Tag: debt

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education and schooling national politics & policies tax policy

Trump to Ax Tip Tax

Joe Biden, taxes, tipping, student loans, buying votes, debt

When Biden panders to his lower-​income supporters, he targets zeroing out their student debt and regulating credit card companies with further restrictions on their ability to charge for overdrafts and the like.

When Trump panders to his lower-​income supporters, he promises to exempt tips from income taxation, as he did recently in Las Vegas.

This may be the most obvious difference between left- and right-​styles in politicking to the masses, good-ol’-fashioned vote-​buying or its twin: leftists forgive debts and add regulations, rightists reduce taxes.

Like me, you may, at first blanch, prefer the latter form of pandering, but Eric Boehm, at Reason, offers some reasons not to look so kindly on Trump’s pandering. First, and most obviously: “Reducing revenue without identifying offsetting spending cuts means Trump is merely promising to borrow more heavily.”

A bigger challenge comes later: “On the surface, that sounds great. But there’s already one likely unintended consequence: A lot more income will suddenly be reported as tips. Any time a government gives preferential tax treatment to one type of economic activity, you tend to get a lot more of that type of economic activity. Does that mean we’ll have an entirely tip-​based economy?” The answer is a likely No.

Oddly, Mr. Boehm doesn’t address one obvious element: Tips aren’t wages and they aren’t profits. Tips are gifts. They aren’t determined by employers and they aren’t specified by employees. And gifts aren’t taxed as income like other income is.

So letting people who accept tips in the course of their labors not pay taxes on them is really, really hard to object to.

In fact, I don’t object.

This is Common Sense. I’m Paul Jacob.

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Accountability general freedom

The S‑Word in California

California, immigration, socialism, spending

Frédéric Bastiat called it “spoliation”; California’s Democratic politicians call it social justice.

A bill went into effect last week, offering complete medical coverage to an estimated 700,000 undocumented — illegal — immigrants.  The price tag? 3.1 billion dollars.

Well, not “price tag”: call it a subsidy tag.

California taxpayers will pay for it. Or perhaps U.S. taxpayers will end up with the bill, as Dagen McDowell insisted on Fox News, prophesying that the program “will turn into a national issue” that will, inevitably, “swamp the federal budget.” 

Ms. McDowell also noted that the state’s targeted sugar daddies, the wealthy, “are going to other states, so much that they’ve lost a congressional seat,” all of which must lead to insolvency.

Indeed, the state is running far into the red — the color of the ink on budget columns, not voting columns. The state faces not merely annual deficits and a huge debt, there is also this looming trillion-​dollar debt implied by the unfunded liabilities of the state employee pensions.

There is an old pattern here, which is why I brought up an old author in the first sentence.

First we subsidize the poor. Then we extend the subsidies up the income ladder. Now we give huge subsidies to those who enter the country illegally.

It’s as if Californians have forgotten the nature of income redistribution: you have to have income to redistribute. At some point the wealth being taken from the productive vanishes, as society becomes unproductive and descends into ruin.

There are two meanings of Bastiat’s “spoliation”:

noun
1 the action of ruining or destroying something.
2 the action of taking goods or property from somewhere by illegal or unethical means.

The two are linked. 

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies

A New Speaker Conjures

New Speaker, Congress, debt, spending

The new House Speaker was a dark horse in the mad rush to fill the position vacated after Kevin McCarthy’s ouster in a historic political play. But Mike Johnson (R.-La.) appears to be a thoughtful man, known more for his prayers than backstabbing, and sporting an interesting set of principles. They are listed on his congressional web page; he calls them the seven “core principles” of conservatism:

  1. Individual Freedom
  2. Limited Government
  3. The Rule of Law
  4. Peace Through Strength
  5. Fiscal Responsibility
  6. Free Markets
  7. Human Dignity

Inspiring, but the devil can bog us in details — under each rubric his elaborations sound more like fantasied ideals than anything like current practice. And for a man who got ahead by having “no enemies,” any real advancement would hardly conjure up consensus and comity.

Johnson acknowledges current government failure — at least in his fifth principle, which he explains entirely in terms of political fault: “Because government has refused to live within its means, America is facing an unprecedented debt and spending crisis. Federal debt now exceeds $33.5 trillion, and our current fiscal path is unsustainable and dangerous, jeopardizing our nation’s economic growth, stability and the security of future generations.” He goes on to express a congressional “duty to resolve the crisis.”

Yet, only standard Republican talking points are offered as back-​up, with zero acknowledgment of the bipartisan difficulty of reducing spending even a smidgen.

Truth is, each of his principles is honored by the federal government only in the breach. While we may hope and pray that the new Speaker takes all of these serious enough to work to change course, we have to wonder: Does he have a prayer? 

This is Common Sense. I’m Paul Jacob.

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Accountability national politics & policies U.S. Constitution

Facing the Debt with Deceit

trillion dollar coin, platinum, folly

The “trillion dollar coin” solution to the federal debt reared its absurd head, again, during the recent “debt ceiling” brouhaha.

