obama refugees

Obama looking to ‘welcome’ 213,000 humanitarian arrivals in FY17 with $2.2 billion budget

…..and that $2.2  billion is only for the Office of Refugee Resettlement (HHS) portion of the costs!  It does not include the US State Department funding or the cost of security screening. Nor does it cover the cost of most welfare, subsidized housing, medical care and most of the cost of educating the children.  They aren’t saying yet how many Syrians Obama will be requesting.

While I was on my 30 day ‘listening tour’ that took me to 13 mid-western and western states, the Obama Administration held a press conference call about the stepped-up Syrian Muslim refugee flow in to the US.  Thanks to Christine for sending the transcript which I decided to post below in full.

Just so you know, all of the officials on the call are Obama appointees.  Remember them! These are the people who are changing the demographics and the character of your home towns.

Anne Richard and Robert Carey both revolved in to their government perches from a refugee resettlement contracting agency (the International Rescue Committee). Shin Inouye is a former Washington, D.C. spokesman for the ACLU.  And, for my friends in Montgomery County, MD, León Rodríguez was once your county attorney.

These Obama appointees are all hard core open (NO!) borders advocates, and if Hillary is elected they will likely be able to stay on and continue their work of changing America by changing the people!

And, if you are wondering, Obama has one more shot in September to make a determination about how many refugees will be admitted to the US in the next fiscal year.

We know what Obama is going to do, but what will Paul Ryan do?

It will be up to Speaker Paul Ryan and the REPUBLICANS to decide if the numbers Obama is requesting will be acceptable because it is Congress that will fund (or not fund!) the President’s final request!

This (below) is from a press conference call on August 5th. Those of you doing research around the country on what is happening where you live will find this useful.

BTW, I am struck by how little the reporters know about the program and so they largely wasted their questions.

See phone numbers at the end for the public affairs office of each government agency responsible for the refugee program.  If you are reporting via alternative media about what is happening where you live, try calling those numbers!  Call and ask questions even if you already know the answers!


Welcome and thank you for standing by. At this time all participants are in a listen-only mode until the Question and Answer session of today’s conference. At that time you may press Star 1 on your phone to ask a question.

I would like to inform all parties that today’s conference is being recorded. If you have any objections you may disconnect at this time. I would now like to turn the conference over to Shin Inouye, USCIS. Thank you, you may begin.


Shin Inouye

Shin Inouye:   

Thank you (Sheila) and thank you all for joining us today to discuss the current state of Syrian refugees security screening and admissions. As a reminder this call is on the record and without embargo. On the call we have Assistant Secretary of State, The Bureau of Population Refugees and Migration, Anne C. Richard, US Citizenship and Immigration Services or USCIS Director Leon Rodriguez, and Health and Human Services Director of Refugee Resettlement, Robert “(Bob)” Carey.

We’ll have our speakers offer remarks about their agency’s respective roles in the refugee process and then open up the call to your questions. Let me first turn it over to Assistant Secretary Richard.

Anne Richard:  


Anne Richard

Thanks, this is Anne speaking. The United States has been a global leader in the resettlement of refugees. That’s why last year the President made a renewed commitment to help in some of the most vulnerable refugees in the world, pledging to increase the number of refugees we will accept from around the world to 85,000 from 70,000 per year over the last three years. As part of this commitment we also pledged to welcome at least 10,000 refugees fleeing the terrible conflict in Syria.

To that end early in the fiscal year we began working to adjust the capacity of our refugee admissions program, to bring many more refugees to the United States. To welcome more refugees from Syria we worked with the Department of Homeland Security, with our intelligence community and with other relevant agencies to upgrade our capacities to conduct security screening. DHS increased the number of the DHS offices available to interview applicants so that more security screening interviews could take place for more applicants, resulting in more refugees approved for travel.

In Jordan, for example, between February and April of this year we worked with DHS to surge additional staff to Jordan where DHS offices conducted interviews for about 12,000 UNHCR referred refugee applicants. In Beirut, Lebanon we restarted interviews of refugees in February. These had stopped for a year because of space limitations in the embassy compound. In Turkey we added staff to the resettlement support center in Istanbul that covers refugee processing in Turkey and Lebanon and DHS sent additional officers to conduct interviews.

In Iraq we began processing refugee resettlement cases in Erbil in December 2015. Thanks to these efforts and through the coordinated efforts of the Department of State, Department of Homeland Security, Department of Health and Human Services, we can now say that we have 8,000 Syrian refugees so far this year and that we are very confident that we will welcome at least 10,000 refugees from Syria by the end of this fiscal year. Monthly totals have climbed from low numbers of refugees admitted in the first half of the year to higher numbers recently.

In May, June and July the impact of our investments in and the enhancements to the process began to be realized. Our expectation from the beginning was that the rate of Syrian refugee admissions would increase over time as referrals from UNHCR — the Human Refugee Agency — UNHCR increased as we added to the capacity to process more cases referred to us and as DHS sent more DHS officers to the field to conduct the necessary rigorous and exhaustive security screening.

Briefly and in closing we want to reiterate that this is just one line of multiple lines of effort that the US government is undertaking to help the victims of terrible conflicts and crisis around the world. I want to remind you all that President Obama will convene the leader’s summit on refugees on the margins of the 71st session of the UN General Assembly in September. This summit is about encouraging all countries to take action and do more now.

Wealthy governments are asked to make new and significant contributions relating to humanitarian financing and refugee resettlement or admissions – other forms of admission to their country. Countries that host refugees are asked to make new commitments related to refugee self-reliance and inclusion, with a specific focus on letting refugees work and allowing refugee children to go to school. The purpose of the summit is to recruit other countries to join with us and make a real difference in the world’s contributions towards helping refugees.

At this point I’d like to turn to my colleague, the head of USCIS, Leon Rodriguez.

Leon Rodriguez:  

Thank you Anne and thank you for your presentation. I too am gratified with the success that we’ve had in refugee admissions, particularly with respect to Syrian admissions. The process that we have applied to reach those admission levels is the same process that we have applied for many years – actually with a few enhancements that have further strengthened that process.


Leon Rodriguez

There are basically two critical components to the process and adjudicating, whether an individual is admitted to the United States as a refugee after that individual has been referred to us by the United Nations high commissioner and refugees and by the State Department. The first is to determine – this is what our officers do to determine whether that individual actually qualifies as a refugee – whether they meet the legal definition.

The legal definition that we use is derived from the United Nation’s convention on refugees, and that definition is used by all of the signatory countries to the convention, although in many cases each country interprets the conventions slightly differently. The second aspect and probably particularly critical for this discussion is we determined if — notwithstanding the fact that the individual meets the legal definition of refugee — if there is still some basis to deny that individual admission to the United States.

That can occur in one of two ways. In some cases we have – we exercise our discretion. For example if we have concerns about that individual’s credibility. In other cases we may have evidence that that individual falls under a specific category of inadmissibility. For example, if there is evidence that they are a known or suspected terrorist. To do that we used a number of tools. From my perspective the most critical of those tools is the refugee officer – is our highly trained, highly experienced staff that we deployed throughout the world to screen refugees.

Before they get there they have been extensively trained both in the legal tenants surrounding refugee law — the grounds inadmissibility that I discussed before — but also very critically in fraud detection and prevention, security protocols, interviewing techniques, credibility analysis.

They’ve also been briefed in country conditions and in regional conditions and again that briefing is often extensive, and the depth of that briefing grows as we spend more time in a particular refugee environment, be that the Syrian environment, the Iraqi environment, the Somalian environment, or as the case may be, the central American environment. The interviews that are conducted by those officers are frequently extensive – pro-credibility issues and pro-particular basis of inadmissibility.

In the specific cases of Syrians there are additional steps that are also taken. All of those cases or the majority of those cases, rather, are subject to something we call Syrian enhanced review, which provides us specific in-depth support both from our Refugee Affairs division and our Fraud Detection and National Security directorate to provide enhanced view of those cases before the interviews even occur overseas. This is intelligence-driven support – for example it yields specific lines of questioning that our officers are prepared to ask.

It also includes social media review of certain Syrian refugee applicants. Additionally and during the course of the interview an officer identifies areas of national security concern about a candidate, and that case moves into what we call the controlled application review and resolution process – essentially a hold process where further investigation and inquiry into that case occurs.

At the same time we have a number of law enforcement and intelligence resources that our officers utilize in order to determine whether there is any derogatory — and that’s a critical term — derogatory information about that individual. Those sources can come from State Department databases, databases of customs and border protection, the Department of Defense, but most critically from both the United States law enforcement and intelligence communities, including the FBI as well as a number of intelligence community partners as well.

One particularly important aspect there is a process that we call the intra-agency check which involves queries of a series of intelligence community holdings. That occurs not only prior to the interview of the individual but actually occurs on the recurrent basis during the entire process of that individual’s adjudication, and in many cases actually beyond the period of that individual’s admissions. So that if new derogatory information arises about that individual we are able to act on that derogatory individual – derogatory information at any time that that information may arise.

We have on an ongoing basis the implementing improvements to these processes – much of that is law enforcement sensitive or intelligence community protected. But those improvements have been occurring on an ongoing basis. I believe that this information is very critical because it really rebuts what is a widely held view that in fact we do not have resources against which to vet these individuals.

In fact literally hundreds of individuals from different countries, including hundreds of individuals from Syria, have had their admissions to the United States denied because of information that was found in these databases. Additionally, a number of other individuals have been denied admissions or have been placed on hold because we have determined – we have accessed that there are credibility concerns that have arisen during the interview process.

And that process is the same one that we conducted a year ago, two years ago and last week, and we will continue as we move through the process of screening refugees to apply those methodologies. Thank you.

Shin Inouye:     

Thank you Director Rodriguez. Next we’ll hear from Director Carey.

Robert Carey: 

bob carey

Robert Carey

Okay thank you. (Bob) Carey here. We could go to the work of your Office of Refugee Resettlement, under the Refugee Act of 1980 Congress created within the Department of Health and Human Service and the Office of Refugee Resettlement, and we are charged with providing refugees with resettlement assistance. This assistance includes employment training and placement, English language instruction, cash assistance and additional social services, all of which are designed to assist refugees in integrating into their new communities and to promote early self-sufficiency.

