Connecting the Dots: How the Latest Affordable Housing Policy Benefits Homeowners and Realtors, not First-time Buyers

Tobias Peter, senior research analyst at the AEI Center on Housing Markets and Finance, wrote the following blog post: Connecting the Dots: How the Latest Affordable Housing Policy Benefits Homeowners and Realtors, not First-time Buyers.

In it he explains how “another government housing policy intended to open “the door to home purchase mortgages for large numbers of new buyers” has failed.  Instead of bringing income-constrained borrowers into the market, it making housing less affordable by adding more fuel to a national house price boom that is pricing them out of the market, while providing a windfall to home sellers and real estate agents.”

Connecting the Dots: How the Latest Affordable Housing Policy Benefits Homeowners and Realtors, not First-time Buyers

Tobias Peter (, Senior Research Analyst

AEI’s Center on Housing Markets and Finance

January 16, 2018

The numbers are in and yet another government housing policy intended to open “the door to home purchase mortgages for large numbers of new buyers” has failed.  Instead of bringing income-constrained borrowers into the market, it is making housing less affordable by adding more fuel to a national house price boom that is pricing them out of the market, while providing a windfall to home sellers and real estate agents.

Let’s connect the dots.  As of the weekend of July 29, 2017, Fannie Mae, one of the two government sponsored housing enterprises (GSE), started buying and securitizing many more mortgages with a debt-to-income ratio (DTI) of up to 50 percent.  The DTI measures the ratio of monthly payments to income.  The higher the ratio, the greater a borrower’s monthly debt payments and the greater a borrower’s likelihood to default.

Prior to the policy change, the large majority of Fannie borrowers were limited to a DTI of 45 percent, with only a few borrowers allowed to go as high as 50 percent with compensating factors such as a certain number of months of cash reserves or a higher down payment.  Fannie’s move thereby allowed borrowers to take on more debt relative to their income.  Freddie Mac, the other GSE, had been buying more mortgages with DTIs over 45 percent than Fannie, but it too ramped up its purchases after Fannie’s announcement as data from the AEI National Mortgage Risk Index (NMRI) show.

Sensing an opening for income-constrained borrowers to now enter the housing market, housing advocates hailed Fannie’s move as a “win for expanding access to credit.”  Yet this line of reasoning was always flawed.  Access for income-constrained borrowers already existed.  The Federal Housing Administration (FHA), another government housing entity, already guarantees loans with a DTI up to 57 percent and with less stringent credit score and down payment requirements than Fannie or Freddie ever would.  By offering this service at a lower cost to certain borrowers, Fannie’s (and Freddie’s) move thereby pitted one government guaranteed insurer of mortgages against another.

The effect of the change has been stunning since it took effect.  First, the share of Fannie borrowers with a DTI above 45 jumped 11 percentage points to 17 percent within just three months after the program’s implementation.  Yet precious few of these borrowers were new market entrants while the large majority were Fannie borrowers taking on more debt.

This is problematic.  In today’s seller’s market, prices have been rising rapidly.  The measures from a variety of sources all show prices rising 6 to 7 percent over the past year, and as much as 10 percent for entry-level homes.  DTIs function as a friction slowing the increase of house prices through binding limits.  Remove the friction and house price increases will pick up.  This happens the following way: First, income-constrained borrowers take advantage of the higher limits, as they initially no longer have to settle for lower priced homes.  Then, because supply is limited, the extra debt ends up raising prices – either directly through more aggressive bidding for houses or indirectly through appraisals when inflated home sales become comparables for other sales as our research shows.  Soon, the cycle feeds on itself and everyone, not just income-constrained borrowers, has to take on more debt.  This is exactly what happened as the NMRI data also show (see chart).

What is driving up prices so rapidly today is the combination of a seller’s market, which is now in its 63rd month, and more liberal access to credit through, for example higher DTI limits, or generally looser lending standards as documented by the NMRI.  Since 2012, national house prices have risen by around 50 percent as shown by the Case-Shiller index, but in the bottom tier of the market, where supply is more constrained and credit more liberal, prices have doubled.

And so, what started as a policy change by Fannie Mae to close the growing affordability gap has added yet more fuel to the house price boom, especially at the lower end of the market.  Thereby this policy will benefit existing homeowners, realtors, and builders, but it will hurt first-time buyers and those with limited resources as they will have to stretch further to afford homeownership or be forced to remain on the sidelines.

164 Companies Credit Tax Reform for Bonuses and Pay Raises

One hundred sixty-four companies have gone on record stating they gave bonuses and pay raises to employees because of the new tax reform law, according to Americans for Tax Reform.

The list has been continually updated and jumped from 40 companies to 164 in 10 days, the Washington Examiner reports.


The businesses include American Airlines, AT&T, prominent banks and savings and loans, Boeing, Comcast, Pacific Power, and Visa.

The list shows what each company paid in bonuses and includes attached statements or press releases, saying tax reform was the catalyst for each company’s decision.

AT&T showed direct support for President Donald Trump in its statement and said it expects the changes to produce more jobs and “economic growth.”

“Congress, working closely with the president, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” AT&T Chairman and CEO Randall Stephenson said in a statement. “Tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”

Americans for Tax Reform tweeted the list and said companies also provided increased 401K contributions along with the bonuses as a result of the new tax law.

EDITORS NOTE:  Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities for this original content, email

VIDEO: Black Activist Says Trump Policies, Unlike Obama’s, Create Jobs for Black Americans

Project 21’s Horace Cooper joined The Daily Signal’s Genevieve Wood to discuss the historic low unemployment rate for black Americans and how the left is co-opting Martin Luther King Jr. Day to protest tax reform and promote action for illegal immigrants covered by the DACA program. Here is an edited transcript of the video.

Wood: Horace, Martin Luther King Day is coming up next week, and there has been a lot of interesting news, especially for the black community on the economic front, in this past week or so. What do you make of the numbers coming out?

Cooper: The news for black America is amazing. It’s phenomenal. We have had three separate records accomplished: In June of 2017, in September of 2017, and in January of 2018, we have set record low unemployment for black Americans. And what’s really exciting, relative to the rest of the country, is black Americans are making much more progress …  and that’s, like, really big gains.

Wood: You probably just heard that overflight. We’re very close to the Pentagon right now and Reagan Airport, so you’re going to hear a lot of airplanes. Horace, we talk about historic numbers. This is the lowest black unemployment has been in over 45 years. Why all of a sudden? Is it President Obama’s economy, which is kind of what he claimed in the last few weeks?

Cooper: It was surprising to me to hear the president make these claims.

Wood: The former president.

Cooper: The former [president], Obama, make these claims. It was very surprising because from 2009 to 2015, black America’s unemployment rate turned to the worst numbers that we have seen as a community. It was the very policies that he pushed that caused this disparity.

Here’s the thing: Black American unemployment typically is somewhere between 40 percent and even 100 percent higher than white America’s unemployment. When this [black unemployment rate] number in 2018 reached 6.8 percent, that was the narrowest gap we’ve ever seen. We saw nothing like that during the Obama administration.

And it didn’t surprise me, because the policies of President Obama were more focused on handing out food stamps, and assistance, and government handouts, rather than seeing to it that the most important civil rights of all, your right to be independent, your right to be self-sufficient, [were] being honored with policies of limited government. That’s not Obama’s plan.

Wood: Now, President Trump has been in office only one year. What do you think explains the nosedive in unemployment across the board, but particularly with minority Americans?

