Category: subsidy

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subsidy too much government

Precedented Payments

CARES Act, Coronavirus, Covid,

I idly wonder who cooks up the initialisms for the big federal legislative packages (“laws”) — you know, like the recent “CARES Act” that distributed $2.3 trillion conjured out of thin air . . . and the faith and credit of a wobbly reputation. CARES stands for “Coronavirus Aid, Relief, and Economic Security,” and I say “idly” because I am not googling this. 

If I can resist searching for (as I am instructed to do daily) “any three numbers and ‘new cases,’” I can let others do that initialism research.

Whoever it is, though, does a pretty good job. Usually. Good P.R. But they missed the boat a bit on CARES. It should have been CORPSE, standing for “Coronavirus Overpayment, Relief, Prodigality, Stupidity and Eeeeek!” Act.

For, you see, $1.4 billion was sent to dead people.

More than a million of them.

At least we can be thankful that the IRS wants that money back.

Well, “wants” is a funny word to use for a bureaucracy. Especially since the IRS has no current plan “to notify ineligible recipients on how to return payments.” According to the General Accounting Office.

You can read about it all at Reason.

I would say it makes for fascinating reading, but it doesn’t really. This is the same-old/same-old. The Department of Kludge and Fubar, you know, which would be a better name for most government bureaus.

The Reason piece call the CARES Act “unprecedented emergency spending,” but I think we could find plenty of precedents. 

If we googled.

This is Common Sense. I’m Paul Jacob.

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education and schooling subsidy

The Most Foolish Bank of All

education, bank, loans, Devos,

There are few things more foolish than turning the Department of Education into a bank.

“Congress never set up the U.S. Department of Education to be a bank, nor did it define the secretary of education as the nation’s ‘top banker,’” said Betsy DeVos, Trump’s controversial Department of Education secretary, at an annual education conference in Reno. “But that’s effectively what Congress expects based on its policies.”

Secretary DeVos “recommended that Federal Student Aid (FSA) — the nation’s largest provider of financial aid — be spun off from the Education Department so student loans can be better managed and administered,” Forbes summarizes.

The FSA is a bank, but not a very good one. It makes bad bets, which Mrs. DeVos tries to make clear by asking a few rhetorical questions:

  • “Is it any surprise . . . that both principal and interest are currently being paid down for only one in four loans? 
  • “Nearly 11 million borrowers have loans that are delinquent or in default? 
  • “And 43 percent of all loans are considered ‘in distress’?”

Even worse, the loans amount to an especially cumbersome form of subsidy, one that has corrupted the university system, misallocated higher education resources and inflated tuitions, and sunk generations into debt.

While DeVos’s reforms might possibly be an improvement, what if the troubles associated with the federal government’s student loan programs are not the result of how they are managed, but that the federal government is involved at all?

Centralizing consumer credit in specialized Congress-created lending institutions (Fannie Mae and Freddie Mac) was at the heart of last decade’s massive financial crisis. Shouldn’t a major banking reform focus on avoiding the moral hazards involved in government-run credit and subsidies?

DeVos’s plan doesn’t strike me as educated on this angle.

This is Common Sense. I’m Paul Jacob.

education, bank, loans, Devos,

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subsidy tax policy

The Truth of Tax Privileges

Tony Gehrig, Dave Piepkorn, Caldevron, taxes,

In Fargo, North Dakota, a company called Aldevron applied to the city council for a tax exemption. If given, it would spare the company from handing $4.6 million dollars to the city government over the next ten years.

Now, Aldevron isn’t just a company with a name seemingly out of a sci-fi movie. It is science-fictional in its mission, providing “high-quality plasmid DNA, proteins, enzymes, antibodies, and other biologicals to help our partners achieve ground-breaking science,” and so on.

Sounds very interesting. But is it $4.6 million interesting?

That is subjective. A more objective question was asked of the company’s representative by Commissioner Tony Gehrig: “If you didn’t get the incentive would you still expand?”

The answer was revealing: yes.

That is when another commissioner, Dave Piepkorn, got a bit peeved.