ORR carries out this work through an extensive public-private partnership network and funding to state governments and non-profit organizations across the US. In fiscal year 2016 ORR expects to serve upwards of 200,000 humanitarian migrants. So these humanitarian migrants include refugees, but also asylees, keeping Asian entrance on unaccompanied refugee minors, victims of torture and unaccompanied children.

Our work includes collaborations at the federal and state level with resettlement agencies, resettled refugees themselves and members of the communities that welcomed them. A central goal of the program is to ensure that states and municipalities have the best information available to help them prepare for incoming refugees. To this end each state has a state refugee coordinator, and often a state refugee health coordinator who oversees services and refugee benefits provisioned to eligible individuals in the given state.

The President’s fiscal year 2017 budget requests include $2.2 billion for ORR programs and that represents the cost of maintaining services for additional refugees and other entrance and unaccompanied children primarily from Central America. The President’s budget request would support a total of 213,000 humanitarian arrivals including 100,000 refugees in 2017. Once a refugee arrives in the US they are eligible to access the same benefits as American citizens who are here legally including temporary aide to newly families, Medicaid, SSI, and SNAP.

When refugees do not meet eligibility requirements for these programs ORR provides time-limited refugee cash assistance and refugee medical assistance. Social services and targeted assistance funds are allocated to states based on a formula tied to the prior two years of refugee arrivals, and that accounts for refugees and other entrance movements to other states after their initial resettlement on their path to legal permanent residence and citizenship.

ORR also supports additional programs to refugees and integrating which include migrant enterprise development assistance for ethnic community organizations, agricultural partnerships and services for survivors of torture. Another critical service we provide is school impact program funding which provides approximately $15 million for activities that assists children in adjusting to school after the trauma of war flight and all too often interrupted education.

As an alternative to access and cash assistance refugees may also enroll in what is known as the Matching Grant program – that’s Intensive Case Management program conducted by private non-profit organizations which assists refugees in finding employment and in economic self-sufficiency – self-sufficiency within four to six months after their arrival in the US and which is funded with a combination of private and government funds. And at the end of the program last year 82% were self-sufficient at the end of 180 days. [This is a joke, refugees can still be receiving most forms of welfare, such as food stamps and housing help and still be labeled “self-sufficient.”—-ed]

In summary, the Office of Refugee Resettlement stands committed to welcoming integrating newcomers into the fabric of our society. We believe this goal benefits not only refugees and their families, but strengthens communities and our nation as a whole and refugee resettlement is a reflection of our core value of who we are as a country, providing protection to individuals fleeing persecution on the basis of their race, religion, political opinions or membership in a social group. So thank you.

Shin Inouye:   

Thank you Director Carey and thank you to all of our speakers. Operator if we can go ahead and open it up or if you could provide the instructions for how folks can ask questions.


Thank you. We will now begin the Question and Answer session. If you would like to ask a question please press Star 1 to unmute your phone and record your name clearly. If you need to withdraw your question press Star 2. Again to ask a question please press Star 1.

Our first question comes from Julia Edwards with Reuters – your line is open.

Julia Edwards:      

Hi, thank you. I was wondering if you could quantify how many refugees or how refugees were not considered after the additional screening procedures that were put in place by Congress at the end of last year? Or was there anyone who was ruled out as a result of this additional screening measures being put in place?

Leon Rodriguez: 

I think that the screening measures were never actually voted into effect that you’re discussing, so when I talk about screening measures they’re basically the ones that we apply as our part of our ordinary process – that is joined between USCIS, State Department, the law enforcement intelligence community partners. And again what I would say is based on that screening – just speaking to the Syrian case, you know, hundreds – I wouldn’t be able to put a specific number on it now but hundreds have been denied.

There are even larger numbers of individuals who go on hold because concerns have been raised or – and also individuals who are denied on a credibility basis because our officers determined that there are concerns about the accounts that they’re given when we interview them.


Our next question comes from Julie Davis with the New York Times. Your line is open.

Julie Davis:  

Hi there. Well I was hoping you could be more specific about how many of the Syrian applicants had been denied because of the information that was found on the databases or put on hold because of credibility concerns. It sounds like you don’t have those numbers now. Would that be something you could get to us after the call potentially?

Leon Rodriguez:   

Yes we can see if we can get you those numbers. Again what I will share are those numbers are large. When we’re talking still about, you know, we’re talking about 8,000 who have been cleared for admission this year we’re still talking about a substantial number who have either been denied or held because of these types of concerns.

Julie Davis:      

Okay and also I’m wondering whether you can say, based on the up-ticks that you described, just in May, June, July – I assume August, you’re expecting will be the same if not larger in terms of refuge – Syrian refugees resettled. Do you expect that to continue rising into fiscal 2017, and do you have any estimate at all of how many Syrian refugees you may be looking at welcoming as a result of this surge in the next, you know, after the fiscal year ends?

Leon Rodriguez:

Actually I’m going to share a little bit more of an answer to your first question and I think I’m going to defer to my State Department colleagues. So our approval rates are 80%, denial rate is 7%, and the balance is hold – that kind of reflects the overall universe. So, you know, I can’t give you specific numbers that reflects about our clip of approvals denials and holds.

Julie Davis:     

Got it.

Leon Rodriguez:  

And Anne I’m wondering if you want to – I don’t know if you’re in a position to talk about next year or not…

Anne Richard:   

Well just to say the current pace of arrivals will continue through the end of this fiscal year so we may exceed 10,000 and for next year we will continue to welcome large numbers of Syrians, but it’s too soon to have a target figure established.


Thank you. And our next question comes from Jared Goyette with PRI. Your line is open.

Jared Goyette:  

Hi I was just wondering if you could provide any detail to the I-130 program and if that’s had any impact in terms of the numbers of, you know, the number of Syrian refugees coming in – that’s of course the family petition? Thank you.

Anne Richard:  

No we don’t have numbers for you for this call but we can follow-up on that after the call.

Jared Goyette:

Okay thanks.


The next question comes from Nick Ballasy with PJ Media News your line is open.

Nicholas Ballasy: 

Thanks for taking the question. My first – the first part of my question is among the applications for refugee status that have been denied, you said some of them were denied – was it because of national security or terrorism issues? And then the second part of my question is as you know, if you’re applying for legal status by marrying a US citizen or in a different category, you have to prove you have the financial support and you’re not a public charge and you also have to pay thousands of dollars in fees for those applications.

Why are refugees treated differently than people seeking legal status in the United States through the legal immigration process?

Leon Rodriguez:   

Sure, this is Leon Rodriguez and I’ll invite my colleagues to chime in as well. You know, the fact is that refugees are refugees because they’re often coming out of war-torn countries or countries devastated in some other way. Frequently individuals have been living away from their countries without any means of securing a livelihood, or in many cases when we’re talking about Syrians, of having their children educated. So more typically individuals do not have the economic wherewithal. It’s also – frankly it’s a statutory decision that was made. We do not have authority to charge any kind of fee for refugees – it’s not a legal authority that we have.

Nicholas Ballasy:  

And then the issue of the denied applications, was the reason for any of those denials national security or…

Leon Rodriguez: 


Nicholas Ballasy:

…(test) and concerns?

Leon Rodriguez: 


Shin Inouye:      

All right (Sheila) if you could move to the next question please?


Absolutely and as a reminder if you would like to ask a question you can press Star 1 on your phone and record your name when prompted. Our next question comes from Lauren Ashburn with EWTN. Your line is open.

Lauren Ashburn:   

Thank you very much and thank you for taking my call. The percentage of those Syrian refugees who have been let into the country – what percent are Muslims? Do you have that breakdown?

Anne Richard:     

Yes, most are Muslims over 99% are Muslims. [At least she is being honest! But, the reporter wasted her question because that information is readily available elsewhere.—ed]

Lauren Ashburn:  

And then what percent are of religious (execution) are fleeing (because they) say religious persecution?

Anne Richard:   

I don’t have that breakdown for you.

Lauren Ashburn:  

Okay and then you mentioned, Secretary Carey – you mentioned that 82% are self-sufficient at the end of 180 days and I was wondering how long do the rest of them stay on benefits? How long do you extend the benefits?

Robert Carey:    

The benefits access depends on the category. There are some individuals for whom, you know, refugee cash assistance can be extended for up to eight months for certain individuals, and then others may be eligible for mainstream benefits if they fit the qualifications.

Lauren Ashburn:   

Okay, thanks.


Our next question comes from (Esa Gomez) with ABC News. Your line is open.

(Esa Gomez):    

I was wondering out of the 8,000 of the admitted refugees how many of them were children?

Anne Richard:      

I should – we should have that number for you. Seventy eight percent were women and children and the number of children we’ll have to get you but let’s see  – nearly – let’s see, 4,576 were under 18 – just a little under half female and roughly half male of the children. [Does this really give us any comfort when we know it is the Somali “children” who grew up in America that have been the most radicalized of the Muslim migrants?—ed]

(Esa Gomez):   

Is that of the children or women and children?

Anne Richard:     

So the first number I gave you the 78% were women and children. And then the second that’s 78% out of 8,000. And then the number of children is – or under 18 year olds is 4,576 and they’re roughly half and half men and – girls and boys rather.

(Esa Gomez):       

Oh okay, thank you.


And again as a reminder you can press Star 1 on your phone and record your name if you have a question. One moment please for any additional questions. We are showing no further questions at this time. (Unintelligible)…

Shin Inouye: 

(Unintelligible) (a couple). All right, well thank you (Sheila). Thank you all for joining us. As a reminder this call is on the record and without embargo. If you have any additional questions here are the phone numbers for the respective public affairs offices for the participants on the call. The State Department is at 202-647-2492. Once again The State Department is 202-647-2492. USCIS is at 202-272-1200. Once again USCIS is at 202-272-1200. And HHS is at 202-401-9215. Once again HHS is at 202-401-9215. Thank you very much.


