November 22, 2017

An Extended Tax Reform Debate Will Subject Us to the Usual Absurdities

liarJohn McCain’s confirmation he’d vote against the House tax reform bill as currently proposed means Republicans won’t be able to lower taxes – for some people – nearly as quickly as most of them want to. In all, three Republican senators have indicated their unwillingness to vote for the plan, meaning Republicans would need Democratic votes to get it through.

As Democratic support is unlikely, the American public will have to endure several weeks or months of grandstanding, proposed amendments, and further neutering of any real benefit to taxpayers. The worst thing about these rituals is they are always largely a debate over absurdities. Here are just a few of the perennial favorites.

Over Ten Years

Both sides of any tax and spending debate use the “over ten years” canard. Those politicians claiming their plan will “balance the budget” claim their bill will do so in ten years, always after increasing spending this year. Those opposing the same plan will pick out spending lines they don’t like, whether increases, decreases, or new spending, and use the ten-year canard to make the impact seem bigger than it is.

For example, if Republicans proposed cutting $100 billion from domestic spending (a mere 2.5% of the overall federal budget), Democrats would wail Republicans were depriving the public of $1 trillion of desperately needed services. Republicans would claim they were saving taxpayers $1 trillion. Neither side would acknowledge the $1 trillion is a rather small percentage of the ten-year federal budget.

In reality, Congress has no power to pass any bill that can’t be changed in as little as two years. Spending bills are debated every year. So, anything politicians say and the media parrot regarding a spending bill’s effects over the next ten years is largely hot air. All that really matters is what their proposals will do next year. And that news is virtually never good.

Read the rest at Foundation for Economic Education…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Newsweek: Trump’s Tax Reform is Aimed at Punishing Democratic Voters

dmoe votersOn October 19, Republicans passed the first $4 trillion federal budget in U.S. history, a version of which narrowly passed the House on Thursday.

At $4.1 trillion, the budget represents an approximately 5 percent increase in spending over the last fiscal year of the Obama administration and sets the stage for President Trump to do what every GOP president has done since WWII: increase spending far more than did his Democratic predecessor.

Simple arithmetic will tell you that if spending increases, either taxes or deficits must increase, too. But although the GOP has been happy to let deficits explode in the past, they will have a harder time defending them this time around after their eight-year assault on Obama’s deficits, which increased debt from $10 trillion to $20 trillion.

Therefore, Republicans are going to have to raise taxes to avoid bigger deficits.

They have set out to do exactly that to their political opponents while cutting taxes for their supporters.

All of this makes their current narrative about eliminating the state and local deduction from federal tax liability especially unseemly.

They claim the deductions force low tax states to subsidize high tax states like California, but that’s not true. California and New York pay more in federal taxes than they reap in federal benefits.

That isn’t to defend the egregious taxation in states like New York. But as Republicans love to remind us, the wealthiest 20 percent of Americans pay most of the income taxes and most of those people live in blue states Republicans are targeting for effective tax hikes.

Read the rest in Newsweek…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Big-Spending Republicans Seek Tax Hikes on Blue States

taxincreasesignTen days ago, Republicans passed the first $4 trillion federal budget in U.S. history, a version of which narrowly passed the House on Thursday. At $4.1 trillion, the budget represents an approximately 5% increase in spending over the last fiscal year of the Obama administration and sets the stage for President Trump to do what every GOP president has done since WWII: increase spending far more than did his Democratic predecessor.

A History of Spending Increases

Simple arithmetic will tell you that if spending increases, either taxes or deficits must increase, too. But although the GOP has been happy to let deficits explode in the past, they will have a harder time defending them this time around after their eight-year assault on Obama’s deficits, which increased debt from $10 trillion to $20 trillion.

Therefore, Republicans are going to have to raise taxes to avoid bigger deficits. They have set out to do exactly that to their political opponents while cutting taxes for their supporters. All of this makes their current narrative about eliminating the state and local deduction from federal tax liability especially unseemly. They claim the deductions force low tax states to subsidize high tax states like California, but that’s not true. California and New York pay more in federal taxes than they reap in federal benefits.

That isn’t to defend the egregious taxation in states like New York. But as Republicans love to remind us, the wealthiest 20% of Americans pay most of the income taxes and most of those people live in blue states Republicans are targeting for effective tax hikes. To raise spending by $200 billion and then claim the moral high ground based on fake news is exasperating even by Washington’s standards.

