Reaganomics Vs. Obamanomics: Facts And Figures

Peter Ferrara

In February 2009 I wrote an article for The Wall Street Journal entitled “Reaganomics v Obamanomics,” which argued that the emerging outlines of President Obama’s economic policies were following in close detail exactly the opposite of President Reagan’s economic policies.  As a result, I predicted that Obamanomics would have the opposite results of Reaganomics.  That prediction seems to be on track.

When President Reagan entered office in 1981, he faced actually much worse economic problems than President Obama faced in 2009.  Three worsening recessions starting in 1969 were about to culminate in the worst of all in 1981-1982, with unemployment soaring into double digits at a peak of 10.8%.  At the same time America suffered roaring double-digit inflation, with the CPI registering at 11.3% in 1979 and 13.5% in 1980 (25% in two years).  The Washington establishment at the time argued that this inflation was now endemic to the American economy, and could not be stopped, at least not without a calamitous economic collapse.

All of the above was accompanied by double -igit interest rates, with the prime rate peaking at 21.5% in 1980.  The poverty rate started increasing in 1978, eventually climbing by an astounding 33%, from 11.4% to 15.2%.  A fall in real median family income that began in 1978 snowballed to a decline of almost 10% by 1982.  In addition, from 1968 to 1982, the Dow Jones industrial average lost 70% of its real value, reflecting an overall collapse of stocks.

President Reagan campaigned on an explicitly articulated, four-point economic program to reverse this slow motion collapse of the American economy:

1.  Cut tax rates to restore incentives for economic growth, which was implemented first with a reduction in the top income tax rate of 70% down to 50%, and then a 25% across-the-board reduction in income tax rates for everyone.  The 1986 tax reform then reduced tax rates further, leaving just two rates, 28% and 15%.

2.  Spending reductions, including a $31 billion cut in spending in 1981, close to 5% of the federal budget then, or the equivalent of about $175 billion in spending cuts for the year today.  In constant dollars, nondefense discretionary spending declined by 14.4% from 1981 to 1982, and by 16.8% from 1981 to 1983.  Moreover, in constant dollars, this nondefense discretionary spending never returned to its 1981 level for the rest of Reagan’s two terms!  Even with the Reagan defense buildup, which won the Cold War without firing a shot, total federal spending declined from a high of 23.5% of GDP in 1983 to 21.3% in 1988 and 21.2% in 1989.  That’s a real reduction in the size of government relative to the economy of 10%.

3.  Anti-inflation monetary policy restraining money supply growth compared to demand, to maintain a stronger, more stable dollar value.

4.  Deregulation, which saved consumers an estimated $100 billion per year in lower prices.  Reagan’s first executive order, in fact, eliminated price controls on oil and natural gas.  Production soared, and aided by a strong dollar the price of oil declined by more than 50%.

These economic policies amounted to the most successful economic experiment in world history.  The Reagan recovery started in official records in November 1982, and lasted 92 months without a recession until July 1990, when the tax increases of the 1990 budget deal killed it.  This set a new record for the longest peacetime expansion ever, the previous high in peacetime being 58 months.

During this seven-year recovery, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third-largest in the world at the time, to the U.S. economy.  In 1984 alone real economic growth boomed by 6.8%, the highest in 50 years.  Nearly 20 million new jobs were created during the recovery, increasing U.S. civilian employment by almost 20%.  Unemployment fell to 5.3% by 1989.

The shocking rise in inflation during the Nixon and Carter years was reversed.  Astoundingly, inflation from 1980 was reduced by more than half by 1982, to 6.2%.  It was cut in half again for 1983, to 3.2%, never to be heard from again until recently.  The contractionary, tight-money policies needed to kill this inflation inexorably created the steep recession of 1981 to 1982, which is why Reagan did not suffer politically catastrophic blame for that recession.

Real per-capita disposable income increased by 18% from 1982 to 1989, meaning the American standard of living increased by almost 20% in just seven years.  The poverty rate declined every year from 1984 to 1989, dropping by one-sixth from its peak.  The stock market more than tripled in value from 1980 to 1990, a larger increase than in any previous decade.

In The End of Prosperity, supply side guru Art Laffer and Wall Street Journal chief financial writer Steve Moore point out that this Reagan recovery grew into a 25-year boom, with just slight interruptions by shallow, short recessions in 1990 and 2001.  They wrote:

We call this period, 1982-2007, the twenty-five year boom–the greatest period of wealth creation in the history of the planet.  In 1980, the net worth–assets minus liabilities–of all U.S. households and business … was $25 trillion in today’s dollars.  By 2007, … net worth was just shy of $57 trillion.  Adjusting for inflation, more wealth was created in America in the twenty-five year boom than in the previous two hundred years.

