even when companies were losing money! Does he have no contact whatsoever with the economic world?
It is quite clear that the major course of the recent meltdown was government activities creating an environment for making real estate loans that never should have been made. A short trip down memory lane through Youtube and the unconscionable congressional hearings moderated by Barney Frank, Maxine Waters, and Chris Dodd should be enough to remind Beckel of the real economic culprits.
It was all too obvious that when the Republicans tried to rein in this overextended lending policy of Fannie Mae and Freddie Mac they were viciously attacked as scare mongers and racists. For Bob Beckel to insist that unnamed Wall Street groups performed criminal activities in connection with this economic meltdown is incredibly irresponsible. From an evidentiary point of view, it is just as likely that Beckel committed criminal activities.