Read the rest at Foundation for Economic Education…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Newsweek: As Congress and Trump Grind to a Halt, the Government Rumbles On

gettyimages-642093036 Newsweek

Donald Trump in the East Room at the White House on February 16, 2017 in Washington, DC.MARIO TAMA/GETTY

President Trump spent the weekend embroiled in yet another Twitter skirmish, this time with retiring Republican Senator Bob Corker. Trump may even have suffered a rare defeat on his own turf, based on Corker’s hilarious rejoinder about someone missing their daycare shift at the White House. If Trump has a soul, even he laughed at that one.

But many blame this kind of drama as a major contributing reason to Trump “not getting anything done” so far during the first year of his presidency. Even those on the blood-in-their-eyes, Trump-hating left make this criticism. One would think they’d be glad he’s not getting anything done, but apparently, a government not doing anything is even worse for them than one doing things they don’t like.

If only “not getting anything done” were true. The Pentagon goes on waging war, uninterrupted by elections, supposed gridlock, or even “government shutdowns.” War has become the normal state, with “an act of Congress” required to stop it, rather than start it.

Domestically, all of Washington’s unconstitutional regulatory agencies have hummed along without pause. The FDA is still driving up prescription drug prices by keeping thousands of generics off the market. The TSA is still violating the 4th Amendment millions of times per day while virtually never discovering dangerous items brought on board, even during their own tests. And the Social Security Administration goes on cutting checks as if it didn’t have tens of trillions in unfunded liabilities.

Read the rest at Newsweek…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

How Long Can Americans Go on Hating the President and Each Other?

redandblueTrump Derangement Syndrome rages on, the latest symptoms flaring equally based on causes both legitimate and ridiculous. A key characteristic of the syndrome is its ability to evoke the same outrage over the president retweeting a harmless (and let’s admit it, funny) meme as threatening to destroy an entire nation. The breathless apoplexy over absolutely everything Trump-related, down to the shoes his wife wears while traveling, has desensitized Trump’s supporters to behavior even they should be concerned about.

It is true Trump has inspired new levels of hostility — even for politics — but Americans have been hating the president for this entire century, which is no longer in its infancy. Bush may not have been “literally Hitler,” but he was Hitler nonetheless to the Democrats, just as Obama was “literally Mao” to conservatives. But the proud American tradition of hurling invectives at the president isn’t nearly as ominous as the trend towards violence. Both the right and the left have mobilized armed groups, not just carrying signs but ready for violence. In fact, violent resistance is the far-left Antifa’s stated raison d’etre.

US Government Power Has Never Been Higher

It isn’t that the three men who have held the office since 2001 are monsters. Anyone who paid attention when Bush, Obama, or even Trump was caught in a quiet moment “off the record” would have to admit that they seem like reasonably likable people. That’s the rub. Government makes nice people do terrible things, things even they themselves would have considered barbarous before taking office.

Unfortunately, most Americans do not bat an eye at the worst offenses committed by the presidency, namely the killing of millions in undeclared wars of choice with nations who have never attacked the United States. But Americans on both the right and the left are increasingly feeling the effects of ceding power over domestic affairs to Washington and the executive branch in particular. The stakes of presidential elections are much higher now that Washington doesn’t just regulate interstate commerce, but regulates the minute details of how businesses are run, how crops are grown, what local public schools teach and even what signs they put on their restrooms.

Read the rest at Foundation for Economic Education…

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Trolling Bernie Sanders Part 1

I know. It’s a little like when Kramer was beating up those ten and twelve-year-old kids at his karate school on Seinfeld. But it’s just too hard to resist trolling the commie con man, if for no other reason than to expose him to his confused supporters. So, by popular demand, some highlights from my past few months trolling Bernie.

IMG_0798 IMG_0812 IMG_0814   IMG_0873 IMG_0901   IMG_0785 IMG_0796

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

It’s Time to Repeal and Replace the Republican Party

Gop slash 2President Trump attempted Friday to put a smiley face on the defeat of the American Health Care Act (ACHA), known to its opponents as “Obamacare Light.” From his perspective, the failure to secure enough Republican votes to pass the AHCA will lead to a “better bill” in the long run, because that future bill will have bipartisan support. The president did not elaborate on how the bill he envisions would be better or what about this bill, which he virtually threatened members of his own party to vote against, he didn’t like.

Opponents of the AHCA opposed it because it was too much like The Affordable Care Act (Obamacare) itself. Trump’s comments beg the question for anyone hoping for less government in health care, rather than more: How exactly will participation by the Democratic Party make the next bill better?

It’s fair to say Trump is far from a typical Republican, especially on health care. He’s supported single payer government health insurance in the past, even as recently as his 2016 campaign. But what about the rest of the GOP? If the House of Representatives is any indication, merely tweaking and renaming Obamacare was a viable solution to what they have denounced for seven years as the first step down the slippery slope to socialism.