What is so striking about Obamanomics is how it so doggedly pursues the opposite of every one of these planks of Reaganomics.  Instead of reducing tax rates, President Obama is committed to raising the top tax rates of virtually every major federal tax.  As already enacted into current law, in 2013 the top two income tax rates will rise by nearly 20%, counting as well Obama’s proposed deduction phase-outs.

The capital gains tax rate will soar by nearly 60%, counting the new Obamacare taxes going into effect that year.  The total tax rate on corporate dividends would increase by nearly three times.  The Medicare payroll tax would increase by 62% for the nation’s job creators and investors.  The death tax rate would go back up to 55%.  In his 2012 budget and his recent national budget speech, President Obama proposes still more tax increases.

Instead of coming into office with spending cuts, President Obama’s first act was a nearly $1 trillion stimulus bill.  In his first two years in office he has already increased federal spending by 28%, and his 2012 budget proposes to increase federal spending by another 57% by 2021.

His monetary policy is just the opposite as well.  Instead of restraining the money supply to match money demand for a stable dollar, slaying an historic inflation, we have QE1 and QE2 and a steadily collapsing dollar, arguably creating a historic reflation.

And instead of deregulation we have across-the-board re-regulation, from health care to finance to energy, and elsewhere.  While Reagan used to say that his energy policy was to “unleash the private sector,” Obama’s energy policy can be described as precisely to leash the private sector in service to Obama’s central planning “green energy” dictates.

As a result, while the Reagan recovery averaged 7.1% economic growth over the first seven quarters, the Obama recovery has produced less than half that at 2.8%, with the last quarter at a dismal 1.8%.  After seven quarters of the Reagan recovery, unemployment had fallen 3.3 percentage points from its peak to 7.5%, with only 18% unemployed long-term for 27 weeks or more.  After seven quarters of the Obama recovery, unemployment has fallen only 1.3 percentage points from its peak, with a postwar record 45% long-term unemployed.

Previously the average recession since World War II lasted 10 months, with the longest at 16 months.  Yet today, 40 months after the last recession started, unemployment is still 8.8%, with America suffering the longest period of unemployment that high since the Great Depression.  Based on the historic precedents America should be enjoying the second year of a roaring economic recovery by now, especially since, historically, the worse the downturn, the stronger the recovery.  Yet while in the Reagan recovery the economy soared past the previous GDP peak after six months, in the Obama recovery that didn’t happen for three years.  Last year the Census Bureau reported that the total number of Americans in poverty was the highest in the 51 years that Census has been recording the data.

Moreover, the Reagan recovery was achieved while taming a historic inflation, for a period that continued for more than 25 years.  By contrast, the less-than-half-hearted Obama recovery seems to be recreating inflation, with the latest Producer Price Index data showing double-digit inflation again, and the latest CPI growing already half as much.

These are the reasons why economist John Lott has rightly said, “For the last couple of years, President Obama keeps claiming that the recession was the worst economy since the Great Depression.  But this is not correct.  This is the worst “recovery” since the Great Depression.”

However, the Reagan Recovery took off once the tax rate cuts were fully phased in.  Similarly, the full results of Obamanomics won’t be in until his historic, comprehensive tax rate increases of 2013 become effective.  While the Reagan Recovery kicked off a historic 25-year economic boom, will the opposite policies of Obamanomics, once fully phased in, kick off 25 years of economic stagnation, unless reversed?

Peter Ferrara is director of policy for the Carleson Center for Public Policy and senior fellow for entitlement and budget policy at the Heartland Institute.  He served in the White House Office of Policy Development under President Reagan, and as associate deputy attorney general of the United States under President George H. W. Bush.  He is the author of America’s Ticking Bankruptcy Bomb, forthcoming from HarperCollins.

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http://www.forbes.com/sites/peterferrara/2011/05/05/reaganomics-vs-obamanomics-facts-and-figures/

Give a Man a Fish…

By: Bryan Baumgart  

11/2/2012

With the release of the latest jobs report we learn that for every ONE job created under the Obama administration, 75 more people have been added to food stamp rolls. 

In total since January of 2009, a net of 194,000 new jobs have been created while 14.7 million people have joined the food stamp rolls. As The Weekly Standard points out today, “During that time, our nation’s debt has risen $5.63 trillion. Total spending on food stamps is now more than $80 billion annually. Total welfare spending is now approximately $1 trillion, or enough to send every household beneath the federal poverty line an annual check for $60,000.”

