Category Archives: Economics

Animal’s Daily Immigrant Welfare News

President Trump is on record as proposing a five-year moratorium on welfare benefits for new immigrants to the US.  Excerpt:

President Trump announced Wednesday night that he will soon ask Congress to pass legislation banning immigrants from accessing public assistance within five years of entering the U.S.

“The time has come for new immigration rules that say … those seeking immigration into our country must be able to support themselves financially and should not use welfare for a period of at least five years,” Trump told a campaign-style rally in Cedar Rapids, Iowa.

Trump’s proposal would build on the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which allows federal authorities to deport immigrants who become public dependents within five years of their arrival. Many of that law’s provisions were rolled back during the George W. Bush and Barack Obama administrations, but Trump’s proposal would make more categories of federal benefits off-limits to immigrants.

Here’s the thing on welfare and immigrants:  You can either have a welfare state, or you can have a liberal immigration policy.  You can’t have both.  Unfortunately, both is what we have right now, and while plenty of immigrants come to the U.S. seeking opportunity and work, plenty more come seeking Uncle Sam’s Gravy Train of Free Shit, and that just is not acceptable.

The linked story cites this study by the Center for Immigration Studies, maintaining that 51% of households headed by an immigrant receive some welfare benefits, as opposed to 30% of native households.  That number, if it can be verified, is revealing.  (I did a cursory search but have been unable to find said verification.)  If this is the case, then it seems 51% of immigrant families are on the aforementioned gravy train, at least to some extent.

We aren’t so desperate for more immigrants that we need to offer free handouts to all and sundry.

Animal’s Daily Air Traffic News

President Trump is proposing to privatize the nation’s air-traffic control system.  Not a bad idea.  Excerpt:

President Trump, in a speech Monday, promised to replace the current government-owned and operated air traffic control system with a private “self-financing, non-profit organization” relying on user fees, not taxes, to fund itself.

The idea is not new. Canada, the U.K. and Germany are among the roughly 50 countries that privatized air traffic control.

It has been a long-fought goal of libertarians like Bob Poole, senior transportation analyst for the Reason Foundation (the non-profit that publishes this website). Poole has argued since the 1970’s the “high-tech 24/7 service business” that is air traffic control “is a poor fit for a tax-funded bureaucracy housed within a safety regulatory agency.”

Poole proposed what Trump is now embracing, dumping the Federal Aviation Administration-run system with a non-profit air traffic control entity less bureaucratic, more cost-effective, and ultimately more responsive to consumer needs.

As a 2016 Office of the Inspector General (OIG) report found, the FAA has done a pretty terrible job managing and modernizing a system upon which some two million air travelers every day rely.

Despite repeated attempts by Congress to reform the FAA’s management, personnel, and organizational practices, its “costs continue to rise while operational productivity has declined,” the report concluded.

Canada thought this was a good idea, and it turns out they were right.  Here’s the solution.

The airlines are for this.  The pilot’s union is for it.  Canada did it with considerable success.  So did the UK.  Ditto Germany and France.  New Zealand did it in the 1980s, and as the linked Reason article points out, they saw their “...air traffic control system go from losing $5.5 million a year to turning a $2.3 million profit in just a year after privatization.”

There are no good reasons not to do this; we can modernize, we can increase efficiency, we can reduce cost.   Who could be against this?

Well, the loony old bat from Frisco, Nancy Pelosi, for one; she said privatization would “hand control of one of our nation’s most important public assets to special interests and the big airlines.”

For the political Left – and Pelosi is so far to the left, she needs inserts in her left shoe to stand straight – government is always the answer.  In this case the history of privatization speaks pretty eloquently.  Hopefully Congressional Republicans will grow a pair and push this through; let Queen Nancy howl.  Success speaks for itself.

Climate Hysteria

Today President Trump pulled the United States out of the Paris climate agreement, producing predictable howls of outrage from all quarters but most of all from the political Left and the leaders of other nations who will now be denied billions of dollars in income transfers from Uncle Sam.

Some respected scientists weighed in:

This was a bad deal, True Believers.  I’m not a climate change denier; the Earth’s climate has been changing for 4.55 billion years now, and through most of that time it’s been warmer than it is now.  I also don’t doubt that human activity has some effect, although it isn’t worth crippling the economy over.

