Friedman: How Wealth Works

Richard Epstein on the Benevolence of Inequality

Watch Does U.S. Economic Inequality Have a Good Side? on PBS. See more from PBS NewsHour.

The President is Wrong About Taxes.

from Carpe Diem:

During Monday night's national address, President Obama recited the Buffet line that millionaires and billionaires pay lower tax rates than their secretaries. Democrats in Congress routinely cite Mr. Buffett's tax confessions as irrefutable evidence that tax rates on the very rich are too low and the system is unfair.

Except it is not true.

(Data is from the IRS.)

Legal Plunder

I have yet to receive a convincing answer to the following question:

If it is wrong for your neighbor to come to your house and demand you pay for his health care, why is it ok if the whole neighborhood gets together and makes the same demand?

ARRA: The seen and the unseen

American Recovery and Reinvestment Act

What is seen:

450,000 government sector jobs "created or saved"

What is unseen:

1,000,000 private sector jobs forestalled


Read more in this Ohio State Study:

"The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled"

For the time challenged: NCPA highlights the study findings.

Bastiat's "That Which is Seen and That Which is Not Seen"

.

American Dependence on Government Assistance Highest Ever

From the National Center for Policy Analysis Daily Policy Digest:

Americans depended more on government assistance in 2010 than at any other time in the nation's history, a USA Today analysis of federal data finds. The trend shows few signs of easing, even though the economic recovery is nearly two years old.

• A record 18.3 percent of the nation's total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010.
• Wages accounted for the lowest share of income -- 51.0 percent -- since the government began keeping track in 1929.

The wage decline has continued this year.

• Wages slipped to another historic low of 50.5 percent of personal income in February.
• Another government effort -- the Social Security payroll tax cut -- has lifted income in 2011.
• The temporary tax cut puts more money in workers' pockets and counts as an income boost, even when wages stay the same.

From 1980 to 2000, government aid was roughly constant at 12.5 percent. The sharp increase since then reflects several changes: the expansion of health care and federal programs generally, the aging population and lingering economic problems.

• Total benefit payments are holding steady so far this year at a $2.3 trillion annual rate.
• A drop in unemployment benefits has been offset by rises in retirement and health care programs.
• Americans got an average of $7,427 in benefits each in 2010, up from an inflation-adjusted $4,763 in 2000 and $3,686 in 1990.
• The federal government pays about 90 percent of the benefits.

Source: Dennis Cauchon, "Americans Depend More on Federal Aid than Ever," USA Today, April 26, 2011.

For text:

http://www.usatoday.com/news/nation/2011-04-26-government-payments-economy-medicare.htm?loc=interstitialskip

For more on Tax and Spending Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=25

Addendum:
For an excellent commentary and further elaboration see TANSTAAFL at Small Thoughts.

.

How was 2008 like 1936?

People received more from the government (on average) than they sent in.



This is NOT a sustainable trend.

Read more here. (Third article down)

(HT Warren Gibson)

Where do your federal tax dollars go?

April 15.

Tax Day, and my in-laws wedding anniversary. (This year it's their 60th!!)

Today I received an email from David Plouffe, Senior Advisor to the President. (Bet you didn't know I had such powerful friends.)

Here it is:

Good afternoon,

Have you ever wondered how much of your own tax dollars actually go to support foreign aid? To support education? Well, now you can find out – and you might be surprised.

In his State of the Union Address, President Obama promised that this year, for the first time, American taxpayers would be able to go online and see exactly how their federal tax dollars are spent.

So today, we’re announcing the first-ever federal taxpayer receipt. Check it out:


Just enter a few pieces of information about your taxes, and the taxpayer receipt will give you a breakdown of how your tax dollars are spent on priorities like education, veteran’s benefits, or health care.

Sincerely,

David Plouffe
Senior Advisor to the President

I decided to give it a try. Plugged in my Social Security tax, Medicare tax and Federal Income tax. Then I calculated how much of my tax is spent on the military, the courts and the police---the only three legitimate areas of government action.

31%

If government was reduced to its proper function of protecting our inalienable individual rights to life, liberty and property, I could pay 60% less tax. More importantly, I would have 60% less my property expropriated by the very institution designed to protect my property.

Something to think about.

Government needn't be so large and our liberty so diminished.

.

Vilifying Dr. Berwick — for the Wrong Reasons

My op-ed was published on today's PJ Media:

If you don’t like ObamaCare, you probably really don’t like Donald Berwick, the current administrative head of Medicare and Medicaid.

You know him. He’s the one who’s “in love” with the Britain’s National Health Service, the guy who insists that we “must — must — redistribute wealth,” and tells us that, since rationing is unavoidable, we’d best do it “with our eyes open.”

But in regards to government-funded health care — including Medicare and Medicaid — Dr. Berwick is right, so it does no good to shoot the messenger.

Medicare, Medicaid, and all collectivized medical care require rationing for the simple reason that allscarce resources must be rationed.

You can read the rest here.


.

Free Market: not just the most effective, but also the most moral solution to poverty

Milton Friedman is right as far as he takes it. The free market is the most effective system the world has known for producing wealth and reducing poverty. What he doesn't say in this video clip is that the free market, because it is limited to voluntary exchange, is also the most moral system for reducing poverty. A system which employs the initiation of force will not be as effective--it can only redistribute wealth not create it--but even more importantly, it entails in its methods the destruction of civil society.


(HT Ideas Matter)

Really, Mr. President?

From yesterday's interview of President Obama by Bill O'Reilly:

CLAIM: “I lowered taxes over the last two years.”

FACT: The health care law includes a whopping $569,200,000,000 in tax increases scheduled to take effect over the coming years – taxes that will harm an economy struggling to grow. Most of these taxes will be paid by, or passed through to, the middle-class – including a new 40 percent tax on insurance policies the government is forcing individuals to buy, a tax so unpopular Democrats refused to impose it before 2018, well after President Obama will leave office.

CLAIM: “We want cost controls in health care.”

FACT: According to the Medicare actuary, the health care law will INCREASE costs by $310,800,000,000. In June 2009, President Obama claimed that any health care legislation must control costs: “If any bill arrives from Congress that is not controlling costs, that’s not a bill I can support. It’s going to have to control costs.” But just last month, the Medicare actuary once again confirmed that the President’s promise is “false, more so than true.”

CLAIM: “What we said was, if you have health care that you like, you keep it.”

FACT: According to the Administration’s own estimates, half of all employers – and as many as 80% of small businesses – will be forced to give up their current coverage within the next two years, thus subjecting them to costly new mandates that will increase premiums. Last month, the Medicare actuary agreed with the Administration’s own estimates that the President’s promise is “not true in all cases.”

CLAIM: [Responding to O’Reilly’s claim that the bill was “a huge government intrusion” that will “take over, basically, decision making for Americans”] “But, Bill….you have a responsibility to make sure that you have got coverage.”

FACT: The law goes much further than its constitutionally dubious requirement to obtain coverage – it forces individuals to buy, and large employers to offer, government-defined insurance coverage or pay financial penalties, meaning federal bureaucrats will be defining the parameters under which all Americans will obtain health care. Moreover, the law itself creates 159 new bureaucracies and programs, stretching the federal government’s involvement into virtually every nook and cranny of the health care sector.

(Above taken from an email by Chris Jacobs, Health Policy Analyst, Republican Policy Committee)

And there's more:

O'REILLY: Do you deny that you are a man who wants to redistribute wealth.

OBAMA: Absolutely.

O'REILLY: You deny that?

OBAMA: Absolutely.

Who is the scoundrel?

And if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2% of Americans. Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break.

--President Obama, SOTU 2011

Let's say you have been borrowing money from a friend to pay rent or better yet, say a friend has simply been generously giving you money, and this has been going on for a long time. Finally, your friend says, "dude, I can't give you any more money." Would your response ever be: "I can't afford to allow you to stop giving me money"? In fact, isn't it the case that you can't afford to pay your own rent? Would you be mad at your friend for not giving you more money? And, if you were mad, rather than grateful for the past and eager to pay your own way, shouldn't you be considered a scoundrel at best?

How is it different ethically when we apply this principle to the government?

--Doug Reich, The Rational Capitalist

Those who do not know history...

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." --Cicero - 55 BC

Are bound to repeat it.

(HT R. Folsom on The Barstool Economists yahoo group.)

2094 of the reasons the US is broke.

410	Department of Health and Human Services
226	Department of Agriculture
217	Department of the Interior
170	Department of Education
125	Department of Justice

Last updated December 22, 2010

CFDA contains detailed program descriptions for 2,094 Federal assistance programs. The above chart shows the program distribution for the top five issuing agencies.

Is a man capable of sustaining his own life?

The Federal Government and all those who have supported these programs don't seem to think so. That's why there are now 2094 federal government assistance programs.

I won't take the time to type in all the programs as I did for the state of California. If you are interested, you can access the full list here.

.

HT Small thoughts for a Complex World

Four Ways to Spend Money

When you go to the polls next week, think about which way the candidates and the initiatives propose to spend money...and then remember that the most cost-effective way to spend money is when you spend your own money.

Vote accordingly.

.