I wrote about it over ten years ago, when Big Talkin’ Republicans were challenging Big Spendin’ Democrats over raising the debt ceiling at that time. 

The idea is bold trickery, allowing the President to inflate the currency by leveraging Treasury’s Congress-​given ability to coin platinum coins at any face dollar value. 

Typically, such collector coins sport on the reverse a value far below the metal’s value.* The trillion dollar coin would invert that, fixing the face value far, far above the metal value. The freshly minted coin would be sent to the Federal Reserve, covering the books that way.

It’s inherently deceptive and obviously ridiculous.

Thus it symbolizes contemporary politics quite aptly.

After the recent budget compromise that forestalled any real work of marshaling the federal government’s scarce (if astoundingly awesome) financial resources, however, the trillion dollar coin has been shelved.

For now.

Indeed, Democrats are tiring of the debt ceiling brinksmanship game. And it is mostly posturing. “Democrats have introduced a bicameral proposal to overhaul the debt ceiling process, leaning heavily into the recent default scare to push a bill that would essentially let Treasury ignore the debt cap and continue writing cheques with no limit,” explains The Epoch Times.

Would this any be better than the fake coin?

Perhaps more honest.

But, once again, it would be Congress giving away its authority. 

And until Congress can restrain its spending habits, we, the people, will always come up tails.

This is Common Sense. I’m Paul Jacob.

* On the day I checked, the spot price for an ounce of platinum was just over $1000, and the face value on the American Platinum Eagle remained $100, the ratio being a tenth of metal value.

trillion dollar coin, debt, Congress, folly

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deficits and debt international affairs national politics & policies too much government

Debt for Pakistani Trans

Pakistani transgender youth, American debt

Thirty-​two trillion dollars. That’s a lot of money we don’t have.

I checked the U.S. Debt Clock last night. The federal government was, at that time, $200 billion shy of owing that amount, $32 trillion.

It’s such a big number that it doesn’t seem real.

Maybe that’s why politicians ignore it. And keep spending, adding to it.

All spending that seems fishy contributes to that debt. But so, alas,does spending that a majority of Americans may want. When you are over-​spending, all spending contributes to the red ink.

Still, to witness elected government officials throw money around with reckless abandon is especially irksome. Consider all the taxes that pay for that debt, continually as well as eventually. And the misdirected investments that get derailed from productive activity just to fund that debt.

Today’s example of idiotic spending? A mere $500,000. Half a million bucks. Chump change — next to the trillions on budget lines.

So this half-​a-​million is slotted to go to Pakistan.

To train Pakistanis to speak, read and write in English.

But the kicker’s in the headline, courtesy of The Epoch Times: “Biden Earmarks $500,000 for Transgender Youth, Other Groups in Pakistan.” The blurb makes the obvious point I wish to drive home: “Biden ‘hell-​bent on spending money we don’t have,’ said Rep. Ralph Norman’s office.”

Biden’s prodigality will provide “intensive professional development courses for Pakistani transgender youth.”

The old saw about such foreign aid runs, “Don’t we have transgender youth in this country to help?”

But better to join Rep. Norman and point to the debt clock. And shake our heads.

This is Common Sense. I’m Paul Jacob.

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deficits and debt folly national politics & policies

Earmarked Nation

pork, spending, Congress, debt

The big secret of the federal government’s budget is that there isn’t one.

Instead of proposing a rational budget, Congress spends money in huge omnibus bills, which sweep up most of the big items into a bucket which is then poured out into the economy. Since these buckets contain more money than can actually be found in federal coffers, the consequent deficits are covered by debt. 

Which accumulates. 

Looming larger and more ominous every year.

One way these omnibus bills are managed is that almost no one reads them. As former House Speaker Nancy Pelosi said of Obamacare, ya gotta pass it to find out what’s in it.

How to get congressmen to go along with this financial chaos? Bribery. Make the spending binge even bigger with earmarks.

That’s where members of Congress place local boondoggle projects into the omnibus bills and get them through without having to convince anyone but the leadership of the projects’ dubious merits.

I used to talk more about earmarks. But when the Tea Party Republicans entered in 2011, they nixed earmarking “the pork.”

When the Democrats came back into power, the aforementioned Mrs. Pelosi brought them back, which, in the last big omnibus bill, pushed spending up an extra $8 billion or so.

Though Democrats love earmarks as an institutional practice, Republican protests are often merely pro forma. Alabama’s Retiring Republican Senator Richard Shelby, for example, “got $666.4 million down there to Alabama,” explained Tom Temin recently. “Sounds like there’s going to be a lot of Richard Shelby bridges, Richard Shelby schoolhouses, Richard Shelby highways.”

Thankfully, one of the concessions Speaker of the House McCarthy made with the Freedom Caucus (whom the president calls “ultra-​MAGA” and “semi-​fascist”) was to attack the earmarking practice again — after a failure to decide against earmarks late last year.

We’ll see how that goes. But the real test will be the abandonment of omnibus spending packages.

This is Common Sense. I’m Paul Jacob.

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