Cooper: Any investor, any businessman, any company understands now that America is open for business and if you’d like to do business in the United States, we’re going to say, ‘That’s great.’ Remember what the last president said?  ‘You didn’t build that.’ The last president said people that did things, that built things that were consequential, they were the people that we have to go after, to [put in a] stranglehold, a litany of regulations. And by the way, The Heritage Foundation did seminal studies every year, talking about how the last president set records for how many regulatory strangleholds he put on the United States.

This president, President Trump, is doing just the opposite. Two things: One is, he is not bringing new regulations into place, but [two,] he is actually rolling back the bad regulations that we saw before. So businesses are opening up and it turns out the pool of  people that are most available right now, because of multiple years of bad regulatory and economic growth, are black Americans. And those people therefore are rushing into the marketplace. This is great news.

Wood: It’s great news. But as you well know, Horace, as we come up to MLK Day you are going to have a lot of folks out there talking about how the Trump administration, the tax reform package that was passed just before Christmas, is bad particularly for black Americans. We know this because they have already said they were going to do it.

[House Minority Leader] Nancy Pelosi and a lot of others are going to be holding events over the weekend in “honor” of Martin Luther King Jr., kind of hijacking the holiday, I would argue. To go tell black Americans why this is actually a bad economy for them, the complete opposite of all the numbers and evidence.

Cooper: Here’s the irony, what the left wants to tell black America is, ‘Who are you going to believe, them or your lying eyes?’ If you want to look at your bank account, if you want to look at the value of your home, if you want to make that the test, then you’ll look and you’ll say, ‘Wow, the news is amazing. My uncle, my cousin, even my next-door neighbor, they’re getting jobs that they didn’t have.’

A record 2 million fewer people are receiving food assistance under the Trump administration than before. But it is also not a surprise to me. Here’s the thing: When you look at Martin Luther King, most people remember the ‘I Have a Dream’ speech. What they don’t recall is that the main reason for the big rally at the Lincoln Memorial [in August 1963] was a jobs program.

Black Americans were worried and concerned that there weren’t a lot of great economic opportunities. And that’s how this [March on Washington in 1963] got organized. The essence of what black America and the civil rights effort was about was letting people be able to get the kinds of things that control their own lives.

Wood: The right to a quality education, the right to good jobs.

Cooper: Absolutely. Right. A great house.

Wood: Not the right to handouts, wanting handouts.

Cooper: Absolutely. But the left, with these teach-ins as you mentioned, it’s cynical what they are doing. They don’t have a program for black America. Black America rejected—people don’t realize this—black America rejected Barack Obama’s program. How do I know this? [In 2008], the highest percentage of black Americans in history voted for the Democrat [Obama].

In 2012, we saw something happen that we have never seen before. Fewer black people voted for the re-election of a president. We haven’t seen that in 120 years. Not with Clinton, not with Nixon, not with Reagan. Every other re-elected president got more black votes than they did the first time around.

Wood: And why do you think that is? Do you think people really made the calculation within the black community, he hasn’t done what he said he was going to do?

Cooper: They absolutely could see that. You can’t show up the day before Election Day and have to wait for a handout, and then on the day after go and say I’m going to vote for this guy because he is making me great. But the Democrats and the left have been very good, and that’s what this teach-in is about.

Wood: Well, you make a point. And I want to talk more about Project 21 because I’m sure a lot of folks watching are going to say, ‘Wow, the news media doesn’t usually go out and find people like Horace Cooper to talk about Martin Luther King Day.’ 

They want to know where there are more Horace Coopers. And Project 21 is one of those organizations. The release that you all put out talked about, in addition to the teach-in, that while all of that is going on, the liberals are also pushing the DREAM Act and trying to legalize a lot of illegal immigrants.  

Cooper: Oh, it’s a classic bait and switch, a beautiful bait and switch. When you don’t have a good program for people—by program, I mean a policy initiative that would be good for them—what you do is you find something to distract them.

What’s ironic is they’re not going to succeed in telling people, in this teach-in that they announced, that ‘You shouldn’t want the tax cuts you are about to get,  you shouldn’t want more money in your bank account, you shouldn’t want more flexibility in the kinds of jobs.  And that’s what’s coming your way. You don’t want that, that’s bad, we want to make you understand that the Trump regulatory tax policies are bad for you.’

Meanwhile, what they don’t say is ‘By the way, we do have a program, not for you, [but] we have a program. It is primarily focused on illegal immigrants. And in fact, even as late as today, the talk is we’ll shut the government down if we don’t get the ability to get the illegal immigration support policy changes that we want. Hey, black America, look at the teach-ins, that’s what we’ve got for you; but for our new favored class, we’ve got real policy changes that are designed to improve and make their livelihoods better.’

Wood: And in many cases, though, trying to get [illegal immigrants] into the same government programs that got [black Americans] trapped into big government.

Cooper: Well, of course, that’s the ultimate goal.

Wood: Because those folks will often times also turn into voters once they get locked into government. And they become the party of big government.

Cooper: It’s a vicious cycle.

Wood: You’re right, it’s a bait and switch. Let’s talk about Project 21. Tell everybody what Project 21 is, how they can get involved, and how they can learn more about it.  

Cooper: Project 21 is an organization made up of black Americans who have rejected the idea that the only way for black Americans to succeed is if the government specifically engages in a series of handouts or preferential treatment. We are people, moderate and conservative, who say that the best way for black Americans to succeed is the same way it is for [all] Americans to succeed: Strong families, hard work.  Get a good education, engage in the kind of policies where you personally save your money, you’re not extravagant. Where you make the sacrifice and you hand your children.

We believe in limited government, we believe in family values. We believe the church and the synagoge are the primary place where good values get inculcated. Our organization welcomes any American that believes in those kinds of things and wants to make sure that those are the values that we put forward. That got America started, that got America to succeed, that’s the future for America.

Wood: And that’s a lot of things that Martin Luther King Jr. absolutely stood for.

Cooper: Absolutely.

Wood: Horace, thank you.  I’ve known this guy for over 20 years, he is rock-solid. It’s great being on with you. Thanks for coming on and being out here and talking with us.

Cooper: Thanks for having me on The Signal.

Wood: And thank you everybody. Check out Project 21. And thank you for watching us right here on The Daily Signal’s Facebook Live.


Portrait of Genevieve Wood

Genevieve Wood advances policy priorities of The Heritage Foundation as senior contributor to The Daily Signal. Send an email to Genevieve. Twitter: .

RELATED ARTICLE: Rate of Imprisonment for Black Adults Falls 29% Over Decade

A Note for our Readers:

Trust in the mainstream media is at a historic low—and rightfully so given the behavior of many journalists in Washington, D.C.

Ever since Donald Trump was elected president, it is painfully clear that the mainstream media covers liberals glowingly and conservatives critically.

Now journalists spread false, negative rumors about President Trump before any evidence is even produced.

Americans need an alternative to the mainstream media. That’s why The Daily Signal exists.

The Daily Signal’s mission is to give Americans the real, unvarnished truth about what is happening in Washington and what must be done to save our country.

Our dedicated team of more than 100 journalists and policy experts rely on the financial support of patriots like you.

Your donation helps us fight for access to our nation’s leaders and report the facts.

You deserve the truth about what’s going on in Washington.

Please make a gift to support The Daily Signal.


How Tax Reform Is Keeping Promise ‘Fight for $15’ Couldn’t

As the union-backed “Fight for $15” movement has sought to enact mandatory minimum-wage increases in states and localities across the country, tax reform seems to have spurred wage growth using a different approach.

On the day President Donald Trump signed the sweeping tax-reform law, the New Jersey-based OceanFirst Financial Corp. issued a press release announcing “a commitment to increase the bank’s minimum hourly pay rate to $15.00 within 30 days of the enactment of the Tax Cuts and Jobs Act,” affecting 135 employees.