This is by no means an isolated incident in the GOP’s history. Despite running on reducing the size and influence of the federal government, Republican presidents and Congresses have consistently presided over more significant expansions than the Democrats. A look at historical data on federal outlays reveals that federal spending increases far more when a Republican is in the White House than under a Democrat, regardless of which party controls Congress.

Beginning with Nixon, federal spending has virtually doubled during the administrations of all three two-term Republican presidents. Even Eisenhower increased it fifty percent, despite two year-over-year cuts in 1954 and 1955, respectively, equaling the percentage increase under LBJ’s “Great Society” (although the latter was accomplished in one term). Spending increased far less under Democratic Presidents Clinton and Obama than under any post-war Republican president who served two terms. It seems unlikely that trend will change under President Trump, who has proposed $60 billion in increases to military and Homeland Security spending.

Republican rhetoric also typically includes “slashing” regulations on economic activity, but the reality rarely bears any resemblance to the rhetoric. Like many of his Republican predecessors, Eisenhower created an entire new department, Health, Education and Welfare, which paved the way for LBJ’s medical entitlements. Nixon created the EPA, which alone is responsible for some of the most stifling regulation on business. Reagan is widely credited for massive deregulation, but most of the meaningful deregulation was passed while Carter was president. George W. Bush’s only two meaningful economic policies were the economically destructive Sarbanes-Oxley Act and the TARP bailout.

Over the entire sixty-four years since 1953, voters truly interested in reducing the size and influence of the federal government have decried what have recently come to be called, “RINOs,” (Republicans-in-Name-Only). This is a term popularized during the Tea Party era to describe Republican politicians who run on shrinking the federal government, but who govern more like liberal Democrats once in office. If only a real Republican could be elected, say the grass roots, then the federal government would finally be brought back within its constitutional limits.

But when have these “real Republicans” ever existed? Once upon a time? If one goes back to its founding in 1854, the Republican Party was the big government party. By 1860, the platform included all the familiar big government planks from its predecessors, the Whigs and the Federalists. And spend big they did, particularly on railroads and other infrastructure, in addition to raising protectionist tariffs.

It wasn’t until Woodrow Wilson and the new Democratic Party leapfrogged the Republicans in terms of big government that Republicans even campaigned on shrinking the federal government, which wasn’t exactly a radical idea following the spending and regulation ramp-up during the largest war in human history to that point. Evidently, Warren Harding and Calvin Coolidge are the only “real Republicans” to have ever occupied the White House. And let’s not forget that both merely returned policy to that of their 19th century Republican predecessors. Harding and Coolidge praised Alexander Hamilton’s economic policies and governed accordingly.

Considering the present Republican administration, there has never been a better time for those truly interested in smaller government to confront reality: the ninety percent of Republican Congressman who would have voted for the AHCA are the real Republicans. They represent what the Republican Party has been about for the entire 163 years of its existence: big government conservatism.

It’s time to repeal the GOP and replace it with a party truly committed to less government, free markets and a peaceful foreign policy. While the numbers associated with third parties are not encouraging, one cannot ignore the vast potential represented by that half of the electorate who don’t vote at all. Together with the large number of Republican and Democratic voters who “hold their noses” and vote for the lesser of two evils, a new party formed from the Libertarian, Constitutional and Reform Parties, marketed to disaffected non-voters, could represent a viable alternative.

At this point, what could those seeking smaller, less intrusive government possibly have to lose?

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Trump’s Job-Killing Carrier Deal

trump-carrierDonald Trump has not taken office and already he is delivering on his promise to keep manufacturing jobs in the United States. Yesterday, he visited Indiana to celebrate his part in persuading Carrier to keep 1,100 jobs slated to move to Mexico at its Indiana facility. Speculation of bullying, tax-funded quid pro quo (Carrier’s parent company, United Technologies, holds large defense contracts) and corporate welfare were plentiful.

Today, Zero Hedge reports Carrier was persuaded by none of the above. Instead, the company received “$700,000 a year for a period of years in state tax incentives.” That means keeping the jobs cost the government about $636 per job annually in tax revenues.

It would seem a win-win. 1,100 Americans keep their jobs, Carrier gets lower taxes to avoid having to pass on the cost difference to its customers and all the local businesses in Indiana benefit from the purchasing power that remains there with the domestic Carrier employees instead of being exported to Mexico.

That, as 19th century political economist Frederic Bastiat would say, “is what is seen.” What is not seen is all the consequences of Carrier not moving those jobs to Mexico, where they could produce their products at a lower cost. When those consequences are considered and the ledger is balanced, the deal will have made the United States as a whole poorer and will have cost it jobs.

