Alan Blinder is a distinguished economist who insists on misleading the public about economic matters. The latest affair is found in Blinder’s Op-Ed, “A Speedy Recovery Depends on More Aid: Will Trump Deliver?” wherein Blinder deliberately misleads his readers about the economy and the road to recovery. Here are some of his statements:
“Mr. McConnell is a roadblock to more relief funds.” It wasn’t McConnell, but Pelosi who refused to talk. McConnell put forth a relief package but because it did not include the extra state and local bailout funds desired by Pelosi, Pelosi would not even consider it. Yet, Blinder omits this. The assertion that McConnell is the one who is a “roadblock” is not only a difference of opinion, it’s an outright lie.
“Senators and the public need to understand that it was CARES and the rest that propped up the economy “artificially” as the virus was pulling it down.” The economy is not artificially propped up. It is well on it’s way back to where it was prior to COVID. In fact, just a paragraph prior to this one, Blinder notes that the recovery has been V-shaped, yet he suggests here that the relief given by CARES somehow wasn’t real relief. And if relief packages are indeed “artificial props”, why does he want another one? But what’s even worse is that Blinder, an economist mind you, believes so much in the CARES Act, but if anything, CARES restricted economic growth in the economy by paying people not to work and reducing incentives to work, so the recovery that we have experienced is despite the CARES Act, not because of it.
“Americans are suffering from the tragic results of the Trump administration’s malign neglect of the virus.” Nothing could be more politically upside down. Trump was the first to restrict travel while the Dems screamed it was wrong to do so. Likewise, his vaccine programs have been aggressive enough to produce multiple vaccines that are now being implemented in the public. Blinder puts the blame on Trump, yet it was the states, not Trump, who imposed the lockdowns — many excessive and some still ongoing — that have shuttered industries and businesses. Some of these will never recover, yet the economic consequences of prolonged shutdowns are real, and rest squarely on the shoulders of states.
“State and local governments, which are on the front lines in the battle against the virus, urgently need several hundred billion dollars in federal aid. They must balance their budgets.” Here’s the biggest falsehood. Blinder fails to mention that many states and local governments were in economic dire straits prior to COVID as a result of profligate spending and fiscal mismanagement, and this irresponsibility directly affects those particular governments’ recovery efforts today. The states with the biggest budget problems pre-COVID are the ones begging for the biggest bailouts. They are also the ones who have implemented some of the harshest and irrational lockdowns that have made things even worse. What’s more, these same governments have steadfastly refused to institute common sense restrictions on themselves such as freezing pay, furloughing workers, etc. It’s egregious, but Blinder just wants to paper over that part by calling for “balanced budgets.” None of these people who spent recklessly never cared for balanced budgets prior to now. And without changing spending habits nor making drastic cuts to the budget in the future will go right back to being in the hole.
“These folks have pretty straightforward needs: cash income, food, shelter and health care. The federal government knows how to provide these things.” This is cringe-worthy. Blinder forgets that it’s the American people who are the source of economic prosperity and he forgets that it is their taxpayer money earned through hard work and ingenuity.
This article reveals that Blinder really is a shill for the Democrats, and used his column to mislead people into believing that bailing out states and local governments is the only way our economy is to be “saved.” But it makes virtually no economic sense to spend massive amounts of taxpayer funds to cover up fiduciary irresponsibility. It would be reckless for Congress to commit any more money to such endeavors. McConnell knows this. We know this. Just about everyone knows this except for those leaders and governments who have never shown themselves to be accountable with someone else’s money — which is how they got in their financial budget shortfalls in the first place.
Those are not leaders. Blinder does a disservice to his readers by espousing some of the worst economic fallacies that will ultimately hurt, rather than help, fellow Americans.
One of the most outrageous and economically stupid measures to pass on Election Day came out of San Francisco: a new tax called the “Overpaid Executive Tax.” It’s really as bad as it sounds. This law levies a .1% surcharge on any company in San Francisco whose top executives earn 100 times more than the “typical worker.” It was enacted as a means to fight against pay inequality, but all it does is show how incompetent its proponents really are.