It’s one of 21 companies that have announced raising their base wage to $15 per hour because of tax reform, on a running list compiled by Americans for Tax Reform that currently shows more than 120 companies have announced raises or bonuses for employees.

Businesses large and small are taking the same action, citing tax reform as the reason, including some of OceanFirst’s much larger national competitors, such as Fifth Third Bancorp, with 13,500 employees, 3,000 of whom will benefit from the boost in base wage to $15, according to a company.

Others include BB&T with 27,000 employees; PNC Bank, with 47,500; U.S. Bancorp, with 60,000; and Wells Fargo, with more than 200,000. All raised their minimum wage to $15 per hour, and credited tax reform for the change.

It isn’t just banks. Connecticut-based insurance firm The Travelers announced that along with $1,000 bonuses for its 14,000 employees, “we have only a small number of U.S.-based employees making less than $15 an hour. We will increase their hourly wage to $15.”

While still early in the wake of enactment of the tax-reform law, the demonstrable results seem to be in stark contrast with the mandatory minimum-wage laws requiring a $15 wage.

After passing such a city ordinance, Seattle commissioned a study by the University of Washington, which found the cost to low-wage workers outweighed the benefits by a 3-1 ratio, and found that on average, low-wage workers would lose $125 per month in lost work hours, lost employment or lost job opportunities because of the law.

The National Bureau of Economic Research published the study.

“The problem with legislating a $15-per-hour wage is that if productivity is not up to $15 per hour, that person loses their job,” Americans for Tax Reform President Grover Norquist told The Daily Signal. “When you change the regulatory and tax policies, you expand the economy for workers, and productivity can expand for a greater reward.”

The results were predictable, said David Kreutzer, senior research fellow for labor markets and trade at The Heritage Foundation.

“What happens with tax cuts is that demand pulls wages up, and then you don’t have a problem with people losing jobs,” Kreutzer told The Daily Signal. “Without an increase in demand, people will lose their job, or typically don’t get hired. … The fight for $15 is unambitious and impossible. You can’t make people rich through mandates. We want an economy so strong that people can make $20 or $25 per hour because productivity is so strong.”

At the start of the new year, 18 states instituted a higher minimum wage, according to the National Conference of State Legislatures.

Of those, California and New York passed laws to eventually raise the minimum wage to $15 per hour by 2022 and 2020, respectively. Other states that approved increases to less than $15 were Arizona, Colorado, Hawaii, Maine, Michigan, Rhode Island, Vermont, and Washington.

The states of Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota automatically increased their minimum-wage rates based on the cost of living.

Americans for Tax Reform found that overall, at least 1 million Americans were benefiting from announced pay raises or bonuses as a result of tax reform, and the nonprofit organization thinks that it’s likely more than that, since many companies don’t make public announcements.

In most cases, companies didn’t specify how many of their employees would benefit from the minimum-wage hike.

Companies on Americans for Tax Reform’s list that announced raising the base wage to $15 per hour are, with number of overall employees listed, where announced:

  • American Savings Bank, 1,100 employees
  • Americollect, 250 employees
  • Aquesta Financial Holdings, 95 employees
  • Associated Bank
  • Bank of Hawaii, 2,074 employees
  • Bank of James
  • Bank of the Ozarks, 2,300 employees
  • Central Pacific Bank, 850 employees
  • Comerica Bank, 4,500 “non-officer” employees
  • First Hawaiian Bank, 2,264 employees
  • HarborOne Bank, 600 employees
  • INB Bank, 200 employees
  • Regions Financial Corp.
  • SunTrust Banks, 24,000 employees
  • Territorial Savings Bank, 247 employees

“We didn’t become a prosperous country because our Founding Fathers said, ‘Let’s pass a law to make everybody rich,’” Norquist said. “We became prosperous because they got out of the way to let people trade and invent. This is very helpful in getting out of the way so that more people will earn more than $15.”

A spokesman for the Fight for $15 organization did not respond to comment for this article. While it primarily advocates for laws, the organization doesn’t oppose companies voluntarily raising the wage, noting on its website Target raising the wage for employees as a “big win.”

The AFL-CIO, an umbrella organization for labor unions, supports laws to raise the minimum wage to $15 per hour, but opposed the tax reform law. An AFL-CIO spokesman did not respond to The Daily Signal’s request for comment.

The tax-reform law cut the corporate tax rate, previously the highest in the world among developed countries, from 35 percent to 21 percent, putting the U.S. on par with most other industrialized nations. The tax law also cut individual rates and eliminated some loopholes.

Portrait of Fred Lucas

Fred Lucas

Fred Lucas is the White House correspondent for The Daily Signal. Send an email to Fred. Twitter: @FredLucasWH.

RELATED ARTICLE: Right-to-Work Advocate Blames Unions’ Legal Threats for Loss

A Note for our Readers:

Trust in the mainstream media is at a historic low—and rightfully so given the behavior of many journalists in Washington, D.C.

Ever since Donald Trump was elected president, it is painfully clear that the mainstream media covers liberals glowingly and conservatives critically.

Now journalists spread false, negative rumors about President Trump before any evidence is even produced.

Americans need an alternative to the mainstream media. That’s why The Daily Signal exists.

The Daily Signal’s mission is to give Americans the real, unvarnished truth about what is happening in Washington and what must be done to save our country.

Our dedicated team of more than 100 journalists and policy experts rely on the financial support of patriots like you.

Your donation helps us fight for access to our nation’s leaders and report the facts.

You deserve the truth about what’s going on in Washington.

Please make a gift to support The Daily Signal.


Analysis Finds 1 Million Americans So Far Getting Pay Raise From Tax Reform

One million Americans are getting pay increases because of the tax reform package signed into law in December.

“More than one million hardworking Americans have already received a ‘Trump Bonus’ or ‘Trump Pay Raise’ as a result of the historic tax reform package that President Donald J. Trump signed into law just before Christmas,” @PressSec says.

That’s according to Americans for Tax Reform, a conservative group that established a running list of companies that have announced bonuses, wage hikes, and charitable donations.

“Just five days into 2018 the Tax Cuts and Jobs Act has changed the nation for the better,” Americans for Tax Reform President Grover Norquist said in a statement. “American companies are raising wages, paying bonuses, expanding operations, and increasing 401(k) contributions.”

The website asks for people to provide information if they are aware of other companies providing pay raises because of tax reform.

President Donald Trump and Republicans in Congress said the reform would grow the economy, while Democrats argued the corporate tax cuts would not benefit employees.

White House press secretary Sarah Huckabee Sanders issued a statement Friday night, which said:

More than one million hardworking Americans have already received a “Trump Bonus” or “Trump Pay Raise” as a result of the historic tax reform package that President Donald J. Trump signed into law just before Christmas. President Trump said from the beginning that lowering tax rates, simplifying the complicated tax code, and making our companies more competitive would be the fuel that propels our economy to new heights. The preliminary results show that the president is right, and American workers and families are the big winners. And this is only the beginning. The president remains focused on empowering Americans to build more prosperous lives for themselves and brighter futures for their children.

The new law cut the corporate tax rate from 39.6 percent to 21 percent. It also lowered individual rates and closed loopholes.

Among the employers to give bonuses were AT&T, which gave $1,000 bonuses to its 200,000 employees; American Airlines, which gave $1,000 bonuses to 127,600 employees; BB&T Bank, which gave $1,200 bonuses to its 27,000 employees and raised the base wage from $12 to $15 per hour; Southwest Airlines, which gave $1,000 bonuses for 55,000 employees and $5 million in charitable donations; and Sinclair Broadcasting, which gave $1,000 bonuses for 9,000 employees.