He “accused Gehrig of ‘bitching’ about the subsidies,” explains Rob Port of the Say Anything blog. Then Piepkorn went on to “bitch” . . . about Gehrig. “It really bothers me when he puts words in people’s mouths.”

So Commissioner Piepkorn asked Aldevron’s rep if the company would go somewhere else sans the special privilege.

The company man, looking a tad uncomfortable, as Port notes, said no. Businesses have to take a long view of their relationships with local government, and tax breaks are just one element in overall “friendliness.”

After all, businesses have to go somewhere.

Rob Port concludes that “the subsidies occur because they’re expected, not because they’re needed.” 

Fargo’s voters might consider an initiative to take away politicians’ ability to make creative use of their taxing authority.

Perhaps while voting out Piepkorn.

This is Common Sense. I’m Paul Jacob.

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Tony Gehrig, Dave Piepkorn, Caldevron, taxes,

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education and schooling subsidy

Sell College Short?

college, student, debt, loan, forgiveness, hat,

We are often lectured on the importance of a college education. The path to upward mobility is greased via higher education, we are informed, and all that investment in time and money pays off . . . with a lifetime of higher salaries and better opportunities.

“The typical American with a bachelor’s degree or higher,” President Barack Obama pointed out back in 2014, “earns over $28,000 more per year than someone with just a high school diploma.” 

Accordingly, Obama urged “students and parents” to “begin preparing yourself for an education beyond high school.”

Was he just pulling our legs?

After all, $28,000 extra each year for many decades isn’t chump change. Yet, if college proves such a royal road to wealth, why would highly educated folks gaining such lucrative earning-power need the bailouts . . . especially from taxpayers who didn’t make that self-investment?

That subsidy of the richer by the poorer is precisely what many Democratic Party presidential candidates are promising younger voters, with Sen. Bernie Sanders topping the proposed taxpayer-generosity by offering to cancel all $1.6 trillion in outstanding student debt.

“Not satisfied with having the government take over 20 percent of the economy with his Medicare-for-All program,” James Joyner writes at Outside the Beltway, “the Vermont Senator wants the government to assume all debt taken on for education and make college absolutely free from here on out.”

If a college education is worth what it costs, no bailout should be necessary.

And only in the political world would anyone suggest giving away such a valuable commodity for free.

This is Common Sense. I’m Paul Jacob.

college, student, debt, loan, forgiveness, hat,

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initiative, referendum, and recall subsidy

Subsidizers May Be Checked

Ohio, referendum, control, stop, emergency button,

“FirstEnergy Solutions might not want to spend its bailout money just yet,” warns a story in Crain’s Cleveland Business. 

At issue? A possible statewide referendum on House Bill 6.

HB6 would, according to the Cleveland Plain Dealer, “gut Ohio’s green-energy mandates and set up customer-funded subsidies to nuclear and coal power plants.” It passed the majority Republican state House “thanks to key support from several House Democrats.”

Passage of HB6 through both houses of the Ohio Legislature and its signature by Governor Mike DeWine would force Ohio ratepayers to fork over roughly $150 million in subsidies to FirstEnergy Solutions for its two nuclear power plants.

Except for one thing — in Ohio, voters possess a powerful political weapon: the referendum. 

Already a diverse coalition of opponents to the bill has formed Ohioans Against Corporate Bailouts, filed a referendum and kicked off a petition drive that has “until October 21, 2019, to collect the 265,774 required signatures.”

“HB6 has created some strange bedfellows,” the Plain Dealer notices, including bringing together “environmental groups, the fossil-fuel industry, renewable energy companies, and some small-government activists” in opposition.

“Many of the forces that fueled the Trump presidency, before 2016 — I’m talking the Tea Party and others — could be supportive in undoing this bill,” explains Paul Beck, former chair of Ohio State University’s political science department. “And so could people on the left. You may find an incredible divergent group of people aligned with each other.”

“Liberals hate that it subsidizes dirty coal plants,” reports Crain’s. “Many conservatives hate that it picks winners and losers by subsidizing one industry over another.”