Some may not be surprised by this trend; we are after all in the grips of a pretty stagnant economy. The problem however, isn’t the ever increasing number of Americans added to the rolls of food stamps. The problem is that the current administration has put in a much greater effort to increase food stamp rolls than to increase job creation. They have promoted dependence rather than empowerment.

President Obama claims, “We do not pressure any eligible person to accept benefits, nor is our goal to simply increase the number of program participants.” You can imagine how surprised I was then, when I was approached by a friend recently who mentioned that they were currently receiving SNAP themselves. They stated that while applying for college at Education Quest, counselors approached them and suggested they apply for SNAP.  The process was easy enough. They applied, had an interview, and began receiving food stamps immediately. Counselors even coached them on how to be accepted into the program stating, “It helps if you are a full time student working at least 20 hours a week.”

Despite the president’s claims, the focus of the Obama administration remains on increasing enrollment in SNAP. The administration has partnered with Mexico, meeting with Mexican officials over 30 times in an effort to boost participation among immigrants.

The USDA boasts a range of strategies and programs designed to bring more people to SNAP, including taking on “pride.” Awards are provided to local assistance offices for “counteracting” pride and pushing more people to sign up for benefits. A “Common SNAP Myths” sheet details the importance of reaching people who do not think they qualify or have beliefs that conflict with accepting food stamps. A pamphlet currently posted at the USDA website encourages local SNAP offices to throw parties as one way to get potentially eligible seniors to enroll in the program. Despite the high rate of food stamp participation, the USDA has numerous blueprints posted on their website aimed at getting more people to enroll. The USDA even goes so far as to argue that the program is “the most direct stimulus you can get.”

Only 194,000 net jobs have been created under the Obama administration. This pace doesn’t even keep up with the population increase. So few jobs have been created that the employment rate actually decreased due to an increasing number of working age adults have given up even looking for jobs. The real unemployment number (U-6) currently hovers around 14.6 percent.

While on the campaign trail, the president’s slogan has been to, “ask a little more from the wealthy”.  He doesn’t plan to ask though, he plans to take. Allowing the Bush era tax cuts to expire equates to a tax increase on job creators. In the words of Senator Marco Rubio, “I have never met a business owner waiting for the next big tax increase before he will create some jobs.”  Under the president’s current proposals, job creation in the private sector isn’t likely to pick up anytime soon. If these trends continue, we won’t have enough employed Americans to fund SNAP for the needy. If the trends aren’t reversed, America will soon go the way of our European neighbors.

A Lesson from Greece

by: Bryan Baumgart

November 7, 2012 

In late 2009, Greece had found itself removed from a long period of unprecedented economic prosperity and cast into the throes of a severe economic collapse. The Greek Ministry of Finance, in a 2010 report “Stability and Growth Program” highlighted FIVE main causes of the economic collapse.

1.   GDP plunged due to lack of competition in the private sector.

(Gross Domestic Product is the total value of all goods and services produced over a specific time period, usually calculated by adding the total income or the total amount spent by a nation).

2.   Budget Deficits skyrocketed when spending over a six year period (from 2004 to 2009) dramatically outpaced income, mostly to finance public sector jobs, pensions, and other social benefits.

3.   Government Debt Levels reached unsustainable sizes. Debt levels rose so dramatically that in April 2010, rating agencies downgraded the Greek economy to “junk status”, which caused the private capital market to freeze and bailout loans (from IMF) were required to avoid default.

4.   Budget Compliance was nonexistent.

5.   Statistical Credibility was compromised. To keep within monetary guidelines, the government misreported official economic statistics, even paying Goldman Sachs and other banks for helping them hide the actual level of borrowing. Flawed statistics made it impossible to predict accurate GDP growth, budget deficits, and public debt which turned out to be far worse than anticipated. Trust among financial investors was lost.

In May of 2010, Greece avoided default when the IMF (International Monetary Fund) agreed to a bailout of $163 billion dollars (110 billion euros). The conditions of the bailout required Greece to comply with:

1.      Implementing austerity measures (cutting spending on benefits and public services/welfare).

2.      Privatizing government assets worth $68 billion dollars (50 billion euros) by 2015.

3.      Implementing outlined structural reforms aimed at improving market competitiveness and growth (moving the public sector back to the private sector).

Greece failed to comply quickly enough and another bailout of $171 billion dollars (130 billion euros) was required and offered in February of 2012, with a requirement of even further austerity measures (more cuts to benefits and public services/welfare), a rise in taxes, and even more privatization reform.

The tax increases resulted in record numbers of Greek businesses going bankrupt. In 2011, Greece lost a total of 111,000 businesses (up 27% from 2010). The unemployment rate jumped from 7.5% in 2008 to over 25% in July of 2012. During that same period, the youth unemployment rate skyrocketed from 22% to 55%.

As Jon Henley stated in a March 2012 issue of The Guardian:

“In an economy without a welfare regime to speak of, the impact of five consecutive years of recession has taken its toll. Charitable foundations that used to fund educational programs have taken a big hit themselves and have now shifted to paying for soup kitchens. Neighborhoods are marked by buildings that owners are desperate to sell or rent and a major increase in the homeless sleeping rough. Almost half of Greece's young people are unemployed, as are one in five of their older peers. Despondency is everywhere, despite the "rescue". If future Greek governments keep to the terms of the bailout, by 2020 public debt will be back to what is was when the crisis erupted in 2009.”

But the leftist government of Greece refuses to face reality.  They have promised to hire at least 100,000 more people in the public sector, to restore all the budget cuts made over the past two years, and to offer free health care and social services to all illegal immigrants. To date, no real reforms have occurred in Greece. Not a single privatization has taken place. There have been no important changes in the labor market and no simplification of the tax system. Instead, the government has put nearly all of its energy into squeezing more taxes out of the overregulated private sector. The economy is in its fifth year of contraction, half of all young people are unemployed, the suicide rate is going up by double digits every year, and hundreds of thousands of people working in the private sector have not been paid for months.

Greece snubbed a policy of wealth creation for a policy of borrowing and subsidies. They have now reached such high levels of debt and government dependency that a realistic solution to their economic crisis is impossible.  Riots and violence rage every time necessary spending cuts are made, because the citizens of Greece are now completely dependent on social assistance. The UN warned that Greece may be charged with human rights violations if necessary cuts are made as citizens could be left without food, water or shelter. The only solution is temporary; borrow while you can because it’s only a matter of time before it all comes crashing down! Then human rights go out the window and chaos ensues!

 

How does the United States compare to our European neighbors? Much like Greece, we found ourselves plunging from prosperity into an economic crisis in 2008, brought on by manipulation of economic statistics by the government backed mortgage giants Fannie Mae and Freddie Mac and the removal of market competition allowing Fannie and Freddie to issue high risk loans without fear of failure.

Since our plunge into recession we have acted much in the same manner as Greece, repeatedly bailing out private companies branded “too big to fail” with tax dollars, and removing competition by nationalizing private industries from banking and mortgage to school loans and healthcare.  

Over the past four years the United States has dramatically increased government dependency, setting records for disability and food stamp rolls. Under the Obama administration, just short of 15 million people have been added to food stamp rolls while total welfare spending has already exceeded $1 trillion dollars annually.

The country’s debt has increased by $5.63 trillion dollars leaving us over $16 trillion dollars in debt.  For every $1 dollar added to the economy, this administration has added $3 dollars in debt. We have carried an annual deficit over $1 trillion dollars each of the four years Obama has been in office. Like Greece, much of the deficit has stemmed from entitlements and outrageous pensions and benefits packages cut over crony deals between elected officials and union leadership. Our debt has become such a liability that in September the United States joined Greece in having its credit rating downgraded.

Much like Greece, we have not complied with a budget. In fact, this administration has not even passed a budget since President Obama took office. Our country’s sluggish GDP figures (well below the 3.5% annual growth indicating an improving economy) indicate the poor jobs situation won’t improve anytime soon. So many people have given up hope looking for jobs the BLO actually dropped the unemployment rate down to 7.9%. The actual number of Americans whom now are without jobs totals almost 27 million for a REAL unemployment rate of 14.6%. The actual youth unemployment rate pushes 17%. Yet, for every ONE job created, 75 Americans have been placed on food stamp rolls.

The President’s signature achievement, Obamacare, hasn’t even kicked in yet and employers have begun involuntarily dropping employees down to part time to avoid the fines they would face under the law; potentially leaving up to 5.9 million Americans without benefits. Not that medical coverage would do Americans any good, as Bloomberg points out, the United States is looking at a doctor shortage exceeding 15, 230 primary care physicians alone under the new healthcare law.

Much like in Greece, austerity efforts to curb spending in the United States were met with strikes and resistance. Inflation is up, food and gas prices are way up, tuition and insurance preimiums continue to skyrocket, and household income continues to plunge.

Yesterday, voters turned down Governor Romney’s policies to create wealth in favor of continuing President Obama’s policies of increases in taxation, entitlement spending, and borrowing. As we approach the fiscal cliff early next year, our government faces the same predicament Greece did. Experts widely agree, if the tax hikes and cuts to public spending are allowed to kick in, the country will likely fall in to a much deeper recession.  Like Greece, the United States has reached the point of no return, and there is no indication that we will choose a different strategy.