Let’s first consider the decision in a vacuum, without the tax incentive. Carrier was moving the jobs to Mexico because it could produce the same air conditioner there at a lower cost, which it could then pass on to its customers. Keeping the jobs in Indiana raises the cost of production above what it would be with the move. That forces Carrier to raise its prices.

And we must assume Carrier would have saved more than $636 per worker per year in tax breaks had they moved those jobs to Mexico, or the move wouldn’t have made financial sense. With each worker on average producing many air conditioners per year, saving $636 per worker works out to a negligible cost savings per unit. So, Carrier is likely absorbing some of the higher costs of keeping the jobs in Indiana, over and above what they are receiving from the government. Those costs must be passed on to customers or taken out of profits, the latter resulting in either lower dividends or less money reinvested in future improvements to production.

“Ah,” says the supporter of this move, “but many people are willing to pay a little more to keep those jobs in America!” Perhaps, but the economic consequences remain. Assuming the price of an air conditioner would be $5,000.00 if produced in Mexico and keeping the jobs in America only raises prices by the $500, Americans are now paying $5,500.00 for an air conditioner instead of $5000.00. They get no more for their money than they would have paying $5,000.00. All they have in exchange for the $5,500.00 is the same air conditioner.

Had the job moved to Mexico and that same air conditioner been available for $5,000.00, the customer would have been able to afford an air conditioner and a bicycle, or an air conditioner and a new carpet, or an air conditioner and a new suit, for the same $5,500.00 he now spends to get the air conditioner only. The consumer is poorer because of the deal. His standard of living is lower. And let’s not forget that for every one employee producing air conditioners, there are hundreds or thousands of people consuming what those employees produce.

At the end of the day, the ledger balances to this: the same number of air conditioners are being produced, but at a higher cost. That difference in the cost of production is lost. The standard of living of everyone who consumes air conditioners is lowered by however much more it costs to produce air conditioners in Indiana instead of Mexico. We assume it is $500, but the exact figure is not important. They are poorer by whatever amount the diminished efficiency increases production costs.

“But kind sir!” says the apologist, “you have missed something. You have forgotten the purchasing power of those 1,100 employees, which will help local businesses and keep that wealth in America. That creates jobs that otherwise would have been lost!”

No, it is not forgotten. It is merely balanced against purchasing power lost by all those consumers of air conditioners and against all the jobs they would have created with the $500.00 they would have spent with local businesses, had they saved it in purchasing the air conditioner. The air conditioner customer who also bought a bicycle, a new carpet or a new suit also created jobs or supported existing jobs, which are now lost. And not one in a million knows where they went. The unseen killer of those jobs is the decision to make the same air conditioner at a higher cost in Indiana than at a lower cost in Mexico.

It doesn’t end there. Let us not forget the 1,100 jobs lost in Mexico, the third largest importer of U.S. exports. Because of the lost purchasing power of Mexican consumers, U.S. companies who export to Mexico lose revenue and must lay off workers.

When the whole ledger is balanced, the jobs lost in the U.S. at least equals those 1,100 retained and likely far exceeds them, as inefficiency grows exponentially as its effects ripple throughout the economy.

Finally, the apologist for the deal makes his last stand. “Yes, good sir, you make many fine points. But this deal involved lowering taxes for Carrier, which bestows upon them the same savings they would have realized by moving the jobs to Mexico. And even you must agree that lowering taxes and paying productive workers is better than allowing the government to use it less efficiently!”

Well, there is the rub. The government is doing with those lost taxes precisely what the apologist said. It is using them less efficiently than the market would have. The market would have moved those jobs to Mexico and lowered the cost of air conditioners. The government has used its taxing power to keep the jobs in Indiana and raise the cost of air conditioners above what it would otherwise be if the jobs moved to Mexico, with or without the tax incentive.

But even on the tax incentive there is more that is not seen. It is not as if the $700,000.00 in tax revenues were left in the hands of the taxpayers, who might use it productively. 100% of it went to subsidize the higher cost of producing an air conditioner in Indiana instead of Mexico. And the government went on spending the same amount as before, simply collecting the $700,000.00 Carrier doesn’t pay from others, now or in the future.

So, while the cost of the tax break is not added to the sticker cost of the air conditioner, the public is still paying that additional $636 per worker per year in the additional taxes collected to make up the government’s loss on Carrier. The public is also poorer by whatever price increase or profit reduction is necessary to offset the additional costs the company agreed to absorb to make the deal work.