That does conclude today’s conference. Thank you for participating. You may disconnect at this time.

This post is filed in our ‘where to find information’ category, here.

Business man house in human hands

Home Ownership Dips to Nearly the Level in 1960

The U.S. home ownership rate, as recently reported by the Census Bureau, dropped to 62.9% in the second quarter of 2016, a rate about equal to the rate of 61.9% reported over a half century ago for 1960. This stagnation compares unfavorably to 1900 to 1960 when the non-farm homeownership rate increased from 36.5% to 61%.-a period encompassing rampant urbanization, immigration, and population growth. For example, the non-farm population quadrupled from about 42 million to 166 million, yet the non-farm home ownership rate increased by 67%. Except for the interruption caused by the Great Depression, the rate of increase was moderate to strong throughout the period.

How can this be? Isn’t there an alphabet soup of federal agencies-FHA, HUD, FNMA, FHLMC, GNMA, RHS, FHLBs-all with the goal of increasing homeownership by making it more “affordable”? Don’t these agencies fund or insure countless trillions of dollars in home loan lending–most with very liberal loan terms? Could it be the federal government massive liberalization of mortgage terms creates demand pressure leading to higher prices? Could it be federal, state, and local governments’ implement land use policies that constrain supply and drive prices up even further? Could it be government housing policies have made homeownership less, not more affordable or accessible?

The answer is an unequivocal yes. Since the mid-1950, liberalized federal lending policies have fueled a massive and dangerous increase in leverage-one that continues to this day. For example, in 1954 FHA loans had an average loan term of 22 years vs. 29.5 years today, an average loan-to-value of 80% vs. 97.5%, average housing debt-to-income ratio of 15% vs. 28%. Only the average borrowing cost in 1954 of 4.5% is the same as it is today. The result is today’s FHA borrower can purchase a home selling for twice as much as one with the underwriting standards in place in 1954-but without a dollar’s increase in income!

The result is that federal policies and a phalanx federal agencies have made the dream of home ownership, particularly for low-income and minority renters: less accessible, less affordable, less of a means to reliable wealth building, and more dangerous.

Home prices have risen substantially faster than incomes. Nationally, the median home price is 3.3 times median income, up from 2.9 times in 1979 and 2.0 (FHA only) in 1954. Today Los Angeles has a median home price 8.8 times median income, up from 4.2 times in 1979. Observers, including the FHA commissioner in 1963, noted: “Under conditions of limited supply, price changes tend to exceed [construction] cost changes.”

The size of new homes has nearly tripled–from 988 square feet in 1950 to 2687 square feet in 2015
. This wouldn’t be a problem if the demand for larger homes came from growing real incomes not growing leverage. This problem was recognized in President Clinton’s 1995 National Homeownership Strategy (NHS), which noted: “The new entry-level or starter home is fast becoming a thing of the past. … During the [1972-1992] period, the median new home size grew from 1,385 square feet to 1,920 square feet, and prices increased accordingly.” NHS’s goal was “to promote expanded production of starter homes … for all families who want and can afford to buy.” Unfortunately, the demand-side features of the NHS promoting higher leverage worked at cross-purposes and ended up financing even larger homes, so that by 2007 and 2015 respectively the average size had increased 31% and 40% since 1992.

The now standard 30-year loan condemns FHA’s and other low-income buyers to a life of debtorship. The 20-year loan term it replaced built wealth rapidly and reliably.

Finally, it has made foreclosures commonplace again. From 1934 to 1957, FHA had an estimated 13,500 insurance claims on defaulted loans (note: in 1957 the US homeownership rate was 60%). From 1958 to 2014 FHA had an estimated 3.5 million insurance claims. This is the direct result of liberalized credit standards. Government policies have become what they were intended to cure. The FHA itself described the problem it faced in 1936-“To many people, “Mortgage” became just another word for trouble-an epitaph on the tombstone of their aspirations for home ownership.”

The answer? Market-rate, economical housing, along with incentives to reduce leverage so as to reliably build wealth. This starts with bending the local and state government regulatory cost curve so as to increase the supply of market rate, economical housing. This is housing that largely serves service, light manufacturing and entry-level workers. Such housing is economical by design, making it naturally affordable, not expensive housing made affordable by government subsidy. Unleashing private enterprise will expand supply, thereby allowing supply and demand to reach equilibrium at lower and more sustainable price points. Undoubtedly the greatest beneficiaries will be low- and moderate-income and minority households.

EDITORS NOTE: This column originally appeared on RealClearMarkets.com.

trump infrastructure cnbc

Infrastructure Unites Voters in Divisive Election Year — Advantage Trump

MILWAUKEE, Wis. /PRNewswire-USNewswire/ — With 90 days left before Election Day, a national poll released Tuesday by the Association of Equipment Manufacturers (AEM) found that half of registered voters say the nation’s infrastructure has gotten worse over the last five years, and a majority of voters said roads and bridges are in “extreme” need of repair.

Donald Trump at the Detroit Economic Club stated:

We will build the next generation of roads, bridges, railways, tunnels, sea ports and airports that our country deserves. American cars will travel the roads, American planes will connect our cities, and American ships will patrol the seas.

AEM notes that the findings were part of a new national poll to gauge voter perceptions and attitudes about the current and future state of U.S. infrastructure amid a high-profile election. The poll found that registered voters, regardless of political affiliation, recognize the declining state of the nation’s infrastructure as an issue that should be addressed and believe that the federal government should do more to improve infrastructure across the board.

“Americans across the political spectrum understand the dire state of U.S. infrastructure and believe that the federal government should do more to improve our infrastructure,” said Dennis Slater, president of AEM. “Voters recognized that increased federal funding for assets such as roads, bridges, and inland waterways will have a positive impact on the economy, and they are looking to the federal government to repair and modernize.”

The national poll identified a number of key findings, including:

  • Nearly half (46 percent) of registered voters believe that the state of the nation’s infrastructure has gotten worse in the last five years.
  • A significant majority (80 – 90 percent) of registered voters say that roads, bridges and energy grids are in some or extreme need of repairs.
  • Half (49 percent) of the surveyed population feel that the federal government is primarily responsible for funding repairs to the nation’s infrastructure.
  • Seven out of every 10 registered voters say increasing federal funding for infrastructure will have a positive impact on the economy.
  • More than eight out of every ten Americans consider water infrastructure (86 percent), solar powered homes (83 percent) and smart infrastructure (82 percent) as the top three important innovations for the future of infrastructure.
  • Voters across the political spectrum think that the federal government should do more to improve the nation’s overall infrastructure, with 68 percent of Republicans, 70 percent of Independents and 76 percent of Democrats sharing this sentiment.

Registered voters also feel that government across the board should be doing more to improve the nation’s overall infrastructure, with 76 percent of individuals surveyed wanting more from state governments, 72 percent looking to the federal government to do more and 70 percent expecting more from local governments.

“Both presidential nominees have voiced their strong support for infrastructure investment,” said Ron De Feo, CEO of Kennametal and chairman of AEM’s Infrastructure Vision 2050 initiative. “The specific ideas and proposals they offer over the next 90 days will be critically important, and voters should consider them carefully on Election Day.”

The national poll was conducted as part of AEM’s ongoing efforts to develop a long-term national vision for U.S. infrastructure. An analysis of the national poll results is available here.

aem logoAbout the Association of Equipment Manufacturers (AEM) – www.aem.org

AEM is the North American-based international trade group providing innovative business development resources to advance the off-road equipment manufacturing industry in the global marketplace. AEM membership comprises more than 850 companies and more than 200 product lines in the agriculture, construction, forestry, mining and utility sectors worldwide. AEM is headquartered in Milwaukee, Wisconsin, with offices in the world capitals of Washington, D.C.; Ottawa, Canada; and Beijing, China.

hawaii governor david ige

Hawaii: Obama’s favorite Democrat run state ranks 50th in Cost of Doing Business

CNBC: America’s Top States for Business 2016

49. Hawaii

Quality of life in the Aloha State can’t be beat. But neither can costs, which are the highest in the nation.

2016 Rank
2015 Rank
Workforce 165 48 46
Cost of Doing Business 45 50 50
Infrastructure 116 46 49
Economy 181 25 42 (Tie)
Quality of Life 295 1 1
Technology & Innovation 90 38 36 (Tie)
Education 74 43 45
Business Friendliness 27 46 44
Cost of Living 2 50 50
Access to Capital 14 37 37
Overall 1009 49 50

Economic Profile

  • Governor: David Ige, Democrat
  • Population: 1,431,603
  • GDP growth: 1.7 percent
  • Unemployment rate (May 2016): 3.2 percent
  • Top corporate tax rate: 6.4 percent
  • Top individual income tax rate: 8.25 percent
  • Gasoline tax: 60.39 cents/gallon
  • Bond rating/outlook: Aa2, positive
  • Major private employers: Bank of Hawaii, Corp., Hawaiian Electric Industries Inc.

Economic profile sources: U.S. Census Bureau, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, Federation of Tax Administrators, American Petroleum Institute, Moody’s Investor Service, S&P

Venezuela fee

Venezuela Has Made It Impossible to Run a Business by Rachel Cunliffe

Businesses in Venezuela have a problem.

Actually, almost everyone in Venezuela has a great many problems. Starvation, for example. Shortages of basic goods. Dysfunctional and understaffed hospitals, which lack medications. A corrupt and increasingly militarised government determined to protect the incumbent president, Nicolás Maduro, at all costs.

Shortages, inflation, and protectionism cripple the economy.But businesses, especially factories, face another, more specific problem. As Venezuela’s economy has ground to a halt and its currency has depreciated by nearly two thirds in the past year, the raw materials needed for manufacturing have become prohibitively expensive, or simply impossible to come by. This is not helped by the government’s steep import tariffs and currency restrictions, nor by the rock-bottom price controls, which make operating a business an utterly unprofitable enterprise.

This disaster is entirely of President Maduro’s own making. But rather than acknowledge that 17 years of Chavismo socialism have been a terrible mistake that have wrecked Venezuela, Maduro is tightening the iron fist of state control.