*Where does Greece stand today?

Headlines from USA Today (November 6, 2012): “Strike Hits Greece in Bid to Derail Austerity Plan”

Tuition Subsidies Causing Tuition Hikes!!!

Posted by Jason Bedrick - Oct. 24, 2012

 

In 2008, then-Senator Barack Obama pledged to make college more affordable. President Obama kept his promises to increase grants and expand loan forgiveness, but the cost of attending college continues to rise. As the College Board Advocacy & Policy Center reports today, tuition at public universities rose 4.8% this year. While tuition didn’t grow as fast as in previous years, tuition continues to rise faster than inflation and growth in family income. And, as we know, student debt is exploding. Graduates of the class of 2011 carry an average of $26,600 in student loan debt, up 5% from the class of 2010.  Nationwide debt from student loans exceeded $1 trillion this year,  surpassing all other forms of debt that Americans carry, including credit card debt and auto loans.

The Obama administration’s plan to make college more affordable has involved a massive increase in taxpayer subsidies to students. Even after adjusting for inflation, federal subsidies to higher education have more than doubled in the last decade to over $49 billion in 2011-12. The largest increase occurred in 2009-10 when the federal government’s share of tuition aid dramatically increased from 33% to 44%, with federal spending growing 167% from $26 billion to $44 billion.

Four-year degrees are increasingly expensive but the payoffs are not guaranteed. To pay off the student-loan debt and earn a decent return on investment for the time and money spent on college, graduates expect access to more and better-paying jobs. Increasingly, this hope is in vain. The New York Times reported last year that 22.4% of college graduates under age 25 were unemployed. An additional 22% were working in jobs that did not even require a college degree where their average annual income was under $16,000. Those fortunate enough to find jobs have discovered starting salaries down 10% on average from $30,000 in 2007-2008 to $27,000 in 2009-2010. Moreover, some studies have shown that four-year college students who rank near the bottom of their class earn about the same as those graduating near the top of two-year community colleges, further calling into question the universal value of a bachelor’s degree. It is no wonder then that Pew Research finds that 57% of Americans no longer believe that college is worth the money.

So is more money the answer? Actually, it is a part of the problem since colleges raise tuition in response to increased tuition aid. As my colleague Neal McCluskey explained in his testimony before Congress:

 According to data from the College Board, between the 1981-82 and 2010-11 school years, inflation-adjusted aid per full-time equivalent student — the bulk of which came through the federal government — rose from $4,418 to $13,914, a 215 percent increase. Meanwhile, real tuition and fee costs at four-year colleges grew roughly apace. At four-year public institutions prices expanded from $2,242 in 1981-82 to $8,244 in 2011-12, a 268 percent ballooning. At four-year, nonprofit private institutions prices rose from $10,144 to $28,500, a 181 percent leap.

It is, of course, difficult to conclude definitively from simple aid and price comparisons that aid fuels price increases. But a growing body of research controlling for variables outside of aid supports the hypothesis that aid has an appreciable inflationary effect, though study results vary by type of aid and institution.

It should come as no surprise that subsidies raise prices. Fortunately, there are now a growing number of innovative alternatives to traditional four-year colleges that have the potential to dramatically reduce costs while providing a quality education. Instead of subsidizing the expensive, inefficient and too-often ineffective status quo, government should just get out of the way.

http://www.cato-at-liberty.org/mr-president-tuition-subsidies-are-the-affordability-problem-not-the-solution/ 

Even a 100% Tax on Income Over $250K Wouldn't Touch the Deficit

This year, Congress will spend $3.7 trillion dollars. That turns out to be about $10 billion per day. Can we prey upon the rich to cough up the money?

According to IRS statistics, roughly 2 percent of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It's not even yacht and Learjet money. All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income.

If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there's a problem because there are 224 more days left in the year.

How about corporate profits to fill the gap? Fortune 500 companies earn nearly $400 billion in profits. Since leftists think profits are little less than theft and greed, Congress might confiscate these ill-gotten gains so that they can be returned to their rightful owners. Taking corporate profits would keep the government running for another 40 days, but that along with confiscating all income above $250,000 would only get us to the end of June. Congress must search elsewhere.

