Tag: stimulus

New at Cato, Tax Day Edition

tax-dayHere are a couple of dishes Cato Institute scholars cooked up for Tax Day:

  • Writing for National Review Online, Chris Edwards warns against the dangers of rapidly increasing government spending:

    When filling out your tax forms, you might want to think for a second about where all that money is going. After federal spending roughly doubled in the Bush years, it is growing by leaps and bounds under President Obama. What’s more, the federal government is increasing the scope of its activities — it is intervening in many areas that used to be left to state and local governments, businesses, charities, and individuals.

    There are now a staggering 1,804 subsidy programs in the federal budget. Hundreds of programs were added this decade, and the recent stimulus bill added even more. The result is that we are in the midst of the largest federal gold rush at taxpayer expense since the 1960s.

  • At Townhall, Dan Mitchell rails against the current tax code:

    Beginning as a simple two-page form in 1913, the internal revenue code has morphed into a complex nightmare that simultaneously hinders compliance by honest people and rewards cheating by Washington insiders and other dishonest people.

    But that is just the tip of the iceberg. The tax code also penalizes economic growth, distorts taxpayer behavior, undermines American competitiveness, invites corruption and promotes inefficiency.

  • At CNSNews.com, Edwards argues that policymakers should give Americans the low and simple tax code that they deserve.
  • Also, don’t miss the new Cato video that reveals how troubling the American tax system really is.

Stop the War, Stop the Spending

One of the great things about Ron Paul’s presidential campaign was its cross-ideological appeal. Libertarians, free-market conservatives, and antiwar young people all found his candidacy appealing. As someone who has despaired for years about the split between free-marketers and civil libertarians, who ought to be part of the same broad freedom movement, I looked forward to seeing that combination continue. So here’s a suggestion.

President Obama’s frightening tax-spend-and-take-over-private-businesses policies are re-energizing a free-enterprise constituency that had been depressed and dispirited by the reality of a Republican government giving us bigger, more expensive government for eight years. Cato’s full-page newspaper ads against the “stimulus” bill generated much enthusiasm and media discussion. CNBC’s Rick Santelli and South Carolina governor Mark Sanford have become folk heroes for speaking out against Obama’s economic policies. Now there are anti-tax “tea parties” planned in more than 300 cities. The growing resistance to Obama’s spending agenda is encouraging.

But meanwhile, where’s the antiwar movement? President Obama rose to power on the basis of his early opposition to the Iraq war and his promise to end it. Now he has doubled down on the war in Afghanistan and has promised to keep the war in Iraq going for another 19 months, after which we will have 50,000 American troops in Iraq for as far as the eye can see. If McCain had proposed this sort of minor tweaking of the Bush policy, I think we’d see antiwar rallies in 300 cities. Calling the antiwar movement!

So here’s my suggestion. Some libertarian group – which may or may exist already; the Internet makes it amazingly easy to organize a new group at a moment’s notice – should start a campaign to unite the antitax and antiwar constituencies with a simple message:

Stop the War, Stop the Spending

Or maybe it should be “Stop the Wars, Stop the Spending.” But it would pick up on Ron Paul’s appeal with his TV ads in which he said, “I’m the only presidential candidate who’ll bring our troops home from Iraq immediately and stop wasteful government spending.” Millions of Americans are tired of the war and worried about soaring federal spending. Somebody should give them a rallying point.

Not Waiting for Government

As Tad DeHaven mentioned the other day, CNN reported recently that business owners and residents on Hawaii’s Kauai island got together and made repairs to a state park – in eight days – that the state had said would cost $4 million and might not get done for months. Businesses were losing money since people couldn’t visit the park, so they decided to take matters into their own hands.

“We can wait around for the state or federal government to make this move, or we can go out and do our part,” [kayaking company owner Ivan] Slack said. “Just like everyone’s sitting around waiting for a stimulus check, we were waiting for this but decided we couldn’t wait anymore.”…

“We shouldn’t have to do this, but when it gets to a state level, it just gets so bureaucratic, something that took us eight days would have taken them years,” said Troy Martin of Martin Steel, who donated machinery and steel for the repairs. “So we got together – the community – and we got it done.”

It reminds me of the story 20 years ago of how Donald Trump got tired of watching the city of New York take six years to renovate a skating rink, so he just called up Mayor Ed Koch, offered to do it himself, and got the job done in less than four months. He got so enamored of the skating rink that he ended up getting the concession to run it.

And it also reminds me of the stories in James Tooley’s brand-new book, The Beautiful Tree: A Personal Journey Into How the World’s Poorest People Are Educating Themselves, which talks about how poor people in China, India, and Africa have set up schools for their children because government schools were absent or of poor quality.

If government would get out of the way, businesses, churches, charities, and individuals would solve a lot more social problems.

Stop Spending Our Future

That’s the title of an alarming, but informative, video over at Reason TV.  The video contains lots of eye-popping comparisons between amounts being spent on bailouts/”stimulus” and previous big-ticket government expenditures like the World War II and the New Deal.

And if you haven’t done so already, check out my colleague Dan Mitchell’s videos on the fallacies of Keynesian economics and the folly of so-called fiscal “stimulus” packages.

Hawaiians Don’t Wait for Government - Rebuild Road

The spirit of 1776 is alive and well in Kauai:

Their livelihood was being threatened, and they were tired of waiting for government help, so business owners and residents on Hawaii’s Kauai island pulled together and completed a $4 million repair job to a state park – for free.

“We can wait around for the state or federal government to make this move, or we can go out and do our part,” Slack said. “Just like everyone’s sitting around waiting for a stimulus check, we were waiting for this but decided we couldn’t wait anymore.”