For the full list of companies, click here.

This story was updated to include a comment from White House press secretary Sarah Huckabee Sanders.

Portrait of Fred Lucas

Fred Lucas

Fred Lucas is the White House correspondent for The Daily Signal. Send an email to Fred. Twitter: @FredLucasWH.


How Tax Reform Is Keeping Promise ‘Fight for $15’ Couldn’t

We Hear You: Tax Cuts, the GOP Establishment, the Job Outlook, and the Trump Economy

Black Unemployment at Lowest Rate on Record

A Note for our Readers:

Trust in the mainstream media is at a historic low—and rightfully so given the behavior of many journalists in Washington, D.C.

Ever since Donald Trump was elected president, it is painfully clear that the mainstream media covers liberals glowingly and conservatives critically.

Now journalists spread false, negative rumors about President Trump before any evidence is even produced.

Americans need an alternative to the mainstream media. That’s why The Daily Signal exists.

The Daily Signal’s mission is to give Americans the real, unvarnished truth about what is happening in Washington and what must be done to save our country.

Our dedicated team of more than 100 journalists and policy experts rely on the financial support of patriots like you.

Your donation helps us fight for access to our nation’s leaders and report the facts.

You deserve the truth about what’s going on in Washington.

Please make a gift to support The Daily Signal.


VIDEO: Bernie Supporters Love the Republican Tax Plan

By and large, New York City Democrats seem to hate the Republican Tax Bill. But how do they feel about it when told it’s Bernie Sanders’ plan? Documentary filmmaker Ami Horowitz took to the streets of New York’s East Village to find out.

EDITORS NOTE: The featured image is of supporters of Democratic presidential hopeful Sen. Bernie Sanders (D-VT) hold signs during the Independence Day Parade in Waukee, Iowa July 4, 2015. REUTERS/Scott Morgan – RTSNRSX.

SURVEY: Senior Attorneys and Executives saw ‘Litigation Environment Improving’ in 2017

The U.S. Chamber of Commerce Institute for Legal Reform issued its 2017 Lawsuit Climate Survey, which found that “senior attorneys and executives see the litigation environment improving generally.”  The survey found a jump of 13% in 2017.

The survey by the Harris Poll to explore how fair and reasonable the states’ liability systems are perceived to be by U.S. businesses. Participants in the survey were comprised of a national sample of 1,321 in-house general counsel, senior litigators or attorneys, and other senior executives at companies with at least $100 million in annual revenue who indicated they: (1) are knowledgeable about litigation matters; and (2) have firsthand, recent litigation experience in each state they evaluate.

The 2017 Lawsuit Climate Survey noted:

The 2017 survey reveals that the overall average scores of the states are increasing, and senior attorneys and executives see the litigation environment improving generally; more than six in ten respondents (63%) view the fairness and reasonableness of state court liability systems in the United States as excellent or pretty good, up from 50% in 2015 and 49% in 2012. The remaining 36% view the system as only fair or poor, or declined to answer (1%).

Moreover, a state’s litigation environment continues to be important to senior litigators, with most respondents (85%) reporting that it is likely to impact important business decisions at their companies, such as where to locate or do business. This is a significant increase from 75% in 2015 and 70% in 2012.

According to respondents, the five worst jurisdictions (with others very close behind) were Chicago or Cook County, Illinois (23%); Los Angeles, California (18%); Jefferson County, Texas (17%); New Orleans or Orleans Parish, Louisiana (14%); and San Francisco, California (13%).

Along with the 2017 Lawsuit Climate Survey, the Institute for Legal Reform released its study on how states can improve their lawsuit climates. The study, “101 Ways to Improve State Legal Systems,” lists key legal reforms that states can adopt and includes specific examples recently enacted by some states.

Trump Should Rescind Work Authorization for H-4 Visas

Meaningful border security and effective enforcement of our immigration laws are anathemas to globalists who see in America’s borders impediments to their wealth.

While U.S.-based globalists routinely spout globalist propaganda, often disguised as “news reports” by American journalists, comparable globalist propaganda spewed by foreign journalists is rarely reported in the United States.

On December 18, 2017, Quartz India published an article, under the category of Back In Limbo, “Under Trump, Indian H-1B wives fear becoming second-class citizens again.”

The title of the article was not only illogical but also apparently sought to blur the distinction between American citizens and aliens.

Beneath the title of that article was the image of the hands of a newly naturalized citizen holding an American flag, accompanied by a brief description of the naturalization ceremony where the photo was taken.

There was no explanation, however, as to why the photo taken of an American flag at a naturalization ceremony is somehow to be conflated with a report about nonimmigrant aliens working in the United States.

The obvious question, certainly not asked or answered in the article, is how could any alien, particularly a nonimmigrant alien, complain about “becoming a second-class citizen?”

Simply stated, aliens are not citizens — first-class, second-class, or any class at all.

In point of fact, aliens must be acquire lawful immigrant status in order to ultimately be eligible to come United States citizens provided that they meet a number of prerequisites. Nonimmigrant aliens, by definition, are aliens who are admitted into the United States for a temporary period of time and must, after the period of admission expires, return to their native countries.

H-1B and H-4 visas, the focus of the Quartz India grievance, are nonimmigrant visas.

Furthermore, it is a crime for an alien to claim to be a United States citizen. Under the law (18 U.S. Code § 911) any alien who makes a false claim to being a United States citizen is committing a felony that carries a maximum penalty of up to three years in prison.

Use of misleading language is a major element of the campaign waged by immigration anarchists and globalists who seek to eradicate America’s borders.

In the Orwellian world of immigration Newspeak, aliens who enter the United States without inspection are referred to as entering “undocumented” a fabricated term to obfuscate the truth that these aliens are illegally present in the United States.

By eliminating the term “alien” from the vernacular where any discussions or debates about immigration are concerned, a tactic initiated by President Jimmy Carter during his administration, set the stage for the bogus assertions that anyone who believes in securing our nation’s borders against the entry of criminals, terrorists, and other aliens who would pose a threat to best interests of America and Americans are deemed to be “anti-immigrant” when, in reality their position should be referred to as “pro-immigration law enforcement.”

This use of language to control the debate was the topic of my recent article, “Language Wars: The Road to Tyranny is Paved With Language Censorship.”

The article published by that publication, complaining that their citizens are not being treated in a manner equal to United States citizens, is simply yet another step along the path to immigration anarchy and the destruction of American sovereignty by confounding logic and reasoning in pursuit of a political agenda.

Bad as the title of that piece was, the article itself goes on to hammer the United States for its policies, and we have Obama’s anarchistic immigration policies to thank for this.

Consider the opening paragraph of the article:

Rashi Bhatnagar gave up her career as a journalist when she left India in 2009 and moved to the US on an H-4 dependent visa. For years, she struggled with frustration because her visa status did not allow her to work in the US. But in 2015, she saw a sliver of hope after the erstwhile Barack Obama administration allowed the spouses of H-1B workers awaiting green card approval to apply for work permits of their own.

The article then noted that on December 14 of this year the Trump administration announced that it would reconsider the Obama policy of permitting certain H-4 aliens to be granted employment authorization and how unfair this was.

The article went on to report:

Since 2015, over 104,000 spouses were granted EADs. A large number of these would likely be from the sub-continent as Indians receive a major chunk of the H-1B visas every year.

Let’s take a moment to consider the issues.

The alien referenced in the first paragraph of the article came to the United States voluntarily knowing full well, before she even set foot on U.S. soil, that she would not be permitted to work in the United States. Nevertheless, she willingly came here and found the conditions to be what she knew that they would be before she boarded the airliner.