It’s worth noting that this tax applies to both publicly traded companies and private companies within San Francisco and it ensnares both local companies and large companies that conduct business within the city. What’s more, it’s completely arbitrary. What are you comparing when you say 100x or 200x the typical local worker? Does that mean on an hourly basis? Does it mean a part time typical worker compared to a high level overtime executive? Do you include overtime? Do you include benefits? It’s a virtually impossible number to calculate. And even if you did have a number to calculate, why is it 100x and not just 50x? Let’s say you compare a high tech company with a retail company such as a supermarket. The supermarket will have a lot of lower wage workers, whereas a tech company will have a lot of higher paid workers. It’s comparing apples to oranges in an effort to get someone to “pay their fair share.”
I hope this has the economically expected effect of them losing a lot of money and business, which is obviously the opposite of what San Francisco probably wants during a pandemic. Current companies will likely change their hiring plans to eliminate or reduce the amount of lower-lever/lower paid workers. Likewise, companies considering doing business in San Francisco will undoubtedly hesitate or entirely change their mind. Why do business in a locality that is particularly anti-business with such ridiculous rules. Furthermore, this surcharge is basically not a tax, it’s a forced donation (because those affected have the option of leaving if they want to). It puts a responsibility on the company to leave San Francisco because the tax affects all the shareholders of the company. This also means that any company that doesn’t leave San Francisco because the tax applies to them is someone who is ultimately abusing their shareholders to whom they have a fiduciary responsibility.
This tax is utterly meaningless and it just shows that people proposing this are so economically ignorant that they should be embarrassed. The problem is that the people on the Left who come up with such ridiculous ideas are never actually embarrassed by that ignorance.
One of the most overlooked yet troubling aspects of Biden’s plan is his doubling of the Global Intangible Low-Taxed Income (GILTI) tax. GILTI taxes items that generate foreign income and profits owned by American companies with foreign affiliates. This is troubling, because GILTI taxes American companies on income that has virtually nothing to do with anything in the United States. It’s bad enough that the current tax rate is 10.5%; Biden wants to raise this to 21%.
The tax laws of every developed country – except the US – provide that their companies do not pay tax on earnings from outside their country. Thus a German company earning money from activities in China or the UK pay taxes only to that jurisdiction – not to Germany. The US always taxed US companies on earnings from abroad, as soon as that money was returned to the US. That created a pretty stupid situation, encouraging these companies to leave this money outside of the US, and invest it in foreign, non US ventures.
The GILTI tax was created as part of the Tax Cuts and Jobs Act (“TCJA”) of 2017 as part of the attempt to fix this situation. What the TCJA did was require that all companies with foreign operations have to pay a penalty tax on all the money accumulated abroad, going back to the ‘80s; this rate was low and spread over 8 years. In exchange for it, the idea was that US companies would now be on par with other countries, in a territorial formation. In other words, pay a low tax on the money the US company never repatriated, repatriate it, and then in the future, you don’t pay tax on it, thereby discouraging profit shifting.
But Congress lied. In addition to paying the upfront tax at a low rate and thereby getting a tax for the future, they couldn’t help themselves. They added the GILTI tax, so now it’s taxed whether it’s repatriated or not. And this is bad. Congress reneged a little bit, because the GILTI is a relatively low tax but because it is worldwide, and now they have to pay tax every year on these foreign profits. So companies paid upfront and now they have to pay this tax every year — albeit at a low rate — so now it’s worse.
Now what Biden is suggesting with the GILTI tax is basically fraudulent. People paid that upfront fee so not to have to pay taxes — and now with this proposed 21% rate — is like fraud against American international companies. The 2017 tax act required an upfront benefit that got future benefits, now Biden wants to take away the future benefits.
GILTI puts American companies operating abroad at a competitive disadvantage. The foreign affiliates already have to pay a penalty tax just to be on equivalent footing with other companies abroad (companies that don’t have to pay the GILTI tax here, mind you). GILTI then tacked on a 10.5% tax and now Biden wants to double it — when it should be ZERO.
Biden’s plan to double GILTI goes hand-in-hand with his overall plan to tax U.S. businesses (he also wants to raise the corporate tax rate to 28% and add a 15% minimum tax based on profit reported on financial statements.) Going after businesses is already bad policy and his desire to double GILTI shows his ignorance and his willingness to further erode American competitiveness.