It’s amazing what a little private initiative and economic incentive can do.  Contrast this story with that of a bridge being built to connect Microsoft campuses in Redmond, WA with federal “stimulus” money.

Week in Review: ‘Saving’ the World, Government Control and Drug Decriminalization

G-20 Summit Agrees to International Spending Plan

g-2The Washington Post reports, “Leaders from more than 20 major nations including the United States decided Thursday to make available an additional $1 trillion for the world economy through the International Monetary Fund and other institutions as part of a broad package of measures to overcome the global financial crisis.”

Cato scholars Richard W. Rahn, Daniel J. Ikenson and Ian Vásquez commented on the London-based meeting:

Rahn: “President Obama of the U.S. and Prime Minister Brown of the U.K. will be pressing for more so-called stimulus spending by other nations, despite the fact that the historical evidence shows that big increases in government spending are more likely to be damaging and slow down recovery than they are to promote vigorous economic expansion and job creation.”

Vásquez: “The push by some countries for massive increases in spending to address the global financial crisis smacks of political and bureaucratic opportunism. A prime example is Washington’s call to substantially increase the resources of the International Financial Institutions… There is no reason to think that massive increases of the IFIs’ funds will not worsen, rather than improve, their record or the accountability of the aid agencies and borrower governments.”

Ikenson: “Certainly it is crucial to avoid protectionist policies that clog the arteries of economic recovery and help nobody but politicians. But it is also important to keep things in perspective: the world is not on the brink of a global trade war, as some have suggested.”

Ikenson appeared on CNBC this week to push for a reduction of trade barriers in international markets.

With fears mounting over a global shift toward protectionism, Cato senior fellow Tom Palmer and the Atlas Economic Research Foundation are circulating a petition against restrictive trade measures.

Obama Administration Forces Out GM CEO

rick-wagonerPresident Obama took an unprecedented step toward greater control of a private corporation after forcing General Motors CEO  Rick Wagoner to leave the company. The New York Post reports “the administration threatened to withhold bailout money from the company if he didn’t.”

Writing for the Washington Post, trade analyst Dan Ikenson explained why the government is responsible for any GM failure from now on:

President Obama’s newly discovered prudence with taxpayer money and his tough-love approach to GM and Chrysler would both have more credibility if he hadn’t demanded Rick Wagoner’s resignation, as well. By imposing operational conditions normally reserved for boards of directors, the administration is now bound to the infamous “Pottery Barn” rule: you break it, you buy it. If things go further south, the government is now complicit.

Wagoner’s replacement, Fritz Henderson, said Tuesday that after receiving billions of taxpayer dollars, the company is considering bankruptcy as an option. Cato scholars recommended bankruptcy months ago:

Dan Ikenson, November 21, 2008: “Bailing out Detroit is unnecessary. After all, this is why we have the bankruptcy process. If companies in Chapter 11 can be salvaged, a bankruptcy judge will help them find the way. In the case of the Big Three, a bankruptcy process would almost certainly require them to dissolve their current union contracts. Revamping their labor structures is the single most important change that GM, Ford, and Chrysler could make — and yet it is the one change that many pro-bailout Democrats wish to ignore.”

Daniel J. Mitchell, November 13, 2008:  “Advocates oftentimes admit that bailouts are not good policy, but they invariably argue that short-term considerations should trump long-term sensible policy. Their biggest assertion is that a bailout is necessary to prevent bankruptcy, and that avoiding this result is critical to prevent catastrophe. But Chapter 11 protection may be precisely what is needed to put American auto companies back on the path to profitability. Bankruptcy laws specifically are designed to give companies an opportunity — under court supervision — to reduce costs and streamline operations.”

Dan Ikenson, December 5, 2008: “The best solution is to allow the bankruptcy process to work. It will be needed. There are going to be jobs lost, but there is really nothing policymakers can do about that without exacerbating problems elsewhere. The numbers won’t be as dire as the Big Three have been projecting.”

Cato Links

  • As the North Atlantic Treaty Organization celebrates its 60th birthday, there are signs of mounting trouble within the alliance and increasing reasons to doubt the organization’s relevance regarding the foreign policy challenges of the 21st century. In a new study, Cato scholar Ted Galen Carpenter argues that NATO’s time is up.
  • Should immigration agents target businesses knowingly hiring illegal immigrants? Cato scholar Jim Harper weighs in on a Fox News debate.
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So Much for the Promise of Financial Transparency

President Barack Obama promised transparency and accountability for how the federal government spends the trillions – or is it quadrillions (I’ve lost count)? – in bail-out money, stimulus outlays, and expanded government programs.  Alas, his administration doesn’t seem interested in living up to his promises.

Reports ABC News:

The watchdog for the Troubled Asset Relief Program, the government’s financial rescue plan, said today that the Treasury Department has not been cooperating with oversight efforts up to this point.

“We do not seem to be a priority for the Treasury Department,” the Congressional Oversight Panel’s Elizabeth Warren told a Senate Finance Committee hearing today.

“We have sent letters. We have requested that there be someone named so that we can get technical information. And so far, we have not been a first priority,” Warren said. “We use what you give us, and we will exercise the leverage given to us by Congress. In part, that’s why I’m here today. I’m here to talk to you about what’s happened so far, what we have discovered so far, the inquiries that we have in mid-stream and for which we continue to await responses.”

Warren, visibly frustrated with a lack of cooperation from the administration, emphasized, “This problem starts with Treasury.”

Obviously, this isn’t the first time that a presidential commitment has gone aglimmering.  But given the extraordinary opportunity for pervasive waste, fraud, and abuse in the tsunami of new federal spending, few presidential commitments have been as important.