The BBC reports that the Venezuelan government has seized a factory that makes hygiene products like toilet paper, owned by the US company Kimberly-Clark. Kimberly-Clark’s crime? Closing the factory, due to an inability to obtain raw materials.

The Venezuelan Labour Minister, Oswaldo Vera, has called the closing of the factory “illegal,” and promised that the factory will continue to operate “in the hands of the workers.” To which the obvious question must be: with what materials? How does the government think the factory can re-open without the raw materials it needs?

The president there is then the issue of the chilling authoritarianism of declaring that a privately-owned company broke the law by ceasing business. In May, President Maduro threatened to arrest and jail the owners of factories that stop producing, saying Venezeula’s productive capacity was “being paralysed by the bourgeoisie.”

Who would open a business where it’s illegal succeed and illegal to fail?In actual fact, it is being paralysed by the government’s radically anti-business policies, which include such threats. What company, whether domestic or international, will want to set up a factory in Venezuela under such tyrannical conditions, knowing it is impossible to make a profit and that owners risk arrest by trying?

Maduro has blamed the latest crisis, as he has all previous crises, on an economic war being waged against his regime by the opposition, in collusion with US forces. The simple fact is he has left business owners no options, creating a climate in which it is impossible to operate. The daily protests against food shortages across the country show that Venezuelans are getting desperate. Nicolás Maduro’s socialist regime is running out of time.

This article first appeared at CapX.

Rachel Cunliffe

Rachel Cunliffe

Rachel Cunliffe is the Deputy Editor of CapX.

federal budget book reading

The Concorde Coalition says it’s the Budget Stupid!

WASHINGTON, D.C. /PRNewswire-USNewswire/ — Sobering 30-year projections that the Congressional Budget Office (CBO) released today underscore the need for the 2016 presidential and congressional candidates to provide voters with credible plans to put the federal budget on a more responsible course, according to The Concord Coalition.

cbo long term spending revenues

“If current laws remained generally unchanged, the United States would face steadily increasing federal budget deficits and debt over the next 30 years—reaching the highest level of debt relative to GDP ever experienced in this country” – Congressional Budget Office.

“Americans like to think we put a high priority on strengthening the country and looking out for the next generation, but the CBO’s latest long-term projections show once again that we are falling far short on both counts,” said Robert L. Bixby, Concord’s executive director. “Those who aspire to national leadership should take a good look at these projections and explain to the public how they intend to avoid the intense budget pressures and grave economic consequences toward which current policies are leading us.”

Bixby added:

“If candidates for federal office over the next few months ignore the CBO’s warnings of severe trouble ahead, whoever wins in November will not have a clear mandate for the reform measures needed to rein in the federal debt, strengthen the economy and protect our children’s future.”

The federal deficit has been dropping in recent years, creating a sense of complacency in Washington about the need for such reforms. Yet under current law the deficit is rising again this year and the debt will continually grow more quickly than the economy — a trend that is ultimately unsustainable.

Today’s CBO report looks out over the next three decades and projects even greater government debt and fiscal pressures after 2026.

The federal debt held by the public, which was only 39 percent of GDP at the end of Fiscal 2008, has climbed to 75 percent. That is already high by historical standards. The budget office projects that under current law, that debt would rise to 86 percent of GDP in 2026 and to 141 percent in 2046 — far exceeding the historical peak of 106 percent shortly after World War II.

As the CBO points out, such high levels of public debt would reduce national savings and income, increase interest costs that would put more pressure on the rest of the budget, limit the nation’s ability to respond to unforeseen problems and increase the likelihood of a fiscal crisis in which investors would demand extremely high interest rates on further loans to the government.

“The changes needed to bring about a sustainable fiscal policy are substantial and the costs of delay are profound, yet so far the 2016 presidential candidates have said nothing that comes close to addressing the challenges identified in CBO’s report,” Bixby said.

According to CBO, simply keeping the debt-to-GDP ratio from rising above its current level, would require spending cuts and/or tax increases totaling 1.7 percent of GDP in every year through 2046. That would amount to $330 billion in 2017.

Waiting until 2022 would require annual changes totaling 2.1 percent of GDP, and procrastinating until 2027 would require annual changes totaling 2.7 percent of GDP.

The choice about when to make policy decisions also has different generational impacts. As CBO says: “Reducing deficits sooner would probably require today’s older workers and retirees to sacrifice more and would benefit today’s younger workers and future generations. By contrast, reducing deficits later would require smaller sacrifices by older people and greater sacrifices by younger workers and future generations.”

An aging population and rising health care costs are key factors in the government’s growing financial problems. As more people retire, the government must spend more just to maintain current levels of service. Health care costs rise as more treatments become available and demand for them increases.

CBO says federal spending on Social Security, the government’s major health problems and other “mandatory” programs would rise from 13.2 percent of GDP today to nearly 16.9 percent in the decade starting in 2037.

The budget office also warns that interest payments on the federal debt are expected to rise rapidly as government borrowing continues and low interest rates return to normal levels. Net interest costs now amount to only 1.4 percent of GDP but that figure is expected to rise to 5.1 percent after 2037.

The CBO report shows other areas in the federal budget — even those that may prove critical to the nation’s future — being squeezed harder and harder in the coming years. CBO projects that over the next 30 years spending on national defense, infrastructure, research and development,  and everything else other than health care, Social Security and interest payments would drop to 5.2 percent of GDP, down from 6.5 percent today.

In addition to more thoughtful spending decisions in Washington, reasonable reforms in the federal tax system could help boost the economy and reduce federal borrowing.

“As in past years, CBO’s long-term projections are a valuable reminder that the federal budget is not on a sustainable course,” Bixby said. “Interest payments and a few spending programs, no matter how important, cannot be allowed to squeeze other national priorities out of existence. Voters this year would do well to look for candidates who understand this and are prepared to do something about it.”


The Concord Coalition is a nationwide, non-partisan, grassroots organization advocating generationally responsible fiscal policy. The Concord Coalition was founded in 1992 by the late former Senator Paul Tsongas (D-Mass.), late former Senator Warren Rudman (R-N.H.), and former U.S. Secretary of Commerce Peter Peterson. Former Senator Sam Nunn (D-GA) serves as co-chair of the Concord Coalition.

RELATED ARTICLE: The 15th Obamacare Co-Op Has Collapsed. Here’s How Much Each Failed Co-Op Got in Taxpayer-Funded Loans.


Corruption: Millions in business loans to Muslim refugees not tracked by Obama administration

I’m dashing out the door and cannot do this incredible work by Judicial Watch justice, but wanted to get it up now hot off the presses!

For years I’ve wondered how you get at this information on special loans for special peopleand now I know—someone does a Freedom of Information Act request (a specialty of JW as Hillary knows so well!).

Here is how the story begins:

The U.S. government gives refugees on public assistance special “loans” of up to $15,000 to start a business but fails to keep track of defaults that could translate into huge losses for American taxpayers, records obtained by Judicial Watch reveal. The cash is distributed through a program called Microenterprise Development run by the Department of Health and Human Services (HHS) Office of Refugee Resettlement.

Since 2010 the program has granted thousands of loans to refugees that lack the financial resources, credit history or personal assets to qualify for business loans from commercial banks. Most if not all the recipients already get assistance or subsidies from the government, according to the qualification guidelines set by the Microenterprise Development Program. It’s a risky operation that blindly gives public funds to poor foreign nationals with no roots in the U.S. and there’s no follow up to assure the cash is paid back. The idea behind it is to “equip refugees with the skills they need to become successful entrepreneurs” by helping them expand or maintain their own business and become financially independent.

You gotta read this, continue here.

If you are looking for an organization to donate to—Judicial Watch is it!

Afterthought:  Repeatedly you see news stories that refugees are opening new businesses at record rates and thus boosting the local economy.  (Opening businesses with your financial help.)  This information makes me wonder how many of those new businesses survive for even a year or two?

young man at window

The Most Schooled Generation in History Is Miserable by Zachary Slayback

It’s said that sadness isn’t the opposite of happiness — boredom is.

A fully schooled generation has created a generation of bored adult children.With this in mind, is it any surprise that children, adolescents, and young adults today are so unhappy? Is it any surprise that so many turn to extending their schooled lives into structured activities as long as possible? Is it any surprise that when people don’t know what to do, they simply go to graduate school?

To understand this mass unhappiness and boredom with life — and the sudden uptick in quarter-life crises — look at where these young people have spent most of their lives.

What we see today in Millennials and younger is something henceforth unseen in the United States: a fully-schooled generation. Every young person, save the occasional homeschooler, today has been through schools. This means rich and poor, established and unestablished, and developed and undeveloped young adults have all been put through roughly the same exact system with the same general experiences for the last two decades of their lives.

School teaches them that life is broken into discernible chunks and that learning and personal development are to be seen as drudgery. Rather than teaching them how to foster a love of learning, a constantly-centralizing school regime in the US today teaches them to look for standards to be measured against.

Rather than helping give them the cognitive and philosophical tools necessary to lead fulfilled lives in the context of the world in which they live, schools remove them from this world and force them to develop these skills only after 18–25 years of being alive. Rather than allowing them to integrate themselves into the broader scheme of life and learn what they get fulfillment from achieving and what they don’t, school leaves fulfillment to five letter grades and a few minutes of recess.

“We destroy the love of learning in children, which is so strong when they are small, by encouraging and compelling them to work for petty and contemptible rewards, gold stars, or papers marked 100 and tacked to the wall, or A’s on report cards, or honor rolls, or dean’s lists, or Phi Beta Kappa keys, in short, for the ignoble satisfaction of feeling that they are better than someone else.” ~ John Holt

In short, school teaches apathy towards education and detachment from the world. School removes people from being forced to learn how to get fulfillment from a variety of activities and subjects and instead foists a handful of clunky subjects onto them hoping they meet state standards for “reading,”“mathematics,” “writing,” and “science.”

Extended Childhood

Not only this, but they’ve had childhood extended further into adulthood than any other generation before them. A young person today is considered a “child” much longer than a young person was 20 or 40 years ago. To treat a 16 year-old as a child in the 1960s would have been insulting. Today, it is commonplace.