Thankfully, the fate of the giveaway rests in the hands of Ohioans, not their subsidy-loving representatives.

This is Common Sense. I’m Paul Jacob.

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Accountability free trade & free markets general freedom national politics & policies privacy subsidy too much government

The Post Office Scam

USPS, Post Office, monopoly, competition, Amazon, discounts

The President of the United States says that the U.S. Postal Service is scamming us by offering shipping discounts to Amazon, the mail-order giant. “Post Office scam must stop.”

President Trump is hovering in the vicinity of the right idea. But what about government-required discounts for shippers? Are these scams too?

Congress has long required lower postal rates “for religious, educational, charitable, political and other non-profit organizations. . . .”  Robert Shapiro estimates that such mandates cost the agency over a billion dollars a year. The government forces USPS to do a great many things that lose money — things that companies functioning in a free market cannot profitably do.

And American taxpayers must perennially fork over billions to sustain its lumbering operations.

It is true that, in markets, buyers of large quantities of a good or service routinely pay less per unit than buyers of small quantities; such discounts can enhance the seller’s bottom line. The fact that USPS offers discounts to a mega-shipper like Amazon does not in itself show that charging more per parcel would generate more revenue.

The question is, then, which transactions would flourish if the agency were just another market player instead of a government-protected, government-hobbled, government-subsidized bureaucracy?

Like any government-run “business,” the Post Office is itself a “scam.” This scam must stop. Phase out USPS as a government agency and let any company deliver first-class mail to our mailboxes on any honest terms that might attract customers.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets moral hazard nannyism national politics & policies property rights responsibility subsidy too much government

TrumpCare Trumped

Trumpcare, Ryancare, healthcare, Obamacare, Freedom Caucus, socialism

It took awhile for the Obama Administration to accept the term “ObamaCare.” Nancy Pelosi was the initial driver of the massive scheme to permanently alter American medicine and insurance, and “PelosiCare” would have been a fit moniker for the wildly mis-named “Affordable Care Act.” But the administration put the whole of the new president’s political capital behind it, and the ACA went into law popularly known as “ObamaCare.”

The Republicans pledged to repeal it, from Day One. And repeatedly passed repeal bills, certain to be vetoed by the president named Obama. They needed a Republican in the White House.

Donald Trump ran, in part, on the promise of getting rid of ObamaCare. But upon taking the reins, two things became obvious: Republicans in Congress lacked the guts to repeal the ACA, and even lacked a coherent scheme to alter it.

The new president could hardly be expected to possess the plan they lacked, though on the campaign trail he suggested* the best approach: repeal, then open up insurance markets across state lines. The GOP Congress, on the other hand, was all promise and no clue.

So Speaker of the House Paul Ryan hastily cooked up what was to be the new TrumpCare — a ridiculous reform package with nothing much to say for it.

He failed to gain support from Democrats (of course) and Freedom Caucus representatives.

TrumpCare, trumped, became RyanCare. A failure.

The Freedom Caucus representatives? They breathe freely.

Sure, they “betrayed” the new president, “robbing” him of glory. But they also saved the country from a “reform” in many ways worse than ObamaCare.

This is Common Sense. I’m Paul Jacob.

 

* It’s worth keeping in mind that Trump had been for socialized medicine before running for office. This is why there was no reason to expect policy leadership on his part.

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Accountability free trade & free markets moral hazard national politics & policies political challengers porkbarrel politics responsibility subsidy too much government

Trump Proposes a Budget

Trump, budget, spending, big government, entitlements, welfare, cuts, pig

Will Donald Trump, infamously successful businessman, actually do something about the federal government’s out-of-control deficits and mounting debt?

Economist Pierre Lemieux, writing in the Financial Post, finds some reason for hope in President Trump’s “America First: A Budget Blueprint to Make America Great Again”:

The proposal to eliminate funding for agencies like the Corporation for Public Broadcasting, the National Endowment for the Arts, and the National Endowment for the Humanities is welcome. Artists should be able to stand on their own two feet with the support of private sponsors and organizations, of which there are many in America. Lovers of concerts should finance their own passion.