Many of Obama’s globalist policies ended the day that he left office and still more of his policies are under review by President Trump so that he can truly put America and Americans first, a clear and unequivocal element of his campaign for the presidency.

Providing tens of thousands of aliens, who were admitted with H-4 nonimmigrant visas, with employment authorization runs contrary to the best interests of American workers by enabling these nonimmigrant aliens to compete with American and lawful immigrants for jobs.

It is to be expected that President Trump would take a hard look at this program and, hopefully, terminate these policies.

Of course citizens of India and other countries could not care less about the well-being of America or Americans.

Incredibly, adding to this problem is the fact that for decades we have had a succession of administrations that apparently shared their disdain for Americans. Mr. Obama, undoubtedly led the charge creating policies that eroded American sovereignty that undermined national security and public safety.

Furthermore, the problems with the employment of these nonimmigrant aliens also has an economic component. Money earned by aliens is wired out of the countries by foreign workers, whether they are legally or illegally working in the United States. That money is permanently lost to the U.S. economy and contributes to our national debt and to an adverse balance of trade.

On October 3, 2017, the World Bank issued a report, “Remittances to Recover Modestly After Two Years of Decline.” It included this paragraph:

Among major remittance recipients, India retains its top spot, with remittances expected to total $65 billion this year, followed by China ($63 billion), the Philippines ($33 billion), Mexico (a record $31 billion), and Nigeria ($22 billion).

India has been leading the charge of countries receiving remittances sent home by their citizens who are working in countries around the world. Of course, not all of the money remitted to these countries came from the United States, but America is a leading country where the flow of remittances is concerned.

The egregious article upon which my commentary today is predicated also addressed the issue of remittances and quoted Poorvi Chothani, managing partner at an immigration law firm LawQuest.

Chothani had the unmitigated chutzpah to whine that Trump policies would prevent these nonimmigrant aliens from realizing their “American Dream.”

The “American Dream” for nonimmigrant aliens?

Incredibly, the term “American Dream,” and one that has become over the past several decades, ever more elusive and indeed, illusory for American citizens, has been misappropriated by globalists to purportedly justify providing millions of illegal aliens with lawful status and a pathway to U.S. Citizenship under the failed “DREAM Act” and now apparently for nonimmigrant aliens who voluntarily enter the United States on nonimmigrant visas.

Additionally, the article makes a contrived claim that since, according to the article, 90 percent of the H-4 visa holders are women, the Trump policies are unfair to women. And while the H-1B visa holders may be sending remittances back to India, their wives who cannot work in the United States are unable to send money to support their families because the wages paid to the H-1B spouses are insufficient to meet all of their needs, in the United States and back home to help their families.

Of course the law firm is likely concerned that their profits will suffer if the number of aliens who would come to the United States is reduced because of President Trump’s policies of putting American workers first.

It’s easy to see the damage that has been done to America — just follow the money.

Because of the globalist policies of the Obama administration and previous administrations, the globalists have been literally and figuratively “making out like bandits.”

Thankfully, since the election of Donald Trump, there is truly a new sheriff in town.

EDITORS NOTE: This column originally appeared on

INFOGRAPHIC: 1 of Every 5 Government Employees Has a 6-Figure Salary

KEY TAKEAWAY: Almost 30,000 rank-and-file government employees make over $190,823, more than any governor of the 50 states, according to a report from

The U.S. government pays employees a total of about $1 million per minute, according to a watchdog group’s report on the sprawling federal bureaucracy.

Looking at 78 large agencies, the nonprofit organization found that the average salary of a federal employee exceeds $100,000 and that roughly 1 in 5 of those on the government payroll has a six-figure salary.

Almost 30,000 rank-and-file government employees make over $190,823, more than any governor of the 50 states.

“Our oversight report shows the size, scope, and power of the administrative state,” Adam Andrzejewski, Open the Books’ CEO and founder, told The Daily Signal in a phone interview. “Two million federal bureaucrats have salaries, extraordinary perquisites, and lifetime pension benefits. This compensation package has never been seen in the private sector.”

The median wage for all American workers was $44,148 a year for a 40-hour work week in the final quarter of 2016, according to the Bureau of Labor Statistics.

Andrzejewski said the Open the Books report, released Tuesday and including an interactive map of the 2 million federal bureaucrats by ZIP code, is meant to educate taxpayers on where their dollars are going.

So what about those perks?

When federal employees reach the third anniversary of their employment, he said, “they get eight and a half weeks’ paid time off” plus “10 holidays, 13 sick days, and 20 vacation days.”

“We estimate those perks alone cost the American taxpayer $22.6 billion a year,” Andrzejewski said.

With the government paying the disclosed workforce $1 million per minute, according to the report, every eight-hour workday costs taxpayers more than $500 million.

A total of 406,960 employees make a six-figure income, amounting to roughly 1 in 5 employees. From 2010 through 2016, the number of federal employees making more than $200,000 increased by 165 percent.

“People are really hungry for these hard facts, they are interested in searching their little piece of the swamp,” Andrzejewski told The Daily Signal.

An image from the report. (Photo:

Among other findings of the report, called “Mapping the Swamp: A Study of the Administrative State”:

—A small federal agency in San Francisco, Presidio Trust, paid out three of the government’s four largest bonuses, including the largest in fiscal year 2016. The biggest bonus, $141,525, went to a personnel manager who did payroll.

—The Postal Service and the Department of Veterans Affairs employ over half of all disclosed federal workers, at 32 percent of and 19 percent, respectively.

—About 2 million “undisclosed” employees work for the Defense Department, including active military duty. Their compensation, including $1 billion in bonuses and $125 billion in pensions, amounts to $221 billion per year.

Federal workers are paid a “new minimum wage,” Open the Books argues, because the average employee at 78 of the 122 departments and independent agencies reviewed makes $100,000 or more.

“Congress should hold hearings to bring transparency to all the information we’re still missing, including performance bonuses and pension payouts,” Andrzejewski said in a prepared statement. “It’s time to squeeze out waste from compensation and stop abusive payroll practices.”


Portrait of Rachel del Guidice

Rachel del Guidice

Rachel del Guidice is a reporter for The Daily Signal. She is a graduate of Franciscan University of Steubenville, Forge Leadership Network, and The Heritage Foundation’s Young Leaders Program. Send an email to Rachel. Twitter: @LRacheldG.

Internet Currencies and National Security

Internet currencies do not claim to replace state currencies, but even if the phenomenon is realized only partially, it is hard to dismiss the idea that it could deprive states and financial establishments that control the global financial system of their exclusive hold over means of payment. In the long term, if this phenomenon spreads and is not regulated, it could also have implications for internal stability. At present, regulatory bodies such as central banks in the West as well as in Israel appear fairly indifferent to internet currencies and their impact on various fields of activity, because they are not a familiar official currency, security, or asset. Israel would do well to accelerate the process of defining its approach to internet currencies, with an integrated examination of the subject by all the regulatory bodies involved, including cyber teams, and in collaboration with other elements worldwide.

An established financial system is critical to states and their citizens in all areas of life, and it is one of the characteristics of sovereignty. The development of means of payment and financial systems outside the control of states arouses much interest, including with reference to national security, in both the narrow and broader senses of this term. The issues include funding terrorist activity, raising capital by organizations committing terror and sabotage, bypassing sanctions, making secret payments for sensitive and prohibited materials and technologies (nonconventional WMD, surface to surface missiles, cyber capabilities), undermining established financial systems, interfering with tax collection, committing cyber and ransom crimes, laundering money, paying bribes, and damaging public funds. This article deals with this aspect of the phenomenon of virtual decentralized currencies, such as Bitcoin, Atrium, and others (hereafter: “internet currencies”).