No matter what defense the apologist offers, there is no escaping this. By keeping those jobs in Indiana instead of letting them move where the market is directing them, the net effect is the United States as a whole is at least $636 poorer per year for every employee kept in Indiana by the deal. It also loses jobs due to the higher prices it still pays for air conditioners, over and above what the tax break could alleviate, or the wealth lost in dividends or reinvestment Carrier sacrificed to absorb whatever additional cost savings it had to forego to keep the jobs in Indiana.  And this is one little company and just 1,100 jobs. Imagine if Trump delivers on his promise to keep or bring back millions?

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

The Irony Everyone’s Missing in the Hamilton-Pence Controversy

hamilton-penceFour days after Mike Pence was lectured by the cast of the hit musical Hamiltonand booed by its audience, the controversy rages on. President-elect Trump sent out the expected angry tweet demanding an apology. The left melodramatically gasped, “freedom of speech,” even though no one has suggested government action against the actors. And, suddenly, the right is more offended than an SJW at an Ann Coulter lecture. Even Trump whined about the theater being a “safe space.”

The only person who doesn’t have a strong opinion on this is Mike Pence. He handledthe situation with uncommon grace, shrugging off the boos from the crowd with a line for the ages: “That is what freedom sounds like.”

All of this pales in comparison to the supreme irony everyone is missing in this whole overblown controversy. Here we have the cast of a musical that holds Alexander Hamilton in an admiring light expressing deep anxiety about a president who just won a stunning upset victory after running his campaign largely based on the political ideas of – wait for it – Alexander Hamilton.

Read the rest at the Foundation for Economic Freedom…

The Electoral College is Vital to Freedom and Peace

400px-1992prescountymap2Retiring U.S. Senator Barbara Boxer (D-CA) filed legislation proposing an amendment to the Constitution abolishing the electoral college. She and many across the United States believe the president should be chosen by direct popular vote. This would be a huge mistake. The electoral college is vital to freedom in a republic the size of the United States.

Lest this be taken as a partisan argument for Donald Trump, let me clear the air. I did not vote for Mr. Trump. I understand the aversion many in both parties have for his style and even the substance of some of his policies. I understand the disappointment of Clinton supporters. I’m a libertarian from Buffalo, NY. My team never wins, neither in politics nor anywhere else – believe me, I understand!

But regardless of my reservations about Trump, the manner in which he was elected must be preserved as the only way to preserve a nation this large and culturally diverse.

Michael Moore recently called the system antiquated and only created to protect the dubious “rights” of slave states. Not so. In fact, it was created to protect smaller states from domination by the largest, including slave state Virginia. Let’s remember, the people of the original thirteen states did not have to accept the Constitution. Rhode Island, which passed laws to gradually emancipate its slaves from 1784-87, didn’t ratify it until 1790.

It’s primary reason for holding out was the addition of a Bill of Rights to the Constitution, measures which clarified the restrictions on the power of the federal government, but did not protect slavery. What it did ensure was that larger states like Virginia and Pennsylvania were not able to dictate how Rhode Island governed its internal affairs. The very first clause of the First Amendment, properly understood, prohibited the federal government from establishing a national religion, like the Church of England. Rhode Island, founded in the name of freedom of religion by a man kicked out of Massachusetts because of his religious beliefs, was especially concerned about this.

While some of the particulars are different, the underlying principle remains the same. The United States is a diverse federation of drastically different cultures. Those who believe New York City, Atlanta, GA, Boise, ID and Los Angeles, CA aren’t different cultures just aren’t being honest with themselves. As President Obama is so fond of saying, E Pluribus Unum (out of many, one).

There are some laws the federal government enforces within the states, based on its power to regulate interstate commerce. But the executive who enforces those laws must represent the people of every state, especially given how culturally diverse they are. That’s why we have an electoral college. That is why the people of Idaho, many of whom may find the societal values in places like New York or California abhorrent, agree to abide a chief executive who most likely comes from a place like that – because they and their culture have an equal say in electing him, even if they’re outnumbered.

If the shoe were on the other foot and Midwestern evangelical states had a population advantage, you can bet New Yorkers and Californians would be defending the electoral college to the death.

The beauty of our system is that it allows people with vastly different beliefs and values to live together in one federal republic dedicated to protecting their freedom to hold those beliefs, right or wrong, so long as they do not infringe the rights of others. To transform the republic to a pure democracy and allow a few, cosmopolitan states to rule over people who don’t share their beliefs would truly be tyranny and a threat to domestic peace.

The Constitution guarantees “to every State in this Union a Republican Form of Government,” not a democratic one. The founders were wise in this respect. In the name of diversity, freedom and peace, we should keep the electoral college.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.