According to Forbes 400, America has 400 billionaires with a combined net worth of $1.3 trillion. Congress could confiscate their stocks and bonds, and force them to sell their businesses, yachts, airplanes, mansions and jewelry. The problem is that after fleecing the rich of their income and net worth, and the Fortune 500 corporations of their profits, it would only get us to mid-August. The fact of the matter is there are not enough rich people to come anywhere close to satisfying Congress' voracious spending appetite. They're going to have to go after the non-rich.

http://cnsnews.com/commentary/article/eat-rich

http://www.youtube.com/watch?v=661pi6K-8WQ

The Role of Government

The following is my post on The Political Insiders Report today:

“Sometimes you fall off of the ladder…there is a safety net there…liberals tend to believe that the safety net is a hammock, so you can stay there the rest of your life,” Rep. Allen West

It’s hard for me to find fault with the folks taking advantage of the government hammock. Whether it’s the generations of families living off of welfare, capable persons drawing unemployment longer than they need, or the wealthy taking advantage of tax loopholes; it is entirely legal, and human nature after all. The true fault lies with those who make it possible to live at other’s expense. Those who savor the “slavery” of making voters completely dependent for their basic needs because it equates to guaranteed votes.

What is the proper role of government? 

Objectivists believe the only role of government is to protect its citizens. A police to protect from criminals, an army to protect from foreign invasion, and courts to protect property and contracts from breach or fraud. However, altruists believe the role extends to caring for those citizens who aren’t capable of caring for themselves. This noble view pervades most of American politics today.

The structure of philanthropy in government.

Two primary beliefs exist on how to go about helpingAmerica’s needy. One side believes in charity while the other in a redistribution of wealth often to fund entitlement programs. The two contrast each other.

As Davies and Antolin state in Friday’s Wall Street Journal, “Charity can only be charity when it is voluntary. Coerced acts, no matter how beneficial or well-intentioned, cannot be moral. If we force people to give to the poor, we have stripped away the moral component, reducing charity to mere income redistribution.”

Certainly, redistributing wealth to the needy in the form of entitlements is an effective form of philanthropy, but what happens when the government runs out of wealth to redistribute?  This belief system eventually leads to a nation of poverty.  There is an inherit danger in viewing wealth as a finite resource that must be shared.  The “trickle down” philosophy is accurate.  Just as wealth can be and is created, so too can it be destroyed.  Progressive taxation aimed at redistributing wealth to the needy is well intentioned, but eventually succeeds only in destroying wealth and creating poverty.

The private sector does not flourish under high taxation.  As Sen. Marco Rubio stated, “I have never met a job creator who told me that they were waiting for the next tax increase before they started growing their business.” And as goes the private sector, so goes the economy. As is evident, the needy suffer more under a poor economy. Unemployment is up, and with it the need for more welfare. Food stamp rolls have met record highs as has “real unemployment”.

The creation of wealth is vital to caring for our needy. As former Omaha Mayor Hal Daub stated, “You need wealth to have charity.” Economic policies that lead to wealth creation, combined with social policies encouraging charitable giving through tax credits not only lead to more effective social assistance, but guarantee the sustainability of that assistance. They do so while respecting the potential of the individual and encouraging the pursuit of life, liberty and happiness.

While entitlement programs destroy personal accountability and breed generations of dependence, charities encourage and motivate the individual to strive to reach their full potential rather than enabling dependence. They provide a true safety net for America’s needy.

To Read more on the topic, visit my post here.  

"Only 30% of government “welfare” spending goes to the needy. Private charity is the opposite, with over 70% going to the needy. That means private charity is 150% more efficient than the welfare state.

Unions = Lobbyists / "There Won't Be Jobs Left To Protect"

by: Bryan Baumgart - May 30, 2012

It always amazes me when the same folks that despise lobbyists can somehow rationalize support for unions.  

Unions ARE lobbyists! 

They may be WORSE than lobbyists because they not only employ the same tactic of bribery used by lobbyists, but they also use much more sinister tactics such as bullying and threats!

The dictionary definition of "lobbyist":

• a group of persons who work or conduct a campaign to influence members of a legislature to vote according to the group's special interest.  

This is precisely what the unions do!  Unions and lobbyists both go after taxpayer money by influencing (through bribes or threats) the government officials that oversee the dispersion of the taxpayer's money.  Our representatives sit across from the union bosses at the bargaining table.  Union leadership promises to keep those government officials in office in exchange for lavish perks at taxpayer expense.  Perks that average citizens don't receive, such as the pension and healthcare benefits that are sinking cities like Omaha today!  Average citizens not only pay for their own retirement and healthcare, but union bosses request that average citizens also pay for their over-the-top benefits as well!  Those union leaders also make it clear to those elected officials sitting across the table from them, that failure to comply with requests for lavish perks will cost them their office.  

This is what we see being played out in Wisconsin today to Governor Scott Walker, who had the bravado to stand up to the unions and take away their right of collective bargaining over pensions and healthcare. The unions have already spent over $60 million dollars in an attempt to recall Walker.  They have succeeded in forcing a recall election to be held in Wisconsin on June 5th, despite the fact that Walker's actions have been overwhelmingly successful.