The amount of money Biden’s plan will raise is relatively insignificant (roughly $300 billion over the next ten years) but his attack on businesses is mean-spirited; it hurts our country by making our domestic companies less able to compete abroad in foreign markets. Nevermind that foreign income shouldn’t even be taxed at all! How can Biden justify raising taxes in a way that will make the United States less competitive and will reduce jobs? Increased taxes are a disincentive towards investing and job creation and will only hurt our economy.
Now that Biden has been elected President, it’s important to take stock of what tax changes are likely to be coming. Merrill Lynch did a good job putting together a side-by-side comparison of current tax law in four areas: income, estate, social security, and corporate, and then possible changes in those areas according to Biden’s campaign tax plans. The summary is below.
It is notable that in just about every instance, there will be a tax increase under Biden’s plans. How this will impact the economy, jobs, wages, and investments remains to be seen.
Earlier this year, California passed AB5, a measure that would require companies to reclassify independent contractors as employees. The problem is that the government is yet again intruding on employer-employee relationships under the guise of worker protections. Furthermore, it’s an attempt to put unions even more in charge of things in California while also purporting to provide more revenue to a nearly-bankrupt state, all doomed to failure because of its economic ignorance.
AB5 affects those workers who belong to the gig economy. “Gig economy” is the catchphrase for the portion of the economy made up of freelancers and independent consultants. It’s estimated that 1 in 3 workers now, about 55 million, fall into this category. The gig economy has grown to be very good because it provides much-needed work flexibility and independence that many workers prioritize.
The mechanism by which freelance workers are deemed employees is the “ABC test.” This is the court created formula that companies must apply in order to determine if workers are contractors instead of employees, and it puts the burden of proof on employers. A worker is a contractor if he meets the following three criteria:
1) The worker is free from the control and direction of the hiring entity in connection with the work’s performance, both under the contract for the performance of the work and in fact.
2) The worker performs work that is outside the usual course of the hiring entity’s business.
3) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed
There is no economic or business rationale to these tests – they were created solely to destroy the concept of independent contractor by making virtually all relationships that of employer/employee. The IRS, on the other hand, has established criteria for what constitutes a real employee based on behavioral control, financial control and relationship of the parties. It should also be noted that if the IRS follows the AB5 definition of employee for Californians, the employees will be devastated! That is because under IRS tax rules, employees may not deduct any business expenses, which is a critical tax benefit to the independent contractor relationship.
It is particularly frustrating that advocates of AB5 purposefully ignore the fact that the gig economy arose during the weak Obama economy, which was littered with ever-increasing government regulations and crushing legislation such as Obamacare. This combination made it difficult to become a business or stay in business. It was certainly no wonder that businesses sought alternative forms of employer-employee relationships, which is their inherent right to do so. AB5 now undermines those relationships.
Furthermore, AB5 essentially picks winners and losers; large swaths of independent contractors are exempt, while others have restrictions, and still others are not exempt at all. Among those exempt include: “insurance brokers, doctors, dentists, lawyers, architects, engineers, private investigators, accountants, investment agents, salespeople, commercial fishermen, and real estate agents.” Among those partially exempt include journalists and freelance media-makers such as photographers, but they are now limited in their number of contributions to 35 items per year. Those industries not exempt at all include Uber and Lyft, companies who successfully arose as alternative transportation options during the rise of the gig economy.
And yet, there are really no winners here. Certain industries are exempt, but there’s no justification to do that from a logical point of view. The sole reason why some have an exemption is because they have too strong of a lobby or union presence — which is an irrational justification. There will also be a never-ending succession of lawsuits, as workers try to avoid being treated as an employee. The only winners will be the lawyers.
The gig economy has proven to be a resourceful alternative for workers who seek a myriad of benefits, including work independence, flexible schedules, side money, and increased quality of work-life balance. Now that the economy has recovered from the anemic and over-regulated Obama years, governments such as California are happy to cash in on its success while strangling its workers and businesses with unnecessary, burdensome measures. AB5 will ultimately weaken the economy and destroy some businesses in its wake.
Despite what you may have heard from politicians and journalists, trade deficits are not a bad thing… In fact, they almost always indicate a healthy economy.
Some people (including a number of our civil leaders) believe that the United States’ trade deficit is a bad thing. They think that it means that other countries are abusing us. This is just wrong – and economically ignorant. It is the same as saying that a deficit of sugar in your diet is a bad thing. Just wrong.
By definition, a trade deficit is when one country’s people and businesses are buyingmore goods than they are selling to other countries. Rather than indicating negativity or poverty, this highlights that the people and companies in the United States have the wealth to be able to buy more stuff than the poorer people from other countries are able and willing to buy from us. This is reflective of a healthy economic circumstance. Actually, throughout history when the US has had a trade surplus it generally has been in economic recession or depression. Let’s take a look at what a trade deficit actually is, and why trying to eliminate our trade deficit is misleading and ultimately based in ignorance.
Ultimately, basic economics shows that the amount of money flowing back and forth between two countries has to be the same. What changes is the form of that money: capital vs. consumable goods. When the United States has a trade deficit it means that the United States people and companies as a whole are buying more consumable goods from a country than that country is buying from us. That country in turn is using those dollars to make capital or other investments in the US – rather than buying consumable goods from US companies. China is a great example of this. The reason that we have a trade deficit with China is because we have a lot of wealth and we are willing to spend money on consumable goods. By allowing this deficit, we are in fact just letting Americans enjoy what they want to enjoy, creating a high living standard. The Chinese, on the other hand, are willing to forego the current enjoyment of things so that they can invest in their future – by buying US bonds, or investing in US companies (like automobile plants in Tennessee which provides jobs and economic growth to the US). Those in the US have decided – one by one – that they want to buy stuff to make them happy. Let’s let them do that.
Furthermore, a trade deficit is not a US Government deficit, or debt, or anything of the kind. There is no such thing as a “country’s” deficit. It is not the United States government but rather individual Americans and individual American companies that are choosing to spend their money on consumable goods. The deficit just recognizes that in the moment, US individuals and companies are choosing, transaction by transaction, to part with dollars in exchange for stuff that they would rather have. This is an individual choice that is reflective of individual wealth and ability to spend on consumable goods. We must reject the thinking of some in Congress and elsewhere who are trying to stop US people from buying more stuff from China and other countries. This ignorant recommendation is, by definition, hurting Americans and limiting their freedom to enjoy the things they choose.
An understanding of basic economics shows that trade deficits are a reflection of wealth and success and anyone who denies that doesn’t understand the concepts of trade and deficits.
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.
Rioting and looting damage society and harm people. The recent protests on behalf of fighting institutional racism wreak with unlawful violence and hypocrisy. Of course there are plenty of peaceful protesters who have caused no physical harm to property or other individuals. These are not at issue. Rather, the focus should be on the 15 people who lost their lives from the initial George Floyd protests, the countless businesses suffering stark physical damage to their properties (and despite ignorant assertions to the contrary, never fully covered by insurance), and the many families who had their livelihoods ripped to shreds because of looting.
The violence that tore through Minneapolis and other cities in recent months is simply never justifiable. The argument made by NPR’s interviewee, Vicky Osterweil, who takes on the Marxist theory that damage to property is neither violent nor unlawful is clearly nonsense. We live in the United States of America, where property and the endangerment of the security of our citizens are imbedded into every page of our Constitution. In fact the Fifth and Fourteenth Amendments delineate this protection of property rights explicitly. Violence to another person’s property is unlawful.
Not only has the recent rioting and looting been unlawful but it has been hypocritical to the highest degree. One mob even attempted to assault Rand Paul and his wife in the name of “social justice.” Disgusting hypocrisy as Rand Paul is the very one who introduced the “Justice for Breonna Taylor Act.” Multiple Americans who died in the Minneapolis riots were minorities. The very Americans – including many of those in racial minorities – whom the violent protestors claim to be protecting were harmed by sky-high property recovery payments and most likely will be faced with spiked insurance premiums in the future. The emotional, physical, and economic freedoms that the rioters and looters claim as their banner are precisely what they themselves are destroying.
