by | ARTICLES, BLOG, COVID, ECONOMY, POLITICS
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.
by | ARTICLES, BLOG, BUSINESS, ECONOMY, POLITICS, TAXES
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.
by | ARTICLES, CONSTITUTION, ELECTIONS, POLITICS, TAXES
On November 3, Illinois residents have a Constitutional referendum to change their method of taxation from a flat tax to a “fair tax.” The current system treats all Illinois taxpayers the same by levying a modest 4.95% rate. Under the proposed change, taxpayers would be divided among multiple tiers with a progression of increased rates based on higher levels of income, and both individual and corporate rates would be affected. By removing the Constitutional provision against graduated-rate taxes, the power of taxation is given to the state lawmakers who can decide varying levels of rates for various groups of taxpayers with a simple majority vote. In contrast, the flat tax provides some protection against outrageously high rates because it is impractical and politically unpopular to do so among certain segments of the population.
In anticipation of the referendum passing, the Illinois legislature passed a tax plan that would be implemented on January 1, 2021. Although the Illinois governor — like most progressive morons — has assured taxpayers that the change won’t affect most residents, the impact of the new plan will indeed have dire consequences for many individuals. The new tax rates range from 4.75% to 7.99%. While the lowest 20% of earners will see a decrease in rates, that translates into a whopping $6.00 on the median average earnings of $12,400. On the other end of the spectrum, the new plan includes not only higher rates, but also a recapture provision for highest earners, so that not just their marginal income, but their entire income, is taxed at the 7.99% rate. What’s more, the new plan does not index for inflation on marginal income levels which will result in taxes consuming a greater percentage of taxpayer income if income levels do not increase.
Businesses will also be adversely impacted. The base corporate rate will increase to 7.99%.
However, Illinois also has an additional set of taxes (called the PPRT) levied on corporate and pass-through income of 2.5% and 1.5% respectively. Combined with the new business rate, corporate income tax would be 10.49% and pass-through income tax would be 9.49%. At a time when businesses are struggling due to the pandemic, increased taxes only worsen the situation. Additionally, the business rate will be one of the highest in the nation, making Illinois a less competitive state in which to do business.
The new tax plan is intended to be a revenue raiser, originally calculated to be $3.6 billion in the first year — but that was before COVID-19. Yet the fiscal woes facing Illinois are overwhelmingly derived from massive overspending and ballooning pension obligations, and no tax hike will begin to fix it. According to Illinois Policy, the upcoming budget includes nearly $6 billion in deficit spending, with pension costs consuming more than 27% of expected general revenues. Furthermore, Illinois faces a current $4.6 billion shortfall. Without a balanced budget to restrain spending — Illinois has not seen one in 20 years — tax hikes will be inevitable. And by enacting the “fair tax,” Illinois lawmakers have the power of the purse to raise taxes and levy surcharges at their discretion.
According to revised revenue forecasts from the governor’s office, if the fair tax is enacted, the budget gap is approximately $6.2 billion; if the fair tax is not enacted, the estimated budget gap is approximately $7.4 billion. The change from a flat tax to a graduated tax imposed on Illinoisians is simply not worth the $1.2 billion in possible additional revenue when the legislature can’t even be bothered to find a way to cut spending. Governor Pritzker’s attempt to introduce equity in the tax code by making higher earners pay their fair share will hurt all taxpayers and businesses, especially at a time when the effects of COVID-19 on the economy are devastating across the board. The proposed “fair tax” is anything but for the taxpayers of Illinois.
by | BLOG, COVID, ELECTIONS, GOVERNMENT, LAW, POLITICS
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.
by | ARTICLES, BLOG, ELECTIONS, FREEDOM, GOVERNMENT, HYPOCRISY, LAW, POLITICS
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.
by | BLOG, COVID, ECONOMY, FREEDOM, GOVERNMENT, NEW YORK, POLITICS
As a lifelong New Yorker and fan of Jerry Seinfeld, I really wanted to like CNN’s article,“Jerry Seinfeld is right about New York’s future.” The more I read it however, the more delusional it became until it was outright laughable. The author, Jeffery Sachs, attempts to explain why New York will not fail and he’s right that the city has had tough times before. He’s correct that there will be a day of reckoning. But he is utterly incorrect that this reckoning is “between the superrich and the rest.”
Sachs has decided to lay the blame of the current state of New York City on the feet of the highest income earners, outright suggesting that the rich have gotten richer on the backs of those experiencing financial desperation and hunger due to the pandemic. It’s not the elected officials. It’s not the rioters. It’s not the bungled COVID-19 responses. It’s the billionaires. You can’t make this up:
“NYC has more billionaires than any other city in the world — 111 in 2019. They like NYC, like the rest of us. They depend on NYC for their vast fortunes. And many have enjoyed astounding windfalls of wealth this year as frontline workers around them have died or faced eviction. The true challenge for New York City is not technology or even the pandemic. It is basic decency. A city survives and thrives as a living breathing social organism, one that acts together for the common good. The billionaires must be the ones paying higher taxes to keep the City’s schools, hospitals, public transport and social services running as NYC picks itself up from the crisis.”
What Jeffery Sach either fails to realize or purposefully omits is that the billionaires are already paying far in excess of any rational share of taxes to keep the City’s schools, hospitals, public transport and social services running as NYC picks itself up from the crisis. Highest income earners pay the top rates, including 8.82% in state income taxes along with an extra 3.876% in NYC income taxes. Add to that the 40.8% marginal federal income tax rate — and billionaires pay an income tax rate of over 53%! That’s 119 people paying 53% of their taxes for $8.5 million people and justice warriors want them to pay more? It’s not like these billionaires are using more services.
What’s really going on is that Jeffery Sachs is helping to shape the narrative that billionaires need to pay (more of) their fair share. Is it any coincidence that a new “Make Billionaires Pay” campaign by progressive lawmakers and activists is being debated right now in New York as some sort of a budget justice initiative? They want to add a new form of capital gains tax on those exceeding $1 billion in assets.
A fundamental principle of our American heritage and history says that you don’t take something from somebody just because they have it. That is the approach of a crook. When Willie Sutton was asked why he robbed banks, he famously replied, “because that’s where the money is.” Of course it’s a joke, but it seems like de Blasio didn’t get the joke. Crooks do that, not civil society. As Walter Williams said, “If one person has a right to something he did not earn, it means that another person does not have a right to something he did earn.”
Rather than cutting spending and government services, these fiscally ignorant crusaders take the easy way out and blame the very people who provide the vast majority of the income NYC receives–and then subsequently squanders through bad policy and abysmal leadership. But they aren’t satisfied. They want more. And unlike Jerry Seinfeld, that’s just not funny.
by | BLOG, COVID, ECONOMY, EDUCATION, FREEDOM, GOVERNMENT, NEW YORK, POLITICS
The NYC public schools are now supposed to begin opening on September 29, but unions continue to be apprehensive about in-person instruction. De Blasio already delayed school opening twice this year after ongoing threats of a teacher strike, citing “concerns raised by our labor partners.” On the other hand NYC charter and private schools have a variety of re-opening options other than virtual: from fully in-person to hybrid to outdoor classrooms. The contrast in competency is astounding.
The schools have been fully closed for six months because of COVID, and it’s not like educators didn’t know that their singular task of providing education to children would resume in the fall. Nor are NYC public schools the only education system to face COVID. Virtually the entire country has had to come up with plans to safely re-open schools, and yet NYC public schools continue to be unprepared and incompetent.
De Blasio has proven incapable of negotiating with the unions, and in doing so, he has let down students and parents. This inability to effectively execute a plan to help students learn is perhaps the strongest argument to date as to why charter and private schools should really be the models we move towards in order to provide quality 21st century learning to our children.
by | BLOG, COVID, ECONOMY, POLITICS
I was annoyed to read an article as ridiculous as Alan Blinder’s “Will Congress Ever Break the Covid Relief Standoff?” in which Blinder puts the blame on Senate Republicans. In fact, the entire premise of the article is that “Senate Republicans resist passing a new bill, even though it’s needed and politically expedient.” But this is simply untrue, and shows the great lengths to which Blinder omits key facts in order to advance the narrative that the Republicans are at fault.
A few days ago, Senate Democrats declined to consider a $500 billion COVID package put forth by Senate Republicans. 52 Republicans (all except Rand Paul) voted to advance the bill, but without one single Democrat vote, the measure died. According to the rules of the Senate, having a majority that included nearly 100% of the Republicans isn’t enough to pass the bill; by invoking cloture (requiring 50 votes to override) they prevented the bill from even being debated. But did Blinder mention this at all in his article? Absolutely not. Instead, he describes how the Senate Republicans “resisted” passing a new bill, because not caving to the $3 trillion relief package offered by the Democrats is somehow an act of resistence.
Blinder continues this ridiculous idea, saying “progress has been blocked” by McConnell. How? The Democrat $3 trillion relief package version (the Heroes Act) contained “items that Republican abhor,” and this somehow makes it the Republican’s fault? And yet, in the very same paragraph, Blinder describes how the Heroes Act itself “was just an opening bid, which House Democrats never expected Senate Republicans to embrace.” This brings to mind two questions: 1) why are the Democrats crafting a bill that they willfully acknowledge they didn’t expect to pass; and 2) why are the Democrats given a free pass to craft a bill (they don’t expect to pass) at the high end of the spending spectrum, but when the Republicans craft a bill at the low end of the spending spectrum, it’s considered a “political stunt.”
Blaming Republicans for causing problems (resisting) because their bill, which the Democrats described as “emaciated,” did not have the right kind of Democrat spending, is outrageous. Such nonsensical hypocrisy and patent lies should not be tolerated.
by | ARTICLES, BLOG, ECONOMY, ELECTIONS, POLITICS
I was shocked to read “Get Ready for the Biden Stock Boom” in the pages of the Wall Street Journal, written by a former editor of Barron’s, no less. Ed Finn really, really wants you to support Joe Biden and his article is full of so much wishful thinking that it reads like a Disney Fairy Tale — except in reality, there will be no happy ending.
To be fair, Ed Finn does acknowledge that the stock market will certainly experience some turbulence if Joe Biden is elected — but that’s because smart investors know that socialist policies are coming in the form of higher taxes, strangling regulation, and ridiculous legislation such as the “Green New Deal.” You think Obama was bad for the economy? Wait until Biden gets in there.
Yet after laying out the coming economic reality, Ed Finn still wants you to believe in Joe Biden, and the rest of his analysis is basically dependent on the word IF. You can’t make this up:
“IF a President Biden can control the federal budget deficit, IF he can forge better relationships with America’s trading partners, IF he can reverse some of President Trump’s anti-immigration policies, IF he can bring a less combative atmosphere to Washington and the nation, there is no reason to think that during his term average annual stock returns, including dividends, can’t be in the 10% range, as they have for the past 95 years.”
It should be noted that even with all the “if’s” coming true, they have no positive economic consequence. They would be nice, but not economically powerful.
How does he spell out how Joe Biden’s going to improve the economy: “Given Mr. Biden’s ambitious plans to use increased tax revenue to fund more spending on green energy, health care and infrastructure, it’s conceivable he could spur the U.S. economy enough to push annual stock returns to 15%.” Ed Finn must think that the readers of the Wall Street Journal are stupid. To think that anything relating to “green energy” isn’t detrimental to the economy is economically illiterate. We already have efficient fossil fuels, but the Democrats would happily pay three times as much for less energy to be environmentally woke — and that’s supposed to improve the economy? That’s either ignorant or socialist or both. And see how Finn continues to use wishful language: “it’s conceivable he could spur the U.S. economy enough to push annual stock returns to 15%.” That’s because neither Finn’s analysis nor Biden’s policies are actually grounded in any sort of economic reality, only fantasy.
On the other hand, what we do know is that there are multiple policy proposals that WILL have negative economic consequences, none of which will come close to offsetting any of the rosy positives that Finn is pinning his hopes on. The main threats Biden poses to the stock market are increased regulation and higher taxes. Increased regulation will inevitably result in slowed economic growth, and with that decreased profits and a less robust stock market. But that’s not even the worst of it. Two specific initiatives will affect the stock market both in the short- and long-term: 1) Raising taxes on corporate profits from 21% 28% and 2) Nearly doubling the capital-gains tax from 20% to 39.6% on income over $1 million/year — and don’t forget the investment-tax surcharge of 3.8%! Of course, Biden plans to raise taxes on nearly every taxpayer regardless.
Ed Finn ought to be ashamed for penning such an unrealistic economic outlook with Joe Biden at the helm. Increased taxation, crushing regulation, and impudent legislation never improves the economy or the lives of the American people.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, NEW YORK, POLITICS
New York Governor Cuomo continues his crusade for a state bailout by claiming that New York is a “donor state” and therefore entitled to more federal funds. By this, he means that New York gives more in tax revenue to Washington than it gets back. However, the “donor state” mantra and his calculations making that claim are incorrect.
A recent article in the Wall Street Journal, “New York is No ‘Donor’ State,” did a thorough breakdown on how to calculate and account for federal funds in order to better understand the ebb and flow of dollars in and out of states. In this, it showed that New York really isn’t a donor state at all. It seems that various “donor state” claims tend to cling to a Rockefeller Institute report published in 2017 that erroneously calculated what states receive. For instance, it counted both food stamps and servicemen’s paychecks as federal subsidies when that’s clearly not the case. Likewise, it omitted the federal subsidization of municipal debt issuance and also didn’t account for the implicit socialization of their unfunded pensions and postemployment benefits. Thus, in reality, New York is one of several high-tax blue states that “are net ‘receivers’ of federal funds.” The aforementioned article is a definitely worthwhile read.
But even if the donor state claim were true to some degree, it’s still a weak argument for a bailout. Any notable imbalances occur for several reasons that Cuomo refuses to even consider. For instance, the federal tax code is very progressive and New Yorkers have high incomes. Likewise, New York receives relatively less money in the form of federal contracts and federal employee wages. This is logically caused by the fact that New York has made itself such a terrible place to do business (including sky-high costs and ridiculously burdensome regulation and taxes) that it can’t compete for these projects. Furthermore, the flow of New York taxpayer money to Washington and back has virtually nothing to do with why the New York government can’t balance its budget due to overspending. The government is not the taxpayer. The states send no money to Washington – their earners do.
In other words, it’s not that the government is being shortchanged. The state government isn’t hurt by this at all. The taxpayers of New York are the ones hurt by perennial fiscal mismanagement and it is a sham to request a bailout under the guise of being a donor state.