This was just a bad deal.  The main feature was transferring billions of U.S. dollars to developing nations who were exempt from any requirement to reduce carbon emissions for decades.

The United States has already led the way in reducing carbon emissions.  As a nation, our carbon footprint is lower than it was in 1992.  We don’t need to give away billions of dollars from our already-broke Imperial government to keep moving ahead on this.

Also:  If this was such a great deal, as former President Obama would have us believe, why did he not present it to the Senate and have it ratified as a binding treaty?

Animal’s Broke Californey News

California is considering a single-payer health care plan.  All California residents, regardless of legal status, would be entitled to a free health care ride; no treatment denied, no deductibles, no nothing, no kidding.  Only catch:  It will cost more money than the Golden State has.  Excerpt:

California has been considering a single-payer healthcare plan. S.B. 562, the “Healthy California Act,” is currently in committee, and today the numbers came out on what it would cost to actually make this plan a reality.

Spoiler alert: it’s not pretty.

According to analysis of the bill, it would cost a cool $400 billion to provide for the healthcare of all California residents. S.B. 562 would cover residents in California regardless of their legal status. If the bill were enacted, healthcare would be entirely free and there would be no deductibles, co-pays, or premiums–entirely free care.

One tiny, insignificant detail: there’s no way the state can afford this. California would have to raise an additional $200 billion in tax revenue just to pay for the Healthy California Act, although there’s nothing in the bill that would create a tax that to actually raise the money to pay for the care. It was suggested that a 15 percent payroll tax would provide revenue for the bill.

Perhaps unsurprisingly, the cost is being labeled as the “biggest hurdle” to universal healthcare coming to California.

California is already circling the fiscal drain.  There’s an old saying:  “When you’re in a hole, the first thing you should do is stop digging.”  California seems determined to trade in the shovel for a big damn Armageddon-style drilling machine.

If the California GOP has any brains – and mind you this is an organization that has managed to utterly marginalize themselves in a state that went overwhelmingly for Ronald Reagan in 1984, and for George H. W. Bush in 1988 – (well, those seem recent to me, anyway) they’ll grab on to this bigly.  If this bill passes – and I wouldn’t be surprised if it does, the California Legislature doesn’t appear to have any grasp of fiscal reality – it’s only a matter of time before their new entitlement explodes.

That’s when the California GOP better damn well have a plan ready, something fiscally responsible to pitch to the voters, something that will save the Golden State from fiscal ruin.

You know – something like the House GOP in the Imperial City were busy preparing in the seven years since Obamacare passed.  Remember that plan?  The one they had seven years to prepare?

You know, True Believers, I think we may be fucked.

Rule Five Labour Lunacy Friday

Jeremy Corbyn, the leader of the UK’s left-wing Labour Party, has just released a bat-guano nutty manifesto that, if enacted, would take the United Kingdom straight back to the lackluster Seventies.  Excerpt:

Jeremy Corbyn will take Britain back to the 1970s by nationalising industries, forcing wage caps on businesses and giving huge power to the unions if he gets into power, a leaked copy of Labour’s draft manifesto reveals.

The 43-page document, obtained by the Daily Telegraph, shows that Mr Corbyn plans to nationalise energy, rail and mail and will introduce a 20:1 pay cap for businesses. 

The manifesto says Mr Corbyn is committed to achieving a “nuclear free world” and is “extremely cautious” about using Britain’s nuclear deterrent.

The Labour leader will only send the armed forces into combat if “all other options have been exhausted”, the copy of the manifesto states.

It also says that Labour will rule out a “no deal” Brexit and refuse to set a migration target, in a move that is likely to drive away its traditional supporters who voted Leave in the EU referendum.

The party will also create a Ministry of Labour to hand more power to trade unions, stating: “We are stronger when we stand together”.

Pay bargaining and increased unionisation across the workforce will also be introduced according to the draft plan.

The party will fund its socialist agenda though a huge programme of increased tax and £250billion of borrowing over the next decade with more spending on education and health and big levies on business and industry.