It is interesting that the 99% Occupy Movement folks aren't up in arms over the division of class contained within union systems.  Think of it this way.  The upper class is made up of top union officials, the middle class being union members, and the lower class being the taxpayers.  The top union officials aren't really concerned with protecting jobs or even the rights of union members, they are concerned with protecting unions. As long as powerful unions exists, the ability to blackmail government officials (or corporations in the case of private unions) for lavish perks will remain a reality.  The top officials (upper class) welcome extravagant salaries and benefits while tossing a bone to union members (middle class) to appease them and maintain support.  Who pays for this extravagance?  The taxpayers (lower class) of course! So who will stick up for the taxpayer's interest if government officials fall to bribery and bully tactics?!

I have family and friends who are union members and although they don't agree with the politics pushed by the unions, they state that, "Unions protect my job."  What they fail to realize is that because of union politics, there won't be jobs for unions to protect!  Need an example?  Just look to Detroit and the automaker unions, where the cost of lavish perks has made it impossible for once dominant American auto companies to compete with foreign auto companies out of China and Japan.  And once again, average citizens are on the hook.  To cover the cost of the union's demands, American auto companies have been forced to raise the prices of their autos while passing that cost onto consumers.  And when GM still couldn't compete, it was the taxpayers that were forced to bail them out to the tune of almost $50 billion dollars!


Union supporters argue that foreign automakers have the advantage through cheap labor; however, foreign automakers such as Toyota efficiently produce more autos here in America than the domestic auto makers.  What's the difference?  You guessed it...the absence of unions!

And then of course there is the union employees themselves who are bullied by the unions.  Employees forced to join unions against their will.  Employees forced to contribute money that is spent to elect candidates or to push policies to which they are personally opposed.


Which segues nicely into two points that were brought up above.  Price increases and minimum wage increases.

Unions support an ever increasing minimum wage.  Raising minimum wage leads to inflation and therefore doesn't leave anyone better off than where they started.  In fact, it leaves them worse off in many instances as companies are forced to move jobs overseas to remain competitive on the world marketplace, or close up shop all together. Current wage is better than NO wage.  A better answer is to battle inflation to increase the purchasing power at current wages.


Many folks call corporation evil and call for an increase in their taxes.  "Pay your fair share!, they cry." They fail to realize that corporations never have and never will pay taxes.  They simply pass along taxes to consumers (the same people calling for tax increases on corporations) through price increases.  Calls for increasing corporate taxes equate to calls for increasing taxes on consumers!  


Unions at one time served a useful purpose.  The champion of fair labor practices, wages, working conditions, etc.  They were set up to protect the common man.  Now who will protect the common man from the unions?!!!


READ MORE BELOW:

Unions Must Go

What Public Employee Unions are Doing to Our Country

Indiana School Voucher Program Saves Money

From Nebraska Federation of Catholic School Parents - Parent Advocate

Vol.19, Issue 2 - May 2012

Indiana's new school voucher program has increased options for 4,000 low-and-middle-income families to attend private schools of their choice.  Now the program is saving money for the state due to transfers from public to private schools.  Do you need proof?  The Indiana Department of Education recently announced that the first year of the voucher program will result in $4.2 million in annual savings statewide.  This money is being redistributed to public schools statewide.  School choice is a win-win situation for private and public schools.

www.nebcathcon.org

New York Loses $45.6 Billion as 3.4 Million Residents Leave High Tax State

It is interesting to note the additional revenue from raising taxes comes nowhere close to the loss of revenue caused by taxpayers leaving the state likely due to taxes being raised!

By Elizabeth Harrington - May 29, 2012

New York State accounted for the biggest migration exodus of any state in the nation between 2000 and 2010, with 3.4 million residents leaving over that period, according to the Tax Foundation.

Over that decade the state gained 2.1 million, so net migration amounted to 1.3 million, representing a loss of $45.6 billion in income.

Where are they escaping to?  The Tax Foundation found that more than 600,000 New York residents moved to Florida over the decade – opting perhaps for the Sunshine State’s more lenient tax system – taking nearly $20 billion in adjusted growth income with them.

Over that same time period, 208,794 Pennsylvanians moved to Florida, taking $8 billion in income.

“Many of these New York and Pennsylvania residents no doubt moved to Florida for the warm weather,” says the foundation, a nonpartisan research group. “But many more may have moved there because the state does not have an individual income tax, an estate tax, nor an inheritance tax.”