Though Lemieux gives good reason to want to cut “official arts and humanities” subsidies even sans their budgetary implications, imagine the backlash from Democrats, the media and the whole collegiate sector!

Actually, the backlash has already begun.

Can united government under the GOP cut even these most obviously least necessary aspects of government subsidy?

I’m not holding any pockets of air in my two lungs.

“Many monstrous bureaucracies would be reined in,” Lemieux goes on, listing proposed cuts to the Environmental Protection Agency (-31 percent), Department of Labor (-21 percent), and other departments of the so-called “discretionary” budget. But this is all small potatoes. “Really cutting federal expenditures would require reducing the welfare state — which Trump has no intention of doing.”

And the fortunes Trump wishes to throw at the military? No knack for parsimony there.

Though we can expect a little exceptional hack-and-slashery from Trump, Lemieux remains skeptical of any overall major effect.

Get used to ballooning debt.

Like you haven’t already.

This is Common Sense. I’m Paul Jacob.

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Accountability folly national politics & policies responsibility subsidy too much government

Another Capital Atavism

pork, government waste, Streetcars, public transit

Had I ever heard of the zoopraxiscope before, I’d forgotten it by the time I read Randal O’Toole’s recent critique of the latest Washington, D. C., public transit debacle, the new streetcar system. So I had to look it up.

It was an early “motion picture” projector.

In other words, an “atavism.”

According to O’Toole, “Streetcars were technologically perfected in the 1880s, so for Washington to subsidize the construction of a streetcar line today is roughly equal to . . . Los Angeles subsidizing the manufacture of zoopraxiscopes.”

O’Toole, a transportation specialist, argues that the new system, barely in place, but already on the hook for more subsidy to build more lines, is grossly inefficient.

As well as atavistic.

“Rather than build five more miles of obsolete line,” he concludes, “the best thing Washington can do is shut down its new line and fill the gaps between the rails with tar.”

Drastic?

Well, is it any more drastic or extreme than debuting a mass system without a fare system in place? That is, without even having decided on which payment system to use?

Unfortunately, the inefficient clunkers are unaccountably contagious. “Following Portland’s example, Atlanta, Charlotte, Cincinnati, Kansas City, and several other cities have opened or are building streetcar lines,” O’Toole explains. “Most of these lines are about two miles long, are no faster than walking, and cost $50 million or more per mile while buying the same number of buses would cost a couple million, at most.”

Politicians idolize such schemes so much that we, the taxpayers, are forced to be iconoclastic.

This is Common Sense. I’m Paul Jacob.

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pork, government waste, Streetcars, public transit

 

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free trade & free markets national politics & policies subsidy too much government

Subsidy for Everybody!

According to Vice President Joe Biden, the debate is over. Health care, by which he means medical assistance, is a basic right — to be obtained through government, and made effective by the Affordable Care Act — not a “privilege.”

By “right” he means  “something others are forced to provide,” in this case by taxes, regulations, and the full panoply of U.S. law. Today’s “liberals” like to use the word “privilege” to mean anything obtained without direct government assistance. And therein lies a huge problem.

In his first weekly address of the year, Biden touted how great the ACA, “Obamacare,” is. How affordable it is for families, for everyone! It’s a panacea, though Biden didn’t use the word.

Actually, he didn’t say that we have a right medical care. He said we have a right to health “insurance,” which we’re forced to purchase — and for which many are subsidized, too.

How far does he go with this?

“An awful lot of people who didn’t think they could or would find quality, affordable health insurance are actually able to get assistance from the government to help them pay for their health care plans at a cheaper rate,” he earnestly intoned. “A family of four with an income of around $95,000, they can still get a subsidy to lower their health care premiums.”

You can see where the problem is. If a household making $95,000 per annum can receive subsidies, who’s paying for all this?

Perhaps you.

Can you see why Obamacare’s a prescription for financial disaster?

This is Common Sense. I’m Paul Jacob.