Here are some of the crazier aspects of his tax plan:

  • Income tax hikes for those earning more than £80,000 a year
  • Ensuring 60 per cent of the UK’s energy comes from renewable sources by 2030
  • Fines for businesses that pay their staff high wages and a business levy on profits
  • Companies with government contracts would only be allowed to pay their highest earner 20 times more than the lowest

These far-left policies (and let’s describe them in a whisper, lest the cabal of nutbars running California overhear us and think these proposals are a good idea) would send the productive and a whopping big chunk of Britain’s successful businesses (read that: employers) running for the hills, or for Ireland, or wherever the grass is greener and the politicians less greedy.

Fortunately for Britain, it looks like the Tories have a pretty good grip on Parliament for the moment.  But read these looney-tunes policies and remember them, True Believers, because we have plenty of our own nutty pols who would love to make these things the law of the land here.

Animal’s Daily Unfunded Liabilities News

Out on a limb.

Puerto Rico, America’s own little Caribbean paradise, is broke.  But plenty of the fifty states aren’t far behind.  Excerpt:

The study by Hoover Institution Senior Fellow Joshua Rauh, “Hidden Debt, Hidden Deficits,” is an update of a report issued last year. It should sound an alarm across the U.S. about the growing crisis of underfunded pensions at the state and local level. Instead, sadly, it will likely be ignored.

To put it bluntly, America’s pension systems are being mismanaged, which is hitting state and local budgets hard.

The Hoover study looked at 649 pension systems as of 2015. What it found was alarming. The average investment return for pensions was 2.87% for the year, while the discount rate — essentially, the expected investment return — was 7.36%. That means returns are 61% below expectations, a dismal performance to say the least.

This means that pension systems across the U.S. will have to do one of two things: Find more money to fund the expected payouts, or slash pension spending on future retirees — or some combination of the two. None of the choices is appealing.

Meanwhile these pension gaps pose a major threat to state and local fiscal health.

“While state and local governments across the U.S. largely claimed they ran balanced budgets, in fact, they ran deficits though their pension systems of $167 billion,” Rauh noted. “This deficit equals 18.2% of all state and local government tax revenue. … The deficits are large and the study reveals the fact that state and local government budgets are far from balanced when one considers pension promises.”

Here is the real money (hah!) quote, from this report:

State public pension plans are now underfunded by nearly $5.6 trillion – an increase of almost $900 billion from State Budget Solutions’ (SBS) last comprehensive report in 2014. When state pension funds are examined through the lens of a more realistic valuation, pension funding gaps are revealed to be much larger than reported in official state financial documents. This report totals state-administered plans’ assets and liabilities and finds nationwide total unfunded liabilities to be $5.59 trillion. The nationwide funding level is a mere 35 percent, which is one percentage point lower than two years ago. Combined across all states, the price tag for unfunded pension liabilities is now $17,427 for every man, woman and child in the United States.

Now, keep this in mind:  These pensions are paid with taxpayer dollars, paid to government employees who enjoy defined-benefit pensions and retained benefits far, far in excess of what almost anyone in the in the private sector can hope for today.

 We are in a situation in this country where the ever-decreasing percentage of the productive are paying for ever-increasing coin and benefits for the unproductive.  Granted, the government has to employ a certain number of people – but is there any reason that city, state and Imperial employees should enjoy such generous benefits when their employers make do with 401ks?

There is a principle in economics called Stein’s Law, postulated by economist Herb Stein:  “If something cannot go on forever, it will stop.”  The current state of government employee pensions can’t go on forever.  It will stop.

Question is, how far in debt will it drag us before it does?

Goodbye, Blue Monday

Goodbye, Blue Monday!

Thanks as always to Pirate’s Cove and The Other McCain for the Rule Five links!

Sacramento public housing authorities have joined the ranks of the aggressively stupid.  Excerpt:

Residents at three public housing areas now have a mini-fleet of free Zipcars to make their way around Sacramento.

On Friday, Sacramento launched a pilot program that put eight shared electric Kia Souls at public housing sites. Up to 300 residents can apply for on-demand access to the vehicles, with no charge for maintenance, insurance or juicing up the battery.

The program is funded through a $1.3 million grant from the California Air Resources Board using cap-and-trade funds that businesses pay to offset their carbon emissions.

Local leaders said it will provide green transportation options to disadvantaged areas where even simple tasks like getting groceries can be a challenge.

“Not having a car … it can be a real strain to get places safely,” said Thomas Hall, spokesman for the Sacramento Metropolitan Air Quality Management District, which is running the program in partnership with car-share company Zipcar and other governmental agencies.

The cars are owned and maintained by Boston-based Zipcar, which has car-sharing operations in dozens of cities and on college campuses. Two cars are located at each of four sites: Alder Grove Housing Complex off Broadway, Edgewater apartments downtown, Mutual Housing at Lemon Hill in south Sacramento and the Sacramento Valley Station.

The cars at the train station can be used by any residents of the three complexes once they sign up for the program.

Zipcar already has more than 50 cars in Sacramento for general use, according to its website. Zipcar also has vehicles at Sacramento State and UC Davis.

There are about 2,000 people living in the Zipcar public housing sites, but Hall said the agency does not expect to run out of memberships. He said access to the cars is limited for now to people living at the selected sites, but he hopes the program can expand.

Prediction:  Within two years these cars will be abused and befouled to the point of worthlessness.  Five will get you ten that at least one of them will be used in the commission of some felony or other.

This is government paternalism run amok, in a state that is circling the fiscal drain.  Why is it the responsibility of taxpayers to provide ‘green’ PC automobiles for the use of people in the projects?

There can be little doubt that there will also be some honest, decent folk who will benefit from this, of course.  But these benefits for the few people won’t help the state of California when they hit the inevitable fiscal wall – following which they will have to make a whole bunch of hard choices about what benefits they take away from who, when.

But here’s the real money (ha!) quote:  He said access to the cars is limited for now to people living at the selected sites, but he hopes the program can expand.

Expand?  Excuse me, but expand?  To whom?  When?  More to the point, why?  At what point does the endless outpouring of government largess fail the stupid test?

Animal’s Daily Imperial Spending Spree News

Thanks to our blogger pal Doug Hagin over at The Daley Gator and to Watcher of Weasels for the pingbacks!

I’ll preface this by stating that I haven’t much cared for Brietbart of late; since Andrew Brietbart’s untimely death the site has gone downhill some.  But the other day Rand Paul had an exclusive article there that’s worth reading:  Real Men Cut Taxes.  Excerpt:

Once upon a time, most Republicans believed in tax cuts. Somewhere along the way, inside the beltway especially, Republicans forgot about the benefits of cutting taxes. Republicans became more concerned with government keeping “its” revenue than letting the people keep their money.

Too many Republican have become timid about tax cuts, often spouting the milquetoast line of “revenue neutral tax cuts.”

Let me translate that little bit of Washington-speak for you. “Revenue neutral” tax cuts aren’t really tax cuts. It’s more like tax shifting. Some will pay more. Some will pay less. And the net effect will be that government will collect the same amount of taxes.

If revenue neutral tax shifting is what Republicans stand for, maybe it’s time we re-evaluated what we really stand for.

What will “revenue neutral” tax cut mean to your business? Well, that may depend on how expensive your lobbyist is. Which side of the “revenue-neutral” ledger you wind up on may depend on how well the skids are greased, hardly, a pleasant scenario to anticipate.

I like Rand Paul.  And he’s right about tax cuts; taxation in our country, especially at the Imperial level, are far, far higher than the taxes that drove our nation’s founders to fight a bloody revolution.

But there’s another part of the economic equation that Senator Paul doesn’t mention:

Cut.  Spending.

We won’t solve the nation’s overwhelming debt problem until we cut spending.  The budget is ripe with candidates for the axe.  The Imperial government spends billions on all manner of horseshit, and we could sure as hell cut a lot of that out.

As far as I’m aware, nobody – not one representative or Senator of either party – is talking seriously about cutting spending.  President Trump is making some moves in the right direction, but so far the Congress isn’t cooperating.

The Imperial colossus just keeps growing. We live in interesting times, True Believers.

Animal’s Daily Tax Cuts For The Rich News

Dr. Thomas Sowell persists in proving himself a national treasure in this dissection of the leftie talking point of “Tax cuts for the rich.”  Excerpt:

One of the painful realities of our times is how long a political lie can survive, even after having been disproved years ago, or even generations ago.

A classic example is the phrase “tax cuts for the rich,” which is loudly proclaimed by opponents, whenever there is a proposal to reduce tax rates. The current proposal to reduce federal tax rates has revived this phrase, which was disproved by facts, as far back as the 1920s — and by now should be called “tax lies for the gullible.”

How is the claim of “tax cuts for the rich” false? Let me count the ways. More important, you can easily check out the facts for yourself with a simple visit to your local public library or, for those more computer-minded, on the Internet.

One of the key arguments of those who oppose what they call “tax cuts for the rich” is that the Reagan administration tax cuts led to huge federal government deficits, contrary to “supply side economics” which said that lower tax rates would lead to higher tax revenues.

This reduces the whole issue to a question about facts — and the hard facts are available in many places, including a local public library or on the Internet.

The hardest of these hard facts is that the revenues collected from federal income taxes during every year of the Reagan administration were higher than the revenues collected from federal income taxes during any year of any previous administration.

How can that be? Because tax RATES and tax REVENUES are two different things. Tax rates and tax revenues can move in either the same direction or in opposite directions, depending on how the economy responds.

Dr. Sowell points out the difference between tax rates and tax revenues, but it’s important as well to point out two things that the political Left wither doesn’t understand or doesn’t admit about tax reform:  1) the economy is not a zero-sum game, and 2) incentives matter.  Let’s look at them in turn:

  1. It’s common enough for folks who don’t understand economics (which, to be honest, is most people) to assume that if one person makes a million bucks, that someone else somehow makes less.  That’s the purest of corral litter; Bill Gates, for example, has bade billions from Microsoft; nobody was deprived.  In any real economic transaction, the exchange is voluntary and both parties realize a gain in value; everybody wins, nobody loses.
  2. It’s also common enough for folks who don’t understand economics to fail to understand what the wealthy do with their excess capital.  They (with, I suppose, a few rare exceptions) don’t hide it in huge Scrooge McDuckian vaults, and you can only spend so much on houses and yachts.  Most capital is invested; it is used to develop new products, to start new businesses and expand existing ones; it goes into the capital markets, and again, everybody gains, especially the millions of people whose retirement funds are invested in those markets.

Dr. Sowell concludes:  As a source more congenial to some, a front-page story in the New York Times on July 9, 2006 — during the Bush 43 administration — reported, “An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.” Expectations, of course, are in the eye of the beholder.

And the economically illiterate expect that you can only make money by taking it from someone involuntarily, and that incentives don’t matter.  They’re wrong.

I recommend Dr. Sowell’s book Basic Economics:  A Common Sense Guide to the EconomyIt’s probably the best guide on basic economics available.

Animal’s Daily Canada Trade War News, Eh

A reliable Canadian news broadcast.

President Trump may be starting a trade war with one of our neighbors – over trees.  Excerpt:

Speaking during a first of its kind meeting dedicated only to members of the U.S. conservative media, including Breitbart News, OANN and Daily Caller, President Trump told reporters to expect a 20% tariff on softwood lumber coming into Canada.

“We’re going to be putting a 20 per cent tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada,”  tweeted Charlie Spiering of Breitbart Media.

Trey Yingst of OANN tweeted that according to Trump “Canada has treated us very unfairly” and also threatened a tax on Canada’s dairy industry.

According to the WSJ, Wilbur Ross said the tariff will be applied retroactively and imposed on Canadian exports to the U.S. of about $5 billion a year. He said the dispute centers on Canadian provinces that have been allegedly allowing loggers to cut down trees at reduced rates and sell them at low prices. “The determination that Canada improperly subsidizes its exports is preliminary, and the Commerce Department will need to make a final decision. In addition, the U.S. International Trade Commission will need to find that the U.S. industry has suffered injury. But even a preliminary decision has immediate real-world consequences, by discouraging importers from buying lumber from Canada.”

I’m not sure this is such a good idea.

Whenever you restrict the supply of a commodity, whether by regulation, tariff or any other method – you raise the price of that commodity.  Now, think of one thing, one product, that almost everyone needs, and think of what they are largely made of.

The answer to that:  Houses, and wood.

Raising the price of wood will raise the price of housing.  Real estate prices have always been up and down, but lately, across most the U.S., they have been up.  That’s great if you already own a home; the added equity is money in your pocket.  But if you’re a young couple starting out, it puts that first starter home a little farther out of reach.

It’s too bad we can’t deal with purveyors of bad economic policy by simply casting them adrift.