Internet currencies are based on an advanced technology – “blockchain” – which enables them to exist on a secure internet network, in encrypted form, with no supervision by governments or central banks. Supporters of internet currencies point to their basic advantages compared to national currencies: they can be used for fast, reliable, and continuous money transfers at any time, without the intervention of a central entity. Proponents are encouraged by the growth of bitcoin usage in several countries, representing the breakthrough of virtual decentralized currencies. For example, since April 2016 Japan has recognized bitcoin as an official means of payment, and in December 2017, Chicago launched a “futures” market in Bitcoin. At the same time, senior economists around the world and heads of financial systems generally believe that investing in Bitcoin (and similar currencies) is a speculative gamble and that their rise in value relative to state currencies is simply a bubble.

There are several parameters regarding virtual currencies: the various types of decentralized virtual currencies (internet currencies), the phenomenon of internet currencies itself, virtual currencies in general (not only decentralized), and the new technology. There is broad consensus regarding the innovation represented by the blockchain technology, its value, and its potential future implementations, including within established financial systems and other areas.

Internet currencies can be used to pay for goods and services, conversion to other currencies, and investment. However, public access to and involvement in internet currencies is still low, their status is at this stage unclear, and they are subject to speculative investment. The sharp fluctuation in their exchange rates (against state currencies) makes it hard to see them as useful for commerce. All these factors work to restrain their wider use in business. Some of these features, such as high volatility, could also make it more difficult for hostile elements to exploit them (as described below), although the actual situation in this area is unknown and these features could change in the future. The big test for decentralized virtual currencies, as negotiable currency and as financial instruments, will come when there is regulation in this field, and if and when the behavior of these “currencies” is suitable in terms of stability, accessibility, the quantity of “money,” and so on. The question of user confidence is central, and therefore these currencies are very sensitive to risks, such as technical hitches, manipulations, fraud, insider trading, and cyber attacks, which could undermine this trust.

True, internet currencies do not claim to replace state currencies, but even if the phenomenon is realized only partially, it is hard to dismiss the idea that it could deprive states and financial establishments that control the global financial system of their exclusive hold over means of payment, just as the internet deprives states and the media of their exclusive control of information. With the existing systems, it is hard for the state to track “new money” and its usage, so the main risk posed to states by these currencies is the fact of financial activity moving beyond the state’s knowledge or reach. This includes the financial activity of terrorist and criminal organizations, which can use virtual currencies to pay their activists, acquire weapons on the black market, buy forbidden substances, launder money, and move money from country to country with no supervision. In the future, this currency system could also be used to bypass sanctions imposed on countries and hostile elements, including the purchase of banned substances and technologies, since it is a separate global financial system that is not controlled by states or banks.

In the long term, if this phenomenon spreads and is not regulated, it could also have implications for internal stability. These extra-state systems could enable private and business elements to operate outside the reach of state institutions within their own countries, or even without their knowledge, to avoid paying taxes, to take money out of bank accounts, and so on. These actions could also be done by individuals seeking to maintain the value of their money in countries where the local currency is subject to decline, where there are severe restrictions on foreign currency transactions, or where there is internal instability. Countries that feel threatened could take various defensive actions, such as banning the use of internet currencies and blocking access to trading sites and “digital wallets.”

At present, regulatory bodies such as central banks in the West as well as in Israel appear fairly indifferent to these currencies and their impact on various fields of activity, because they are not a familiar official currency, security, or asset. This phenomenon has apparently exposed a gap in the state regulatory system. Some regulators are not yet worried due to the limited scope of the phenomenon, relative to the vast global extent of commercial markets, capital, and supervised money, and because the internet currency system is separate from the established financial system. For example, on December 13, 2017, US Federal Reserve Chair Janet Yellen said that bitcoin is “a highly speculative asset” and “not a stable store of value,” is solely intended for speculation, accounts for a very marginal part of the payments system, and poses no risks for market stability. In other words, it does not replace the state currency, and if the “bubble” should burst soon, the resulting shockwaves will not be very strong. Nevertheless, it is clear that if the “bubble” continues to inflate, the extent of the damage will rise accordingly. China is following developments closely; in early December, Pan Gongsheng, a deputy governor of the People’s Bank of China, warned investors, saying: “There is only one thing we can do: sit by the river bank and one day we will see bitcoin’s body pass by.” Concern for the implications of bitcoin for the general public has also been expressed in South Korea, where the government is introducing regulation.

Israel is still formulating its position, although it has been aware of the phenomenon for several years. In an open letter of February 2014, the Bank of Israel warned the public about the dangers of using decentralized virtual currencies, and stressed that they were not legal tender, even though they were called “currencies.” The Bank said that “this is an activity with a high-risk factor with regard to money laundering and funding of terror,” since it facilitates anonymous financial transactions that bypass regulated systems. The position of the income tax authorities in Israel is that virtual currencies are not currencies or securities under the laws of the state, and therefore the sale of a virtual currency will be taxed like the sale of an asset, and the profit will be subject to capital gains tax. Shmuel Hauser, head of the Israel Securities Authority, characterized the recent rise in bitcoin rates as a “bubble” and brought up the need for a regulatory position on stock exchange companies dealing with these currencies.

Israel would do well to accelerate the process of deciding on its approach, with an integrated examination of the subject by all the regulatory bodies involved, including cyber teams, and in collaboration with other elements worldwide. At this stage, since the world has not yet reached firm decisions about internet currencies, state authorities should adopt a conservative approach. If the dangers embodied by internet currencies become clear, legislative and enforcement steps at the state level could indeed be an important part of the response. A fundamental solution will require international consensus. If extensive fraud is discovered, the system will collapse in any case. Yet even now it is important to promote, as much as possible, the formulation of responses to the various risks, including the prevention of “crime and terror funds.” It is also advised to make the most of the opportunity provided by the innovative technological aspects of these systems, as this could also make a contribution to established systems.

NOTE: *The article was written in the framework of the Economics and National Security Program at INSS. It should not be seen as recommending investment or commercial use of the phenomenon examined here.

Shmuel Even


The Qatar Crisis: Causes, Implications, Risks,…

Philip GordonAmos YadlinAri Heistein

Countering Qatar’s Negative Regional Impact

Muslim Woman Who Laundered Bitcoin for ISIS Entered U.S. via Chain Migration

So did at least two other jihadis, Pennsylvania cop shooter Ahmed Aminamin El-Mofty and New York City subway jihad bomber Akayed Ullah. How many is it going to take?

“Woman accused of laundering bitcoin for ISIS got U.S. visa thanks to family ties: officials,” Associated Press, December 23, 2017 (thanks to Blazing Cat Fur):

NEW YORK – Federal authorities say a Pakistani-born woman accused in a bitcoin scheme to help the Islamic State group got a visa allowing her into United States because of her family ties.

The Department of Homeland Security says Saturday that Zoobia Shahnaz, a naturalized U.S. citizen living on Long Island, benefited from a family-based immigration system Republican President Donald Trump says threatens national security.

Earlier this month, the 27-year-old Shahnaz was charged with laundering bitcoin and wiring money to the Islamic State group. After quitting her job, she was stopped at Kennedy Airport in July attempting to fly to Pakistan.

Shahnaz’s lawyer has said she was trying to help Syrian refugees….


ISIS-linked group uses Bitcoin to raise funds for weapons

Hackers claim ISIS Militants linked to Paris Attacks had a Bitcoin Wallet worth $3 Million

In 1 Chart: What’s in the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act is the most sweeping update to the U.S. tax code in more than 30 years. The recently released conference report would lower taxes on business and individuals, and unleash higher wages, more jobs, and untold opportunity through a larger and more dynamic economy.