The Tax Foundation has created a “migration calculator” based on data from the Internal Revenue Service, tabulating the number of individuals moving between states each year, and income affected by the shifts.

The calculator shows that 612,520 people renounced their citizenship in New York State and moved to Florida in the 10-year period, taking with them $19.7 billion in adjusted growth income.

Between 2009 and 2010 alone, 40,195 New York residents moved to Florida, taking $1.3 billion in income.

According to the group, New York ranked second among the states for the highest state and local tax burden in 2009.  The Empire State was ranked highest for tax burden every year from 1977 until 2006, except in 1984 when it was ranked second.

New York State has a progressive personal income tax rate ranging from 6.45 percent to 8.82 percent for those earning over $2 million. Sales varies by county, and is between seven and eight percent.  In Manhattan, the sales tax is 8.875 percent.

According to the Retirement Living Center, which examines tax burdens by state for those nearing retirement, New York also levies a gasoline tax at 49.0 cents per gallon and a cigarette tax of $4.35 per pack, along with an additional $1.50 per pack in New York City.

New York is also one of 17 states plus the District of Columbia that collects an estate tax, with a $1 million exemption and a progressive rate from 0.8 percent to 16 percent.

In 2007, New York State collected $1.1 billion from its estate and gift taxes, the highest of any of the states, according to the Tax Foundation.

California is also known for more onerous taxes and regulations, and the foundation shows similar trends of migration from there to other states like Texas and Arizona.

The Tax Foundation ranked the Golden State sixth highest in the nation for state and local tax burden in 2009.

Between 2000 and 2010, the most recent data available, 551,914 people left California for Texas, taking $14.3 billion in income.  Texas has no state income tax or estate tax.

A total of 48,877 people moved to Texas from California between 2009 and 2010 alone, totaling $1.2 billion in income.  Another 28,088 from California relocated to Nevada and 30,663 to Arizona, a loss of  $699.1 million and $707.8 million in income respectively.

Overall, California had the most departures between 2009 and 2010 – 406,883 people, representing a loss of $10.6 billion in income. Over that year 365,763 people moved there, representing a net loss of 41,120 residents.

Since 2000 1.2 million more people have left California than have moved there, the second biggest net loss, after New York.

Florida, meanwhile, had a negative net migration of 966,934 between 2000 and 2010 – meaning nearly a million more people moved to the state than left. Texas also has a negative net migration – 807,552 – during the same time period.

Florida and Texas rank the two lowest in net migration over the decade, followed by North Carolina, Arizona and Georgia, each of which has a negative rate.

The Tax Foundation acknowledges that taxes are not the only reason to flee a state. “Taxes are one of hundreds of factors that go into a person's decision to move,” it says on its website. “Others include age, technology, job prospects and the quality/quantity of government services provided.”

The foundation also points out that the migration calculator is not definitive.  “A true study that sought to quantify the importance of taxes for locational decisions would need to account for as many other factors as possible, in addition to possible serial correlation issues between variables, especially taxes.”

http://cnsnews.com/news/article/escape-new-york-high-taxing-empire-state-loses-34-million-residents-10-years

Americans Making Over $50K Paid 93.3% of All Taxes in 2010

By Christopher Goins - April 14, 2012

Americans making over $50,000 paid most of the federal taxes that were paid in the U.S. in 2010.

According to statistics compiled from the Internal Revenue Service (IRS) by the Tax Foundation, those people making above $50,000 had an effective tax rate of 14.1 percent, and carried 93.3 percent of the total tax burden.

In contrast, Americans making less than $50,000 had an effective tax rate of 3.5 percent and their total share of the tax burden was just 6.7 percent.

Americans making more than $250,000 had an effective tax rate of 23.4 percent and their total share of the tax burden was 45.7 percent.

Out of the 143 million tax returns that were filed with the IRS in 2010, 58 million – or 41 percent – of those filers were non-payers.

In other words, only 85 million actually paid taxes.

But Tax Foundation data also shows that people who didn’t pay any income tax received $105 billion in refundable tax credits from the IRS.

Additionally, statistics from the Tax Foundation shows that the federal tax code is 3.8 million words long – 3.5 times longer than all seven books of J.K. Rowling’s famous Harry Potter series combined.

According to Scholastic.com, the total word count of all seven Harry Potter books is 1,083,594 words with Harry Potter and the Sorcerer’s Stone being the shortest (76,944 words) and Harry Potter and the Order of the Phoenix the longest (257,045).

In contrast, the federal tax code is 3.8 million words, almost a tripling of its size since 2001 when the Joint Committee on Taxation estimated the tax code to be 1,395,000, and almost doubling its size since the Tax Foundation's estimates in 2001.