Adult children wander the hallways of universities and workplaces today, less-equipped to find purpose and meaning than their predecessors. They can’t be entirely blamed for their anxiety and depression — their parents, teachers, and leaders put them through an institution and created a cultural norm that created the world they live in today.

“Once you understand the logic behind modern schooling, its tricks and traps are fairly easy to avoid. School trains children to be employees and consumers; teach your own to be leaders and adventurers. School trains children to obey reflexively; teach your own to think critically and independently. Well-schooled kids have a low threshold for boredom; help your own to develop an inner life so that they’ll never be bored.” ~ John Taylor Gatto

This is the perfect formula for creating a group of constantly bored people. They’ve been deprived of a chance to find meaning for themselves in subjects by engaging with them on a deep level and internalizing the responsibility necessary to live in the world. They’ve been cut off from opportunities to make real connections with people based on more than a lottery of ZIP codes for a decade. They’ve been taught that achievement is getting to the next level set by people outside of themselves.

Sadness isn’t the opposite of happiness — boredom is. A fully schooled generation has created a generation of bored adult children. It’s no wonder young people today seem so unhappy.

Originally appeared at zakslayback.com.

Zachary Slayback

Zachary Slayback

Zachary Slayback is the Business Development Director for Praxis, a one year program that trains future entrepreneurs. He writes regularly at ZakSlayback.com and can be contacted at zak@slayback.xyz.

democratic socialism

Democratic Socialism Debunked: The rhetoric and the reality never changes [+Videos]

Socialist rhetoric changes very little over time. It turns out to be rather easy to juxtapose refutations from decades ago against the blather you hear on the news today.

As with economics generally, the fallacies of collectivist statism must be refuted in every generation. So here we have video of Milton Friedman dealing with the fallacies of Bernie Sanders.

For your convenience for sharing, here are other versions of the video.

Short versions:

RELATED ARTICLE: Socialist Self-Deception: Einstein and the USSR to Bernie Sanders and Venezuela

EDITORS NOTE: The below graphic summarizes socialism by one of its primary proponents.



arm resling

When Employers Compete, Workers Win — When They Can’t, Workers Lose by Donald J. Boudreaux

David Henderson does a very nice job summarizing why stripping workers of the right to offer X as part of an employment contract makes most workers worse off, even if the intention of the government officials who do the stripping is to help workers — and, indeed, even if a Nobel laureate economist misses this reality.

Here’s another part of the picture.

Workers’ bargaining power ultimately is tied positively to workers’ alternatives: the greater the number, and the better the quality, of a worker’s employment options, the stronger is that worker’s bargaining power. If many different employers are competing for your services — each by offering you good pay, good benefits, and good work conditions — you as a worker have splendid bargaining power.*

It follows that government interventions that reduce the creation of good jobs— that is, interventions that reduce firms’ incentives to create better opportunities for employing human labor — reduce workers’ bargaining power. In turn, it follows that if overtime-pay arrangements of the sort that emerge in the absence of government restrictions on employment contracts are for many firms and workers the most efficient sorts of labor contracts available — as they are likely to be in a competitive economy — then government prohibitions that make those contract terms illegal will reduce firms’ efficiencies and, hence, dampen their willingness to create new jobs that pay as much as jobs would pay in the absence of those prohibitions.

Put differently, government restrictions that shrink the ways that employers can squeeze more efficiency into their operations shrink the number of jobs that are created, or reduce the maximum pay that employers can offer to employers who perform newly created jobs.

Over time, therefore, regulations such as the newly imposed overtime-pay diktats dampen workers’ bargaining power by reducing the number of high-as-possible-quality jobs created by employers. With fewer such jobs, there’s less competition for workers.  And with less competition for workers, workers’ bargaining power shrinks.

Note that empirically documenting this reduced competition for workers, as well as documenting its effects on workers’ pay (lower than otherwise), fringes (lower than otherwise), and work conditions (worse than otherwise) would be practically impossible. Because the consequences of these diktats play out fully only over a long span of time, it is simply too difficult for an empirical investigator to uncover, amidst all the countless other changes that occur in the economy, the details of what pay, fringes, and work conditions would beotherwise — that is, had such diktats not been imposed.

Yet unless you think you can say nothing absent empirical evidence about the effects on workers’ well-being of a reduction in the intensity and quality of competition for labor, then you should worry that these new overtime-pay diktats will, over time, make many workers worse off than they would otherwise be.

* Note that if, in this situation, you as the worker (whose services employers are competing for) agree to reduce the value that you will receive on one margin (say, pay) in order to increase the value you will receive on another margin (say, working conditions), it would be wholly mistaken for an outside observer to notice your agreement to work for lower pay and conclude from that observation that youremployer has undue bargaining power over you. And it would harm you if this outside observer, arrogant in his or her ignorance of the details of your and your employer’s affairs, orders your employer to increase your pay to some level higher than you agreed to accept.

Cross-posted from the indispensable Cafe Hayek.

Donald J. Boudreaux

Donald J. Boudreaux

Donald Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, a professor of economics and former economics-department chair at George Mason University, and a former FEE president.


It’s Time to Put the Market Back in Housing Finance

Today’s government-centric housing finance system is an “economics free zone” indifferent to supply and demand. Composed of an alphabet soup of agencies, this system has fostered a massive liberalization of mortgage terms and provided countless trillions of dollars in lending in up and down markets. At the same time, other government polices constrain supply. As a result, housing has become less, not more affordable or accessible. Here’s why.

“[In a seller’s market] it is more likely that the liberalization of mortgage terms will increase both price and the amount of the debt, with debt service remaining approximately unchanged. … Thus, the liberalization of terms easily becomes capitalized in higher prices.” (Fisher 1951).

Because of a reliance on excessive leverage, US homeownership policy has failed to broaden homeownership access, failed to achieve wealth accumulation for low- and middle-income homeowners, and led to 11 to 12 million foreclosures since 1973.

US multifamily policy failed to promote plentiful rental housing opportunities at rents accessible to low- and moderate-income tenants (Fisher 1975; Jakabovics et al. 2014). With the supply of unsubsidized, economical, workforce housing stagnating, there are calls for large expansions in subsidies.1 Building hundreds of thousands of high-cost apartment units—with inflated costs because of federal, state, and local regulations as well as layers of subsidies to lease to extremely low and very low income households—is not viable (Fisher 1975).

The Case against Current US Homeownership Policy

For 60 years, policymakers have loosened mortgage lending standards ostensibly to promote broader homeownership and wealth accumulation, particularly for low- and moderate-income households.

  • In 1954, Federal Housing Administration (FHA) borrowers had an average loan-to-value of 79.9 percent, an average loan term of 21.4 years, and an average housing debt-to-income ratio of 15 percent.
  • By 1964, these metrics had risen to 92.8 percent, 29.9 years, and 16.5 percent, respectively.
  • Today, the average figures are 96 percent, 29.5 years, and 28 percent, respectively.

Today’s FHA borrowers spend nearly twice as much of their income—2.15 times the debt, for a home at 1.79 times the price, with 6 times the default risk under stress—compared with typical 1954 FHA borrowers with the same nominal income.

It not surprising that the FHA has experienced 3.4 million foreclosures from 1973 to 2014 (one in eight purchase borrowers) compared with a near-zero rate in its first 25 years.2 For the 25 percent of FHA borrowers living in the highest default rate zip codes, an estimated one in five lost their homes, with untold neighborhood devastation (Pinto 2012).

Fact 1: The US homeownership rate is no higher today than in the early 1960s and is only marginally higher than in 1956, before FHA loans with low down payments or 30-year terms became broadly available.3

Fact 2:  Homes are less affordable today, standing at a multiple of 3.32 times median home price and median income compared with 2.95 times in 1979 or 2.86 times in 1992.  A new round of increasing loan leverage began after 1992, the year Congress imposed government-sponsored enterprise (GSE) affordable housing mandates. This helped drive home prices to unsustainable levels (4.05 times in 2006). After hitting a trough of 3.03 times in 2012, the ratio now stands at 3.32 times.4

Fact 3: Low- and middle-income households have lost wealth since 1989.

Fact 4: Liberalizing credit terms during a seller’s market inflates home prices and sets up future price volatility and higher default rates under stress.5 Extended periods of increasing leverage fuel a price boom that makes homes unaffordable, promotes price volatility, and leads to unforgiving mean reversion.6

Figure 2 confirms FHA’s first chief economist Ernest M. Fisher’s 1951 prediction that in a seller’s market, liberalized credit terms easily translate into higher prices. During the current up cycle, real home prices are up 16 percent.

In January 2015, the FHA announced a mortgage insurance premium cut during a seller’s market. It had the effect predicted by Fisher: nearly three-quarters of the additional buying power was absorbed by price (18 percent) and quality/quantity (55 percent) effects.7 Because the price effect increased the cost for all FHA buyers, the marginal cost of attracting each new first-time buyer was high ($82,000).8

Fact 5: Averages are misleading, and home prices are volatile.

National averages are misleading because they mask price volatility (figure 3) and price dispersion at the metro, zip code, and neighborhood levels (figures 4 and 5).

Lower-priced homes, generally owned by low-income and minority households, experience higher price volatility and lower nominal gains. In figure 5, the bottom price tier of all 28 cities had a lower nominal price increase per year than the top tier (computed over 18 years). These borrowers also experience higher default rates because of the higher leverage.9

Fact 6: Post crisis credit is not tight;10 underwriting and regulatory changes promote rather than constrain a boom.11 Whether leverage is exotic is less relevant than the relative change in buying power generated by increasing leverage, which drives deviation from the price mean.