The conference report is a serious effort to reform a complex and badly broken system that provides significant tax relief to the vast majority of taxpaying Americans.

Portrait of Adam Michel

Adam Michel

Adam Michel focuses on tax policy and the federal budget as a policy analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Twitter: @adamnmichel.

RELATED ARTICLE: Trump’s Tax Reform Will Benefit Middle Class More Than Wealthy

Hi Daily Signal Reader:

We hope you enjoyed this article.

The Daily Signal exists to be a trusted alternative to biased mainstream media. We take pride in delivering the truth about what is happening in Washington and how it affects your life.

Trust in the mainstream media is at a historic low—and for good reason. Ever since Donald Trump was elected president, the liberal slant of many major media outlets has been exposed.

Our dedicated team of more than 100 journalists and policy experts believe you deserve the truth about what’s going on in Washington–and they rely on the financial support of patriots like you.

As time runs out for December, will you make a donation to make sure we can continue to bring you the truth in 2018?
Your donation helps us fight for access to our nation’s leaders and report the facts—and it will advance our mission to help all Americans understand what must be done to save our country.


VIDEO: Democrats’ Favored DACA Amnesty Bill Would Cost $26 Billion

The legislative replacement for the Deferred Action for Childhood Arrivals program favored by most Democrats would add billions to the budget deficit, according to an estimate from Congress’ nonpartisan accounting shop.

The Congressional Budget Office released Friday its score of the Dream Act of 2017, a DACA amnesty bill that would provide legal permanent residence and, eventually, a path to citizenship for well over 1 million younger illegal immigrants. The CBO found that the Dream Act would increase the federal budget deficit by $26 billion over a decade, mostly by conferring eligibility for federal benefits to the amnestied immigrants.


Introduced earlier this year by Sen. Dick Durbin, D-Ill., and Sen. Lindsey Graham, R-S.C., the bill has become the DACA replacement of choice for congressional Democrats. Both Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi have said they are committed to passing a “clean” Dream Act to legalize DACA recipients and other similarly situated illegal immigrants.

The Dream Act would direct the Department of Homeland Security to give lawful conditional status to illegal immigrants who were under 18 years old when they initially entered the U.S. and have lived here for at least four years prior to the bill’s enactment. Because of the Dream Act’s expansive eligibility criteria, the number of illegal immigrants who would benefit from the Dream Act is far higher than the DACA population of about 790,000.

The CBO estimates that about 2 million illegal immigrants would be granted conditional lawful permanent resident status under the Dream Act. “Roughly 1 million of the 1.6 million people receiving unconditional LPR status would become naturalized U.S. citizens during the 2018-2027 period,” the CBO cost estimate states.

Amnesty for that population would boost the deficit mainly through increased direct spending on Medicaid, health insurance subsidies, and food stamp benefits. On the revenue side, any tax gains from bringing illegal immigrants “on the books” would be largely offset because “increased reporting of employment income would result in increases in tax deductions by businesses,” according to the CBO’s estimate.

“As a result, corporations would report lower taxable profits and pay less in income taxes,” the CBO report added.

Democrats’ push for a “clean” Dream Act is unlikely to result in a DACA replacement before the end of the year, as immigration advocates and their allies on Capitol Hill have demanded.

Though Republicans have expressed support for crafting a legislative fix, both the White House and immigration hawks in Congress have insisted that any DACA replacement bill include border security enhancements and deeper reforms such as limits on chain migration and ending the Diversity Visa Lottery.

Republican leadership has also rejected the idea of including Dream Act provisions in the 2018 spending bill, which is due Friday.


Will Racke

Will Racke is a reporter for The Daily Caller News Foundation. Twitter: @hwillracke.

DITORS NOTE: Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities for this original content, email

5 Myths About Tax Reform, and Why They’re Wrong

Next week, the House and Senate will take their final votes on tax reform. The president’s goal is to sign the legislation into law before Christmas.

Although there are still some unknown details, the important parts of the bill for most Americans are already known and would greatly improve our current, woefully out-of-date tax code.

The bottom line is that taxpayers across America can expect a tax cut. The bill would lower tax rates for individuals and businesses, double the standard deduction, and significantly increase the child tax credit.

The bill is also pro-growth and pro-American worker. The economy could grow to be almost 3 percent larger at the end of 10 years. That translates to more than $4,000 dollars per household, per year. American families could finally get a real raise.

Americans deserve to know the truth about the proposed tax reform packages. There are several myths going around about what the proposed plan would do.

Here are a few of them, and why they’re wrong.

Myth 1: This is just a tax cut for the rich, and it will actually raise taxes for everyone else.

The truth is in fact the opposite. The Senate tax bill increases the amount of taxes paid by the rich and, according to the liberal Tax Policy Center, 93 percent of taxpayers would see a tax cut or no change in 2019. It found similar results for the House bill.

Both tax bills would actually increase the progressivity of the U.S. tax code. That means fewer people at the bottom will pay income taxes, and people at the top will see their share of taxes paid increase.

The Cato Institute’s Chris Edwards notes that the Senate tax bill cuts income taxes for people making $40,000 to $75,000 a year by about 37 percent. People making over $1 million see a cut of only 6 percent.

In two recent Daily Signal pieces, we calculated how 12 different taxpayers would fare under each of the tax plans. The results show that almost everyone will see a tax cut, and only the wealthiest families are at risk of their taxes going up.

Under the current tax code, the top 10 percent of income earners earn about 45 percent of all income and pay 70 percent of all federal income taxes. The U.S. tax code is already highly progressive, and these tax reforms will only increase the trend of the wealthy paying more than their share of income earned.

Myth 2: Repealing the individual mandate will raise taxes on the poor, raise insurance premiums, and kill 10,000 people a year.

Only in Washington can removing a tax penalty be considered a tax increase.

Tax reform will likely repeal Obamacare’s individual mandate, which imposes a tax penalty anywhere from $695 to upward of $10,000 for not purchasing the type of health insurance mandated by the federal government.

Depending on income and available health insurance options, the federally mandated health insurance comes with subsidies paid to the insurance company that can range from no more than a few dollars to over $12,000 a year per individual, and upward of $20,000 per year for families.

Repealing the mandate would not force anyone to give up their coverage or forego their current tax credits. It would just make the Obamacare insurance optional, and thus increase health care choices.

Eliminating the Obamacare individual mandate will not reduce any taxpayer’s income by a single cent. It will, however, reduce the tax bills of many individuals and families—based on their own choices—by hundreds, if not thousands, of dollars.

The individual mandate with its penalties is also not the “glue” that holds Obamacare together, as some have claimed. It never was.

“The lifeblood of the law is the generous taxpayer insurance subsidies, which attract and maintain the historically sluggish enrollment,” explains senior Heritage Foundation senior fellow Robert Moffit. Repealing the mandate will not precipitate doomsday for insurance premiums.

While it is extremely difficult to predict how insurance premiums would change without the individual mandate penalty, we do know that eliminating the penalty will prevent low- and middle-income individuals and families from having to subsidize the high medical costs of others.

One particularly outrageous claim is that due to people voluntarily choosing alternative health care solutions, 10,000 people will die each year because the government is no longer forcing Americans to buy health insurance.

Two economists reviewed these claims and found the exact opposite. They found that there is “poor evidence linking insurance coverage to mortality” and that “the mandate may in fact be elevating death rates in some populations.”

When you factor in the economic growth and higher wages from tax reform, the tax bill could actually save lives.

Myth 3: Corporations and their rich owners will receive a huge windfall.

Politicians who don’t want tax reform claim that cutting taxes for business will only help the rich.

Despite the name—“corporate” tax reform—the burden of the corporate income tax falls almost entirely on workers in the form of lower wages. Americans are undoubtedly skeptical about this claim, but the realities on the ground are actually quite simple.

When business taxes go down, workers’ wages go up.

That’s not just the result of corporate benevolence. Rather, wages rise because higher profits translate to additional investments that make workers more productive, and businesses that don’t pay workers what they are worth will lose them to competitors who do.

American corporations pay a federal income tax rate of 35 percent—one of the highest in the world. If tax reform can lower that rate to 21 percent, American businesses and the workers they employ will be globally competitive again. Businesses will invest more, hire more workers, and be forced by the laws of supply and demand to raise wages.

This is exactly what happened over the past decade and a half in neighboring Canada. In 2007, Canada began lowering its corporate tax rate. And guess what? Wages grew significantly faster in Canada than other comparable countries.

Most economic researchers agree. A recent review of 10 separate studies published between 2007 and 2015 concluded that when governments cut corporate taxes, workers receive almost all of the benefit through higher wages.

Myth 4: Tax reform will be bad for seniors.

Retirees may be the most concerned about what tax reform will mean for them, as most rely on relatively fixed incomes.

But, the proposed reforms are good news for retirees. For the most part, they would be less affected than other Americans, as the proposed reforms would not change the way Social Security and investment income are taxed.

Many retirees would in fact benefit from the tax bills’ doubling the size of the standard deduction.

While seniors’ earnings and pension income would be subject to new individual income tax brackets and rates, those changes would actually mean tax cuts—not increases—for an overwhelming majority of seniors and retirees.

Myth 5: Tax reform won’t grow the economy, it will only add to the debt.

Congress rightly allowed the tax reform bill to decrease revenues over 10 years by $1.5 trillion—about 3.5 percent of projected revenue. But such “static” budget scores provide zero useful information about how the reform will actually affect the deficit.

Properly designed tax reform will lead to a larger economy and higher wages. Each of these economic benefits can result in more tax revenue.

A recent Heritage Foundation analysis shows that the Senate tax reform bill could boost the size of the U.S. economy by almost 3 percent over the long run.

Other estimates are even more optimistic. Nine leading economists recently described how the economy could see a boost of up to 4 percent due to tax reform. The President’s Council of Economic Advisers believes the economy could grow between 3 and 5 percent, a range that was independently verified by three economists from Boston University.

Tax reform that grows the economy could result in more than $130 billion of new federal revenue in every year outside the current budget window. And that’s using the most conservative of the estimates above.

More optimistic estimates would bring in well north of $200 billion, making up most—if not all—of the static tax cut once the economy reaches its new larger potential.

Congress’ spending addiction shouldn’t stop tax reform, but the tax cuts will be short lived if Congress continues to increase spending every year.

The fact remains that our deficit cannot be eliminated with tax increases. Believing it can denies the fundamental problem: The deficit is driven by out-of-control spending. Spending is where congressional deficit hawks should turn their attention.

It is true that the proposed tax reform packages would mean big changes for individuals, families, and businesses across the United States. Overwhelmingly, however, these changes would be resoundingly positive.

Lower- and middle-income families would receive the largest tax cuts, and they would be the primary beneficiaries of business tax reforms that would generate higher wages and more job opportunities across America.


Portrait of Adam Michel

Adam Michel focuses on tax policy and the federal budget as a policy analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Twitter: .

Portrait of Rachel Greszler

Rachel Greszler is a senior policy analyst in economics and entitlements at The Heritage Foundation’s Center for Data Analysis. Read her research.


U.S. factories closed out 2017 with a boom.

GOP Lawmakers Target Another Obamacare Mandate in States

Immigrant Businessman Talks America’s Need for Tax Reform

Survey: Fear of Debt Won’t Stop Millennials from Spending More This Holiday Season

A new survey by finds that millennials are planning as much or more on holiday shopping this year than they did last year, despite their growing fear of credit card debt.

To better understand how millennials think about budgeting, credit card debt, and spending around the holidays, we polled 500 18-34 year-olds in the U.S. who carry credit card debt.

Key takeaways

  • More than 70% of millennials plan to spend as much or more than they did last year, while only 30% said they plan to spend less.
  • Even though most respondents know they’ll spend as much or more than last year, nearly half of them (47.8%) don’t seem to have a budget.
  • Eight out of ten respondents (81%) who plan to spend money holiday shopping don’t intend to borrow money, or will repay new credit card debt right away. More than half (52.2%) will pay for their purchases with debit cards or cash.
  • However, a very small segment of millennial holiday shoppers (6.2%) say they plan to dig into their savings to pay for their gifts.

Haunted by the ghost of Christmas Present(s)?

More than 70% of respondents surveyed said that they planned to spend just as much or more on holiday shopping than they did the previous year.
This is despite that fact that an overwhelming number of respondents stated that credit card debt was the biggest fear in their lives, even scarier than the threat of war, or even death.

Worryingly though, budgeting seems overlooked, as less than half of all respondents said they know how much they plan to spend on shopping this year.

Creating and even sticking to a budget won’t make you immune to holiday debt — we all know how those little, last minute purchases can add up. But it’s crucial to set a limit for yourself before you hit the stores.

Because if you don’t…

We know what you’re getting for Christmas this year

It’s debt.

Debt seems to have become part and parcel of holiday shopping, with 16% of millennials planning to lean on their credit cards to finance their spending.

But it’s not all doom and gloom — eight out of ten (81%) respondents who plan to spend money holiday shopping seem to be shying away from borrowing, and plan to pay it off immediately if they do.

But wait…there’s myrrh


The percentage of millennials who plan to withdraw from savings our take out a personal loan to pay for their holiday shopping

So intent are millennials on getting their holiday shopping done that more than 7% of millennials surveyed plan to dip into their savings, or even take out a personal loan, in order to pay for their Christmas purchases.

Needless to say, this is probably not the best idea, especially if you already have credit card debt, as all of our respondents do.

Sleighing your debt

It’s easy to get carried away during the holidays. But your credit card debt doesn’t have to sound the death knell for those sweet holiday deals you’re itching to take advantage of. These tips can help you keep your spending on track.

  • Set a (realistic) spending limit: Different strategies will work for different people. Some people do best at by setting individual budgets for each person on their gift list; others might find it easier to set a maximum amount for themselves and figure it out from there. But the most important thing to remember is that having some plan is better than not having one at all.
  • Carry cash: If you’re already struggling with credit card debt and you find it difficult to resist temptation, just carry cash. Withdraw the amount that you can afford to spend and leave your credit cards behind. This will force you to think about your budget and help you stay away from those impulse buys.
  • Take advantage of holiday sales: Planning is key if you want to get the best prices this holiday season. Make a list of potential gift items and start tracking them early. You can find some great discounts during Thanksgiving, Black Friday and Cyber Monday sales.
  • Prioritize paying off credit card debt: If all else fails, and you end up accruing some credit card debt, make a conscious effort to pay it off as quickly as possible. Carrying a balance on your credit card(s) can rack up your fees and interest costs and negatively impact your credit score


We obtained this data by surveying 500 adults ages 18 to 34 who have credit card debt, and asking them the following questions:

  • Do you plan on spending more, the same, or less on holiday shopping this year than you did last year?
  • Do you know how much you plan to spend on holiday shopping this year?
  • How do you plan to pay for your holiday shopping this year?

The survey was conducted through Pollfish on October 24, 2017 as part of a study to illustrate millennials’ holiday spending behaviors.