If you want to go out and use your freedom of speech in a peaceful way, be my guest– it is your absolute right. If you intend on gathering together a mob full of hatred and hypocrisy, be ready for the consequences. We all ought to be raising our voices against the violent protestors as much as we are trying to solve the civil rights problems of our day. Shame on those who are hypocritically or ignorantly harming the well-being of our own American people.
The Democrat’s have had court victories in Michigan, Pennsylvania, and other states in connection with requiring that votes received after election day must nevertheless be counted. And in many of these decisions, the Courts have simply overruled the actual wording of the relevant law. Since it is accepted that many more Democrats than Republicans will be voting by mail, there seems to be a general belief that this is good for Democrats. But should that really be the takeaway?
It is quite clear that no matter what concessions the Democrats win in court, a huge number of mail-in votes will be invalidated. Whether because of mail delays (past even the extended deadlines), signature issues, proper following of instructions, etc. many ballots will be invalidated. I believe that these rejected ballots will far exceed any additional votes gleaned by enabling people to not have to physically go to the polls. People voting by mail are likely to be those who would, absent Covid, have gone to the polls. Extra votes would probably only come from “harvesting”, which will hopefully be quashed.
Also, I believe it likely that Appeals courts will reverse at least the most egregious overreaches by the state courts. It is hard to see how blatant rewriting of legislation could be considered acceptable, even by Democratic leaning courts. But unlike some, I do not believe that the Supreme Court will weigh in. I believe that SCOTUS will say that the States have ultimate authority to determine their own voting procedures.
With Kamala Harris as the Democrat’s Vice-Presidential candidate, it’s important to know that she has committed some rather egregious trespasses as a prosecutor. Just as disturbing is her fluctuating policy positions, calling into serious question her attempt to presently appear as a criminal justice reformer. Instead, Harris should be known for 1) her criminality and very poor judgement as a prosecutor 2) her hypocrisy, and 3) her opportunism.
One of the biggest areas of concern is her prosecutorial misconduct. In many instances, she basically acted as a rogue prosecutor who should have possibly been charged criminally for her own actions in some of the following incidents:
*During a case in 2015 in which a prosecutor concocted a confession from the defendant, thereby leading to the case being dismissed, Harris’s Attorney General’s office appealed the dismissal.
*During a case in 2015 in which a prosecutor in his case fabricated information to a jury relating to compensation to an informant, Harris’s Attorney General’s office fought the defendant’s appeal.
*During a case in which the entire Orange County DAs office was removed from the trial for failure to turn over evidence, Harris sought to block the removal.
*During a case in which a man was wrongfully imprisoned for 13 years, Harris’s office attempted to keep him locked up.
*After a crime lab technician purposefully tainted evidence in a vast amount of cases, Harris hid his actions while acting as a San Francisco DA.
Furthermore, Kamala Harris has worked on rebranding herself from previously being tough on crime to more sympathetic to justice warriors. For instance:
* Until 2014, Harris was against the legalization of marijuana while acting as the Attorney General of California.
* Harris declined to support criminal justice sentencing reforms that were on the ballot in California in 2012 and 2014.
* Harris’s office opposed an order to lessen the amount of prisoners in California, while supporting the use of prisoners as laborers due to the low cost.
* During her time serving as the Attorney General in California, Harris supported the dubious practice of civil asset forfeiture under the guise of going after drug operations.
Additionally, Harris was eager to be in the spotlight while moving up the political chain in California; two ridiculous incidents in particular come to mind.
*While running for US Senate, Harris’s office arrested the owners of Backpage, a site for classified sex workers, after publicly declaring that they “were protected from prosecution under federal speech law.” The case was promptly thrown out by a judge.
*While running for US Senate, Harris’s office went after for-profit colleges in California as part of an Obama initiative, while subsequently refusing to release any buyer of potential future liability– meaning anyone purchasing would be under constant threat of a lawsuit. Subsequently, no buyer would accept the terms. The Corinthian college system therefore shuttered 23 schools, putting people out of work and education.
Kamala Harris has repeatedly shown to have no moral compass. Her actions as a prosecutor should be alarming, as well as her hypocritical flip-flopping of positions. She has shown to be a mercurial political opportunist and has no business being a Vice-Presidential candidate.