Fact 7: Federal, state, and local policies increase home-building costs (Jakabovics et al. 2014).  The 10 metros with the lowest multiples of 2013 median home price and 2013 median household income had less restrictive land-use regulations.  The 15 metros with the highest multiples had more restrictive land-use regulations.12 Even California has recognized that public policies are largely responsible for it being the most expensive housing market in the country (Taylor 2015). Burgeoning impact fees have a disproportionate impact by constraining the construction of entry-level homes. 13

The Case against Current US Multifamily Policy

Fact 1: Rents are increasingly less affordable. In 1979 (earliest Zillow data available), median rents nationally stood at 24 percent of median incomes (Los Angeles rents stood at 30 percent of median incomes).  Today, the national rate stands at 30percent with Los Angeles at 49 percent.

Fact 2: Federal, state, and local policies increase apartment construction costs.  Eight of the 10 metros with the lowest multiples of 2015 median rent and median household income had less restrictive land-use regulations.  Thirteen of the 15 metros with the highest multiples of 2015 median rent and median household income had more restrictive land-use regulations.14

Fact 3: Multifamily debt (in 2010 dollars) is rising much faster than the number of total units because of liberal financing from Fannie Mae, Freddie Mac, FHA, and Ginnie Mae, as well as highly accommodative monetary policy.15

Fact 4: While the Low-Income Housing Tax Credit (LIHTC) is the primary means of promoting the construction of “affordable” apartments, it’s expensive and opaque.

New LIHTC credits total $10 billion annually, funding about 100,000 LIHTC units.

  • These units have high construction costs (estimated $175,000 to $200,000 per unit).
  • These units serve few low-income tenants; 80 percent are either extremely low income (area median income less than or equal to 30 percent) or very low income (area median income from 31 to 50 percent); only 7 percent have an area median income greater than 60 percent but less than or equal to 80 percent (Furman Center 2012).
  • These units benefit from layers of subsidies, driving subsidy costs to $12,000 per unit, raising questions about unfair distribution of scarce resources. These subsidies include government-aided financing, state and local subsidies, and rental assistance (e.g., Section 8 and Housing Choice Vouchers) targeted to very low and extremely low income households.
  • This tax credit risks repeating same errors as previous housing subsidy programs.
    • Tenants are overwhelmingly minority households (61 percent), and nonelderly units are concentrated in metropolitan statistical area census tracts with high minority concentrations (Office of Policy Development and Research 2016).
    • Many developments face fiscal challenges to avoid blight that sets in after 16 to 20 years.

Market-Based Solutions to Bring Home Prices Back in Line with Median Incomes and Improve Accessibility

Objective: A more stable housing finance market that provides a reliable path to wealth building and broader low- and middle-income access to homeownership.

  • Repeal Title XIV (qualified mortgage) and section 941 (qualified residential mortgage) provisions of Dodd-Frank (Pinto 2016) (legislative action needed)
  • Require the FHA and GSEs to adopt sound underwriting, pricing, and capital standards (legislative and administrative action needed)
  • Repeal the GSE affordable housing goals (see replacement Low-Income First-Time Buyer tax credit below) to end destabilizing competition between the FHA and the GSEs (legislative action needed)
  • Adopt policies to support market stability by ensuring a high preponderance of good-quality mortgages (administrative action needed)
  • Help low- and middle-income families with wealth-building strategies
    • The American Enterprise Institute’s Wealth Building Home Loan offers such a path, but the 30-year mortgage does not.16(administrative action needed)
  • Enact the Low-income First Time Homebuyer (LIFT Home) tax credit (legislative action needed)
    • This credit would allow low-income,17 first-time buyers to forgo the interest deduction and receive a one-time refundable tax credit.
    • This credit is equal to 4 percent of the mortgage loan ($10,000 maximum) and can be used to buy down the loan’s interest rate for at least seven years on loans with terms of 20 years or less.
    • The legislation would funnel $4.5 billion per year to fund 500,000 LIFT Home buyers, 250,000 of whom would be incremental low-income, first-time buyers. This assumes that 150,000 live in apartments (freed-up units would be a bonus).
    • Funding LIFT Home would require the following:
      • Reductions in the US Department of Housing and Urban Development’s budget
      • Repurposing other budgeted amounts that support affordable housing to push tax dollars directly to homebuyers instead of having the money siphoned off by bureaucracies and advocacy groups
      • Restructuring home mortgage interest deductions to promote wealth, not debt accumulation
        • For future homebuyers, this restructuring would
          • limit interest deductions to purchase loans and exclude second mortgages and cash-out refinances (also for existing homeowners) and
          • cap mortgage interest deductions to amounts payable on a loan with a 20-year amortization term.
      • For existing home loan borrowers, the restructuring would
        • grandfather current interest deductions, ameliorating impact of change on current home prices; and
        • direct any interest savings (from refinancing an existing loan at a lower rate) toward shortening the loan term.

Over 10 years, these solutions would reduce capital needs by 60 percent and allow weaning off the federal government’s overwhelming loan guarantee role. Outstanding debt would be reduced by approximately 20 percent, and risk-absorbing capital per loan would be reduced by 50 percent.

  • With less interest rate risk and lower capital requirements, these loans would be safer and easier for depository institutions to hold in portfolio.  Today, these institutions hold about 50 percent of total single-family mortgage debt.

Market-Based Rental Housing Solutions to Bring Rents Back in Line with Median Incomes and Improve Accessibility: the “Blight Preventer” Loan

Objectives: Shift from the current debt- and government-centric finance system to a rental housing market where supply is permitted and encouraged to meet demand; establish life cycle underwriting18and the “Blight Preventer” Loan as best practices in financing subsidized multifamily housing.

  • Repeal GSE affordable housing policies and the Community Reinvestment Act
  • Increase supply of unsubsidized economical workforce and entry-level apartments
  • Use lifecycle underwriting and 15- and 20-year self-amortizing first mortgage—the “Blight Preventer” Loan (White and Wilkins 2016):
    • Excessively long loan terms used to finance affordable multifamily properties leave many properties unable to fulfill affordability commitments without additional public subsidies and leaves those properties poorly maintained, leading to blight and urban decay.
    • Most affordable multifamily housing is located in lower-income neighborhoods, leaving public funders to accept blight or throw good money at bad investments.

Bending the Cost Curve to Increase the Supply of Unsubsidized Economical Workforce and Entry-Level Houses and Apartments

  • Local and state governments should
    • authorize expedited permitting and “just-in-time” building inspections;
    • identify building code interpretations to reduce cost impact;
    • review and amend density and parking requirements, height maximums, size minimums, and other provisions that increase barriers and raise costs;
    • expand permitted uses in a zoning district that are not subject to special review and approval by local government;
    • review and amend building codes that dictate costs and amenities that put economical workforce developments at a disadvantage;
    • reduce regulatory complexity and include staff flexibility in applying and interpreting burdensome requirements (direct staff to be as flexible as possible);
    • adjust impact and permitting fees to reflect any reduced impact of such housing;
    • establish a “good enough to be economical” standard; and
    • reduce the expenses calculated as a percentage of costs.
  • Designers and  builders should implement innovative and economical techniques for
    • design and construction,
    • sustainability,
    • utilizing existing infrastructure,
    • repurposing existing structures, and
    • management.


  1. “Cantwell Launches National Campaign to Increase Federal Resources for Affordable Housing,” press release, March 24, 2016, https://www.cantwell.senate.gov/news/press-releases/cantwell-launches-national-campaign-to-increase-federal-resources-for-affordable-housing; Peter Dreier, “How to House the Working Poor,” How Housing Matters, last updated April 7, 2016, http://howhousingmatters.org/articles/house-working-poor/.
  2. FHA Actuarial Studies and author. See Pinto (2012).
  3. Edward J. Pinto, “Housing finance fact or fiction? FHA pioneered the 30-year fixed rate mortgage during the Great Depression?” AEIdeas (blog), June 24, 2015,http://www.aei.org/publication/housing-finance-fact-or-fiction-fha-pioneered-the-30-year-fixed-rate-mortgage-during-the-great-depression/.
  4. Zillow and author.
  5. Liberalization of credit terms takes many forms, including smaller down payments, higher debt-to-income ratios, longer loan terms, lower interest rates, quantitative easing, and reduced mortgage insurance premium.
  6. Mean reversion is a theory suggesting prices and returns eventually move back toward the mean.
  7. The 0.50 percent decrease in premium increased buying power by 6 percent. This could be “spent” in three ways: price effect (seller raises price), quality/quantity effect (buyer purchases larger or better-quality home), or expanded access (attracts new buyers).
  8. Forthcoming research to be published by Stephen Oliner, Edward Pinto, and Tobias Peter.
  9. Default risk increased in zip codes where median family income and median home prices are low. See Pinto (2012).
  10. First-time buyer credit metrics are follows: 69 percent of buyers have a combined loan-to-value ratio less than or equal to 95 percent, 97 percent have a 30-year loan, 29 percent have a debt-to-income ratio less than 43 percent, and 22 percent have a FICO score below 660. See “Mortgage Risk Index Release of March 2016 Data,” American Enterprise Institute’s International Center on Housing Risk, last updated April 26, 2016.  As an up real estate cycle ages, credit maximums usually become minimums, thus leading to calls for even more liberal credit terms, including less traditional ones. See Fisher (1951).
  11. For example, income leverage (measured by borrower debt-to-income ratio) is largely unconstrained by Dodd-Frank’s qualified mortgage regulation. Its 43 percent limit is swallowed by agency exemptions (Fannie, Freddie, FHA, the US Department of Veterans Affairs, and the Rural Housing Service guarantee some 85 percent of all primary home purchase loans). An effective income leverage limitation operates to “take the punch bowl away” before a leverage-fueled price boom goes too far.
  12. Demographia.com and author. “Regulations Add a Whopping $84,671 to New Home Prices,”NAHBNow (blog), May 9, 2016, http://nahbnow.com/2016/05/regulations-add-a-whopping-84671-to-new-home-prices/.
  13. Nick Timiraos, “How City Hall Exacerbates the Entry-Level Housing Squeeze,” The Wall Street Journal, May 5, 2016, http://blogs.wsj.com/economics/2016/05/05/how-city-hall-exacerbates-the-entry-level-housing-squeeze/.
  14. Demographia.com and author.
  15. Paul Bubny, “CRE Debt Increase Hits 8-Year High,” Law.com, March 15, 2016,http://www.law.com/sites/paulbubny/2016/03/15/cre-debt-increase-hits-8-year-high/?slreturn=20160419120431.
  16. Edward Pinto and Stephen Oliner, “WBHL,” American Enterprise Institute’s International Center on Housing Risk, accessed May 19, 2016, http://www.housingrisk.org/category/wealth-building-home-loan/.
  17. Incomes below 80 percent of the area median income.
  18. Lifecycle underwriting considers a property’s ability to cover its long-term capital needs (e.g., replacing worn-out roofs, air conditioners, and appliances) over the property’s life cycle. See Brennan and colleagues (2013).


Brennan, Maya, Amy Deora, Ethan Handelman, Anker Heegaard, Albert Lee, Jeffrey Lubell, and Charlie Wilkins. 2013. “Lifecycle Underwriting: Potential Policy and Practical Implications. Working paper. Washington, DC: Center for Housing Policy.http://media.wix.com/ugd/19cfbe_891b4788e2e64d0cb71a75940a101f2f.pdf.

Fisher, Ernest M. 1951. “Financing Home Ownership.” In Urban Real Estate Markets: Characteristics and Financing, edited by Ernest M. Fisher, 61–90. Cambridge, MA: National Bureau of Economic Research. http://www.nber.org/chapters/c3180.pdf.

———. 1975. Housing Markets and Congressional Goals. Westport, CT: Praeger Publishers Inc.

Furman Center for Real Estate and Urban Policy. 2012. “What Can We Learn about the Low-Income Housing Tax Credit Program by Looking at the Tenants?” New York: New York University.http://furmancenter.org/files/publications/LIHTC_Final_Policy_Brief_v2.pdf.

Jakabovics, Andrew, Lynn M. Ross, Molly Simpson, and Michael Spotts. 2014. Bending the Cost Curve: Solutions to Expand the Supply of Affordable Rentals. Washington, DC: Urban Land Institute.http://uli.org/wp-content/uploads/ULI-Documents/BendingCostCurve-Solutions_2014_web.pdf.

Office of Policy Development and Research. 2016. Data on Tenants in LIHTC Units as of December 31, 2013. Washington, DC: US Department of Housing and Urban Development.https://www.huduser.gov/portal/sites/default/files/pdf/LIHTC-Tenants-2013.pdf.

Pinto, Edward J. 2012. How the FHA Hurts Working-Class Families and Communities. Washington, DC: American Enterprise Institute. http://www.nightmareatfha.com/how-the-fha-hurts-working-class-families-and-communities/.

———. 2016. “Repealing Dodd-Frank’s Qualified Mortgage and Qualified Residential Mortgage.” InThe Case Against Dodd-Frank: How the “Consumer Protection” Law Endangers Americans, edited by Norbert J. Michel, 31–38. Washington, DC: The Heritage Foundation. http://thf-reports.s3.amazonaws.com/2016/The%20Case%20Against%20Dodd-Frank.pdf.

Taylor, Mac. 2015. California’s High Housing Costs: Causes and Consequences. Sacramento, CA: Legislative Analyst’s Office. http://www.lao.ca.gov/reports/2015/finance/housing-costs/housing-costs.pdf.

White, Tom, and Charlie Wilkins. 2016. “‘Blight Preventer’ Loan: Property Lifecycle Underwriting and 15–20 Year Self-Amortizing First Mortgage Debt as a Best Practice for Financing Subsidized Multifamily Housing.” Washington, DC: American Enterprise Institute.http://www.housingrisk.org/wp-content/uploads/2016/05/White-Wilkins-MF-debt-paper-final.pdf.

EDITORS NOTE: This column originally appeared on the Urban.org website.


BELOW ZERO: What does ‘negative interest rates’ mean and will the policy work?

A friend of mine sent me a video concerning negative interest rates and the positive and negative impacts they may have on the economy. There are six foreign banks that have adopted negative interest rates. European countries offering negative interest rates include Denmark, Sweden, Switzerland, Hungary and the European Central Bank (ECB). Japanese banks also offer negative interest rates. Taken together these countries and the ECB represent 1/4 of global economic output.

Question: Are zero interest rates good or bad? 


Here are two videos that answer the above question:

What does ‘negative interest rates’ mean and will the policy work?

Video on negative interest rates from Bloomberg:


Below Zero: The World Experiments with Negative Interest Rates

World’s Longest Negative Rate Experiment Shows Perversions Ahead

How Sweden’s negative interest rates experiment has turned economics on its head


Paul Krugman, Now Mistaking Less for More by David R. Henderson

This is from Paul Krugman, “Obama’s War on Inequality,” New York Times, May 20.

The other story was about a policy change achieved through executive action: The Obama administration issued new guidelines on overtime pay, which will benefit an estimated 12.5 million workers.

What both stories tell us is that the Obama administration has done much more than most people realize to fight extreme economic inequality. That fight will continue if Hillary Clinton wins the election; it will go into sharp reverse if Mr. Trump wins.

Step back for a minute and ask, what can policy do to limit inequality? The answer is, it can operate on two fronts. It can engage in redistribution, taxing high incomes and aiding families with lower incomes.

It can also engage in what is sometimes called “predistribution,”strengthening the bargaining power of lower-paid workers and limiting the opportunities for a handful of people to make giant sums. In practice, governments that succeed in limiting inequality generally do both. (Emphasis added.)

It is clear from the context that Krugman is claiming that the new Obama regulation on overtime pay is an example of “strengthening the bargaining power of lower-paid workers.”

He’s wrong. It does just the opposite.

Probably the best way to help him see the point — if, as I doubt, he wants to see the point — is to consider his situation with his employer, the City University of New York. Krugman is a salaried rather than an hourly worker, so he doesn’t have to punch a clock, and no one is keeping track of his hours.

He can work on his lunch break if he wants, he can work on an airplane, he can work any time and anywhere.

I don’t know the specifics of his deal with his employer, but I am virtually certain of the above claims.

Imagine that you are making between $40K and $45K — much less than Krugman’s $225K. You are salaried. You don’t want or need as much flexibility as Paul Krugman has, but you do want some flex. You want to be able to have an occasional long lunch hour some days and a short lunch hour other days. But this won’t always works out to 40 hours a week. Some weeks you will work 38 hours, some 42 hours, some 45 hours, some 34 hours. You ask your employer for that flexibility, and your employer answers, “Fine, as long as the work gets done. And, in return, there might be times — not often, but sometimes — when you need to come in on a Saturday morning.”

You think about that. You respond, “OK, as long as I can take a few hours off in a day, when there’s a lull, but I guarantee that the work will get done.” Your employer and you agree.

Is there anything in this story that sounds implausible?

What just happened?

You exercised your bargaining power.

Now someone who doesn’t know you from Adam comes along and says,

Your agreement with your employer means that some weeks you will work 45 hours. In the weeks that you earn 45 hours, the employer must pay you for 47.5 hours. (Overtime rules require that the employee be paid time and a half for any hours over 40 in a week.)

You may think that those cancel out so that your average is 40 hours a week. Tough. We don’t think the same way. Your deal is illegal. The employer must pay you overtime any week that you work more than 40 hours, no matter what happens in the other weeks.

Now the employer has to rethink his earlier agreement. Paying overtime wasn’t part of the plan. He can adjust by lowering your base pay so that some weeks you earn less than before and some weeks (the weeks with overtime) you earn more than before. And he must keep track of all these hours, whereas he didn’t before. He reluctantly goes along and cuts your base pay.

The arrangement has been altered. You might not like that. You have rent to pay in the 4-bedroom house you share with 3 other single people and you like the certainty of that weekly income. But now the employer, in response to that regulation, has removed that certainty.

Your bargaining power is now less. QED.

Cross-posted from Econlog.

David R. HendersonDavid R. Henderson

David Henderson is a research fellow with the Hoover Institution and an economics professor at the Graduate School of Business and Public Policy, Naval Postgraduate School, Monterey, California. He is editor of The Concise Encyclopedia of Economics (Liberty Fund) and blogs at econlib.org.

jet plane taking off

Corporations Should Flee America: High Tax Rates Help Politicians, Not the Country by Doug Bandow

Every day in Congress, it seems, a member who created a problem demands more power and money to “solve” the resulting crisis. So it is with “tax inversions,” by which companies change their tax domicile — their country of residence, for tax purposes — to escape Washington’s clutches. Doing so deprives Uncle Sam of money to waste, which naturally drives politicians into a frenzy.

Left-wing activists tend to favor corporate taxation. They imagine a society divided between businesses and people. However, firms are owned by people, employ people, sell to people, and contract with people. Taxing companies means taxing people.

Politicians like to target business in order to disguise the incidence of taxes. At least shareholders know they are paying government twice. Employees and consumers, in particular, usually don’t know that they are earning less and paying more, respectively, because of government. In effect, everyone is taxed twice, first at the corporate level and then at the personal level.

America’s current corporate income tax rate is roughly 40 percent — it varies a bit by state and locality — and is second highest in the world. Only the United Arab Emirates is higher. Just six economic laggards — Argentina, Chad, Iraq, Malta, Sudan, and Zambia — match the federal government’s 35 percent rate. In fact, America is one of only three states in the Organisation for Economic Co-operation and Development (OECD) not to reduce rates over the last 15 years.

The US tax code includes loopholes to lower the effective burden for many companies, but trading complexity for lower effective levies is dubious policy. Virtually every other nation on earth has a lower rate. According to tax firm KPMG, the global average is 23.87 percent. Asia’s is 22.59 percent. Europe averages 20.12 percent. The tax rate for OECD countries, America’s most obvious competitors, is 24.86 percent. Several states in Europe come in at 10 to 15 points lower. The rate in Czech Republic and Hungary is 19 percent, in Switzerland 17.92 percent, in Taiwan and Singapore 17 percent, and in Ireland 12.5 percent.

The United States makes the situation worse by taxing a company’s global earnings. Most countries claim only money earned within their boundaries. Although Americans can take a credit for foreign taxes paid, most firms owe extra. Only five other OECD countries also tax worldwide income.

It should surprise no one, then, that companies seek to escape Washington’s grasp. As Judge Learned Hand, no radical libertarian, pointed out in 1934: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the Treasury.” Hand criticized the idea of “a patriotic duty to increase one’s taxes.”

Companies “avoid” taxes simply by conforming to the law as written by Congress and regulations as drafted by the IRS. A recent tool of choice has been inversions, whereby a merger moves a firm’s tax domicile overseas. Doing so actually makes it more cost-effective for companies to invest in the United States. About 50 major firms have “inverted,” more than half of those since 2008. Another 20 may be considering the idea. Among the recent controversial deals have been Liberty Global–Virgin Media, Burger King–Tim Hortons, Pfizer–Allergan, CF Industries–OCI, and Johnson Controls–Tyco Industries (British, Canadian, Irish, Dutch, and Irish partners, respectively).

High tax rates help politicians, not the country. An old-fashioned highwayman grabbed your money and went on his way. Uncle Sam seizes your cash and then uses it to boss you around in the name of helping you and everyone else. Moreover, higher corporate rates directly reduce business investment and indirectly cut consumer spending, thereby slowing job creation and economic growth.

High rates also put American enterprises at a competitive disadvantage. They can try to make do while bearing a greater burden — some simply keep their money abroad. The share of profits attributed to low-tax jurisdictions has more than doubled over the last three decades, and an estimated $2.1 billion in US multinational profits have not been repatriated. Some of that cash may be held overseas for business reasons, but avoiding high US tax rates is a powerful incentive.

Even the White House has acknowledged the problem:

Our system has one of the highest statutory tax rates among developed countries to generate about the same amount of corporate tax revenue as our developed country partners as a share of our economy; this, in turn, hurts our competitiveness in the world economy.

But, so far, the administration has done nothing to redress the situation.

The best response would be to lower corporate tax rates and adopt a “territorial” tax system, hitting only domestic earnings. Although this change would make the United States more competitive, the problem is not just tax rates. Throughout the latter half of the 20th century, America was the freest OECD nation. However, the US rating has fallen over the last decade and has dropped in every category; it is weakest on size of government, business regulation, and rule of law/property rights. The latest Economic Freedom of the World index ranks America at only 16.

Instead, most politicians decry “economic treason” and “desertion” and want to punish American firms. It’s not the first time Uncle Sam has sought to bar the door to tax escapees. The Treasury Department has been tweaking rules since the 1990s without much success.

The Obama administration has made the issue a priority. President Barack Obama said of corporate inversion, “I don’t care if it’s legal; it’s wrong.” He called it an “unpatriotic tax loophole.”

Treasury Secretary Jack Lew denounced the lack of “economic patriotism.” His department issued rules each of the last two years in a largely unsuccessful attempt to prevent inversions, but, complained Lew, “Our actions can only slow the pace of these transactions. Only legislation can decisively stop them.” Nevertheless, he reportedly has another 150 pages worth of regulatory changes in the works. Some observers believe the administration is drawing out the process to create uncertainty in order to discourage more inversions.

These tactics create a substantial danger of unintended consequences. Inversions usually reflect a mix of motivations, of which taxes are only one. Penalizing inversions may discourage economically motivated changes. European firms worried that the 2014 regulations would cover them because of their corporate structure, even if it was not a product of an inversion. Nestle’s senior vice president of taxes, Alex Spitzer, warned that new restrictions could result in “unintended consequences, creating disincentives for inbound investment.”

Nevertheless, corporate critics are revving up their campaign. Billionaire GOP presidential candidate Donald Trump called Pfizer’s departure “disgusting.” Senate Minority Leader Harry Reid contended that Pfizer “is gaming the system and will avoid paying its fair share of US tax dollars.” Senator Bernie Sanders denounced the “corporate deserters.”

Hillary Clinton attacked the Pfizer–Allergan deal, complaining that it and other inversions will “erode our tax base” and “leave US taxpayers holding the bag.” She proposed taking “specific steps to prevent these kinds of transactions,” such as imposing an “exit tax” on firms that leave and impeding the transfer of multinational profits to US subsidiaries.

Other ideas include continuing to impose US taxes if management control remains in America; if a certain percentage of assets, employees, or sales stay here; if the new company doesn’t do substantial business in its new location; or if its foreign ownership is less than half the shares (the current rule is 20 percent) in the combined operation. Some critics have suggested taxing money earned and kept overseas, imposing higher capital gains tax rates on sale of shares in inverted companies, limiting federal contracts for “inverted” firms, organizing consumer boycotts, and criticizing low-tax nations for, as the New York Times puts it, “their beggar-thy-neighbor tax policies.”

Some politicians propose industry-specific penalties. For instance, to favor domestically produced pharmaceuticals in FDA approvals and federal purchasing, which would hurt patients. Senator Sherrod Brown (D-Ohio) urged a boycott of Burger King. Last year, New Jersey’s legislature voted to punish inversions, which would encourage companies to shift to other states.

Washington has taken much the same approach to individuals who renounce their citizenship to avoid excessive regulations and taxes, attempting to penalize them on their way out. Nor is the US government alone in wanting to squeeze more cash out of the productive. Big-spending European states are engaged in a constant war with their lower-tax neighbors. It doesn’t matter how much governments collect from taxpayers; it never is enough.

It is the height of chutzpah for politicians to act as if providing them with money is evidence of patriotism. 

Despite Washington’s sustained campaign to squeeze more money out of hapless taxpayers, firms have good reasons for resisting the taxman. First, the more cash they have, the better able they are to invest in both capital and labor. That means more and higher-paying jobs. Second, the more money they keep, the fewer resources politicians have to waste on pernicious purposes. That means greater liberty.

Indeed, it is the height of chutzpah for politicians to act as if providing them with money is evidence of patriotism. The real outrage is what goes on every day in Washington: essentially looting and pillaging. Politicians are greedy, stirring up envy in other people for their own advantage. In such circumstances, cutting Washington’s take is a moral imperative.

America long was known globally as a land of opportunity. Now, its government is driving the creative and productive abroad. Policymakers should acknowledge their responsibility and reform the punitive policies that are changing America for the worse.

Doug BandowDoug Bandow

Doug Bandow is a senior fellow at the Cato Institute and the author of a number of books on economics and politics. He writes regularly on military non-interventionism.


Dear Presidential Candidates: The National Debt is your Running Mate

WASHINGTON, D.C. /PRNewswire-USNewswire/ — With voters going to the polls in several key primary and caucus states on March 15, The Concord Coalition reminded all candidates today that regardless of party affiliation or ideology the rising national debt will affect the feasibility of their policy proposals.

“The debt is your running mate,” said Concord Co-Chairs Bob Kerrey (D-NE) and Jack Danforth (R-MO) former U.S. senators, and John Tanner (D-TN) and Mike Castle (R-DE), former U.S. House of Representatives members.

Their full statement.

Our nation’s budget policies simply don’t add up. And judging by what the leading 2016 presidential candidates are promising on the campaign trail, this sobering fact has not sunk in.

Republicans are proposing major tax cuts and higher defense spending. Their proposed spending cuts are nowhere near as large or specific. Democrats are proposing an array of expanded domestic programs that even if paid for with higher taxes would leave large and growing deficits.

This may seem like good campaign rhetoric, but it calls for a hard reality check. Whoever is elected president in 2016 will face a deep fiscal hole.

Failure by the new president and the next Congress to take quick and effective action on this fundamental problem could hurt the economy, lower American living standards, strangle investments on national priorities like infrastructure and medical research, leave critical entitlement programs on unsustainable paths, and put our position of global leadership at risk.

Even more shameful, we would be passing on the unfair burden of an enormous government debt to our children, grandchildren and future generations.

Projections by the Congressional Budget Office (CBO), based on current law, demonstrate that the government is in an increasingly difficult position:

  • The budget deficit is projected to begin rising this year reaching $1 trillion (4.4 percent of GDP) by 2022 at the end of the next president’s first term.
  • Debt held by the public is projected to grow from 76 percent of GDP this year to 86 percent over the coming decade, far above the 39 percent average for the past half-century.
  • According to CBO, “Beyond the coming decade, the fiscal outlook is significantly more worrisome,” with debt rising further to 155 percent of GDP by 2046.

Population aging and rising health care costs mean that spending growth on the major entitlement programs is outpacing revenue growth, squeezing out other programs and adding to the debt. Under current law:

  • The CBO projects that most of the spending growth over the next 10 years will be driven by major health care programs (32 percent of the increase), Social Security (28 percent of the increase), and interest on the debt (23 percent of the increase).
  • Mandatory spending — which grows on autopilot and includes the major entitlement programs — along with interest on the debt will consume 99 percent of all revenues by 2026.
  • The projected rise in interest payments on the debt, from $255 billion in 2016 to $830 billion in 2026, is attributable to growing government borrowing and interest rates gradually increasing to more typical levels.
  • Social Security and Medicare continue to pay out more than they take in from their designated revenues, putting a growing strain on general revenues. The programs’ trustees warn that, “Social Security as a whole as well as Medicare cannot sustain projected long-run program costs under currently scheduled financing.”

Owing in large part to tight caps agreed to in the Budget Control Act of 2011, discretionary spending — which includes defense, education, transportation, justice, environment and certain veterans’ benefits – will actuallydecline from 6.5 percent of GDP in 2016 to 5.2 percent in 2026. By that year, discretionary spending and the deficit will both amount to roughly $1.4 trillion.

That means that cutting “waste, fraud and abuse,” as so many candidates advocate, is not the answer; Congress would have to eliminate all discretionary spending to balance the budget that year (assuming there were no entitlement cuts or tax increases).

The next President and Congress will not have the luxury of putting off the hard choices. Voters must ask some tough questions about the totality of the candidates’ fiscal plans and whether they add up. Candidates must do more than rail against the debt; they must give voters credible plans to rein it in and put the country’s finances on a sustainable path.

So our message to the candidates is this: The debt is your running mate. It will be there when this year’s winning candidate takes the Oath of Office. Your campaign promises need to reflect that reality. So far, they don’t.


The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC