–Debt is bad; debt is good. Take your pick.

The debt hawks are to economics as the creationists are to biology.

There is no functional difference between a federal tax cut and a federal spending increase. Some might argue that federal spending is superior or inferior to private spending, though evidence for either is slim, and either has the same result. They both increase the amount of federal money in the economy. (Mistakenly called the federal “debt.”)

Further, increasing the federal money supply stimulates the economy, and decreasing the money supply depresses the economy. So it is both laughable and sad to see how debt hawks squirm between wanting a lower debt, higher taxes and lower taxes, along with less federal spending, more spending and improved GDP. As the song says, “Something’s gotta give.”

Here are quotes from the always confused editors of the Chicago Tribune, in the editorial dated 8/1/10, titled “Out of debt.”

“. . . Democrats and Republicans are very good at doing one thing: running up the debt. That’s the reason for the National Commission on Fiscal Responsibility . . . to find ways to stem the red ink.” O.K., so federal deficits are bad.

“. . . at this stage (a tax increase) would be a terrible mistake, not only for the health of the economy, but for the nation’s long-term fiscal health.” O.K., so federal deficits are good, in both the short term and in the long term.

“More likely, Congress and the president would spend every nickel (from a tax increase) – and then spend some more.” Oh, oh. Now federal deficits are bad, again.

“Nor does it make sense to place a new (tax) weight on the economy when it is already struggling to grow.” Woops, deficits are good, again.

“Congress can’t afford to indulge the notion that endless borrowing is a sustainable strategy.” So deficits are bad.

“The wisest option is to extend tax cuts for a year . . . “ Deficits are good

“. . . then see what the deficit commissions proposes to curtail our addiction to debt.” Deficits are bad.

“ . . . Erskine Bowles suggests a healthy ratio of $3 dollars in spending cuts for every $1 in tax increases . . . it’s essential if we hope to foster lasting prosperity . . . “ Deficits now are awful. Mr. Bowles “scientific” suggestion equals $4 in spending cuts or $4 in tax increases, or anywhere in between. Guarantee: He has zero data to support his 3/1 ratio, but hey, who need facts?

“ . . . while sparing the taxpayers of tomorrow an unsupportable debt burden.” Deficits are bad.

And here is my favorite: “Coupled with spending discipline, revenue measures can be on leg of the journey back to fiscal sanity. But if they are the first and only leg, they will be a fatal detour.” Huh? They are saying spending cuts and tax increases are good, but first we should have spending increases and tax cuts!

All of the above is classic debt hawk double talk. Federal debt is a taxpayer “burden,” but necessary to grow the economy, but “unsupportable,” even though taxpayers don’t pay for federal debt, and the government has the unlimited ability to service its debt.

That kind of muddy thinking is what needlessly has extended this recession and the unemployment that goes with it. Ignorance may be bliss, but it sure is harmful. As the theme at the top of this post reads, “The debt hawks are to economics as the creationists are to biology.”

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–Four lessons about Congress and our economy

The debt hawks are to economics as the creationists are to biology.

What lessons does the following article provide?

7/31/10: (AP) “WASHINGTON (AP) – Tucked into the new health care law is a requirement that could become a paperwork nightmare for nearly 40 million businesses. They must file tax forms for every vendor that sells them more than $600 in goods.

“Business groups say it will swamp their members in paperwork. “This foolish policy hammers our business community when we should be supporting their job growth,” Sen. Mike Johanns of Nebraska said. The requirement would hit about 38 million businesses, charities and tax-exempt organizations, many of them small businesses already swamped by government paperwork . It would also create an avalanche of paperwork that could strain the IRS.

“Republicans want to repeal the filing requirement and pay for it by changing other parts of the new health care law. Democrats want to repeal the filing requirement and pay for it by raising taxes on international corporations and limiting taxpayers’ ability to use special trusts to avoid gifts taxes.”

Four lessons:

#1. Federal taxes represent the single most damaging factor in our economy – far more damaging than bankers’ greed or speculators’ law-breaking. Taxes not only remove massive amounts of money from our economy, but they waste millions of hours for preparation, and enforcement.

#2. Congress does not understand the fundamentals of government finance. Federal taxes do not pay for federal spending, and tax reductions do not need to be “paid for” by increases in other taxes.

#3. Taxing business, while simultaneously trying to stimulate employment, makes no sense. Every tax on business hurts the economy, while increasing unemployment.

#4. Senators and Representatives are far worse than the “greedy” businessmen Congress loves to criticize. Congress’s greed is both for money and for votes. Members of Congress have one concern, and it is not the best interests of America. It is re-election. In that sense, Congresspersons are the least patriotic people in America, often taking actions they know will hurt the country, merely to assure themselves of ongoing personal power. Each day, Congress does more damage to America than have Al Qaeda, the Taliban and oil spills combined.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–Return the Statue of Liberty

The debt hawks are to economics as the creationists are to biology.

Arizona patriots have spent, and apparently will continue to spend, enormous amounts of money, to track, arrest, try, jail and deport illegal immigrants. In addition, the ongoing legal costs to create and defend in court, the various anti-immigration laws, are substantial.

All this money is spent because of the perceived economic drain on legal taxpayers, for schools, medical facilities and other welfare and human services support programs, the belief illegal immigrants take jobs from American citizens and the belief illegal immigrants are responsible for illegal drugs in Arizona.

An Arizona law (mostly overturned) would have allowed police to demand proof of legal residence from those stopped or arrested, when there was “reasonable suspicion” that they are in the country illegally.

What constitutes “reasonable suspicion”? What factors, for instance in a traffic stop, would give a police officer “reasonable suspicion” that a person was an illegal alien? Skin color? Accent? Are white people exempt? And if the officers “reasonable suspicion” were wrong, would an innocent person be detained? Will every person in Arizona now be required to carry official citizenship papers or a birth certificate, (ala Nazi Germany) in case a police officer has a “reasonable suspicion about him/her?

Pro-immigrant groups say Arizona’s expensive efforts merely are a manifestation of bigotry, and are not supported by economic considerations. For instance, the words and actions of Sheriff Joe Arpaio from Maricopa County, Arizona do bear a strong resemblance to the words and actions of “Bull” Connor, the notorious bigot from Birmingham, Alabama, who claimed he merely enforced Alabama’s segregation laws.

With all the emotional shouting, facts are not being heard. Perhaps it all begins with a simple question: What is the real difference between an illegal immigrant and a legal immigrant? While much has changed recently, a REPORT completed for the year 2004 is instructive. Summarized, it indicates that on balance, illegal immigrants provide an overall economic benefit for Arizona.

While we’ve heard no outcry against legal immigrants, it’s may be possible illegal immigrants are even more beneficial. They are more likely to be of working age, more likely to work (they came here to earn money) and possibly less likely to commit crimes (for fear of deportation).

A chart on p. 58 of the above report says: “Fiscal costs of immigrants in 2004 were an estimated $1.4 billion. Tax revenues attributable to immigrants as workers were approximately $2.4 billion, resulting in a net fiscal gain of approximately $940 million.”

It is quite common, when a nation experiences difficult economic times, for the citizens of that nation to look for scapegoats and especially to develop xenophobia. I suspect that is what has happened in Arizona and in the several other states considering tough, anti-alien laws. It’s become so crazy, some Republicans want to deny citizenship to U.S.-born children of illegal immigrants!

Sadly, during times of stress, some “patriots” forget our heritage: “Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore; send these, the homeless, tempest-tost to me. I lift my lamp beside the golden door.“ Shall we return the Statue of Liberty?

Or better yet, perhaps we simply should stop making the path to citizenship so darn difficult.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–Max Baucus rides to rescue the Constitution

The debt hawks are to economics as the creationists are to biology.

Montana’s Senator Max Baucus introduced a Constitutional amendment in response to the recent Supreme Court ruling in Citizens United vs. Federal Elections Commission, which said that corporations and foreign governments can spend unlimited dollars calling for the election or defeat of a candidate. Baucus’s proposed amendment:

“Section 1. Congress shall have the power to regulate the contribution of funds by corporations and labor organizations to a candidate for election to, or for nomination for election to, a Federal office, and the power to regulate the expenditure of funds by corporations and labor organizations made in support of, or opposition to, such candidates.

“Section 2. A State shall have the power to regulate the contribution of funds by corporations and labor organizations to a candidate for election to, or for nomination for election to, public office in the State, and the power to regulate the expenditure of funds by corporations and labor organizations made in support of, or opposition to, such candidates.

“Section 3. Nothing contained in this Amendment shall be construed to allow Congress or a State to make any law abridging the freedom of the press.”

The First Amendment to the U.S. Constitution reads: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

To say the Baucus proposal is rushed, sloppily constructed and useless would be an understatement:

1. It is limited to corporations and labor organizations, but does not address all those organizations that are not incorporated, such as foreign governments, partnerships, etc.

2. “Power to regulate” is so broad-stroke as to have no limitations whatsoever, and so repeatedly would be in conflict with the First Amendment.

3. “. . . .abridging the freedom of the press” doesn’t include freedom of speech, which is what advertising, lobbying and political contributions are all about.

4. It covers “candidates,” but not issues. Those candidates, who have a defining position (i.e. “bring the troops home, tomorrow” or “no limit on gun ownership”), easily could be supported by mentioning the issue or the slogan, without mentioning the candidate’s name.

In short, it’s a typical “flag-burning” amendment, designed to demonstrate Baucus’s outrage and patriotism to his constituents, but with neither substance nor hope of passage.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity